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Home My WebLink About1988-05-12 City Council Summary MinutesCITY COUNCIL MINUTES PALO ALTO CITY COUNCILMEETINGS ARE BROADCAST LIVE VIA KZSU- FRE )UENCY9O.1 ON FM DIAL= Special Meeting May 12, 1988 ITEM PAGE 1. Special Meeting for the Purposes of Meeting as a Committee of the Whole in a Study Session re Financial Conditions 60-59 Study Session re Financial Condition of the 60-59 City Adjournment at 9:45 p.m. 60-62 60-58 5/12/88 Special Meeting Thursday, May 12, 1988 Th€ City 'ouncil of the City of Palo Alto ;wet on this �.te in the Council Conference Room, 250 Hamilton Avenue, at 7:55 p.m. PRESENT: Bechtel (arrived at 7:43 p.m.), Cobb, Fletcher, Klein, Levy, Patitucci (arrived at 7:47 p.m.), Sutorius, Woolley ABSENT: Renzel 1. SPECIAL MEETING FOR THE PURPOSES OF MEETING AS A COM- MITTEE OF THE WHOLE IN A STUDY SESSION RE FINANCIAL CONDITIONS X280-04) MOTION: Council Member Cobb moved, seconded by Woolley, that the City Council convene into a Committee of the Whole for the purposes of holding a Study Session re Financial Conditions. MOTION PASS= by a vote of 6-0, Bechtel, Patitucci, and Renzel absent. STUDY SESSION RE FINANCIAL CONDITION OF THE CITY City Manager Bill Zaner reviewed the revenue and expenditure levels for the City budget. The overview included informa- tion related to the proposed process for dealing with the 1988-89 budget shortfall, which involve=d reducing the oper- ating budget by approximately $1.7 million, reducing the Capital Improvement Program by approximately $1 million, and and taking the remaining $1 million from the General Fund Reserve for Contingencies. Approximately 10.0 persons/years would be reduced by either attrition or other means. He presented a chart of items proposed for reduction of approx- imately $500,000 that would directly affect the public, and an amount of $1.2 million that resulted in internal reduc- tions that the public would perhap3 not be affected by. Council Members discussed -and questioned the 10.0 persons/ years' reduction and asked whether the positions would be reduced by attrition and/or vase; -.t positions that might occur during the course of the year. Observations were made with respect to raising the rate of return on the Utility assets and the fact th't Capital Improvement Program should not not be a sourot of money to support operational expenses. Several Council Members expressed concerns rel4ting to the perception that there were no program cuts and felt them was a need to be sufficiently aggressive for 1988-89 rather than to prolong the problem until 1889-90. 60-59 5/12/88 MOTION: Council Member Cobb, seconded by Klein, moved to reconvene into a Special City Council Meeting. MOTION PASSED unanimously, Renzel absent. MOTION: Council Member Patitucci, seconded by Klein, moved that the City Council: 1) Recognize the need for long -ter■ reductions of $3 - 5 million (in today's dollars) in reccrring expenditures; 2) Increase revenue to about $1 million per year, probably as a result of re-examining the Utility revenue transfer rate, and also look at the appropriate level of sees; Cost reduction (long-term permanent reductions) in each of the next two budget years of $1.5 million in each year (which translates to $1.2 million in employee com- pensation or a staff reduction of 20 persons in each year); 4 ) Cuts will be made by Council examining programs with their associated dollars, staffing, and service impact of any related reductions or elimination. (The City Manager will recommend program alternatives and the Council will make the final selection); 5) Finance and Public Works Committee to further discuss the appropriate ■ix of reserves and Capital Improvement funds necessary to achieve the right balance in order to soften the leveling over two years; 6) To the extent possible, that reduction in positions will be spread over two years to allow redeployment of per- sonnel within the City and to take maximum advantage of attrition. Council M,.:ber. Bechtel questioned the term "redeployment" as indicated in the motion. Council Member Patitucci felt where jobs became available, the affected personnel could bid for those jobs. City Manager Bill Zaner explained there were employee con- tracts that at some point toward the end of the year required that the personnel to be laid off must be identi- fied because the affected personnel had bumping rights. There could be an opportunity for the informal process during the early part of the year. Mayor Sutorius asked whether the City had an early retire- ment program. 60-60 5/12/88 Mr. Zaner replied there was no formal early retirement pro- gram. Council Member Woolley asked in terms of the approximately 20 positions --10 of which were `identified --if those would occur on July 1. 1988, and the remainder at anytime during the next year. Mr. Zaner responded the ten currently -identified positions might not be the same recommended as a result of the motion on the floor. Council Member Patitucci said the Council would make deci- sions on programs that would accumulate to about 20 posi- tions. The 1988-89 budget might show the positions differ- ently, e.g., some of the positions might be phased out in July/August, some in January, and the remainder in June/ July, 1989. The objective was to achieve the ongoing rate of reduction in recurring expenditures or $1.5 million. Mayor Sutorius said it was important to understand from staff's standpoint that positions were identified to be eliminated on July 1, 1988. The Council's new direction would require quick turnaround by staff, Finance and Public Works (F&PW) Committee and tne Council because any loss of personnel as of July 1 would be difficult: if the timing did not provide for any notification, process. Council Member Patitucci reiterated the goal was not to accomplish in the next fiscal year the equivalent of 20 positions for the total year. The goal was to havz a plan which reduced permanent ongoing expenditures at a rate of $1.5 million per year and reduced during the course of the 1988-89 fiscal year approximately 20 positions. Council Member Bechtel asked if staff could accomplish the the directive. Mr. Zaner said it was not possible to get the Council a bud- get document by June 20, but staff could provide the requested information to Council as well as a procedure which allowed the City to continue to expend funds during an interim period. Council Member Bechtel supported the motion because she felt it was important to look at the larger picture. Mr. Zaner said the discussion that evening focused on pro- grams and reiterated the ten identified positions were not fixed, and staff would return with a different package as a result of the new direction. MOTION PASSED unanimously, Menzel absent. 60-61 5/09/88 Council Member Levy said after reviewing the background information with the conclusion there was a $3 million defi- cit, he wanted to know by major departments and major revenu.: sources, what the original estimates were for 1987- 88, what the actuals were, as well as the original estimate for 1988-89. Mayor Sutorius said there was a revised third quarter report being forwarded Lc the Council which would answer some of Council Mem!ier Levy's questions and also suggested he meet with staff separately for further clarification. Director of Finance Emily Harrison said there had been seve- ral different proposed expenditure budgets for 1988-89. Council Member Cobb said he expected informPtio:i during the F&PW Committee meetings on what the City Manager and City Auditor considered to be a prudent levr1 of reserve. ADJOURNHEN1 Adjournment at 9:45 p.m. ATTEST: APPROVED: Clerk 60-62 5/12/88