A. GARCIA/SFVS

Rafaela King is the new interim finance director for the City of San Fernando.

The City of San Fernando is facing a bigger budget hole than previously reported by former City Administrator Al Hernandez, according to an independent audit of the 2011- 2012 Fiscal Year finances presented at this week's city council meeting.

In the audit prepared by the Riverside-based firm Teaman, Ramirez & Smith Certified Public Accountants, the city had a $1.2 million deficit in its general fund and a $2 million deficit in its Grants Special Revenue Fund, totaling more than $3 million in red.

At least $526,000 of that were unpaid bills to the Los Angeles Fire Department (LAFD) for two months of service in the 2011-2012 Fiscal Year (which ended June 30th, 2012). City officials continue in discussions with the LAFD regarding its contract, reported interim city manager Don Penman.

Besides the economic downturn in recent years, some of the items that have put the city in a dire financial stance go back more than a decade.

A. GARCIA/SFVS

Members of the Mariachi Masters Apprentice Program received recognition during the San Fernando City Council meeting.

For instance, and for inexplicable reasons, city officials borrowed $750,000 from each the Retirement Fund and the Sewer Enterprise Fund (for a total of $1.5 million) in 2001 to cover the Las Palmas Park Improvement Project, when a grant they were expecting did not materialize and the project exceeded its budgeted costs.

The council was then led by former state assembly member Cindy Montanez, and borrowed the money despite apparently having funds to cover the cost in the general fund. That money was borrowed at a 20-year repayment term of $100,000 annually, and the City still owes $966,000 on that loan.

In addition, the lack of funds in the city budget means it hasn't fulfilled its entire obligation to a trust fund set up to pay for its retired employees' health care. In Fiscal Year 2011-2012, the City was supposed to contribute $2.6 million to that fund, but only put in $917,000, which means it must make up the difference this year, on top of the contribution allocated for this year – nearly $6 million.

All of this would add up to nearly $10 million of debt. The mid-year report for the 2012- 2013 Fiscal Year will be presented Feb. 19, and could deliver more bad news.

Avila Says Stop Blame Game

"We've got a lot of debt that we have to address," summarized Penman at the end of a presentation that seemed to conflict with reports from his predecessor, Hernandez, who had reported the budget hole was $1.1 million. Councilmember Jesse Avila said the current council should stop blaming past councils for the financial problems and that the report, while somber, at least gives the council "a reality check."

"We have to stop blaming the previous council because it's useless. What we need to do is start attracting businesses," said Avila. But Mayor Pro-Tem Sylvia Ballin, noting she was "distressed" by the deficit revelations in the audit, did point the finger. "We haven't been told the truth," she said. "The previous administration said we were only $1 million in the red and here we are a few months later and we're nearly $10 million in the hole.

"Now that we have ugly, we have to do everything to make things right," she continued. "Every dollar counts going forward." Included on the agenda of the Feb. 4 meeting Monday were a $17,121.73 expenditure for the purchase of a new 50 horsepower pool pump for the San Fernando Regional Pool and a $164,000 contract for the purchase and installation of an On-Site Sodium Hypochlorite Generation System (OSG) for one of the city's water tanks. While both items are sorely needed, Ballin opposed the OSG contract, given that the company that bid on it (the only one to do so on a second bidding round) hiked its fees $21,000 from its previous bid.

"I don't like being taken advantage of," said Ballin in opposing the item, which was approved by the rest of her colleagues.

Fundraising For July 4 Fireworks

Ballin also had a difference of opinion on Councilmember Joe Fajardo's proposal to fundraise for the Fourth of July Fireworks Celebration. The annual event costs the City nearly $26,000 and with the existing budget deficit, she said, they simply don't have the money for it.

Last year, the city used money from a recreation fund to cover about $10,000 for the event that were not matched by sponsors, principally Crown Disposal, Inc. That company is currently in negotiations with the city regarding a trash services contract. Fajardo suggested going out to the business community to ask for help in covering the costs of the event.

Ballin said she didn't think the council members should be fundraising, as this creates the impression to businesses that "they own you."

"We're in a very bad, bad financial situation. There's just some things you have to give up," she said.

Once again, however, her reservations were pushed aside. Fajardo was given the go-ahead to try to raise funds for the event along with fellow Councilmember Robert Gonzales.

Another point of contention came when Mayor Antonio Lopez proposed considering declaring Ficus trees a public nuisance in the city, given that they damage sidewalks, sewer lines and power lines, block street signs, and that its fruit is poisonous and dangerous to pets.

While everyone agreed this is a good idea, what Ballin contended that such a declaration involves writing an ordinance. City Attorney Maribel Medina, whose legal fees is already a sticking point for some in the current council, drafts ordinances. Medina said researching and preparing such an ordinance would cost about $2,000.

"Is this important? Yes it is, but we have to set priorities," Ballin said. "I think is something that we can table. I don't see the money to pay for this ordinance." In the end, the council made some modifications to the initial proposal and staff will return with some suggestions as to how to deal with the trees.

Better News

The council officially recognized the Mariachi Masters Apprentice Program (MMAP), which last year was selected as the 2012 National Arts and Humanities Youth Program award winner by the President's Committee on the Arts and Humanities. Its young musicians performed at the White House, and met first lady Michelle Obama.

The change in the council at the end of last year had prevented it from previously acknowledging the achievement of the MMAP musicians and their instructors.

The council also introduced new interim finance director Rafaela King, who will be in charge of helping the City keep control of its books. "I'm just glad to be on board to help out," said King when asked for a comment about her new position.