March 30, 2016 TO: City Council Members CC: John Baker, Interim...

MEMO March 30, 2016 TO: City Council Members CC: John Baker, Interim City Manager FROM: Council Member Tom Figg RE: BUDGET CONSIDERATIONS FOR FY2016-17 In the last budget cycle, a number of suggestions were offered to improve financial reporting, institute performance standards and hold ALL of us accountable for end results. In large part, these suggestions were dismissed along with ideas for cost containment and revenue enhancement. I would again like to offer my suggestions as we embark upon the FY2016-17 budget process. I would also like to invite the City Manager’s thoughts and those of staff as to the ability to incorporate these ideas into the next budget document without creating undue organizational burdens. OVERARCHING CONSIDERATIONS

1. The Council endorsed five basic strategic goals to pursue in FY2015-16. For FY2016-17, creating a “Sustainable Financial and Economic Future” should be established as Priority #1 with all others being secondary.

2. The budget should incorporate a financial strategy to communicate near and long

term objectives and provide a policy guide for decision making. Attachment No. 1 provides a possible example (introduced during FY2015-16).

3. City Council accomplishments should be generic to avoid dispute. Departmental accomplishments should be succinct and directly relate to initiatives listed from the previous year (i.e., not simply reiterating primary ongoing activities).

BUDGET DOCUMENTATION

1. The budget document should account for the categories listed below. These categories should be displayed for each operating unit of the City, and in the instance of the City Council, should be itemized according to each member. a. Discretionary Expenditures: Travel, conferences, training, dues/ memberships

& contract services. b. Program Operations: Programs administered by each department (e.g.,

community events, VC leadership academy, etc.).

c. Community Support: External organizations receiving financial support &

corresponding budget amounts (e.g., chamber, library, etc.)

2. The budget document should provide a simplified understanding of changes from year to year (i.e., approved appropriations vs. actual expenditures). a. Issue Identification: Percentage differences in revenues and expenditures with

explanation of major changes.

b. Departmental Accountability: Comparison of proposed initiatives to actual outcomes with explanation of shortfalls and proposed corrections.

c. Contract Services: Legal expenses (operational vs. litigation), consulting

services and program activities.

3. All non-essential expenditures should be itemized and addressed for possible elimination. This includes all leisure services (e.g., the Port Hueneme Library), discretionary travel (e.g., RDP-21), and discretionary memberships (e.g., “EDC”).

NEW INITIATIVES

1. Water Rates: Conducting a comprehensive utility rate study (with emphasis on water) should be incorporated into the forthcoming budget. The water rate analysis was approved but not memorialized in the FY2015-16 Budget.

2. Business Attraction: Retooling the City’s business licensing practices to backfill existing storefront vacancies as opposed to increasing fees assessed against existing businesses. This concept is covered in Attachment No. 2.

3. Cost Recovery: Researching the potential structure and community acceptance of a Public Safety Parcel Tax that includes retention of the local police department, reserves and lifeguard programs. This concept is covered in Attachment No. 3.

RECOMMENDATION: Endorse the ideas and concepts discussed above and ask that the City Manager incorporate these considerations into the FY2016-17 budget process. Attachments: A. Attachment No. 1: Strategic Financial Plan B. Attachment No. 2: Business License Considerations C. Attachment No. 3: Revenue Enhancement Alternatives

ATTACHMENT NO. 1

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Alternative funding sources include OHD/City Community Enhancement Funds and SPA/RDA Loan Proceeds

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ATTACHMENT NO. 2

1974 Actual 2014 ActualInflationary

Change From 1974

Actual Dollar Amount 41,994$ 359,793$ 201,653$ 43.95%Per Capita Amount 2.35$ 16.07$ 11.28$ 29.81%Population 17,850$ 22,389$

1974 2014Inflationary

Change From 1974

Actual Dollar Amount 85,244$ 693,392$ 409,337$ 40.97%Per Capita Amount 4.78$ 30.97$ 22.95$ 25.90%Population 17,850$ 22,389$

Year One Year Two Year Three Year Four Year Five TotalBusiness License

Unsubsidized 3,212$ 3,212$ 3,212$ 3,212$ 3,212$ 16,062$ Subsidized (%) 100% 75% 50% 25% 100%Subsidized (Amount) (3,212)$ (2,409)$ (1,606)$ (803)$ (3,212)$ (11,244)$

Sales Tax Receipts 5,684$ 5,684$ 5,684$ 5,684$ 5,684$ 28,418$ Total Outcome 2,472$ 3,275$ 4,078$ 4,881$ 2,472$ 17,174$

NOTES: Business License computations are based on a typical storefront location which is the average number of all registered business (122) versus total business license fees collected. Sales Tax Receipts are computed on a similar basis. CONCLUSION: By employing a graduated schedule of license fees, more revenue can be generated compared to leaving storefronts vacant. Assuming a current commercial vacancy rate of 20%, added annual income could total over $500,000 by year five (i.e., 30 vacant storefronts x $17,174)

NOTE: THE CONCEPT OF INCENTIVIZING

COMMERCIAL OCCUPANCY CAN BE USED TO TARGET

SPECIFIC TYPES OF BUSINESSES (e.g., RETAIL)

AND/OR GEOGRAPHIC LOCATIONS (e.g., PORT

CITY PLAZA)

Difference Over Inflation

Business License Fees

Sales Tax RecieptsDifference Over

Inflation

ATTACHMENT NO. 3

Public Safety Services FY2015-16

Police 7,369,854$

School Crossing Guards 53,000$

Reserves Program 28,414$

Lifeguards 204,845$

Subtotal 7,656,113$ Total General Fund Deficit ($1,373,668)

Housing Units Businesses Tax Weighting Minimal Moderate MaximumResidential (No. of Dwellings) 8,271 70% $961,568 $2,679,640 $5,359,279Commercial (No. of Busineses) 140 20% $274,734 $765,611 $1,531,223Industrial/Other 70 10% $137,367 $382,806 $765,611

$1,373,668 $3,828,057 $7,656,113

Minimal Moderate Maximum Minimal Moderate MaximumResidential (No. of Dwellings) $116 $324 $648 $10 $27 $54Commercial (No. of Busineses) $1,962 $5,469 $10,937 $164 $456 $911Industrial/Other $1,962 $5,469 $10,937 $164 $456 $911

Annual Tax Ramifications (Per Unit)

Tax Categories Total Tax Recovery

Monthly Tax Ramifications (Per Unit)

Notes: The apportionment of taxes between categories of land use is estimated based on a combination of source data including housing units (State statistics), registered businesses (City website posting) and land use acreage (mapping data). Actual figures will l ikely change pending more thorough analysis. Definitions:• Minimal: Equivalent to City’s General Fund Deficit ($1.4 Mill ion).• Moderate: Mid-Point Between Minimal and Maximum Cost Recovery.• Maximum: Full cost recovery of Public Safety Services ($7.6 Mill ion).

In Summary

• We Need to Confront the Obvious – Containing Personnel Costs

• We’ve Been Hammered on the Downside but Offered Little on the Upside

• We Should NOT Move Forward Without an Overarching Strategy

FY 2015-16 BUDGET WORKSHOP

• There are Numerous Questions and Policy Decisions That Should Be Vetted

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COMMUNITY DEVELOPMENT DEPARTMENTFor City Manager to Address

BUDGET QUESTIONSGeneral Cost/Revenue Analysis

• Specific Actions and Resultant Savings Proposed to Reconcile the Budget Deficit (Page 4)

• Reason for Large Cost Increases for City Council, General Government, Human Resources, CD & PW (Pages 6, 34, 47, 51, 56, 65, 68 & 121)

• Rationale and Availability of $5 Million General Fund Reserve Loan to the SPA (Pages 7 & 22)

• Accounting for Beach Erosion Costs, State/Fed/Insurance Reimbursements and Budgetary Implications (e.g., Possible Reduction of Projected Deficit) (Page 27)

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BUDGET QUESTIONSGeneral Cost/Revenue Analysis

• Status of RDA/NCEL Promissory Note and Reason for Reduction of Income (Page 33 & 164)

• Reason for Large Expenditure Increases for RDA/SA and SPA in the Face of Operational Wind-Down (Page 39)

• Rationale and Budget Implications for Transferring Landscape Maintenance to Deputy City Manager (Page 110)

• Cause and Effect of Negative Interest Appearing Throughout the Enterprise Accounts (Page 126 and 129)

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COMMUNITY DEVELOPMENT DEPARTMENTIn Summary

BUDGET QUESTIONSPersonnel Cost Analysis

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BUDGET QUESTIONSPersonnel Cost Analysis

• Number and Status of Personnel Vacancies, Their Treatment in Terms of Budgeted Costs and Potential Savings if these Positions are Not Filled (Page 252)

• Number and Status of New Personnel Requests, Their Treatment in Terms of Budgeted Costs and Potential Savings if these Positions are Not Filled (Page 252)

• Number, Status and Duration of Personnel on Paid Administrative Leave, Pending Claims and Cost Ramifications to the Budget

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COMMUNITY DEVELOPMENT DEPARTMENTIn Summary

BUDGET QUESTIONSUtility Cost Analysis

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BUDGET QUESTIONSUtility Cost Analysis

• Reason for Large Increases in Revenues, Expenditures and Reserves in Water Operations and Enterprise Fund Balances (Pages 8, 22, 29, 35, 113, 124, 126 & 127)

• Cause, Effect and Forecast of Utility Payment Reductions Through the “Care Program” (Not Shown)

• Reduction of Utility Rates by Re-Amortizing Capital Replacement & Fund Reserve Requirements (Not Shown)

• Status of Conducting Rate Studies (with Emphasis on Water) in Con-junction with the PHWA (Not Shown)

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COMMUNITY DEVELOPMENT DEPARTMENTFor City Council to Consider

COUNCIL DIRECTIONBudget Preparation/Policy Considerations

• Require Quarterly Expenditure Reports for Council Consideration and Make this a CM Major Initiative (Page 3)

• Establish “Sustainable Financial and Economic Future” as Priority #1 for the Immediate Future (Page 5)

• Keep Council Accomplishments Generic to Avoid Dispute Among Members (46 & 48)

• Condense Reporting of Departmental Accomplishments and Initiatives to Major Policy Issues (Page 66)

• Incorporate City’s Budget, Investment, Reserve Policies as Appendices to the Budget Document (Not Shown)

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• Address Safety, Morale and Computer Software Training as Major Initiatives for Human Resources (Page 50)

• Reformate the Current Proposed Budget to Better Account for the Following (Page iv):

– Discretionary Expenditures: Travel, Conferences, Training, Dues/Memberships & Contract Services for Each Budgetary Unit

– Program Operations: Programs Administered by Each Department (e.g., Community Events, VC Leadership Academy, etc.)

– Community Support: External Organizations Receiving Financial Support & Corresponding Budget Amounts (e.g., Chamber, Library, etc.)

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• Require Future Budgets to Better Account for the Following (Page iv):

– Issue Identification: Percentage Differences in Revenues and Expenditures with Explanation of Major Changes

– Departmental Accountability: Comparison of Proposed Initiatives to Actual Outcomes with Explanation of Shortfalls and Corrections

– Contract Services: Legal Expenses (Operational vs. Litigation), Departmental Expenditures and Programmatic Purposes

• Incorporate a Near and Long Term Budget Strategy to Communicate Council Policies and Guide Future Budget Decisions (Attached)

SETTING A COURSE FOR THE FUTUREWe’re Living On Borrowed Time

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COMMUNITY DEVELOPMENT DEPARTMENTUtility Cost AllocationSetting a Course for the Future

• We Must Address the Structural Deficit

• 72% of GF Costs are Attributable to Personnel

• If We Don’t Address This Issue Head-On, We Won’t Fix the Problem


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SUMMARY RECOMMENDATION#1 ISSUE NEAR TERM ACTIONS LONG TERM STRATEGY

FinancialSustain-ability

Requires a Reduction

in Personnel

Costs

• Negotiate Employee Concessions

• Eliminate All Vacant Positions

• Freeze Hiring of New Personnel

• Employ Experts to Maximize Organizational

Efficiencies• Pursue Revenue Raising

Opportunities

• Reduce Employment Based on BMPs

• Align Salaries to the Market Place

• Identify Outsourcing & Service Reduction

Alternatives• Formalize Policies for

Pension Liabilities• Adopt an Overarching

Strategic Plan


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STRATEGIC BUDGET PLAN• Strategic Near and Long-

Term Policies are Required to Fix the Structural Deficit

• RECOMMENDATIONS:

– Direct CM to Craft a Comprehensive Near and Long Term Budget Strategy for Council Adoption

– Incorporate the Financial Strategy into the Budget Document to Explain the Council’s Policy Position

– Adopt Continuing Financial Authorization as Necessary to Achieve a Final Budget Adoption

DATE: OCTOBER 13, 2015 TO: PORT HUENEME CITY COUNCIL FROM: COUNCILMEMBER TOM FIGG RE: UPDATING BUSINESS LICENSING FOR: CITY COUNCIL MEETING OF OCTOBER 19, 2015 As part of our ongoing budget discussions, Mayor Pro Tem Douglas Breeze urged the Council to consider updating the City’s Business License Ordinance (per his memo included in the City Council Agenda Packet for the meeting of September 21, 2015). To Member Breeze’s credit, the Council should not leave any stone unturned in its shared quest to reconcile a structural budget deficit. However, not all revenue raising alternatives have equal cost validity or voter equity as explained in Attachment No. 1. In conjunction with our September 21st meeting, I provided Council with a comparison of our current business licensing rates to several cities in western Ventura County along with the findings of Kosmont-Rose Institute (Attachment No. 2). The comparisons in Attachment No. 2 are based on fee structures, whereas, the table below is revenue-based and suggests that the City has evidenced a healthy increase in revenues over time taking into account the effects of inflation and changes in population.

Port Hueneme Business License Fees Difference Over Inflation 1974 Actual 2014 Actual Inflationary Change

Actual Dollar Amount $ 41,994 $ 359,793 $ 201,653 +43.95%Per Capita Amount $ 2.35 $ 16.07 $ 11.28 +29.81%Population $ 17,850 $ 22,389

Port Hueneme Sales Tax Receipts Difference Over Inflation 1974 2014 Inflationary Change

Actual Dollar Amount $ 85,244 $ 693,392 $ 409,337 +40.97%Per Capita Amount $ 4.78 $ 30.97 $ 22.95 +25.90%Population $ 17,850 $ 22,389 Sources:

1. 1974 and 2014 Actual Business License and Sales Tax Receipts, Adopted Budgets, City of Port Hueneme.

2. Inflationary Change from 1974, United States Department of Labor - Bureau of Labor Statistics (CIP Inflation Calculator), October 2015.

Memo from Council Member Tom Figg For City Council Meeting of October 19, 2015 Page 2 If business licensing is intended to offset the impact those enterprises have on the City, then the establishment of corresponding tax schedules should account for all income derived from those businesses. In the case of harbor tenants, business impacts are largely figured into the compensation already received by the City from the Oxnard Harbor District. As for the NBVC, impacts attributable to Navy contractors are largely confined to the Naval Base, not the City. Finally, in regard to tax equity, a ballot measure to increase business license revenues would disenfranchise those most impacted. Other tax alternatives (Attachment No. 1) are more inclusive and voters have a better understanding of how it affects them personally. In summary, I’m not convinced that our business licensing practices are wholly outdated. I’m equally concerned that tax increases could undermine our competitiveness to fill vacant storefronts and hasten the departure of others. If the desire is to ensure that all businesses pay their fair share, then let’s focus on outreach and enforcement efforts and less so on punitive measures that could be self-defeating by discouraging business development. Admittedly, I may be in the minority, but I have an entirely different view as to how business licensing should be used. In my humble opinion, the City should offer incentives to backfill vacant storefronts rather than doing the opposite. With those thoughts in mind, I would like to offer the following recommendations for Council consideration:

Establish a Revenue Enhancement Committee to evaluate the three identified alternatives: Business Licensing, Police Parcel Tax and Assessment Districts.

Appropriate a one-time allocation of General Fund Reserve or SPA funds (not to exceed $100,000) to undertake the fact finding effort.

Obtain membership from the following entities: OHD, Portus, NBVC, Chamber of Commerce, School District, City and citizens at large.

Employ the services of a qualified specialty consultant to provide independent financial analysis, facilitate Committee discussions and gage public opinion.

Consider, among other alternatives, a restructuring of the City business license ordinance to incentivize the backfilling of vacant storefronts.

Utilize the outcome to fashion one or more potential tax initiatives for placement on the November 2016 ballot.

ATTACHMENT NO. 1

Tom

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ATTACHMENT NO. 2

Port Hueneme Draft Budget Page 1 Council Member Tom Figg Council Meeting of 9-21-15 Comments and Suggestions

PRESS RELEASE BUDGET REMARKS (9-21-15)

Comments/Suggestions Offered by Council Member Tom Figg

GENERAL COMMENTS

1. First and foremost, I want to commend the CityManager and City Staff for their efforts in the face ofextraordinary challenges

2. We’ve been provided a solid assessment of ourunfavorable financial condition; however, we lack acoherent game plan to fix the underlying problems

3. The Budget Message is focused on the downside ofour circumstance but doesn’t advocate proactivemeasures to offset structural deficits

OVER-ARCHING RECOMMENDATIONS

1. I ask that the Council consider a more robust budgetstrategy that deals with both cost containment andrevenue enhancement (Attachment No. 1)

2. With limited exceptions, I recommend that we defernon-essential discretionary expenditures until we bringrevenues and expenditures in line (Attachment No. 2)

3. In future years, I’m recommending a variety of changesin how the budget is structured and presented to helpfacilitate decision making

a. A more in-depth assessment of departmentalinitiatives vs. accomplishments from year to year

b. Express revenue & expenditure changes inpercentages and explain significant deviations

Tom

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Tom

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Port Hueneme Draft Budget Page 2 Council Member Tom Figg Council Meeting of 9-21-15 Comments and Suggestions

4. I’m recommending a more in-depth analysis of utilityrates and delivery options which could translate to areduction in rates charged to customers

BUDGET DETAILS

1. I’ve asked for more in-depth explanation regardingsignificant cost and revenue deviations compared tothe past fiscal year

2. I’ve asked for clarity on the purpose and effect of the$5 million loan to the SPA from the General FundReserve and ramifications of refunding the debt

3. I’ve asked that Management Partners explain theirfindings regarding the City’s financial operations andhow that translates to the proposed budget

4. I’ve asked that the proposed Cost Allocation Plan bemore fully explained as to significant differences fromthe last plan

5. I’ve asked for explanation regarding expenditures andcost recovery specific to the SPA and Successor RDAwhen both entities have limited remaining life

6. I’ve asked that departmental accomplishments andforthcoming initiatives be more succinct and reflectiveof Council priorities

7. I’ve asked that a variety of measures be incorporatedinto the budget that address employee safety, moraland productivity

8. I’ve asked that all discretionary expenditures,programs and subsidies specific to each departmentbe fully disclosed (i.e. Expanded Library Hours, etc.)

City of Port Hueneme Page 1 Two-Year Budget Strategy May 26, 2015 FY2015-2017

SUGGESTED BUDGET STRATEGY FOR FY 2015-2017 (Summary Recommendations from Council Member Tom Figg)

BUDGETARY ISSUES

COST CONTAINMENT

REVENUE ENHANCEMENT

COMPLIMENTARY ACTIONS

OV

ER

- Our Near-Term Revenue Picture is Unclear; Criti-cal Cost Variables May

Not be Known Until After June 30, 2015.

Additional Time is Needed to Fully Evaluate

Cost Containment and Possible Reduction in

Service Options.

Ballot Measures (If Any Are Pursued) Require

Community Vetting and Syncing with the Elec-

toral Process.

Institute a Two-Year Budgetary Strategy; Year

1 - Analytical Phase; Year 2 - Policy Imple-

mentation Phase.

YE

AR

1

We Need to Address a General Fund Shortfall of $1.1 Million in FY2015/16.

(NOTE: This Gap May In-crease and the Final Shortfall May Not be

Known Until After June 30, 2015).

Staff Reduction Through Attrition, Consolidation of Job Duties, Leaving

Vacancies Unfilled, Out-Sourcing & Layoffs.

Evaluate Development Opportunities, Pursue

New Grant Funding, and Attract High Yield Reve-

nue Producers.

Utilize Reserve Funds as a Temporary Measure;

Evaluate Alternative Tax Measures to Back-Fill

the General Fund. Freeze Discretionary Ex-penditures (e.g., Travel, Conferences and Non-Essential Consultant

Contracts).

Explore Advertising Op-portunities for City Vehi-cles/Facilities and Other Entrepreneurial Means of

Raising Revenue.

Produce Quarterly Ex-penditure Reports to Monitor Departmental

Expenditures and Budget Appropriations.

We Have A Structural Deficit Between Tradi-tional Sources of Gen-

eral Fund Revenues and Actual Expenditures.

Undertake Outside Audit of the City’s Cost Alloca-

tion Process vs. Best Management Practices

(“BMPs”).

Evaluate Realistic Dispo-sition and Income Poten-tial of City Owned/Con-trolled Real Estate As-

sets.

Set Targets for Reduc-tion of Internal Cost Re-covery (Complimentary of An Existing Reserve

Funds Policy). We’ve Become Increas-ingly Reliant on Internal Cost Recovery and Util-ity Fees to Supplement

the General Fund.

Conduct a Critical As-sessment of Utility

Rates, Water Quality Op-tions and Capital Re-

placement Amortization.

Ascertain Cost/Feasibil-ity to Finance Capital Re-

placement through Bonding of Future OHD

Revenue Payments.

Benchmark Utility Rates Against Cities of Similar

Size, Community De-mographics and Ability

of Residents to Pay. Action Approved by the City Council on May 4, 2015. Additional Suggestions based on Public Commentary Received on May 4, 2015. High Priority – Action as Part of the FY 2015/16 Budget Adoption.

City of Port Hueneme Page 2 Two-Year Budget Strategy May 26, 2015 FY2015-2017

YE

AR

1

BUDGETARY ISSUES

COST CONTAINMENT

REVENUE ENHANCEMENT

COMPLIMENTARY ACTIONS

Salaries and Benefits Consume 72% of the City’s General Fund;

Overall Compensation is Highly Competitive.

Reposition Compensa-tion Schedules to Cities of Similar of Size in Ven-tura County and Not All

Cities At Large.

Devise Ways to Incentiv-ize Employees for Reve-nue Production & Cost Savings Above Estab-lished Benchmarks.

Achieve Compensatory Parity Among and Be-tween Classifications, Benchmarked Against Cities of Similar Size.

There’s Been a Dispro-portionate Growth in De-

partmental Staffing & Costs Over an Extended

Period of Time.

Establish Staffing Benchmarks & Opera-tional Thresholds for

Each Department Based on BMPs.

Establish a Long-Range Vision of Community

Purpose as Opposed to a Near-Term Strategic

Planning Process.

Hold Directors and Man-agers Accountable for

Benchmarks Applicable to the Their Respective

Departments. The Cost of Public

Safety is the Highest Among All Departments;

44% of Total General Fund Expenditures.

Evaluate Cause and Ef-fect of Overtime Pay;

Make Organizational Ad-justments to Minimize

Overtime Charges.

Retain a Financial Con-sultant to Evaluate Fea-

sibility of Alternative Tax Measures to Underwrite General Fund Services.

Conduct Town Hall Meet-ings on Water Cost/Qual-

ity Options, Police Re-tention/Outsourcing &

Alternative Tax Vehicles. Chronic Deficits Have Resulted in Deferred

Maintenance and Capital Replacement of Public Facilities (Parks, etc.).

Identify and Quantify Re-duction in Services Op-tions (e.g., Frequency of Street Sweeping, Provi-sion of Lifeguards, etc.).

Evaluate Potential of Post-Redevelopment

Tools (e.g., Infrastructure Financing) to Relieve the

General Fund.

Consider Adjustments in in the Structure of As-sessment Districts to

Compliment Other Possi-ble Tax Measures.

YE

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2

We Need to Address a General Fund Shortfall of $1.5 Million in FY2016/17.

(NOTE: This Gap May In-

crease and the Final Shortfall May Not be

Known Pending the Out-come of FY2015/16).

Undertake Additional Staff Reductions to Ad-dress Deficit Through

Labor Negotiations, Con-tracting of Services, etc.

Adjust Cost Containment Measures Based on Rev-

enue Enhancement Achieved During

FY2015/16.

Utilize Reserve Funds as a Temporary Measure;

Evaluate Alternative Tax Measures to Back-Fill

the General Fund.

Implement Cost Containment and Revenue En-hancement Findings and Recommendations Result-ing from Studies and Analysis Conducted in Year 1.

Adopt/Update Policies to Guide Future Budgetary

Cycles (e.g., Staffing, Performance and Reve-

nue Benchmarks).

Action Approved by the City Council on May 4, 2015.

High Priority – Action as Part of the FY 2015/16 Budget Adoption.

Establish a Long Range Vision as Opposed to Conducting Annual (Near-Term) Strategic Planning.

FISCAL CONDITION ANALYSISApril 20, 2015

AGENDA ITEM #8A

d

What Are Our Options?

• COST CONTAINMENT

• REVENUE ENHANCEMENT

COST CONTAINMENT

WHAT AREAS ARE WORTHY OF EXAMINING?

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COMMUNITY DEVELOPMENT DEPARTMENTUtility Cost Allocation

INTERNAL COST RECOVERYShifting of Fixed Costs to User Fees

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COMMUNITY DEVELOPMENT DEPARTMENTUtility Cost AllocationHow Can We Reduce Costs?

2013

1975

22%

15%

SOURCE: Adopted Operating Budgets, City of Port Hueneme, 1975-2013.

UTILITY RATESNearly Doubled in Past Ten Years

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ACTUAL SERVICE USEA Steady Decrease in Consumer Needs

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Average Daily ConsumptionMillion Gallons Per Day

Average Daily Collections (Tonnage)

SOURCE: CAFR Report for FY Ending June 30, 2014, Finance Department, City of Port Hueneme.

CCRP

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COMMUNITY DEVELOPMENT DEPARTMENTHow Can We Reduce Costs?

116%

100%

31%

182%

DEPARTMENTAL EMPLOYMENTDoubled in Past 40 Years


FISCAL SUSTAINABILITYDepartmental Costs

CCRP

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OTHER POTENTIAL SAVINGSWhat Else Can be Done?

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• Decrease Frequency of Street Sweeping.

• Extend Capital Replacement Schedules.

• Reduce Discretionary Expenditures (Travel, Etc.).

• Balance Water Quality with Delivery Costs.

• Compete Sole Source Service Contracts.

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REQUEST OF STAFFFurther Budget Analysis

• Conduct a Detailed Analysis of the City’s Current Cost Allocation Program.

• Establish Staffing Benchmarks & Compare to Actual Needs.

• Re-Assess Capital Improvement Program and Replacement Schedules.

• Evaluate an Assortment of Other Potential Options.

WHAT OPTIONS DO WE HAVE IN RAISING

REVENUE

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COMMUNITY DEVELOPMENT DEPARTMENTUtility Cost Allocation

REVENUE ENHANCEMENT

COST OF SERVICESPublic Safety Consumes the Most Resources

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COMMUNITY DEVELOPMENT DEPARTMENTHow Can We Raise Revenues?

Fiscal Year 2014-15

SOURCE: 2014-15 Operating Budget, City of Port Hueneme, 1975-2013.

PUBLIC SAFETY NEEDSUnderfunded Services

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COMMUNITY DEVELOPMENT DEPARTMENT

• Special Details

• Bike Patrols

• Drug Surveillance

• Crime Prevention

• Crime Free Multi-Family Housing

How Can We Raise Revenues?

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ALTERNATIVE APPROACHESGeneral vs. Special Taxes

General Taxes(Measure M)

Special Taxes(Police Measure)

VoterThreshold 51% 67%

Persons Affected

Businesses Only(Minority of Voters)

All Property Owners(Majority of Voters)

Services Provided Non-Specific Public Safety

RevenuePotential Unknown $1 - $3 Million

Likely Opponents

Harbor & Navy Tenants/Contractors Unknown


POLICE PARCEL TAX

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• Option #1: Uniform Assessment Based on Property Type.

• Option #2: Zoned Assessment Based on Service Need.

Annual Monthly TotalProposal #1 136$ 11.37$ 1,000,000$ Proposal #2 341$ 28.44$ 2,500,000$ Proposal #3 682$ 56.87$ 5,000,000$

Alternatives Example Single Family Charges


OTHER POTENTIAL REVENUE SOURCES What Else Can be Done?

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• Seek Proposition 1 Funds to Pay for Water System Improvements.

• Explore Establishment of an Infrastructure District.

• Creative Use of Existing and New Grant Funds.

• Reposition Development/ Disposition of City Properties.

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COMMUNITY DEVELOPMENT DEPARTMENTWhat Options Do We Have?

REQUEST OF STAFFFurther Budget Analysis

• Solicit Proposals to Help Structure a Police Tax Measure.

• Seek Community Input on Ballot Options & Willingness to Pay (Townhall Meetings).

• Maintain Budget Status Quo Pending Outcome (e.g. Two-Year Process).

• Evaluate an Assortment of Other Potential Options.

CONCLUDING REMARKSApril 20, 2015

AGENDA ITEM #8A

d

What Condition is Your Condition In?

Uncertainties (Yet to be Determined)• $178,000 General Fund Projected

Deficit. • $800,000 in Unanticipated Costs &

Revenue Losses• $1.1 Million in Funds at Risks.• $0.8 Million in Needed Capital

Improvements.Approach (Two-Year Budget Process)• 1st Year Strategic Planning• 2nd Year Implementation

FISCAL CONDITION ANALYSISApril 20, 2015

AGENDA ITEM #8A

d

What Kind of Community Do We Want?

LET THE COMMUNITY

DECIDE THEIR FATE

March 30, 2016 TO: City Council Members CC: John Baker, Interim...

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