Andrew Edwards, Staff Writer
Posted: 07/16/2012 07:17:25 PM PDT
SAN BERNARDINO – It was nearly two years ago when the city’s treasurer warned that the city was on the brink of financial crisis.
“We have been getting by with borrowing money from other funds and other magic accounting tricks, but the fact of the matter is that (revenue) pool has shrunk by $40 million over the last three years,” City Treasurer David Kennedy said during an Aug. 23, 2010, meeting.
Kennedy, an elected official to the part-time job to oversee city investments, stood by that opinion on Monday and said the city’s intractable fiscal problems became even worse with the end of redevelopment.
For many years, the council was “robbing Peter to pay Paul, and then they took away the piggy bank,” Kennedy said.
The city’s Economic Development Agency existed to fight urban blight in San Bernardino and had its own budget. But the council repeatedly used agency’s funds to offset shortfalls in the city’s general fund.
For example, the council voted in 2009 to borrow $1.3 million from the EDA to help balance its books.
In 2010, when Kennedy made his dire warning, San Bernardino was in the midst of yet another year when the City Council had to somehow erase a multi-million dollar budget deficit without enraging residents by cutting vital city services.
That year, however, it was impossible for the council to avoid slashing services. The same night Kennedy and others warned of a fiscal crisis, the council voted 4 to 2 to adopt a budget that included the rare step of reducing the size of San Bernardino’s police and fire departments.
Those drastic steps, however, were not sufficient to stave off a $45 million deficit and San Bernardino’s move toward Chapter 9 bankruptcy.
There are plenty of explanations for the city’s financial slide. The post-2007 foreclosure crisis and recession hit San Bernardino harder than other American cities, and San Bernardino never fully recovered from the closures of Norton Air Force Base and Kaiser Steel in Fontana.
But San Bernardino’s leaders had a habit of looking to short-term budget fixes while long-term solutions remained elusive.
The night Kennedy provided his warnings and the council passed the 2010-11 budget, City Manager Charles McNeely observed that 13 of the 15 preceeding years, the council began its budget debates with a projected deficit.
But City Attorney James F. Penman referred to the August 2010 meeting during Monday’s council meeting. By 2010, Penman said, San Bernardino’s elected officials had grown weary of hearing administrators overstate financial worries.
“Year after year, we were always in the red, we adopted a budget, and we cut mostly employees. And then in January and February, when the midyear review came out, we miraculously had money, and then we rehired people,” Penman said.
Any attempts at a longer-term solution – such as new taxes or deep budget cuts, would not have been easy to come by – nor guaranteed to work in the years immediately before and after Kennedy’s warning in 2010.
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