Budget and Government Efficiency Committee Meeting - October 17, 2018

The Budget and Government Efficiency Committee met on October 17, 2018, at 9:00 AM (local time) with Chair Bry, Councilmember Kate, and Councilmember Gomez present (Vice Chair Ward absent). The committee reviewed several items including the FY2018 year-end financial report, a proposed ordinance regulating Segway rental businesses, software and copier contracts, and updates on the minimum wage program and network services transition. The meeting lasted approximately 2.5 hours.

Public Comments & Testimony

• Non-Agenda Public Comment: Martha Welch spoke about library book sales, plastic bag enforcement, and franchise fees. Chris Hart was deferred to item 3 (Sharp copier contract).
• Item 4 (Year-End Report): Martha Welch opposed franchise fees, arguing they burden consumers and claiming the city uses them to pay for services.
• Item 1 (EPAMD Ordinance): Bridget Bazone, a former Segway tour guide, expressed concerns about lack of operator outreach, uncertainty about the code of conduct, weight limit enforcement, and helmet requirements. Kenneth Lippman, a Segway tour operator for 12 years, argued that the ordinance was prompted by a single rogue operator, noted rising insurance costs, and questioned the requirement to name the city as an additional insured.
• Item 3 (Sharp Copier Contract): Chris Hart from Sharp Electronics highlighted past savings and expressed excitement about the new contract.

Discussion Items

• Item 4: FY2018 Year-End Financial Report – The Department of Finance presented final unaudited results. Total general fund resources were $1,434.3M (up $4.5M, 0.3% variance) and expenditures $1,418.2M (down $6.8M, 0.5% variance). The net increase of $11.3M resulted in excess equity of $10.8M above required reserves. Councilmember Gomez questioned fire department staffing (net loss of 22 full-time positions, higher attrition, one academy budgeted), police department staffing (219 sworn officers short, new marketing campaign, declining attrition), and parks water consumption (increased costs due to drought recovery). Councilmember Kate asked about cannabis tax revenue ($2.7M), sales tax variance ($10M delayed due to state software glitch), fire recruitment challenges (8 of 36 conditional offers declined), and contract reclassification ($9M for 101 Ash lease moved to debt). Both requested a list of vacancies by department.
• Item 1: EPAMD (Segway) Rental Business Ordinance – Risk Management proposed an ordinance requiring permits, insurance ($2M/$4M), safety rules, and a code of conduct. The permit fee of $48 is 100% cost-recoverable. Councilmember Gomez noted that only 2 of 7 identified operators were contacted after the draft was complete, and he moved to forward the item to full council without recommendation, directing staff to work with operators to address concerns about insurance requirements, the code of conduct, and lack of prior outreach. The motion passed unanimously.
• Item 2: Spin Effects Software Amendment – The Department of IT requested approval to increase the contract by $221,000 to $461,795 and extend the term by up to seven years for a payroll reporting tool. The committee approved unanimously.
• Item 3: Sharp Electronics Copier Contract – A cooperative procurement contract with a five-year not-to-exceed amount of $6.38M, projected to save over $1M. The new model uses a hardware lease plus low per-page cost. The IBA noted potential future savings by reducing desktop printers. The committee approved unanimously.
• Item 5: Minimum Wage Program Update – The Office of the City Treasurer reported on enforcement and outreach. Since the ordinance took effect in July 2016, the program has handled complaints and tips, with 10 proactive directed investigations launched in FY2019. Outreach included presentations, business walks, and a PSA campaign. Councilmember Gomez praised the improved responsiveness and requested a breakdown of accommodation vs. food service complaints. Councilmember Kate asked about employer outreach for the upcoming wage increase to $12 in January 2019 and confirmed that investigations are typically employer-wide to protect complainant confidentiality. This was an information item only.
• Network Services Transition Update – The Department of IT reported that Zensar Technologies assumed management of the city's network in July 2018. Transition milestones are nearly complete, with priority one incidents down from 5.5 to 0.4 per month and resolution times improved by 55%. About 60-70% of network infrastructure is near end of life, and an 18-month replacement plan is in development. Councilmember Kate and Gomez praised the progress. This was an information item only.

Key Outcomes

• Item 4: Year-End Report – Accepted as information; no vote required.
• Item 1: EPAMD Ordinance – Motion to forward to full council with no recommendation and direct staff to work with operators passed 3-0 (Chair Bry, Councilmembers Kate and Gomez in favor; Vice Chair Ward absent).
• Item 2: Spin Effects Software – Approved unanimously (3-0).
• Item 3: Sharp Copier Contract – Approved unanimously (3-0).
• Item 5: Minimum Wage Program – Information only; no vote.
• Network Services Transition – Information only; no vote.