Far from a deficit, Costa Mesa is $3.8 million ahead

The Orange County city that received national attention when it moved toward laying off up to half its workforce and outsourcing municipal services to private contractors in order to trim its future pension cost is finishing the year $3.8 million in the black.

Officials in Costa Mesa, who had projected a $1.4-million deficit, credited better-than-expected sales taxes and cuts to city staff and municipal programs for the improved numbers.

“We’re not in the critical period, but we’re still in the hospital,� Mayor Pro Tem Jim Righeimer said.

Costa Mesa’s stance on trimming future pension costs has made it a model for some politicians and a target for those believe city leaders are pulling a political stunt.

“This demonstrates that this council can’t be trusted and that this has been politically motivated the whole time,� said Jennifer Muir, spokeswoman for the Orange County Employees Assn., which is suing Costa Mesa over proposed city worker layoffs.

“It’s important to look back at the past year and remember that when this whole layoff scheme started, the City Council said we’re on the brink of insolvency and have no money,� she said.

Last fiscal year, the city’s reserves dipped to $5 million but more recently have risen to $10 million. The city brought in an independent auditor who said Costa Mesa is not perilously close to going broke but should consider spending more on paying down its long-term debt.

Costa Mesa negotiated higher pension contributions from its employees almost halfway through the year and saw a boost in revenue from an increased hotel tax, which voters approved in November.

Righeimer was one of the major forces behind the council majority’s agenda: reduce the city’s payroll and increase spending on capital improvements. The council majority argues that cuts are necessary for long-term fiscal solvency, as pension costs are projected to increase.

The city’s expenditures also dropped 8.6% due to a mixture of layoffs, keeping positions vacant and cutting city amenities like the police helicopter program.

The city is still looking into outsourcing up to 40% of its workforce.

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