HomeMy WebLinkAboutEconomic Advisory Board - Minutes - 05/17/2023Page | 1
05/17/23 – Minutes
Economic Advisory Board
REGULAR MEETING
Wednesday, May 17, 2023 – 4:00 PM
300 LaPorte Avenue, Council Information Center
1. CALL TO ORDER: 4:00 PM
2. ROLL CALL
a. Board Members Present –
• Denny Coleman
• Mike Colwell
• Thierry Dossou
• Erin Gray
• Mistene Nugent
• John Parks (Vice Chair)
• Braulio Rojas
• Richard Waal
• Renee Walkup (Chair)
b. Board Members Absent –
c. Staff Members Present –
• Jillian Fresa, Staff Liaison
• Lawrence Pollack, Finance Department
d. Guest(s) –
• Kevin Jones, Chamber of Commerce
3. AGENDA REVIEW
4. APPROVAL OF MINUTES
a. Board approved April Minutes
5. NEW BUSINESS
a. Finance Update, Lawrence Pollack
• Lawrence introduced himself and provided an update about the history of how
Finance created the Budget for Outcomes (BFO) process as well as the system
(JD Edwards) it adopted and continues to use.
• Continue the BFO process every 2 years and have integrated this process which
is not iterative by creating a performance management system adding in
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metrics, etc. to measure how it’s working and continue to provide
transparency for our community’s understanding.
• City adopts its Strategic Plan in March à Creation and adoption of the refreshed
Strategic Plan.
• Council priorities are also included in the Strategic Plan – this year, because of
a voting change, their priorities will be adopted at the same time.
• Revenue forecasted in March à Sellers (staff) in departments create offers
(budget requests)
• Offers are created through April à sellers in departments create offers (budget
requests)
• Budget requests need to support the “how” – how these requests will support
the Strategic Plan and community’s goals
• Inputs / Environmental Scan include:
- Resident Inputs/Priorities including community survey, focus
groups/outreach, equity considerations and Boards and Commissions
- Council Input / Priorities include: community concerns and adopted priorities
- Organizational Input / Priorities include: City Plan, Master Plans, Economics
and financials, emerging trends/issues and metrics
• BFO Teams Review Offers (May-June) à Staff on BFO teams recommend which
offers to buy based on their review prioritization.
- What programs and services best fit our Strategic Plan (this last cycle they’re
reviewing 680 requests)
• From here BFO teams come up with 7 recommendations
• Budget Leadership in July fine tunes the recommendations to develop the City
Manager’s Recommended Budget
• City Council then reviews the recommendations (Sept-Nov) and makes changes
for the final adopted budget
• Benefits of our process – you can see what you’re paying for
• This transparency has been helpful for Council’s overall understanding
however this process can also be very overwhelming when it comes to
communicating with community members – covering the granularity can be
complex
• One thing we’re working on with CSU’s Center for Public Deliberation to
understand how we become more effective with this process
• Q (Thierry) I have a quick question – what tools do we use to create the
priorities list? How do we decide what makes the budget cut and what
doesn’t?
• A (Lawrence) The priorities list comes from the Strategic Plan and for the
specific budget request – all of those budget requests – the 680 that I
mentioned that are created by staff, those are evaluated to support the overall
plan. Then they are evaluated by staff teams with final decisions by the
Executive team. Does that answer your question?
• Comment (Thierry) Yes, it did.
• Q (Richard) So does the City have a December/January fiscal year?
• A (Lawrence) Yes
• Comment (Lawrence) So at a high level, that is our budget. So what additional
information can I provide that would be helpful?
• A (Rene) So considering that we’ll have a new Council in January, is the City
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considering changing the budget year to align better with new Council
members?
• Comment (Lawrence) Because the process is so intense, we would not want to
do this on an annual basis. It would be a long conversation about shifting that
and a future possibility.
• A (Rene) So with the new Council, I’m assuming they’ll be training, do you have
plan on how that training is going to occur?
• Comment (Lawrence) One of the Assistant City Managers will be bringing
them, in collaboration with Council, they’ll be working to on board prior new
Council members prior to them being sworn in. They’ll even go as far back as
before the election, providing information so Council members can go into the
election with eyes more wide open. What does a day in the life of a Council
member really look like and what are the expectations of Council?
• Trying to provide more upfront information ahead of the elections and then
after the election happens, more opportunities to help with that significant
learning. There’s a lot to wrap your head around as a new Council member.
• Q (Denny) I have a question about revenue that’s produced by individual
departments, let’s say Economic Health comes up with a way to make
$250,000 through innovation, is it likely that they get the opportunity to spend
that or does it go into a pot that everybody gets a piece of it? Are they
rewarded for their innovation or is it more like they’re just thanked and
encouraged to keep doing innovative things to bring it more funding? I’ve been
on the recipient of both and ones a heck of a lot better than the other.
• Comment (Lawrence) That’s a great question and I’ll respond initially that not
all funds are created equally. So Economic Health lives within the general fund
which is a little different story than if the Streets Department which has
separate funds, Transportation funds, if they came up with something in
revenue, that would flow back into transportation. If that wanted to use that
new revenue, they would still have to get Council approval on appropriation to
spend that. But it would still most likely get funneled to Streets and so your
example of Economic Health is good because it’s less cut and dry. So of the
funds could potentially go back to support Economic Health – if there were
excess funds from this revenue generation, then that could either go to the
general fund or go back to Economic Health.
• Q (Richard) Instead of revenue generation, what about cost savings?
• A (Lawrence) Basically goes to the bottom line, this is just part of the standard
operations. If you have $100 and you spend $90, the remaining $10 would go
to the bottom line and the community would say that is for future Council to
use as needed.
• Q (Mistene) Are there tensions around this?
• A (Lawrence) We try to avoid that – there is a tension within any organization
to avoid that and we refer ourselves as the protectors of the general fund. This
is because everyone wants to use the general fund before they use their own
funds. If you have a cost savings, that area does not get to just use it, those
funds go back to the general fund.
• Q (Rene) Are there departments that straddle both general fund and their own
funding?
• A (Lawrence) Yes.
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• Q (Rene) Which departments are general fund funded?
• A (Lawrence) I can pull out a work chart if you want it? This is a lot – most
departments are simplistically governmental funds vs. enterprise funds like
Utilities. Does everyone get that distinction? An example of this is our benefits
fund, our fleet fund – everyone has a fleet whether you’re on the general fund
or Utilities side. Rene, can you ask the question again?
• Q (Rene) I was asking with departments are funded through the general fund?
• A (Lawrence) within the governmental almost all departments are funded
through the general fund.
• Q (Rene) So does the City BFO process cover the entire City budget whether
it’s general funded or enterprise funded?
• A (Lawrence) If we’re not in a cost-cutting environment where we’re
intentionally looking for funds to cuts, and I’ll explain to you some of the cuts
we’ve made to ongoing budgets, if we’re not looking for those cuts, then we’re
assuming that as long as they’re performing, we’re going to limit growth to
inflationary number. Any offer that involves an inflationary number, becomes
an enhancement offer to make sure that the overall numbers are monitored
and are not growing disproportionately.
• For example with Recreation perse, they have an overall goal of using 70% of
their fund and the other 30% is backfilled by the general fund.
• Comment (Rene) So they’re 70% self-sustained.
• Q (Braulio) I just want to make sure I have the right assumption, when the
budget is created then it goes to City Council for approves, that this is going to
be the budget? So moving forward, any savings are identifies and justified,
they also need to be approved by City Council?
• A (Lawrence) Not necessarily, so City Council has the role for authorizing the
initial proposal but in our Charter there is actually no wording stating they
have authorization to not approve it. We can do that internally.
• Let’s say, I’ll give an example of the plastic bag fees, there were revenues we
were forecasting and there were budget requests that were going to funded
with that revenue. Our residents are not paying for bags, they’re using their
own bags, so our projections were way off. And what we’ve done is okay,
we’re not going to have that revenue, we need to reduce our expenses so we
have an internal process that we call pros and appropriations where we freeze
it and we take it away so you’re not allowed to spend it. Still it was authorized
technically by Council but because we don’t have the revenue coming in, we’re
not allowed to spend it.
• If it was a different situation where it was a cost savings we were realizing and
we wanted to freeze that, that would just go back to the fund balance.
• So the budget itself has a mechanism to adjust depending on the
circumstances.
• Comment (Braulio) So my understanding is that then the budget itself has its
mechanism to adjust down the road.
• A (Lawrence) We manage those very tightly and that’s why we have monthly,
what we call is a monthly financial report where we review and analyze how
city operations both governmental and the utilities side is doing from our
actuals compare it to what we have in the budget and we look at both revenue
and expenses.
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• Q (Braulio) I have another one and this is the last, how do you prevent units
from over-budgeting?
• A (Lawrence) so for over-budgeting, the most simplistic way to think of our
budget requests is our current level of service for our ongoing offers, we
manage those by beforehand, making sure we have an agreement that of this
total amount, it can only grow by an assumed inflationary rate.
- Match the inflationary increases both on the revenue and the expense
sides
- We manage the current level of service by those agreements. Then
anything else that is net new has to compete for approval and how it
compares to anything else that is being suggested in the budget.
- A department itself can’t just have significant growth because of some
change, even the City Manager ones, we tightly manage those levels of
service because we always have a tension of not having enough resources
for everything that would be desired, that natural tension just like we all
have in our own personal budgets. We have to manage those tightly and
any modifications to the budget are getting an overall modifications to the
budget are getting approval from the City Manager.
• Q (Braulio) Okay.
• Q (Denny) Flip that a little and say someone comes to Jillian and says “we have
a great idea for a revenue enhancement” – does she have to a year and 9
months to add it to the budget or is there a way to take advantage of some
new, really significant idea?
• A (Lawrence) so I’ll go back to disposable bags again, that’s an example of
something that after the budget was approved in 2022, that was not included,
that was net new. That was approved by Council sometime in 2022 with the
expenses being justified by the anticipated revenue. So there are options
through supplemental – let’s backup, how many ways can we approve
spending at the City? We really have 2 ways we can modify the budget 1 way is
through what are called supplementals, an idea that becomes its own revenue.
A significant departure from that, an example would be most recently with the
rental housing, and the extra expectations that it was going to be put on
landlords. That would have been a program that would have been “net new”,
not coming with any revenue. A program that would have been funded out of
the general fund.
- There are mechanisms where Council has the flexibility where they don’t
have to wait for such a long period of time.
• Also in the second year of our budget, the Council adopts a 2-year budget, they
adopted a 2023 and a 2024 but in our charter they are only authorized to
spend on the one year at a time. This fall we’ll come back with the second year
of the budget as they adopted (2024) with modifications – these are things
that are specifically asked for by Council or the City Manager. And those
requests are smaller – something like 20 vs. 680+. There typically aren’t a lot of
surprises that come up – conversely this is a time when if revenues aren’t
coming in to our forecast, we can reduce the second year of that 2-year budget
to align with the unfortunate decrease. The important point here is to right
size as needed based on shortfalls, etc.
• Q (Braulio) How is the mechanism to cover general budget, if you have a
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general budget
• A (Lawrence) By charter, we have to have a balanced budget – a combination
of revenue and/or reserves. We cannot deficit spend.
• Q (Braulio) This has not happened in your time?
• A (Lawrence) No, there may be from an accounting perspective, these are
things that accountants and auditors are looking for areas where we have gone
over per our budget balance.
- Technically, we manage budgets at the department level. So for example with
Economic Health we evaluate their budget throughout the year.
- Legally EHO could go over budget and they’re all within the General Fund.
The charter says we cannot go over at the fund level. We manage at a
department level.
- If Economic Health got approval to go over their budget, before that
authorization is approved, we’d need to evaluate the entire general fund, do
we have vacancy savings.
• Q (Braulio) I remember that during Covid, after Covid, I remember that we
looked at how long the City could exist if revenues didn’t approve – that was
the objective of my question and I’m glad you asked.
• Q (Erin) So you mentioned 680 programs, I’m curious as a new budget comes
up to be improved, how many of these programs can go over, what are
impacts, what are they meeting our goals, how is that put into the budgetary
process?
• A (Lawrence) So we have the current level of service and just because Council
has approved what we call and we call an enhancement, and that doesn’t
necessarily go into the new level of service. So our executive team, City
Manager and Executive Directors, evaluate our enhancements and the
question comes during the evaluation, is this performing at the level we
expected. For the enhancements we don’t have all of the information needed
so all of these decisions are City Manager decisions.
- We are looking at the overall goals and if we’re meeting those budgetary
goals.
• Comment (Lawrence) Let me go over the cost savings but before we do I want
to orient you to our website – we have some information that’s at your
fingertips including Budget 101 (Spanish and English),
www.fcgov.com/citymanger/budget.php
• Will be adding some additional budget information later this year.
• There is also a summary of the City’s 2023-2024 budget (24 pages) located on
this website.
• Quick facts – the city operates on a very low percentage of property taxes vs.
other cities in other states
• When the budget narrative was created, it includes all of the latest numbers
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and there’s another document that dives deeper into the details for those who
are interested.
- Performance metrics
- Organized in numerical order according to each budget offer
- Will eventually include a budget user guide video
• Q (Denny) Does the City focus at all on making additional revenue, revenue
enhancements?
• A (Lawrence) Actually we tend to focus more on saving money – this is
something I also wanted to point out.
• From a cost saving perspective, in 2017 we implemented a process
improvement program called FC Lean. This is to reduce waste – and in 3 years
our soft cost savings was 10,000 hours which is around $395,000 in soft cost
savings.
• One place you can see this – you can view www.fcgov.com/kfcg and view our
cost savings over the years after FC Lean was implemented.
• Another comparison for cost savings – in 2021, we had cut $12.6 million in
budget cuts and in 2022 we only added back $4.9 million so in the 2023-2024
budget cycle, although there were enhancements, we took another $2 million
out of the budget based on monies that weren’t being used. The combination
of these is just under $9 million in cuts.
• There was a renewed focus on asset management – people, parks, and
technology – taking care of what we have. Big shift in our focus.
• We have another pressure of the ARPA monies that will be going away - $28
million. We need to review of those funds spent, what was the most impactful.
• 2025-2028 will become a lot leaner
• Comment (Rene) – This has been very informative, lots of resources – we I’m
delighted how the City is finding new ways to save money and avoid
duplication. Are there any other questions?
• Comment (Mistene) – Lawrence, if the increased tax isn’t approved by voters,
what’s the process at that point?
• A (Lawrence) It would got back to staff and we’d also be revisiting the “stop
doing” list – no one wants to stop services but this will need to be discussed.
• Comment (John) – Is there a website where we can find the tax information –
• A (Lawrence) No, there’s not a formal website it would just be through Council
discussions and Council Finance.
• Comment (John) – Do you know if there’s been any changes in the last 30
days?
• A (Lawrence) April 25 was the last discussion – Council went around and they
each spoke about the different options of revenue generation they’d be
interested in.
• Comment (Mistene) Did anyone go to the last Council session? I did and it was
helpful – these are recorded if folks want to go back and watch it.
• Q (Denny) Is there a presentation coming up on enhancements? What’s the
City calling that? Up in Issues – all boards and committees.
--10-minute break--
• Comment (John) – Reviewed previous meeting discuss regarding the proposed
new taxes for sustainability measures – there’s a $31 million funding gap,
there’s $8-12 million for Parks maintenance, $14 million for equity and climate
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priorities for City Council, $2.5 million for buildings, $1.5 million for zero waste
and EVs – in general, there were a suite of subsidy taxes including alcohol,
nicotine, marijuana, large GHG emitters tax (Anheuser Busch and Broadcom),
• Comment (John) We decided at the last meeting to write some sort of a memo
to Council – understand how much savings are happening to offset – how
much savings are there to offset the spending? I heard $9 million in savings –
Mistene or maybe Jillian could give us an update on what was discussed at the
last Council meeting?
• Comment (Mistene) They did a roundtable discussion and they solely focused
on the topic of raising taxes and the areas that would cover.
- Shared Ginny’s presentation from the previous meeting with the summary
of the proposed funding areas.
• For follow-up: Jillian will resend the presentation from Ginny with more details
of what was shared
• The issue at hand is the timeframe for these proposed funding options – there
isn’t much time for public outreach so that’s the main concern.
• Comment (Braulio) Overall there is a need as a board to get into alignment
with what’s being proposed – if we agree they should have taxes, do we write
a memo to City Council and if so, what should we propose that Council should
take into consideration?
- What do we take into consideration? What are the scenarios we could
propose with our memo? Going into details will be difficult so it’s my
recommendation we keep our memo high level.
• Comment (Richard) Unfortunately where he’s sitting in the room, the audio
isn’t picking up his voice and what he shared.
• Comment (Braulio) Overall how the information is presented to voters is very
important – helping folks understand what the priorities mean. If you appeal to
the voter’s values, I feel that there’s a chance of getting these initiatives
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passed.
• Comment (Mistene) In my opinion, I’d like to see what the discussion would
look like from City Council not to raise taxes – so far, I haven’t heard this
perspective but I think it’s an important topic to address. Priorities are
priorities but it’s really important how we get there.
- Where I’m struggling in my head as a board, should we not send a memo
based on the point that we don’t have consensus
- I also feel like this discussion should have happened many months ago.
• Comment (John) I agree that we don’t have consensus – I would invite
everyone to take a look at the Council agenda and send a note to the group
with your recommendation on the top 2-3 priorities.
• Comment (Mistene) Before we go there are 2 things – 1) FYI to the group in
case you didn’t see, the minimum wage proposed increase didn’t pass and 2) I
recommend this group watches the Council session
• Comment (Jillian) Jillian – I can share that video out for folks to watch
• Comment (Denny) What if we send a memo to Council to let them know we’re
here and ready to engage in the future, when there’s more time to provide
input?
• Comment (Mistene) Also if we’re more proactive in our agenda, we would
have also covered this.
- It would be helpful if we had an advocate who’s on City Council
• Comment (Rene) Yes – could we invite Shirley Peel? Maybe it would be helpful
to have her join on a quarterly basis.
6. OTHER BUSINESS
NA
7. ADJOURNMENT
a. (5:58pm)
Minutes approved by a vote of the Board on XX/XX/XX