San Diego City Council Budget Review Committee Hearing on FY2017 Year-End Report and FY2018 May Revision - May 18, 2017
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San Diego City Council Budget Review Committee Hearing on FY2017 Year-End Report and FY2018 May Revision - May 18, 2017
The Budget Review Committee of the San Diego City Council met on May 18, 2017, at approximately 10:00 AM to review the Fiscal Year 2017 Year-End Budget Monitoring Report and the Mayor's May Revision to the Fiscal Year 2018 Proposed Budget. The committee heard public testimony, deliberated on revenue and expenditure projections, and voted on the year-end report.
Non-Agenda Public Comments
- Catherine Rhodes recommended that the council pursue a 3% increase to the Transient Occupancy Tax (TOT) directed to the general fund, and reclassify online travel agencies as hotel operators to capture additional revenue, citing Santee's Proposition U as a model. She argued this would not be a tax increase but a tax diversion from out-of-state agencies.
- Martha Welch complained about poor road conditions on Market Street and other streets, criticizing the city's reliance on low-bid contractors. She also opposed spending $5 million on a special election, stating the money could be used for parks, senior centers, and other projects.
Item 1: FY2017 Year-End Budget Monitoring Report
- Presentation: Financial Management Director Tracy McCraner, Budget Coordinator Vanessa Montenegro, and Deputy Director Matt Vespee reported a projected general fund surplus of $11.2 million, driven by $15.4 million in excess revenue (including a one-time $13.6 million payment from the county for annexation of property near Mount Hope Cemetery) offset by $4.2 million in over-budget expenditures (primarily fire rescue full staffing and police/fire overtime). Major revenues exceeded budget by $12.4 million, while expenditures were over budget by 4.2 million. Risk management reserves were projected to meet policy targets. The report included recommended appropriation adjustments and year-end budget authorities.
- Public Testimony: Martha Welch questioned why sales tax did not decrease after Proposition 30 ended, and criticized franchise fees and insurance company practices.
- Council Discussion: Councilmember Gomez requested details on how the Mount Hope annexation funds would be used for maintenance in surrounding communities. Councilmember Ward asked about franchise fee negotiations with SDG&E (still years away) and noted a housing commission letter recommending a reduction in inclusionary housing fees. Councilmember Kate clarified that the sales tax increase from a one-time correction was not ongoing, and inquired about the Qualcomm Stadium fund transfer. Councilmember Alvarez asked about the unused park and recreation savings that were transferred to Qualcomm.
- Vote: The committee unanimously adopted the FY2017 year-end budget monitoring report.
Item 2: FY2018 May Revision to the Proposed Budget
- Presentation: Deputy Director Matt Besby, Budget Coordinator Adrian Del Rio, and Director Tracy McCraner presented a $14.6 million increase in expenditures and 5.5 new positions, funded by updated ongoing revenues ($500,000), $14.1 million in excess equity, and minor reductions. Key additions included: $2.4 million one-time for arts and culture, $150,000 for a police officer recruitment/retention study and marketing plan, $100,000 for police chief recruitment, three positions in the city attorney's office for domestic violence and neighborhood prosecution, $800,000 for a littering and graffiti abatement pilot program, funding for tree planting under the Climate Action Plan, $10.3 million to pre-fund the general fund reserve, and $215,000 for IT projects in the city treasurer's office. The May revise also incorporated Senate Bill 1 (gas tax) funding, freeing up $10.2 million in the Infrastructure Fund for drainage, facility improvements, and road repairs.
- Public Testimony: Over 30 speakers, mostly in opposition to arts funding cuts. Key speakers:
- Lissa Corona (San Diego Art Institute) requested flat funding of $15.1 million for arts, emphasizing the economic and educational value of the arts.
- Karen Andrus (Coral Club of San Diego) opposed cuts, noting that small arts organizations are disproportionately impacted.
- Alan Zider (San Diego Regional Arts and Culture Coalition) asked for $15.1 million flat funding, noting that every city arts dollar leverages three-to-one private matching funds, and that a cut would result in loss of $9.2 million in total resources.
- Jean Samuels (Spreckles Organ Society) described the importance of city funding for the free public concerts.
- Ann Feige (Community Forest Advisory Board) requested restoration of $880,000 for shade tree pruning, warning of increased tree failure risks and city liability.
- Freedom Bradley Ballantine (Old Globe Theatre) urged restoration of arts funding, citing programs that serve homeless and correctional facilities.
- Jorge Rivas (Old Globe) shared personal testimony that arts programs saved his life.
- Sophie Wolfram (Climate Action Campaign) requested funding for Community Choice Energy, bike lanes, and tree pruning restoration.
- Andy Hanshaw (Bicycle Coalition) emphasized the need to fund climate action plan goals and bike infrastructure.
- Larry Baza (Arts Commissioner) thanked council members and requested $15.1 million for arts.
- Robert McNamara (District 3) supported the mayor's budget as balanced and opposed Proposition H waiving, suggesting an extra $80,000 for beach trash pickup.
- Amanda Lee (ACLU) urged a community-inclusive process for the police chief search, with a diverse stakeholder committee.
- Council Discussion:
- Councilmember Ward expressed concern about the arts still being shortchanged despite the $2.3 million restoration, and questioned the $10.3 million reserve pre-funding (exceeding FY19 target) and the $800,000 for graffiti abatement (which was not publicly requested). He also noted the lack of funding for police recruitment/retention beyond the study.
- Councilmember Alvarez also supported arts funding at FY2017 levels, questioned the graffiti program's origin, and expressed concern about police staffing levels and the need for a public process for the police chief search. He asked about SB1 funds being used for slurry seal and questioned Fire Station 22 funding vs. other priority stations.
- Council President Cole thanked the public and staff, supported the police chief search with community input, and noted that arts and libraries remain priorities.
- Councilmember Sherman noted the difficulty of future budgets and the need to replenish the pension stabilization reserve.
- Councilmember Zaf (likely Councilmember Zapf) highlighted the importance of arts and culture funding, including festivals and parades, and advocated for looking internally for the next police chief to avoid morale issues and unnecessary spending.
- Councilmember Kate asked about franchise fee projections, channel clearings, and minor expenditures for parking citation hearings and CAFR software. She supported pre-funding reserves to ease next year's deficit.
- Councilmember Kercy (Council President Pro Tem) asked about the one-time nature of the arts funding and praised infrastructure projects funded by SB1.
- Chair Bree outlined her priorities: police recruitment/retention (including funding for AB 953 compliance), lifeguard training, and lifeguard staffing at Children's Pool.
Key Outcomes
- The FY2017 Year-End Budget Monitoring Report was unanimously adopted.
- The FY2018 May Revision was discussed in detail; no final vote was taken. Councilmembers will submit budget memos by May 22, 2017, with further prioritization. The Independent Budget Analyst (IBA) will issue a report on the May revise on June 1, 2017.
- The committee will continue to deliberate on the FY2018 budget before adoption.
Meeting Transcript
Great, good afternoon, everyone. Uh welcome to the budget review committee hearings of the San Diego City Council. A quorum is now present, consisting of Councilmember Ward, Council President Cole, Council President Pro Tem Kercy, Councilmember Kate, Councilmember Sherman, Council Member App, Councilmember Alvarez, and myself, Barbara Bree, the chair. We will now proceed with non-agenda public comment. Clerk, please proceed. Yes, thank you. There are seats in the front for speakers. Ms. Rhodes, you'll be followed by Ms. Welch. Hello, Catherine Rhodes, and um thank you for having this meeting here. Um I actually wanted to talk about what you guys are doing either Monday or Tuesday when you're going to do the three percent increase to the transit occupancy tax for the convention center. What I would recommend for you guys, and that takes two thirds vote. What I would recommend you guys to do is just go for 3% straight up to the general fund instead. You'll get a lot more money coming in. And specifically, um, also if you could just add just one sentence to your municipal code and and to do exactly what Santee did. For example, in 2012, Santee did proposition U. And this was just their wording. They did a 4% TOT increase, and they reclassified online travel agencies, and they created 400% increase because that online travel agency. A lot of people book their trips on that, and you're not getting you know, you're you're getting the wholesale rate, not the rate. So much money being wasted. But so what they said is shall the ordinance increase the current the city's current occupancy tax from six to ten as applies to hotels, motels, online travel agency, and campsites. They just threw in that online travel agencies where they had the hotels. And if you do that on Monday, just that one little wording, you will make so much money for the city of San Diego because right now you're you're not um living up to your potential. Um, and what I would recommend is for the IBA to actually talk to the people from Santee and also from the people from Palo Alto, and they can show you that all you need to do is have a public vote and um reclassify online travel agencies as hotel operators, and you can make so much more money without a tax increase because that's not actually a tax increase, it's only a tax diversion from out of state online travel agencies to the city's general fund. Thank you. Thank you, Martha Welch. Please come forward. Martha, I was on market day between 23rd and 26th. There's a new slur slurry. This room doesn't look so bad before that. The roads of about two years ago. There's no stripes either. Why not Broadway? Eric Mark is all cracked up so much, you know. Or are Elgin or uh or Elton Boulevard or Ash. They look so much better. They look worse than that. Why don't you look at uh crypto on uh K USI turcophiles? They tell he's looking for the worst uh cities um roads. Why don't you be there and we want to do those roads because that's very bad. Because if you don't do that, it's gonna look very bad because Turco's not afraid. He's a road saying the worst roads. I've seen on the on the report, some roads have the the cables coming out and potholes, and because what happens, you you you patch it up with asphalt and it goes down and it breaks up very easy because you you're you're the cheapest person you get all the time, so it breaks up because we don't have uh we don't have people on the city doesn't do it ourselves because that's the problem. We saw when the with the with the clean the ropes, we don't have people to do this. We we contract, that's what we do. We don't have we don't have people to fix the roads at all. It's private. We know we know that, and that's why you have the lowest bid. That's why we have the roads in so bad.
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