HomeMy WebLinkAboutStaff Report 269-08BUDGET
’08-09’
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:JUNE 09, 2008 CMR: 269:08
SUBJECT:ADOPTION OF AN ORDINANCE ADOPTING THE 2008-09
BUDGET, INCLUDING THE 2008-09 CAPITAL IMPROVEMENT
PROGRAM, CHANGES TO THE MUNICIPAL FEE SCHEDULE,
UTILITY RATES AND CHARGES, AND CHANGES TO
COMPENSATION PLANS, AND RELATED RESOLUTIONS
RECOMMENDATION
Staff recommends that the City Council approve the following:
1. The Budget Adoption Ordinance (Attachment 1), which includes:
a. The City Manager’s 2008-09 Proposed Budget (Exhibit A - previously distributed).
b. All changes detailed in the Amendments to the City Manager’s 2008-09 Proposed
Budget (Exhibit B).
c. 2008-09 Proposed Municipal Fee Schedule (Exhibit C - previously distributed).
d. Revised pages to the Table of Organization (Exhibit D).
e. Amendments to the 2008-09 Proposed Municipal Fee Schedule (Exhibit E).
2.Resolution Amending Utility Rate Schedules for an electric rate increase (Attachment 2).
3.Resolution Amending Utility Rate Schedules for a water rate increase (Attachment 3).
4.Resolution Amending Utility Rate Schedules for a gas rate increase (Attachment 4).
5.Resolution Amending Utility Rate Schedules for a refuse rate increase (Attachment 5).
6.Resolution Amending Utility Rate Schedules for a storm and surface water drainage rate
increase (Attachment 6).
7.Resolution Amending Utility Rate Schedules for Electric, Water, Gas and Wastewater
connection fees and Water and Wastewater capacity fees (Attachment 7).
8.Resolution Amending the Compensation Plan for Management and Professional Personnel
and Council Appointed Officers (Attachment 8).
9.Resolution Amending the Compensation Plan for Service Employees International Union
(SEIU) (Attachment 9).
CMR:269:08 Page 1 of 8
BACKGROUND
The City Manager’s 2008-09 Operating Budget was submitted to the Finance Committee on May
6, 2008 and the 2008-09 Proposed Capital Budget was submitted on May 8, 2008. During the
month of May, the Finance Committee held hearings and reviewed the Proposed Budget,
including the General Fund, Enterprise Funds, Internal Service Funds, Capital Improvement
Programs and the Municipal Fee Schedule. A total of four public hearings were held on May 6,
8, 13, and 15 during which the Committee reviewed and discussed the City’s operating and
capital expenditures for the next year.
As a result of the hearings, the Finance Committee and staff have recommended changes to the
Proposed Budget as detailed in Exhibit ,B.
DISCUSSION
This staff report focuses primarily on the financial changes recommended by the Finance
Committee during the public hearing process and the fiscal related adjustments suggested by
staff following submission of the original proposed budget. Certain key non-financial changes
are also highlighted in this report. All other non-financial recommended changes to the proposed
budget are described in Appendix 4, which was distributed to the Finance Committee on May 15,
and will be incorporated into the 2008-09 Adopted Budget document.
Finally, the Finance Committee directed staff to report back during budget adoption on the
following issues:
Gas Fund - In response to a question from the Finance Committee regarding the issue of
"unaccounted for gas".
Staff will return with a plan for updating the estimate of natural gas leakage from
the distribution system in Fall 2008.
The pros and cons of a team approach to filling the Environmental Coordinator position
in the City Manager’s Office and the experiences from the current team-members.
o Staffwill respond during the budget hearing
The economics of City sponsored camp programs:
In response to the Finance Committee’s inquiry regarding the economics of the
City’s summer camp program versus local agencies providing similar programs,
the Community Services Department is committed to supplying programs that
meet the community’s demand as well as meeting the needs of our community’s
diverse economic strata. To that end, the Department will work more closely with
the Palo Alto Unified School District prior to developing its 2009 summer camp
programs to assure a diverse offering of summer programs that avoids redundancy
yet maintains or enhances the cost recovery expectations for the department.
Finance Committee Recommended Changes to the City Manager’s Proposed Budget
,, The 2008-09 City Council Contingency account is proposed for allocation as follows:
CMR:269:08 Page 2 of 8
Contract services for Earth Month outreach and activities coordinated through the City
Manager’s Office - $30,000
Contract services related to the creation and initial work of the Community
Environmental Action Partnership coordinated through the City Manager’s Office -
$15,000
Contract services for advice and guidance on the management of the City of Palo Airport
coordinated through the Administrative Services Department - $30,000
Council Contingency account status
Earth Month outreach
Community Environmental Action
Partnership
Airport consultant
2008-09
($30,000)
($15,000)
($30,000)
Refuse Fund - The Finance Committee tentatively approved the Refuse Fund 2008-09
Operating Budget which included the annual PASCO compensation amount as
recommended by staff. The Finance Committee noted there is a potential contract dispute
regarding the compensation amount and requested that legal clarification be provided to
the full Council. A confidential memorandum on the potential contract dispute has been
submitted under separate cover by the City Attorney and a summary of staff’s
recommendation and PASCO’s alternative proposals is discussed in the Refuse section in
this report.
Staff-Recommended Changes to the City Manager’s Proposed Budget
Staff recommends the following changes based on new information following submittal of the
original proposed budget.
General Fund
Fire
Emergency Medical Services (EMS) Study - $50,000. In 2008-09, the Fire Department
will use contract services to conduct a study of the EMS operations. The scope of the
study will include:
A comprehensive assessment of current resources and service demands
The evaluation of the effectiveness and efficiencies of the current program
Projected service demands and changes in the delivery system to meet anticipated
future needs
Evaluation of current field practices/procedures and staffing levels
CMR:269:08 Page 3 of 8
Maximizing efficiencies in billing and collections
Assessment of funding needs and additional/enhanced revenue sources
Assessment of equipment and vehicle needs
Development of an Master EMS plan recommending best strategies, policies and
procedure for the future
Human Resources
Under benchmarking measures for the workload outputs section of the operating budget,
(page 96, operating budget) staff is changing the number of grievances filed from 15 to
10 in 2008-09. This change more accurately reflects the trend rather than an average.
Police
~,Reclassification of 1.0 FTE Community Services Officer to Program Assistant I - $5,500
to align position with actual work duties.
Public Works
Addition of supplies and materials - $10,000. In 2008-09, an additional 1.0 FTE Facilities
Mechanic was added to the Public Works Department in response to recommendations
made to the City by Kitchell CEM consultants in a report on the General Fund
Infrastructure backlog. Additional supplies and materials for the new hire will be needed
to assist them in their job duties.
Addition of $18,000 in temporary salaries to support the graffiti abatement program. This
will provide funding for the continuance of the current abatement program.
Infrastructure/CIP
The following items were presented to the Finance Committee with the May 6, 2008
places" memo:
New CIP Project AS-09000 (City of Palo Alto Municipal Airport Transition
Project). Funding of $50,000 will be provided by the Infrastructure Reserve.
New CIP Project PE-09004 (Los Altos Treatment Plant (LATP) Master Plan
Study). Funding of $100,000 will be provided by the Infrastructure Reserve.
New CIP Project EL-09001 (Evaluation of Local Cogeneration Opportunities)-
Funding of $350,000 will be provided by the Electric Fund Supply Rate
Stabilization Reserve.
Additional funding of $600,000 to CIP Project PE-04014 (Animal Service Center)
from Infrastructure Reserve.
Additional funding of $300,000 to CIP Project PE-08004 (Lytton Plaza
Renovation) from Infrastructure Reserve.
Additional funding of $50,000 to CIP GS-07000 (Elwell Court Tenant
Improvements) from Gas Fund ($12,500), Water Fund ($12,500), Electric Fund
($12,500), and Wastewater Collection Fund ($12,500)
Change funding of $125,000 to CIP RF-10003 (Drying Beds, Material Storage
and Transfer Area) from Refuse Fund ($125,000) to Refuse Fund ($62,500) and
Wastewater Collection Fund ($62,500)
CMR:269:08 Page 4 of 8
Additional funding $45,000 to CIP VR-09000 (Scheduled Vehicle and Equipment
Replacement) from General Fund
Scope change to CIP PE-09002 (Greer Park Irrigation System Replacement and
Phase IV). This change has no impact to reserves.
Enterprise Funds
Electric Fund
¯Addition of PaloAltoGreen Commodity expense - $109,000. The increase in customer
and City sales for PaloAltoGreen requires an addition to the purchase of the commodity.
Fiber Optics Fund
¯ Establish a new Emergency Plant Replacement Reserve and establish reserve guidelines
for the Fiber Optics Fund. The original request for the Emergency Plant Replacement
Reserve was in the amount of.$250,000. Staff is increasing that recommendation to $1
million to be consistent with other Utility Fund Emergency Plant Replacement Reserve
guidelines.
Refuse
o
Fund
The current waste hauling and recycling contract with PASCO requires the Council to
approve the reasonableness of PASCO’s annual compensation as part of the budget
process. For FY 2008-09, PASCO has asserted that it is entitled to additional
compensation in the amount of $767,000 to $950,000 to compensate it for cost overruns
and losses incurred in FY 2006-07. Based on the contract language, staff disagrees with
this approach and instead recommends that the compensation be adjusted by the
applicable CPI as specified in the agreement. Accordingly, the proposed budget includes
an annual compensation amount of $10,960,234, which reflects the CP! increase
recommended by staff. (For further background, see CMR 246:08).
Internal Service Funds
Vehicle Replacement and Maintenance Fund
Increase in revenue from Operating transfers-in from the General Fund for the purchase
of van for the new facilities mechanic position in the Public Works Department -
$45,000
External Services Fund
Based on previous Council direction, the External Services Enterprise Fund and
associated positions have been eliminated in 2008-09 effective 6-9-2008.
Revenue and Expense Options to Help the General Fund Accommodate Debt Service for
the Public Safet~ Buildin~
Staff presented to the Finance Committee the "Best Bets" for revenue enhancements and expense
reductions to identify $1.0 million to transfer to the Public Safety Building Reserve. The Finance
Committee tentatively approved the options identified with the exception of the elimination of
CMR:269:08 Page 5 of 8
0.5 FTE Sr. Librarian. Staff has removed that option from the "Best Bets" as presented in
Appendix 4.
Additionally, the item to remove Fire personnel support from the Bike Safety program has been
eliminated. It has been determined that the Fire Department can continue to support the program
since the department will soon be fully staffed and could potentially use Fire personnel assigned
to light duty to support the Bike Safety program. The Fire personnel support for the Bike Safety
program will continue and the "Best Bet" expense reduction will be reflected as overtime
savings.
Compensation Plans
Two classification changes are requested in the Management and Confidential, and Classified
(SEIU) Compensation Plans. New or changed classifications are included, along with the
accompanying resolutions in Attachments 8 and 9.
Table of Organization
Amended pages to the 2008-09 Table of Organization are included with this report (Exhibit D).
The table has been revised to reflect the staffing changes presented in this report. Changes
reflected in the Table of Organization will be incorporated into the relevant department
organization charts and the revised organization charts will be published in the adopted budget.
Municipal Fee Schedule
The Police and Planning and Community Environment Departments have additional municipal
fee changes to the schedule for increases in animal services and inspection services. There is also
one change in the citywide fees to add an online payment processing fee for parking citations.
Contracts Greater Than $85,000
On May 15, 2008, the Finance Committee approved the fiscal year 2008-09 contract scopes of
professional services agreements greater than $85,000 (CMR:238:08).
RESOURCE IMPACT
The 2008-09 Proposed Budget as submitted to the Finance Committee resulted in an increase to
the General Fund Budget Stabilization Reserve (BSR) of $0.3 million in 2008-09. The changes
resulting from the Finance Committee hearings and staff recommendations resulted in a $0.1
million decrease to BSR funding in 2008-09 (Appendix 1). The projected ending balance for the
BSR in 2008-09 is $25.5 million. Additional revenue and expense reductions of $1.0 million
were identified as funding options for the Public Safety Building debt service. Those dollars will
be transferred to the Public Safety Building Reserve when established. The projected ending
balance for the Public Safety Building Reserve in 2008-09 is $4.0 million. As a result of the
changes to the capital budget, the projected ending balance in the Infrastructure Reserve (IR) in
2008-09 is $11.6 million. Additional changes to the Enterprise Funds result in an approximate
$8.3 million increase in reserve balances in 2008-09 (Appendix 2).
POLICY IMPLICATIONS
These recommendations are consistent with existing City policies.
CMR:269:08 Page 6 of 8
ENVIRONMENTAL REVIEW
Adoption of the budget does not represent a project under the California Environmental Quality
Act (CEQA).
ATTACHMENTS
Attachment 1:
Exhibit A:
Exhibit B:
Exhibit C:
Exhibit D:
Exhibit E:
Budget Adoption Ordinance with the following Exhibits:
City Manager’s 2008-09 Proposed Budget
Amendments to the City Manager’s 2008-09 Proposed Budget
2008-09 Proposed Municipal Fee Schedule
Revised Pages in the 2008-09 Table of Organization
Amendments to the 2008-09 Proposed Municipal Fee Schedule
Attachment 2:Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedules E-l, E-l-G, E-2, E-2-G, E-4, E-4-G, E-4-TOU, E-7, E-7-G, E-
7-TOU, E-14, E-16, E-18 and E-18-G of the City of Palo Alto Utilities
Rates and Charges Pertaining to Electric Rates
Attachment 3:Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedules W-l, W-2, W-4, and W-7 of the City of Palo Alto Utilities
Rates and Charges Pertaining to Water Rates
Attachment 4:Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedules G-l, G-2, G-6, and G-10 of the City of Palo Alto Utilities Rates
and Charges Pertaining to Gas Rates
Attachment 5:Resolution of the Council of the City of Palo Alto Amending City of Palo
Alto Utility Rate Schedules R-l, R-2, and R-3 of the City of Palo Alto
Utilities Rates and Charges Pertaining to Refuse Rates
Attachment 6:Resolution of the Council of the City of Palo Alto Amending Utility Rate
Schedule D-1 (Storm and Surface Water Drainage)
Attachment 7:
Attachment 8:
Exhibit A:
Attachment 9:
Resolution of the Council of the City of Palo Alto Amending City of Palo
Alto Utility Rate Schedules E-15, G-5, W-5, and S-5 of the City of Palo
Alto Utilities Rates and Charges Pertaining to Connection Fees and
Capacity Fees
Resolution of the Council of the City of Pato Alto Amending the
Compensation Plan for Management and Professional Personnel and
Council Appointees Adopted by Resolution No. 8748 to change the title
and compensation of one classification.
2008-09 Compensation Plan Changes for Management and Professional
Personnel
Resolution of the Council of the City of Palo Alto Amending the
Compensation Plan for Classified Personnel (SEIU) Adopted by
Resolution No. 8658 to add one classification.
Exhibit A:
CMR:269:08
2008-09 SEIU Compensation Plan Changes
Page 7 of 8
Appendix 1:
Appendix 2:
Appendix 3:
Appendix 4:
Appendix 5:
Related Staff Reports:
2008-09 General Fund Summary and Reserve Balances
2008-09 Enterprise Fund Summary and Reserve Balances
2008-13 Capital Improvement Fund Summaries and Amended Projects
May 15, 2008 Memorandum to Finance Committee detailing changes to
2008-09 City Manager’s Proposed Budget to date and summary of
Revenue and Expense Options to Help the General Fund Accommodate
Debt Service for the Public Safety Building.
Memorandums distributed "at-places" during the Finance Committee
budget hearings.
CMR:165:08;
CMR: 182:08;
CMR:227:08;
CMR: 169:08;
CMR: 185:08;
CMR:238:08;
CMR:170:08;CMR:ITI:08;
CMR:213:08;CMR:223:08;
CMR:243:08;CMR:246:08
PREPARED BY:
SHARON BOZMAN
Budget Manager
DEPARTMENT HEAD APPROVAL:
LALO PEREZ
Director of Administrative Services
CITY MANAGER APPROVAL:
STEVE EMSLIE & KELLY MORARIU
Deputy City Managers
CMR:269:08 Page 8 of 8