San Diego Budget Review Committee Meeting: FY20 Q3 Monitoring Report and FY21 May Revision

The Budget Review Committee (BRC) held a virtual meeting on May 21, 2020, pursuant to Executive Order 29-20 (suspending Brown Act requirements), with councilmembers participating via teleconference. The meeting covered two agenda items: the Fiscal Year 2020 Third Quarter Budget Monitoring Report and the Mayor's May Revision to the Fiscal Year 2021 Proposed Budget. The committee heard the city attorney's office make a special opening statement (agenda item one was not formally noticed for questions), took public testimony from nearly 50 callers, and voted unanimously on item one. No vote was taken on item two; councilmembers were scheduled to deliver their budget prioritization memoranda the following morning, with final action set for City Council on June 9, 2020.

Consent Calendar No consent calendar was presented in this meeting.

City Attorney's Statement on FY20/21 Budget (Opening Comment)

• City Attorney Elliott stated the office anticipates reducing or leaving vacant up to 40 positions (over 10% of the office workforce) under the current proposed budget, which would undermine public safety. The criminal division reviews approximately 20,000 misdemeanor cases and about 3,000 domestic violence cases per year. Since the pandemic began, the office obtained 77 gun violence restraining orders (vs. 55 in same span last year), received 1,000+ calls to the Family Justice Center, and provided more than 600 telehealth counseling sessions. The City Attorney's office did not receive any CARES Act funding. Assistant City Attorney John Hammerling described the department's continuous COVID-19 mitigation work (prosecuting cases, responding to victims, reducing jail population), and noted that deputies continue to receive hundreds of new cases, including domestic violence and elder abuse. The chair noted these comments were not formally noticed as an agenda item, so no questions were taken.

Public Comments & Testimony

The committee received one call on Item 1 (Jory Sunyata, a member of the public concerned about FY21 carryovers of $700,000 for the prevention/other funding program and the $1.85 million flexible spending pool). For Item 2, about 50 callers were in queue; the clerk read a written comment (in Spanish) from Esperanza Gonzalez of the City Heights community requesting rental relief, protection of tenants' rights, elimination of late fees, and a translation was provided. Speakers' positions are summarized below:

• Joel Anderson, Haney Hong (CEO, SD County Taxpayers Association): advocated for opening of all San Diego County lakes for fishing and hunting, urging partnering with the County for cost-sharing; considered these activities as naturally available.
• Michelle Anderson, Shelley Bay (San Diego Parks Foundation), and Anne Perod (Dine president), Haney Hong: thanked the mayor and council for having rec center hours restored, and urged restoration of grounds maintenance and recreation hours. They highlighted the Parks Foundation's work to bring free Wi‑Fi to 24 rec centers (it was praised). No negative effects of funding on donations were raised.
• Shelley Bay (Deputy City Attorneys Association) and Rev. Sherry McTeare (Inter-Religious Worker Justice of San Diego County) called to allocate CARES funds to the city attorney's office: Shelley Bay emphasized that city attorneys are essential (FAMILY JUSTICE).
• John Dahlhouse (Friends of Balboa Park) (also numerous other speakers representing Parks Foundation): asked the council to add Balboa Park recreation centers to the list of those whose hours are restored and to reinstate a program manager position at Balboa Park. Multiple speeches honored the mayor and staff for no further cuts to the Commission for Arts and Culture.
• Representatives of the Community Budget Alliance (CBA) and member groups (ACRE, Environmental Health Coalition, Mid-City Can, Youth Will, SD350, Circulate San Diego, Logan Heights CDC, Employee Rights Center, other union groups): demanded a “People’s Budget” including rent relief, tenant counsel—including tenant counseling and legal services, housing for all, a cash fund for undocumented families, internet access expansion for all, no cuts to living wage enforcement, no cuts to workers' rights, and for the police's $42 million CARES fund to be reallocated to social ministries. Multiple speakers requested a—rent relief.
• Margaret Hanney (SD Parks Foundation) and multiple parks foundation board members: cited their foundations (ACCA lauded value) focus (e.g., trees in Bay Terrace, 46 trees). They appreciated the restoration of hours over safety concerns.
• Trees: many speakers (public and forestry board) opposed the proposed 75% cut to tree maintenance (from $2.4 million, but they stated tree budgets). They discussed their need for to be maintained and the danger of decreased maintenance was a concern.
• Several speakers (Joey Sunyata again) praised the Mayor's preserve of Mountain View Library and asked for libraries open 5 days per week, and no cuts to city clerk or city auditor departments.
• Many speakers (community groups) opposed the large allocation to the police improvement in FY21 and called to reallocate those funds to tenant assistance and local housing programs.
• Michael ZugetIda (President of the San Diego Municipal Employees Association) told the council they would be asking to restore all filled positions continued their (45 proposed wipe out restricting). Also suggested utilizing the pension stabilization reserve of $7.9 million.
• The wiener men, sharks, fish and hunting (County Wildlife Federation, Coastal Construction Association) requested open all city reservoirs to all users and to increase fees on all users to use the city funds more fairly.
• Haney Hong (CEO of SD County Taxpayers Association) advocated for no lapses into structural fixes, but to cut fiscal structural deficits, [and to consider], make friends like outsourcing, closing parks, libraries that are less efficient or utilized, and using more stable revenue sources such as property tax and franchise fees.

Discussion Item (Item 1): FY20 Third Quarter Budget Monitoring Report

• The report was presented by Sarah Main (Assistant Director, Department of Finance) and Adam Jones (Financial Operations Manager) highlighting the financial status as of 9 months actual data and projections for the remaining 3 months of FY20.
• Major forecast: revenues projected $50.7 million (3.3%) below budget; expenditures projected $17.7 million (1.1%) below; results in a net deficit of $10 million. The deficit offsets by using that—the $10 million that came from a transfer of prior-year general fund contributions (CARES funds) to various CIP projects.
• Revenue drivers: Sales tax growth rate reduced from +3.75% to −20.95%, causing a $21.8 million shortfall; Transient Occupancy Tax (TOT) growth revised from +3% to −21.2%, causing a $43.5 million shortfall; Franchise fees down $6.1 million (SDGE, refuse haulers, cable) and property tax exceeds budget by $8.9 million.
• Expenditure drivers: Savings in salaries ($3.8 million): hiring freeze put in place in March 2020; offset by increased overtime for police/fire/lifeguards; salaries increased with expected OT. Non-personnel spending $17.6 million under (due to restricted spending, deferred reserve member contribution, and lower city park fees): police NPE deficit of $4 million (safety supplies, crown liabilities, and forensic examinations + housing of misdemeanants); fire NPE deficit $2.2 million; Neighborhood Services Department $3.6 million more‚ — partial offset (£) to operate Operation Shelter to Home and staff/в . ▪ $268.3 million in eligible state and federal relief (propose $10.3 million to Operation Shelter to Home, $5 million for child care, $11.5 million for increased CDBG/EDG/HOPWA allocations and reimbursement of $85 million to public safety and other depts for COVID expenses). ▪ Suggested mitigations: use of excess equity ($27.9 million) and $$$$ (the $10 million from capital projects to general fund) to reduce back to a balance budget while leaving reserves intact.
• CIP: Combined into third quarter report: requests $10 million to be returned from CIP funds to the general fund; includes cuts of $1.7 million to West Mission Bay Drive Bridge and $1 million for other obligations, of which $9.3 million deappropriated from not-for-construction projects (like $— many projects), to be reimbursed from commercial paper issuance in FY21. Priorities reported include $1.7 million to the West Mission Bay Drive Bridge, $1 million to the O&P, and $500,000 for Palm Avenue/ I-805 interchange. • Did any questions arise? (any other procedural tokens: Councilmember Kersey about Hickman Field and all of Grove—the design will be completed on time — budget will be transferred from general fund (with `base bid’ to available for them but not for a full add); new requests to develop the next commercial paper memo in June.
• Council member comments: council members voted with the motion from Montgomery. No citizens speaking at the actual time gave testimony. Vote— unanimous (8–0) yes.

Discussion Item 2: May Revision to the Fiscal Year 2021 Proposed Budget

• Presentation: Matt Vespe (Director of Finance) and Adrian Del Rio (Assistant Director, Department of Finance) presented the mayor's FY21 May Revision. It maintains the balanced budget at $1.6 billion in the general fund. It costs a cumulative negative impact of more than $350 million in FY20/21 combined; uses $268 million in state-federal relief (including $146.1 million reimbursed COVID-19 operational costs and other funds supporting Operation Shelter to Home and Small Business Relief).
• Increased of net $63 million in general fund expenditures, also brings a restores $79 FTE positions including: park and rec centers and pools returning to 60/week (54 positions with $5.6 million); 16 code-enforcement positions (fully reimbursed by fine income); Mountain View Beckworth Library reopened; $15.9 million in new expenditures including larger pension; $2.4 million for debt service (based on updated football stadium sale revenue); changes in market-non-Labor.
• Made $9.2 million in updated reductions: savings on the Veterans Village shelter; an increase to Park Improvement Fund based on decreased Mission Bay lease revenues (charter §55.2); $1 million in savings on decent, energy, and fringe; $1.7 million cut to smart street systems (general fund no longer stagger street lights); cut to 8 werepassed in police department (to be absorbed by staff); reduction for 8 White, okay. but they also eliminated S the limit overhead 1.2: $300,000 in convention center funds (long-term marketing) and Cut(q) to SD Convention Center (Tourism board marketing).
• Revenues: A drop of $83.1 million additional from proposed budget: TOT down $62.1 million (negative 36.7% growth; $177 million in FY20 vs. $270 million prior; cumulative loss $176 million); sales tax down $7.7 million (negative 13.5% growth; cumulative $61 million); all other revenue down $13.3 million. The CARES fund use is $146.1 million (which includes $94 million in reimbursable public safety personnel and pay-roll supplies).
• Funding for COVID-19 (CARES + 2-35) includes $248 million from CARES, $11.5 million CDBG/ESG/HOPWA (approved 5/19), $7.1 million state homeless task array, total uses $268 million: FY21: $39.7 million for Operation to Home Shelter/Home, 1,500 rooms; including exit and durable housing funds; $12.8 million for Small Business Rescue Fund (more than 10,000 small business applied to only $6.1 million grant); and $100 million for reimbursement for public expenditures.
• CIP: also included an increase of $6.4 million – mostly enterprise enterprise for water/wastewater/sewer projects; deappropriation of $4.1 million from gas tax and TransNet revenue (impacting street overlay). About $75 million remains annual for pavement overlay projects.
• Future: The IBA will present its Fiscal Review and FY20 Q3 analyses; the city council will meet to take action on June 9 (corrected from a verbal error to June 19th). The deadline for societal/mayor and Finance May budget submittals is de Bloom of that day.

Additional Discussion (Libraries, Reservations/Hunting, New Departments, and COP-funded CARES)

• Multiple council members asked questions and raised pending suggestions for the FY21 council action–possible additional changes: restoring libraries to 7 days (with street service here point considering limited reopening), restoring the expected budget level for tree-trimming/weed/graffiti and pot-hole crews ($3.5 million), CMU rule but no available (carbon), not to fund 5.5 new fulltime positions for stadium; continuing added on the San Diego Police, rather use and city vest — functions; also not to fund creation of 2 new departments (mobility and others).
• Specific questions gone: for new departments (mobility–Stormwater‐), the single director position was fully loaded using SERS pension (higher annual coad (but ACOO (full added) earlier by IB--). Question about the real growth in police, then; the initial request for Caries money – chief compliance officer Matt Helm provided CARES guidance on public safety using the Expenditure: public safety is flexible. Failure to obtain maintenance.
• The city attorney officer’s total expenses: use of the 50 / 45-person portfolio could cut litigation; assistant of CARES relief – maintained measurement.
• Fire National, Sharkey's Restaurant dated with the TOT; trip budget = July-December (110(

Key Outcomes

• 1. The committee voted unanimously (8–0 by a roll call vote) to approve the FY2020 Third Quarter Budget Monitoring Report and its appropriations, including the $88.4 million in finally executed COVID-19 relief authorization and various interfund transfers. It includes a $10 million return from Capital Improvement Program funds to the general fund, and establishes $5 million requested authority for project lists (reimbursements from commercial paper).
• 2. No vote was taken in at to (№2), instead each council member will submit a budget priority memo (due the following morning on May 22, 2020) to the IBA staff. The final decision on adjustments will be made at the June 9 (not the meeting) meeting.
• 3. The IBA says to be issuing their annual budget report on III