CITY COUNCIL STAFF REPORT
Meeting: April 16, 2024
Subject
Potential service-level reductions for the FY 2024-25 Proposed and Final Budgets Recommended Action
Provide confirmation on potential service-level reductions for the FY 2024-25 Proposed and Final Budgets Reasons for Recommendation
Background
On January 17, 2024, staff sought Council direction on potential service-level reductions to help resolve the City’s structural deficit. Council provided feedback and directed staff to provide additional information on the following questions. Responses to those feedback and questions are included below.
Responses to Council Feedback
Operations and Maintenance
Feedback
Department Response
Confirm the City provides an ACH option so that customers are not limited to pay on credit cards only The City currently has the capability to process ACH payments but is exploring methods to streamline the process. The ACH payment process will be finalized by July 2024, when the updated fee schedules go into effect. Furthermore, the City accepts checks and cash as a form of payment and customers would not incur the proposed credit card charge.
Provide information on costs to further reduce Scene printed copy A digital-only Scene publication would reduce estimated costs by $53,600 ($9,000 printing cost + $4,400 postage cost for 4 publications) per year. Currently, each printed issue of the Scene costs $15,900, including $2,500 for graphic design, $9,000 for printing, and $4,400 for mailing/postage.
Keep funding both CUSD and FUSHD crossing guard programs Total crossing guard funding (estimated $301,293 for CUSD and FUSHD) will be retained in the City’s budget.
Keep Poet Laureate program but explore sponsorship opportunities Staff has explored funding from the Library, but they decided against funding this program. Staff proposes retaining Poet Laureate funding ($2,000) in the City’s budget.
Keep staff training, as necessary
Staff training will be retained, as necessary.
Further understanding of how Enterprise Funds (BBF and Sports Center) and Senior Center expenses work Staff from Parks and Recreation and Administrative Services met with the Mayor in early April to provide details on how the Senior Center and Blackberry Farm Enterprise Funds operate.
Infrastructure
Feedback
Department Response
Provide more information on sidewalk maintenance and street tree maintenance and how programs would work Subsequent to the previous discussion, staff has revised this budget reduction proposal to minimize the cost impact to residents. Attachment A provides a description of the reductions. Updated fiscal impacts for sidewalks and trees are included below.
Research a potential fee or tax specific to the sidewalk and street tree programs
Staff will continue to explore revenue options. Generally, taxes for a specific purpose require a 2/3 majority to pass. Initial research indicates no neighboring agencies have implemented this option.
Confirm with CUSD on the proposal related to sports field at school grounds Staff has been working with CUSD on options. Due to timing and contract commitments, staff recommends continuing this effort as advanced planning for FY 2025-26.
Fiscal Accountability
There was no Council follow-up for this item.
Community Benefit
Feedback
Department Response
Keep all programs but look for potential sponsorships
There is an ongoing effort to continue exploring potential sponsorship or donation options.
Updates to Service-Level Reductions
The following table shows changes to the proposed service-level reductions since they were first introduced on January 17, 2024. Any service-level reductions not listed are assumed to move forward unless Council provides additional direction.
Details for the proposed service-level reductions are included in Attachment A. The fiscal impact for the updated reductions is $9.0 million, compared to $10.5 million in reductions proposed on January 17, 2024.
Grouping
Proposed Service-Level Reduction 1/17/2024
Estimated Budget Reduction
1/17/2024
Updated Proposed Service-Level Reduction 4/16/2024
Updated Estimated Budget Reduction 4/16/2024
Difference
Operations and Maintenance
Reduce Crossing Guard Services
$50,000
This reduction has been eliminated.
$0
$(50,000)
Crossing guard funding will be retained in the budget per Council direction.
Operations and Maintenance
Reduce Budget for Internal Audit
$70,000
Reduce Budget for Internal Audit
$40,000
$(30,000)
Added back funding for one additional audit. Total budgeted cost is $60,000, down from FY 2023-24 cost of $100,000 Operations and Maintenance
Reduce Parks & Recreation Expenses
$33,619
Reduce Parks & Recreation Expenses
$31,619
$(2,000)
Added back funding for Poet Laureate program.
Infrastructure
Shift School District Grounds Maintenance to School District $737,394
This reduction has been eliminated.
$0
$(737,394)
Due to timing and contract commitments, staff recommends continuing this effort as advanced planning for FY 2025-26 Infrastructure
Shift Street Tree Maintenance to Property Owners
$455,008
Maintenance of Trees and Medians Service Level Reduction $200,000
$(255,008)
See Attachment
Infrastructure
Shift Sidewalk Maintenance to Property Owners
$1,000,000
Maintenance of Sidewalk, Curb and Gutter Service Level Reduction $600,000
$(400,000)
See Attachment
Community Engagement
Following Council’s study session and to encourage strong community involvement, interactive in-person town hall meetings were held on February 29, 2024 and April 11, 2024. The meetings aimed to engage residents, businesses, and stakeholders. These sessions provided enhanced transparency and collaboration, fostering inclusive decision-making processes.
Furthermore, during April, City staff organized focus groups and budget-related outreach at multiple locations across the city. These initiatives were aimed at ensuring diverse voices were heard and actively included in the budget discussions.
Next Steps
The service-level reductions will be incorporated into the FY 2024-25 Proposed Budget for Council consideration in May.
Sustainability Impact
No sustainability impact.
Fiscal Impact
Proposed service-level reductions and fiscal accountability measures are estimated to reduce ongoing expenditures by approximately $9.0 million annually. Implementing these reductions would significantly help reduce the $15 million structural deficit.
In the January 17, 2024 budget forecast, a deficit of $10.1 million was projected for FY 2024-25. It is expected to be covered by $9.0 million in reductions and $1.1 million in unassigned fund balance. An updated forecast will be presented as part of the FY 2024-25 Proposed Budget. In the upcoming year, the City remains committed to tackling this deficit by balancing service-level reductions and revenue enhancements until the shortfall is resolved.
California Environmental Quality Act
Not applicable.
_____________________________________
Prepared by: Thomas Leung, Budget Manager
Reviewed by: Kristina Alfaro, Director of Administrative Services Matt Morley, Assistant City Manager
Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – Public Works Sidewalk and Trees Follow-up
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