Sacramento Budget and Audit Committee Meeting - May 1, 2018

The Sacramento Budget and Audit Committee met on May 1, 2018, from 2:00 p.m. to 3:06 p.m. in the City Hall Council Chamber. The committee reviewed the FY2018/19 Proposed Budget Overview, the Master Fee Schedule, and two audit reports, forwarding all items to the full City Council for consideration. Discussions centered on budget sustainability, economic growth, neighborhood investments, and workplace safety.

Consent Calendar

• Approved the April 3, 2018, Budget and Audit Committee meeting minutes (File ID: 2018-00643) by a unanimous vote (3-0, with Mayor Steinberg absent).

Public Comments & Testimony

• No public comments were made on matters not on the agenda.

Discussion Items

FY2018/19 Proposed Budget Overview

• Interim Finance Director Dawn Holm presented the proposed budget, totaling $1.1 billion, a $1 million increase from the prior year. The budget is described as a "status quo" budget with only $1.4 million in new ongoing expenditures not offset by revenues.
• The budget includes 7 new positions to support youth services and police body-worn cameras, and 30.79 fully offset positions for economic development, development activity, utility regulatory requirements, roadway/bike maintenance, and pool staffing.
• General fund revenues are projected to grow by $27.8 million (6%) from FY18, driven by housing market growth, retail sales, and new development areas (Delta Shores and DOCO). Property and sales taxes make up 65% of general fund revenues.
• Expenditure growth of $25.5 million is primarily due to pension and salary expenses, with nearly a third offset by increased reimbursements and service reductions. The CalPERS discount rate change from 7.5% to 7% is being phased in, resulting in a 100% increase in payments by FY25.
• The budget is balanced for FY19, but deficits are projected starting in FY20 ($7.5 million), growing to $18.5 million by FY21 even with a half-cent Measure U extension. Without Measure U, deficits are larger.
• Councilmember Jay Schenirer requested an analysis of potential investments in high-need neighborhoods, focusing on quality-of-life indicators (e.g., library hours, community center programming, park maintenance). He advocated for outcome-based budgeting and geographic budget analysis.
• Mayor Steinberg emphasized the need for inclusive economic growth, noting that 34% of families in the Sacramento region are struggling, with higher rates for African American (47%) and Latino (42%) residents. He stressed that Measure U renewal is critical to sustaining programs and that the city must grow its tax base to address deficits.
• Councilmember Rick Jennings supported community-driven investment, calling for an "inward-out" approach where neighborhoods define their needs.
• Councilmember Angelique Ashby described the budget as a "prudent start" and noted limited room for additional priorities given the projected deficits.
• The committee voted unanimously (4-0) to accept the proposed budget overview and forward it to the City Council for consideration.

FY2018/19 Master Fee Schedule

• Jason Bader of the Finance Department presented the annual citywide fees and charges report, recommending 17 new fees and 211 modifications affecting six departments, generating an estimated $186,000 in new general fund revenue and $554,000 for all other funds.
• Councilmember Ashby raised a concern about a $500 fee for school districts to use city parks for end-of-year events, which she argued undermines partnerships with schools. She noted that schools often help maintain parks.
• Interim Parks Director Shannon Brown explained that an audit found the department lacked authority to waive fees, and a council report is being drafted to provide flexibility. The committee agreed to expedite a resolution to the May 8 City Council meeting to waive fees for school districts, with a request for data on the number of schools and total cost of waivers.
• The committee voted unanimously (4-0) to forward the Master Fee Schedule to the City Council for a public hearing.

City Auditor's Audit of the Department of Utilities Workplace Safety

• Senior Auditor Farista Soltani presented the audit, which assessed workplace safety controls in the Department of Utilities (DOU). Between FY13 and FY17, DOU employees filed nearly 300 workers' compensation claims totaling over $4 million.
• The audit made 22 recommendations. Key findings include: DOU lacks sufficient controls over safety equipment, fails to comply with vehicle safety requirements, and has gaps in compliance with Cal/OSHA standards. A critical issue: gas detectors were not being properly maintained—50 gas detectors had not uploaded data in over a year, and employees used detectors nearly 300 times without a required daily bump test, and over 80 times without monthly calibration. Failure to detect hazardous gases could be fatal.
• DOU Director Bill Busath acknowledged the findings, stating that DOU requested and funded the audit. Of the 22 recommendations, 2 are for HR, 4 are implemented, 3 partially implemented, 7 committed to by December, 1 by April, and 3 requiring 3-5 years. He noted training and improved processes are underway.
• Councilmember Jennings requested a detailed implementation plan prioritizing the most serious safety issues, with a report back in four weeks. Mayor Steinberg specifically asked for urgency on the gas detector issue, with a status report in one quarter.
• The committee voted unanimously (4-0) to accept the audit and forward it to the City Council.

City Auditor's Whistleblower Hotline Activity Report

• City Auditor Jorge Oseguera presented the report for October 2017 – March 2018. Case volumes have been consistent over the last four years. The report highlighted multiple substantiated cases involving sexual harassment, where inappropriate content was distributed by city employees. Whistleblowers used the anonymous hotline to report concerns.
• The auditor noted that the office has updated marketing materials and created a poster to encourage reporting. Councilmember Ashby asked about the status of the cases; they have been forwarded to Human Resources and are in the process of resolution.
• Councilmember Jennings asked about the 29 open cases; Oseguera explained they may be under investigation or recently received, and will be reported in the next period.
• The committee voted unanimously (4-0) to accept the report and forward it to the City Council.

Key Outcomes

• Approved the April 3, 2018, meeting minutes (3-0, Mayor absent).
• Accepted the FY2018/19 Proposed Budget Overview and forwarded it to the City Council (4-0).
• Forwarded the FY2018/19 Master Fee Schedule to the City Council for a public hearing (4-0), with a commitment to expedite a resolution to waive school park fees at the May 8 City Council meeting.
• Accepted the City Auditor's Audit of the Department of Utilities Workplace Safety and forwarded it to the City Council (4-0). DOU will provide a detailed implementation plan within four weeks, with a priority on gas detector safety.
• Accepted the City Auditor's Whistleblower Hotline Activity Report and forwarded it to the City Council (4-0).
• The committee will reconvene on May 29, 2018, to consider any changes to the proposed budget.