TO:
FROM:
Mayor and City Council
Philippe Eskandar, City Manager
BY: Philippe Eskandar, City Manager
Nicole Tibbet, Community Engagement Manager
DATE: February 12, 2025
SUBJECT: FY 2025-26 BUDGET PROCESS OVERVIEW AND
PRIORITY INITIATIVE DISCUSSION
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Engaged and Connected Residents
Efficient, Responsive, and Effective City Services
Fiscally Responsible and Transparent City Government
BACKGROUND
As the financial blueprint for the City government, the annual budget is an important document, and the process of preparing that plan of action is one of the most significant jobs performed by the City Council and City personnel during each year. Beyond serving as a financial plan, the annual budget estimates the City’s annual revenues and expenses, outlines the quality and quantity of governmental services and the method of distributing costs to the various segments of the community through the collection of taxes and fees.
It defines the level of services to be rendered by City departments and highlights capital purchases and projects for the upcoming fiscal year.
The public-facing portion of the annual budget process in San Marino traditionally begins at the last meeting in January of a given year with a goal of adopting the budget by the last meeting in May. Due to the final meeting in January being canceled this year, we are holding this portion at the first meeting in February. The continuous improvements made over the years to both the budget itself and the process by which it is reviewed have yielded successfully adopted budgets annually. Last year’s budget was adopted on May 31, 2024, well in advance of the beginning of the next fiscal year on July 1st.
Gretchen Shepherd Romey, Mayor
Tony Chou, Vice Mayor
Hunter Chang, Council Member
John Chou, Council Member
Calvin Lo, Council Member
The City Council’s budget process ultimately yields operating and capital expenditure plans and is comprised of several components, including:
• Discussion of Priority Initiatives;
• The presentation of a mid-year budget status that also incorporates a revenue projection for next year and a long-term financial forecast; • Detailed feedback from City Council on staff’s recommendations for capital improvement projects and equipment;
• Detailed feedback on staff’s recommendations for departmental revenue and expenditure plans; and
• Revisions and approval of the City Manager’s recommended Operating and Capital Improvement budgets.
In addition to distributing the budget calendar (Attachment 1), this item is intended to provide City Council an opportunity to discuss potential “Priority Initiative” items, which are special projects selected and supported by the City Council. Staff looks forward to receiving Council Members’ considerations on which initiatives to consider for the FY 2025-26 budget.
One aspect of the budget process that is important to highlight early on that was discussed at length with the City Council last year relates to the structural revenue issues the City faces. The Council will recall that during the Fiscal Year 2024-25 budget process, the City was facing a budget deficit of approximately $1.3 million in the preliminary budget. Following revisions by staff, a balanced budget was presented and adopted by the City Council.
However, it was also discussed at that time that expenditures are forecast to continue to exceed revenues in the coming years absent new revenue streams or modifications to programs. As staff prepare for the upcoming budget process, it is anticipated that a structural deficit will again need to be addressed this year. Staff will present more details on the outlook and options to begin addressing the issues at the February 28 City Council meeting.
DISCUSSION
In 2018, the City Council engaged in a strategic planning exercise and confirmed eight Critical Success Factors necessary for maintaining and strengthening an exceptional San Marino. In no particular order, they are:
• Engaged and Connected Residents
• Efficient, Responsive, and Effective City Services
• Safe Community
• Well-Maintained Infrastructure
• Fiscally Responsible and Transparent City Government
• Attractive, Complementary Business District
• Inviting and Relevant City Facilities
• Beautiful, Preserved, Single-Family Neighborhoods
For FY 2024-25, the City Council approved four Priority Initiative themes. A summary update on those Initiatives can be found in Attachment 2 to this report.
Today’s Priority Initiative discussion focuses on the Operating Budget. All items should be related to at least one of the Critical Success Factors noted above. In addition to reflecting at least one Critical Success Factor, Priority Initiatives on the operating side must meet at least one of two criteria:
• Represent a shift in City policy; and/or
• Exceed the City Manager’s procurement authority.
In this vein, staff will include some ongoing efforts that represent continuous efforts to advance policy and operations toward a more efficient delivery of services to residents. Council will see Priority Initiative themes that have ongoing projects tied to them along with new projects/programs that have budget or policy requests tied to them.
Importantly, while the City Manager is legally responsible for submitting the budget to the City Council for consideration, it is the culmination of a process rooted in coordination and collaboration across the entire organization. No one component of the City’s budget can stand alone without consideration of its impacts and dependencies throughout the entire budget or organization. As such, the Priority Initiatives presented below are the result of a wide range of inputs. These inputs include but are not limited to the happenings in and around San Marino, observations of trends or best practices in municipal service delivery, the expertise of the City’s Department Directors, and of course, the policy directions provided by the City Council, to name a few.
The following Priority Initiatives are presented for the City Council’s consideration:
Public Safety Excellence
• Improve Cellular Coverage
o Investigate cell tower site locations in order to support better cell phone coverage across the city, particularly to support emergency response and minimize life safety issues.
• Explore Pedestrian and Traffic Safety Improvements
o Continue to utilize smart traffic engineering practices and recommendations from the city’s Traffic Task Force and Public Safety Commission to improve pedestrian safety.
Preserve Our Residential Neighborhoods
• Housing Element Implementation
o Continue implementation efforts of the Housing Element in order to maintain certification.
Build Upon Our Fiscal Health
• Financially Self-sustaining Sewer System
o Establish a financially sustained sewer system and funding mechanism necessary for on-going capital maintenance.
• Ensure Fiscal Stability Through New Revenue Streams
o Evaluate revenue enhancement opportunities to ensure the City is able to provide for the long-term stability of services. • Maintain Local Control of Sales Tax Dollars
o Ensure local sales tax is reinvested in San Marino and controlled by the residents who pay it.
Foster Investment in Economic Development
• Streamline Brick and Mortar Openings
o Review zoning and municipal code sections for possible amendments that would streamline the opening of new retail establishments.
• Showcase Local Commerce
o Develop and implement a policy that would allow the showcasing of San Marino Businesses through the City’s media channels.
Celebrate San Marino
• Lacy Park 100th Anniversary
o Commemorate the 100th Anniversary of Lacy Park with a large community event.
• Lacy Park Arboretum Accreditation
o Explore and apply for arboretum accreditation for Lacy Park to add to our preservation and promotion of the vibrant tree population there.
No final FY 2025-26 budget decisions will be made today. Council Members are invited to discuss and provide feedback to staff on the Priority Initiatives you would like to see the City undertake over the next fiscal year.
Community outreach will be conducted in addition to recommendations made today. Any Priority Initiatives requested by Council to move forward will be researched further, priced out, and will be placed in the Community Feedback Survey. The goal of the survey is to gauge community support for each initiative, this will be promoted through every possible medium the City has to get word out. The results of the survey feedback will be included in the Priority Initiative Staff Report presented to Council in March. The cumulative list of potential Priority Initiatives from the Council and the community will return to the City Council for selection on Wednesday, March 12, 2025. The Capital Improvement Program will be presented to the City Council for review at the March 28, 2025, meeting.
FISCAL IMPACT & PROCUREMENT REVIEW
This report has no fiscal impact and requires no procurement review.
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends that the City Council engage in a discussion to identify potential Priority Initiatives for FY 2025-26.
ATTACHMENTS
1. FY 2025-26 Budget Calendar
2. FY 2024-25 Priority Initiative Update