Redlands Council: No Concern of San Bernardino Bankruptcy 'Domino Effect'

The very first public question posed Wednesday at the city of Redlands State of Community luncheon focused on whether there is any concern of a possible "domino effect" from the San Bernardino city council's authorization to file for bankruptcy the night before.

"Where do we stand? Are we going to become a domino?" asked moderator Geoffrey Bonney of Bonney Architects.

"No," answered Redlands Mayor Pete Aguilar. "We're in an incredibly good position financially. There's no hesitation when I say that I have complete confidence that our financial situation is strong.

"It's unfortunate what's happened with our partner to the west," Aguilar said. "We obviously stand ready to talk with them through this process, and to offer support.

"But at the end of the day, your city council has made I think wise decisions in growing our financial reserves to six million dollars. We have an ending fund balance of another six million dollars. We have twelve million dollars combined in unrestricted cash. If an occurrence was to happen, economically or physically, earthquakes or something, we are in a good position to accomodate that. I think we've had our credit rating increased over the past few years . . . We've made the right decisions, in my opinion, to make sure that we stand on solid economic footing."

Before the luncheon began in the Orton Center at the University of Redlands, Councilman Bob Gardner addressed a similar question about San Bernardino's plan to file bankruptcy and how Redlands finances compare.

"Obviously we've just approved our budget for the next fiscal year," Gardner said. "It's a balanced budget where we've not touched any of our reserves, and we have no deficit.

"We obviously feel for very much for the situation in San Bernardino, given their pressing problems and their decision yesterday," Gardner said. "It's an important point to say that everybody in the region bears responsibility for each other and while we are a separate community we certainly will be looking at how we can be supportive in any way.

"I've talked about doing joint activities with other municipalities and we continue to want to do that with the city of San Bernardino and be helpful in any way we can, as far as their difficult financial situation," Gardner said.

The current Redlands budget is "between $50 to $60 million our general fund, but if you look at all the funds that are really involved, you're well over a hundred million dollars as far as what we will be spending in the next fiscal year."

Councilman Jon Harrison, who said he has been on the Redlands council since 2001, also addressed the "domino effect" question about San Bernardino's bankruptcy situation.

"There is no immediate concern about any domino effect because each individual local city is independent," Harrison said. "We're each independent under state law, and I think further, I think there's no reason to worry because back in 2007 when the economy really started to go down, we started back then revamping our budget structure, putting away reserves, cutting down our costs and expenses, so we avoided the situation they're in by starting earlier, over several years reaching the point we are now, where we have a stable financial situation."

The city council several years ago passed at least one budget that was not balanced, Harrison said.

"A couple of times, back in I would say 2004 or 2005 time frame, we were doing a few things and spending some of our reserves on operational expenses, adding police officers or what have you. And that means they're using one time money, the reserves, on ongoing expenses," Harrison said.

"We realized that was an unsustainable approach, and so about 2005, 2006 we changed that direction and said everything is going to be balanced, and one-time funds will only be used on one-time expenses. So we've been on the right track now for five or six years."

More than 100 people attended the luncheon, a catering supervisor said. The event was sponsored by the Redlands Chamber of Commerce and First California Bank.

The San Bernardino council, facing a city deficit of $45 million, voted Tuesday night to proceed with a Chapter 9 bankruptcy filing, joining Stockton and Mammoth Lakes to become the third California city to seek bankruptcy protection in recent weeks.

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