“The Salinas Plan”Refresh (draft)
Presentation to the Finance Committee
February 7, 2023
The Salinas Plan Refresh
Overview
Review and “refresh” of 2018 The Salinas Plan
Status of TSP recommendations – What has been completed, in-progress, and what has been rejected as feasible Addition of updated/new recommendations reflecting current economic and service challenges faced by the City Tools
Updated budget forecast model
Review of current departmental plans and studies
Interviews with department leaders and line-staff (where needed) Review of updated historical metrics – budget, services, service results RBConsulting
2 Status of The Salinas Plan (TSP)
The City has been working diligently on implementing the TSP 2018 Recommentations Over 1/3 of the original recommendations have been implemented or rejected The remaining reco’s are in progress or recommended to remain as active reco’s RBConsulting
3 Revenues & Expenses
RBConsulting
4 Recent General Fund Revenues
RBConsulting
5 General Government revenues grew 4.6% per year from FY17-FY22, led by sales taxes at 5.6% per year
Sales and Property Tax from FY17
Sales taxes contribute double the revenue as property taxes About half of the sales tax comes from Measures E & G each year This makes the City vulnerable in a recession that impacts taxable-sales spending RBConsulting
6 General Fund Expenses
General Government Salaries grew at less than 1% per year since FY17-FY22, led by lower FTEs, limited wage increases Total General Government expenses grew 4.7% per year (FY17-FY23), led by Transfers and Benefits RBConsulting
7 CAGR = Compound Annual Growth Rate
Change in FTE
FY09 To FY23
No Recovery from Great Recession
FY18 to FY23
Limited Investment in New Staff
RBConsulting
8 Budget Forecast
RBConsulting
9 Growth Rates | FY17 – FY32
Revenue Growth
Expense Growth
RBConsulting
10 Building Fees
CalPERS
Baseline Forecast Net GF Revenue
The City’s improved financial condition is fueled by strong property tax and sales tax growth through the pandemic The forecast shows a more stable base to build on UNLESS Measure G is not extended Needs to increase wages, add staff, maintain infrastructure and invest in new projects could upend this fragile balance even with an extended Measure G RBConsulting
11 Alternative Forecasts
Extended Measure G is key to providing long-term fiscal stability Alt. 1 shows the impact of Measure G plus increasing salaries by an additional 1% per year over the 3% to 3.5% assumption* Alt 2. keeps Alt. 1 assumptions and adds in a 10% revenue set-aside for capital funding ** RBConsulting
12 * Includes both wage increases and additional hiring ** Total funding, including current expecting CIP funding
Additional Needs to Consider
Capital Investments (~$500 Million)
Deferred maintenance (amount unknown)
Investments in Sherwood Hall and other City facilities
Housing and Homelessness programs
Employee compensation study implementation
Fully fund policy reserves
RBConsulting
13 A Future of Trade Offs
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14 Recommendation Groupings
RBConsulting
15 Coming Issues
Measure G Sunset in April 2030
Expanding fire to new growth areas
Homelessness Impacts
Police/Fire
Public Works
CDD (maintenance of programs after end of grant funding) Staffing – FTEs and pay has been stagnant. Define the needs in each along with funding consequences Parking
Need to add street sweeping to address NPDES issues – requires “no parking” zones New parking garage under consideration with County – need to evaluate ability to self fund RBConsulting
16 Coming Issues (con’t)
Deferred Maintenance – Creating budget space to address No estimate of the breadth and cost across the City
PW identified roads, storm drainage, and utility systems with major (cost unknown) deferred maint.
No estimate on buildings, but implementing an asset management program More investment in IT?
Fire indicated deferred maintenance on fire stations and apparatus Continued community investment
Meeting NPDES state mandates
Reduce GF subsidies – Golf & Storm Water to create room to add staff, increase pay, and invest in City infrastructure and facilities RBConsulting
17 Measure G
The Measure G sunset looms large for the City, with plans to extend it in the near future If unsuccessful, it will have a debilitating impact on the City Loss of $16 Million in personnel funding
Contribution of $5.4 Million per year towards the Public Safety building debt service RBConsulting
18 Significant Capital Investment
Over $530 million in road, parks, new development, and IT needs identified in recent studies New development impacts include Borondo Road and new Fire Station Deferred maintenance for buildings is not currently known but will be calculated using a new asset management program. Need will likely be significant RBConsulting
19 Maintain current 56 PCI*
Reach 75 PCI
PCI = Pavement Condition Index. A PCI of 55 is “fair” and 75 is “good”. Current funding levels will drop the City’s PCI to 48, or “poor” Salinas has significant unfunded capital and maintenance needs
Questions?
RBConsulting
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