Rossi’s Financial Expertise Leads to Interim Council Position

Stephen Rossi

Stephen Rossi got an early start to his brief tenure on the South Pasadena City Council last week, when the other council members decided to swear him in to office to get him involved in budget-related discussions and presentations.
Rossi, a local resident since 2007, was selected from among five applicants to take the reins in District 2 until Dec. 2 and succeeds Marina Khubesrian, who resigned last month in the wake of a fake email scandal and had a few months left on her term. For his background in finance and recent work highlighting a variety of issues regarding the city’s budgetary process, Rossi was selected as “the Avenger for this mission,” as Councilman Michael Cacciotti phrased it.

“Our city is in a financial crisis at the moment and there have been a lot of questions directed to me, in particular, about the budget, the audits, how we make sure we can continue the services for the community that we’ve come to love and expect,” Rossi said during his interview by the council last week. He added that the people who brought their concerns to him “want to make sure that the city is in a position where we’ve got good experience on the council in this interim period to be able to address that situation and fix those problems.”
Also seeking the appointment were Larry Abelson, Marcos Holguin, Timothy Searight and Casey Law. After interviews last week, Mayor Pro Tem Diana Mahmud first advanced Abelson as her choice, based on his prior experience with three city commissions.
“Unfortunately, because they will only have five meetings, it’s a very, very steep learning curve,” she argued. “I think we need to reward the people that have demonstrated past service, particularly when they are so qualified.”
Cacciotti successfully lobbied for Rossi after he and the two remaining council members abstained from the vote on Abelson. Public comment was on Cacciotti’s side: More than 300 residents endorsed Rossi in a letter to the city, and the majority of residents’ remarks on Sept. 2 also showed support for Rossi.
Cacciotti was careful to extol the qualifications of all five candidates, even suggesting that any of them could successfully serve their own full terms on the body in the future.
“However, this is a quick three-month job,” he added. “It’s a very specific skill set that’s needed for a specific amount of time. It’s like a surgeon. This is a special operation.”
Rossi’s appointment was approved by Cacciotti, Councilman Richard Schneider and Mayor Bob Joe, with Mahmud abstaining. Rossi was brought back to the council chambers for an impromptu swearing-in and was seated for the remainder of the meeting, at Cacciotti’s request.
A managing director at Palm Tree LLC, Rossi touted his background in financial structuring and restructuring as qualifying him to help address the city’s situation: a significant revenue dip caused by the coronavirus pandemic and a lack of audits to help bolster fiscal forecasting. It was an analysis by Rossi, alongside another by a former finance director, that helped influence the council to pause on adopting a 2020-21 budget in June.
At issue is the to-be-completed audit for the 2018-19 fiscal year, which has continued to hit road bumps as it becomes more overdue. The pandemic presented an issue for on-site work by analysts earlier this year, and although the council appropriated additional funds to expedite the remainder of the process in June, Finance Director Karen Aceves late last month began a leave of absence.
The council is expected to commit to a budget upon the completion of this audit and ahead of November’s election, which will ask voters whether they want to renew the utility users tax, which is the city’s second-largest revenue source.
During his interview, Rossi proposed establishing an ad hoc committee to help address the financial situation, chiefly to “ensure that the audit is actually completed not only prior to the election but prior to and with sufficient time for those numbers to be reviewed and disseminated to the public so that we can actually begin to rebuild a sense of trust and transparency with the residents of this community,” he said.
“The second thing,” Rossi added, “is we need to ensure that the 2019-20 audit actually gets started so we don’t end up a year behind on that as well.”
Rossi also called for monthly and quarterly financial reports to be presented to both the council and the city’s Finance Commission. In addition to the finance issues, Rossi highlighted support for businesses and renters during the pandemic and tackling expected housing requirements from the state as key issues for the city as it moves forward.
First and foremost, however, is addressing the budget. Appropriately, Rossi’s first vote as a councilman was to direct the city staff to put together possible “golden handshake” deals for 10 municipal employees whose retirement would ostensibly help save the city some money.
“We haven’t had regular reporting on finances in nearly three years,” Rossi said. “The city is 10 months behind on cash reconciliations, which means they have no idea how much cash they have, how much floats out there or if it’s even in the right places from a fund accounting perspective. How are we then supposed to determine what our budget proposals are going to be for the year if we don’t even know what our cash position is?”
Longtime resident Jack Donovan is expected to take over the District 2 seat in December, as he was ultimately unchallenged during the initial candidate qualifying period when Khubesrian decided against seeking re-election. However, the write-in candidate filing period is currently running through Oct. 20.