1 00:00:00,400 --> 00:00:07,520 Recording in progress. >> Welcome to the city council special 2 00:00:05,279 --> 00:00:12,400 meeting this Monday evening, February 23rd. City clerk, please call the role. 3 00:00:10,160 --> 00:00:14,240 » Certainly. Mayor Lorraine, council member Nome 4 00:00:13,840 --> 00:00:16,720 » here. >> Council member Sphere Gaditzki 5 00:00:16,240 --> 00:00:18,800 » here. >> Council member Nash 6 00:00:18,160 --> 00:00:20,720 » here. >> Deputy Mayor Fernandez 7 00:00:20,000 --> 00:00:23,760 » here. >> And Mayor Lorraine 8 00:00:21,840 --> 00:00:28,160 » here. Thank you and welcome. We're excited to 9 00:00:26,080 --> 00:00:32,480 be here in person with options for those who choose not to be in person to 10 00:00:30,000 --> 00:00:36,640 participate virtually. Thank you for your cooperation and for helping us 11 00:00:34,640 --> 00:00:41,440 maintain an efficient and accessible meeting environment. There are several 12 00:00:38,960 --> 00:00:45,520 ways to participate. For those attending in person, you may complete a yellow 13 00:00:43,760 --> 00:00:50,239 request to speak slip and hand it to the city clerk. If you are participating 14 00:00:48,160 --> 00:00:53,760 remotely, use the raise your hand feature in Zoom 15 00:00:52,239 --> 00:00:58,000 and you will be called on at the appropriate time. 16 00:00:55,360 --> 00:01:04,239 If you're calling in via phone, press star 9 to raise your hand and when 17 00:01:00,399 --> 00:01:08,080 called upon, press star six to unmute. These options for public comment will 18 00:01:06,080 --> 00:01:12,720 remain available until I close public comment period for each specific item. 19 00:01:11,040 --> 00:01:17,119 For members of the public who might be watching us on YouTube who wish to 20 00:01:15,119 --> 00:01:21,200 provide live public comment, please note that you must join the meeting through 21 00:01:18,640 --> 00:01:24,960 the Zoom webinar using the access information listed on the agenda as we 22 00:01:23,360 --> 00:01:31,439 don't currently have a public comment feature available in YouTube. 23 00:01:28,720 --> 00:01:37,759 And with that, we have one item in our special meeting, a study session, the 24 00:01:33,920 --> 00:01:41,280 fiscal year 202526 midyear budget update with a presentation from our finance 25 00:01:39,439 --> 00:01:45,119 director, Abby Viser. Good evening, Abby. 26 00:01:43,600 --> 00:01:48,880 » Good evening, honorable mayor and city council. As you mentioned, I'm Abby 27 00:01:46,640 --> 00:01:53,520 Viser, the finance director, and I'll be doing a brief overview of where we are 28 00:01:51,040 --> 00:01:57,520 with fiscal year 2526, uh, looking at our midyear. Um to give 29 00:01:56,240 --> 00:02:01,439 you a sense of what we're going to walk through today, um we will be talking 30 00:01:59,600 --> 00:02:06,799 mostly about our general fund, which is of course our main operating fund. Um 31 00:02:03,680 --> 00:02:10,800 we'll look real quickly at the 2425 actuals, how we ended that year. We'll 32 00:02:09,200 --> 00:02:16,640 look at how we're doing for fiscal year 2526, digging down more into revenues, 33 00:02:14,319 --> 00:02:20,560 um as well as expenditures, looking what our general fund balance is looking 34 00:02:18,480 --> 00:02:24,720 like. Um, we'll give an update on where we are with our financial sustainability 35 00:02:22,640 --> 00:02:28,959 plan and we'll also take a look at the sewer fund to see um, where that main 36 00:02:26,879 --> 00:02:33,760 enterprise fund how that's doing at this mid year. 37 00:02:31,599 --> 00:02:37,040 Um, to do kind of a refresher, this is the information that was presented in 38 00:02:35,120 --> 00:02:41,280 our annual comprehensive financial report. So, as of the end of the year of 39 00:02:39,519 --> 00:02:46,239 2425, um, you can see we adopted a budget of 40 00:02:43,519 --> 00:02:51,040 with a deficit of about 10.6 6 million but by the end um at midy year we had 41 00:02:48,959 --> 00:02:56,879 projected 6.4 um as a deficit we ended with our 42 00:02:53,760 --> 00:03:00,959 auditing of 1.5 million in surplus and then when we look at our kind of 43 00:02:58,080 --> 00:03:06,000 budgetary um controls we ended up having a deficit of about 3 million 2.9 44 00:03:03,360 --> 00:03:10,159 million. So that's how we ended uh fiscal year 2425 45 00:03:08,640 --> 00:03:14,319 and then we'll go into what we're expecting for 2526. 46 00:03:12,560 --> 00:03:20,239 Uh back in June, the city council adopted our budget with a $12 million 47 00:03:17,040 --> 00:03:26,879 deficit. That was with the 175.8 in revenues and 187.8 in expenditures. 48 00:03:23,920 --> 00:03:32,879 At this point at about 20 for the 2526 midyear, we're expecting closer to 6.9 49 00:03:30,480 --> 00:03:36,799 as our deficit. Um again, that is kind of just looking at our spending um 50 00:03:34,799 --> 00:03:41,200 halfway into the year. And again, I'll kind of take a closer look at that. So, 51 00:03:39,680 --> 00:03:48,879 first let's look at our general fund revenues. uh for 25 26 um as you can see 52 00:03:45,680 --> 00:03:54,000 um we've had some um deductions. So in property tax we're seeing lower and this 53 00:03:51,440 --> 00:03:59,519 is because of the reduction in our VLF shortfall. We did receive that in August 54 00:03:56,159 --> 00:04:06,080 and because we only received 67% of our $6.6 million shortfall. We are showing a 55 00:04:03,680 --> 00:04:10,319 we we got 4.4 million and we're showing the $2.2 million deficit. So, I've 56 00:04:08,560 --> 00:04:16,880 revised the estimates in our property tax due to that VLF shortage. Um, we 57 00:04:13,680 --> 00:04:21,519 only got that 2.2 represents 33% of the shortfall. Uh, sales tax is looking a 58 00:04:19,280 --> 00:04:25,199 little lower. Um, real property transfer tax um is looking better and I'll kind 59 00:04:23,600 --> 00:04:29,040 of go into that. And then interest earnings are a little higher. And so, 60 00:04:27,360 --> 00:04:32,720 we're expecting at the end of the year about a million more in revenues. And 61 00:04:30,720 --> 00:04:36,320 again, this is a conservative estimate um kind of based on what we know at this 62 00:04:34,639 --> 00:04:40,639 time. Um, in terms of our revenue sources, 63 00:04:38,880 --> 00:04:45,600 property tax of course is our number one revenue source. It's very stable. Um, 64 00:04:43,600 --> 00:04:51,199 other than the portion of course that is VLF. So, you'll see here that it's been 65 00:04:48,320 --> 00:04:56,320 rising steadily over time. Um, but like I mentioned, we had anticipated 89.4 66 00:04:53,840 --> 00:05:01,199 million in property tax and only saw 87 million because of the VLF shortfall 67 00:04:58,639 --> 00:05:06,320 that was reduced this year. Um to talk a little bit more about 68 00:05:03,280 --> 00:05:10,720 property tax, I want to show um on this chart the blue bands kind of represent 69 00:05:08,560 --> 00:05:15,120 our secured based property tax. This is our really most consistent source. And 70 00:05:13,360 --> 00:05:20,400 although we've had higher levels of growth in the past, um this year we're 71 00:05:17,360 --> 00:05:24,639 seeing about 3.8%. Um which is is not bad. That's kind of what we budgeted. Um 72 00:05:22,639 --> 00:05:29,759 and it was it's showing consistent increases. In addition, in the red bar, 73 00:05:27,039 --> 00:05:34,240 we have our excess E-RF as well as other revenues that are property tax related. 74 00:05:31,919 --> 00:05:39,120 Those are also increasing steadily. And then you have VLF, um, which is kind of 75 00:05:36,160 --> 00:05:42,800 the green bar, which you can see it's kind of cyclical. It's going up and 76 00:05:40,560 --> 00:05:45,199 down. And again, that has to do with the shortfalls. 77 00:05:44,320 --> 00:05:50,320 So, [clears throat] I thought it'd be good just to take another moment to look 78 00:05:47,280 --> 00:05:55,680 at why property tax in lie, the vehicle license fee, um, is such an inconsistent 79 00:05:53,199 --> 00:06:01,120 source of funding. Um so you can see from here um that VLF is a major portion 80 00:05:59,280 --> 00:06:06,479 of our property tax. It's an important section um and it rises traditionally 81 00:06:04,400 --> 00:06:12,560 with the rest of property tax. But because VF is funded by excess ERF and 82 00:06:09,520 --> 00:06:18,080 property tax from our non-basic aid schools, we are not always getting that 83 00:06:15,440 --> 00:06:22,880 full allocation to the city of Sonteo as well as the other cities and the county. 84 00:06:20,400 --> 00:06:28,720 Um, right now of the 23 school districts that are within Sonteo County, five of 85 00:06:26,080 --> 00:06:33,039 them are non-basic aid. Um, and if that changes, our allocation goes down even 86 00:06:30,639 --> 00:06:39,280 more. But right now, this um, for this fiscal year, we're estimating 6.9 would 87 00:06:35,759 --> 00:06:44,319 be our total VLF entitlement. Um, with that only five school districts in the 88 00:06:42,080 --> 00:06:51,919 non-basic aid category, we would be getting 7 million less in that uh, VLF 89 00:06:48,880 --> 00:06:55,759 entitlement. And then we also usually get the shortfall from the previous two 90 00:06:54,240 --> 00:07:00,880 years because it takes two years to get that shortfall back. So this year we 91 00:06:58,400 --> 00:07:06,479 should have gotten the 6.6 million which was from 2324 and instead of course we 92 00:07:03,520 --> 00:07:11,039 got the 4.4 million which was 67% of that. So as you can see this year we're 93 00:07:08,319 --> 00:07:17,039 estimating about 14.2 in VLF. But there are some concerns 94 00:07:15,360 --> 00:07:22,800 because we don't know for sure if that 7.1 is actually going to be um the 95 00:07:20,080 --> 00:07:26,639 shortfall we're going to see and also of course whether we're going to get that 96 00:07:24,080 --> 00:07:29,520 funding from the state. So um I think you all are aware that the city is 97 00:07:28,080 --> 00:07:34,160 working with the county as well as all the other cities within Sonteo on 98 00:07:31,440 --> 00:07:37,280 several fronts to see how we can recover this shortfall both for this year and 99 00:07:35,759 --> 00:07:42,639 into future years because it is a significant portion of our funding. 100 00:07:40,479 --> 00:07:47,520 So, um, next I want to talk about our second largest, um, source of revenues, 101 00:07:44,560 --> 00:07:53,759 our sales tax. Um, this one I'm showing the trend line here because it has been, 102 00:07:50,160 --> 00:07:57,840 uh, fairly flat. Um, it's looking good, but it's also just not increasing at 103 00:07:55,680 --> 00:08:01,919 what we had expected it to increase. So, in yellow, you see the measure S sales 104 00:07:59,840 --> 00:08:05,520 tax. That's budgeted at about 6.8 million, and that's what we're expecting 105 00:08:03,360 --> 00:08:10,319 still for this year. Um, and then the remaining is the 1%. Um, and that's kind 106 00:08:08,319 --> 00:08:14,560 of sticking steadily with what we received last year. Um, but we did lower 107 00:08:12,720 --> 00:08:18,160 expectations just a little bit because we weren't yet seeing the growth we were 108 00:08:16,240 --> 00:08:21,599 hoping to see. Um, we'll wait another quarter to see if we get better data and 109 00:08:19,919 --> 00:08:27,440 we might be able to revise that up a bit. Um, but this is again our second 110 00:08:25,440 --> 00:08:30,879 largest source of funding and although measure [clears throat] S hasn't been 111 00:08:28,639 --> 00:08:36,640 increasing, it has been a stable at about $6.8 to 7 million. 112 00:08:34,959 --> 00:08:41,599 Uh the next source of funds I want to talk a little bit more about is our real 113 00:08:38,159 --> 00:08:46,480 property transfer tax. Um this is important because this is um definitely 114 00:08:43,760 --> 00:08:51,200 what helped us to not hit the deficit um last fiscal year and it is coming in 115 00:08:48,880 --> 00:08:56,560 pretty strong for this year as well. So if you can see the the red bar here is 116 00:08:53,519 --> 00:09:01,440 the portion of measure C uh portion of our real property transfer tax that 117 00:08:58,800 --> 00:09:06,080 comes from measure CC. So last year it was 6.2 million. This year we're 118 00:09:03,440 --> 00:09:11,120 expecting about 1.9 million. Um, and this again is the extra 1% on the 119 00:09:08,640 --> 00:09:17,200 regular property transfer tax which is in blue. This is voted in by Sonteo city 120 00:09:14,399 --> 00:09:21,120 voters. And again, it has provided an excellent one-time revenue source to 121 00:09:19,279 --> 00:09:25,519 help us especially when we're reaching those deficit years. But, um, we're very 122 00:09:24,000 --> 00:09:29,600 conservative in how we budget it because you can see that this, um, revenue 123 00:09:27,360 --> 00:09:35,680 source is quite volatile. it moves up with how the housing and commercial um 124 00:09:33,040 --> 00:09:39,680 real estate market moves and we can't count on it. Last year we had an a 125 00:09:37,839 --> 00:09:44,480 really nice chunk of measure CC, but I can't count that that will come in again 126 00:09:41,279 --> 00:09:48,320 this year. Um so I've moved that up to about 11 million in our budget. So 127 00:09:46,480 --> 00:09:54,800 that's up a bit and so is helping to offset our losses in property tax. 128 00:09:52,880 --> 00:10:01,839 Um now to move to general fund expenditures for fiscal year 2526. 129 00:09:58,399 --> 00:10:06,080 Um we are conservatively expecting that we will see some savings within our 130 00:10:03,600 --> 00:10:10,560 salaries and benefits. So I've adjusted that down about 2 million. Um and then 131 00:10:08,560 --> 00:10:15,839 also we're expecting some savings in our transfers out. So I've budgeted that at 132 00:10:12,640 --> 00:10:20,320 2.1 million. Um the other major expenditure areas we're kind of keeping 133 00:10:17,920 --> 00:10:25,200 where they are because expendit expenses especially on the operating side are 134 00:10:22,480 --> 00:10:28,800 still fairly up given um the high cost of operating expenses. 135 00:10:27,120 --> 00:10:34,399 » What's transfers out? >> So transfers out Oh yeah. So transfers 136 00:10:31,600 --> 00:10:38,560 out are typically um items to our capital improvement projects. And so 137 00:10:36,640 --> 00:10:44,079 that it's budgeted items, but if they don't, so for measure S, example, we 138 00:10:41,040 --> 00:10:48,800 don't move it out until the projects are spent. So we don't some some funds we 139 00:10:46,959 --> 00:10:52,320 move right into our capital spending, but measure S we don't. So if we're if 140 00:10:50,800 --> 00:10:56,560 we still have measure S at the end of the year, then that's still in our 141 00:10:53,680 --> 00:11:01,600 general fund bank basically. So that's what that represents. Um, so this one, 142 00:10:59,279 --> 00:11:08,880 as you can see, I'm estimating a savings at the end of the year um to be 143 00:11:04,079 --> 00:11:13,760 expenditures closer to 183.7 million. And then again, just to refresh, that 144 00:11:11,120 --> 00:11:19,839 then leads us into expecting about a $6.9 million deficit as at the end of 145 00:11:17,680 --> 00:11:23,440 this year if we kind of realize the savings and that the revenue comes in as 146 00:11:21,680 --> 00:11:27,680 expected. Let's see. One thing I wanted to share 147 00:11:25,839 --> 00:11:32,079 kind of as we're looking at that is kind of our general fund trends. This is what 148 00:11:30,560 --> 00:11:37,440 it looks like with our operating expenses in green, our contributions to 149 00:11:34,560 --> 00:11:41,920 the CIP, those transfers out in purple, and then we have kind of this revenue 150 00:11:38,959 --> 00:11:46,800 line item that is fairly flat this year. Um, so that's where you can see the 151 00:11:44,320 --> 00:11:50,320 revenues are not rising with the expenses and that has kind of been 152 00:11:48,720 --> 00:11:53,760 unfortunately the story over time. So that's why we're always kind of trying 153 00:11:51,600 --> 00:11:57,680 to keep up um with where expenses are going. 154 00:11:55,680 --> 00:12:02,959 Um the other thing I want to talk to is the general fund balance. Um as you can 155 00:12:00,320 --> 00:12:07,680 see from this, we're expecting a slightly lower general fund balance. Um 156 00:12:05,200 --> 00:12:14,240 if that deficit of 6.9 million comes through. Um the good news is though at 157 00:12:10,079 --> 00:12:19,839 the end of 2425 we ended um that fiscal year with 119.5 158 00:12:16,399 --> 00:12:23,760 million in our our general fund reserve. Um thus showing you know how this 159 00:12:22,000 --> 00:12:28,079 council as well as councils before have been disciplined in their spending. 160 00:12:25,440 --> 00:12:32,800 We've really put away um that rainy day fund. So this careful spending from last 161 00:12:30,240 --> 00:12:37,600 fiscal year has really helped to keep the runway open as we work through our 162 00:12:35,200 --> 00:12:42,639 fiscal sustainability plan. So although we anticipate we could be down to 113 163 00:12:40,639 --> 00:12:48,079 million if this deficit comes to fruition, we still have that that's a 164 00:12:45,120 --> 00:12:52,560 pretty significant um reserve still. Um so talking through then what is going on 165 00:12:50,800 --> 00:12:57,839 with the fiscal sustainability plan because we are trying to make headway in 166 00:12:55,120 --> 00:13:04,320 that um given that we know this deficit spending is the deficits are still out 167 00:13:00,880 --> 00:13:08,480 in the next couple of fiscal years. Um I want to highlight kind of some of the 168 00:13:05,839 --> 00:13:12,639 levers that we're using around um the financial sustainability p plan. Uh the 169 00:13:11,120 --> 00:13:16,079 first one of course is expenditure control. That is an important one. The 170 00:13:14,320 --> 00:13:20,079 city um all the different departments are kind of looking at belt tightening 171 00:13:17,760 --> 00:13:25,279 and where we can be efficient in our spending and save money. Um so within 172 00:13:22,399 --> 00:13:29,200 that category um we have um about eight frozen positions within the city right 173 00:13:27,040 --> 00:13:34,160 now that we're holding um from recruitments and that's saving us 174 00:13:31,040 --> 00:13:38,720 funding. We also are trying our best to um charge to capital projects where it 175 00:13:36,480 --> 00:13:42,399 makes sense as well as move funding out of the general fund where it makes 176 00:13:40,160 --> 00:13:46,079 sense. We've been looking at benefit savings. So, we've moved some of the 177 00:13:44,160 --> 00:13:49,360 charges from the workers comp out of the general fund because that that fund has 178 00:13:47,920 --> 00:13:53,440 a healthy balance right now. So, we think we can go a year or two or or 179 00:13:51,519 --> 00:13:57,199 maybe even three without charging quite as much as we've been charging. And with 180 00:13:55,600 --> 00:14:00,959 operating budget savings, we've been also looking to see where we can cut 181 00:13:58,800 --> 00:14:05,920 corners, um, make new agreements, and save money. Right now, we're estimating 182 00:14:03,199 --> 00:14:10,720 that that's about 3.2 million in savings if we reach those goals. I've been more 183 00:14:08,240 --> 00:14:14,560 conservative in what I put forward in in my end ofear estimate, but that's what 184 00:14:12,880 --> 00:14:19,440 we're shooting for in terms of how we're looking to um save money within the 185 00:14:16,880 --> 00:14:23,120 departments. At the same time, we have looked at the other levers. We are 186 00:14:21,040 --> 00:14:26,079 looking at revenue enhancements. Uh, of course the council has asked us to look 187 00:14:24,480 --> 00:14:30,160 into the sales tax measure. So, we're doing um more research on that and doing 188 00:14:28,079 --> 00:14:33,920 some education. Um, we're looking at revenue agreements where we can to bring 189 00:14:32,079 --> 00:14:39,040 in more revenue as we did with the downtown parking. We're looking at cost 190 00:14:36,720 --> 00:14:43,839 recovery and cost allocation. Uh, parks and recreation updated their cost 191 00:14:40,800 --> 00:14:48,240 recovery plan um for their fees last year and so this year their revenues are 192 00:14:46,240 --> 00:14:52,160 coming in higher because those new fees were put in place before this fiscal 193 00:14:49,839 --> 00:14:54,880 year. We'll be doing a citywide cost allocation through the finance 194 00:14:53,600 --> 00:14:58,800 department to make sure that general fund costs are being properly allocated. 195 00:14:57,360 --> 00:15:03,199 In addition, we're pursuing grant opportunities. Um, as you know, we have 196 00:15:00,639 --> 00:15:07,920 the contract with the grants coordinator and we've been successful with several 197 00:15:04,959 --> 00:15:15,600 grants recently. Um, the 20 20 million about uh grant that we received um for 198 00:15:11,760 --> 00:15:19,839 the um for the Fashion Island Boulevard project as well as the $1.2 $2 million 199 00:15:18,079 --> 00:15:25,279 grant for Lakeshore Community Daycare Center and the 0.55 million grant for 200 00:15:22,240 --> 00:15:29,199 the real time information center. Um so those are all uh projects that are 201 00:15:27,199 --> 00:15:33,040 moving forward on grants. And then we also have economic development. Uh the 202 00:15:31,040 --> 00:15:38,399 city council recently adopted that work plan for the next three years and we're 203 00:15:35,519 --> 00:15:41,680 looking at items to expand and diversify revenues through that economic 204 00:15:39,760 --> 00:15:45,199 development work plan. Um an example would be the billboard policies that'll 205 00:15:43,680 --> 00:15:50,240 be coming to the council in another month or two. Um so these again are the 206 00:15:47,839 --> 00:15:56,880 kind of levers that we continue to work on um in order to kind of re reduce um 207 00:15:54,399 --> 00:16:01,759 to reduce our expenditures and improve the uh revenues within our financial 208 00:15:58,800 --> 00:16:05,440 sustainability plan. And then the next thing I want to talk 209 00:16:03,440 --> 00:16:10,959 about before we finish is the sewer fund. Uh this of course is the city's 210 00:16:07,920 --> 00:16:15,839 main enterprise fund. Um and I wanted to give you an update on where that is. 211 00:16:13,040 --> 00:16:20,000 This is again based on um all the customers within the sewer fund 212 00:16:17,279 --> 00:16:25,120 enterprise. So the mid-year projection for their revenues is we're estimating 213 00:16:21,920 --> 00:16:28,320 about 96.3 million um in revenues for them. That is a little bit of an 214 00:16:26,560 --> 00:16:33,440 increase from what we've budgeted at the beginning of the year. At the same time, 215 00:16:30,560 --> 00:16:39,120 we do anticipate seeing some um savings due to salary vacancies. So we're 216 00:16:36,480 --> 00:16:44,480 estimating expenditures at about 62.8 million. Um, CIP expenditures were 217 00:16:42,160 --> 00:16:49,920 amended and they're looking to be the same right now at 31.4. 218 00:16:47,199 --> 00:16:56,160 And then that gets us to an unrestricted fund balance of about $34 million. 219 00:16:54,320 --> 00:17:02,079 This is not unexpected. There's a couple of things that have been added to our 220 00:16:58,320 --> 00:17:06,319 reserve. Um, for example, in last fiscal year and then also in this fiscal year, 221 00:17:04,400 --> 00:17:10,799 we are now seeing the state revolving loan funds come in. And so that is a big 222 00:17:09,039 --> 00:17:15,120 infusion of cash that is coming to reimburse us for our clean water program 223 00:17:12,799 --> 00:17:19,600 expenditures. So that has boosted our unrestricted fund balance. And at the 224 00:17:17,280 --> 00:17:23,360 same time um you know this fund balance is really going to help us maintain 225 00:17:21,120 --> 00:17:28,559 ongoing operations of the sewer fund. It's going to help cover future CIP and 226 00:17:26,000 --> 00:17:32,799 it's also going to provide the robust debt coverage ratio that we need to 227 00:17:30,400 --> 00:17:36,720 maintain given the amount of financing that we will be paying for the clean 228 00:17:35,039 --> 00:17:41,200 water program improvements that were conducted. So um this is a a good 229 00:17:39,440 --> 00:17:45,280 balance to see in terms of for our sewer enterprise fund. 230 00:17:43,919 --> 00:17:49,840 Then finally just to give you an overview of what we'll be doing on the 231 00:17:47,039 --> 00:17:56,080 budget process right now. Um we're working on the two-year budget for 232 00:17:52,880 --> 00:17:59,840 fiscal year 2628. Uh departments have submitted their operating budget. We're 233 00:17:57,600 --> 00:18:04,480 working on the personnel costs and so we'll be prepared for a budget study 234 00:18:01,600 --> 00:18:09,120 session on the operating budget um on April 20th. We'll be also bringing a 235 00:18:07,039 --> 00:18:15,760 preview of the capital improvement five-year plan at that meeting. Then 236 00:18:11,679 --> 00:18:21,840 we'll have our um first hearing on the budget on June 1st. That'll be our 2628 237 00:18:18,720 --> 00:18:27,440 proposed budget. And then at June 15th will be the second scheduled public 238 00:18:23,440 --> 00:18:31,600 hearing for the 2628 budget adoption. Oh, and then the other thing that um 239 00:18:29,280 --> 00:18:36,960 will be coming forward is we are doing some midyear fiscal year 2526 CIP 240 00:18:35,280 --> 00:18:40,960 adjustments. So, it's only capital projects, but we'll be bringing that 241 00:18:38,880 --> 00:18:44,720 most likely at the March 16th city council meeting. That'll be a consent 242 00:18:42,720 --> 00:18:48,720 item. And with that, if there's any additional 243 00:18:46,480 --> 00:18:51,720 questions, I'm here um for those questions. 244 00:18:53,200 --> 00:19:00,880 » Thank you very much. This time we'll start with public 245 00:18:57,520 --> 00:19:04,953 comment. If anyone in the room has public comment, they can give a yellow 246 00:19:02,799 --> 00:19:07,039 request to speak slip to the city clerk. [clears throat] 247 00:19:05,600 --> 00:19:11,760 City clerk, can you please tally how many speakers you have? 248 00:19:09,520 --> 00:19:15,919 » U Mayor Lorraine, we have one request to speak and that is in our virtual 249 00:19:13,200 --> 00:19:21,960 environment. Um our one and only speaker will be Thomas Morgan and we'll set the 250 00:19:18,160 --> 00:19:21,960 timer at three minutes. 251 00:19:22,480 --> 00:19:26,960 Tom, Thomas, please go ahead and unmute your mic. 252 00:19:25,520 --> 00:19:31,840 Uh, good evening. Thank you for the opportunity to speak. Um, I I was just 253 00:19:29,520 --> 00:19:35,600 doing a search of the internet and not too long ago and I came across a state 254 00:19:33,520 --> 00:19:41,760 controllers report that indicated the county the controller had miscalculated 255 00:19:39,039 --> 00:19:48,080 the excess raff over a multi-year period. So, I was just wondering if 256 00:19:44,640 --> 00:19:52,240 we're done uh if that's completely flushed itself out or if we still have 257 00:19:49,760 --> 00:19:56,000 any impacts from that. Thank you. 258 00:19:53,520 --> 00:19:59,640 » Okay. Thank you, Mayor Lorraine. That concludes public comment. 259 00:19:59,919 --> 00:20:09,600 » Thank you very much. I think I might just check with uh Director Viser to see 260 00:20:06,080 --> 00:20:14,880 if um you happen to have any any response to 261 00:20:11,760 --> 00:20:19,039 public comment. >> I mean, I think my response is right now 262 00:20:17,200 --> 00:20:22,240 we haven't gotten anything from the county saying that our excess raff is 263 00:20:20,880 --> 00:20:28,480 going to be different than budgeted. that our most recent communication from 264 00:20:23,840 --> 00:20:32,240 the county um was um very in target um in in line with our estimates. So if 265 00:20:30,880 --> 00:20:38,480 there's additional communications, I haven't had any in that front. 266 00:20:34,320 --> 00:20:44,240 » Thank you. At this time, uh I would like to ask my fellow council members if they 267 00:20:41,039 --> 00:20:47,120 have questions or comments. Council member Diaz Nash, please go 268 00:20:45,679 --> 00:20:51,520 ahead. >> Thank you through the mayor and thank 269 00:20:48,720 --> 00:20:54,960 you Director Viser. That was clear and understandable and well done very 270 00:20:53,440 --> 00:21:01,120 quickly. So, thank you very much to you and your team. Uh, just a couple of 271 00:20:57,520 --> 00:21:06,784 questions. One for the public. Why is VLF 272 00:21:02,799 --> 00:21:08,804 categorized under property tax? [laughter] 273 00:21:09,120 --> 00:21:15,000 » Just you're clear and concise as always. Yes. 274 00:21:16,799 --> 00:21:24,559 » So, let's see. I'm trying to think. I mean, yes, there's a there's there's 275 00:21:22,240 --> 00:21:33,679 quite a backtracking that we could go through to say why VLF is part of 276 00:21:28,080 --> 00:21:39,520 property tax, but in general, um, this I'm trying to think what's the best 277 00:21:35,760 --> 00:21:46,080 way to describe this. Um, this is an entitlement that the city is 278 00:21:42,320 --> 00:21:52,080 supposed to have from a former source of vehicle license fees. uh that were again 279 00:21:49,520 --> 00:21:59,280 a consistent source that we got and yes they have been backfilled by um excess 280 00:21:56,480 --> 00:22:05,760 raff and property tax that went through the school districts. Um so VLF is kind 281 00:22:03,120 --> 00:22:12,640 of a probably a misnomer really in the end result. Um, but again because it's 282 00:22:09,679 --> 00:22:16,240 the because of I mean again I probably need a whole slideshow to go through the 283 00:22:14,240 --> 00:22:22,960 triple flip of where how we got here. But in general because um it's funded by 284 00:22:20,799 --> 00:22:26,320 um the RAF and property tax that comes from the non-basic aid. That is where 285 00:22:24,799 --> 00:22:30,720 that funding goes. It goes into the property tax bucket because it's really 286 00:22:28,000 --> 00:22:33,200 part of the Sanonteo County's overall uh property tax assessment. 287 00:22:32,799 --> 00:22:37,360 » Okay. >> Is [clears throat] that helpful? I just 288 00:22:34,960 --> 00:22:40,720 wanted you to share so that anybody listening to this or looking at it later 289 00:22:39,280 --> 00:22:44,799 on >> probably would have that question 290 00:22:42,320 --> 00:22:46,880 without going through the 500 slides. >> Yeah. 291 00:22:45,360 --> 00:22:50,159 » High level conception. I think that makes total sense. So, thank you. 292 00:22:48,480 --> 00:22:54,240 » Well, and I do think it's, you know, I've seen that the county has been 293 00:22:51,679 --> 00:22:58,799 trying to work on some messaging to show how VLF has come about and it's actually 294 00:22:56,320 --> 00:23:03,120 it's a two-page handout. So, even in a short handout, it is hard to get that 295 00:23:00,880 --> 00:23:11,760 messaging consolidated down, but we're working on it. Yes. Good. Thank you. Um, 296 00:23:06,799 --> 00:23:17,200 and what is the city's thinking in terms of future budgeting of how we handle 297 00:23:14,799 --> 00:23:23,520 VLF? >> So, at the moment, um, for this coming 298 00:23:20,559 --> 00:23:26,000 fiscal year, I'm going to potentially be putting zero in to see what that looks 299 00:23:25,360 --> 00:23:30,559 like >> for the VLF shortfall. So, again, to be 300 00:23:28,400 --> 00:23:36,080 clear, and I don't know if you want to pull up the VLF's funding slide. I think 301 00:23:32,880 --> 00:23:44,000 I have it on my screen. Um, so to be clear, we do if we get 16.9 million 302 00:23:39,919 --> 00:23:48,080 about right now, 7.1 is estimated as the shortfall. So if we were not going to 303 00:23:45,840 --> 00:23:52,320 budget to receive the shortfall, that would be $7 million. 7.1 potentially 304 00:23:50,799 --> 00:23:57,360 that we would not be putting in as revenues. So just to jump in a little 305 00:23:55,120 --> 00:24:02,159 bit just about what the future of VLF is and how we're approaching it here. Uh 306 00:24:00,320 --> 00:24:06,559 director Viser is correct that I'm looking at right now uh budgeting zero 307 00:24:05,039 --> 00:24:09,840 in for VLF which is going to hurt us significantly when you're looking at on 308 00:24:08,080 --> 00:24:14,159 top of this doesn't account for the $5 to7 million structural deficit that 309 00:24:12,080 --> 00:24:17,840 we're dealing with in our forecast. So when you look at a 10-year forecast it 310 00:24:15,600 --> 00:24:22,400 did not anticipate completely losing VLF. And so um right now we're working 311 00:24:20,799 --> 00:24:27,200 with the county. I am part of a city manager group working with the county 312 00:24:23,760 --> 00:24:30,880 manager and uh real real team. We were just on a call [clears throat] with 313 00:24:29,279 --> 00:24:34,400 assembly member Diane Pap and she'll continue to you know put forth 314 00:24:32,640 --> 00:24:38,320 legislation as we've done in previous years. It's just getting harder and 315 00:24:35,679 --> 00:24:42,400 harder every year um to make that happen. This past year we only received 316 00:24:40,080 --> 00:24:48,480 I believe 67%. That's why you're seeing that $2.2 million uh deficit which 317 00:24:45,039 --> 00:24:51,840 equates to 33% of that VLF. We're also actively the council gave direction to 318 00:24:50,080 --> 00:24:55,039 enter into a lawsuit against the state of California because we're fighting on 319 00:24:53,440 --> 00:24:59,520 behalf of our residents and for our money on that 33%. Uh and with that the 320 00:24:58,159 --> 00:25:02,159 department of finance, you know, and how things shake out and I'm not going to 321 00:25:00,559 --> 00:25:04,960 get out out ahead of my wills here with my city attorney right next to me, but 322 00:25:03,760 --> 00:25:09,039 you know, we'll be working through that. So, that's a long- winded way of saying 323 00:25:07,120 --> 00:25:13,440 we're going to be, you know, looking at zero, you know, but hopefully something 324 00:25:11,039 --> 00:25:18,320 can come in with our annual legislation or budget um approval process. You know, 325 00:25:16,480 --> 00:25:22,159 hopefully some of the member happen and Senator Becker and our Sanonteo 326 00:25:20,320 --> 00:25:27,520 contingent up in the state can make something happen again uh this upcoming 327 00:25:24,240 --> 00:25:31,279 year, but honestly, it's we're it's not something that we can depend on as as 328 00:25:29,279 --> 00:25:34,159 you're seeing and it is a true threat and this is an existential threat for us 329 00:25:32,960 --> 00:25:36,880 and the county will say it too if you talk to our county manager overall and 330 00:25:35,600 --> 00:25:40,559 we are the largest city in the county. Therefore, we have the largest piece of 331 00:25:38,080 --> 00:25:46,080 VF amongst any of the 20 cities. >> Great. Thank you very much for sharing 332 00:25:42,720 --> 00:25:52,559 that both of you. Uh, third question. How does our $113 million general fund 333 00:25:49,840 --> 00:25:57,679 reserve compare as a rough rough percentage to general fund reserves in 334 00:25:55,039 --> 00:26:00,640 other cities? >> You know, I don't know off the top of my 335 00:25:59,279 --> 00:26:04,080 head kind of what other cities are looking at in their general fund 336 00:26:01,919 --> 00:26:08,159 reserve, but I it's I would say it's very healthy for us. I mean if you think 337 00:26:05,679 --> 00:26:13,279 about when we went through the general fund reserve policy update um we talked 338 00:26:11,440 --> 00:26:19,520 about the different components that we had within that and if you put like most 339 00:26:16,159 --> 00:26:24,960 people for the kind of um kind of the emergency fund they have like 25% 340 00:26:22,720 --> 00:26:29,440 of expenditures set aside and we have that and we were able to put them aside 341 00:26:26,960 --> 00:26:35,520 the 25 million in capital. So if you look at that 113 million figure, it 342 00:26:31,919 --> 00:26:40,640 includes that 25 million NCIP reserve that we put aside, it includes a 25% 343 00:26:38,000 --> 00:26:44,720 reserve. It also includes a 25% contingency reserve. So we have a couple 344 00:26:42,720 --> 00:26:51,360 of different buckets and a lot of cities have a target of just that one 25% 345 00:26:48,240 --> 00:26:55,760 target. So I do think that um we're doing well in that we have several 346 00:26:52,799 --> 00:26:59,840 buckets that we can use to to stabilize um different against different things. 347 00:26:57,760 --> 00:27:03,679 So just to jump in a little further on our reserve policy as you guys approved 348 00:27:01,520 --> 00:27:07,279 and so uh we have a pension stabilization reserve. We have also the 349 00:27:05,760 --> 00:27:10,720 budget contingency reserve. So there's all pieces it's not you know we look at 350 00:27:08,799 --> 00:27:15,039 the total and we're looking at 113 million but it's actually broken up into 351 00:27:12,720 --> 00:27:20,799 bits and pieces of our overall reserve policy itself. Um so it's not just a 352 00:27:18,000 --> 00:27:25,039 stack of just you know the the dollars as just overall reserve. um you've been 353 00:27:23,440 --> 00:27:29,840 very deliberate in making sure that there's specific amounts set aside for 354 00:27:27,279 --> 00:27:32,559 specific uh rainy day issues and we're having to tap into those. We are in 355 00:27:31,200 --> 00:27:37,120 rainy days right now and so we're having to tap into that currently. Um you know 356 00:27:35,440 --> 00:27:41,200 depending on how financial markets look on the outlook in the future we've been 357 00:27:39,120 --> 00:27:45,360 lucky uh right now the last couple years with Kalpers on our pension uh that 358 00:27:43,760 --> 00:27:49,600 they've had really good positive returns. The minute we go and below I 359 00:27:47,919 --> 00:27:53,760 think it's about the 6 and a half% right I think is 6.8 360 00:27:50,799 --> 00:27:56,960 » 6.8% 8% reserve. The city has to fill that difference 361 00:27:55,360 --> 00:28:02,399 » uh in that pot of money. And so that's where having that $10 million will help 362 00:27:58,960 --> 00:28:06,240 us to be able to bear that burden in in the future as well. 363 00:28:04,720 --> 00:28:11,279 » Thank you. And I think that's a great example for the public of how one number 364 00:28:09,200 --> 00:28:16,960 does not tell the story and how we're really prepared for contingencies of of 365 00:28:14,640 --> 00:28:21,360 many many different natures. And then my final question is 366 00:28:19,200 --> 00:28:28,480 the city is putting a lot more emphasis on streamlining processes you using 367 00:28:24,559 --> 00:28:34,240 using technology to improve uh reduce costs or improve improve return to 368 00:28:31,600 --> 00:28:41,919 residents. Could we see that that eventually could uh turn into savings 369 00:28:39,120 --> 00:28:45,840 that we could actually book or is that just something that we're going to try 370 00:28:43,679 --> 00:28:50,799 and be as efficient as we possibly can be and see what happens? 371 00:28:49,120 --> 00:28:56,640 » I mean, I think there's a couple of different ways we can look at that. I do 372 00:28:52,720 --> 00:29:03,120 think the efficiencies can help us save money in the long run, but more likely 373 00:28:59,679 --> 00:29:07,279 it will help allow folks to spend their time on higher value activities that 374 00:29:05,600 --> 00:29:11,360 will get to more things that potentially we haven't gotten to before. Um, but 375 00:29:09,840 --> 00:29:15,440 again, I think it depends on which technologies that we're talking about. 376 00:29:12,960 --> 00:29:18,159 But in in terms of overall, I think it's it's hard to blanket statement it, 377 00:29:17,120 --> 00:29:22,559 right? So, so keep adding a little bit more 378 00:29:20,880 --> 00:29:26,480 color here, but I think our police chief can attest to this just about technology 379 00:29:24,640 --> 00:29:31,840 and the usage of it. You know, right now we've had uh a lot of special events or, 380 00:29:29,919 --> 00:29:36,320 you know, protests and whatnot. And so having our drone program, our our our 381 00:29:34,640 --> 00:29:40,559 real-time information center has been huge. Uh right, Chief. I think just 382 00:29:38,720 --> 00:29:45,600 overall being able the amount of bodies or police officers it would take uh in 383 00:29:43,039 --> 00:29:50,159 order to you know make sure that it's a safe event. We're able to um use these 384 00:29:48,720 --> 00:29:54,799 drones and our real-time information center to help uh reduce the amount of 385 00:29:52,640 --> 00:29:59,360 police presence uh because we're limited on the amount of resources. But we're 386 00:29:56,559 --> 00:30:05,520 trying to, you know, use technology to be able to help uh blunt those uh 387 00:30:02,640 --> 00:30:09,360 resources and and just overall making sure that our officers are safe, our 388 00:30:07,120 --> 00:30:11,919 community is safe. Um or even AI report writing. I know that's something that 389 00:30:10,399 --> 00:30:16,320 we're working on too. And so that allows our police officers to be out on the 390 00:30:13,200 --> 00:30:20,159 street more. Um, you know, they still got to review all these reports, but it 391 00:30:18,240 --> 00:30:26,080 still helps uh reduce time so that we have officers out there not having to um 392 00:30:23,679 --> 00:30:28,240 utilize as many officers uh downtime at the station, having to write these 393 00:30:27,120 --> 00:30:30,399 reports and being out there in police in our community. 394 00:30:28,720 --> 00:30:34,240 » Right. And I think that kind of messaging is be really important to 395 00:30:32,080 --> 00:30:41,120 continue to share with the public as we move forward. So, thank you very much 396 00:30:36,480 --> 00:30:44,240 for the clear, concise answers. >> Thank you. Anyone else have? 397 00:30:43,120 --> 00:30:47,039 » I do. >> Deputy Mayor Nicole Fernandez. 398 00:30:45,919 --> 00:30:51,360 » Thank you. >> Um, so 399 00:30:49,360 --> 00:30:53,760 to the city manager, um, can you talk a little bit Oh, 400 00:30:52,399 --> 00:30:57,200 » turn the mic on. Hi. To the city manager, can you talk a little bit, you 401 00:30:55,679 --> 00:31:01,520 have taken a leadership role in trying to find a resolution to the VLF issue? 402 00:30:59,760 --> 00:31:06,000 Can you talk a little bit about what that process has been like and what 403 00:31:02,960 --> 00:31:11,840 we've done to explore a permanent solution? I know that there have been um 404 00:31:09,440 --> 00:31:17,279 it's it's a it's a coalition effort. So would you talk a little bit about that? 405 00:31:13,520 --> 00:31:21,120 » Yes. So part of a VLF committee of basically the county and city managers 406 00:31:19,200 --> 00:31:25,440 and so we meet every month actually and we've been meeting even uh more 407 00:31:23,200 --> 00:31:30,320 frequently and I know that the county is uh really working to put together a 408 00:31:28,080 --> 00:31:34,960 great team to really advocate on the county's behalf and all US 20 cities as 409 00:31:32,640 --> 00:31:40,799 well. um because the county, you know, 70 million is their impact. We're we're 410 00:31:37,440 --> 00:31:45,120 7 million. So, just on top of that, but um what we're having to do is really put 411 00:31:42,960 --> 00:31:49,039 San Monteo County on the map in the cities of San Monteo. And so, we're also 412 00:31:47,200 --> 00:31:54,399 going to have to articulate what does that mean for us if we don't get that 7 413 00:31:51,679 --> 00:31:58,080 million overall. And so with that right now, the call to action from the county 414 00:31:56,080 --> 00:32:02,559 is to ask all the cities to kind of start putting together what those plans 415 00:32:00,159 --> 00:32:06,080 would be if that money does not come through in the future. And so we're 416 00:32:04,640 --> 00:32:08,880 working on that, but there's also advocacy, lobbying efforts from the 417 00:32:07,760 --> 00:32:14,559 political side of things to the governor's office. Um, but also just 418 00:32:11,360 --> 00:32:19,600 bringing greater awareness to uh this this VLF issue and the the funding 419 00:32:17,440 --> 00:32:23,120 shortfalls that all 20 cities in the county are going to experience. 420 00:32:21,760 --> 00:32:26,640 » Thank you. And I know that you've been hard at work in taking a leadership role 421 00:32:24,559 --> 00:32:31,919 on that resol that solution a potential solution. So I'm grateful for your 422 00:32:28,159 --> 00:32:36,559 leadership, Alex. Um this I also just want to make sure that we highlight for 423 00:32:33,760 --> 00:32:42,159 this for this that in some ways this is a narrative issue in the fact that San 424 00:32:39,760 --> 00:32:45,120 Monteo County I mean this is a a crux of the budget challenges that we have is 425 00:32:43,679 --> 00:32:49,919 the fact that V that we're not getting this VLF money. Um we're [clears throat] 426 00:32:48,000 --> 00:32:52,960 we're in a unique situation where we are the I think one of three counties who 427 00:32:51,519 --> 00:32:56,559 has this problem, but we're really the the the county the most urban county 428 00:32:54,799 --> 00:32:59,519 that really is seeing the full effects of this. Is that right? 429 00:32:57,519 --> 00:33:03,440 » Yes. The only other two counties are Mono and Alpine, which are very small 430 00:33:01,760 --> 00:33:06,640 counties. And so we are the largest county experiencing this. But there are 431 00:33:05,120 --> 00:33:12,080 a couple other counties that on the horizon as you know the property uh the 432 00:33:10,080 --> 00:33:18,960 assessed value of the properties and more schools go from uh nonb non-basic 433 00:33:16,720 --> 00:33:23,120 aid to basic aid. Um you're going to start seeing these impacts. But we're 434 00:33:21,279 --> 00:33:26,640 kind of singled out right now because no other county is really experiencing uh 435 00:33:25,039 --> 00:33:30,080 this issue. And so that's why we're continually trying to raise awareness of 436 00:33:29,120 --> 00:33:35,120 this issue. >> Right. Thank you very much. And the 437 00:33:33,039 --> 00:33:38,640 other sort of crux in us getting receiving the reimbursement and again 438 00:33:36,640 --> 00:33:43,760 just to highlight for where we are politically as a city and county is that 439 00:33:41,679 --> 00:33:48,240 previously we've had budget chairs from San Monteo County for both budget 440 00:33:45,679 --> 00:33:52,000 committees that would usually allow this to go into the draft documents for the 441 00:33:49,840 --> 00:33:55,360 legislature. Is that right, Alex? >> You had filtering on these side. 442 00:33:53,440 --> 00:33:59,039 » We had friendly Yes, we had friendly legislators that would look to this 443 00:33:57,760 --> 00:34:03,120 issue. And with the changes in leadership recently, we've lost in some 444 00:34:01,679 --> 00:34:06,720 ways we've lost that that friendly immediiacy. Is that my understanding? 445 00:34:05,360 --> 00:34:11,200 » Okay. I just want to make sure that we sort of build the narrative. And um a 446 00:34:08,720 --> 00:34:15,440 few weeks ago, uh Mayor Lorraine and I were able to uh attend a county briefing 447 00:34:13,839 --> 00:34:18,960 on this matter along with a couple of other matters. I know either one of one 448 00:34:16,960 --> 00:34:24,399 of us will report out on it um during news and announcements, but this was a a 449 00:34:21,040 --> 00:34:28,639 big part of that discussion. And so I don't know how we are going to in San 450 00:34:27,040 --> 00:34:31,919 Monteo because this affects us the most. We're the largest city. I don't know 451 00:34:30,079 --> 00:34:37,119 what the plan is for us to build the nar to help build the communication around 452 00:34:34,720 --> 00:34:42,000 the VLF issue so that our constituents are activated for this but I would like 453 00:34:40,240 --> 00:34:45,760 us to take action on that point whether it's a letter a subcommittee something 454 00:34:43,679 --> 00:34:48,720 that where we're pulling in our new communications director communicate 455 00:34:47,280 --> 00:34:52,320 community engagement director but this is this is a job one in my mind. Thank 456 00:34:52,079 --> 00:34:56,200 you. >> That's exactly what we're working on. 457 00:34:56,560 --> 00:35:02,800 » Thank you both. Anyone else? Council >> member mayor, just a few follow-up 458 00:35:01,680 --> 00:35:07,000 questions. Thank you for your presentation. Um, 459 00:35:07,119 --> 00:35:15,920 you were mentioning the real time real real transfer tax is volatile. What are 460 00:35:13,920 --> 00:35:20,079 some of the volatilities or what are some of the reasons why for example we 461 00:35:17,920 --> 00:35:24,640 saw such a large dip from 6.2 two down to 1.9. 462 00:35:22,079 --> 00:35:30,240 » So again, the real property transfer tax is is especially the the 0.5% which is 463 00:35:28,160 --> 00:35:37,760 our was on the blue. Actually, let me open it up so I'm not talking at it. 464 00:35:33,920 --> 00:35:42,320 So um the blue uh 0.5% real property transfer tax is dependent really on the 465 00:35:40,000 --> 00:35:47,280 housing market since it is a transfer of the housing property. So, as the as 466 00:35:45,760 --> 00:35:52,560 there's been issues with the housing market, then we see less property 467 00:35:49,520 --> 00:35:55,760 transfer tax. Um, what's interesting is last year, you know, they were like, oh, 468 00:35:54,240 --> 00:35:59,119 the housing market's not moving because interest rates are high, but we did have 469 00:35:57,839 --> 00:36:05,359 significant movement still in the housing market, but then the 6.2 is 470 00:36:01,760 --> 00:36:09,680 really the commercial market. So um that um is the new piece that kind of came in 471 00:36:07,760 --> 00:36:13,440 with measure CC is there's been excuse me there's been a lot of commercial 472 00:36:11,440 --> 00:36:17,440 property transitions especially last year and some in this year and that is 473 00:36:15,520 --> 00:36:22,400 what's leading to kind of those big swings because you're having the over 474 00:36:19,599 --> 00:36:27,440 $10 million transfers that are triggering the 1% to measure CC but in 475 00:36:25,599 --> 00:36:31,839 general because it's based on the the housing market predominantly given our 476 00:36:29,599 --> 00:36:35,920 base that's really kind of it shows the eb and flow of the housing market. 477 00:36:33,839 --> 00:36:41,200 » So just the basic you're seeing the volatility here on this graph and so we 478 00:36:39,119 --> 00:36:46,640 when we budget our budgeting principle is basically we use 479 00:36:44,240 --> 00:36:52,320 ongoing revenues for ongoing costs and then one-time monies for one-time costs. 480 00:36:49,839 --> 00:36:58,000 And so really when you look at those red bars over there, you know, it can 481 00:36:54,960 --> 00:37:00,880 fluctuate to zero all the way up to it could be even higher than that depending 482 00:36:59,280 --> 00:37:05,359 on what commercial real estate uh transfers because this is measure CC 483 00:37:02,800 --> 00:37:10,880 which is a 1% on any property over $10 million that's is sold here in the city. 484 00:37:08,160 --> 00:37:15,839 And so typically we you know we've been fortunate last year um where that 6.2 2 485 00:37:13,760 --> 00:37:22,720 million really helps close the gap um with our deficits, but we can't 486 00:37:18,880 --> 00:37:26,560 continually budget at those um amounts. We can comfortably, I think, budget at 487 00:37:24,400 --> 00:37:29,440 about what Abby $10 million is what we're doing right now or even that is 488 00:37:28,160 --> 00:37:31,920 kind of it's probably 8 million, seven or eight million. 489 00:37:29,920 --> 00:37:36,800 » We can do about 8.5 million. >> Yeah. That that we actually look at that 490 00:37:34,079 --> 00:37:40,160 we feel confident about the real property transfer tax. So, I just want 491 00:37:38,320 --> 00:37:44,720 to be clear. >> Thank you. Um my next question if you 492 00:37:42,800 --> 00:37:51,200 could go one slide up there which line slide six no seven maybe 493 00:37:48,720 --> 00:37:54,720 I was trying to find the fire JPA um >> oh the expenditure side 494 00:37:52,720 --> 00:37:59,280 » one back. >> Yes. So I asked you this but just for 495 00:37:56,800 --> 00:38:04,240 public record um I was asking what percentage is is real operation versus 496 00:38:02,320 --> 00:38:07,680 legacy costs and if it was hoping you could 497 00:38:05,440 --> 00:38:11,280 » right and so when you look at the SMC fire and legacy cost line you see that 498 00:38:09,359 --> 00:38:15,599 it's 38.8 million and so that represents about 499 00:38:13,520 --> 00:38:21,359 31.7 is the fire operating and about what 500 00:38:18,640 --> 00:38:28,320 does that make that about 7.7 is the legacy costs. Um, so when we um take the 501 00:38:25,520 --> 00:38:32,000 budget to the fire board, uh, the Sato Consolidated Fire Board for approval, 502 00:38:30,560 --> 00:38:36,400 that's typically got the city's contribution in that. And so that's why 503 00:38:35,040 --> 00:38:40,480 this number doesn't change because we agreed to that at the beginning of the 504 00:38:37,520 --> 00:38:45,680 year. And again, that's and the legacy costs are also um, they don't change. So 505 00:38:43,200 --> 00:38:50,560 that's why the total gets you to 38.8. >> And will legacy costs eventually change? 506 00:38:48,000 --> 00:38:55,119 Meaning I I do we have to wait for firefighters not to retire but to to 507 00:38:52,560 --> 00:38:59,280 pass to to be no longer with us before uh that drops off or 508 00:38:56,880 --> 00:39:02,800 » I mean I I guess what I'm asking too is also we we haven't had our own fire 509 00:39:01,280 --> 00:39:06,560 department. We've been part of a JPA for like five and a half years now. So 510 00:39:04,960 --> 00:39:11,040 » already we're not we're not continuing the legacy, right? So it seems like that 511 00:39:08,560 --> 00:39:15,599 will contract at some point or are the costs going up so that they're kind of 512 00:39:12,960 --> 00:39:20,400 offsetting? So this is really the fire's kind of unfunded liability section. So 513 00:39:18,240 --> 00:39:25,920 it does have to do with costs incurred prior to and you know we have the 514 00:39:23,440 --> 00:39:29,760 benefit of we kind of extend that over time so we don't have to pay those 515 00:39:27,359 --> 00:39:33,920 unfunded liabilities right away. So this that legacy cost is really going to be 516 00:39:32,320 --> 00:39:37,599 ongoing for quite a while because we're catching up with what we didn't put 517 00:39:35,520 --> 00:39:42,160 aside for those costs that we had already committed to back in the day. So 518 00:39:40,000 --> 00:39:46,160 um and again as Alex mentioned it does have to do with how the markets are 519 00:39:43,680 --> 00:39:50,800 doing right. So our unfunded liability with the city's pension as well as the 520 00:39:47,839 --> 00:39:55,359 fire legacy costs um changes depending upon if the contributions have increased 521 00:39:52,800 --> 00:39:59,520 in value based on the market value there >> and just overall 522 00:39:57,839 --> 00:40:05,440 actuarials. There's a whole science to this uh and formula and so it is uh 523 00:40:03,119 --> 00:40:10,320 council member Nuome it goes with your life expectancy. 524 00:40:06,880 --> 00:40:17,839 » Yeah. Um and so you'll see that probably in 2040 2041 is when we start uh you 525 00:40:14,800 --> 00:40:21,839 know going back to the positive overall because there's a wave of life 526 00:40:19,920 --> 00:40:24,320 expectancy at that point. >> Sorry I didn't mean to be grim. Uh 527 00:40:23,540 --> 00:40:28,480 [laughter] like my last question was I think you 528 00:40:26,480 --> 00:40:34,480 mentioned that there were currently eight frozen positions roughly. What 529 00:40:31,680 --> 00:40:38,160 does that represent in in um cost per year? And 530 00:40:35,920 --> 00:40:42,560 » are those positions spread across the city or are we finding that like one or 531 00:40:40,560 --> 00:40:48,160 two departments are carrying the the heavy lift of that? 532 00:40:43,920 --> 00:40:53,520 » So that represents about 08 or $800,000 um8 million. Um so that's about what we 533 00:40:51,359 --> 00:40:57,040 expect in general fund savings from those positions. Um we have spread them 534 00:40:55,760 --> 00:41:02,079 out across a couple of different departments. Um public works, parks and 535 00:40:59,680 --> 00:41:05,280 recreation, finance. So we're trying there's a couple others. So we we're 536 00:41:03,599 --> 00:41:09,359 trying to spread them out, but it's really based on opportunity, too. It's 537 00:41:07,040 --> 00:41:14,480 kind of when the right vacancy that can be held that has general fund funding 538 00:41:12,400 --> 00:41:19,119 can can be frozen is kind of how we're approaching it right now. 539 00:41:16,079 --> 00:41:22,480 » Thank you. Thank you, Mr. Mayor. Of course, council members cooker. 540 00:41:20,880 --> 00:41:28,720 » Um, this question is probably for the city manager. Um, if we don't get the 541 00:41:26,319 --> 00:41:33,640 VLF and we aren't able to pass something like a sales tax, what would happen? 542 00:41:34,319 --> 00:41:42,000 So what basically happens is that we're looking at so right now our 10-year 543 00:41:39,200 --> 00:41:47,680 forecast which typically includes 100% backfill of our VLF we're at about a5 544 00:41:44,319 --> 00:41:51,280 to7 million structural deficit but then when you add the VLF you're looking at 7 545 00:41:49,520 --> 00:41:55,599 million and that'll continually grow each year even more so. So you're 546 00:41:53,040 --> 00:42:00,079 looking at just next year if um we're not able to get a revenue measure we 547 00:41:57,839 --> 00:42:04,800 have our regular starting structural deficit. So you're looking between what 548 00:42:02,000 --> 00:42:06,640 Abby probably 14 million at least as a floor. 549 00:42:05,520 --> 00:42:10,319 » Mhm. >> And then that quickly. So that's where 550 00:42:08,160 --> 00:42:15,359 we say at least we have a runway because you know leadership from the council and 551 00:42:12,560 --> 00:42:20,400 from the administration of being able to you know have reserves. We're able to 552 00:42:17,520 --> 00:42:25,359 float um the next few years but we have to work through that financial 553 00:42:21,440 --> 00:42:31,040 sustainability plan. Um, and then just an idea to throw out there. Um, happy to 554 00:42:29,040 --> 00:42:37,520 do follow-up. But the same way we have a G JPA for fire, have we have we ever 555 00:42:34,480 --> 00:42:43,119 talked to other cities about doing something like that for maintenance or 556 00:42:40,240 --> 00:42:45,520 public works across 557 00:42:43,839 --> 00:42:49,920 » since I since I've been here or even in Sano County, I have not uh had seen that 558 00:42:49,520 --> 00:42:53,119 » okay >> model 559 00:42:50,800 --> 00:42:58,480 » just because it seems like every city in the county has their own departments. 560 00:42:56,640 --> 00:43:04,000 But maybe there would be opportunities to collaborate or consolidate. 561 00:43:01,920 --> 00:43:09,160 Um, all right. Great presentation. Thank you 562 00:43:05,920 --> 00:43:09,160 very much. 563 00:43:09,839 --> 00:43:17,920 » Yes, thank you very much, Director Viser. 564 00:43:13,520 --> 00:43:25,760 And, uh, I appreciate the update. It is uh, a bit sobering. Um, but 565 00:43:21,839 --> 00:43:31,760 I'm glad to know that we are uh, you know, putting multiple irons in 566 00:43:27,599 --> 00:43:36,319 the fire to see what we can do uh, to project better going forward. We're not 567 00:43:33,760 --> 00:43:42,400 just, uh, putting all our eggs in one basket. Uh, I appreciate learning about 568 00:43:39,440 --> 00:43:46,400 um, some savings that we found and uh, some other opportunities to uh, consider 569 00:43:45,119 --> 00:43:50,720 revenue opportunities, including the billboard item you mentioned, which will 570 00:43:48,000 --> 00:43:57,040 be coming up soon. And uh I recommend everybody uh join us for the upcoming 571 00:43:54,000 --> 00:44:03,200 sessions beginning in April for the the next budget to stay updated with where 572 00:44:00,000 --> 00:44:06,760 we are. And with that, I believe I will close the item 573 00:44:07,440 --> 00:44:17,119 and adjourn the special meeting uh until around 7 o'clock at which time 574 00:44:15,200 --> 00:44:21,480 we'll have our general special regular meeting not special. Thank you. All 575 00:44:18,480 --> 00:44:21,480 right.