CITY COUNCIL FINANCE COMMITTEE. March am 945pm. San Leandro City Hall 835 E 14 Street. San Leandro California. Sister Cities Gallery

Transcription

1 CITY COUNCIL FINANCE COMMITTEE March am 945pm San Leandro City Hall 835 E 14 Street San Leandro California Sister Cities Gallery HIGHLIGHTS Committee Members Mayor Cassidy Councilmember Gregory Councilmember Souza City Staff Present City Manager Hollister Assistant City Manager Marshall Finance Director Vesely Deputy Finance Director Rodriguez Budget Compliance Manager Perini Accountant I Galvin Administrative Assistant III Perez Public Present Dale Reed Mia Ousley David Bohne Kathy Ornelas Jacqui Diaz Charles Gilcrest Pauline Cutter Jill Replogle The meeting was called to order at819am 1 Discussion Regarding FY Budget Development Finance Director Vesely presented the Finance Committee with a handout that summarized the FY budget development process and preliminary budget projections Vesely outlined the baseline budget and explained to the Committee that although the projected General Fund deficit for FY is 126 million the budget gap is much smaller than previous years Finance is meeting with departments to identify cost savings within their departments Vesely stated that the City Manager s FY Proposed Budget will be presented to City Council on May Mayor Cassidy instructed staff to provide information regarding proposed program reductions as well as detailed department expense budgets Vesely stated that information will be provided in upcoming meetings Vesely also stated that staff will continue to refine numbers throughout the budget process There are several factors that will facilitate changes to the budget including the threat of the State s disbandment of Redevelopment Agencies If the Governor is successful in his proposal to eliminate these local agencies the City will have to reconsider a number of its budget assumptions Community Development Director Sims spoke to the Committee regarding the upcoming City Council topic on Redevelopment Agency property Sims briefly informed the Committee that the Redevelopment Agency of San Leandro RDA will be asking Council to approve action to protect current RDA assets including property Sims stated that Assistant City Attorney Rich Pio Roda will be at the Monday March City Council meeting to answer questions 1

2 2 Review of FY Budget Development Schedule Including City Council Work Sessions on City Budget Vesely reviewed the budget working calendar with the Committee Mayor Cassidy would like to see detailed department budgets at the upcoming meetings for more discussion Vesely briefly went over what will be discussed at future Finance Committee meetings including RDA on March 18 proposed fees on April 15 and a summary of the FY Proposed Budget on May 6 3 Discussion Regarding California Public Employee Retirement System Ca1PERS Rates Vesely discussed the CaIPERS rates as a followup from the February meeting Vesely provided a history and projection of future rates for both the Miscellaneous and Safety plans from through The PERS board is scheduled to meet soon to discuss assumptions that may impact local agency rates Councilmember Souza asked about alternatives to PERS Vesely stated that at this time there is no alternative without going to all bargaining units for vote and approval However if all bargaining units agreed to forgo PERS the City would still be liable for all past debts Councilmember Souza also questioned how PERS determines the rates for various cities and what if any is the incentive for PERS to lower the rates Vesely stated that rates are actuarially based and account for demographics age of plan etc Mayor Cassidy requested a comparison of surrounding cities and the rates they pay for both Miscellaneous and Public Safety employees Vesely stated that staff will provide at March 18 Finance Committee meeting 4 Discussion Regarding Property Transfer Tax Rates As a followup to a question brought upon the Finance Committee on February Vesely provided a comparison of the Real Property Transfer Tax RPTT rates for Charter cities in Alameda County The City of San Leandro has one of the lowest rates 6 per 1000 highest only to the City of Hayward Councilmember Gregory had posed the question of increasing the rates City Manager Hollister stated that an increase to the RPTT must go before the voters at the next General Election and must be approved by a majority vote if the funds are to be used for a general purpose a 23 vote is required for designated purposes 5 Discussion Regarding Water Pollution Control Plant Rates Vesely reported that on June City Council held a Public Hearing on the increase to Residential Sewer Service Rates for both single and multiple family homes in compliance with Proposition 218 requirements City Council unanimously passed Resolution approving the monthly maximum sewer rates for the residential and commercial services for five years beginning FY through FY The annual increase for residential services would be 5 per year and would be billed to residential customers via their annual Alameda County Property Tax bill The City was to provide the County with the amounts to be billed by parcel number Unfortunately this did not happen Because the City failed to communicate the new rates to the County the rates were not increased and therefore the Water Pollution Control Plant Enterprise Fund did not receive the projected in increased revenue for FY In order to recover the lost revenue the City will have to bill each residential parcel 5 for 2

3 the current fiscal year as well as 5 for and is requesting approval from the Finance Committee to bring before the City Council Vesely indicated that the department has implemented improved procedures to avoid this type of error in the future Mayor Cassidy thanked staff for bringing to the Finance Committee s attention as soon as the error was discovered Committee Recommendation Committee recommended taking to Council for approval 6 Public Comments Mia Ousley stated that based upon the provided Budget Calendar the public does not have many opportunities to provide input prior to the June Public Hearing on the budget Ms Ousley suggested that notices of the upcoming meetings eg Finance Committee and Work Sessions be made available for public attendance Charles Gilcrest appreciates staff and Council s hard work especially with RDA Mr Gilcrest suggested writing to our legislature demanding for an increase to the City s share of Property Tax should the RDA be disbanded 7 Committee Member Comments Mayor Cassidy thanked both Ms Ousley and Mr Gilcrest for their input and advised Mr Gilcrest that he would be meeting with Senator Ellen Corbett should Mr Gilcrest wish to provide a letter Mayor Cassidy thanked staff for their hard work Mayor Cassidy also stated that he would be speaking with staff regarding the possibility of conducting Town Hall meetings but suggested that press releases be placed in the San Leandro Times for future meetings for public attendance He also would like to have a Frequently Asked Questions page on the City website 8 Adjourn The meeting was adjourned at940am 3

4 CITY OF SAN LEANDRO CITY COUNCIL FINANCE COMMITTEE March am 945am San Leandro City Hall 835 East 14 Street San Leandro California Sister Cities Gallery Agenda 1 Discussion Regarding FY Budget Development 2 Review of FY Budget Development Schedule Including City Council Work Sessions on City Budget 3 Discussion Regarding California Public Employee Retirement System CaIPERS Rates 4 Discussion Regarding Property Transfer Tax Rates 5 Discussion Regarding Water Pollution Control Plant Rates 6 Public Comments 7 Committee Member Comments 8 Adjourn Committee Members Mayor Stephen Cassidy Councilmember Michael Gregory Councilmember Diana Souza

5 City of San Leandro City Council Finance Committee March Corrected March OF SPN w0 0

6 1 Discussion Overview Budget development process General Fund financial overview General Fund preliminary balancing plan Summary of proposed expenditure reductions Budget calendarnext steps 2

7 FY 2012 Budget Process Established FY 2012 Baseline budget limited cost increases revised revenue projections 753K Initial Baseline GF deficit Revised GF deficit 126M Met with departments to identify recurring reductions Balancing plan recurring cuts revenue some 1 time Will present balanced budget to Council on May 16 3

8 FY 2012 GF Summary Baseline Revised 1 Proposed 2 Total Revenue Total Expenditures Net Operating Revenue Expenditures Total Other Financing Sources Uses Net Revenue Expenditures Revised baseline revenue changes dept budget submissions furlough savings 2 Proposed budget with balancing measures included 4

9 Proposed Balancing Measures Balancing Measures Additional new revenue 200 Department expenditure reductions 848 Reduce ISF rates one time 211 Total 1259 Recurring revised revenue projections BLT UUT fines Recurring department cuts Continue to refine preliminary reductions One time reduction of ISF rates pending completion of comprehensive review 40

10 Expenditure Cuts Summary No position reductions Maintains current level of service Police Department 330K Red Light Camera program reduce contract costs Other line item reductions still refining Cityy Manger age n s Office IT e Reduction in budgeted retiree medical payments Reduction in citywide technology expenses

11 Expenditure Cuts u m m a Finance Insurance Fund 105K Reduction in budgeted insurance premium payments Reduction in anticipated UUT rebate payments Public Works 50K Anticipated annual contract savings Recreation 10K Other budget adjustments 114K Labor distribution corrections non departmental savings ISF rate reductions 211K One time pending comprehensive internals services funds review 4110

12 i Preliminary etas Change in thousands Actual Actual Estimated Baseline Proposed Revenues fr Comments Property Tax Sales Use Tax Measure Z Real Property Transfer Tax Utility Users Tax Franchise Fees Business License Tax Minimal projected growth All Other Revenues Minimal projected growth Total Revenue Expenditures Sub Total Salaries Benefits Net of benefit and salary changes Services Supplies Department budget savings Fire Contract Services Fire contract increase Capital Outlay Debt Service Internal Service Fund Charges No ISF rate holidays Other Total Expenditures Net Operating Revenue Expenditures includes 300K to Reserve Net Revenue Expenditures

13 FY 2012 GF Assumptions Expenditures No wage increases Furlough medical cost share savings 7 medical 2 dental rate increases PERS employer rate increases 45 Safety 47 non safety FY time balancing measures eliminated No 500K transfer from Insurance Fund No 300K transfer to Gas Tax fund No State take aways Grow Reserve by 300K 9

14 Other Possible GF Impacts State budget impacts Assumptions do not include RDA take away Possible net loss of about21m Staff reviewing optionsplan present on Increased PERS rates in FY 2013 Other fund deficits ie Shoreline Fund Developing balancing options Further erosion of City revenues 10

15 Preliminary Forecast Actual Adopted Projected Projected Projected Projected Projected Total Revenue Total Expenditures Net Operating Revenue Expenditures Total Other Financing Sources Uses Net Revenue Expenditures FY 2012 balanced While future budgets reflect projected deficits City Manager will propose balanced annual budgets that include required balancing measures Preliminary forecast many variables will impact projections 11 1

16 FY 2012 budget calendar Finance Committee Finance Committee RDA CIP Council Budget Work Session GF CIP RDA Finance Committee Council Work Budget Session 411 PERS Ilabilities Other Funds Finance Committee fees Council Public Hearing fees Finance Committee Council Proposed Budget Finance Committee Proposed budget review Council Budget Adoption Public Hearing

17 City of San Leandro CaIPERS Employer ER Contribution History and Projections Miscellaneous Plan Safety Plan FY ER Rate Change FY ER Rate Change NOTES Miscellaneous Plan CaIPERS ER contribution for FY 2012 FY 2013 FY 2014 projections val FY 2013 could increase 15 3 if investment assumed rate of return lowered to Assuming 2 increase in FY 2015 Safety Plan CaIPERS ER contribution for FY 2012 FY 2013 projections valuation FY 2013 could increase 4 5 if investment assumed rate of return lowered to 7s Assuming 3 increase in FY 2014 Assuming 2 increase in FY 2015

18 City of San Leandro Property Transfer Tax Summary and Comparison with Alamenda County cities Per 1000 Ranking Property Value Highest to City City Rate Lowest Berkeley Oakland Piedmont Alameda Albany San Leandro Hayward Source CaliforniaCityFinance com April 2009 Additional Information 1 To increase the PTT voters must approve by a majority vote if the funds will be used for general purposes a 23 vote is required for designated purposes 2 Only chartered cities may increase property transfer tax rates 3 Very volatile revenue stream driven by real estate market therefore may not see significant increase in transactions or value of transactions for the next few years 4 City of San Leandro currently generates about24m per year in PTT to the General Fund 5 Every 1 increase to the transfer tax rate will generate approximately year G Finance Committee Property Transfer Tax comparison xlsx

19 CITY OF SAN LEANDRO STAFF REPORT DATE March TO Stephen Hollister City Manager FROM Tracy Vesely Finance Dire or BY Mary Ann Perini Budget and Compliance Manager SUBJECT PROJECT DESCRIPTION DISCUSSION REGARDING THE WATER POLLUTION CONTROL PLANT RESIDENTIAL SEWER SERVICE RATES FOR FISCAL YEAR SUMMARY AND RECOMMENDATION The tax bills received by property owners for fiscal year did not include the increased Residential Sewer Service Rates adopted by City Council on June for single family homes and multiple family homes Staff recommends that the Finance Committee approve billing residents the incremental increase for FY on the FY property tax statements under a separate description and authorize communication to City residents of the forthcoming adjustment BACKGROUND On June City Council held a Public Hearing to consider annual sewer rate increases in compliance with Proposition 218 requirements that require the City to conduct a Majority Protest process when considering proposed rate increases The rate increases are based on a comprehensive rate study as required by the State Water Resources Control Board s State Revolving Fund Resolution No was unanimously passed by the City Council approving the monthly maximum sewer rates for both residential and commercial services for five years beginning FY through FY the average annual increase for residential services is 5 The residential sewer rates are billed annually to San Leandro property owners by the Alameda County Tax Collector By August each year the City provides the County with the amounts to be billed by parcel number Because the City failed to communicate the increased rates to the County the FY Alameda County Property Tax Statement reflected the FY residential sewer rates in error Consequently the 5 increase was not implemented and the Water Pollution Control Plant Enterprise Fund did not receive the in increased revenue for FY

20 Finance Committee Water Pollution Control Plant Residential Sewer Rates 2 March ANALYSIS Staff has reviewed the error and made the following findings The City Attorney confirmed that the City would be in compliance with Proposition 218 requirements if the City recovered the incremental increase of 131 per month for single family homes and 094 per month for multiple family dwellings for FY during the FY property tax billing cycle The Alameda County Tax Collector Auditor s Office Tax Analysis division has approved use of a second line item to capture the FY sewer adjustment If the City chooses to do nothing then approximately in sewer revenues would be foregone The Summary of Residential Sewer Service Charges Attachment A provides the monthly sewer rates for FY base year and the approved rates beginning FY through FY Using the actual number of parcels billed for the FY property tax statements revenues are calculated for each of the fiscal years including a breakout of the new revenues attributed to the 5 annual rate increase The chart also depicts the proposed correction to the FY tax bill Staff recommends that next year s rates be set at the pre approved amount and that the City bill and recoup the 15 under billing from this fiscal year RECOMMENDATION Staff recommends that the Finance Committee approve billing residents the incremental monthly increase of131 for single family homes and094 for multiple family dwellings for FY on the Alameda County Property Tax statement for FY and seeks ultimate approval from the City Council on March ATTACHMENTS Attachment A Summary of Residential Sewer Service Charges G FinanceCommtttee Staff Report Residential Sewer Service revised docx

21 City of San Leandro ATTACHMENT Summary of Residential Sewer Service Charges A of Current Rate Approved Monthly Rates Residential Service Parcels FY FY FY FY FY FY Single Family Home Monthly Rates Single Family Annual Revenues Multiple Family Unit Monthly Rates Multiple Family Annual Revenues Total Residential Sewer Service Revenues Annual revenue increase Proposed Correction for FY Rates in FY Current Corrected Annual Total Sewer of FY FY FY FY Parcels Rate Increment Sewer Service Service Charge Single Family Home S 131 S S Monthly Rates Annual Cost Single Family Annual S Revenues Multiple Family Unit S S Monthly Rates Annual Cost S Multiple Family Annual S Revenues Total Residential Sewer Service Revenues Average Annual cost to rate payer a Correction of FY rates reflect the difference between the approved rates for FY and the current rates for example is the difference for the Single Family Home rates and for the Multiple Family Home rates b Reflects the adopted sewer service rates for FY as per City Council Resolution dated June GAFinance Committee Sewer Service Charges xlsx

22 CITY OF SAN LEANDRO CITY COUNCIL INTERNAL COMMITTEE MEETING SIGN IN SHEET NAME OF CITY COUNCIL INTERNAL COMMITTEE DATE OF MEETING Finance Committee March Signingin on this sheet is not required for participation Information provided below may be usedfor notification andorfollowup NAME MAIL ADDRESS TELEPHONE NUMBER ADDRESS 1sf c ss cre f 2 3 P Fnai e X 33 CALTI a2ootr J utz 5 Chn Sfih Ga S i6 s 412 Ct Ate 514 S17 3 9lr J14t 10 ciy ems 33LL Rev

23 CITY OF SAN LEANDRO CITY COUNCIL INTERNAL COMMITTEE MEETING SIGN IN SHEET NAME OF CITY COUNCIL INTERNAL COMMITTEE DATE OF MEETING Finance Committee March Signingin on this sheet is not requiredfor participation Information provided below may be usedfor notification andorfollowup NAME MAIL ADDRESS TELEPHONE NUMBER ADDRESS 1 Ir 738 ceiu a 4it o Pc4 Ma9 rc rak AA nl e y o Cii sue N IcL atair f 6 Cy v cl 44 c 7 8 1T ji PsaC Rcv