DT: JULY 1, 2009

RE: 2009/2010 BUDGET

The following comments and suggestions are being made in order to give feedback to staff on the budget workshop presentation on June 25, along with public comments.

Nobody wants to eliminate positions, filled or vacant, nor do we want to reduce any employee benefits or services to the public. However, we must face reality with our eyes open. Our Country is in the midst of a major downturn in the economy. It is our responsibility to respond with decisions that reflect the new economy and not simply to maintain the status quo. Cities all around us are taking dramatic steps to balance their budgets. We must not be afraid to do what is necessary to maintain the economic health of our city. Steps we take now should not just be directed to putting a bandage on the budget for the next year, but should look toward maintaining fiscal stability for the long term. Along these lines I have a number of suggestions:

1.  We should approach our decision making from a zero-based programmatic basis instead of the incremental approach of keeping the past budget as a base line.

2.  In evaluating each individual department and each individual program or project, we should also recognize what is typical in other cities that are able to get by with lower expenditure levels.

3.  The initial budget requests that include a 10% reduction for each department should be looked at as just a starting point for making decisions. They simply represent each department headís recommendation for their respective department if they have to make cuts. You may decide that some departments should not be cut at all after evaluating the effect of cuts, while others may be cut significantly more or eliminated entirely. Again, I emphasize that a zero-based approach should be taken.

4.  There really should be no sacred cows in this budget process. For example purposes, only let me say that although public safety is my primary concern, we cannot tell you not to look at cuts in this area. What we should be asking is "What is an appropriate expenditure level for our City?" Once this is established, we then decide how best to spend these resources. Our goal should not be to simply fund x number of employees.

In terms of more specific recommendation, I offer the following:

1.  In the administrative departments which include, but are not limited to legislative, city manager, and general administration, staffing levels and funding should be based on the minimum costs to provide effective services and again, should be based on comparisons to similar cities.

a.  Legislative staffing levels should be cut to comparable levels.

b.  Car allowances should be based on actual expenses incurred instead of an arbitrary amount that may be in violation of the cityís charterís established compensation levels.

c.  City Manager department staffing should be cut to comparable levels.

2.  For two years the Managerís office has said they would study the economic cost benefits of an early retirement incentive. The results of this study need to be presented and any economic benefits clearly shown.

3.  For two years the Managerís office has indicated that they are studying lower pension costs through modification of our existing plans. A plan for lowering these costs needs to be presented in time to be implemented in this budget.

a.  For new hires do not include overtime or vacation/sick payouts in pension calculations. Use only base pay.

4.  The CRA should not be eliminated, now, but should be made a city department headed by an Assistant City Manager or other department head. Along these lines we should look closely at areas where the CRA receives extra services from the City and recover these costs either directly or through administrative fees. We should also consider removing 2700 N. Ocean from the CRA boundaries allowing substantial tax revenues to come directly to the city.

5.  Staffing levels in the legal department should be looked at carefully, particularly with the amount of work that is contracted to outside attorneys.

6.  Consider the effectiveness of keeping an in-house grants writer. Department heads should be capable of identifying and writing grants within their department.

7.  Consider eliminating contract for paid armed security at city hall. Determine how other cities handle their security.

8.  Freeze all but essential travel.

9.  Study economic and services benefits, as I mentioned in a previous memo, for fire and rescue services by contracting to the county.

10.  Recognizing the reported favorable experience we have had this year in terms of health insurance claims, do not accept any cost increases without detailed explanation and consideration of alternatives. Consider options to lower costs through joining others plans Ė i.e. county.

11.  Look carefully at pros and cons of lowering liability insurance fixed costs by raising deductibles or possibly going bare in certain areas.

12.  Look carefully at the budget line item for Unemployment costs to be sure that we have sufficiently taken into consideration potential staff reductions.

13.  Make sure we are providing the same level of budget scrutiny to the Enterprise Funds as we are to the General Fund.

a.  Consider economic benefits of privatizing the Marina through long term lease.

b.  Consider the cost of insurance for the Dry Stack at Marina that some would argue should be condemned or at the least shut down due to maintenance neglect.

14.  Conduct a survey to determine viewer utilization of City cable station. Also, determine what other cities operate their own station. Decide whether utilization justified costs.

Again, these are observations and recommendations. I am happy to discuss should you have any questions.