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HomeMy WebLinkAbout05/28/2002 - Study SessionCITY OF NEWPORT BEACH City Council Minutes Study Session May 28, 2002 - 4:00 p.m. ROLL CALL Present: Heffernan, Bromberg, Glover, Mayor Ridgeway; O'Neil (arrived at 5:10 p.m.) Absent: Adams, Proctor (excused) CURRENT BUSINESS 1. CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR. Council Member Heffernan stated that he planned to ask for a continuance of Item No. 23, Main Street Ficus Tree Removals, at the evening meeting based upon the short notice that was given to the public and their inability to contact experts in time. He also requested that a copy of Council Policy G -1, Retention or Removal of City Trees, be provided to him prior to the meeting. 2. 2002 -03 BUDGET REVIEW. Using a PowerPoint presentation, City Manager Bludau displayed a list of fourteen funds included in the 2002 -03 preliminary budget. He stated that there are an additional eight budgeted funds and several others that are non - budgeted. The general fund represents over 65% of the total dollars and also provides the greatest flexibility of any of the funds. City Manager Bludau stated that one of the funds not listed is the annexation fund, which is a fund set up from the payments received from the Irvine Ranch Water District (IRWD) to offset the Newport Coast assessments. Council Member Glover asked if the City's budget had been analyzed in conjunction with what is going on with the State budget. City Manager Bludau stated that it is too soon in the process since the State Legislature is just beginning to look at their alternatives. Administrative Services Director Danner added that the Vehicle License Fee (VLF), which totals $2.7 million, was not included in the revenue estimates, however. City Manager Bludau displayed the City's organizational chart. He then displayed a chart showing the total City revenue estimate of $149,722,799 for the 2002 -03 fiscal year and the amounts expected from the governmental, enterprise and internal services funds. Displaying a pie chart, City Manager Bludau noted that property taxes represent the largest revenue source to the City. Per Mayor Ridgeway's question, Administrative Services Director Danner clarified that the charts cover all revenue sources, and would be used for both the Capital Improvement Program (CIP) as well as the City's operating Volume 55 - Page 163 INDEX 2002 -03 Budget Review (40) City of Newport Beach Study Session Minutes May 28, 2002 budget. Per Mayor Pro Tern Bromberg's question, Administrative Services Director Danner stated that the Transient Occupancy Tax (TOT) is included in the sales and other taxes revenue source category. City Manager Bludau stated that it is estimated that $95,497,721 will be received from general fund revenues, with the majority of it being from property and other taxes. Per Council Member Glover's question, City Manager Bludau stated that less than $20 million is expected from sales tax. Council Member Glover stated her concern for sales tax revenue decreasing in the future due to distribution changes by the State. INDEX Mayor Ridgeway added that the State Legislature has considered such changes in the past, but that he didn't feel that it would happen. City Manager Bludau agreed that many iterations of the concept have been discussed, but stated that the revenue estimates do not reflect the sales tax distribution changing. City Manager Bludau displayed another chart and stated that over 63% of the general fund revenue comes from secured property, sales and transient occupancy taxes. Administrative Services Director Danner noted that the 2% increase in the sales tax revenue is actually a 5% loss estimate with a 7% increase factored in for the additional sales tax revenue expected from the effects of the annexation of Newport Coast. Council Member Glover requested that she be provided with a comparison of the percentage of revenue received from sales tax for the cities in the County. City Manager Bludau stated that the general fund revenue estimates are conservative. He then displayed a bar chart that illustrated the top ten general fund revenues and a comparison of the 1999 -2000 fiscal year with the 2002 -03 fiscal year. Mayor Ridgeway noted that VLF was still included. Administrative Services Director Danner explained that the estimate has been reduced from $4 million to $1.3 million, which eliminates the backfill that is expected to be taken away by the State. City Manager Bludau displayed a bar chart showing the top three revenue sources and a comparison of them over the past twelve years. He stated that it illustrates the downturn in property taxes when the Education Revenue Augmentation Fund (ERAF) became effective in the early 1990'x, and the fairly steady growth that has taken place since. He then displayed the same bar chart, but with an additional bar that illustrated what the property tax revenue would have been over the past twelve years without ERAF. City Manager Bludau stated that total expenditures budgeted from all funds for the 2002 -03 fiscal year is $142,199,431, with a total operating budget for the City of $110,539,148 and a total CIP of $31,660,283. He additionally Volume 55 - Page 164 City of Newport Beach Study Session Minutes May 28, 2002 INDEX noted that the total operating budget, excluding enterprise and internal service funds, is $95,426,486 and includes general government, public safety, community development, public works and community services. He noted that public safety accounts for 53.13% of the total budget and public works, which includes general services, accounts for 21.85 %. Council Member Heffernan requested that a ten -year comparison of the proportion of public safety to the total budget be provided prior to the next Study Session. Council Member Glover confirmed that the operating budget does not include the CIP. City Manager Bludau displayed the expenditures estimated for the water and sewer enterprise funds, which were $18.7 million and $2.5 million, respectively. He stated that the totals for operating expenditures and the CIP illustrate how aggressive the City is in regard to water and sewer line replacements. City Manager Bludau displayed a pie chart showing expenditures by type. He noted that 51% of the total budget expenditures are for salaries and benefits, 24% for maintenance and operation, and 22% for capital improvements. Council Member Glover asked how much of the money budgeted for capital improvements would be used towards improving water quality. Assistant City Manager Kiff stated that $1.2 million would be spent on water quality. She asked about her request to have $5 million spent. City Manager Bludau stated that it was staffs understanding that this would be spent over a five -year period. Assistant City Manager Kiff noted that the $1.2 million would be used towards new endeavors. Per Council Member Heffernan's question, Assistant City Manager Kiff stated that the cover for the Big Canyon reservoir is budgeted in the water enterprise fund. Council Member Heffernan asked about the timing of installing the cover and the Federal funds that the City is attempting to receive. City Manager Bludau stated that the cover is one of staffs top priorities and although more attempts would be made to receive the funding, the cover needs to be installed as soon as possible. City Manager Bludau displayed a pie chart that showed expenditures by function and noted public safety at 41 %, public works at 17 %, enterprise at 12% and internal services at 9 %. He then displayed a bar graph showing the proposed expenditures by department for the 2002 -03 fiscal year, compared to those proposed for the 2001 -02 fiscal year. He noted that the greatest change is in City Council, which showed a decrease for the upcoming fiscal year due to the decrease in airport expenditures. City Manager Bludau stated that the 2002 -03 budget is primarily status quo, with a few exceptions. He displayed a chart showing expenditures by function for the past six years, and pointed out that the greatest expenditures are for public safety and the decrease in general government is due to the decrease in airport expenditures. City Manager Bludau displayed a bar chart showing the general fund, and Volume 55 - Page 165 City of Newport Beach Study Session Minutes May 28, 2002 the stabilization and contingency reserve funds. He noted that Council Policy F -2, Reserves/Designations of Fund Balances, requires that 10% of the general fund be kept in the contingency reserve fund and 2% in the stabilization reserve fund. Council Member Glover suggested that the City write a letter to the State and request information on how the $40 million for ERAF was spent. INDEX Mayor Ridgeway stated that it was supposed to have been spent on education. City Manager Bludau displayed a slide showing expense items not included in the budget ceilings. He stated that these were expenditures that staff knew the City would have, but the amount was unknown. Administrative Services Director Danner added that estimates were made for these items and the appropriate funds have been set aside. He noted that the slide also showed expense items that have been included in the budget and the ceilings for each. City Manager Bludau stated that although he has characterized the budget as a status quo budget, there are some additional expenditures for the annexation of Newport Coast and for the items not included in the budget, which are primarily personnel type items. City Manager Bludau displayed a list of the supplemental budget requests by department, which totaled $1,053,716. He noted that $340,396 of the requests were approved, primarily for the Fire Department. Referring to the previous slide, Council Member Heffernan asked if the $3.9 million budgeted for annexation expenses included landscaping and a traffic signal for Sage Hill. Public Works Director Badum stated that the traffic signal project is currently unfunded. General Services Director Niederhaus stated that landscaping has also not been budgeted. Council Member Heffernan stated that Newport Coast residents want to know what landscaping services the City will be taking over. Assistant City Manager Kiff stated that the preannexation agreement is very specific about what will be paid for. City Manager Bludau admitted that the $3.9 million estimate is probably low. Per Mayor Pro Tern Bromberg's inquiry, City Manager Bludau stated that the issue of staffing in the Planning Department would be discussed later in the review. Mayor Ridgeway suggested that the discussion also include the fees that were increased the previous year to accommodate additional staffing in the Planning Department. City Manager Bludau displayed a list of the eight new full -time positions requested for the 2002 -03 fiscal year budget, and noted that only one has been approved. He explained that this was for a fire prevention specialist in the Fire Department and had already been postponed, but was needed due to the annexation of Newport Coast. He noted the two requested positions for the Planning Department and agreed that the department is understaffed. He stated that the idea of using fees to fund the additional Volume 55 - Page 166 City of Newport Beach Study Session Minutes May 28, 2002 positions would be discussed in more detail during the review of the Planning Department budget. Referring to the CIP, Council Member Glover asked how successful the City has been at keeping the roads maintained. Public Works Director Badum stated that the City is doing well. Council Member Glover asked the same question with regards to water pipes and the City's infrastructure. Public Works Director Badum stated that the City is in very good shape and has been following master plans for several years. He noted the minimal amount of problems that the City experiences. Council Member Glover asked how the City ranks in comparison to other cities and where more money could be spent. Public Works Director Badum stated that one area that the City is lacking in is City facilities and buildings. Council Member Glover stated that she is more concerned about the infrastructure and what affects the public directly. She stated that she doesn't want to see the City fall behind in maintaining its infrastructure. Public Works Director Badum stated that he is confident that the City is keeping up with such maintenance. Mayor Ridgeway confirmed with Public Works Director Badum that master plans exist for everything that the Public Works Department has jurisdiction over. Public Works Director Badum specifically listed water, sewer, street drainage, pavement management, bridges and piers. He stated that City facilities should also have a master plan. Council Member Heffernan asked if a master plan existed for the dredging of the lower bay. Mayor Ridgeway responded by stating that the City is very close to getting funds for the dredging and that it is an Army Corps of Engineers project expected for 2002 -03. City Manager Bludau stated that some cities fall behind in infrastructure maintenance because they don't increase water and sewer rates, which results in a lack of funds for adhering to a master plan. City Council In regards to the City Council budget, Assistant City Manager Kiff stated that there are no significant changes. He explained some of the individual line items. In regards to discretionary spending for each district, City Manager Bludau stated that some districts have more than $7,000 budgeted due to encumbered funds. Assistant City Manager Kiff additionally noted the airport management section of the City Council budget. Referring to special department expenses, it was noted that the various events are funded by approval of the City Council. Specifically, Mayor Ridgeway stated that the Film Festival will be required to present an economic report. INDEX Council Member Heffernan asked if the $500,000 budgeted for the airport was adequate. City Manager Bludau stated that it should be adequate for Volume 55 - Page 167 City of Newport Beach Study Session Minutes May 28, 2002 the upcoming fiscal year, but noted that it is only an estimate. Council Member Heffernan asked how potential liability in regards to the airport would be funded. City Manager Bludau stated that funding litigation prior to it happening would show an expectation that it will happen. City Clerk INDEX City Clerk Harkless stated that the City Clerk's budget has no significant changes for the 2002 -03 fiscal year. She stated that the main addition from the prior fiscal year is the $55,000 budgeted for election costs. She mentioned other minor changes. Specifically, she noted the increase in postage costs due to the processing of passports in the office. City Clerk Harkless noted that the City Clerk's office has processed 187 passports since the service began in February 2002, accounting for $2,800 in additional revenue. City Clerk Harkless stated that she did submit a supplemental budget request for an amount not to exceed $30,000 to hire a records management consultant to set up a records retention schedule for the City. She stated that this has not been done citywide for over thirty years. City Manager Bludau stated that it is needed, but he had more important supplemental requests that he approved instead. Per Mayor Ridgeway's question, City Clerk Harkless stated that not all City records are required to be kept permanently. The consultant would determine the schedule for when records could be destroyed. Council Member Glover asked if government code also specifies which records must be kept as hardcopy and which could be kept on disk. City Clerk Harkless stated that it does, and additionally noted that the Emergency Management Plan requires that each department provide the City Clerk with a list of their vital records. She stated that this would assist in disaster recovery, if needed, and that a records retention schedule would help the departments to meet this requirement. Council Member Glover asked if there was a central site for records storage. City Clerk Harkless stated that there is not, and that the City Clerk's office maintains the records of the City Council only. Per Mayor Ridgeway's question, Public Works Director Badum stated that the Public Works Department is currently scanning their plans and that the hardcopies on kept on site. City Clerk Harkless noted that the various storage sites throughout the City are in need of improvement. City Manager City Manager Bludau began the discussion of the City Manager's budget and noted that Assistant City Manager Kif£s salary is budgeted through both the utilities and general funds. Assistant City Manager Yiff stated that there are no changes to personnel for the department in the upcoming fiscal year. He briefly mentioned a few individual line items, and noted that the City Manager's budget also includes the Harbor Resources Division. Volume 55 - Page 168 City of Newport Beach Study Session Minutes May 28, 2002 Per Council Member Heffernan's question, Administrative Services Director Danner stated that the debt service listed in the City Manager's allocation plan is for the State loan that the City received to redo the Balboa Yacht Basin. Assistant City Manager Kiff confirmed for Council Member Glover that the Resource Allocation Plan presents the totals from the budget detail, but in a friendlier format. Per Mayor Ridgeway's question, Assistant City Manager Kiff stated that the City Manager's budget includes the City Manager's office, the public information officer and the Harbor Resources Division, which includes tidelands administration, the yacht basin and parking. Council Member Heffernan asked why tidelands administration is included in the City Manager's budget. City Manager Bludau stated that it was moved there because the City's focus on water quality increased and there were many different aspects that needed coordination, including legislative activity involving the upper bay and management of the lower bay. Assistant City Manager Kiff added that dredging would be included as a water quality issue for the bay, but that the reservoir would be handled by the Utilities Department since it involves drinking water. Administrative Services Director Danner stated that the City Manager's budget totals $1.028 million. City Manager Bludau added that other water quality functions may be reorganized to insure that the City is responding to water quality issues. City Attorney "Zip) s►' City Attorney Burnham stated that the City Attorney's budget is unchanged from the previous year. Administrative Services Department Administrative Services Director Danner stated that the Administrative Services Department is comprised of five divisions, and includes resource management, fiscal services, management information services and the revenue division. He noted that there were three supplemental requests submitted for the revenue division, but that they were not approved. He stated that the requests included a new full -time employee to take on increased responsibilities with regard to income properties, but it was decided that it could also be handled by contract. Council Member Glover emphasized that when contracts are negotiated to outsource responsibilities, the business outcome must take priority over the personalities involved. Mayor Ridgeway stated that there are computer programs available that can help with property management. Council Member Heffernan stated that he thought that the Administrative Volume 55 - Page 169 City of Newport Beach Study Session Minutes May 28, 2002 Services Department was supposed to be overseeing and coordinating the revenues and expenditures of the City. Administrative Services Director Danner stated that a report discussing this issue should be finalized soon. Administrative Services Director Danner stated that the other supplemental requests for the revenue division were for a part -time employee and a database cross - reference system. He stated that the fifth division of the department is the accounting division and a supplemental budget request for a reclassification of an employee in the division was approved. He stated that this reclassification was the only substantial change to the department's budget. INDEX Mayor Ridgeway asked if a more detailed presentation would be made of the divisions in the department. City Manager Bludau stated that the City's budget is basically a flat budget with few changes, and that these changes would be brought to the City Council's attention as the presentations are made. City Manager Bludau stated that the budget detail breaks each division down in detail. Mayor Ridgeway stated that a specific concern of his is the conflict between the Planning Department, the revenue division and the City Attorney's office with regard to the charter boats in the bay and tidelands administration. City Manager Bludau stated that it is not included in the list of top priorities. Mayor Ridgeway stated that he would discuss the issue further with the City Attorney. Police Department Using a PowerPoint presentation, Police Chief McDonell stated that the Police Department budget for the 2002 -03 fiscal year totals $30.6 million, which is a 3.2% increase over the previous year. He stated that although there are no new employees being requested, the increase is contained in the salaries and benefits accounts due to negotiated agreements with the bargaining units and previously approved positions as a part of the annexation. He noted that 84.1% of the department's total budget is for salaries and benefits, and 68% is for field related services. Police Chief McDonell stated that two adjustments to the budget were approved by the City Manager in maintenance and operations. He stated that he did not get approval to increase funding for fuel costs, although the cost for gasoline has risen and is used for all of the rolling stock in the department's fleet. Police Chief McDonell stated that the department is using less electricity than it did in 1997, but the cost of electricity has increased. He noted the changes the department has made to reduce consumption by .07 %, but stated that there is still a projected 36% increase in total cost. He displayed a bar chart that illustrated the same point. Police Chief McDonell stated that the functions of the Chief of Police office include the operation of the professional standards unit, the Drug Abuse Resistance Education (D.A.R.E.) Program, environmental services, community relations, the volunteer program, crime prevention, and the citizen's and teen academies. He displayed and listed the many functions of Volume 55 - Page 170 City of Newport Beach Study Session Minutes May 28, 2002 INDEX the support services, patrol, traffic and detective divisions. Police Chief McDonell stated that 84.1% of the total budget for the department is for salaries and benefits. He added that there are 238 full -time employees, with 149 being sworn personnel and 89 being non- sworn. He noted that the department has a higher percentage of civilian positions than most police departments, which reduces costs and liability. Council Member Heffernan noted that the cost of salaries and benefits for the department has increased at an average rate of 8% per year over the past four years. Police Chief McDonell stated that part of the reason for the increase has been due to the annexation of Newport Coast. Council Member Heffernan stated that he wasn't criticizing the department, but wanted to point out that maintaining the level of service that the City provides to the community does come at an expense. Police Chief McDonell stated that the department has accounted for approximately $3.8 million in revenue to the City since 1996 from grants awarded through the State and Federal competitive processes. He stated that specific competitive grants have included COPSMORE in both 1995 and 1998, an office of traffic safety grant in the 2001 -02 fiscal year, a countywide regional Driving Under the Influence of Alcohol (DUI) taskforce grant, a DUI enforcement team/checkpoint grant, COPS universal hiring program grant, another COPSMORE grant in 2000, a California law enforcement technology equipment program grant, and a California Department of Justice criminal identification and information grant. Police Chief McDonell stated that non - competitive grants, which are also known as per capita grants, have accounted for approximately $503,000 in revenue and have included a local law enforcement block grant, a supplemental law enforcement services fund grant, a 2002 California Law Enforcement Equipment Program (CLEEP) grant and a 2002 California 9 -1 -1 emergency service system upgrade grant. Mayor Pro Tem Bromberg asked if the sixteen new positions for the 2002 -03 budget were for Newport Coast only, or if it included the Santa Ana Heights and Bay Knolls annexations as well. Police Chief McDonell stated that it would include all of the annexations, and consisted of ten sworn positions and six non -sworn positions. Council Member Glover stated that when looking at other cities on the internet, Newport Beach doesn't come across as being as crime free as other cities. Police Chief McDonell stated that the statistics are based on resident population and not tourist population, so it is difficult to draw a good comparison. Council Member Glover additionally noted the two recent homicides in the City and asked if this would also reflect poorly on Newport Beach. Police Chief McDonell stated that it would, even though the homicides were related to relationships and occurred within residences. Council Member Glover stated that Newport Beach is very crime free and the arrest statistics are related to summer activity. Police Chief McDonell agreed and stated that 40% of the arrests are alcohol - related. Volume 55 - Page 171 City of Newport Beach Study Session Minutes May 28, 2002 Mayor Ridgeway asked what percentage of calls for service come from Districts Nos. 1 and 2. Police Chief McDonell stated that he could find out, but does know that 40% of the department's arrests take place on the peninsula and in West Newport. Mayor Ridgeway recalled that the two districts accounted for close to 60% of calls for service. Police Chief McDonell confirmed that it is the highest demand area. Mayor Ridgeway additionally noted that the area has the highest number of bars per capita in the City. INDEX Mayor Ridgeway asked for an update on the status of the 800 MHz program. Police Chief McDonell stated that the City Manager could provide an update on the cost sharing issue, but he stated that the maintenance of the system is being handled in a cost effective manner and $20,000 has been budgeted for the maintenance of the radios. In response to Mayor Ridgeway's questions, Police Chief McDonell added that all of the cities in the County and the County are involved in the program. He stated that the system is working well, although a few additional repeater sites are needed and this is being worked on with the County. PUBLIC COMMENTS — None. ADJOURNMENT — 6:00 p.m. The agenda for the Study Session was posted on May 22, 2002, at 2:20 p.m. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. City Clerk Recording Secretary Volume 55 - Page 172