Budget and Audit Committee Meeting Summary - February 7, 2017

The Sacramento Budget and Audit Committee met on Tuesday, February 7, 2017, at 2:00 PM in the City Hall Council Chamber. The committee, chaired by Mayor Darrell Steinberg and comprising Members Angelique Ashby, Jay Schenirer, and Rick Jennings, unanimously approved the consent calendar, discussed year-end resource allocations, budget guidelines, library funding, a police helicopter replacement, and the fire department overtime audit. The meeting adjourned at 4:23 PM.

Consent Calendar

• Item 1 – Approval of Minutes: Approved minutes from December 6, 2016, and January 24, 2017.
• Item 2 – Proposed Operating Permit Fees for Marijuana Businesses: The committee reviewed proposed fees and passed a motion recommending the resolution as amended (correcting a Class C cultivation renewal fee from $18,100 to $24,630) to the City Council, with direction that a report be brought back within 6 months and quarterly thereafter.

Public Comments & Testimony

• Item 3 – Use of FY2015/16 Year-end Resources: A member of the public, Arts and Totenko, asked whether the proposed $350,000 for the Alder Grove Marina Vista project would cover permits, clarifying that the funds are meant to expedite entitlement for the redevelopment of a public housing project creating up to 1,500 units.
• Item 7 – City Auditor’s Audit of Fire Department Overtime Use: Chris Andrew, Vice President of Local 522, thanked the audit team for finding no fraud or abuse but argued that much of the audit overstepped the auditor’s expertise, claiming the cost of overtime is essentially equivalent to regular duty when benefits are considered. He urged the committee to focus only on the control-related findings and discard other recommendations.

Discussion Items

• Item 3 – Use of FY2015/16 Year-end Resources: Mayor Steinberg proposed using the $11 million+ in one-time general fund surplus for six categories: (1) $590,000 for parks and recreation youth programs; (2) $500,000 for a challenge grant with school districts for community beacon after-school programs; (3) $5 million set aside for affordable workforce housing; (4) $350,000 for a downtown specific plan to expedite the Alder Grove Marina Vista project; (5) $2.25 million for bikeway and pedestrian improvements; and (6) $1.1 million for neighborhood services directed by each councilmember. Committee members expressed support but raised concerns about timing, flexibility (e.g., allowing public safety academies instead of beacon programs), and the need for community input. A motion to forward the categories to the City Council passed unanimously 4-0, with further details to be presented in 2 to 4 weeks.
• Item 4 – FY2017/18 Budget Development Policies and Guidelines: Finance Director Leyne Milstein presented redlined budget policies, noting a revised five-year forecast that includes economic uncertainties and the expiration of Measure U in 2019. Councilmember Schenirer requested that a 10% floor for the economic uncertainty reserve be added to both the budget policies and the separate reserve policy. The committee unanimously passed a motion (4-0) forwarding the policies to the City Council with that amendment.
• Item 5 – Sacramento City Library Funding: Library Director Rivkah presented the library’s financial situation, noting that the city’s general fund contribution has not increased since 2004 despite growing service demands, and that Measure B and Measure X parcel taxes provide only 44% of funding. The library faces a structural deficit and will exhaust fund balance in the out years. The committee received and filed the report, with discussion about a funding ramp-up to be included in the FY2017/18 budget and a possible working group to explore long-term solutions.
• Item 6 – Police Air Program and Update on Asset Forfeiture Funds: Interim Police Chief Brian Lewin presented a proposal to replace one of the department’s three 1970s-era helicopters using $2.8 million from state grants ($2.3 million), asset forfeiture funds ($417,000), and surplus ($100,000). He noted operational safety concerns, difficulty obtaining parts, and that the air program reduces liabilities and improves response times. Councilmember Schenirer questioned the use of drones as an alternative but was told the technology is not yet suitable for police work. The committee unanimously voted (4-0) to forward the resolution to the City Council.
• Item 7 – City Auditor’s Audit of Fire Department Overtime Use: City Auditor Jorge Oseguera presented findings covering four areas: (1) reliance on overtime due to 73 unfilled positions, with an estimated $280,000 in potential savings from hiring new employees; (2) negotiated provisions that added over $1.2 million in costs; (3) insufficient controls over overtime administration; and (4) alternative staffing models such as single-role ambulance staff. Fire Chief responded that many recommendations are already being implemented (e.g., hiring over 100 new firefighters). Councilmembers Ashby and Schenirer criticized portions of the audit, arguing that the costs of overtime are often misrepresented and that some recommendations (like three-person crews) have been previously rejected. The motion to accept the audit and forward it to the City Council passed unanimously 4-0, with acknowledgment that the audit provides a basis for future discussions during contract negotiations.

Key Outcomes

• Consent Calendar: Approved unanimously (4-0).
• Item 3 – Year-end Resources: Motion passed to forward the six funding categories to the City Council for further refinement and adoption, with a timeline of 2–4 weeks for detailed proposals (4-0).
• Item 4 – Budget Policies: Motion passed to forward the FY2017/18 budget development policies and guidelines to the City Council, with an amendment to include a 10% floor for the economic uncertainty reserve in both the policies and the separate reserve policy (4-0).
• Item 5 – Library Funding: Received and filed; staff directed to include a funding ramp-up proposal in the May FY2017/18 budget.
• Item 6 – Police Air Program: Motion passed to forward the resolution authorizing the replacement of one helicopter using grant and asset forfeiture funds to the City Council (4-0).
• Item 7 – Fire Overtime Audit: Motion passed to accept the audit and forward it to the City Council; the fire department has already begun implementing several recommendations (4-0).