Days before Moody’s Investor Service may reevaluate the City of Long Beach’s finances, City Manager Jack Schnirman announced that a more than $10 million deficit, or about 12 percent of the overall budget, is projected for the current fiscal year.
The city expects to close the 2011-12 fiscal year with $10.2 million in the general fund, down from $107,000 last July, according to Newsday. Funds from a collective $4.5 million in tax anticipation and short-term budget notes that the city borrowed last November will cover $1.5 million of the deficit gap, and the city will try to cover outstanding $8.7 million in the proposed 2012-13 budget by April.
Schnirman, who was appointed by a new Democrat-majority city council in January, believes that the projected numbers puts to bed the idea from critics that there is no fiscal crisis, and in regard to the city’s spending and revenue since the general fund was at $7.5 million in 2008, he said:
"You see revenues declining and expenditures going up, and the space between them is really just deficit.”
Moody’s downgraded the city’s bond rating five levels below its previous A1 status on Dec. 20, and said that it would reevaluate the city’s finances 90 to 120 days from that date. In its Weekly Credit Outlook newsletter in February, Moody’s published a “credit positive” article on the city's decision to declare a fiscal emergency on Feb. 7.