Long Beach declares end to 'fiscal crisis'

Long Beach City Hall on March 28, 2013. Long Beach City Hall on March 28, 2013. Photo Credit: Tara Conry

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Long Beach's City Council voted Tuesday to end its self-imposed "fiscal crisis" designation, as officials say the city has moved into a state of recovery.

Long Beach's Democratic-controlled administration cited a recent Moody's Investors Service report that reaffirmed the city's bond rating and improved its outlook from "negative" to "stable" as evidence that the city is in recovery.

But local Republicans, who are in the midst of a campaign to take back three seats on the council, derided the move as a hollow election-year gesture.

A former Republican administration created an $18-million deficit and spent $21 million in surplus between 2008 and 2012, according to a report issued in July by state Comptroller Thomas P. DiNapoli.

Moody's downgraded the city's credit rating to one step above junk-bond status in December 2011. A new Democrat-led city administration took office a month later, replacing the Republicans.

The City Council declared the fiscal crisis in February 2012, giving City Manager Jack Schnirman more authority over the city's budgeting and spending policies.

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Schnirman reduced the city's workforce by 12 percent and cut labor costs from 83 percent of the budget to 63 percent, which were among the moves that allowed the city to pass a balanced budget for the fiscal year that began July 1, city officials said.

"It is now appropriate to remove the 'fiscal crisis' designation, enter the long-term recovery phase and put forth a long- term financial recovery plan," city officials said Tuesday in a statement.

Long Beach Republicans, who have one seat on the five-member City Council, said the Democratic administration has relied too heavily on borrowing for the city's fiscal troubles to be over, said Jim Hennessy, a Republican spokesman. The city has $42 million in outstanding debt, according to a recent Moody's report.

"This administration is not fooling anyone with their smoke-and-mirror public relations," Hennessy said.

He added that the city faces a "serious taxpayer crisis" because of its reliance on debt.

The City Council also adopted the "Long Beach Fiscal Recovery Plan," which calls on Long Beach leaders to replenish the city's depleted fund balance.

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