Deputy City Manager Justine Bruno challenged what she called “inaccurate” budget criticisms by Arcadia Mayor Sharon Kwan and former Councilwoman April Verlato.
Kwan and Verlato, who was termed out of office last year, have warned pay increases in contracts with city employee unions could drain reserve funds and lead to future budget deficits.
In an email to HeySoCal.com, Bruno addressed concerns Verlato put into a recent mass-email, “several of which draw inaccurate conclusions about the city’s budget.”
Referring to Verlato’s observation that the city’s Equipment Fund report shows a $3 million drop in funding, Bruno responded, “I presume she is talking about the reduction in Beginning Fund Balance, which shows the (fiscal year) 2024-25 Estimate at $19.3M and $16.1M in FY25-26?
“The amount transferred into the Equipment Replacement Fund each year is based on a 10-year rolling average of our equipment spend. This means that we transfer into the fund what we expect to need based on 10-years of data. Having a flat amount for the Beginning Fund Balance across all years implies that we purchase equipment in flat/even increments and replace in the same manner, which is not practical or logical. We replace the asset when it’s necessary based on age, condition, and lifecycle, and in other instances, when supply chain limitations disrupt our ability to obtain the asset, which causes even more fluctuation.”
According to Bruno, the former councilwoman’s “assertion implies that a $3M variation in the Equipment Replacement Fund indicates a negative trend. This is not an accurate conclusion for the reasons stated above.”
Bruno also challenged Verlato’s assertion that Equipment Fund spending was decreasing — “substantially less is expected to be spent from the equipment fund than the prior year. $5.2M less. That’s a cut,” according to Verlato.
Bruno countered that “spending less from one year to another on equipment is not a cut,” she wrote. “A cut would be a reduction in an established level of service, program, purchasing level, etc.
“Again, the reason our spending fluctuates from year-to-year is based on factors I described above. You can see these variations by reviewing our Equipment Replacement Fund spending over any period of time, beyond the one year that is referenced,” Bruno noted.
She then said Verlato falsely claimed city officials presented conflicting information in a June 3 budget presentation showing a discrepancy in the $3.1 million allocation for equipment and what is shown in a document detailing spending on equipment.
According to Bruno, “$3.1M is the total amount spent on Equipment Replacement, across all funds. The $1.9M shown in the Equipment Replacement Fund table is just the General Fund.”
Bruno provided this breakdown of the $3.1 million in question and pointed to the city’s Capital Improvement & Equipment Replacement Budget that’s online:
- Air Quality Management Fund — $100,000
- Water Fund — $850,000
- Arcadia Par 3 Golf Course Fund — $85,000
- Sewer Fund — $30,000
- Homeland Security Fund — $100,000
- General Fund — $1.9 million
Bruno acknowledged Verlato’s observation that revenue from the utility users tax is declining.
“Correct, there are fluctuations in all major revenues sources, but the increase we receive here is based on the growing price of electricity, internet, gas — nothing we control,” Bruno wrote. “I would challenge you to find one municipal budget where all revenues go up-up-up, never dipping below the prior years collections. It doesn’t exist.”
According to Bruno, the former councilwoman led an unsuccessful campaign to have the UUT repealed from 2014-16.
“(Verlato) claims that she is concerned about the state of the City’s budget, yet she invested a lot of effort to reduce/eliminate an important revenue source for Arcadia,” Bruno wrote.
She also challenged Verlato’s assessment that property tax is “just 5%.”
Bruno countered, “If you were to do research and compare property tax collections among cities, you will see that 5% growth is strong. Last year, Arcadia’s property values placed the city in the top 15 for all of LA County, which contradicts April’s assertion that our property tax collections are typical, and do not represent above-average growth.”
On employee compensation totals, Verlato said “estimates (in the city budget) do not include an increase in employee costs after the third year of current contracts”:
“That statement is false,” Bruno said. “Those projections do include a 3% increase in employee payroll costs, which can all be verified in the attached presentation slides that are on our website (in slide 19).
“The slide appears to be intentionally snipped to mislead the reader…not appreciated,” she added.
“We have already provided April with all of this information, yet she continues to misrepresent and selectively reinterpret it to fit a narrative that portrays the City as dishonest, lacking transparency, and fiscally unsound,” Bruno wrote in her email, referring to Verlatto’s budget analysis as “misinformation and unfounded speculation.”
The deputy city manager added that Verlato was “selectively using facts to push a skewed agenda.”
Kwan did not immediately respond to a request for comment.
“Justine Bruno is intentionally attacking and slandering me because my numbers are accurate and correct, so she has to take a swipe at me to bring a cloud of doubt around my numbers,” Verlato said in an email to HeySoCal.com. “But I’m just reading the City’s slides. I’m not making anything up. I did not intentionally manipulate or twist facts. Their equipment fund slide shows a decline in funds over the next 5 years at the current funding level. That’s the City staff warning council and the public. They can’t walk that back just by making things about me.”
Verlato said she “never supported a repeal of the UUT, and I’m pretty sure there is video evidence of me at a council meeting in 2015 or 2016 saying as much at public comment prior to my successful campaign for city council in 2016.”
The City Council voted 4-1 Sept. 2 to censure Kwan for alleged misconduct. Kwan said a motivation for the censure action, the first of its kind in Arcadia history, was to silence her for asking questions about city finances.
In her email, Verlato criticized city employees:
“I am a threat to (the police and fire department unions’) unchecked, bloated compensation packages that lead to financial instability in the City, so they make up outlandish rumors about me to try to tarnish my reputation,” she wrote. “I am a resident and have a vested interest in the City being able to afford our police and fire. I am a direct beneficiary of these services and if our current revenue sources can’t sustain our employee costs, me and my neighbors are the ones that have to pony up the money. Justine and all City staff are the direct beneficiaries of our taxpayer dollars and they have a vested interest in supporting the passage of compensation packages even if the City’s revenues don’t sustain or justify those raises.
“Follow the money,” Verlato said.
Information and documents on Arcadia’s annual budget are available on the city’s website.
