Hey, Council members, can we get to the dice so we can get started, please?

And welcome to the budget review committee of May fourth, twenty twenty-six.

Our committee liaison Natalie Kessler will go over instructions for today's meeting.

The meeting will continue until the entire agenda is complete.

Non-agenda public comment will take place during the six PM meeting this evening, May fourth, twenty twenty-six.

hearing this evening or during sub-item S additional department review.

This information and instruction is also available on the budget review committee website.

Um excuse me on the budget review committee agenda on the city's webpage.

While the public is able to allow to attend the meetings in person, this meeting is being televised and live streamed on the city's website, and council administration will continue to make arrangements for the public to comment using the Zoom webinar platform.

Additionally, members of the public who wish to provide virtual testimony must enter the virtual queue by raising their hand before the queue closes.

The queue will close when the last virtual speaker finishes speaking or five minutes after in-person testimony ends, whichever occurs first.

This will allow for better meeting management between the two platforms and ensure the council is able to manage and conduct city business.

For sub-items containing more than one department being discussed, members of the public will have one minute per department listed with a maximum of three minutes total.

We appreciate the public's cooperation.

Chair.

Thank you so much.

I will now call the budget review committee meeting of Monday, May 4th, 2026 to order.

Natalie, please call the role.

Vice Chair, Council President Lacava, Committee Member Campbell, Committee Member Whitburn.

Committee Member Von Wilbert.

Council President Pro Tem Lee.

Here.

Committee member Campio.

Here.

Committee member Moreno.

Present.

Committee member Ila Rivera.

And Chair, Committee Member Foster.

Here.

Also attending the meeting today, Charles Modica from the Independent Budget Analyst Office.

Assistant City Attorney Michelle Garland from the City Attorney's Office.

Chief Finance Financial Officer Rolando Charvelt and Director of Policy for Mayor Todd Gloria, Matt Yayagin.

If you're in person, please complete a speaker slip located at the entrance of chambers and place it on top of the box indicated at the speaker's lectern at the front of the room.

Please do so in a timely manner to ensure proper meeting management.

In-person testimony will conclude before virtual testimony begins.

And members of the public can join the webinar by computer, tablet, or smartphone by accessing the accessing the link listed online in the preamble language of the agenda on the city's webpage.

If you need to participate by phone, please dial 16692545252.

The webinar ID is 160-332-6900 pound.

This information is also available on the agenda and will appear on the screen during the public comment period for each agenda item.

Please note that if you're watching via City TV 24 or online, there may be a delay.

Please participate via the audio on your phone and mute your TV or computer when it is your turn to speak.

If you wish to speak on a particular item, wait for that item to be called and then raise your hand to speak by tapping the raise your hand icon.

Or if you're a call on participant, press star not on your phone.

If you raise your hand during a non-comment period, your hand will be lowered.

Chair.

Thank you, Natalie, for reviewing those instructions for the benefit of the public.

A quorum is now present.

We will now move to committee members, mayoral staff, city attorney, and independent independent budget analysts for comments.

Hearing none, we will now take up our information agenda.

As a reminder, these are informational items only.

During our budget review committee hearings.

So no motions are required.

As Natalie mentioned, public comment will be heard after each sub-item.

Sub-items have been categorized to follow areas or branches of the city.

Therefore, set several sub-items include multiple city departments.

For these sub-items, the department official will introduce.

We will hear a presentation or presentations regarding all the departments included.

After each department's presentation, council members will have an opportunity to ask staff questions.

At the conclusion of the sub-item and after public comment, council members will have the opportunity to provide concluding remarks.

With that, we will begin with item one, fiscal year 2027 draft budget department presentations.

Natalie, please introduce sub-item A.

Subitem A is fiscal year 27 draft budget review.

And if you're watching online and wish to call in to speak to sub-item A, please call 1669-2545252.

The webinar ID is 160-332-6900 pound.

Chair.

Staff, please introduce yourselves for the record and let us know how much time you would like for your presentation, and feel free to proceed.

Thank you, Chair Foster.

Uh Charles Monica, your independent budget analyst.

We have two presentations for you this morning, actually.

One from the traditional IBA's branch and then another from our division of race and equity.

Our first presentation will take about 25 minutes, and then we can pause and do a shift over if that works for you.

And with that, I will go ahead and get us started.

So for a presentation this morning, you have me as well as Sergio Alcalde, Amy Lee, and Julian Andelina.

That said our entire staff is here if there are any questions, and we will have staff here for you throughout the BRC meetings this week.

This morning we'll give you a presentation that provides a high-level look at our analysis of the proposed budget.

I will get us started with an overview and then I will turn this over to the team before wrapping up.

We'll start with a quick recap of the roles and processes that we will be working through throughout this budget cycle.

Put simply, the mayor proposes a budget, but it is ultimately up to this council to adopt a budget.

The city charter requires the mayor to take the first step in presenting council with a proposal for a balanced budget by April 15th, and he is then required to offer potential revisions to that initial proposal in order for council to have time to give those revisions due consideration.

Typically, these revisions come in May and are therefore called the May revise, and then council is required to adopt a final balanced budget in June.

This year, the mayor released a proposed draft budget on April 15th.

In the two weeks following that release, my office thoroughly reviewed the budget, met with city departments, asked questions about the proposed budget, and prepared our analysis of the proposed budget to more clearly show what is in the budget, what is not in the budget, and key issues that council should consider as it moves forward through this process.

I would be negligent if I did not thank the staff from the IBA's office, including staff in our division of race and equity for the long hours and late nights over the last two weeks, as well as staff from the Department of Finance and other city departments for meeting with us and answering our questions.

Our review came out on Wednesday of last week.

Now we are about to embark on a week of budget review committee or BRC hearings, where council members will have the opportunity to hear from departments and operating branches and ask questions of those departments as you work through how you would like the final budget to look.

This will be particularly important this year, as we are once again faced with the need for cuts, and those cuts will have real service level impacts.

And also because there are three areas in particular in the budget surrounding recreation centers, libraries, and homelessness programs, where the budget assumes dollar cuts but does not provide details on what those cuts will actually entail.

We'll discuss that in a little bit more detail later in this presentation, but council discussion and input on those items will be crucial.

Many of you will also be holding public town halls to hear from your constituents.

My office is available to participate and present to those town halls as well.

And I'd like council members to know that we are available for any town halls that are yet to be scheduled as well.

Ultimately, the city charter will give this council the authority to amend the mayor's proposed budget when it is adopting a final budget.

So the next months of meetings and deliberations will be critical in determining what that ultimate adopted budget is.

One additional note before we move into the meat of this presentation.

As this council is aware, during last year's budget process, you moved the city's race and equity function into my office, and consequently, our report this year includes additional focus on equity implications of various budget adjustments.

You will find those implications throughout our report, and our division of race and equity will have a presentation right after this one to cover key takeaways from their own analysis.

With that covered, it's worth noting that we are now walking into a second consecutive year where we are facing the need for significant cuts.

In November of 2025, the mayor released his most recent five-year financial outlook, and that projected a baseline shortfall of 88.8 million dollars in FY27.

Since then, increases to the city's pension payment and decreases to revenue growth have increased that baseline deficit to 118 million.

As you will hear in this presentation and throughout the week, revenue growth in the city has slowed, and cuts throughout the city are necessary to get FY27's budget into balance.

The need for those cuts should not be a surprise.

The city has been operating with a structural budget deficit for some time.

Going back to the 2010s, the city papered over that deficit by deferring infrastructure maintenance and suppressing city compensation levels, which generated short-term savings but enormous long-term costs.

And over the last five years, while the city has begun addressing those issues, it was able to do so largely through tapping into one-time resources that are no longer available, which leaves us where we are now.

The need to make significant cuts to ensure that our budget is balanced moving forward.

In the long term, the need for new revenue to address the city's deteriorating infrastructure should be clear, as we will discuss.

But in the short term, the city needs to align its ongoing expenditures with its current ongoing resources.

I want to stress that throughout this process, it will be critical to make progress towards closing our structural deficit so that we can restore more stability to city services, gain the public trust that will be necessary to get public buy-in on the revenues that will be needed to repair city infrastructure, and ultimately to get out of this cycle of needing to identify more and more budget cuts each year.

With that, I will turn this over to the rest of the team to walk you through the remainder of this presentation.

Thanks, Charles.

The proposed budget totals $6.42 billion across several funds.

Well, our office has reviewed the full budget.

Our present our presentation today will only cover the general fund since it's the city's main operating fund and is largely funded by the city's general tax revenues.

So in the next few slides, I'll briefly cover general fund revenues and expenditures included in the proposed budget.

Starting with revenues.

The proposed budget includes $2.24 billion in general fund revenue, which reflects a $67.3 million or 3.1% increase when compared to fiscal year to the fiscal year 2026 adopted budget.

This growth is largely driven as AAE.

Sorry.

This growth is largely driven by a net increase in major general fund revenues due to higher property tax and sales tax collections, as well as a net increase in other revenues, largely due to general fund departments performing more reimbursable work for non-general fund departments and additional reimbursements from TOT and environmental growth funds.

On those reimbursements, while they are shown in the budget as new revenue, it's important to note that in many cases they aren't actually net new money coming into the city, but are instead simply transfers into the general fund from other city funds that are in some cases only possible because of other cuts to those funds.

This is the case with additional general fund reimbursements from the special promotional program portion of TOT that are possible because of the proposed cuts to arts and cultural funding.

Focusing on major general fund revenues, amounts included in the proposed budget are 2.9% higher when compared to the fiscal year 2026 mid year projections, which is in line with inflation.

By comparison, other general fund revenues are projected to grow more quickly, with total proposed budget amounts being 3.7% higher than mid-year projections.

Again, it's important to note that the growth in other general fund revenues is largely the result of transfers and reimbursements from non-general fund departments, essentially shifting existing resources rather than additional revenue coming in.

Taking a look at each major general fund revenue source, property tax is anticipated to see moderate growth and remains the primary driver behind major general fund revenue increases.

Sales tax and transient occupancy tax are both projected to grow at a slower pace, reflecting a cooling in consumer spending and tourism activity.

Finally, franchise fees, which is moving the opposite direction as to the other sources, is down 4.1% when compared to the compared to mid-year projections.

This is due to a decrease in revenues related to SDGE's minimum franchise bid payments.

The proposed budget includes 8,062.9 FTEs for the general fund, which is 198.5 FTEs lower than the fiscal year 2026 budget.

Despite this FDE decrease, both budgeted personnel and non-personnel expenditures have increased.

Total general fund expenditures amount to $2.24 billion, which is $71 million or 3.3% higher than fiscal year 2026.

I'll cover some of the large drivers of the expenditure increase shortly when I discuss programmatic additions.

The following slides will discuss major programmatic additions and mitigations that reduce expenditures or increase revenue.

We note that the following tables and this slides in these slides are not inclusive of all budget changes.

Starting with programmatic additions.

The table in this slide totaled 90.9 million dollars in expenditure additions.

Note that these additions also include $13.6 million in revenue.

At the top of this table is $12.7 million for increased fleet fees, which cover both replacement and usage costs.

Following that is a $12.5 million increase for capital infrastructure debt costs, driven largely by higher debt service on the 2025 A lease revenue bond.

A third item on this table is $7.9 million in interest payments for tax and revenue anticipation notes or trans.

Trans large short-term notes, proceeds of which allow municipalities like the city to cover periods of short cash shortfalls due to a timing mismatch between revenues and expenditures.

Note that the proposed budget also includes $11.6 million in revenue from interest earnings associated with trans.

This amount will be reflected in the table in the presentation in this presentation regarding revenue mitigations.

Other large programmatic additions include a $6.6 million increase for fire rescue overtime, a $5.3 million increase for water services provided to city departments, and additional $4 million to cover higher reimbursement costs to non-general fund departments for SDG and utility and permit inspections within the right-of-way.

Turning to expenditure mitigations, this table totals 66.4 million dollars in expenditure reductions and approximately 237 FTE reductions.

I'd like to note that this table is not inclusive of all budget reductions included in the proposed budget.

The largest single expenditure reduction on this table is the $7 million waiver of the contribution to the climate equity fund, followed by $6.3 million in savings from the police department due to the imposition of a hiring freeze.

This table also includes reductions related to parks and rec libraries and homeless homelessness services.

The proposed budget set the target reductions for all three areas, and departments are anticipated to present these options during budget hearings to meet those reduction targets.

And Amy will briefly cover these options later in the presentation.

Other reductions in this table include city attorney salary reductions, the reduction of transportation's multimodal team that supports the development of bikeways, the reduction of a dedicated bomb squad from fire rescue and the removal of council's community projects, programs and services funding.

This slide outlines revenue mitigations, which total about 44.9 million dollars to help balance the proposed budget.

At the top is 11.6 million dollars in anticipated in anticipated interest earnings related to trans, which I mentioned earlier, is followed by a 10.1 million dollar in TOT reimbursements to the general fund due to the funding reduction for penny for the arts.

Next is $7.1 million from franchise fees, franchise fees for from the second more landfill facility, and there is also a $5.3 million transfer from the EMS fund to the general fund.

I'll now turn it over to Amy to discuss general fund reduction packages, including the proposed budget and council's budget priorities.

Thank you, Sergio.

As Charles mentioned earlier, in three departments, library, parks and rec and HSSD, the proposed budget includes a reduction target as part of budget mitigation without additional details.

Rather, the departments, in consultation with the mayor's office, plan to present options to meet those reduction targets during their budget review committee presentation for council feedback.

As council considers these options, council may select or modify an option or develop a different package of reductions.

The next few slides provide an overview of the general fund proposed budget for the departments with reduction packages.

Starting first with library, where the proposed budget includes $73.2 million in library funding, $3.4 million less than fiscal year 2026.

The proposed budget eliminates youth, family, and equity services, including the former Office of Child and Youth Services and donation matching funds, reduces security services, along with a $4.2 million reduction target that can be met by one of three options focused on adjustments to locations with Monday hours.

These options will be fully detailed by staff during the department's BRC presentation.

Moving next to the park and recreation department, where the proposed budget includes $193.4 million or $4.7 million more than the prior year.

Expenditure mitigations total $12.5 million, made up of reductions in park maintenance and brush management, closures of public restrooms, extended annual maintenance closure periods for most city pools, lower staffing for parks for park rangers and recreation services, along with a $5.4 million reduction target that can be met by one of three options to reduce rec center hours based on council and stakeholder feedback.

Again, these options will be fully detailed by staff during their department's BRC presentation.

Moving next to homelessness funding, where the proposed budget includes $72.9 million for services across HSSD, ESD, and PD.

For HSSD's proposed budget at $57.1 million, eliminations are proposed for the Neal Good Day Center and downtown public restrooms, along with a $3.8 million reduction target that can be met by one of three options developed by HSSD.

Although options include other smaller reductions, only the largest program reduction in each option is noted here.

Under option A, shelter operations would be reduced at 16th and Newton, thereby reducing the city's shelter capacity.

Under option B, the 20th and B safe sleeping lot would close, reducing the city C sleeping capacity.

Under option C, eviction prevention program funding would be reduced by around 71%, reducing the city's prevention services.

Again, staff will fully detail each of these options during the department's BRC presentation.

Next, we discussed council's budget priorities as reflected in the fiscal year 2027 updated city council budget priorities resolution approved by council in early February, and whether these priorities are reflected in the proposed budget.

Council budget priorities that were added to the mayor's proposed budget include funding for opiard treatment beds, lifeguard staffing, CIP funding for pedestrian and bicycle safety sidewalks, lifeguard towers and facilities, fire rescue facilities, and library facilities.

Council budget priorities that were partially added include funding for affordable housing preservation and creation, prevention and diversion resources, avoidance of across the board cuts, traffic calming, street lights, and CIP funding for stormwater.

Of the council budget priorities maintained, these include the housing instability prevention program, LGBTQ plus affirming shelter, weed abatement, no shots fired program, SD Access for All, Lifeguard Wellness Programs, specifically for the Life Guard Division Boating Safety Unit, and ADA projects.

The following council budget priorities were not included in the proposed budget.

Office of the city clerk position, library materials and maintenance, climate equity fund, police recruitment and retention, the lifeguard wellness program for lifeguards not within the voting safety unit, recruitment retention and compensation, unimproved streets and alleyways, and parks and recreation facilities.

Regarding fiscal year 2027 compensation, we do note the city has been in negotiations with its six recognized employee organizations.

Any negotiated compensation increases will be reflected in the May revision.

Reduced council budget priorities include the eviction prevention program, library and parks and recreation funding, climate action plan, equity and parks programming, Office of the City Auditor, Brush Management, Pestrian and Bicycle Safety Multimodal teams, and operational safety for stormwater or operational funding for stormwater.

The proposed budget includes 1.9 million for arts and culture funding, reflecting a $12 million decrease compared to the prior year.

As proposed, arts and culture funding equals 0.6% of citywide TOT.

According to the process outlined in Council Policy 100-03, Council's recommendation to partially fund the Penny for the Arts goal at 4.28% of TOT has not been met in the proposed budget.

Nor has the broader goal of the Penny for the Arts, 9.52% of TOT funding.

Increasing funding to council's recommendation would require an additional $11.6 million, and the full penny for the arts goal would require an additional $28 million in funding.

We know any additional increases in art and culture funding would likely require offsetting reductions in the special promotional programs budget, which likely would have general fund implications.

Next, I will turn it over to Jillian.

Thank you, Amy.

Now we'll cover some key citywide issues, beginning with a discussion about classified and unclassified positions.

The proportion of classified and unclassified positions and the growth over the last decade in management positions has been a topic of increased discussion.

While there's still some classified positions that do supervisorial work, some unclassified positions that do not.

As a general shorthand, we can look at classified positions as frontline positions and unclassified positions as management positions.

Using that shorthand, if you look across all budgeted positions in the city, 92% of those positions are classified, which makes the city's ratio of frontline positions to management positions 13.9 to 1.

On a macro level, this ratio is in line with various best practices for management to staff ratios, which generally call for ratios of 5 to 1 to 15 to 1, depending on the size and complexity of an organization.

If we look at all positions across the entire national economy, we see a ratio of 11.5 employees to every one management position.

And consequently, the city's ratio of 13.9 frontline workers to every one management position does not seem unreasonable.

That said, it's worth noting that the proposed position reductions in the budget fall more heavily on unclassified ranks than they do on classified ranks, with unclassified positions representing 6.6% of the city's workforce absorbing 37% of proposed position cuts.

This seems to reflect the sentiment that frontline positions should be preserved when possible.

Our report also contains information on proportions of unclassified positions in each department, which can significantly vary.

During the upcoming budget hearings, council may want to request more details on departments with lower classified to unclassified position ratios.

Moving now on to the climate action implementation, the climate action plan implementation.

The proposed budget includes a $248 million net increase in CAP expenditures, which is a decrease of $83 million from fiscal year 2026.

There's almost 110 million dollars for direct support, mostly from non-general fund sources.

Given the known structural deficit, funding requests from some CAP-related departments were limited during budget development, and thus the unknown, it's unknown how large a potential funding gap exists for implementing the CAP.

However, as our office has noted in reports in the past, the best way to advance the plan, as long as implementation of the CAP does not result in other reduced services, is by resolving the structural budget deficit and the infrastructure funding gap.

Additionally, we want to note that due to the budget deficit, some CAP-related funds are not fully funded.

The $7 million contribution to the climate equity fund is proposed to be waived again this year, but we do note that there's still $11 million remaining in CIP projects that will continue to be spent down as projects progress.

Additionally, the Energy Independence Fund is not proposed to receive $89,000, and its $118,000 fund balance is swept.

As for the city's pension payment, it totals $563 million in fiscal year 2027, which is an increase of $30 million driven by higher salaries than assumed by the SDSURIS actuary.

The general fund portion of this payment is just short of $400 million, making up about 18% of general fund expenditures.

And now moving on to the city's infrastructure funding needs.

The most recent five-year CIP outlook projects a $7.8 billion five-year funding gap, which is primarily driven by stormwater infrastructure needs.

The continual deferment of needed capital infrastructure in stormwater, especially in flood control drainage infrastructure, has resulted in a heavy reliance on emergency projects.

$30 million out of the $52 million proposed in the budget is set aside for emergencies.

Because emergencies are costly and inefficient, establishing a dedicated and ongoing funding source for stormwater is critical.

Decisions made in the operating budget that continue to defer operational maintenance also compound capital infrastructure shortfall.

For example, the proposed budget provides funding to open new parks and rec facilities, but reduces the facilities maintenance budget.

Finally, given the city's funding constraints and funding restrictions within the CIP, even though the council policy 800-14 guides project prioritization, the city must ultimately prioritize existing projects over new to mitigate project delays and impacts of new infrastructure on the operating budget.

This limits progress toward broader council priorities.

And finally, moving to the structural budget deficit.

A structural budget deficit means the city's ongoing costs have persistently been higher than ongoing reliable revenues.

One-time resources are often relied upon to bridge the gap, but they aren't sustainable.

This is both a decades-long issue and one that's more recent.

The city has pursued sales tax measures both in 2010 and 2024, but both efforts failed.

After the 2010 attempt, the city froze compensation levels and deferred infrastructure maintenance to balance the budget.

For the 2024 effort, the city already had a significant budget deficit, primarily driven by the use and subsequent expiration of significant one-time COVID relief funding, which was spent on ongoing existing and new activities.

So the measure would have addressed that, plus been able to finally make progress on infrastructure.

When that one-time funding ran out, it created a hole in the city's budget much larger than regular revenue growth could fill, leading to the painful budget reductions in both last year's and this year's budget cycles.

The table on this slide showed the city's historical general fund structural budget deficit, but the way it's been calculated has shifted over time.

In some years, when the city has paused making reserve contributions, those skip payments were counted as a one-time budget resource.

In other years, they weren't.

For consistently for consistency, the table shows the structural budget deficit, both including and excluding suspended general fund reserve contributions.

In both cases, structural imbalances persist across all years.

We recommend the city adopt a consistent approach that includes suspended contributions as a one-time resource and budget documents.

Ultimately, closing the structural budget deficit may be the single most important thing the city can do to ensure successful operations in the future.

Now I'll hand it back to Charles to finish our presentation.

Thanks, Jillian.

So I will wrap up with a few takeaways.

It's important to note as we go through the next week of BRC hearings and really the next months of the budget adoption process that there are countless different ways the proposed budget could be modified and balanced with different combinations of cuts or even some potential revenues as options that council can pursue.

That said, I want to stress that there is no scenario where a balanced budget can be adopted without significant cuts, and the need for cuts today is a result of many things.

That includes the short-term decisions with long-term costs that were made decades ago, but are also includes the structurally imbalanced budgets that were adopted over the last several years that relied on one-time resources to fund our ongoing expenses.

To that end, it is critical that the budget that we work towards adopting in June makes meaningful progress towards closing or eliminating the city's structural budget deficit.

Achieving structural balance will be necessary to avoid a cycle where every year more and more painful cuts need to be identified to put the city on better financial footing moving forward and ultimately to build the public trust and buy-in that will be necessary for the city to begin addressing its many long-deferred infrastructure needs.

That wraps up our portion of the presentation.

The team and I are happy to take questions or to turn this over to Kim Desmond with the Division of Race and Equity to talk you through the equity implications of the Post Budget.

Thank you, Chair.

Um thank you for that.

We will move to have Dre give their presentation and then we will open it up for uh council member comments and questions.

Thank you.

Good morning.

In front of you, you will see the agenda that guides, as Charles mentioned, the first time equity implications showing up in the IBA report, and we will talk through our approach around how we connect that to our technical equity plans.

We'll talk through some key ways in which the implications were formatted into themes, and then we'll contextualize what this means for compounding disparities in D489 as budget decisions are made.

So want to start out by setting the stage around when you look at equity, it's looking at an approach where you're allocating resources that address a clear gap, disparity or deficiencies.

It's important to note that not all districts are the same.

They're not all starting at the same place historically.

And so when you're making decisions, it's important to look at equal decisions, will not address the historic inequity that has incurred in the 489, and also in some areas of district number three.

And so just want to make sure that we are conscientious of inequity is compounded when you're making decisions within neighborhoods that has already experienced historic disinvestment.

And so with that, we also have gaps, and so those gaps include our assets.

So this could be like our levies, an opening or a breach.

So equity occurs in all different ways, not just in the way that we interact with our neighborhoods, but also our infrastructure.

Equity also impacts our employee workforce.

As decisions are made to reduce our workforce, we most certainly see those impact to our employees, which include higher work burdens for folks who are still here carrying out day-to-day duties, and more notably making sure that we talk about equity in terms of the way that disparities impact opportunities to access across the districts.

When we look at equity implications at each section of the department summary, you'll have a list of the implications for either the reductions, the adjustments or the unfunded requests.

And with that, the way that we define equity implications is looking at progress towards how we address said disparities, gaps, our deficiencies by using our key performance indicators.

Think of a think of the TEPs as a repository to address the way that we address disparities on a continual basis operationally.

So TEPs can be used as decisions are made, ways that we continually look at our fiscal resources, are as Chair Falser will say, our book of business.

There are always opportunities to address gaps, the efficiencies, and disparities in the way we do our work operationally.

So let's not forget about that part of the work as well, as we are looking at the decisions that are in front of you this entire week.

As a reminder, um, with volume two, we track equity highlights.

These are things that are showing our progress.

We look at opportunities with departments.

Our team provides ongoing coaching to not just look at the way in which you may have budgets to address your decisions, but there are other opportunities to address the way that gaps show up in our operation on a daily basis.

And of course, at the end of each section, you're gonna see the enumeration of equity implications for those three categories.

It's important to note that the work that we do with our departments, it's not to be looked at in a silo.

Our work is interconnected in ways that are very dynamic.

And so essentially, when you make decisions to reduce maintenance within general services, that shows up in the way in which our folks in our neighborhoods experience our parks in our recreation centers.

So when making decisions, it's looking at how connected our departments are across the board.

So as a result, these categories are deemed or themed in a way in which when you make decisions around more overtime allocations, then that creates opportunities for transportation to address backlog, right?

And the same thing when you make decisions around our general service department, it impacts our facilities in a way that we're able to respond to those requests.

And so these thematic categories allows us to look at equity implications within themes so you can see our work without being in silos.

Now it's not exhaustive, I will say that.

And so with that, that's objective number three.

So the way that you would follow this is that you have a goal, you have an objective, and then the budget reduction would impact the ability for that department to monitor pollutants in our water, and then you get the equity implication.

And so this example kind of walks you through how each department has a goal and an objective, and then you overlay the equity implication to that reduction.

And so for objective number three for stormwater, we most certainly have an implication there around what that may mean in the way in which we connect the analysis of identifying pollutants in our storm channels.

In example being with the reduction this year, 175,000, and it's gonna impact the ability to do water quality improvement plans around that particular objective that you saw on the screen before.

The same thing for the reduction in the way in which we monitor pollutants in our water body.

And so this shows you how transportation, they're very methodical at how they use KPIs to attract where they're at, and the reduction of that will impact their ability and delay their ability to make sure that we are responding to pollutants in our water systems.

Another TEP goal for the stormwater department as an example is actually objective number six.

In this budget, you see uh elimination of the think blue education program, and that's really used as a way to educate the public around ways to reduce pollutants in our storm channels.

And so that's another example where when you're reading the equity implications, it's in the context of those technical equity plans, objectives, and goals.

And so the reduction to the Think Blue program, you'll hear more from my team around what that means for providing information and resources to our neighborhoods and really looking at how we can mitigate the causes to stormwater pollution.

And there are other things, as you can see here, I could have highlighted a lot of departments.

You're gonna hear my team talk about them after every presentation, but wanted to also highlight the additions as well to our levy maintenance.

And so this is required for our accreditation, and so our team looks at the equity implications around additions as well.

But it's important to notate that that's just the part of a part of the conversation.

We want to look at at an ongoing basis, how we continually manage our levies, not just the San Diego River, but also the Tijuana River levy as well.

This is a huge one, I would say, in regards to the wetland channel clearing.

So this connects to a TEP objective for stormwater.

So you do see a reduction, which we all experienced this with the um floods, in that when you have a reduction of this sort, awesome things will grow in our storm channels, and later on, it will decrease the department's ability to remove those items.

And so this one is the equity implication that we experience the need to do some emergency declarations around clearing those channels.

So this is another one that we see the flooding occurred in historically red line neighborhoods, so making sure that we see the connection of how decisions of this sort impact our high flood channels, which are in our historically red line neighborhoods as well.

So want to make sure that we are putting the impact to this one in context to the department's inability to continually maintain those channels.

General services, you're gonna hear a lot about that in terms of the 13 vacant positions that are up for reduction and what that means across all of our facilities.

It's voluminous given the need to address the ways in which our libraries are wrecked and even our own facilities that we're sitting in currently.

And so just wanted to highlight that a part of the TEP for general services is to make sure that they're providing that to all of our departments.

So this reduction is a huge one in terms of how we're able to maintain leaky roofs and all the things, and quite adamantly, those costs become public liabilities later on because things keep breaking.

So looking at this category, we see the implications here around with our team, my team in the IBA, you're gonna hear us talk about these implications throughout every section in terms of what that means for our facilities.

The same for our fleet vehicle infrastructure.

You see a reduction in this category as well that impacts our climate action plan strategy in terms of converting all of our fleet vehicles to electric or zero emissions by 2035.

So wanted to just walk you all through the themes that you will see in this report.

So, council, as you're reviewing this, you're reviewing the budget additions, reductions, and unfunded requests in the context of the TEP objectives for each department.

And we're thinking about ways that we can mitigate those operationally on an ongoing basis.

And Councilman Capill, I'm glad you are here in terms of the difference in gaps, disparities, and deficiencies, and so that's laid out so we can make sure that we're having those conversations.

When equity work is done at its highest, it's understanding that D4, 8 and 9 have higher concentrations of poverty rates.

I want that to sit in this space for a moment in terms of any additional reductions actually compound currently historic disparities in those recreation centers.

And so essentially, if more reductions are made to those locations in those districts, you see compound disparities for folks who have already been existing in the level of inequity for adamantly, Councilmember Moreno, thanks to your championship of the study, the programming audit, it's a real reality.

So wanted to put it into context is that we don't want to compound the issue that folks in poverty are experiencing and has experienced.

There are some neighborhoods that are very unique.

So when looking at this, you want to maybe narrow in on the neighborhood level, the census track to see how those rec centers are nuanced in those areas.

And in closing, some citywide equity implications that council may want to consider is title six responsibilities.

So council may want to consider the creation of a language access policy determined the creation of language access plan.

So you see a transfer in its position from our DOF department to our P and C department, and there's a workload implication for our staff.

The disparity study, council may want to consider how the timeline for how regularly the study should be conducted.

You don't see a request this year for that study, but we want to maybe think about operationally what is the cadence for that.

Waiver of the climate equity funds considering in reviewing past data as we see a continual allocation to reduce those funds to look at the way in which how those funds have served us in our um structurally excluded disinvested communities.

We're gonna have robust conversation around the cultural affairs grant program.

So council may want to consider what is the policy that entails and dictates threshold for awarding targets to organizations based on their annual um earnings.

Opportunity fund, we may council may want to consider the continual funding difference between rec centers in the northern and southern areas.

And if there's decisions that are made to keep some recreation centers open, then how does that fund really serve the disparities in the northern areas?

And so council may want to consider that.

Last but not least, we're making a lot of decisions using the climate equity index.

So we might want to consider how that tool may warn an update to make sure we're tracking the right and concise indicators to measure progress.

And as you're going through today, feel free to pull me or the team here to look at the ways that TEPs can be used on an ongoing basis to eliminate gaps and disparities.

That's all I have.

Look forward to any questions.

And thank you so much for the presentations.

We will now go to council member to the council members for questions or comments.

We will begin with council member Ilo Rivera.

All right, thank you, Chair.

Uh Charles, thank you, um, Gillian, Kim, um, and everyone from the IBA who uh who worked on this.

Um I appreciate the consistency, Charles.

I mean, uh a lot of what we're hearing today is um exactly what you said you would be telling us a few years back if if certain changes weren't weren't made.

Um and I know that was the continuation of actually uh decades of certain uh points that the IBA has made.

Um I want to just say thank you for the consistency and the honesty, and that's incredibly important.

Um of the the I think the takeaways for me as I'm listening and have listened is that there's no easy outs this year.

Um and there's going to be really difficult decisions that need to be made that have um you know significant impacts.

And there's just there's there's there's no easy way to do this.

Um in that conversation about there being no easy outs, I think sometimes we can look to um what maybe low-hanging fruit but in a small quantity and hope that that low-hanging fruit will amount to a lot more than it actually can.

And and I I I think we're starting to hit I want to ask, because it seems like we're we're hitting that point when it comes to middle management that there were meaningful savings to be had.

Um it we should take a close look at that.

And there's only so much there on that branch to pull from without having significant operational impacts.

Uh Jilly and I appreciate you contextualizing what the ratio looks like in comparison to other government agencies and I think you private and public entities, that that that 11 percent that include private as well.

That's across the entire nation, which includes both public and private entities.

Yeah, and and we're at a third about 13 to one.

13.9 to one.

13.9, so almost 14 to 1, and then it was 11 to 1 across all the time.

With the general caveat that we're using shorthand to say unclassified is management and classified, it's not um so that's really important to note because I again I think there's this um we can find something that's meaningful and needs to be looked at, and also at the same time it can be true that there's no easy outs, that there's there's you know that one move is only going to get us so far.

Um and I think that was kind of driven home to me in a look within the last couple weeks.

I was at a community event and a couple of city employees um approached me because their manager is one of the managers who's going to be cut, and they were talking to me about the the work that that person does on a day-to-day basis and what that would mean for their ability to do their jobs, which is very very like you know, frontline and public facing.

So Jillian, if I if I heard you correctly, you did encourage the council to look at which departments there's still disparities across departments.

Um can you give us some guidance as to where we should be looking?

Um what should yeah, where should we looking for for those disparities?

Yeah, I think um so our write-up in the unclassified classified position section uh calls out a uh several departments.

Um there's panda communications, um, there's HSSD, um, there's human resources, there's also council, uh you know, there's independent offices as well that have um a higher ratio of unclassified.

And and uh so that that this is where the shorthand becomes kind of important to like kind of dig through the the nuances because there's folks who are unclassified but are doing they're doing the work.

They're they're not just sitting behind someone's shoulder and watching people do work.

Um which I think is is the when we when we lean too far into this narrative, we are giving the impression to folks in the public that there's a whole classification of workers at this city who are standing around watching other people work.

Um and again, we need to be as efficient as possible, but I also think that we need to not pretend as if there are easy ways out of this or that there are um lots of folks who aren't doing real work.

That being said, I do think that there's an important note, even in those departments that you just mentioned.

We've raised questions in previous budget years about what work we as a council or the public can actually understand is being done there.

I'll use communications as an example.

We've had this conversation before, and I think on multiple council members have um have raised this concern that we don't necessarily know how to explain to the public what communications department does that they can see and feel and and makes their lives better.

So uh I I'll just say that I appreciate that guidance and we'll definitely be looking to dig in over the course of this week um with the caveat that I know that we could completely eliminate all those positions and if correct me if I'm wrong, Charles, that would not solve our structural budget deficit, correct?

You would still have more cuts you need to find.

Yeah.

Or revenue to find.

Ideally, yes, but realistically there's not going to be a large pot of revenue to save the day this year.

In this cycle.

Yeah.

Correct.

Um well, I again I appreciate that.

Kim, thank you for um for what you laid out.

Um I think I appreciate uh especially appreciate the last um the last bit where you break down that low to moderate income presence in different districts.

I think sometimes when it sounds like a couple of us or a few of us are unhinged about the impacts that certain cuts will have in our district.

Um the only reason it seems unhinged is because there's a disconnect between the way people think of San Diego as a whole and what it looks like in reality in parts of the city.

Seven in ten people in my district fall into the in the category of low to moderate income.

And so the um any proposed impact that will have a disproportionate impact on low to moderate income people, that means it's gonna hit 70 percent of my district.

Um that's why I'll just speak for myself, I push so hard back on those proposals.

Um these is it's not abstract, it's it's a significant majority of the people who I represent.

Not to mention it's the people who have been the most left behind for the by the city for the longest period of time.

And that the and that there was intent behind leaving those folks behind in the past.

So thank you for pointing out what you did, Kim.

I think that I'll wrap up here, Chair.

The directness that you provide that information with is super helpful.

And the impacts of the way that we've been doing things are felt in our community.

So thank you again for all the work that's done.

Thank you, Chair.

Thank you for those comments.

We will now go to Pro Tim Lee.

Thank you, Chair.

Um thank you to the IBA and the Department Division of Race and Equity for the presentations.

Um I think turning to you, Charles, just to get a broader understanding.

Given the structural deficit we're already facing, can you walk us through in the next 12 to 24 months what you would anticipate to be the largest potential external risk factors that we should be keeping in mind, especially given the volatility that we're seeing with economic conditions, gas prices in fact impacting tourism, etc.

Sure.

There are uh two large, almost enormous risk factors that I would identify.

One is uh external and that is kind of nationwide, and one is still external but more internal to the city of San Diego in particular.

Uh the large macroeconomic issues are if the country runs into a recession, uh that will mean that our major general fund revenues those ongoing revenues that we rely on year after year to balance our budget would go down.

And unless our costs go down, that will require additional reductions.

The other um more significant immediate potential uh is frankly a ballot measure that's currently being circulated to set the city's trash collection fees to zero in 2028 and 2029.

If that were to happen, the city's obligation to pick up trash from single family homes would not go away.

But the revenue that would be generated from a trash fee would, and that would have an impact of depending on where you land on if we reduce services to a bare minimum or if we want to continue our current plan to improve our collection rates, uh, it could have an impact of up to 150 million dollars.

Uh I want to be clear that's a very substantial amount.

That's almost twice what we spend on libraries in any given year, somewhat close to what we spend on streets in a given year.

It's more than we spend on our stormwater infrastructure in any given year.

If the general fund needs to make up that difference, then we need to be having a very different conversation next year, which isn't just where are our cuts to a department going to do the least harm to that department, but which department should we just not fund, frankly.

Um that last bit is a little bit of editorializing on my part.

You could decide that you want all departments to take a haircut.

Um it would be a very severe haircut, they would all be bald, but ultimately you'd be setting up departments to not be able to provide the services that you are expecting them to provide, and I don't think that that would be fair to them or the public.

Sure, the chair is asking what's wrong with being bald, but that's okay.

Uh I should have looked at the same thing.

I'm just looking in the same direction here, so sticking out.

Yeah.

Um I I think that's helpful to hear.

I think we all see the uh the major external factors right now from a economic standpoint, and that certainly weighs on all of us.

We've heard that year over year, but this year in particular seems to have been especially volatile.

Um about what's potentially coming in November I I think is something that most folks in the public are still fairly unaware of.

Um I don't know if this would be relevant for the May revise, but I if if there's some possibility to get a better understanding of the potential range of impacts that that could cause, I think that would just be helpful for us to have in the back of our minds, especially as we're discussing how to deal with the cuts that we're already facing this year.

And I would just note that I expect that will be part of the conversation when the environmental services department is presenting their budget.

Thank you.

Um other item for analysis that I'd like to ask if you could help to provide in the next report um following the May revise is uh an analysis of the budgetary reductions that this council uh incorporated as part of its final budget before FY26, uh especially those that were not implemented operationally.

Um it would be helpful to have a full summary of what what components of that were simply re-incorporated into the FY27 budget as additions.

Um I think we're gonna dive fairly deep into everything else, and so I think those are the areas that I've got for you just to start.

So thank you.

All righty, thank you for those comments.

Not seeing any other members on the lights.

Um, I will bring this.

Um well, I guess why don't we do this?

Why don't we move on to um not a or I'm sorry to public comment?

Thank you, Chair.

The public comment period for sub item A is now open, and we have received five speaker slips from individuals in the in council chambers, and there are six hands raised in the virtual queue.

Each speaker will have one minute to speak to subitem A.

We will begin with Michael Zuquette, and you've been seated time by Karin Wilson.

Corrine, if you could raise your hand, please.

So you'll have two minutes to speak to sub item A.

Good morning, honorable chair, members of the city council, Mr.

Mayor, Michael Zuquette, representing the San Diego Municipal Employees Association, joined by my uh colleague Corrine Wilson, who uh who you all know and will be engaging with you this week and in the coming weeks.

Um, wanted to um reiterate a lot of the talk that's already happened about the need to structurally balance this budget.

Um I want to appreciate the mayor and the council for the work you did on that front, both on the cutting and revenue side last year, the work that the mayor has done in this proposed budget and the work you're about to do to bring us to the most structurally truly balanced budget um in any uh memory at the city, and that is what needs to be done.

Uh painful as it is on many fronts.

Um, and as Councilmember Ila Rivera said, it doesn't seem to be a lot of um obvious easy outs or low-hanging fruit left.

So we're we're we're down to the um to the rough stuff.

Um, but it is what needs to be done, and we ask that you uh keep that in mind throughout this process as a lot of people object to a lot of cuts and they have a lot to object to, but at some point um this is what needs to be done.

If everything's a priority, nothing's a priority, and so uh we look forward to engaging with you uh to to finish that job.

Did want to recognize um uh the chief financial officer Rolando Charvel and by extension Mayor Gloria.

Um these last couple of months, at least for us, has been in sort of an unprecedented uh process with this administration or any other in terms of engagement and communication on these budget options, and I believe uh that's been happening with with many of us, and it has helped underscore how difficult it is and the choices that are ahead, and uh so we appreciate that.

Hopefully that's helpful to your process going forward.

Thank you.

Thank you.

Jacob Edwards, you'll be followed by Johnny Charming and Marco Briones.

Thank you.

I'd like to say you all did a beautiful job of putting the budget together.

Um question is is where is our mayor?

Where's Todd Worrium?

Um, I think it's his presence is very important.

I'd like to say there is no easy outs.

The cuts across the board are necessary.

But we need to better prioritize.

What departments need haircuts, of course I do, but uh what departments don't.

That there's some departments well overstaffed, but we should not be making cuts in our police department.

That is a hiring freeze.

That uh we need to more strategically cut where needs to be cut and not have a hiring freeze on our police department that is to serve and protect our citizens.

Also, we need to confront some serious things in our city.

The mafia infiltration is gonna go.

Thank you.

This does conclude your time.

Thank you.

Johnny Charming.

My apologies, just for a point of clarification.

Mayor Gloria is here.

He is present for the hearing, so I just want to make sure we all understand that.

Thank you.

Johnny, please.

Oh, we could go.

Let's go to Marco then, Marco, please.

Thank you.

Good morning, all.

My name is Marco Buronis.

I'm the political director of the San Diego and Imperial County Labor Council.

We represent over a hundred unions and two hundred thousand working families.

I want to thank Mayor Gloria, his team, and these council members here today.

I know this is not an easy process.

We want to thank the IBD IBA in particular for giving us such clarity in how we got here and bringing us back to the message.

Promises to further coming due.

San Diego is not alone in feeling the sting of an economy that is working for some, but not all.

We stood here and walked the streets countless times, advocating numerous times for revenue streams and creative solutions like Measure A, so that those doing exceedingly well pay their fair share.

We understand that we cannot operate at a deficit and cuts must be made.

We're regulars in these halls fighting for our members.

We view them as essential to their communities.

We ask that our voices and their voices be considered in this process and stand committed to helping us find a path forward where our most vulnerable communities do not fall further behind while others thrive.

Thank you very much.

Thank you.

Johnny.

Do you know if I have 90 seconds or 2.5 minutes?

You have one minute, please.

Okay.

Thank you.

All right.

Um hi, my name's Johnny.

I'm a resident of San Diego.

Um, I've been listening this morning.

I hear that there's no resolution without cuts.

And I hear that those cuts compound historic disparities.

I hear that every department is interconnected.

I agree with all of it.

But I'm not hearing alternatives, and they exist.

We're here, uh, we're facing a one 118 million dollar deficit, part of a projected billion dollar shortfall through 2030.

We used one-time COVID relief to buy time.

That time is up, and we don't have any new solutions to show for it.

The proposed response is to cut arts, reduce library and rec center hours, and restrict access to our parks and public spaces.

Well, the only departments getting more money are police and fire.

We're defending, we're defunding everything that keeps our people connected, creative and well, and spending more to manage what happens when they're not connected, creative and well.

And that's actually a self-destructive cycle.

We have proof.

The city projected 15.5 million dollars from Balboa Park Parking.

The actual revenue was about 2.2 million dollars.

Attendance dropped 34%, restaurants lost up to 40%, museums expect a 10 million dollar loss.

Thank you.

I do have solutions if you want to hear the models.

Thank you.

Thank you.

We'll take all comments to you can email councilcommitte at Sandiego.gov with additional comments.

We will now move to the virtual queue.

There are eight hands raised in the virtual queue, and I've started the five-minute timer.

We'll begin with Andrea Ebbing.

Please unmute and begin.

Hi, this is Andrea Ebbing.

I'm not sure why we're funding more for opioid beds when we have leaders who are driving OPI distribution.

We might want to look at um the total dollar amount that the lack of prosecutions for real actual felony crimes has actually cost us all the homelessness it's cost us, all of the malfeasance that takes place from the office of the district attorney and the damage that she's done throughout this county.

She's I'm actually at Scripps La Jolla right now, getting an angiogram for um after being beaten to nearly death by Officer Anthony Warner on May 21st.

So I'm actually calling you from a hospital bed for a lawsuit that you're gonna have to account for, tens of millions of dollars, because it stems from a falsified prosecution by Summer Stefan, which resulted in a ruptured aneurysm, two ruptured aneurysms, and a falsified 100,000 dollar warrant for getting brain surgery on November 4th.

Big issues ahead, and I will expose the hell out of everybody, I promise you.

Thank you.

Our next speaker, phone number ending in 870.

Please press star six and begin.

Natalie, one or two minutes.

One minute.

Oh my god.

Thank you.

Uh this is just gonna be mostly blessings.

Uh, Chair Foster the third, as chair, I send you thoughts of well-being and blessings.

You have my support throughout this budget cycle.

Same for the committee as a whole, our mayor, all employees, and the rest of our public.

Thank you, IBA, for the beautiful photo that begins your report.

Three hundred three hundred and twelve pages.

You get five stars.

Absolutely five stars.

Uh, I want to quote our IBA.

Critical to align ongoing expenses with ongoing revenue to provide stability and restore public trust.

End of quote.

Department of Race and Equity.

I love you.

Gratitude to all of you.

My big like are the KPIs.

And we're rolling on them.

Keep it up.

Uh, when you pull one corner of the universe, you pull the reading.

This does conclude your time.

Thank you.

Our next speaker, Sally Small, please unmute and begin.

Thank you.

Good morning.

Hi.

I'm from D4 Emerald Hills, and I'm speaking on my own today.

Uh I am frustrated as always, uh, that equity is still being uh ignored by the mayor's office for just about everything, whether it's parks and recs or libraries or office of child and youth success, and arts and culture all are part of public safety, and they need to be prioritized way higher than they are, which is uh shrunk into little tiny bits.

Uh thank you to race and equity Kim Desmond's team and to the IBA for every effort that they're making to clear up information that we don't understand or don't know.

Um we need to get people involved in this all the way along.

And I'm sorry that there's so few people online and in person today.

It hurts my heart.

I hope tonight is better.

Thank you.

Our next speaker, Catherine Rhodes, please unmute and begin.

Hello, this is Catherine Rhodes, and there is low-hanging fruit.

That is um Council District 2 candidate Mandy Havlick and I've two um TOT reform ballot measures for the transit occupancy tax.

Our first measure one is to um change the definition of operators to include online travel agencies.

My calculation says that 77 to 144 million.

That solves the structural budget deficit.

My question is why hasn't the IBA ever called me in the 12 years that I've been putting this forward so that we could solve this easy, super easy solution.

And if you could discuss it as an alternative to all these cuts, that would be actually great.

The second is our measure two, the um the replacement for the um convention center expansion that's going to be um ending in three years.

This is a four percent TOT with one percent for libraries, Balboa Park, and um and the arts.

Thank you.

There is solutions.

Thank you.

This does conclude your time.

Our next speaker, Blair Beekman, please unmute and begin.

Hi, uh Blair Beacon, happy May to everyone.

Um thank you that the mayor is here.

Uh he attends uh you know public meetings once a month.

He has staff there.

Uh it's really good he does that as a strong mayor city.

Uh I hope he keeps that up.

Thank you that he's here.

Um with that said, boy, just once again, uh, my message uh this week is going to be uh how can we be talking more about um programs that can be saved?

The concepts of equity as to talk about our process.

The cities of Oakland and LA, they've had like billion dollar deficits themselves, and they've really cut back a lot and yet are still providing social services and talk positively about social services instead of this c talk about continuous haircuts for each other.

And we have to change our approach in San Diego, in the very least, you know, and how do we how do we have conversations more positively?

Can we please be working towards those things?

Thank you.

Thank you.

The five-minute timer has concluded.

We have five hands remaining in the virtual queue.

We will take no additional callers after these five.

John Stump, please unmute and begin.

Good morning.

Inconvenient truth.

The inconvenient truth of this budget is that police and fire are running a scam on overtime to keep their um staffing under budget, under requirement.

And the other inconvenient truth about this budget is that city employees are paid and compensated at a level greater than the constituency, the residents of the city.

You need to do an analysis that compares the median income for city employees to the median income income for the city.

The median family income is about $80,000.

No city employee makes that little.

Thank you.

Thank you.

This does conclude your time.

Our next speaker, Peggy Walker, please unmute and begin.

Thank you.

The presentation said a budgetary goal is to eliminate gaps that impede equitable access to resources to thrive.

With that in mind, budgetary considerations must look at equity implications for youth, tobacco and cannabis use rates to fairly address health needs of underserved populations.

An American College of Preventive Medicine study found a disproportionately high prevalence of tobacco and cannabis use among non-white youth.

It highlighted need for tailored interventions to address racial disparities in tobacco and cannabis use among black and Hispanic youth.

Please consider that tailored strategies are needed not only for opioid use, but to mitigate racial inequities related to negative tobacco and marijuana use outcomes so that all may thrive.

Thank you.

Our next speaker is the original.

Please unmute and begin.

Yeah, if you weren't racketeering with our money, I mean we wouldn't be in these types of situations.

So it's extremely sad that we can't really just be honest about what's going on.

And if you guys really cared, you would be taking pay cuts yourself as long as well as Todd, um, you know, instead of like, you know, he has in the past taking our money to make stupid music videos that are fucking ridiculous.

Um just shows what a clown show he is, and um as a mayor.

Um because it you shouldn't be proud of of the what's going on or what we're facing, um, but you should be taking responsibility for it.

And we shouldn't be giving you know the police department any more money when they brutally assault and murder um and do many nefarious things.

Um and we just continue to give them more money.

It's crazy.

It's like, you know, Anthony Warner shouldn't be on paid leave, he should be fired, and we should be taking his salary and using that to you know fill the budget gaps, along with many other officers that have uh this does conclude your time.

Our next speaker, Kathleen Lippett, please begin.

Kathleen Lippett, I've asked you to unmute.

Yes, yes, yes.

Thank you very much for letting me speak.

I think that the policies that the city has adopted and the trends of the direction where they believe or they assert that they are providing compassionate responses, it's clear that none of their policies have actually accomplished that.

So even though this was tongue-in-cheek, giving ex cons licenses to sell drugs in underprivileged neighborhoods is not reparations, it's abuse of the very communities that have been negatively negatively impacted by drug use in the first place.

And even though they glib remark this morning, even that uh the homeless uh uh struggle with new sum, the homeless have won.

They have declared victory, is really truth in jest, it's hard, it's hard to hear, but that is exactly what has happened.

All the money that has been spent on it, you've grown the bureaucracies that address this issue, but nothing else.

This does conclude your time.

And our final speaker in the queue is Judy String.

Please begin.

Uh good morning, City Council.

Thank you.

Our families talked often about the budget situation here in San Diego, where so many of us live.

And when we examine how we do family budgets, and I realize there's some very differences, but there is some so similarities.

And what we as a family have always tried to do is to have two guiding principles.

One, how do things look?

Are they clean?

Are they gracious?

Are they organized?

Are they kind?

And I would like to suggest that with Disney bringing us multi-million dollar contracts in the next couple of years as they dock more ships, more cruise ships.

We ought to take a better look at what they're going, what people are going to see.

And two, is how do the decisions we make affect children?

Because those choice making that children see and do and make are going to affect them as adults.

And we need to be very careful about what we take away from them that they need.

Thank you.

Thank you.

And Chair, this concludes public comment.

Already, thank you to all the members of the public for participating.

We will now move to any final council member concluded concluding remarks on sub-item A.

Not seeing anyone on the lights.

Um, I will just um offer a few comments and just thank you to the IBA's office.

Um, also thank you, um, Kim for your information.

Um hopefully the public will see um as we made the uh move um with the Department of Race and Equity to the IBA's office um that um there is more um information available um and I think some real information to consider um as we look at equity and bring and continue to bring equity um to the forefront.

I think clearly um there's still some more work to do.

Um I will just say I think um as we talk about um management of positions, um what's in front of us, I still think we need to take a uh a look at our operations um and really determine um because I think there's some still decisions that need to be made as to what is a must-have and what is um a want.

Um, I think we need to have further discussions um regarding that.

Um I will say some of the decisions that are in front of us are pretty troubling.

Um not sure how we can make a decision to cut stormwater staff or efforts and not at the same point in time indicate how we are going to maintain our channels and so forth as we just went through a disaster and just want to make sure that we are not going to be repeating that disaster.

Um, as far as I'm concerned, as we do make these cuts again, um just because there may be a cut does not mean that the work goes away.

Um different than the conversation we just had about trash.

If we can't collect fees, we don't have the decision to say we're no longer going to collect trash.

Um so thank you for that, and that will um bring us to the conclusion of subitem A.

We will now hear sub item B.

Natalie, please introduce sub-item B.

Item one, subitem B is introduction to fiscal year 27 budget overview and financial branch overview, which includes special promotional programs, citywide program expenditures, risk management, and information technology.

Chair.

Thank you so much.

Mayor, I see you standing at the podium.

Please introduce yourself and your team and feel free to uh present.

Thank you, Chair Foster.

Good morning, uh Chair Foster and members of the budget review committee.

On April 15th, I published a draft city budget for your review.

I formally presented it to the full city council two weeks ago, and today marks the start of your detailed public review where we move from the broad shared priorities to specific investments that will serve our residents.

This is a challenging moment for our city.

Closing the structural deficit will not be easy, and this week's discussions will make that obvious.

They understand the day-to-day workings of there's necessary to run the eighth largest city in the United States, and they will be available to you throughout the week to answer your questions.

I have full confidence in this team, and they stand ready to support you as you weigh how best to use our limited resources.

This budget process is a shared responsibility.

My team and I are here giving you the are committed to giving you the tools that you need and information as well to adopt a budget on June 9th.

Uh thank you, Mr.

Chairman, for the opportunity to introduce this item.

I will now turn it over to our Chief Financial Officer, Rolando Shraval.

Thank you, Mayor.

Good morning, Chair Foster, members of the budget review committee.

I'm Rolando Travel, Chief Financial Officer.

With me is Ben Batalia, uh finance director.

Uh, we're going to be covering an overview of the FY27 draft budget, and then uh after that, we're going to be covering the finance branch.

So on April 20th, we provided an overview of the FY27 budget.

Uh instead of covering that presentation again, we wanted to spend some time on some foundational concepts that explain from a historical perspective why we have a structural budget deficit, some of the limitations on the funding that we have, and then also touch on uh some of the serial-based budget budgeting work that we've done.

Uh here's uh overview, if you can go back one slide, uh of the presentation.

Uh again, we'll talk a little bit about the overall $6.4 billion budget and some of the restrictions that those uh funds have, uh more of a historical view of the causes of a structural deficit, um, some of the more recent impacts to our structural deficit uh deficit.

Uh we're going to touch on general fund budget and uh some of the limitations we have as well there in terms of how much discretion we have and which areas we can actually reduce, and then again we'll be providing some supplemental information on serial-based budgeting.

So here's uh a picture, a pie chart of uh the entirety of the citywide budget, and this is important, obviously, uh, as uh council members you are aware of this, but for members of the public, members of the media, this is an important point to make.

Uh about a third of the our six point four billion dollar citywide budget is the general fund.

That is the the portion that is mostly supported by taxes.

This is where some of the discretionary expenditures take place, uh basically funds that are not supported necessarily by fees, but by our property taxes, sales tax DOT, uh, and that covers obviously our public safety function, uh our neighborhood services like both libraries and parks, some of our street and uh stormwater infrastructure work.

And then you have the other two-thirds of the of the $6.4 billion pie that we work on, and those are mostly locked uh into restricted sources.

This will include the largest pieces being our public utilities department, for example, where water fees, sewer fees can only be used on that specific operation and to maintain the infrastructure.

And those again are mostly funded with a specific fees.

In terms of our structural deficit, I wanted to highlight four main costs that have driven a lot of the underinvestment that we've seen over the last couple of decades that mostly impact our aging infrastructure.

One, our lower lower sales tax rate compared to other large cities in California, the deliberate underfunding of the pension system that took place 1996-2003 that we're still paying for, the underfunded stormwater federal and state mandates that continue to be a strong uh uh pool on our budget, uh, and then finally touch on uh the trash fee that we have basically been providing for free uh at least uh for more than a century until uh until FY26.

So here you'll see uh a graph of uh the 10 largest cities in California by population and the sales tax rate that they have.

You can see Oakland at 10 and three quarters uh at the top of the uh of the list here, uh the average being closer to around eight and nine percent, and then towards the bottom of this of the graph here, you see San Diego together with Anaheim at seven and three quarters.

So basically San Diego being at the lowest level of sales tax rate uh when you look at the entire uh state.

Uh Anaheim, obviously, a lot of tourism money coming in and through their hotel tax.

I'm sure they make more than uh their fair share from that revenue source.

Now, just a little bit of context there, one percent of sales tax is about 380 million dollars, right?

For for the city, at least for the city of San Diego.

Moving on to this next slide, uh this shows uh the pension underfunding and the impact that it's had uh on on the city's finances on the general fund.

Back in 2019, Buck uh created uh an extraerial analysis on the impacts that uh the underfunding of the pension system that took place back in 1996 and 2003 had on the city.

This is these were the efforts that the policymakers at that point made to basically provide increase increase in benefits and at the same time uh reducing the contributions to the pension system.

So in this graph, you see uh the black bars showing the uh the liability as a whole.

You can see here the decreasing with time as pen uh the payments have been made, and then the the gold uh uh bar, and you see how the pension payments associated with this uh obligation have continued to increase because of interest uh being applied to the liability overall.

You see that the payment on an annual basis has ranged between 88 million dollars and 188 million dollars, right?

So these are dollars that could have been going on an annual basis to uh maintain our infrastructure and would have made a big difference in terms of where we stand now.

Here is another important uh area uh that has uh created a lot of budget pressure for the city.

Uh this relates to our stormwater mandates as part of the Clean Water Act uh being enforced by uh the state.

Uh typically other cities have a storm drain fee.

Uh we have a fee, but it's minimal, uh, really basic barely covers any of the expenditures.

And you can see here how this shows the last seven years.

This is when stormwater became its own department.

Uh you can see the uh increasing cost.

It shows both operating and capital expenditures uh going from about 48.5 million dollars in FY21 all the way to peaking at 151.8 million dollars after a lot of the emergency work that took place because of the 2024 January storms, and then leveling off at about 116 to 119 million dollars in the following two fiscal years.

This is on top of the 733 million dollars in uh uh debt capacity uh that has been basically reducing our ability to fund other uh infrastructure needs.

Uh and as we continue to move forward and we continue to see this side of our uh infrastructure, uh we continue to see emergencies that are continuing to crowd out and eat into our capacity to fund uh other uh CIP critical CIP projects.

Here's the fourth component, uh looked at a little bit more detail.

You can see uh refuse collection cost recovery uh since FY16 all the way through FY25, which was the last year that the general fund paid for for these costs.

Uh it's more over more than a century of uh the the city paying for these service while most other cities in and in the state have basically been able to charge a fee for them.

Um you can see bring a relatively flat growth all the way through FY21, but then when SB 1383 requiring organic recycling was put into place, you see a sharp increase uh almost more than almost doubling uh the cost to provide this service uh to our residents uh going from about 42 million dollars to close to 80 million dollars towards the end uh of uh of the general fund funded uh cost for this for this service.

So looking at it holistically, and it's not only the amount that we see uh in terms of uh the annual impact, right?

It's the cumulative impact of of these all of these pressures on the general fund.

Had we had a 1% sales tax in place uh over the last 10, 20 years, had we had a storm drain fee that paid for stormwater mandates, had we not had this underfunding on the pension system, had we been able to charge for trash.

The cumulative impact of those dollars going on an annual basis to invest in our infrastructure would have made a huge difference in terms of our infrastructure.

What's happened though is over the last 20 years uh this has resulted in deferred maintenance, impacting our right-of-way assets, our city facilities, and our stormwater infrastructure.

To round out the conversation on infrastructure, uh we had we have relied because of these uh structural pressures, uh, we have had to rely on on debt service, uh financing a lot of these critical work.

You can see here, as you know, we have a debt policy that sets the amount of both pension, retired health care and debt for the general fund capped at 25 percent.

The reason for that is we don't want to have fixed costs that really we really don't have discretion to cut above 25 percent just for uh to have a healthy general fund.

And you can see that we are getting really close to that limit, um, especially mostly being driven by pension and OPEB or retired health care that's shown in the darker blue bar here, and then existing debt, which is the darker uh the medium color blue, and then the lighter blue being our projected uh expected uh debt debt issuances.

Um you can see with the debt peaking close to FY28, then there's a reduction in our pension payment because of the that underfunding that I was discussing being paid off.

Uh but then uh as we continue to rely on debt, uh that continues to put pressure and puts us at about 23 percent in terms of our uh debt ratio over the for the last uh three fiscal years shown in this slide.

Now looking at the more recent impacts uh of uh that have also continued to exacerbate some of the structural issues on our uh general fund, you see property tax, our largest revenue source uh accounting for about 39 percent of the total revenue, with mortgage mortgage interest rates being high, that's impacting the number of home sales.

When you look at our growth, uh it's about four and a half percent compared to the five and a half percent we were seeing in recent years.

Sales tax being our largest revenue source, about 17.3 percent.

The impact on consumer confidence because of inflation, because of now uh the increase in oil prices impacting the growth there.

Uh we're projecting about a 2% growth compared to a three to four percent average that we've seen in previous years, and then the TOT being the large uh the third largest revenue source at 7.4 percent, that being impacted again by a lot of the geopolitical events, uh as well as lower group travel, lower international travel, only seeing one and a half growth compared to the average of six percent that we had seen in previous years.

Now, while our revenues are growing at a more moderate pace or a slower pace, our costs are increasing at a much higher pace, right?

So uh when you look at just basically to maintain the same levels of service that we were seeing for the last uh several years without really any enhancements, we see just these are just a few examples, right?

Over the last five years, insurance cost up 168 percent, litigation claims are pay our payouts up about 87 percent, the cost of vehicle replacement up 60 percent.

In FY27 alone, energy and utility costs increasing by 7.3 million.

Now, when we are looking at the general fund and trying to identify budget reductions in order to address the structural deficit, you can see here how the general fund by function is composed.

You can see that about half of the general fund is related to public safety.

About 10% is related to infrastructure, that is transportation, stormwater.

Um obviously public safety being the most uh critical function that the city provides residents.

It's an area that's really difficult to reduce.

Infrastructure, it's an area that when we underinvest in infrastructure, that just means that it just increases reliability later on, either through litigation or through the higher cost of maintaining those same assets.

So that really leaves a very small area that we can really work through in terms of identifying budget reductions.

Here's another take on the same uh amount, basically the $2.24 billion general fund.

You can see that more than a third of the general fund is related to fixed costs.

We covered a few of them before the pension debt service or retired health care, those are obligations that we cannot avoid.

There's other costs like workers' compensation, fleet maintenance, and other non-discretionary that make up the other amount, which basically accounts for about 37% of the entire general fund budget, which leaves less than two-thirds that relate to programs and services, maintenance and support services, and those are the areas that we have discretion to reduce.

Lastly, before I hand it over to Ben, I just wanted to touch on why we have a 70.

Have increased by about 110 million dollars.

That includes, like I mentioned before, annual pension, equipment replacement, deferred capital debt service, uh, budget or personal expenditure savings for a vacancy factor, workers' compensation.

There are about 28 million dollars that are more related to actual budget decisions that were approved.

As you will see, most of them have to do with just run the business, issuing a new short-term note, then there's interest associated with it, some legal and mandated obligations, right sizing the transportation budget.

There are about $8.9 million of fully reimbursable uh additions.

Uh, one example is adding 72 beds from the opioid uh restricted sources, and then about $76.1 million in reductions uh for a net increase of about $70.9 million dollars.

With that, I'll hand it over to Ben, and he's gonna cover uh some of the updates on CBB related to FY27.

Thanks, Rolando.

The city uses various zero-based budgeting approaches in the budget development process.

Departments are required to apply a ZBB approach to several key categories, including non-discretionary accounts such as utilities, rent, and debt service, information technology accounts, non-standard hour positions such as interns and other hourly staff, fixed fringe benefits, including the annual pension payment, workers' compensation, long-term disability, and retiree health care, as well as public liability costs.

Additionally, the Department of Finance identifies other areas that may benefit from a zero-based review each year.

For example, a review of public safety overtime needs.

And finally, departments are required to assess their baseline budgets to determine if incremental adjustments are necessary to maintain or enhance existing service levels.

In these cases, departments will develop budget adjustment proposals to be evaluated and considered during the budget development process.

Expenditure categories that are zero-based each year represent about 40% of the total general fund budget.

The fiscal year 27 draft general fund budget includes about $891 million of the $2.2 billion budget that's zero-based.

The remaining budget primarily consists of budgeted standard hour positions and other non-personal expenditures such as supplies and miscellaneous expenditures.

There was a new focus for this budget process on a zero-based review of external contracts and services for the general fund as well as specific and select non-general funds.

At the start of the budget process, each department was required to review their fiscal year 26 external contracts and services budgets and itemize how they're projected to be spent in the current year by account and contract.

Accounts that are part of this review include professional, technical, and consulting services, insurance, fees and permits, rent, training, and travel, among others.

Each expenditure was reviewed and justified individually, with projections developed for both fiscal year 26 and fiscal year 27.

Departments also documented the service levels supported by the expenditures and identified whether the costs are ongoing or one-time in nature.

For fiscal year 27 projections, about 4.4 million in decreased spending was identified across 23 accounts, and about 16 million in increased spending was projected across 48 accounts.

The net increase is largely driven by inflation and increased operating costs, which are necessary to maintain baseline service levels.

The results of this analysis helped determine which areas of the budget could be decreased to support other areas of need.

The fiscal year 27 draft budget includes approximately 4.8 million in general fund reductions through the zero base review of external contracts and services.

Some examples include a reduction in San Diego County jail rent costs and helicopter maintenance costs in the police department, a reduction in supplies and training costs in various departments, and a decrease in contractual costs to support labor negotiations.

Over the next week, departments will be discussing the individual results of their zero-based budgeting review of external contracts and services for fiscal year 27.

So with that, I'll hand it back over to Rolando.

Thank you, Ben.

That concludes our presentation.

Happy to answer any questions.

Alrighty.

Thank you for that.

I don't believe we have any IBA comments on this specific presentation.

I'll now turn to council members for any questions or comments.

Seeing none.

Councilmember Elo Rivera.

Thank you.

I asked some of this last week, but I or a couple weeks ago, but I I want to kind of return to it.

Rolando, I very much appreciate the context and completely agree that the combination of uh un under or unfunding obligations of the past is part of why we're here.

Um I think that all that is super important.

I think what I'm trying to understand is, and we've talked about this a bit before.

Um there was mention of the sales tax, but are there other areas of of revenue that DOF or the mayor's office has considered for for helping us get to a better place financially?

Because I don't think anyone could be wrong.

I don't think anyone likes where we're at.

Um so the you know, to to get to where we we like want to be um it's gonna require some additional resources, and I'm trying to understand what DOF what else do you have is thinking could could help with that.

Thank you for the question, Councilmember.

Absolutely.

I think any the reality is that we are our structural deficit is much larger than what we've been addressing once you look into the for maintenance on infrastructure.

Um I know there has been discussion about uh, especially when you get the look at the the uh the survey that we uh offer residents to take.

Uh there is a strong preference to the extent there are there is willingness to increase revenue for that to be related to tourist uh type uh revenue increases.

I know the city uh treasurer's office has been working with council uh council district one on um potentially identifying some corrections to the technical language for OTC that could potentially bring in $15 million.

So we're more than happy to continue to work with the council president on that front.

Uh I know that there's other uh TOT measures on the table.

Uh I I think those would be uh definitely helpful in terms of meeting uh our current obligations.

And really at this point, it's it's more the willingness of the you know both mayor council and the public to support any additional revenues uh to to cre to try to create uh reduce the shortfall.

I I appreciate that.

Um that's all for now.

Thank you, Chair.

Thank you for that.

We will now go to council president Joe Lacava.

All right.

Uh thank you, Chair.

Uh, my apologies for coming a little bit late.

I did hear some of the initial presentation, uh, and so I want to extend my thanks for for all the work that it took to bring this budget forward and how difficult the decisions had to be in where to draw the lines and uh come up with that balanced budget.

Um to kind of pick up a little bit on uh Councilmember Ilo Rivera's comments.

You know, when I ran for office in 2020, and people always ask candidates what are you going to do differently, and I kind of said, you know, there's a lot of good ideas out there that fell by the wayside because someone didn't have the appetite or the willingness to pursue.

Uh while trash fee or the people's ordinance was probably not the most popular one right now.

Uh that was something that had been floated around for a number of years uh before uh council member Ila Rivera kind of encouraged me to join and pursue Measure B and uh was able to get that passed.

Um the OTA issue is another one that's been floating around that uh past administrations knew about, didn't take the effort to do that, uh, which does not take revenue out of people's pockets.

Um I think not just doing things the way we've done and trying to reflect back on some of those that are possible, some of those that uh actually don't have further financial impact on our constituents, um, are worth uh digging into the complexity of the budget has really taught me there's so many buckets, so many decisions in terms of how we've assembled that uh that digging a little bit deeper on things that maybe were talked about and dismissed because there wasn't an appetite back in the day uh is always I think what our constituents um are really demanding of all of us to be able to do.

So I'm just gonna ask one question, and you're gonna hear me repeat this question as we go through departments.

Um June of last year is still fresh in my mind.

Um is the budget based on items that require council action to actually implement going forward.

So we we approve a budget in June, and then operations last year had to come back.

Parking was probably the most dramatic uh that so is this budget resting on depending on council to approve items?

The there are the non-maturally I would say no.

Uh there are a few positions uh in that were being proposed by the city treasurer's office that requires an increase in the fee for some of the uh minimum wage, uh the our um some of the the Office of Labor's standards, uh, which will be coming back in June, but that that's really minimal.

Uh we're talking a few hundred thousand dollars.

We're pretty much living with what we know today to make it so we don't get swept up on what happened last year.

And I know there'll be contracts that will come forward to us to implement some of the actions uh that will be um uh based in there, but all within the context of the budget.

There is uh Magic Anne's remote reminding me of the we're issuing short-term notes.

Um that is to avoid negative interest in the general fund is more of a technical matter, but that will also be subject to council approval.

Okay.

Um that I just wanted to kind of kind of set the table with that conversation.

I'll be asking the other departments just to kind of double check on that.

But again, thank you for the work.

Uh, thank you, Chair, for leading the budget review committee, and that'll conclude my comments.

Whoops.

Thank you so much for that.

We will now go to Pro Tim Lee.

Thank you, Chair.

Um thank you again for this initial uh presentation.

Uh I think this probably could have been said even with the IBA before this, but I think there's a lot of education that needs to be done with the public to help them understand the city's structural deficit.

And I think it's gonna be inherent upon all of us on this council, perhaps with with the help of the IBA, especially as we're gonna be holding town halls, I believe, many of us, um, with members of the public to understand uh why the city is where it is and why we are severely underfunded.

Um I do want to look at at some of the particular areas of the budget that I think have been some of the most sensitive uh to members of the public, and those are the areas relating to libraries, uh park and rack, and homelessness.

And Rolando, I was wondering if you could walk us through how the baseline reduction targets were determined for each of these areas.

Absolutely.

So uh the process typically that we go through is uh as we issue our our five-year outlook, that's the beginning of our budget process.

And at that point we determine if there is a shortfall in this case there was a significant shortfall of about 88.8 million dollars.

That shortfall grew as we continue to work on the budget process all the way to about 118 million dollars.

So the first step that we take is uh we identify uh um a target reduction for all departments, thinking uh really trying to request more than what we need so that there's enough there to make decisions.

Uh so what we did at that point, we requested seven percent that was was more than the eighty-eight million dollars that we needed.

Um obviously, as the the budget's uh structural deficit continued to grow, that provided some challenges in themselves.

But basically, we requested all departments to identify about seven percent of reductions.

That gives us enough uh material material to work with and make decisions.

Uh there were some departments that were that had a lower uh reduction target, mostly having to do with public safety, transportation, and um and homelessness.

From there, the decisions are compiled.

We rely on the director's expertise to determine the areas of the reduction that will be the least impactful to their operations.

They present them through what we call the executive budget review committee, basically to better understand the impacts at the executive level of what those uh what those are, and then decisions are made uh and those are that's the package that you see before you today in terms of what has been proposed for reduction.

So, to my understanding, there was a baseline target that was given to each department that they were requested to present.

Um how is that number determined?

It's based on the overall uh budget shortfall.

Uh and the idea is, like I said, to try to identify we asked for more reductions so that we have enough to work with uh uh in this case, because the budget continued to get worse and worse, what had was submitted initially was pretty much the the adjustments that we had to work on, and even then we probably we had to also uh consider other reductions as well.

So for areas like uh libraries, park and rec, homelessness, um, I assume that there were proposals that were given by those departments that were already accepted in as a part of the development process of this budget.

And then the remaining figure that the IBA noted in in their report that was remaining that that was that was an additional amount that was determined that was needed to be cut from those departments.

Are you talking about the the three options for library uh for rec centers and libraries?

Correct, yeah.

So the the 2.3 for libraries, for example.

I can address that.

So um as we were going through the budget process, at least for this cycle, we we really tried to uh learn from um the cycle, the budget cycle last year, and we tried to engage uh as much as we could with council ahead of time.

Obviously, we're we're facing a deadline where we need to basically stop all changes, uh, which is around mid-March so that we can actually produce a budget document.

So uh we initially the departments identified about about five million dollars on the rec's uh park and rec center uh for rec center reductions.

The the composition of which reductions, that was something that we wanted to have greater uh discussions with with council.

Um at the end of the day, what we are proposing is uh identifying three options.

We will be requesting feedback from the city council on uh on those options, and then from there uh identifying uh a proposal for the May revision.

I guess given the timeline that we've expected um with the budget coming out on April 15th, and then the um memo that I think we all received with the attachments for potential options.

Um something that I've really wanted to understand is how those reduction targets were determined.

Because obviously when the budget came out on April 15th, there was a set number already that was already predetermined for libraries, a set number determined for uh park and rec, a set number for homelessness.

Um I think for a lot of us on this council, especially last year, that we're trying to tie the reductions that were being proposed with operational impacts.

Um it's it's hard to understand how you come up with numbers without actual operational service impacts identified in advance of that.

Absolutely.

So the the way the number was arrived at is uh and and maybe Andy and and Misty will be able to better explain it, but in concept is they determined a certain number of hour reductions across the board for all of the rec centers and and in all the libraries.

That was the the way we determined the amount.

But then the second layer of that uh analysis was well, should we do across the board reductions or not, right?

So the the base amount was based on across the board cuts, but the second layer of analysis of do we consider uh communities of concern and give a greater weight to maintaining those hours, that's the next step of the analysis.

Thank you.

Thank you for helping to understand that because I think that that maybe helps us understand how this was come about.

Um, especially because last year the discussion was a lot about across the board cuts.

And I think the way that the timeline of the budget has been presented, how the options have been presented, I think frankly what it shows is that what you've brought forward to us is across the board cuts.

Uh the difference is serious that you'd like the council to make those decisions for you as opposed to presenting a set of options based on the information that has been collected thus far.

I I mean I guess I would ask the IBA how typical is it in your experience for a proposed budget to include reductions of this magnitude without first identifying the specific operational impacts.

In recent memory, it's atypical.

Um if you go back, I think the first budget that the Sanders administration put out was maybe an 80-page document, which didn't have any details on budget outside of the dollar amounts going to main large departments and divisions.

So it's not unheard of.

It is atypical in recent history.

Ideally, you would see the actual programmatic impacts of what is being proposed in the budget, both additions, reductions, and maintenance.

So based on what you've heard as well, uh it appears that what's really been proposed is that we know we need to reduce a certain number of hours across each of these segments.

I think what's been proposed is you need to on a macro level reduce a certain number of dollars.

There was a decision made by the administration on how many dollars should be reduced from each department.

And then within each of those departments, there are a number of proposed reductions that do have specific operational impacts detailed.

And then you've got those three areas associated with rec centers, library operations, and homelessness programs, where the details not provided in the budget.

As I said in my opening remarks, there are a thousand different ways that you can combine cuts and revenues to get to a balanced budget.

Um so for those three, again, there are many, many different ways that you could get to that dollar figure.

Um whether or not that was the appropriate dollar figure from each department, I will leave to this council to determine.

That's what we've got the next month and a half to determine.

Thank you.

Yeah, I think my note here is that um in past years, even when we've had these difficult decisions, what we've had is a series of options, typically between different departments and different areas of services within the city that we're trying to apportion.

And the extra challenge that this council has this year is that now we're being presented with options.

The entire budget is a lot of options, depending on how we move things.

But within that are additional options that this council will now have to consider, uh, which is information that we have asked for, especially in this last year.

I think my shock is just that after a full year of asking for that, we're still at the same place, uh, which is needing to make micro decisions based on the information that's presented.

Um I think that is especially challenging now that the numbers that are in the budget were simply preset as predetermined numbers that we're trying to work on.

Um I don't think that is the discussion this council should have.

I think the discussion this council should have is a broader overview of how we look to brought balance the budget as a whole, recognizing that there are things that we may pull from within each of these areas, but we're certainly not limited to each of these areas.

Uh there are other areas in the budget uh that I know there are folks in the room here for um that were hard set into this proposed budget uh and we did not have options presented to us for.

Um and similarly, I think that means that those are not this council should not treat them as well as being set already.

Uh they should be part of the full discussion as we look to move things around.

So um thank you for answering those questions.

All righty, thank you for that.

Seeing no other members um on the lights, um, we will move on to our next item.

And I will ask staff to introduce yourselves for the record, and then we will continue with the financial branch overview.

Um just as a point of clarification, Rolando, once you complete your overview, before we go to, I believe the next item is special um promotional programs.

We will take a quick pause.

I'll check in with the members, see if there's any questions or comments.

If not, then we'll go on to the um remaining um presentations, QA and so forth.

Thank you.

All right.

Absolutely.

Good morning again, Chair Foster, members of the budget review committee.

My name is Roland de Travel, Chief Financial Officer for the City of San Diego, and I'm here with uh Ben Batalia, Department of Finance Director, Angela Colton, risk management director, and Jonathan Banke, our chief information officer.

Also here uh in the audience are Liz Correa, our city treasurer, Julie Rasker, Human Resources Director, as well as members of the finance branch executive management team.

We're here today to present the finance branch for fiscal year 2027.

The finance branch plays a foundational role in the city's operations.

Every dollar the city collects, spends, manages, and accounts for flows through the work of the departments and programs that make up this branch.

We're pleased to be here today to walk you through the branch overview, the value we deliver to the city and the budget changes proposed for the coming fiscal year.

We'll be covering the first four slides, then uh Ben will cover uh special promotional programs and citywide expenditures, and those uh this um percentages will be followed by risk management and department of IT.

Uh go back one slide, Ben.

Uh Sir Finance Branch is composed of five departments with a total of 161 uh employees.

Uh it is composed of five departments, the Department of Finance, the Department of Information Technology, Human Resources Risk Management, and Office of the City Treasurer.

There are also two large programs that are not necessarily uh don't have employees uh in them, but are allocations that are managed by Department of Finance.

Those include the special promotional program basically funded by TOT fund and the citywide program expenditures, uh, which basically cover a lot of the costs that are not really uh we're not really able to allocate throughout the city.

And the total budget for the finance branch is about $65 million, so a little bit over that.

Um, before we go into the numbers, I want to just uh take a moment to highlight the value that the finance branch delivers every day to the organization.

Uh we have about eight functional areas that we oversee uh the financial strategy uh strategy and capital planning.

We're able to issue bonds, manage debt and lead financial planning to advance the city's capital improvement program.

Through the budget and financial oversight function, we develop the city's annual budget and conduct quarterly monitoring to align resources with city priorities and maintain fiscal balance.

Under revenue and treasury management function uh that allows us to collect, reconcile, and invest city funds, maximizing revenue and ensuring there's always liquidity to fund the day-to-day operations.

Through our labor and wage enforcement team within the city treasurer's office, uh, we enforce minimum wage, living wage, and prevailing wage requirements, protecting workers and promoting fair labor practices across the city.

Through our accounting and internal controls function, we maintain the financial reporting and audit functions that ensure the city's books are accurate, transparent, and compliant.

Through our technology and information systems, the Department of IT manages the city's enterprise technology platforms, including the ERP modernization projects, cybersecurity, and digital equity initiatives.

Our workforce and organizational support are handled by human resources.

They support every department in the city by recruiting, developing, and retaining the workforce that delivers services to San Diego and its residents.

And finally, our risk management function uh from workers' compensation to allows recovery and occupational safety.

The risk management department protects the city's finances and workforce.

Together, these functions enable the city citywide service delivery and long-term financial sustainability.

The finance branch's combined FY27 draft budget totals approximately $605.8 million dollars.

That's an increase of about $23 million over FY26.

Um that is mostly related to our citywide expenditures and special promotional program increases.

When you look at the positions, uh overall, there's a decrease decrease of about 22.5 positions.

That includes 18 reductions, 13 additions, and 17 positions being transferred out of the finance branch.

Um of the additions that uh you'll see here of those 13 additions, all of them are reimbursable except for two.

One in the Department of IT was added to bring in-house a cybersecurity contract.

So there are net savings uh by adding the position and reducing the contract.

And then there is one position under risk management that was restored as part of the meeting confer process as part of the FY26 budget.

Um the first four departments uh that you see on the slide here will have their own presentation, so I'm not gonna cover those in detail.

Uh Department of Finance, about 109,000 uh dollars uh uh decrease, um, reducing about three positions.

The city treasurer's office um has an increase of about three million dollars.

That's net after we brought in a large portion of the compliance department and basically an additional 30 positions, again, mostly having to do with the compliance restructure, and then human resources department reduced it by about 944,000 uh three positions being reduced.

Um those are uh uh also include contractual services uh related to our labor negotiations that are being reduced as part of our zero-based budget uh process.

Uh so with this, I'll hand over the presentation.

Uh well, I'll stop there, uh Chair, and see if there are any questions.

Alrighty, thank you for that.

I don't see any members on the lights.

So we will move on to our next presentation special promotional programs.

The special promotional program's budget is funded through TOT revenues.

Since August 1st of 1994, the city's TOT tax rate has remained at 10.5%.

The special promotional programs budget represents five of the 10.5 cents collected from TOT revenues.

The remaining 5.5 cents is deposited directly into the general fund per the city's municipal code.

Council Policy 100-03 provides guidance on programming of the TOT funding, and it states that TOT is supposed to is to be used to advance the city's economic health by promoting the city of San Diego as a tourist destination and a place of creativity, innovation, and entrepreneurship in the national and international marketplace, supporting programs that increase hotel occupancy as well as attract and retain base sector businesses and entrepreneurs, development of visitor related facilities, and supporting the city's artistic and cultural amenities and natural attractions.

The four cent portion of TOT, $119 million for FY2025, supports a variety of programs and services, with $92.7 million reimbursing eligible services in the general fund.

A detailed listing of these services will be discussed later in the presentation.

$20.6 million will support debt service payments for bonds previously issued for the convention center expansion, as well as a construction of PETCO Park.

$3.3 million will provide operating support for public safety and traffic control services around PETCO Park during baseball games and special events.

The Office of Special Events and Filming, and risk management support for special event insurance processing.

$1.9 million will support the Cultural Affairs Division, and a million will support economic development programs, including the business expansion, attraction, and retention program.

In December of 2023, this uh council policy on TOT was updated to establish a legislative process for the City Council to recommend the use of the one cent of the TOT allocation.

The updated policy requests that the mayor and the Department of Finance, as part of the proposed budget, provide the council with a report on the proposed use of the one cent of TOT within the annual budget.

As requested, we included details in the citywide budget overview section of volume one of the draft budget.

And as part of this presentation, we are reporting that the entirety of the one cent council discretionary allocation, or $29.7 million, is proposed to be transferred to the general fund to support general government purposes.

The fiscal year 27 draft budget includes significant reductions in the general fund to balance the budget, and transferring the one cent council discretionary allocation to the general fund for general government purposes, including public safety, homelessness services, and infrastructure operations and maintenance, helps reduce the need for additional cuts to operations, which would negatively impact service levels for city residents.

The more significant budget adjustments for fiscal year 27 include a $12.3 million increased transfer to the general fund to support eligible services, and a $5.3 million reduction in operational support primarily to the convention center.

Historically, TOT has supported dewatering costs and the marketing contract, but Measure C TOT revenue will now support those needs.

The one cent discretionary transfer is decreasing by 940,000 due to the overall decrease of 4.6 million in projected TOT revenues, which support special promotional programs.

The Arts and Culture Program, which is funded by TOT, transferred to the economic development department in fiscal year 2026.

The fiscal year 27 draft budget reduces $11.8 million in grant funding for creative communities, organizational support, and impact managed by the Cultural Affairs Division of the Economic Development Department.

As mentioned, approximately 92.7 million in TOT funding is proposed to be allocated to support eligible general fund services, including the administration of the TOT program, support for sidewalk sanitation, street litter containment, and street sweeping in high tourist areas, the city's lifeguard program, homelessness services, operations and maintenance of Mission Bay Park, the city's Park Ranger program, as well as the Balboa Park Tram Service.

Any decrease in TOT support for these services will require additional budget reductions in the general fund.

That brings me to the end of this presentation.

Happy to answer any questions.

Thank you for that.

We will now turn to the IBA for comment.

Thank you, Chair.

The special promotional programs budget of the TOT fund is a vehicle to provide TOT revenue to eligible city expenses that promote the city.

The FY27 proposed budget projects that TOT revenue into the TOT fund will be $6.2 million less than the FY26 adopted budget.

The special promo budget expenditures can be thought of as transfers to other departments operating budgets to support their costs.

The primary reductions were a $12 million reduction to arts and culture, $833,000 reduction to capital improvements, and a $4.1 million reduction to safety and maintenance of visitor related facilities.

These reductions total $16.9 million.

The reductions allow for a $10.7 million increase in general fund transfers and reimbursements to operating departments, mainly a $9.5 million increase to HSSD, a $1.1 million increase to parks and recreation, and a $1 million increase to ESD.

We'd also like to note that the reduction in expenditures to Pet Co-Part debt service was the result of a bond refunding.

The $3.7 million reduction to the convention center is being incurred by the Measure C convention center fund for the first time this year.

And the reduction to Mission Bay and Boba Park Improvement standalone line item is being reclassified as an increase to parks and rec general fund reimbursements.

In terms of the council's penny for the arts goal, the proposed budget provides $1.9 million to arts and culture, which is a $28 million gap to fund the Penny for the Arts School, and a $11.6 million gap to the no change target in council's budget priorities resolution.

Our office, including the division of race and equity, will discuss our analysis of arts and culture reductions on Wednesday during the budget review for the economic development department.

Thank you very much.

I'm available to answer any questions if needed.

All righty.

Thank you for those comments.

We will now turn to council members for questions and comments.

We will start with Pro Tem Lee.

Thank you, Chair.

I see that the mayor and COS already left as we're detailing this area of the budget.

And frankly, this is one of the areas where I specifically wanted to understand how choices were made and how we're not being presented with options.

I did notice that in the slides, it seemed to also, when you sort of mentioned that the special promotional programs was including the one cent TOT that's discretionary.

Is that how it's set aside in the charter as well?

So the way that the fund functions, that the one cent discretionary and the four cent special promotional will get pooled into the TOT fund.

Um and then, like with anything in the TOT fund with the special promotional budget is up to council's discretion.

Um DOF takes the recommendations uh from council's budget priorities about how to use that one cent uh and then incorporates that uh or doesn't incorporate that into the proposed budget.

Um to your question about the differences in the municipal code, even though the four cent um and the one cent are a special tax and a special fund.

Um the uses of that special fund are kind of defined by the municipal code, which I'll defer to the city attorneys on, and the language that's in the municipal code about what are eligible expenses to promote the city are fairly broad.

Well, so uh, and and maybe I'll let my colleagues comment uh on this if they choose, but I'm gonna assume this is partially why council members Marino and Campio um updated a council policy or created a council policy to try to insert council's um desire on how to utilize our one cent discretionary portion of TOT uh and that process has been in place the last um two years or so.

And so I think one of the choices that has been made is I mean, I frankly ask, how is the council policy that's been designed to determine use of that one cent being met by the administration?

So part of that council policy requires uh the mayor and also Department of Finance to bring forward um uh to the city council the um anticipated or requested use of that one cent.

And so as part of this budget, there were very you know a lot of different um tough decisions that had to be made.

One of the decisions is to take that revenue for the one cent to support um ongoing general fund services.

Um and as was pointed out, the proportion that would have been needed to meet the council's budget priorities that were outlined when we passed those, the four point something percentage was about eleven point three million dollars.

In FY26, the proportion of arts and culture funding to overall TOT was about 4.28%.

If you wanted to maintain the exact same percentage with what projected current overall TOT levels are, um, there would have to be an additional eleven point six million dollars uh just to meet that target.

Understand.

Uh and that is because at the moment that proportion is or that percentage that's being funded is zero percent.

Not exactly.

So there's about 1.9 million dollars that still meets the penny for the arts uh that's counted.

So there's about 0.6%.

Um we can dive into that further, I think when that item comes up, um, because I think I'll be curious as to how that's being broken down.

Um yeah, I I think that's that says a lot about what we have apportioned here.

Uh based on the numbers that are being presented, where's the bulk of that funding uh being transferred to?

Pardon me, councilman, the bulk of what funding being transferred to?

The reduction in arts and culture funding out of special promotional programs.

Oh the reductions are um distributed across then uh eligible general fund reimbursements, um, which also takes weight off the general funds, so you could very broadly say that it's being distributed across the general fund, but specifically within the special promotional programs budget, the largest increase uh is for the homeless strategies and solutions department.

Got it.

And so out of the hundred and I'm gonna just use the 120 million dollars that's tied to special promotional programs that's outside of the council's portion.

Um this uh slide seems to show this slide is specifically for those components that are now being transferred to support general fund activities, correct?

That's correct.

So 92.7 of the about 120 million is used to support eligible general fund activities.

Um so over three quarters of funding that has come in through TOT has now been over the years increased to um primarily support reimbursement of general fund services.

Some of them I I absolutely understand, and many of them I do.

Um, but it is a choice that I think we have we make.

And I'd be curious as we come back in May, if there uh could be some analysis that shows us the trend line of how the city has moved uh in terms of the percentage of our utilization of SVP uh for general fund purposes.

We can get that free council member.

Thank you.

Um I was actually curious uh for the business expansion attraction and retention program.

Um what are the successes and drawbacks that we've seen from that program uh thank you for the question.

I'll ask if a representative from the economic development department could respond to that since they manage that program.

Good morning, council member.

Thank you for the question.

Christina Bibler, Director of Economic Development.

So our business retention, expansion and attraction program primarily works with businesses that are small businesses and large businesses across the city, those that are trying to come in as well as those that are already here and retaining those.

So we do have a team that is roughly 18 FTEs funded by various different funding sources that support the city's incentive programs.

So that can be everything from the foreign trade zone, our business retention expansion um incentives, the business incentive program, business cooperation program, storefront improvement, et cetera.

So all of those programs very have various levels of success based on the type of business that that program is serving.

Um happy to provide this council with stats on the previous few years.

Yeah, perhaps when we get to EDD we'll we'll get to delve into that further.

Um and then another item uh that was specifically in here previously that has now been moved is special events and filming.

And um I understand that's more so a consolidation elsewhere, though you could help us understand if there are also positions being reduced as a result.

So special events and filming, the department is proposed to be restructured as a new division within recreations and parks.

However, they're still proposed to be funded by the special uh promotional program's budget.

The change has to do with the reduction of one position and the reclassification of another positions, hence the net reduction.

Okay.

As we get to that segment, I I what I'm gonna be curious about is uh the revenue anticipation that we typically have from the areas in which we are seeing reductions and and how we're balancing that out with expectations.

Um Councilmember, I'll note that for special events uh division now, the projected revenue that is transferred into the special promotional program's budget uh isn't expected to significantly change next year versus this year, but that's a good question to ask uh the division during Parks and Rec's presentation.

And and does that include the filming component as well, where I believe the reduction is?

I believe it does include film permit revenue as well, sir.

Okay.

When we get to that portion, we can discuss it.

Last question I would have in this area in particular is that uh it was mentioned that um the advertising for the convention center has been moved out of special promotional programs and is now being incorporated in the dollars being spended from measure C.

Is is that something that was discussed as the possibility specifically through Measure C funding?

Since I I don't see it as a capital nature, which I think a lot of that focused on.

So council member, hopefully, our uh report on uh the convention center's budget will be released any minute now.

Um and we'll detail that a little bit more and go over it more uh during their agency review on Thursday or Friday.

Um the question about if it's an eligible expense though, our understanding from speaking with the measure uh the attorneys is that those are eligible expenses.

There's an order of operations about what measure C was intended for for the convention center in order of priority, first one being uh expansion modernization, and the others being um in no specific order, business support, operating support, um, and marketing support.

Um Ben, if you want to add anything to that.

Yeah, and I'll just add that um exactly what what um he just mentioned, what Noah just mentioned is that was included in the clarifying ordinance that the council approved uh just a few months ago.

Okay, thank you.

Uh my last note in this um segment is just that I I think this is usually an an untalked about segment of the budget, um, but this year seems to have a very glaring shift, and that is that as the city moves towards trying to achieve a structurally balanced budget as a city and a structurally balanced operation.

Um it is hard for me to understand and believe that structurally balanced as a city means that we would have zero support for arts and culture aside from the remaining portion, which we'll discuss later, which I believe is frankly just for operational and administrative needs.

Um it's a choice that's made.

Again, this is this is me pointing out that in some areas we're being asked to pick between the choices that we have as a city in this particular area, that choice was already made, and that choice is very glaring, I think, to everyone within the community.

So thank you.

Alrighty, thank you for that.

And I just want to ask as we had um council president pro Tim asked that the mayor would be available.

I just want to confirm he is no longer available to answer questions as we move forward.

Is that correct?

Chair, uh, I can answer any questions on behalf of the mayor's office.

We also have members of the mayor's executive team here as well to answer any questions.

Okay.

I appreciate that, but that is a no, correct.

Okay, thank you.

Um with that, we'll move on to Councilmember Ilo Rivera.

Uh all right, thank you, Chair, and thank you, uh Council President Pro Tem Lee for for digging in there.

I'm gonna um get pretty specific pretty quickly here.

Um I very much appreciate that broader overview and the detail that that um you just dug into, Council President Pro Tem.

Um something that stood out in the IBA review was this.

The proposed budget increased support for Petco Park operation by about $813,000 or 71.8%.

Um we've heard a lot about the 86.6% decrease in arts and culture funding.

Is there any context that the the DOF would like to provide for that?

Yes, happy to do so.

Thanks for the question.

Um so that particular line item supports police and fire services outside of PETCO Park in downtown uh during ball games and also special events.

The reason why you're seeing such a large increase, it's not a an $800,000 increase is because we utilized fund balance in FY26 to not in that particular fund in the Petco Park Fund.

So we did not have to transfer as much from TOT into that fund.

Now we're since we've already utilized all the fund balance in that fund, uh, this is the full amount of support that's required for next year.

Noah, is there anything that you'd like to add to that I think the uh obligation for the city to cover um those event costs is something that we might uh be able to discuss more uh with the department um about what's required in the joint use management agreement, what the impacts would be for the city not to cover those costs, both in terms of tourism and the way that the money flows through special events revenue from Petco Park.

Yeah.

I I appreciate that part.

Padre sold for $3.9 billion last week.

$3.9 billion.

They were purchased for $800 million in 2012.

So they saw five times appreciation during their time operating out of a publicly owned stadium.

And don't get me wrong, there's lots of benefits for them operating there, but a enormous amount of money was made doing that.

Uh I know Christine had to take off, but I see Bob.

I see I see folks who are down here begging to maintain funding for arts and culture organizations.

Um arts and culture organizations that serve communities and employ people, San Diegans, um, and we're going to increase support for a wildly profitable enterprise by 72%.

I have a problem with that.

I have a problem with what that says we're prioritizing, who that says we're prioritizing.

Was there an analysis of the impacts on jobs or communities?

Um before the the number was set for the the cut starts and culture programming.

Councilmember Iler Rivera, no, we did not do an analysis on jobs and the impacts uh to the number of people employed in the arts and culture sectors.

You know, uh as we were working to uh bring this budget to structural balance, we were also weighing that against the jobs that the city provides and and our city workers and trying to be able to mitigate the impact to our city workers as well.

Of course.

And I think that's a false choice because again, I think what we're doing is subsidizing a multi-billion dollar enterprise where uh folks' profits are um are in the billions at the expense of folks who are making barely getting by here in San Diego.

So my point here is really simple.

I think that we should be asking ourselves why the Padres, again, who just sold for $3.9 billion, um, are not paying for those services that they rely on to make all that money.

And if we could instead use those resources to um start to account for some of the cuts that the arts and culture community um is is about to to feel based on the proposed budget.

Um again, I think this is a matter of of of choice.

It's a it's a values question.

Um, and I don't think it is in any way unreasonable to ask um billionaires and multimillionaires to pay for the services that they rely on in order to make all that money.

Um, especially if it means being able to keep San Diegans employed and San Diegans connected to programming that they rely on to have a decent quality of life, to feel to feel fulfilled.

Um I think what uh most people would uh agree is an important part of what makes a community a community.

Um so I'll be digging into that more.

Noah, I really appreciate you pointing it out.

I really appreciate you pointing out that it is a there's there's some choice involved in that.

Um and I I think it it is uh emblematic of a broader issue that we need to wrestle with in this budget of who it is that we're willing to subsidize and who we are asking to pay to to um most feel the burden of the cuts that are being proposed.

Thank you.

All right, thank you for those comments and questions.

We will now turn to council president Joe Locava.

Uh thank you, Chair.

Uh thank you for the presentation.

Uh you know, this early in the process, I think really highlights how complex the budget is and how inner related everything is, and trying to tease it out as my two colleagues uh spoke to, and I appreciate their comments.

So I I want to ask kind of a fundamental question of what is the thought process that says let's fund these particular line items out of special promotional programs other rather than any other funding source in the general fund.

It's really part of the just greater strategy of budgeting the general fund, ensuring that it's balanced.

Um there are limited, there's limited amount of budget in the general fund that is eligible for this funding source.

So there is kind of a balancing between utilizing this funding source as well as other funding sources to help uh support eligible general fund expenses.

The items that you see on the table here have been funded in TOT in the past.

We did identify one additional uh line item, uh the street litter containment program at about a million dollars.

But essentially it's it's part of the broader strategy of helping to balance the general fund.

Uh the complexity is obviously you're talking about various city departments that we're gonna be talking about later in the week.

So the question is whether to talk about them now or kind of white.

Um, but a couple of things that kind of pop out uh there.

Uh the Balbaugh Park tram service that we thought might be funded by the Belbo Park parking fees.

Um clearly there is a nexus between the tram services and visitors uh to the community and uh parking lots that are quite distance from the cultural heart of Balboa Park.

Um we didn't do that out of this fund last year.

We're putting it in this year.

Uh is there a brief explanation?

This is more of a technical correction.

There was um another special fund, the Mission Bay Balboa Park Fund that only funded the Balboa Park tram service.

It was about $800,000.

It's been about $800,000 a year for for many years.

The funding source for that is TOT.

So instead of having multiple funds for this, we're we're essentially uh budgeting the tram service within Park and Rec's general fund and then uh budgeting that reimbursement from the TOT fund into the general fund.

So all those expenditures are now in one place.

Okay.

Again, the complexity of how things are interrelated.

The other thing that pops out here is uh HSSD.

I know we're gonna have a separate presentation on that, but there's a pretty sizable bump from what we did last year to this year and help us understand before we get into the nitty-gritty of HSSD why that change.

Sure.

Yeah, the primary reason for that is there are just fewer grants available next year to support homelessness programs and services.

That department is fully reimbursed.

The general fund is fully reimbursed next year by various funding sources.

One is TOT.

The other large contribution is the Measure C TOT funds, and then finally opioid funding.

Uh the remainder is uh funded the various state and other grants.

Okay.

So I I think the takeaway is just the lack of state and federal grants that we have relied on in the past uh may come in federal and state budgets going forward with fingers crossed.

Uh I know many of us have in our own different way of been lobbying Sacramento to try to get some of that funding restored to uh previous levels.

So I think that answers kind of that the basic questions at this point.

So thank you, Ben.

Thank you, Chair.

All right, thank you for that.

We will now go to Councilmember Moreno.

Thank you, and thank you for the presentation, and thank you to the IBA for your thorough analysis of the special promotions program.

Um as I reviewed the report, I was struck by the significant changes in the allocations.

Uh, homelessness services, for example, is seeing a 55.8% increase in TOT funding compared to last year.

Similarly, sidewalk sanitation funding has increased by 69.7%.

Uh this these increases are made possible in part by an 86.6% reduction in arts and cultural funding.

I'm concerned uh these homeless services and street sanitation activities will most likely stay in downtown, even as other parts of the city face similar issues.

Um I hope I'm wrong in this assumption, but most of the work that I see take place is happening in downtown.

Um what is particularly frustrating about this conversation is as my role as the chair of the audit committee, we've identified several opportunities that could either save the city money or generate additional revenue.

Just this year we reviewed the performance audit of the city's management of its lease golf uh property portfolio, which, if implemented, could generate millions of dollars.

Um in this circumstance, reappraising Fairbanks ranch lease could bring in millions of dollars in additional um general funds each year.

I do recognize that these actions take time and are not immediate solutions to our current budget challenges, nor will this one circumstance fill the budget challenges we're seeing before us today.

However, some of these audits have been on the table for years, uh, well before the fiscal constraints we're facing today.

Um I don't think what I see before me is something that I can get behind.

Um to me it seems like it wasn't thoughtful or and thought out.

Um so I just wanted to put that on the record.

Um it's extremely painful to see what is happening to our arts and cultural funding.

Uh it's a one billion dollar economic engine in the city of San Diego, and to see that gutted in such a way is really gonna have major impacts, um, not just impacts that we're gonna see um at the moment uh or this year, but impacts that are gonna continue to ripple.

Um I would like um to see the list uh of the sidewalks that have been cleaned out the past year to see what um what this year what my constituents can see for this up and coming year.

So I will put that on the record and obviously we'll get into more detail um as those departments come in.

But I can express and I can't stress enough how um how just painful this is uh for the arts and cultural community.

Um I was just at Fern Street uh circus this past Saturday.

I funded them with CPPS funds.

There had to be about I don't know, I want to say something like 50 children at South Bay Eger.

Uh and um that wouldn't have happened without the CPPS funding, without the funding that we allocated and TOT funding and to tell my residents, my children down in the South Bay that this is now gonna turn to street cleaning in downtown is very painful to me.

Um so I wanted to put that on the record, but I do thank you for the presentation, and I do think the IBA and thank you to my colleagues.

Um, but I think the comments were um were um very productive this morning.

Thank you.

Um thank you for that.

Not seeing any other members on the lights, um, I think that will uh conclude these special promotional programs.

Um I will close with I too am concerned on um the changes here.

Um I think I agree with council uh president.

This does start to um really um look at just how complex the budget is as we look at all the different um funding sources and eligibility associated with those um funding sources.

Um but I must say to see increases, um and I've said this since I've been elected.

Um as we look at our homelessness, um I too share in the concerns of council member uh it it is very hard for me to um to continue to um operate and advocate as I look at the increase in the homeless population that I'm seeing in my district and to continue to see services basically centered around um downtown.

Um this is getting more and more difficult to um to support um and I've been very transparent in that um and I will continue um to highlight concern is I don't think our return on investment is where it needs to be.

And I think we need to do a a very um another deep dive into our processes, um, our programs, our operations, um, and make sure that we are meeting our intent, and that is to move people into housing.

And I think if we do the proper exercise and analysis and understand how we are spending our money and the returns that are we receiving, we will look at that and say we need to really do some considerable changes to meet our intent.

Um so um with that, um it looks like I just want to jump in.

My apologies, Chair.

Um risk of rubbing salt into the deep wounds of these cuts.

Why isn't Penny for the arts listed here and being zeroed out?

Isn't this what this would Penny for the Arts would normally show up, or is that in a different spot?

It it does.

It does show up here in the budget document and volume two of our budget document at the end of the special promotional programs uh budget page, there is a table that shows last year's funding for Penny for the Arts and the and FY27 um recommended or proposed funding for that.

So you can see that change there.

Okay.

I just you know these are a lot of things that this council is trying to wrap its head around.

There's a lot of things you guys wrap your heads around.

Uh I just want to make sure that I wasn't missing something and not seeing it in this particular table.

As you said, um I trust that it actually shows up there in the budget.

So thank you, Ben.

And if I can just clarify what this table is showing is the amount that is being transferred to the general fund to support general fund uh eligible activities.

So this is just a portion of the $120 million budget.

Okay.

All right, thank you for clarifying.

Thank you, Chair.

No worries, thank you.

And I think that's an important question is we want to make sure we're being transparent to the public as well as we manage those expectations and what we're trying to accomplish.

So with that, that will conclude the item for special promotional programs.

We will now move to the next presentation, which is citywide program expenditures.

Thank you, Committee Chair Foster.

Citywide program expenditures is a quasi department that's also managed by the Department of Finance, and it supports citywide general fund costs that don't belong within a specific operating department.

Examples include debt service costs for capital bonds and vehicle purchases, support for insurance and public liability claims, rent expenses, transfers to the park improvement funds, citywide election costs, and reimbursements for right of right-of-way permits and inspections for SDGE work.

That's covered under the franchise agreement.

The citywide program expenditures budget is increasing approximately 27.7 million over last fiscal year.

The largest drivers of this increase include a $12.5 million increase in debt service costs to support the lease revenue bonds recently issued to support general fund capital projects, an increase of $7.9 million to support the issuance of a tax and revenue anticipation note to address projected cash flows in the general fund.

An increase of $4 million to support reimbursements to the development services department for right of way permits and inspections for SDG and E work covered under the franchise agreement, and an increase of $2.8 million to support election costs next year.

These increases are offset by a reduction of $7 million related to waiving the transfer to the climate equity fund and a reduction of $1.1 million related to bringing Civic Center Plaza Janitorial Services in house.

A zero-based review of external contracts and services confirmed that contracts within the department are primarily non-discretionary as they support essential and mandated services.

The fiscal year 27 draft budget largely maintains these expenditures with adjustments primarily reflecting updated obligations.

And that brings me to the end of this part of the presentation.

Yes, yes, Rotem.

Thank you.

Since the DOF uh since DOF covered the citywide program budget changes, I'll just provide highlights on a few select areas.

Overall, citywide expenditures is budgeted at 212 million dollars, which is a net increase of almost 28 million dollars or 15% higher than the fiscal year 2026 budget.

A large portion of this increase is due to an 11.6 million dollar increase in lease revenue bond debt service costs, which brings the general fund budget for LRBs to be about $65 million.

The $11.6 million dollar net increase in LRB debt service is driven by approximately $20 million in higher payments for the $465 million new portion of the 2025 A issuance.

This increase is partially offset up by almost $7 million from shifting eligible 2023 A LRB debt service costs from the general fund to the solid waste management and recycling funds, as well as a 1.5 million dollar savings from the 2025 refunding of several other LRBs.

Another large driver of citywide program increase of the citywide program increase is the $7.9 million in interest payments for tax and revenue anticipation notes or trans.

Trans are short-term notes, proceeds of which allow municipalities like the city to cover periods of cash shortfalls due to a timing mismatch between revenues and expenditures.

For example, up the approximately $400 million general fund portion of the pension payment is made on July 1st, and significant inflows of property taxes do not occur until December and January.

Additionally, cash available to the general fund to cover these timing differences has recently declined as discussed in our report.

This is the first time the general fund will be using trans since fiscal year 2013, and the proposed budget anticipates borrowing around $300 million for fiscal year 2027.

Quickly, we also note in our report that there is $11.6 million in revenue in the proposed budget for interest earnings associated with trans proceeds.

This budget, this budgeted revenue not only offsets the $7.9 million interest expense, but also provides an additional $3.7 million positive general fund impact.

While our office reviewed the supporting projections of this revenue amount, we note that there are multiple unknowns at this time.

The OF indicates that it will have update updated estimates on the borrowing amount, interest rates, and potential earnings outlined in the May revision.

We will conduct a more thorough analysis of these estimates once that information is available and before trans are brought to council for consideration in June 2026.

The final budget change I'll cover is a $1.5 million decrease for corporate mass release rent, which is due to several factors, including net savings associated with rent adjustments for various locations and lower property management budget for the Civic Center Plaza.

Additionally, $827,000 of this decrease is due to transitioning to in-house janitorial services for the Civic Center Plaza.

Note that there's a corresponding expenditure increase for the Department of General Services for in-housing these services, but overall there is a budgeted net savings of $405,000.

Lastly, while the general fund transfers to the Capital Improvements Program, Climate Equity Fund, and the General Fund Reserve are normal normally included in the citywide program when they are budgeted.

The fiscal year 2027 proposed budget does not include such transfers in order to provide funding for other critical expenditures.

Also, for the city charter mandated calculation, an infrastructure fund transfer is not required, and thus now no transfer is budgeted for fiscal year 2027.

This concludes my comments, and we're happy to answer any questions.

Thank you, Chair.

Thank you so much.

We will now move to council members for comments or questions.

We will start with Council President Joe Locava.

No, actually, you won't.

I'll take it off.

Thank you anyway, Chair.

All righty.

Any any other comments from members at this moment.

Alrighty, seeing none.

Um again, I think I just cannot reiterate just how important equity is as we are making our decisions not to fund certain certain funds, the climate equity fund.

Um I've told staff this as we've been receiving briefs.

Um not to allocate funding, but I want to make sure as we're looking at the CIP that we are also looking at what we can do within the CIP with the existing dollars to further support equity items to meet the intent.

Again, because something goes away and we are not doing something, does not mean the intent is still not met.

And so I just want to throw that out there to city staff.

Um, so with that, that will bring citywide program expenditures to a close, and we will move to our next presentation, risk management.

Please introduce yourself and begin.

Thank you.

I am Angela Colton.

I'm the risk management department director.

And I'm kicking off by talking about our core baseline services that are maintained in this draft budget.

We have workers' compensation, which is our health benefits to our injured employees, public liability, where we handle claims against the city, employee benefits, where we're administering health benefits, deferred compensation, as well as long-term disability, our commercial insurance program where we support procuring eight different insurance policies for the city annually, as well as Ben mentioned earlier, funded through TOT.

We review the insurance requirements for any special events occurring in the right-of-way.

We have a very small occupational health and safety unit that supports 13,000 employees across the city, and we do loss recovery efforts as well to recoup funds owed to the city for damage to our city assets.

This is all done with 109 positions, a 20 million dollar draft budget.

We are an internal service fund funded approximately 58% by the general fund.

Some of our accomplishments and operational efficiencies from this last fiscal year or last year.

We do have an award-winning workers' compensation program, I will say, is uh quite exciting.

We received three different awards in calorie year 2025, two specifically for our PTSD program supporting our sworn firefighters and sworn police officers.

We're definitely kind of ahead of the industry when it comes to those resources.

We also procured a new claims management system, CLEARAI.

That contract has been executed.

We just had our first kickoff meeting a couple weeks ago.

We are expecting enhanced data tracking and loss analytics with this system.

It will take us about 12 to 18 months to implement, but that's very exciting movement in the right direction for us as well.

We also negotiated updates with all six represented employee organizations for the city's long-term disability program.

That was roughly a two-year project, and council just approved those updates to the program three weeks ago.

We also have an ongoing effort to fill new public liability positions that the city council added to the budget last year with an offsetting reduction in our insurance premiums.

Continue working towards filling all those positions and reducing our claim response times as a result.

Our significant budget adjustments and service level impacts in the draft fiscal year 27 budget include the restructure of occupational health and safety into the risk management department from the compliance department.

This was effective late November.

We've also included the reinstatement of one safety officer as Rolando mentioned earlier.

That resulted from meet and confer following the budget cuts from fiscal year 26, where MEA successfully negotiated to reinstate one of the safety officers to avoid bargaining unit work being transferred to unclassified staff.

Generally, the occupational health and safety unit continues to be understaffed.

Four positions for a 13,000 employee organization is rather low.

We will focus almost entirely on legal compliance with OSHA and our commercial driver program and then fill in additional support where we can.

This effectively eliminates our loss control data analytics team, which was focused on monitoring of where the risks are occurring so that we could provide better information to departments and management for decision making on where resources should be allocated.

I am optimistic that some of that work will get replaced with our new system, which should have more robust analytics built into it, as well as dashboards that will become available to departments, and we can come back and re-evaluate where those gaps are after the system's implemented.

We also have a reduction of one program coordinator in the workers' compensation section.

This position has been supervising eight people directly.

It's the team that supports the police department.

We are going to reevaluate the organizational structure of the workers' compensation team and kind of shuffle staff around.

It will increase the span of control.

There are some risks associated with this, potentially on meeting compliance requirements, which could result in penalties, but I am confident that with us kind of restructuring and shuffling staff around, we'll be able to minimize or avoid those risks altogether.

The other item on here is we've established a cost recovery model for our loss recovery team and added an additional position to that team.

So the loss recovery team, as I mentioned earlier, goes after funds owed to the city for damage caused to our assets.

This could be either getting reimbursements from our own insurance policies or from third parties, say, for example, in a car accident.

That team brought in over 14 million dollars in calendar year 25, but because they're not legally required, they are often one of the teams that is considered for reductions.

Rather than reducing them, we are looking to turn them into a cost recoverable team, and they will be reimbursed by the funds they bring into the city.

That allows us to continue doing that effort.

Generally, our department is understaffed in quite a few areas.

Our focus going into this budget was on cost containment and maintaining legal compliance with all of our programs.

We had some contractual changes we were able to make by doing a review of our external contracts.

We are moving a 247,000 contract for benefits consulting services over to be funded by the benefit-related funds rather than being funded through our operating fund.

We reduced a planned enhancement to the wellness program for 100,000 and eliminated a 70,000 agreement with the Department of Finance for services that they no longer provide due to different streamlined operations.

The budget equity impact highlights are some things I've already mentioned before.

Our new claims management system will enhance our data tracking and loss analytics and support more equitable allocation of city resources moving forward.

We have the ongoing hiring of the 14 positions in public liability to promote equitable service delivery, reducing caseloads, improving timeliness and consistency in claims handling.

And then in our workers' compensation program, as I've mentioned before, our PTSD program promotes equity by providing specialized treatment, aiding recovery and return to work for our sworn officers.

And that concludes my presentation.

Thank you.

All righty.

Thank you for that.

We'll now go to the IBA.

Thank you.

I'm Trisha Tackey from the Office of the IBA.

Angela covered the significant adjustments for risk management.

So instead, I'll focus on a few key issues.

Consistent with waiving contributions to the general fund reserve.

The proposed budget waives contributions to the risk reserves, leaving them 41.1 million or roughly 40% under reserve policy target levels.

When you consider the loan made by the public liability fund to the sewer fund, it is a little bit less, approximately 33.4 million citywide.

However, these funds remain notably underfunded.

The city's reserve policy is expected to be updated later this year, which should include updates to the risk reserves.

Because these funds, particularly the public liability fund, experience year-to-year volatility, and reserve contributions have been underfunded in recent years.

Updating the reserve policy and establishing a funding plan will be critical to ensuring the stability of these funds and the city's ability to manage the ebb and flow of these claims.

As you'll see repeatedly this week, departments like risk management are paring down their work, prioritizing what's legally required, and reducing areas that aren't cost recoverable.

There are impacts to these decisions.

For instance, the city has significant safety needs that exceed what can be provided by the city's occupational health and safety team, which will remain focused on legal requirements instead of proactive measures that support employee health and safety.

As of last week, the average caseload per adjuster for workers' compensation was 203, which is significantly higher than the industry standard of 158.

The proposed budget reduces a program coordinator who supports that team, which will likely extend the review and approval of workers' compensation claims.

Finally, we're seeing the functional end of a program, the loss control division, which was analyzing trends in public liability and workers' compensation to inform decision making and help mitigate risks to the city.

As Charles noted this morning, budget reductions are necessary to address our ongoing structural imbalance.

However, I raise these issues because it's important to be transparent about the reality of our reserves and the service level impacts of this budget.

These areas will continue operating at less than ideal levels and warrant attention in future better fiscal years.

I'll hand it over to Helen in the division of race and equity to review the budget equity implications for the department.

Thank you, Tricia.

Good morning, Chair Foster and members of the budget review committee.

My name is Helen Walde Gorgas.

Pronouns she her hers with the IBA's division of race and equity.

Our budget equity implications within the department review start on page 285.

Two of the FY27 proposed adjustments for risk management include equity implications, both of which are tied to staff reductions.

The reduction of the workers' compensation program coordinator further constrains an already lean team where the average caseload for staff is higher than the industry standard as reflected in the department's key performance indicator.

The reduction of the loss control program coordinator would eliminate proactive reporting on risk management programs, including workers' compensation and public liability.

This diminished reporting on risk exposures decreases access to information for the public and decision makers.

That concludes my comments.

Happy to answer any questions.

Sorry about that.

Thank you so much.

I'll now turn to council members for any questions or comments.

Not seeing anyone on the lights.

I do have just one question.

If you can let me know what's happening with the 14 FTEs.

We are almost to the fiscal year.

How many have we hired?

What's the status?

Where are we actually at?

Thank you.

We did a very robust hiring process in November and December.

So as you may be aware, the process at the city takes quite a few steps.

You know, we get budget approval for the positions, we then have to go to personnel, request that they agree that we ask for the right type of position.

Then we open the job applications, we get applicants, those get reviewed by personnel.

Finally, we get a list of names so we can kick off interviews.

Yeah, my team really pulled it together and did back to back interviews for five or six job classifications over just a few weeks in November and December.

We filled as many positions as we possibly could before the request to fill process took place.

That resulted in a lot of promotions of our existing staff, which then created an additional vacancy behind them.

We also had some natural attrition with people retiring or leaving for other opportunities.

I currently still have 11 vacancies in that team in that section.

So we added 14 positions in the budget last year after all of that hiring.

And I have had a few requests to fills approved since then.

We still have 11 positions vacant in that section.

And what's that dollar value?

Oh, I don't know that off the top of my head, I'll have to get back to you.

Do you does DOF have it?

I I would back to you on that council.

Thank you.

All righty.

That will uh that will conclude our presentation on risk management.

Um also I do believe we are still working on getting their presentation on all of the settlements and the expenditures for our um policing activity.

So look forward to getting that scheduled.

Um we will now move on to our presentation for information technology.

Please introduce yourself and feel free to begin.

All right, uh good afternoon.

I'm Jonathan Banke, Chief Information Officer with the Department of IT.

Um starting out with accomplishments in IT.

Uh the uh SD Access for All Digital Equity Program was recognized as a visionary trailblazer by the National Digital Inclusion Alliance for its work in bridging the digital divide in San Diego.

The department also completed a comprehensive broadband master plan that aims to expand high-speed internet access, improve affordability, and advance digital equity across the city.

And then over the past year, we implemented artificial intelligence solutions to improve efficiencies and regional cybersecurity.

We completed the new payment card industry standard compliance to support millions of annual credit card payments to the city, and public safety radio system infrastructure and coverage improvements were completed to support our first responders.

Some of the operational efficiencies uh include an estimated time savings of over 27,000 hours after implementing the co-pilot AI assistant.

And some of the reductions that we'll cover today include over 1.3 million in savings that were realized through continuous improvement initiatives to consolidate tools, innovate, and yield new efficiencies from modernization.

And then we'll note the department also identified an opportunity to defer 3.7 million in costs from fiscal 27 through contract renegotiations.

And budgety uh equity highlights include reducing our reaching over 13,000 residents to provide feedback for the city's broadband master plan.

Our digital navigators made technology more accessible for over 5,000 residents, including uh assisting residents with the Balboa Park parking portal, affordable home internet, government services, and digital equity training.

And then in partnership with computers to kids, nearly 800 affordable computers that include lifetime tech support were distributed through events and the digital navigator program.

And we'll move on to significant budget adjustments in the general fund.

Those include a reduction of 118,000 for the PC replacement program, a reduction of 130,000 for library mobile hotspots that will be covered by the PEG funding next year, and then uh a one-time addition of two and employ employee and empower interns uh that are reimbursable through grants to support our digital navigator services.

Moving on to the IT fund, uh there's a reduction of four million, including uh tool consolidations, modernizations, efficiencies, and some one-time delays of infrastructure replacement and modernization projects.

And then we have additions of 2.3 million uh in contractual increases for court licensing and just general inflation and cost increases.

Uh moving on to the next or the one SD fund.

Uh significant budget adjustments include uh million and a half reductions in SAP consulting for discretionary enhancements, and that will require uh prioritizing break fix support, uh, regulatory or mandated requirements and audit or compliance-driven needs.

Uh and then there was a 107 or 710,000 uh increase, that's just for uh contractual core ERP licensing costs.

Um, and then uh the uh the largest item was the addition of a 3.9 million to support the ERP modernization.

Uh this project uh budget does include the staffing cost, but as the IBA did note in their report, we are currently developing plans for backfilling the work of some of the staff that are moving over to the project in late fiscal 27.

And then lastly, in the wireless fund uh includes the addition of 500,000 to support the public safety radio system and emergency dispatch centers.

This adjustment covers contractual increases for support provided by Motorola that includes radio system maintenance, uh network equipment, operational support services to ensure operational continuity and compliance with uh FCC regulations.

And then moving on to our core baseline services.

There's a lot in IT, uh, but digital equity has public Wi-Fi, our digital navigator program, digital literacy program, architection, uh architecture and engineering provide services that support our applications, our networks, cloud services, really providing the foundation of technologies that runs city operations and service delivery, cybersecurity uh protects our data, our technology, our continuity of operations, and then our digital governance and strategic operation division manages our IT strategic sourcing governance, our core IT service management, and they support over 15,000 computers and devices.

Enterprise applications manages the critical SAP systems and functions, including things like our financials, HR, utility and asset management, the wireless technology services division provides critical public safety radio services, supporting our first responders when San Diegans call for help.

And then our IT financial team manages the citywide uh IT budget and complex IT financial management functions.

And then lastly, the uh zero-based contract review, uh review of external and zero-based contracts, includes centralized IT contracts through managed service providers and enterprise licensing agreements, and those achieve cost-effective scalability for our citywide IT services.

Those contracts transfer operational risk from the city to the managed service providers through uh service level requirements, and they deliver economic benefits with services that often require less than full-time equivalent staff, uh, offer temporary project-based skills and supply special specialized expertise for our modernization efforts.

Another positive with that model, it also provides opportunities for small local businesses to participate in delivering those services to the city.

Uh quick examples of those contracts.

CGI provides application development and uh maintenance services, Zensar provides workplace services, network, voice, enterprise compute services, and then companies like Dell provide our Microsoft Enterprise Licensing Agreement, and SAP and Deloitte support our SAP systems.

And that concludes the presentation, and happy to answer any questions.

Thank you for that.

We will now go to the IBA.

Thank you.

I'm Trisha Tackey from the Office of the IBA.

Jonathan covered the significant adjustments included in the proposed budget, so I'll focus on just a few key issues.

First, on the general fund side, there's some good news.

The budget maintains funding for SD Access for All, while the general fund shows a 130,000 reduction for hotspots.

This is the funding swap that's using PEG fund to continue providing 2,000 hotspots that residents can check out of the library to access the internet.

The department will also leverage two interns to bolster services provided by the digital equity program.

The division of race and equity will speak more about their positive impact.

Second, the IT fund includes many reductions, including right sizing licenses and contracts, eliminating duplicative tools, and deferring innovation projects.

However, it also defers important network modernization, security upgrades, and replacement of aging equipment.

While many of these are intended as one-time reductions to help balance the general fund, continued deferral in future years could create security risks and lead to higher long-term costs.

The IT fund is also impacted by several restructures.

The web team has been moved to the performance and analytics department, which you'll hear more about this afternoon.

A program manager supporting Council of Affairs Public Safety and their surveillance ordinance for the mayor's office is moving from compliance to the IT fund.

Finally, the PRA team is moving from communications to the IT fund, but only two of the four positions will transfer, while two are proposed reductions.

Council may want to ask how these reductions will impact the city's PRA responsibilities.

For the one SD fund, I would highlight two items.

The reduction of SAP consulting services will impact various departments who are working on process improvements.

IT plans to prioritize its remaining funding for critical SAP updates, break fixes, and mandated or compliance related updates, while delaying planned efficiency and enhancement projects.

These could slow the implementation of audit recommendations for departments like PNC.

The proposed budget includes 20.5 million for the ERP modernization effort, 6.9 million cash funded, and 13.7 million debt financed.

The cash funded portion is included in the 1SD funds proposed budget.

Projected costs between FY27 and FY30 are expected to total 178 million, including 78 million from the general fund, which will largely be debt financed.

The proposed budget also includes 50,000 in our office for a consultant to provide independent technical expertise to help us evaluate the city's modernization project.

The ERP implementation will also require substantial staff time, roughly four FTEs in IT and 59 in other departments, with backfilling needs potentially starting later in FY27.

Because these staffing impacts are not budgeted, and FY27 includes staff reductions in impacted departments.

Council may want to request an update on the ERP modernization staffing plan.

I'll hand it over to Selena and the Division of Race and Equity to review budget equity implications for the department.

Thank you, Tricia.

And good afternoon, Chair Foster and members of the budget review committee.

My name is Salina Villegas, and I'm with the Office of the Independent Budget Analysts of the Division of Race and Equity.

In conducting our review of the Department of Information Technologies FY 2027 proposed budget, we examined all proposed adjustments for their potential equity impacts.

Through this process, we identified four adjustments with equity implications, including reductions, additions, and areas of potential risk.

These are detailed in the DRE budget equity implications section for IT, which can be found on page 141 of the IBA report.

This afternoon I will be speaking to each of these equity implications.

First, the department's investments in digital equity programs, such as mobile hotspot lending, device distribution, and digital literacy workshops.

These are designed to increase access to technology for residents and digital equity priority areas, including low-income households, seniors, unhouse individuals, and immigrant communities.

This is an addition that supports equitable access to technology.

Second, the addition of employing empowerment interns expands the department's capacity to support these digital equity initiatives and to deliver outreach and navigation assistance for essential digital services.

However, the report notes that the mobile hotspot program is currently funded by the public education and government PEG fund, which is not a guaranteed long-term source.

This creates some risk for the sustainability of digital inclusion efforts if alternative funding is not identified.

Third, the report notes that the elimination of the assistant director position is a reduction that decreases the department's leadership capacity for strategy, contract compliance and cross-departmental coordination.

This may affect the department's ability to oversee major initiatives that influence service equity, such as cybersecurity investments and enterprise system upgrades.

Finally, the division of race and equity notes that continued investment in ERP modernization is an addition that is expected to improve system stability data, transparency, and reporting capabilities, which are important for tracking and addressing disparities across city services.

As Tricia noted, sufficient backfield during implementation is also essential to prevent service disruption that affects residents who rely on timely city support.

A stronger ERP environment reduces these risk and supports more reliable equitable service delivery across city departments.

In summary, our analysis provides an assessment of how the Department of IT proposed budget decision may impact the city's ability to advance digital equity and maintain reliable accessible technology services for all residents.

Thank you, and I welcome any questions.

Alrighty.

Thank you for that.

We will now turn to any council members for questions or comments.

Not seeing any, I think that will conclude that presentation.

Thank you, Chair.

The public comment period for subitem B is now open.

And as a reminder, subitem B does include the introduction to fiscal year 27 budget and the financial branch overview.

Each speaker will have one minute per department for a total of three minutes, so please indicate which department or departments you will be speaking to.

We have received four speaker slips here in chambers, Bob Lehman and Peter Kamiski.

We've also received speakers from Christine Martinez and Jacob Edwards.

Bob Lehman, if you can please approach the lector and let us know how much or uh which department it doesn't matter which one, which department or departments you'll be speaking to.

Uh just about the IBA report, I guess, on the first two.

Okay, so two minutes?

Thank you.

I just need a minute.

Okay.

Thank you.

Good afternoon, Chair and Council members.

I want to ground my comments in your own independent budget and analysis report.

The IBA IBA exists to help you understand the real impacts of this budget.

In this case, it's very clear.

This proposal reduces 100% of funding for arts and culture organizations in San Diego.

But what's most important is how the IBA frames it.

These cuts are placed under neighborhood services and enrichment.

That means this is not being treated as optional funding.

It's being identified as a community access and equity issue.

Last year, 119 organizations received OSP funding.

70 organizations delivered neighborhood based projects through CCSD with grants under $30,000, reaching communities across the city.

Limiting these programs doesn't just impact organizations.

The IBA also reinforces that arts and strategy are part of our economic development strategy, tied to tourism, small business, and jobs.

So this is a question for you.

If arts and funding is a neighborhood service, an equity tool, an economic driver, what replaces it?

We are here to work on you with solutions, not just now, but going forward to ensure sustainable, equitable investments in arts and culture.

We urge you to restore funding for OSP and CCSD and align this budget with the priorities outlined in your own analysis.

Thank you.

Thank you.

Peter Kamiski.

Council members, my name is Peter Kamiski, Belbopack Cultural Partnership, and I'm here today to address the critical need to maintain funding, maintain funding for us and culture programs within the city budget, and specifically within the special promotions, uh special promotions program.

Let's start with the city charter.

We saw it this morning.

Section 64 mandates that the city council annually provides support for educational, scientific, historical, and cultural institutions that benefit our city.

The implementation of that council policy 103, we saw it this morning, explicitly identifies arts, culture, and community festivals as priority areas for TOT.

The current proposal eradicates OSP, CCSD, CPPS, and ACCF.

Is both critically damaging to our community and unacceptable.

Equally concerning is the consideration or decision to remove this funding line from TOT special promotional programs.

We're not here today, though we argue strongly to debate the value of arts and culture.

You'll you'll you've been previously uh exposed to that.

You will agree with the logic, and you'll hear from the community again this week.

In the proposed budget, we are seeing these funds redirected to the general fund rather than supporting the cultural fabric of San Diego.

We're asking council and the budget review committee to do two things.

Reject the elimination of arts and culture grants program from the both the budget and specifically from the special promotions line item.

And if needed, and as recognized by committees and council last year, allocate the council's 1% fund as a backfield.

Thank you.

This does conclude your time.

And uh another call for Christine Martinez or Jacob Edwards.

Okay, this will conclude in-person public testimony.

We will now move to the virtual queue.

There are seven hands raised in the virtual queue.

I've started the five-minute timer, and as a reminder to the callers in the virtual queue, please indicate which department or departments you'll be speaking to.

John Stump, please unmute and let us know which departments.

Okay, you'll have three minutes to manage, please begin.

Uh, yes.

Um first of all, there's a very objectionable term that the uh presenters continue to use, and that concerns um failure to pay the um pension programs.

It isn't failure to pay or delaying the pension programs, it's a pension program that is unsustainable, and you had to borrow money when you delayed it.

You've got to look at what you're expending as compared to the constitution.

Um, can you continue to hear me or to hear me?

Yes, please continue.

Oh, thank you.

Uh, on risk management, how much money has been put into the general liability to pay the flood victims from 2024.

This is a particular concern for District 8, which has um a senior citizen park that was flooded out, and they have uh a million dollar claim.

Where is risk management in that?

Uh on citywide special promotional and citywide program expenditures.

You know, uh council member Sean Ilo Rivera was concerned about uh the amount of money that PETCO wasn't reimbursing the city for its cost, but the same is true for the old globe, the zoo, and all the other big institutions.

If you want to be fair, big institutions who are profiting off of special promotions should first reimburse the city for the cost that they incur.

The city has to provide police, fire, ambulance, and infrastructure to the zoo, to the old globe, the art museum, and every other large institution.

There should be one approach.

It's the approach used with CWorld, where the city gets reimbursed for the actual cost that is incurred by those special promotional programs.

Thank you very much.

Thank you.

Becky Rapp, please unmute and indicate which department or departments you'll be speaking to.

The budget department.

I my name is Becky Rapp, and I'd like to address slide nine of the budget department presentation, which shows a series of what if scenarios and how those potential decisions could increase costs for residents.

But what is missing is the other side of the equation.

Before asking residents to take on new costs, we should be taking a hard look at programs the city has already implemented that have not delivered as expected.

Revenues have fallen short of early projections projections, and many permitted businesses didn't even open.

And the city continues to carry ongoing administrative and regulatory costs.

This is a real impact to our budget.

So where is that same level of transparency for existing programs?

Where's the cost benefit analysis showing what has worked and what hasn't?

If we're going to have an honest conversation about future costs, it must include accountability for our past decisions.

Thank you.

Thank you.

Blair Beekman, please unmute and indicate which department or departments.

All right, Blair Beekman, I wanted to speak to the uh budget financial overview, uh promotional programs, uh expenditures, and information technology.

Three minutes to manage, please begin.

Thank you.

Um thank you for uh council comment on these items.

It was really nice to hear uh council person lee talk about TOT items and how that can bring in uh some interesting revenue sources and that he wants some accountability in the coming months, uh, how that's developing.

It looks like it can help some programs, and I got my serious first understanding of uh what is um what the mayor is actually trying to do well, and I thank him for that.

And um I have to be mindful of my criticisms.

I mean, that's how I I mean to be mindful, and I know I'm overly broad and not very knowing, and this I and things help today to begin understanding uh how all sides are trying to address budget issues.

So thank you.

Thank you to council person Moreno, who very nicely said that you know, in in our good work of working on downtown issues, that we can't be over focusing on those things.

The same with council person Foster.

So it's like these are the this is the way I want to be talking about things is that we're all in the ballpark of things, of good things.

How do we then become more clear where you know district uh four and district eight can get a bit more money uh for their uh local neighborhoods?

And how does that work?

That's the good stuff.

And that's I really hope our conversations can be focused in those terms.

And again, that we have um the budget itself and fixing the deficit can be over a longer period of time than everything done all at once.

And we have to really be clear on that concept.

I wish I said those words at my first public presentation, but uh be very clear.

We we have to allow more time to fix the deficit.

We have to allow more time to fix the deficit, and we can't we have to go slowly.

And about uh broadband, it's not just you know filling digital equity, it's making sure there's accountability with that equity.

That's the future of the public open process.

Thank you.

Oh, I got more time, cool.

Yes, so uh with my additional time, yeah.

Um very much that you are working working on digital equity and its importance and a lot of the items for the information technology thing had to do with uh how San Diego UASI works and how you ask San Diego UASI can work well and in best terms and best practices.

I mean, they have to do a bit of shady stuff sometimes, a little uncomfortable uh is a better term, I suppose.

And um, but this stuff what was presented today, uh San Diego UASI can do well, and it's our decency.

Let's hold them accountable, let's be clear what they're doing, and that the process uh of bridging the digital divide is a community process.

It's not just putting in a bunch of tech and saying we're saving ourselves, it's making sure that whole process is open, clear, and accountable, all of us to participate in.

That's building our future of sustainability.

Thank you.

This does conclude your time, and the five-minute timer has concluded.

We have seven hands remaining in the queue.

We will take no additional callers after these seven.

Kathleen Lippitt, please indicate which department or departments you'll be speaking to.

Oh, thank you.

Wait a minute.

Trying to unmute here.

Can you hear me?

We can hear you.

Thank you.

Uh Kathleen lived here.

I would like to speak to the city budget, the risk management and pension programs.

Had the city's public policies been backed by objective cost benefit analysis, the paradoxical harmful outcomes could have been avoided.

Policies intended to mitigate public harm instead grew bloated bureaucracies with a focus on their own sustainability.

Policies were based in political ideology rather than not to serve the public good.

And their harmful outcomes were both predictable and predicted.

For profit policies of commercial drug industries like marijuana were designed to exploit human weakness, not to raise human capacity.

Every taxpayer funded policy the city adopts should be backed with a cost objective, cost benefit analysis.

And regarding pensions, please consider that these pensions are exorbitant.

And was previously stated, they are not sustainable.

They are they are benefits that the public only wishes they had a hope of having.

Oh, I have a little bit more time.

Sorry.

Um so the failure for the city to acknowledge the city policies that were trending in the wrong direction should have been admitted to.

Instead, what we see are city officials blaming the public for a lack of revenue.

The city in Idaho, they passed a plat, a flat tax.

They ended up with billions in surplus.

And guess what they did?

They gave it back to the taxpayers.

I cannot imagine the city of San Diego if they were to have excess money left over, that they would do the same thing.

Sorry to say that, but you'd have to be the most polyamish uh individual not to see how these policies have played out.

Thank you.

Thank you.

Our next speaker is Catherine Rhodes.

Can you please indicate which department and begin?

Um, hi.

The first three special um risk management.

I forgot what the second one was.

Okay, you'll have three minutes to manage, please begin.

Lovely, thank you.

Catherine Rhodes, and I want to say thanks again for um for discussing our transit occupancy tax or what we call TOT reform ballot measures.

There's two ballot measures.

The second ballot measure is um is what we call a replacement TOT, which replaces the convention center up to 3.25% TOT and instead have a 4% TOT.

And the reason for that is in nine years, uh, the if if you don't uh build a $1 billion convention center expansion, then that 3.25% is going to go away unless you bring bring a tax increase for another TOT tax increase forward in the next eight years.

And so this is a way to kind of preempt the um the discussion.

And I know that the city council can't discuss if you're going to build a convention center or not until January 1st, 2027, but that doesn't mean the convention center can't talk about it.

It doesn't mean the unions can't talk about it, it doesn't mean the public can't talk about it, just you can't talk about it.

And the library people and the arts community.

And so what um, you know, the council district two candidate Mandy Havlick and I have put forward these ballot measures on we're going to have the second rules committee hearing on May, I believe May 20th, um, on a Wednesday at 9 a.m.

Um and so what we're asking for is that um uh and what what this is is um and I don't know, do I only have 18 seconds or do I have more than that?

You have another minute after this.

Okay, okay, and so basically what it is is um four percent one percent for the convention center improvements, not the expansion, one percent for homeless, so they'll be made whole, one percent for infrastructure, including um the lifeguard stations in Ocean Beach and Mission Beach, and one percent for penny for the arts, Balball Park, and libraries.

And what um each of these would be um since each one percent is 10 million, and for the the last one, we could have 10 million dollars going to the penny for the arts to to almost make them whole.

But if measures one and two actually go um are put together, there's actually going to be even more money um than 10 million.

There should be about 14 million, and so they would actually be made whole, the libraries would be made whole, and then we could actually have some money for a Balboa Park um for a Balboa Park Conservancy that could get rid of the need for us to have paid parking at Biboa Park and make everybody happy.

So we have a solution to make all of everybody happy to make everybody look good.

It's just we're thank you.

This has conclude your time.

Our next speaker, Zoom user, please indicate which department or departments you'll be speaking to.

Thank you, man.

A special promotions program, citywide expenditures, the risk management, and the information technology.

Three minutes, please begin.

Sure.

So on special promotions program, those are some of the ones in Balboa Park.

This could be a money maker.

Uh a while ago, they had that statue down there in Balball Park where the Mexican guys and the Americans were working together on it.

And the guys ran the Mexican guys ran off with the statue or that structure they built, and they didn't pay.

They owe us money.

So that'd be a way to go after those guys and get the money back for some of the programs at Balboa Park.

I think it was a special promotion.

The city did, but it was really a weird thing.

And then that's like the citywide promotion, or maybe it's the special promotion.

I think it's special.

But it's just here about the city, uh Todd Gloria canceling all these programs.

It's beyond heartbreaking.

That's those programs, all these programs are the foundation of the kids in this community.

It's just unacceptable, man.

And the risk management, like the California state just outlawed the dams that it could break at Lake Hodges.

And that's huge liability.

You know, it's unbelievable, man.

And then the same way with when everyone the lawyers figure out how to sue people for the Tijuana River open sewer, when they figure out how to sue the city with all the people that are getting sick and dying and cancer, that's a huge liability for the city.

The lawyers just got to figure out how to how to how to start filing the cases, and it's going to be overwhelming.

So and also our insurance just raised like 140%, which is understandable when they start looking at the liability repays.

And then also, I think it's getting worse too because the risk, like they just voted to have 750 million new cars for the city car program.

Hey, times are tough, man.

Times are tough.

Like in my household, hey, uh, the condo projects have put another 6,000 thing on everybody to fix the decks from state program.

It's like, oh honey, let's go out and buy two new cars.

Like it's ridiculous, man.

We should have bought all used cars at the for the risk management thing and the information technology.

I think we know, like the government, the governor of New York said that black people cannot use computers.

So maybe we should have a little more training.

According to her, they couldn't figure out how to vote or something, register.

So maybe we need more information technology training for black people because according to her, they can't figure out how to use computers.

So thanks a lot.

Our next speaker is Tony.

Please indicate which item which department or departments you'll be speaking to.

Yeah, can you hear me?

Yes, we can hear you.

Yes, I will be speaking to uh the butt the budget.

Okay, please uh proposed budget.

Okay, please speak in.

Thank you.

Yes, uh good morning, counsel.

I just wanted to say uh thank you for your diligence in working on this problem.

I know that this is uh macro issue that everyone is super zoomed in and focused in on.

I want to back up a little bit and start by addressing what Sean Elo Rivera has said on numerous occasions uh with regard to previous administrations being a large part of the blame and the reason why we're in this current situation.

Um, I tried to do a little bit of digging to see kind of what specifically what Sean was referring to.

I spoke to a friend recently who was telling me that Kevin Faulkner purchased um the old Sempra energy building in downtown, uh, which cost the city 160 million dollars.

And I hope that everyone that's listening knows uh and oh, and the other half of that, of course, is that the building was filled with asbestos and uh the renovations uh to this building are in a large part that's uh you know filled with asbestos is a big part of the reason why we're in the the uh budget crisis that we're in, uh, not making sound financial decisions.

Thank you.

This does conclude your time.

Thank you.

Our next speaker is Madison.

Please unmute and indicate which department you'll be speaking to.

Okay, yes, the special promotional programs and risk management.

Okay, two minutes, two minutes again.

So for this year's budget, as you consider funding for special promotional programs.

I urge you to be cautious about investing public dollars in ways that may normalize or promote substance use.

Even indirectly, that can work against our goal of protecting young people.

And from a risk management perspective, it's more responsible to reduce exposure and access to intoxicating products and not expand it.

We've already seen challenges with the city's cannabis program where projected revenues fell short while costs remain significant.

And I'm not actually sure where the specific numbers for that program are in the reports, but hopefully we can get a look at the costs of the seed program.

When programs tied to intoxicating substances don't deliver financially, the city is left carrying not only the fiscal burden, but also the broader public health impacts, which are numerous.

Instead, I would think those resources would be better directed toward prevention.

Things like youth education, after school programs, mentorship, and family support.

These are proven ways to reduce early substance use, which is strongly linked to addiction, mental health challenges for teens, and involvement with the justice system later on.

Preventing those outcomes is far less costly than responding to them.

I'm here to ask you to make youth drug prevention a clear priority in both your risk management strategy and your budget decisions, especially when it comes to the special promotional programs.

We have to make sure that these costs are worth it.

And if we want to be fiscally responsible and protect community health at the same time, the path is clear.

Invest in prevention and be mindful about how city funded programs may influence youth behavior.

Thank you.

Thank you.

Judy String, please unmute and indicate which department you'll be speaking to.

Good afternoon, San Diego City Council.

I wanted to echo City Council Member Marino's comments about the audit committee.

Well, first of all, the two items I'd like to speak to are citywide program expenditures and second risk management.

Citywide program expenditures.

And particularly looked at leases and the recommendations that came in.

I thought were superb.

We have a great deal of public property being used for huge private gain.

And we are not garnering what we should.

She mentioned one of that I'm particularly aware of, and that's the Fairbanks facility.

Beautiful public property that a huge LLC, who we haven't been able to identify who those people are, seems to be getting a lot of money from it.

And we, the public, are not benefiting.

Number two, risk management.

Risk management speaks to the awards that the department has received in their workers' comp programs.

And that's wonderful.

Keeping a healthy workforce, I'm sure is important to you all.

I noticed when we had someone out here on our street street one street over, doing something with the street lights that they were smoking out at the curb.

But I wondered how much programming does our city do to help our workforce be healthy, because nothing is worse for help than public and smoke and vaping to affect their overall general good health.

And I hope that we're taking advantage of the opportunity that we create for our workforce by doing good workplace education and letting them know the good public policies that are in place to protect their health, and they should not be smoking in the workplace and they should not be smoking in public places.

Our final speaker in the queue, phone number ending in 870.

Please indicate which department you'll be speaking to and begin.

Thank you, Natalie.

I'll be speaking on all of them.

Three minutes, please begin.

Let's really collaborate on that with her and figure out if that is really it seems to me a lot of revenue.

Thank you.

Um switch a little here.

It is now our structural budget deficit.

And it too is covered with band-aids.

Thank you all for your presentations, addressing in very detail the complexity, the complexity, the complexity of each band-aid on the canary.

Town halls to explain our structural budget deficit are valued and appreciated.

A very special shout out to the IT department and to uh the equity focus on these items as we go through them.

Now I do want to repeat a little bit what I said about the department of race and equity.

I have tremendous gratitude that they're rolling.

My big like are the KPIs, and they influence all items on this uh subitem B.

And they'll they'll influence everything.

The key performance indicators, they're they're just crucial.

Let's get the data on the qualitative and the quantitative end on that.

Equity, we must remember is systemic.

And if you pull, if you pull out one corner of the equity universe, you pull out the whole thing.

So IBA D R A D R E, excuse me, keep up your very important work.

Now I want to finish by summing up the quote by the IBA team.

Uh critical to align ongoing expenses with ongoing revenue.

It's so simple.

I added that to provide stability and restore public trust.

End of quote.

That just sums it up.

Everything that was said is so extremely complex for me as a public.

It's amazing to try to get the big picture of it.

But it's all about restoring, providing stability and restoring public trust on all these levels that are coming forward and being so upset about what's happening.

Let's work together on stability and trust.

One Sandy, one people, one family, one San Diego.

Thank you for listening.

It was a great moment morning, great work, Chair, and everybody else.

Welcome to all.

Thank you.

And Chair, this concludes public comment on a sub item B.

Thank you so much.

And thank you to all the members of the public for participating.

We will now move to council members for any concluding remarks.

We will start with Council President Pro Tem Lee.

Uh thank you, Chair.

Um, and I I waited until the section so that I didn't um uh take up time in the IT section, but I do have a couple questions that are actually related to IT in particular, and um wanted to if you could highlight again where we stand with the mobile hotspot program, because again, I I understand how we've seen it in the budget might be reflected differently because of the one-time nature of what was done last year.

Yes, the mobile hotspot program will continue as it is today with uh 2,000 hotspots.

Uh so we did have uh funding, uh which we will uh continue, you know, one time funding, but we will continue to request it each year.

Um so uh from our perspective right now, that that program continues supported.

Okay, thank you.

Um I inside some of the additional contracts that were in the budget.

Um, there was a chunk of it specifically for Salesforce licenses, and it was mentioned that that was a consolidation of licenses specifically within IT.

Does that match by um proportional decreases in other departments where they're being moved?

Um so yes, the the licensing centralized in IT and uh you know moved into our budget.

So uh so Ben, I believe we'll we'll just yes, you'll you'll see some corresponding decreases within each individual department that had those costs already budgeted.

Okay.

I and I ask it because the one line that really stuck out in the budget was this significant increase in additional contracts while we were looking at budget mitigations by removing positions and on the face, it would seem to suggest that we're moving to contracting and eliminating positions, which I didn't know if that was actually the case.

Um I know one of the biggest endeavors of the department is to support um the backbone of uh IT's operations and the city's operations um through the ERP modernization effort.

And so, as part of what we're seeing in the budget is that a significant amount of that is not being funded by cash correctly in this budget, that we actually see uh a fairly sizable proportion of it that is uh gonna be coming from debt service.

And I just wanted to understand that because one of the one of the big discussions we always have in budgeting is when Europe modernized come to the council for discussion.

They're huge numbers, and more and more we're getting pressed by the public about how we're reducing contracts that we have and the costs that we're seeing your year.

Uh yeah, that's correct.

So the increase of 3.9 million in the uh one SD fund.

Uh but looking at uh fiscal year 27 um cash uh what for general fund uh was 1.4 million.

Um and you can check my homework uh Ben, but uh boy, yeah, 1.4 million cash.

Okay.

I think um I this is one area I where we've often, as a council express the significance of needing to move forward with the modernization effort, especially with the horizon that we've got in terms of support.

Um but usually it's bundled as one very large multi-year project.

I think something for us to understand is is just frankly being able to distinguish between every necessary um piece of of the modernization effort versus what may be flexible enough to consider given the next couple of years of the budget crunch that we've got.

Um in no way suggesting that we don't move forward, but we're just at a point where we're making hard choices within the city, and I think we owe it to ourselves to be able to ask what is absolutely necessary in the the shortest time frame versus what can be pushed, in which ways also understanding that there's staffing impacts, including backfill, that's all sort of weighed in here, and it's very difficult for this council to to you know um take out of the full picture.

And and uh you know it's 100% necessary timing-wise.

Uh just because the the current SAP system will be 20 over 20 years old when when it reaches end of support.

So really important things, uh payroll, our financials, uh, you know, new tax law changes, um, all of those things really core systems that run core operations delivering services all over the city, uh, from procurement financials to uh you know working on assets out in the streets, and because it truly is an end-of-life product, uh we really do have to act now.

Um and and there's some efficiencies, right, that we'll get out of it.

Um replacing a 20-plus year old system uh with better data analytics um and and more more opportunities to improve business processes.

So um there are uh positives to uh to a big modernization like that.

Uh I I certainly understand that, and and and I think on this diet I've championed the fact that we do need to get the work done.

I I also am I think we're all facing this point where we are balancing choices at the moment.

And so I I'm going to acknowledge that I don't think we can take an answer of uh it's a hundred percent necessary.

Um and I think we we owe it ourselves to understand, at least in detail, if that is the case, how it's broken down.

Core functions like HR, um payroll processing, et cetera.

I absolutely understand how that's gonna have to happen within a certain time frame given the transition.

If there are any components that we can look at to consider where the timeline stands, where staffing impacts are again, I think this is a year, again, given it's a multi-year effort, we need to know what's absolutely necessary now within the current year that we've got versus what has some window of flexibility before our end of life point hits.

So I did just propose that for the future, and maybe it's something as uh we continue to work with the IBA we can get a better understanding of.

Um of the last things I noticed um something that you had pointed out, um Charles, or at least IBA in your report was that there are there is at least one position within the Department of IT that is is really actually a member from the office of the mayor.

And you had happened to point that out in the report.

It's not the only one, and so it's something that I would ask how we understand which pieces of the office are being moved into which departments.

Uh we will ultimately get to that portion of the discussion at some point, I presume.

Um but in preparation for that, it would be helpful for us to get a better understanding.

So we will we've got a discussion or report of a number of different positions that are being moved from one office to another.

Uh there are various chief positions that are being allocated from the mayor's office to other departments, the position that you're referring to specifically, I believe had previously been budgeted in compliance and now is moving over to the Department of IT.

But that position um traditionally has reported to the mayor's office and has done more things that are just associated with compliance-related functions is also the legislative affairs person in the mayor's office that deals with this council.

And I don't think that's a unique thing just in one department or just one office.

There may be other areas from the city where positions are um have maybe multiple hats, and I I think for consistency would help us to understand which ones are staying within the departments they are, which ones are being moved.

Um, because we're all trying to understand what increases and decreases we're seeing in terms of mitigations and new positions, and if that's not reflected consistently across years, then what looks like uh an addition or a change may actually not be what it looks like on paper in the budget.

Um and so I again that that's something I I would implore between the IBA HR and personnel for us to have a full understanding of all the different moves that we have position-wise.

That concludes my comments.

Thank you for that, Pro Tem.

We will now move to Councilmember Elo River.

Uh thank you, Chair.

I just want to say thank you to everyone who um who presented this morning.

Um appreciate all that.

Uh thank you, Stelina and the rest of the um Office of Race and Equity or the Division of Race and Equity for the work that you do, Charles, um, for your reports as well.

Um thank you to Council President Pro Tem for diving in deep here and um the other items.

Um we've got a long road ahead of us this week for sure, and so I'm not gonna say too much uh more right now.

I've I've said a lot already this morning, but um I I will just reiterate that uh what is in front of us I can't swallow without understanding better where we're actually trying to go.

And I think uh Council President Pro Tem is has asked some very specific questions about trying to understand um Council President asked them as well.

Um, where did we get these numbers?

Why did we decide um that this was the place um to reduce rather than other places?

Um I've yet to hear responses that make me comfortable with um what's been proposed.

So um obviously a lot of work to do this we and the the candor from um the both city staff, IBA um in responding to our questions uh is extremely helpful because it it will allow us to do a better job uh in and putting this the final product together.

Thank you, Chair.

Thank you.

Councilmember, we will now go to Councilmember Campillo.

Thank you, Chair Foster.

Thank you to all the staff today who've uh put in a lot of work to present today, answer our questions.

Um I'll focus just mostly on the arts and culture issue, uh which I've been vocal about in the past because what I'm seeing is a dismantling of the ecosystem as opposed to a trim that should be picked up by other people.

Um and it's because eliminating the critical grant funding that directly supports families, it's their jobs, and it's the small organizations and working artists across the city that are a component of our economy that our creative economy plan that we put a lot of work into as a city tells us.

Um we hear a lot about core services as a phrase that comes up during budget discussions, and I don't hear enough about core responsibilities because creating good jobs and attracting people to our city with arts and cultural programming, uh many of which create affordable opportunities for our own residents to take part in, that's a core responsibility.

It's not the same as sending a police officer out or paving a street or fixing a sidewalk.

Uh, but it is a core responsibility to create a strong local economy and putting dollars back into these employees' pockets and saving the dollars for the customers' pockets, those are both good things.

And by undermining arts and culture, we're not truly saving money to set spend on course services.

We're undermining an excellent revenue stream and pushing institutions to actually raise their prices to meet their own costs.

So let's be very clear about the economic ramifications.

When you cut arts and culture to balance a budget today, that makes life more expensive for San Diegans tomorrow and makes next year's budget deficit worse.

I think if we had spent more money on arts last year and the year before and the year before that, and for the 15 to 20 years we talked about Penny for the Arts, I think we'd have a lower budget deficit this year and last year and next year.

But it takes the foresight to keep arts and culture sectors strong today so that core services will be funded and families will have more affordable experiences and education well into the future.

So I just want to put it out there that if we're going to be serious about economic growth and affordability and vibrant communities, we can't gut the very sector that helps drive all three.

So I look forward to working hard to refund that portion of this.

And of course, uh, I know there was a lot more spoken about than just that issue today, uh, but that's gonna be a huge focus of mine.

Thank you, Chair.

Thank you, uh Councilmember Campillo.

Um nicely said.

Um I do just one quick question.

If you can help me to understand, I see we have um public records act team moving over from communications, but it looks like we have a contracts increase, but we also have a service level agreement with the city attorney's office, which I consider a contract.

Why are why do we have a service uh SLA with the city attorney's office?

Um that's uh been a standard for uh city attorney support, and we can get you more information on that.

Uh but they're providing services to us.

We have you know close to 100 contracts and and a lot of uh compliance uh that we do, so we certainly do need their assistance.

I understand.

I'd like to have more insight as to why we have an SLA as we talk about you know general fund departments and the work that's taking place.

Um, also um do appreciate the conversation about the SAP and the ERP system.

Um I think there's um some things that we do need to get our arms around in regards to the system.

What works well, what doesn't work well.

Right?

I hear that with some of the modules we have issues.

And if we are having issues, we need to get them fixed so they meet our um operational needs.

Well, we need to look at not utilizing them and mitigating our costs.

Um I'll leave that there.

Um, and again, thank you for the presentations today.

Thank you, uh Charles to you and your team and all the work um that went into the conversation this morning.

Thank you to my colleagues for the questions and comments that have been provided.

Um, with that, uh, we will now take a brief recess and return for subitem C performance and logistics branch overview at 2 p.m.

this afternoon.

Thank you.

Good afternoon.

We will now reconvene for the afternoon hearing of the budget review committee meeting on Monday, May 4th, 2026.

Sarah, please call the roll.

Vice Chair Council President Lacava.

Committee member Campbell, Committee Member Whitburn.

Here.

Committee member Von Wilbert.

Council President Pro Tem Lee.

Here.

Committee member Campio.

Committee member Moreno.

Present.

Committee member Ilo Rivera.

And Chair, Committee Member Foster.

Here we go.

All righty.

A quorum is now present.

We will now continue our information agenda.

Sarah, please introduce subitem C.

Thank you, Chair Foster.

Item one, subitem C, Performance and Logistics Branch Overview, which includes general services, transportation, and performance and Adam Linux departments.

And if you're watching on City TV or the live stream online and you'd like to dial in to speak, please call 1669-2545252.

And when prompted, input webinar ID 160-3326900 pound.

Thank you.

Staff, please introduce yourselves for the record and let us know how much time you will need for your presentation.

And please proceed.

Hi, good afternoon.

Uh budget chair foster and council city uh city council members, I'm Bethany Bizek, Chief Performance and Logistics Officer.

And I'm pleased to open this afternoon's session of the budget committee hearing.

We'll need 25 minutes for our presentation.

Today you'll hear from directors whose teams provide integrated operational backbone that keeps our city delivering efficient, accountable, and customer serviced activities.

Our residents expect reliable, high quality service, and even in a deficit year, that remains our commitment.

I'm grateful that our departments are presenting on the first day of the hearings.

As you listen to our directors this afternoon and throughout this week, I encourage everyone listening today to consider one key theme.

No city department works in a silo.

Every outcome our residents experience is the result of multiple teams working together.

When a police officer or firefighter responds to an emergency, think not only of the responder, but also of the fleet technician who ensured the engine or patrol car was repaired overnight and ready to serve.

When a resident turns on the tap and receives clean drinking water, think not only of the plant technician, but also of the PANDA data analyst who redesigned the customer call center experience to reduce wait times.

When someone checks out their favorite next read at their branch library, yes, thank the librarian, but also recognize the contracting officer who issued nearly 2,000 purchase orders for the library department last year.

And when families visit their neighborhood recenter, thank the parks and rec grounds maintenance worker, but also the transportation electrician who repaired the field lights and the general services plumber who kept the facilities working.

Next slide.

We are one city.

We are proud of our nearly 400 MEA employees, over 6127 employees, and our unclassified team members who work together every day.

Since the organizational realignment in November and the creation of the performance and analytics uh logistics branch, we have focused on integrating changes that strengthen efficiency and improve customer service despite the constraints of a significant budget deficit.

I'd like to highlight a few examples.

The performance and analytics department created a water consumption tool that helps departments track usage and identifying cost savings opportunities.

The purchasing and contracting department expanded access to a rebound contract tracking to every single city employee, launched reoccurring meetings with client departments to proactively manage contracting forecasts, and has partnered with the economic development corporation to help businesses understand how to competitively bid in the city and across the region.

The Department of General Services launched a red tag reduction efficiency process to reduce the number of red tag vehicles that were out of service from 260 to less than 125 and implemented new monthly reports to ensure the most critical vehicles remain operational despite limited resources.

The transportation department established a new OSA Chen hazard training program, resulting in 263 employees receiving the lifetime national certification.

Because this training was delivered entirely in-house, the city saved more than 200,000 compared to using an outside vendor.

These accomplishments represent only a small sample of how our teams are prioritizing internal customer departments, external service expectations, and operational excellence.

Before I turn it over to the directors for their presentation, I want to thank Charles, Kim, and the entire IBA team for their collaboration through the process.

This is a difficult budget year, and no decision will be without consequence, and we understand that.

The IBA's commitment to transparency with us ensures our residents and everyone involved understands the choices ahead.

Our teams stand ready to continue innovating, collaborating, and delivering for San Diego.

Thank you.

Now I'll turn it over to Mike Tully.

Thank you, Bethany.

Good afternoon, Budget Chair Foster and committee and council members.

My name is Michael Tully, Interim Director of the Department of General Services.

General Services provides centralized fleet facilities and energy services for all city departments.

The FY27 draft budget reflects a net reduction in staffing and targeted expenditure adjustments.

These changes result in service level impacts, primarily in facilities and energy division.

We'll walk you through these adjustments in more detail, including impacts, risk, and how we will continue to support departments and communities across the city.

The department has a total of 428 FTE organized into four divisions.

Fleet maintains and repairs over 5,000 vehicles and motive equipment.

Facilities maintains approximately 9 million square feet through 1,600 city buildings and facilities.

And our administration and business operations manages acquisitions, fiscal operations, and safety and training.

The department completed a restructure to properly allocate management and administrative staff in FY27, which is why you will see incremental FTE changes in each of the divisions throughout the budget document.

In the next few slides, we'll walk through the fiscal year 27 impacts to service delivery and staffing.

We are now looking at energy division and the impact proposed staffing reductions.

Impacts here are driven by the reduction of two unclassified positions.

These positions support the city's ability to engage in policy, long-term electrification efforts, expanding climate action programs, and being proactive in seeking new opportunities.

With these reductions, we lose dedicated staff in these areas and unable to be at the forefront of energy independence and greening our fleet.

Here we have facilities division and FY27 division has 171.75 FTE, a net decrease of 12.75 FTE.

The majority of these positions in the division are responsible for major core functions like plumbing, painting, HVAC, electrical, carpentry, and roofing.

This slide shows how our staffing levels are associated with workload compared to industry standards.

Even at our current staffing levels, each trade position is responsible for more square footage than municipal benchmarks on average nearly double.

When factoring the city's substantial deferred maintenance backlog estimated in the billions, actual service demands exceed benchmarks even further due to the age and condition of the facilities.

Included in these reductions, but not shown in the slides are four trade supervisor positions.

Carpentry supervisor, building supervisor, HVAC supervisor, plumbing supervisor, all currently vacant.

Losing these supervisory positions reduces oversight and quality control, increases span of control, and creates gaps in coordination across multiple trades.

Essentially, these reductions result in the remaining staff having to do more with less.

We'll continue to be responsive to critical failures and health and safety issues, but with little to no ability to stay ahead of problems.

In practice, that means longer response times, growing maintenance backlog, preventative maintenance being deferred.

These reductions expose the broader challenge we are facing with long-term deferred maintenance.

Without adequate staffing and a facilities condition assessment to guide and prioritize the work in a strategic manner, closing the deferred maintenance gap becomes further out of reach.

For our facilit for our fleet operations FY27 draft budget is less about reductions.

What this slide shows is a growing demand for fleet services.

The workload per technician has continued to increase with the addition of more than 100 vehicles approved in prior budgets without an increase in staffing.

As a result, the technician to vehicle ratio continues to get further away from the industry best practice of 1 to 50 to 1 to 69 for fiscal year 27.

Operationally, that shifts focus to priority one vehicles like fire trucks, police patrol vehicles, refuse packers, and pothole repair vehicles.

As a result, priority two vehicles will see increased downtime.

Since all departments rely on both, this impact will be felt citywide.

Our goal is 90% priority one vehicle availability, and we are currently at 87% and trending downward, reflecting the difficulty of sustaining service levels with current staffing.

This slide displays a zero-base review of DGS's internal external contracts.

These pie charts highlight our external contracts are tied to essential services.

And facilities, the majority of these contracts support life safety systems, including fire alarm and suppression, elevators, and similar critical infrastructure.

In fleet, these contracts cover specialized services that our technicians are not equipped to perform internally.

This includes heavy-duty tire services, vehicle lift services, and repairs that require proprietary tools are external expertise.

In energy, these contracts are fundamental to delivering core programs, including energy billing, rate optimization, and citywide electrification and decarbonization efforts.

All three divisions rely on external services to deliver our core functions and represent a small portion of the department's overall expense.

While DGS has been historically under-resourced over the last year, the department has had measurable achievements.

Key accomplishments in fleet division include implementing the citywide dashboard, improving visibility and coordination with departments, strengthening how we manage and support their operations.

The completion of over 46,000 work orders reflects the scale of that support.

And for the past seven years in a row, fleet operations has been awarded the top 100 public fleets.

Facilities' accomplishments over the last year include completing over 10,000 work orders and delivering major renovations, including MLK pool facility and university city library.

Energy division executed an energy savings performance contract and engaged with departments in completing their fleet conversion plans.

A $16 million grant was awarded for public EV charging.

Across all three divisions, the common thread is DGS's readiness to support departments in fulfilling their mission and being a leader in environmentally sustainable practices.

Building on those accomplishments, this highlights how our work translates into equitable outcomes across the city.

On the facility side, improvements were concentrated at public-facing locations.

This includes projects like MLK Pool, Paradise Hills Recreation Center, OTI Mesa Library, and multiple recreation centers.

For energy divisions, efforts are focused on expanding access to infrastructure and improving climate resiliency.

Projects like microgrids and communities of concern and EV resilience hub at Montgomery Waller improve both access and reliability of services.

You might notice that our fleet division is not included in the highlights.

Fleet's role in equity is more indirect.

As a centralized maintenance function, the impact is realized through the departments we serve and support, particularly police, fire, and transportation.

Ensuring that those vehicles are operational and reliable supports our service delivery across all communities.

In closing, what I believe I've shown is a department that stands ready to support the city's core operations and deliver delivery of essential services, even as additional resources become scarce.

This concludes my presentation, and I'll now turn it over to transportation to continue the presentation.

Thank you.

All right, let's pause here and we will go to the IBA for comment.

Thank you, Chair Foster.

My name is Jordan Moore with the Office of the IBA.

Our analysis of general services can be found on page 188 of our uh report that was released last week.

One of the some of the key takeaways from our analysis that you'll see, and you heard Michael talk about many of the reductions that are taking place.

The largest one is in the facility services division, which is funded directly out of the general fund.

There are 13 vacant positions that are being reduced this year.

Um I'll note that while those positions are vacant, when we asked the department how long they've been vacant, the vast majority of those vacancies were within the last really 18 months.

The reasons the positions are vacant has more to do with the request to fill process and natural attrition not being able to backfill than it does with you know a difficulty to hire or a lack of need for these positions.

In fact, one of the things that we'll note is that, as Michael alluded to, you are seeing new facilities coming online.

There are always new things that the city is doing, new recreation centers, other new buildings.

Facility services all not getting additional people.

In fact, they are losing people.

So what the impact of that's going to be is you're going to be seeing maintenance issues, which are already fairly severe for city facilities, most likely continue to degrade as you're adding responsibilities without also adding the personnel that you need to maintain those buildings.

I mean, in the energy conservation program, again, there's also some position reductions.

Probably the biggest one that we found in our review had to do with fleet electrification.

Um while this position was added initially in response to the city's climate action plan, fleet electrification is more and more becoming a state mandate.

It's no longer just a city goal.

And the reporting that goes along with that is becoming more and more strenuous.

Without this position, that reporting now has to fall onto other staffers, which, as mentioned, through general services as a whole has been typically understaffed for years.

The last two issues I'll point out have to do with one facilities condition assessments.

So the last time the city did FCAs was over 10 years ago now.

So we the city really does not have a good handle on where its facilities are, what work needs to be done, those types of things in order to do a significant amount of capital investment.

When you don't know what things are going on, systems will start inevitably beginning to fail, and you will run into issues like we do.

I don't think I have to remind anyone what the mission beach lifeguard station looks like right now.

That's the kind of thing that happens when you defer maintenance and don't understand what's happening to your facilities.

Then the final thing I'll note, and this is highly technical, but we wrote it up.

So General Services helps other city departments.

That's what they do.

Facilities, fleet energy.

They are the backbone that helps other departments run.

Fleet and energy are funded through what we call internal service funds.

So they are all funded internally, and the allocations for their budgets come from those departments that they assist.

Facility services, due to historical things has never been funded that way.

It's straight out of the general fund.

They do receive some special revenue when they go to do things for like PUD and other departments, but from a budgetary standpoint, they are straight out of the general fund.

Our office believes that it's time to actually have facilities budget, recognize what they do.

They work for other departments.

They are a cost that other departments incur in order to operate.

And so the best way to do that is to also begin to convert facility services into an internal service fund as well, which, as we notice something that can take place over the next couple of years.

That concludes my comments, and I'll turn it over to Grace for some equity impacts.

Thank you, Jordan.

Good afternoon, Chair Foster and the members of the budget review committee.

My name is Grace Baguno with the Office of the Independent Budget Analyst Division of Race and Equity.

The budget equity implications in fiscal year proposed budget for general services is included in the IBA report starting on page 193.

The proposed budget does have two equity implications.

The first implication is the reduction of staff, which has already been named, specifically in the ability to maintain and repair city-owned and leased assets, including our libraries and parks like Balboa Park.

Since facility condition assessment hasn't been done since 2016, as Jordan alluded, the current state of these facilities is unknown.

And for that, we will need to create some prioritization process for that maintenance work in order to avoid creating additional disparities in these facilities that have historically not been invested in.

As our office noted earlier, these impacts are felt to the public through faulty air conditioning systems, leaky roofs, and deferred maintenance in the 37 library branches, 60 recreational centers, and over 400 parks in our city.

In addition, as been stated, the new park and recreation facility is coming online in fiscal year 27 and has no general services staff being added to ensure that those facility facilities stay safe and clean.

The second equity implication is in the reduction of that program coordinator position in fleet electrification, which has an equity impact in the neighborhoods adjacent to our city fleet yards, like Choyas operations yard.

The slower the city adopts the replacement of these fleet vehicles, especially those that are diesel vehicles, the longer the emissions of these vehicles impact the air quality in historically underserved communities.

This concludes my comments on general services and happy to build any questions.

Thank you.

Thank you for that.

We will now turn to council members for any comments or questions for the department.

We have council president on the lights.

All right, thank you, Chair.

Uh let's see if I can collect my thoughts.

So one, thank you for the presentation.

Bethany, thank you for your opening comments to remind us where the importance is and maybe why it's been traditionally underfunded, because it kind of gets lost in all the conversations that are more public-facing or better understood of what you do.

So a couple of questions.

So Jordan talked about some of the vacancies that are there when we but I think there's actual budget cuts that actually impact the number of staff you have to do the work.

Uh electrician, plumber, et cetera.

So those are actually hard budget cuts that are proposed here that eliminate staff when we already didn't have enough people under best practices to do the work.

Pardon me wants to ask you what the implications are, but I think we know in how the what the conditions of the buildings are and sometimes get to be pretty dramatic uh in those impacts.

Um did the department have it like a 7% cut, and this is how you got to the 7% or Mike or Beth?

Yeah, yes.

We were we were asked um for a 7% reduction, and this is how we got to that.

And what we did was we looked at how we could continue to perform core services and meet public and health, public safety and health, and this is where we landed on the vacancies.

Okay.

So this was on top of the cuts in 26, which probably also 25 was probably under-resourced for what a city of our size, the facilities we have, so you're just getting deeper and deeper into the bones of that.

So you had a challenge, you you stepped up and met that challenge.

Let me ask you one specific thing.

Let me get my notes.

Um Jordan talked a little bit about this, but the reduction of the fleet electrification program coordinator, less about our climate action plan and the ambitious goals we had, but more of a state mandate.

Are we concerned about compliance with the state mandate if we're not staffing this up at the level that we need to be able to deliver the targets and we are, sir?

And I will also call uh Heather Warner, uh deputy director for energy up, but I will go ahead and take the first swing at this.

We are currently out of compliance currently with CARV and without a dedicated staff person.

That moves us further away from that goal.

But the reason the decision was made, I I hope that I clearly conveyed in my presentation just where we're at in the other divisions in terms of fleet and facilities, and to look at a unclassified position in one of those divisions was not going to work.

So, unfortunately, this was a very difficult decision, not only from an operational perspective, but also just simply from a human perspective, to be honest.

And this is where we landed, we landed.

Okay, and I appreciate that.

And I think my questions are more just to help us understand what the implications are and the balance against all the cuts and priorities.

So to expand on what Michael was saying, um, there's kind of two components to CARP compliance.

One is just the very this the specific kind of reporting that we have to do and you know, submit data to carb, that we have to do.

And that is 50% of all fleet purchases have to be zero emission right now, every year in 2030, that goes to 100 percent.

We are currently not in compliance with that requirement.

Some of that is the simple constraint, also a budget constraint that EV vehicles in our fleet are much more expensive.

They're usually about two times more expensive because so few of our fleet vehicles are kind of light duty sedans, et cetera, they are major industrial equipment.

Um that lack of compliance right now does not have kind of a uh penalty.

The state has not established a financial penalty on that.

We do not know how long they're gonna give to cities and municipalities on that runway.

Right now, the immediate opportunity cost is that if we are not compliant with all carb regulations, we are not eligible for any external carb money.

So we are not eligible for any grant funding competitive or formula through CARB or through APCD to help us fill that gap.

And it's a little bit of there is a compounding effect in that space, it can compound to the positive, or it can unfortunately compound to the negative.

Um yes, having not having a person who is dedicated to looking at um, we now have our fleet conversion plans.

Do we need to get more creative in procurement?

What how are we procuring those vehicles?

What new EVs are coming out into the market in this industrial space?

Um, we just don't have as many eyes understanding the possibilities to which we can pivot.

And we are not going to have that with this reduction.

Okay.

Well, you anticipated my next question about we talked about the unvisual, but the actual acquisition of vehicles uh going forward.

And so what you're also telling us is this is not a case of fines.

This is a case of losing out on grants.

And so at this time, yes.

At this time.

So thank you, Heather.

Thank you.

And I'll close here and and you know, I will remind everybody what I have to remind myself that what I've said publicly multiple times.

If I don't like a cut, I've got to find a cut someplace else to balance it out because the budget still has to balance.

Uh uh tough conversations.

I I can see in your face how tough these were.

Uh, but I appreciate the work in trying to make it work in all the staff there that are trying to take up that extra workload.

But like you said, um, that is not a good path to be on.

It's hard enough to fill these positions.

Um maybe I'll ask one last question.

Uh on plumbers and electricians, are those still traditionally hard for us to hire, or is it we've actually done pretty well on when we do, but we've been in the RTF process for the past year.

So thanks for confirming that.

All right, thank you very much.

Thank you, Chair.

Thank you so much.

We will now go to Pro Tem Lee.

Thank you, Chair.

Uh, thank you for the presentation.

Um I was also curious about the slide that outlined the 13 FTEs um that were being reduced.

Um, and then to match that up with uh what Jordan had mentioned in terms of the positions are currently vacant.

I I think it would help us to get a sense of the length of vacancy of I I I get the range.

Um, but in in that slide it talked about, or I mean it seemed to showcase the reduction in service response that we would anticipate as a result of not having those positions filled.

Correct.

Is that based on this last correct?

We we were trying to show identify that uh the square footage for per trade was gonna go up with those reductions.

So we get further away from industry standards in terms of what the the square footage should be.

I think I get that.

Um I think I'm just trying to reconcile that if we're looking at positions that were just vacant in the last during the last fiscal year versus ones that were vacant for a longer period of time.

So if there's a sense of the average vacancy number of changes, I don't have that right in front of me, but I know they provided it to me.

So in my comments, I think I said most of them have been less than 18 months.

So my point with this is that this is not the type of vacant position reduction that we saw in years past where we were reducing vacant positions that have been vacant for three, four years sometimes, where that service level wasn't being provided when that's there.

These are positions that are vacant more due to circumstance, right?

Maybe an electrician happen in the last nine months happened to find a better job somewhere else because and the only reason it's vacant is because they haven't been allowed to rehire due to the RTF process, right?

So in my opinion, they happen to be vacant right now, right?

So this will not impact anybody who's currently employed the city.

But these are positions that very recently have been providing service to the city.

So to me, this is a this is a more impactful service level reduction than what you typically would have seen with vacant position reductions in the past.

These are only vacant due to circumstance.

We can provide you with that information because I know they sent it to me, and I found it interesting how little time many of these positions have been vacant.

Sounds good.

And and I think that would be helpful also because I, as I understand it, the requestful process only applied this half of this fiscal year, correct?

And so not to say that everyone should have suddenly been hired within that time frame, but as I understand it, quite a few departments took advantage of the fact that there was no request to full process in that roughly six-month window and seemed to hire significantly.

Um and so as the council gets data on these slides, and maybe this is just a note for every department to come forward ahead of this.

Uh I get it, every cut that is being proposed at the moment obviously has some kind of service level impact.

Um I I'll speak for just myself, but I want to make sure that what we're seeing is a fair reflection of what that service level impact is compared to this last fiscal year.

So if these positions were vacant, half of them vacant for the entire year, then us counting a decline in service because of that vacancy year over year seems a bit of a guesswork.

And so again, we're gonna be comparing this from department to department, but I think we owe it to ourselves to ask these questions so that we're not it's not enough just to take what's going to be on the slide to to understand where the impacts are.

Don't get me wrong, I think um the IBA pointed out what's probably most significant here is that we already know we're severely behind in terms of infrastructure backlogs, uh, especially with city facilities, and we have new facilities opening, including in my district, and so I I completely hear the the reality that this is going in reverse to where we need to be.

And so, as a city, I think what we need to think about is is this a short-term impact that we're gonna take in the next year or two, given the deficiencies we have in the budget, until we see some relief in FY29 and what the pathway to get to where we need to be in FY29 is as well.

That's that's sort of the comparison I think we need to have so that we can make the choices we need to make.

That concludes my comments.

All righty, thank you.

Looks like we have council president back on the lights.

Uh thank you, Chair.

Uh I have an opportunity to mention something that um came up this morning, but I forgot.

The janitorial contract at Center of City Plaza, so we're bringing that in-house at a significant cost reduction.

Correct.

Correct.

City employees are able to do that cheaper than the outside contract and the same level of service.

So I think that's always worth highlighting.

So thank you for confirming.

Chair.

Thank you for that.

Seeing no other um members on the lights, um, I do appreciate Council President highlighting that we are able to do something, I guess, cheaper than the private sector.

Um, I think we need to do some more internal analysis and see what we can do to maximize our opportunities.

Um, but I will say this, I also appreciate the um line of questioning from council president pro Tem.

Um, as what's difficult for me, um again, one, we're hearing that you know, we did not take advantage of the time for of the time where we did not have the um controls in place for the hiring process, and then two, as we are here today to hear the comments that are being offered.

Um, I'm a little taken back because it's my understanding as we go through the hiring process, basically comes down to what is a uh I guess there's a determination made um by the mayor that indicates any central employee versus a non-incential employee.

So um I'm a little taken aback by how this is being presented.

Um, but clearly we have more work to do.

Um, and I think just as an overall question as we talk about vacancies, I do think, and Randy, I don't know the best way to handle this, but I do think we need to have an understanding just how long positions have been vacant, right?

Uh I I think that would be good to understand.

Uh, because even as I look at police, I'm coming to find that we've had vacancies since 2017, right?

So I think or positions that have been baked vacant since 2017.

So I think that's all valuable information I think we should have as we continue through this process.

Um so with that, that concludes um our discussion on general services.

Uh we will now move to transportation.

Please introduce yourself and feel free to begin.

Good afternoon, budget chair Foster and City Council members.

I am Naomi Chavez, interim director for the transportation department.

Transportation greatly appreciates the City Council's support over the past year as we continue to navigate a challenging budget climate.

I'd like to start by providing a quick overview of the transportation department.

We are 500 plus strong with dedicated employees who maintain the most visible infrastructure assets the city owns.

From streets to sidewalks and everything in the right of way, our employees take great pride in improving our neighborhoods and getting the job done every day for the San Diegans we serve.

But to be clear, that job gets more difficult each day.

We don't have the staffing or resources to keep up with the ever increasing requests from the public for repairs across the city.

That was true before this current budget crisis, and that struggle will continue under this draft budget.

The department consists of five divisions business operations, engineering asset management and parking, fiscal administration and IT, right of way management, and streets.

There's been a lot of discussion during the budget process about middle management, so we wanted to share information on those positions.

The transportation department currently has 19 unclassified staff to oversee 500 employees.

The unclassified represent 3.7% of total staff.

In the fiscal year 27 draft budget, the various staffing reductions will leave transportation with 17 unclassified employees representing 3.4% of total staff.

The core baseline services that transportation provides are also among the most frequent requests the city receives through our public works dispatch and the Get It Done app.

We're responsible for maintaining a street network of 6,600 lane miles and 4,500 miles of sidewalks.

We take care of over 55,000 street lights in the public right of way citywide.

We manage traffic operations and evaluate over 6,000 public requests each year for new crosswalks, stop signs, and other traffic safety improvements.

And we maintain and enhance our city's urban canopy with responsibility of over 250,000 trees and the public right of way.

Each needs significant investment to start making progress, and that's just not possible given our current budget situation.

The worst part is that not addressing these repairs today means the cost to eventually fix them will also continue to grow.

If you are considering any budget increases for transportation, this list represents our needs to better meet public demand and reduce liability.

The good news is that transportation has proven time and time again that when we get funding, we get the job done.

Our millen pave team is a perfect example.

For the second consecutive year, they will be setting a record for in-house paving.

They're currently on pace to complete 30 lane miles this fiscal year, which is a 25% increase compared to last year.

The transportation department also took on the challenge of implementing several new parking initiatives without any additional staff or resources.

Those initiatives included the special event zone, extended hours, new meter installations, valet parking reform, and more.

Through March, those initiatives have generated an additional $6.5 million compared to fiscal year 25.

Last fall, the City Council voted to allocate 1.8 million dollars in community parking district revenue to transportation to implement neighborhood repairs, and we delivered.

There have been over 5,000 repairs since late October, including thousands of potholes and streetlight repairs.

We've also installed several sidewalk replacements and dozens of traffic safety improvements with those dollars.

It's important to remember that without that council vote, none of those upgrades would have occurred.

Another council vote last fall authorized transportation crews to work on the largest in-house sidewalk CIP project in history.

That work is ongoing right now in Council District 6 with over 250 locations for sidewalk replacement.

We also took a giant step forward in make to making our city a safer place with the adoption of the speed management plan.

The safety forward plan calls for lowering speeds on nearly 700 miles of our street network.

Funding for implementation will be included in the Mayor revise to be released next week.

Another internal project that we accomplished this year was moving our traffic management center out of the city operations building and into the Gibbs office complex.

Our electricians worked on this for months and moved over 10 miles of fiber optic cable.

The completion of this project enhances real-time monitoring and coordination for a traffic network that controls over 1,600 signalized intersections.

Looking at our equity impacts, the department continues to work toward ensuring equity in the way work is done throughout the city.

About 43% of the city street network is in communities of concern, so when transportation selects streets for paving, we ensure that at least 43% are in those communities.

For fiscal year 27, we're doing even better, with 45% of streets schedule for paving in communities of concern.

We have also prioritized proactive pothole patching in neighborhoods with a history of underreporting via get it done.

During dry months when demand for pothole repairs is low, we send crews to those neighborhoods to find and fill potholes.

We're also trying to do more in-house sidewalk CIP replacements.

To that end, we'll be fixing sidewalks with our in-house team and council districts four and eight next year.

Other equity actions include planting trees and performing tree protection maintenance, as well as designating specific funding for sidewalk repairs.

Now let's look at our budget adjustments.

There's a significant increase in overtime that addresses three issues.

First, an addition of 2.7 million to right size the overtime budget following several citywide salary increases in recent years.

About $750,000 for work that will be reimbursed by the parks and recreation and economic development departments, and $300,000 for an in-house sidewalk CIP project.

The next ad to meet our is to meet our obligations for the Ready Said Grow program to help maintain and water trees that have already been planted.

By investing those funds, we generate $3.7 million in grant revenue.

I want to be crystal clear that this funding will only be used for watering and maintenance.

There is no funding for new tree planting in fiscal year 27.

The last addition is to cover the increased cost for asphalt and concrete materials as prices continue to climb.

Turning to the proposed cuts, we had to make some difficult decisions.

The largest cut is the elimination of the multimodal team for a savings of 2.4 million dollars.

This team is responsible for the design of pavement striping on resurfaced streets that adhere to community plans and the bicycle master plan.

They also deliver tens of millions in affordable housing related grant funding that is contingent on bike improvements.

The loss of this team will mean that for future road repair projects, we will implement the same traffic striping that existed prior to paving.

We've also eliminated two unclassified positions in the draft budget.

The first is the program manager for parking management.

The PM currently overseeing the multimodal team will assume the parking responsibilities with his position funded by parking revenue.

The second is a program coordinator position in urban forestry.

Eliminating this position jeopardizes the city's ability to meet compliance and grant obligations.

This PC is the operational backbone for San Diego's two largest planting programs, both of which have allowed the city to implement award-winning tree planting and community outreach programs.

This will force the city forester to absorb up to nine additional direct reports, reducing strategic capacity and slowing citywide tree safety operations.

Let's take a look at our utilities undergrounding program.

Over the last three fiscal years, we have been building out the pipeline of projects from district creation through design.

Fiscal year 27 will see the most projects go into construction in a single year.

Construction is the most expensive part of a project.

For all in-flight projects from design through CIP work, we have over $800 million in obligated funds.

We're adding two full-time positions to help with project management, oversight, and accountability.

As for external contracts and services, the department did an in-depth analysis to ensure they are right sized for the department needs.

What we found was that the current contracts and services are underfunded for the needs of the department.

Following that analysis, we recommended continuing contracted services for weeds, trees, graffiti, and sidewalk slicing at fiscal year 26 budgeted levels.

In summary, transportation continues to make progress despite limited resources.

Our mill and pave team is setting a new mileage record this year.

Next year, we'll be implementing the most utility undergrounding projects in a single year.

We're also investing in our employees despite not having a dedicated budget for safety and training.

Most notably, we save the city hundreds of thousands of dollars by conducting an in-house training such as the OSHA 10 hazard recognition training mentioned by our branch chief.

We've also implemented operational efficiencies to ensure that we're spending every single dollar we receive for road repair, rather than leaving money unspent as happened in the past.

As for the fiscal year 27 draft budget for transportation, there will be lots of good work happening in our neighborhoods.

We'll pave streets, we'll fix sidewalks, we'll turn street lights back on.

It just won't be enough.

As we have shared many times, the backlogs for some of the most popular services transportation provides will continue to grow.

That's because the public demand for these neighborhood repairs is on the rise, and the current investments we're making fall short of the public's expectations.

We understand the city's current budget crisis requires sacrifice and reductions to close the deficit.

Transportation is happy to do its part to help, but we also feel strongly that our elected officials and the public should know what to expect.

The reality is we will have to say no more often when a city council member or a resident asks for something we can't afford to do.

But make no mistake, transportation stands ready to deliver if and when additional funding is available.

Thank you.

All righty, thank you so much.

We'll now go to the IBA.

Thank you, Chair Foster.

Again, Jordan Moore with the office of the IBA.

Our full write-up on transportation is on page 299 of our analysis that we released last week.

It's all the way in the back.

Obviously, there's some large increases coming for transportation, $2.7 million in overtime related salaries, another million in reimbursable over time, $2.7 million covered by the Ready Set Grow Grant.

So there were some significant increases in the department's budget.

One thing I will note is that in discussions with the department, there was also an allocation of $700,000 for an air pollution control district settlement funding.

However, we were informed that this was an error.

They thought the funding was falling off on a one-time basis.

It actually isn't, so that'll get fixed in the May revision.

The reductions you also heard as well, the largest one being the multimodal team, Naomi covered the impacts of that.

Things that I'll note that are in our analysis, though, that you won't find in the report.

We have some highlights of the or sorry that you won't find in the staff's presentation.

Um there were some analysis of additional requests as transportation noted.

They there are many things that they could do with resources that they are currently not staffed to do.

We highlighted some of the larger ones that they were asking for.

Um there were also some reductions that they put up to hit targets that were not taken, although I would not necessarily recommend swapping out anything for those reductions that are there.

Finally, in our analysis, is where we provide you with kind of an overview of both where road repaving allocations are and then also how other transportation funds are being used on road repaving, and you will see this a lot in the CIP tomorrow, but just to note Slurry SEAL is staying about the same.

In fact, it's getting an increase because it is funded by ongoing RMRA funding as it has been for years.

Uh overlay and reconstruction funding, though, is falling off by about 20 million dollars from last year to this year.

We're going down to only about 27 million dollars set aside for overlay, which is much, much lower than what the pavement management plan would call for.

Most of that is just due to the fact that there's a lack of available financing proceeds in the CIP.

Um, finally, we also do transportation fund allocations, because what you don't always see in the transportation budget are where where's all the gas tax money going, the RMA funding and transnet.

So we have a table that kind of shows you there.

One last thing I'll highlight, because this came up in an item last week or two weeks ago at the Active Transportation and Infrastructure Committee.

The RMRA fund has accrued some fund balance from previous year projects falling off.

So in that RMRA item, but not in the budget yet, are items that are going to be funded with RMRA that we're anticipating in the May revision that we know are priorities of council.

This includes the funding that will be coming forward to do the speed management plan implementation, funding for a new pavement condition assessment, and additional funding for a CIP project.

So just to let you know, those are not in the draft budget as it is currently proposed, but we are anticipating those to be added coming out of RMRA in May.

Um with that, I'll conclude my portion and turn it over to Helen for the equity implications.

Thank you, Jordan.

Good afternoon, Chair Foster and members of the committee.

Again, Helen Weldegorgus, she, her, hers, with the IBA's division of race and equity.

Our budget equity implications within the department review start on page 304.

Nine adjustments within the transportation department's proposed budget include equity implications, two of which reflect reductions, and seven of which reflect additions.

As highlighted in the report and by staff, the reduction of the multimodal team, including 14.5 FTE, will eliminate new bikeway installations, thus decreasing progress towards the city's climate action plan target to shift 50% of all trips in the city to biking, walking, and transit by 2035.

Two additions totaling $3.3 million would support tree maintenance efforts in historically underserved communities, but would not cover tree planting services.

So all tree planting efforts would end in FY26.

These funds fall under the purview of the urban forestry program coordinator.

Given the proposed reduction of that position, administration of these contracts, supervision of staff, and other workload responsibilities would shift to the urban forestry program manager.

Two additions totaling $92.9 million dollars would support the utilities undergrounding program, UUP's efforts to underground the approximately 1,000 miles of remaining overhead utility lines.

Previously, UUP did not have a formal model used to pick projects.

Lastly, as shown in the tables on pages 305 and 306, the department is experiencing backlogs of key services across assets like roadways and sidewalks.

The FY27 adjustments include three distinct additions related to staff overtime, totaling approximately $3.7 million.

These additions would support the department's effort to address the backlog, but are not sufficient to fully resolve it in this budget cycle.

As such, equity implications exist in the department's prioritization process for determining what level of service to provide and where.

That concludes my comments.

Happy to answer any questions.

Alrighty.

Thank you so much.

We will now go to council members for any questions or comments.

We will start with council member Campio.

Thank you, Chair.

Thank you to our staff.

Um I have more comments that I'll bring up later on when we get to the end of the entire portion here, but I wanted to ask a question about something I saw relating to the scope of the multimodal team.

I've heard it talked about over the last several weeks is basically the bike lane team is something that people have used as sort of a shorthand.

Can you go over the full scope of what the multimodal team does?

Because it's not just bike lanes.

Of course, council member.

Um the multimodal team evaluates and implements traffic safety improvements as part of our paving projects.

So any um paving project, these uh this team evaluates for new enhancements that could be applied um after the paving takes place.

Okay, so that includes stop signs, that includes crosswalks, the design of the crosswalk uh curb ramps, basically anything that could come about as a result of uh fixing a road, they look at it and make suggestions, or do they implement or what is what is what is actually the um physical outcome of their work?

Mainly striping, uh, but these are traffic engineers.

So as you mentioned, as they're uh assessing, for example, uh a project, and they know that A B 413 is something that they should be taking consideration.

That's an example of like a recommendation that they would make.

Okay, understood.

Um I saw a line, a bullet point here that well, to be very clear, they don't they don't create new bike lanes, right?

They it's not part of creating more pathways, it's essentially making the ones that are already designed safer, or am I missing something?

So combination, but this team does design uh new bike facilities for implementation.

Okay.

A third bullet point on the elimination of multimodal team on the slide said secures and delivers tens of millions, I assume, of dollars, correct?

In affordable housing related grant funding that is contingent on bike improvements.

Can you explain what we're giving up right there?

So uh we're not giving anything up.

We're losing the capability of having an in-house team perform this work.

But should those opportunities be available, we would look elsewhere within other city departments, whether it's engineering and capital projects or contracts uh to see if there's any capacity to do this work.

Okay.

So what I'm understanding is that if there well, as it comes around about with affordable housing development, there's grants that we can secure to help build that affordable housing that's dependent on us putting in place bicycle facilities, correct?

Correct.

Okay.

Councilmember, if I could just add some clarity to that, sure.

Primarily referring to the affordable housing and sustainable communities grant program uh from the state, which uh provides funding for affordable uh housing projects that are in tandem with some kind of uh mobility improvement.

Okay.

Does that go to EDD to hand out or to use to finance affordable housing?

My understanding is it's generally direct to the to the uh uh provider of the affordable housing project.

Okay.

So uh people who are developing affordable housing are looking to the city to create you to our multimodal team to create the environment where they could secure funding to actually build more units.

Correct.

They will typically uh engage with our grants team and the grants team and the multimodal team will work with them to look at if there are existing planned facility improvements or or other things that are already kind of in the pipeline that could be added to make that project more uh attractive.

Okay.

So on its face, at first look, it seems that not only is it a safety issue, but there's also housing goals that we would be driving towards with the multimodal team.

But you're telling me there's other components within the transportation department that would help us, in your words, secure and deliver tens of millions for that grant.

It just wouldn't be the multimodal team anymore.

Or is that not the case?

I think that's something that we're gonna have to continue to look at, our capacity to provide that design service.

I think it depends on the specific projects.

Often there are things that are already in the pipeline, or there might be a way to contract out that work or tap into other traffic engineers, for example, within the engineering and capital projects team.

I think this is a relatively nascent conversation that we would be looking to have going over the next year towards the next application process.

Okay.

Um it seems to me if we have multiple goals being met by this team, it seems like that's uh a good investment to have uh overall.

Um I'll keep my comments for the rest of the time, but thanks for explaining uh what that bullet point meant.

Thank you.

Thank you.

We will now go to Council President Lukava.

Uh thank you, Chair.

Uh thanking to my colleague for the question about that.

Uh I'll kind of pick up on some of that as uh well.

Um as was mentioned when I look at the IBA interpretation, there is the multimodal team, there's the bike stat team, and then there's another line item, bikes and signals.

So can you I I think the council member was kind of alluding to this.

How do all those three different line items work?

Like the bike stat team, that still is funded, and what would they do differently than the multimodal team?

Yes, council member, uh, council president, I can take that question.

So the multimodal team, in fact, as Naomi mentioned, is performing striping the vast majority of their time is dedicated to paving projects coming and then the striping that they'll design in terms of the delivery.

The STAT team is our in-house team that performs the maintenance and also installation of bike facilities.

So not only do they, when we have funding for capital projects, they do installation.

They're also the ones that are going out and repainting the green stripes, replacing the flex posts, those types of things.

Think maintenance of existing facilities more so, and then when they have reimbursable activities, they they will do that.

Um associated with signals is related to other operations from a uh either engineering or uh maintenance perspective, but related to a different asset.

Okay, well, thank you for that clarification.

Uh the budget also seemed to make a big commitment towards our vision zero goals and the so-called, which I hate the name, but the FATAL 15.

Does that would be handled by other engineers rather than the multimodal team for those kinds of improvements?

Thank you, Council President.

So the uh multimodal team is one way in which the city could deliver on its vision zero goals.

There are others, and to give an example, um, this budget is funding over $500,000 in um critical safety improvements at intersections identified by Circulate San Diego.

Okay.

Um shifting gears a little bit.

I got a little confused, and maybe I'll throw it to you, Jordan.

Um you actually have a page on cuts that were thought about, but not actually.

So um so is tree maintenance still funded in this budget or not.

No, you're the tree maintenance budget is funded at the same level it is last year.

Yeah, they did not that was the table that talks about the reductions not included.

Those were reductions that the department put in to meet their targets that DLF left alone.

So all the things on there were left alone.

Okay.

I just wanted to make sure I understood that.

So all the investment we've had in planting trees and then the need for watering, then that's still funded.

Probably a little bit underfunded, but it's still funded, if I understand correctly.

So uh to be clear, there is no budget for tree planting starting in fiscal year 27.

So going forward, it'll be the watering and maintenance of trees that have been planted.

Okay, thank you for clearing that up in in my head.

Um the only other thing I'll say, and I know we're gonna get a lot of public comment.

Um the pivoting that the transportation department has done, you know, has really been a sea change in how the cities operate, and a great example of when you look at things differently with different eyes.

Um how much better we can do the in-house mill and pave team is a great example of really getting things done.

Um I want to thank you for the new sidewalk at Scripps Park.

That came in much less expensive than if we had outsourced it in a traditional construction contract.

So uh great examples of what uh city employees can do uh when they're given the resources.

So uh thank you, Naomi, for the presentation.

I think you really hit a lot of good points in there and highlighting what transportation does.

Uh so um uh with that, I'll just thank you and thank you, Chair.

All right, thank you, Council President.

We will go to Councilmember Whitburn.

Thank you, Chair.

Uh, thank you for the presentation.

Uh the department has really done some terrific work uh with the parking revenue uh allocation of dollars uh has just been a huge success.

Uh the council's previous decision to uh uh allocate those dollars uh to the department uh and certainly the bill and paved team has been a big success.

I want to follow up on the line of questioning uh from Councilmember Campillo and uh Council President Lacava regarding the multimodal team, which does some really important work uh when it comes to bicycle infrastructure and uh the grants that it brings in in terms of the bicycle infrastructure.

Certainly one of the well, I mean this city council has said that the top transportation related priority of the city is safety.

Uh and ensuring that we are continuing to upgrade our bicycle infrastructure to frankly save lives, I think is a pretty important responsibility not to mention the positive impact that that has on our climate goals.

Uh and then in terms of the grants, uh as Councilmember KPO was benching, we made really good use of where we add bicycle infrastructure so as to make an affordable housing project pencil.

Uh we have seen that play out uh that actually made affordable housing projects uh come to fruition.

So uh that's worth uh I mean I've got some data in front of me right here, those affordable housing sustainable community awards have uh about to do 123 billion dollars.

Uh 29 billion dollars in uh bike pedestrian safety grants.

Uh we've seen U.S.

Department of Transportation safe streets for all opportunities with hundreds of billions of dollars available there.

Uh I'm hearing that there may be opportunities for other departments to in subway pick up pieces of that work.

But I I would want to really understand how that would work and whether we would in fact have the capacity to do that before I would probably want to support anything that would reduce bicycle safety and anything that would reduce our opportunity to secure grants that would make affordable housing uh more possible.

So uh I just I'll leave it there.

I think what that team does is really important, and I will probably want to either try to find a way to maintain that team or ensure that the work that it does can in fact be picked up elsewhere.

Thank you.

Thank you.

Councilmember, we will now go to Councilmember Ilo Rivera.

Thank you, Chair.

Um we thank you for the presentation.

I really appreciate the um the bluntness in some of the um statements you made.

Uh Jordan is always thank you, Helen.

Thank you for your work.

Um I I'll start by kind of echoing what what Councilman Whitburn talked about in terms of um the work that you've done with the parking meter funding.

Um the the updates, it's not just the amount of work that's getting done, it's the that we that we can track it in the way that we are that I think is especially important.

And I think in what I've seen from how you're communicating about the investment of parking dollars into neighborhoods, probably the cleanest and most the cleanest line and the and the the quickest reporting of any revenue source in our city for people understanding I put a dollar in and this is how the work gets done, and I think that's incredibly important for folks to rebuild trust with the community.

So thank you.

And obviously, our city teams are an incredibly important part of that.

If they weren't out there doing the work that they do as well as they do it, as quickly as they do it, um, and as efficiently as they do it, um, that none of this would be possible.

Um so want to say thank you for that.

Um my colleagues have asked a number of questions about the multimodal team and the potential impacts there.

I guess not to belabor the point, but I guess the the thing that I'm most kind of concerned about there's two parts.

One, there's a complete streets policy that was not like a gesture, it wasn't a symbolic gesture, it was a commitment to make streets safe for everyone.

And as the budget is proposed, how are we supposed to know that we're not going to like quite literally be paying paving over opportunities to make streets safer and better designed?

Uh could you restate the last part of your question, please?

Yeah, so once the work is done, the work is done.

And if we don't have someone on the front end helping plan and be intentional about making sure that we don't miss opportunities, then the options are the work doesn't end up happening and the street doesn't become as safe as it could, or we have to go back afterward at significant additional cost, and then do it after the fact.

And so how do we know in the budget as proposed that we're not going to miss those opportunities on the front end and afterward wish that we will we've had done it before and either again see that opportunity gone until the next time work is done on the on that road or have to come back after the fact at significantly additional significant additional risk uh expense.

So striping in those cases will be restored to the design that is currently in place.

Uh the other thing I want to share is that the multimodal team as um as part of their their work, they design basically new infrastructure.

And as I share during my presentation, uh between backlogs and core services that are being unfunded, we simply cannot afford to maintain new infrastructure.

So difficult decision, but that is one of the uh drivers as part of it.

Is if there's an opportunity to pave and restore to the striping, whether there's a share row in place or a different type of category of bike lane, then that will be restored as part of those projects.

Council Councilmember Eler Vera the capacity that will remain if the multimodal team is eliminated will be within ECP, quite frankly.

On a case-by-case basis, when we have CIP dollars or we have an investment in an individual project, that's where things like closing the gap will be taking place, those types of things, but the rest of our road network will be striped in kind.

Now, on the other side of this, the city planning team still remains intact from a master planning perspective, a bike master plan perspective.

So as there are grant opportunities, we have that network uh plan there so that we can go after grants and other opportunities, but our paving program will mean that the roads will be striped as they are today.

Yeah, I I think I'm just gonna be kind of blunt about this.

And and and because the budget, like no department that we hear from, no cut that we hear from is is in a vacuum in the context of a budget where we have very little context for many of the cuts that are being proposed.

This is how this is what I'm concerned about.

That um the mayor's office heard one too many complaints about bike lanes and just decided to make a sharp left turn and say we're not doing them anymore.

And rather than doing the work of better explaining that these weren't just bike lanes, they were uh uh enhancements for improved safety for people driving, biking, walking in wheelchairs, etc.

Um instead of better explaining what those expenditures are in a budget, um, categorizing them as bike lanes when they were like far more than that, which gives the public the sense that they paid tens of millions of dollars for striping when it actually wasn't that, they were paying for repaving for all sorts of additional infrastructure improvements.

So the this the skepticism or the questioning, I just want to kind of contextualize it on my end.

It's I I'm understanding what you're saying, and I I am very concerned that this is a reactionary uh reactionary move.

Um we're going to lose foresight and we're gonna lose efficiency as a result of this.

And so um I know the work will be done well because you do good work.

Um, but what I am again concerned about is that that that good work won't be as inclusive of all of the good things that it could include um because of uh of of this change.

So anyway, I won't belabor that.

My my colleagues did a great job of asking those qu those questions.

Um the the last thing um the ready set growth position um is managing a large federal grant, correct?

And um that coordinator oversees equity focused contracts.

Uh what are we going to do to ensure that we don't see a drop-off in service delivery to underinvested in communities?

So, council member, that position was brought on to oversee, as you mentioned, those two very important initiatives.

We're in three year of five of one of the two initiatives, and the APCD settlement requires that we spend a certain dollar amount.

What will happen is we will spend that dollar amount, we will be in compliance with that.

What it will mean is that our city forester will need to take on those responsibilities for the remainder of the duration of the contract.

We purposefully front loaded the planting under that so that we could get the tree watering done in time and expend those funds on the 10 million dollar grant that will also need to be absorbed by our city forester.

Um this was a challenging decision.

That said, we knew that those two programs had a specific duration associated with them, and because we front loaded a significant amount of that work, that was why that was uh while challenging, a little bit easier to swallow and to figure out that operationally we might be able to absorb it as much as we don't want to.

Got it.

So understood kind of from a workflow perspective.

But then there's the again the in the the part about how that work is done and ensuring that the communities that have been ignored in the past, disinvested in in the past, that they're not deprioritized, and giving someone a whole bunch more work when they've already got too much work is a recipe for being less thoughtful, just to be like quite frank.

Um and so I that's what I'm asking is how are we going to ensure that that that focus of ensuring that the communities that didn't have trees and finally got them aren't gonna watch those trees you know wither and die because someone who's got a citywide focus is trying to manage a huge program and doesn't necessarily have the same time to ensure that um on a zip code by zip code basis um the trees that were planted are actually grown into actually grow and provide the shade and the air quality that they they were meant for.

Understood.

So yes, the capacity, I I hear you, and um I can guarantee to you that those funds will be spent in the areas that they were intended to be spent.

Though that is the very purpose of those two programs is to spend them in those specific areas, and we've established a team in addition to the program coordinator that oversees the outreach, oversees the public engagement, oversees all of those components so that I'm confident that that team understands the mission and the vision and will continue to further support the trees that have already been put in the ground.

Okay.

Thank you.

Thank you, Chair.

Thank you.

We will now go to Pro Tim Lee.

Thank you.

Um I think my colleagues have dived into many of them, so I won't try to repeat all of them.

Um I think one of the big things I I did want to ask about is uh my understanding of last year's budget was that when we especially in the mid-year actions that the council took, that the transportation department was underfunded last year in the budget to meet the overtime needs that had matched the prior year.

And so what I'm seeing here is a um it's noted as a salary adjustment over time.

So I'm gonna assume that at least fills some of the gap that was perceived to be missing from FY25 to 26, but even the overtime component increases here total to like 3.5.

That's far short of the six or so that was being sought.

So can you explain to me where we are with overtime in the department?

And then also, I mean, to be frank, I I assume that overtime means that we don't have the capacity to complete the work that needs to be done with the structural staff that we would need.

Uh but it also comes at cost because that means we're paying extra time for that.

Some of it already makes sense because of the timing of the work that has to happen, but is there a plan for the next couple of years in which we would look to reduce reliance on overtime to actually get the department itself more structurally balanced.

Thank you, Council President Pro Tem.

As you mentioned, uh last year the repart department did burn approximately six million dollars in overtime.

Uh this year in the budget is uh the FY27 budget includes approximately five million dollars in overtime.

The 1.3 million base budget, which was the same amount from last year, got carried over.

There's the 2.7 million adjustment, which I spoke about in the presentation for uh salary adjustments that some of them have not been have not, it has not been adjusted as far back as 2021.