The meeting was called to order at 7:09 P.M. by Chairman Wolowicz, at the City Hall Community Room at 30940 Hawthorne Boulevard, for the purpose of conducting the business pursuant to the Agenda. Roll call was answered as follows:
PRESENT: Clark (7:35 P.M.), Curtis, Smith, Wallace, Wolowicz
ABSENT: Butler, McLeod (all excused)
Also present were Finance Director McLean; Accounting Manager Downs; Senior Administrative Analyst Gyves; Joan Cox, from Harris & Associates; and Mark Mandell, from Richards, Watson & Gershon.
Chairman Wolowicz advised that Member Clark indicated that she would be arriving late to this evening’s meeting; and noted that Member Butler and Vice-Chair McLeod would not be in attendance.
Approval of Agenda
Chairman Wolowicz requested that the Financing Alternatives agenda items be taken out of order discussed out of Agenda sequence to accommodate late arriving members.
Director McLean requested that the following two agenda items be merged into one oral report for this evening: State Budget Update and CSMFO Annual Conference.
Without objection, Agenda Item Nos. 3 through 7 were considered out of order.
State Budget Update and Report – Attendance at Annual CSMFO Conference
Director McLean advised that he recently attended the annual CSMFO Conference, wherein former Chief of Staff of the Davis administration gave a presentation regarding the state budget crisis. Director McLean explained that the speaker highlighted the trigger mechanism to reduce the VLF to its current level, whereby if the state’s financial position got to the point where the administration became concerned that the state could not meet its obligation, that a trigger could be effected to increase the VLF rate; and added that the speaker stated that it’s very possible this trigger will be pulled prior to the end of this current fiscal year, June 30th. Director McLean mentioned that it was the City’s expectation that this $1.6 million VLF backfill to the City was going to be paid through the end of the year. He stated that the speaker expects that if this trigger is pulled or if the legislature is to adopt a budget that excludes a backfill or a reinstatement of the VLF tax, that a ballot initiative would be created to enable the voters in the state to decide whether or not they want a VLF tax. Director McLean expressed his concern that if that were to happen, the voters may abolish the VLF tax, either in its entirety or at least the backfill, thus reducing VLF revenue between $1.6 Million and $2.4 Million annually. Director McLean stated that another point the speaker addressed was his belief that an initiative will be brought forward to roll over a portion of the deficit to a subsequent year or to take a portion of the current deficit and try to finance it over the long term -- pointing out that some creative mechanism would have to be found to enable this to be done.
Director McLean added that the speaker indicated that there seems to be no pressure or motivation amongst anyone involved in the budget process to rush into moving this process forward; and that he does not believe anything noteworthy will occur with the budget process prior to June 30. Director McLean added that the City’s budget following June 30, 2003, would exclude VLF revenues.
Chairman Wolowicz questioned what anticipated steps should the City be taking with the likelihood of the loss of VLF revenue.
Director McLean commented on the contingency plan that has been laid out by the City Manager, which includes eliminating any capital improvements on a go- forward basis subsequent to the loss of the VLF backfill; and advised that the other area of the City’s budget that will be impacted will be road maintenance and improvements. He noted that the VLF revenues go into the City’s General Fund; and stated that the City transfers approximately $1.8 to $2 million each year from the General Fund to the Street Maintenance fund.
FY 2001-2002 CAFR Q & A
Accounting Manager Downs stated that included in the notes of the financial statements would be any information regarding subsequent events that may affect the financials in the future. She added that the Five-Year Model is prepared in conjunction and just prior to the finalization of the budget; stated that the first two years of the Five-Year Model, 2003-2004 and 2004-2005, will be the two years presented in the two-year budget document; and noted that the financial statements present only historical information.
Update - Global Needs Team of the Open Space, Planning & Parks and Recreation Task Force
Director McLean stated that FAC Member Clark and Vice-Chair McLeod would participate on the team to assist the Open Space, Planning & Parks and Recreation Task Force in establishing a list of topics for the Task Force to address and to possibly help formulate the survey questions for the needs assessment; and mentioned that the survey will be conducted telephonically and will take approximately 20 minutes. He mentioned that prior to the survey being put into circulation, it would be reviewed by the City Council. Director McLean stated that a tentative appointment has been scheduled for March 12, 2003, 8:00 A.M., City Hall, for Member Clark and Vice-Chair McLeod to meet with the Task Force consultant. While conducting the approximate 20-minute long telephone survey, Director McLean cautioned that care must be taken in creating the survey questions, not to formulate questions that will give erroneous feedback due to the residents not having adequate information to base their answers upon. Chairman Wolowicz suggested that the FAC could be of assistance to the Task Force team in posing any questions related to financing arrangements.
Director McLean provided a sampling of the Power Point presentation of the financing alternatives that will be provided to the City Council at its March 4, 2003 meeting. Director McLean highlighted such topics as the sewer and storm drain infrastructures and the possibility of establishing a storm drain user fee, an estimate of the long-range cost for infrastructure improvements and maintenance, and roadways, parks and open space. He solicited suggestions from FAC as to any revisions that the Committee would like to see.
In response to Chairman Wolowicz’s inquiry, Director McLean explained that between now and the creation of the rate analysis, staff will take the steps necessary to update the Storm Drain Master Plan in order to get a better approximation of what the City’s needs are for storm drain improvements, including the associated costs; and then based upon that, he advised that the City’s advisors will work with staff to formulate a long-range plan that will include what work can be done incrementally over, for example, a five-year period.
Members of the FAC provided a few suggested refinements to the presentation that will be given to City Council on March 4, 2003. Brief discussion ensued on the FAC’s attendance at the March 4, 2003, City Council meeting.
2003-2004 FAC Calendar
Director McLean noted that the calendar would be included in the next FAC agenda.
Reports by Liaisons
At 9:29 P.M., the meeting was adjourned to March 26, 2003.
Chair, Financial Advisory Committee
Denise Bothe, Recording Secretary