HomeMy WebLinkAboutStaff Report 208-10TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER
DATE: APRIL 12,2010
REPORT TYPE: Study Session
City of Palo Alto
City Manager's Report
DEP ARTMENT: ADMINISTRATIVE
SERVICES
CMR: 208:10
SUBJECT: Preview of the City Manager's Proposed Budget for Fiscal Year 2011
RECOMMENDATION
That the City Council review and comment, as needed, on a General Fund "Preview Budget" for
FY 2011.
BACKGROUND
The budget preview provides an early look at the budget cuts and revenues under consideration
for inclusion in the City Manager's Proposed Budget to be presented to Council on May 3, 2010.
This preview is for the General Fund only, which includes such services as Police, Fire, Library,
Community Services, Planning, Public Works, for instance.
In FY 2010, the adopted budget closed a $10 million gap, followed by an additional $6.2 million
gap closed with the FY 2010 midyear budget approved by Council on April 5. In FY 2011 the
City is facing an approximate $8.3 million budget gap that has increased from $6.4 million
identified in the February Long Range Financial Forecast (CMR:I43:10). The increase is
primarily due to a decrease in projected Utility User's Tax revenue due to recommendations to
have no utility rate increases in FY 2011. These numbers reflect Palo Alto's continuing fiscal
difficulties in the worst downturn since the Great Depression. Cities across California are in a
similar, or worse, condition.
Because the magnitude of service reductions to the community and loss of jobs to the City
workforce are significant, this overview is being released early to help prepare the City
organization and the community for tough choices that must be made during the upcoming
deliberations on the proposed budget that will begin in May.
DISCUSSION
The Preview Budget provides an overview of representative service reduction, cost recovery, and
revenue proposals that could included in the City Manager's FY 20 II Proposed Budget
scheduled to be released on May 3, 2010.
CMR: 208:10 Page I of6
At the direction of the Finance Committee, the City Manager has produced a range of options
that exceed the $8.3 million budget gap, to provide the Finance Committee and Council with
choices to balance the budget.
The table below provides a financial summary of the budget gap and proposed solutions.
Preview Budget Options Summary ($ millions)
Projected Budget Gap (as of 4/5/10) ($8.3)
Total Proposed Cuts ($7.4 ongoing, $1.1 onetime) $8.5
New Revenue and Revenue Increases $0.9
Proposed Budget Balancing Solutions $9.4
Additional Budget Balancing AlternativeslNext Tier $0.9
Total Prooosed Budget Solutions $10.3
Pending Other Revenue and Reductions $1.07
Total Potential Solutions for Finance Committee $11.3*
Review
* Provides $3 million more than needed for decision
flexibilitv.
It is important to acknowledge that there may be refinements to these proposals, but they are
representative of the budget reductions that will be necessary to resolve the City's current
structural budget deficit. Projections at this time show that approximately 56.5 full-time
equivalent (FTE) positions would be eliminated with all the proposals. In addition, 18.52
temporary positions would be eliminated. The total of FTE and temporary positions is 75.02,
representing a total of 119 individual positions, of which 70 are currently filled. A breakdown of
the position reductions by fund and citywide is shown below.
Full Time Equivalent (FTE) Reductions
Total Reduction Percentage
General Fund 622.51 (50.50) (8.1%)
Enterprise Funds 356.24 (0.10) (0.03%)
Other
Funds/Internal
Service Funds 76.6 (5.90) (7.7%)
Total 1055.35 (56.50) (5.4%)
T emporary oSItIon Re uctlOns P .. d
Total Reduction Percentage
General Fund 41.71 (8.71 ) (21%)
Other Funds 32.93 (9.81 ) (30%)
Total 74.64 (18.52) (25%)
CMR: 208:10 Page 2 of6
FY 2011 position reductions would follow other reductions over the past decade. In FY 2004 the
City eliminated 29.9 FTE, in FY 2006 25.45 FTE, and in FY 2010 21.30 FTE.
As we work through the public outreach meetings, hear from employees, and in the Finance
Committee meetings these recommendations will be subject to change.
Given the magnitude of the structural budget gap, however, there is no escaping service
reductions and job losses. In resolving a structural budget gap, there will be no easy answers.
The proposed cuts represent a mix of targeted and across the board reductions. The City
Manager and Department Directors identified cuts based on maintaining services at lower costs,
so contracting-out solutions have been included where possible. Some programs cuts were made
where the service could be preserved but at a reduced level. For example, the Traffic Team in
the Police Department is subject to elimination under this plan. Regular patrol will need to pick
up some amount of their responsibility. Finally, some programs have been proposed for
elimination entirely. For example, the annual sidewalk maintenance program is recommended to
be cut (with costs shifted to homeowners). Following is a list of reductions that illustrate the
range of impacts of the service reductions, cost-recovery and revenue proposals included as
potential budget decisions.
I. Elimination of contract funding for the annual Side"{alk Replacement Program with shift
of responsibility for sidewalk repair to residents ($500,000)
2. Contracting out of some tree trimming/line clearing and elimination of four full-time
positions ($386,000)
3. The elimination of the Traffic Team will cut five full-time Police Officer positions
($894,000)
4. Elimination of one Community Services Officer position serving the centralized
community outreach program, including Neighborhood Watch, Citizen and Student
Academies, Community Newsletter, Community Events and Fairs, Community
Education Programs, Coordination of the Officer Request for Services Programs,
coordinating public education efforts in Emergency Preparedness with Block
Coordinators, Neighborhood Watch Captains and PANDA ($101,000)
5. Funding for school crossing guards eliminated ($345,000)
6. Reduction ofI-ISRAP funding ($50,000)
7. Library hours shortened and the closure of the Library on Mondays at Main, Mitchell and
the Children's Library will eliminate two full-time and one part-time position ($215,000)
8. The re-opening of the College Terrace Library delayed an additional eight months to June
30,2011 ($74,000)
9. Book collection funds for the Libraries reduced ($117,000)
CMR: 208:10 Page30f6
10. Partial cost recovery increases are proposed through increased participation and/or
admission fees for many programs including Junior Museum and Zoo, Art Center
Gallery, Children's Theatre productions, recreation classes, ali classes, nature interpretive
program, and the science outreach program, Animal Services, HazMat inspection fees
and Planning fees.
11. Shuttle services will be reduced to hourly stops at limited locations eliminating the
service for the Noon shuttle and Marguerite shuttle and reducing the Cross-town shuttle
to one bus ($196,000)
12. Elimination of the twilight concert and brown-bag summer concert series ($27,000)
13. In the Fire Department, Advanced Life Support (ALS) and Basic Life Support (BLS) fees
are proposed to increase by 10% generating an estimated $200,000 in new revenue.
14. Elimination of one full-time Child care position and reduction of one Family Resources
Coordinator position to a half-time position in the Community Services Department
($137,000)
15. The proposed contracting out of Lawn Bowling Maintenance eliminates one fUll-time
position ($45,000)
16. Day use fees at Foothills, Arastradero and Baylands parks are proposed ($100,000)
17. The proposed contracting out of park maintenance at Mitchell Park and Rinconada will
eliminate four full-time positions ($147,000)
18. Vehicle replacement funding for the City's fleet/equipment purchases was reduced by
$483,000. A review of the size of City's fleet has been undertaken to further reduce
future fleet/equipment expenditures.
19. Employee training and education reduced Citywide across all departments ($92,000)
20. Elimination of funding for building maintenance services resulting in the reduction of
three full-time building maintenance positions ($230,000)
21. Contracting out custodial services will eliminate five positions ($540,000)
22. The City will be seeking 50 percent cost sharing from the PAUSD for the School
Resource Officer position ($83,000)
23. Elimination of two full-time positions in Police investigative services that investigate
cases of financial loss, and fraud ($377,000)
24. Elimination of a Fire Hazmat Position with future Hazmat services proposed to be
provided by mutual aid through the County ($37,000)
CMR: 208:10 Page 4 of6
25. The proposed contracting out of golf course maintenance includes the elimination of
seven full-time maintenance positions ($236,000)
26. The proposed reorganization of the Community Services department eliminates one
Division Manager position ($185,000)
27. Elimination of a building inspector, senior planner and staff support eliminates three
positions in Plauning ($382,000)
28. The reorganization and contracting out of the Print and Mail shop includes the
elimination of three full-time positions in the Administrative Services Department
($269,000)
29. Elimination of administrative support organization-wide resulting in the elimination of
seven positions ($462,000)
30. Reductions in the City Attorney's outside legal funds ($145,000)
31. Reduction of one full-time position in information technology ($159,000)
32. Reduction of one full-time position responsible for customer service and revenue
collection ($90,000)
33. $1,237,000 revenue decreases: the golf course ($225,000), plan check fees ($537,000),
and parking citations ($475,000)
CONCLUSION
The Preview Budget is a new approach, given the unprecedented challenges and choices facing
the city. It is provided to illustrate the range of possible budget balancing recommendations
under consideration in advance of the final preparation of the City Manager Proposed Budget,
which will be presented on May 3, 2010.
The City Council Finance Committee directed staff to identify a range of budget reduction
options and revenues larger than the deficit, in order to provide a range of choices for Council
consideration. As a result, the Preview Budget includes $10.3 worth of recommendations, with
another potential $1 million pending.
Since the number of options identified are greater than what is needed for closing the general
fund budget gap, more layoff notices will have been sent than will eventually be necessary. (See
attachment A for the full list of positions identified for possible elimination.)
The Preview Budget provides information designed to provide as much flexibility in job
reassignments as possible to minimize actual layoffs, and to inform the public about the
challenging choices Council will be facing.
Staff is in the process of completing design for a series of community outreach meetings and
information sharing efforts begiuning in late April and continuing through May, as directed by
CMR: 208:10 Page 5 of6
1 _____ _
Council. City Management is also engaging employees in design team meetings into June to
explore other budget ideas and organizational changes to consider.
It is expected that the City Manager's Proposed Budget issued in May 3, 2010 may vary some
from the Preview Budget as we refine proposals and hear feedback. Obviously, the final
decisions in FY 2011 will be made by the City Council.
ATTACHMENTS
Attachment A: Details of Potential Position Eliminations
PREPARED BY:
DEPARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL:
CMR: 208:10
DAVID RAMBERG
Assistant Director
MARC PUCKET.a'
Budget Manager
Director, A ministrative Services
Page 6 of6
. •
. • ..
ITotal
I I
Administrative Specialist I
Building Serviceperson
Maintenance Assistant ~ H
Management Spec
ATTACHMENT A
City of Palo Alto
Detail of Potential FTE Eliminations· Temporary Positions
Fiscal Year 2011 Budget
vacant (0.25) 11,294
vacant (0.46) 19,940
vacant
vacant (0.92) (73,281)
Project Construction Inspector· H vacant , .
I I I
(13.51) (859,808)
(0.25) (11,294
0.46) (19,940
(0.92 (73,281)
(0.46) (27,211) (0.46) (27,211) , '.
"
(5.01) (219,568) (18.52)1 (1,079,377) I
(1.00)
ATTACHMENT A
City of Palo Alto
Detail Potential of HE Eliminations· Regular Positions
Fiscal Year 2011 Budget
. ,
1126,693) (5.00) (459,973) (7.00) (760,524) (43.50) (2,544,116) (66.50) (3,891,306)