Regular City Council and Housing Authority* - Regular Meeting

Good afternoon, everyone, and welcome to the, city council study session meeting of Tuesday, 05/12/2026. I now call the meeting to order. Let's all stand together and say the pledge of allegiance. Ready? Begin. I pledge allegiance to the flag of The United States Of America and to the republic for which it stands, one nation under God, individual with liberty and justice for all. Thank you. Madam clerk, could you please do a roll call?

Mr. Mayor, the record will reflect that all councils present except for council member Reynolds.

Thank you. So we have one study session item today. Madam Clerk, could you please read the title?

Fiscal year twenty twenty six-twenty twenty seven proposed budget study session and to start it off will be Mr. Ocarike, our financial consultant.

Mr. Ocarike, hold on one second Just to get down the ground rules, so it's a study session. Everybody's a little bit more relaxed. You're allowed to use first names if you wish. If you want to be more formal, that's fine too. We're all dressed a little bit more casually. We're going to have our presentation by staff. Council's going to get an opportunity to make questions, then we're to hear from the public. Depending on how many people we have, typically it's two minutes for a study session. Lately, we've been bumping it up to three.

We'll most likely do that because this is an extremely important topic, and it doesn't look like there's that many people that wish to speak. At that point in time, we'll go through and go down the line and make comments, and then we'll adjourn. But we've got a lot of stuff to cover. With that, Mr. Okareka, you've got the floor.

Thank you, mister mayor. Mayor Pro Tem, council members, good evening. Tonight, we have the fiscal year twenty twenty six-twenty seven proposed budget study session. And before we get into it, I'd like to point out that you have the budget book as well as the agenda item that describes most of the contents of the budget. And tonight, we're going to set up tag team the presentation.

I'm gonna be leading the presentation, but I have with me Mark, who is the budget manager and Anna, the finance officer, as well as the department heads, Roger is here to you know, talk about some of the proposed capital improvement budget. And we do have, I believe, the police chief and the fire chief, as well as the department heads in the audience to answer any questions that you may have relating to the various departments. And in terms of the agenda tonight, we're going to sort of talk start by talking about the guiding principles and strategic plans that underlie the the budget. Sort of giving the budget a context, and we'll go through the economic update, what we are seeing today in terms of the economy in The US, in California, as well as customers per se. And then, we'll touch upon all the budget assumptions that we're making relative to revenue projections.

How the what we've seen in the economy today informs all of those projections on the revenue side. As well as on the budget, on the expenditure side, we'll look at all the assumptions we're making and all the drivers. All the budget drivers on the expenditure side that informs our proposed budget to you tonight. Then we'll talk about the general total budget of the city. Including the operating budget as well as capital budget.

And then we'll go a little bit more specific to the general fund, which is the big general operating fund that everybody is concerned about that funds all of the operating activities of the city. And after that, we'll touch upon the fiscal sustainability here. We'll take a look at our reserves, the state of our reserves and what we're projecting in terms of reserves for the next fiscal year. And then, we'll go through the calendar. Calendar from today to our projected adoption date of the budget of the first meeting in June. Okay.

Before we stop, I just want to make sure the council knows that's all fine, and I want we might whip through it, and nobody might have a question for you. We win, everybody will be able to restrain themselves to the end. However, this is the study session for the council. If the council wishes to ask a question, they'll just they have my permission to do that, and then they'll just have to ask for the floor, politely we'll stop you and ask that specific question, okay, and a reasonable follow-up. So, okay? That's fine. Good. Okay, what's next?

All right, next slide, please. Just on the guiding principles here. These are the guiding principles adopted by council and the strategic goals. The first one there is to strengthen the public's safety and improve the quality of life. And we're talking about the entire city residents, public safety and the quality of life.

And this budget incorporates so many of those elements. The next one, diversify, stabilize and increase housing to reflect community needs. There's allocation here for housing. And we also enrolled in the greening of the environment. The other is recruit and retain high quality staff and I think our staff is focused on that and the budget as you will see reflects that as well.

And the last one there is to maintain and enhance cities, facilities, technology and equipment. And the budget incorporates full allocation to the infrastructure fund as well as the IT funds. Now, focusing on the economy here. The catch word in the current economy is uncertainty. A lot of things are going on, increasing fuel prices, the interest rate hasn't been adjusted by the feds since December.

Inflation is becoming a concern and consumer confidence according to the Michigan survey, the record today it's 48.2 which is a record low. This is all driven again by rising gas prices, inflation concerns, and the geopolitical tension that's going on right now in The Middle East. So but the good news, if you could see the line in there is that there's decreased concern about recession. And with all of this going on, even at the national level, at California, and even at the customers at per se level here, none of those things have really dampened the level of activity that we're seeing in terms of customers patronizing our stores locally. So sales tax, as you will see in a few slides down, reflects some of that anticipation that sales will continue to be at a certain level irrespective of all these concerns.

We don't know where it's going, but the entire budget is based on revenue projections taking all of this into account. The way it stands right now, it looks a little bit not too bad, but we are also concerned that if it goes on much longer, it might also impact ability to generate revenue, especially sales tax, which is the biggest revenue for the city. Next slide please. And, with this slide, I'm gonna hand over to Anna to talk about on the revenue side some of the assumptions that we've made in terms of percentage increases to the revenue.

Good evening mayor, mayor pro tem, council members, city manager. I would like to walk you through our budget assumptions. As you previously heard about our economic outlook, it is this information along with the information we received from our financial consultant. With this being said, we are expecting around two to 10% growth in our major revenues to the FY twenty five twenty six adopted budget. Specifically sales tax which is our largest revenue source we are forecasting at about 10% again compared to the current adopted budget.

Next is our property tax which continues with an upper trend at 2% followed by our transit occupancy tax we are projecting with the growth of 7%. Currently with permits we are forecasting a little over 7% and our franchise fees we are looking at being forecasted a little bit above 10%. This includes our waste hauler electric and gas fees. In regards to our other revenue sources, these are being forecasted as flat to very low growth. Additionally, we have a city fees that is underway in which we are evaluating the various fees across the city.

Thank Thank you, Anna. Let me just point couple of things there on that slide. The numbers that you just heard about two to 10% growth is budget to budget. Now, put it in context and I think something that the fire park commented on when we went to Fire Park last time is that when we look at it, you know, relative to our projected year end numbers, it's a modest increase of approximately 3% or thereabout. So, we've seen this wave of whatever has been happening recently in the economy over the past few months.

And all of that is being reflected in the current year projections as well as the projections for next year. And with revenue, this is really the starting point because revenue numbers, total revenue sort of puts a limit on the expenditures, if you will, because we have an annual budget and revenues has to cover all the expenditures. Now, on to the expenditure side, some of the assumptions given everything that we know as of date in developing this budget. It starts with the base budget. And that base budget includes all of our labor and contractual obligations.

Okay, basically, and in terms of how that is derived, this finance department meets with each of the departments. We go through all of their budget details to determine there are some one time items that are in there and know, are the things that are teed up for next fiscal year still necessary relative to the current year. So, essentially, I use the terminology that we basically shake the tree to make sure that what's remaining is really what's needed by any of those departments. And, on top of that, this particular budget also includes some cost containment measures. And, the target was set at 5% for each of the departments.

And, while we did not get all of the 5% reduction out of the total budget, most of the departments made significant effort to cut back some of their budget and size. Even though some of it may be one time for next year. But, at least we did achieve some cost containment measures. When we get to the number slides, we'll point out those numbers at a time. There's also some gradual incremental right sizing of the budgets.

As we discussed here a few weeks ago in the budget study session, and also it came up in our discussion at five pack. Some of our budget line items does not necessarily reflect what the history has been over the past two to three years. And that includes over time and some of our part time budgets. But, we are making efforts in this budget to begin the process of right sizing those budget to reflect the actual budget for those particular line items. And, the budget also assumes actually the fully staffing position that our police department is in now, where all this one positions are fully filled and staffed.

And the fire department, it's, also pursuing, recruitments right now to fully staff, their sworn positions. In addition to that, in this budget, we have identified 14 positions that we're that we'll like to recommend to be frozen through the first fiscal year. And, 13 of that is in the general fund. And, we are also making an assumption here and setting a target of two percent attrition factor across the board. That's over the entire total budget of the city of approximately, as you will see in the numbers, close to $200,000,000 And this is a departure from what was done in the past where some of that attrition was department specific.

Here, we're saying we're going to implement a 2% across the board attrition factor. And, it will be evenly distributed all across department relative to the size of the department's budget. Also, incorporated in this budget is the fully funding of the annual requirement for CAN, and IT needs fund. And that also includes, in addition to funding it fully for this year, includes the scheduled repayment of previously deferred transfers to those two funds. And, want to emphasize those are deferrals were financed or teed up to be paid back over five and ten years.

And whatever that year one payment is, it's included in this budget. Okay. Next slide, please. And just to put a little bit more context here when we're talking about funds within the city. Again, the general fund is the big operating fund of the city.

We also have another category of funds, the special revenue funds. And that includes all the federal state funds such as M2 funds, gas tax funds, CDBG, and all those funds. The commonality there is that all of those are restricted for specific purposes. And, those cannot be used for general operating, general fund purposes. We also have internal service funds that gets allocation in the budget to and some of that include the equipment replacement fund, our self insurance fund, and the information technology fund.

And then, the capital improvement fund, which is basically what we term here as fund four zero one that captures all the monies that are necessary to execute the public works capital projects. And, there's also the housing authority fund that gets some allocation for homelessness and housing support. Now, in terms of the overall budget of the city, for next fiscal year, we are proposing a budget, all funds, in the amount of 200 and, $44,900,000. That's about almost $20,000,000 or 9% increase from the current year adopted budget. About $109,300,000 or 55% in the general fund resources is dedicated to public safety.

The budget tees up investment of approximately $22,000,000 into the city parks, streets, transportation networks, other infrastructure. And, there's also additional $12,000,000 of bonds that we're for the renovation of the Fire Station Number 2. The budget also includes a $2,000,000 annual requirement annual car per UAL contributions increase over last year. And then, as I pointed out in previous slide, it includes fully funding and the repayment of the scheduled portion of the capital asset needs and the IT funds. And, about 1,300,000 it's teed up to be allocated to the housing fund.

And, this shows just a pictorial view of you know, the total city budget. General fund is about $200,000,000 Internal service funds about 15.2. Capital projects about 13.2. And this this is just a component of the capital projects that are funded, you know, without some of the special revenue funds. The other ones that are funded with, I'll say, gas tax, M2, and the likes are captured within that $16,600,000 of special revenue funds.

So, this is another way of looking at the allocation of funds within the total city budget of $244,900,000 And, just looking at that numbers strictly. The proposed budget, the middle column there, you know, operating budget in total. And, this operating budget includes the general fund, the special funds, and all the internal service funds. That totals about $211,000,000 an increase of 4% over the same budget for the current fiscal year. And transfers out, in that middle column, you'll see the $9,825,000 Those are largely transfers to the CAN and the IT RF fund, the internal IT replacement fund.

And for capital projects, the total here is 23.5. It includes the $22,000,000 that I referenced in the previous slide, plus approximately $1,600,000 of IT projects that are considered capital. And this slide kind of breaks down the transfer to the capital asset needs fund and the IT needs funds of $9,800,000. For this year, for the capital asset need, 5% of our general fund budget of 200,000,000 equates to $10,000,000. And out of the $10,000,000, we have leveraged, $2,800,000 to issue revenue bonds that are used to for infrastructure development.

And, we're also planning to leverage our $1,100,000 of that money to borrow approximately, $12,000,000, to do the renovation of the Fire Station Number 2. And the repayment of the previously deferred can transfers amounts to about $600,000 So, at the end of the day, about $6,700,000 is transferred to the Capital Asset Needs Fund. On the IT needs fund, 1.5% are set by ordinance amounts to about $3,000,000 and the IT needs deferral repayment portion for this year. It's about $100,000 totaling the $3,100,000 So, the 3.1 plus the 6.7 that accounts for the $9,800,000 transfer to those two funds as was shown in the previous slide. And then, just pointing out that the housing authority again, has a contribution at two of, one point, $3,000,000 to help support homeless shelter and programs, and this includes funding for all contractual obligations for the shelter operators and the meal providers.

The information technology replacement fund, going through the same thing, total of 3.2 $3,100,000 is transferred into it. 2.2 for replacement of eligible expenditures and projects and about $900,000 for project related staff cost. The self insurance funds, this budget also includes about half $1,000,000 in additional funding to cover the increases anticipated in insurance premiums. And with this slide, I'm going to turn over to the city manager to talk about the Arts and Cultural Master Plan Fund.

Thank you.

Half a percent of the cannabis retail tax from Measure Q is used to fund the Arts and Culture Master Plan and it averages about 242,000 a year. At the last City Council meeting on May 5, we had a presentation from the Arts Commission that talked about their accomplishments over the last five years and the things that they hope to accomplish with the Arts Master Plan over the next five years. One of the things that we heard from the council was we received direction to make sure that we were allocating additional funding towards the city's arts and culture programs, So, to that end, we will be awarding a contract on June 16. We'll be bringing it to council to award a contract for the preparation of the next five year master plan and then our goal is to upon completion of that five year master plan bring the plan to council for adoption along with a budget to fund the programs and plan projects going forward.

Excuse me. It's my first question. When do you think that's going to happen?

We'll be awarding the contract on the sixteenth, oh the the time it takes to develop the master plan?

Come back and ask us budget.

I'll have to defer to the parks and community services director on the time frame for development and

Along with John asked from Brian's walking up here. So that'll be the time, Cecilia, that that we will understand what the funding will look like in terms of the increases or moving money around? That's when we'll find that out?

That's correct and it would be ideal for us to be able to develop a five year funding plan for the five year master plan.

Okay.

Director, sorry, Brian.

Good evening, Mayor, Council Members. Typically a master plan to be developed from the award of contract can, it's probably about nine months to do a thorough outreach, you know, reaching out to the community and doing the research and pulling out all that information together and finalizing a good product for the council to take a look at.

All right, good. I'll make sure to use my three minutes. All right. Thanks, I'm sorry to interrupt.

All right, thank you so much. Next, I'm going to turn over the next slide, number 18, to Kassam Ali, the human resources manager, to talk about the position changes in the budget, as well as the frozen positions that we are holding for the fiscal year.

Good evening, honorable mayor and members of the city council. The proposed fiscal year twenty six-twenty seven budget does include the following recommended changes in positions. The elimination of one park ranger, this park ranger position was an additional position that was approved in fiscal year twenty four-twenty five, specifically to Staff Harper Park, but rather than have a single park ranger assigned to a specific park, the department has restructured their deployment of park rangers and is able to eliminate one position. We're also requesting to reallocate a public safety dispatcher position to a public safety dispatch supervisor position. This will create a rotating administrative assignment to provide additional support in the training and CAD and other administrative support at the supervisory level.

We're also looking to reallocate the chief of code enforcement position to a new classification of senior permit technician. This new classification will provide additional support in assisting with the more complex transactions that happen at the front service customer service counter. The last request is to reallocate the Emergency Medical Services Coordinator to an Administrative Fire Battalion Chief, which will be able to assist in overseeing the EMS program and training. In addition to the new senior permit technician classification, staff is also looking to create or reactivate a planning technician classification that's going to help provide additional support at the customer service counter. There's no FTE change for this position.

It simply allows the department to under fill a planning position, and will provide more of an entry level professional opportunity in the planning series dependent upon department needs. The proposed budget also includes recommendation to freeze 14 positions, 13 of which are in the general fund. These positions will be funded in the budget, but will be frozen from recruitment and hiring purposes. The following list includes positions that were frozen in the current fiscal year and are proposed to be frozen for fiscal year 'twenty six-'twenty seven. So, being frozen in six-'twenty seven is a deputy city manager position, the assistant director of development services for nine months, principal planner for three months, and associate planner.

Code Enforcement Officer two was frozen in 'twenty five-'twenty six, will continue to be frozen in -twenty seven. The chief of code enforcement was frozen in twenty five-twenty six, will be unfrozen for twenty six-twenty seven, and as I mentioned, will be reallocated to a new classification of senior permit technician. I'm also being frozen for twenty six-twenty seven as an assistant finance director, police record shift supervisor, assistant fire marshal. The Office Specialist II in the Parks Department will remain frozen for twenty six-twenty seven. Programmer Analyst II is newly frozen for twenty six-twenty seven, and the Engineering Technician III, Lead Facilities Maintenance Technician and Maintenance Supervisor will continue to be frozen for fiscal year twenty six-twenty seven.

The Senior Engineer position, which was frozen in 'twenty five-'twenty six, will be unfrozen and authorized to fill for fiscal year 'twenty six-'twenty seven. In the other fund, the Office Specialist II position in development services will remain frozen for 'twenty six-'twenty seven.

Can I

fire a question out there real quick? Oh, I'm sorry.

No, you can go first, Mike.

We're very informal. Can somebody explain to this non CPA finance guy what's the actual impact to our budget on that? So we have the positions that appear on our budget as being funded, but we're gonna freeze the hiring of those positions. Explain to me what's the actual impact because we don't actually expend the funds?

That's correct. So the position will be funded in the budget as part of our complete staffing. When we don't fill the position, the city does realize the salary savings from not filling the position.

And just to play it through in my head, if we didn't freeze the positions and we actually did onboard these new positions, we'd actually incur that expense and it would take away from our our it would increase our expenses bottom line.

But the the funding's already there for the positions. Yeah. That's would what just I'm be spending the funding that was already budgeted.

Yeah. So I guess that's my question. What does it do as far as a savings or whatever? We've set aside the money, so it's not able to be used for anything. What's the benefit of not onboarding these people? I'm just help me understand that.

I can answer that. Well, again, it's part of the overall strategy of the budget that we're presenting to you. There's two components to we put in an attrition factor, and we also, you know, have a targeted savings of say 5% that we've indicated in this budget, and the other component is also that we're trying to right size various components of the budget. Now, if we hold these positions vacant, we budgeted for it, but we hold it vacant and say they are frozen. You're not spending that money.

That money hopefully at the end of the year defaults into where if we have exceedances in other areas that we have not particularly right sized, that could cover it. You are adopting a funds budget, right, not necessarily a line item budget. So it allows the chief administrator that flexibility to manage within that fund. So it is savings that you don't spend that money, but it gives you that flexibility where you can apply it to other areas where because what we're doing right now is a projection. There's nothing set in concrete. Either side can move. The revenue can move and the expenditures can move.

I think I got you. Here's all I'll use it in my simplistic language. We've set aside a credit and we know by freezing the position, we're not going to expend those funds. So that credit is going to be there. Right. To use it to offset some other unforeseen expense that may arise potentially.

Well, I could live with that. Okay.

But It's a buffer.

It's sort of sort of a buffer, and but that's the whole idea. Again, you want to you're adopting an annual budget. You want to be able to adopt a budget within your projected revenue, so you don't have to dip into your reserves or have to again defer payments to your can or IT fund. So doing all of this brings your total expenditure within that limit of your projected revenues.

Manuel?

Thank you, John. I have a quick question. So we have a deputy manager position on here, right? So that means, almost the same deputy manager. Does that means should times not be difficult, we would have another person be hired in this role?

Yes, that's correct. The funding is there should the need arise for us to fill the deputy city manager position.

When did we create two deputy manager positions for City of Costa Mesa?

We only have one deputy city manager, which was Alma Reyes' previous position. She is now the assistant city manager.

Okay, so we have an assistant city manager and deputy?

Correct.

What purpose do they both serve if they're very similar sounding titles?

The deputy city manager can handle sort of more of the oversight of the administrative tasks within the city manager's office. Ideally, if you have two, either two assistant city managers or one deputy and one assistant, They can liaison with the department heads to work with the department heads on their perspective projects and programs, and maybe you divide up half of the departments into being assigned to the deputy city manager, the other the assistant city manager, so that they can work with those departments on any of their needs.

Okay, and when did we create this position? This is city manager.

Maybe Kasima can help answer that question. We

actually added a second assistant city manager, I want to say within the last four years maybe, and then that second city manager was subsequently reallocated to a deputy city manager we created that classification, and that was within the last couple years.

Thank you.

Where are you going? I was going to ask, so I like to complain about money being fiscally responsible, but I also like I'm gonna try to practice what I preach. So, on the arts thing, noticed it's not I don't know if it's supposed to be on the slide or not. We just lost the arts young lady. I forget her name already.

She was yeah. And I'm wondering because that I think council member Moore asked about this last time, I think her salary was in the arts budget when it's typically, that type of salary would be in the general fund budget. I'm wondering, do we need her? And if if we didn't fill that position, could that 100 and some odd thousand dollars go toward some of this art stuff that we're talking about? I know these are just big questions, so that's some savings there. I'm not sure how much. I think we could do the job without filling that position, which would mean a considerable amount of annual income. Is that am I being crazy on that?

So so that that is one option the council could consider and provide direction to us on. It is a position that is funded through the Arts and Culture Fund. We did hear some comments from the council at the last meeting to address filling that vacancy, but we will follow the council's direction.

Okay, and one last, go ahead, or you speak yeah, go ahead.

I'll ask a follow-up to that actually. So, I was looking at page 129 of the budget book that we received, and under the salaries and benefits for the fund labeled Arts and Culture Master Plan, we go from 179,000 in the adopted budget to 30,000. So, I was assuming that meant that you had already cut that position or did not intend to fill it anytime soon. But then I also saw page 65 under Parks and Community Services staffing, we do show that our specialists filled in 20 seven. So what am I not understanding in the salary number not being a full staff person?

So, Council Member Marr, the salary number in there represents the retirement, the UAL costs. We do plan on bringing this whole fund back with the position once the five year is adopted, and so at that time we will identify the whole package of both the personnel and arts programming costs. So, at that time, you'll see a complete budget, but for now, we're keeping a placeholder for the retirement, the UAL cost, and that'll be brought forward after the adoption of the next five year plan.

So, we're sort of doing the opposite of what we're doing with the frozen positions? In the case of the frozen positions, we're holding them as a credit, as somebody set up here. But in this case, we don't have a budget allocated, and we're hoping, I don't know, at mid year or maybe later that there's funding available.

Once once the next five years gets adopted, it'll identify the full cost and at that point, we'll return and with the funding source as well and so, we do plan on bringing a complete revenue to support all of the expenses as well.

Council Member Marr, let us look into that further and get back to you with some details.

Okay, I mean just to sorry Jeff, do you mind if just yeah, I mean it sort of looked between this and the amount that we set aside for the arts and culture budget, which I will say this shows that we had 416,000 in twenty five-twenty six. Sorry, I'm on page 126 of our budget book. And then goes down to $2.42. So we are still setting aside the half a percentage from the cannabis tax for next year. It just feels like we're kind of we're just pausing arts and culture for nine months until we have an arts and culture master plan.

That's sort of how this is reading. We're reducing the funding from where it was this year. We don't have a person and we're not allocating anymore until we get a five year plan. Feels like a pause. I think that's kind of the opposite of what we were advocating for in the last meeting.

Absolutely.

Can't we just, to Andrea's point, I mean, can't we just extrapolate out? We didn't finish everything from the first master plan. It's not like, you know, I just have a feeling, I think maybe some of the other council members, that this is just whole idea that we're going to, like, close out the five year, and then we're going to do another one, and then we're going to start over. It just seems kind of artificial to me, because there's always art. There is a lot of art stuff going on, not really funded by the city, but before we had the master

plan, right? Mean, so I'm also thinking about ArtVenture, right? Are we just not are we not going to do ArtVenture this year because we're real person?

There's a

lot of stuff that just happens. I mean, so in other words, I mean, I'm not sure. I honor Jeff's question about do we need a full time FTE to be the arts manager? I don't know that. That's something I'd like to hear as the thing goes on. But also, I think that this numbering right here, you know, it just doesn't seem realistic to me. I hope it's not realistic, because I hope we don't put a pause on all arts activity for nine months.

So, mayor, do have proposed the $242,000 for arts and culture master plan. The intent is that money be used for arts and culture programs and activities going into this next fiscal year. You know, we anticipate looking to hire someone to fill our art specialist position, that may take a little bit of time. We may not get the position filled for five or six more months into the fiscal year, that will realize some salary savings. One of the things that we do plan on doing just as a whole with this budget is really coming back to council and doing a true mid year check-in with the council to see how we're doing across the board in all departments, in all funds, and give the council a realistic picture of what our assumptions have been and the arts and culture master plan fund will be one of those.

Okay.

I'm gonna ask just one more question and it's gonna be along you're gonna give some information back for Andrea. Along those same lines I'd like to ask for some information. This is a big one but I would like how many positions have been added or expanded over the last five years were related to outreach, sustainability, planning, communications, and program coordination? In other words, unrelated to core services. How many positions in the last five years were related to the things that were not core service functions of staff?

So that's a big ask, but maybe next something along those along those lines, I'd like to know for in the same time frame you're getting Andrea's info. That'd be great, Cecilia. Thanks. That's all that's all I have.

Jeff, what are the categories again?

I I would like to know which so it would be, for outreach, sustainability, planning, communications, or program coordination.

Okay, thanks. Okay, I think we're pick where you left off.

I just wanted to clarify, I was reminded that we actually had two assistant city managers for quite some years, even back a couple of city managers ago, so wanted to make that clarification.

Thank you.

We didn't have two city managers, we had oh we did many, Assistant many years city

managers. Rick

Francis and Amy Latourneau. Boy that's going back there. Go ahead, I'm sorry. Where were we?

Go ahead.

AB2561 requires the city to annually present to the city council our current vacancy information. This will formally be presented to the city council at the June 2 meeting. I wanted to provide a brief overview of the current vacancies by bargaining unit for fiscal year twenty five-twenty six. This is based on a budgeted number of five eighty five positions for fiscal year twenty five-twenty six, which excludes the seven council members and the eight frozen positions. For fiscal year twenty five-twenty six, the vacancy rates by bargaining unit range from 0% up 23% for one of our smaller non represented groups with an overall vacancy rate of 6%.

Okay. Thank you, Kesama.

Sorry, one more slide.

Next slide. Oh, sorry.

And then, a quick overview of our current vacancies. These are the vacancies as of April 26, or the April 2026. The city currently has 38 vacancies across all departments, and I will turn it back over to the finance team.

Okay, thank you. Let me just point out, the previous slide, if you bring that back, just is a reporting requirement for the current fiscal year. So in your analysis, I just want to make sure you don't combine the numbers. This is just a state requirement reporting for the current fiscal year. We kind of mixed our two fiscal years there.

So okay. Next slide please. Now, we're going to pivot and get into capital improvement project. As I said earlier, where the total allocation there is $33,950,000 We have the public works director, Roger, here to get into some of the details.

Thank you. Mr. Mayor and city council members, so we have a capital improvement program. We talked about it a couple months ago in March 30 session. So, the CIP is funded from a variety of funding sources.

Majority of them is actually from the capital improvement fund that's about $6,100,000 Then we have other funds, grant funds, Measure M2 fair share, gas tax, we have a couple of gas tax funds. And in addition, we have some minor allocations from park development, traffic impact fees and the cannabis traffic impact fees also. As you can see, the future bond financing for Fire Station is also shown at $12,000,000 Next slide. So, here are some of the highlight, you know, major projects that are being considered in the next year. CIP, we will continue with the design of alley projects, the last phase of this project.

So, we have, I think, 12 or 13 alleys remaining, and we'll be designing them in the next fiscal year. Replacing police department chillers. We have two chillers, and they both have to be replaced at this time, and that's budgeted. Partial funding for the emergency communication center. So, the Communications Building is under design right now.

We think the design should be done sometime by later this year, and then we'll go into bidding phase on that one. So, some portion of the funding is being requested in the next fiscal year, and there might be more in the following fiscal year. We added again citywide tree maintenance in the public right of way. This will be funded from gas tax, replacement of the Harper Park Playground, that's replacement of the existing playground structure as well as surfacing and other amenities. For Moon Park, we are just budgeting an outreach in the next fiscal year because the actual scope of the project is not known yet, so we'll be having outreach that will start in July, and once we have a plan for Moon Park, then we'll design and we'll have a budget for request in following fiscal year.

Costa Mesa Skate Park, again, this is already we awarded the project and there is some additional funding request for the skate park. We'll be having a groundbreaking on Monday, next Monday actually on the skate park project. Finally, Fire Station 2 reconstruction, This is the this includes a future bond financing. The station is the design is mostly complete. We hope to go for bid process in June and then hopefully have a clear picture of the project and we'll come to you for both bond financing and award of the project by September year.

Okay. So, let me ask you a quick question on this bond financing. There's always I've never really been able to ask it. Maybe I won't be able to ask it well now, but so we've been putting a certain amount of money aside for the bond financing. It was $1,100,000 I think was it? Or $1,000,000 last year. It's a low seven digit number, And and we're putting it aside, right? And then we're going to go out and do our bond financing, like $12,000,000 to build the fire station. It's going to take some transaction cost to achieve that. And then we're going to eventually get our bond financing.

So, we get the financing, and then over time, you know, as construction goes on over a number of years, we're going to draw off that financing to pay our and some of the money, I guess, is going to come out of our general fund, but we're going to supplement it with our bond financing to pay for the fire station. The part that I'm not 100% sure on about the prudence of this, okay, is putting aside so much money in advance, okay? Because, you know, the whole purpose of debt financing is you use other people's money, and you pay them for the use of the money, okay? That's interest, obviously. But here, we're taking that money and we're putting it aside, almost as if we're putting it although it doesn't hit the reserves almost as if we're putting it in a restricted reserve fund.

Okay? Now, I would understand that if I were buying a house, because I want a certain amount of money to be set aside for liquidity so that I don't miss a payment. Right? But I don't think we're in that situation now. So with all of the other things we need to spend money on, core things, and certain things that we're not spending money on because we're putting that 1.1 or $2,000,000 aside.

Is it fiscally prudent to do that, just to have a fund that we could use later to pay somebody for the use of their money? I mean, and I don't know if that's who I don't know which one of you guys is the expert, if any, on that. But I'm just trying to understand the fiscal prudence of setting aside that money. And by the way, I exclude I know some of the money's going to be paid for transactional costs, but we're setting aside more money than is necessary to do the bond counsel and underwriter and things like that. So who wants to answer?

So, Mr. Mayer, I'll start and you know, finance can add to that. So, we set aside $1,000,000 from $1,100,000 from this twenty five-twenty six and assuming that we would be going out with the bond financing this year. So, that money, what happens, it gets allocated to the a city cost for the project. It's not going anywhere.

It's going to be for use for the Fire Station 2 project. The cost of the Station 2 right now, we are estimating is to be anywhere from 12,000,000 to $15,000,000 It's very hard to project right now with all the uncertainty that's going on. You know, the inflation with, you know, contractors also taking a risk in going after this three year project. So, the money is there. In case we need that extra money, that money will be added to the project fund as the city match for the project, or city shared for the project.

So, it's basically sitting there, so if you to use the home analogy, to pay our equity or a down payment or whatever you want to say, that we're not financing. Exactly. Okay.

Exactly. That's how the current 1.1 will be that way. The next year 1.1 that we are asking for will go for actual bond payment. That's more like

or Right.

Annual payment.

So the $2,200,000 is to pay for our skin in the game. Yes. Got it. Thank you. Appreciate it. That answers my question.

But can I ask a follow I mean, why not just take out a $15,000,000 bond then?

I mean, that's potential. I mean, that's why we are waiting on the bond till we get the bids in. So, we're kind of trying to time it so that we have a clear picture of where we need to go. But, I think our bond counsel is more comfortable with 12,000,000 at this point.

Okay. I guess that was my question. Is it being limited by the amount that we're allowed to borrow? Is it being limited by ourselves and the amount we feel comfortable repaying, given where general funds are? I'm just curious what the upper limit is and why.

I can probably weigh in a little bit on this. Part part of it is because we have we pledge assets of the city, and some of those assets are currently pledged for the bond that was used to finance the library. And so, when we do this, we will have to either use different assets. For example, fire station number two is already pledged to the bond repayment on the library. So, we will have to find other assets to substitute in order to do the bond issue for the fire station because it cannot be the security for the bond.

So it's a question of capacity in terms of the value of assets and what we are willing to pledge to secure those bonds.

Thank you. Were you going

to add to that? No, no, no.

Okay. Thank you. Sorry, mister mayor. Well, thanks for letting me tack on.

Good question. Thank

you, Roger. Now we've talked about the total city budget. We're going to move on to specifically the general fund. And next slide please. General fund, again, in a minute I'm going to turn it over to our budget manager here, Mark, but just looking at the slide here, the third column of numbers, that is our proposed twenty twenty six, twenty seven budget, and total estimated revenue is approximately $200,000,000 and total operating budget is about 190,200,000, and then we layer on the transfer out to the capital asset need fund, and IT needs funds for 09/2008.

So basically, all of our revenues spoken for. So that is a structurally balanced budget. And with that, I'm going to turn it over to Mark, and we'll start really looking at some of the details.

Thank you Kingsley. Good evening council mayor, mayor pro tem, city manager. As far as this general fund revenue highlights goes, the general fund revenue is projected to be 200,000,000 for FY twenty six-twenty seven, an increase of 13,100,000 over the prior year adopted budget. So I do want to emphasize that it is budget to budget, so a budget to budget increase of 7%. However, if you look at the projected year end of this year of 194,000,000, it's only a growth of three percent.

So, I do want to make that clarifying statement that it's a growth of about 3% from this year. Sales tax Can is the biggest

you say that again?

Okay. So

I was distracted. I want to make sure I heard it.

So, next year's projected revenue is 200,000,000. When you compare it to last year's adopted budget, it's a $13,100,000 increase. So, that's an increase of 7%. However, if you look at this current year end projection, rather than the adopted budget

That's how you get three. Got it. Okay.

This current year's projection is year end is 194. So, it's only a three, a modest 3% increase rather than a 7%.

Okay, I understand. Thank you. Sorry about that.

Thank you. Sales tax is this city's biggest source of revenue. So, unlike most cities where housing and property tax is the primary source, Costa Mesa is unique in that sales tax is the city's largest revenue source. It's estimated at $82,500,000 for FY twenty six-twenty seven, an increase of $7,500,000 or 10 percent from last year's adopted budget. Property tax is estimated at $64,000,000 reflecting a 2% growth above last year's adopted budget, and transient occupancy tax is estimated at $10,600,000 reflecting a 7% increase above last year's adopted budget.

I do want to note that transient occupancy tax may be impacted if fuel prices prolongs because that impacts also not only car fuel but jet fuel as well, and so that may limit travel and leisure spending. So we will continue to monitor those revenue sources. As far as fees and charges are estimated at $13,900,000 reflecting approximately an increase of $800,000 from the prior year's adopted budget, and cannabis taxes are going to be estimated relatively flat at $3,700,000

Can I fire a question out there while we're talking?

Mike, sure.

You know, when we're talking about the fees and charges, estimated 13.9 and an increase of 808,000, that's the projected. I looked at page seven of the presentation where we mentioned, you know, revenue assumptions and impact, and I think you had permits, and that's part of that component there under fees. That would include the permits. Permitting. On page 26, when we're looking at fees and charges, that number includes our permitting fees.

Yeah.

Okay. And then earlier, I believe you guys were predicting about a 7%, increase in permitting fees. If you go to page seven, and that was a comment that you made. Right. Okay.

My question is, is that 7%, what are the limiting factors there at all? Are we maxed out at full capacity with staffing to process relatively set number of permits in any given twelve month cycle, or is that 7% anticipated on just the the number of permits that actually make it to the counter? Is there any limiting factors that are, keeping those permitting fees down? Could we process more and increase that number? I'm just trying to understand how our revenue works.

We have our development services director, Carrie Tye, participating via Zoom. We do get projected permit revenue increases from the development services department. Some of those projections are based on anticipated projects that are in the queue that we know might be pulling building permits or breaking ground in the next fiscal year. So, some of the information is based on that. We certainly aren't limited to the finite capacity of staff. We do have outside consultants to help us with plan check and plan review, but I want to turn it over to Director Tai for some additional context and information.

Thank you, City Manager Gayardo Dailey. Good evening, Mayor and members of the City Council. Yes, to elaborate a little bit on the process that the Development Services team uses in concert with the budget team to forecast next year's revenues, We do use a series of different factors to anticipate what next year's volumes look like. In part, use general trajectory for what our current year volume is, and we project that into next year, but we also look at the types of larger projects that have been approved. If the council is aware, the Planning Commission and city staff have been very active in approving many different housing projects through entitlements, which we anticipate will come forward into the permitting realm in the next fiscal year.

And that's why we're tracking a 7% increase because we're taking into account all the activity we've seen come through Planning Commission and also staff level for entitlements. There usually is a lag time about six to nine months between the time that entitlements are approved and the construction drawings are developed by the applicants before they submit. And so, we use that timeline to forecast that. So, hopefully, that gives you a little bit of a preview as to some of the factors we use. Thank you.

If

we could compact that timeline from six to nine months to get through plan check to get from permit certificate of occupancy, would that increase the fee revenue?

Yeah. And to clarify, the six to nine months is what we see as the from the private developer team. So their structural engineers, their architects, their designers, that's the time we observe that they take between the time we give them their approvals and the time they submit plans. And, unfortunately, the city, you know, is in control of the private development side. That's just our observation of the turnaround time it takes.

And then, once they come into us, we do have set turnaround times for plan review on an internal formula. And then, when those plans go back out, again, it's out of our control as to when they resubmit. We can control our timelines, but unfortunately, I think saturation in workload factor on the private development side that we've heard about as well.

Okay. And that was kind of that closeout right there was kind of the point I was getting to, but appreciate your comment.

Why don't you proceed?

Thank you, Mr. Mayor. Just go back to that slide. Just wanted to make a general comment as well on the revenue because as I said earlier, revenue kind of puts out the limit here for our budget. And if you look at all the revenue categories that we have outlined here in the bullet points as Mark went through them, Sales tax is our biggest revenue for the city, followed by property tax.

And those two, we spend a lot of time really going through and vetting it with our consultants in order to arrive at these numbers. I just want to just emphasize that. And TOT as well, those are we go through a lot of process to look at our historical numbers, the current economic climate, and what the consultants are telling us in terms of projections for next year. Do

we talk to Travel Costa Mesa?

To Travel Costa Mesa, and I'm there are meetings with Travel Costa as well.

Yeah, we should.

Do. We do. Yeah. With Paulette from Travel Customers.

Good, thank you.

So all the bases are covered there, and the last discussion here in terms of fees and charges kind of informs with all the departments, Finance relates with all the departments to make sure that whatever we are projecting in terms of fees here are based on some solid analysis and reality. We don't want to project revenues that at the end of the year we say, uh-oh, we didn't make it. If anything, we want to be pleasantly surprised on the other side. But just want to emphasize that revenue is the starting point of the budget development. And next slide, just a pictorial view of it, the same information that we just shared with you in the chart.

I'm going to pause here and invite back the economic and development services department director to talk about this slide concerning the name change of the department. Is she there?

Yes, thank you. Yes, good evening again, mayor and members of the city council. Yes, to elaborate on the proposed name change for the economic and development services department into community development. There's two general reasons, one's more primary than the other. So, I'll start with the first.

As the City Council knows, one of the city's strategic initiatives couple of years is to focus on increasing and providing housing opportunities for all. And that's been demonstrated in the department's progress in the neighborhoods where we all belong effort, which was the implementation phase of Measure K and also Fairview Development Center, and the Housing Element adoption and certification process. That collectively will essentially increase the city's housing stock by about 50%. That is the most substantial growth period anticipated. And so, in reflection of that, and to balance a very substantial growth time, and to balance the needs of the existing community as we balance existing residents, existing businesses, and how we maintain their quality of life in the face of the substantial development phase.

We thought the name Community Development was a much more broader facing and broader sounding set of services that actually reflects what we provide in managing all of the privately owned land in the whole entire city. And I call it from cradle to grave. So, we go all the way from policy planning to plant, to the actual plan review, to building permits, to inspecting safety, and then code enforcement, which is our community improvement division, manages the balance of quality of life through neighborhoods. It's really a cradle to grave approach of maintaining quality of life in the community, balancing the substantial growth period. And so, the name Community Development better encompasses the complete suite of services that we provide.

The second reason is that we do business with people from many different cities, and the name Community Development is more commonly found that provides our suite of services, and so that way our customers coming to Costa Mesa who might be new here will just know that the Planning Department, the Building Department, the Code Enforcement Division, the Housing Division is all found out of Community Development. It's a more common department name. So, are the two reasons. I was very high level, but I'm happy to answer any questions that anybody has. Thanks.

So did you just say that that's a common label or term in other cities for what we do in your department?

Yes, mayor. Absolutely. The name community development is the most common department name for the suite of services that the Economic and Development Services Department currently provides.

Okay. All right. Well, I mean, the only thing that may and so is this being presented to us, or are you asking for our opinion on the name?

Oh, thank you. We are presenting the proposed name change as part of the budget process.

Got it. The the only I mean, listen. I'm not gonna make a big deal about it, but it seemed a little bit confusing because we've got Parks, Arts, and Community Services, and we've got Community Development. I thought that there might be some confusion between those two departments. I mean, we can get used to anything, I'm sure. But I just thought that that might create some confusion. But I had some other ideas, but I'm not going to share them at this time. Go ahead. You had a

Yeah. Mean, again, I like the idea of the meaning behind it, but if I were a community member who needed something for a business, I wouldn't know to go here first. That's kind of my fear with the name change. It's not intuitive enough for me to figure out, oh, if I'm a business owner, this is where I go to get a business permit, or if I'm a developer, this is where I go to get my projects checked. So that's the only thing I would worry about.

Yeah, anyway, maybe we'll talk about it in our comments. Okay.

All right.

And then we'll move on to some specific departments within the general fund and I'll have Mark, our budget manager, go through the departments and just want to point out that we also have the police chief and fire chief here as we go through the department, if they want to chime in or you have any specific questions for them. Go ahead, Moi.

Sure. So this pie represents the general fund full budget and the city's commitment to ensuring and strengthening the public's safety and improving quality of life and as demonstrated on this pie, 35% of the budget is allocated to the police department, 20% is dedicated to the fire and rescue department, so together those two public safety departments represents 55% of city's budget. You also have public works, which is another big department, which maintains all of the city's utilities, as well as the streets and the buildings and infrastructure, followed by information technology, which manages and maintains the city's information technology needs. Development services as Director Tai represents about almost $11,000,000 of the budget, followed by city managers department 5% of the budget at 10,400,000. Underneath, you'll see a big chunk for non departmental.

Non departmental is where we have all of our transfer outs into the CAN and IT, as well as our principal payments and all of our subsidies that we provide to homeless, and so that's why you see a bigger chunk there. So going to the police department, police department there's 142 sworn positions within the police department. Police department is fully staffed in the sworn classifications. Within the police department's budget for next year, we're reallocating a public dispatcher to a public safety dispatch supervisor in order to meet operational needs, as well as the elimination of the park ranger as Kasima aforementioned a few slides earlier. The police department also has $700,000 for new and replacement vehicles, that's just within the life cycle of the vehicles that are phased out and replaced as they meet their life expectancy.

For the fire and rescue department, there are 86 sworn positions within the fire and rescue department. Recruitment is currently underway for eight firefighters, so fire is also in the efforts of pursuing full staffing. Other annualized enhancements include the reallocation of a emergency medical services coordinator to a fire battalion chief, and about 100,000 dedicated to a new vehicle. And this point

Sorry sorry to interject, and I didn't want to ruin your flow when you went to the fire department. I want to talk a little bit about the police department, because one of the things that I've been talking with chief about was kind of like the problem of having a lot of officers that were fully staffed on the city coast of Mesa, which is a good thing. We want to have a fully funded police department. But even with fully funded staff, we still sometimes have to use overtime. And I know that's been historically something that we don't always account for, because historically we've used vacant positions as a way to find those funds.

On this budget cycle, are we taking into account police overtime? Because it happens every year, I've been on council. And it's something that, even with Fluffman's fund of staff, we will see.

Thank you, council member. In this particular proposed budget, we are trying to, we have not fully right sized the overtime budget in either the police department or the fire department. What we are doing here is putting all of it in context, especially with our frozen positions, our attrition factor, and the vacant positions that we're going to manage through this whole cost containment measures, and we're saying basically in this proposed budget that this is a transition year. Don't know for sure, and we don't know for sure that the last two or three years over time levels is a true indication of what will happen next year or the following year relative to over time in those two departments, because they were really short staffed in those years, and I would assume that some over there may be some overtime overages attributable to that, but we don't have the data to support either way. So for this budget, we're basically saying within the context of all this managed cost containment, we're going to see where, you know, now that they are fully staffed and fire department is also pursuing fully staffing in this one positions.

We're going to now get a clear view at the end of the fiscal year, but it is critical as the city manager pointed out for you to have a very in-depth analysis media to see how these things are trending in order to make on time adjustments at that point if necessary. So, this budget doesn't fully allocate what you will see. If you take the average of three years of overtime and you're expecting to see it in allocated this year, it's not Because at this point, in my own professional opinion, you don't have the right, I can't rely on this, you know, we cannot rely on this data given, you know, changing set of circumstances.

Okay, no I appreciate the nuanced answer. I think for me just looking at the end of my tenure, I don't want to have a situation where people are able to point to overtime as a negative when it comes to PD and public safety. So I hear your point about using this year to really see what a fully staffed department would lead to in overtime, to then properly look at that in future budget projections, which is that no one's answer. Thank you.

Thank you.

Mr. So, as a follow-up to that, what can we do structurally to make sure we have the systems in place in order to track that level of nuance? I mean do we have a different charge code or fund bucket where we log what is overtime associated with training or overtime related to special events or overtime related to, you know, not not being able to get everything done you need to do during your shift and so you're sticking around for an extra couple of hours. Mean, how do we get more granular with that data?

I think currently maybe it can be tracked, but we're going through some systems changes that I think will enable the city to better track it, and I think the, we have the IT director here that we're implementing some enterprise resource system that I believe will help, you know, track it. However, you know, my point is still that perhaps, you know, we could track it with whatever tools you have right now, even if it's in Excel. Yeah. But the set of circumstances are different, and you need to track it, you know, going forward, you know.

Totally agree.

To really get a good indication of where you stand relative to overtime in all these departments.

My concern is that we were fully staffed and then at the end of the year we look back and overtime's dropped by, I don't know, 10%, right? And we're like, I don't know what happened. You know, the more we can start collecting that granularity of data now, I don't care, you're right. It could totally be in Excel and get updated every pay period. But, it does need to get tracked so that we have that level of information and we don't look you know in a year like no idea why it's still high.

Council Member Maher, that is one thing that we are going to make a concerted effort going forward to know what the expenditures are, that the departments know their budgets inside and out, and that we're tracking these things so that six months into the fiscal year we don't find out that we exceeded the amount that we were appropriated for the entire year. So we are going to do a better job and certainly the finance department is of tracking that and working with departments to look at the dollars and work within the ones that they were allocated. And if you know one of the things that we heard and you know this will probably get covered in the presentation or maybe through public comment, but some of the feedback that we received from the FIPAC group last week was you know are we adequately budgeting for things like utilities if we know that historically year over year they come in a higher amount? Are we adequately budgeting for overtime in the police department when we know year over year historically they've been tracking or trending at about the same amount? So I think that's where this midyear check-in with the council is going to be really important so that we let the council know how we're doing.

Do we need to make adjustments? Where can we find ways to make those adjustments? And you know, were those budget assumptions that were used to develop the twenty six-twenty seven budget correct, or do we need to make modifications?

I think it's a good question and a good comment too that we need to track it more carefully. Because I think Mike said this last time, and I've always said this too, that there should be an inverse relationship, right? The more staffing you have, the lower overhead you have. But that's really not true, because if you look at the and I think you guys did a pretty good job in it must have been the staff report that I read today, where you go through and you talk about the reasons for overtime, particularly I mean, overtime is largely in police and fire. So, you know, you mentioned our reimbursed overtime for wildfires, for fire.

You mentioned things like court appearances for PD. And you might say with the fully staffed police department, that might be a direct relationship. You have more court appearances. You have more sworn officers, more arrests, more cases go to court, more court appearances, therefore more overtime. So that's a little bit of an anomaly, I guess.

But as I looked at those, I thought some of them you would expect overtime to go down as staffing goes up. Some of them you would expect there to be no change, and, like, you can't predict wildfires. You know? And so, in other words, I do think that this both of these things are good ideas, tracking it in terms of category and also checking back in on a frequent basis. I mean, you know, from the staff's perspective, it could be, you know, once a month or whatever.

And maybe the council, what, a couple times a year or something. But nevertheless, you know, it's a little bit of elusive, because within those buckets, they're not necessarily you can't predict them. You know, you could do your best. You can come up with some range for planning purposes, but you can't always predict them. But I think the exercise is good, and I think getting some accuracy in this number is good because we've just kind of been moving over a year over a year, just budgeting and going over budget, budgeting and going over budget.

And that's it would be better if we could be make an effort to be more precise on that. Okay, so sorry. Broke your flow, I won't say that later. Go on.

All right, thank you. Next slide. All right, just to finish off the general fund. What we're proposing to you is a structurally balanced budget. Basically, setting our budget within the revenue limitations that we have for the fiscal year.

And for general fund, 55% of the resources is committed to public safety. As Kasimar pointed out earlier, we are reallocating three positions while reducing one FTE position within the budget. And this budget also includes, you know, 2,000,000 appropriation for the year over year increase in our unfunded actual liability for CalPERS. And we are implementing, as I've mentioned several times, a 2% attrition factor across all departments, you know, a deviation from the specific department attributions that we did in the past. And we are allocating a total of $6,700,000 to the CAN inclusive of the $600,000 of scheduled repayment from previously deferred transfers.

The same thing we're doing the full allocation to the information technology needs fund. Again, it includes about 100,000 of the deferred repayment. So basically the theme here for the budget, measure decisions, meaningful impact, the goal is Sorry to achieve

to cut you off. You skipped slide 32 there.

Oh, which one?

The the pie chart. I just had I'm not gonna I'm not gonna drill drill you too much on this. Although, I do have a question.

Okay.

Just on the this is probably Roger's category maybe. On on the proposed budget, by category, 34 mill looks looks good, makes sense. I just had a question on the transportation piece, and I'm glad it was broke out in the streets and transportation, but I'm going ask just a general philosophical question. I think that's what this is. But are transportation projects primarily are they primarily improving traffic flow and roadway efficiency?

Are they intended to shift behavior away from driving? And before you, answer that or how I think you might answer it, is what measurable congestion reduction has resulted from previous active transportation investments? And the last part I'm gonna add to that, I'd like this information if we can at some point, would be can staff provide before and after traffic's performance metrics from completed bike and pedestrian projects? That would be a future ask. But I was just I don't know. That's a lot, Raja, there. But you see what I'm getting at?

Yes, council member. So, I'll try to answer, and some of them might require a separate memo from us on the benefits of different projects that we implemented. So, the projects mostly, I would not say bike and pedestrian, I would say complete street projects. So, that's the requirement of it's been going on for many, many years that when we design projects, we make the projects as complete streets, which means it's accessible to all modes of transportation. And, that includes cars, buses, bikes, pedestrians, everyone.

So, the big chunk that you're seeing that number is high because we get a lot of grant funds to cover projects like that. So, for example, the biggest one that you see there is $2,700,000 for Adams Avenue bike facility project. That's been in the works for a few years now, and we got grant funding from the federal government to

Responsible for ongoing maintenance on that, Raj?

It's to implement this Adams Avenue project and then it will be city's maintenance once we implement the project. But, you know, most of our transportation projects are funded mainly by other funds than general funds. We we get gas tax, we can measure them, you know, funds, as well as grant funds to cover a lot of our projects. Now, with respect to the benefits of these projects, we definitely see an increase in bicycling activity, whether it's students bicycling or whether it's adults going on short trips or commuters that go on longer trips. So, we are seeing an increase in activity, that's evidenced by different counts that even OCTA does counts of bike activity in our city, and other cities too.

And, we make sure that when we do projects, we take into account the regular car traffic too, and make sure that they are not impacted. And, we do measure that also on an almost annual basis. We look at all the major intersections and see how we are doing.

Can you get me before and after on these projects, I mean, would that be a big ask? I mean, it's not not a criticism. I admittedly was I understand the grant funding piece, and I knew that would be part of the answer, but I guess I was using it as an opportunity to make a philosophical statement as well, but I I do want to I just don't think that we talk about traffic congestion enough in the city. Active transpo gets a lot of press, which I understand. I'm not I'm not I I know that's an important piece to a lot of people in the city, but so is driving. So, I wanna make sure that we're capturing all of it. So, the before and after on the traffic performance would be good for me and a lot of my folks in my district to know after these projects are completed. So, you, Raj. Appreciate it.

Yes, compliments. We'll do that.

When you're doing that, too, make sure to include crashes.

Of course. Right?

Yeah. Because one of the I mean, one of the primary purposes of this stuff is to slow everybody down, and so we have fewer crashes. And if there is a crash, the injuries are not as great. It's all part of the context.

Mr. May, just one small correction, sorry. Yeah. Male I wouldn't call it slow everybody down. I think follow the speed limit is more appropriate for me to say that we make sure that there is no speeding.

Male Well, know, but we've reduced speed limits. That's what I'm getting at.

Male Over time, yes. Yes, we did. Male I mean, in fact,

yeah, like 17 places we've reduced speed limit.

Yes, yes. Again, according to the state law, yeah, we followed that.

Yeah. I mean, I'd like I remember, like, all the medians, they slow people down. They slow people down, Right?

Thank you. Again, just pointing out that, you know, the theme measure decisions, meaningful impact, and achieving long term fiscal system abilities is one of the underlying goals of the budget and the city. And the next slide here sort of captures this is the city reserves. And just going through it, the last column there, basically, where as you saw, the general fund budget is basically just fitted within the estimated revenues. So we're not projecting any surplus right now that can go into reserve.

But the reserves, as it stands, is still as robust as possible under the circumstances, and it has a reservation for a lot of stuff that enables the city to maintain the good financial standing that the city has and the credit rating that the city has. So, the last slide there would basically repeating.

Sorry. Can I ask a question about this?

Yes. Sure.

Okay. So '21 shows that as of 06/30/2025, reserves totaled $61,000,000 So, that matches. Then, if we go to '32, General Fund 101, fund balance 07/01/2026 goes down to 57,000,000.

'32? Sorry. What page are you on? Two.

The very top row, right, that general fund one zero one. Should that match the '61?

Yeah, that should be marching '61. So, we'll take a look at that.

Okay. Yeah, thank you. Honestly, of the reason I asked is to make sure I understood it.

Yeah, yeah, appreciate that. Thank you for that.

Yeah, no problem. Thank

you. Yeah.

Okay.

Okay. And just again, in conclusion, we have this a balanced structurally balanced budget. We're not digging into the reserves as presently proposed, and we're fully funding all the advanced required transfers to the infrastructure and IT replacement funds. And with that, you know, the next slide basically is our budget calendar. The goal is to have the adopted budget on the first meeting in June on June 2.

We are also going back to Fire Park tomorrow evening. We presented the budget to them last week, and tomorrow Fire Park would have more deliberation on the budget and perhaps develop some recommendations for council, leading up to the proposed adoption date. And we've also penciled in, as I said before, the second meeting in June 16 in case the council requires more time to look into the budget and was not able to adopt it on the second. And with that, you take questions.

Yes, Lauren.

So you had said you're going to give five pack an opportunity to make a presentation to counsel. Is that correct?

We're

going to fight back tomorrow so that FIPAC can provide a recommendation on the budget to council.

Okay, so they'll be making a presentation prior, is that correct, to the meeting beginning on the second, or when will this presentation happen that it's going to be given to council?

We'll incorporate VIPAC's recommendation in the budget staff report that would come to council on June 2. We don't anticipate FIPAC coming to council on between now and then and making a presentation to council. We will be at FYPAC tomorrow. We made a presentation to them last week, received some initial feedback, and then tomorrow we'll go back to FYPAC for more deliberation and hopefully a recommendation to counsel on the budget.

Okay, I'd like to request that if FIPAC wants to make a presentation to counsel that they be given that opportunity to do so because if they have something to say, I'd love to hear it.

Can I ask a quick question?

Yes, of course. Yeah. This is time for council questions. Yes.

Yeah. And I I second that. I always like more information, as you say, and and at a minimum, incorporate a slide of what their concrete recommendations or thoughts were. But I'd like to if they're up for it, physically hear from them. Yeah. Just there was just one question. Slide 14, you guys referenced lease revenue bond payments of 2,800,000. Is that a preexisting bond that that maybe predated me, or is that did I understand that's a bond that's been comp contemplated?

Yes. That's a preexisting bond.

And what was the purpose of that bond? What's it allocated? What were those funds allocated for?

Okay.

Because, beauty, it's for the Lions Park projects, which includes the library Okay. The committee center, yeah.

Okay. Yeah, that predated me, that makes sense. I just wanted to see. Thanks.

Go ahead, Andrea.

May I just select the number of post its on my desk and his eyes got a little big. I promise I'll go fast. Capital improvement fund looking at page 32. So we said 6.1 ish, so it's got a fund balance already 3.5. So that's just to clarify.

That's money that we've set aside for previous capital improvement projects that are continuing through twenty six-twenty seven and we're spending down that 3.5 that's already in that fund now. We're allocating an additional 6.1 that we talked about. There's also another 600 ks in there that I'm not sure where that comes from, but there's another 600 ks to get us to $6,700,000 And then operating expenditures in twenty six-twenty seven one point one two eight, so that's how much of that 6.1 we actually think we can spend in 2627? Seems like we'd be able to spend a lot more than that.

The operating expenditures, I'm thinking it's for the staffing expenses for this capital improvement projects.

Okay. In addition to what we're spending on are we counting yeah, are we counting that all as revenues if they're being spent on capital improvement projects? Somebody help me understand. I would expect the number in the third column proposed operating expenditures to be the amount that we expected actually expending on capital improvements in this fiscal year plus that salary amount. Page 32, Roger. Page 32.

The the total amount for capital for expenditure is gonna vary year to year.

Yeah, I get that. That's why there's 3 and a half million sitting there right now. But the idea that we'd only we're allocating 6.1 of it, we're only spending 1.1 of it and that may or may not include any of the salaries. Seems something's not matching there in my head.

$6,100,000 is for the projects that are for all the CIP that's listed further back. So, that's a $6,100,000

Yep, and then we've got another 600 ks to go in estimated revenues, but only 1.1 in expenditures.

So, on top of the 6.1, will have about $1,100,000 on top of the 6.1 towards that goes towards salaries and benefits of the staff that will be working on these and previous CIP projects.

Okay. I think we're missing some money from the proposed operating expenditures, but I'll let staff get back to me on that and not belabor this right now. Okay, page 41, paramedic fee advanced. I'm guessing that's something to do with our ambulance program. This is sources of funds. Sorry for those not following in the budget book here. About a 4% increase taking us to 8.2 in this proposed budget. The fire chief is nodding vigorously in the back. So yes, that is our ambulance program. Do we want to rename that?

Paramedic fee is a little generic. Okay. I am a little surprised that we're seeing we're projecting TOT going up so much. I know we think that those with means will continue traveling, but a lot of this is also business travel that we benefit from. And I don't know about you, but everybody is tightening their belts right now. I don't want us to be too optimistic about TOT, especially if we don't end up with anything on the ballot. Do we have a plan to mitigate that risk? What are the leading indicators? I don't want to wait till mid year to decide that's a million bucks we're not going to get. Thoughts?

Well, for TOT, I mean, we're looking at, you know, we've done, you know, through the end of the fiscal year, as well as some of the economic analysis from our consultants, you know, for sales tax and, you know, the travels to customers for sales tax. When they do come to customers for sales tax, stay in the hotel. I mean, for sales purchases, you know, some of our very high end stores. So they took all of that into account, and that's really a middle of the road sort of projection there.

Seven and a half percent is middle of the road?

That's what we're seeing.

Like double CPI, I don't know. That just seems like So, a

you know, we, you know, that's why I think it's critical, you know, to come back immediate to see how these things are trending. You know, if the concern persists, you know, with, you know, the tension in The Middle East and gas prices and fuel, jet fuel, and that kind of stuff with increases in plane tickets, Maybe we need to revisit that, but as of now that's what the outlook is.

How often do we get a report from Travel Costa Mesa or any other source updating us on that? Like will there be a leading indicator? Will we know if summer I'm thinking summer travel. Right? If summer travel doesn't happen, then we should know about this pretty darn quick.

Right. And I think the city has regular meetings with travel customer. And I don't know how monthly or bimonthly, I'm not sure. You want to answer that?

So we do have periodic meetings with Travel Costa Mesa. Travel Costa Mesa does update us. There are, you know, updating indicators from Travel Costa Mesa on not only travel patterns, but conferences that are scheduled as well, and as well as different kind of activity that happens around hotels.

All right, I guess I'll be more explicit. I mean, we bring back a report in September that just indicates where the trend is right now on on TOT specifically?

Hi, yes, Councilmember Marr. I would also like to remind the council that in upcoming meeting we will have the BIA reauthorization and we will have a presentation from Paulette from Travel Costa Mesa that will also be able to provide further information on what their projections are regarding TOT.

Okay. Yeah. I just want to make sure we stay on top of it so we can make adjustments as needed.

Absolutely. And, we'll continue to monitor that so that if we do need to come back to council and make adjustments, we'll do that.

Okay, thank you. Okay, I'm on a page 61. So we're just looking at like general general fund expenses. Electricity and street lights have been 1,200,000 for the last couple of years. We're only budgeting 1,000,000.

Gas has been $60.70 ks. We're only budgeting $45,000 Legal expenses have been or excuse me, legal advertising's been $3.11, we're only budgeting $2.43, like are we, how realistic are these estimates? Because it feels like we've sort of maybe sandbagged them a little bit. That is a question. Why do we think that street lights are going from 1,200,000 to suddenly getting cheaper when we know electricity prices are going up?

Well, I mean it goes back to my earlier statement that this is all a managed cost containment approach within this budget to make sure that we stay within revenue limitations here in the annual budget. As we save from other areas, know, whether it's the frozen positions or the vacancies, some of it, you know, we'll see how this trends at mid year, and we may come back to you and say we need to reallocate some monies to fund these things based on the trend that we're seeing. But right now, you know, we're just basically allocating the amount we're allocating here just to fit in within the revenue limitations and put in these cost containment measures around it to make sure that not only we are achieving our attrition factor, that we're saving enough in some areas where we can really save on and have that flexibility to address some of these areas over time, utilities, part time and other areas and update you middle of the year. We may see revenues get more than we are projecting right now or less. All of that we have to come back and update council regularly.

This is a transition budget, know, to put it in another way. And you know, given our revenue limitations and the environment, we need to fit the budget within that.

Yeah, okay. Yeah. Yeah, I hear what you're saying. Are we thinking the same thing on legal fees? We went from 2,000,000 in 2023 to upwards of 2.8 in the adopted '25 budget, down at 1.8 this year. Seems like that's another one that we can never oh sorry, 62. Were there two sixty? No, 62, yeah.

Yeah, legal fluctuates. It depends on the issues that you're dealing with in any particular year. Yeah. You know,

Landscaping and sprinklers down by half $1,000,000. Again, I think that's the same thing as utilities. We're going to figure it out later. Okay.

For landscaping.

Some of the landscaping and sprinklers, we will be using gas tax to fund some of them, especially if they're in the public right of way areas, realigned it in that manner.

Okay. Just

page two twenty, the non departmental, I found that write up a little confusing. This cost center accounts for debt service requirements related to the city's outstanding bonds, but then the rest of the paragraph is I think actually refers to several loans that we have for fire apparatus. And then we also included some contingency funds and some legal funds. It's really this cost center is really not just about this outstanding bonds, it's about a bunch of other stuff. So when we finalize we might want to just read structure that write up to make it make a little bit more sense. And then what are the salaries and wages that live in non departmental?

I don't

think we used to have any there and now we've got $3,000,000 there. Again, I thought this was mostly bond and a transfer in transfer out fund, I was surprised to see salaries.

So that's a question council member, that's a great question actually. So those are the amounts that are set aside for the anticipated MOU bargaining agreements that we're

Oh, currently

that's where we put it. Okay, thank you. That's very helpful. Yeah, and then more legal costs that live in non departmental. I mean, guess that's sort of how it works. We distribute legal costs out across the various departments. So I don't if that's just legal associated with the housing authority or why non departmental would get its own or if you just if it's a bucket for contingency and that's where you put it, kinda. Sorry 222 for those following along at home. It's fine, you don't have to answer that. All right, I think that's all I have, Mr.

Maria. Thank you.

Okay. So, I just want to pick up on what Andrea was just talking about. I think it's, you know, I've been talking a little about the budget lately, and it's like, what I one thing I've developed is this little saying is, I'm not interested in a conservative budget. I'm not interested in an aggressive budget. I just want an accurate budget.

Okay? And so when Andrea brings up these points where the like the electricity, that's a pretty material amount. I did some calculations, and it shows that the electricity in some of these areas and you don't even need to look at it. She went over it. It was like 80% of what it was last year.

And that I mean, I have no reason to believe it's not going to be 80%, or it's going to be 100, or 120%. But I know that the directors, at the request and direction of the city manager, went through a very deliberate process of reducing their budgets in areas other than, you know, FTEs, right? Human except for the frozen, right? So it would be really interesting to me, as the budget moves forward, when we see something like that, if we could just have a few sentences justification, right? How is it that

we're

spending maybe an easier one is with legal, you know? We do have I mean, I could probably write that off the top of my head. Kim certainly could. But, it's like where we see material reductions because I don't want it to be like, you know, then next year it's like, oh, well, you know, now we're overspending. Well, are we really overspending, or did we under budget?

Right? So, if we could go through and drill down just on the material stuff, right? I mean, if it's not a big number, it's not worth your time. But on something like some of the things that Andrea identified were, I think, worthy of some careful study and explanation the next time around. Question I had is so Mark, I remember, and I was just like, hey, you just got me in so much anticipation and excitement.

You said I think the words you used is, the budget's going to be an eye opener. Remember you said that? An eye opener. Okay. So what about this budget? Because do you think it's the most eye opening aspect of it this year compared to a prior year prior year's practice?

So the difference with this year versus prior year practice is prior year practice had been trying to reconcile things at the end of the year, okay? And so what we're trying to do here is try to fulfill the mayor and the council's wishes is to have it rightsized on the front end. And so this $200,000,000 is as representative as possible within the revenue constraints that we have, and so this is a $13,500,000 growth from last year's adopted budget. And so that statement reflects back to last year's adopted budget, in that this budget is the right sizing or the efforts into going to the right direction and being as transparent as possible what the cost, and so we're making those concerted efforts to reflect that.

Okay. I understand that. All right. So, if there's no other questions, let's go to the public and hear what the public has to say. Everybody can take three minutes if you wish. And by the way, if you guys come up with other questions you want to ask, you're not foreclosed counsel. Anybody from the public? Chair Ochoa.

Okay. You

have the floor.

Okay, thank you mayor. Good evening, thank you mayor, mayor pro town, council members, staff, and community. I'm Alicia Cho, chair of the Arts Commission. Just thinking about our presentation last week, and I appreciate the comments made by the city manager, as well as all of you. And as chair, I feel responsibility to be here tonight, specifically to highlight two concerns in the fiscal year twenty six-twenty seven proposal.

First, page 127, the narrative describing how arts programs are funded through Measure Q. That has not been updated to reflect council's comments, and I'm not sure if waiting until a new master plan would be appropriate. Second page 124 which was mentioned earlier in this evening's conversation, only $30,000 has been allocated for our one dedicated art staff signaling either delays in recruitment or possibly eliminating that role entirely. It doesn't sound like that's the intention, but it does signal some kind of alarms. A friendly reminder that we're not asking for increased funding, only reallocation.

Our one art specialist, she runs our arts grant process, supports Tessa applications for private property owners, connects community members to resources, and keeps our programs alive. Without them, all this art stuff in Costa Mesa just is effectively on hold. So what does that say about the city of the arts if we have we can't even invest in one essential arts position? The Commission kindly asks that you fully fund this position with immediate recruitment. I know that aligns with our guiding principles in this finance proposal, so recruiting and retaining qualified staff.

So just wanted to just give my two cents about that. And I guess I also wanted to address an individual named Craig, the young person who called in during public comment last week. He said that the schools don't have enough counselors and they're right. The demand is not being met. While art cannot fix sadness or hopelessness, it can reflect our humanity back to us.

It connects us to meaning. It connects us to community, to each other. The things that make our wild, crazy, heartbreaking, beautiful life worth living. And our grantees have provided art therapy and mental mental health awareness workshops, something we'd

like to

continue with having a fully funded art specialist individual in our in our commission. Because our youth deserve it, our city deserves it, and thank you again.

Yes, Ralph. Good evening, Mayor and Council. Just for the record, I'm speaking for myself and not for FIPAC. Chartered, I want to thank staff. It's a lot of work to put together an annual budget, and especially with the situation they inherited, it's especially challenging. I think we're beginning a good working relationship with staff and the FIPAC committee and that's all positive. I have two concerns. Next chart please. Two concerns. I have multiple concerns but two I want to mention because we got limited time.

I especially appreciate the questioning by Councilwoman Marr. We don't spend enough time in my opinion talking about expenditures. Appreciate the presentation, but it was lacking on expenditures. The staff is recommending or proposed reducing MNO, maintenance and operation expenditures by 5%. That's $2,000,000. Really didn't talk about where's that $2,000,000 coming from. So the city manager mentioned utilities and overtime. Here's utilities. Pictures worth a thousand words. The orange line is the budget, hasn't changed much in six years.

The blue line are the expenditures. To nobody's surprise, utility costs are increasing. About an $800,000 over budget in the prior year. The current year, I don't want to forecast for staff. I don't know what it's going to be, but I'm sure it'll be right around $800,000 or a little bit more. So my question is why are we budgeting only 3.1? I understand the transition year philosophy, but electricity rates are not waiting for transition years. They are what they are. So that's that's a concern. Next chart, my favorite, overtime.

The orange line, overtime over the last fifteen years or so, twelve, thirteen years, overtime the budget basically hasn't moved much at all. In that's $4,000,004.08, $4.08, 5,000,000, that's the 2,000,000 that was increased, but if you have a 4 to $5,000,000 spending more than your budget on overtime, 200 ks is not really addressing the problem. So that's a huge problem. There are now I agree with you, 90% of that is police and fire, but it's not a question what they're I think they're overspending, we really don't know. They haven't been overtime hasn't been budgeted properly in fifteen years.

And it has to address it. Now there are labor codes in the payroll system or the labor system to address overtime. It tells the reason for the overtime. I'm not sure if that's being utilized, but certainly reports can be, I would think, hopefully be generated. And I would advocate for a quarterly review of how the how the overtime is being spent and what that dollar amount is, because you don't want to get surprised next February or March saying that you're over spending overtime. It should be, first of all, should be budgeted.

Sorry Ralph. Flo, Flo, you have the floor.

Thank you. Thank you, Mayor Stevens, for your comment concerning how public works infrastructure projects reduce crashes. I get the statistics every month from PD about crashes involving drivers and pedestrians and cyclists, and indeed, with all the wonderful new projects, those statistics are showing some great improvement. I am concerned about the park ranger being reduced by one. I walked recently in Fairview Park.

I saw no park rangers. This week there yesterday there was a big fire on the East Side of Fairview Park. My friend, Teri Fouquet, took pictures of it, which I have posted on social media. She is there every day walking her dog. She never sees a park ranger.

We need more park rangers at Fairview Park. Two weeks ago, there were three fires in Fairview Park caused by some pyromaniac. Yesterday's fire was caused according to Fire Department by some kids. So Park Ranger going from seven down to six, I don't think is a good idea. We need more Park Rangers at Fairview Park. Thank you.

Thank you, Flo. Yes, Charlene.

Let's have a little fun here. Lighten up this evening. Our city's not just bike lanes and cannabis shops. There are bold, bright murals and many a utility box. Now, know budgets are built on a practical view, but a city without the arts is just passing through.

So make space for music and creative dance. Give culture a seat, not a shrug or a glance. Fund the specialist, the art specialist with your pen, keep the arts thriving again and again. With arts in our parks, where we all can play, with songs in our hearts, let's do this today. Okay, now, here's the thing.

I've been volunteering for arts in this community for twenty four years, and I know it's hard to believe I'm not that old. However, that said, for me, art is woven into everything we see and do in this city. So to address your very important question, councilmember Pettis, what would we do if we didn't have a specialist? I think it would be incumbent to really have some information brought forward by our parks director Mr. Gruner to make sure you understand the amount of work that person does.

When council member Mar and I served for many years on the cultural arts committee, we were made up of 11 members and at least four or five subcommittees we served on. In addition to that, it was one half staff. So many of the things that we tried to put into place are now gone. Action arts in the parks. But some of the things really took hold and were really pushed forward with the art specialist and the commission.

Think about ArtVenture. We started out in a one little shop in SoCo with about 25 pieces of art. An ArtVenture has now become state of the art for the entire county and beyond with more than two fifteen pieces juried into that. I don't know if anyone else is going to be able to volunteer to curate that and to keep that going. We went from allocating 3 or $4,500 grants to where we are today with seeing more than $55,000 in grant applications for our arts grants program, and we were only allowed, we could only give up to $12,000 but we went from 500 to $12,000 so I really hope that you know that if you fully

Thanks, thanks.

Cynthia.

Good evening, Cynthia McDonald. From a citizens perspective, I appreciate that this budget prioritizes efficiency, it reduces reliance on our reserves, and maintains a balanced approach to operating costs. Those are important goals. However, the overall budget has still grown by 9% compared to last year. And while some expenses like the CAN obligation and the IT replacement are necessary, we still need to ask whether we're truly allocating resources where they're needed.

Public safety, always been top concern for this community. The budget reflects that with an 11.6 increase in police funding. But within that increase is the decision that raises the concern, the reduction of the park ranger position. The decision highlights a larger issue. The park ranger was assigned to Harper Park to address concerns on the East Side.

And by many accounts, that presence has improved behavior and compliance. Yet now that progress has been made, the position is being eliminated rather than being assigned, while there is still this long standing need on the West Side that remains unaddressed. If you attended the Fairview Park Steering Committee meetings or reviewed its March report to you, the City Council, you would have heard years of complaints about unsafe and disruptive activity in Fairview Park. The committee specifically requested a full time dedicated park ranger. Recent incidents underscore the urgency.

The multiple fires in the park, you know, the past weekend and in prior weeks. Reports of verbal harassment. Concerns for women who do not feel safe walking there. Vandalism to the OCME train facilities. Drug use. Ongoing inappropriate activity throughout the park. Prevention matters, and prevention requires presence. It can't fall upon individual residents to address these issues, especially when behavior is escalating and enforcement is so obviously needed. The solution is straightforward. Don't eliminate the park ranger position.

Reassign it. Prioritize Fairview Park. The need has been clearly identified for years. If the budget adjustments are needed, consider alternatives within the broader police allocation, such as deferring vehicle purchase. This is not about adding costs, it's about redirecting resources where they have the greatest import impact on the safety and quality of life of our residents, which is your first strategic goal. Thank you.

Thank you, Cynthia.

Rick.

Good evening. Rick Huffman. I'm very concerned about the assumptions in the upcoming budget about the sales tax revenue, and the sales tax revenue is 41% of our overall general fund revenue, and it's projected to increase another 10% up to adding a $7,500,000 to the projected budget revenue. And I think that's optimistic. I hope it maintains that increase, but with the way the general economy is looking, I I would be very careful about that.

So that's a that goes a long ways to covering the $13,000,000 increase for the whole general fund category, and the operating budget part the the part of the budget is is $9,000,000. The capital budget is 4 and a half million dollars. These are important things that could get disrupted by a drop off in retail sales, car sales in South Coast Plaza for instance. So carefully look at that please. Thank you.

Thanks Rick. Diane.

Good evening, Diane Russell. Art lover, consumer of art activities in the city. I'm very concerned about the way that you're dealing with the arts budget. That it sounds kind of like oh, we're not going to do it. We're not going to fund anything for nine months.

Whatever happens, happens. It will go the things that happen in the city happen because we have a we've had a dedicated art specialist that has been managing it, planning it, working with the Commission to make things happen. Does this with the way that you're writing the budget, does that mean that the art crawls are going to go away? Is ArtVenture going to be gone for the next two years? These kind of things don't just happen.

They need planning with dedicated staff. They need staff that can work with the Commission. They need staff that will work with their assistance to make these things happen. I want to make this short because nobody wants to hang around that long. But it's just to say oh, no problem, nothing we don't need to what you're doing is basically working to balance the budget on the back of the arts programs, and if we're going to be the city of the arts, then we need to get behind the arts and fund the programs and staff to make that happen. Thank you.

Anybody on

Zoom? Yes, Andrew please.

Andrew you have the floor.

Thank you very much, Mr. Mayor, City Council members, and staff. Really appreciate all of the work that's going into the budget. I know this is not as fun as it seems on Zoom. So a couple of things that I've noted just instant into the discussion today.

Firstly, 3.8% annualized inflation rate that just came out would suggest that, as Ralph pointed out, some of the O and M costs should be going up, not down. I think that at the end of the year, we're either going to see a reduction in services or a blown budget, and I think we can do better than that. With respect to active transportation and car congestion, while I appreciate the question, I think it needs to be distilled down to a more specific question, like where specifically do we have congestion in the city and then do we have active transportation programs that have been implemented and what is the impact on congestion? I do appreciate, Mayor, your request that crashes be involved in that analysis. And I would also add that we should probably have OCTA transit congestion metrics also added to that analysis.

I think some of the work our staff is doing, we are going to see increased on time buses, and I think that's a huge element of transportation. And then finally, nope, that's it. That was it. You very much.

Thanks, Andrew. Anybody else?

No, Mr. Mayor.

Okay, close public comment. Why don't we just, go down the row? Mike, you wanna start?

Why can't I start this time?

Gonna go okay. Okay. Go right to left. We'll go right

to left.

Over here.

Fair enough. Fair enough. Fair enough.

Thank you. Jeez.

Fair enough. Jeff. Jeff. And then we'll go. Right. I

love you guys. But, no, I do wanna speak though. Please, arts people. Arts is my favorite commission. I say it all the time, and my questions weren't related to canceling or trying to get rid of money.

We were actually all over it in terms of getting you guys funded. You've been woefully underfunded, so please know that that is a primary focus for a lot of us, and arts is a big deal, and it's going to be funded properly. I promise. Just on the just I asked all the questions I needed to ask, and I support reasonable investment in our city, and I believe that local government works best when it remains disciplined and focused. In uncertain economic times, our first obligation should be protecting core services and infrastructure before expanding operational commitments into into, I don't know, newer policy areas that may be difficult to sustain long term.

There wasn't enough detail that we talked about tonight, but I I suspect that that's been something that's occurred in the past, and I'm gonna keep an eye on it in the future. And I believe that's the role of local government is to stay focused to the needs of the city. So thank you very much.

Thanks, Jeff. Manuel?

Thank you, John. See, Jeff, you ruined my flow. I could've listened a bit more, but it's okay. You're right. The first I'll last. Last should be first. Staff, thank you for working on this budget. I really appreciate that it's balanced without reserves. It's a really good accomplishment. I just wanna say something I've said internally a lot. It's not lost on me that I'm terming out of city council. It's the beautiful thing of life that all things must come to an end. So anything that is difficult to do, I would really encourage staff to put it on this council. Let us be the ones that do the tough decisions. That's our job as stewards of Costa Mesa.

I really am happy that we're looking at ways to be more transparent about how we actually do budgeting and accounting. I really appreciated the nuance discussion we had on PD overtime, because again, as the mayor mentioned, PD overtime often means officers going to court to deal with situations that they had to address during their jobs. There's lot of examples like that, and I think as long as we're able to be in a good sound position, that's all we can do. We can't control the state of the world. Can't control state of the world.

We can't control who our president goes to war with. We can't control the effects of that in terms of sales tax, but what we can control, we should. And I'm really pleased with this approach. One thing I do encourage is as we do the hiring freezes, that there's jobs that we can do without having to fill the positions. We should do that.

It's not lost to me that most of our increases comes from employee costs, which is not a negative thing, it's a good thing. It's a very community, but it's a real thing. So if we can leverage technology in an appropriate way moving forward, so we have the same level of service if not better, we should. Actually where my questions came from when it came about having an assistant manager. I did not have experience in Costa Mesa apart from one year having two ACMs.

I'm in a city now where we have three, and people constantly have those questions. So I just think where we have a chance to save a buck, we should. Because at the of the day, people care about the basics. People want to know, is this an emergency and they call 911, that someone's going call from PD or fire to help alleviate their day. We know that folks want safe streets for their kids to walk to school safely, to bike to school safely.

And we know they want to see investment in their community with businesses thriving and businesses opening up. And I'll really end at that point is I know we're freezing a lot of positions in the to be named potentially community development department, but I think that's an area where we should be focusing more in on. People come to council members with complaints. It's not often you get a thank you in this job, it's fine. We adjust problems for the communities we're here for.

And I really want to see this from a place where businesses can move quickly in the process, not get bogged down by bureaucracy or by nitpicks, because every business we don't open up is sales tax we don't have. During difficult times like this, every dollar matters. So again, staff, really good job. I'm proud of the work we've done. I'm proud of the balanced budget. I'm proud of not using reserves. And I'm happy we're moving forward with trying to be more transparent and more accurate, as John says, with the budget.

Thanks Andrea.

Okay two asks, two follow ups and two ideas. One let's fund the arts position now. It's basically already funded in the budget the way it is very well. The position is accounted for in the budget but the funding is not there and I don't think that $100,000, $150,000 is gonna make or break us. I'm actually more concerned about the public works positions that we're not funding than I am the development services positions.

Some of those have been empty now for this will be the second year in a row that they've been frozen. And yes, some of the things that go through community development actually get held up in public works, because public work has to sign off on the traffic impact and the parking impact and other parts of development that I'll let you Raja decide, you know, which one you want to advocate for. But I just want to be clear that it's not like community development is the only place where you know permits and business licenses and other things or business expansions are getting held up. So those are my two asks. Two things for follow-up.

I would like to understand maximum bond amount and our thinking around how much of a bond we want to take out. And to the mayor's point, how much money we're setting aside in case that goes up. I mean, we do a $12,000,000 bond and we have $1,000,000 set aside, but the cost comes back at 16,000,000, What are we going to do? And so it'd be helpful for me to understand that in context as well. And then I would definitely like us to come up with a plan to be tracking the TOT impacts in real time.

And so yeah leave leave it to staff to figure out how to best do that. Okay and then two ideas. There was you know I get it we were trying to as everyone else said like get to a good place on this budget and I am impressed that we got there without dipping into reserves. But I also know we've had lots of conversations about the potential for private funding you know that skate park was an opportunity potentially to like get naming rights out there again like it used to be. There's you know there's plenty that we're doing.

I don't know, does Andrew will want to donate a playground equipment to Harper Park? It seems like there should be some opportunities for additional private funding to be supporting the city. But I just don't even know if we ask or we make the process clear to somebody who might want to go do something like that. The second question is rent versus own or lease versus own. I we've gotten to a place where we were leasing a lot of our fire apparatus if I recall or at least like on some kind of a a lease with ownership at the end model.

I don't know I'm probably getting that wrong, but conversely there's also a time when we spend so much money renting something we might as well have bought it. And so I just for all of, I mean there is a lot of equipment costs in here. There's a lot of vehicle costs in this budget. Or have we done that math for each of those individual circumstances and figured out what is the most fiscally prudent? Also recognizing it's a tough budget.

Maybe we do something this year that we wouldn't normally do and then you know fix it in subsequent years or have a plan in subsequent years. So that's it. I support the arts position. I'd like to make sure we're double checking public works and that we're not inadvertently cutting to the bone by not funding those positions for multiple years in a row. Bond Maximum, TOT, private funding, rent versus own. Thank you.

Lauren.

Okay, thank you Mr. Mayor John. So, you know, I had an opportunity to spend some time with staff after our last meeting and get a lot of questions answered, particularly from Kingsley and Mark, and they spend an awful lot of time explaining things, and one of the things that I learned is that a lot more goes into this than I thought, and I also realize the importance of our five pack committee and their function to this community and how they really do care and audit what is happening in this community. The five pack committee also explained a lot of things via just some questions that I had and defining some certain line items, so I want to thank the five pack committee, and I want to thank staff and Mark and Kingsley for putting together not only a really good presentation, but explaining a lot of the things that I was not very clear on. That was extremely helpful.

Some suggestions. You know, Fairview Park is kind of like the jewel of our city when it comes to parks. There's not a lot of places that have what we have in Fairview Park, not to mention at the little train station. Having some sort of allocated staff member in some capacity, whether it's a ranger or a security type of security or something like that, to provide some semblance of security at the park. Not only that, maybe even a ranger station.

I'm not sure where we could get funding for that or how that would look, but I think that's something we definitely should look into. We want to maintain safety at Fairview Park. I don't know how much a fire cost to put out, but I can guarantee you it's a lot more than putting a ranger and a ranger station in, so I'd love to see something like that. And I'm I'm gonna I'm gonna echo what I've already heard. We we definitely need to allocate funds, time, and personnel, to the arts.

Costa Mesa is a city of the arts. Let let's remember that. Costa Mesa is a city of the arts, and it's the arts that really does bring a lot of visitors in globally to visit Costa Mesa. If it wasn't for the Seegersom Center and what they bring to this community via arts, performing arts, we wouldn't be the city that we are. So, let's consider that as well. That's all I have, thank you.

Thanks, Lauren. Mike?

Yeah. I don't know how to do this second to last. I always get my stuff out of the way first. This has been a good process for me. Know, last year, we went through this the first time, and it it I don't know, maybe because I felt like I was just peddling to keep up last year, but this time, whether it's an accurate observation or not, I think this process has gone relatively smoothly, I staff's efforts, I appreciate them getting FIPAC involved and having our CIP presentation.

We had a lot of that back and forth before we got here tonight. We had the arts committee come down here to express their concerns, and just kudos to staff. I what I witnessed tonight is you guys are doing your best to incorporate all that in there. And so keep it up as we continue through the process. Yeah, and I guess the only kind of observation I'd add, I mean, comments by everybody, and I think there's plenty of asks that are already out there, but one of my observations, what I've heard, I've heard from a couple different avenues that, you know, it seems like we've had this rather substantial increase year over year from the 01/1984 operating budget to this proposed one of 01/1990, but what I think I've been hearing on the right sizing and the right sizing mantra is that maybe part of that increase is attributable to the fact that we're trying to be accurate, and we're trying to accurately lay out what the true expenses will be going forward.

And maybe I'm missing that because I'm more of a word man in front of a jury and not an accountant, but I think that's what I've been hearing. So kudos to that, and I think it just echoes what I've heard others say, that the goal here is transparency, accuracy, and if we've got to take some bad medicine and tighten our belt at the front end, I'd rather do that than get the news threefour into the year, and we're scrambling to try to backfill. So those are all my comments. Thanks.

Thanks, everybody. Great everybody did great comments. I appreciate it. Thank to the for the presentation. Kingsley, you were pretty good at orchestrating it and getting everybody involved, just like a quarterback, you know? A little football reference. I know your son plays defense, but that's okay. And great job, Mark and Anna, for your presentations, and all the staff members that came up and answered key questions for us. Thank you also. Thank you to the city manager for, you know, directing the department heads to come in and, as we say, tighten their belts and come in as close to 5% cuts as they can.

Also, thank you to those department heads that did that. That's not an easy thing to do. So I appreciate it, all of it. You know, it's nice to have a structural budget. There's a lot of people who are a lot of mayors who are don't have that luxury right now.

I mean, I don't know how I got on this algorithm, but it seems like every night it's not that algorithm, Manuel. I don't know how I got this on my feet, but I got, poor Dan Slater of Orange, and he does a heck of a job, by the way. So every are you on this one, Alma? So so he he gets questions from the community about the budget. You know, they're having their struggles in Orange, and he doesn't shrink from them.

He gets right in front of the camera, and he answers the questions. And there was one question he answered that I thought might be worthy of us, talking about, and somebody asked about parking fees in the city of Orange, particularly in the Orange Circle. And, they, you know, it's there's a book I think somebody, recommended to me, of course I haven't read it, called The, High Price of Free Parking. And, you know, if you go to anywhere in Costa Mesa, you cannot pay the city of Costa Mesa to park in our commercial zones. You can't do it.

And, I mean, even gold plated cities like Newport Beach, you gotta pay your way. If you wanna park on PCH, you got to go and get this freaky code that you've got to do on a QR you know, what do they call that? The QR codes? Yeah. Anyway, I'll get there.

I'll get there. But you got to do that in Newport Beach, you know, the place where they've got massive houses, you know, and property tax up the wazoo, and you still got to pay for parking. In Costa Mesa, you get a free ride. One of the things that Dan said that I thought was interesting is that parking fees in Orange didn't occur because they wanted to raise money, but because they wanted to have flow at the Orange Circle. Right?

And so a lot of people were complaining that people were parking for free and then just using the public streets as basically a place to store their car. And then and in particular, the vendors the store owners complained, and not only has parking fees in Orange Circle you know, now this is like the only way I want to emulate Orange, by the way is not only has it derived parking revenue, but also turnover in their commercial area, which added to better performance of their retail businesses. So, I think maybe that's not something that we're going to be able to bring across the finish line, because of our short time that we're going to be here, but something definitely in the future for the council to consider. And as Manuel said, tough decisions. If you want us to make a tough decision in that area, I'm prepared to do it.

Now, this is going to I think Chair Ochoa is going to get mad at me. But we've been talking about a lot about the arts and what are we going to do, and what are we going to do with this period between now and nine months from now. And by the way, if we say it's nine months from now, it's not going to be nine months from now, and it's not going to be eight months from now. It's going to be something more than nine months. So I asked Chiru Chua about this idea of an ad hoc committee in lieu of a consultant, I got a very strident and negative response from her, and I deserved it.

But, what about getting an ad hoc committee to work on an interim plan, an interim master plan, just to get us through and then be able to advise us as the months go on about how to supplement the budget? Because you hear us all, we're very sensitive to that. The other thing that occurred to me is along the lines of what Andrea said about getting a public private partnership. I don't think we do that enough, particularly in the arts. Now, I'm not saying that we should do this to kind of foist our responsibility onto them, but we have a very enthusiastic arts committee.

For example, UCI is really, kicked up about the, their their participation in taking over the Orange County, Museum of Art, and they would be a great collaborator to with the city of Costa Mesa. And then some of the longstanding collaborators, a South Coast rep that's been there forever, a performing arts center. We had discussions about with the Pacific Symphony and the Performing Arts Center. So I think working and kind of building a more collaborative cross pollination coalition and us as the city being part of that and not just let them kind of go and do their things and we take credit for it, but really be part of a coalition to work together to be greater than the sum of the parts would be good. Travel Costa Mesa has all this data.

Okay? So everything you need, they have it, they track it, they know what they're doing, they know what they're doing six months, twelve months in advance. So maybe we can come back with a specific report pertaining to TOT in the next budget discussion, just like a report that they do. They do PowerPoints. Paulette could generate a PowerPoint tomorrow that'll answer all our questions.

And finally, Okay, and I'm going say this is not quite finally. It's almost finally. Ferry Park, the idea of a park ranger. I think one the things that will be good because it's hard for a park ranger, even one park ranger, to cover Fairview Park. That's a lot.

If we had measures like drones, somebody mentioned ANDREL. I think that was Andrea mentioned ANDREL. Somebody else maybe did it. Drones, maybe ANDREL can help us out with that, get us the best drones out there for deterrence and recording what's going on and following up. Also, maybe some, what do you call it, deer cameras or something like that out there, motion sensor cameras. Don't mention anything about flock, please. But something out there other than just a park ranger who's very limited in time and very expensive relative to technology, I think we could use to make Fairview Park safer. And finally, I've been

doing a little

Googling, multitasking, and there it is a very popular thing to have the community development department. Many have that, and so I'm giving up on that. My idea was PPCC, planning PP? PPCC. No. I know, I know. Permitting, and community sorry, and code compliance.

You can't even say it.

I love it.

Planning, permitting, and code compliance. People would remember it. Alright. But go with go with community development. Don't care. You got my vote. Alright? We're insured.