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HomeMy WebLinkAbout04/19/2005, BUS 2 - STRATEGIC BUDGET DIRECTION I co U n C l t Maune Dem 4-19-OS j acEnoa Report I�N:�b S �. CITY OF SAN LU IS OBI SPO FROM: Ken Hampian, City Administrative Officer Bill Statler, Director of Finance & Information Technology vk�� SUBJECT: STRATEGIC BUDGET DIRECTION CAO RECOMMENDATION Approve conceptual budget balancing strategy for 2005-07. REPORT-IN-BRIEF The purpose of this report is to answer two basic questions as we begin preparing the Preliminary Financial Plan for 2005-07: 1. What's the challenge facing us? 2. And what's our strategy for responding to it? Our goal in answering the second question at this point in the process is not to make specific budget decisions regarding revenues and expenditures: there are a number of budget workshops and hearings ahead of us after issuance of the Preliminary Financial Plan in mid-May for that purpose. And the fact is that there are still too many unknowns—both on the revenue and expenditure side—for a "final" plan at-this time. However, in preparing the Preliminary Financial Plan, we need "strategic" guidance now from the Council regarding the role that each of the following four basic components should play in balancing the budget for 2005-07: 1. Use of reserves. 2. Revenue additions allowed under Proposition 218. 3. Further reductions in the capital improvement plan (CIP). 4. Further reductions in operating programs and services. Stated simply, we will not be able to effectively craft a preliminary budget for Council and community review if everything is a variable: we need some "constants" as we strive to arrive at a budget-balancing formula that makes sense, both from a "municipal math" perspective as well as a community service one. In short, we are not asking the Council to adopt the budget—but we are presenting the Council with a recommended path for us to follow in our "budget journey," and asking for your concurrence (or course adjustment) on this strategic direction. What is the challenge facing us? The short answer is that we continue to believe that results from the five-year General Fund forecast presented to the Council in December 2004 are still the best underlying basis for decision-making at this time. While there are likely to be changes by the time the Preliminary Budget goes to the Council in mid-May, the December 2004 Forecast c9 Strategic Budget Direction Page.2 identified an average annual gap of$2.4 million in 2005-07, assuming a very constrained capital improvement plan (CIP) and excluding the $1.4 million carryover reserve shortfall. (The reserve is currently 16% of operating expenditures compared with the City's policy minimum of 20%). As discussed below, this is reduced by about $400,000 due to three actions taken by the Council since then: approval of a cell site lease at Laguna Lake golf course; conceptual approval of cost recovery for multi-family residential inspections by the Fire Department; and refinancing of the 1996 lease-revenue bonds. With these three adjustments, the resulting gap remaining to be closed is about$2 million annually. Changes from the December 2004 Forecast. The following is a qualitative summary of changes since the December 2004 Forecast was prepared. Except for revenues from the golf course cell-site lease, multi-family residential inspections and refinancing of the 1996 lease- revenue bonds as discussed below, no "numbers" are assigned to these: we are still analyzing the City's budget situation, and it will be mid-May before we finalize recommendations as part of the Preliminary 2005-07 Financial Plan. Nonetheless, this provides the Council with qualitative assessment of the City's budget situation for 2005-07. The Good News 1. Based on delayed timing of the 919 Palm Garage/Offices, dispatch center improvements and radio system upgrade projects, debt service costs are going to be less in 2005-07 than projected in the forecast. 2. Based on initial department estimates, development review fees may be higher than projected in the forecast; and expenditure savings in 2004-05 may also be higher than we projected. 3. On February 1, 2005, the Council approved a cell-site lease agreement with Sprint PCS Assets at the Laguna Lake Golf Course in the amount of$25,000 annually (increasing by at least changes in the consumer price index after the first year). These revenues help reduce the General Fund's transfer to the Golf Fund, and .as such, we have reduced the 2005-07 forecast gap by this amount. 4. On March 1, 2005, the Council conceptually approved higher cost recovery for multi-family residential inspections by the Fire Department. Final Council approval is scheduled for May 17, 2005, when staff will return with an evaluation of the "basic program option (based on the current program) compared with the "somewhat enhanced" option (the main enhancement: adding an Administrative Assistant for improved program implementation). As requested by the Council, this report will also include an analysis of how much of the program costs can be potentially recovered through fines versus fees, as well as rate structure options. Finally, the report will present staff recommendations on these issues and the implementing resolution for Council adoption. From a revenue perspective, the most conservative option is the "basic" program alternative, which will result in net new revenues of$304,000 annually. We have reduced the 2005-07 forecast gap by this amount. Strategic Budget Direction Page 3 5. On April 5, 2005, the Council approved refinancing the 1996 lease-revenue bonds. This will result in annual debt service savings. of $40,000 beginning in 2005-06. Accordingly, we have also reduced the 2005-07 forecast gap by this amount. The "No"News Sales tax and transient occupancy tax (TOT) are two of our top three General Fund revenues, accounting for 40% of total General Fund sources. While we have "raw" numbers (which cannot be relied upon due to reporting and allocation errors by businesses and the State), we still do not have an analysis from our sales tax advisor on how Christmas sales did — which is our most important quarter. And we continue our transient occupancy tax (TOT) roller coaster rider while we were on track (for a short while) for a projected increase of 3% in TOT revenues for 2004-05, January revenues were down from last year by 11%, but February "rebounded" with a 3% increase (we are now up 1.9% for the year). At this time, we are not projecting any changes in these two key revenue sources,from the December Forecast. However, it is likely that as we get better information, the Preliminary Financial Plan will reflect changes from the forecast, which could be up or down. The Bad News 1. While first-year debt service costs in 2005-06 for the 919 Palm parking/offices building will be lower than the forecast, leasing out 955 Mono at market rates after Public Works relocates to the new offices looks less likely. We estimated this to be worth $130,000 per year. 2. Lastly, even if all other revenue and expenditure assumptions turn out to be exactly as projected in the December 2004 Forecast, departments have submitted "significant operating program changes" requesting funds for needs above the "2004-05 base" assumed in the forecast. These are currently under review, and as such, it is too soon to project how this will affect the gap. However, if these are "must do's" (and many appear to be), then the gap will widen. Hopefully, if this is the case, they will be offset by the "good news" items above. In summary, we recommend continuing to base our budget-balancing strategy on the $2.4 million gap identified in the December Forecast—less cell-.site lease revenues of$25,000, higher cost recovery for multi-family residential inspections of$304,000 and the refinancing savings of $40,000. Thus, the "gap" for the purpose of receiving "strategic budget direction" from the Council at this time is about$2 million. Our Proposed Strategy As a starting point for Council consideration, our proposed strategy in closing the estimated $2 million gap consists of the following elements, which are described in more detail later in this report: r Strategic Budget Direction Page 4 1. Reducing reserves to 15% of operating 2005-07 Budget Balancing Strategy expenditures. Closing the General Fund Gap:$2 Million 2. Further reducing the "maintenance-only" ❑Revenues ❑ C CIP. 22% Reductions 39% 3. Further reducing operating program costs and related service levels. ❑Reserves Expenditures:69°i° 9% 4. Implementing selected new revenues as allowed under Proposition 218. ❑Operating While new revenues do not play the leading Programs role in the proposed budget-balancing 30% strategy, they are nonetheless important in mitigating against even deeper cuts in the maintenance-only CIP, operating programs and related service levels. And as reflected above, these reductions already account for about 70% of the proposed solution. Given the "bare- bones" CIP already in the proposed strategy, not going forward with the proposed new revenues will mean deeper cuts in operating programs than reflected in the proposed strategy —cuts on an already-reduced significantly reduced operating budget. For example, we have already reduced the operating budget by over $2 million as part of the 2003-05 budget process, resulting in decreased staffing of over 20 full-time equivalent employees. DISCUSSION Background: What We've Already Done While the challenges facing us are significant, we are not starting off flat-footed. Based on the "six-point" Fiscal Health Contingency Plan (see sidebar) we prepared in October 2001, we have had an "early warning" system and general strategy for responding to the alarms. This has resulted in the .- following preventative measures in 2003-05: 1. Maintain reserves at minimum 1. Hiring "chill" in place for over a year. policy level. 2. Hiringee�e now in lace pending "strategic 2. Follow other key budget and � P P g g fiscal policies. budget direction approval." 3. Monitor fiscal health on an 3. Travel-training chill in place for over a year. ongoing basis. 4. 2004-05 operating and capital budget reductions of 4. Assess the challenge: short or $883,000. long-term problem? 5. Council approval of "pantry item" revenues in 5. Identify options. November 2004 of $88,500: cost recovery for 6. Prepare and implement action vehicle towing ($20,000) and application fees for plan. Cultural Heritage Committee review $68,500). 1 r 4 1 Strategic Budget Direction Page 5 6. As discussed above, refinancing of the 1996 lease-revenue bonds, saving $40,000 annually in debt service costs; conceptual approval of cost recovery for multi-family residential inspections (conservatively estimated at $304,000 annually); and approval of a cell-site lease at Laguna Lake golf course ($25,000 annually). Based on the Action Plan, we have completed "Step 4 Assessing the Challenge" via the five- year forecast, and we know that we are facing a gap of about $2 million annually in 2005-07 (with a constrained CIP and excluding the carryover gap of$1.4 million). This leads us to "Step 5: Identifying Options," which is the fundamental purpose of this report. About."The Gap:"It's Not Static The projected $2 million annual gap for 2005-07 is our best estimate of the gap facing us at this time, and it provides an important framework for our budget-balancing efforts. However, since the underlying factors driving this gap are not static, the gap itself cannot be static. Accordingly, as noted above, it will most surely change based on better information when we issue the Preliminary Financial Plan in mid-May—and continue to change afterwards. The most likely areas of change include: 1. Sales tax, TOT and development review revenue estimates. 2. Funding for major City goals (a separate topic of Council review at the April 19 meeting). 3. "External" significant operating cost increases, such as utilities and fuel. While it is certainly possible that these factors could change in a positive direction, experience tells us that the opposite direction is more likely. However, even though the gap will change, on an "order-of-magnitude" basis, we believe the revised estimate is a reasonable basis upon which to define the problem and tailor a responsive strategy. Proposed Budget Balancing Strategy The proposed budget balancing strategy consists of the following components: 005-07 ., 2005-07 Budget Balancing Strategy Closing the Genera(Fund Gap:S2 Million Annual Percent i Average of Total 0 Revenue&Exmnditures: Reduce Reserves to 22% 15%of Operating Costs 175,000 9% New Revenues 445,200 22% o Reserves Expenditure Reductions 9%Capital Improvements 799,000 39% Operating Programs 606,300 30%Total $2,025,500 100% 30% As reflected above, while reserves and added revenues play an important role, about 70% of the proposed budget-balancing strategy relies upon expenditure reductions. Strategic Budget Direction Page 6 Where Did These Pieces Come From? In putting together the "metrics" of our proposed budget-balancing strategy, we considered a number of sources, including: Community Feedback. As part of the budget process, there has been extensive community involvement through advisory bodies, surveys, letters, budget workshops and the Community Forum. In crafting our proposed budget-balancing strategy, we tried to be very sensitive to what we've heard. On balance, while there is a wide range of varying interests, there is one common thread to the feedback we've received (which is contrary to the conventional wisdom about wanting government to do less). As reflected in the 400 responses we received to our utility billing survey, the fact is that almost everyone wants the City to keep doing the same things—or more: more street maintenance, more open space protection, more growth management, Community Forum.Results more bikeways, more transit service, more Level of Attention parks. Budget Category (Compared to Current) Less Same More While not scientific, the survey results from Affordable Housing 1 10 25 the community forum are also reflective of this: while interest varies between categories, Growth Management 5 23 7 in no service area did a majority of Neighborhoods/Cal Poly 6 19 13 respondents want "less;" in fact, in every Streets&Traffic 7 24 13 category, the overwhelming interest was for Transit.&Bikeways 1 11 22 the "same or more." Downtown 1 18 16 And there is "scientific" data supporting this Tourism 4 15 14 indication for "same or more" City services. Open Space/Natural 3 15 20 In the professional public opinion survey Resources conducted in August 2003, 75% of the Parks&Recreation 3 19 13 community rated the City's services as good Public Safety 2 20 10 or excellent; and this may help explain the more informal results of"more or same." Council. We have strived to be responsive to the results of the Council's goal-setting process. "Front-Line" Employees. We have extensively involved and engaged our employees throughout the organization, both in communicating the problem and in generating thoughtful solutions. This process resulted in 277 budget-balancing ideas from employees from all departments in the City. Many of these are reflected in the proposed budget-balancing strategy, and many others are undergoing further review of the "in-the-pantry" ideas that may be brought to bear on challenges facing us in the longer-term. Employee Associations. We have worked very closely with the leadership of our employee associations, and we will continue doing so. They have been very helpful and supportive in this process. o� ' f Strategic Budget Direction Page 7 Department Heads. After receiving budget-balancing ideas from their employees, Department Heads made specific recommendations to the CAO on those they thought should be strongly considered as budget-balancers for 2005-07. (The criteria we used in making this assessment are discussed below.) In follow-up to this, the Department Heads and the CAO held extensive discussions on these ideas, and reached consensus on the general strategy reflected in this report. CIP Review Team. Along with other coordinating duties, one of the primary responsibilities of this group is to review all CIP budget requests and make recommendations to the CAO. Its members include the Directors of Public Works, Utilities, Community Development, Parks & Recreation, Finance & Information Technology, Police Chief and Principal Administrative Analyst. The CIP component of the proposed.budget-balancing strategy reflects the results of their review. Evaluation Criteria Based largely on the framework set forth in the Fiscal Health Contingency Plan, we used the following criteria in preparing the proposed budget-balancing strategy: 1. Can it be implemented and realistically be relied upon as a budget balancer in 2005-07? 2. Is it within our control to do? 3. Is it reasonable and balanced? Does it reflect shared sacrifice? 4. Is it focused on service impacts and priorities—not an "across-the-board" approach? 5. Is it sensitive to costs and"affordability?" 6. Does it maintain essential facilities, infrastructure and equipment at reasonable levels? 7. How does the"value" compare with the effort? 8. How will we be positioned afterwards for the future? The Components: Reserves We recommend reducing our reserves to 15% of operating expenditures. This is a further reduction from 16% reflected in the budget for 2004-05, and from our policy goal to maintain a minimum fund balance of 20% of operating expenditures. Given the fiscal challenges facing us, and the results of the five-year forecast showing that our fiscal outlook improves in the "out years," we believe that this is a reasonable step in helping balance the budget for 2005-07. On the other hand, since we can only use these once, we do not recommend going any deeper into our reserves than this: as set forth in our Budget Fiscal and Policies, adequate reserves are essential in providing for a wide range of risks to the City's operations, including economic uncertainties, local disasters, contingencies for unseen operating or capital needs, and cash flow requirements. a Strategic Budget Direction Page 8 The Components:Added Revenues The following summarizes our revenue recommendations. It is important to underscore that we are not asking the Council to formally approve these added revenues at this time. There needs to be meaningful opportunities for community input and discussion on these, as well as added information such as comparisons with other communities and the impact of New Revenue Summary these increases on our users. Rscal Year annual 2005-06 2006-07 Average Vehicle Tow Release Fee 34,300 42,500 38,400 Formal approval needs to follow this Third False Alarm Fee 45,800 45,800 45,800 added community input and analysis. Property Dam age-Only 82,300 82,300 82,300 As such, adoption of any changes Collision Reports should occur concurrently with budget Facility Use Fees 48,800 48,800 48,800 adoption, which is currently scheduled Triathlon 3,000 3,000 3,000 for lune 21, 2005. Airport Land Use 10,300 12,400 11,400 Commission Review NPDES Compliance 50,000 60,000 55,000 On the other hand, these fees are Replacement Business 3,900 3,900 3,900 consistent with the City's adopted user Tax Receipt fee cost recovery policies. Moreover, Business Location Change 10,300 10,300 10,300 if the Council has serious reservations Business License Program 37,800 254,800 146,300 about any of these proposals, we need TOTAL 1 $326,500 $563,800 1 $445,200 to know this now so we do not rely upon some (or all of these) as part of the solution if in fact there is not Council majority support for at least seriously considering them as the budget process goes forward. Stated simply, if we do not implement these revenue sources, then our operating programs (and related service levels) will need to be cut even further than reflected in the proposed budget-balancing strategy. Vehicle Tow Release Fee. As part of the November 18, 2004 report on "pantry items," the Council approved higher cost recovery for the Police Department's efforts related to vehicle tows. These occur for several reasons, including: 1. Driver is arrested and taken into custody 2. Blocking driveway entrance 3. Parking on lawn 4. Abandoned vehicle 5. Preventing access by firefighting equipment by parking too near to a fire hydrant 6. Person in charge of vehicle is incapacitated 7. Area posted for"no parking" We do not currently charge this type of fee, but are allowed to do so under California Vehicle Code Section 22850.5. Because of this, many other cities charge a towed-vehicle release fee, with the most common one set at a $100 flat fee. Our proposed vehicle release fee is $96, payable by the registered vehicle owner, summarized as follows: Strategic Budget Direction Page 9 Vehicle Tow Cost Summary Percent Billable Personnel Minutes of Hour Rate. Cost Police Officer 20 0.330 101.32 33.44 Communications Technician 10 0.160 53.46 8.55 Records Clerk 10-15 0.250 42.36 10:59 Police Sergeant 15-20 0.330 126.45 41.73 Accounting,Assistant 2-3 0.041 46.85 1.92 Cost Recovery Fee $96.23 Over the past three years, we have towed an average of 750 vehicles annually that would have been applicable to a tow release fee. Assuming a conservative collection rate of 85% (most owners will want to claim their vehicles), estimated annual revenues are $62,500. When we presented this idea to the Council in November 2004, we conservatively estimated revenues from this fee at $20,000 annually. Since. this initial estimate was included in the December Forecast, the net "added" revenue from this fee as a "budget-balancer" is $42,500. Due to the time needed to implement this fee, first-year collections in 2005-06 are estimated to be slightly less than this amount ($34,500). • Consistency with user fee cost recovery policy. This is consistent with the City's policy that those who drive the need for a service — especially one that we want to discourage — should incur the cost. • Practices in other cities. As noted above, towed-vehicle release fees are common in California cities, with the rate typically set at$100 per tow. • Customer service impact. We believe that the proposed fee is reasonable in the context of the costs we incur. Moreover, as reflected in the above summary of when we initiate vehicle tows, these are behaviors we want to discourage, and as such, full cost recovery is appropriate. False Alarm Fees. The Police Department responds to security alarms in the City at both business and residential locations. The majority of alarm responses are due to false alarms, which are caused by a number of factors, including: 1. Window left open and the wind causing motion that is sensed by the alarm system 2. Interior motion from a mouse, bird or pet. 3. And the most common cause: user error. Businesses particularly have a high number of false alarms from user error resulting from lack of on-going employee training and high employee turn-over. The Police Department responds to approximately 2,200 false alarms annually: 1,500 business and 700 residential. Currently, the City charges a $107.30 false alarm fee beginning with the fourth false alarm in a twelve-month period, increasing with each false alarm to $306.90 for the sixth and any subsequent false alarms. Strategic Budget Direction Page 10 Implementing a modest "third false alarm fee" of$65.50 — and increasing the fee amount for the most extreme number of repeat false alarms (by $192.20 to $499.10) for the seventh and subsequent false alarm in a twelve-month period — will bring the City's false alarm fee schedule in-line with comparable cities and partially off-set the costs of police resources in responding to false alarms. The following summarizes the current and proposed false alarm fee schedule: False Alarm Fees Current Proposed Increase First and Second False Alarm No Fee No Fee No Change Third False Alarm No Fee 65.50 65.50 Fourth False Alarm 107.30 107.30 No Change Fifth False Alarm 175.40 175.40 No Change Sixth False Alarm 306.90 306.90 No Change Seventh and Subsequent False Alarms 306.90 499.10 192.20 Net revenues (after third-party contractor costs of 20% of collections) from our current fees is about $140,000 annually. Based our current false alarm volumes and assuming a 90% collection rate for the added fees, we estimate that this will generate additional net revenues of $45,800 annually, summarized as follows: Added False Alarm Revenues Annual Added Cost New Activity Per Alarm Revenue Third False Alarms 273 65.50 17,900 Seventh and Subsequent False Alarms 238 192.20 45,700 Total 63,600 Contractor Fees @ 20% 12,700 Net Collections @ 90% $45,800 Of this added revenue, about 92% will come from businesses and only 8% from residences. • Consistency with user fee cost recovery policy. This is consistent with the City's policy that those who drive the need for a service — especially one that we want to discourage — should incur the cost. • Practices in other cities. These vary widely between cities, but charging for the third false alarm is not uncommon. • Customer service impact. We believe that the proposed fees (which still provide for two "no cost" false alarms) is reasonable in the context of the costs we incur in responding to false alarms, which is an activity that we want to discourage. Property Damage-Only Collisions Investigations. California Vehicle Code Section 20008(a) requires that any drivers involved in any traffic collisions that result in injury or death make (or cause to be made) a written report to the law enforcement agency that has jurisdiction over the area where the accident occurred. Even though there are no other specific vehicle code sections that require law enforcement agencies to take a report, this section implicitly makes it clear that � - f C� Strategic Budget Direction Page 11 law enforcement agencies have a responsibility to prepare a report. However, non-injury traffic accidents are not included under this section, and as such, taking these reports is discretionary. Traditionally, most agencies have investigated non-injury accidents; however, a growing trend has been to stop responding to non-injury accidents for the following reasons: 1. It is not required. 2. Fault determined from the investigation is primarily used for civil purposes. 3. Time spent investigating these accidents negatively impacts officer response times and officer available time on criminal matters. Approximately two-thirds of the annually reported traffic collisions in San Luis Obispo are non- injury. The time spent investigating these accidents results in a significant amount of dedicated officer time. In 90% of these cases, the benefiting parties are the insurance companies, which rely heavily on law enforcement's determination of cause. These conclusions eliminate the necessity of the insurance companies having to hire a private Accident Reconstructionist, at considerable cost to them. In order to maintain the same level of response and investigation of non-injury traffic accidents, we recommend at least partial cost recovery of officer time to perform the investigation. Our officers typically spend sixty to ninety minutes investigating a non-injury traffic collision and completing their report. At a "full cost" of$101.32 per hour, this means costs of$100 to $150 for the average damage-only collision. In most cases, both insurance companies request copies of the report. As such, a fee of$50 per copy of a non-injury traffic collision investigation report will achieve close to full cost recovery in most cases, assuming this fee will be paid by both auto insurance companies. In 2004, there were about 1,200 non-injury traffic accidents; of these, 2,200 copies of those reports were requested. With the proposed fee of $50 fee per copy, this would potentially generate about $110,000 annually. Assuming cost recovery from 75% of these, we conservatively estimate annual revenues from this fee of$82,300. • Consistency with user fee cost recovery policy. This is consistent with the City's policy that those directly benefit from a service should incur the cost. • Practices in other cities. While setting .a fee for this service is not common practice in California, many cities have stopped taking these types of reports. We believe that this "all or nothing" approach does not best meet user needs, and that the proposed market-based, customer-driven approach makes more sense. • Customer service impact. We believe that this modest fee for a discretionary service is reasonable approach in balancing the cost of this service — and its resource impact on higher- priority law enforcement needs — against its impact on users (which in most cases is an insurance company). We believe that in most cases, they would prefer to pay a modest fee than not have the service provided at all — which is an option for the City (and one that many other cities in the State have implemented). And typically, drivers not at-fault (either directly or though their insurance company) will be reimbursed by the at-fault.drivers (or their Strategic.Budget Direction Page 12. insurance company) for all costs of the collision, including this fee. This makes more sense than having the general-purpose tax payer pick-up this cost for those at-fault in causing the collision. Added Charge for Services Using School District Facilities. The need for this added fee surfaced at the Mid-Year Budget Review in February 2005 as a way of mitigating fee increases by the San Luis Coastal Unified School District for use of their facilities. As we noted at that time, we believe that the District's charges are reasonable when compared with other alternatives. Initiating a $0.25 per person per use charge on all programs using District facilities will generate about $80,800 annually. Of this amount, $32,000 was projected in the Mid-Year Budget Review to help offset increases in District fees. The balance ($48,800) is recommended to help offset service reductions in other recreation program areas, including day care services, classes and adult, teen and youth sports. • Consistency with user fee cost recovery policy. This is consistent with the City's policy that day care services and adult athletics should have relatively high cost recovery (60% to 100%) and that youth sports should have mid-range cost recovery (30% to 60%). • Practices in other cities., Other agencies throughout the county providing a similar service for before and after school childcare are currently charging $3.00 per hour and operate on a monthly fee only, which means that participants pay for expected hours of use and do not receive credits or transfers for unused hours. At $2.70 per hour, the City's day care services are currently the lowest hourly rate, and charge only for hours used. Along with a planned cost of living increase of$.05, this $0.25 per hour increase will simply bring the program into alignment with the hourly rate that other agencies charge, while retaining the "pay for use only"fee structure. • Customer service impact. We believe that this very modest fee increase will have minimal impacts on our customers. Universal Triathlon Fee. Setting one fee for participation in the annual Triathlon regardless of residency will generate about $3,000 annually. The minimal impact on users and participation will be further mitigated by phasing this approach in over two years. With this approach, fees will move from$48 for residents and$64 for non-residents, to $64 for everyone by 2006-07. Airport Land Use Commission (ALUC) Plan Review Fee. Most discretionary projects located in the Airport Land Use Plan boundary must be reviewed by Community Development staff for consistency with the Airport Land Use Plan. Some of these projects can be found consistent with limited review while others require the staff to help prepare an Aviation Easement form for recording with the County Clerk. We project that there will be an average of 100 permits per year of this type with an average staff time of one hour. A third, and less frequent project, requires staff to prepare documents for ALUC review and attendance at one of their hearings. These will take an average of four hours. To recover these costs, we recommend a fee of $100 for the simpler permits and $400 for projects that go to the ALUC. This will generate new revenues of $12,400 per year. (First year revenue, estimates are prorated to $10,300 to reflect a September 1, 2005 effective date.) Strategic Budget Direction Page 13 Estimated ALUC Review Fees Annual Cost Per . New Activity Application Revenue Administrative Reviews 100 100.00 10,000 Reviews Requiring ALUC Hearing 6 400.00 2,400 Total $12,400 • Consistency with user fee cost recovery policy. This is consistent with the City's policy that development review services should generally fully recover their costs. • Practices in other cities. This type of review is not applicable in most agencies. • Customer service impact. We believe that this modest fee will have minimal fiscal impacts on applicants while ensuring timely turn-around and review of their applications. In addition, City staff frequently assists the applicant in getting through the ALUC process, yet there is no cost recovery for this service, Waterway Management Fee: NPDES Cost Recovery. When we first introduce the new storm water management requirements of Phase II of the National Pollution Discharge Elimination System (NPDES) to the Council in 2002, we noted that there would be added costs in implementing the expanded construction management standards (primarily run-off control from private development). We noted at that time that the best way of recovering these costs would be through the building permits process, since the responsibility for enforcement largely lies with our building inspectors. Based on our experience so far, approximately 65% of permits issued we issue are subject to these requirements. Setting a fee of 7% of the plan check and building permit fee for projects subject to the Waterway Management Plan and the storm water management program will generate additional revenue of $60,000, recovering the 50% of a building inspector position (including indirect costs) required to enforce these regulations. (First year revenue estimates are prorated to$50,000 to reflect a September 1, 2005 effective date.) • Consistency with user fee cost recovery policy. This is consistent with the City's policy that development review services should generally fully recover their costs; and it is consistent with prior recommendations that we set a fee tied to the building permit process to recover these costs. Now that we have experience with these regulations, we are able to assess the impacts and recommend a fee strategy. • Practices in other cities. Most cities set building permit fees at a level that recovers costs, although virtually all have different rate structures for doing so. • Customer service impact. We believe that this modest fee will have minimal fiscal impacts on applicants while ensuring timely turn-around in inspecting their projects. Replacement Business Tax Receipt Fee. Our current business tax ordinance calls for setting a fee for replacing lost or misplaced business tax receipts by resolution; however, we have never done so. On the other hand, it costs us $31 in staff time, materials and computer resources to process these requests. Given the City's fiscal situation, we recommend setting a fee of$31 for this service. Based on 125 requests for this annually, this will generate $3,900 per year. CQ ^ 13 Strategic Budget Direction Page 14 • Consistency with user fee cost recovery policy. This is consistent with the City's policy that those directly benefit from a service—or drive the need for it—should incur the cost. • Practices in other cities. Most cities charge a fee for similar replacements based on the cost of doing so. • Customer service impact. We believe that this modest fee will have a minimal impact on the business community: of 7,000 business tax receipts issued annually, only about 2010 need this service. This fee will also have a minimal impact on voluntary compliance with the requirement to possess a valid receipt (the underlying reason that we not previously set a fee for this service), since virtually all requests are due to the business's external requirement to show proof of payment (such as a loan application). Business Change of Location Fee. Our current business tax ordinance also calls for setting a fee for processing a change of business location; however, we have never done so. On the other hand, it costs us $108 in staff time, materials and computer resources to process these requests: $31 for Finance staff to process the change; and $72 for Community Development to review the change in location for consistency with zoning and building requirements. Based on 100 location changes processed annually, this will generate $10,300 annually. • Consistency with user fee cost recovery policy. This is consistent with the City's policy that those directly benefit from a service—or drive the need for it—should incur the cost. • Practices in other cities. Most cities charge a fee for similar location changes based on the cost of doing so. • Customer service impact. We believe that this modest fee will have a minimal impact on the business community: of 7,000 business tax receipts issued annually, only about 1% need this service. This fee will also have a minimal impact on voluntary compliance to have with the requirement to possess an up-to-date receipt with accurate location information (the underlying reason that we not previously set a fee for this service), since virtually all requests are due to the.business's external requirement to show proof of payment (such as a loan application). Business License Program. Except in very limited circumstances (such as taxi and massage therapist permits), the City does not issue business licenses. Our business tax ordinance exists solely to raise revenues for general municipal purposes, and does not regulate businesses in any way. Accordingly, the business tax receipt that we issue (not license) is simply evidence that the business tax has been paid: it is not assurance that the business is in compliance with any City regulatory requirements (or those of any other agency). However, as noted above, there are regulatory aspects in how we process business tax applications and renewals. For example, in addition to .reviewing changes in location, Community Development also reviews all new business tax receipt applications for compliance with zoning and building regulations. In short, there is already a significant regulatory component of the City's business tax program, but we are not recovering these costs. Strategic Budget Direction Page 15 Similar to processing location changes, it costs the City $108 to process new applications for businesses located within the City: $36 for Finance staff to process the application; and $72 for Community Development staff to review the application for consistency with zoning and building requirements. (Businesses with offices principally located outside of the City are not reviewed by Community Development, and as such, only the Finance cost component at $36 is applicable). Annual renewals, assuming no change in location, cost$31 per business. It should be noted that the City's current minimum tax is $25, and has not changed since 1958. While the concept of a business license fee is different than a minimum tax, setting a business license fee of$31 per year in conjunction with the minimum tax (for total minimum amount due annually for both of$56) recognizes the significant passage of time (almost 50 years) since the City last adjusted the minimum. And for new businesses, the impact of the new $108 is largely offset by the fact that the first year, all new businesses only pay $25, regardless of their likely gross receipts. Based on the proposed rate structure, implementing a business license fee program will generate $254,800 on an annual basis. However, revenues in 2005-06 will be less than this ($37,800 for new applications only), since it will not be possible to enact a business license ordinance (and subsequently set fees by resolution) before the annual renewal process (which begins July 1, 2005). Estimated Business License Fee Revenues Annual Proposed New Activity Fee Revenue New Applications Located in the City 150 $108.00 $16,200 Located outside of the City 600 36.00 21,600 Annual Renewals (Effective in 2006-07) 7,000 31.00 217,000 Total $2549800 • Consistency with user fee cost recovery policy. Implementing a business license fee will help recover the administrative and regulatory costs we are already incurring. In short, it will not create any new requirements, but simply recognize the efforts and related resources already in place. • Practices in other cities. Most cities issue business licenses and set minimum fees as needed to recover their cost of issuance. • Customer service impact. We believe that this modest fee will have a minimal impact on the business community. As noted above, the current minimum cost of a business license/business tax receipt has remained unchanged at $25 since 1958. For renewing businesses, the proposed combined license/tax minimum will be $108. By comparison, simply adjusting the minimum tax for changes in the consumer price index since 1958 would result in a minimum of $168. (Note: Since this would be a business license, it will not be subject to the Downtown Association surcharge based on the business tax.) Strategic Budget Direction Page 16 New Revenue Summary. In light of the City's fiscal situation, we believe that the proposed new revenues are reasonable in avoiding even deeper cuts in essential services. They are all consistent with the City's user fee cost recovery policy; and although they play New Revenue Summary an important role in the overall budget balancing strategy, they are only about 20% of the solution, with expenditure °Revenues reductions playing the leading role (70% eio of the solution). o Recreffiion o Police Foes Fees 36°k As reflected in the sidebar chart, two of ir/° the revenue recommendations — police related fees and business licenses — a De'elop°1ent Review account two-thirds of the new revenue 14=/6 recommendations. o Business We believe that these fees are especially uoense warranted in light of the limited cost 3P/o recovery options for police services (and their heavy reliance on general-purpose revenues) and the value of the City's public safety and infrastructure maintenance services to the business community in the case of the business license revenues. In summary, without the proposed new revenues, we will need to cut even deeper into our CIP and operating programs. The Components: CIP Reductions Detailed information on each specific CIP project request will be included with the Preliminary Financial Plan, and will be the sole focus of discussion at the special budget workshop scheduled for May 31. As such, it is not our intent to fully evaluate the General Fund CIP at this time. However, we do want to get Council concurrence on the underlying approach we plan to take in preparing it: to focus on maintaining what we already have. As discussed above, our goal is to present for the Council's consideration a General Fund CIP that is the lowest possible to reasonably maintain our existing infrastructure and facilities. Maintenance-Only CIP. Compared with past CIP's before 2003-05, this approach will result in the following kinds of cuts, reductions or deferrals in General Fund projects: 1. No General Fund money for open space acquisition (although we will be recommending $25,000 annually to maintain and management existing open space areas). 2. No park improvements. (We will do essential maintenance and replacements, but not enhancements or additions.) 3. No new sidewalks. Strategic Budget Direction Page 17 4. Reduced pavement maintenance from 2003-05 of about $500,000 per year (which in turn reflected a significant reduction from 2001-03 and recommended funding levels in the Pavement Management Plan.) The impact of this reduction is discussed in the major City goal work program for Infrastructure Maintenance, which is also being considered by the Council on April 19, 2005. The Short Story: This reduced funding level means suspending the "area-paving" concept set forth in the Pavement Management Plan. 5. Reduced public art: we recommend setting aside '/x% for public art—rather than the I% called for under our policy—for consistency with our private sector requirements. (This was set at 3/a% in 2003-05.) Basically, if it's "new" or"added"—and funded by the General Fund—we do not plan to include it in the Preliminary Financial Plan. Compared with the forecast assumption of"maintenance- only" CIP of about $3.1 million annually, we will be recommending further reductions in the CIP of about $750,000, for an average annual General Fund CIP in 2005-07 of $2.4 million annually. For context, the December forecast noted that $6.1 million annually is needed to adequately maintain existing infrastructure, facilities and equipment. While the proposed CIP reductions affect all areas of the City's operations, pavement maintenance is especially impacted. Important Caveat. There will still be some "new" projects underway in 2005-07 funded by the enterprise funds, grants and impact fees. The essential distinguishing feature of the recommended strategy is no funding for "new or added"projects in the 2005-07 Financial Plan from the General Fund. Related to this concept,it should be noted that engineering design, inspection and project management resources will not be significantly affected by this due to the large workloads on the "non-General Fund" projects noted above. However,given our fiscal situation, some reduction in engineering staff resources is likely in 2005-07. Mission Plaza Improvements. At the November 18, 2004 budget workshop, we provided the Council with a comprehensive update of the status of current CIP. One of the areas we recommended for reduction at that time is the current funding for Mission Plaza improvements in the amount of$98,000. As we noted at that time, the Council originally approved this funding as part of the 2001-03 Major City Goal for Downtown Improvements, which included a work program to implement the "Mission Plaza Dogleg." When this concept went to the Council in June 2002 with the various street closure options, the Council did not approve the "dogleg" concept of closing this street area. However, the Council approved in concept pursuing other Mission Plaza and street- related improvements, such as bulb-outs and decorative street paving patterns. In Fall 2003, the Architectural Review Commission reviewed and approved a revised project concept, with the following features: Strategic Budget Direction Page 18 1. Expanding the amphitheater and adding a central walkway installing new seating, planters and landscaping. 2. Redesigning the area between restrooms and the Art Center, including terracing and new walkway and stairs to align with existing pedestrian bridge. 3. Installing new paving, including decorative pavers in street and plaza. 4. Building bulb-outs and enhanced crosswalks. 5. Installing new signage. Since the conceptual design is complete, with Council approval we could move forward with construction documents in about six months. However, as noted back in November 2004, we have not brought forward the revised concept for Council approval of the plans and environmental documents for two reasons: resource limits due to.staffing vacancies in the Engineering Division; and limited construction funds. The concept approved by the ARC is likely to cost about$300,000 to implement compared with the $98;000 currently available. Given the fiscal challenges facing us and the recommended "maintenance-only" CIP budget strategy, we recommend deleting this funding. The Components: Operating Reductions After using reserves, considering reasonable revenue options and reducing CIP costs to the lowest level possible in reasonably maintaining our existing infrastructure and facilities, all that's left in balancing the budget is reducing operating costs and related service levels. In this case, assuming that all the other pieces of the budget-balancing pie remain in place, this means further cuts in operating ,costs and service levels by about $600,000. As such, we have devoted significant efforts over the past several months in surfacing operating reduction options in all departments. And because operating cuts are the primary variable in our budget-balancing equation, it was essential to surface options that are more than the resulting"target" of$600,000. Attached are the results this of this process, which identifies $1.4 million in options from all departments, representing a reduction from 2004-05 operating costs of about 5%. Organized by department, this summary provides the following information for each option, presented in reverse priority order in each department: 1. Affected program within the department. 2. Description of the option. 3. Its impact on services.. 4. Reduction in "full-time equivalent" (FTE) staffing. 5. Annual savings. Strategic Budget Direction Page 19 For several of the options, such as shifting the cost of Police Department parking enforcement from the General Fund to the Parking Fund, there is no direct service impact: it simply reflects better cost accounting. However, for many of the options, there would be significant impacts, and this is why it is important that we have "non-operating" budget balancers in the mix; and within the operating budget arena, an array of reduction options that is greater than the "net" we're looking for. Otherwise, this would simply be an "across-the-board" exercise that doesn't take into account service priorities. It is important to stress that these are options. It is too soon to make specific recommendations at this time for several reasons: 1. First, do the other pieces make sense? If not, we will have to go deeper than the remaining $600,000 "target." 2. What is the gap we're trying to close? As discussed above, we will have a better picture of this by mid-May. 3. And we need more time to analyze service impacts and priorities. Again, we plan to address this in the Preliminary Financial Plan. Lay-Off Avoidance. As part of our budget-balancing efforts, it is almost certain that we will reduce authorized regular positions at some level. However, this is not the same as laying-off an existing employee, especially if the position is vacant. While we would not recommend staffing reductions based solely on which positions are vacant—this needs to be done on a service impact-priority basis, and vacancies happen due to serendipity—vacancies do provide added organizational flexibility. And creating this flexibility is the underlying reason for the hiring restrictions that have been in place for the last eighteen months. In short, while we do not want to be driven by vacancies in reducing costs, it has been our conscious goal to avoid regular staff lay-offs. Of the full-time equivalents (FTE's) included in operating cost reduction options, none of them would result in regular staff lay-offs. Participation of the Enterprise Funds in this Process The enterprise funds—water, sewer, parking, transit and golf—account for almost 50% of the City's financial operations. While the fiscal problems facing the City are in the General Fund, the enterprise funds are also participating in the budget-balancing/expenditure reduction process. In several cases, they are an integral part of the General Fund's balancing strategy for expenditure reductions. With these added costs, there will be added pressure on rates. However, it is our goal through belt-tightening and cost reductions to absorb these costs and to avoid rate increases above what would otherwise have been required. Long Story Short- The enterprise funds are not exempt from budget reductions. Selective Lifting of the Hiring Freeze Pending development and approval of a clear budget-balancing strategy, we have completely frozen all new recruitments for regular staff positions since January. However, after Council approval, we plan to selectively lift this freeze for critical positions that are clearly not affected CD Strategic Budget Direction Page 20 by any of the operating cost reduction options. Filling positions will still require CAO approval on a case-by-case basis; but with a clearer sense of direction, we should resume filling essential- service positions that are highly unlikely to be affected by our final budget-balancing decisions. Next Steps Based on the strategic budget direction that we receive from the Council at this meeting, we plan to finalize preparation of the Preliminary Financial Plan and issue it by May 19, 2005. This will be followed by five special budget workshops and hearings. The following summarizes the key next steps for the Council in the 2005-07 budget process: Council Budget Review: Remaining Steps 1. Preliminary Financial Plan overview and General Fund operating programs. May 26 2. General and other non-enterprise fund capital improvement plan CIP)projects. May 31 3. Enterprise Fund operating programs,CIP projects,revenue and rates(water,sewer, June 2 parking, transit and golf). 4. Continued review of Preliminary Financial Plan. June 7 5. Adoption of any new fees and Financial Plan. June 21 SUMMARY The purpose of this step in the budget process.is to present the Council with a conceptual strategy for balancing the budget for 2005-07. Its purpose is not "budget approval:" that process will begin with issuance of the Preliminary Financial Plan in mid-May, with five Council study sessions/hearings to follow before budget adoption. Moreover, there are still too many . unknowns—both on the revenue and expenditure side—for a "final" plan at this point in the process. However, in preparing the Preliminary Financial Plan, we need "strategic" guidance from the Council on key pieces of the budget-balancing pie. ATTACHMENTS 1. Budget Balancing Strategy Summary 2. 2005-07 Operating Cost Reduction Options G:Budget Folders/2005-07 Financial Plan/Budget Balancing Strategies/Agenda Report—April 19,2005 2005-07 Financial Plan Attachment t BUDGET BALANdNG� STRATEGY April 19, 2005 The Budget Gap December 2004 Forecast: Two-Year Average * 2,394,500 Less cell-site lease revenues at Laguna Lake golf course (25,000) Less "net" revenues from multi-family residential inspections (304,000) Less debt service savings from refinancing 1996 lease-revenue bonds (40,000) Revised Annual Budget Ga $21025,500 *Excluding$1.4 million carryover minimum reserve shortfall. Closing the Gap Strategy Annual 2005-06 2006-07 Average Use of Reserves Reduce Fund Balance to 15% of Operating Expenditures 350,000 175,000 New Revenues 326,500 563,800 445,200 CIP Reductions Delete Mission Plaza Improvements Funding 98,000 49,000 CIP Reductions from Forecast Forecast Assumption 3,082;500 3,175,000 3,128,800 CIP Review Committee/CAO Recommendation 2,699,600 2,058,000 2,378,800 Reduction from Forecast 382,900 11117,000 750,000 Total Before Operating Program Reductions 1,157,400 1,6809800 1,419,200 Remainder to Close Gap with Annual Operating Budget Balancers $606,300 2005-07 Budget Balancing Strategy Closing the General Fund Gap: $2 Million O RevenueEx[3 22% OCiP Reductions 39% E3 Reservespenditures:69% Operating Programs 30% 1 2005-07 Financial Plan Attachment Staffing Annual Savings FTE's 2005-06 2006-07 Council and Administration 119,300 83,100 City Attorney 0.2 10,000 10,000 City Clerk 27,800 $36,000 Human Resources 42,200 42,800 Finance&Information Technology 1.5 144,500 144,900 Community Development 1.0 85,800 85,900 Parks &Recreation 1.2 72,800 72,800 Public Works 4.0 407,900 407,900 Police 4.0 371,800 385,000 Fire 1.3 169,200 169,200 Total 13.2 $19451,300 $19437,600 Note: All regular positions vacant 2005-07 Operating Cost Reduction Options ADMINISTRATION AND CITY COUNCIL Attachment 2 Staffing Description Service Impact FTE's 1 2005-06 1 2006-07 -CITY COUNCIL Office Equipment&Maintenance Impact offset by close attention to costs 100 100 (7275) and efforts to reduce expenses. Office Supplies(7421) Impact offset by close attention to costs 1,000 1,600 and efforts to reduce expenses. Printing&Repro Supplies(7425) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Publications&Subscriptions(7427) Impact offset by close attention to costs 100 100 and efforts to reducer expenses. New Council Members(7545)(7555). Impact of reductions from amounts set 2,000 Reduce each(two): professional via resolution are offset by close development by$200;City business by attention to costs and efforts to reduce $400; mileage by$200 and start-up by expenses. $200. Council Members(7547)(7548)(755 1) Impact of reductions from amounts set 1,600 1,600 (7552). Reduce each:professional via resolution are offset by close development by$200 and mileage by attention to costs and efforts to reduce $200. expenses. Current Mayor(7549).Reduce Impact of reductions from amounts set 400 400 professional development by$200 and via resolution are offset by close mileage by$200. attention to costs and efforts to reduce expenses. New Mayor(7553). Reduce Impact of reductions from amounts set 1,200 professional development by$200;City via resolution are offset by close business by$600;mileage by$200;and attention to costs and efforts to reduce start=up b $200. expenses. Communication Services(7611) Impact offset.by close attention to costs 600 600 and efforts to reduce expenses. CITY ADMINISTRATION Contract Services.(7227) Cable rate reviews will be performed 1,400 1,400 in-house rather using consultant service. This impact will be partially offset as the review and monitoring process is less complicated since approval of reduced basic service. Office Equipment(7275) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Print&Reproduction(7283) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Office Furnishings&Equipment Impact offset by close attention to costs 200 .200 2419) and efforts to reduce expenses. Office Supplies(7421) Impact offset by close attention to costs 200 200 and efforts to reduce expenses. Postage(7423) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Publications&Subscriptions(7427) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Education&Training(7459) Impact offset by close attention to costs 600 600 and efforts to reduce ex enses. _F_ I . - Professional Conferences(7529) Significantly limits training and 800 800 organizational development opportunities. -2- Q�— 3 2005-07 Operating Cost Reduction Options ADMINISTRATION AND CITY COUNCIL Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 Printing&Supplies(7425) Only 1 new brochure(rather than the 4,500 4,500 traditional 2 to 3 brochures)will be able to be produced;balance will be used for reprints. Professional Conferences(7529) Significantly limits training and 2,500 2,500 organizational development opportunities. Operating Materials/Supplies(7843) Modest to significant impact in that this 1,700 1,700 will severely constrain our ability to implement activities in our conservation plans that do not have some sort of outside funding. ECONOMIC DEVELOPMENT Contract Services(7227). Eliminate Consultant Contract Services Should the economic advisor be needed 10,000 10,000 $5,000;Reduce Economic Vitality Corp for significant new retail projects,such (EVC)marketing services$5,000 as Chinatown or Marketplace,no contract services funding is available. Reducing EVC contract from$10,000 to$5,000 will have an unknown impact on marketing services provided by organization. Marketing(7335). Limits the opportunities to promote the 1,700 1,700 City. Trips&Meetings(7537). Significantly limits training and 2,000 2,000 organizational development opportunities. Operating Material&Supplies(7843) Impact in 2005-07 offset by adequate 500 500 inventory of supplies plaques& marketing items for next two years. CULTURAL ACTIVITIES Grants-in-Aid (Reduction comparable Moderate impact anticipated. Reduced 4,700 4,700 on percentage basis to other programs funding means possible reduced in the City) allocations to grantees or number of cultural grants funded. COMMUNITY PROMOTIONS Promotion &Public Relations(7227) Minor impact. Reduction will affect 4,000 4,000 (Reduction comparable on percentage amount of advertising purchased. basis to other programs in the Cit _ Chamber&Visitor Conference.Bureau Moderate impact when spread over 3 10,600 10,600 (7337) contracts. Contract revisions to (Reduction comparable on percentage increase operational efficiencies should basis to other programs in the City) negate reductions but could affect amount of new services provided. Commission&Comm.Meetings Impact offset by close attention to costs 100 100 (7455) and efforts to reduce expenses. TOTAL 119,300 783,100 -4- a 2005-07 Operating Cost Reduction Options ADMINISTRATION AND CITY COUNCIL Attachment 2 Staffing Description Service Impact FrFs 2005-06 1 2006-07 _CITY COUNCIL Office Equipment& Maintenance Impact offset by close attention to costs 100 100 (7275) and efforts to reduce expenses. Office Supplies(742 1) Impact offset by close attention to costs 1,000 1,600 and efforts to reduce expenses. Printing&Repro Supplies(7425) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Publications&Subscriptions(7427) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. New Council Members(7545)(7555). Impact of reductions from amounts set 2,000 Reduce each(two): professional via resolution are offset by close development by$200;City business by attention to costs and efforts to reduce $400; mileage by$200 and start-up by expenses. $200. Council Members(7547)(7548)(7551) Impact.of reductions from amounts set 1,600 1,600 (7552). Reduce each:professional via resolution are offset by close development by$200 and mileage by attention to costs and efforts to reduce $200. expenses. Current Mayor(7549). Reduce Impact of reductions from amounts set 400 400 professional development by$200 and via resolution are offset by close mileage by$200. attention to costs and efforts to reduce expenses. New Mayor(7553). Reduce Impact of reductions from amounts set 1,200 professional development by$200;City via resolution are offset by close business by$600;mileage by$200;and attention to costs and efforts to reduce start-up b $200. expenses. Communication Services(7611) Impact offset by close attention to costs 600 600 and efforts to reduce expenses. CITY ADMINISTRATION_ - Contract Services(7227) Cable rate reviews will be performed 1,400 1,400 in-house rather using consultant service. This impact will be partially offset as the review and monitoring process is less complicated since approval of reduced basic service. Office Equipment(7275) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Print&Reproduction(7283) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Office Furnishings&Equipment Impact offset by close attention to costs 200 200 (7419 , and efforts to reduce expenses. Office Supplies(742 1) Impact offset by close attention to costs 200 200 and efforts to reduce expenses. Postage(7423) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Publications&Subscriptions(7427) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. Education &Training(7459) Impact offset by close attention to costs 600 600 and efforts to reduce expenses. Professional Conferences(7529) Significantly limits training and 800 800 organizational development opportunities. 2 �q I 2005-07 Operating Cost Reduction Options ADMINISTRATION AND CITY COUNCIL Attachment 2 Staffing 1- Description Service Impact FTE's 2005-06 1 2006-07 NATURAL RESOURCESMANAGEMENT Regular Salaries(7010). Additional Some impact to Manager&Biologist 13,300 13.300 cost allocation beyond prior years of on projects currently a part of work Manager(5%)&Biologist(8%)to program. Uncertain impact with regard Water&Sewer Funds for negotiating, to new projects. Where Biologist will mitigation monitoring&reporting for assume responsibility for work Coon Creek,Old Creek&Nacimiento previously contracted out,other projects; projects may be delayed or eliminated. 5,600 5,600 Cost allocation of Manager(5%)to Bob Additional work will impact ability to Jones Bikeway grant for mitigation 1)complete as many conservation plans monitoring; as planned,and 2)produce new 32,000 educational materials such as brochures. Cost allocation of Biologist(33%for 2005-06)from grant funding for mitigation monitoring of Foothill Bridge project-, 8,000 Partial cost allocation for Biologist(8% for 2005-06)from TIF funds for mitigation monitoring of Calle Joaquin ro'ect. Contract Services(7227). Reduce Land Reducing Land Conservancy from 4,500 4,500 Conservancy by$4500;Conservation $7,500 to$3,000 per year will have a Plans by$3000;and other contract modest impact on program. They will services by$2500. work only on one important project for the City. Other items will be handled in-house or by special contract if other funds(such as mitigation)are available, or will be delayed or eliminated if funds are not available. Reducing Conservation Plans from 3,000 3,000 $10,000 to$7,000 per year will have a modest impact in that it will reduce our ability to develop such plans in timely fashion. This will fund 2 plans over the two-year Financial Plan. Reducing other contract services from 2,500 2,500 $12,500 to$10,000/yr.will have an uncertain impact depending upon level of acquisition effort. This is because funds may not be available for the necessary studies(such as appraisals and environmental surveys)that are necessary to accompany acquisition projects. I Office Equipment Maintenance(7275) Impact offset by close attention to costs 300 300 and efforts to reduce expenses. Office Supplies(7421) Impact offset by close attention to costs 200 200 and efforts to reduce expenses. Postage(7423) Impact offset by close attention to costs 100 100 and efforts to reduce expenses. p _ Q-3 - ' �l 2005-07 Operating Cost Reduction Options ADMINISTRATION AND CITY COUNCIL Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 Printing&Supplies(7425) Only I new brochure(rather than the 4,500 4,500 traditional 2 to 3 brochures)will be able to be produced;balance will be used for reprints. Professional Conferences(7529) Significantly limits training and 2,500 2,500 organizational development opportunities. Operating Materials/Supplies(7843) Modest to significant impact in that this 1,700 1,700 will severely constrain our ability to implement activities in our conservation plans that do not have some sort of outside funding. ECONOMIC DEVELOPMENT_ Contract Services(7227). Eliminate Consultant Contract Services Should the economic advisor be needed 10,000 10,000 $5,000;Reduce Economic Vitality Corp for significant new retail projects,such (EVC)marketing services$5,000 as Chinatown or Marketplace,no contract services funding is available. Reducing EVC contract from$10,000 to$5,000 will have an unknown impact on marketing services provided by or anization. Marketing(7335). Limits the opportunities to promote the 1,700 1,700 City. Trips&Meetings(7537). Significantly limits training and 2,000 2,000 organizational development opportunities. Operating Material&Supplies(7843) Impact in 2005-07 offset by adequate 500 500 inventory of supplies plaques& marketing items for next two years. CULTURAL ACTIVITIES Grants-in-Aid (Reduction comparable Moderate impact anticipated. Reduced 4,700 4,700 on percentage basis to other programs funding means possible reduced in the City) allocations to grantees or number of cultural is funded.. _.- COMMUNITY PROMOTIONS _ Promotion &Public Relations(7227) Minor impact. Reduction will affect 4,000 4,000 (Reduction comparable on percentage amount of advertising purchased. basis to other programs in the Ci Chamber&Visitor Conference.Bureau Moderate impact when spread over 3 10,600 10,600 (7337) contracts. Contract revisions to (Reduction comparable on percentage increase operational efficiencies should basis to other programs in the City) negate reductions but could affect amount of new services provided. Commission&Comm.Meetings Impact offset by close attention to costs 100 100 (7455) and efforts to reduce ex enses.. TOTAL 119,300 83,100 -4- 2005-07 Operating Cost Reduction Options CITY ATTORNEY Attachment 2 Staffing Description Service Impact. FTE's 2005-06 2006-07 Temporary Salaries. This line was in Impact offset by close attention to costs• 0.2 $4,000 $4,000 2003-05 budget at a time when a temp and efforts to reduce expenses was used to cover flex days and during transition in legal assistants position. City Attorney's office does not to intend to use a temp for flex days of legal assistant. Publication&Subscriptions. This Impact offset by close attention to costs 6,000 6,000 line used primarily for maintenance of and efforts to reduce expenses law library. City Attorney will continue to maintain library in cost effective manner,wisely choosing renewal of subscriptions and utilizing online research. TOTAL 0.2 $10,000 $10,000 _5 _ n ' 2005-07 Operating Cost Reduction Options CITY CLERK Attachment 2 staffing Description Service Impact FTE's 2005-06 2006-07 Advertising. Eliminate routine display Some impact to citizens used to $6,000 $6,000 ads. reviewing newspaper ads. Legal ads would still be published and display ads would be published for"matters of significant neighborhood or community interest"as required in Council's Policies and Procedures. Record Storage and Document Will delay access by all employees of 700 300 Imaging: Eliminate additional City Clerk's Legislative index history MuniMetrix software licenses and without additional software license. reduce microfiching costs. Office Equipment Maintenance. Impact offset by maintenance coverage 1,500 1,500 Reduction in maintenance cost for via anticipated PEG Access funding Cablecast Control Room. when released. Print and Reproduction. Reduce 4,200 4,200 number of agenda packets and Council Impact offset by providing agenda brochures produced. packets on City's website. Reduces copies to departments and outside agencies that can access them on the City's website;and eliminates free copies of reports to citizens. (Current policy provides for up to three free agenda reports per meeting. Office Supplies/Postage. Reduce 1,100 700 purchase of office supplies. Impact offset by conscious efforts to keep office purchases to a minimum. Publications&Subscriptions. 500 500 Reduce publications and subscriptions. Impact offset by close attention to costs and efforts to reduce expenses Professional Conferences and 2,000 1,500 Training. Eliminate attendance at Eliminates additional City Clerk several conferences. training for office assistant and minimizes options for City Clerk to pursue recertification. Also reduces benefits of networking at media conference. Professional Organizations. Impact offset due to lead responsibility 400 400 Eliminate membership in Alliance for for programming by contract services Community Media. from non-profit organization. Annual Advisory Body Events. Requires using limited in-house staff 5,000 5,000 Reduce budget for advisory body resources for training or hiring speakers training and annual recognition event. at a lesser rate than in the past. Will necessitate major changes in format of annual recognition event. Council Meetings. Reduce budget for Impact offset by close attention to costs 6,400 6,400 Council meals,snacks and Council- and efforts to reduce expenses related supplies. a -6- 2005-07 Operating Cost Reduction Options J CITY CLERK Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 Elections Advertising. Eliminate Some impact on citizens used to 1,500 newspaper publication of candidates' newspaper availability of this statements. information. However, this information could now be posted to the City's website and a display ad could be published indicating its availability there. Requires changing the City's Campaign Regulations Ordinance. Elections Contract Services. Require While this would be a significant 8,000 candidates to pay the cost of publishing change in past practice,charging for campaign statements in sample ballots. candidate statements is in the mainstream of practices of other California cities. Of 136 cities responding to a recent survey,84% charge for candidate statements;only 16%provide this for free. Other options that would result in lesser cost savings include: reducing the number of words from 400 to 200(only one city in the survey noted above—whether free or reimbursed—allows 400 words as we do;the rest limit statements to 200 words);and/or either eliminate other translations or require candidates to pay for them. (Currently the City is paying for a Spanish translation: in the survey noted above,only 10%do this.) TOTAL $27,800 $36,000 -7- iI 2005-07 Operating Cost Reduction Options HUMAN RESOURCES Attachment 2 Staffing Description Service Impact FTE's 2005-06 1 2006-07 HUMAN RESOURCES ADMINISTRATION: Reduce Employee Recognition Impact offset by the Employee $1,200 $1,200 Expenses. 10%reduction (from Recognition Committee exploring ways $12,500 to$11,300) in line item for to continue to recognize employee work employee recognition activities. efforts with fewer dollars. Employees Implement 07/01/05. may be asked to contribute to the cost of Employee Recognition events. Reduce Organizational Vitality Impact offset by seeking lower cost 4,500 5,100 Expenses. 8%reduction(from$24,500 alternatives to training activities related to$20,000)in OV component of to supporting the organization's health training line item. and vitality and providing training Implement 07/01/05. through current staff members' expertise. Reduce City contribution to NMA. Reduced support for NMA(National 3,700 3,700 Eliminate contribution for Certified Management Association)activities that Manager program($3,000)and reduce foster professional and personal annual contribution by 7%(from development. $9,700 to$9,000). WELLNESS PROGRAM Reduce Wellness Supplies. Reduced Impact offset by looking for no-and 1,000 1,000 amount for supplies for the Wellness low-cost alternatives to acquire supplies program. for the Wellness Program. RISK MANAGEMENT. Various Line Item Reductions. Reduced funding for safety audits and 4,500 4,500 Reductions to contract services, training. Only training provided education and training,and safety through the California JPIA will be incentive line items. offered. Reduced funding for activities promoting safety in the workplace. HUMAN RELATIONS COMMISSION Reduce Operating Expenditures. Impact offset by close attention to costs 1,800 1,800 Reductions in various line items. and efforts to reduce expenses Reduce Grants-In-Aid. Reduce Reduced funds available to assist non- 5,500 5,500 funding 5%from 2004-05 level profit organizations who provide human (comparable to reductions in other City services to the community operations). HUMAN RESOURCES ADMINISTRATION — - Reduce Contract Services—for legal Depending on the need for outside legal 15,000 15,000 expenses. Implement 07/01/05. counsel related to grievances, disciplinary appeals and/or arbitration, there may be no service impact;there are no guarantees that this will be the case. May increase the workload of the City Attorney and Assistant City Attorney for consultation. -8- I 2005-07 Operating Cost Reduction Options HUMAN RESOURCES Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 Minor Restructuring of Human The Human Resources Director is $5,000 $5,000 Resources Department. considering restructuring one or more positions and anticipates a net salary One position is currently vacant. savings. This will likely result in a less- experienced person being hired when the HR Analyst position is filled. TOTAL $42,200 $42,800 a� 3a -9- 2005-07 Operating Cost Reduction Options FINANCE & INFORMATION TECHNOLOGY Attachment 2 Staffing Description Service Impact FTE's 2005-06 1 2006-07 ADMINISTRATION Reduce OS FTE Temporary Staffing. This will significantly impact 0.5 13,800 13,800 Two years ago as part of the 2003-05 administrative support in the budget-balancing process,we department. eliminated an Administrative Assistant position. In partially mitigating the impact of this reduction,we backfilled this cut with$14,800 in temporary staffing. Reducing this to.$1,000 ' annually will save$13,800 annually. INFORMATION TECHNOLOGY Reduced Telephone Services. Impact on ability to meet customer 15,800 16,200 Reducing the budget for telephone service telephone services partially services will save.$15,800 in 2005-06 offset by efficiencies in telephone and$16,200 in 2006-07. services and negotiated rates. Revised Monitor Cost. The City's Impact on our ability to achieve goal of 6,000 6,000 current workstation replacement policy staying current with technology is offset includes the cost of a$500 monitor: by improvements in price/performance. Given a replacement cycle of 33%of annual workstation/GIS-CAD replacements(about 30 monitors annually),reducing the monitor cost from$500 to$300 results in annual savings of$6,000. Revised Workstation Cost. The Given rapid changes in technology and 12,500 12,500 City's current replacement policy sets our policy of retaining workstations for the standard"desktop"workstation cost 3.5 years,reducing the capabilities of at$2,000(which includes a monitor, replacement computers will have some City standardapplication software, impacts in achieving our goal of staying taxes and delivery). Based on the current with technology,especially as City's current estimated life of 3.5 years units approach the end of their 3.5 year per unit,reducing the desktop standard life. However,this impact is largely from$2,000 to$1,650(from$1,500 to offset by improvements in $1,350 per workstation without a price/performance since this standard monitor)will result in annual savings of was set in 2003. $12,500. - 10- a - 33 2005-07 Operating Cost Reduction Options FINANCE & INFORMATION TECHNOLOGY Attachment 2- Staffing M Description Service Impact ____- FTE's 2005-06 2006-07 ACCOUNTING Eliminate one Accounting Assistant This position is responsible for weekly 1.0 61,400 61,400 Position. The Accounting program has accounts payable and payroll data entry, a vacant(regular)Accounting Assistant in addition to other special assignments position. at peak times such as audit and budget. The 2005-06 projection for an This impact will be partially mitigated accounting assistant is$61,400. This by the proposed conversion to new vacancy would require approximately financial management software,under 345 hours of temporary assistance at a which departments will be doing their cost of$5,000 to cover peak workload own data entry into the system It is tasks. This position can be eliminated also partially mitigated by the transfer effective 7/1/05. of liability and workers compensation insurance coverage to the CJPIA. Other weekly tasks,will be assumed by the remaining three accounting assistants in the Accounting program, which will result in some additional time to process workload and respond to special requests. INFORMATION TECHNOLOGY Reduced Computer Supplies. Impact on our ability to respond to 13,900 13,900 Reducing the budget for computer computer supply needs is partially supplies will save$13,900 annually. offset by efficiencies in providing support services. Reduced Contract Services. Impact on our ability to respond to 17:500 17,500 Reducing the budget for contract infrastructure needs is partially offset services will save$17,500 annually. by efficiencies in providing support services. SUPPORT SERVICES _ - - -- - ------- -- - Reduce number of staff attending Sending fewer staff to the League 3,600 3,600 League conference. Currently we conference may result in the loss of budget for 6 department heads to attend important information required that the:annual League conference at a cost cannot be covered in other ways. of$1,200 each. Reducing the number of staff to 3 saves$3,600 per year. This savings could be effective immediately. TOTAL 1.5 $144,500 $144,900 - 11 - 2005-07 Operating Cost Reduction Options COMMUNITY DEVELOPMENT Attachment 2 Staffing Description Service im act _ - - FTE's 2005-06 1 2006-07 ADMINISTRATION Contract Services. Reduce We can look for interns with more GIS $1,500 $1,500 graphic/digital services by$1,500 or graphic backgrounds,as well as 1,000 1,000 annually map updating by 1,000 and planning,which is beginning to be a on-line planning map access by$500 standard knowledge base. The 500 500 by providing 50%of this service in- Planning Technician can absorb more house by Planning Technician,with graphic/digital responsibilities. We can potential for training planning intems seek volunteer interns from Cal Poly. or Permit Technicians(regular and Consider some training for Permit temporary staffing)to perform these Technician position for digital services. responsibilities.. The Planning Technician could train interns and Permit Technician in these tasks,but it will affect his/her workload productivity and customer service may be impacted slightly due to training time. It will also take increased staff time to locate,interview and select qualified interns(three-month to one- year internships)on a regular and repeated basis. Office Equipment Maintenance. Do Defer basic maintenance of newer 1,000 1,000 not renew existing or purchase new equipment and repair or replace only if maintenance agreements for equipment critical to operations. that has not required service in the past or for equipment that is used infrequently. Live with less than perfect office furniture and replace only when safety is an issue. Printing and Reproduction. Focus Impact offset by out-source digitizing 500 500 more on digitized copies and e-mailing of agenda packets and more data,specifically where color maps or information on Intra-Net and Web Page drawings are involved. Begin a to replace paper documents. program to eliminate unnecessary "paper"items that are stored on-site; computer generate as necessary. Pursue digitizing options by PRP Publications and Subscriptions. Reviewing website news is an 500 500 Eliminate some publications that are alternative to magazine publications. available on-line or in digitized format. However,often times it is easier to . obtain information from hard copies; staff can read an article when time permits;without a computer. This alternative can hinder the educational component of the department. i 2005-07 Operating Cost Reduction Options COMMUNITY DEVELOPMENT Attachment 2 Staffing Description Service Impact FTE's 1 2005-06 1 2006-07 COMMITTEES AND COMMISSIONS — - - Travel,Meetings and Dues: Registration and lodging are the most 5,000 5,000 Professional Conferences. Host local expensive components of professional workshops or conferences that all conferences;this option would allow committee and commissions(as well as more advisory body members to attend staff)could attend;Solicit volunteer and participate in a local forum rather speakers(such as Paul Crawford, than out-of-town conferences. Rademaker Design and other local Committee and Commission members professionals)or offer minimal will have opportunities to receive compensation. training at the same time, and share information pertinent to the specific areas of authority. BUILDING AND SAFETY Engineering and Plan Checks: Will extend turn-around time for plan 10,000 10,000 Reduce contract plan checking checks during peak workloads. Without consultant services,all plan checking must be done in-house and will impact the existing workloads of the Building Permit Coordinator, Plans Examiner,and the Chief Building Official. DEVELOPMENT REVIEW - -- - — - - - -- Regular Salaries: Eliminate the The Department's customer service 1.0 65,800 65,900 vacant Administrative Assistant and support staff services will be position. severely impacted. The Department's front counter operations are currently Note this position is currently being staffed by a Permit Technician in the filled by a temporary position,which Building Division,and Permit would not be funded beyond June 30, Technician and an Administrative 2005. Assistant in the Development Review Division. Loss of one third of the support staff will require changes to department operations in order to maintain customer service. Support staff duties that will be impacted include customer service assistance to the public at the front counter and on the phone;production of Advisory Body Agendas,packets, and follow-up. Meeting packet delivery may be slowed as well as steps that are needed to finalize project actions and file closure. Some duties may need to be reassigned to other staff members. Staff morale could be significantly affected. TOTAL I.0 $85,800 $85,900 13- a - 2005-07 Operating Cost Reduction Options PARKS & RECREATION Attachment 2 Staffing Description Service Impact _ FTE's 2005-06 1 2006-07 RECREATIONAL SPORTS AND CHILDREN'S SERVICES _: Fee Cap on Facility Use Charges: Annually$94,700 is budgeted in $10,700 $10,700 The San Luis Coastal Unified School Building&Property to compensate San District has agreed to cap assessment of Luis Coastal Unified School District, facility use fees at$84,000. (SLCUSD)for use by Recreation programs of SLCUSD facilities.. 60240-7701 5,300 SLCUSD has agreed to cap the annual 60250-7701 5.400 fees at$84,000 yielding a savings of Total $10,700 $10,700. On one hand,it is possible that the City's fees could be less if Implementation: 7/05 charged based on actual use. On the other hand,this is a more cost effective approach for both the City and SLCUSD,and will result in more timely and predictable billings. FACILITIES.RECREATIONAL_SPORTS _CHILDREN'S SERVICES TEENS SENIORS&CLASSES Eliminate Limited-Benefit Front Impact is offset by departmental re- 1.0 42,000 42,000 Counter Staff: Eliminate the Limited organization and enhanced computer Benefit clerical position responsible for registration software. It will mean answering phones,conducting reorganizing facility reservation registration and replace with a responsibilities and combine those combined position for facilities duties with the front counter reception reservations and front counter position. Service impact will be assistance. minimal due to the department reorganization and the enhanced Implementation:7/05 computer registration software. - 14- �I 2005-07 Operating Cost hadudtion Options PARKS & RECREATION Attachment 2 Staffing Description Service Impact FTE's- 1, 2005-06 1 2006-07- RECREATIONALSPORTS- Collaborate with "First Tee"to Service impact will be minimal as 0.2 6,800 6,800 Offer Youth Golf and Discontinue Youth Golf has become a duplicate Youth Track program since the successful offering of the First Tee program at Laguna Lake Staffing and Non staffing lines will be Golf Course. Youth Track has received affected. diminishing registration until the program was cancelled due to lack of 60240-7014 4,500 participation last fiscal year and 60240-7044 100 programs of Futsal,Youth Volleyball 60240-7048 1,000 and Flag Football have provided 60240-7203 800 alternative opportunities. 60240.7829 400 60240-7701 500 TOTAL 7,300 Revenue Loss 100-45610 -500 TOTAL $6,800 Implementation.7/05 ADMINISTRATION - --- --- =— -- Reduce Non-Staffing Line Items. Contract Services. Department will 5,300 5,300 Reduce line items by$5,300 annually reduce the contribution of funding for as follows: promotional supplies for department wide logo items for special events, Contract Services(7227) 2,900 (1600). Eliminate the contract with Construction Material (7781) 1,400 Work Training Program for trash Jack House Promotions(7244) 1.000 dumping for the office, (1300) thus TOTAL $5,300 requiring in house dumping of trash. Implementation:7/05 Construction Material. Department will eliminate funding for graphic design services and office improvements. Jack House Promotions. Print fewer promotional brochures annually for Jack House public information disbursal. RANGER.SERVICES---.___ Temporary Staffing Reimbursement Ranger activities will shift from normal 6,000 6,000 Credit. Receive$6,000 annually for patrol duties to those funded by the mitigation projects funded by Natural grant program. Resource Management grants. Implementation: 7/05 SPECIAL EVENTS AND AQUATICS - 15- 2005-07 Operating Cost hcduction Options PARKS & RECREATION Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 Reduce funding for supplies for event Contract Services. Eliminate purchase 2,000 2,000 coordination by$1,000 annually and for of promotional materials with lane line and flag replacement by department logo supporting department $1,000 wide special events.. Implementation: 7/05 Machinery&Equipment Extend the useful life of lane lines and marker flags at the Aquatics facility by extending the frequency of replacement. Replace only those in need of serious repair or that become damaged and unappealing due to weather damage. TOTAL 1.2 $72,800 $72,800 - 16- 2005-07 Operating Cost Kvduction Options PUBLIC WORKS Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 PARKS,AND_URBAN FOREST MAINTENANCE Reduce Existing Landscape 1. An accumulation of trash,weeds, $42,400 $41,600 Maintenance Contract. This is a needed pruning and trimming in reduction in service levels for contract small landscaped areas. landscape maintenance services of 2. Weekly maintenance frequencies traffic islands,sound walls and other will be reduced to monthly and identified miscellaneous small monthly frequencies will be reduced landscaped areas. to quarterly. CIP PROJECT ENGINEERING Eliminate a Program Coordinator. 1. There will be no one to operate the 1.0 90,600 90,800 This is.a regular position that ran the Job Order Contracting program. JOC program and completed smaller 2 An average of 9 small CIP projects CIP projects. (approximately 28%of the number The position is currently vacant. of projects assigned)per year will not be completed due to the loss of the coordinator. GEOGRAPHICAL INFORMATION SYSTEMS Eliminate the GIS Manager 1. No one to coordinate GIS with other 1.0 96,300 96,500 Position. This is a regular position agencies such as county,state, that managed the GIS unit and contractors,and other non-profit supervised one full time and two half organizations. time GIS-staff positions. 2. No one to coordinate/manage The position is currently vacant. $19,500 worth of software licenses. 3. No central figure to manage 120 Gigabytes(and growing)of GIS data.. 4. Discontinue new interactive map development(backing off from e- government initiative) 5. Significant increase in work loads for the other GIS technicians. 6. Service requests may be rejected or delayed based on priority. May need to contract out for GIS analysis that would have been done by in-house GIS specialist (SQUArcSDE/Geodatabase/Unit conversion). 17 - �_ 4c) 2005-07 Operating Cost haduction Options PUBLIC WORKS Attachment 2 Staffing Description Service Impact FTE's 1 2005-06 1 2006-07 BUILDING MAINTENANCE Eliminate a Building Maintenance 1. Lighting maintenance in all non- 1.0 70,600 70,700 Technician position. This is a regular building maintenance program areas position that performed primarily high- (Parks,Public Restrooms, Parking level electrical work for the Building Structures, Safety Trail,highway Maintenance Division. entry signs,Jennifer Street Bridge) will need to be performed by other The position is currently vacant. departmental staff. Other departmental staff will need to be trained in electrical lighting maintenance and prepared to out- source work to contract services when beyond their capabilities.Response times and contract service costs will increase in other departmental programs. 2.General electrical or HVAC related repair and maintenance work beyond moderate complexity will have to be delayed,performed by contact service labor,or deferred. Response times and contract service costs will increase in the building maintenance program. 3. Moderately complex modular furniture repair or improvement will have be delayed,performed by contact service labor or deferred. Response times and contract service costs will increase in the building maintenance program. 4.Special City meeting set-up requests will need to be redirected to other departmental staff or be contracted out for a fee to existing contract janitorial service companies.Contract service costs will increase in other department programs. 5.Non-repair improvement work requests will have to be drastically reduced. Contract service costs will increase in other department programs. 6. Open work order totals are currently at: 30 for Customer Service Requests; 11 for Project Requests;9 for preventative maintenance requests;9 for self-generated requests; 13 for open ended contract service 2005-07 Operating Cost haduction Options PUBLIC WORKS Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 maintenance work(represents daily, monthly,quarterly,or annually reoccurring outsourced work)These numbers,as well as response times, will rise creating a backlog of work. Use of out-sourced contract labor will increase overall particularly for electrical and HVAC trade work. CIP PROJECT ENGINEERING Eliminate the Supervising Civil 1. Supervision of 7 design staff,and 1.0 108,000 108,300 Engineer Position. This is a regular scheduling and monitoring of CIP position in the CIP Engineering work work will be added to the City group that performed as the Assistant Engineer responsibilities,resulting City Engineer and supervised four in less time for programs and engineer and three technician activities currently completed the positions. City Engineer. Estimated to be 15% of the City Engineer's time.. The position is currently vacant. 2. An average of 5 CIP projects (approximately 16%of the number of projects assigned)per year will not be completed. 3. Maintenance of standard documents (Engineering Standards,Standard Specifications, DBE Program)will be completed by design staff reducing project completion by an average of 1 project(approximately 3%of projects assigned)per year. 4. Complicated CIP projects normally assigned to this person will now be assigned to less experienced staff which may result in increased project development duration and construction problems and costs. TOTAL 4.0 407,900 407,900 19- ���� 2005-07 Operating Cost kaduction Options - POLICE Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 PATROL-- - - - Cost Recovery for Parking Better reflects cost accounting for staff 30,000 30,700 Enforcement. This would transfer costs in issuing parking citations. monies from the Parking Fund to the Police Budget to reimburse police time for parking enforcement activities. SUPPORT SERVICES - - - - - -- - - - - Building Maintenance and Janitorial. Reduction in the overall level of facility 1.0 25,000 25,000 Converting the Building Maintenance care and maintenance. Based on Worker salary and benefits to full- discussions with Public Works facility service contract janitorial services will maintenance staff and Excel janitorial results in a net.savings of$25,000 services impacts will be reasonably annually. The current position will mitigated. become vacant prior to July 2005 as a result of retirement. TRAFFIC.SAFETY Fleet Reduction-Motorcycle. Reflects impact of reduced traffic 4,000 4,000 Eliminating one police motorcycle enforcement. scheduled for replacement in 06-07 at a cost of$24,000 now that it is clear the "frozen"Traffic Officer will not be filled. $24,000 annualized over 6- years. PATROL Eliminate Police Officer Position. Increase workload for other officers on 1.0 105,200 111,700 This police officer position is currently patrol;decreased ability to respond to vacant. non-emergency calls for service,and;. increased response times to calls. NEIGHBORHOOD SERVICES_ Neighborhood Services Manager- Duties not directly related to 0.25 25,400 25,500 Position Conversion. Converting the neighborhood issues,such as Crime full-time Neighborhood Services Prevention would need to be re- Manager position to a part-time distributed to other staff members (approximately 0.75 FTE)contract increasing their workload. position would better position the City for future position reductions should a revenue measure not pass. The contract position would focus on neighborhood outreach and issues. The position will become vacant in May 2005 as a result of retirement. JUVENILE SERVICES_-INVESTIGATIONS_ Eliminate Police Officer Position Elimination of the entire DARE 1.0 105,200 111,700 (DARE and Junior High School program. The Police Department Resource Officer SRO). This position continually receives extremely positive is responsible for conducting both the feedback about the DARE program DARE program and for providing from students,parents,school school resource officer services at the administrators and community Junior High School as part of our focus members. Should this program be -20- f, 2005-07 Operating Cost 6aduction Options POLICE Attachment 2 Staffing Description Service Impact FTE's 2005-06 2006-07 on at-risk youth. This position is eliminated,itis likely to be currently filled as a special assignment. controversial. It would also eliminate a If this position is eliminated,the officer significant opportunity for positive would be reassigned to a vacant police police contact with our young people patrol officer position. including valuable substance abuse education. Reducing SRO services at the Junior High School would significantly reduce our ability to work with our most at-risk youth population. NEIGHBORHOOD_SERVICES _ Eliminate Neighborhood Services Eliminating the position would 0.75 76,200 76,400 Manager Position. Rather than significantly reduce the City's ability to convert to a part-time contract position, be responsive to neighborhood groups this option would completely eliminate and issues. the Neighborhood Services Manager position. The listed savings amount Redistribution of duties,to the extent it reflects the remaining salary and could be accomplished,would benefits beyond the contract conversion dramatically increase the workload of option listed above. remaining staff. Total elimination of this position would likely be significantly opposed by neighborhood groups and associations. TOTAL 4.0 $371,000 $385,000 -21 - a LA 2005-07 Operating Cost L:,wduction Options FIRE Attachment 2 Staffing Description Service Impact FTE's 1 2005-06 1 2006-07 EMERGENCY RESPONSE Reduce Infection Control Costs Impact offset by close attention to costs 3,000 3,000 and efforts to reduce expenses. HAZARD PREVENTION Reduce scope of weed abatement This will be a less effective program in 0.3 6,400 6,400 program by taking a less proactive controlling weeds. approach. Eliminate one Fire Inspector position This would have significant adverse 1.0 100,400 100,400 impacts on our ability to meet inspection requirements. EMERGENCY RESPONSE Close Fire Station No. 3/Move staffing Increased response times,unable to 59,400 59,400 to Fire Station No.,1. meet our response criteria of 4-minute response time 95%of the time. The savings would be the non-staffing costs of the fire station. According to the Hunt Management Study,this equates to current dollar savings of$59,400 per year. TOTAL l.3 $169,200 $169,200 -22- � � JUNCIL =CDDDIR ?CAO FIN DIR :CE ACAO E FIRE CHIEF REED TTORNEY .0PW DIR0`CLERK/ORIG ;"d'POLICE CHF aPRZ[3❑ DEPT HEADS ZREC DIR ,�I:: TIL DIR SLO CLERK HR DIR MEMORANDUM From the Office of the City Attorney .April 19, 2005 RED FILE To: Mayor and City Council -- ME ING AGENDA DATE ITEM #A . S a. From: Jonathan P. Lowell, City Attorney Re: Political Reform Act Requirements and Proposed Business License Fee Issue Council member Settle has asked whether a Council member's business or rental property interest in San Luis Obispo would preclude a Council member from participating in making a decision on the proposed business license fee contained in the 2005-07 Budget Balancing Strategy on tonight's Council meeting agenda. Short Answer As discussed below, a specific business license provision of the "public generally" exception allows all sitting San Luis Obispo Council members to participate in decision making relating to the proposed business license fee. Analysis Government Code section 87100 provides "no public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest." Government Code section 87103 provides, in part: "A public official has a financial interest in a decision within the meaning of Section 87100 if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public generally, on the official, a member of his or her immediate family, or on any of the following: (a) Any business entity in which the public official has a direct or indirect investment worth two thousand dollars ($2,000) or more. (b) Any real property in which the public official has a direct or indirect interest worth two thousand dollars ($2,000) or more. t Memo to Mayor and City Council April 19, 2005 Page 2 (c) Any source of income, except gifts or loans by a commercial lending institution made in the regular course of business on terms available to the public without regard to official status, aggregating five hundred dollars ($500) or more in value provided or promised to, received by; the public official within 12 months prior to the time when the decision is made. (d) Any business entity in which the public official is a director, officer, partner, trustee, employee, or holds any position of management. As part of the Budget Balancing Strategy for 2005-07 to be considered by the City Council on April 19, 2005 there is a recommendation that the Council adopt a business license fee program that recoups the City's costs associated with the regulatory aspects of the current business tax program. Two members of the City Council are business owners in San Luis Obispo. In addition, two members of the Council are landlords and, consequently, are subject to the City's business tax and would be subject to a business license fee, if adopted. Thus, applying the general rule under Government Code section 87100,it would appear three Council members (one is both a business owner and a landlord) would be precluded from participating in decisions regarding the business license fee program. However, the Fair Political Practices Commission's regulations contain the following exception, the relevant portions of which are set forth here: 18707.1. Public Generally. General Rule. (a) ...the material financial effect of a governmental decision on a public official's economic interests is indistinguishable from its effect on the public generally if both subdivisions (b)(1) and(b)(2) of this regulation apply. (b) Significant Segments and Indistinguishable Effects. (1) Significant Segment. The governmental decision will affect a"significant segment" of the public generally if any of the following are affected as set forth below: (c)Business Entities. For decisions that affect a business entity in which a public official has an economic interest, the decision also affects either 2,000 or twenty-five percent of all business entities in the jurisdiction or the district the official represents, so long as the effect is on persons composed of more than a single industry, trade, or profession. For purposes of this subdivision, a not for profit entity other than a governmental entity is treated as a business entity. (2) Substantially the Same Manner: The governmental decision will financially affect a public official's economic interest in substantially the same manner as it will affect the significant segment identified in subdivision (b)(1) of this regulation. The financial effect i Memo to Mayor and City Council April 19, 2005 Page 3 need not be identical for the official's economic interest to be considered "financially affected" in "substantially the same manner." The proposed business license fee would affect greater than 25 % of all business entities in the City and extend to all industries, trades and professions. Adoption of such a fee would affect the three Council members in substantially the same manner as it would affect the significant segment identified in subdivision (b)(1) of this regulation, i.e. all other businesses, including landlords, within the City. Thus, the effect of a business license fee on the economic interest of the three Council members would be indistinguishable for its effect on the public generally. Conclusion Under the business entity subsection of the public generally exception of FPPC regulation section 18707.1, the three Council members who would be subject to a business license fee if such a program is adopted may participate in the decision making process relating to the adoption of such a program. cc: Ken Hampian Audrey Hooper council memoizanoum [city of San LUIS OBIS o, Ac)mmistnation be aatment DATE: April 18, 2005 TO: City Council RECEIVED APR 1 b 2C,-Da FROM: Ken Hampian, CAO r LO CITY CLERK SUBJECT: Agenda Item 2: Duplicate Pages In case you have been scratching your head, there are duplicate pages in Attachment 2 of Item 2, which outlines the decrease options: Pages 2-23 and 2-25 are the same, and pages 2-24 and 2-27 are the same. Sorry for any confusion. CAOTCDD DIR ACRO -Z FIN DIR .BATTORN.-v FIRE CHIEF RED FILE L "CLERK 0,910 �CJCCHF IE ❑ D T,�cADS ME ING AGENDA lam_ Ec DIR DATE ITEM # � jy� zurlL DIR COUNCIL MEMO TEMPLATE