Rancho Palos Verdes City Council
   

D R A F T

MINUTES

RANCHO PALOS VERDES CITY COUNCIL

ADJOURNED REGULAR MEETING

BUDGET WORKSHOP

APRIL 14, 2003

The meeting was called to order at 6:30 P.M. by Mayor Stern at Fred Hesse Community Park, 29301 Hawthorne Boulevard.

Roll call was answered as follows:

PRESENT: Clark, Ferraro, Gardiner, McTaggart, and Mayor Stern

ABSENT: None

Also present were City Manager Les Evans; Assistant City Manager Carolynn Petru; Director of Finance Dennis McLean; Director of Planning, Building, and Code Enforcement Joel Rojas; Director of Public Works Dean Allison; City Clerk/Administrative Services Director Jo Purcell; and Recording Secretary Bothe.

Director Allison led the flag salute.

APPROVAL OF AGENDA:

Mayor pro tem Ferraro moved, seconded by Councilman Clark, to approve the Agenda as submitted. Without objection, Mayor Stern so ordered.

REGULAR BUSINESS:

Budget Policy Issues

Recommendation: Discuss the budget policy issues and provide staff with direction regarding the inclusion of these items or others identified by Council in the proposed Baseline Budget for FY 03-04.

City Manager Evans explained that this is the first in a series of budget workshops and hearings that will be conducted prior to the formal adoption of the budget; stated that the City needs to adopt its budget by June 30th; and noted that the next budget policy workshop will be held on April 29th. He stated that two budget workshops have been scheduled for May 10th and May 19th; and that two budget public hearings will potentially be held on June 3rd and June 17th. He commented on the differences among the various budget meetings and hearings – pointing out

that this meeting and the April 29th meeting were being held to discuss the budget policy/budget format, dealing with the global issues, the concepts, and the strategic policies and principles, and not so much the numbers. He stated that he anticipated a draft budget document would be presented to the City Council at its budget workshops in May; and explained that this draft budget document would be based on the City Council’s feedback from the budget policy meetings. He noted that the City Council will address at its May meeting the numbers, various departmental budgets, performance indicators, address how different programs are coming along; and advised that at those May meetings, staff will ask the City Council to make some difficult decisions relative to the budget numbers.

With regard to the formal process of the budget hearings, City Manager Evans stated that the first budget hearing will be scheduled for June 3rd; that staff will present at that time a budget which they believe will be ready for adoption based on the City Council’s budget policy decisions made at the workshops and the public feedback. He noted that if the budget is not adopted at the City Council’s June 3rd meeting, then the matter will be continued to the June 17th City Council meeting for final adoption. He indicated that staff is working on a two-year budget, but that the City Council will be addressing from a policy standpoint only one year at this meeting.

Director McLean advised that the five-year model would be introduced at the budget workshop on May 10th.

City Manager Evans noted that finance staff will start getting into much more detail at the May 10th meeting, working through the first two years of the model and then out through the fifth year of the model.

City Manager Evans explained that the City is in a different situation than it has been in for approximately the last ten years due to the struggling economy, the lower State funding and less assistance from the State and other financial considerations; and explained that this year, the City is dealing with the State budget crisis and the uncertainty of what the State will do to balance its budget. City Manager Evans advised that RPV receives 18 percent of its General Fund revenues from Vehicle License Fees (VLF’s), which is approximately $2.4 million this year; explained that since the State had reduced the City’s VLF’s by 2/3rds, the State had been backfilling these funds to the cities rather than the cities not receiving these revenues; however, with the State budget crisis and with the Governor’s proposed plan, City Manager Evans stated that this backfill to the cities would disappear and cities would bear the brunt of the State reducing the VLF’s by 2/3rds.

City Manager Evans explained that because of this uncertainty, staff has prepared a scenario that would reflect the VLF backfill portion as not available in next year’s budget and would propose to City Council a baseline budget. He stated that the City is currently in fiscal year 2002-03, starting the year with a balanced budget; and explained that during this fiscal year, staff has added in some new programs that were funded out of the City’s General Fund reserve. He explained that at the beginning of the year, staff projected $13.3 million in revenues and proposed $13.3 million in expenditures; and stated that the VLF backfill is approximately $1.6 million this year and that the net figure of $11.7 million is what staff believes it will have to work with next year until staff knows what will happen with the VLF.

City Manager Evans explained that staff has gone through all the budgets and attempted to come up with a baseline budget; and advised that the proposals did not reduce service below the point where staff felt the citizens would initially notice a significant difference – pointing out that some of the programs suggested to be cut have a long-term detrimental effect. City Manager Evans stated that staff has put together an approximate $10.7 million baseline, identifying an approximately $3.4 million menu of programs, projects, requests, activities that staff believes are somewhat discretionary, at least in the short term.

City Manager Evans explained for the Council that staff is proposing a larger package for the City Council to pick from because he had asked the various departments to put together the things that they would like to do if the additional funds become available -- new programs, expanded programs, additional employees compensation; and he indicated that staff included the increase in insurance costs in the baseline budget, but that staff did not put any of the other new or expanded programs in the baseline budget.

City Manager Evans noted for the Council that staff is projecting $13.3 million for 2003-2004 if the City gets its backfill, but that staff would project $11.7 million without the VLF backfill. City Manager Evans stated that the $10.7 million baseline projection includes all ongoing discretionary required -- explaining that the level of some of these services the City provides is discretionary; stated that some of the programs the City provides are required, such as the police protection program, basic planning services, and he pointed out that it does not indicate anywhere at what level these services should be provided. He explained that staff has attempted to identify in the baseline budget all the programs that the City has to provide and to leave those programs at the levels which the residents have been enjoying for the last five years.

Mayor Stern stated that it most likely would be prudent for the Council to adopt a budget of $11.7 million and added that budgetary amendments could be made if more money becomes available.

City Manager Evans stated that the numbers staff has dealt with are General Fund revenues; that in addition to the $13.3 million of the City’s General Fund budget this year, the City will probably spend about $5 million, or about $18 million total; and explained that funds other than General Fund revenues are restricted and used for such purposes as transit, arterials, streets, parks – pointing out that those revenues can only be used for those specific purposes.

Councilman Clark stated that it makes prudent fiscal sense to plan conservatively right now, but that the City Council should work through what it would do if those VLF funds, and others, became available.

Councilman McTaggart suggested that because the state budget will be in a crisis situation for a number of years, the City Council should have a contingency plan that should exclude dipping into the reserves.

Councilman Clark stated that the City Council should reaffirm what is its General Fund reserve policy.

City Manager Evans stated that the current General Fund reserve policy is to maintain an unappropriated General Fund reserve equal to 6 months of the revenues, which is approximately $5- or $6 million at this point.

Councilman Gardiner questioned whether it would be prudent to do a worst-case analysis by not touching the reserves; and suggested that if additional revenues are obtained, that the prioritized list could be altered.

City Manager Evans noted for Councilman Gardiner that the figures in the staff report reflect the Sheriff Department’s 2.6 percent increase; and that with the exception of the employees’ salaries, it does reflect the anticipated increase in various contracts that the City has.

Councilman Gardiner questioned if staff factored in the approved employee raises and what it does to the $10.7 million figure.

In response, City Manager Evans stated that it adds $50,000 in 2003-2004 and another $50,000 in 2004-2005.

Mayor Stern highlighted the City’s low turnover of City employees and the importance of maintaining that minimal turnover.

Councilman Clark stated that the staff report relative to employee compensation should include all forms of compensation received by employees, such as discretionary merit increases, ability for bonuses, educational reimbursement, cost of health benefits, etc.

Addressing Councilman Clark’s comment, City Manager Evans stated that the cost of the employees’ retirement plan, health/dental/vision/life insurance and employee assistance program is approximately 30 percent of the $2.7 million payroll; and that this year, the cost of the retirement program is going up from 7 percent to 9 percent and is included in the baseline budget.

Assistant City Manager Petru added that the employee contribution to the retirement program is going from zero to 2 percent next year and that it will go up to 8.2 percent the following year. She added that the health insurance is going up by approximately 20 percent a year.

City Manager Evans stated that the City does have an employee incentive award/bonus program, which accounts for approximately 1.5 percent of the payroll; and stated that the tuition reimbursement program covers up to $500 per participating employee per year.

Councilman Gardiner highlighted his interest in looking at the residential street maintenance program.

City Manager Evans advised that the residential street maintenance program is most likely the City’s costliest program after the Sheriff’s contract; and he stated that the City streets are in good condition at this point due to the ongoing maintenance program. He added that Proposition C or arterial grants from the County cannot be used for residential programs; noted that the residential street maintenance program has been part of the General Fund since approximately 1997; and stated that last year, staff budgeted $600,000 for the slurry maintenance program. Continuing, he explained that if the City allows a street to go too long without scheduled maintenance activity, the street will start to break down; and stated that in order to keep the program going, staff believes $1.3 million is needed in the next fiscal year to remain in a proactive street maintenance program; but stated that the program activities could be decreased slightly and still be effective.

Councilman Gardiner questioned what the result would be if the City did not fund the street maintenance program for a year and questioned if staff has an alternative option to consider.

City Manager Evans noted for Councilman Gardiner that because the City’s streets are in very good shape, the Director of Public Works feels that for the short term, this program could be effective on approximately half its budget; that with the decreased budget for this program, Public Works staff could address only those streets that are in dire need of attention; and that staff believed that this decrease could go on for 2 or 3 years, but then the City would have to get back to a much more aggressive street maintenance program. City Manager Evans stated that it would be preferable to have a reduced street maintenance program rather than eliminate it for a year.

Councilman McTaggart noted his support for decreasing the street maintenance budget rather than entirely eliminating it for one year, allowing only those problem areas to be addressed during this cutback.

City Manager Evans noted for Councilman Gardiner that staff could identify from the Pavement Management Plan those streets that should not be deferred, those that are at the top of the priority list for needing repair.

Mayor pro tem Ferraro stated that the condition of the roads should not be jeopardized, but that she would support reducing the street maintenance program activities and a thoughtful deferral plan for one year. There was consensus to reduce the activity in this program for at least one year.

With regard to the storm drain and sewer systems, Councilman Clark questioned what the City is using to determine the end of the useful life of the storm drain and sewer systems as opposed to emergency repairs or reconstruction needing to be done.

City Manager Evans pointed out that RPV has millions of dollars worth of storm drains that currently need to be worked on; noted that the City currently maintains an approximate $8.2 million reserve fund that could be tapped to cover an emergency storm drain repair project; and stated that by this fall, staff should be able to provide the City Council with a report on the results of the first investigation of the system. City Manager Evans stated that the City would need to continue with its sewer cleaning and inspection program into the next fiscal year.

With regard to the sewer lines, Director Allison advised that $350,000 has been budgeted in this fiscal year for the engineering investigation; and commented on the environmental laws that are being passed which compel jurisdictions to make improvements to the sewer and storm drain systems. Director Allison stated that the first investigation of RPV’s storm drain system will be to determine the condition of the pipes and to determine if there is adequate capacity; advised that the investigation will cost approximately $1 per foot of line investigated – pointing out that RPV has approximately 850,000 linear feet of line in the system; and that it would take up to five years to complete the investigation of the entire system. He noted that $150,000 out of the $350,000 earmarked for this project will be for the engineering study that would result in a model of the system, a database; and that the remainder would be used to take a first look at 1/3rd of the sewer system.

Councilman Clark suggested that instead of surveying the entire system that the City be broken up into specific quadrants, to take a representative sample and extrapolate out the condition of the entire system. He questioned the necessity of investigating every foot of the entire system.

Director Allison explained that there are too many variables, such as tree roots, geology, age of the pipes, size of the pipes, to be confident that the City would get a representative sampling; and that the sampling would not reflect where on the priority list the lines should be placed for repair.

Councilman Gardiner suggested that the life cycle of a sewer system be considered in a systematic approach to this project.

Councilman McTaggart stated that it would be prudent to concentrate on those areas that already present a worst-case scenario, which he stated is generally on the east side of the City. He mentioned that there are special plastic liners available for larger sized sewers.

Mayor pro tem Ferraro noted that it is her understanding that most of the pipes in the City are already well passed their life cycle; and that she believes staff is attempting to determine the worst areas rather than going from one catastrophe to the next.

Councilman Clark reiterated his opinion that the City Council should adopt a conservative budget until it is known what the State will do with its budget; and he pointed out that there are a lot of other competing needs for this money.

Councilman Gardiner stated that the absolute minimum essential should be done and that City Council should revisit this issue at a later point when the State budget becomes clearer.

Mayor Stern recessed the meeting at 7:57 P.M. and reconvened the meeting at 8:08 P.M.

With regard to the Internal Services Fund, City Manager Evans noted for Mayor Stern that the Building Replacement Fund balance is approximately $1.8 million.

Mayor Stern expressed his opinion that this fund is low on his list of priorities for funding this year.

With regard to Public Safety issues, City Manager Evans explained that an additional traffic enforcement officer is being proposed at an introductory cost of $112,000 per year for the peninsula cities; and that this full time traffic enforcement officer would spend 50 percent of his/her time in RPV at a cost of about $60,000 per year for the first two years.

Mayor Stern noted his hope that the additional traffic enforcement on Via Rivera had been slowing the traffic down with the writing of traffic citations; and questioned what the City is receiving in its share of the revenues from these citations.

City Manager Evans stated that in calendar year 2002, the Sheriff wrote just under 2,500 citations in RPV; that RPV generated approximately $72,000 from those citations, approximately $30.00 for each citation coming back to the city; and noted that this revenue did not cover the expenditure for this additional traffic enforcement.

City Manager Evans noted for Councilman Gardiner that he has been unsuccessful in his efforts to investigate what percentage of traffic citations the City receives, but noted that the Sheriff will be present at the next budget hearing to address these inquiries.

Councilman Gardiner noted that from the statistics, writing a limited number of tickets might not be adequately slowing down the traffic in problem areas.

While his main concern is slowing down speeding traffic, Mayor Stern stated that the statistics reflect the additional traffic enforcement is not a revenue source that is adequate enough to offset the additional cost.

It was the consensus of the City Council that while it is imperative to control the speed of vehicles, incurring this additional cost at this time is not prudent.

Councilman Gardiner requested that more information be provided on what revenues the City receives from traffic citations.

With regard to Student in the Law classes, City Manager Evans noted that two additional classes had been added to this program.

It was the consensus of the City Council to maintain the number of Student in the Law classes due to its popularity and value to the youth.

With regard to the CORE Grant Deputy Program, Councilman Clark stated that he would support eliminating one deputy in this program; and questioned what type of benchmarking has been done to determine the success of these activities. He pointed out that without any grant money, this would be new funding out of the City’s budget.

City Manager Evans explained that the CORE deputies work with the schools, neighborhood watch meetings, shopping centers, and youth activities; and noted that these services have been funded through State and Federal grants, but added that some of these grants are no longer available at this time.

Councilman McTaggart suggested that the City approach those who provide these grants to seek further funding.

With regard to the View Restoration Program, City Manager Evans stated that the majority focus of this program are residents requesting that action be taken on City-owned trees; and advised that in the case of a City-owned tree, there is no burden on the view owner to file or to pay for the removal/replacement, or trimming of the tree, that the entire burden is placed upon the City. City Manager Evans commented on the alternative to reduce the staff from 3 employees to 2; and stated that this would lower the level of service by not being able to have personnel in the office at all times during operating hours and by taking longer to address the residents’ concerns. City Manager Evans stated that another alternative being suggested is to revise the permit fee procedure.

Councilman Gardiner questioned whether this program could be self-funded.

In order for this program to be entirely self-funded, Director Rojas explained that the fees would have to be substantially increased. He explained that what is driving up the cost is the routine/annual trimming and maintenance of the City-owned trees; and he indicated that it would be less expensive to remove and replace these trees.

Councilman Clark noted that the city of Tiburon, in Northern California, has had this program in place much longer than RPV; and that after much trial and error, Tiburon has had to increase its permit fees to help fund their program and to avoid capricious filings which quickly drive up the costs of their program.

Mayor Stern commented on the low percentage of residents this program benefits; and stated that he would support increasing the permit fees to help make this program more equitable to all.

Councilman Gardiner stated that this program should be more self-funded than it currently is; and suggested that when these issues are taken to court, that all of the court fees should be applied to the losing party.

It was the consensus of the City Council to increase the fees for this program, allowing the City to recoup at least a portion of the City’s expense.

Councilman Clark cautioned that the increase in fees should not be so high as to basically wipe out the intent of the ordinance.

With regard to the City Attorney’s budget, City Manager Evans stated that the basic monthly attorney service runs around $20,000 to $25,000; and added that this funding does not include the specialized services or the cost of litigation. He expressed his preference that this matter be further addressed in a closed session meeting wherein the City Attorney will be present.

With regard to Community Outreach, City Grant program, Councilman Clark stated that due to the budget situation, it is more important to closely scrutinize the applications that will be coming forward; and stated that as much as he would like to fund the good causes, this City just does not have the money to do so at this time.

Mayor pro tem Ferraro concurred with Councilman Clark’s statements that these tough times bring forth the necessity for belt-tightening.

Councilman McTaggart stated that he would be more closely looking at what proposals will have a direct benefit to this community.

With regard to the Traffic Management Program, the Traffic Signal Battery Backup System, City Manager Evans stated that the City may lose the $30,000 grant if not used in a certain period of time.

Director Allison confirmed that the $30,000 traffic signal battery backup system grant would have to be spent this calendar year.

Director Allison noted for Mayor pro tem Ferraro that the $30,000 grant came from the Public Utilities Commission.

Councilman McTaggart questioned the cost benefits of switching to the LED signals.

Director Allison noted for Councilman McTaggart that because this City does not have a lot of experience with this type of system, the maintenance costs is unknown at this time, but that he would look into that more closely. Director Allison indicated that it costs the City approximately $200 a month to power an intersection signal; and that this cost is substantially decreased when replaced with an LED system, dropping by approximately 60 percent to operate.

Director Allison stated that the LED system take less energy to operate and is therefore less likely to go out of operation. He indicated that the Sheriff’s Department is usually quick to respond to traffic control malfunctions.

With regard to the One-Time City Building and Park Improvement Project, Portable Generator and Electrical Modifications at Park sites, Director Allison stated that the power usually goes out 2 to 3 times per year at City Hall and that the backup generator on site is a reliable source of backup power for the computers and other equipment.

Director Allison noted for Councilman Gardiner that the generator at City Hall does have an uninterruptible backup power supply, that there is no pause in power supply.

City Manager Evans advised that Hesse and Ladera Linda Parks are the City’s two backup emergency operation centers in case something catastrophic happens at City Hall.

With regard to meetings and conferences, Councilman Gardiner urged the City to utilize distance learning whenever available as opposed to traveling to the conference sites.

ADJOURNMENT

Mayor pro tem Ferraro moved to adjourn the meeting at 9:28 P.M.