Chairman Ready when you are okay all right.

We will call the order of the budget and audit committee meeting for September.

There we go.

We got we got audio.

We got projection for September 16th, 2025.

Thank you for uh joining us this morning.

Apologize for the little bit of a late start.

Um, but we can't go any further without calling the role to establish a quorum, I guess.

Is that is that true?

That is true.

Okay.

Councilmember Talamantes.

Yeah.

Councilmember Maple.

Yeah.

Councilmember Gatta.

Here and Chair Dickinson.

We do have a quorum.

We have a quorum and Councilmember Maple, if you would lead us in the last time.

It would be my pleasure.

Please stand if you are able.

Please rise for the opening acknowledgments in honor of Sacramento's indigenous people and tribal lands to the original people of this land, the Nissanan people, the Southern Maidu, Valley and Plains, Niwok, Putwin Wind 2 peoples, and the people of the Wilton Rancheria, Sacramento's only federally recognized tribe.

May we acknowledge and honor the Native people who came before us and still walk beside us today on these ancestral lands by choosing to gather today in the active practice of acknowledgement and appreciation for Sacramento's indigenous people's history, contributions, and lives and remain standing.

Salute and pledge.

I have pledge allegiance to the five of the United States of America.

And to the Republic for which it stands, one nation under God.

Thank you.

Thank you very much.

All right.

We have two consent items this morning.

Any member wish to discuss either the consent items.

I'll move consent.

We have a motion.

Second on the consent matters.

There's nothing further.

And we have no one to speak on those.

I hope.

I guess.

All right.

All those in favor signify by saying aye.

Opposed say no.

And uh any abstentions.

Motion carries unanimously.

Thanks very much.

And we'll go on to item three.

Our review of proposed budget policies and processes and discussion of two-year budget process.

Good morning.

Good morning.

Good morning, Chair, Council members, members of the public.

I'm Pete Coletto, the finance director.

Uh joining me is Mrthala Santizo, our budget manager.

And while I can't believe we're already talking about the fiscal year 27 budget, I can think of no better subject to start off along uh Tuesday than this one.

Uh and really we're looking to uh bring a couple items for your uh kind of uh consideration and comment.

Uh first, you know, there was some confusion, I think last year around uh how certain departments would submit reduction plans and things like that.

And so really what uh we're looking to do is clarify that everything's gonna go through the central budget process and um give the committee uh a sense of what we're thinking this year, very similar to the last two years, where we want to give council uh a menu of options.

Uh we also want to bring for your consideration um you know an update to our hearings process based on what we've seen um in some other jurisdictions as far as council member budget amendments and this is really to give us time as staff uh to present all the options that that come from council members and give you the analysis you need for uh full deliberations, and then we were asked um to come back with some options as far as balancing not just the budget year but budget year plus one, and so we wanted to bring those to you and with that I'm gonna hand it off to Mirthala.

Thank you, Pete.

Good morning.

I'm Ruthala Sandy.

Good morning.

Um, so I will go over the details of the policy and procedures laid out in the staff report, but um to just start the uh presentation off with the forecast.

Uh this slide should look very familiar.

This is the five-year forecast from the 26th approved budget.

We are balanced for 26, but show showing deficit from fiscal year 27 on.

This forecast does not include any state homeless funding for fiscal year 27, any future costs from labor contracts, or any loss of federal fund federal funding.

Okay.

Moving forward.

Um, so as we kick off the budget season next month, we want to lay out the process for council and public, starting with the charter budget guideline.

It states that each department office and agency of the city shall provide in the forum and at the time directed by the city manager all information required by the city manager to develop a budget conforming to modern budget practices and procedures, as well as specific information which may be prescribed by the council.

Thank you.

Okay.

So this slide outlines the process for the development of the fiscal year 27 budget due to the projected deficits that you just saw in the five-year forecast.

All departments, including charters and appointed offices, will submit balancing strategies totaling 15% of their net general fund dependence.

This will include measure U as well.

The budget office will provide all departments with their 15% target so that there's no confusion.

Budget reduction strategies should seek to minimize service impacts to residents and try to preserve core services.

And then finally, all departments, including charters and appointed offices, will follow the budget process provided by the budget office.

We are officially kicking off the budget season in October, which is next month, and all timelines and instructions will be provided to departments at that point in time.

Alright, so this slide outlines staff recommendations to council amendments.

Staff recommends that council members submit their amendments to the proposed budget in a memo format to council and the city manager by the end of the first council budget hearing.

This will allow staff to conduct a fiscal analysis of the proposals and provide summaries of the proposals to the at the following budget hearing.

It will give, as Pete said, the council the ability to review all the summaries, all of the analysis, and have it there for their discussion and deliberation.

The other thing too is that all the memos and staff analysis will be published with the staff report, allowing for each council member and also the public to view the proposals along with the analysis.

So during last year's budget process, there was a request to discuss the development of a two-year budget process.

So, due to the level of planning, the resources required and the current technology that would be required to do so, conducting a two-year budget process would be extremely difficult for the city to do.

However, we're presenting three options for your review.

The first option is to balance the entire second year budget.

This could be achieved by approving additional reductions to be implemented in the second year budget with the unused reduction strategies from the proposed budget, or approving ongoing reductions in the proposed budget to fully balance the second budget year.

The second option would be to determine a maximum percentage deficit threshold for the second budget year.

So for example, if the general fund expenditure budget is 900 million and the threshold is two percent, then the deficit cannot be more than 18 million.

And then of course the third option is to just continue with the current process, which means that the city was solely balance, focused on balancing the fiscal year 27 deficit.

And finally, here is the proposed um fiscal year 27 budget hearing schedule in March.

All departments will provide a comprehensive update on programs and services to provide insight on how the city is directing limited staffing and financial resources.

The proposed budget will be released in the week of April 28th.

On May 5th and 12th, the proposed budget will be presented to council, and council will deliberate on that evening to provide direction to staff on May 26.

Um, staff will present the changes to the pro of the proposed budget to BA committee, and then final versions of the budget will be presented to council for adoption on June 9th.

And that is my presentation.

So we're open for questions and discussion.

Thanks for the presentation and I'm gonna turn first to my colleagues and see if there are comments or questions.

I gotta go back to the right screen to see that.

Okay, mayor program.

If there's no members' comments from the public, then um I'll let me start off.

I think first with the uh on the council amendments to proposed budget proposal.

Um, you know, one I think I think that uh being able to submit a memo and and get some feedback is good practice, but uh I I would be um opposed to uh any strict requirement on a member of the council having to submit a memo um in order for a condition or a change in the budget to be proposed in fact you know the the purpose of the budget it flies in the face of of a of a budget hearing when you propose something and when there's deliberations members of the public our constituents will come during that hearing and then make a comment about something and at that point the council member would say because as much as we tried to communicate with every member of our community sometimes the hearing process is in fact is what it is will say well there there's an issue that we need to entertain and so this requirement of of a memo uh as a uh uh uh the only approach to consider uh a request I think is is concerning um the because then that stops the process early on and so only the public that is consistently engaged in the normal budgeting process would have the opportunity and as we see you know uh the budget process is deliberative okay it's we build on the budget as we're coming closer the financial numbers come in later they don't always come in right at the beginning we get a clear picture as we come to the budget cycle and so um uh now on the flip side uh you know we've had council members who proposed alternate all uh alternate budgets or alternatives to budgets at the budget hearing um you know I I don't usually subscribe to that either because I think it really goes against all the work that's been done through the all the the deliberative process and we haven't had the opportunity to analyze it so um while I I recommend I appreciate staff's recommendation to you know uh you know put something uh in place I I would I would actually you know have uh strong reservations about any change in the council rules or policies when the when that's the purpose of a committee you deliberate through this process and we have staff to work on those things so um I'll leave it to that um you know I think there's there's a question about how we should move forward but I do see that in in the future that could become a a bureaucratic obstacle to uh to our deliberation I think it's good practice I think it's helps with uh being able to help uh articulate to staff what we're trying to address and then have staff to be able to provide that but I I think a pa a policy change a strict policy change would be concerning um on the second issue and maybe maybe if you want uh we could stop there and then go to the two year pieces I don't know if we want to put the two questions yeah I I wanted to ask a question I I I understand that notion between a you know substantive policy um proposal that a council member might have and that need to do the appropriate level of analysis and not having time to do that and I think that's um somewhere of what we got pinched last year in not understanding the cost of some of the proposals and not being able to have a timely response for strategies to fill them.

So it was a very much a scramble at the end of the year.

So we're trying to balance both of those things so I would love to hear from the committee if there is a way to um create a process almost for both so that we're not left as a team scrambling at the very end but that we provide that opportunity for real time talk that you're talking about in the committee hearing process um almost a both and so that staff has time to react and do the appropriate level of analysis I'm not sure how we thread that needle.

I don't know if you have ideas here but it would certainly be something interesting that we could take forward to council when we present these same proposals.

Yeah I guess I would say only to to that not to rebut but um to uh to say that the the I think the challenge with the schedule and the budget schedule that's been proposed in the past uh doesn't lend itself to that timing.

You know I think it's um the if it means we have to start earlier, because what has occurred is we have a budget hearing here, and then we have the same presentation four hours later for the entire council.

And that is completely duplicitous and frankly a waste of the staff time.

What should happen is uh this budget committee here's an issue, discusses concerns um you know, in response to the Brown Act, you have other council members watching in the purview.

And uh, and you know, I think that the deliberative process here uh is where you know if the city manager was to receive concerns or questions from other council members, then we can discuss those and debate those here and and tease out issues.

But I think the I think part of it is is the way that the committee hearing schedule uh has not allowed for for that type of analysis to bring things up earlier in the process.

So that's that's my observation of it.

So with the indulgence of my colleagues uh just on this point, uh the the development of the budget is uh uh to a certain extent an evolutionary process and it's an iterative process.

And I uh I I think that makes it very difficult to uh prescribe a deadline for uh council um ideas and s and suggestions.

What what it does though uh I think have as a consequence is the later you make a suggestion or a comment, the less likely it is that the staff is going to have time to do uh the kind of analysis that is uh uh appropriate, and I think that then means at least uh for my part, it means that that the council is less likely to be receptive if they don't know the consequences or the impacts uh because it hasn't uh been fully fully vetted.

But uh I do agree uh with Mr.

Getta that it uh uh I think it's difficult to set a deadline, um, because uh there may be things that that uh come along after the first budget hearing that then spark an idea or create a suggestion or something of uh of that kind.

So I I don't think there's anything, and there's certainly nothing wrong with with saying, you know, the sooner you make uh a proposal or suggestion uh and and uh add whatever detail you can, the better chances that your proposal or your suggestion is is going to make its way into the into the budget.

But I wouldn't I I I I wouldn't think that putting a deadline on making suggestions uh frankly is is gonna uh hold.

It's it's people are gonna come up with ideas right up to the end.

I mean that's just the way the budget budget process works.

Anyway, that was just on the on on that point.

So I think what we can do is is certainly as part of the uh presentation of this as it goes forward to the full council is is underlined that the sooner you make suggestions or proposals, the better for your chances of getting that uh accepted.

Uh I think that's the that's the prescription that it seems to me.

So with that, Mr.

Gatta, did you have additional comments you wanted to make?

They're on the two-year cycle.

Uh, go ahead.

I don't know if my coming comment uh colleagues had comments on on this item and we can continue on that, or or uh if not I'll go on the two-year cycle piece.

Well, why don't you hold that?

Let's see if there are other comments.

Uh the other members are are signed up.

So uh council member Maple.

Thank you, Chair.

Um, so it's specific to that item.

Um I share some of your your concerns, but I also understand that you know we saw the the magical sausage making that happened last year, um or I guess um this year, earlier this year, and um, you know, that's a challenge too.

You know, you you all need to be able and the public needs to be able to understand exactly what the consequences of the decisions that we're making mean, and it's in it's almost impossible for you to do that if we're throwing things at you last minutes.

I think there's definitely a need to have more of a process.

Um, but we while still, you know, creating flexibility for us to when as we get more information to to get those changes, and so um I you know, I I I think that maybe as a practice it's somewhere in the middle, it's like the expectation is that if you you know we're doing our homework in advance, we're submitting our our memos to you if we do have suggested changes, um, and then we still have some flexibility at the end if there's something, but hopefully that work at the beginning will lead to um lead to the ability for you to address most of those changes and have not have a lot last minute.

So, however we want to structure that, and I don't know if we need to have a code change to do that.

I don't know if that's what's proposed here.

Um just more of like a practice or policy.

Correct, yeah.

And I I was gonna ask, um, would the committee consider you know not having a deadline but having the proposals be uh submitted in written form uh because that was very uh difficult for staff to kind of catch everything that was on the dais, and then you know, we we also heard from members of the public too.

Like, hey, we weren't sure uh what was being discussed, so is that something the committee could consider that the amendments get from presented in writing?

I think I'm I would my reaction to that again is it's the same same um equation.

The if you put it in writing, you got a better chance of it getting fully understood and and considered.

But you know, if someone's sitting here on the day we're adopting the budget and comes up with the best idea since sliced bread, I don't wanna I don't wanna say oh I'm sorry, uh you didn't do it soon enough and you didn't do it in writing, we're not gonna we're not gonna consider it.

That's so so uh again I think it's pra it's it's really what what Ms.

Maple is saying it's it the it's a better practice, but but um I'm not sure I'm not sure I would say absolutely it has to be in in writing.

I'd say look, you if you want this thing considered, put it in writing.

Uh give the staff a chance to take a look at it and and respond.

But that's that's just that's my reaction.

How about to the extent possible?

Sure.

I mean, I think that's you know, uh absolutely favored.

I mean, uh you can I think you can use all kinds of words to say do it this way without necessarily saying it's an absolute bar if you don't.

Did you want to um Vice Mayor weigh in on this?

Well, just on this uh more on this point.

I just oh okay.

Okay, yeah, that's okay.

Um so I I I agree with that, and I think um maybe one way that practically we could manage this is um ensuring that we you know, which whichever hearing is the one that the expectation is.

I'm assuming that would be um because you know you said the first budget hearing.

Did you mean the first presentation, or did you mean when the budget gets released, or did you mean the May 12th hearing?

Originally we uh our thought was when we first present the budget to council if we could get that feedback around because we'll have briefed all the council members on what's in the budget.

Um, you know, we'll be the May 5th.

Yeah, and then we would come back the next uh when you have your deliberations and give us direction to bring that final budget back, we would be able to present to you.

Here is um, you know, here are the amendments that we've heard uh from council.

Uh here are some different options that council uh council members uh brought forward for consideration, and then be able to give you analysis so that you can have a discussion about them.

Okay, I think that's fair.

Um and so May 5th, and so my recommendation would be, you know, we're as we head into the the budget season and we have our first, let's say our first presentation at budget and audit on on March 3rd, that then you know it's like hey, just a reminder.

May May May 5th, that's when we want to see it.

And so, I mean, I I I I hate to say it like that, but you know that we're all pulled a million directions, we're on a ton of committees, we're on JPAs, and so it's sometimes it's challenging for us to conceptualize the timeline of when things are needed.

So that would be my recommendation, and then of course have it be a this is our heavy preference, but if things come up, I think that will help.

Thank you.

Well, I uh thank you.

I just want to clarify uh May 5th, see, because when I looked at your recommendation and looked at the calendar, I thought, oh, May 12th was what you were suggesting, because that's when we first have deliberations as a council.

So uh uh just what were you thinking?

Were you thinking May 5th?

We were, we were.

Uh, but again, we're you know, we're pretty open.

Cause we're we're really hoping for um that direction on the 12th if if possible.

Obviously we also have the 19th on as a hold if we needed it, uh but we were hoping to get that direction on the 12th and then bring that final budget to B and A and then to councils.

Thank you.

I I think that's quite early, but okay.

All right.

Um just so we're all talking about the same thing.

We could say that we can't be budget and be done in three hours.

Yeah, we're done.

Vice Mayor.

Thank you, Chair.

Uh let's see.

So I have a few different thoughts that align a little bit, but um on timeline.

Can we include the presentation to measure you on the timeline structure?

Yeah, for sure.

We'll add that into the calendar.

But we do have that on our internal one.

Okay.

Can you add it, start adding it to all the workshops and on the staff reports?

Because every year we say, oh no, we've got to go to measure you.

And then we say, well, you have our commitment, and then we go back and sure.

And just uh on the measure you point.

So I've uh we've been working with the chair, and uh one of the um things I think we both agree on is we want to get measure use input earlier in the process, and so we're actually gonna be meeting with the committee uh before we even start our budget balancing process to get their priorities on reduction areas and um because we've kind of talked it's hard for them, you know, the budget gets published, and then they're saying, Well, we you know, we like this, we don't like this.

It's easier in good times when they're saying, hey, I think we should invest more in this or versus that.

Um, but now uh what we were thinking is hey, if you can kind of tell us what areas you're really concerned about as a commission for us to protect, that way we can give that information to the departments funded by measure you, and they can take that into consideration as they actually develop their plans on the front end, okay.

And then I know you do a community survey every year, so can you add that to the timeline as well?

Yes.

Um, and then I agree with uh Mayor Pro Tem Gera on the timing uh just because sometimes here at budget and audit we hear the presentation for two hours and then we hear it later on that evening for two hours again, and so just for I mean everyone's time uh to make sure that we coordinate the schedule accordingly.

Uh I think that one of the problems that we have here at the city is, you know, we have our staff department presentations, then we have the budget that gets proposed and all the different all the like hundreds and hundreds of reductions, then the city manager proposes it.

Then the between the time that the city budget is released to the time that we adopt it, I don't think it gives us as council members enough time to truly explain to our community how these budget reductions are gonna, you know, impact us.

And so that's something for the schedule of like timing.

I don't know how we do it sooner, especially as we move into the conversation of option one or two, um, to see how we move everything way sooner, uh, because this will be a new process for us and changing in how we do our budgeting here at the city.

So uh more time in between the budget reductions being proposed and us deliberating here so we can go out to the community and get feedback, I think is important, and then uh we have our council uh workshop on our priorities coming up, and every year we say, hey, we're gonna do these priorities so that we are aligned in our mission and our budget and our values, and how are we gonna use what we do there to impact our budget now?

And so I don't know if there's a creative way of doing budgeting where our dollars are aligned exactly within the pillars of what we outline at our council workshops, probably our city manager will probably chime in.

Uh, but like how how does that get weighted?

So, say for example, uh we adopt our five priorities, make sure that the budget aligns and that the most amount of money is going to those five priorities, then as council members, then the budget gets released and say council members have priorities that are not within those five subcategories.

Then I'm sorry, they don't make the cut.

We had a council workshop for a reason so that we can all go in the same direction.

And so we have that coming up soon, and so I'm curious to see how we're gonna incorporate that into the budget.

Go ahead.

So the goal of the priority setting is just um really reflects what what you had mentioned is that to ensure that everything that we do and the programs and services that we deliver align with your priorities, and so one of the things that we're gonna do is uh this year come back and adopt those priorities.

So that will be about a month after the workshop, then we're gonna take those same priorities and work with the new city manager to create a strategic plan around how we're delivering for you on those priorities, and that will then be reflected in um we'll be able to group our budget based on those priorities.

But you can't forget there are programs and services that have regulatory requirements or legal mandates or things that may or may not fit within your priorities, and so we can kind of squeeze all those things in too.

So so we will make sure that our budget is organized and reflective of council's adopted priorities from the workshop on the 30th, and and when they do come back to council, that is the whole goal of the priority setting workshop and having a one strategic plan for moving the city forward and and reflective of council's priorities.

So that those are all of the goals for the priority setting and then the development of the budget thereafter.

One of the things that we changed, I think it was just last year was that when departments presented, we included attachments of their reduction offerings.

And so I would encourage council members to start then and there in reviewing and understanding and sharing with community what potential impacts of budget reductions could be.

Because whether we choose to stay with a one-year budget or we choose to take some form of balancing that reflects doing something in the second year, we will more than likely be utilizing most of those strategies, and they will be shared with you early on in March.

So we've tried to move it forward, council member, like you suggested, and I think it's just the practice of last year was the first year, and that you have access to those resources, and that can be shared with the community.

Okay, and then I have two more at the top.

Thoughts, Chair.

Uh, economic development.

Uh, I'm really interested in the budget timeline to make sure that there's time to see all the programs we've invested in at the city of Sacramento, money input versus money generated and output, and see what worked, what didn't work, uh, just because I'm just very mindful that as we begin these conversations, we can't continue to just increase our fees, increase our parking fees, and put the burden on the stakeholders here in Sacramento.

So, those are my two thoughts.

Thank you.

We're bringing back a workshop on economic development.

I think mid-November, Denise is nodding her head.

So we got you.

Awesome.

Thank you so much.

Okay, anything else?

No, okay.

Back to to Mr.

Gower.

Thank you, Mr.

Chair.

Um, so on the two-year budget, you know, uh like while while I well, I see uh a strong benefit of having a I would call it just a multi-year budget.

I'm not gonna say two, three or whatnot.

Um in helping us guide where we're going, a couple things.

One, um I wouldn't question whether we even have the capacity or the capability to do an accurate two-year budget.

Uh maybe we do.

And uh the and I and I definitely think it it's an aspirational approach, but um, but there are the there are so many fluctuations that happen even within a one year, in fact, even a six month, that um that I worry about uh in in some scenarios where like schools are mandated by statute for three years to have a three-year budget, yet they almost do a this um this pink slip scenario that to send to people um halfway through the year or it and then they say, Oh, just kidding, we're gonna hire you back on, you know, because they have to do it mandated because of law.

So uh I I worry about this um this again, you know, a very strict approach about how you accomplish uh a budget that is fluid.

Uh and um and and many things happen, and we can always come back.

This council could always come back and adjust those budgets, but the budgets are we try to get them as tight and as clear as we can.

If you serve on any nonprofit board or whatnot, you want to keep get it as close as you can so that you can one give a good assessment to the public of how dollars have been spent and will be spent.

And if um if it if we can't articulate c very clearly this is what the like the I would tell you would be difficult to say what are our tax revenues are gonna be two years out, um, just with so many changes that are happening at the state level, uh, maybe changes in the federal government, um, you know, our tariffs going up and down, you know.

Uh so the the all of those things I would say is that while I think it is helpful for us to to develop um a uh an aspirational process, which I think the staff already has.

They've put in our our uh uh projected liabilities and uh I think we're the we are weak in uh in um and I've you know thank you for doing the the the hearing on economic development because of this is one of those things where I've come back over and over again is diving deeper into our our uh sales tax, our one percent Bradley Burns, understanding where how that is continuing to go on a downward pressure and a better understanding our uh revenue side um is helpful because I think the staff has done a good job of understanding what the liabilities are over the next two years and how great they can continue to be.

But I I would worry uh Mr.

Chair about the this um this trying to balance an entire second year budget um when um when we don't now maybe this is uh the exercise on how we start doing that and then we develop processes, but maybe some basic questions are does the staff currently have the the methodology or ability to do a two-year uh balanced budget.

And maybe I'm wrong in that.

Yeah, so we uh we have some system limitations, so we would not be able to do to do um what I would call uh traditional two-year budget.

So you see some other cities have you know a a true two-year budget.

Um so what the options before the committee would be, you know, with the budget, we produce a five-year forecast, and so in that five-year forecast, you have the budget year, budget year plus one plus two plus three plus four.

And so what we would do if council um directed us to uh would be to balance or balance within a tolerance that budget year plus one in our forecast.

So we couldn't we we do not have uh the technological capability right now to do a two a two-year budget, a true two-year budget.

So that that's what we would be doing.

We'd be managing um the forecast.

The other piece of it, just um that you know, to kit to consider when we are doing um kind of those amendments late in the process, if council adopted a policy for balancing budget year plus one, we would just have to be very cognizant of that uh of that second year impact.

If let's say council restored a cut, for example, does that then put you out of um out of the policy you adopted?

So that would be something we would we would work with you on.

Uh but that's what we would, if council directed us to, that's what we would be doing.

We would be using the five-year forecast and the projections and the balancing strategies to handle that budget year plus one.

Well, thank you.

I think that's uh, you know, and and if if it is a uh a technology issue, if it's uh an actual resource issue, you know let alone a policy issue, um, and the council wishes to move in that direction, then again, then maybe that's that's another question for the budget.

How much are we gonna spend and into that?

Now, if it makes sense for us, if the staff believes like, hey, you know, if we did spend the money and for us to have the ability to do that, and we think we could help maybe help adjust that, then I think that's worth the expense.

But I would hate for us to go and spend more money on technology if staff doesn't feel that it's going to change the outcome of what we what we do now.

So I'll leave it at uh to that, Mr.

Chair, and I guess I guess uh, you know, the it goes back to the deliberative process.

I I think that putting out the forecast and more information about those implications and you know, the in even an analysis of uh when we adopt the budget, okay.

If we if we adopt the budget, and once you as part of the balance uh the budget adoption, that as we approve it, sometimes it's a celebratory thing, it's like we got it done.

But in reality, it should be like yes, but here's the reality of what we have to do next year.

I mean, I think having that conversation that the adoption of the budget so that it sets the stage for the second year is probably um has more value than trying to, you know, um uh be a long range, be seeing that long range target and trying to nail it, you know, at that age, at that distance.

So thank you, Mr.

Chair.

Thank you.

Uh Councilmember Maple.

Thank you, Chair.

Um, so one question I have, so I read in the stock report and just heard you now that basically we don't have the infrastructure or the practices in place.

Um so my first question is what steps would we need to take in order to achieve a multi-year or two-year budget cycle in the future, knowing that we don't have that right now.

Yeah, so we have a very antiquated budget system, we have an antiquated financial management system.

Um, and so that does need to be replaced, and it uh that's something I know the IT department is uh looking at, and that will have that has to happen in the next few years, but that would be a prerequisite to doing what I would call a true two-year budget, and yeah.

So do it is it a is it a DOS or a Unix system?

Pretty much we need to use a dialogue.

So we started it was a blue screen.

So yeah, um the the it's a there's a technical, you know, when I think that it says a true two-year budget, we are entering it into a system we can pull for the from the system, we can report out in that manner.

We can we have um capacity.

If you said to us uh we like uh reduction A in the first year and reduction B to balance the second year, that will all be tracked, it just won't be tracked in a technical system.

And so I think what we're looking for direction from this committee is does this committee want to reflect in what comes to council because we will have the same conversation.

We are supportive of moving to that second year as a committee, or we'd like to talk it through further with council, or we would just like to be able to provide some um feedback.

It is doable but messier the second way, and I think it's a good segue, Pete's not wrong.

We're gonna need to find 25 million dollars eventually for a new financial uh HR system because it is beyond its useful life.

I think our last system was 20 years ago.

Okay, so that's that's really helpful.

Thank you.

And so I guess that that leads to my next question of um we know that we need to replace this no matter what, sounds like this, you know, regardless of whether or not we want to move this multi-year cycle, you need new technology.

Is that already planned in a future budget, or is that something that we put on hold until after we are out of this, whenever we might be out of the deficit?

Yeah, it's something we're working on, and we're working with IT to figure out how to finance.

It's something that we ultimately need to do.

Uh, but we do not have a budget line item that says uh this is for the new financial system.

So okay, so so the answer is no, not yet.

Um so I'm just curious because you know, I I'm thinking chicken and egg, like just like obviously government is not business, but like in a business you have to spend money to make money.

Um, if we're going to do the best job that we can in addressing the budget deficit and all the strategies that we need to take, and we know that we need to improve our technology to do that, then you know, I think it's on us and this committee and the council to find a way to do that because that's hopefully ultimately gonna make us better and more efficient and make your jobs um easier to do, because I'm sure it's very challenging to track in an antiquated system.

I'm not sure what that looks like.

I don't know if it's like a series of spreadsheets or like X's and O's somewhere or something.

You don't want to see how the sausage gets.

There's a reason why math is not my strong suit.

So um, but I I personally support that, and I think we should um think about as a council how we can make that happen sooner so that we can address that.

So that's just one piece.

Then my next question on this multi-year budget um possibility is what do other jurisdictions do?

Like what are some of the best practices?

I know it's all over the map, but are there some that you all as experts on the budget look at and you're like, oh my gosh, that's the best way to do it.

We should be thinking about that.

And then my next question to that is what steps would we need to take besides technology to get there?

Yeah, I you know, I think um there are all trade-offs, and you know, um council member Gera mentioned kind of a big one.

The the further you go out when you're forecasting, the less certain you are, right?

So uh you could in theory adopt the five-year budget, right?

But the revenues and expense assumptions in year five are much less certain than in the in the budget year, and so that's kind of the trade-off.

Um, as far as best practices, you know, one of the uh one of the best practices is making sure you're doing a forecast, right?

So that council isn't just looking at um one year in isolation that they're seeing, hey, you know, this is what what we're looking at going forward.

Um that's something when you talk to the bond rating agencies, they look for with with jurisdictions.

Do you have a a five-year forecast or not?

Um, but this is really uh more of a policy call for council is you know, hey, how much do we want to adopt of ongoing strategies versus one time?

That's that's ultimately what this is.

Um, and you know, do we want kind of more flexibility to defer certain things, or do we want to uh kind of rip the band-aid off more?

And that's really the discussion here on a policy level.

And that is a great segue into my next comment.

Um, and thank you.

Uh those are my questions.

Um, the I've said this now a few times over the last um two or three years, is I think that it's time that we have an open honest conversation about like what's the what would a rip the band-aid off scenario look like.

Not saying necessarily that we would choose that path, but that to have that conversation openly and honestly with ourselves and with the public and other staff, because you know, we can either, as I've seen it over the last several years, is we can either continue to make smaller choices that do reduce you know the service impacts to the public, that do make it you know, so that we're not you know necessarily having deep cuts and impacts, but the problem that I see with that is that then extends our pain over many years, potentially, versus what would a scenario look like if we wanted to take a you know a a stance that was um reflective of how do we get ourselves out of this deficit as soon as possible.

What would that look like?

I don't know if that's a decision that we would make as a council, but I think it's important information for us to have and to decide upon.

Um, and so I'm really interested in seeing all those scenarios as we move forward um so that we can have those conversations because um I know it's challenging, it's not it's not a winning uh political conversation to have at all.

Um, but it is something that as I look at the financial health of the city and the future, I think an important conversation.

So that's that's gonna be top of mind for me as we move forward into these um conversations, and I'm and I just appreciate the information.

Thank you.

Thank you.

Thank you.

Uh and Vice Mayor.

Uh City Manager, are you looking we we need a motion today with option one, two, or three, correct?

I don't do we need a express the sense of the committee as it goes to.

Yeah, it says pass the motion, so so it says, however, there are several alternative options to council consider to balance the fiscal year, and it gives us three different options.

So are we are you looking for a motion to be able to take to council?

That would be ideal, although if we took if we went with option three, would we even have to bring it to council?

Because that's kind of what we're doing, right?

Is not doing anything.

So you can that could be the motion, and that would be what we would bring forward to council is the direction from this committee.

The committee considered and said and you know directed us to move forward with option three.

They can still talk through everything when we get to council, but they'll know what the committee recommended.

Okay, so then I guess I'm gonna do a combination of these motions based on what I've heard here today.

Uh so then I'd like to pass a motion to one just rip the band-aid and understand what it means to the public to make these tough budget decisions.

Two, look into the technology that we need that council member maple mentioned to be able to do these two-year budget projections and future forecast.

Um, and three, I think I'm just gonna say like it we can determine a de uh option two, determine a deficit percentage threshold for the second year budget, like councilmember Garrett said, you can't project for future property taxes, sales tax, our liability PERS.

There's a lot of unknowns that make local government different than what other government agencies have to do.

So I think it can be a combination of what we're seeing here today.

So uh, so again, so one rip the band aid, make tough budget decisions to new technology system to be able to do budgets, and then three, do maybe a 2% um option two to a deficit percentage threshold uh just because of all the unknowns.

I want to clarify it also um is moving the policy forward that everybody participates in the same manner and form, and that we will endeavor to have budget proposals in writing to the extent possible because it makes it easier to evaluate understanding some some reflection of that in the in the committee's action, and as early as possible, and as early as possible, yeah.

Just as an idea.

Right.

Um I'm not in favor of council members having to write every single one of their proposals.

Like it it wouldn't be, it is to the extent possible.

Like if you can put it in writing, that'd be great because that helps us analyze it.

But we know because we have the based on council member Gera and Dickinson that things come up and conversations happen and right, but just sort of documenting that the ideal and the goal would be in writing, but understanding that that may or may not to the extent possible.

I would just say it recommended as a best practice that uh adjustments to the budget.

Yeah, put in the process.

I think that's fine, but ultimately at the end of the day, having these deliberations on the dais, I think is healthy for the public to see and for us to be able to explain and talk about how these reductions are going to impact us.

We'll tell you what, we take your three items.

Let's just hold this prescription for a moment, and we can we can make that as a separate motion if there's uh support for it.

So we have a second for the the motion on the three items.

I I let me just ask for clarification.

Uh it's not uh we rip the bandage off or whatever um uh metaphor we're using here means what?

What did what does that mean to you?

I want to uh make sure we all we're all understand the same thing when we're using this term.

What is it?

So what we're what we're hearing as staff is that um council wants to see all of the reductions, ongoing reductions that it would take to fully balance the budget uh in the future years.

Not necessarily that council's gonna adopt that, not necessarily that the city manager has to propose that, uh, but you want to see an option of hey, if we went with all ongoing cuts, for example, to balance the budget so that we balance in the future years, what strategies could council employ to do that?

I'd like clarity.

Are you asking us to balance the budget that way when we build it in the spring?

Yes.

Okay.

So then that would be balancing budget year plus.

That would be choosing option one.

Well, I think budget year, no, uh budget year is 100% ongoing.

Okay, and then I heard budget year plus one is the percentage-based, because um council member mentioned option two that we do some version of option two for year two.

Yes.

Yes, just because of because of what council member Garrett said.

I mean, he's absolutely correct.

We can't project sales tax, property tax, and everything else that he said.

Well, uh I'm not sure I'm tracking.

Okay, because what I I mean, what I hear Pete saying is his understanding is look out some number of years, maybe it's five, and uh project what you'd have to do on an ongoing basis with reductions uh in order to balance not just the budget year, but two, three, four, and five.

Is that is that what you were saying?

That's what I initially heard, but then after the clarification, what I'm hearing is that the proposed budget would only be would only utilize ongoing reduction strategies, and then budget year plus one could only run a deficit of two percent.

Is that that's what I'm hearing the clarification, and we will always have to come back as council member Gera points out, because there will be changes in revenues that we couldn't predict.

There will be for better or for worse.

Um so there will be a there will always be an annual process, it doesn't negate the idea of an annual process, it gives and provides more certainty in that first year of what the second year cuts are gonna be.

I do want to ask one more question though, which might complicate it.

So council earlier this year adopted a policy that if we do have any prior year savings, the first use of that is to balance the coming budget year if a deficit is forecast.

Um so is the proposal here to waive that policy for the coming fiscal year, because that would that's by definition a one time um balancing strategy.

Well, uh if you if you didn't apply that, whatever that savings might be to offsetting cuts you otherwise would have to make in the in the budget year, what would you do?

What would you do with that?

So the uh the second the second by council's policy, the second use would go it would get the EUR back to its 10% minimum, and then the third use, a third would go for unfunded pension, a third for unfunded uh deferred maintenance, and then a third would be for uh other discretionary one time projects uh mr gira uh well so uh uh a couple of uh clarifying things and I I just I want to first put off the that for the for the past two budget cycles now I I do believe the staff has actually proposed and publicly what ripping the pandaid looks like.

I mean the categories of one, two, three and four are are the solutions so I I don't I don't think that's anything new.

So I I think I don't think we've highlighted them really as much because it's almost kind of like hey here's the solutions but here's the proposal but but we've actually been doing that so um to and and what I heard from council member vice mayor talamantes here mention is that we should be looking at uh a at least a way to project the deficit for the next year um to your point um you know if if we maintain the policy I don't think I don't think they're in conflict because the goal is to reduce the deficit it could be by by other means but um the policy itself if we were to balance the budget for two years then yes that would be a problem because any s any savings go all to that none to uh rainy day none to uh defer pension liability um at all so if we were to balance the the two year budget then yes we have to repeal the the CAFR policy so uh but if we're going to uh if we're going to set a target for us to look at a the uh a deficit margin for the next year I don't I don't necessarily think that that they may be in conflict maybe I'm maybe I'm seeing it wrong but um uh now uh I'm willing to support this moving forward going to option two to the council and have that conversation um I do think though that that uh what uh what is most prudent for us uh is and in fact deficit and option number two almost uh discusses kind of what I mentioned like it's when we approve the final budget we need to do it in context of knowing what the what the next year looks like so um so I guess my my point in there saying is that there the the conversation of ripping the band aid off I uh we've been putting that already forward I don't see that that that is uh uh a difference here now what the council actually does that's the difference okay well uh uh is there I mean is it work both ways in the sense this sense uh you apply the policy to one scenario and you don't apply it to the to the other which means you're not offsetting otherwise reductions that would have to be made with with savings or does that become too too complicated I think the city manager wants to chime in that um I I think it's um we we it is too complicated to propose multi-scenario budgets we will propose a budget I think based on this direction that's a little bit different than last year which is a budget year that uses no one time and I think simply by default we can have council direction and if we don't use one time it then follows that path of if you don't use the one time dollars then they're available for these three other things and then we will also propose with that budget the reductions necessary to get to that two percent threshold we can't produce multiple scenario fair enough that really was so that's how you that's how you get to what I think I heard is the direction then if if the implication of the motion is that the budget you're gonna you're going to um propose would would not include any one time funds that could offset cuts I'd just say I don't support that.

Okay.

So if that's if that's the the essence of the first 10% of the motion.

Then that's problematic from from from for my point of view.

Now what I I I believe what Councilmember Maple's trying to get at is we want uh both for our own purposes and the public's, what would happen if you didn't apply that?

How severe would conditions be?

But I don't know if we can get given what you just said, um for interim city manager.

I don't know if we can get there or or not.

Whether we can I have a quick clarifying question if that's okay.

Um so you're right that that was my intent.

It's not necessarily that ripping the band-aid that the staff hasn't provided those possible scenarios.

That's true.

More so that we as a council have really not had those conversations publicly about what could that look like.

What I just heard you say, assistant our interim city manager, is that um that creating scenarios would be too complicated or not possible.

Can you can you explain that to me?

We we have to propose a balanced budget, and it you need it that needs to live in the budget system, it needs to be reportable, it needs to be something we can report out on.

And what we did last year was heard from you some type of balance between one time and ongoing.

But when we talk about the notion of ripping a band-aid off to me that says get rid of the one time, make the true cut.

So you would propose a budget that had only ongoing reductions.

Um what we did last year was a version of the scenarios.

We said here's our one time, here's our ongoing.

Now here's the list.

And if we had to get to 100% ongoing, you would have to cut this far down the list.

So we did proffer both, but it's what does this committee and what will council want to see in the proposed budget?

What actually gets proposed built into the system shared with the public as here's the thing we're gonna deliberate?

Okay, and that's you know, I think I think of April 28th as the date when the proposed budget gets put out to the public, and I think about the time between now and April 28th or March 3rd, um, which is the first um presentation, and think to myself, like I'm just more of a visual person, so like what like if there were three different types of ways that we could do this that includes the middle of the ground strategies, the lightest touch, and the worst case scenario, what does that actually look like?

That personally would help me, but I also recognize if that's not possible or it creates too much work for staff, then that's something we can talk about.

But that's more of what I was envisioning.

Thank you.

So I I think one thing that may help, um, you know, if council does adopt a kind of maximum deficit threshold for budget year plus one, and if that threshold, for example, is two percent, um, you're you're by definition going to be using a lot of ongoing strategies.

Um you're just gonna have to do that.

Um so you know, if that if that's the direction from the committee, hey, we want to set a tolerance for budget year plus one, uh, that still will give you the flexibility of potentially using one time or not bringing forward a proposed budget with all ongoing cuts, um, while also, you know, mostly frankly ripping the band-aid off because um you know that two percent deficit in year in year two would be probably around eighteen to twenty million, um, depending on what the general fund is, and you know, our projected deficit there is is 70 million right now.

So um just a thought maybe if you're gonna if you do want to focus on budget year plus one, um, we may not need to really define budget year quite as much.

Okay, so um I I'm trying to just align this.

So uh if we wanted to uh choose option two for on the on the two yard two year question, then uh then your your saying that for the budget year plus the plus one, you you'd need to show those those ongoing reductions, even if in the budget year you're using applying what we previously adopted about using first first call on savings for the for the budget year.

Correct.

Okay, so we have a motion on the table, and I'm looking at the maker of the motion.

Is is that an acceptable approach to you?

Yes, yes.

Yeah.

I think you want me to repeat it.

Just option two.

Okay, so we're gonna do option two with I think it boils down to the IT system update.

Yeah, I think it boils down to option two.

And the second or okay.

So that's that that that's the motion on the table with the looking at the uh technology.

Uh and I just I just have a question.

I mean, uh in the IT work plan, do they have this budget system update somewhere in there?

Yes.

So we see we need to do uh study first, which we do have some funding set aside for, and that should be I think happening.

I'll check in with the IT director, but that's in the short term.

Uh so do we really do we need that as part of this?

I mean, I think not as you are encouraging look at that, uh, update the budget uh process uh or technologies.

So I think what we can do is as part of any study of a new budget system, we'll evaluate uh we'll make sure that they include an option to do a true a true two-year budget, um, and then we can incorporate the direction that way.

Does that work for you?

I'm gonna say I think if I may that there's value including it in the direction that was provided to staff as part of committee commission action because then it establishes this committee's um recognition and commitment to the notion of the need for a new financial system.

So I appreciate that actually.

Yeah, so so then to clarify then we can add it.

We'll figure out how to do it.

Okay, so the motion is to do option number two with a system update for IT for to be able to do budget projections in the future forecast.

And what what threshold for option two, or do you want us to bring options for council?

You had suggested, well, you said if the percentage threshold is two percent.

It was an example.

But you did that, you did that just a little bit.

So you can pick whatever I'm open, I don't have a number.

Well, why don't we bring some options for council to consider?

I think I think that will help us, yeah.

Today and tomorrow.

Okay.

So we have so the motion uh is option option two on the two-year plus the uh technology um reformation for for the budget, budget technology or process and the policies and we'll we'll get it.

Okay, and the seconder is good with that.

I am all right, that's the that's the motion and the and the second.

So hold that hold that thought.

Um I just before we we take a vote on the motion.

I just want to make a f uh a few comments, but I wanted to check uh Mayor Protem.

Did you have something you wanted to add?

Uh yeah, I mean I I one a couple thoughts.

One, I uh yes, I do support if the staff feels that the the system is out of data and and we need to get looking at placing it.

I I would I would be very uh I'd like to know when we actually execute a 25 million dollar procurement.

Okay, because there will be a general fund procurement unless there's some you know uh you know uh grant out there for balancing your checkbook.

But it goes to my point, like learning to balance your checkbook.

You know, maybe people don't do that anymore because it does all on your auto system, but um those are just basic financial.

So I just I would worry about when we actually execute 25 million dollars because I could tell you I there's a lot of different places where I would rather put 25 million dollars on the short term.

Not that we don't need to to do that.

Um or end up in some scenarios is how the state issues its checks still.

But uh the second piece, the second comment that I wanted to uh make is um to the qu the question about uh the discussion, how we how how we are more public about the true cuts and what that means.

Uh this goes to the approach that the uh the city has done during the budget.

And the you know, the interim city manager and previous city managers have done what I call the what the city does road show during the budget process, which I I think is educative, particularly for a new council, but I think it's time ill-spent.

Uh and rather than doing what the city does road show, we should have uh, you know, what these cuts uh uh result in specifically, specifically, because there isn't any deliberation really.

You spent two hours discussing what a department does, which, you know, by and large, we should have known by doing our tours and visiting and whatnot and talking to the departments and spending more time really discussing, okay, uh, you know, impact level one does this, two does this, and if we're doing this ongoing, this is what your constituents are going to feel.

I think that's much more fruitful than each department giving us the PowerPoint of all of the wonderful things that they actually do, which we know.

Yeah, we we are um aiming to make them more budget focused this year, so more of a I call it early budget work sessions, uh, but there will be more of a financial focus versus a uh operational focus.

If the discussions are really about addressing and recognizing what what has to happen, and that's how the presentations need to be geared, and not in the past where, or you know, and in the as I've seen in the legislature times where people are highlighting how the how to defend their department, and here we need to figure out how to you know make our city move forward.

So, yeah, I I appreciate that that comment because um I found the presentations well interesting, not not particularly tuned in to what we were actually going to be be grappling with, and I and I do think it will help the public understand what the consequence of reductions are if the departments are telling us this is this is what we're we're doing that we know no longer will be able to do if we have this strategy um uh adopted.

I I think that's much more meaningful.

I I I agree with that.

I had I had uh a couple things I wanted to ask about or add and comments, uh, some of which we've we've talked about.

But um uh this fall we're gonna be uh if I recall correctly, talk about the vacancy policy.

Yes, so we're gonna we're trying to align the timing with um HR's uh state reporting.

So it'll be probably late fall, early winter, um, that we'll be coming to the committee and then to council.

Okay.

And then I uh is there an expectation that we will have some kind of mid-year budget consideration?

Um, so we will uh as we do every year, we'll be coming to council with um with a mid-year financial update.

Uh we'll report last year's uh year end results, which we're we're finalizing right now.

Um, and if you know there are there do need to be if there do need to be uh budget adjustments, we may bring we would have to bring those to council as well.

So if we went into a recession and our revenues tanked or something like that, you know, we would be bringing an update uh to that.

Okay.

So you uh I mean at this point, you at best you've got maybe not even two months of data for the for the correct fiscal year, so you don't really know any certainty which direction things might be headed.

We're also hoping we'll have because we we typically come in February, and we're hoping that we'll have um our HAP allocation as well, um, and then we can update, we'll bring an updated financial forecast and have really what our target is going to be for fiscal year 27.

Is there a point at which it makes sense to uh discuss uh what is happening with federal money?

So uh, you know, I have good news and bad news.

Uh the the good news for the city is we have not had the same impact that I've seen, for example, uh with counties.

Uh the bad news is that it's still threatened, and so what we can do is update that uh inventory that we put together around our our federal funding, whether direct or via the state.

Um but uh but yeah, we've uh we have not seen the impact that I've seen um seen on the county level.

So, so at uh at what point would would you think it makes sense to uh inform the council and and the public of uh where things are going with respected and it's got to be a not just an overall number it's got uh obviously it's it's divided into lots of little buckets, so yeah, I think when does that make sense to do?

Um I think during mid year that would be a good time to come uh just when we're talking about our overall uh financial picture as well as our budget, our updated budget forecast.

Okay.

I also think you're gonna want to hear from your outside entities, and while we're bringing the SETA budget on the consent calendar, they're gonna be forwarding their presentation.

Um they have some fairly substantive impacts on the workforce side that will um affect what they do and how they do it, um, not in the very near term, but but coming soon, as well as um we don't know yet, haven't heard specifics, but if um the actions that have been spoken about that HUD may take, it could severely impact SHRA.

So your our partner agencies are gonna, you know, need to definitely report um out to council.

Yeah, uh and uh uh I obviously we have to wait and see what happens later this month at the at the federal level uh uh and and beyond just in terms of whether there's a commit continuing resolution or shutdown.

Um actually they pass appropriations bills, which I wouldn't hold my breath about happening, but okay.

But I I just at some point I think it might it makes sense.

Um we talked about the getting aligned with the measure you committee, and I appreciate uh your sensitivity to to working with them to so um that they are uh able to a timely have input to you and to us uh about that.

Um I think the other things that I had noted we have talked about.

Let's come, let's get the motion taken care of.

We'll come back to this recommendations on in writing that's in a moment.

So uh are there other everybody have the motion in mind?

Yes.

Any other comments on the motion?

Okay, do we have anyone who wishes any member of the public who wishes?

Okay.

Uh then uh if there's nothing further, all in favor of the motion signify by saying aye.

Those opposed say no, and any abstentions motion carries unanimously.

Thank you.

Now let's um I I do think we should recommend to our colleagues uh and to ourselves that it it would be a best practice.

That's the wording of that.

Yeah, best practice to make uh any suggested adjustments to the budget uh in writing and as early as possible, so that doesn't foreclose coming in, you know, last minute and saying, Oh, hey, I found this this bag of money out in the hallway.

Um, but it but it's on the lottery.

So I I I chair will make that motion.

Is there second to that motion?

All right, second by Mayor Pro Tem.

Uh any discussion on that motion, all right.

If not, all is in favor signify five by saying aye.

Any opposed say no, and abstentions.

Uh motion carries unanimously.

Thank you.

We look forward to another brief discussion on the budget soon.

Get them for the next item.

Uh Peter, I have a question for you.

It's a really important question.

Yes.

Does the budget land on your birthday again?

It does not this year.

All right.

Yeah, we developed the schedule.

Moving right along, uh, and our next item is item four update to recommendations in the 2020 citywide innovation and efficiency assessment.

Yeah, thanks.

Uh thank you, Chair.

So uh in 2010, in the wake of the great recession, uh, we brought in management partners to do uh uh an overview of the city.

Uh they came and did a another one in 2020, and we just wanted to provide an update on uh their recommendations.

So they provided uh 39 recommendations to the city, and we tried to break them into chunks.

So here's what we fully implemented, here's what we either partially implemented or were in progress.

Um, here's what we don't recommend to implement because of um we didn't feel they were appropriate or they would have negative impacts, and then there were three that would need further direction from council if we were to pursue them.

Um so this is a chart of how they break down, so you can kind of kind of see that.

We do have more detail in in the staff report on each recommendation and why uh the city uh has responded the way it has responded.

Uh here are all the fully implemented recommendations.

I'm not gonna read through all of them.

I will just say the last one that we added was recommendation 16, which extended the parking meter fees to Sundays.

Uh, the last time we brought this to council about a year and a half ago, uh we had a fully implemented um item, which was update the business operations tax.

That's been removed as measure C failed, and um council is now or law and legislation is now considering an updated um measure.

Uh so these are the partially implemented and in process.

And again, there's more kind of detail on why we feel that way in uh in the staff report.

And some of them, you know, the goal that management partners was trying to uh to hit.

You know, some of these we found different ways to do that.

And uh these are the three that really require direction from council if um if staff is to pursue, we we view these more as um kind of big picture policy calls where we would look for input from our our policymakers.

Uh the first is uh to issue a RFP for uh to contract out solid waste and recycling.

Uh the second was to pursue legislation to allow the city to come uh collect gener payments to the general fund from SMUD, and the third is a charter amendment to remove binding arbitration for police and fire.

And so again, those are our ones we would need direction before uh looking at.

And uh we again we just wanted to provide this update as we head into budget season so that the committee um can see you know what the city has has done as far as pursuing efficiency and and or give any direction that the committee wishes to give.

Thank you, Pete.

Uh questions or or comments.

Mr.

Getton.

Uh thank you.

Um uh Mr.

Chair.

Uh this is this is you know, I appreciate the information.

The information is not new.

Um I don't I think for some of these, uh the I don't see the council uh ready to say like contract solid waste or go through that that process or even you know uh uh continue to pursue legislation.

If we did pursue legislation, then we need to do that through I think a a collaborative process with SMUD.

Uh they've been amazing partners with us on these issues.

Um and uh and so I appreciate the information that's here, it's not new.

I think it's good information for us to consider moving forward.

Um this is off tangent, but I I do think that um maybe through our city auditor or uh the department highlighting uh you know our other partner, which is the state, and the lack of contributions that we've felt from state properties should be something that we should highlight during the budget process.

And um, you know, in the past I think you know there's been some hesitation uh whether it was by the council or by the manager to uh highlight those issues as we were working with the state on some of our you know issues to address homelessness and grants and whatnot, but but I I I completely think that you know, in this case, we need to be much more uh vocal about you know the the either whether it's vacant buildings or the cost that associate with uh with our service to the state, how much our our police department you know is involved in in uh uh sometimes mutual aid that uh should be a responsibility the state.

And so uh so I think and because I'd rather have our our police foreman focused um, you know, the on dealing with issues within our neighborhood and things like side shows then and some of the costs that they incur from cost at the state because we are the state capital.

So I think uh while tangential, uh I think it's just a good exercise to highlight that aspect that is a cost to us from being a capital city.

So thanks.

Uh Vice Mayor Talamantes.

Uh can you expand on the pursue legislation to collect the city, you know, with SMUD?

It's a 200 page report.

And I read it, but I read that section.

I if you can expand or give us like a summary of what we're doing.

Yeah, we have um a summary uh uh kind of in this back.

So, you know, the the council at the time this was brought uh felt that it might increase rates on rate payers, which is why they didn't pursue this.

I'm sorry, I I because I had the same question.

Can can you I could I read the description I didn't understand I what I saw last yeah, what the transaction was that this that it was describing.

Can you can you just explain this from the beginning?

So it's it's almost like a yeah, give us like a summary because uh similar like a franchise fee.

So we have PGE and we have PGE, um and ATT, and they pay the city a franchise fee for the benefit of having their services in the city and providing business to our uh services to our residents, and we don't get that from SMUD.

And they um, you know, uh that is something that we could, but we would have to have special legislation do, um, establish that and collect from them.

And that takes special legislation because they're a municipal utility.

Yes.

Okay.

Okay, now I know when you see franchise fee, I uh okay.

Now I understand.

But other studies that's in the report that says Los Angeles did it.

Um if management partners tells us Los Angeles did it with uh oh.

Well they're they're they're big, B T and E.

Yeah.

So with uh Southern California Edison and although Edison's not a municipal, they're not municipal, they're investor-owned utilities, yeah.

And so that's the distinction as well.

So that's why we can do it with PGE, but SMUD, we would need special legislation because it is a municipally owned utility, and that's the distinction why we can't.

And what do we do now with PG and E?

We have a franchise.

Franchise fee.

We have an agreement, they pay us money, it's included in the general fund budget.

Audit.

Okay.

Okay, and so the concern was that the if the city was charging a franchise a franchise fee that it could be passed through to ratepayers.

Correct.

Correct, yeah.

Okay, okay, got it.

Um was there ever, pardon me, was there ever any uh projection done of the uh of how much revenue would be raised at different, say if it was the same fee that PGE pays, what that would would be so um management partners estimated a range of five to seven million a year um in 2020.

Uh however, they also did did rate the achievability of getting this as low.

Um so that's kind of the uh trade-off.

Okay, yeah, okay.

And I mean, this would not be really a strategy for the upcoming budget year.

Much longer.

Correct, yeah.

That's a longer translation.

Yeah.

All right, okay.

Well, I'd be curious into looking at it and having more conversations.

Okay.

I mean, obviously not this year, it's gonna be a very long time in the making, and we need to contact SMUD.

SMU's a great partner, uh, but I know they're increasing their rates, and um if other jurisdictions have seen it as a way of revenue, why not?

You know, even if we decide no, having more information doesn't really hurt.

Well, and maybe it's have a conversation with with SMUD about look, we we'd be interested in this, but hey, are there things you could do for the city that would have value but but offset the idea of a fee.

Yeah, the hardest part for SMUD is that they are subject to 218 in use of rates for very specific things that benefit their customers.

So them providing things to the city becomes problematic within that scenario versus um a franchise fee, which is a charge for the benefit of doing business is something that they could pay.

It is a a obligation of all of their ratepayers.

So we just have to be careful, right?

When you get into that whole conversation and click their dollars.

Yes, but they they have a whole wide variety of uh spectrum of programs for the benefit of their customers uh for new businesses for existing businesses for retrofitting homes, uh all kinds of things.

So I I I just a suggestion that I I mean I know with uh um with the county going back to the early 2000s, uh SMUD subsidized repl replacing all the lights in a lot of the county buildings.

So um, you know, in that say that out loud, just kidding.

Oh my god.

Statute of limitations is fine.

Uh uh so I I I mean, regardless of this franchise fee uh discussion, I think that's a conversation worth having with SMUD.

If we haven't, yeah, I I agree with Council Member Dickinson.

It's a worth coming to conversation, so install more electric chargers.

Yes, yes, sir.

Oh, yeah, though the one uh thing again, you know, that it's in book two government two governing boards.

Uh I think one if we're gonna if we were to go at this, part of the reasons why I think that uh the recommendation is unlikely to happen is you'd have two government entities that had to agree, then pursue legislation and then you know, and then every other IO and every other muni in the state would be concerned that their local jurisdiction might want to pursue this as well.

So that's the other thing.

So but the the bigger piece that I think I worry about, particularly in this case, is that um the one of the benefits that we have incurred from having SMUD as a muni is uh in the rates and their responsiveness to to businesses in our city and the county, and I would worry about um any kind of scenario that uh that we lose that economic advantage, and then they go to say the city of Roseville that also has its own muni, but then they'll control their own their own uh uh rates, and they have really great rates as well because they're immuni, and they're they're probably one of our bigger competitors when we're thinking about business location or relocation.

So from a budget standpoint and tax revenue and whatnot.

I I wanna I want to make sure that just because we're trying to get tax revenue for the general fund, that we don't inadvertently um you know uh uh affect our ability to to build and retain uh business and industry here.

So that's it.

And that was the trade-off that was discussed the last time.

Yeah.

Uh I didn't notice um uh on the ones that uh on the items that had been partially implemented or in process.

I didn't notice that there were target dates for completing them.

Did I miss that or are they not target dates or so um we we didn't put in target dates there, but I can follow up with it.

We I also didn't ask the departments for target dates, uh so I can follow up with them and see if there are any.

I know for something like the business tax, there's not necessarily a target date yet for that.

Uh it's something that's still in discussion.

And then some of the things that are partially implemented, um, you know, the staff may feel well we should only uh partially implement it.

So we've implemented what we're planning on implementing.

But I can come back I can uh get some more information and okay uh I I I would appreciate that.

Yep.

Um and some uh I'd like uh conduct third-party uh audit of utility bill.

I mean that's that's happening, is it not?

I believe it's in process, but I can double check.

Okay.

I mean I thought we had a firm that was was uh monitoring the utility billings and the um whether the weather utilities are uh are um uh uh are paying the correct jurisdiction.

I know um that that happens that sometimes they pay the money, but they pay it to the the wrong party, uh things like that.

I'll double check.

We do have um firms that do that, but the recommendation may have been more expansive than just that.

So I'll I'll double check that.

Okay, okay.

That that one caught caught my eye among others.

Um all right.

Uh any other comments from uh committee members, any member of the public who wishes to address this item.

Yes, Chair, I have one speaker, Keon Bliss.

Okay.

Um this is an important conversation that I think uh really deserves more public attention, but unfortunately we're here at 9 a.m.

Uh when most of us fairly can't uh don't have the time to attend.

Um some of the things that I've noted in the uh updated responses, uh such as under recommendation number eight, where it's establish a cross-functional team including public safety information technology and finance staff to create a dashboard uh monitoring broad guidance all departments regarding methods to manage overtime.

While the like in 2020 city staff agree with that, the 2025 response of uh the city saying that it does not and no longer supports that of staff is pretty problematic considering that from 2012 to 2024, our city is paid city taxpayers have paid a staggering hundred and fifty-eight million dollars and in police overtime and overtime just for the police department.

With at least eighty-one percent of that amount paid after 2016, which is sort of be reflected actually in the 2020 report.

The top five overtime expenses in 2024 were comm center backfill, previously uh being the complaint desk backfill, uh, impact teams, regional transit overtime, court appearance, and administration supervision.

Why we don't want to conduct like have a dashboard to monitor this and deter in order to determine our efficiencies is pretty beyond me.

It seems like a basic uh no-brainer, and it's something that uh other cities like uh like and uh across the country have done before.

And no other city employees outside the police department and fire department make more than 90% of their base pay in overtime, which dozens of police office of Sacramento police officers have done.

I think that along with uh recommendation number thirty-nine, the charter amendment to remove binding arbitration, uh, needs to be approved and uh fully implemented.

Um there's no reason.

We're if we're gonna be a data-driven city, as uh members of city management like to thank you for your comments.

Chair, I have no more speakers on this item.

Thank you for your comments.

Your time is complete.

Thank you.

Okay, that uh anyone else uh uh signed up to speak.

Okay, that um takes care of public testimony.

There's no action required on this.

Um so uh if there are no further comments, appreciate that.

We'll move on to committee comments, ideas, questions, and meeting reports.

See none.

Uh we have no further business to come before the committee, and so we will stand adjourned.

Thank you all.

Thank you all.