HomeMy WebLinkAbout2003-06-16 City Council (3)BUDGET
’03- ’05
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE
SERVICES
DATE:
SUBJECT:
3VNE 16, 2003 CMR:316:03
ADOPTION OF THE 2003-04 BUDGET, ADOPTION IN-
CONCEPT OF THE 2004-05 BUDGET AND APPROVAL OF
A BUDGET ADOPTION ORDINANCE, INCLUDING THE
2003-04 CAPITAL IMPROVEMENT PROGRAM, CHANGES
TO THE MUNICIPAL FEE SCHEDULE, UTILITY RATES
AND CHARGES,AND CHANGES TO COMPENSATION
PLANS
RECOMMENDATION
Staff recommends that the City Council approve the following:
1. The Budget Adoption Ordinance (Attachment 1), which includes:
a. The City Manager’s Proposed 2003-05 Budget (Exhibit A previously
distributed).
b. All changes detailed in the Amendments to the City Manager’s Proposed 2003-
05 Budget (Exhibit B).
c. Proposed 2003-04 Municipal Fee Schedule (Exhibit C previously
distributed).
d. Revised pages to the Table of Organization (Exhibit D).
e. Amendments to the Proposed 2003-04 Municipal Fee Schedule (Exhibit E).
2. Resolution Amending Utility Rate Schedules to affect a gas rate decrease (Attachment 2).
3.Resolution Amending Utility Rate Schedules to affect a wastewater collection rate
increase (Attachment 3).
4.Resolution Amending Utility Rate Schedules to affect a water rate increase
(Attachment 4).
CMR:316:03 Page I of 12
5.Resolution Amending Utility Rate Schedules for various refuse service rates
(Attachment 5).
6.Resolution Amending Utility Rate Schedules for various electric service rate changes
(Attachment 6).
7.Resolution Amending the Compensation Plan for Classified Personnel (Service
Employees’ International Union, Local 715) (Attachment 7).
8.Resolution Amending the Compensation Plan for Management and Confidential
Personnel and Council Appointed Officers (Attachment 8).
BACKGROUND
The City Manager’s 2003-05 Proposed Operating Budget was submitted to the Finance
Committee on April 24, 2003 and the 2003-04 Proposed Capital Budget was submitted a
week later on May 1, 2003. During the month of May, the Finance Committee held
hearings and reviewed the Proposed Budget, including the General Fund and Enterprise
Fund Capital Improvement Programs and the Municipal Fee Schedule. Seven public
hearings were held on May 6, 8, 13, 15, 20, 27, 29 and included over 30 hours of
committee review and discussion of the City’s operating and capital expenditures for the
next two years. The Finance Committee also reviewed several proposed rate adjustments
within the Enterprise Funds.
As a result of the hearings, the Finance Committee and staff have recommended changes
to the Proposed Budget (Exhibit B). It is worth noting that the 2004-05 fiscal year budget
is adopted "in-concept" with the attached ordinance. This spending plan will be reviewed
and modified as necessary during the interim budget cycle next year.
DISCUSSION
This staff report focuses on the financial changes recommended by the Finance
Committee and the adjustments suggested by staff that have a fiscal impact. Please note
that all non-financial recommended changes to the proposed budget are described in
Appendix 6 and will be incorporated into the 2003-05 Adopted Budget document. These
changes are not described further in this staff report.
The following are a list of motions passed by the Finance Committee, directing staff to
report back on various items during the 2003-04 fiscal year:
Finance Committee recommends that staff report to Finance Committee by the end
of September with a plan for how Council will significantly reduce the unfunded
liability in retiree health care costs.
CMR:316:03 Page 2 of 12
Finance Committee recommends that staff report to Finance Committee by
midyear _00~-04 on a citywide organizational structura! review including all
management/supervision positions of four (4) or fewer direct reports. The first
phase of this review will focus on the General Fund and Internal Service Funds.
Staff will include City Auditor input in this review, who will report directly to
City Council on its findings.
Finance Committee recommends that staff report to Finance Committee by
September 2003, with a plan to work with major cities within the City’s labor
market area for the objective of appropriate control of long-term growth of
benefits and medical costs consistent with good labor practice.
Finance Committee recommends staff incorporate the goal of funding the
Infrastructure Reserve in future years as follows: $1.0 million in 2004-05, $2.0
million in 2005-06.
Finance Committee recommends staff report on the status of the Externa! Services
Fund at midyear 2003-04.
Finance Committee recommends staff report on the cost analysis of street
maintenance and comparison of cost with neighboring cities (e.g. Santa Clara).
Report to be presented to Counci! sometime in fall.
Finance Committee recommends staff report by 6/30/04 with a plan to enforce
noise abatement.
Finance Committee recommends staff report by !2/31/03, on various funding
options for the highest priority Storm Drain CIP projects and provide justification
for classifying such projects as priority.
Finance Committee recommends staff report by late Fall with information on
auditing the City fleet. Any budget adjustments resulting from this audit will be
incorporated into the 2003-04 midyear report.
Finance Committee recommends that: a) the Community Services Department
evaluate, and recommend how to increase the variance between resident and non
resident fees in the Community Services Department prior to mid-year; b)
Determine how the hours available to Seniors who use discount golf cards can be
extended and specify any fiscal impacts that may result; and c) Report on the
applicability of adding a non-resident junior golf fee. Any adjustment to fees
should be incorporated into the 2003-04 midyear report.
CMR:316:03 Page 3 of 12
The following are a list of follow-up items that, while not approved by a Finance
Committee motion, staff has promised to report back on during the 2003-04 fiscal year:
The City Manager will return to the Finance Committee to discuss implementing
the City Auditor’s three recommendations to City Council resulting from the
analysis of the Long Range Financial Plan.
Staffwill solicit Finance Committee input on ERP reporting options.
The City Manager will return to the Finance Committee to discuss long-term
financing of the Municipal Golf Course, the feasibility of making it an enterprise
fund or contracting out the operation, and the consequences with regard to staffing
and union agreements of doing so.
The City Manager will return to the Finance Committee in September 2003, with a
presentation that discusses measures to help minimize the impact of the Terman
Library closure on southwest Palo Alto.
Finance Committee-Recommended Chanaes to the Ci_ty Manager’s Proposed Budget
The 2003-05 Council Contingency has been allocated as follows:
t.Reinstate College Terrace LibrwT hours - During the Finance Committee
meeting held on 5/29/03, $12,000 was allocated to Community Services
Department budget in both 2003-04 and 2004-05 to support reinstatement to
the current five day staffing level.
2. Banners and Downtown Ligt~ts - During the Finance Committee meeting held
on 5/27/03, $15,000 was allocated to the Public Works Department budget in
2003-04 to fund banners and downtown holiday light maintenance expense.
3. Bus Shelter Revenue Removal - During the Finance Committee meeting held
on 5/27/03, $50,000 was allocated to the elimination of Public Works
Department revenue related to bus shelter revenue removed by a Finance
Committee motion. This allocation may change due to pending Council action
scheduled for 6/16/03.
4. Biwcle Boulevards Implementation Project (PL04010) - During the Finance
Committee meeting held on 5/20/03, $50,000 was allocated to a newly created
capital project (PL04010) related to the Bicycle Master Plan implementation.
2003-05 Council Contingency 2003-04 2004-05
"Beginning balance ....$285,000 $285;000
CSD - restore College Terrace Library hours ($121000)($12,000) ,
PWD - Banners / Downtown Tree Lights ($15,000)($0)
PWD- Bus Shelter Revenue removal ($50,000)($50,000)
CIP- Bicycle Boulevards Implementation ~roject
(PL04010)($50,000)($0)
Ending Balance $158,000 $223,000
CMR:316:03 Page 4 of 12
Elimination of all catering expense for all boards & commissions, and council
meetings - As a result of the motion, Staff is proposing an additional budget
reduction of $3,200 for council meeting meals, $1,300 for the Reorganization
meeting and $2,600 for State of the City meeting. Total additional reduction is
$7,100.
Reinstate CommuniO; Setn~ice Department (CSD) programs that are expected to be
cost neutral and that balance revenue against direct and marginal costs. As a
result of this motion, the CSD budget has been amended as follows:
1. Children’s Theatre
o Increase 0.67 hourly FTE for Children’s Theatre in 2003-05:$25,182
o Increase revenue to offset additional expense in Children’s Theatre in
2003-05:$25,182
2. Adult Arts Pro~ams
o Reinstate adult arts program expense in 2004-05:$19,720
o Reinstate adult arts pro~am revenue in 2004-05:$32,900
3. Art Center
c) Reinstate 0.07 hourly FTE to retain Art Center hours in 2003-05:$2,631
~Reinstate revenue associated with retaining Art Center hours in 2003-
05:$8,820
4. Recreation
c Reinstate contract expense for recreation instructors in 2004-05:
$40,000
c Reinstate revenue associated with recreation instructors in 2004-05:
$50,000
5. Cubberley Community Center
~ Increase 2.00 hourly FTE to perform setups for increased room rentals
at Cubberley: $75,171 in 2003-04
c Increase revenue associated with additional Cubberley expense in 2003-
04:$90,000
Hire the Director of Libraries position by no later than December 2003 - As a
result of this motion, the CSD budget wil! be increased by $88,500 in 2003-04 and
$177,000 in 2004-05.
The Human Services Division of CSD should decrease reliance on paper-based
kiosks and increase web presence to secure cost savings - This motion does not
result in a change to the CSD budget in 2003-05.
CMR:316:03 Page 5 of 12
Revise the CSD impact measure on page 169 fi’om: "Maintain a minimum of 4,000
volunteer hours in support of library programs and services (4,000 both years)",
to: "Maintain a minimum number of volunteer hours in support of library
programs and services (4,500 in 2003-04 and 5,000 in 2004-05)."
Revise the CSD hnpact Measure 6 on page 169 from: "Have 15 percent of
materials at Main Library and Mitchell Park Library checked out at the self check
stations," to "Maintain 20 percent in 2003-04 and 30 percent in 2004-05 of
materials at Main Library and Mitchell Park Library checked out at the self
cheek stations."
Add a CSD Keyplan related to Libra,?, Automation to page 168: "Towards the
goal of implementing library technology to improve service and control
staffing costs, develop by January 2004, a plan to restructure the circulation
areas at Mitchell Park and Main Library to maximize the use of self-cheek
equipment and decrease repetitive stress injuries by staff."
Accelerate the elimination of two police officer positions to 2003-04from 2004-05
- As a result of the motion, Police Department salary and benefit budget will be
reduced by $0.2 million in 2003-04. There are no additional savings in 2004-05 as
this savings was already included in that fiscal year.
Accelerate the elimination of hvo communication technician positions to 2003-04
from 2004-05 - As a result of this motion, the Police Department budget will be
amended when an outside contract has been put in place and the staffing levels
subsequently adjusted.
Add a Police Department keyplan related to profiling - As a result of this motion
the following will be added to the Police Department text: "In 2003-04, continue
to compile and report demographic data on police contacts to City Council on a
quarterly basis"
Report on feasibility of 2003-05 Athletic Fields CIP - As a result of this motion,
staff proposes Athletic Field Artificial Turf and Lighting Projects CIP (PG04010)
for $155,000 in 2003-04. Funding for this project includes IMP placeholder funds
for Greer Park ($80,000) and El Camino Park ($75,000). This CIP (Appendix 4)
seeks to determine which fields are most appropriate for the installation of
artificial turf and lighting, and then implement over a five-year period. Staff will
make an Athletic Fields presentation to Council on June 23, 2003.
CMR:316:03 Page 6 of 12
Local and Neighborhood Collector Street TrafJ?c Calming CIP (PLO0026) - The
Finance Committee recommended increasing the funding of this project by
$50,000 to $150,000 for additional traffic calming project work. This additional
funding is from the Street Improvement Fund.
Municipal Fee Schedule (Exhibit E)
o Birthday Part), fee clarification (page 14) - The description of this fee will be
amended to "Birthday Parties at the Junior Museum & Zoo" and the associated fee
is changed to an $85 - $255 range which represents the rental fee of the facility.
Appeals fee set to increase from $100 to $120 (page 5) - The Finance Committee
felt the increase from $100 to $200 was excessive and recommended to fee to be
$120 in 2003-04. This motion does not change the CSD budget in 2003-04.
Picnic Area Reseta, ation fee (page 17) Finance Committee recommends
reinstating the picnic area reservation service and related fees, with signage
describing the enforcement options available. This motion does not change the
CSD budget in 2003-04.
Eliminate $2 Baylands Parking Lot Day Use Fee (page 14) - Finance Committee
recommends that the proposed $2.00 Baylands Parking Lot Day Use Fee be
eliminated. This motion reduces annual General Fund revenue by $18,000 in
2003-04 and 2004-05.
Staff-Recommended Chan~es to the City Mana.~er’s Proposed Budget
General Fund:
Community Services
Decrease 0.25 Senior Librarian and increasing 0.25 Librarian - This change
shifts resources where needed and results in annual savings of $2,588.
~ Eliminate 1.0 FTE vacant Office Specialist in the Human Services Division in
2003-04 and reinstating the 1.0 Office Specialist in the Recreation Division in
2004-05 - This change moves up a planned position elimination resulting in
additional salary and benefit reduction in the 2003-04 CSD budget of $67,041.
Eliminate 0.41 hourly FTEfrom recreational services in 2004-05 instead of the
Junior Museum and Zoo in 2003-04 - This change increases the CSD budget by
$15,410 2003-04.
CMR:316:03 Page 7 of 12
Fire
Additional EMT differential compensation - 2.0 FTE Deputy Fire Chiel~s have
qualified for (2.5%) EMT differential compensation; $9,108 in additional salary
expense will be added to the department budget in 2003-05.
New Emergency Response Reimbursement - The Utility Department (Gas Fund)
has agreed to reimburse the Fire Department for emergency response expenses;
$63,000 in additional revenue will be added to the department budget in 2003-05.
Public Works
~ Additional bus shelter maintenance expense - The removal of VTA maintenance
responsibility for bus shelters from the proposed budget, requires the addition of
$30,000 in annua! maintenance and replacement expense to the department
budget. The annual cost is determined by the total estimated total CIP of $240,000
(spread out over 10 years) plus $6,000 annual cost for supplies and glass
replacement. A separate CMR will be presented to full Council on June 16, 2003
to debate on the proposed plan.
Capital Budget
Art In Public Places (AC86017) - Due to staff error this proposed CIP’s funding
for fiscal years 2003-05 is increased by $!5,000 from $40,000 to $55,000.
CommuniO~ Services Facilities Lighting Enhancements (LIOIO14) - In 2003-04
additional proposed funding of $90,000 from Electric Fund DSM public benefits
fund for photovoltaic lighting at the Golf Course Parking Lot.
~ Fire Portable Radio Replacement (PD04010) - Due to a miscalculation, this
project will have an $11,700 decrease in its reimbursement amount from Stanford.
~ Palo Alto South of Forest Avenue (SOFA) Park (PG02018) - Modify to provide
for an interim park solution as requested by the SOFA neighborhood. At this time,
funding cannot be found to realize a full-fledged park at the 2-acre site. An
interim park will provide for grass and minor landscaping until such time as
funding becomes available to construct and maintain a full service park.
Special Revenue Funds
~ Residential Housing-in-Lieu Fund - Staff proposes an additional budget allocation
of $100,000 in the Residential Fund to provide funding for a comprehensive study
of the BMR Program procedures, deed restrictions and an economic evaluation of
alternatives to our current appreciation method for BMR owner units. This funding
would provide for consultant work ($50,000), contract staff to administer the
consultant contract (35,000) and outside legal consultation ($15,000). The Council
discussed this comprehensive study last September when the Council adopted the
BMR Assessment Loan Program. The scope of work for the proposed program
wil! be one topic of a Council Study Session on Affordable Housing to be
CMR:316:03 Page 8 of I2
scheduled in September or October. Affordable Housing is a Council Top Five
priority.
BMR Emergency Program Fund- Staff proposes an allocation of $100,000 in
additional budget in the Emergency Fund from the Residential Housing funds to
provide loan funding for the BMR Assessment Loan Program. Last September the
Council allocated $150,000 for initial funding for this new program. The City also
applied to the state for $500,000 in California Housing Finance Agency (CHFA)
HELP funding for additional seed money for the program. The CHFA funds are
highly competitive, and the state did not approve the city’s request for HELP
funds because the City was unable to specifically identify recipients of the money.
Given the nature of the City’s assessment program and the CHFA application
process, staff considered that resubmitting for another funding round would have
the same result; therefore, the city will need to continue providing the funding for
this program if it is to continue. In addition to the Abitare and Redwoods projects,
there are two other complexes with BMR units that are undergoing substantial
condominium association assessments and owners have indicated they intend on
submitting loan applications. This budget revision would provide sufficient
assessment loan funding for those projects. Based on Council direction, Planning
staff and the Attorney’s Office are also developing an assignment fee structure to
adjust the resale price of BMR units to provide an ongoing source of revenue for
future assessment loans. The anticipated expenditures for assessment loans will be
balanced by expected revenue from the new proposed assignment fees. The BMR
Assessment Loan Program enables the City to provide funding for both future
assessment loans and for preservation of the existing BMR unit housing stock.
Affordable Housing is a Council Top five Priority.
Enterprise Funds
Electric Fund
Increase~fiber license fee revenue - Increase in projected revenues ($0.95 million
in 2003-04 and $0.35 million in 2004-05) reflects updated projections in this area.
~ Reduce contract services expense - Reduction of $0.1 million in 2003-05 base
expense reflects additional anticipated savings.
CommuniO~ Services Facilities Lighting Enhancements (LIO!O14) - In 2003-04
additional proposed funding of $90,000 from Electric Fund DSM public benefits
fund for photovoltaic lighting at the Golf Course Parking Lot. No resource impact
on the Electric Fund since fund has already been budgeted in the Public Benefit
Program.
Gas Fund
~ New Emergency Response Reimbursement - The Utility Department (Gas Fund)
has agreed to reimburse the Fire Department for emergency response expenses;
$63,000 in additional annual expense will be added to the fund budget in 2003-05.
CMR:316:03 Page 9 of 12
Water Fund
Reduce New Vehicles (2) CIP (WS04016) by $82,000 - The department has
reduced the need to two trucks from the original four at a total cost of $100,000.
Refuse Fund
Hourly Conversion 1.0 So’eet Maintenance Assistant - An hourly conversion of
!.0 FTE hourly to 1.0 FTE Street Maintenance Assistant results in an additional
$22,000 in salary and benefits expense in 2003-05. This proposed staffing is
needed for the increased maintenance responsibilities associated with the new
downtown parking structures and is partially reimbursed ($11,000) by the
University Avenue Parking Assessment District.
~ Reclassification of !.0 Heavy Equipment Operator- This proposed staffing
adjustment of 1.0 FTE Equipment Operator to Heavy Equipment Operator results
in an additional $8,692 in salary and benefits expense in 2003-05. The
reclassification request is needed due to heavy equipment requirements to operate
a much larger equipment due to expansion of yard waste expansion program)
~ Reclassification of 1.0 Heavy Equipment Operator - This proposed staffing
adjustment of 1.0 FTE Street Sweeper Lead to Heavy Equipment Operator Lead
results in an additional $9,234 in salary and benefits expense in 2003-05. The
reclassification request is needed due to a compression issue.
General Benefits and Insurance Fund
Reduction in 2004-05 Benefit Expense - A reduction of $0.8 million in 2004-05 fund
expense reflects recent revisions to estimated employee benefit expense. The General
Fund portion of this expense reduction is estimated to be $0.5 million, with the rest
spread to other funds.
Compensation Plans
Several classification changes are requested in the Management and Confidential, and
Classified Compensation Plans. New or changed classifications are included, along with
the accompanying resolutions in Attachments 7 and 8.
RESOURCE IMPACT
The 2003-05 Proposed Budget as submitted to the Finance Committee resulted in a total
increase to the General Fund Budget Stabilization Reserve (BSR) of $0.3 million in
2003-04 and $0.1 million in 2004-05. The changes resulting from the Finance Committee
hearings and staff recommendations increase BSR funding an additional $0.2 million in
2003-04 and $0.4 million in 2004-05 (Appendix 1 & 2). The projected 2003-05 ending
balances for the BSR and IR are $22.5 million and $17.4 million respectively (Appendix
2). Additional changes to the Enterprise Funds result in an approximate $2.0 million
overall increase in reserve balances in 2003-05 (Appendix 3) from the proposed
document.
CMR:316:03 Page 10 of 12
POLICY IMPLICATIONS
These recommendations are consistent with existing City policies.
ENV3RONMENTAL REV3EW
Adoption of the budget does not represent a project under California Environmental
Quality Act (CEQA).
ATTACHMENTS
Attachment 1 :
Exhibit A:
Exhibit B:
Exhibit C:
Exhibit D:
Exhibit E:
Attachment 2:
Attachment 3:
Attachment 4:
Attachment 5:
Attachment 6:
Attachment 7:
Exhibit A:
Budget Adoption Ordinance with the following Exhibits:
City Manager’s Proposed 2003-05 Budget
Amendments to the City Manager’s Proposed 2003-05 Budget
Proposed 2003-04 Municipal Fee Schedule
Revised Pages in the Table of Organization
Amendments to the 2003-04 Proposed Municipal Fee Schedule
Resolution of the Council of the City of Palo Alto Amending Utility
Rate Schedules G-!, G-2, and G-6 of the City of Palo Alto Utilities
Rates and Charges Pertaining to Gas Rates
Resolution of the Council of the City of Palo Alto Amending Utility
Rate Schedules S-1 and S-2 of the City of Palo Alto Utilities Rates
and Charges Pertaining to Wastewater Collection Rates
Resolution of the Council of the City of Palo Alto Amending Utility
Rate Schedules W-I, W-4, and W-7 of the City of Palo Alto Utilities
Rates and Charges Pertaining to Water Rates
Resolution of the Council of the City of Palo Alto Amending Utility
Rate Schedules R-I, R-2, and R-3 of the City of Palo Alto Utilities
Rates and Charges Pertaining to Refuse Collection
Resolution of the Council of the City of Palo Alto Amending Utility
Rate Schedules E-14 and E-16 the City of Pato Alto Utilities Rates
and Charges Pertaining to Electric Rates
Resolution of the Council of the City of Palo Alto Amending the
Compensation Plan for Classified Personnel (SEIU) Adopted by
Resolution No. 8056 and Amended by Resolution Nos. 8059 and
8141, to include new Classifications
2003-04 Compensation Plan Changes for Classified Personnel
CMR:3!6:03 Page tl of 12
Attachment 8:
Exhibit A:
Resolution of the Council of the City of Palo Alto Amending the
Compensation Plan for Management and Confidential Personnel and
Council Appointed Officers Adopted by Resolution No. 8096, and
Amended by Resolution No. 8117, to add new Classification
2003-04 Compensation Plan Changes for Management and
Confidential Personnel
Appendix 1:
Appendix 2:
Appendix 3:
Appendix 4:
Appendix 5:
Appendix 6:
Summary of Changes to the 2003-05 Proposed General Fund Budget
2003-05 General Fund Summary and Reserve Balances
2003-05 Utility Fund Summary and Reserve Balances
Capital Improvement Fund Summaries and Amended Projects
Infrastructure Management Plan PowerPoint presentation to the May
20, 2003 Finance Committee
May 29, 2003 Memorandum to Finance Committee detailing
changes to 2003-05 City Manager’s Proposed Budget to date
Related Staff Reports:CMR:195:03; CMR:256:03; CMR:263:03; CMR:267:03;
CMR:268:03; CMR:269:03; CMR:276:03; CMR:285:03
PREPARED BY:
CHARLES PERL
Budget Manager
DEPARTMENT HEAD APPROVAL BY:
CARL YEATS
Director of Administrative Services
CITY MANAGER APPROVAL:
EMILY HARRISON
Assistant City Manager
CMR:316:03 Page 12 of 12