Budget coming soon, San Bernardino says in bankruptcy court - San ...

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Special Section: San Bernardino

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RIVERSIDE -- Nearly a year after filing for an emergency bankruptcy instead of passing a budget on time, the city will present a fiscal plan Monday that restarts payments to the country's largest pension fund - payments it's controversially skipped since August - its bankruptcy attorney said in court Tuesday.

The California Public Employee Retirement System tried to sue to make the city continue those payments, but earlier cuts now leave available money for CalPERS, said Paul Glassman of Stradling Yocca Carlson & Rauth.

"It's expected the budget will show the city is able to meet cashflow for its operations and also to resume payments to CalPERS," Glassman said. "The approval of the budget is not necessarily the final action... We will continue to work on the budget to improve cashflow by making additional cuts and adding to revenue from the time the budget is approved. "

The plan is for the City Council to study the budget at Monday's meeting, then approve it May 6, he said.

The city's pendency plan - the skeleton budget on which it's been operating - deferred an estimated $34.9 million in obligations, including CalPERS payments, but "assumes resumption of payments in (fiscal year) 2013-14. "

Exactly what resumption of payments means and how much will be

paid back remain to be decided, Mayor Pat Morris said outside the courtroom afterward.

Hiring the financial staff necessary for that budget and making substantial progress on discovery - negotiations over what evidence will be provided to the city's creditors - addressed two of the concerns CalPERS has repeatedly raised, Glassman said.

Other than that and the setting of another hearing for May 7, little has changed since they appeared in U.S. Bankruptcy Court last week, said CalPERS attorney Michael Lubic.

"Generally, I would say I do agree with what Mr. Glassman said," Lubic said. "The progress has been painfully slow - those seem to be the words that people are using these days. "

The delays are understandable, especially because there's been such progress toward cashflow information that CalPERS trusts, Lubic said.

"As you know, in bankruptcy, it's very hard to negotiate until you have information that you know is accurate," he said. "CalPERS continues to believe the city has not devoted adequate resources to their Finance Department. "

Between contract employees and fulltime staff, the city now has 14 people in its Finance Department with plans to hire three more, Glassman said.

"We will ultimately be at full staff, which is 17 people," he said.

That's eight below what CalPERS says a city San Bernardino's size should have - even one not dealing with bankruptcy - and it's small enough that extensive discovery requests weigh down resources, Glassman said.

Discussions about discovery, or what documents and interviews with officials the court will require the city to provide to creditors, took most of the time at Tuesday's hearing.

Three unions seeking to sue the city want to depose city officials to make the case that the city didn't properly negotiate before imposing contracts that lowered take-home pay.

That would include talks with Jason Simpson, who was the city's finance director for the early part of its bankruptcy, said David Goodrich, a lawyer for the firefighters union.

"We are looking for something that would contradict what the city says," Goodrich said, saying Simpson likely has information that current employees the city has agreed to make available likely wouldn't. "... We're not going on a fishing expedition. We just want to hit the key players. Just like the city, the union doesn't have unlimited resources. "

Bankruptcy Judge Meredith Jury said nothing would stop the unions from talking to Simpson on her own, but she warned them not to look for information too far afield from the central issues.

"I am trying to send the message that I don't want you flailing around on things that aren't going to affect the court's opinion on the matter," she said.

The delays are to be expected because the city filed bankruptcy so suddenly - unlike Stockton, it filed under an "emergency" section that didn't require negotiating with creditors first - Morris said outside the courtroom.

But they're costly, at a time when there's little money to spare.

"It's expensive stuff," Morris said. "These people we contract with and use are highly compensated professionals. "

Source: http://www.sbsun.com/news/ci_22987928/budget-coming-soon-san-bernardino-says-bankruptcy-court

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