STAFF REPORT MEETING DATE: May 16, 2017 TO: FROM: City Council Regan Candelario, City Manager Russ Thompson, Public Works Director Maureen Chapman, Interim Finance Manager Chris Blunk, Deputy Director Public Works 922 Machin Avenue Novato, CA 94945 415/ 899-8900 FAX 415/ 899-8213 www.novato.org SUBJECT: PROVIDE DIRECTION TO STAFF ON PROPOSED FY 2017/18 OPERATING BUDGET AND CAPITAL IMPROVEMENT PROGRAM BUDGET REQUEST Consider providing conceptual budget direction on the City s Manager s proposed FY 17/18 Operating Budget and Capital Improvement Budget recommendation so that staff can prepare the budget document for public and Council formal review on June 13, 2017. DISCUSSION The City typically begins its annual budget process each January with staff from the Finance Division, City Manager s Office and each department discussing goals, objectives, expenditures, and revenues for both the operating and capital budgets. The City Manager then prepares recommended budgets to present to the City Council through a series of work sessions in April and May. The City held three community budget planning workshops to allow residents to learn about the annual budgeting process, provide information about Measures F & C, and receive an update on the Five-Year Forecast. The meetings were well-attended and residents were able to meet with department representatives and provide feedback and suggestions to staff. cc17_089 April 18 Capital Improvement Budget Work Session In the first budget workshop, staff presented the proposed Capital Improvement Budget and listing of vehicles scheduled for replacement in FY 17/18. The City Council asked questions and provided feedback. April 25 Operating (General Fund) Budget Work Session -- During this budget workshop, staff presented a variety of data and information regarding the proposed fiscal year 17/18 General Fund and Measure F budgets. Additionally, staff presented information about each department s current year accomplishments; FY 17/18 budget recommendations; and FY 17/18 goals and objectives. The City Council asked questions and provided feedback. The purpose of the May 9 Council meeting is for the City Council to provide conceptual direction on the City Manager s recommendations for the FY 17/18 Budget (Operating and Capital). This direction will inform the development of the detailed budget document that will be presented formally and adopted on June 13. 1
City Manager s Proposed FY 17/18 Budget Recommendations The City Manager s proposed budget recommendations emphasize a prudent and targeted approach on our community s highest priorities and most pressing challenges. With an improved economy, there is an increased demand for services and an associated increase in workload. These areas include services driven by the burgeoning housing and real estate market such as planning, building, and inspection services. While the Community Development Department is much of the emphasis of these service needs, workload has increased across all departments; thereby impacting our ability to respond in a timely fashion and increasing frustration for staff and the community. Some services, especially those that were significantly reduced during the recession, are degrading over time as insufficient staff to do the work means an increasing backlog of requests and needs. Staff views the budget requests as necessary to provide the basic / core city services to ensure safety, preserve our assets, and exercise fiscal prudence. Furthermore, the recommendations focus on the areas of City service that residents have told us are most important to them. In developing the budget, staff focused on addressing the most important service needs that continue to be expressed by the community. With Measure C in place, Novato is better positioned to be able to focus on the following critical service areas: Focus on Public Safety Augment administrative support staff to allow officers to focus on field duties, increasing public safety service levels. Increase overtime and training budgets to reflect historical trends, and in support of the department s efforts to attract and retain new officers. Reinvest in Maintenance Continue investments in City facilities and improve accessibility, streets/parks/island deferred maintenance and enhanced custodial/facility maintenance services through a variety of staffing and programs. Respond to Increased Permit / Inspection Activity As part of the FY 16/17 budget, City Council approved funding for two additional positions (one planner, one building inspector) to respond to increased permit / inspection activity. With the economic upswing, One-Stop Shop, building, planning and code enforcement services have all been impacted. The new positions were added as rolling 2-year limited term positions. Demand has continued during this fiscal year; therefore, staff is recommending that Council extend the positions for an additional year, through FY 18/19. In this way, a 12-18-month glide-path exists for both the City and the position incumbent to downsize staffing if needed. Employee Investment & Organizational Stability Continue to invest in our employees by providing them with tools, training, and support to ensure a healthy, happy, productive workforce (training, technology, wellness and recognition programs). o Implement Organizational Efficiencies continue to realize organizational efficiencies through creative solutions including the increased use of non-sworn personnel in the daily administrative operations of the Novato Police Department and through organizational restructuring as was proposed by the City Manager on April 18, to allow staff to refine and refocus on City Council priorities. Long-term Fiscal Health integrate the Council s Strategic Plan within the FY 17/18 budget. Staff will continue to identify potential reductions and savings, opportunities to leverage private 2 2
funding and/or resources, and create new efficiencies to have an even greater impact on our Five- Year General Fund Forecast. Support Youth and Senior Programs Reallocate part-time hourly funding and recognize increased program revenues to fund an additional.75 FTE gymnastics instructor for preschool and recreation classes. Utilizing regular staffing rather than temporary employees allows for stability within these popular programs. Continue Financial Assistance Program to allow lower income residents to participate in PRCS programs. Commitment to Public Engagement and Outreach Continue to deliver on the City s commitment to enhance public engagement and make our public outreach and website information consistent, accessible, understandable and interactive with enhanced staffing and operational funding. New initiatives include a draft Communications and Community Engagement plan and the implementation of an Open Data system by end of the calendar year to continue the City s proactive communication with, and engagement of, the community. Comprehensive Economic Development & Innovation Program Develop and implement an Economic Development Strategy that is multi-faceted and builds upon the City s commitment and investment in attracting Bio Life Science jobs and industry expansion to Novato, with a special emphasis on fostering public-private partnerships, enhancing City business services including permitting and development processes, and business development, and creating a formal business retention and expansion program to create a strong, diverse local economy. Changes from the Prior Budget Work Sessions Following the budget workshops in April, staff took Council feedback--those changes are listed below. The operating budget changes have a minimal impact on the budget and forecast projections. Operating Budget Budgetary changes to the draft General Fund budget incorporated both recommendations from Council and from the community. Additionally, staff reviewed estimated costs that were included in department requests and revised those as final data became available. The total impact to the General Fund expenditure budget is an increase of $17,440. Expenditure Description Original Request Revised Increase / Request (Decrease) Public Works Administrative Manager Payroll $4,560 $2,000 ($2,560) Streetscape Committee Support $5,000 $5,000 Community Garden Support $20,000 Transition to Deep Green with MCE $25,000 $20,000 ($5,000) Total General Fund Impact $17,440 One change to proposed General Fund revenues is the addition of $63,500 in excess ERAF funds that the City was notified about after the first budget workshop. Revised Increase / Revenue Description Original Budget Budget (Decrease) Excess ERAF $1,350,000 $1,413,500 $63,500 3 3
Below are the updated General Fund revenue and expenditure tables, based on the information presented to date and the changes listed above. Proposed FY 17/18 General Fund Revenues Revenue Type FY 16/17 Revised BudgetFY 17/18 Proposed Budget Change Taxes 29,836,585 30,753,505 916,920 Licenses & Permits 1,127,450 1,149,200 21,750 Intergovernmental * 428,050 394,450 (33,600) Service Charges 2,828,305 2,924,000 95,695 Fines, Forfeits & Penalties 510,500 525,500 15,000 Use of Money & Property 475,030 540,110 65,080 Miscellaneous Revenue 81,400 52,100 (29,300) REVENUE TOTAL 35,287,320 36,338,865 1,051,545 Operating Transfers 1,275,526 1,269,935 (5,591) IF Loan Repayments / Operations 230,000 230,000 - TOTAL 36,792,846 37,838,800 1,045,954 % Budget Change 2.8% Proposed FY 17/18 General Fund Expenditures Department FY 16/17 Revised BudgetFY 17/18 Proposed Budget Change Central Administration 1,841,805 2,307,589 465,784 Administrative Services 3,057,914 3,410,381 352,467 Citywide Programs 2,254,053 2,887,835 633,782 Police * 14,014,384 14,408,557 394,173 Community Development 2,493,180 2,621,623 128,443 Public Works 6,812,333 6,858,497 46,164 Parks, Recreation & Community Service 3,562,926 3,410,664 (152,262) EXPENDITURE TOTAL 34,036,595 35,905,146 1,868,551 Operating Transfers 3,346,354 2,733,185 (613,169) Unspent Appropriations (500,000) (650,000) (150,000) TOTAL 36,882,949 37,988,331 1,105,382 % Budget Change 3.0% CIP Operating Transfers for City Hall 483,702 408,700 (75,002) 4 4
Capital Improvement Budget The draft CIP budget presented to Council on April 18 included projects, both new and ongoing, utilizing unallocated Measure F funds as one of the potential funding sources. Council expressed concern with this strategy and requested that staff explore other potential funding options for the projects. The CIP portion of the May 9 presentation includes alternate funding strategies for those projects. Measure F Committee Feedback The Measure F Oversight / Citizens Finance Committee met to review the Operating Budget recommendations and the funding alternatives for the Capital Improvement Program Budget on May 2. The Committee was in favor of using Measure F funds for the Hill Recreation Area project and recommended that the project be completed in one phase. The Committee emphasized that use of Measure F funds for capital projects should reflect the intent of the original ballot language. Recreational, Cultural and Community Service Commission Feedback The Commission met on March 9 and received a presentation on the initial draft Operating and Capital Improvement budgets. One of the Commission s requests regarding the CIP budget was that the Hill Recreation Area renovation project be completed in one phase. Conclusion Based on Council s direction on the proposed Operating and Capital Budgets, staff will move forward to prepare the draft budget document. The proposed FY 17/18 budget will be available to the public in late May with a budget hearing and adoption on June 13. RECOMMENDATION Provide conceptual direction on the City s Manager s budget recommendations so that staff can prepare the budget document for public and Council formal review on June 13. Staff recommends the budgets as discussed in detail at the Council meetings on April 18 and April 25, with modifications as discussed above. ATTACHMENTS 1. Consolidated Operating Budget Recommendations 5 5
2017/18 Consolidated Operating Budget Requests Account Description / One-time Reason General Fund Measure F Clean Stormwater Community Development Plan retention (digitizing) CDD has no dedicated expenditure account for plan retention/digitizing but on average collects $18,000/year from permit fees for document retention/storage. 12,000 Software Maintenance Software maintenance for web hosting services related to public access to digitized records 7,500 Sustainability Coordinator Implement Climate Change Action Plan 120,000 Public Works Repairs/Maintenance Requesting additional $8,000 for purchase and installation of storm drain trash collection devices. The Storm Drain Master Plan and BASMAA PHASE II Trash Reduction Program identified high priority areas requiring enhanced collection of debris in various locations, which include Leafwood, Nave Drive (from Hamilton Parkway to Bolling), Grant Ave and various stretches of Olive Ave. The Trash Reduction program will become mandated by the state later this year. 8,000 Intergovt/County of Marin Increase in MCSTOPPP contribution charges 40,000 Intergovt/State of CA The City of Novato is getting billed $22,000 for MS4 Storm Water Permits from the State Water Resources Department. 5,000 Requesting permanent position for Public Works Administrative Manager, and need to make adjustments to make it an attractive offer for chosen candidate. The difference between Step 5 Public Works Administrative Manager and Step 4 Maintenance Superintendent is $1,824 per year, plus benefit costs. (GF cost approximately Regular Employees $2,000.) 2,000 Repairs / Maintenance Supplies The Novato Police Department has been experiencing increased repair costs due to 40 year old air handlers/hvac equipment breakdowns. 5,500 Increase current funding in order to keep up with lighting replacement supplies at 901 Sherman, NPD and 922 Machin Ave. We have not increased our electrical supplies since staff moved into 922 Machin Ave. 1,000 Utilities - Gas & Electric Increase current funding resulting from city transitioning to "Deep Green" option with MCE 20,000 Streetscape Committee Support The Committee has requested additional funds to support their efforts to beautify islands throughout the City 5,000 Community Garden One-time Relocate and prepare site for Community Garden on the Lieb property on Hill Road. 20,000 Supplies There is currently no funding for Lu Sutton Child Care repairs & maintenance supplies. Safety concerns may arise if proper supplies are not replenished or cannot be purchased for repairs that are requested on a weekly basis. 1,500 Supplies Increase current funding due to ongoing light replacements at Margaret Todd Senior Center and Hill Gym. Light replacement inside our facilities will continue to be a top priority due to safety. 500 Repairs / Maintenance There is currently no funding for repairs and maintenance at the Hamilton Community Pool. When the Community pool is operational Maintenance receives multiple request for repairs that needs to be performed by a licensed technician. 1,500 Contract Services One-time Allocate funding for dumpster rental to clean out unnecessary storage in city facilities. 10,000 Contract Services One-time Provide additional support to Downtown Streets Team 23,000 Police Patrol Salary, benefits, retirement- Upgrade (1) Officer positions to Upgrading 1 officer position to corporal takes us to 4 corporals that supplement sergeant supervision of the patrol teams. This increase creates improved opportunities for officers and a positive impact on retention, succession planning and enhances recruitment options. With the patrol staff average "time in rank" at 4.02 years, an increase of Corporal supervision is critical. 8,100 6
2017/18 Consolidated Operating Budget Requests Account Description / One-time Reason General Fund Measure F Clean Stormwater Records Salary, benefits, retirement- (1.5) Records Clerk The additional 1.5 positions will provide efficient responsiveness to internal staff, the public, reduce the backlog of records paperwork, and will allow sworn employees to focus on higher level public safety duties. A carryover issue from the Recession resulted in a significant loss of the department's non-sworn support staff causing officers to perform many clerical duties. This has resulted in a measurable decrease of productive officer time in the field diminishing our public safety service levels. Previously, the Records Units had six FTE's performing clerical and support duties, compared to the current staffing level of 2.5. Last fiscal year overtime reached $33,050 and is anticipated to reach $26,000 this year, in order to maintain office hours and a minimal level of service. An increase in FTE will allow us to maintain actual OT closer to budgeted amounts. The additional 1.5 positions will increase the Records Unit to 4 FTE's, a reasonable level based on technology improvements and efficiencies; the unit will be appropriately staffed for the foreseeable future. 116,500 Increase is requested to bring the overtime budget more closely in-line with actual overtime expenses. Overtime expenses have exceeded the overtime budget for the past 5 years. Although employee salaries annually increase the overtime budget has remained relatively stagnant. 150,000 Patrol Overtime-Overtime increase Contract Services - Medical-SART exams Mandatory annual increase imposed by the County's provider for assault victim exams. 7,250 Professional Standards Training- Police Academy - fund 4 officer trainees annually Professional Standards Training- Increase In-service Department training - for mandated training The $34,000 request will specifically fund all new Officer Trainees selected to attend the police academy. In order to be a competitive employer, it is important that we offer positions for academy graduates as well as entry level officers. Without this new funding, the training budget is depleted and restricts the option of funding other state and federal mandated staff training. 34,000 The $30,000 request will increase the existing training budget to fund advanced officer training and training specific to promotions and new specialty position assignments. To date, personnel movement includes: 15 new employees hired, 6 promotions, (new Corporals, Sergeants and Lieutenants) and 15 new assignments to specialty positions. The promotions have caused a ripple effect in our specialty units, such as Investigations, Traffic, Major Crimes Task Force and COPE. As a result, these new supervisors and officers working in specialized units will need training to advance in their new positions. 30,000 This is a mandatory annual increase imposed by the County who provides annual maintenance for: RMS, CAD MDC systems. 42,750 County of Marin Contract Services Parks, Recreation, and Community Services Staff training costs Annual training costs for Childcare Staff 3,130 Employee Salary/Benefits.75 Gymnastics Instructor to handle preschool and recreation classes 62,200 Hourly Employees Reduction of hourly employees with new gym instructor (20,000) (INCREASED REVENUES COVER REMAINING POSITION COSTS) (42,200) Central Administration Economic Development Additional ED business outreach; continue Life Science support 26,000 Communications Website Enhancements, Communications Planning, etc. 30,000 City Attorney Increased costs anticipated to continue 75,000 Election Costs One-Time Off-year election costs 180,000 Administrative Services OPEB Actuarial report indicated need to increase annual contribution 57,000 Animal Services Increased costs 45,000 HR Legal Fees Increased costs anticipated to continue 41,000 Insurance (Gen Liab) Increased costs anticipated to continue 72,000 Impact Fee Study One-Time Update city's impact fees 50,000 Subtotal 922,230 45,000 Subtotal One-Time 260,000 23,000 7