May 11, 2022
2022-2023 Proposed
Operating Budget Overview
City of San José
Presentation Agenda
Slide 1
• Opening Remarks
• Economic Context
• Budget Development Context and Approach
• Proposed Budget Overview
• Budget Balancing Strategy and Recommended Budget Actions • Next Steps
Slide 2
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Slide 12
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Slide 30
2022-2023 Proposed Operating Budget
General Fund Operating Margin
2 This figure was revised from the $27.7 million surplus as presented in the February 2022 Forecast as a result of continued analysis of projected revenues and expenditures.
Slide 31
2022-2023 2023-2024 2024-2025 2025-2026 2026-2027
Five-Year
Surplus/
(Shortfall)
Incremental
Surplus/
(Shortfall)
$30.12 $26.0 $23.5 $22.7 $28.9 $131.2
1 Does not include 1) costs associated with services that were funded on a one-time basis in 2021-2022; 2) costs associated with unmet/deferred infrastructure and maintenance needs; and 3) one-time revenue sources or expenditure needs.
2023-2027 Revised General Fund Five-Year Forecast
($ in millions)1
Opportunities and Challenges for the
2022-2023 Budget Development Process
Slide 32
• While some headwinds remain, the economic and revenue outlook is positive, and the City has some limited opportunities to build back services that have been reduced in previous years
• Remaining resources from the American Rescue Plan Fund continue to provide substantial assistance to support community and economic recovery activities, but these funds are running out
• The challenge has been to both allocate resources in accordance with the investment priorities in the Mayor’s March Budget Message for Fiscal Year 2022-2023, while also addressing the broader priority to allocate ongoing funding for services that have been funded on a one- time basis for many years – most of which support disproportionately impacted communities
• Not all services reduced during the pandemic have been restored; work will continue in future budget cycles
2022-2023 Proposed Budget Overview
Budget Balancing Considerations
Slide 33
Mayor's March Budget
Message
City Council and
Organization
Priorities
Budget Balancing
Strategy Guidelines
City Council Policy
1-18 and City of San
José Budget Principles
Budgeting for
Equity
2022-2023 PROPOSED CITY BUDGET1: $5.3 billion
TOTAL NUMBER OF FUNDS: 141
TOTAL NUMBER OF POSITIONS (FTE): 6,885
City of San José Proposed Operating
Budget Overview
Slide 34
Capital Funds
$1.67 billion
27%
Special Funds
$2.96 billion
48%General Fund
$1.51 billion
25%
Note: An adjustment of $801 million is necessary to arrive at the $5.3 billion net 2022-2023 Proposed City Budget to avoid the double-counting of transfers, loans and contributions between City funds. 2022-2023 Proposed Budget Overview
Slide 35
• Balanced all funds (General Fund, special and capital funds) • General Fund projected surplus of $30.1 million fully allocated • Investment Priorities:
Homelessness and Affordable Housing
Public Safety
Battling Blight
Climate and Seismic Resilience
Equitable Economic Recovery
Fiscal Sustainability
• Budgeted Positions (all funds) are up 3.1%, from 6,647 to 6,855 2022-2023 Proposed Operating Budget
Uses by City Service Area (All Funds; $ in Millions)
Slide 36
* Excludes Fund Balance, Transfers, Reserves, and Capital Project expenditures.
Community and Economic
Development
$318.9
11.0%
Environmental and Utility
Services
$813.4
28.2%
Neighborhood Services
$236.6
8.2%
Public Safety
$783.5
27.1%
Transportation and Aviation
Services
$264.9
9.2%
Strategic Support
$470.6
16.3%
2022-2023 Proposed Budget
General Fund Sources
Slide 37
Total General Fund Sources: $1,508,211,649
Fund Balance, 13.4%
Property Tax, 29.4%
Sales Tax, 20.8% Business Taxes, 5.5%
Franchise & Utility,
10.5%
Real Property Transfer Tax, 3.0%
Transfers &
Reimbursements, 8.4%
Others, 9.0%
2022-2023 Proposed Operating Budget
General Fund Uses
Slide 38
Total General Fund Uses: $1,508,211,649
General Government
8.4%
Public Safety
50.0%
Capital Maintenance
5.7% Community Services
11.0%
Capital Contributions
0.7%
City-Wide
8.1%
Transfers
1.7%
Earmarked
Reserves and
Contingency
Reserve
10.6%
Encumbrance
Reserve
3.5%
Non-Departmental
24.9%
2022-2023 Proposed Operating Budget
General Fund Uses by Category
Slide 39
Total General Fund Uses: $1,508,211,649
Personal Services
65%
Non-Personal/Equipment
9%
City-Wide Expenses
8%
Capital Contributions
1%
Transfers
2%
Earmarked Reserves and
Contingency Reserve
11%
Encumbrance Reserve
4%
2022-2023 Budget Balancing Strategy
General Fund
2022-2023 Ongoing
Total General Fund Surplus $ 30.1 $ 30.1
Recommended Balancing Strategy
– Changes in Sources $ 73.0 $ 1.7
– Changes in Uses 103.1 31.8
Total Balancing Strategy $ 30.1 $ 30.1
Amount Remaining $ 0 $ 0 Slide 40
$ in millions
2022-2023 Budget Balancing Strategy
Changes in General Fund Sources
Slide 41
2022-2023 Ongoing
Beginning Fund Balance 58.1 0.0
2022-2023 Future Deficit Reserve 28.3 0.0
2021-2022 Excess Revenue/Expenditure Savings 25.0 0.0
Sick Leave Payments Upon Retirement Reserve 2.0 0.0
Pest and Turf Management Reserve 1.0 0.0
Other Reserve Liquidations 1.8 0.0
Grants/Reimbursements/Fees 9.9 0.1
CaliforniansForAll Youth Workforce Development Grant 9.2 0.0 Commercial Solid Waste CPI Adjustment 0.6 0.6
UASI Grant – Office of Emergency Management 0.5 0.0
Other Fee Programs/Reimbursements/Grants (0.3) (0.5)
Other Revenue 3.4 0.0
Transfer from American Rescue Plan – Revenue Loss Reimbursement 3.3 0.2 Transfer from the General Purpose Parking Fund 0.1 0.0
Overhead from Other Funds 1.6 1.6
Total Change in Sources $ 73.0 $ 1.7
$ in millions
2022-2023 Budget Balancing Strategy
Changes in General Fund Uses
2022-2023 Ongoing
2021-2022 Previously One-Time Funded Services $41.1 $23.9 Service Level Enhancements 40.9 8.7
Other Fee Programs/Grants/Reimbursements 10.0 0.2
Unmet/Deferred Technology, Infrastructure, and Maintenance 6.8 0.1 Earmarked Reserves (Essential Services, Budget Stabilization, Vehicle Abatement) 5.3 0.3 New Facilities Operations and Maintenance 3.2 1.7
Cost Reductions/Service Delivery Efficiencies/Funding Shifts (0.1) (0.1) Use of Reserves (Deferred Maintenance, Committed Additions) (4.1) (3.0) Total Change in Uses $ 103.1 $ 31.8
Slide 42
$ in millions
Slide 43
2022-2023 Proposed Budget Investments
General Fund and American Rescue Plan Fund
2022-2023 Proposed Budget Investment Priorities
General Fund and American Rescue Plan Fund*
Investment Priority
2022-2023
General Fund
Adjustments
2022-2023 American
Rescue Plan Fund
Adjustments
2022-2023
Combined
Adjustments
Ongoing
Adjustments
(General Fund)
Homelessness and Affordable Housing $23.3 million $21.8 million $45.1 million $0.4 million Equitable Economic Recovery $14.0 million $28.2 million $42.2 million $4.3 million Public Safety $23.0 million $23.0 million $7.6 million
Battling Blight $8.8 million $7.0 million $15.8 million $8.3 million Climate and Seismic Resilience $14.2 million $14.2 million $5.3 million Fiscal Sustainability $5.4 million $5.4 million $0.2 million Strategic Support** $5.5 million $2.3 million $7.8 million $3.2 million Other Community Services** $6.2 million $6.2 million $5.6 million Deferred Infrastructure** $6.8 million $6.8 million $0.0 million Use of Reserves** ($4.1 million) ($4.1 million) ($3.0 million) Total $103.1 million $59.3 million $162.4 million $31.8 million * While only the General Fund and ARP Fund are shown in this table, other Special and Capital Funds may also contribute funding to these Investment Priorities. ** Although not explicitly identified as a standalone Investment Priority, these allocations are consistent with the City Council-approved 2022-2023 Budget Balancing Strategy Guidelines and provide context to the remaining allocated amounts Slide 44
2022-2023 Proposed Budget Investments
American Rescue Plan Summary
Source
American Rescue Plan Act $ 212.3
Interest Earnings (Estimated) 1.1
Total Source of Funds $ 213.4
Use
2020-2021 Actual Expenditures and Encumbrances $ 1.9 2021-2022 General Fund Support 45.0
2021-2022 Community & Economic Recovery Allocation 108.8 2021-2022 Estimated Savings (1.6)
2022-2023 Recommended Allocation 59.3
Total Use of Funds $ 213.4
Slide 45
Recommended Budget Actions
Homelessness and Affordable Housing
• Emergency Interim Housing Construction and Operations ($40.0 million)/Attachment D
• San José Bridge Program ($3.0 million)/Attachment D
• Planning Development Fee Program CEQA Review Staffing ($498,000)/City Attorney’s Office & PBCE
• Urban Village Planning ($400,000)/PBCE
• Drug treatment and Mental Health Services Partnerships ($500,000)/City-Wide Expenses
• Automatic Public Toilets ($410,000)/City-Wide Expenses • Accessory Dwelling Unit Ally Program Staffing ($312,000)/PBCE • Downtown Homeless and Mental Health Response and Support ($300,000)/Attachment D
Slide 46
Recommended Budget Actions
Homelessness and Affordable Housing
• Underwriting and Financial Consulting for Affordable Housing Projects (250,000)/Housing
• Housing Preservation and Production Staffing ($237,000)/Housing • Homeless Response Team and BeautifySJ Coordination Staffing ($207,000)/Housing
• Yes in God’s Backyard ($200,000)/PBCE
• Destination Home: Silicon Valley Staffing ($179,000)/PBCE • Housing Catalyst Team Staffing ($164,000)/Office of Economic Development and Cultural Affairs
Slide 47
Recommended Budget Actions
Equitable Economic Recovery
• Continued Child and Youth Services ($10.5 million)/Attachment D • Continued Food Services and Food Distribution Resilience Corps ($4.8 million)/Attachment D
• Support to the Convention and Cultural Affairs Fund ($4.0 million)/ Attachment D
• Placemaking/Viva Calle and Viva Parks ($3.4 million)/ PRNS & Attachment D
• CaliforniansForAll Youth Workforce Program – Learning Resilience Corps ($3.2 million)/City-Wide Expenses
• Supplemental Arts and Cultural Grant Funding ($2.0 million)/Attachment D • COVID-19 Recovery Taskforce ($2.0 million)/Attachment D • Digital Equity and Device Access ($1.1 million)/Attachment D Slide 48
Recommended Budget Actions
Equitable Economic Recovery
• School of Arts and Culture Expansion ($1.0 million)/City-Wide Expenses • Racial Equity Staffing ($903,000)/Library, PBCE, PRNS, Police, Transportation
• Community Engagement ($700,000)/Attachment D
• Coyote Valley Monterey Corridor Study ($575,000)/City-Wide Expenses • Cannabis Equity Program ($500,000)/City-Wide Expenses • San José Al Fresco ($400,000)/Attachment D
• Storefront Activation Grant Program ($500,000)/City-Wide Expenses • Child and Youth Services – Family, Friends, and Neighbors ($500,000)/ City-Wide Expenses
• Non-Profit Food Provider Permitting Costs ($500,000)/City-Wide Expenses • San José Aspires Administrative Support ($450,000)/Attachment D • City of San José Disparity Study ($400,000)/City-Wide Expenses Slide 49
Recommended Budget Actions
Public Safety
• Police Sworn Hire Ahead Program ($7.5 million)/Police • Foot Patrols in Downtown and High Needs Neighborhoods Staffing ($3.7 million)/Police
• Emergency Operations Center and Equipment Room Fixtures, Furniture and Equipment ($2.3 million)/Information Technology
• Public Records Team Staffing ($931,000)/Police
• Recruiting and Backgrounding ($895,000)/Police
• Mobile Crisis Assessment Team Staffing ($822,000)/Police • Coyote Creek and Guadalupe River Trail Patrol ($600,000)/Police • Community Service Officer Staffing ($615,000)/Police
• Traffic Safety Team Staffing ($416,000)/Transportation • Body Worn Camera Review ($350,000)/City Attorney’s Office • Bureau of Fire Prevention Arson Unit Staffing ($310,000)/Fire Slide 50
Recommended Budget Actions
Public Safety
• Employee Services Workforce Enhancement Staffing ($303,000)/Fire • Re-arresting Criminal Defendants ($300,000)/Police
• Public Safety Initiatives Staffing ($200,000)/City Attorney’s Office • Automated Speed Detection and Messaging ($175,000)/City-Wide Expenses
• Domestic Violence High Risk Response Team ($125,000)/Police • Improving Criminal Justice Program ($120,000)/Police
• Bureau of Investigations – Family Violence Unit Staffing ($109,000)/Police • Ambulance Services Evaluation ($85,000)/Fire
Slide 51
Recommended Budget Actions
Battling Blight
• Beautify San José Consolidated Model ($11.7 million)/PRNS & Attachment D • Vehicle Abatement Program ($1.2 million)/Transportation and General Fund Capital, Transfers, Reserves
• Beautify San José Landscape Maintenance Program ($1.1 million)/ Transportation
• Project Hope ($486,000)/PRNS
• Guadalupe River Park Maintenance ($394,000)/PRNS
• Code Fee Programs Enforcement Staffing ($334,000)/PBCE • Proactive Legal Enforcement of Blighted and Nuisance Properties ($250,000)/City Attorney’s Office
• Responsible Landlord Engagement Initiative ($200,000)/City-Wide Expenses • Code Enforcement Policy and Program Support ($121,000)/PBCE Slide 52
Recommended Budget Actions
Climate and Seismic Resilience
• Program – Climate Change Pathway ($5.9 million)/
City-Wide Expenses
• Community Forest Program ($3.6 million)/PRNS & Transportation • Climate Smart Program Implementation ($2.1 million)/
Environmental Services and Transportation
• Climate Resilience Planning and Development ($1.7 million)/ City-Wide Expenses
• Alum Rock Park Vegetation Management ($458,000)/PRNS
Slide 53
Recommended Budget Actions
Fiscal Sustainability
• Essential Services Reserve ($3.0 million)/General Fund Capital, Transfers, Reserves
• Budget Stabilization Reserve ($2.0 million)/General Fund Capital, Transfers, Reserves
• Fellows Program ($200,000)/City-Wide Expenses
• Donor Wall ($150,000)/City-Wide Expenses
Slide 54
Recommended Budget Actions
Other Community Services, Strategic Support, Deferred
Infrastructure, and Use of Reserves
• Transfer to the Communications Construction and Conveyance Tax Fund – Radio Replacement ($2.0 million)/General Fund Capital, Transfers, Reserves
• South Bay Water Recycling Operational Improvements ($1.7 million)/ESD • Pest and Turf Management Team ($1.1 million)/PRNS
• Library Branch Hours and Operations for Lower Resourced Communities ($917,000)/Library
• San José Municipal Stadium LED Lighting ($800,000)/General Fund Capital, Transfers, Reserves
• Recruitment and Retention Staffing ($793,000)/Human Resources • Animal Care and Services Staffing ($669,000)/Public Works • City Hall Carpet Replacement ($650,000)/General Fund Capital, Transfers, Reserves
Slide 55
Recommended Budget Actions
Other Community Services, Strategic Support, Deferred
Infrastructure, and Use of Reserves
• Parks Rehabilitation Strike Team ($604,000)/PRNS
• Learning and Development Program ($581,000)/Human Resources • Procurement Improvement Staffing ($552,000)/Finance
• Recovery Foundation and Drive to Digital – Hybrid Workplace ($500,000)/City-Wide Expenses
• Recovery Foundation and Drive to Digital – OneCity Workplace ($500,000)/City-Wide Expenses
• Recycle Right Direct Customer Outreach ($480,000)/ESD • Happy Hollow Park and Zoo Security ($450,000)/PRNS
• Street Sweeping for Protected Bike Lanes ($445,000)/Transportation • Police Activities League (PAL) Stadium Complex and Program Support ($337,000)/PRNS
Slide 56
Recommended Budget Actions
Other Community Services, Strategic Support, Deferred
Infrastructure, and Use of Reserves
• Martin Luther King, Jr. Library Hours and Operations ($334,000)/Library • Traffic Safety Team Staffing ($338,000)/Transportation • Upgrade Airport Electricity Service to Total Green ($300,000)/Airport • Debt Management Software Replacement ($250,000)/Human Resources • Recruiting and Onboarding Software Replacement ($210,000)/Human Resources
• Library Security/Public Safety Supervision Staffing ($210,000)/Library Recommended Budget Actions
Fee and Charges Adjustments
• Utilities:
– Storm Sewer Service Fee: No increase
– Sewer Service and Use Charge Fee: 9% aggregate increase – Recycle Plus Rates: 8% increase for single-family and 4% for multi-family dwellings
– Municipal Water System Rates: revenue increase of 12% increase (rates will vary by user)
• Development Fee Programs: fee increases of approximately 4% to 8% recommended
• Other Fee Programs: fee changes to generally maintain cost recovery, with exceptions
– Library cost recovery rate drops from 33% to 20%; PRNS remains below 50%
Slide 57
Slide 58
Next Steps
May 11th through 16th City Council Budget Study Sessions May 11th, 21st, 23rd Community Budget Meetings
May 17th/June 13th Public Budget Hearings
June 6th Mayor’s June Budget Message Released
June 14th Council Review/Approval of Mayor’s June
Budget Message and Budget
June 21st Adoption of the 2022-2023 Budget and
Fees and Charges
2022-2023 Proposed Operating
Budget Overview
Jim Shannon
Budget Director
Bonny Duong
Assistant Budget Director
Claudia Chang
Deputy Budget Director
Selena Ubando
Financial Status Coordinator
Bryce Ball
Operating Budget Coordinator
Nanci Klein
Director of the Office of Economic
Development & Cultural Affairs
Blage Zelalich
Acting Deputy Director, Business Development
Office of Economic Development & Cultural
Affairs