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Guest Commentary

Long Beach Must Face Our Economic Challenges

From Issue: Volume XXI - Number 14
7/22/2013


By Damon Dunn


[Editor’s Note: Damon Dunn, the first announced candidate for Long Beach Mayor, was first again by denouncing the proposed double-digit raises for Long Beach city managers. The Beachcomber first broke the news of the pending raises on July 19.]


Released last Friday, the state’s latest employment numbers showed the number of Long Beach unemployed increased by 2,700 over the month before. Our unemployment rate jumped a full percent to 11.2 percent. The total number of persons employed remained 10,700 below the pre-recession peak level. These numbers are a reminder of how much further we still have to travel before our city regains its full economic recovery.

The same lesson applies to our city’s budget and revenues. In spite of years of cost cutting, we remain behind in achieving the goal of a self-sustaining budget, with ongoing costs in balance with long-term revenues. Outer year projections in FY 15 and FY 16 are for continued deficits.

Yet, current news reports indicate that the city’s management staff is now seeking significant salary increases. Raises of this size simply are not supportable by the condition of the city budget.

The city employees have made contributions to help resolve our city’s budget imbalance. Positions have been cut. Pay raises curtailed. And recent rounds of negotiations have put a dent in the city’s massive retirement debts. Yet, as Mayor Foster detailed in his budget speech last August, the city still has a way to go in bringing its total labor costs under control.

Long Beach also faces the financial challenge of major debts. Deferred maintenance--our libraries, roads, and other infrastructure – now stands at over $814 million. CalPERS’ most recent accounting as of June 30, 2011 shows the combined pension deficit at $291 million on an accrual valuation basis, and $692 million on a market valuation basis. The amount taken annually from the city budget to cover this debt along with the ongoing payments is driven more by the changing CalPERS financial performance and discount rate assumptions, and not local conditions over which we have control. But significant pay raises will also lead to major increases in our unfunded pension liability – and this is one local condition we can control. It does not make sense to incur more pension debt when we do not yet know how we are going to pay our existing pension liability without cutting even more into the service levels we need to provide.

But our biggest deficit is in our jobs – the 10,700 jobs we remain below the pre-recession peak and the many thousands more we should be growing from Long Beach’s incomparable civic and human assets.

While the Long Beach budget has improved, now is not the time to declare financial victory and enter into a new round of management raises that will only create the next round of financial deficits. Some level of raises may be warranted based upon performance, but the decision has to be justified by growth of general fund revenues. The mindset of city government needs to shift from financial crisis management, to how we can grow long-term, sustainable revenues by creating jobs, expanding businesses, and creating the job opportunities our community needs and deserves.

[Dunn’s website is www.damondunn.com]