BUDGET STUDY SESSION NO. 1
JULY 22, 2002
7:00 P.M.

1. CALL TO ORDER 7:00 p.m.

2. ROLL CALL

Council Members Present: Hartnett, Howard, Jordan, Pierce, Ruskin, Vice Mayor Ira, Mayor Claire

Staff Present: City Manager Everett, Brian Ponty/Assistant City Manager Ponty, City Clerk Howe, City Attorney Yamamoto, Assistant City Attorney Brower, Police Chief/interim Fire Chief Bolanos, Sergeant Matuszak, Assistant to the City Manager Gonzalez, Financial Services Manager Freeman, Information Technology Manager Chulick, Information Technology Supervising Analyst Tikekar, Financial Services Accountant Saldou, Revenue Services Supervisor del Rosario, Financial Services Accountant Greenhorn, Interim Community Development Services Director Liedstrand, Community Development Services Manager Patterson, Community Development Services Manager LaTorra, Planning and Redevelopment Manager Church, Senior Civil Engineer Chang, Traffic Engineer Haygood, Housing Coordinator Jones-Thomas, Fire Marshall Vella, Human Resources Director Rivera-Pen~a, Parks, Recreation and Community Services Director Centeno, Parks, Recreation and Community Services Superintendent Hover, Parks, Recreation and Community Services Supervisor Beth, Parks, Public Works Services Director Ingram, Public Works Superintendent Rosas, Public Works Superintendent Mann, Public Works Superintendent Barwacz, Library Director Chen, Library Services Supervisor Bauer, Fire Department Battalion Chief Balton, Volunteer Balsamo

3. ORAL COMMUNICATIONS - None

4. PROPOSED 2002/2004 BUDGET STUDY SESSION No. 1

4.A. WELCOME AND INTRODUCTION - Mayor Claire stated the background that the Council held public Priority Setting Sessions in January and February 2002 where policy was set for staff to follow. Staff has developed a proposed budget to accomplish those policies within a finite amount of money.

4.B. OUTLINE OF BUDGET STUDY SESSIONS - City Manager Everett added that the Council has also seen the Capital Improvement Program (CIP), the HSFA and the CDBG programs that are included in the budget proposal.

He further stated that the presentation would begin with the budget, the economy; and expenditures by type, source and departments. Property tax and sales tax being the most important in terms of revenue would be discussed next. The property tax allocation will be depicted as per a typical household so that it clearly delineates how the tax is applied toward various services. The sales tax projection will be explained and five year projections will be shown as well. The session will continue with Performance Measures and the Capital Improvement Program.

7:20 P.M. - Mayor Claire left the dais

5. COUNCIL PRIORITIES - City Manager Everett reviewed the Council priorities and specifically, within each priority, described what is or is not in the budget, and where the possible funds would come from.

-Council Comments and Questions
Comments included the point that media centers are located in each and every school and regarding Cultural Activities, although not defined, the policy direction was to expand or diversify those activities wherever possible.

7:34 P.M. - Mayor Claire returns

6. GENERAL FUND - Financial Services Director/Assistant City Manager Ponty made his presentation based on the following outline and utilizing a PowerPoint presentation:

a. Introduction, economic overview, and general fund overview
b. Budget by dept (p.1) review and discuss
c. Funding sources pie chart - 02/03
d. Expenditures by department pie chart - 02/03
e. Expenditures by function pie chart - 02/03
f. Funding sources pie chart - '03/04
g. Expenditures by department pie chart - '03/04
h. Expenditures by function pie chart - '03/04
i. Property taxes
     i) 10 year history and projections
     ii) allocation of taxes paid by homeowner
     iii) % of property taxes by department
j. Sales taxes
     i) sales tax history and projections
     ii) allocation of 8.25% general sales tax
     iii) recent history by economic category
     iv) sales tax concentration
k. Five year projections

-Council comments and questions

Council comments included the point that the retail/cinema project is important not only for a vital downtown but for stability of our revenues. Various questions were asked pertaining to the parking fine increase and parking fees. Clarification on increases to the City Clerk Department and Fire Department were also requested.

-Public Comments and Questions

Housing and Human Concerns Committee (HHCC) Chairperson Charlie Greer, on behalf of the Human Service Financial Assistance fund (HSFA), stated that the HHCC had presented to Council an additional increase of funding from $246,000.00 to $270,000.00. At that time, Council requested a needs assessment and received that assessment in December 2001. The recommendation from HHCC to Council was to increase funding by $24,000.00. At that time, Council stated that additional services must be provided from the additional funding. Chairperson Greer stated that the HHCC recognizes the task before Council, but during these economic times, conveyed that the community truly has the needs.

M/S Howard/Ruskin to increase by $24,000.00 on a one year basis only, the allocation to the Housing and Human Concerns Committee recommendations for a total of $270,000.00. The motion passed by a majority voice vote with Council Member Jordan voting no.

MINUTE ORDER 02-206

Recess – 8:45-9:00 p.m.

7. PERFORMANCE MEASURES - Assistant to the City Manager Gonzalez gave various examples of individual department performance measures.

8. CAPITAL IMPROVEMENT PROGRAM - Senior Civil Engineer Chang gave an overview of the list of proposed projects and funding sources for fiscal year 2002/03 of which $24,761,761.00. has been allocated. He stated that the majority of the 10 funding sources have their own revenue sources, such as the water and sewer projects coming from the enterprise funds, and the transportation fund is supported by Measure A. The Capital Project Fund of $4.7 million in the past up to fiscal year 2002/03 has been supported by the Utilities Users Tax and transferring from the General Fund. Based on the latest financial projections, this will be the last year of transferring into the CIP. Fiscal year 2003/04 has received an allocation of $35,669,105.00.

The latest projection for the Capital Improvement Program fund balance is approximately $5.5 to $6M. Senior Civil Engineer Chang gave several alternatives for utilization of the fund balance. The recommendation was to continue to allow placing the amount into reserves.

-Public Comments and Questions - None

-Council Comments and Questions

Council Member Ruskin stated that the San Francisco Board of Supervisors voted 8-3 to place the Hetch Hetchy bond measure on the November ballot. The significance is that after pressure from work that is being done by all of the 29 Bay Area cities and water districts as well as State Legislators, San Francisco has agreed to place the measure on the ballot for a vote. The amount of $1.6 billion is a figure sufficient to cover cost of their work and their share to fix the regional Hetch Hetchy water delivery system. This will be sufficient with the passage of the three bills in Sacramento that the group has been working on with the help of Assembly Member Papan and Senator Speier. With the three bills and the ballot measure passage, there will be State oversight of the project and the funding mechanism set up so that in addition to the $1.6 biillion, the rest of our fair share will be available to fix the Hetch Hetchy system.

Council Member Hartnett stated that he thinks the reserve should be kept, that Council should receive recommendations later on and keep in mind that although the desire may be to work on six items, the amount may not cover more than one. The commitment to the new library funding in Redwood Shores has been made and the expectation that grants and the GID should cover that, but because the money will probably be leveraged significantly with grants, some amount of the reserves should held for that if necessary. In connection, if possible, Council has stated that it should be more than a library and more of a community serving facility and staff should keep that in mind. With respect to additional park renovation and sports fields, Council and staff should keep looking for joint venture opportunities.

Council Member Howard agreed with the above comments and stated that staff and Council should be as creative as possible and not forget the Courthouse restoration project and look at all opportunities.

9. DISCUSSION AND QUESTIONS BY THE COUNCIL OF THE RECOMMENDED GENERAL FUND BUDGET – City Manager requested clarification on the parking fines topic. He stated his assessment was that there is a need to discuss with the Downtown Association for input but that would not occur prior to the next Budget Study Session on July 29.

Council consensus was for staff to approach the Downtown Association regarding a parking fine increase and request input on the topic.

10. SUMMARY OF FOLLOW-UP ITEMS – City Manager Everett stated that the next Budget Study Session on July 29 would focus on the Enterprise Funds and Redevelopment.

11. ADJOURNMENT – 9:52 p.m.

M/S Howard/Jordan to adjourn until the Budget Study Session of July 29, 2002. The motion passed by a unanimous voice vote.

Respectfully submitted,

Patricia S. Howe, CMC
City Clerk