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HomeMy WebLinkAboutFiscal Year 2011-1012 City Manager's Proposed Budget - Study Z1 ka,,, - &�c Remarks to the Huntington Beach City Council 8/1/11 Daniel P. Gooch • Good afternoon Honorable Mayor and City Council Members my name is Dan Gooch, 1 am in my third decade of residency in Huntington Beach and have previously serviced on the Personnel Commission for 8 years from July 1, 2001 through June 30, 2009. During the last two years of my tenure 1 served as Chair. As always, I thank you for your service. • I more recently addressed your Honorable Body on April 3, 2011 and have attached a copy of my comments in the hand-out before you. Those thoughts are on the green sheet. Contained in those remarks are recommendations that are germane to the items before you. • 1 come before you today to share my thoughts on the Council Agenda item proposing to extend the P.O.A. contract through September 30, 2013. Through my review of the Contract and the Side Letters I have come to the following conclusions: 1. For the past decade the City of Huntington Beach has augmented agreements by utilizing Side Letters in a majority of their contracts. While this approach helps resolve short term problems, it does not address long standing issues which, accordingly, continue to cause the City severe financial distress. 2. Having worked in the personnel field for three decades it is my experience that Unions offer Side Letters in order to avoid negotiating the actual contract. Side Letters offer immediate concessions in order to allow unions to maintain their accumulated gains. Having these "offerings" in front of them, elected and appointed officials generally acquiesce at the expense of real negotiations. 3. Accordingly, acceptance of the proposed Side Letter extension will delay allowing the City to address the issues of adding a 2nd tier to the retirement schedule, increase the employees' contribution to their retirement and eliminating outdated"special pay"options. 4. Some Council Members have stated that if we do not accept what is before us "we will lose out on what the P.O.A. has acceded to with the previous Side Letter." That is assuming that further negotiations would not be fruitful. I disagree. 5. If the City Council rejects the current proposal the P.O.A. has the option to extend the existing Side Letter for another six months which would account for approximately $400,000 in savings. I believe they would not extend those concessions. They can do this as late as 9/30/11. If they choose to let the current Side Letter expire the City can begin dedicated negotiations to resolve long term financial problems. Any items that are found to be desirable in the existing Side Letter can be included in a formal contract and, if necessary, phased in over the life of the agreement. According I recommend the following: • Reject the proposed extension; • Direct the City Manager to immediately begin to negotiate the Contract in order to effectuate long term goals. Remarks to the Huntington Beach City Council 4/3/11 Daniel P. Gooch UNFUNDED LIABILITY FOR PENSION AND HEALTH EXPENSES: At a public meeting last Thursday evening attended by the Mayor and Councilman Bohr, the City Manager indicated the unfunded liability is currently at "around $100 million. . When asked how this was being addressed in the current budget his answer was non-specific. As recently as 18-24 months ago the City Council granted increases in the pensions of a segment of the City workers that, according to the City Manager's power point . that evening, increased the unfunded liability by approximately $5 '/Z million. I'm hopeful that tonight this unfunded liability will be addressed by City staff and, if not, that the City Council direct staff TO address this huge liability to the citizens of H.B. NEGOTIATIONS WITH EMPLOYEE UNIONS: The City Manager also indicated that some of the unions "are aware" of the City's financial status and are in the process of sitting down with management and agreeing to concessions that will result in over$1 million in savings to the City. While this is a wonderful gesture the City Council should direct the City Manager and the city's negotiators that in formulating these concessions they DO NOT agree in principle to any future limitations on negotiations by the City. These concessions SHOULD NOT preclude the City from seeking a different retirement tier for new employees. It is only by addressing the pension costs on a long-term basis that the city will be able to get the $100 million paid down. STUDIES REGARDING CONTRACTING OUT OF SERVICES: When asked if the City was currently studying any service for potential contracting out, the response was "no". If the City Council does not direct the City Manager to conduct these type of studies how will we ever know if we can secure similar services at a reduced cost. Many cities in Los Angeles County have looked to H.B. as a leader in this field as demonstrated by the successful privatization of our refuse collection. I'm quite certain there are other opportunities as well. We simply need the will to pursue them. -,�?4 � dP O a � o 0 dD e fl A July 28, 2011 Huntington Beach City Council 2000 Main Street Huntington Beach, CA 92648 Dear Mayor Carchio and City Council Members: The Huntington Beach Art Center Foundation understands that in order to fill a 3.4 million dollar deficit in the City's budget, cuts in several City staff positions have been recommended. One of the recommended cuts is the curator position at the Art Center. Over the past twenty years our Art Center has earned an excellent reputation, in large part due to the work of the curator. We understand that the difference between retaining the position as a City position, or out sourcing as a contract service is$30,000. We believe the budget issues facing the City are very real, and we would like to offer a solution to this funding gap so that the curator's position can remain a City position. The Foundation Board met on July 25, 2011 and voted unanimously to commit to provide$30,000 for the retention of the full time curator position, during the 2011-2012 budget year. The Art Center Foundations has a proven track record of being able to raise funds to support the Art Center. Through the efforts of the Foundation the community has raised more than 2 million dollars to support the Huntington Beach Art Center since before its inception. We are confident that we can raise the$30,000 necessary to keep the curator position funded; and we are open to quarterly installments to assure Council that every dollar pledged will be in the City's treasury. This is an achievable goal for the Foundation; our organization has raised significantly more in less than a year. The Foundation recently donated$12,000 to the Art Center for their summer programming,which includes;Art Camp, Family Arts Day and the fall exhibition. You can be assured that our pledge of$30,000 to support the full-time curator's position will not diminish our ongoing contributions to the day to day operation of the Art Center. The Foundation believes an Art Center without a full-time curator significantly reduces the credibility of institution in the art community. The Art Center needs to retain its strong reputation with professional artists on the national stage to insure their participation in future shows, and be marketable to donors,including foundations, corporations, and arts supporters. The Foundation believes the retention of the curator position is instrumental in making the Art Center more self sustaining in the coming years. Please give us this opportunity to help preserve a staff position that is vital to the functioning of our Art Center and improves the quality of life in the City. The Art Center Foundation is ready for the challenge. Thank you for your consideration, Mike Adams Chair, Huntington Beach Art Center Foundation (7 t 4)536-5258 Fox(714) 374-5304 538 Main Street Huntington Beach, CA 92648 x.r �d'.r s xxx ''S"All, f�'� v s A4 4, 4 "k .� s" _ .. t'•.; "-,:+ ycyi}} Kra'" W ,� ?.. lik Kill _ �S{ tt s • y r w, " RElm ,� am SIP` nv. FIS 0- A 20 t t 7 ,Ap AM- ON K h iix Z"I I " 1 6, �l _ W, x NM or of F01 s � Y � x N" v t x i fMR it }' s- y? -1" k , ,x Biu-A .,.[ t± 8 �"�, a��'� ,t �; �� �'�°'�" 'yak,d x,t^,. � f i a,', n� �' ,� �•�. . t� t a �. v d � A WN &keve al, I nues Itu 77r,7 } 9 of ; £44, Whon All Al g,,A-ot tr � tJ� -R�,v,3,1� MS N11-Nll--,oim i.. 71, ","'An, A, AT #} r s .4, ve IF So .0 �e� p k ; x, y f µ a yg} K 'ro o� d. Budget s un1 to F' 20 4/12 General Fungi Proposed Budd' et Assumption'k ' . h o Vacant A s t ons`r�mai. only if approves by City Manager o No service enhancements o Funded status of City's nsiot , .nd retiree benefit plans rem ns at minimally required levels n ` o No i, ncrease to the City 's emergency reserves o Negotiated pay raises are included to reflect contractual agreements q p �. to, o R:efiects a 5-'Year Plant restore e ui n�ent fud.ing a ro mate l��els o Slight General Fiund revenue growth given some improvement in the r economy _ o a $ � �nillinis prpria l d for street repairs from. capital reserves ,t 1Pro.pose d Budget $3 . p,millon General Fund budget chalhe identified in January 2011 o Economy"has Slowly climbed out of two years of recessionary period p eriod helping to increase certain revenues w o State Budget Challenges o � Bevel Amen elimina d; new "pay o play" program instituted o s te` tale: f IV a everiue G ao Orgx�iza:tin challenged to =provide core services with less resources ' 0 I M 3 s cin projected deficit 21 z fi `r ; •fin x g$ IR i w � ARSAI n r' s ill et t . s � ,= t t. l lhr IM VO 4- bu. Ot* eas( `om t F) -A I th, "v `6 '1 rop. ME 1 bud-_; iPat s �` lf b . t do d,,. 2`0 1 th Y: W3% v w4 ?r " x in,, -e p ton t or ME q � 5 ,N s= s wa' k �r Wa enro z 0 ► Ira meted 6rid und f" d s Cis 'Kz,; Genes I u u Ex enditures $ 184. 1 Million*� kevenues $ 182.8 Million Operating, Capital, Non Debt Operating Service . 4% and From otlier Transfers Agencies 2% Sao Money 8% Property Taxes 37% Fines and Forfeiture§,-55,olhs Personnel ' 2°l0 72 Licenses and Permits 'Sales Tax 5, Utility 12% f . ' TOT 4%; , Users Tax ,, 14% ;Includes 1.3 million froth capital;reserves to r end street rep lrs 6 General Fund. evenues W, o Property Tax o Continues to be relatively flat due to a wea ,real estate market. A wBest 0 increase included based on assessed values from" the County of Orange o Sales Tax o ebounded in the current fiscal y r; projected to increase by an additional 3:5% in FY 2011/12 . o TOT r o A o rebounded in the current fiscal year; projected to increase' yan additional 4.8% in FY 20 11/12 o Lieses end Permits° g p o Remaining relatively flat for FY 20 11/12 1 4 rGeneral FundRevepyes 7 Y6a r Ovey'view x x r In 100's $1951000 $180,000 $165,000 $150,000 z Actual Actuls Actuals Actua j . ' ctuals Proj ecte r Proposed k; 05-06 06-07 07-08 08-09 09-10 10-11 11-12 m 0 r r .,. x, u' A � t tx•.s "` ` y i� z 1 v. §#t N ,.�. . max..= kv, R a Tg r ' vk b b u t ti'" Y. {emu. „' ; ... 9A7'l,` 4 T �. c� onfiri es �� ,� t lohsma n � � 01, 2 Y rexsen�� e ruth r � r �u insv k•, .: ' mad ee to bd Ak;�, el ,I A 14, sub DOa4, e ' l vepe k .� q uir isc in � � }* hill k lk r t ` ev dg6 .. �` ��" �LeVel 2 cifts wert nec vide f x`Seterm. th" t b Q7 . 1, ,. A , ��',: "' .'st` K may;. ,a4��?„ 4*k};',W'�„ •".e' $#h� �'`,. luk ROO 'eggft 12 F °' r m � � � _ „ PF lk hate Grpvj 41; Nil RP 0s, SAI"', tg Or -V 5. fr 11 r x , � r Fungiy �y`��. "'TA, q* N e g f o- x r, v ot' I s z � -crease f 1 lion From Y � : ' 1 F eav h AM .45�� 4 } � € k urarw k. ns 6� tea^ N. w w om 4. 24 Opw kc z �a Rr . r 5 ..., X :, Dipartment Economic Development 3 2 1 Community Services 1 2 1 2 Fire** 5 1 4 Library Services 2 2 Planning and Building 1 1 Police*** 4 6 6 4 Public Works 7 4 3 Total 18 13 14 17 * An additional 8 positions are also eliminated from the Proposed Budget due to PARS retirements "The filled Fire position will be transferred to another position *** The filled Police sworn positions will retire.in FY 11/12, vacant positions are non-sworn St urn o Economic Development - Less funding for economic delopmenbusiness improvement/Redevelopment activities "3 FTEs o Fire — Defundng of 1 l months of one truck (4 FTEs) will increase emergency response es; the ddrlding o f a Deputy Fire Marshal will create workload impacts; and the civilianization of a Fire Development Specialist will reduce costs w o Police — Defending of 5 Police Officers and 1 Lieutenant may increase response tinges to calls for service and result in less proactive policing; Elimination Hof 4 Police Services specialists will result in fewer staff re grin 6lke documents for court; Reduction in -time Aero p .. p g P Support Unit staff will provide less support to this unit r. t� ;t t r p » c. y � {�v t" 22 " St $ :tt ; ,qq a� x 6`{` ?• w x_ ATM' � ��"�� - '.�. �; �. .`�t' ���3s �� Viz,' �} ,. 77 n erve � c � �f a vacaxts "�� ter TeThnician toe ; tracted an � tzilararia wl Sher reduce directeric; s{ ",a; - _ w 3 �tir'"°r''`xs .i ,- Cam•A`.-,. {",,_�r� � e pub11C �. _ t t fhh M: imi nati , Iled and 3) nt rva i .t r a r r er will imp c e level of of City parks , fleet a. `streets� ertannel c.pts' d "yffset by inr e in outsid46, y .i4 J. {nY'^II .;� ts'� W1M'duc # � '.kZ4,r '• ,. { 5 ry s 1 In � Bu � - �as anar Adin Anastwil , u ; 3 be 1Q. AW "e v ��� . {� art ur t osit o limina�tcd from r ,Q � � « tam yeas direct© s is d.efundn tl �� $ (���` ,�p^�. �y » hstrat . a1 , i!! e' ,: +yj�1 { 3« }'. .'rc` x Sl k �+ x , ' "46 Qw r. ~ 7 x' 3.,. �4 x t o i x ,t,on £ h sf � 5 �= l OP x'` '4 L_i q iota. S:""� +. r r " p ♦ft N rfl r t Central ,.� ;,.� yr c a�, r env `? P z F � Ctlon of ��ui ?rn t brae : � y e i `in c n fir Federal �,+�bb st s r 7 Wuctii w., ;iF • �,v r � Pier 1 � nce z,} ., M r Contract sy, ades, b,curren technolog fix fin-no al e lu l and , ss� �: �d w b c ed x duc 0 i overtone, tF,, onfitI �,� u r at e. 1 -,AAW . en, nce, travel, � prcfe c " icerluds ►ut ,de ccune ` a §dx"..sstc i � p x x a40 414 rin ,. r .: fi '42 Y� wm Umt�-` di� s „ a d onal 1 .o mill � u t�� x �c��et for ; + rt � I ► t I epla e f tat fS3 . s1 10itj 72 � b� v ern roe nt to t it � � iMot are propose �.t u t �� 1 JrC1Vemen�,t am. ,. Ax n �a K r� -jai F + � out � t it,id ftfthe b U4-stre . «. � • w et- et' f �K ltn3ro �� , la 4 r ' ra „ .,- �,...., { 4 - � s 15 ` „ '�; � -i^,p'*�� w a•,;����, �. „».�'ate' •fs'b„'? t:7c '',x � a s s s • " 1 i " i i � i si s i i � i " 1 " 1 i s11 i s " is s 1 Estimated Balance ®, Economic Uncertainties 19,710 Equipment Replacement 6,913 Capital Projects 11,670 PARS Obligation 3,549 Other Fund Balance's 81,210 Total Fund Balance 409052 � r ism va It sed Bud vi ,-F tvpo et Re 9 V, -1 P , IF z mm0 z� s Y= N t �"n �... -- s e .. ., Ej jmt at � 82.8l• n ,m w: Tk „x k a � � l . n111c � � t� W� e n a w . :, x i �rproe� �t ewes t fund street repairs fi � t A'�`�' aik �� ra Y Q�o a e r i td or defunde ys} s t a tl 1- n t . ft � e T ,die ;. b - _ ' �t men t r a tot &; .. INN, v -114 n 0*7 r "CA� �gotiatcdpay raises s s, �&�benefit' increase� r C ;u �!' s` j ` ee ent Agency� Options M,f cuss on of Current Statu's and Options f r i . . w r .o r r i F r v s� Is, nt Re air, ngyt. @ c ,. � :>,... i a }r: ��. <: '� �' �„ z z n June '' , 2a f x no two tai �� g t Trail l il W -41 ,�xr� F s r ` ►l u ►KKen s + v+ 1 }mo t nc powers m e : �: 1 - t. ►b �h r ve1 n t a cles of Oc 1 , 0 1 h T ` i �� � nd will rev�e %li,V ` ..gene t { g ' Iv k + p e felon . e : nt pa men u - $46 ' g� . y ' nuffliono, Wt o , 06 Inc r s a ., etc. �n 011 "Patin C Y : � W S 55 f � r kl y• t Am- 15, Redevelopment',,I, w v Sri,= Assembly Bill X127 Creates Alternative Redevelopment Agency Program x Imposes "voluntary payments" to avoid AB XI 26 impacts Redevelopment activities:continue if the City enacts an "opt in" ordinance b v. 1, 201�1'to com ` 1 -with AB X1 27 y For FY 2011/12, the City would pay its proportionate share of $1 .7 Billion - Estimated at $4,85116, For FY 2012/13 and annually thereafter, the City would pay (i) its proportionate share of$400 Million; and (ii) additional funds equal to 80% of the School District's �harc of taX increment needed tq pay Agency ind hteoness newly inc after N&ember 2011 - Estimated at $1,600,000'annually s s stn � 120 Fuggy E ; � C Project, n t y ► � Expevrem . ;c- rx OWN k Tax Increment Revenue 1' /l w „ 7,39 ,Qp0 ,. S „ Westminster f P rty, 56 1 Lease R:evemA �� ears N , , 16%, ,� ,' w. a en t x -34,000 Total P `( ee venue h= , 1914S,001} P, ;. ;Ponds /Section f08`'M4�Aont 3,539,000 n � eloper Tax Sharing Aire , sIt 3,0010 , x 02,Q Q 'ar t� y t!'[�ry to^Pl4yif. i.y, fi z 61$51,002146,6,11- � K Fund Loan Repayment 47914,0Q0 qS$. �Y< o 9MP 3 Mil a Personrie ritO 11340,040.': zr' l k Total Epee 3 .t (1684 UQO) t Tzn01, gal, k y ? As�� rec Teflon of o 3 F' s based bu et prior to2G & ` � r_ r. t R, a IVA 1ot, ' '�„.�"� ��S�%� .?•'' >i t'*`uz ,� xM �,� het r, TO g _ ,r• x Vi te r dEstim ZZ Ai ,. 4 � k. PO � � eratce * 1, OO,OQO t. n „ MVB $704y000 � . " vper Tax SharinA - nts 0, 000 Wr ,.woo 54 0,00, $30 u ' As sees T � du +�r is x' llec , 1 vacant) xt t y Zi 22 z r K ggn z' _. r s low _ undindk W�e �a py �►esr JUNPeudltures Tvenue � 3 Y. r., Ta ne-: t.ne� en� $ 1J ' '`x' ��'ryzr ' „; n ,.- i 1,1"'9".� ', » �`€ � ".'' •. ': q�3 `��q1 q x "r� 7/�� e e.� :Y 11Wn e�T• yb+"$'<'K` �i k"'£v' i 4$ 5 '�� 580y4R c, Total Projected revenue s , ` w � 000 x Required Pa yments s, Bonds /Section 108,Loan/ erfront 3,549,00(l�k D �l per, » �l ents � 02,000 A6'sing Set slde- %o Payments to S chda i*i is .y-t . y " � QC�,f(lt State X C1t . 'PGeneral quad Loan.Repayment Hou n ,oan ,epayrnent t 500,nOfl ' k . d �900�1 � Tot� ens M681,46C� ... , r < Estate z°la icr over 1/12 y ng +�F��{` j�'gx, � /'� "�(y' {r �'y'{��'�F�] 77� vial..P-a } q; a � �':`41. ,G, l `n +5 y, 14/1.��71 - 4#��df a i�✓ a x'e { 'kh ;x Key{,• r xiOw N r{ 54 Total ReducedFTEs Personnel Costs $7771138 10.5 -3 = 7.5 2 Filled, 1 Vacant Operating Costs $56100 Equipment $501000 Total $193889138 TotalFTES • • � •dFilledNacant Personnel Costs $395,166 10.5 -5 = 5.5 4 Filled, 1 Vacant Operating Costs $450,834 Equipment $0 Total $8469000 x x `X x , h IDV e fy rt 0 »`t �i %�;` gree Y ikf, � K V`�eve dA V 1u1ir ements {1,_. n theilla 'T'erra and Strand pay ' . sta M �A „ - Bfhe- ella ' 'e� rnt vvll rbrse theeveope �1 iln ands t6 e rye �� rir ant by . a , � � ,r �. ; v . AAA rr f Y h i dp 4 anaent vv4rburse � dev� ��ew � xnian tag The A r�� x cn k ?a cif millit four the �devinprnt 3 a�r s ie o"fe bread h a nt is paid or � .tam_ Oren revenges a ted by .� 4 per Pro > � NA, �- ''��,.� _..��z _ .._ _ .. - #Wax4���' r' r'•v,*�'s�'h"" s� `^}'�� >�s.s- rrx„ .. x , _ r I Estimated *Recommended % Withheld Increment Deferral Strand Agreement 800,000 1009000 13% Bella Terra Agreement 11,2009000 4005000 33% Total $290009000 $5009000 25% Proposed F � Increase, x Fee increases can generate a potential $300,000 increase in revenues and cost savings s r } tiF - Changes in recreational fees, rental fees and parking rates are projected to increase General Fund revenue by $200,000 c b - Credit card processing fee changes are projected to reduce the City's credit card processing costs by approximately $100,000 A x - Due to projected General Fund deficits in FY 2012I1 and the out-years, increased fees can be used to reduce these deficits; or w i - Increase finding for touch needed capital projects and infrastructure repairs (or decrease spending from CIR to $1.0 million) 4 r s µ +tiwr a es r a i r dab Recommended 1 Options Refinance Bonds L2009000 Cut Personnel and Operating Costs by 35% 45400 MVB Grant 30,000 Defer Developer Payments *5001000 TOTAL $196849000 erg, ! i ! ® Date Week of August 8, 2011 Proposed FY 2011/2012 Budget Book to City Council August 15, 2011 Budget Study Session/CIP Presentation August 31, 2011 Charter Deadline to Submit Budget to City Council September 5, 2011 Potential Budget Adoption Dates September 19, 2011 (Regularly Scheduled City Council Meetings) September 30, 2011 Charter Deadline to Adopt the FY 2011/2012 Budget October 1, 2011 New Fiscal Year Begins IRM 21E ..' x z t e L . r 2 r r � z , Mm- IN t ' = r U „ , t OS' 4-1 Fly � x CA2", , z v- t. x a f Hi - J k wy� v h s : �Mft