NEW YORK - The Long Beach City Council approved plans to issue $6 million of revenue anticipation notes in mid-April to fund operations through June and make its payroll.
Long Beach saw a five-notch downgrade by Moody’s Investors Service in February and faces a $10 million budget deficit. It declared a fiscal emergency last month. Last week Moody’s affirmed its rating of Baa3, saying it will continue to review the rating for possible downgrade.
In its report, Moody’s said that a “demonstrated ability to manage cash shortfalls in the near-term” and a “continued ability to access the capital markets or privately place additional note borrowings” could make the rating go up.
In the city council meeting on Tuesday city manager Jack Schnirman said he will focus on those issues and the current administration is responsible for saving the city’s bond rating.
“Here we are tonight as a result of the work we did with Moody’s and taking their advice to make sure that we have the liquidity that we need to smooth over the rough patches and borrow on a short-term basis to meet our cash flow needs,” Schnirman said before the council voted to approve the bond sale.
He added that borrowing is not a long term solution, but that it is necessary to get the city through the end of the fiscal year.
Already the current administration has reduced the number of management employees and reduced annual salary costs of the city’s management team by over $269,000, according to salary data the city released on its website.
Schnirman has also asked all commissioners and department heads in Long Beach to submit spending reductions as part of his plan to reduce the city’s budget by 25%.
Going forward he said the administration will need to work to create a budget and a process that will get the city on the road to recovery.
Gordon Tepper, the city’s director of communications, said on Thursday that it had not yet been decided whether to issue the notes in a negotiated or competitive offering.
Bond counsel for the deal is Orrick, Herrington & Sutcliffe LLP.