Next week’s council meeting will see a number of budget discussions. Following on the wings of the citizen-based Project Toto Model, the city has contracted with Bob Leland of Management Partners to develop a financial forecasting model to show impacts of decisions on the city’s budget in the short- and long-term.
According to the staff report, “The model incorporates existing commitments of the city, as well as future obligations. Mr. Leland has demonstrated the model at the March meeting of the Finance and Budget Commission and will present the model and its underlying assumptions to the City Council. The Council will have a chance to review the model and ask questions of Bob.”
Staff adds, “Staff will be able to use the model as a tool in the future to determine the likely fiscal impact of specific actions.”
In the meantime, the council will receive a mid-year update. During the budget, the council used $8.6 million in one-time money to address seven expenditures including: $200,000 for Grant Match Funding; $500,000 for process engineering; $1.5 million for H Street Tunnel; $375,000 for East Covell Bike Path; $300,000 for Russell Bike Path; $870,000 for 5th Street Reconstruction and maintenance holes; and $500,000 for the Community Choice Energy Project.
Staff notes, “In addition to these expenditures the following two items were held at Council direction until Fiscal Year 2015/16 was closed and fund balance to achieve these payments were confirmed.”
The June 2016 General Fund balance “not only met but exceeded expectations.”
Staff argues, “While this updated snapshot in time shows an improvement in fund balance, we are mindful of outstanding issues and unfunded liabilities which will likely impact these projections prior to year-end.”
In addition, the city is still engaged with two holdout bargaining groups – Fire and DCEA – “which could have budget impacts prior to June 30, 2017.” Staff is also mindful that “future actions by the State and updated projections by CalPERS will likely influence the FY 2017/18 budget.”
Nevertheless, staff is recommending two additional capital expenditures:
$500,000 to citywide signal upgrades – “Staff will use these funds to address 10 – 15 of the 20+ signals in the Covell and Russell Boulevards corridors in order to allow these signals to have the capabilities to be coordinated and more efficiently move through signal phases to respond to actual traffic demands (not run on fixed timing). The signals within these corridors are antiquated and many have failed vehicle detection which causes them to run on fixed time which is not efficient and leads to delay and increased greenhouse gases.
“In order to accomplish the ultimate goal of signal coordination, the signals need to have upgraded, or new vehicle detection, new signal controllers and cabinets, pedestrian signal improvements and new upgraded signal heads to be compliant with State and Federal regulations. Based upon information from a Citywide signal analysis previously completed by an outside contractor, these upgrades will typically range from $30,000 – $50,000 per intersection.”
$500,000 to Birch Lane – “Based upon a Walk Bike Audit Report, there were several deficiencies at and near the Birch Lane Elementary School. In order to improve the safety for school children and the Community in general, the following improvements were recommended: improving the pathway and crossing at Covell, curb extensions at intersections on Birch Lane, enhancing mid-block crosswalks, constructing a pedestrian refuge between East Covell and Dennison Drive, enhanced signage, ADA improvements and high visibility yellow pavement legends and markings.”
Staff writes, “If these improvements are completed, they will help to provide further safety and circulation improvements which will enhance work that has and will be done through the East Covell Corridor Plan.”
However, the question is should council be expending money for projects at this time, given the state of the city’s finances? Project Toto estimates the city needs millions to plug funding gaps on pensions, OPEB (Other Post-Employment Benefits), roads, and other infrastructure.
The city has contracted with Bob Leland to further analyze Project Toto and give staff modeling tools.
While the immediate fund balance remains solid, the longer-term forecast is concerning to troubling.
On Tuesday, council will be asked to weigh the immediate needs of these projects against the longer-term challenges that the city faces.
—David M. Greenwald reporting