Placentia City Council members are largely relying on spending cuts and layoffs to pull the North OC city out of a roughly $1.5 million budget deficit.<\/p>\n
It marks a different approach compared to a host of other Orange County cities that closed budget gaps by using reserves, reallocating money and issuing hiring freezes.\u00a0<\/p>\n
[Read:: How Rocky Are Orange County\u2019s Municipal Budgets?<\/a>]<\/p>\n \u201cI know the changes are probably tougher to see than what we\u2019ve seen in the past,\u201d said Councilmember Jeremy Yamaguchi at the June 30 meeting. \u201cWe\u2019ve experienced, I think, a long run of having very nice things that we\u2019ve wanted to have for a long time, but I think it\u2019s time to go back to basics.\u201d<\/p>\n The council unanimously approved the spending cuts and layoffs.<\/p>\n \u201cI think the council\u2019s been really clear that we want to focus on the basics, primarily infrastructure and public safety,\u201d said Mayor Chad Wanke at the meeting.<\/p>\n In May of this year, staff gave a presentation stating that the initial gap would be patched using $1,458,351 from other funds.<\/p>\n City staff proposed closing the gap using $682,454 from the Section 115 Trust \u2013 a fund used to help support retired employee benefits \u2013 and $775,896 from a sum of money paid to the city for their annexation of unincorporated county land, Hamer Island, in 2022.<\/p>\n But city council members decided against it after they questioned how future budgets would fill a similar gap without one-time funds being available.<\/p>\n \u201cMy main concern, honestly, is sustainability,\u201d Yamaguchi said at the May 19 meeting. \u201cIt starts small and if you don\u2019t nip it in the bud then it\u2019s going to grow to something that\u2019s a lot harder to handle.\u201d<\/p>\n To bridge the gap, council members rolled out a series of spending cuts within the city, including two layoffs, two unfilled positions being unfunded, reallocation of funds from staff to sewer funds and reducing landscaping on city properties.\u00a0<\/p>\n An additional $180,000 in savings from Advanced Life Support costs will help balance the budget as well.\u00a0<\/p>\n According to a city presentation at the June 30 meeting, operating revenues for the city will total around $53.9 million \u2013 giving the city a balanced budget. The initial proposal in May showed $55.3 million in expenditures \u2013 $1.46 million over the city\u2019s revenue.<\/p>\n \u2018Sloppy Accounting\u2019<\/p>\n City council members were presented a financial audit that revealed miscalculations in last year\u2019s budget.\u00a0<\/p>\n The report showed two uncorrected misstatements \u2013 the city did not record or receive $132,367 in receivable interest from Veterans Village, and the city had to adjust the beginning net position of $546,912 for the implementation of Governmental Accounting Standards Board Statement 101<\/a> about compensated absences.\u00a0<\/p>\n \u201cSeems like sloppy accounting,\u201d Wanke said at the meeting.\u00a0<\/p>\n There were several corrected misstatements listed during the presentation at the June 30 meeting.<\/p>\n Approximately $2,808,000 was incorrectly recorded to the City Capital Projects Fund instead of the Risk Management Internal Service Fund, and the city also recorded $2,880,000 in liabilities twice.\u00a0<\/p>\n The city also forgot to record some entries for its leases, resulting in a series of misstatements in the budget that added up to over $1.6 million, including mistakes where staff over or under counted how much money they had coming in.\u00a0<\/p>\n In the Placentia Regional Navigation fund, $650,000 was recorded as revenue for the wrong fiscal year, and there was an overstatement of revenue and understatement of unavailable funds of about $1,218,000.\u00a0<\/p>\n About $564,000 of fiduciary fund property tax additions was not recognized as revenue, city capital project fund accounts expected to collect $196,000 in revenue but was later determined to be uncollectable, and $862,000 was adjusted to clear the city\u2019s balances.\u00a0<\/p>\n The city also did not properly record $647,000 in revenue receivables before the fiscal year ended, requiring adjustments.\u00a0<\/p>\n \u201cIt looks like we have this kind of similar issue repeating itself, with this overstatement of revenue and understatement of unearned,\u201d Wanke said.\u00a0<\/p>\n