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Bell official says city's finances worse than thought

The interim city administrator says the projected deficit could more than double to over $4 million by the end of June. He cites one-time costs, including legal bills stemming from the salary scandal.

January 28, 2011|By Jeff Gottlieb and Ruben Vives, Los Angeles Times
  • Carmen Bella, 76, a Bell resident for 33 years, yells in anger at city leaders after a scheduled council meeting Thursday was canceled because of a lack of a quorum. Residents had packed the chambers.
Carmen Bella, 76, a Bell resident for 33 years, yells in anger at city leaders… (Gina Ferazzi / Los Angeles…)

As the Bell City Council prepared to debate drastic budget cuts Thursday night to stave off bankruptcy, the city's top administrator said its finances were even more desperate than suspected and were worsening because of extraordinary legal bills and other costs facing the scandal-scarred city.

"The city has reached a financial crossroad," wrote Pedro Carrillo, Bell's interim chief administrative officer. "While the recommendations set forth in this report require difficult decisions to be made, without these actions, the city will likely be forced into insolvency."

A county audit released earlier this month said the city would face a $2.16-million deficit at the end of the fiscal year in June. Carrillo's report, however, said the figure could more than double because of one-time costs, including legal bills stemming from the salary scandal that has enveloped the city.

Residents said they found it maddening that the tough financial choices might be left to council members who are facing felony misappropriation charges that essentially blame them for Bell's financial mess.

But the council meeting was abruptly canceled when Mayor Oscar Hernandez and Councilwoman Teresa Jacobo failed to appear. Jacobo had been taken to a hospital and Hernandez called in sick, according to Councilman Lorenzo Velez.

"It's disgusting," said Ulisses Bella, one of dozens of residents who had filled the council chambers to capacity in anticipation of the meeting. "Maybe they're scared to make tough decisions."

In effect, the city has not had a City Council meeting since November. Jacobo and Hernandez walked out of December's meeting amid jeers from angry residents.

In his report, Carrillo outlined drastic options that include reducing retirement benefits, making across-the-board-cuts in salaries and eliminating city services. But what has prompted the most emotional reaction is a proposal to disband the Police Department and contract with the Los Angeles County Sheriff's Department.

The Police Department takes up 68% of the general fund, and eliminating it would net the city $3.5 million in savings, according to the report. "The outsourcing of the department may eliminate the city's entire deficit without having to make cuts in any other department," Carrillo wrote to the council.

"We're just flabbergasted and surprised," said Kurt Owens, vice president of the Bell Police Officers Assn.

The police union has pushed for reform in the city since The Times revealed the high salaries of city administrators and elected leaders. Eight current or former city leaders now face public corruption charges, including all but one member of the council.

Council candidate Nestor Valencia, founder of the Bell Resident Club, said these types of major decisions should wait until a new council is seated after the March election. Since most of the council members are marked for recall, it is possible that the five-member council will be filled with a new cast after the balloting.

Cristina Garcia, a leader of the activist group BASTA, which includes the Bell Police Officers Assn., agreed that any decision to disband the Police Department should be up to the new council and that a commission should be charged with studying the issue so the council can move forward quickly after the election.

In his memo, Carrillo blames the city's problem on Robert Rizzo, Bell's top administrator for 17 years before he was forced out in July. Rizzo, Carrillo writes, failed "to adhere to generally accepted accounting principles, internal control systems, and best practices when making decisions affecting the city's finances."

With Rizzo running the city, and with council members' acquiescence, Bell employees received some of the highest salaries and most lucrative retirement benefits among public agencies in the state and perhaps the nation. Rizzo was in line to earn $1.5 million in salary and benefits last year and Assistant City Administrator Angela Spaccia $845,960. At least six other officials received compensation of more than $200,000.

"For years, salaries were unilaterally established by the former chief administrative officer, and were not justified based on payment for like services in similar jurisdictions," Carrillo wrote.

In addition, employees contributed none of their own money to the state retirement system, and the city established a supplemental retirement plan that gave many employees an additional 1% boost.

Although salaries for several of the highly paid administrators have already been reduced, Carrillo recommended that all salaries be cut, employees be forced to make payments into the retirement system, and the city's special retirement plan and deferred compensation payments be eliminated.

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