By Jeff Miller and Dan Carson
This summary was prepared by Jeff Miller and Dan Carson at the request of the Finance and Budget Commission and sent to the Davis City Council.
The commission discussed a broad range of technical and strategic budget issues. City staff members were able to address many of the questions asked by commissioners, and we appreciate their help. The list below highlights significant issues that we believe warrant further consideration by the City Council in its own budget deliberations:
— The budget plan should be adjusted to reflect a $397,000 payment expected June 23 from the State Controller’s Office as reimbursement for past claims filed by the city for carrying out various state-mandated programs. Only $78,000 was previously assumed from this source in the city budget. Staff indicated these monies could offset a potential 2014-15 gap in property tax collections discussed below.
— We are in agreement with city staff that two critical pieces of information are needed to determine if the city budget should assume more property tax revenues in the budget plan. First, the May distribution of property taxes is (according to the June 16 staff report) $200,000 below expectations. City staff is investigating these numbers with the county to determine if they will change between now and the end of 2014-15. Second, the Yolo County Assessor has not yet released the 2015-16 property tax assessment roll, which greatly affects the city’s future property tax receipts. The issue should be revisited later this year when more is known.
— The assumption in the budget of just 1% growth in sales tax revenues in 2015-16 appears low, given the city’s past growth in sales tax-related activity and economic trends. City staff has agreed to further discuss its sales tax assumptions with its consultant. The council should consider in the range of 4% to 5% growth for 2015-16.
— City staff indicates that none of the money set aside in a $1.2 million “litigation reserve” in 2014-15 will be spent. We believe these monies should be recognized in the budget plan as being available for other purposes. City staff is suggesting part of the money could be used to help address a $1.5 million deficit in funding for certain employee benefits, which would reduce future budgeted costs for these purposes.
— What had been a $1.6 million balance in the city Cable TV Fund as of 2013-14 is starting to be used for city infrastructure projects. The balance is expected to be $375,000 lower by the end of 2015-16. We recommend the council determine later this year how surplus monies in the fund should be put to work, and that the balances in other special funds be examined to see if they are appropriate.
— While work has continued on developing a new information technology project we believe the project should be accelerated so that it would, among other things, allow better accounting and management of city spending.
— Although tracking of capital projects in the new budget presentation has improved, there are concerns that monies for the actual implementation of the project has not been budgeted or reflected in the five year fiscal forecast. As part of our continuing efforts to implement our new mission statement we believe we need a reporting system that can map the percentage of a particular capital project that is complete against the monies spent to that point on that project. The reporting should also include information on a completed projects adopted budget versus actual total dollars spent on the project, and a comparison of the project timeline for each project versus its actual timeline.
— The commission requested information on salary cost by employee in the Department of Public Works to determine why some of these costs seem high.
— Additional information was sought from staff regarding the $315,000 budgeted for support within the RDA Successor Agency budget.
— The commission expressed interest in the potential for implementing “lean management” principles to reduce budgeted costs. (By one definition, lean management seeks to eliminate any waste of time, effort or money by identifying each step in a business process and then revising or cutting out steps that do not create value.) For example, costs for purchases of printers and copying might be reduced by new work rules and procedures.
— The commission inquired about what the city’s goals are in the pending negotiations with employee associations, and whether under current trends average compensation costs are being contained.
— The commission expressed interest in moving toward fuller use of scenario analysis in the consideration of the budget plan. For example, scenarios could be developed to spell out what additional spending items would be prioritized in the event that revenues were better than expected, as well as what reductions should be implemented in the event of an unanticipated downturn in city finances.
— The commission expressed interest in modifying the budget projections in the future to display information pertaining to long term unfunded/accrued liabilities, such as personnel or deferred maintenance costs not covered within budgeted expenditures.