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Record of Proceedings

San Diego Budget Review Committee: FY2014 Year-End Report and FY2015 May Revision - May 21, 2014

Budget Review Committee — Wednesday, May 21, 2014
BodySan Diego, California
SessionBudget Review Committee
DateWednesday, May 21, 2014
StatusFILED
Video Record
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2:40

All right, good morning, ladies and gentlemen.

2:42

Welcome to the budget review committee of the San Diego City Council.

2:44

We'll call this meeting to order.

3:02

Ms.

3:03

Rhodes, if you'd come forward, you'll have three minutes.

3:05

Ms.

3:06

Rhodes, you have a lot of speaker slips this morning, so I'll just encourage you to sit in the front row, okay?

3:10

Thank you.

3:11

Um hi, Catherine Rhodes from Point Lema.

3:13

And I wanted to come here today because um in June coming up, um I'm going to bring forth a tax increase, uh a TOT tax increase to be a um to um so that would be a five percent TOT tax increase for a maximum of fifty-five fifteen point five percent.

3:33

And that would be instead of the TMD and instead of the um special tax that is going through the validation process that I feel that you you know, you'll never be able to get.

3:42

So I I feel that you're losing money right now by not putting anything on to um onto the ballot for people to actually vote.

3:52

And so um back a while ago I did an analysis of TOT in San Diego.

3:59

And you know, nineteen sixty-five was the only time the public ever got to vote on on the TOT increase.

4:05

And we voted for a four percent increase.

4:08

So all the other increases to get it up to the ten point five percent were only voted on by the city council through City Council resolutions.

4:15

And so this is going to be coming up, I think June 2nd or 3rd or something like that in the rules committee.

4:22

Um, this is coming forward.

4:23

But the other thing I wanted to to mention to you guys is um how you guys are totally losing money um based on not being able to get the um get the full tax on the gross amount of um the gross receipts of how much a room cost.

4:41

Um that's because the online travel agency like Expedia Orbit and stuff like that.

4:46

They um buy the rooms at a discounted rate, and so we only get taxed on that discounted rate.

4:52

But other cities, I I I forgot where it was, I think it might be in Chicago or other places.

5:00

Um they found what they said is if you have a public vote and you change the wording on the vote to say that we can um have the TOT be applied to the gross room rate, you would just save money right away.

5:14

So I feel that you guys are are losing money, and if even if you don't didn't want to put a um an additional five percent TOT increase so you could get rid of the validation lawsuits.

5:24

Um you're just leaving money on the table because um you're not allowing the public to vote.

5:30

And so it's been you know, 1965, so it's been quite a long time since the public had the um had the opportunity to vote on a tax increase.

5:40

And um that's kind of what I want to say.

5:44

I'm coming up um, you know, first of June.

5:47

And I would like somebody to to actually look into it because it it would be a good deal.

5:51

Why are you leaving money on the table?

5:53

The only reason is because nobody wants to go against the hotelers.

5:56

And you could just put it there and you know, you can't have it for a general fund tax because nobody would vote on it.

6:01

But if you say, let's have it for infrastructure or an art, there you go.

6:05

All your fire stations can actually be um paid for.

6:08

Thank you.

6:09

Thank you.

6:10

I have no other requests uh to speak on a non-agenda item.

6:13

Uh so we'll move on and ask if there's any committee member comment at this time.

6:18

See none, I'll ask if there's any city attorney, IBA or mayoral staff comment.

6:22

None.

6:23

All right.

6:24

Well, this morning uh we will hear the 2014 year end report along with the Mays, the mayor's May revision to the FY15 budget, uh which was released yesterday.

6:33

Uh we had uh, I think a great public hearing on on the budget on Monday night.

6:37

Certainly want to appreciate the over 100 people who came out to voice their opinions on priorities on uh the city's budget.

6:43

Uh so thank you to all who are here today as well to continue the dialogue uh and the public input on this process.

6:49

So moving on to today's agenda, our first item this morning is the fiscal year uh year 2014 year and budget monitoring report.

6:56

We have, I understand, a 12-minute presentation uh by uh Ms.

6:59

McCraner, who's here along uh with Mr.

7:01

Vesby and Ms.

7:01

Ms.

7:02

Quarry.

7:02

Great to see you all.

7:03

I'll put 12 minutes on the clock and the floor is yours.

7:06

Thank you.

7:07

Good after or good morning, uh Council President and Council members.

7:10

My name is Tracy McCraner, Financial Management Director, and with me are Matt Bespee and Alia Curry, uh both FM budget coordinators.

7:19

Uh also in attendance today are representatives from all the operating departments, so any questions that we can't handle from you, uh we have representatives here to help with that.

7:29

So we're here today to go over the fiscal year 2014 year-end report, um, the budget monitoring report.

7:36

This is our projection of where we think we're going to end the fiscal year, and now we have nine months of actual activity, and we've worked with each department to project out the remainder of the fiscal year or the last three months.

7:50

Uh this report is going to focus on the general fund, our main operating fund for the city.

Discussion Breakdown — Share of Meeting
Budget█████████████████████████████████████████████53%
Public Safety███████████13%
Public Private Partnerships█████6%
Code Enforcement████5%
Parks and Recreation████5%
Urban Forestry Management███4%
Public Engagement███4%
Transient Occupancy Tax██2%
Public Comment██2%
Summary of Proceedings

San Diego City Council Budget Review Committee Meeting: FY2014 Year-End Report and FY2015 May Revision - May 21, 2014

The San Diego City Council Budget Review Committee met on May 21, 2014, to receive the Fiscal Year 2014 Year-End Budget Monitoring Report and the Mayor's May Revision to the Proposed FY2015 Budget. The meeting included public testimony, staff presentations, and council discussion. Key themes included improved revenue projections, infrastructure investment, public safety funding, and ongoing concerns about hiring, code enforcement, and urban forestry.

Public Comments & Testimony

  • Catherine Rhodes (Point Loma): Urged the council to place a Transient Occupancy Tax (TOT) increase on the ballot (from 10.5% to a maximum of 15.5%) and to change the tax base to the full room rate paid by consumers rather than the discounted rate paid by online travel agencies. She argued the city is losing revenue and criticized the lack of a written budget for the successor agency.
  • Mike Zuquet (CNAU Municipal Employees Association): Opposed the $225,000 allocation to Civic San Diego for planning and permitting in Encanto and City Heights, arguing it triggers a meet-and-confer obligation under state law and that the city has not bargained in good faith. He urged the council to delay the decision until proper negotiations occur.
  • Troy Murphy, Trisha DeAlgin, Ann Feige (Community Forest Advisory Board): Requested funding for an urban forester/tree warden position, citing severe neglect of the city's urban forest, lack of coordination, and missed opportunities for proactive management and fines enforcement.
  • Lonnie Stevens (Teamsters Local 911): Thanked the mayor and council for adding a lifeguard position at Windansea Beach and for other lifeguard improvements.
  • Ann Cottrell (College Area Community Council): Strongly requested a dedicated, ongoing code enforcement officer for the College Area, citing 699 high-occupancy rental properties (mini-dorms) and overwhelmed enforcement capacity.
  • Trish Boaz (San Dieguito River Valley Conservancy): Supported reinstating funding for the San Dieguito River Park Joint Powers Authority.
  • Additional speakers supported urban forestry positions and requested a code enforcement officer for the College Area.

Discussion Items

Fiscal Year 2014 Year-End Budget Monitoring Report

  • Presentation by Tracy McCraner (Financial Management Director), Matt Bespee, and Alia Curry: The General Fund is projected to end FY2014 with revenues exceeding expenditures by approximately $9.9 million. Revenues are projected $23.3 million over budget (1.9%), driven primarily by a $14.1 million property tax surplus due to higher assessed valuations and a $34.9 million one-time RDA dissolution distribution. Sales tax is projected $2.8 million under budget due to slower-than-anticipated growth. Expenditures are projected $9 million under budget due to $6 million in personnel savings (vacancies) and $3 million in non-personnel savings. The projected unrestricted fund balance is $168.3 million (15.7%), above the 14% reserve target. Excess equity of $16.8 million is recommended to be held for potential wildfire costs, RDA dissolution liabilities, and to fully fund the public liability reserve.
  • Council Questions: Councilmembers discussed revenue trends, vacancy rates (487 actual vs. 328 budgeted), sales tax projections, and the public liability fund (claims paid included an $8.7 million Lexing case settlement). Councilmember Coral Zehf noted the need to improve the city's hiring process, echoed by IBA comments.
  • Motion: The committee voted unanimously to accept the report and forward it to the full City Council with recommendations.

Mayor's May Revision to FY2015 Proposed Budget

  • Presentation by Mary Lewis (CFO), Tracy McCraner, and Julio Canizal: The May revision increases the FY2015 General Fund budget by $22.7 million, based on improved revenue projections (higher property tax, TOT, and other revenues). Key additions include:
    • $6 million increase to property tax revenue (county assessment revised to 4.75% growth).
    • $1.4 million additional TOT revenue and $770,000 in tourism reimbursements.
    • $1.7 million reduction in debt service due to delayed bond issuance.
    • $12.8 million transfer to the public liability reserve to reach the 50% funding target.
    • $1.7 million for community projects and programs.
    • $1 million for citywide street light installation.
    • $718,000 for fire rescue protective equipment.
    • $500,000 for brush management (full funding for 452 acres).
    • $150,000 for 25 homeless triage beds for SDPD Homeless Outreach Team.
    • $225,000 for Civic San Diego transit-oriented development plans in Encanto and City Heights.
    • $500,000 for tenant improvements and moving expenses for a new Communications Department.
    • $200,000 for a sustainability program manager for the Climate Action Plan.
    • Additional funding for lifeguards (one at Windansea), brush management, and a San Dieguito River Park JPA ($254,000).
  • Council Discussion: Councilmembers raised questions about:
    • The Civic San Diego allocation and meet-and-confer obligations (City Attorney Chadwick stated the city recognizes its obligation and will begin formal bargaining).
    • TOT projections and the potential to increase arts funding.
    • The need for dedicated code enforcement in the College Area (Councilmember Emerald).
    • Infrastructure equity and prioritizing projects based on need.
    • The creation of a Communications Department and its impact.
    • The funding level for the homeless triage beds and whether $150,000 is sufficient for year-round operation.
  • Council President Gloria emphasized the importance of the Civic San Diego investment for underserved communities and set a timeline: Council budget priority memos due May 23, IBA report June 4, and final budget action June 9.

Key Outcomes

  • The committee unanimously approved forwarding the FY2014 Year-End Budget Monitoring Report to the full City Council. No formal vote was taken on the May Revision; further hearings are scheduled.
  • The council will receive written responses to questions and will consider the final FY2015 budget on June 9, 2014.
  • The committee directed staff to provide additional details on the Civic San Diego proposal, street light locations, and the homeless beds funding.

Meeting Transcript

All right, good morning, ladies and gentlemen. Welcome to the budget review committee of the San Diego City Council. We'll call this meeting to order. Ms. Rhodes, if you'd come forward, you'll have three minutes. Ms. Rhodes, you have a lot of speaker slips this morning, so I'll just encourage you to sit in the front row, okay? Thank you. Um hi, Catherine Rhodes from Point Lema. And I wanted to come here today because um in June coming up, um I'm going to bring forth a tax increase, uh a TOT tax increase to be a um to um so that would be a five percent TOT tax increase for a maximum of fifty-five fifteen point five percent. And that would be instead of the TMD and instead of the um special tax that is going through the validation process that I feel that you you know, you'll never be able to get. So I I feel that you're losing money right now by not putting anything on to um onto the ballot for people to actually vote. And so um back a while ago I did an analysis of TOT in San Diego. And you know, nineteen sixty-five was the only time the public ever got to vote on on the TOT increase. And we voted for a four percent increase. So all the other increases to get it up to the ten point five percent were only voted on by the city council through City Council resolutions. And so this is going to be coming up, I think June 2nd or 3rd or something like that in the rules committee. Um, this is coming forward. But the other thing I wanted to to mention to you guys is um how you guys are totally losing money um based on not being able to get the um get the full tax on the gross amount of um the gross receipts of how much a room cost. Um that's because the online travel agency like Expedia Orbit and stuff like that. They um buy the rooms at a discounted rate, and so we only get taxed on that discounted rate. But other cities, I I I forgot where it was, I think it might be in Chicago or other places. Um they found what they said is if you have a public vote and you change the wording on the vote to say that we can um have the TOT be applied to the gross room rate, you would just save money right away. So I feel that you guys are are losing money, and if even if you don't didn't want to put a um an additional five percent TOT increase so you could get rid of the validation lawsuits. Um you're just leaving money on the table because um you're not allowing the public to vote. And so it's been you know, 1965, so it's been quite a long time since the public had the um had the opportunity to vote on a tax increase. And um that's kind of what I want to say. I'm coming up um, you know, first of June. And I would like somebody to to actually look into it because it it would be a good deal. Why are you leaving money on the table? The only reason is because nobody wants to go against the hotelers. And you could just put it there and you know, you can't have it for a general fund tax because nobody would vote on it. But if you say, let's have it for infrastructure or an art, there you go. All your fire stations can actually be um paid for. Thank you. Thank you. I have no other requests uh to speak on a non-agenda item. Uh so we'll move on and ask if there's any committee member comment at this time. See none, I'll ask if there's any city attorney, IBA or mayoral staff comment. None. All right. Well, this morning uh we will hear the 2014 year end report along with the Mays, the mayor's May revision to the FY15 budget, uh which was released yesterday. Uh we had uh, I think a great public hearing on on the budget on Monday night. Certainly want to appreciate the over 100 people who came out to voice their opinions on priorities on uh the city's budget. Uh so thank you to all who are here today as well to continue the dialogue uh and the public input on this process. So moving on to today's agenda, our first item this morning is the fiscal year uh year 2014 year and budget monitoring report. We have, I understand, a 12-minute presentation uh by uh Ms. McCraner, who's here along uh with Mr. Vesby and Ms. Ms.

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