Archive for the ‘Finance’ Category

Writer not surprised Antioch facing bankruptcy, again

Tuesday, April 18th, 2017

Dear Editor:

It comes as no surprise to me that the outlook for our City is bleak. I hope it does not come as surprise to you. We have known for some time now that we were spending more than we made. That we were slow on collecting monies owed the City and that we were not managing the budget in a more professional manner. There is no “single” event” that brought us to where we are today – On the Brink of Bankruptcy. It was many years for promises not kept, contracts poorly negotiated, special interests having to be placated. We saw it coming, the slow way hiring of new officers was happening, the passing of specific measures to address crime. But poorly implementing them. Increasing taxes on landlords to help our city.

But now we are down to the brass tacks. I have faith and believe there is a path through all this mess that can bring us out the other side. Cuts, slashes in retiree retirement pay, make them have to carry a larger portion of healthcare and other benefits, roll back salaries on employees. Increase fees for inspections, use fees, and some permits. Get the police number where it needs to be. It is a fairly simple solution that requires a hand implementation. 1. Save now, anyway we can. 2. Complete the police staffing. 3. Reduce our crime rate. 4 With a safer city people might want to live and spend money here and that might help us to recover. Even if we declare Bankruptcy, we still have the obligation to get our fiscal house in order. We still have to balance the budget.

We still have to settle with the claimants. We still have to pay our legal bills, and we still have to deal with our unfunded liabilities. So, running from the problem will not work. If we file, there will not a positive trusting relationship between the bankers, suppliers, vendors, employee organizations and the city management. That will just make things worse than they are.

Fred Rouse


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City Council learns Antioch again facing bankruptcy, within five years

Monday, April 17th, 2017

In spite of the additional $6 million from Measure C, each year

By Dave Roberts

Antioch’s budget, which teetered on the brink of bankruptcy during the Great Recession resulting in massive employee layoffs, reduction in city services and closure of City Hall one day a week, is once again headed toward bankruptcy unless significant cost-cutting measures are taken. That was the bad news from Finance Director Dawn Merchant at a City Council budget study session on Tuesday, April 11th.

Antioch’s $52.7 million General Fund budget is projected to begin deficit spending by $2.6 million in July of next year due largely to increased police staffing, pay and benefit hikes for all city employees and increased payments to the California Public Employees Retirement System. The deficit spending will occur despite the city receiving more than $6 million annually from the city’s Measure C half-cent sales tax hike that was passed in 2013.

That tax is due to expire in four years. The loss of that revenue would result in the city running a $12.5 million deficit in the fiscal year beginning July 2021, according to budget projections. And the city could be bankrupt and $10 million in debt the following year, increasing to $25 million in debt the year after that.

“It’s really important for council when making any decisions going forward, based on projections going forward, to consider the fact that Measure C needs to be looked at to either be renewed or some other revenue measure in its place,” Merchant told the council. “Otherwise once that ends, the city is going to be in a significant financial bind that we could find ourselves in. We could have to lay off police officers. The Police Department is over 70% of the General Fund budget.”

But employee costs are increasing so fast that even if Antioch voters approve an extension of Measure C, the city could still be facing bankruptcy in the budget year starting July 2023, according to a budget chart. Essentially, extending Measure C would only stave off bankruptcy for about a year and a half. As a result, the council may have to make tough cost-cutting decisions in the coming months before the 2017-18 budget is adopted on June 27.

It’s unclear, however, where those cuts would occur. Employee salary and benefit costs comprise the vast majority of the budget. But instead of holding the line on employee costs, in November the council approved more than $9.2 million in salary and benefit hikes over five years.

The other potential area for cost savings involves quality of life services. The city currently provides:

  • $1.1 million in subsidies for recreation programs and the Antioch Water Park, which is projected to increase $107,151 in the next fiscal year.
  • $501,222 for Animal Services, which is projected to increase to $873,735 in two years.
  • $455,000 for the Lone Tree Golf Course. The course also is years behind on $951,756 in debt service payments to the city, and is unable to repay two other loans totaling $1.1 million.

In addition, the Antioch Marina will need a $120,000 subsidy starting in 2019. And council members have expressed interest in increased funding for the Lynn House Gallery and to begin funding the July 4th and Holiday DeLites events.

Council Member Monica Wilson suggested cutting the city subsidies for the water park, golf course, marina and animal services.

“We are at that point where we really need to make that tough decision on can we carry the weight of the cost in those four areas,” she said. “We have looked at different organizations or companies that would come and maybe finance those things. I go to the golf course from time to time. I think it’s a great thing. But, unfortunately, I don’t think we can keep carrying that load. We’ve definitely come to the point where we need to make that decision on that area.

“On special event funding, we need to look at a definite finite amount of money that we can work with different groups. We need to look at how much longer we can support events. We want to support events but we really have to look at how much we can support the different events. How much are we able to afford to these different events.”

But Mayor Sean Wright advised the council to be cautious in cutting amenities that improve the city’s quality of life.

“When we look at the four subsidies that we do, it’s only $2.7 million, which is about 5% of our total General Fund money,” he said. “If Measure C does not get extended, we run out of reserves in 2022-23. If we do extend it, we’re only extending ourselves an extra two years to really be in that same boat. So really what we’re looking at is an increase in [employee compensation] contracts and an increase in PERS. For us to be able to save $2.7 million still doesn’t get us out of the hole.

“What’s coming as an avalanche is much bigger than $100,000 for events or $2.7 million. So looking at our budget I think we need to be fiscally prudent. But when you’re looking at a police officer or a code enforcement officer or doing things that increase the viability of economic development and community, for us to save $150,000 it’s like taking a large business and deciding that ‘You know what, in three years I’m really going to be suffering so I’m no longer going to market, I’m going to stop marketing now to save the money for three years that we’re going to need.’

“And ultimately what you do is you cause your demise because you stop doing things that would attract future development and future monies. So I think we need to be very careful in our conservative approach to look at what do we need to do to make our community something that economic development wants, that people want to come to, people want to live in, our home values go up so we increase that, we increase property taxes, we increase businesses.

“We need to be very careful. If we limit and cut ourselves, we’re still going to be in the same place. If we save $3 million a year we might postpone it one year, but we’re going to be in the same place with this oncoming avalanche of PERS and increased [employee] costs. We need to be very conservative and prudent, but smart in our decision-making so that we don’t lower the viability of our community. Sometimes spending an extra $100,000 on something that makes our community better, people want to live here, is money well spent in the long run – even though it looks like in three years that may be something we have to be careful of.”

Several residents agreed with Wright that the city should not cut recreation and animal services. Others urged the council to cut costs by renegotiating the contracts with city employees.

“We cannot tax ourselves out of this problem,” said former Council Member Ralph Hernandez. “This has existed for many years. It’s a train wreck that has been heading for a couple of decades. It’s time this council addresses it and takes honest-to-goodness action. Reopen negotiations on [employee] contracts and … be honest with them and tell them the truth: ‘We have X dollars….’ The [employee] organizations meet or they don’t. If they don’t, you impose what is needed to keep this city viable and avoid bankruptcy.”

William Leroy was also concerned about employee costs, which include $142 million in the city’s unfunded liability for retirement benefits.

“There’s over half a million dollars sitting up there in campaign contributions that got you into the seats you’re in,” he said. “And we pretend that that’s the taxpayers donating money to your campaign, when in fact we know it’s so that you can get up there and do the unpalatable like passing taxes. The way the system works is the police endorse you because you turn around and endorse their pensions and wages. And I can’t blame them for wanting more money. I do blame you….

“It continues on this game of pretending you are not bought and paid for, when in fact you are. You don’t represent us. You take our money. I think the police ought to be arresting you because that’s called theft. I’m really sad that you do this. I wish somebody would break out of the ranks and do something honest and good for the people of Antioch.”

The council’s next budget study session is scheduled for April 25 in which they will discuss the five-year capital improvement program and any outstanding issues from Tuesday’s session.

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Free Financial Wellness Workshop in Antioch, Jan. 30

Saturday, January 21st, 2017


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$1M of Measure C funds spent on administration, not more police

Monday, January 16th, 2017

Antioch Council to continue spending same amount, but not from police budget

By Dave Roberts

When 68% of Antioch voters approved the Measure C half-cent sales tax hike in 2013, the ballot measure said the money would be used to hire 22 more police, plus code enforcement officers as well as help economic development and job creation. The ballot wording didn’t mention that the money would also be used for city government administration, but that’s where more than $1 million of Measure C funds is being spent.

The sales tax had raised $13.3 million as of June 30, 2016. This has provided for the hiring of nine additional police officers and filling more than a half-dozen community service officer and code enforcement positions.

But not all of that money is devoted to public safety salaries and benefits. About 8% goes to what the city budget refers to as “internal services.” Nearly half of internal services revenue goes to the city finance department to provide payroll, accounting and purchasing services. The rest is divided among other city departments, including the city manager, attorney, clerk, human resources, city council and facilities maintenance.

The share of Measure C money going to administrative overhead for the police department has increased from 7.1% two years ago to 8.5% last year and 8% in the current fiscal year. Citywide the percentage budgeted for internal services has grown from 5.6% in 2012 to 6.3% from 2013-15 to 7.8% in 2016 and to 8.1% in 2017. The percentages are based on a formula in the city’s Cost Allocation Plan, which was adopted in 2005, and the growth in the internal services departments.

The increased cost of administration, particularly paid for with Measure C funds, created concerns at last week’s City Council meeting. Sal Sbranti, a former member of the Measure C Citizens Oversight Committee, acknowledged to the council that Measure C funds can be used for administration, but he questioned whether city administrators are taking advantage of the increased sales tax funding for public safety to beef up their own departments.

“The question deserves to be asked as to why this [administrative] allocation continues to rise at such a rate,” he said. “Every year the amount going to citywide administration goes up regardless of whether it meets Measure C guidelines or not. The committee formal report stated that due to the way the city budgets the police department for Measure C, the committee has some concerns as to whether all Measure C monies are being properly utilized to meet the objective of this measure.

“We the citizens of Antioch voted for Measure C to reduce crime, increase code enforcement, reduce 911 response times and to minimize blight. What do we get? More money spent on HR, city manager’s office, city council, city attorney – just amazing. In the last six years citywide administration has gone from $1.44 million to $3.152 million. That’s you guys approving a budget. You approved them to double their budget in six years. In the same period of time the police department only went up 52%. So who’s putting the control on citywide administration, HR, all those functions?

“Measure C is to take care of the crime in the city of Antioch. If we continue to spend money on HR, finance, the attorney and other citywide administration, at the end of the Measure C sunset [in 2021] we’ll not have the money to continue with the number of police that we have. They should not be taking Measure C money to do this. That was not what the City Council told us they were going to do. That is not what we voted on.”

Sbranti’s concerns were shared by several council members.

“I understand the Cost Allocation Plan, I understand the purpose of it,” said Mayor Sean Wright. “As somebody who worked on Measure C to help get it passed, I also understand the consternation of watching Measure C money get spent on other sources that are not helping to directly improve the safety of our community.”

Councilwoman Lori Ogorchock, who had asked that the issue be placed on the council agenda, shared the mayor’s understandings and suggested two budgeting options.

“I asked for Measure C just to go toward these officers,” she said, “and the other one was to just flat out remove the Measure C cost allocation of the citywide administration fee. Or to keep doing it the way we’ve been doing it. I do trust that [city administrators are] doing it correctly and that the percentage has not changed. I understand the math where if the funds go up, the amount is going to go up. It does make sense. I do understand what people are saying the [administration] funds should not come out of Measure C funds. I have agreed with that.”

Also concerned was Mayor Pro Tem Lamar Thorpe who questioned why administrative costs had risen so much when the police department only had a net increase of less than a dozen police officers.

City Finance Director Dawn Merchant responded, “The police department has the largest share of employees of any department in the city. So we spend more resources with police department payroll versus other departments. It’s not just payroll. We pay accounts payable invoices, any money they collect we do the billing. There are a wide variety of services that finance does.”

Thorpe was skeptical, asking “For 10 additional people?”

Merchant responded, “It’s not just 10 additional people. It’s in total for the entire police department.”

City Manager Steven Duran jumped in, saying, “It doesn’t matter if there’s 10 additional people or 10 less people. The pie that’s divided is the cost of internal services. And the formula is the Cost Allocation Plan. Whether Measure C ever existed or not, the formula stays the same. So it’s nothing that anybody does except apply the math that’s in the plan. It doesn’t matter how many hires we’ve had.

“I think one of the things that some of the detractors have been emphasizing is how much it went up since 2012. That’s because when there were layoffs and furloughs prior to that, it went down. So, for instance, the city attorney has been sharing half of an administrative person and gone without a legal secretary for several years. In this year we budgeted for a legal secretary, therefore the city attorney’s budget is going up. Therefore every other department that pays internal services, they are going to pay a little more for the city attorney – police department, water, sewer, everyone. The formula doesn’t change, and it doesn’t matter what the other departments are doing or how many they have added.”

Thorpe seemed mollified, but he took exception to Duran’s characterization of the people concerned about Measure C money going to escalating administration.

“I hear you and I hear the point that if they hired no police officers and I guess if they had no additional invoices to process, it would still be the same,” said Thorpe. “I was trying to figure out how the formula [came to be] and who decided the percentage. And you’re telling me that it’s a formula that already exists, so I’m understanding that.

“I just have to point out that these are not detractors, Mr. City Manager. These are residents who have concerns, and they bring those concerns to us. So we have to take those concerns seriously. So if it frustrates you that we ask these questions, I’m sorry. But we are going to ask these questions. So I want to make clear that there are people who have concerns out there. I ask these questions to be open and transparent so that folks understand what the process is.

“So now I understand that there’s a formula. Whether it should be applied to Measure C is a starting point that I would like to discuss. Because that seems to be a concern that residents have.”

To address that concern, Wright made a motion that was unanimously passed by the council to direct Merchant to not include the administrative cost charges in the Measure C budget.

Merchant told the council that the administrative overhead would instead be shown to come out of the general fund budget, but the money being spent on administration in the overall budget would remain the same. “The expenditure is going to be there,” she said. “It’s just whether we say it’s a part of the equation for Measure C.”

Councilman Tony Tiscareno echoed Merchant, saying, “I want to make it clear that the public needs to know that there isn’t going to be a difference in cost allocation. It’s going to be the same. It’s coming from one column to another column. The reason I didn’t question the Measure C cost allocation at the time is because it was transparent to me, I saw firsthand where the money was going, knowing the money was being spent like it was supposed to be spent. We wanted to use it for hiring police and code enforcement. And I think we’ve done so.

“But we need to be transparent about all our expenditures where the money goes. This just makes it a little simpler for me to view it. But for folks that believe that this may help extend Measure C, I’ll play. But it’s still money being spent that has to be spent.”

The council is scheduled to begin reviewing the 2017-19 budget in April and to adopt it by July.

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Running Your Money – Bank account opening bonuses: for real?

Tuesday, January 3rd, 2017

Running Your Money column logoAre bank account opening bonuses for real?

Yes, but you will pass many dark dank alleys in a dicey neighborhood, so take care. Banks often have a third party do the pitch, such as Hustler Money, Money Crashers, and Nerd Wallet. They are very up- front about being paid by the banks. In many of them Chase is mentioned first. Being paid by the banks doesn’t make the offer phony. Often there is promotional code you must use. You can open the account online.

Two bits of advice: Always, always, print a copy of the offer and keep it at least until you have collected the money. And, always, RTFP (definition available in the Suburban Dictionary). I ignored my good advice in a recent deal with Wings Financial Credit Union; I read the fine print but didn’t print out a copy. When it came time to collect the puny $50 gift card, customer “service” said, “Ah, ah, ah, you have to agree to accepting paperless statements to earn the gift card.” I didn’t remember that but I was stuck.

Chase often puts pitches in that envelope of coupons including sewer repair and ridding your abode of rodents. I have taken several Chase offers. I like to open the account at a nearby branch. They always recognize me even though I enter the bank only to open an account; otherwise I go to the money wall.

I recently opened a Chase Business Account, depositing $1,500. The rep won’t be fussy about your business,  E just wants to close the deal and rack up brownie points. Chase will deposit $300 to the account about 70 days after opening, when  It will be available to withdraw. You must maintain a $1,000 minimum balance. To avoid a monthly fee keep at least $1,500 in the account That’s an annual percentage yield 40%. The fine print says if you close the account before 12 months, it will deduct the bonus. Well, nyah, nyah, nyah, what if I take the money and run before I close it? But they might not recognize me when I come in next year with the offer. It’s like guys on Hogs in black leather jackets with an eagle on the back; I don’t wish to incur their displeasure.

For an HSBC Bank: bonus of $350, initially deposit at least $25 dollars, pay two bills a month through them for three months and collect $350. No minimum payment is stated; I deposited $25 and for two months made two payments of $4. Account opening was arduous, I danced to their tune online and it took three weeks to open. They asked questions indicating they were seeking affluent depositors, but I have the account.

BMO Harris offered a $200 bonus and Tech CU a $150 bonus for opening an account and making a direct deposit of a paycheck or government check, such as Social Security. Residents of Northern California are eligible for membership in both institutions.

These offers appear and poof, all gone, but new offers will appear.

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Save money by slaying the “energy vampires” in your home, this Halloween

Tuesday, October 18th, 2016

Ghouls and goblins aren’t the only thing California residents have to worry about this Halloween. There’s another threat lurking in nearly every household: you can’t see or feel it, but it drains your hard-earned cash without you even realizing. This threat is the “energy vampire” – and it accounts for nearly 10% of all energy use in California homes.

“Energy vampires” (or standby power) is a term used for any electronic we leave plugged in that slowly sucks energy from our homes. These can be video game consoles, phone chargers, guitar amps, laptops, printers and more. What’s worse, the average U.S. household spends about $130 per year to power devices while they appear to be off.

So how can households reclaim some of these costs? Here are a few tricks and tips:

  • Unplug your devices. Perhaps the most obvious thing you can do to battle energy vampires is to unplug devices when they are not in use. Make it a habit to unplug your charger when your phone is fully charged, or your video game console, when you’ve finished playing. These small, simple behavior changes add up in energy savings – and in dollars and cents.
  • Enable ENERGY STAR power management settings. ENERGY STAR qualified computers and monitors offer a variety of power settings to help you monitor your energy use. By enabling these settings, you can have your devices go into power save mode when they are not actively in use.
  • Use Advanced Power Strips (APS). Replacing your conventional power strips with advanced power strips can help reduce electricity waste when devices are idle – without your having to change the way you normally use your electronics.  Advanced Power Strips work by preventing electronics from drawing power when they are off or not being used.



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myRA – a safe startup retirement account

Tuesday, September 20th, 2016

Running Your Money column logoBy Harry Stoll

“myRA” is a retirement account established by the U.S. Treasury in January 2015; it’s for workers without an employer-sponsored retirement account. (If you have any other retirement plan, such as 401k or another Roth IRA, it doesn’t matter.) myRA is a form of a  Roth IRA, but with one important distinction: It is not stock market based as other IRA’s are, but on U.S. Treasury bonds. So it won’t grow dramatically, but you cannot lose money. The Treasury bonds backing it averaged 2.9% for the 10 years ending December 31, 2015.

You can open a myRA with as little as $25 and make contributions as low as $5 (provided your income is less that $131,000 or 193,000 for married couples filing jointly). You can arrange for you employer to make regular contributions, have regular contributions from a checking account or make periodic contributions from a checking account. The amount you can contribute in a year is $5,500, or $6,500 for those over 50.

The money you put in has been taxed so there’s no tax on it when withdrawn. The dividends are also tax free when taken out, which is a huge plus. There are hoops to jump through when withdrawing. In general you can withdraw after age 59 and ½ without being taxed or paying a penalty.

An important point: when the balance reaches $15,000 or you have it for 30 years, whichever is first, it must be transferred to regular Roth account. And before that amount is reached funds in the myRA can be transferred to another Roth IRA. Here’s a method to then get cash from the Roth IRA to which you transferred funds: I have a self-managed Roth in which I select the investments. I could transfer funds to from myRA to the regular Roth where it goes into an “available for investment” category. I could then have the broker send me a check.

This is an ideal retirement investment for those entering the labor market, whether it’s flipping burgers, bagging groceries, steaming lattes, or being a corporate lawyer. You can make contributions when you are able. It might be a strain sometimes, but it’s a start. End of lecture

MyRA can also be used by anybody as a safe place to stash some money and get some interest.

The U.S. Treasury has arranged for Comerica Bank to be the custodian for myRA’s. It accepts contributions from checking accounts. But you can’t delete an account once established. The web site states you can have up to five external accounts, but customer service said it’s up to three. Not a deal breaker, but annoying. And because your contributions temporarily go into a Comerica Bank account they can share certain of your information. No charge appears against the account; obviously the U.S. Treasury is paying Comerica a fee. I had no luck in getting Comerica to tell me the fee. I’ll try the Treasury and report back.

To get started:

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Estate Planning: A long list will save me, right?

Wednesday, March 16th, 2016

Matthew Hart column logoFor the last few months I have been talking about the Advance Health Care Directive (AHD).  I covered who will make a good agent and why co-agents can be a bad idea.  Once the agents are specified in the AHD the next piece of information in the directive is a list of things that the agent should do and can’t do.  Some people try and get really exhaustive with their list thinking the doctor will be following it to the letter.

What most people don’t realize is that the list of do’s and don’ts is only for your agent.  The doctor will not be reading the list.  The doctor will be looking at the AHD to find out who is in charge and then will ask your agent what course of action to take.  Therefore, what is most important is whom you put in charge.  Moreover, as medical technology changes, a list of do’s and don’ts may become outdated before you know it.  In addition, as we age the list of do’s and don’ts might radically change.

The point I try and make to my clients is; it is more important to choose a good agent who you communicate with often so that they can execute your wishes around health decisions even in an environment of change.  Next month I will talk about probate.

Matthew Hart is a California Licensed Attorney who is an Estate Planning, Trust & Probate Law Specialist certified by the State Bar of California.  He can be reached at 925-754-2000 or and he has offices in Antioch and Walnut Creek.


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