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City Falls $3 Million in Hole

By   /   November 17, 2012  /   1 Comment

A city that has been kept in the dark about finances is facing a budget deficit of over $3 million. Despite the fact the city manager specifically said at a recent city council meeting the city is “not spending one penny of reserves” the city manager this week admitted the city would be spending over half the reserves. Numbers don’t lie.

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City Manager Explains Red Ink Spending

Desert Hot Springs City Manager Rick Daniels

Desert Hot Springs City Manager Rick Daniels

Desert Hot Springs, CA – A city that has been kept in the dark about finances is facing a budget deficit of over $3 million.

Despite the fact city manager Rick Daniels specifically said at a recent city council meeting the city is “not spending one penny of reserves” the city manager this week admitted the city would be spending over half the reserves. Numbers don’t lie.

Bad news was announced at a Finance Committee meeting last Thursday chaired by council member Jan Pye. Previous meetings of the committee exclusively formed of Mayor Yvonne Parks and Jan Pye have not been open to the public.

In addition to Yvonne Parks also attending the meeting were city manager Rick Daniels, finance director Terrance Beaman, and two staff members. Councilman Adam Sanchez arrived late, listening in but not participating in the discussion. In total 14 people attended the meeting.

The meeting opened with Beaman listing stakeholders vested in city financial stability. Number one on the list were city residents, followed by business owners, tourists, community groups and city employees, etc. Stakeholders at the meeting identified themselves and the majority were city employees with only one a business owner.

When the question of why there were no representatives of merchants or the tourist and hotel industry in attendance the answer was that they were invited but choose not to attend. Jan Pye suggested the lack of attendance was an indication of confidence in the way the council has been handling things. It was a comment that struck everyone dumb before the shock that came next.

Temporary Deficit Spending

City budget papers presented by Beaman were distributed with one line item clearly identifying a budget deficit of $3,223,000. City manager Rick Daniels down-played the issue saying deficit spending was “temporary” as certain money promised from the power plant and a sales tax appeal “would take care of that.”

That was counted by a comment from Planning Commissioner John Girardi, the former director of finance for the city of Coachella explaining the rule of city financing is not to bank on receiving promised but not guaranteed funds.

Bottom line is the city this year is exhausting $5 million in reserves by over fifty percent and the official story from city hall is we have nothing to worry about. Importantly, the City Manager Rick Daniels is replenishing the reserve dip with shaky one-time revenue and doing nothing about solving the problem. This simply leaves the city vulnerable again the following year unless things change.

Money for Nothing

Other issues discussed included the possibility of recovering several million dollars lost on the Pink Flamingo and Jewish Temple properties and the Music Festival. City manager Rick Daniels said he would bring that information to the next meeting.

The committee worked mostly in the dark unable to review specific costs as it was not presented with a complete accounting of all expenditures. Top of the list was management pay, an issue that has been successfully avoided for a considerable time.

With the city manager’s contract alone sucking up nearly $1 million over three years and other top city managers pulling down in excess of $10,000 a month, some are starting to believe the city could and should save money and get equal value by paying half that amount – or less.

However, in a recent council meeting when Council members Russell Betts and Adam Sanchez supported limiting top management pay to new hires (proposing a pay cap just on new hires alone and not affecting existing personnel) they were resoundingly beaten down by the council majority of Parks, Pye and councilman Scott Matas.

Who’s in Charge?

With the council majority unwilling to limit pay to city employees – who now have a controlling majority of the finance committee – it is a legitimate worry that city employees appear to be in charge of city hall, not our elected representatives.

The urgency of the city’s financial crisis was more alarming to some than others. It was suggested to meet more frequently for solving the city’s budget crisis as all were in agreement that some sort of overhaul is necessary. However the majority present, dominated by city employees, overwhelmingly decided on continuing once a month meetings, perhaps hoping a solution will appear all by itself to save the day.

The next meeting scheduled Dec. 20, 6:00 pm should be interesting as the committee requested details with an emphasis on examining top management pay. In the past this has been secret. However, it would be surprising if the city manager does not supply the committee with specifically requested detailed information essential for fiscal budgeting and instead supplies general salary ranges instead.

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photo by Bruce Montgomery

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About the author

Dean M Gray

Writer, Artist & Publisher. Dean started in the newspaper business at the age of nine earning 90 cents a week walking 3 miles delivering a newspaper door to door. 500 miles later he graduated to a bicycle route. Delivering news evolved into reporting news when he started publishing his first independent newspapers in high school. He served as editor for college newspaper has been published in newspapers and magazines. Dean has been writing his way out of a paper bag and traveling uphill ever since. He is a member of the Society of Professional Journalists and Investigative Reporters and Editors. His publication is Desert Vortex News - http://www.desertvortex.com

1 Comment

  1. City Hall in Desert Hot Springs has the same spin for a major problem as City Hall in 29 Palms. They blame their problems on hardworking residents. DHS’s response is an outrageous. Keep after them Dean; please do a follow-up.

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