Budget and Audit Committee Meeting - February 1, 2022

The Budget and Audit Committee of the Sacramento City Council met on Tuesday, February 1, 2022, from 3:03 p.m. to 4:01 p.m. via teleconference. The meeting covered consent calendar items, a discussion of the Fiscal Year 2020/21 Annual Comprehensive Financial Report (ACFR), the Truth, Reform, & Reconciliation Multi-Year Operating Project, and a Fleet Electrification Update. All members were present: Mayor Darrell Steinberg (Chair), Councilmember Eric Guerra (Vice Chair), Councilmember Rick Jennings, and Councilmember Mai Vang.

Consent Calendar

• Item 1 – Cannabis Business Operating Permit Extension Fee and Appeal Fee: The committee considered and forwarded to City Council the establishment of an extension fee for cannabis BOP applications and an appeal fee for illegal cultivation.
• Item 3 – FY 2020/21 Independent Accountants’ Report on Appropriation Limit Calculation: Received and filed.
• Item 4 – FY 2020/21 Transportation Development Act Fund Audited Financial Statements and Compliance Report: Received and filed.
• The consent calendar was adopted unanimously via a single motion (Guerra/Jennings) with all four members voting yes.

Public Comments & Testimony

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

Discussion Items

• Item 2 – Fiscal Year 2020/21 Annual Comprehensive Financial Report (ACFR): This item was moved from the consent calendar to the discussion calendar. Osvaldo Lopez, Finance Manager, presented the ACFR, noting a clean audit with an unmodified opinion. Key financial results: General Fund tax revenue exceeded budget by $23.5 million; department operations saved $11.6 million; offset by $4.9 million in citywide expenditures, resulting in $30 million in one-time resources added to the available fund balance. An additional $15.7 million was available in the Major U fund. The city’s other post-employment benefit trust was $74.8 million (25% of estimated liability), and the General Fund Economic Uncertainties Reserve increased from $55.2 million to $58.5 million. The committee accepted the report and forwarded it to the City Council for approval (motion by Guerra, second by Vang; unanimous).

• Item 5 – Truth, Reform, & Reconciliation Multi-Year Operating Project: Dr. LaTesha Watson, Director of the Office of Public Safety Accountability, presented a timeline and cost breakdown. The project originally had $320,000 approved, but the selected firm (Sustainable Equity) proposed a total of $600,000 (an additional $280,000). Committee members discussed the need to align this work with the city’s racial equity initiatives (Race Forward and the Racial Equity Leadership Network). Councilmember Vang requested clarity on deliverables and stipends for community participants. Councilmember Jennings stressed urgency to move forward. The committee directed staff to refine the MOU and scope of work to ensure synergy with existing racial equity efforts. The item was received and filed, with direction to present a refined proposal as part of the mid-year budget discussion.

• Item 6 – Fleet Electrification Update: Mark Stevens, Fleet Manager, reported that the city’s fleet of about 2,700 vehicles is 49% alternatively fueled, with operating costs for battery electric vehicles at 18 cents per mile vs. 33 cents for gasoline vehicles. Barriers include upfront capital costs and infrastructure needs. The committee requested a detailed budget and infrastructure plan to support the city’s goal of 75,000 electric vehicles by 2025 and to accelerate the transition of the city fleet. Councilmember Guerra suggested exploring economic development opportunities through local manufacturing and design. The item was received and filed, with a request for a follow-up presentation.

Key Outcomes

• Item 2: Motion passed unanimously to accept the FY2020/21 ACFR and forward to City Council.
• Item 5: Received and filed; direction given to refine the MOU in coordination with racial equity efforts and bring back for budget consideration.
• Item 6: Received and filed; staff directed to return with a capital and infrastructure plan for fleet electrification, including potential costs and economic development opportunities.