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HomeMy WebLinkAboutCC Min 1998-06-04 5-26-98 / 6-4-98 losses, pursue dialogue with the upstream cities and agencies who may have responsibility for the pollution that ends up on the beach at Seal Beach. He suggested that there be release of information to the press as to what is being done about beach closures, etc. Councilman Boyd requested comments from the public, preferably in writing, of suggestions as to how customer service at City Hall and City Departments can be improved. Councilmember Campbell mentioned that given the lack of calls this past week the cable service must have been somewhat better, and announced again the Comcast promotion in conjunction with the Los Angeles Times, a newspaper subscription for $1.79 per week for a year, current and new subscribers. She announced that the close of the comment period for the Bixby Draft EIR is Friday, May 29th at 4:00 p.m., the City Clerk will be available to accept them, also that the final Environmental Quality Control Board meeting prior to the close of the comment period will be tomorrow evening in Council Chambers at 6:30 p.m. Mayor Brown thanked the Council for the cooperative atmosphere of the meeting. He mentioned also that the Council will continue to work towards lowering the utility users tax. I ADJOURNMENT It was the consensus of the Council to adjourn the meeting until Thursday, June 4th, for a budget workshop. By unanimous consent, the meeting was adjourned at 8:30 p.m. Attest: clerk I Seal Beach, California June 4, 1998 The City Council of the City of Seal Beach met in regular adjourned session at 4:06 p.m. with Mayor Brown calling the meeting to order with the Salute to the Flag. ROLL CALL Present: Mayor Brown Councilmembers Boyd, Yost I Absent: Councilmembers Campbell, Doane Councilmember Campbell arrived at 4:15 p.m. and Councilman Doane arrived at approximately 4:35 p.m. 6-4-98 Also present: Mr. Till, City Manager Mrs. Stoddard, Director of Administrative Services Mrs. Yeo, City Clerk I APPROVAL OF AGENDA The order of the agenda was presumed accepted by the lack of action of the part of the Council. BUDGET WORKSHOP The City Manager said the intent of the workshop was to provide an overview of the budget, review of the current financial condition, balance sheet, the capital budget, and possibly another workshop will allow review of the departmental budgets. He noted that most discretionary actions relate to the capital program, there being few discretionary issues in the operating budgets. With regard to contract services, the Manager noted that an exhibit of staffing levels will show the trend over the past twenty years, some due to service level reductions others the result of contracting, and there are several areas that remain to be looked at. Councilmember Campbell arrived at 4:15 p.m., it was also noted that Councilman Doane had not been aware of this adjourned meeting. I Staff provided a slide presentation for information of the Council relating to Facts About City Dollars: California Cities - A Better Bargain Than 20 Years Ago - the burden of cities fees and taxes on California taxpayers is lower today than it was 20 years ago, during that time the cost of city government to the average Californian has declined 6%, by contrast, the cost of state government has increased 6%; local governments in other states in the country receive 20% more tax revenue per resident than those in California; in 1974-75 cities in California received 21% of their revenue from federal, state and county governments, today the total is 13%. I Where Cities Get Their Money - generally, a city receives two types of revenue - 1) that which is earmarked for a specific purpose and cannot be used for anything else, 2) general or discretionary revenue which the council can spend as it sees fit; general or discretionary revenue includes sales and property taxes; examples of earmarked or designated revenue include - Special tax - requires a two-thirds vote of the people and is allocated for a specific purpose such as transportation, public safety or flood control, by comparison, general taxes which are not earmarked for specific purposes require only majority (50% + 1) voter approval; Assessment of property-related fee - property owners may vote to assess themselves in order to fund improvements to their sidewalks, road or street lights; Fees and Charges - a city may charge fees for specific services such as library or recreation services, building permits, garbage collection and water use to cover its costs of providing the service, for example, the fee one pays to participate in a recreation program can only be used to fund that program and cannot exceed the cost of providing that program. 6-4-98 How Cities Spend Your Money - of an average California city's general fund, approximately 36% is discretionary and the Council decides what city services to fund, the remaining 64% is either earmarked for specific purposes, such as debt obligation like bonds, or is fee revenue that must be used to pay for the services provided~ approximately 60% of an average city's discretionary I funds more is spent on public safety services, the cost of which has risen sharply in the last 20 years, in fact, California city per-capita spending on police and fire services has increased 50% and 17% respectively~ by comparison, in the last 20 years per-capita spending on parks and recreation has declined 24%, city per-capita spending on libraries has declined 8%. Impact of State Control Over Local Revenues: Property Tax Shifts of the 90's - in 1992-93 and 1993- 94, facing massive deficits in the state budget, the Legislature and Governor transferred $3.6 billion of property tax revenue from cities, counties and special districts to K-14 schools, allowing the state to reduce its general fund spending on education~ cities and counties depend substantially on sales tax and property tax revenues for discretionary income and were already experiencing the same recessionary effects as the state~ these property tax shifts continue today and grow an average 4-5% each year, after Proposition 172 restoration, which is dedicated to public safety, cities will lose $433 million in 1998-99, since the shifts began, cities have lost a net $2.3 billion, counties a I net $5.9 billion and special districts a net $1.5 billion~ within 10-15 years the property tax revenue taken by the state will double in value due to strong property tax growth and a healthy economy~ Elimination of Historic Statewide Revenue Sources - since 1980, the state has eliminated cities' portions of several historic statewide revenue sources, liquor license fees, cigarette tax, trailer coach/mobile home fees, totaling a loss of more than $300 million per year for cities. Where Your Taxes Go - property Tax - on average the taxes paid by Californians are distributed as - 14.09% - City, 16.28% - County, 17.69% - Special Districts, 51.94% - Schools (K-14)~ Sales Tax - the basic sales tax rate in California is 7.25%, many counties and a few cities have additional voter approved rates, most commonly for transportation, this additional amount ranges from 9.25% to 1.25%, causing the total California sales tax rate to vary from 7.25% to 8.25%~ California's sales tax rate is distributed as - 1.0% - City/County, 6.0% - State General Fund, 0.25% - Countywide Transportation, 0 to 1.25% - Transit/Special District, Total Sales Tax Rate 7.25 to 8.5%~ State Income Tax - 99.5% of state income taxes pay for state programs like I schools, prisons, health and welfare, the state directs less than 9.5% to cities~ Federal Income Tax - Californians paid $38.8 billion in personal income tax to the federal government in 1996, an average of $3,449 per household, federal programs provide additional money to your county and state; in 1995-96, California cities received $1.4 billion in federal aid for housing, job training, community policing, mass transit and economic development programs, among others, that equals about $125 per household, meaning less than 3% of your federal income tax payment goes to your city; Local Fees and I I I 6-4-98 Charges - local fees and taxes imposed and collected by your city benefit only your city. Various comments to the presentation/discussion thus far included in part: * The impact on personal income during the past 20 years - it has gone up; Motor Vehicle fees are about 9% of the General Fund revenue; property Tax is about 15.8%; Street Lighting Assessment is about $140,000 per year, after Proposition 13 many cities compensated revenue by raising fees and then imposed a Utility Tax, Seal Beach increased the Utility Users Tax, the use of which is more discretionary and can be used for public safety; Recreation fees must reflect actual costs, no profit can be made on those fees, they are paid by those who use the services; most cities subsidize a number of services, recreation being one, if fees are too high you defeat the services because of the competitive nature of recreation programs; Desire to pursue the cities upstream of the San Gabriel River for their pollution impact on the waters and beaches in this community; About half of the revenue is discretionary funds, around $12 million; public safety is about 60%; water funds are primarily revenues to expenditures; sales tax is only about $1.5 million; There has been a decline of Police personnel in Seal Beach, fire services are contracted, as well as recreation programs; Question posed as to the cost to contract with Sheriff's Department even though that is not being given thought; Mention was made that a cost saving to Rossmoor was contracting for tree trimming; contracting should be put to competitive bidding; Public Works becoming their own agency, contracting for whatever is needed, is an example. When the property tax was shifted to the State for two consecutive years that was very difficult for the City, this community depends heavily on property tax, the City then looked to the Utility Users Tax, however as the property tax grew the State continued to take more; Mention was made that there are two bills pending at the State level to not allow the State to take the property tax growth and to place a cap on what the State can take; it was said the proposal is for a Constitutional Amendment. * * * * * * * * * * * The Manager reviewed in some detail revenue losses to Seal Beach due to State actions, specifically City property taxes and Redevelopment Agency taxes. Summary of all losses include: cumulative property tax loss since 1992, $4,678,320; aerospace sales tax decision, March 1995 through March 2000, $298,600; property tax shift of RDA causing overhead revenue loss, $215,000; and Redevelopment Agency cumulative property tax loss since 1992, $1,026,347; in addition, annual losses include: 50% of fines and forfeitures, 1992 through 1998, $750,000; cigarette tax since 1992, $240,000; business inventory property tax since 1990, $200,000; highway users tax since 1990, $75,000; motor vehicle fee rate frozen at 1992 appreciation schedule, $408,000; booking fees assessed by County, $150,000; property tax collection fees assessed by County, $204,000; total annual losses since 1992 of $2,027,000, and total revenue loss due to State Legislative 6-4-98 actions since 1992, $8,245,267. As to staffing trends, reference was made to comparisons from fiscal year 1978/79 to 1997/98, total personnel in 1978 was 162, 101.5 in 1998, the police Department a prime example where there were 61.5 in 1978 and 43 in 1998, which in that Department tends to create a revenue generation diversion factor, the Lifeguard Department has fewer persons guarding the beach, the Department is unmanned during certain hours, Public Works can show that tree trimming has been reduced, allowed to go for longer periods of time, then trimmed more severely. I * Suggestion was made that for the public hearing presentation the reduction of personnel and services be specifically identified as they relate to recognizable functions, also things that could have been accomplished had the State take-away's not occurredl * Suggestion too that it be shown that because the sales tax levels are low this community relies heavily on property taxes; * As to revenues, they are fairly flat, some growth in property tax, virtually no growth in the utility tax, the greater impact of the deregulation will be seen next fiscal year, however the actual amount of utility tax dollars collected from the residents is downl * With reference to the City contracting with County Fire, question was posed as to the amount paid for fire services and how has it changed over the years; response was that the cost is paid to the Fire Authority not the County, for three years the cost was consistent, during that time there was agreement that the cost for services would not increase more than an established cap, in the meantime there was to be an equity study to assure that all participants were paying their fair sharel I * Comment was made that some will conclude that there is control over the employee count at City Hall however there is none over the fire services; the response to that was that there is, the City can dictate the staffing levels and services, which in turn is reflected in the costsl explained also that the previous two years the increases were relatively small, there was also a labor impasse, now resolved, the result of which has been a 3.6% increase, a multi-year contract that is also tied into a survey that will place them as one of the highest salaried groups, there is also the equity study which in time could mean an additional cost; however if pushed too hard some agencies will be looking to start their own fire departments or forming another Authority. In reference to the Fund Balance Analysis, the Manager noted that the General Fund is the discretionary funds, the remainder are enterprise or restricted funds. It was explained that the balance as of July 1, 1998 is $2,073,633, of importance is the beginning balance as compared to the estimated end of year balance, using caution to assure there is not a trend to deficit spend; there is a five year Capital project Plan, revised each year with an amount set aside annually for large projects, this year $143,000 is scheduled for release; estimated revenues are $12,810,475, about $3.8 million of utility users tax, the next largest would be I 6-4-98 I property tax, then sales tax, and miscellaneous sources; the $887,500 of revenue is money in, payment out for Briggeman Disposal, and as to discrepancies of revenue and expenditure figures, staff explained the budget numbers are not yet final. Transfers into and out of the General Fund is an accounting technique, transfers in are monies that can legally go to the General Fund for discretionary spending from a restricted fund, water is a example where a portion of an employees salary is allowed to be reimbursed to the General Fund, transfers out are monies to Recreation, Tideland Beach, etc. where there is insufficient income generated to pay for all operations, thus the General Fund subsidy; staff explained that the transfers in and out must balance, which they do, transfers out can be tracked and go to Workers Comp, Public Liability, Tideland Beach, Recreation, and a small transfer to the Local Law Enforcement Block Grant Fund, new this year, which represents a City match. Operational Expenditures are $11,053,120, Capital Improvements are a little under $1 million, some of that taking three years to accumulate, the Reserve of Fund Balance designated for capital improvements is $222,000, that money not to be spent this year rather set aside for specific future projects, the Additional Reserve of Fund Balance of $227,000 reflects a portion of the $1 million Charter requirement for the Cash Basis Fund. The Manager explained that the Estimated Year End Balance is about $200,000 lower however is reflective of the Additional Reserves Fund. As to the Cash Basis Fund, it was clarified that a vote of the electorate would be required to change the $1 million requirement, to that it was suggested that there should be an adopted policy for a percentage reserve, possibly ten or fifteen percent; it was noted that the OCCRMA reserve is $900,000; with this budget the Cash Basis will be at three quarters of a million, the insurance reserve will be $400,000. If one were to add the accumulated vacation time and payable sick time, that would be over a million dollars, yet it is assumed that will not all come payable at one time, the question is then what is a prudent reserve; workers compensation disability claims, if they were to all prevail those would be entitled to additional payoffs when they leave employment, research proved last year to be a considerable amount, thus to establish a reserve for compensated absences of about $250,000 that would cover those who prevail in a contested disability retirement, also those who retire without disability for their vacation and payable sick time, this budget reflects actual anticipated. Another reason for establishing these reserves is to let the labor groups understand that when employees exploit the system it impacts the budget and the future compensation of employees. Question was raised as to how Council compensation is established, thinking was that general law cities are compensated based upon population and number of Council representatives. It was noted that $276,800 is budgeted for Workers Comp even though the City is insured, as yet that has not been treated as the other reserves have been, and the $400,000 self-insurance reserve could be a factor for that purpose. Question was whether there should be a policy decision to commit $5,000 or $10,000 to such reserve, a small amount added each year; comment was made that people will file legal actions against the City regardless, it would not be in best interest if someone looked at a reserve fund as an encouragement of a lawsuit, or at least a reserve should not be identified for such purpose; at present there is an operational budget for miscellaneous claim issues; it was noted that people believe that cities are insured for all I I 6-4-98 liabilities, they are not, this City is self-insured, therefore when people take a legal action against the city they are actually suing themselves. There was a review in brief of other revenue funds, restricted funds such as Tideland Beach, Gas Tax, Measure M, Recreation, Block Grant and Law Enforcement funds, and again, the transfers from the General Fund for specified purposes. It was explained that Roberti-Z'Berg is an open space grant for recreation purposes. Enterprise Funds is an accounting term for operations that are meant to be self-sufficient, water is an example, that fund covers the cost of water purchases, pumping, equipment, personnel, etc., the sewer fund as well. It was explained that the AD 94-1 designation is the surfside undergrounding, also that the monies for the affordable housing loan and grant program have yet to be added to the Capital Projects category. Attention was again directed to reserves, more specifically the deficit thereof, with an explanation that the Self-Insurance and Cash Basis are mandated, a $700,000 reserve for compensated Absences would be acceptable, nothing below that. It was explained that legal expenses are shown in the operational portion of the budget; calculation of past legal expenses averaged about $10.53 per person on an annual basis, pointed out however that legal expenses for such as Bixby and Hellman are reimbursable; noted also that legal costs of the City of Los Alamitos, half the size of Seal Beach, are twice as much. with reference again to the Capital Improvement Plan it was noted that it was developed in 1996/97, the intent being to accumulate monies over a period of years to fund large projects, $962,250 anticipated to be spent in fiscal 1998/99; to that it was mentioned that the County sanitation District is aware that city sewer facilities are not in the best condition, the District is developing a program to work with the cities on a matching fund basis, in that city lines must work in conjunction with the County main lines. with regard to the proposed Public Works Yard fuel tank replacement and site remediation, Councilman Boyd inquired why the City has its own fuel system, why not a credit card system. The Manager explained that the remediation is a mandate that all underground tanks be replaced by 1998, the tank replacement could be questionable, yet it would cost more to go to the pump, the factor of cost must be weighed, another factor is availability after experiencing a large earthquake as an example, filling stations do not have backup generators, the City does, it is understood however that the Fire Authority no longer uses the City fuel facility, the local fuel site is convenient for the Police Department and Public Works, electric fuel stations will soon be installed and to that there has been question if fossil fuels are going to be used much longer. Councilman Yost relayed his experience during a disaster emergency where fuel was available only through a fire station or Police department, emphasizing the need to have fuel available; to that Councilman Boyd suggested the use of a fuel credit card system, also investment in a temporary fuel trailer for the storage of both diesel and gasoline, possibly agreement with the Navy for City use, it is also believed that some filling stations have generator backup systems. Mention was made that the AFRC rebuilt their tanks partially above ground, to which there had been concern as to where the fuel would spill in the event of an earthquake. The Manager offered to look into the status of the fuel tank remediation and replacement contracts, possibly separate them. The Mayor inquired about the financing source for resurfacing Seal Beach Boulevard from Beverly Manor to southerly of Westminster Avenue, as reported in a news I I I 6-4-98 / 6-8-98 I article. with regard to the proposed street maintenance projects, the Manager made specific reference to improvements to the beach parking lots, some projects budgeted as far back as 1995/96, they were held up and included in the Main Street improvement plans even though shown separately in the CIP. The Mayor recommended that the Council review the Capital Improvement Plan thoroughly. It was suggested that something needs to be done to 10th Street by St. Anne's Church, also the cul-de-sac streets in College Park East. The Manager stated that a Master Plan is being prepared that will identify and prioritize each street location that is in need of repair, expected to be completed by fall. A recommendation was made that the sewer and storm drain plan be completed first rather than repairing a street and then dig it up to replace a sewer or storm drain. To a question as to a time frame for future street projects, the Manager said the last 1997/98 project will be before the Council at the next meeting, generally one project is done in the summer, another in the spring. ADJOURNMENT As to a date to meet for another budget workshop, the Council tentatively agreed upon June 16th at 4:00 p.m. By unanimous consent, the Council adjourned until Monday, June 8th at 6:30 p.m., to meet in Closed Session if deemed necessary. Approved: I Attest: Seal Beach, California June 8, 1998 The City Council of the City of Seal Beach met in regular adjourned session at 6:35 p.m. with Mayor Brown calling the meeting to order with the Salute to the Flag. I R~LC~L Present: Mayor Brown Councilmembers Boyd, Campbell, Doane, Yost Absent: None Also present: Mr. Till, City Manager Mr. Barrow, City Attorney Mrs. Yeo, City Clerk