HomeMy WebLinkAbout06/09/1997 - Adjourned Regular MeetingCITY OF NEWPORT BEACH
• City Council Minutes
Adjourned Regular Meeting (Study Session)
June 9, 1997 - 3:00 P.M. INDEX
ROLL CALL
Present: O'Neil, Thomson, Edwards, Hedges, Glover, Noyes and Mayor
Debay
Absent: None
CURRENT BUSINESS
1. 1997 -98 BUDGET REVIEW.
City Manager Murphy gave the following overview of the 1997 -98 Budget,
explaining that since November/December of calendar year 1996, the budget has
been under review and that he would be focusing on the major issues. Next in line
is to cover the Supplemental Budget process, the report from the City Council
Finance Committee, taking questions from the City Council and the public, and
creating a budget check list which will be voted on at the City Council meeting on
June 23, 1997, at which time the entire budget will be adopted.
The first key issue is that it is a much smaller budget than last year's budget;
• Revenues in all Funds for Fiscal Year 1997.98 is estimated at $115 million (13.1 %)
which is $17.3 million less than in 1996 -97. Expenditures are $104.5 million which
is $25 million less than last year (19 %), mostly due to the Capital Projects being
much smaller than in the past. A key issue is the fact that the budget is balanced
and $600,00 is being transferred into the Stabilization :Reserves.
Mayor Debay suggested that the 12 -page City Manager's transmittal letter that
was part of the Budget Resource Allocation Plan be made available to the general
public, as it gives a good summation.
City Manager Murphy compared the two largest revenue estimates for Fiscal Year
1997 -98, property tax - $20.7 million; and sales tax - S13 million, with the Police
Department's budget of $22.4 million and the Fire and Marine Department's budget
of $15 million, which indicates that these two city department budgets exceed the
city's two largest revenues.
City Manager Murphy explained that with respect to Expenditure Distribution,
50% of next years total budget represents salaries and benefits, in comparison with
the 1996.97 budget at 39 %. The reason is that there were so many large capital
projects last year that as a percentage this year it's much higher, because the
overall budget is down. Maintenance and Operation, which is another key part of
the budget accounts for 24 %, but in real dollars the M & O accounts are down $2
million this year compared to last year, largely because of reduced costs of
acquiring water due to the Groundwater Development Project. The Capital
Improvements at 23% for this city's size and complexity, in relation to other cities,
• is down compared to last year's with respect to percentage and real amount. Other
Charges - 2% represents three debt service issues which are outstanding (Library
Bond Issue, Water Revenue Bonds and the Balboa Yacht Basin Loan through the
Volume 51— Page 270
1
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
0►,
State of California). Capital Outlay Accounts within each of the city departments
are primarily for acquiring computer equipment, etc.
City Manager Murphy reviewed the Basic Operating Expenditures by each
department with respect to the total budget: Police - 28 %; Fire and Marine - 19 %;
Public Works & Utilities - 21.2 %; General Services - 14 %; and Community Services
- 7.7 %. This visually shows where the city spends a major part of its revenues and
in terms of reducing the budget the public has been very vocal about not touching
safety, etc. He pointed out that the City Council, City Manager, City Clerk, City
Attorney, together with Administrative Services, Insurance, Equipment and
Maintenance, Planning and Building budgets are pretty small when compared to
the other expenditures.
With regard to the General Fund Balance, specifically the Stabilization Reserve
Account which is earmarked for emergencies, City Manager Murphy explained that
the expenditures have been slowly declining and at the end of Fiscal Year 1995 it
was at its lowest point. The reserves are slowly being built back again as
indicated with the $600,000 to be set aside in Fiscal Year 1997 -98. The portions
that are earmarked and from year to year encumbered from one budget to another
for specific projects are Parking Fund and Park In -Lieu Fees. A little over $6
million allocated for the Stabilization Reserve and the other components of the
General Fund Reserves (balance) sounds like a lot, but the Council policy is 15 %.
With a budget of $60 million it's necessary to have a cushion when the city is faced
• with wild swings in revenues. Insurance and long -term liabilities are key issues,
and with respect to long -term compensated absences, liabilities are basically
vacation, sick leave and flex leave that employees accumulate. If the city ceased to
exist, this liability would be over $7 million in cash, and one of the issues being
dealt with in the MOU's reached with seven of the eight employee groups is flex
leave (discontinuing flex leave spill-over and trying to reduce the number of days
being spilled over). The city's Self - Insurance for Workers Compensation (required
by state law) covers up to $350,000 per claim, and above that the city is covered
with an excess insurance policy. Within each department a premium is collected in
the Insurance Fund and set aside. In the past, General Liability has cost the city
some extraordinary losses and since Fiscal Year 1993 - 94 excess insurance was
acquired with a protection above $1 million. With regard to the outstanding
liability potential, the Workers Compensation is going up with more claims being
filed and litigated.
With respect to the Supplemental and Unfunded Priorities Request List dated May
30, 1997, City Manager Murphy said that the Revenue Estimates that the Council
had in their Budget packet delivered on May 1 was based on the most recent
property tax payments and sales tax and it may actually be a little bit low. He is
recommending this Fiscal Year that this be put into an insurance reserve and that
the Council consider doing that and other things as they look to the 1997- 98 Fiscal
Year. Within the Supplemental and Unfunded Priorities Report, he posed the
following questions to the Council: 1) Does the Council approve of the concept of
allocating additional dollars to programs and priorities as moneys become available;
2) If moneys are available should they simply be transferred to the Stabilization
• Reserve or the Insurance Fund; 3) Are there projects suggested for supplemental
funding in accordance with City Council policy objectives. In addition, the
memorandum Council received from the Committee consisting of the Planning,
Volume 51 - Page 271
•
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
Police, Public Works Directors and City Manager had projects listed that were
requested by city departments which were unable to be funded in the base budget
such as: Street light repairs (the city has no money currently in this budget for
continuing improvements to the street light system); Disaster Preparedness; and
Balboa Yacht Basin and Upper Bay dredging. He indicated that approximately
$500,000 might be available regarding the departments' supplemental requests, in
addition to available Community Block Grant Funds.
Council Member Glover commented that Mayor Pro Tem Edwards and Mayor
Debay, including herself as Chairman, are participants of the City Council Finance
Committee. She feels that this year's budget is balanced, looks good, and the City
Council will be in a position to really make some policy decisions regarding the
Supplemental Request List. During the four meetings to review the budget the
Finance Committee feels that they have done a thorough job, and the decision made
in the past to combine city departments has resulted in success, as well as the
decision of privatization. She identified the committee's concerns as follows: Street
lightin - which is basically the maintenance and improvement of the present
system. Disaster preparedness - whether to classify this as high priority, how to
approach it, and how much money should be funded. Look at what the Balboa
Yacht Basin, which is owned by the city, is netting; and make a decision for
maintenance this year or to defer (no maintenance). Upper Bay Dredging -
whether the city should set aside money to do this in future years. She advised
that the Senate and Assembly have allocated funds to the Upper Bay Project, and
that this is now in the Budget Conference Committee with the possibility of getting
• the funds through the state this year. Also, Congressman Cox has promised the
city this money. General Fund - The Committee feels more comfortable that the
city is putting in approximately $600,000 this year (up to 9%). Many municipalities
use 8 %, but the Finance Committee would like to get it up to 15 %. Insurance
Reserve Fund - The city is going to contribute approximately $4.8 million this year,
but estimated expenditures is $4.5 million. She feels that City Manager Murphy
has very wisely suggested to the City Council that they look into adding ideally
about $5 million in addition to what the departments contribute each year. Lease
for the Lincoln Athletic Center - Should the city be leasing a center which basically
is for the use of the gymnasium when there is a gymnasium at the Boys' and Girls'
Clubs in Eastbluff in a building that belongs to the city which, at this time, is not
used for PB& R programs. Lighting at the Oasis when people take trips from there
and they come back and the parking lot is not lighted ($50,000 expenditure). Dog
nuisance -The possibility of dog owners paying for dog nuisance bags as is being
done in other communities, rather than appropriating $38,000 in the budget for 51
sites for dog dispensers.
City Council/City Clerk
Mayor Debay opened the budget review discussion with regard to the City Clerk's
request for a full time position in place of the present part time position.
City Clerk Harkless advised that the City Manager's 1995 reorganization plan
resulted in the Clerk's office being changed from 3 full time positions to 2 -1/2
• positions, wherein the Legislative Records Clerk position was cut to part time. She
said that if the Capital Improvement item for the Document Imaging is approved in
this budget year, she is requesting that the Legislative Records Clerk position be
Volume 51 - Page 272
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
I 1
• taken back to a full time position. Discussion ensued wherein it was decided that
the City Clerk's request for Document Imaging and the part time position be
restored to a full time position be placed on the budget check list.
City Manager
City Manager Murphy advised that on the Supplemental Request List, he is
requesting: 1) an additional position (low priority) to assist with constituent issues
for the Council, as well public information requests and; 2) additional money to
fund pursuing annexation of Newport Coast (application and LAFCO costs).
City Attorney
Information that the Attorney's Office is recruiting for a vacant Legal Secretary
position was shared.
Administrative Services
Administrative Services Director Danner commented that there is one
reclassification in the Human Resource area of Management Analyst, and in the
MIS Division there is $39,000 in salary savings achieved by a position left vacant
for a considerable part of the year to reach their budget ceiling. Council Member
Hedges questioned how this will be met next year (1998 -99) wherein Mr. Danner
• said that the department generally has enough turn-over and this has not been a
problem in the past. City Manager Murphy added that there are two departments
chosen for salary savings: 1) Administrative Services and 2) Police to allow those
departments to reach their budget ceiling, leaving the position vacant with the
understanding that they basically put these savings into the bank. Mr. Danner
said that there is a request for the Supplemental Request List to ask for some of
that money back to hire that person soon (new Management position $50,000 and
$25,000 to restore operating costs drastically reduced to meet budget ceiling). In
response to Council Member Hedges, Mr. Danner said that his total department
budget is $4.1 million.
City Manager Murphy said that in terms of overall positions, there are net three
positions up in the city's work force; all of those positions being in the Police
Department as a result of grants received.
In response to Council Member Hedges as to whether the Administrative Services
Department is staffed to perform the proper administrative oversight functions, Mr.
Danner advised that one of the comments received from the auditors is that this
area is very lightly staffed and suggested, if any funds do become available, that
Human Resources (Personnel) is one area they would recommend "beefing up."
City Manager Murphy advised that the clerk position that was vacated was
upgraded to an analyst position to reduce going outside for a consultant on different
studies and in addition, that Division would like to add another position to do more
classification studies inside, rather than going outside which would allow more
analysis on issues in the area of Workers Compensation and General Liability, and
• to reduce those costs to support the Risk Management position.
Mayor Debay had a question about health and retirement benefits for the part time
Volume 51 - Page 273
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
INDEX
• workers. City Manager Murphy said that this would be a Supplemental Request
and will be looked at in the overall package during the first meeting in July, as the
basic issue is that for the years that management has made reductions the
organization has shifted over to a larger part time workforce, i.e., Library,
Lifeguards (Marine and Fire). He advised that there are seasonal employees that
work during the summer or during peak season and the part timers that work in
the Library work year -round, less than full time but more than half time, and as
they work more than 1,000 hours per year they are eligible for the benefits under
PERS. The new federal law requires the city to pay retirement benefits for all
employees. There is another program, PARS, which is less expensive than Social
Security but they have no leave or health benefits, and the recommendation is to
look towards a program for those that work above 1,000 hours, but less than 40
hours per week, which a number of cities are doing, recognizing the importance of
the part time positions.
Police Denartment
Under the Supplemental Request category, Council Member Glover addressed the
Jail Breathing Apparatus - $8,050, wherein Police Chief McDonell explained that
this is safety equipment (self - breathing apparatus) that all of the similar type jails
in the surrounding area have for the staff to assist in evacuating prisoners in the
event of fire. This puts the staff in a better position to effect rescues, should they be
out on a call, and Police Chief McDonell said that this has been put on the
• recommended list.
Council Member Hedges said that this is a safety issue, and the equipment should
be purchased within the Police Department's existing budget without asking for
supplement funds. He also asked if there is an ongoing program for opportunities
to privatize within the Police Department, wherein Police Chief McDonell replied in
the affirmative.
In response to Mayor Debay, Police Chief McDonell advised that the Police
Department has civilianized a number of position, i.e., Crime Scene Investigator,
Community Services Officer, and Fiscal and Facility Maintenance Manager, all of
which were formerly sworn positions to economize.
In response to Mayor Pro Tern Edwards, Police Chief McDonell said that timing is
of the essence on document imaging ($40,000 requested) as they are in the stage
now of implementing a new computerized dispatch system that is probably coming
on line in December. The testing phase is to begin in August with the Records
Management System which is where the document imaging really comes into play
to begin the following April. Because they have not done the design specifications
for the Records Management System they are in a better position now, as it will be
costly to do all the program modifications necessary to integrate into the new
system. He said that the Police Department moves a huge number of documents
internally which could be eliminated, and he feels that the savings will be
considerable in just'xeroxing' costs alone.
• In response to Council Member Noyes, City Manager Murphy advised that his
initial reaction to the proposal of the Police Department leasing their own vehicles
is that he personally is optimistic of the figures, and he wants a third party to look
Volume 51 - Page 274
u
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
Q113
at the report in great detail to see of there are those hard savings. If the numbers
were solid he would have approved the proposal immediately. In addition, if the
Police Department takes on vehicles, do we want them to take on risk management
and their own personnel as there is more than just vehicles. We have to look at the
organization as a whole as the overall shop is a $2 million operation.
Police Chief McDonell said that he will make these reports available to the City
Manager for the next Council meeting.
Council Member Hedges suggested that the Police Department take the
opportunity to effect the savings if they take on their own light vehicle maintenance
and deal with other issues as they come. He said that he appreciates City Manager
Murphy's approach, but he feels that there is the possibility of reaping potential
savings.
Fire and Marine
In response to Council Member Thomson, Fire Chief Riley said that they have quite
seriously looked at the use of overtime and how it is utilized to staff vacancies. The
Fire Department carries no additional staffimg for Uncontrolled Vacancies
(extended industrial accident leave, bereavement leave, jury duty, and sick leave)
and vacation relief. Fire Chief Riley advised that this was a conscious decision that
was made by the City Council prior to his arrival, but analysis has shown that the
• costs associated with those areas that they have control over its cheaper to use
overtime for those staffing vacancies than to hire additional personnel (salary and
associated benefit package). He indicated that in response to Council's concern,
that the Overtime Salaries Subtotal, Account Line #7043 in the budget is down
$210,000 from the previous year, attributed to changes that the Fire Department
has made through the meet and confer process and the way employees are allowed
to take vacation or holiday time off in lieu of pay.
Council Member Thomson said that he feels this is going in the right direction, but
nevertheless, $730,000 is being paid for vacation overtime pay, and the possibility of
a new hire should be revisited. City Manager Murphy said that this will be looked
at and brought back to Council.
Council Member Hedges questioned why Fire personnel use ladder trucks to visit
the grocery store, wherein Fire Chief Riley responded that this is mainly because
the Firefighters reporting for duty must be ready to respond to any alarm, and
anything that they need to do during the day, whether grocery shopping, inspecting
businesses for fire safety, attending training, doing community presentations, they
always take the vehicles with them so that they can respond from wherever area
they are located. Managerially speaking, Council Member Hedges said that going
on short runs causes more wear and tear on vehicles than longer runs, and he has
been approached and questioned why the City of Newport Beach allows this
practice to continue which proves to be very costly. Fire Chief Riley said that they
will certainly take a look at the alternatives and be glad to bring back the
information to Council.
• Council Member Hedges questioned the Supplemental Budget Request for $20,000
to market the Paramedic Program. City Manager Murphy explained that this
Volume 51 - Page 275
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
• request is
of -0 .7
program.
Council Member Glover said that this was discussed. at length in the Finance
Committee meetings and she suggested that Fire Chief Riley do an accounting
system including the startup costs so that the city knows what is being netted from
the program and if, indeed, the projections are being met.
Planning and Building
City Manager Murphy commented that the Code Enforcement Supervisor has been
shifted from Building back to Planning. Council Member Glover said that she
thought this position was included in the BPPAC Plan, wherein City Manager
Murphy explained that on the Supplemental Budget List within the area of New
Positions, the addition of a permanent part time Code Enforcement Officer is
requested to be funded with the CDBG Program. Irk reply to Council Member
Glover's question, City Manager Murphy agreed that this could be included on the
check list as part of the base budget using CDBG Funds.
In response to Council Member Thomson, City Manager Murphy explained that the
contracted staffing levels of the Building Department will diminish following the
completion of existing projects within the city, and said. that he would be happy to
make available benchmark studies indicating that while other agencies (Los
Angeles) are doing on average 13 inspections per day, Newport Beach was
averaging 20 per day.
General Services
Council Member Hedges commended General Services Director Niederhaus on the
steady and ever increasing efficiency of the operation of the General Services
Department accomplishing more with fewer people. General Services Director
Niederhaus expressed his thanks, and commented that in 1995 -96 the Equipment
Maintenance Division saved $90,000 that went into the Replacement Fund. At the
end of this fiscal year, he predicts $140,000 more will be shifted out of the cost of
operating and maintaining the equipment into the Replacement Fund for a total of
$230,000 in two years and this is since the Police report was written. He said that
they have taken many of the Police Department's recommendations, reducing their
maintenance force from three to two people with lesser pay and it seems to be
operating very well.
Council Member Noyes commented that he feels spending $570,000 for Building
Maintenance with a full time staff of five employees is too much. General Services
Director Niederhaus explained that there is one full time supervisor and four full
time regular employees, and the others are temporaries that clean the restrooms
only on the weekends including the student laborer under the Youth Employment
Program. Also 75% of the Building and Maintenance is done by contract. Mr.
Niederhaus added that not all the work can be contracted out, especially the
problem of emergencies where there is a need for a skeleton crew. In response to
Council Member Noyes' concerns, Mr. Niederhaus said that he would review his
• department's budget further.
Community Services
Volume 51 - Page 276
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
1\IIW
Council Member Hedges said that he would like to see the Oasis Senior Center
operated as an enterprise as there is the opportunity for a steady source of revenue
to support their operation. City Manager Murphy asked for Council direction
toward making the Oasis self - supporting.
Council Member O'Neil said that he would not be in favor of looking at this issue
again, as he felt that the majority of the Council was of the opinion that the city
should have these types of services in place.
Community Services Director Kienitz said that they would be glad to bring back the
analysis that was done, further commenting that the Oasis budget is slightly less
than last years at $368,000, and annually for the last several years that has been
augmented by another $150,000 from the Friends of Oasis. Of that $368,000, 25%
comes back in revenue. In the KPMG Study, the Council agreed that there should
be 85% full cost recovery of those fee -based programs.
Council Member Hedges explained that his concept of viewing this as an enterprise
would be to show it broken out as a separate budget item and then if a General
Fund subsidy is needed, that would be shown as a line item General Fund transfer
to Oasis. He feels that if Oasis cannot support itself, it can at least be shown as a
line item to those eligible 25% of the entire community for this special service to
continue.
• Administrative Services Director Danner feels that what Council Member Hedges
wants is to set up a separate fund for all the individual income producing
operations, which may be difficult.
In response to Council Member Hedges, Community Services Director Kienitz
explained that the Cultural & Arts Budget this year is (town slightly from last year
at $81,000 with $40,000 of this for the Cultural Grants, $3,000 for the Grant to the
Sister City Association and the rest is for operating costs.
Council Member Thomson solicited comments to his suggestion that Library
Services be separated from Community Services, and Mayor Debay replied that this
should be a request for a report back on a future agenda.
Public Works
City Manager Murphy said that the Council may want to also consider the Capital
Improvement Projects volume with respect to the check list, and hearing no
questions, Mayor Debay moved the budget discussion forward.
Internal Services
Council Member Glover said that she wanted to be sure that the Insurance Reserve
Fund was on the check list.
• Council Member Thomson expressed concern on the issues of outside attorney's fees
and medical fees, wherein City Manager Murphy explained that the medical fee
includes the payment as a result of the police officer's death ($500,000), and to pay
Volume 51 - Page 277
•
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
INDEX
Council Member Hedges asked for an update on Helicopter Liability (increased from $65,000 to
$104,000), wherein Police Chief McDonell deferred to Risk Management. Risk Manager Farley
explained that this figure represents the increase for the whole coverage for the new helicopter
the city is purchasing. The existing helicopter that is still being flown has been sold. The
liability insurance coverage is $50 million and the whole coverage provides damage protection.
Council Member Glover asked for clarification regarding allocation of ABLE Funds. Police
Chief McDonell explained that Costa Mesa and Newport Beach are the participants with the
costs being split. Currently, Newport Beach is in negotiations with the City of Santa Ana for
contract services, and this report will be given to Council.
Mayor Pro Tern Edwards queried who makes the determination for priority use, wherein Police
Chief McDonell advised that quite often the helicopter pilot will make this determination while
on the scene of the emergency, but if there is another call of a higher priority, then the Watch
Commander can make the determination to have the helicopter pilot pull off. Additionally,
Police Chief McDonell said that Newport Beach has informal agreements to respond for fire
fighting capabilities to back up the City of Huntington Beach, and vice versa, only on priority
calls.
PUBLIC COMMENTS
William Fundenberg, 808 West Balboa Boulevard, said he had a question with
• regard to the Capital Improvement Program, and that he was not able to attend the
evening meeting concerning the budget. He questioned the use of "other, " and the
missing $94,750, directing attention to page 99 Community Development Block
Grants Source of Funding for the Balboa Peninsula Improvement Program.
City Manager Murphy explained that this amount of funding was the maximum
amount that Newport Beach could utilize from the CDBG and stay in compliance
with federal requirements for housing, homelessness, etc. This amount would be
utilized both for the initial study and the beginning of the implementation.
Ann Quinn, operator of Newport Dunes Resort, requested the Council's support in
getting a city financial contribution to the 4th of July Fireworks Show. She said
that since 1958 the Dunes has privately paid for a very public event; everyone has
benefited from the event; and the community has come to expect it. She suggested
that the city share 50/50 in partnership to help finance the rising costs, adding a
line item for $7,500 to this year's budget. She cited that the majority of
surrounding cities pay fully for their residents' fireworks shows and that
specifically, the City of Long Beach partnerships with the Queen Mary who
conducts the show and the city pays them $30,000.
Mayor Pro Tern Edwards requested that this issue be put on the check list.
Louise Fundenberg, 808 West Balboa Boulevard, inquired about the Supplemental
Budget as she has been unable to locate one, wherein City Manager Murphy said
• he could make a copy available to her. She also addressed the Capital
Improvements regarding widening from 32.d Street to 30th and questioned the need
for a six lane highway.
Volume 51 - Page 278
•
•
•
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
Mayor Debay placed this on the check list.
Public Works Director Webb clarified that the budget should show five lanes to
provide the three lanes to get people off of the Peninsula, rather than onto the
Peninsula.
City Manager Murphy recapped the check list issues as follows:
City Clerk Documenting Imaging and Part time position to full time position
Police
Denartment Jail Breathing Apparatus and Vehicle leasing /maintenance proposal
Planning &
Building Code Enforcement position (part time from CDBG)
Community
Services Cultural Grants Program
Internal
Services Insurance Reserve Fund issue
Newnort
Dunes Fireworks Show
The following issues were also added:
Mayor Pro Tem
Edwards Street lighting and dog nuisance
Council Member
Hedges Human Resources Grant
ADJOURNMENT — 5:30 p.m.
Volume 51 - Paige 279
110-IT50
City of Newport Beach
Adjourned Regular Meeting (Study Session)
June 9, 1997
•
The agenda for the Adjourned Regular Meeting (Study Session) was
posted on June 4, 1997 at 2:20 p.m. on the City Hall Bulletin Board located
outside of the City of Newport Beach Administration Building.
0
City Clerk
•
r
Recording Secretary
c
Yo
Volume 51 - Page 280
INDEX