How do we give us a h do we give us a h do we give us a hug Hello, everybody, welcome to our council meet our our special council meeting today, Wednesday, August 27th, 25.

I'm gonna go ahead and call the meeting to order.

I'm gonna pass it to Clementine for roll call and share announcements with the public.

Councilmember Barber present.

Councilmember Garcia.

Here.

Council Member Rash here.

Council Member Smith?

Here and Mayor Williamson?

Here.

And public comment and participation information is provided on this meeting's agenda, which is online at moderate.gov slash agendas.

In person attendees, please keep your electronic devices muted to prevent audio interference with our meeting.

And thank you for participating in your city government.

Thank you, Quintine.

With that, we'll go ahead and do kick off with the Pledge of Allegiance and I'll ask Councilmember Smith to kick us off here.

One nation under God.

Thank you, Ed.

All right, and with that, we're going to our one public appearance item that brings us here today.

Item one on the agenda is to receive presentation on potential strategies to reduce the city's ten million dollar structural annual budget deficit.

And with that, I'll go ahead and pass it to Hans for staff presentation.

As you all know, we uh passed in June uh this year the single largest budget uh in the Monterey's hand uh history um of around 10 million dollars, but we also passed uh the um the the note that the hundred and ten million dollars in um uh in general fund revenues is being outpaced by our uh expenses of 120 million dollars at a tune of ten million dollars.

So we have a uh structural deficit or a deficit between income and and uh expenses of around ten million dollars.

This fiscal year we were able to balance uh the budget uh using um uh variety of tools that we presented to the city council and ultimately uh got it approved.

But today we also shared with you uh that today we would uh talk to you about uh how are we going to bridge this gap of ten million dollars?

Um why do we have ten uh ten million dollar deficit?

One might ask.

Well, part of that is uh are uh a lot of costs that are outside of the control of the city.

Uh the largest chunk of salaries that we have in this uh the largest chunk of of our expenses are uh personnel costs.

Uh you you cannot have AI roll out to uh police call, or you cannot have AI uh fix a fire or extinguish a fire.

Uh a lot of the tasks that we are doing day in, day out are done by by personnel.

But also we have costs that are increasing and that are outside of our our city's control.

Uh and then as an example, uh the the city's liability and property insurance premiums raised between 2020 and uh 2020 by 3.2 million dollars.

That's 375% more that we have to pay for liability and property insurance.

And uh frankly, our revenues that basically the money that we are taking in uh are not keeping up with the cost that we have to pay for services and for insurance premiums and so many more.

So now today we want to talk about how can we address uh the $10 million structural deficit uh for this fiscal year.

Again, we were able to balance it with one-time solutions, but that is not sustainable.

We need to put something in place that is sustainable over the next few years, and we can do it by increase ongoing revenues.

We can also do it by reducing ongoing expenditures.

And so today we we have prepared um um a presentation uh as well as um uh a few um uh assignments to to the council as well as to the community, and we hope to bring this all back uh on September 2nd.

But without further ado, I have asked our finance director to um uh interest us uh with uh with a few charts and slides and some some costs um some uh number overviews that that will highlight where we are and uh where we can go if we do nothing or where we will go if we do something.

So with that, Rafael.

Thank you.

Thank you, Hans.

Good afternoon, council and um citizens.

So Hans just said everything I was gonna say for my first slide, so we'll skip back.

Move on to except for I just wanna actually really talk about um real quickly what um a structural deficit is.

Like every year we we struggle to make the revenues and the expenditures kind of balance out.

Um, and so 100 million, a million here, a million there is not a huge difference um with our 200 million dollar budgets.

Not we can we can pretty much kind of move stuff around, shift things, and we can actually absorb that.

10 million dollars was a lot different in absorbing that, and especially with structural structural meaning that it is an ongoing um expense, an ongoing difference.

It's not just this one year, not just something happened this year.

This is uh next year is going to be the same, the following year it'll be the same, or maybe slightly go up based on CPI and based on um other increases to things.

So we just wanna really make sure that everybody understands that it's not a one-time deficit, it is a structural meaning that this is ongoing, and so we need to put some things in place to kind of fix this problem.

So, again, like Han said, we did do a lot of temporary one-time things this year to actually plug that 10 million.

If we reduce the amount for 2024 and 2025 that we put into the reserves with the exception of economic uncertainty, we left that the same.

So that maintained is still maintained at 20%.

Um we increased um we took out seven percent of ONM across the board.

We froze, well, we chilled some positions, and we call them tilled as opposed to frozen, so that we had the opportunity to kind of move some things around.

If attrition came or something came up, where we can kind of move some things around.

Um, we increase the percentage of salary savings that we use to kind of um to bridge that gap because we know that we always have some vacancies, um, and we account for that.