Council adopts provisional budget | Department of Finance receives $ 80,000 to clean up books | South Pasadenan

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SouthPasadenan.com News | The City Council discusses the adoption of the provisional budget, Wednesday June 24, 2020 (Left to right, top to bottom): Michael Cacciotti, Richard Schneider, Marina Khubesrian, Mayor Pro Tem Diana Mahmud, Mayor Bob Joe, City Manager Stephanie DeWolfe, Chief Financial Officer Karen Acèves

On June 24, South Pasadena City Council voted unanimously to pass what city manager Stephanie DeWolfe called “a budget that does not reflect current economic realities.”

The vote was the culmination of an emotional standoff between groups with widely varying degrees of confidence in running the city.

“You are faced with a difficult decision tonight,” DeWolfe told council members ahead of the vote. Adopt a proposed budget of $ 45 million for the 2020-2021 fiscal year that reflects the significant loss of estimated revenue of $ 3.5 million expected due to the impacts of the pandemic, or a two-month “rolling credit” current spending levels to allow time to resolve the overdue City Audit 2018-19 file and for “some community members to continue to review their views on the City’s financial statements”.

SouthPasadenan.com News | City Manager Stephanie DeWolfe, Wednesday June 24, 2020 Video Conf. Board meeting

Public comments were strongly in favor of continued ownership, with only one of 13 comments supporting adoption of the draft budget.

The city’s finance committee voted unanimously to recommend to Council the adoption of a new budget, but turned the tide after hearing dozens of budget issues raised by a former city finance director and a separate citizen report showing that the budget they recommended on May 26 was drastically different from one of them was only presented a few days later for Council consideration.

City finance director Karen Aceves said the changes represented updated internal and external estimates related to the pandemic added to make the numbers more accurate. But the commission was scared and on June 18 voted 4-1 in favor of the continued ownership advocated by a growing list of citizens.

The board also acceded to staff’s request for an additional $ 80,000 to hire an accountant and purchase software to help speed up the ongoing “clean-up” of what have been called “inappropriate accounting practices” that stretch back 10 years, the extent the city first disclosed this month amid the ongoing budget controversy. The nearly two-year clean-up effort is now at 70%, said CFO Karen Aceves, but required considerable resources which contributed to delays in completing the city’s annual audit and other projects.

SouthPasadenan.com News | Financial Director Karen Aceves, Wednesday June 24, 2020 Video Conf. Board meeting

Aceves made a presentation and answered additional questions, many of which related to the time constraints his department would face based on the Council’s vote. Ongoing resolution would require extracting the new figures from the budget and reinserting this year’s figures into the software. It will take some time to complete the already delayed audit. Getting a new bookkeeper on board to help with the cleanup could take two months. She said her five staff – none of whom have been with the city for more than two years – have spent 12 to 15 hours a day cleaning up, transitioning to automated licensing and licensing software. pays, to the creation and then to the reconstruction of the budget. for the impacts of the pandemic and respond to a separate county audit request, while continuing the day-to-day activities of the department.

Council member Marina Khubesrian said her constituents cared less about “spreadsheets” and more about the city’s cash flow and credit rating. Aceves said both are good. The city has “a strong cash flow”, “can pay our bills” and has tools to draw on cash. Khubesrian wanted to know if the Council could adopt a continuous appropriation with the new attached budget.

SouthPasadenan.com News | Councilor Marina Khubesrian, Wednesday June 24, 2020 Video Conf. Board meeting

City attorney Teresa Highsmith shot him dead. Resolution is what has been noticed to the public. The possibility of adopting a budget is mentioned in the staff report, but not in the title of the agenda item. The Council “cannot suddenly change and pass a budget,” Highsmith said. “It would be inappropriate under Brown Law.”

Council member Richard Schneider moved the adoption of maintenance of appropriations. He complained that the staff report distorted the Finance Committee’s position on the budget and that the staff appeared to support the budget, arguing against their own recommendation for continued assignment. He was particularly offended by the “tone” of the staff report for its “inflammatory” and “derogatory” language and its references to “deficiencies” which seem to leave the impression that former city officials were “incompetent or evil” .

SouthPasadenan.com News | Municipal Councilor Richard Schneider, Wednesday June 24, 2020 Video Conf. Board meeting

He said extending current spending is “not a big deal” as the Council can revise or change the budget as it sees fit. “There is nothing in stone that says you have to spend or collect” a certain amount. Once the audit arrives, the budget can be adjusted. He said he didn’t question that Aceves was trying to get the right numbers for a moving target.

Council member Diana Mahmud made a lengthy statement highlighting the unprecedented nature of the times and the extreme uncertainty of the City’s revenues and expenditures over the coming year. She was “extremely uncomfortable” about taking action that would weaken the town’s chances of negotiating a $ 400,000 concession with the town’s unions or make it harder for the town to get the job done. ‘voter approval for an extension of the tax on users of public services, taking a position that does not suggest that the city anticipates a significant drop in its turnover. To do so “goes against the truth”.

SouthPasadenan.com News | Mayor Pro Tem Diana Mahmud, Wednesday June 24, 2020 Video Conf. Board meeting

“I strongly support the city’s need to be transparent and to explain inaccurate financial statements from the past to our residents,” said Mahmud. “We need to do this as quickly as possible to restore the shattered trust our residents have in the city. However, it does not make sense to me to hold next year’s budget hostage to correct the accounting mistakes of the past.

Board member Marina Khubesrian said it was clear the Finance Committee grappled with the issues before making its recommendation. But “the responsibility stops with the city council”. The audit is retrospective while the budget is prospective. Quoting a comment she had read from South Pasadena CPA Wendy Kerfoot, she said embracing continued ownership would be tantamount to claiming that the last three months of pandemic impacts “have not happened.” It would be foolish. ”

The city must be in the best possible financial condition, she continued. Emotions and anxieties are high for everyone. “Let us not let this crisis divide us to the point of not making a decision that is not really based on reality.”

SouthPasadenan.com News | City Councilor Michael Cacciotti, Wednesday June 24, 2020 Video Conf. Board meeting

Board member Michael Cacciotti, who supported Schneider’s motion to maintain the supply, said he would feel irresponsible to pass a budget “based on the facts before me” and in the face of comments from “90 percent” of people he spoke to demanding resolution. Like Schneider, he strongly objected to “derogatory” comments he said staff and others had made about former city officials. The tone is a complete change in the community that he couldn’t tolerate. Cacciotti expressed his gratitude to the citizens who contributed to the debate, as well as to the staff, although he also expressed his frustration that his numerous requests for detailed financial information were rejected by one of his colleagues on the Council and some staff.

As is increasingly common, this left the deciding vote to Mayor Robert Joe. He proposed adopting the maintenance of appropriations and directing the staff within 60 days to bring back the final figures for a 2020-2021 budget in the form of a list of income and expenditure; appropriate up to $ 80,000 to hire an accountant for a maximum period of six months and purchase an accounting software module for $ 20,000.

SouthPasadenan.com News | Mayor Robert S. Joe, Wednesday June 24, 2020 Video Conf. Board meeting

The clerk then recorded the unanimous vote, with Mahmud saying his approval was based on the city attorney’s statement that, unlike how the city manager presented the choice at the start of the meeting, “we are prevented from voting in the 2020- Budget 2021 project.

Council then had a final discussion on what the $ 80,000 allocation would cover. DeWolfe and Aceves said it depends on what the Council wants. In addition to day-to-day operations, tasks now include completing the cleanup, completing the audit, establishing a new budget, and closing the fiscal year. The extent of public awareness for the new budget remains to be determined.

But DeWolfe said, “The expectation of the community is that we will go back and fix any errors as quickly as possible. I think it’s in everyone’s best interest.

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