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HomeMy WebLinkAboutAgenda Report - May 19, 2004 I-01AGENDA ITEM I— CITY OF LODI COUNCIL COMMUNICATION AGENDA TITLE: Recommendations by the City Manager's Budget Advisory Committee and the City Manager Regarding the 2004-2005 Financial Plan and Budget. MEETWG DATE: May 19, 2004 PREPARED BY: City Manager RECOMMEMDED ACTION: Recommendations by the City Manager's Budget Advisory Committee and the City Manager regarding the 2004-2005 Financial Plan and Budget. BACKGROUND INFORMATION: The City Manager convened a group of business leaders to serve as a Budget Advisory Committee during preparation of the City's adjusted Fiscal Year 2004-05 Budget. After a series of meetings, the Committee developed a number of "big picture" recommendations that they will present during their oral report to the City Council during the May 19, 2004 Council meeting. The Committee consisted of the following members: Randy Snider, Chairman Annette Murdaca, Vice -Chairperson Dennis Bennett Bill Huyett Joanne Mounce Debbie Olson Kent Steinwert Bob Wheeler Leon Zimmerman Mr. Randy Snider (Committee Chairman) and Debbie Olson (Committee Member) will make the presentation to the Council on behalf of the Committee. The City Manager will present his recommendations for adjusting the Budget based on a number of challenges facing the City including the recently published State "take -away" as projected by the League of California Cities. During the City Manager's presentation, he will frame the City's updated "challenge" (Exhibit A) and will discuss options that Council may consider for making adjustments to the FY 04105 Budget. Options include such items as a Public Safety half cent safes tax, a mandatory work furlough for non-public safety employees, funding the on-going environmental litigation, the annual Electric Utility transfer to the General Fund Capital, and other possible adjustments. APPROVED: H. Dixoh Flynn, Additionally, the City Manager will present a list of Significant Expenditures Requests (SERs) (Exhibit B) as submitted both last year and this year for the FY 04105 and an updated Budget Calendar (Exhibit C). FUNDING: Not applicable Dixon Flynn City Manager HDF/JSK Attachments Ramp Genera€ F=4 Budget Challenge 2004415 EXHIBIT A GenerM Fund enera1 Farad_ Capital --Library— the -r — State 'Take Av"ay (705,404) 1705,00) lrrcume Ad; ustmenl - General Fund 0906 r3 O Ruiay's estimate- based on per iorrnarsce thzcugh Marcb 2004 (i3OgQ,"3W) City Take Away Ger-real :l~urrd Capltai (3150,00,D) Tra3xsfeT iTom EleCre EP)njnated (350,000) 350,0110 Electric Loafs pies interest 5 7061 (545,B00) Repayment of,$3501,000 from 1088 (5.45,600) 5'76, � ped --J 'e ln-(.ieu Franchise to 9% - Raie£ ReoucliQq ct In-iUeu Fr laO ivFe fjam 1 L 9% Budge' 1rcreases C,Ay lefk Election Funding (62,400) (62,350) City Attorney Audit of Envlalo 3 (2 0,4043 t2 9,t3po) TGEPCEClean up „35i, 3J} (4,351,01313) Electric Utility Se7vlces S,iift Field SetMces from Rnarut ,; - No Savings (.414,000) Sire DieparYment perf6rrfiancs Bonus {48} 000) Approved By Council (48,W4) Dispatching Fee (41,0%9) Approved By Council (41,004) Pofice Departrmenl Animal Sholter C1ait-Time Staff' (19,2010) {19,200) Transfer Appease Clerk to PoMce - 15 x54) WaterfW35tLwater utllikde5 Mairdenancee'Norker (42,704) Approved By Council (42,700} Transportation Traffic Monitor Equipment (17,5134) Recommended 17,504) Human Resources PERS lncmase [190,ocoi General Liability i,M,UQQ1 Re,;Gmmended (44J,4;3i1) Golden Hac:dshal e (4G0,000) Approved Phase Ji (4pdi,000) Facilities Service RentaE Finance Departn�er# C108,100 Recommended (108,086) Total Fake Away 5,136,61(1 (4,28S,635) 895,6t14 512.500 t42,740' (17,544) Budget Adjustments 2004-05 udget edurttc ns City Council Phase 1 and II 03,000) Approved City Clerk Phase i and it (5,000) Community Cerates` Phase 1 and !I (15,100) Approved Out .Arts Program (25,000) Community Development Phase 1 and 11 (10,500) Approved City Manager Combine City Manager and Economic Development Phase 1 and 11 (22,900) Approved Reduce City Manager's Salary 10% (12,840) Transfer Appeals Clerk to Police No savings Corgi municatiins (3,500) Travel (8,000) StAl pies and Material (14,900) Csity Wide Postage (40,000) Economic Development Combine City Manager and Economic Development IwcofmmG Development Coordinator (11 5,800) Supplies and Material (4,000) Special Payments (3,000) Information Systems SuppEies and Material (24,000) Police Department Phase I and 11 (36,000) Approved Kgh Crimes Investigator (69,00) Defer Reclass Management Analyst (5,200) Defer Fire Department: Phase i and ii (35,000) Approvod Firefighter (81,000) Geier Defer Pararnedic Program (506,800) Defer Vehicle Operations Course (12,600) Defer Finance Department Phase t and 11 (30,000) Approved Shift Field Services to Electric No savings Human Resources Phase 1 and 11 (19,200) Approved Workem Cornp (230,500) Department Recommandatbn f, odical Accowit increase (352,700) Approved Phase fl Literary Phase: I and 1! (1,000) Approved Coat Sunday Hours (17,000) Water/Waswwater Utilities Storni Water Analyst `0.6,000) Department Recommendation Organization Evaluation (25,000) Depaftment Recommendation Electric Utility Servicer Professional Services Increase (10,000) Defer Automated Meter Reading (2,000) Defer Four Computers (7,000) Defer Equipment (45,000) Depa0ment Recommendation Parks and Fier Phase I and 11 (172,600) App mved Piz CAL) Operator (11,500) Defer Refurbi.sh Basketball F=loors (5,000) Defer PSJ%Irc ' £i ks Pnase I and [l (51,000) Approved Unrostrlc;ted Capital P! -ase 11 (1,116,000) Transfer from General Fund Capital Reciass 4 Engineering Positions (26,400) Defer Maintenance €voice Department (3,500) Reduce JeanlioriE Set -vices (57,500) Approved SHb-Total ,30 Options inc(e,ase F# Eng F reezcf to 2:6 Positions Extend Vo ontary Tirne Off 1 Year efw Admin Leave Pay Out Review Community Promotion Programs Cap Employee Medical Cast Explore 2-Tior Retirement Plan Furlough Nott -Safety 26 days Or Cut additionM 28 positions to 56 (520,1 00) d addlti,Qnai positions (50,000) Soft Estimate (160,000) [negotiable Negatfable Negotiable 1,100,000 Defer Pay Raises $406,000 or Furlough 12 days $500,000 $1.8E�0,[3CiC1 'vital Savingsa q€ � Significant Expenditure Requests Fiscal Year 2004/05 Tentatively Approved Dept./Request Police Reclass Management Anaylist II Hire High Tech Crime Investigator Fire Fire Admin. Office Relocation Hire Firefighter (1) Implement Paramedic Program Performance Incentive Bonus Increase in Physical Exam Costs Increase in Dispatching Contract MDC Tech. Grant Match SCBC Grant Match Foam Consortium Emergency Vehicle Ops Course PW Water/WasteWater Utilities Storm Water Mngmt. Analyst Organizational Eval & Restructure Hire PW Maint. Worker for Plant Electric Utilities Professional Services Increase Contract Automated Meter Reading Replace 4 computers Convert Contract Electric Drafting Tech to FT Hire Electrical Technician Convert Contract Utility Equip Specialist to FT Convert Contract Customer Svs Mngr to FT Convert Program Coord to FT Transportation Traffic Monitor Replacement Parks and Recreation PT Intern CAD Operator Approved $41,000 Denied $5,185 $69,000 $40,000 $81,000 $506,845 $5,000 $65,400 $24,750 $4,500 $12,595 $66,000 $25,000 $42,725 $10,000 $2,000 $7,000 $(45,000) $17,500 $11,495 Refinish Basketball Floors $5,000 Dept./Request Approved Denied Purchase Sod Cutter $5,000 Parks Division Office Relocation $16,000 Library Convert Contract Literacy Prog. Coord to FT $36,148 Community & Economic Development PW Reclass Engineering Positions $26,400 PW AutoCAD Version Upgrade & Sub. Service $18,000 Information Systems Software Upgrade for Orcom GUI Interface $11,000 Convert Contracts to FT Senior Programmers $- City Clerk Additional Election Costs $62,350 Human Resources Additional General Liability $100,000 Reduce Workers Comp $(230,000) Organizational Support Services - Facilities Additional Maintenance New PD Building $120,000 Reduction of Janitorial Services $(57,500) Increase Rent for Finance New Location $108,085 Total: $223,160 $1,037,318 2004-05 Financial Plan and Budget Instructions MAJOR BUDGET PREPARATION MILESTONES PUBLIC STAFF MEETINGS Review of Possible Budget Shortfall 11/18/03 Discussion of VLF Impact & Budget Reductions Phase I 12/17/03 City Manager Recommendation to Conduct Public Survey 1/07/04 Discussion on Mid -year Budget Adjustments Phase II 1/21/04 Meetings with City Manager Budget Review Committee Members Feb `04 On-going Presentations to Service Clubs on Budget Challenges — 3 weeks Feb `04 Discussion on Mid -year Budget Adjustments Phase II continued 2/04/04 Review of Public Survey Results by City Manager 4/20/04 Public Survey Results Presentation 4/21/04 Inter -Fund Transfers Presentation 4/27/04 Governor's May Revise Release 5/13/04 Presentation by City Manager's Budget Advisory Committee and City Manager 5/19/04 Regarding Recommended Adjustments Discussion on Fund Balance & Release of Draft Budget Document 6/02/04 Adoption of 2004-05 Financial Plan & Budget 6/30/04 Dates subject to change. Shirtsleeve sessions and/or Special Council meetings may be necessary May 13, 2004 go Jennifer Perrin Page 1 of 3 From: Richard [rprima@comcast.net] Sent: Tuesday, May 18, 200411:43 PM To: Larry Hansen; John Beckman; Susan Hitchcock; Emily Howard; Keith Land Cc: Dixon Flynn; Wally Sandelin; Del Kerlin; Frank R. Beeler; Dennis Callahan; George M. Bradley; Tiffani Fink; Rebecca Areida; Richard Prima Subject: Budget To: Lodi City Council From: Richard Prima Date: May 18, 2004 As you continue your work on amending and adopting the FY 2004105 budget, I wanted to offer my comments from the perspective of a long-time City employee and a Department Head. While you are not the first City Council to deal with austere times and difficult budgetary decisions, I believe that of nearly the past 30 years, this economic problem is the most severe in both duration and magnitude. And, the present Council is one of the more diverse in terms of opinions on many issues, beyond just financial ones. Thus, you have a difficult task ahead of you, but I am confident that you will work in the best interest of the citizens of Lodi. Of course, at the heart of the difficulty is figuring out and agreeing on just what that "best interest" is. I believe that a major part of that "best interest" is having a City workforce comprised of individuals who share your goals of doing the best possible job for our citizens and are motivated to do so. Over my time with the City, I have been impressed at the high level of desire of city employees to do a good job for the citizens of Lodi. They are possessive of their responsibilities and take pride in doing a good job. While I can't speak from the experience of working in other cities, I have certainly heard enough stories from others in my profession to believe this is the case. 1 believe much of the motivation for any individual needs to come from within the individual. But external factors can severely damage this motivation even among those with the highest levels. And I am concerned that I am seeing and hearing too many such adverse factors in recent months and being contemplated in the budget process. However, before I describe these, I wanted to comment on another theme that I am, and I ' m sure you are hearing as well — that is the notion that past, bad decisions have put the City in this situation. While it is obvious that past decisions have played a significant — but by no means the sole role in the City's current financial problems, it is pointless to dwell on them now. One of the major ongoing costs we have now relates to borrowing money to build major City facilities and the associated costs of program operation and maintenance. These facilities (the completion of Hutchins Street Square, the Central City Revitalization Project and the Police Facility) were needed then and are wonderful assets now. We made the decision at that time given the information we had available and what was perceived to be in the best 5/19/2004 Page 2 of 3 t interests of the citizens. The citizens who enjoy them now and the services they. provide are the ones paying the bill as I believe it should be. And, perhaps most pertinent to our cfarrent situation, these decisions are not ones we can go back and redo. They were not bad decisions, simply they may not be the same ones we might make today, which tells us to cautious as we consider the decisions we will be making now and in the future. Perhaps the most discouraging "de -motivational" factor is that much of the City's current financial picture is the result of actions of others - mainly the State of California through their "take-aways" - and other external factors such as increased costs for insurance and reduced interest earnings. But how we deal with these impacts are the ones I am concerned with: • "Doing it to ourselves" - by this I mean discussion of further reducing, or even paying back, past transfers from city utilities to the General Fund. While I understand and even concur with adjusting the in -lieu transfers when faced with major rate increases as recently took place with water and wastewater; it makes no sense to me to similarly reduce the electric transfer simply to make the percentage the same as water/wastewater. If we did so, and later had a large electric increase (and I'm certain someday there will be one) would we reduce it again, and reduce the water/wastewater transfers just to keep pace? Similar to the above discussion on projects, past City Councils made the decisions they did given the situation at the time. While you may disagree with them now, it hardly seems appropriate to attempt to undo these decisions retroactively in such poor financial times. • "Carrying on business -as -usual' - The City considered a number of budget reduction measures in adopting the current 2 -year budget and selected minimal, relatively painless measures to help balance the budget. The result was a year of relatively little impact to services and to the public. We used various delaying and one-time tactics to get through the year in the hopes things would turn around. Now it appears we went through a year of stress and dread and things look even worse. believe the public understands that when times are tough, things need to either get cut, delayed or other things (taxes/fees) will cost more, and the probably expect some of each. To continue to expect that we can continue services as usual while carrying more and more vacant positions and not only ask the remaining employees keep up, but do it with less pay, is unrealistic and is a serious "de -motivator". . "Continuing give-away programs" - While the amount of money the City puts into various discretionary grant, community promotion and other subsidized programs is not as large as the overall budget shortfall, the impression is that these programs are more important than the day-to-day services provided by the City. • "Creating employee and service have and have-nots" -While this may, not be the exact case, there is certainly the impression that the City is essentially not touching "public safety" positions and solving the budget problem on the backs of the remaining employees and the services they provide. This is not unlike the situation within Public Works in which some employees in the water and wastewater utilities feel they shouldn't be affected by General Fund budget problems. I believe both are inappropriate. l am not saying that services should necessarily be cut evenly across - 5/19/2004 Page 3 of 3 the -board, but there should be meaningful "participation" in all aspects of City operations. This have/have not impression is being bolstered by the current labor negotiation situation in which the Maintenance & Operators Unit is without an agreement. This situation goes beyond just salary issues and includes certification and incentive programs and other working condition issues which seem to be commonplace in other units but become "no -can -do's" in this unit. We need to get this situation resolved so all our employee units are on the same basis. With the above comments as background, I do have specific suggestions regarding the budget: t. Do not further reduce the utility in -lieu transfers to the General Fund nor "pay -back" past transfers to the General Fund Capital. Stopping future transfers to the General Fund capital will have adverse impacts on the capital and equipment replacement programs, but could be managed. 2. Suspend Administrative Leave payments as being proposed. 3. Continue the voluntary furlough program, providing implementation options for the employee such that the reduction in pay does not affect retirement benefits. (This is also a consideration for the mandatory furlough program being considered, although I do not favor this program.) 4. Temporarily raise discretionary fees to reduce program subsidies. Call it a "State take- away surcharge". 5. Severely scale -back or eliminate the various discretionary grants, community promotion and other "free" entertainment programs offered by the City. 8. Reduce the General Fund reserve level to some minimum level recognizing past revenue shortfalls. This is the rainy day we save for... 7. Establish a General Fund cost reduction target for each Department and have the Staff provide a list of positions and service curtailments to meet or exceed the target. The targets should take into account existing vacancies/frozen positions, but also expect that some specific service reductions will need to occur. 8. Update the General fund revenue and expense model to plan for replenishment of reserves and restoration of reduced services. Cc: H. Dixon Flynn, City Manager Public Works Division Heads WIR91Lr 1. -Irl. 94-95 95.96 96-97 97-98 98-99 99-00 00-01 2001-02 2002-03 2003-04 200449 Arts Commission 35000 35000 35000 50000 50000 50000 50000 75000 75000 75000 am Downtown Lodi Business Parntership 2700 2700 2700 41550 25650 33850 61500_ 62000 100000 47000 41 0p Lodi Conference & Visitors Center LWWG 60000 60000 130000 130000 130000 130000 1 Lodi District Chamber of Commerce 15000 75000 75000 10000 10000 25000 25000 25000 25000 25000 Lodi-Toka Rota Oooh Ahh 8000 15000 15000 15000 15000 15000 15000 18000 18000 1ROOd :. Lodi-Toka Rota Kids Night) 15000 15000 15000 18000 18000 1 San Joaquin Parntership 20000 20000 20000 20000 20000 20000 30000 30000 30000 30000 27000`== Viacam Outdoor Signs* 27960 27968 28807 29672 29760 30630 31800 34500 33480'`: of Lodi General Fund Budget Challenge 2004-05 General Fund General Fund Capital Libra Electric Water Sower Other State Take Away (705,000) (352,500) (211,500) (141,000) Income Adjustment - General fund (858,207) Estimate Based on March Performance (858,207) City take Away General Fund Capital (350,000) Transfer from Electric Eliminated (350,000) 350,000 Electric Loan plus interest 5.706% (545,800) Repayment of $350,000 from 1996 (545,600) 545,000 Reduce In -Lieu Franchise to 9% - EUD - Rate Reduction of In -Lieu Franchise from 12% to 9% Budget Increases City Clerk Election Funding (62,400) (62,400) City Attorney Audit of Envision (250,000) (250,000) TCEIPCE Litigation (1,351,000) (1,351,000) Electric Utility Services Shift Field Services from Finance - No Savings - Fire Department Performance Bonus (48,000) Approved By Council (48,000) Dispatching Fee (41,000) Approved By Council (41,000) Pence Department Animal Shelter Part -Time Staff (19,200) (19,200) Transfer Appeals Clerk to Police - W ater/Wastewater Utilities Maintenance Worker (42,700) Approved By Council (42,700) Transportation Traffic Monitor Equipment (17,500) Recommended (f 7,500) Human Resources PERS Increase (190,000) (190,000) General Liability (100,000) Recommended (100,000) Golden Handshake (400,000) Approved Phase 11 (400,000) Facilities Service Rental Finance Department f108,101 Recommended (108,100) Total Take Away (5,o88,707) _ (3,780,407) (1,107,100) (141,QME 895 800(r 42,7001 C�) h , Budget Adjustments 2004-06 ; General Fund Budget Reductions City Council Phase l and it (13,000) Approved (13,000) City Clerk Phase) and II (5,000) Approved (5,000) Community Center Phase I and 11. (15,100) Approved (15,100) Cut Arts Grants (25,000) Return to 2001 level of $50,000 (25,000) Community Development Phase I and II (10,500) Approved (10,500) City Manager Combine City Manager and Economic Development Phase I and 11 (22,900) Approved (22,900) Reduce City Manager's Salary 10% (12,800) (12,800) Transfer Parking Appeals Clerk to Police . - No savings Communications (3,500) (3,500) Travel (8,000) (8,000) Supplies and Material (14,900) (14,900) City Wide Postage (40,000) Co. a06) Economic Development Combine City Manager and Economic Development Economic Development Coordinator (115,800) (115,800) Supplies and Material (4,000) (4,000) Special Payments (3,000) (3,000) Information Systems Supplies and Material (24,000) (24,000) Police Department Phase I and 11 (36,000) Approved (36,000) High Crimes Investigator (69,000) Defer (69,000) Reclass. Management Analyst (5,200) Defer (5,200) Fire Department Phase I and II (35,000) Approved (35,000) Firefighter (81,000) Defer (81,000) Defer Paramedic Program (506,800) Defer (506,800) Vehicle Operations Course (12,600) Defer (12,600) Finance Department Phase I and 11 (30,000) Approved (30,000) Shift Field Services to Electric - No savings Human Resources Phase I and II (19,200) Approved (19,200) Workers Comp (230,500) Department Recommendation (230,500) Medical Account Increase (352,700) Approved Phase II (352,700) Library Phase 1 and II (1.000) Approved Cut Sunday Hours (17,000) Water/Wastewater Utilities Storm Water Analyst (66,000) Department Recommendation Organization Evaluation (25,000) Department Recommendation Electric Utility Services Professional Services Increase (10,000) Defer Automated Meter Reading (2,000) Defer Four Computers (7,000) Defer Equipment (45,000) Department Recommendation Parks and Rec Phase I and 11 (172,600) Approved (172;600) PIT CAD Operator (11,500) Defer (11,500) Refurbish Basketball Floors (5,000) Defer (5,000) Public Works Phase I and II (51,000) Approved (51,000) Unrestricted Capital Phase II (1,116,000) Transfer from General Fund Capital (1,116,000) Reclass 4 Engineering Positions (26,400) Defer (26,400) :- A 1 Facilities Service Maintenance Police trtent (8.500) Reduce from $128,500 Reduce Janitorial Services (57,500) Approved with new contract Sub-Total3,3� 17,000), Options Increase Hiring Freeze to 28 positions (520,000) 8 additional positions Extend Voluntary Time Off 1 Year (50,000) Soft Estimate Defer Admin Leave Pay Out (150,000) Negotiable Review Community Promotion Programs - 1% to 2% pay cut across the hoard (520,000) Explore Medical Cap - Negotiable Explore 2 -Tier Retirement Plan - Negotiable Mandatary Furlough 26 days Non -Safety (1,100,000) Defer Pay Raises $406,000 or Furlough 12 days $500,000 Or (2,340,000) Cut additional 28 positions to 56 $1,800,000 Total Savings 5,657,000 (8,500) (57,50.0) (3,104;000) (520,000) (50,000) (150,000) (520,000) (1,100,000) (3.104,000) City of Lod) Budget Adjustments 2004-05 Revenue Adjustments Item Amount Comments General Fund General Fund Capital Library Electric Water Sewer Other Revenue Enhancements 2004-05 Increase Sales Tax 114 cent 1,950,000 General Revenue Voter Approval 50% 1,950,000 Increase Sales Tax 114 cent 1,950,000 Special Revenue Voter Approval 67% Public Safety or TCEIPCE 1,950,DOO TOT Tax 6% to tO% 2&&,000 General Revenue Voter Approval 50% 288,000 Promote Bid for Community promotion Membership Contributions In -Lieu Tax to 9% - Electric July 1, 2005 General Revenue Voter Approval 50% (1,500,000) 1,500,000 in -Lieu Tax to 9% -WM July 1, 2005 General Revenue Voter Approval 50% Revenue Neutral Capital Transfer Capsital Transfer Approved By Council April 2004 (350,000) 350,000 Capital Transfer Electric Loan (545,600) 545,600 Water Rate Increase 2,000,000 Appb roved By Council April 2004 2,000.000 Sewer Rate Increase 1,540,000 Approved By Council April 2004 1,540,000 9t 1 Fee 300,000 Council Approval Required Total Revenue Enhancements B 008 ODO 2 668 000 (895,6M) 2 95 600 2 000 DOO 1.540.000 - r City of Lodi Revenue Adjustments General Fund 2003104 Estimate Revised Department June 30, 2003 May 13.2004 Difference Fees Police 302,915 134,600 (168,315) Finance 545,365 704,000 158,635 Community Development 810,460 467,200 (343,260) Public Works 534,760 704,000 169,240 Parks and Recreation 680,429 600,000 (86,429) Hutchins Street Square 563,098 437,000 (128,088) Sub -Total 3,443,027 3,046;800 (396,227) Interest Earnings 1,644,380 1,200,000 (444,380) First Responder Fee 400,000 200,000 (200,000) High Crimes Investigator 69,000 - (89.0001 Sales Tax 9,105,000 9,505,000 400,000 Soccer Field Revenues 146,600 {t48,SOq� Sub -Total 11,366,980 10,905 000 (461,980) Total 14,810,007 __ 13,951800 858m,