Long Beach City Council OKs borrowing $6M

The City Council has voted, 5-0, to authorize Comptroller Jeff Nogid to borrow $6 million in revenue anticipation notes before the end of April.

News that the city would need to borrow to cover payroll and operating expenses came days after officials projected a $10.25 million deficit for the current fiscal year. The city ended the last fiscal year with $107,000 in its general fund.

Around 75 residents attended a special meeting Tuesday, and several came to the podium during the public hearing to warn officials to cut the city’s payroll.

Resident John Bendo pointed out that roughly 81 percent of spending in the city’s current budget is personnel-related, which City Manager Jack Schnirman confirmed.

Former City Councilman Denis Kelly said that before taxes are raised, cuts need to be made.

“It’s going to be ugly, but it’s coming, and you need to start laying the groundwork now,” Kelly said. “If you come in with a 25 percent tax increase and don’t cut a dime, you won’t be here long.”

But most residents who spoke said they understood the need for borrowing at this point. Nogid said the city would pay the $6 million back within 10 to 12 months, and that interest rates would be around 2.25 percent. The city will aim to close $8.75 million of its debt in the upcoming budget, due next month, and will start the 2013-14 fiscal year $7.5 million in debt.

Schnirman said short-term borrowing would be a regular part of getting the city back to financial stability. He announced Wednesday that all city departments would be forced to cut 25 percent of nonsalary related spending until the end of the fiscal year.

Above: Long Beach City Hall