CC 2018-02-13_12b PP_Budget Priorities
Consideration of Budget Priorities
5/14/2019
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Why are we here?
2/13/2018
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Wait, What?
How can this be?
The economy has been growing since 2009, right?
Other than last week, the stock market has been booming, right?
The State is flush with revenue, right?
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Answer:
Increased Costs of the CalPERS Pension System
Defined benefit system
Enhanced Benefits 1990’s-2000’s
Started with the State
Safety moved from 2.5% @ 55 to 3% @ 50
Non-safety from 2.0 @ 55 to 2.5% at 55
Retroactivity
The vast majority of local governments followed
Investments returns not meeting projections during the dotcom bust and the great recession ($100 Billion loss, 34.75% of fund value)
Inability to change pension formulas (The California Rule)
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Who is to Blame?
No shortage of blame by commentators:
CalPERS Board
State Legislature
Unions
Local Governments
The Courts – the “California Rule”
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We Can Just Get Out, Right?
Theoretically, yes; Practically, No!
To leave a city would have to fully pay its obligation.
Safety $31 to $37 million
Classic $37 to $46 million
If you don’t pay CalPERS, your retirees get their pensions significantly reduced, which will most likely lead to law suits and your current employees looking for other opportunities.
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My Take
This is real
This isn’t going away in the next decade.
“You (the cities) are just going to have to hang on for a decade…or two”
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Wage and Retirement
Non-Safety Tier I
54¢ for each $1 in wages.
Safety Tier I
84¢ for each $1 in wages.
Safety Tier III
12¢ for each $1 in wages.
Safety Tier II
18¢ for each $1 in wages.
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My Take (Cont.)
Someone may fix it somehow and sometime in the future, but we should continue to take our own actions to ensure that this Municipal Corporation survives this problem…others may not.
This challenge will not be easy
We are in a better position than most Cities
It will take serious prioritization and soul searching about “our reason for being” as an organization, but it is not futile.
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2/13/2018
Current Year
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Proposed Priorities for FY 2018-20
1. Within two years, reverse expense/revenue gap by:
FY 2018-19: Reduce expenses by $450,000, resulting in a surplus of about $157,000
FY 2019-20: Further reduction of expenses by $450,000, resulting in a surplus of about $1.4M
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How Do We Do This?
$900,000 in reductions probably won’t be found in efficiency efforts
Two common actions:
Across-the board-cuts of all departments (not recommended)
Priority based reductions – Core and Essential vs Non-core and non-essential city services
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Advantages
Setting a rational framework for decision-making that reaches beyond mere popularity of specific programs and ultimately aligning what services citizens expect with what their city can
afford
Gaining a better understanding of what services local governments are legally obligated to provide
Fully understanding what services and to what extent residents expect specific services
Clearly direction to staff as they build a proposed budget:
what should be in a proposed budget; and
what does not necessarily have to be in a proposed budget
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Core and Essential
Focus on services identified as “Core and Essential” and fund these services to fully meet adopted City policies.
Ensure that Core and Essential services are “Right Sized” based upon accepted metrics of service outcomes.
Analyze “non-core and non-essential” services and make recommendations of how the City can more efficiently provide the service, find another entity to provide the service, or find additional
revenues to support the service.
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Core and Essential
Business of Government
High level of stewardship of Public resources and money
Transparency of Government (Open government practices, meetings, decision-making)
Professional management of personnel
Fair and open elections
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Core and Essential
Public Health
Provision of safe drinking water in amounts and sources that allows for reliable quantities during droughts
Provision of a fire hydrant system to allow for adequate fire suppression
Provision of sanitary sewer system and treatment of wastewater
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Core and Essential
Public Safety
First Preventers
Engineering services to prevent flooding, landslides, and uncontrolled traffic and to limit future city expenses caused by development proposals
Maintenance of drainage basins and storm water conveyances
Building permits and inspections to ensure structures meet basic life safety standards
Reasonable planning and zoning regulations and enforcement to avoid decreases in property values due to incompatible uses and substandard development
Upkeep of public property to avoid injuries and cost from claims and lawsuits
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Core and Essential
Public Safety
First Responders
Police
Police Administration
24/7 Patrol Services with 3 officers on patrol during most hours
Records and Property and Evidence
Traffic and parking enforcement during peak times and in key areas such as schools and highly traveled commercial areas
Detective services
School Resource Officer
Fleet management
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Core and Essential
Public Safety
First Responders
Fire
24/7 Fire and emergency response services within 6 minutes of a call
Fire prevention services (commercial safety inspections, weed and vegetation abatement and enforcement)
Fire investigations
Fleet management
Public Works
Maintenance and emergency repair of previous investments in vital public infrastructure
Fleet management
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Core and Essential
General Welfare
Transportation Systems
Maintenance of
Roads at the Pavement Condition Index adopted by the Council
Bike lanes
Sidewalks
Signals and striping
Street lights
Medians
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Core and Essential
General Welfare
Parks and Open Space
Upkeep and maintenance (fire/fuel hazard reduction) of current passive parklands and open space
Community Appearance
General cleanliness
Street sweeping
Litter removal
Public trashcans
Graffiti removal and enforcement
Street trees
Mandated responsibilities from the State and other Governments
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Important but not Necessarily Essential Services
Parks
Playgrounds
Sport Facilities
Baseball and softball fields
Soccer fields
Football fields
Pickleball courts
Tennis courts
Basketball courts
Horse shoes
Sport Facilities Support Services
Scheduling of field use for sports leagues
Arrangement for referees for sports leagues
Lighting of fields for night use by sports leagues
Specialty Parks
Community garden
Dog park
Community Facilities
Woman’s Center
BBQ and picnic areas
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Important but not Necessarily Essential Services
Recreation
Child Care and Development Services
Daycare
Pre-school
Summer camps
Community Events
Father Daughter Date Night
Family Egg Hunt and Festival
Halloween Maze
Etc.
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Important but not Necessarily Essential Services
Issues of Statewide or County Concern
Human Services
Sheltering of people
Food service programs
Mental health
Legal services
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Proposed Priorities for FY 2018-20
2. Increase revenues by:
Analyzing City costs to provide services and consider achieving full cost recovery for a wider range of services
Encouraging economic development in order to achieve identified service outcomes for core and essential services
This will require the addition of $180,000 in revenue above and beyond normal assumptions starting in year three growing to total new revenue of $390,000 by year 10.
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Proposed Priorities for FY 2018-20
3. Reduce exposure to volatility of pension payments by the end of year two by:
Analyzing and making recommendations on tools such as pension prepayments and Section 115 Trusts.
4. Begin to study options to develop new revenue sources such as a future tax measure for new or expanded services
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Seeking Direction
Does the Council wish to adopt the budget priorities with our without changes?
Does the Council wish to adopt the list of essential and core and non-essential and non-core with our without changes?
Does the Council wish to consider other options such as across-the-board reductions, other revenue strategies, etc?
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Next Steps and Key Dates
Council discussion about priorities – February 13
Community Outreach
Analysis and preliminary direction related to larger budget issues or impacts (115 Trust for pensions and FCFA request.) March 13
Council review of results of community outreach and preliminary budget balancing strategy – March 27
Departments begin developing first draft operating and CIP budgets
Preliminary budget presentation – April 24
Budget Adoption – June 12 (June 26 if needed)
1/23/2018
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Questions
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Existing Council Priorities
Improve financial sustainability through economic development
Support City infrastructure
Improve cost-recovery on services
Retain and attract employees
Make decision about Brisco Interchange project
Increase water security
Enhance parking
Maintain cost-effective fire service
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Council Input
Core and essential vs non-core and non-essential
What levels of service are acceptable/core and what are “extra” Needs vs. wants
What MUST the budget contain
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Background
General Fund 10 Year Forecast – 1/23/2018
Expenditures exceed revenues
Without intervention, all Fund Balance depleted within 5 years
Major drivers: CalPERS costs, FCFA budget request
Budget Process Ahead
Identify most important services to provide
Seek community input on these priorities
Build a budget that most closely aligns priorities and available resources
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Core and Essential vs Non-Core and Non-Essential
Not across-the-board cuts
Analysis allows expenditure reductions based on priorities
Gain understanding of services the City is legally obligated to provide
Understand services and service levels expected
Define specific direct and indirect impacts
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Proposed Budget Concept #1
Correct and reverse the expenditure/revenue gap
Make services more efficient
More effectively recover true cost of services
Reduce non-core and non-essential services
Shift service providers to those better able to perform them
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Proposed Budget Concept #2
Increase Revenues
Strategic economic development efforts
Encourage development of underutilized or vacant parcels
Fulfill desired retail and services needs
Ensure fiscal benefits to community
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Proposed Budget Concept #3
Reduce exposure to volatility of pension payments
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Proposed Budget Concept #4
Once long-term economic and fiscal sustainability is achieved, start to build a community vision of future wants
Identify new revenue sources to support these efforts
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2/13/2018
Alternative – No economic downturn, no FCFA request
Current Year
+1
+2
+3
+4
+5
+6
+7
+8
+9
+10
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