Placentia, Fullerton’s neighbor to the east, may finally be feeling the burden of past financial troubles.
City Administrator Troy Butzlaff told the Orange County Register the city of Placentia is collectively working hard to recover from years of deficit-spending. The city spent $23.2 million between 2010 and 2011 and had a negative fund balance of about $294,000, according to a recent audit.
Fortunately for Placentia, the city spent less than it took in last year which resulted in a saving of surplus funds, Butzlaff said.
The city has set aside $500,000 in an emergency account—that amount, however, makes up only 2 percent of what the city usually spends in one year.
Until the economy improves, Placentia will have to improve general fund balances, Butzlaff told the Register.
“We are going to have razor-thin general fund reserves, and we have to be careful not to incur unanticipated costs,” he said.
Placentia has been largely affected financially by its police department. The Register reported that the Placentia Police Officers Association sued the city in 2011 because the city was in violation of the police contract, which involves the use of part-time officers and officer raises. Experts said Placentia pays its police department roughly $217 per resident of the city—an estimated $11.1 million each year.
Outsourcing with the Orange County Sheriff’s Department could save the city of Placentia a chunk of change, but Mayor Jeremy Yamaguchi, a Cal State Fullerton alumnus, is not interested in the switch.
“Having control over our own police department, and the community policing it does, is more valuable to us than what we might get by getting a bid from the sheriff’s department,” Yamaguchi told the Register. “It’s not just a cash-flow issue. All the factors need to be taken into account.”
Placentia resident Jason Grenon agreed with Yamaguchi.
“The problem with using the sherriff’s department (for outsourcing) is they have such a big territory that they don’t police your area as well,” said Grenon. “If you were going to try to save money at all you would try to maybe share someone else’s fire department.”
The initial burden of Placentia’s financial troubles may have begun in the early 2000s when OnTrac, a multimillion-dollar project designed to relieve traffic congestion in Orange County, cleaned out millions of investments and borrowed dollars.
OnTrac was cancelled in 2006, leaving the city of Placentia with a debt of about $30 million in 2007, according to the Los Angeles Times.
Following the OnTrac fallout, Placentia faced declining sales tax revenues and fallen property tax revenues, along with the deficit of redevelopment dollars.
“Based on prior tax amounts collected, city management does not anticipate that sufficient funds will be available to repay the debt upon maturity and anticipates refinancing the debt at maturity,” the city audit stated.
According to last year’s audit, Placentia has lost 28 percent of its employees since 2003, from a cut down of 150 staff members to 108. The city has also seen CalPERS payments go down.
In 2009, Placentia paid $1.7 million to its public safety employees and $400,655 to other employees, while in 2011 that number was decreased to $1.6 million to public safety employees and $363,613 to other employees.
“The city continues to aggressively pursue economic development which will provide additional sales and property tax revenues in coming years coupled with continuation of evaluating operating expenditures,” the city audit stated.
Placentia plans to implement a multi-year plan to achieve a sustainable budget, including making decisions that may impact current city programs and services.
According to the audit, Placentia is also working with the neighboring cities of North Orange County to combine services and find alternatives to save city costs in any applicable areas.
CSUF students are largely unconcerned with Placentia’s financial woes.
“I’ve lived in Placentia for 3 years and I didn’t think the city had financial problems,” said Sean Tanaka, 21, a business major. “They do a good job of covering it.”
Rosa Cazares, 19, a fine arts major, said she had been planning to move to Placentia.
“Their financial problems don’t bother me as long as they keep the city safe,” said Cazares.