HomeMy WebLinkAbout2011-06-20_cityofsanrafael_f20c8e92cd80633bcbfa3d608ebe5d2921
Agenda Item No:
Meeting Date: June 20, 2011
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: CITY MANAGER
Prepared by: Nancy Mackle, City Manager City Manager Approvals `
SUBJECT: REVIEW OF CITY OF SAN RAFAEL BUDGET FOR FISCAL YEAR 2011-2012
RECOMMENDATION: Review staff report, and provide any final direction needed for
formal budget adoption at July 5th, 2011 City Council meeting.
BACKGROUND:
The City must adopt a balanced budget for all funds for this coming fiscal year. This report will
provide the City Council and community with an update on the proposed budget for fiscal year
2011-2012. The City Council has reviewed fiscal year 2011-2012 budget information in several
public sessions and in much detail over the past few months as summarized below:
On March 7th, 2011 the Interim City Manager Jim Schutz provided a detailed report
which summarized the budgetary issues before us, actions taken to date, and indicated
that the City would again be facing a General Fund deficit for the upcoming 2011-12
fiscal year. This report provides detailed background addressing how the City has
addressed the recession over the last couple of years and what issues are before us.
2. On March 21St, the Finance Director provided a Preliminary Budget report indicating an
approximate $4.4 million General Fund deficit. This report summarizes the key elements
of the projected 2011-12 deficit.
3. On April 18th, our Finance Director provided a Preliminary Budget, with updated
expenditures from each department and updated forecasts for revenues, and at that time
still indicated an approximate $4.4 million deficit for the upcoming fiscal year.
4. On May 5th, the City Council held a study session on Service Area Prioritizations, hearing
presentations from staff regarding past and future budget impacts on City services and
programs.
FOR CITY CLERK ONLY
File No.:
Council Meeting:
Disposition:
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
5, On May 16th, the Council was presented with a budget report including:
a. Results of the City Council prioritization exercise from the May 5th study session
b. Departmental Goals and Objectives (based on current staffing levels)
c. Capital Improvement Program for 2011-12
d. City Manager recommendations for a partial list of solutions, including one-time
and ongoing budget reductions, shrinking the remaining FY2011-12 General Fund
budget deficit to approximately $2.2 million.
6. Most recently, at the June 6, 2011 meeting, staff presented another budget update, with
additional City Manager recommended actions to balance the budget, resulting in a
remaining deficit of approximately $2 million for FY2011-12.
Cleary, solving the budget deficit is of utmost importance to City Council and staff, as evidenced
by the numerous reports and hours dedicated to this issue. Additional actions are underway, as
discussed below.
ANALYSIS:
Overall Budget:
The total projected overall fiscal year 2011-2012 budget for the City is estimated to be
approximately $85 million. This sum reflects all funds and operations for the City, inclusive of
appropriations of new resources for one time and capital projects (shown as $4.5 million in the
table below). A final review of contractual commitments and operating expenses has been
finalized by Finance Department staff, with input from all City Departments.
CITY OF SAN RAFAEL
FISCAL YEAR 2011-2012
BUDGET FIGURES MESM7
71111111 mal
Total City Budget 1$85.7
Less: Capital and Special Proiect 1 (4.5)
Total Operating Budget 81.2
Less: Restricted Funds Gas Tax, etc. 25.7
General Fund Operating Budget 55.5
Add: General Fund Program Support & Projects 1.9
Total General Fund Appropriation $57.4
General Fund:
The City's General Fund, which accounts for most of the major services to our residents and
businesses (such as police, fire suppression and prevention, planning, building, library, parks,
streets, engineering, traffic enforcement and management, cultural programs) is projected to be
approximately $57 million for fiscal year 2011-2012,
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
Revenues. Revenue enhancements are assumed as a result of a fee schedule update and two new
retail businesses. The master fee schedule will be presented in July to the City Council for
approval. The projected budget assumes revenue increases from the addition of Honda and TJ
Max (in the former Borders location). Additional ideas for future revenue increases are being
studied, such as concepts for sharing services with other jurisdictions, but until details are worked
out, no projections are included in our current revenue estimate.
Expenditures. Expenditures are projected to be reduced in two ways. First, position eliminations
and other departmental cost savings have been proposed. These reductions were presented to the
City Council on May 16th and June 6th, totaling $2.4 million in one time and ongoing savings,
and are summarized on Exhibit A. This Exhibit also includes additional cost cutting actions that
are recommended to eliminate the remaining approximate $2 million deficit. The most
significant personnel actions include the following:
• Elimination of a soon-to-be vacant Fire Captain position (due to an upcoming retirement).
This will reduce the hours available for the Wildland Urban InterfaceNegetation
Management program and limit Fire Investigation services.
• Elimination of the Code Enforcement Supervisor position, which is currently vacant.
This will create a slower cycle for code enforcement inspection as well as slower response
to complaints.
• Elimination of a Police Sergeant position, currently vacant, a position that formerly
supervised the motor unit. This will result in reassigning our last motor officer back into
patrol, which would mean less traffic enforcement and less ticket revenue.
• Elimination of a Police Officer position, currently vacant. This will result in re -assigning
an Officer, currently in charge of organizing departmental training, back into patrol. This
re -assignment is possible because Police training hours have been reduced significantly as
a budget reduction action ($80,000 in overtime reductions, approved by City Council on
May 16th)
• Reduction in contractual services in the Office of Emergency Services (OES). This will
result in a reduction of training and other preparedness measures in the community.
The second approach to solving the remaining deficit is assumed to be through a 4% total
compensation reduction across all bargaining units, for the term of the upcoming labor contracts.
Labor negotiations are still ongoing as of the writing of this report. The value of the 4%
reduction is approximately $1.4 million for the 2011-12 fiscal year in the General Fund alone.
After the conclusion of negotiations, labor contracts will be presented to the City Council for
consideration and approval. Without this reduction in total compensation, the budget cannot be
balanced, unless the City Council authorizes eliminating approximately 10-12 positions, in
addition to those listed in Exhibit A. Significant reductions in community services and programs
would result if the City were to eliminate that many additional positions.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
With the budget in balance as proposed, the City will continue to have several vacant positions
that will not be eliminated. I am not recommending, however, that they be filled at this time.
Facing another significant deficit next year, in most cases it will not make sense to fill a vacancy.
On a case by case basis, vacancies will be considered for hiring. For example, if non General
Fund monies are found to pay for the position, or if safety or fiscal analysis indicates it is prudent
to fill a vacancy to avoid extensive overtime, a recruitment may be approved.
Reserves. The General Fund reserves are estimated to be 3.3% of our General Fund, and remain
at a very low amount of approximately $1.9 million. This amount is still well below the 10
percent goal in our approved financial policies.
Other Funds. The Parking Fund requires additional action, as described below, but all other City
funds are projected to be balanced for FY 2011-12.
Parking Services Fund
Parking Services is an enterprise fund which is designed to be self-sustaining (i.e., revenues
covering all costs) and not negatively impacting the General Fund. Revenues are generated
primarily through charging for the use of parking garages, structures, metered street spaces, and
also through citation fees. Typically, the City has increased parking and citation rates every two
years. However, the last parking rate increase was in Fall 2007, as we have continued to defer
increases due to the poor economy. Not only have the costs increased to operate Parking
Services since 2007, but the State has repeatedly taken more and more of the revenue from
parking citations. The State currently takes $12.50 out of each citation.
These facts have caused Parking Services to rely on reserves to balance the annual budget — a
condition that can not continue. The solution to the current budget challenges for Parking
Services is the same as the City overall — reduce expenditures and look to increase revenues as
appropriate. As a direct companion to the action recommended in this report below, which is to
reduce staff, staff will be bringing to the Council in July a recommendation for the master fee
schedule, to include a more modest revenue increase in citation rates. This increase, combined
with cost reductions, will allow for a more sustainable fund in the future.
The Parking Services position eliminations shown in this staff report represent an approximate
20% decrease to staffing levels — an almost $400,000 cost reduction, which corresponds closely
to the reduction in revenues Parking has been experiencing. Parking Services has also reduced
non -staffing costs as well. This is a significant restructuring of Parking Services and will result
in slowing down maintenance projects and customer service response times, in addition to have a
reduced staff presence in garages and lots. The recommended position eliminations include the
following:
• Administrative Assistant I (vacant)
• Police Security Officer (layoff)
• Supervising Parking Enforcement Officer (layoff)
• Parking Maintenance and Collections (layoff)
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
FISCAL IMPACT:
There is no fiscal impact at this time, as staff plans to return to the Council for final approval of
the budget at the July 5th meeting.
The proposed budget for FY2011-12 as presented today is balanced for all funds. It is, however,
based on the best assumptions we can make with the information available to us at this time. If
actual revenue and expenditures differ from our assumptions, as often happens, staff will return
with budget amendments mid year, or sooner, to correct our fiscal course of action.
It is important to note that at the time of the writing this report, the State budget balancing
impacts are unknown and could be significant to the City's budget. The State Legislature passed
a budget this week, however the Governor quickly announced he would veto the main budget
bills. Two Redevelopment bills were passed that would significantly impact our Economic
Development Department staffing and programs. The California Redevelopment Association
announced litigation would be pursued on the Redevelopment components of the budget.
Meanwhile, we await the final State budget to also hear the impacts on booking fees and Literacy
Program funding.
It is also worth noting that the adoption of a balanced budget for Fiscal Year 2011-12 does not
mean the City's General Fund structural deficit has been solved. This is due to the use of "one
time" solutions, which are a significant source of the budget balancing actions this coming year.
This use of one time solutions allows the City to avoid eliminating much—needed services to the
community, but it does not provide a longer term sustainable budget solution — that solution will
require additional sources of revenue or deeper cost cutting in the future.
OPTIONS:
The Council could accept the report for the City's proposed budget for fiscal year 2011-2012,
for final adoption on July 5, 2011; or the Council could direct changes to the proposed budget for
fiscal year 2011-2012, and staff will return with those changes on July Stn
RECOMMENDATION. Accept staff recommendations for FY 2011-12 budget.
EXHIBIT A: Budget Balancing Actions for FY2011-12
FISCAL YEAR 2011-2012 GENERAL FUND BUDGET
CITY MANAGER RECOMMENDATIONS
JUNE 20, 2011
EXHIBIT A
JGne:20; ,20,1 i its/= vuncil Actions < ; .
Ongoing Reductions:
1 $
1,446,448
No FTE's 1 $
1,446,448
90,833
FD
Elimination of Fire Captain (retirement) -Net of revenue loss
$
206,500
-1.00
$
206,500
CD
Elimination of Code Enforcement Supervisor vacant
$
145,850
-1.00
$
145,850
PD
Elimination of Sergeant vacant - Net of revenue loss
$
136,664
-1.00
$
136,664
Pb
Elimination of Officer vacant
$
133,098
-1.00
$
133,098
FIN
Reduced Parking Fund contribution to General Fund
$
(40,000)
No FTE's
$
40,000
MS
Reduce Contractual Services in OES
$
50,000
No FTE's
$
50,000
One-time Savings:
CM Total Comp Savings- all Bargaining Units
1 $
1,446,448
No FTE's 1 $
1,446,448
90,833
Supervising Parking Enforcement Officer
$
113,000
-1.00
Subtotal June 20th
$
2,078,560
$
2,078,560
-1.00
$
89,667
Administrative Assistant I
$
GRAND TOTAL GENERAL FUND
$
4,544,902
-5.83 $
4,494,742
Parking Services Reductions (non General Fund) FY 2011-12
Ongoing Savings: Annual Savings FTE Savings
Police Security Officer
$
109,000
-1.00
$
90,833
Supervising Parking Enforcement Officer
$
113,000
-1.00
$
94,167
Parking Maintenance and Collections
$
107.600
-1.00
$
89,667
Administrative Assistant I
$
62,600
-1_00
$
52,167
Total Parking Services
$
392,200
-4.00
$
326,833
GRAND TOTAL STAFFING REDUCTIONS - ALL FUNDS -9.83