Budget and Government Efficiency Committee Meeting - February 2, 2017
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Budget and Government Efficiency Committee Meeting - February 2, 2017
The Budget and Government Efficiency Committee, chaired by Councilmember Barbara Bree (District 1), met on February 2, 2017, to discuss and approve several items related to city finances, contracts, and policies. Key actions included approving a vending partnership, the mid-year budget report, reserve policy revisions, and the City Council budget priorities for FY2018. The committee also received informational reports on prevailing wage, living wage, business diversity, and procurement streamlining.
Consent Calendar
- The committee unanimously approved the record of actions from the November 16, 2016 meeting.
Public Comments & Testimony
- Martha Welch (public comment) expressed concerns about the city's budget, alleging that the city pays for unused SAP software and hides budget items in committee rather than full council. She also criticized the proposed vending machine fees as excessive.
- Joy Sanyata (District 3 resident) thanked staff for their reports and urged council to keep individual budget memos from each district. She requested immediate funding to begin the process of finding a replacement for Police Chief Zimmerman, emphasized wise use of the Chargers termination payment, and called for a summit on the structural budget deficit.
- Emily Howe (Research and Policy Analyst, Center on Policy Initiatives) urged the committee to ensure effective enforcement of living wage, minimum wage, and prevailing wage laws, noting that positions remain unfilled and that enforcement is under-resourced.
Discussion Items
Item 1: Marketing Partnership Agreement with COMPASS Group USA
- Staff presented a five-year agreement with Canteen (a division of COMPASS Group) to provide vending services. The agreement guarantees minimum annual revenues totaling $530,000 over five years, with revenue share percentages of 33-36% on beverages and 23-26% on snacks. It includes at least 50% healthy vending options, energy-efficient machines, and in-kind support for city events.
- Councilmember Kate questioned the revenue share variance and the financial responsibility for smart markets; staff clarified the partner covers installation costs.
- Motion to approve passed unanimously.
Item 2: FY2017 Mid-Year Budget Monitoring Report
- Staff presented the report based on five months of actuals. Projections showed expenditures outpacing revenues by $4.2 million, but this is offset by the $12.575 million Chargers lease termination payment received on February 1, 2017. The report identified increases in departmental revenues (e.g., police, fire) and expenditures (e.g., fire staffing, stormwater).
- The report recommended three appropriation adjustments: a correction for the Development Services Enterprise Fund, a transfer of $5.9 million from the public liability reserve, and appropriation of $5 million for tenant improvements at 101 Ash Street.
- The IBA noted unanticipated fire personnel overages and planned to release its review on February 9, 2017.
- Councilmember Sherman commented on the accuracy of projections. Councilmember Gomez expressed concerns about the use of Mount Hope annexation funds for general fund deficit offset. Councilmember Kate questioned franchise fee and sales tax trends.
- Motion to forward to Council passed unanimously.
Item 3: Revisions to the Reserve Policy
- Staff recommended reducing the workers' compensation reserve goal from 25% to 12% of actuarial liability, and extending the timeline to reach the 16.7% general fund reserve goal from 2021 to 2025. This would free up funds for FY2018 budget.
- Councilmember Sherman questioned the plan to replenish the pension stabilization reserve; staff stated a plan would be presented with the budget.
- Councilmember Gomez asked about the distribution of freed reserves; staff noted 82% would be general fund.
- Motion to approve and forward to Council passed unanimously.
Item 4: FY2018 City Council Budget Priorities
- The IBA presented its report, summarizing priorities from all nine council districts. Top priorities included police recruitment/retention (8 council members), police technology, fire rescue staffing, and others. The report also prioritized infrastructure, park plans, and addressing the structural deficit.
- Councilmember Gomez emphasized collaboration and the need to begin the police chief search early.
- Councilmember Kate noted that community input resulted in 120+ low-cost items like streetlights and crosswalks.
- Councilmember Sherman praised Chair Bree for requiring councilmembers to identify funding sources for their priorities.
- Motion to approve and forward to Council passed unanimously.
Informational Item: Prevailing Wage Annual Report
- Staff presented the annual report on the Prevailing Wage Program, which ensures compliance with state prevailing wage laws. The program covers public works contracts over $25,000 and alteration/demolition/repair work over $15,000. Over the last three fiscal years, the city received $65.9 million in state revolving fund loans, partly due to its compliance.
- Staff reported on monitoring activities and compliance, noting that most contractors are familiar with requirements. In FY16, there were 15 violations totaling $234 in underpayments, all corrected.
- Councilmember Sherman expressed concern about the cost of enforcement versus recovery, and asked for future reports to quantify costs.
Informational Item: Living Wage Ordinance FY2016 Report
- Staff presented the FY2016 annual report on the Living Wage Ordinance. The ordinance covers 444 contracts with 130 contractors, totaling $56 million. The living wage rate is $14.43 (increasing to $14.66 in FY17). Compliance reviews found violations in 7 contracts, and back wages recovered totaled $600,000 since inception.
- Public comments included concerns from Martha Welch and a call for stronger enforcement from Emily Howe.
Informational Item: Business Diversity Report
- Staff reported on the Equal Opportunity Contracting Program, including outreach efforts, diversity statistics, and compliance. The city has over 1,300 certified SLBE/ELBE firmsasiest highest year. FY16 construction awards totaled $440 million, with significant participation from certified firms.
- Councilmember Gomez questioned certification thresholds and requested a workshop in District 9.
Informational Item: Purchasing and Contracting Streamlining Measures
- Staff highlighted process improvements, including the P2P project (Ariba), which will be the first fully implemented municipal agency. They also discussed delegated authority, contract pre-approvals, and performance metrics.
- Councilmember Kate asked about the pre-approval process; staff indicated they would refine municipal code language before proposing it again.
Key Outcomes
- Vending Partnership Approved: Motion passed unanimously to authorize the mayor to enter into a five-year marketing partnership with COMPASS Group USA.
- Mid-Year Budget Report Approved: Motion passed unanimously to forward the report and appropriation adjustments to the full City Council for the February 14, 2017 meeting.
- Reserve Policy Changes Approved: Motion passed unanimously to recommend approval of the revised reserve policy (workers' comp 25%→12%, stability reserve increase slowed to 0.25% annually) to the full Council.
- FY18 Budget Priorities Approved: Motion passed unanimously to forward the IBA report and proposed budget priorities resolution to the full Council.
Meeting adjourned at approximately 11:30 AM. The committee will reconvene in March 2017 (date to be determined).
Meeting Transcript
Um good morning, everybody. Uh I'm Barbara Bree. I'm uh the chair of this committee, and I'd like to call the meeting to order. Um, as most of you know, I I represent uh District One. Uh, this is my first time on the city council. Uh, this is my first time chairing a committee meeting. So uh please let me know if you think something isn't going the way it should be, since I am a newbie at this. I would really appreciate any help that you you want to offer. So I'm now gonna call the meeting of the budget and government efficiency committee to order. And a quorum is now present, consisting of committee members uh Gomez, Kate and Sherman, and me, uh the chair. So uh moving right along. Um the committee record of action actions from the November 16th, 2016 meeting will be approved by unanimous consent unless pulled for discussion. Do we have a request to pull the record of actions? Okay. Seeing none, uh, we'll now proceed with the non-agenda public comment. And this is limited to two minutes per speaker, and we only have one speaker. Yes. Uh, we have one speaker today, uh Martha Welch. Good morning, Martha Welch. How do you base a button on false fakes? SAP. Right here, they're doing prison right here. Everywhere uh every time you go, um uh um James Um Um P he says other programs all the time. And we had Emma, he comes here. No, we don't we don't that we don't we don't sap, we don't do that. So it's on the budget. That's not right. How could you pay something you don't use? It's not right when you do that, do you know? If you it's about three million. If you don't use it, only only all on uh tell you have you have computers, and you can tell if you have SAP. It's up to you to tell that if you're honest. If you're not honest, it will go ahead and we'll waste three million. That's what that that that's about you won't tell us, but I I don't think you have it because I've never seen SAP on anything you do here. Now the budget on the calendar is this competing. That's not right. It Goma is going to take anything in budget if you do that because it's not on the budget committee. Or somebody it's not right what you do because uh it's to be like two thousand and five of two thousand fifteen is in the main over there, and everybody could talk about it in the budgets. Right now it's performance audits all we have. And that's okay, but you have to do the financial also. You're cheating us, and we you know, you work for us, you know that and ultimately we're your bosses. And you don't respect us with what you do in the city because you lie and uh your budgets are are not right if you hide it in this committee and not the main over there and a night meeting, all that stuff doesn't happen. It's not right, would you do? You know, uh I've been here for two years working on this project I'm doing with the city, and I'm not afraid what goes on in the city, I'm not afraid what goes on, and I'm gonna tell everything, and I have friends in the government, and I tell what's going on in the city, and people watch this meeting, and they know it's gone. Every meet every meeting, something comes up like this. You know, uh you lie every time, it's always different. Um you don't um if the budget is not true, because you have all these things that aren't true in the budget. Uh I when they had the button in 2005, I saw it adding problems and all that stuff. Um thank you, Ms. Welch.
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