San Diego Budget Review Committee Meeting: FY2019 Budget Review - May 2, 2018

The Budget Review Committee (BRC) convened on May 2, 2018, to review the Mayor's proposed fiscal year 2019 (FY19) budget. The committee received a comprehensive report from the Independent Budget Analyst (IBA), heard presentations from multiple city departments, and took public testimony. The meeting stretched from morning to afternoon and covered the IBA's overall budget analysis, neighborhood services, library, development services, planning, economic development, park and recreation, and the finance branch. No formal votes were taken; the committee instead gathered information and directed staff on follow-up items.

Consent Calendar

• No consent calendar items were on the agenda.

Public Comments & Testimony

• Non-agenda comment: Travis Rugerello spoke about mental health concerns, describing his personal background and feeling marginalized. He said he was tired of feeling like a 'psychotic symptom' because of his identity.
• Neighborhood Services: Vince Mikelanis (District 7 Community Forestry Advisory Board) and Ann Feige (Community Forest Advisory Board) opposed cuts to urban forestry, asking to restore $900,000 for maintenance, $300,000 for planting, and $200,000 for two staff. Sophie Wolfram (Climate Action Campaign/Community Budget Alliance), Joyce Lane (San Diego 350), Angelina K. Sani (Center on Policy Initiatives/CBA), Carolina Martinez (Environmental Health Coalition), and Anna Castro Reynoso (Environmental Health Coalition/CBA) supported the new Office of Sustainability and equity position, and urged CAP expenditures be included in the five-year outlook.
• Library: Rodney Fowler (Local 127) opposed janitorial outsourcing; John Watska, Jeff Olson, Tony C, Maureen Givertz, Wendy Urushima Khan (Library Commission), Joan Reese (Friends of the Library), and Jay Hill (Library Foundation) supported library programming and security funding.
• Park and Recreation: Leslie Dudley opposed inequitable park funding, citing a lack of parks in lower-income areas.
• City Treasurer: Angelina Corsani and Rev. Sherry Metier (Community Budget Alliance/Interfaith Worker Justice) urged funding for community contracts to enforce minimum wage and earned sick leave.
• Other items had no public speakers.

Discussion Items

IBA Overview of FY2019 Proposed Budget

• IBA Director Andrea Tevlin and staff presented their review. The proposed budget has $1.45 billion in general fund expenditures (up 1%, ~$14 million), nearly 7,600 FTEs, and $1.44 billion in revenues plus $12.3 million in excess equity. The FY19 reserve target is 15.25% (~$192 million). Balancing requires $46.4 million in mitigations, including $14.1 million in ongoing service reductions.
• The IBA flagged potential concerns: tree trimming cycle would lengthen from 9 to 21 years, graffiti abatement would cut private-property cleaning, Mira Mesa community plan update would be delayed, and park/facilities maintenance would be reduced.
• The proposed budget funds 21 of 35 council priorities. Key funding includes bridge shelters, navigation center, police recruitment/retention ($18.5 million), Clean SD expansion, arts at $14 million, and capital projects. Missing priorities include urban forestry, fire-rescue resource access, lifeguard increases, and additional DSD code enforcement.
• Key citywide issues: 101 Ash renovation costs rose from $5 million to $27-32 million; bids canceled; new plan due May 23. Civic Center Plaza improvements are on hold. The Othello facility is on hold and used for storage. Homeless services lack a funding plan beyond FY19; operating costs are $14.6 million in FY19. CAP expenditures total $153 million but 80% is Pure Water. Sidewalk funding of $1.2 million covers one-third of one mile vs. a 650-mile need. The pension payment is $324.5 million (down $1.6 million) with an unfunded liability of $2.76 billion.
• The IBA warned of a potential double-digit deficit in FY2020.

Neighborhood Services and New Offices

• Deputy COO David Graham presented. Five positions will move to the new Office of Boards and Commissions, which will consolidate support for five boards and report to the mayor. The new Office of Sustainability will implement the Climate Action Plan, merging staff and adding five positions, including an equity specialist. The energy fund will move to this office.
• Public speakers strongly supported the equity position but opposed urban forestry cuts.
• Councilmembers questioned the office's budget structure, support for 44 other boards, and CAP implementation metrics.

Library

• Director Misty Jones reported accomplishments, including RFID completion and partnerships. The proposed budget adds $1.3 million and 6.37 FTE for new branches. Reductions include $382,000 in contracts. Unfunded requests include $288,000 for branch security and $202,000 for RFID gates.
• Public speakers called for a line item for programming and security, noting $600,000 in city funding leveraged $1.2 million in private donations.
• Councilmembers expressed support for programming and security, with several vowing to prioritize it.

Development Services

• Director Robert Vockey presented the department's performance: ~55,000 permits, 92% on-time reviews, 93% next-day inspections. General fund budget decreases by about $400,000 and 1 FTE. Enterprise fund faces a $4.6 million deficit; proposed fee increases (6% in FY19, 4.5% in FY20, 3.5% in FY21) will be considered by council. Costs include $1.4 million for relocation and $4 million rent for 101 Ash.
• Councilmembers questioned vacant position eliminations and the need for more code enforcement staffing.

Planning

• Director Mike Hansen presented a $9.6 million general fund budget (down $490,000). The department will add $250,000 for a middle-income housing density program. A $200,000 reduction may delay the Mira Mesa community plan update by a year.
• Councilmembers discussed upzoning in transit priority areas, Mira Mesa timing, and the University City plan update.

Economic Development

• Director Eric Caldwell presented. The department will eliminate five intern positions and transfer two FTEs to the sustainability office. Reductions total $267,894, including $90,000 for business cooperation rebates, $50,000 for MAD formation, and a $100,000 swap of CDBG for Connect to Careers.
• IBA noted the safe parking program only has nine months of funding and that there are unfunded requests for a business cooperation position and economic development strategy.
• Councilmembers supported the business incentive program but questioned staffing.

Park and Recreation

• Director Herman Parker reported a $6 million increase and 11.2 FTE for new facilities, plus $898,000 for portable restrooms downtown, $291,000 for three administrative positions for recreation councils, and $133,000 for a senior park ranger. Reductions include four vacant maintenance positions and $155,000 for habitat restoration.
• Public speaker Leslie Dudley opposed park funding inequities.
• Councilmembers were concerned that the three new administrative positions contradict earlier assurances that recreation council work would be absorbed. They also questioned pool maintenance and water budget increases.

Finance Branch Overview

• CFO Rolando Charville introduced the branch, which manages 354 FTEs and a $186 million operating budget, including citywide expenditures.

City Treasurer

• Treasurer Gail Granowich and staff presented a $16.8 million budget with five additional FTEs for cannabis tax collection and auditing. They will outsource audits for $250,000. Revenue projections include $6 million in cannabis business tax.
• IBA noted no additional resources for earned sick leave/minimum wage outreach were included.
• Public speakers asked for community contracts for worker outreach.
• Councilmembers questioned cannabis audit scope, parking citation revenue assumptions, and wage enforcement outreach.

Debt Management

• Director Lakshmi Comey presented. The department manages a $3.3 billion portfolio and proposes a $3.1 million budget. One program coordinator position is eliminated. The department will launch a general fund commercial paper program.

Risk Management

• Director Julio Conisal presented an $11.6 million internal service fund budget. Changes include a net addition for FSA/COBRA services, a reduction in workers' comp temporary staffing, and a reduction of one clerical assistant; the lobby will move to self-service. Excess reserves are used to support operations. The IBA noted $217,000 in unfunded IT requests.

Department of Finance (Consolidation)

• The controller's office and financial management will merge into a new Department of Finance. The FY19 transition yields net savings of $62,000, with $860,000 in staff reductions and $257,000 in additions. The department will have 113 employees and three divisions. Councilmembers asked about the consolidation's impact on reporting schedules.

Citywide Program Expenditures

• Matt Vespi presented the $127 million citywide budget. Key adjustments include a $16.2 million infrastructure transfer, $3.9 million to the TOT fund for arts, $3.6 million for pension stabilization, $2.8 million for bridge shelters, $554,000 for reserves, $450,000 for executive complex relocation, and $300,000 for elections (total $1.8 million).
• IBA noted the elimination of $2.3 million for executive complex rent, elections uncertainty (Soccer City measure could cost $3.4 million to print), and a $4 million increase in deferred capital debt service.
• Councilmembers discussed the sustainability of one-time arts funding and the growing cost of homeless services.

Key Outcomes

• No votes were taken; the committee received the IBA review and department presentations.
• The IBA made several recommendations, including: consider restoring certain service reductions, develop an ongoing funding plan for homeless facilities, include CAP expenditures in the five-year financial outlook, and create a comprehensive city facility space plan.
• Councilmembers requested additional information and follow-up on: 101 Ash, Othello, Civic Center Plaza, sidewalk repair carryover, code enforcement staffing, recreation council administrative costs, urban forestry, and community plan updates.
• The May revise is expected on May 15; the 101 Ash financing plan will go to Infrastructure Committee on May 23 and Council in June. DSD fee increases will be considered in June.
• Due to time constraints, the committee adjusted its schedule, moving several items to the afternoon but ultimately completing all planned presentations.