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Home My WebLink AboutCity Council Study Session #1 - Joint Meeting of the Finance��NTINGTp y4F c+ Ci 5 9 � 2 �c��pUNTY CP��cA File #: 18-170 City of Huntington Beach MEETING DATE: 8/6/2018 Joint Meeting of the Finance Commission and City Council - Finance Commission will present Budget balancing options Roll Call: Hreish (chair), Sterud (vice chair), Bunten, Lo Grasso, Romero, Small, Van Der Mark City of Huntington Beach Page 1 of 1 Printed on 8/1/2018 powered a LegistarTA1 Projected Budget Deficits (Based on May 7,2018 Strategic Planning Meeting) ✓Fiscal Year 2019/2020 -$1.059 million ✓Fiscal Year 2020/2021-$1.019 million ✓Fiscal Year 2021/2022 -$2.808 million ✓Fiscal Year 2022/2023 -$1.385 million ✓This is "best case" projection because it does not include any future modifications by CalPERS or possible economic slowdowns Directions and Recommendations City Council directed the Finance Commission to: "Review budget balancing revenue options from staff, and make recommendations to the City Council for approval" Finance Commission: ✓Established a subcommittee to review staff recommendations ✓Met and reviewed staff recommendations, and added recommendations from the Finance Commission ✓Approved final recommendations to City Council that include revenue increase and budget reduction options. ✓Final recommendations exceed projected deficits because deficits are projected to continue and increase beyond FY 22/23 Recommendations Three Types of Recommendations ✓Recommend ations from staff ✓Recommendations from the Finance Commission ✓Recommendations from staff that were modified by the Finance Commission Increase Transient Occupancy Tax (TOT) ✓Current rate 10% - Increase to 11% ✓Requires vote of Huntington Beach residents ✓Projected revenue $1.14 million ✓Finance Commission recommends "No" (currently visitor pays 13%) Increase Sales Tax — General ✓Current rate 7.75% - Increase to 8% ✓Requires vote of Huntington Beach Residents ✓Projected revenue $6.2 million ✓Finance Commission recommends "No" Establish a Special Sales Tax — Public Safety ✓Current rate 7.75% - Increase to 8.75% ✓Requires vote of Huntington Beach residents ✓Projected revenue $23 million ✓Finance Commission recommends "No" Increase Citywide Fees and Charges Community Sellices Parking Meters $1.50 to $1.75 per Hour year round vs sununer only $200,000 Room rental, specific/special events, select recreation sports $96,000 Finance Business license renewal & application $179,000 Massage & entertainment permit $62,000 Parking citation processing credit card convenience fee $3 to $3.28 $40,000 Utility Customer Setup $13,000 Fire Fire Inspections, Special Events Marine Safety, Junior Lifeguard 130,000 Sand Crab Library Library room rentals $10,000 Public Works Construction plan review $4,000 Information Senices Automation fee 5% to 6% 657000 ✓Projected revenue $799,,000 ✓Finance Commission recommends "Yes" Increase Fines for Parking Citations ✓Increase fines for various violations that have not been adjusted recently, and are below fines in several nearby cities ✓Projected revenue $318,000 ✓Finance Commission recommends "Yes" Increase Recovery of Fees Related to Independent Outside Contracts ✓Example: Animal Services Contract with Orange County • Cost rising significantly (FY 16/17 $1.1 million, FY 18/19 $1.5 million) ✓Current city fees are less than full cost recovery ✓Unaltered license fee $100 —full cost recovery $159 (1488 licenses) ✓Altered license fee $27 —full cost recovery $51 (15,878 licenses) ✓Projected revenue unknown ✓Finance Commission recommends "Yes" Increase Commercial Refuse Franchise Fee ✓Current rate 5% - Increase to 7-10% ✓Projected revenue $360,000 to $900,000 ✓Finance Commission recommends "No" Establish "Dark Fiber" leasing program ✓City currently has 380 miles of "under used" fiber ✓Study and develop a program to lease use of fiber ✓Very early stages of development ✓Projected revenue $380,000 ✓Finance Commission recommends "Yes" Examine PCTA Cable Use and Franchising Fees ✓Explore options regarding use of PCTA Cable Television and existing fees ✓Projected expenditure reduction $350,000 ✓Finance Commission recommends "Yes" Staff Recommendation Explore Revenue Opportunities Related to Short Term Rentals Finance Commission Modification Increase Fines and Establish Enforcement Program for Illegal Short Term Rentals ✓Currently little enforcement of estimated 700 short term rentals ✓Projected revenue unknown ✓Finance Commission recommends "Yes" Staff Recommendation Explore Cannabis Related Revenue Options— No Retail Finance Commission Modification Explore Cannabis Related Revenue Options — Including Retail ✓Current state law permits recreational sales and use of marijuana ✓Ballot measure was approved by state and Huntington Beach voters ✓Direct city staff to study and recommend revenue options that would include all cannabis related activities including retail sales ✓Projected revenue unknown ✓Finance Commission recommends "Yes" Maximize Revenue From Shared Service Agreements with Other Cities ✓Current examples • Metro Net, Air Support Unit, Central Net, etc. ✓Direct staff to maximize revenue from current shared service agreements and explore additional opportunities ✓Projected revenue unknown ✓Finance Commission recommends — "Yes" Employees Should Contribute 50% (Maximum Allowed) of Normal Cost of CaIPERS Pension Contribution ✓Authorized by PEPRA in 2018 ✓Requires negotiations with employees groups ✓Projected savings $400.,000 ✓Finance Commission recommends —"Yes" Expand Use Of Parking Meters in Downtown Huntington Beach (Finance Commission Recommendation) ✓Install parking meters on streets not currently metered ✓Projected revenue unknown ✓Finance Commission recommends — "Yes" Begin the Process of Staff Reductions as Vacancies Occur (Finance Commission Recommendation) ✓Personnel costs are currently 72% of General Fund Budget ✓Based on current revenue and budget projections, the Finance Commission believes it will be necessary to reduce the number of city staff to address budget shortfalls ✓Process should begin now rather than wait for budget crisis ✓Past city response to significant budget shortfalls • Layoffs • Enhanced retirement offers ✓Projected savings unknown ✓Finance Commission recommends "Yes" Recommendations Related to Police and Fire Departments ✓Police and Fire Department Budgets are 55% of General Fund Budget ✓Difficult to Make Significant Budget Reductions without Specifically Including Recommendations for Police and Fire Departments ✓Recommendations are Designed to Reduce Expenditures without Reducing Total Number of Staff in These Departments Direct Staff to Evaluate and Make Recommendations on Ways to Reduce Overtime Expenditures in the Police and Fire Departments (Finance Commission Recommendation) ✓Current overtime expenditures (FY 16/17 actuals) • Fire Department $6,082,720 (not including "Strike Team") • Police Department $4.,714,,163 • Total: $11,,516,,883 • Fire Department budget 61% of Police Department budget • Fire Department overtime 130% of Police Department overtime ✓Current established work rules give departments little flexibility in managing overtime expenditures ✓Requires negotiations with employee groups ✓Projected savings unknown ✓Finance Commission recommends "Yes" Maximize Use of "Non -Sworn" Employee Positions in the Police and Fire Departments (Finance Commission Recommendation) ✓Replacing "sworn" with "non -sworn" employees results in significant savings ✓Example in Police Department • Full annual cost of average police officer $250,000 • Full annual cost of average community services officer $100,000 ✓Requires negotiations with employee groups ✓Projected savings — Unknown ✓Finance Commission recommends — "Yes" Direct Staff to Evaluate and Make Recommendations Regarding "Special Pays" in the Police and Fire Departments (Finance Commission Recommendation) ✓What are "Special Pays"? SPECIAL PAYS (If Applicable): 5% Motorcycle Pay 5% Bilingual Pay, if approved 1,300 Uniform Allowance (Sworn) 1,200 Uniform Allowance (Non -Sworn) 3% AA Degree or Junior Status; Intermediate POST Cert 6% BA/BS Degree; Advanced POST Cert 8% Flight Time Premium 13% Certified Flight Instructor 5% Shift Differential Pay 0.25 Field Training Officer (hour) 3.00 On -Call Court Time (minimum hour) 2.00 Cancelled Subpoenas (hour) 4.00 Standby (hour) 2.00 Call Back (minimum hour) 15.00 Telephonic Business (minimum minutes) 50% Holidays Worked Pay: Shift Holiday Pay Longevity Pay 5% 10 Years of Service 10% 20 Years of Service SPECIAL PAYS (If Applicable): Education: 3.00% Level 1 -Attains an Associate Degree or Junior Status 6.00% Level 11 - Attains a Bachelors Degree 6.00% Maximum of 6.00% Special Pay (mutually exclusive) $250 Fire Service Certification Pay $500 Paramedic Re -Certification Pay (Captain & Engineer limited to 30 positions) Other 1.67% EMT Special Pay All Sworn qualifies- in lieu of MOU OT 5.34% Preceptor Pay (Step E) 1.78% Tiller Certification (Step E) 5.00% Bilingual Pay 4.60% Level I Invetigator; Above a Firefighter Paramedic 40-hr rate @ time and a half 11.00% Level II Investigator; Above the Arson Level I Investigaror Rate USAR 1.00% Urban Search & Rescue Type 3 (Light Duty) 3.00% Urban Search & Rescue Type 2 (Medium Duty) 5.00% Urban Search & Rescue Type 1 (Heavy Duty) HAZMAT 5.00% Hazmat Technician 7.50% Hazmat Specialist Cart. 14.00% Rank Paramedic Assignment Pay 1,00% Advanced Paramedic Certification 3.00% Chief Officer Certification 3.00% Fire Officer Certification Longevity 2.50% Longevity Pay (5 yrs but <10 yrs) 5.00% Longevity Pay (10 yrs but <20 yrs) 7.50% Longevity Pay (20 yrs +) Uniforms $150/FY Physical Fitness Program participation required - reimb uniforms & shoes: PERS-able OT/Comp min 2 hrs Callback (@ OT rate) min 2 hrs Mandatory Standby (@ base rate) min 2 hrs Mandatory Standby (@ base rate) Various Court Time Pay (page 16) *Special pay education bonuses do not compound 24 Direct Staff to Evaluate and Make Recommendations Regarding "Special Pays" in the Police and Fire Departments (Finance Commission Recommendation) ✓City must be able to recruit and retain employees ✓Annual costs of special pays in Police and Fire Departments - $7,400,000 (FY 16/17) ✓One Example — FTO pay in Police Department ✓Requires negotiations with employee groups ✓Projected savings unknown ✓Finance Commission Recommends — "Yes" Establish "Spending Cap" of 70% on Personnel Services in Future Budget Years (Finance Commission Recommendation) ✓Current budget 72%, historically about 70% ✓Finance Commission Recommends — "No" Questions? Short -Term Vacation Rental Annual TOT/Visitor Spending/Sales Tax Revenue Shared Home: Whole Home: STVR Visitor Spending: Sales Tax Revenue: $4.5 million $26 million $2 million City Clerk Estanislau Potential TOT Revenue: Shared home Total Inbound guest arrivals: 13,377 Average length of stay in days (VHB website) 4.4 Total days per year-13,377x4.4 58,859 Average cost per night -estimate $ 100 Total STVR shared home revenue per year $ 5,885,880 TOT rate 10% Potential Annual TOT Revenue $ 5881588 Spending Revenue: Total STVR days per year 210,210 Per VHS webske average spent per visitor per day1$77s2.5 average group soel550.2.5 $ 125 Total STVR spending per year $ 26,276,250 Soles Tax revenue $ 2,036,409 Latest STVR TOT Revenue totals by city: in millions Huntington Beach $0 Palm Springs $7.6 San Diego $20 Los Angeles $50 Per city website-Hotel TOT for 2017 $11.4 Kathryn Levassiur (714)343-7931 klevassiur@hbstra.org ntal TOT Revenue: Whole home and guest arrivals: ige length of stay in days (VHB website) I days per year-34,398+4.4 age cost per night -estimate STVR whole home revenue per year rate ntial Annual TOT Revenue Total 34,398 4.4 151,351 $ 300 $ 45,405,360 10% $ 4,540,536 ntial TOT Revenue: Shared home and whole home and guest arrivals: age length of stay in days (VHB website) I STVR days per year-54,600x4.4 I Shared home STVR revenue STVR whole home revenue per year I STVR revenue per year rate ntial Annual TOT Revenue y� RECER01112 fM F/t s s 4L t� AS Fill" F OF C" CLM oFFU RO N ESTAMSUIU, CITY CLERK Total 47,775 4.4 210,210 $ 5,885,880 45,405,360 $ 51,291,240 $ 5,129,124 August 6, 2018