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HomeMy WebLinkAboutSPTH Minutes 2005-05-04NOTES ON SPECIAL TOWN HALL MEETING TERRA LINDA RECREATION CENTER 670 DEL GANADO ROAD, SAN RAFAEL WEDNESDAY, MAY 4, 2005, 7:00 — 9:00 PM SAN RAFAEL CITY COUNCIL: Albert J. Boro, Mayor Barbara Heller, Vice -Mayor Paul M. Cohen, Councilmember Cyr N. Miller, Councilmember Gary O. Phillips, Councilmember Also Present: Rod Gould, San Rafael City Manager Jeanne M. Leoncini, City Clerk DISCUSSION RE CITY OF SAN RAFAEL'S FINANCIAL SITUATION: Introduction and remarks by Mayor Boro, Vice -Mayor Heller and Councilmembers Cohen, Miller and Phillips: INTRODUCTION — MAYOR BORO "I'd like to welcome everyone to tonight's town hall meeting. I appreciate your coming out this evening to learn about the City's serious financial dilemma and what it means for your services, and the choices that lie ahead. In looking around the room, I recognize many of you who know me, and know this Council. I believe it is safe to say you know we are not alarmists. However, we are faced with a serious financial problem that needs fixing, so that we do not have to make major cuts to the basic city services we enjoy and deserve. • You are here because you care about this city and what it has meant for you and your families, your neighbors, and your businesses. San Rafael is a great place to live. In fact, people from all over San Rafael, and all over Marin County, comment to me on what a wonderful place this is. We are a city of natural beauty and wonderful climate. Our city is safe, clean, diverse, and judging from home re -sale prices, people compete to live here. • When asked about what the most significant issue is facing our city, I always respond that it is keeping our city financially viable so that we can deliver the services our residents expect and deserve. Although we have continued to deliver services these past three years at an acceptable rate, we have done so at the same time we were decreasing our budget several million dollars a year. I'm here tonight to tell you that we are at a crossroads. City services are in jeopardy. We are here tonight to ask for your help and input in how we continue to make our city financially viable so that we can produce the level of police and fire services, and other services, from the library to the maintaining of our infrastructure, such as parks and streets, at a level that makes San Rafael such a special place. 1 want to describe our budget time frames. As I said, over the past three years, the City Council has had to address a budget deficit. In the next budget, starting this July 1St, we have an approximate $3 million shortfall. We will be able to address this budget shortfall through the use of one-time funds, and using part of our reserves. However, our financial projections already show that the next fiscal year, 2006-2007, is again $3 million in the red. The economy continues to be flat. In other words, we need a new source of revenue. We have no more rabbits to pull out of the hat. Now, let me be clear about the scale of our financial dilemma. The deficit of $3 million leaves us with just two options. We must either find a new source of revenue, or we must begin making deep cuts to important City services that we all value. If we are to close this deficit through cuts, the cuts could include: Reducing the number of police officers patrolling the streets and neighborhoods Reducing the number of firefighters and paramedics Further delaying the repair of City streets and sidewalks Closing at least one community center Closing the cultural center Further reducing the hours our library is open • We mention these specific items not to alarm you, but to inform you. The scale of our deficit is so large, and we have already cut so much else, these essential City services are all that is left to close our budget deficit. • The alternative is to look at options for generating additional revenue to avoid these cuts. The City Council cannot increase taxes on our own. Only voters can do that. We are currently evaluating revenue options, including a parcel tax, a utility tax, or a sales tax — which you'll hear more about later tonight. • We have asked you here tonight to talk about the tough choices, answer your questions, and hear from you. • All five of us are here tonight to share with you what we know of this situation. Vice -Mayor Heller is going to tell you about the factors that brought us to this point. Councilmember Phillips will explain what we have done to reduce costs and raise revenue over the past three years, and Councilmember Miller will talk about how San Rafael's financial situation compares with other cities. To wrap up, Councilmember Cohen will describe the various options that we are considering to address this budget crisis. • This presentation will take about twenty minutes. Then, each of us will lead a roundtable discussion with the assistance of staff. You are encouraged to sit at any table you wish to provide your suggestions and get your questions answered. • Then, we will ask you to fill out a short comment form. These forms will be summarized in a report that we will use to help us make the best budget decisions we can. We will send you a copy of the composite report if you give us your address on the sign -in sheet. • San Rafael is a proud city. We have a talented, diverse population, and have achieved great successes in every part of our community. With your help and understanding, we can continue our great traditions and achieve untold future successes. • Our goal tonight is to share with you our challenges and solicit your advice, and help in securing our financial viability. Again, I appreciate your interest and look forward to hearing what you have to say. I'd like to now introduce Vice -Mayor Barbara Heller, who will describe the causes of San Rafael's financial predicament." Vice -Mayor Barbara Heller: "Thank you, Mayor. I, too, appreciate everyone's attendance at tonight's meeting. I've reached an understanding that the issues cannot simply be resolved as a one-time annual fix. The causes of the City's financial situation demand that we all take a longer view. I want to share what I've learned. The causes of the City's financial woes are threefold: #1. Constant and increasing loss of local taxes to state government . In recent years, the state has taken away funds that San Rafael has historically used to provide police, fire, and other essential local services. These funds have been taken away to help balance the state budget, which has created a local budget crisis in San Rafael and other cities and towns throughout California. Despite our best efforts to recoup these funds, the best we have been able to accomplish is a cap on what the state can take from us. #2. The City's revenues have been sluggish since 2001. The only bright spot is property taxes, which have grown between 5% and 8% in the last three years. Many of you might remember your civics class where we learned that city government is financed through property taxes? They don't teach that any more, at least in California. It may surprise you to know that only 11 % of your property taxes come to San Rafael, and that this source of revenue to the City makes up only 20% of the City's general fund budget. One way San Rafael has made up for the property taxes taken by the state is to develop sales tax as its largest source of revenue. However, sales tax in San Rafael has grown at a very modest rate since 2001. Hotel taxes are way down since 2001. and finally, #3 Unfortunately, San Rafael's costs are rising faster than revenues, particularly in the areas of healthcare, energy, retirement costs, and workers' compensation. Like many private businesses, San Rafael has faced double-digit increases in healthcare costs for its employees in each of the last three years. There is discussion statewide about reforming public retirement systems. As a member of the people of League of California Cities, San Rafael is engaged in these discussions. Workers' compensation has been an increasing cost to cities and businesses statewide. San Rafael has seen its costs for injured workers rise, even though fewer workers are being injured. Thus, for San Rafael, expenses are continuing to rise faster than revenues. And so, we find ourselves in our fourth year of financial pressure where San Rafael faces a multi-million dollar deficit. Now, allow me to introduce Councilmember Gary Phillips, who will describe how we've coped with this situation in recent years." Councilmember Gary Phillips "Thank you, Barbara, and to all in attendance. As Barbara mentioned, I would like to summarize for you some of the steps we have taken over the last 3'h years to address every aspect of the City's budget. As the managing partner of a San Francisco -based public accounting firm, with an office in San Rafael, I am particularly interested in the City's finances. I can tell you with great assurance that we have examined all opportunities for cost savings, efficiencies, and streamlining to avoid harming critical City services. In this process, we have met 27 times in the last two years alone. During this period, we have explored ways to reduce operating expenses, to increase revenues, and assess additional needs. Some of the steps we have taken to reduce expenditures include: Elimination of thirty positions from the City's workforce, representing about 10% of staff supported by the City's General Fund. These positions include police officers, street and parks workers, library and recreation staff, and middle managers. Last year, we cut salaries for management and general employees by imposing thirteen mandatory days off without pay, representing a 5% reduction in salaries. We also eliminated performance bonuses for outstanding work. We reduced services in all departments, including a 15% reduction in library hours and significant cuts in street maintenance, and we eliminated mid -management positions in Human Resources and Information Technology. We have also been working on the revenue side, with changes in a number of areas including: We've become very aggressive in seeking grants from other government agencies, private foundations, and philanthropic groups. We've begun community fundraising for projects like the Pickleweed Community Center, Camp Chance for at -risk youth, and automatic defibrillators for police cars. We've increased user fees for things like building permits, recreation classes, and facility rentals to recover our full costs. We've increased the number of volunteers who have, in turn, contributed a greater number of hours to benefit the City to offset losses of staff positions. Last year, volunteers contributed the equivalent of $1.3 million worth of labor to the City, out of deep commitment to San Rafael. 4. During the 1990's, we conscientiously built-up our emergency reserves. It has distressed us that now we find that we have to dip into these same reserves. Our facilities needs are also of concern. San Rafael has never had an adequate capital improvement budget, which is reflected in the condition of our City facilities. The City has recently taken inventory of its critical facilities. In that regard, we formed a Critical Facilities Committee last fall that recently reported its findings to the City Council about the need to significantly improve our critical facilities. The library is in great need of repair, and is roughly half the size one would expect in a city of nearly 60,000 people. We cannot add to the collection of books because we are out of space and, thus, must throw away one book for every one we buy. We don't have adequate space for the level of computer technology that is common in libraries across America. The public safety facilities are under -sized and need to be seismically strengthened to ensure they are functioning in the event of an earthquake. Most fire stations and the police station were built decades ago and need to be modernized. In summary, we have faced head-on a number of fiscal challenges. But, as Councilmember Heller described, we are in a situation of rising costs and dwindling resources, and we realize a more drastic step must be taken now to support your city. Now, I'd like to introduce Councilmember Cyr Miller, who will give you a sense of how San Rafael is faring in comparison to other cities across America, and in California. As you will see, we are not alone." Councilmember Cyr Miller "Thank you Gary. When you listen to the tape of Martin Luther King's drum major for justice speech, you hear the audience repeatedly respond, "make it plain," make it plain." Tonight, I want to take to heart the admonition of that audience. This evening, I wish to make it plain to you that over 60% of cities and towns across this nation are in financial trouble. San Rafael is one of those cities. Two-thirds of California's 474 cities and towns are drifting into serious trouble, like San Rafael with its $3 million structural deficit. Some of these California cities have already made, or are about to make, painful cuts in essential services that could place their communities and quality of life at risk. From reading the I.J., I see that Marin County mirrors the nation and our state. Plainly speaking, San Rafael is a low -tax city, with below average revenues and expenditures In 1978, San Rafael had the lowest property taxes of all of Marin when property tax rates were locked into place by the voters' approval of Proposition 13. As Councilmember Heller described, the result is that today, San Rafael receives only 11 cents of every dollar of property tax paid by our residents, while many cities in California, and several in Marin, receive 20 cents or higher. San Rafael has never had a capital improvement budget to seismically retrofit our aging fire stations, update an inadequate police station, and maintain our valued library, active community centers, or beloved Falkirk. The cost of doing business in San Rafael is below average. Why? Because San Rafael has no utility tax, no citywide assessment district, no library tax, no street tax, and no additional general fund parcel tax. Such additional taxes are common elsewhere in California, and are found right here in Marin. To make it perfectly plain then: San Rafael is one of the vast majority of American cities and towns experiencing serious financial difficulties. And so we come to the crossroads. It's the people's choice. It's your choice. What services do you need? What services do you want? What services are you willing to pay for? How will you pay for them? With that, I pass the baton to my good friend and colleague, Councilmember Paul Cohen." Councilmember Paul Cohen 4 "Thank you Cyr. By now, there should be no doubt that we face some tough choices. As the Mayor stated at the outset, San Rafael must make serious decisions this year to avoid losing critical services next year that will affect all City residents. To give you a sense of what it would take, after what will be four years of cuts, to cut another $3 million out of the City's budget, you would have to combine all of the following reductions: 1. Fewer police officers responding to calls and patrolling the streets and neighborhoods. 2. Fewer on -duty firefighters and increased fire and paramedic response times. 3. Reduced library hours, access to books, computers and research materials. 4. Closure of one or more of the community centers and the Falkirk Cultural Center. 5. Further reductions in street, park, and sidewalk maintenance, compromising the safety of motorists, pedestrians, and the disabled, and raising the cost of improving streets and sidewalks later. We, on the City Council, are looking at a long list of options to avoid these outcomes. Circumstances force examination of both sides of the accounting ledger. By that, I mean that we not only need to look at our expenses, but our revenues, as well. The Council has directed staff to begin meeting with neighborhoods and business groups to discuss these financial conditions and choices. And, we are holding three town hall meetings to hear from you directly As the Mayor mentioned, at the beginning of our two-year budget cycle, the City surveys its residents on a wide variety of City issues and services. The most current survey, done in late January, posed a few hypothetical tax questions. The good news is that San Rafael residents are largely satisfied with City services. Some have noted the decrease in street maintenance and library service in recent years, though. The bad news is that few understand the City's financial crisis. Most residents think that the City's financial condition is either good or excellent. There is some support for a hypothetical tax to retain police and fire services, improve street maintenance, and bring fire stations up to modern earthquake safety codes. However, more community outreach needs to be done to make the best possible decisions for San Rafael's future. Please be reminded that the City Council cannot raise taxes legislatively. That power is controlled by the voters of California and its communities. In other words, by you. To raise the kind of money necessary to avoid the deep cuts I've described and preserve essential services, the City might consider placing a tax measure on the November ballot. It might be a parcel tax of something in the range of $280 per parcel, or $218 per dwelling unit. It might be a 5% to 7% utility user's tax, which people pay on top of their PG&E and phone (including cell phone) bills. It could be an increase in the sales tax of about one-half of one percent. Each of these options has pluses and minuses, which we have to weigh. The Critical Facilities Committee of 12 citizens that Gary spoke of was charged with developing a strategy for improving our key buildings in town, but had to confront the City's nagging operating deficit. The Committee recommended that the City Council place a tax increase on the November ballot to avoid deep service cuts. The Committee also recommended that Council proceed to find the means to modernize our fire and police stations and library. There is no good time to raise taxes. However, it is necessary to avoid the service losses I've described. Also, a locally approved tax cannot be taken by the state. Our entire City Council is determined, with your help, to solve this problem and maintain the quality of life of our City and its residents' safety into the future. I'd now like to turn the meeting back over to Mayor Boro who will talk with you about the next part of the meeting." Closing — Mayor Boro "Thank you Paul. In this next phase of tonight's meeting we would like you to join us for some roundtable discussions. The purpose of these roundtable discussions is to have a real dialogue with you, with each other, about what we're facing, what we've done so far, and what more we can do to address this financial crisis. We want to get your questions, thoughts, and suggestions. Each of the Councilmembers will be at a different table, along with staff members. We invite you to sit wherever you are most comfortable. Let's talk about where we are and where we are going. At the end of the roundtable discussions, we'll ask that you jot down any further thoughts or questions on a one-page comment form that we will collect and summarize after all three of the Town Hall meetings are completed. If you signed up at the door to receive a copy of this summary, we will forward it to you when it's done. The next step is that the Council will continue budget meetings and hearings in June and finalize our budget for the 2005-2006 fiscal year. The Council will determine in July whether or not to place a tax measure on the November ballot. So, as you can see, your comments tonight are vitally important to us. Now, if you will please move to the roundtables, we will begin the discussions." At the request of the audience, the roundtable discussions were dispensed with in favor of a general discussion. ADJOURNMENT: