Is Chula Vista Budgetary Rainstorm That Bad?

Buffeted by wind and light showers, Peter Donohue stood on the steps of the Chula Vista police station on the afternoon of December 22 to tell the press that, according to his initial analysis of the city’s financial resources, the city is not as bad off as it has purported to be. Donahue, a consulting economist, was hired by the Chula Vista Police Officers Association to do an independent analysis of the city’s budget.

City services have been cutback, and some of those who provide those services have received their pink slips, terminating their contracts on January 6. Since November’s election and the failure of Proposition H (which was to bring in additional tax revenues) the City has been saying the budget gap will have to be closed by even more layoffs.

In a recent Union-Tribune article, it was written: “They [Chula Vista city officials] lament that the additional $6 million means that instead of laying off 71 workers, including 33 police officers, the city may send notices to a total of 146 employees.”

The gist of Donahue’s revelation was that for a city claiming to be in such dire straits, Chula Vista has an impressively large general fund reserve. According to a prepared handout, “the General Fund unrestricted fund balance for 2007-2008 was $33.5 million, or 23.3% of the total General Fund expenditures…” The statement goes on to say that “23.3% is an exceptionally high reserve ratio. The typical reserve ratio is between 5-10%.”

Reserves are what a city saves for a rainy day. The question being asked is: Has the rainy day come for Chula Vista?

Reserves are also used to buy the city a better bond rate. In a brief interview after the press conference, Donahue said, “The city, when it goes out to borrow money, boasts about its reserves, how it has massive reserves, and as a consequence, people should have no doubt it will be able to pay off its debts. Looking at it from the public’s perspective or the employee’s perspective, the argument that you can’t use the reserves to provide services seems misguided.”

Chula Vista Police Officers Association secretary Phil Collum, when asked about the layoffs in other sectors of the city, said, “This is about the city’s finances, not just the police department, not just the [Police Officers Association]; it goes beyond that to the whole city.”