City to borrow $410K this year
Josh Dulaney, Staff Writer
Posted: 03/23/2011 06:11:55 PM PDT

SAN BERNARDINO – The most recent fight over how to finance a budget shortfall in the City Attorney’s Office came to an end this week when officials approved a measure to borrow money from a city fund.

The City Council voted 4-2 late Monday night to have the General Fund on behalf of the City Attorney’s Office borrow $410,000 from the Regional Development Impact Fee Fund, with the City Attorney’s Office paying the money back out of its fiscal 2011-12 budget.

The decision came after much sniping between City Attorney James F. Penman and members of the council over how well the office’s finances are managed. Fourth Ward Councilman Fred Shorett was among those who have suggested that Penman refuses to make the same sacrifices
other city departments have made during the economic downturn.

“Mr. Penman does not seem to be willing to prioritize or cut,” Shorett said.

Penman told the council that the city is at risk financially if he didn’t get the money he says is needed to defend a spike in lawsuits.

Lawsuits against the city have increased 34 percent in fiscal 2010-11, Penman said.

Penman said the surge in lawsuits has forced his office to ask for more money to pay city attorneys and outside attorneys in order to keep up.

He said that if his office isn’t funded to the level he thinks is necessary, the city could shell out millions of dollars in lost lawsuits and settlements.

Of the city’s 113 pending lawsuits, Penman said the city is a defendant in 98 of them. He said 11 of the 15 in which the city is the plaintiff were generated by the Police Department. Most of those were for injunctions.

On Wednesday, he said the council’s move was unprecedented.

“It makes no sense,” he said. “It’s like the (City Attorney’s) Office is responsible for (generating) the lawsuits.”

Penman’s preliminary budget this fiscal year was $916,400.

He initially cut $165,400, then another $234,900 after the council adopted the budget and required city departments to cut 8 percent from their operating costs.

He said Monday’s vote by the council means he will have to ask the council for more funding this year.

A Finance Department review of Penman’s budget suggested he is to blame for the shortfall.

In a report submitted by City Manager Charles McNeely to the council, the Finance Department said Penman chose to “make his budget cuts in the most critical areas of his operation,” pointing to cuts for outside lawyers and litigation. The report said the cuts left the budget for outside attorneys and litigation “unrealistic” and kept Penman from being able to “carry his operation through the entire fiscal year.”

According to the report, the trend over each of the last four years for outside attorneys and litigation has been roughly $780,000.

McNeely stood by the report Wednesday.

“This is probably as thorough an analysis as I’ve seen of anybody’s budget, and I think it speaks for itself,” he said.

Sixth Ward Councilman Rikke Van Johnson at Monday’s council meeting said that city attorneys in places such as Long Beach, Chula Vista and Huntington Beach have cut back staff in recent times.

Those cities have city attorneys who recognize they have to “adhere to the dictates of the economy,” Johnson said.

Council members Chas Kelley and Wendy McCammack, who voted against the measure, have said the city could use money from the Administrative Civil Penalties Reserve, a reserve account filled through code enforcement penalties, to close the budget budget gap in Penman’s office.

“That money should be used to offset the $410,000 since it’s his office that’s making the collection efforts,” McCammack said.

The reserve is between $1.5 million and $2 million, Penman said.

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