Sacramento Budget and Audit Committee Special Meeting – May 6, 2022

The Budget and Audit Committee of the Sacramento City Council held a special meeting on May 6, 2022, at approximately 10:30 a.m. to review the proposed Fiscal Year (FY) 2022/23 budget, citywide fee schedule updates, and recommendations from the Measure U Community Advisory Committee. The meeting was conducted via teleconference due to the COVID-19 pandemic. Mayor Steinberg, Councilmember Jennings, and Councilmember Guerra (Mayor Pro Tem) were present; Councilmember Vang was absent. The committee forwarded the proposed budget and fee schedule to the full City Council for consideration and received the Measure U committee's recommendations.

Public Comments & Testimony

• Climate Action: Ten public speakers (including Kent Lassen, Chris Brown, Catherine Webb, Susan Hare from ECOS, Deb, Allison, Anne, Ilonka from 350 Sacramento, Moiz, and Kendrick) urged the committee to significantly increase funding for climate change mitigation and adaptation. They noted that the city's climate action plan is behind schedule, that current budget lacks adequate staffing and resources, and that a local match of $75-85 million is needed to leverage federal funds for major transportation projects. Speakers emphasized that the city has declared a climate emergency but has not allocated sufficient resources to address it.
• Arts and Culture: Allison Cagley, Executive Director of Friends of Sacramento Arts, requested sustained funding for the Office of Arts and Culture, citing the Creative Edge Culture Plan and the economic benefits of arts tourism. She warned that eliminating critical funds would reverse progress in arts education and equity.
• Youth and Community Investment: Lambert Davis (speaking on multiple items) expressed support for Measure U but criticized the lack of funding for specific youth achievements (e.g., Grant High School basketball and drum line). He also called for performance metrics to evaluate spending. Another speaker (phone number ending 4366) echoed similar concerns.
• Measure U: Lambert Davis also criticized the city for not providing Measure U funds to his certified business, but he acknowledged the leadership that passed the measure.

Discussion Items

Item 1 – FY 2022/23 Proposed Budget Overview

• Emily Combs, Director of Finance, presented the $1.4 billion proposed operating and capital budget, with $724 million in the General Fund/Measure U fund. Key points:
  • The budget is described as a "status quo" or maintenance budget, with minimal changes except where offset by revenues or critical to service levels.
  • Labor costs increase by $33.6 million (6% increase), primarily due to salary adjustments.
  • $8.3 million in one-time funds are allocated for an additional year of homeless services at current levels.
  • General liability and auto insurance costs are rising significantly due to the city's loss history.
  • Revenue projections show property taxes increasing 6.5% in FY22/23, with slower growth thereafter; Transient Occupancy Tax (TOT) and parking collections are below pre-pandemic levels.
  • The General Fund forecast shows a small ending balance ($1.8 million) for FY22/23, but deficits loom in FY23/24 and beyond, especially if homeless services continue without a sustainable source.
  • The city expects to receive HAP 4 funds ($13.847 million) but has not yet received the award letter.
• Mayor Steinberg commented on the city's progress, noting $119.5 million in Measure U and General Fund investments since 2018, plus $171 million in federal CARES/ARP funds directed to community needs. He acknowledged the climate speakers and requested that staff return with options to increase climate staffing, expedite the climate action plan, and explore using $5 million previously allocated for youth for summer programs. He also requested that a vacancy be assigned to staff the Police Commission independently.
• Councilmember Jennings expressed support for increased funding for youth, violence prevention, and the Office of Violence Prevention, and emphasized the need for a council-wide discussion on priorities. He noted concerns about the sustainability of homeless spending.
• Councilmember Guerra highlighted the importance of economic growth tied to climate goals, such as investments in green manufacturing and the Aggie Square project. He requested information on HAP 4 funds and asked about risk management strategies to reduce liability costs. He also sought clarification on how vacancies contribute to overtime costs.
• The committee passed a motion (3-0) to forward the proposed budget to the City Council for consideration, with the understanding that staff would compile comments and present strategies at the next budget hearing.

Item 2 – FY 2022/23 Citywide Fee Schedule Updates

• Jason Bader presented the annual fee schedule update, recommending 32 new fees, 309 modifications, and 4 deletions, affecting seven departments. These changes are expected to generate $269,000 in new General Fund revenue and $176,000 for other funds. highlights include fee adjustments for fire prevention and new fee structures for community centers and aquatics.
• No public comments were received.
• Councilmember Guerra moved approval, requesting additional information on equitable access to community center fees. The motion was seconded and passed (3-0).

Item 3 – Measure U Community Advisory Committee Recommendations

• Dr. Flojan Cofer, Chair, presented the committee's priorities for FY2022/23. Key recommendations include:
  • Metrics and Performance Measures: Urge the city to resume tracking outcomes (not just inputs/outputs) and to conduct a neighborhood equity analysis of spending.
  • Participatory Budgeting: Request an additional $5.5 million ($500,000 for implementation) beyond the current $1 million pilot, which ends its idea collection phase on May 31.
  • Affordable Housing: Direct Measure U funds to the Affordable Housing Trust Fund for home repair, first-time homebuyer programs, homelessness prevention, and job enterprises in specific neighborhoods (Glen Elder, Garden Land, Del Paso Heights, Meadowview).
  • Homelessness: Expand funding to serve older children, people of other genders, and veterans, and add shelter for inclement weather and safe ground sites.
  • Senior Services: Expand hours, geographic availability, and language access for senior programs.
  • Youth: Continue investments in youth programs (K-12 and under 26), with culturally relevant services for Native, Hmong, and refugee youth, and create a protected city fund for children and youth.
  • Community Investment: Increase funding for community centers and aquatics, and clarify that youth line items should be for youth-specific programs only.
  • Violence Prevention: Ensure funding based on age and zip code, given recent violence upticks.
  • High-Wage Jobs: Invest in the Aggie Square job model and the "Thousand Strong" program; support facade improvement grants for small businesses in areas lacking funding.
  • Arts and Creative Edge: Focus funds on youth and underserved communities.
  • Library: Expand hours to eight hours a day, six days a week.
  • Measure U Branding: Set aside funds to implement a logo and communications plan for Measure U-funded projects.
• Dr. Cofer emphasized the need for clear council priorities to guide the committee's work, as the budget currently relies on previous year's spending.
• Public comment from Lambert Davis reiterated support for Measure U but criticized lack of funding for specific youth achievements and called for performance metrics.
• Mayor Steinberg and Councilmembers Jennings and Guerra thanked the committee and supported the recommendations. They requested that the committee present to the full City Council during budget hearings (likely May 17) and that staff provide a status update on performance metrics. The item was received and filed.

Key Outcomes

• Item 1: Motion passed (3-0) to forward the FY2022/23 Proposed Budget to the City Council for consideration, with directions for staff to provide options for climate staffing, a progress report on the climate action plan, and a list of council comments.
• Item 2: Motion passed (3-0) to forward the Citywide Fee Schedule Updates to the City Council for a public hearing on May 17, with a request for additional information on equitable fees for community centers.
• Item 3: The Measure U Community Advisory Committee's recommendations were received and filed. The committee requested that the full council hear the presentation at an upcoming budget hearing (likely May 17 at 2:00 p.m.) to facilitate priority-setting.
• Next Steps: The City Council will hold budget hearings on May 10 and May 17, with final adoption scheduled for June 14, 2022. The Budget and Audit Committee will meet again to finalize a budget recommendation after the hearings.