All About Financing City Services Task Force - History, Current Recommendations and Future Plans

On February 18th, Pacifica residents of all political stripes and affiliations walked through the doors of the Sharp Park Golf Course Restaurant's Banquet Room to hear the City of Pacifica's Financing City Services Task Force Chair, Bruce Banco, present to the Pacifica Democrats club the history, goals, and  objectives of the Task Force, as well as its recently developed recommendations for the potential options to be taken by the City Council this year.

City and County Median Income Statistics:

"Pacifica is the 6th largest city in San Mateo County. San Mateo County has a median household income of $95,300. Pacifica has a median household income of $91,134, yet has the lowest per capita revenue ($600) in the entire county" said Banco in his introductory remarks to the assembled morning diners. "As you look across the county, we are not anywhere near the top level of pay given to our city employees. In fact, wages paid to our city employees are in the bottom quartile in the state."

Declining Reserves:

Banco went on to explain that the city has approximately 15 funds, with the General Fund being the biggest at $27 million. He also revealed that a city's reserve requirements should be generally at 10% to 20%, but, regrettably, this is the not the case in Pacifica. He enumerated the quickly declining reserves from that of $6,609,009 in FY 09/10 to $4,592,054 in FY 10/11, $1,523,910 in  FY 11/12, to a predicted $503,496 in FY 12/13, $139,810 in FY 13/14, $130,062 in FY 14/15, and $66,946 in FY 15/16, with a"bottoming out" of $0 in reserves in FY 16/17.

Potential Remedies:

And, because of this, the current Financing City Services Task Force has been charged with developing a new 5 year Financial Plan, discussing a reserve policy and/or setting a reserve amount based on a percentage of total expenditures, in addition to prioritizing options for presentation to the City Council for action to be taken.

"The Task Force is presently looking at cuts, concessions and revenue measures, which entail looking at outsourcing, discussing public input developed from public forums and overall generally being more fiscally conservative," Banco explained. "Their job is to examine choices, risks and trade-offs. In order to help with their objectives, they need to look at long term revenues and economic development, in addition to planning for the passage or failure of planned tax measures."

City's Shrinking Work Force:
"Our work force has gone from 230 funded positions in FY 02/03 to now approximately 158 full time employees (176 with part time equivalents), said Banco."We have nine labor unions, and all but two of our employees (Steve Rhodes and Ann Ritzma) are in a labor union. Our total compensation has been down 4.4% between 2010 and 2011. Our total compensation (top step) is below county averages in six of seven categories and our police contracts are soon to be re-opened for negotiations. With nine unions, the negotiation processes are always on-going."

After having given this basic information to the audience, Banco then took a little time in explaining to the group what the Task Force has done between 2008 and the present because, according to Banco, it helps frame what they are doing currently.

Task Force History, Goals and Objectives:

"We have been around for four years. The initial Task Force was formed in July of 2008 for the purpose of identifying funding to replace the fire assessment, which was due to expire in 2009. In January of 2009, we recommended a one cent per dollar sales tax to be voted on by the voters. That particular measure was defeated by 61.68% of the voters.  We went then back to the "drawing board". In July of 2009, the city directed the Financing City Services Task Force to develop a 5-year Financial Plan that would bring financial stability to the city.

"In 2009, we were re-chartered, not to just look at something that was already going away, but to really look at the financial structural liability of the City of Pacifica," Banco reported.

Banco further noted that the Task Force in 2010 recommended a Five Year Plan that included new revenues that would require both voter approval and union negotiations concerning reductions in employee costs. In March of 2010, they issued a report that outlined cuts that included reviewing the city's budget and discussing the sources of revenues, and in some cases, restrictions on expenditures. The Task Force reviewed each departmental budget. The report identified the Task Force's top priorities: maintaining city services and minimizing lay-offs... as much as possible. The report recommended that all segments of the community should come together to share the solutions. The plan recommended $8.5 million in savings by lowering employee costs through negotiated adjustments to salaries, benefits, pension expenses and other associated employee costs.

 

Coupled with the $8.5 million that was to come from these sources, the Task Force recommended three different tax measures, or, at least, were thinking of three different tax measures to go along with that...one was the increase in Hotel Transient Occupancy Tax (TOT) to go from 10 to 12%, the second was a Public Safety Assessment... later changed to Fire Suppression Assessment and the third was a revised Utility Users Tax. Those were supposed to bring in approximately $6 million. The TOT tax passed. That was $160,000.

 

"Back to the drawing board":

 

However, in April of 2011 the Fire Suppression Assessment was abandoned... after responses received by the city were sufficient to defeat it. This forced the Task Force to once again go back to the "drawing board", because the Fire Suppression Assessment was a large component of what they needed...Thus, in June of 2011 the City Council adopted a budget with new cuts of approximately $1.5 million, which included the City Attorney, a police captain, police dispatchers and several other positions that added up to 19.7 equivalent positions that were identified as no longer part of the budget. However, that ended up as not being enough and the Task Force was charged one more time in 2011 to go through and take a thorough look at the whole process again.

 

"Our goal continues to be developing a Five Year Financial Plan, and now, to really start discussing a reserve policy, or setting a reserve amount to address this," Banco said.

 

Banco revealed that this will take some time, since they are already experiencing trouble in even balancing the current budget, let alone in setting reserve policies for the future, but they have been kicking around the 10-20 % figure in their preliminary discussions of same.

 

Goals:

 

"Our goal is about $700,000/yr in either revenue increases or expenditure reductions. We've had 14 meetings since last August. We did a lot of things. We talked about every city departmemt. We talked about every revenue source. And, we received a lot of input from people that eventually were put into what we call Options A, B and C," Banco informed. "These options will be the recommendations that we make to City Council about how to address this problem."

 

Banco then pointed out that all along the way the Task Force has been making recommendations for consideration to the City Council, as well as to staff, about such items as compensation levels in the city, not only salaries, but other items that ought to be considered, when the city does labor negotiations, such as "cafeteria cash", a topic about which Banco indicated to the audience that he had a definite strong opinon...in addition to a whole "laundry list" of other items for them to consider, in order to help them reach the goals that they have for expense reductions.

 

"Our current goal is $3.7 million over the next five years that we're trying to identify, in order to get our reserves back up to between four and five million dollars, where they should be... while still balancing the current budget," Banco revealed.

 

Task Force Public Forums:

 

"In January of this year, we deliberately structured our Public Forum the way we did because in the traditional Task Force meetings, people can speak, but are constrained by the Brown Act from interacting with the Task Force members. We wanted to produce a forum in which people were free to talk at length about their opinions on everything going on concerning the city's budget and have a dialogue back and forth with the Task Force members. There were several lively discussions at the various tables throughout the room, especially about outsourcing the police department, PB and R cuts, revenues, utility user taxes, parcel taxes and other issues," Banco said.

 

Public Surveys:

 

In addition to the Public Forum, they devised a survey that could be filled out at the forum, or on-line or at home and later mailed in to them. The Task Force members wanted feedback. They fully recognized that it was not a scientific sample. However, it gave them a sense of what's going on when they received 60-70% opposed or in support of a particular issue. They took the survey results and crafted their A, B and C Options for the Council's consideration as follows: (All of these options take into consideration the fact that they have already identified $3.7 million in salary freezes and employee compensation changes etc. over the next five years, but there still has to be more negotiations to achieve that number...and the city plans to go back again to the unions to re-negotiate in order to accomplish same.)

 

Task Force Recommendations:

 

Option A:

 

This is the item that was most favorably looked at by the people and with the broadest support...roughly 60% were either strongly in favor or somewhat in favor of this option. This is the option that is the Task Force's preference in order of recommendation. The option is to put a 1/2 cent transaction sales tax on the ballot. It did not indicate what month. It just said a 1/2 cent transaction sales tax.(Although the Task Force would have preferred it sooner rather than later, in other words, the June ballot, as it may or may not be considered for the November ballot, but that would have to be decided later.)

 

In addition to that, they also have included in Option A an increase in Revenues by: Business License increases, establishing TOT for Vacation Rentals, increasing the Fireworks tax, updating Building Permit Fees, assessing Winterization Inspection fees, and increasing towing fees.

 

This would be combined with a reduction in Expenditures by: the implementation of a salary freeze and other employee compensation changes and  the elimination of two supervisory positions from the Public Works Dept,(which two positions have already been accomplished by attrition from two retirements) which brings the total to approximately $1.3 million dollars in expense reductions and revenue increases...

 

Over 5 years this would get the city's reserve percentage up to over 23%, as well as meeting the city's obligations on a yearly basis. It grows the reserve to $6.4 million in five years, which would give the city a measure of security for city government to meet an emergency.

 

Option B:

 

To add an additional reduction in city expenditures by exploring the potential of contracting out Police Dept. services to the San Mateo County Sheriff. They estimated that it would save $1.5 million to do so. Coupled with the other items already mentioned as revenue sources, Option B would bring the total to approximately $1.8 million dollars in expense reductions and revenue increases.

 

If this option happens, over the cost of 5 years it will grow the reserves up to $8.7 million, which is a 30% reserve, which would allow the city to be able to do things again, according to Banco. Right now Pacifica is in a "maintenance mode"...just being able to pay the bills being its number one priority...

 

Option C:

 

The same salary freeze and other employee compensation changes as in the first two Options and the same elimination of the two Supervisory positions in the Public Works Dept, but this Option would now include: Eliminating funding for the Resource Center, the Visitor's Center, and Pacifica Community TV. It would reduce staff for the swim team, reduce funding for library hours and reduce staffing in Police Department by eliminating 1 Sargent and 1 Patrolman.

 

In addition to the aforementioned revenue generation increase in fees in the first two Options, this Option would also call for an increase in teen program fees, recreational swim fees and swim team fees.

 

This would only total approximately $788,018 in expense reductions and revenue increases. Over the cost of 5 years, the reserve would only be at $3.8 million...the smallest of all the options.

 

Future Public Forums:

 

After it presents these options to the City Council, the Task Force has plans to put on more public forums, except the future public forums will be more in the traditional sense of public forums, with the dais and the speakers time being limited to three minutes at the microphones, with quite a bit less interaction than the January Public Forum afforded the public.

 

How to Implement a 1/2 cent sales tax:

 

At the end of Banco's presentation, there was a brief Q and A period in which the first question asked was about the process needed for the Council to get a 1/2 cent sales tax measure on the ballot. Banco responded that the City Council needs to declare a fiscal emergency, call for the measure to be placed on the ballot, and adopt an implementing Ordinance. Declaration of the Fiscal Emergency requires a unanimous vote of the governing body, adoption of the Resolution calling the election will require a majority vote, and adopting the Ordinance will require a 2/3 vote of the governing body and majority approval by the voters at an election.

 

Survey Results:

 

To the questions about what the survey results indicated by way of the options offered to them, Banco replied that when it came to outsourcing police, 57.4% opposed or somewhat opposed; 38.3% supported or somewhat supported the idea. When it came to the 1/2 cent sales tax, Banco reported that 60.1% supported or somewhat supported the option and 35% were opposed.

 

However, Banco was quick to  remind the audience that it is one thing to get a survey result and another thing to get an election vote. He referred to the positive results that they had received concerning the previous 1% sales tax measure that they had put on the ballot... only to be defeated by a 60.68% opposition vote at the polls.

 

"Something has to happen. It might not be pleasurable. If it's not a revenue increase, it could be tax increases or further salary reductions or whatever it eventually winds up to be, we are just going to have to do it!," said Banco in his concluding remarks to the Pacifica Democrats.

 

Submitted by Barbara Arietta