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Citizens Budget Committee 05-04-93CITIZENS' BUDGET COMMITTEE MAY 4, 1993 3:30 P.M. CONFERENCE ROOM A 10300 TORR>=; AVENUE CUPERTI110, CA MINUTES The meeting was called to order at 3:35 p.m. ROLL CALL Staff present: City Manager Brown City Attorney Kilian Director of Finance Snyder Committee members present: Allan Bidwell Robert Hendrickson Roberta Hollimon Bazbaza Jones Darwin Throne David Wheeler City Attorney Kilian distributed copies of the resolution establishing the office of City Attorney. The resolution lists the duties, compensation broken down into retainer and hourly rate, and states that the City Attorney is responsible for his overhead. He also distributed a sample of his monthly billings, :showing the time and chazge distribution. Other information included the recommendatio~is agreed to between the City Manager and City Attorney and approved by the City Council, listing cost cutting measures in the 1992- 93 fiscal year. There was a cut in service 1<;vels, elimination of conferences, and the transferring of chazges from the General Fund 1:o the appropriate Enterprise Fund, as well as cost recovery from private developers for use of the City Attorney's time. Mr. Kilian reviewed charges that are made to the City Attorney budget such as City Hall law library and the use of other attorneys by the city. He ;also distributed copies of quarterly reports sent to the City Council showing the tracking oFthe budget. He received permission from the Mayor to release these reports to the committee. Mr. Kilian requested that the committee do keep them confidential. Forty-three thousand dollars has been saved from last year as of this point. The City Attorney's budget is not easily definable; it depends on what cases the city is required to prosecute and what cases come into the city. Bills can vary greatly. It is difficult to forecast what actual costs will be. Mr. Kilia~l stated that he has been Cupertino City Attorney 14 years and prior to that, he was Assistant City Attorney for 7-8 years. On the MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON MAY 4, 1993 average of every other yeaz, there is discussion. of having an in-house City Attorney. This Council is awaze of azguments for and against it. There are economic and non-economic reasons for and against having an in-house city attorney. So far, Council has decided not to do that. Mr. Kilian stated he understood the; committee is going to recommend looking into an in-house city attorney. He wanted the committee to have the information he was giving them. In answering questions of committee member:,, Mr. Kilian stated that there is no income from prosecuting zoning and code violations. A person is fined if found guilty. He does believe that a pazt of that does come back to the city, but he has no idea what those fines might be. The City Attorney's office deals witlh compliance issues and a current case was cited. The law and order business is not really an income producing business. Usually, before prosecuting, there is a closed session v~~ith the City Council and the attorney asks for authority to proceed on civil injunctions because it would cost money. These aze either misdemeanors or infractions. Attorney fees are seldom recovered. Any revenue brought in goes into the General Fund and it is not reflected in the City Attorney's budget. City Manager Brown stated actions aze mostly cost avoidance, rather than cost collection. Mr. Kilian did not recall any amount the city 1-ad to pay other than for contract disputes with Public Works for doing something wrong to somebody's property. Mr. Throne addressed the issue of the aim of a $50,000 savings. He stated that the committee has been trying to understand where all the city attorney charges are listed. Mr. Kilian pointed out that in the city's budget, some costs are beyond his control and not for him. Attorney's fees for the lawsuit against the City of San Jose, in which Cupertino is participating, comes from the City Attorney's t~udget. That money is going to a different attorney. Mr. Snyder stated that about $2,000 of that i:; reflected in the 1992-93 budget. Rather than calling it the City Attorney's budget, it should probably say legal. It is a misnomer. The City Attorney's budget used to include everything, including legal services from other attorneys. A couple of yeazs ago, it was split out to chazge departments. Following discussion, it was determined that in the 1991-92 fiscal yeaz, the City Attorney budget was $267,000. The 1993-94 projected budget is $247,000 and the 1992-93 revised budget is $243,000. It appears it v~~ill be down approximately twenty some thousand at the end of the yeaz. Mr. Snyder explained that if the City Attorney's budget had continued the way it was, this year's number would have been higher. Discussion followed in which it was determined that the General Plan also creates more work for the city attorney. It has required :attendance at some Planning Commission meetings. Also, the cable television franchise renewal is coming up and the Attorney's 2 MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON MAY 4, 1993 office is involved. It is likely that during tree last quarter of the fiscal year, the City Attorney's budget will increase. Mr. Kilian stated that if the committee reads his report, they will find that so far, there is a $28,000 savings compared to last year's exI-enditures. In addition, there has been a change from charging the General Fund for certain monies and instead, chazging the proper Enterprise Fund or chazging developers, which is not reflected in the budget. Mr. Brown explained that revenues do not sho~N up in the expenditure budget. Mr. Kilian said his information reflects that in. actual dollars, the General Fund has paid $43,000 less than last yeaz for the first three quarters of the fiscal yeaz. Some actual savings have occurred from service reductions and some of the general fund savings have been by chazging other funds. It was reiterate;d that the activities should be called legal, not City Attorney. Mr. Kilian said that all of his bills are available at the finance director's office and are public records. They are reviewed by each department head for accuracy. Mr. Hendrickson said that the information from the City Attorney had been a big help and he wished that the committee had had it from rr~e beginning. Mr. Kilian told the committee members to feel free to give him a call if they want more information or have questions. It was noted that the budget committee's report will go to the City Council on June 2. The committee was requested to call either the City Manger on extension 250 or the Director of Finance on extension 226 when they want them to come back to the meeting. Staff then left the room. The committee looked to see if ASAC had beers eliminated from the budget. ROLL CALL Committee members present: Allan Bidwell Robert Hendrickson Roberta. Hollimon Bazbaza Jones Darwin Throne David Wheeler 2. APPROVAL OF MINUTES OF APRIL 21, 1993 It was moved by Robert Hendrickson, seconded by Roberta. Hollimon and passed unanimously to approve the minutes as submitte;d. 3 MINUTES OF THE CITIZENS' BUDGET C(JMMITTEE HELD ON MAY 4, 1993 Mr. Throne stated he did send out a draft report for comments. He also had a revised report because he could not determine how personnel costs had been arrived at. He was informed that the revised information does not seem to include benefits. Using the first position mentioned and combining salary and benefits, it totals 36.8 thousand dollars per year. Using the second example and adding benefits, the total is 47.1 thousand dollars per year. Using the fmal example, the total would be 54.4 thousand dollars. It was suggested that in the final recommendation to Council, there be three columns, one showing salary, one benefits, and the last one showing the total. Discussion followed regarding the benefits offi;red a city employee as a percentage of the total personnel costs. It was stated that benefits being 20% of the compensation is a pretty good rule of thumb. If it is more, it is out of line for a small company. Mr. Throne stated that he believes that the city has never looked for comparisons in the private industry. Mr. Bidwell said when he first came to this Penney's, they only looked at retail when making comparisons. The store had a high h~rnover. He then decided to look at other industries. in the area and it was an awakening. It was necessary to increase wages and benefits to compete in the marketplace. Now, Penney's at Vallco has the highest average hourly rate of any other Penney's stores in the s outhwest. Mr. Wheeler said it was exactly the opposite iti his profession because they are getting so many resumes. Mr. Bidwell said he suspected there could be some cost savings, as well as productivity increases by cutting jobs to 32 hours. There is no savings in benefits, however. Ms. Jones asked if there would be any problem were there more turnover because there would be less knowledge available. Mr. Wheeler replied that it's good to have son'~e turnover of people at the top of the pay scales. There may be a need for some more training time, but there are cost savings. Ms. Jones said she had talked with Bob Wilson, who said he did not have the opportunity to give his full presentation. She asked him the usefulness of more code enforcement officers and he said he did not like that. He coL~ld have more deputy technicians within the department and make that more cost effective. An officer could reply a burglary call and if the situation is safe, the technician could then take the report and do other duties. He felt that the Sheriffs Department could give better training than the city could and would be able to watch for an m.o. developing around the city. Also, the deputy technicians could be spread over a four city coverage. Ms. Jones stated that if the committee agreed, she would like to encourage the Council to go with that option rather than an increase at the city level. 4 MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON MAY 4, 1993 Mr. Throne said he agreed and he also did not ~~vant to split the responsibility. Ms. Jones stated that the Captain Wilson has r~o objections to the current job of the code enforcement officers. There was a discussion regarding a "golden parachute" to encourage early retirement, which the committee believes is a big potential cost savings. Mr. Wheeler stated that so much of the budget is employee related. There are lots of opportunities for savings, such as the benefit p~ickage, and the retirement option. Mr. Throne referred to a spreadsheet in his handout. He stated employee costs are 56% of the budget and they must be looked at if costs are to be controlled. Ms. Jones agreed that it is necessary to save o~i the cost of people because there is a limit on what can be saved with materials. Mr. Throne said his chart shows what is called "employee services". Ms. Jones pointed out that upon hearing of hear appointment to the budget committee, a realtor said that he had been trying to find pe~~nits issued on a house that has been sold many times. When he comes to the City of Cupertino, it can take two weeks to get old permit information. This information takes one day in San Jose. Part of the problem is not having a good, solid data base. Mr. Throne said there is a recommendation in leis report that the city look into this. Mr. Hendrickson felt this was a good point. He stated that when the information is presented, the committee could say that these changes are going to benefit the employees as well. The possibility of using Volunteer Cupertino to get some of the work done was mentioned. The committee then discussed the sale of the water department. They decided the value of the asset was not available from the documents they had. Mr. Throne felt that if the city looks at priv~rtizing the water department, it would be necessary to go through each item, pull it and do an evaluation on it. The feeling was expressed that the city should lie much more interested in providing parks and taking care of streets than taking care of w<<ter service and some of the other things. Mr. Throne said City Councils have to step back and really say, "What are the things we should be doing; what shouldn't we be doing?" Then, evaluations could be made. Upon being asked if there were any changes to his preliminary draft report, some editorial and typographical changes were made. 5 MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON MAY 4, 1993 Mr. Hendrickson said that some day he would. like to revisit the crossing guard situation. It bothers him that the city is providing crossing guards without being reimbursed. Since the City Council does not get the budget until June 2, the committee felt there was still an opportunity to continue work on their report. Mr. Throne will make some changes and get it to City Hall for distribution. Mr. Hendrickson expressed concern about thy; amount of input they have received. An example he used was the City Attorney providing information at this meeting that they did not have access to at first. Mr. Wheeler said he thinks that generally they are going in the right direction. The total City Attorney cost doesn't seem that out of line, but perhaps, the city can get a bigger bang for the buck. Another consideration was that if the city attorney is in-house, overhead would be reduced. An assumption was made that the c:ity attorney is also doing some other legal work. A decision was made that the committee still would like the city attorney's budget reviewed. This is not a judgment on his ability. There is a possibility of hiring a staff attorney to do court preparation work and thy; routine work, but not do the actual court work. That could be contracted out. There was a general feeling that an awful lot of what the city attorney does is routine or could be done by paralegals. There were some questions regarding how much litigation actually takes place and how many different kinds. Mr. Bidwell gave an example of a Penney's employee who was hit crossing the street in a crosswalk at Vallco. This was a hit and run which occurred in January, 1982. There was a law suit against Penney's, the shopping center, and the city. Penney's cost to date has been $900,000. Mr. Wheeler also gave an example that one of~ his employees tripped on a street tree root and fell. The employee sued the city and recei~/ed $13-14,000. Mr. Throne reviewed the material submitted by Mr. Kilian and pointed out a column entitled litigation. Ms. Hollimon suggested that the committee just say something to the effect that the attorney's budget needs to be looked into. It was reiterated that the wage scales are of more concern. The City Council should look at a competitive wage scale program, including benefits and an early retirement program. In regard to revenue enhancements, Mr. Bidwell felt that cellular phones should be covered by the utility tax. Apparently, it escaped the finance director's review. There is no utility tax line on his cellular phone bill. The committee could also ask that this be looked into. Mr. Wheeler stated he had received some questions regarding the design charette which was approved by Council Monday night and the expenditure for it. The committee is 6 MINUTES OF THE CITIZENS' BUDGET Ct~MMITTEE HELD ON MAY 4, 1993 looking at where to cut and Council's planning; to spend in a new area. He asked how the committee could respond to that. He felt that it would probably be partially funded by business and partially by the city if it is to be .a reality. There is talk about some form of additional tax revenue. Here it goes again. Residents will be taxed for transit, but Cupertino is last in line for rail because there is, not enough density. The answer to density is low cost housing. Discussion followed regarding the drop in house payments and cost of housing. This is not as bad a problem as it was. Housing is ;Mill high, but so are salaries. There is not enough density for light rail, but we have enough money for cars. The committee thanked Mr. Throne for his preparation of the report. The committee reiterated that they believe the city should look at a utility tax on cellular phone calls and look at compensation with salaries and benefiits split. Concern was expressed regarding how this is going to be relayed in an open meeting. It was pointed out that the budget study session takes place in a conference room; it is not cable cast. It is more casual than a regular meeting. In regard to page 2 of the report where it deals with the Sheriffs Department, the committee requested that there be information added regarding the possibility of a sheriffs technician in lieu of expanding the code enforcement area.. Ms. Jones stated she had already discussed thi:c with City Manager Brown. The City Manager and finance director returned to the meeting. They were informed that Mr. Throne will revise the report and submit it to City Hall tomorrow. Mr. Throne gave a copy of the unmarked preliminary report to Mr. Snyder and reviewed the changes that had been made at the meeting. The City Manager was asked to evaluate the report and then provide feedback at the committee's next meeting. The report could b~~ modified prior to presenting it to Council. Mr. Bidwell pointed out that on page 2 of revenue enhancements, he thinks the figure should $6.6 million on line 2. He suggested the finance director look into a utility tax on cellular phone systems. He was informed that there is one; it is not yet 100% because some of the companies still need to be dealt w ith. The committee decided to eliminate the cellul~~r phone issue from the report. Mr. Hendrickson asked if since each of the members was appointed by an individual or group agency, is there anything wrong with a member going back as an individual and sharing an update on what has occurred at these meetings. He said he would like some ground rules. MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON MAY 4, 1993 It was agreed that that could take place. Mr. Bidwell said he has been doing that and Mr. Wheeler said he plans to. Mr. Snyder stated that whatever he had sent to the committee has also been sent to the Council. Ms. Hollimon said that one of the problems is people with such longevity. There was discussion regarding revenue sharing and the fact that some items previously funded with revenue sharing dollars are now using General Fund dollars. The committee decided to meet Tuesday, May 11, at 4:00 p.m. The City Manager requested that when the committee members discuss the preliminary report with Council members that the written report not be distributed. He also requested that specific classifications not be mentioned. 'Che committee agreed with this. The meeting was adjourned at 4:58 p.m. City Clerk