Councilman Questions City Manager's Numbers

As Jack Schnirman presents overview of city's finances, Mike Fagen challenges his hiring practices.

Days before the city announced a plan to borrow $6 million last Friday, City Manager Jack Schnirman was defending his financial projections to a member of his Democrat administration.

Schnirman’s slide presentation at the City Council’s March 20 meeting emphasized that the city must close a $10.2 million deficit before the proposed 2012-2013 budget is adopted next month, or suffer consequences. “If the city’s deficit is not closed, we would lose access to the bond markets, because we would be downgraded again to junk bond status, and be forced to seize many of the city’s critical functions,” said Schnirman, referring to Moody’s Investors Service downgrade of the city’s bond status in December.

Councilman Mike Fagen, however, questioned Schnirman’s management since he was appointed in January, telling him he has done little to stem a growing deficit that was $6 million in December: “There have been no really substantive, mitigating measures, and a month from now we’re going to have to tell the citizens what the real numbers are.”

Schnirman countered that since January the city has saved about $1.2 million through different measures, including reductions in overtime and management salaries.

Fagen also challenged Schnirman’s hiring practices, particularly those involving management-level employees that left.  

“It’s my understanding that you are trying to fill those positions at this time,” Fagen said. “But we’ve also created new positions at additional costs to the taxpayers at a time when we’ve cut CSEA grades, and at the same time that we’re showing the people that we’re $10 million in deficit. I’m not buying this.”

Schnirman reiterated numbers he noted during his presentation: since he took office the city has reduced spending by $258,000 on management appointee salaries, and he asked for a sense of proportionality when considering that such salaries amount to about 6 percent of the city’s budget.

He said the deficit is about 12 percent of the city’s $83.6 million budget. In anticipation that someone may ask why the city can’t just cut 12 percent to balance the budget, he answered: “No, it’s not as simple as a household budget. We have contracts; we have obligations. So the city cannot just unilaterally make changes.”

To help close the deficit, the city will use a $1.5 million budget note that the city borrowed last November for retirement payouts. Schnirman maintains that the city is in the red due to the prior Republican administration’s failure to budget for retirement payouts, overestimating revenue projections and reducing the “rainy day” reserve fund from $14.7 million in 2008 to $107,000 last July.

Resident Kevin Heller, who said he studied the city’s finances in depth and believes bankruptcy is possible, supported the new administration’s move in January to declare a fiscal emergency as a step toward correcting the city’s finances, but he suggested his support is waning.

“The newcomers to the City Council and Mr. Schnirman convinced the public that they would be different,” Heller read from a statement. “They would end the friends and family hiring practices and put the fiscal budget back on a reasonable path. However, instead you have created a huge credibility gap by doing the exact opposite.”

Heller accused Schnirman of filling jobs with friends (some with questionable credentials) and giving raises while declaring a fiscal crisis, and called on him to roll back salaries and eliminate newly created jobs.

“Taxpayers can’t afford more taxes,” said Heller, adding that many people he grew up with in Long Beach are moving. “They just can’t. You have to tackle the cost structure. It’s the only thing that can be done.”

Council President Fran Adelson agreed and asked Heller to join a newly formed Citizens Budget Advisory Commission.

Meanwhile, Fagen accused Schnirman of not preparing or guiding the public on the eve of introducing a budget. “It’s imperative that the people understand what’s coming their way,” said Fagen, who indicated higher taxes and fees are inevitable.

But Corporation Counsel Corey Klein, the person who has sat longest on the present council, defended Schnirman, saying he is the first city manager to give budgetary analysis so early. “Usually we hear these things sometime in May while the budget process is still going on,” Klein said.

The city manager’s office has worked diligently with the comptroller in gathering information, Klein said, and added, “I wouldn’t be commenting on it if I didn’t think it was a step in the right direction.”

Schnirman said that from day one his office has issued information, findings and reforms as they have received them. “[T]hat is exactly what we promised the City Council and Moody’s Investors; we’ve put that out there in full transparency,” he replied.

Karen McInnis March 27, 2012 at 07:36 PM
Ask to see the balance sheet from last years auditors report.....see the multi million dollar pension contribution that was made as required.....that's a nice piece of your rainy day fund.........
Suzanne March 27, 2012 at 11:10 PM
That rainy day fund was used to not raise our taxes, which I am very happy for. We can't continue to afford to live in LB if the taxes continue to be raised to such high amounts. Could the finances have been better managed? Absolutely. But I do believe that rainy day fund was used for good use. No one is blaming Schirnman for the deficit. What we are blaming on Schirnman is promising to cut spending and the democrat campaign promise to not hire friends and family, all the while Schirnman has increased spending by hiring 15 different friends and family memebers with higher wages than the people who previously held these positions, or he just created new positions for friends and family. That is a sham. He is not working in our best interest.
Lala March 28, 2012 at 12:41 AM
Suzanne: excellent points. No one could have anticipated the winter of 2010-11, the hurricane/tropical storm, and the wave of retirements, quite a few of which were high level. Schnirman is proving to be a disappointment, IMO. Either that or he's a stupid puppet who does what others tell him to do re: the appointments. At any rate, I can hardly fathom what this year will bring for us :-/
Eddie March 28, 2012 at 12:56 AM
I can, huge tax increases that cause more foreclosures than the entire motgage debacle.
Candygram for Mongo March 28, 2012 at 02:05 AM
All things being equal, we just need the current council to conjure up another "rainy day fund"
Kevin Heller March 28, 2012 at 02:20 AM
While these are in fact my comments quoted from the last city council meeting, I would stress that other parts of my speech that went through the numbers made it clear that over the last 4-5 years, the costs of running the city have skyrocketed. The prior administration knew they were burning through cash and at the same time hiring more people and approving raises across all departments. This deficit was clearly inherited. In addition to the salary and benefit additions, pension and healthcare costs have increased dramatically and are forecasted to skyrocket. Painful choices are going to have to be made. In the end I fear nobody is going to happy with the outcome. I hold out hope that calmer heads prevail and all sides to this argument make sacrifices that are in the best interest of the citizens of Long Beach.
John Lavine March 28, 2012 at 11:14 AM
If you think it's good to be a Democrat in Long Beach, you have to be living in Mommy's basement and not like her. The socialist Democrats are raising your taxes $1000 or your rent at least $100/month.
CP March 28, 2012 at 11:41 AM
HAS ANYONE ELSE NOTICED HOW DIRTY AND LITTERED WITH TRASH OUR CITY HAS BECOME IN THE PAST FEW MONTHS! Look around people. I walk the same streets everyday and its been weeks and I pass the same garbage everyday. Park Ave, the Islands on the Blvd, the parks and the ramps to the beach are filled with trash and it's not even summer. It's going to be scary to see what this place looks like when the out of towners start tossing their trash around. We may be saving in salaries the City Manager is claiming but we are sure losing someplace else.
Lb resident 22 March 28, 2012 at 11:54 AM
Jack presentation was another bunch of lies. To make all his savings sound better he used his saving cost on an annual basis which in fact it should be until June 30th which is the end of the Citys fiscal year. So his real saving is $150,000 not 600,000. Come on people wake up he is just manipulating the data.
joe March 28, 2012 at 12:13 PM
First of all Corey Klein is not on the City Council he is the Corporation Counsel, the head lawyer for the City. He is hired help and desperate to survive this administration. He will say anything to please Jack and the majority of the City Council. You've sold out everybody Corey and enjoy your time defending these guys you will be gone along with htem in 18 months. Start looking for a job now!
Lb resident 22 March 28, 2012 at 12:33 PM
Amen joe. Corey's days are numbered they are just using him until the retirement incentive is finished then he too will be gone. But your right he has sold out and will say anything to survive. Have some integrity. Fagen told the truth last night something the council and jack doesn't want to hear. Enough with the blaming lets see what they have planned to remedy the crisis. They have none, they will borrow, hire friends from Brookhaven and soon when they won't be elected back they will be out of here!!
Ex-LB Dem March 28, 2012 at 02:52 PM
"Schnirman countered that since January the city has saved about $1.2 million through different measures, including reductions in overtime and management salaries." Complete BS! Schnirman has done nothing! No plan, just like Fagan says! Employees retired, he replaced those retirements with freinds and supporters of the democrats and his own friends from Brookhaven. Other employees were not replaced. Schirman didn't cause these employees to retire, they chose retirement. He just wanst the credit for it! Schirman did not change the weather (depsite what he thiks he is capable of). Overtime is down over last year becuase we hade no snow; verus last year which was the snowiest winter on record in LB! Schirman has yet to deny a single overtime request. If he actually denied something, than he can take credit, but how do you take credit when you have yet to deny a single request for overtime? How can he claim that "he" has made costs saving? He has done nothing except ruin the city's reputation! Last night he announces that he has asked all departments to cut their budgets by 20%? Now, in mid-March? He should have done this on day one in January. And by the way, he can thank Jim Henesey for that idea, didn't he suggest that in one of his blogs? Too little, too late Jack! Good thing we have Fagen and Henesey looking out for us. I can't believe I am saying those names together and thanking them. Jack is full of Sh*&^!@#. and people are catching on to his BS!
Ex-LB Dem March 28, 2012 at 02:56 PM
The old assistant city manager, Mr. Rooney used to make sure that they picked up the garbage and left the cans back on your property, standing up right and neat. Unfortunately Mr. Rooney died last year. I don't think Jack Schnirman's friend Kerry Mollett (from Brookhaven) is going to ride on the garbage trucks like Rooney did! I had my gripes with the republicans, but they didn't raise our taxes, they picked up the garbage neatly, the streets were clean, the water ran, the toilets flushed, they fixed streets, etc. These new guys are complete morons! The only thing these guys are paving the way for is a HUGE tax hike in 10 days!
Ex-LB Dem March 28, 2012 at 03:00 PM
the republicans may have burned through cash but they didn't raise our taxes one dime!
Candygram for Mongo March 28, 2012 at 03:06 PM
yes, because they had cash to burn through
joe March 28, 2012 at 06:15 PM
jack got torn up at the Senior Center the other day, he couldn't explain what Larry Benowitz had been hired to do at the center. Grey Power baby they really had Jack and Fran on the ropes. No replacement was named for McCormack after he hastily "retired".Where's the search committee Jac? Where are the resumes? Are you bringing in another friend from Brookhaven that you deem quailified because they have babysitting experience or they loved their grandparents? Don't sell the oldtimers short Jac or Fran they've seen and heard it all before and we are not buying what you're selling!
Neutron March 28, 2012 at 09:24 PM
For those not at the special City Council meeting last night, Mr. Schnirman gave a presentation on the budget savings to date. To his credit, he did try to explain some of the finances. That is not to say everyone agreed with him, but at least he made an effort to explain. If you look at the saving numbers he quoted, there was one I felt to be a bit disingenuous. He took credit for over $600,000 in savings from amortizing an employee pension payment due to the state. To explain, the state recognizes the economic hard times and allowed local governments to defer their payment to the pension system. Instead they could pay it back over 20 years. It is a one-time bookkeeping gimmick that moves the pension payment off this year’s ledger and into the cities long term debt column. I consider it kicking the can down the road, not a savings. By the way, do a little simple math. The previous administration authorized borrowing $4.25 million in December to meet payroll and to pay retirees. Now they just authorized another $6 million in borrowing to cover the city through June 30. That is $10.25 million in borrowing to carry the city for 7 months. Do some math and that means the city is spending about $1.46 million more than they take in each month. They also said they expect to need to do additional borrowing. How sustainable is that?
Jimmy Hennessy March 29, 2012 at 04:14 AM
Jack is playing a shell game AGAIN: First of all, the numbers he used were all based on yearly salaries. if he wanted to be accurate he would have used 1/2 year salaries, because he fired the employees in January, not in June. So right there that cuts his $600,000 saving down to $300,000! Secondly, because he fired so many people so he could hire his friends from Brookhaven and the political supporters of Mandel, Torres, and Adelson, he conveniently left out those employees termination pay. That is pay for all of their unused vacation, sick, compensation time, etc. The total for all the employes he fired is in the $420,000 range! So, in the ned, Jack "Shell Game" Schnirman is not be truthful once again (this is becoming a habit. He is lying to the people of this city. Overall his personnel moves ended up with a net cost, not a savings, of $120,000!!! ($300,000 savings, minus the $420,000 in termination payouts ) Jack is slick....you gotta watch his hands. You may not like this, but its the truth. In addition, he misses a point. Every single one of his hires to date has been a friend of his, or a family/friend of the LB Democratic candidates; a blatant violation of their pledge "to end the practice of hiring family and friends to city hall job." They are being dishonest! Jack is NOT being honest!
Max Power March 29, 2012 at 10:53 AM
How dare they use annual salaries when talking about annual savings!! They should only say what they save per minute. Yeah, bring back Jimmy's brain-dead friends Noreen Costello Lori Beschemi and Mary Jambalvo. Only Republican friends are allowed in city hall. Unless they are also friends of the democrats like colleen silvia rose alton and gordon tepper. Then they need to be demoted or fired. Jimmy-Margaret you have lost your mind. Your friends and family are worried about you. This is not a joke. You need to seek professional help. You do not speak for the Sofields Theofan or the Republican party in general. Your wife is fed up with your antics. You have given yourself carpel tunnel.
Max Power March 29, 2012 at 10:54 AM
paul.d.spellman March 29, 2012 at 12:20 PM
Neutron, The 4.25M RAN loan from December is set to mature at 1.75M in August and 2.5M in December. Do you know if there been any mention if they will be able to meet these maturations or will another trip to the well be necessary? Were the specific mature dates and amounts of this new 6M discussed?
toolittle March 29, 2012 at 12:55 PM
If you look him in the tax rolls it appears he owns a two family house so this may wrong.
CP March 29, 2012 at 01:09 PM
Has anyone seen the transparency data on the city site regarding the salaries! I would like to know if you can consider it a savings, if they are going to fill the position that show $0 for this year and if so has that money been budgeted for.. Has Jack ever given an answer regarding filling these positions? Because if I add up all those numbers and include the positions filled, using the same salaries from 2011 I get very different numbers. JUST SAYING!
DR. Jay May 23, 2012 at 12:33 PM
Hey Kevin , Since you are a well noted Finance person. I have a question why is the only union being cut is CSEA? Why not across the Board ? I mean the Assit City Manager $25,000.00 Increase, Jack $ 10,000.00 Increase, Commissioner $ 40,000.00 increase comptroller. There are many more why not make the cuts across the board. Fagen is the only one to stand up...
LBLover May 23, 2012 at 12:38 PM
Jack took a cut.. Theofan was paid more.
DR. Jay May 23, 2012 at 12:40 PM
Who Else took cuts ? What about the hefty raises he handed out..
Kevin Heller May 23, 2012 at 01:29 PM
Thanks James. Although I do work in finance, I cannot claim to be an expert in municipal finance, union/contract negotiations or political hiring/firing. When I speak, I hope it is understood that I am not claiming to be an expert but rather offering my opinion and observations as a (hopefully reasonably) informed citizen. I agree with the sentiments behind your remarks and as you know made my comments publicly at council meetings earlier this year. There is no question that in 2012 there were a number of politically motivated firings and hirings. No question. It appears to me that this is typically (& wrongly I might add) the normal course of business when a new political party comes into power. However, part of these new City Council people’s platforms was that they would put an end to the friends and family hiring practices of the past. So, it is disappointing.
Kevin Heller May 23, 2012 at 01:30 PM
Thanks James. Although I do work in finance, I cannot claim to be an expert in municipal finance, union/contract negotiations or political hiring/firing. When I speak, I hope it is understood that I am not claiming to be an expert but rather offering my opinion and observations as a (hopefully reasonably) informed citizen. I agree with the sentiments behind your remarks and as you know made my comments publicly at council meetings earlier this year. There is no question that in 2012 there were a number of politically motivated firings and hirings. No question. It appears to me that this is typically (& wrongly I might add) the normal course of business when a new political party comes into power. However, part of these new City Council people’s platforms was that they would put an end to the friends and family hiring practices of the past. So, it is disappointing.
Kevin Heller May 23, 2012 at 01:31 PM
With all that said, the reality is also that the handful of politically motivated employment changes is a small dollar figure when compared to an enormous budget deficit that was indisputably created by the prior Administration. The bulk of my disappointment is aimed at them. They knew they were spending down the cash surplus and new that liabilities would come on to the books as the new administration came into power. They left Long Beach in a bad state. I do believe the UFA has given some concessions too. My guess is that the PBA is not included yet because they are currently in arbitrage and there is little flexibility the city manager has thereupon while that case in ongoing. It is disappointing if the PBA (and I am really not sure if they were or weren’t) was not asked or volunteered to come to the table to voluntarily offer some concessions to help the city. It is telling that they were the only union to not even attend the budget hearings. The reality is that we have too many police, with too high pay, with too generous benefits. Cash payouts of $500K (in addition to generous pension and full paid healthcare) on retirement, come on!
Kevin Heller May 23, 2012 at 01:31 PM
Lastly, although I am disappointed with the politically motivated employment changes, I cannot reach any conclusion other than that the new city manager was solicited to come to Long Beach and help us out of this mess. I do believe he is making a good faith effort to balance the budget given the hand he was dealt. An objective analysis of our finances would conclude that the cost structure of our city is too high, simply put. In addition, he came into a city that had no cash balance, had to borrow to make payroll and faced a recurrent fiscal deficit due to skyrocketing healthcare and pension costs. Long Beach, New York State and the USA will at some point ALL go bankrupt if we continue to rely on deficit financing and tax increases to support an already high cost structure. Real structure reforms have to take place at all levels of government or we are all headed towards an economic situation you do not even want to imagine.


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