Fiscal Sustainability Ad Hoc Committee - Regular Meeting

Good evening. The 05/14/2026 regular meeting of the city of Fullerton fiscal sustainability ad hoc committee will now come to order at 06:05. Secretary, will you please call the roll? Chair Rozak? Present. Vice chair Wayne? Here. Committee member Boushala, who I saw online.

Right here.

Thank you, sir. Committee member Duan?

Present.

And committee member Smith? Here. Committee member Wayne, would you please lead the pledge? And those who are able, please stand. We will now move to the presentation portion of the agenda.

Our first presentation is the fiscal audit engagement kickoff presentation. I'd like to introduce representatives from Grant Thornton, the city's fiscal audit consultant who will provide an overview of the engagement, anticipate anticipated process, and the next steps.

Members of the, committee, I appreciate the time tonight. My name is Bob Hockey. I'm a director with Grant Thornton, and I appreciate the time you've given us tonight. Yes.

Sorry to interrupt. One brief minute. None of our screens are on.

Uh-oh.

Okay. Members of the committee, was saying, thank you for the time tonight. We greatly appreciate it. We know you have a very busy agenda, but we'll take up as precious little time as we can so you can get about that agenda. Tonight, I just had three or four objectives. We wanted to introduce our team that will be focusing on task one and task two of the engagements before us. I wanna just give you kind of a brief understanding of of what we'll be working on for task one and task two and just talk about some of the next steps and some of the work that's already underway. What I'd like to do first is introduce our team. I'll introduce myself first. I'm Bob Hockey.

I'm a director with Grant Thornton. I've been there for about eleven years, one of the leaders in our risk practice, and I focus on economic development, business planning, and strategic planning. I'd like to introduce my next team member, DJ Rosini. He can talk about his background and his capability.

Good evening. As Bob said, my name is DJ Rosini. I'm a managing director with Grant Thornton. I've been with Grant Thornton for about a year and a half. Prior to that, I practiced law as a trial lawyer in Illinois, and then I became an FBI agent.

I was with the FBI for twenty years serving in different roles as a case agent, as chief compliance officer, and as the general counsel for the Chicago office of the FBI. In those roles, I investigated various federal crimes including fraud, white collar crimes like money laundering, embezzlement, and national security matters I worked, stood up the compliance program in the Chicago office of the FBI, ran that for five years, and then I was the chief legal officer for ten years before I retired. I was responsible for all the legal functions, the ethic functions, compliance. I was the data privacy officer for fourteen years. I ran the money laundering and asset recovery section for ten years, and I was a special assistant US attorney for fourteen years in the Northern District Of Illinois.

Excuse me. I retired from the bureau and became the chief security officer for a Fortune 50 company, And now I'm a managing director at Grant Thornton where I lead engagements that involve forensic investigations, fraud risk assessments, compliance program assessments, money laundering, and sanctions. And I'm happy to be here, and I'll turn it over to my colleague, Ann Lane. Thank you.

I'm a little shorter than Bob and DJ. My name is Ann Lane. I'm a director in the risk advisory practice at Grant Thornton. I've been with Grant Thornton three years, but I've been practicing as an accountant. I am a CPA in both the states of New Mexico and Arizona. I have a background in well, I've been practicing as an accountant for over twenty years. I have a background in financial statement audit. I've worked extensively with governments, both, state governments, local governments such as cities and tribal governments. So quite a good amount of experience handling those types of organizations. About five years into my career, I moved into a forensic accounting and fraud role.

So I have performed many forensic audits. I've done fraud investigations. I also do consulting work with companies, to prevent fraud. So look at internal controls and make sure that there's fraud fraud prevention measures in place. I've testified as an ex expert witness in court 14 times, related to forensic accounting and allegations of criminal charges such as fraud embezzlement and money laundering. And I will turn it over to Charles.

Thank you. I'm Charles Mays. I'm also a director with Grant Thornton. I've been with Grant Thornton for coming up on five years now. I have a career in internal audit and external audit with large public companies or public accounting firms, working mostly on internal controls and process improvements for massive big conglomerate companies.

I specialize in clients that may have some challenges with their internal controls and processes to help not only identify the remediation, but help remediate the issues as well. I also do a lot of mergers and acquisition work with our with our clients, more on the internal control side. Now we also bring in automation and IT type portions to our our audits. So we're working a lot of things with that as well. Like

like, TJ, I'm duty to. I'm also an attorney. I try not to let that get out too often, but, occasionally, it does. So you probably shouldn't believe anything I have to say from this point forward. But on behalf of myself and DJ and Anne and Charles, we are grateful for the opportunity to work with the city of Fullerton.

We greatly thank you for it, and we look forward to working with you as we go forward. There you know, there's no question, and I'm afraid oh, there we go. There's no question that one of the reasons why I know that we're talking tonight is that the city of Fullerton is facing some strong headwinds, and there are another a number of issues that Grant Thornton will be addressing working with all of you in the coming coming weeks. And I'd like to just kinda share with you our thoughts and perspectives of what we've learned thus far. First and foremost, there are a number of transactions we'll be looking at very closely in the coming weeks, and these transactions have created a bit of a cloud over the city and its finances.

There's a $10,000,000 budgetary transaction and a real estate transaction, which we'll be looking at very closely. It's our goal to give the city some semblance of resolution on how we can move forward beyond that in the coming weeks. DJ and Ann will be leading up that part of the work, and we're very confident we have the right team for that, and they're rolling up their sleeves as we speak and diving into budgetary and financial issues. We also know that looking long term, the city of Fullerton is facing even stronger financial headwinds when it comes to your budget, potential budget deficits, and having to dip into your reserves quite frequently. These are things that Charles and I will be digging into on task two.

So as we move forward together, there's a number of things that we will be involved with going forward with the team that you see here today. First and foremost, it is task one, and that's scheduled to take place over the next five to six weeks where we'll take a very close look at a number of financial transactions from a forensic standpoint to get a better handle on why the transaction occurred the way it did, if policies and procedures were followed, and if there was any extent of remediation that needs to take place. Under task two, we'll be focused on long term budget forecasts, economic development opportunities, and quite frankly, also cost out and other efficiencies that we believe the city can achieve through a diff different economic course as we move forward. So that's task one and task two. Those are some of the headwinds that we've identified.

We've already launched our conversations with the mayor, city management, and also city council. And those conversations have been very productive to date, and they will continue next week. Task one is a very detailed investigation over the transactions that we discussed. As DJ and Anne had talked about their background, we're not here to to talk about fraud or that kind of an issue, but it is a deep dive into understanding what those transactions were, how they occurred, who was responsible, and what we can learn from that as we move forward. The goal is to remove that cloud over the city so we can focus on longer term objectives in task two.

Task two, as I had mentioned earlier, is a very detailed understanding of the city's financial stability, its financial viability as you move forward, and all the key ingredients into a sound budgetary process. The budget itself, sales taxes, revenue, cost, efficiencies, individual budgets, and headcount. And those are all the key ingredients, as I would like to say, that we'll be focused on as we move forward. There is a potential task three, which we're duty bound to discuss. Depending on the outcomes of task one, we may require a friends a deeper forensics investigation on the financial transactions in question.

And that is a much deeper dive into responsibilities, requirements, and potential wrongdoing. And we'll be in a position to make that rec recommendation in about four to five weeks. What I'm gonna do is turn it over to Anne. I want Anne to give you kind of a brief introduction to task one and what those activities look like. So, Anne, I will give you the floor. Thank

you, Pam.

The task one, I know, you know, DJ and I have provided our background. We've said a lot of words that start with f that sound exciting like fraud and forensics and digging into transactions. But really what we're trying to figure out is what happened. A lot of the engagements where we are brought in for our expertise, it's because we know how to dig deeper. We know how to look into the details of transactions and figure out exactly what transpired and why.

Sometimes that's because people had ill intent. A lot of times, it's because people made mistakes or because there were controls that were in place or there were people who weren't paying attention. So that's a lot of what we're trying to figure out is how did we end up in a place where we had $10,000,000 of unassigned fund balance that people aren't sure what happened with it. And then we had a $2,900,000 adjustment to the financial statements that was prepared by the auditors and trying to understand the depths to that transaction and how that occurred and why that that occurred. So that's really the crux of what we're doing here is trying to figure out what happened, why, and how do we avoid it in the future.

So what steps need to be taken to make sure that those errors or other issues do not occur again. The other thing is to figure out how this information can be communicated to the citizens of Fullerton, to the city council, to city management, to city leadership in a way that is clear so that we don't have future issues or people are able to understand those issues going into the future and allow everybody to move forward in confidence. You wanna skip to the next slide, Bob? If for some reason we do uncover something that would warrant additional investigation, we do have a solid approach for doing this. And as you can hear from our backgrounds, DJ and I do this kind of work all the time.

We know how to ask the right questions. We know how to dig into the right information if that's what's needed and be able to provide synopsis of what happened and why and detailed information about what should be done because of that. We will know more in the coming weeks as to whether or not that's something that actually needs to occur, but we just wanted to let you all know that we do have the capabilities to perform those functions if they do come up.

Back to you, Bob.

So just as Anne had talked a little bit about what task one looks like, I'd like to spend a little bit of time talking about task two, which is the task that Charles and I are really going to be be focused on. And that kicks off in earnest next week. Task two is roll up your sleeves deep dive on budget and economic opportunities on where the city of Fullerton is today, the financial stability that you're enjoying or perhaps not enjoying, and what the next five to ten years looks like from a financial stability and viability perspective. And that really involves six key things. First is we need to understand your budget projections and your budget forecasts.

We need to have a very solid footing with and I think Anne and DJ will provide us some incredible intelligence on the sound budgets that you have, and I think that will provide a number of lessons learned. Second is to really understand at a department level your growth rates and the opportunity where you may be spending in the red, and we all know that's a key issue. The third issue is to really take a very deep look at economic development. We all know that economic development often in times is the lifeblood of a city. But how are you using the x the assets that you have?

How can we exploit those assets? How can we attract additional investors from the outside into the city? How do we market Fullerton when you compete against places like Irvine, the city of Orange, Brea, La Habra? How competitive are you in the marketplaces? One of the next things we'll also take a very strong look at is the opportunity for potential cost reductions and the opportunities for greater efficiencies at the department department level, how you procure, the technologies that you use.

And last is to give you an honest assessment of where you are from a revenue perspective, the revenue sources, the growth of those revenue sources, and the potential revenue shortfalls that you might have. And we'll certainly give you an honest recommendation is if we feel if there are additional revenues that need to be increased. That may potentially be a sales tax or a sales tax increase. And we'll certainly provide you the facts behind any recommendation that we make. So those are some of the key things we'll be focused on for phase two or task two.

So as I said, it's a very deep dive into economic viability, the things that you need to do to increase that viability and get yourself on a solid financial footing as you move forward. So, you know, as we move forward, everyone, again, we appreciate the time tonight. From myself and and DJ and Anne, it is our perspective that over the next several weeks, there's a number of things that we're gonna be taking a close look at. We have to take a very close look at the economics of the city, your revenues, your budgets, your forecast. How sound are they?

How viable are your economic found economic foundation that you rest on? Or perhaps if it's not viable, and what some of the options you may have going forward. Second thing is to take a very close look at services funding. As we all know, the citizens who live in this great city have an expectation of what their quality of life should look like. So when we look at infrastructure maintenance, roads, roads maintenance, sewer, all the things that the city residents have come to rely upon, how viable is that? How robust are those capabilities? Are there opportunities for improvement? We need to take a very deep dive into revenues. The sources of those revenues, the depth strength of those revenues, and potentially come back to the individuals like yourself with recommendations for growing revenue. And as I said earlier, that may involve a tax increase as we go forward.

But those are conversations that we need to have as we move forward. We wanna focus on the efficiency of each department. We wanna understand are there opportunities to gain efficiencies and lower costs while increasing the service levels that the city has come to rely upon. We also wanna spend a fair amount of time on economic growth. Are there opportunities to further exploit the resources that we have? Are there further opportunities to attract outside investors to the city? And how do we make the great city of Fulgent as competitive as it can be in the open market? And last, and I wanted to focus on something that Anne had discussed earlier.

How do

we communicate all this in a way that is easily digested and understood by the residents of the city? So the residents have a very clean, simple understanding of where we are financially, where we need to go, what are some of the options that we have, and what do we think is the most responsible course of action as we move forward. So those are the things that we hope to achieve over the next eight to ten weeks. On behalf of myself and and DJ and Anne and Charles, we thank you for the time tonight. We thank you for the time to work with your city, and we look forward to working with each and every one of you in the coming days and weeks. Thank you very much.

Thank you. Would you like to go to the next presentation, or are gonna take comments and questions from

I just didn't if you have any questions of of the Grant Thornton team, now would be the time.

Okay. Any questions? Not yet. Any questions? Yes.

You may have said it and I missed it, but how long between now and when you expect to have that assessment and the product that you're going to communicate to Fortune?

Sure. Task, task one will be completed in approximately five weeks, and, task two will be completed in approximately eight weeks.

Do we have a question from Member of Bushala? Does he have a hand raised? Or a comment?

No,

I have no questions.

Okay. Thank you. But quick question. We've had some staff turnover. Do you think that that may be an issue that either communication or staff turnover?

We'll certainly look at staff turnover. We'll look at staffing ratios compared to other cities, and I think it will be an issue as we go forward. We want to understand the the reasons behind it. Certainly, we'll be looking at compensation and the competitive nature of those compensation and benefits. That will certainly be a part of our exercise.

Okay. I'm also meaning in, you know, maybe projects that were being worked on, someone left in the middle, so those sort of things.

So we're working very closely with Eddie and Daisy, and they're providing us that kind of information, so that's certainly a part of our analytics.

Okay. Thank you.

Thank you.

Not yet. We have another presentation. We are we proceeding on to the next presentation?

Yes. Thank you. We were having some technical difficulties. Our next presenter is actually in Canada right now, and our IT system had blocked Canada. So now we have, unblocked Canada, and we do believe he is online. If he is, he can start speaking. I think he should be able to share his slide deck as well.

Would you like me to do the introduction?

Yeah. Would be Richard Bernard of FM three. And if he is on, I will ask him to start Alright.

I'm just setting up my graphs, so bear with me. I wanna thank the committee for inviting me to present the results of actually two surveys that we conducted with among voters in the city Of Fullerton. I'm going to present the most recent survey first and go back to the earlier survey in the beginning of the year. We conducted the second survey in between April 27 and May. We interviewed a random sample of 618 City Of Fullerton voters who are likely to vote in no on the November twenty twenty six general election.

For questions asked of everyone, the margin of error is plus or minus four point o. We contacted voters by telephone, email, and text, and a random portion of the respondents took the survey on the telephone, a random portion online. We've had the privilege to be to conduct a number of surveys over the years in the city of Fullerton and where we have some track data. I will be presenting those results tonight. And, of course, we offered the survey in English, Spanish, and Korean both online and on the phone.

If you notice something doesn't quite equal a 100% in either of the presentations, I attribute that entirely to rounding. So I wanted to sort of give you a little bit of background. It's in the context of just sort of understanding the survey. We work with the registrar recorder of Orange County. My sample vendor gets up to date information that allows us to determine based on past voter history or if they've recently registered to vote, if they're likely to vote in a November.

We will look at the demographics that are available as associated with those likely voters, and we will make sure throughout every one of our surveys that those demographics mirror the demographics of the likely voters. So if there's group a and b and they make up 50% of of the city from the likely voter pool, we will make sure that group a and b are proportionally representative half and half in those response the responses. So we wanna make sure if the that the data represents your likely turnout in November. Otherwise, the data isn't going to be able to estimate the likelihood of success or failure. Now this particular survey, you could see the graph.

What we did was we took half the sample of approximately 309 and they were presented with a dedicated sales tax measure. Our charge was to test the dedicated sales tax measure and a general purpose sales tax. So if everyone can kinda look on the top part of the slide, you'll see that we introduced very early on in the survey, and I'll present that shortly, a general a dedicated measure that was reviewed by your the legal counsel of the city for a permissible legal question. We then introduced and simulated education, and then we reasked that ballot question that we had asked earlier. And then we introduced some critical statements because no measure goes unscathed, and then we reasked the ballot question.

So in front of you, as we move through the survey, you will see a simulation and an election over time. The bottom half explains that the other random half of the sample was introduced to a general purpose sales tax. A dedicated sales tax requires a two thirds plus plus one voter response in the affirmative among those people who have voted. A general purpose tax requires that it is 50 plus one and the money goes into the general fund and it's at the discretion of the council as to how they spend it each year. So the bottom part, that random half of 309, they were introduced some educational statements.

We reasked that general purpose ballot question for them. They heard some critical statements, and then they, again, were asked to vote after hearing that. So we are simulating two possible election scenarios, and neither of them hear the other measure because in reality, in real life, they don't get to choose between one or the other. So before we get into those actual ballot questions, I wanna give you some sort of some information that we were able to gather ahead of time. We asked a conceptual question, and we've asked question in the past.

Do they even think the city has a need for additional funds to provide the level of city services that residents need and want? And we offered them the option, the great need, which is the dark blue, some need, which is a bright blue and aggregated, the great and some need on the right side. The pink is a little need. The red is no real need, and the gray are the folks who volunteered they didn't know. And you could see across the various years that we've months and years that we've conducted the survey, pretty constant great, at least great, and some need perception.

Though interestingly, the the intensity of the perceived need has dropped, from January 2026. And that was the same election scenario of November 2026 that we asked the voters. But still, it's close to two thirds, though that intensity is a little bit more modest. And we'll often see a correlation between perceived need and willingness to vote. So these are the two ballot initiatives that we presented to voters.

The top one is a dedicated 1¢ sales tax. Only remember half the survey is hearing that one exclusively throughout the survey. This one focuses exclusively on infrastructure, primarily focused on issues related to streets and elements related to streets. The the 1¢, according to finance folks in the city, will generate approximately $30,000,000 annually. We are restricted to 75 words by law, but unlike any other county, Orange County does not include the title in those 75 words.

So it provides a little bit of additional words to communicate to voters so they can have as much information as they can when considering whether to vote. The bottom is the general purpose measure, the 50 plus one. That does talk a lot about infrastructure, but the funds are also indicated that they can be used for other general city uses. And so that one also is a 1¢, and, again, the 1¢ generates 30,000,000. So depending on which lane I'm in, I hear that one, statement, one ballot measure over time.

After we read that ballot question to them, we asked them based on the description, do you think you would vote yes in favor or no to oppose? On the left hand side is that dedicated sales tax measure. And, just a reminder on the top, the margin of error is plus or minus 5.7 because we've split the sample in two, and half is hearing a dedicated and half is hearing a general purpose. So on the dedicated measure on the initial vote, it's 67 yes, 31 no, 2% undecided. I will remind you a dedicated measure requires 66.7% to pass within that margin.

If it's at that sort of threshold of two thirds within that margin of error, the margin of error if it's basically simple math, let's say six, I'm gonna round the 5.7 up. If I had six to 67 at the point in the survey where they just heard the ballot title and summary, on the high end at 73 and at the low end at 61. So it's very you know, it's a it's a coin flip on level of support and that definitely, yes, is kinda low for a dedicated measure. On the right hand side is that general purpose measure that requires 50 plus one. It clearly is not as high on the initial vote as the dedicated measure, but its threshold for passage is a lot less.

So there, the yes was 57, the no was 3% was undecided. It is above that 50 plus one threshold and above slightly above that margin of error for passage. As we move forward, we're going to simulate education. And in one of those efforts to simulate, you may recall in those initial ballot questions, we have pithy little phrases to explain how that money could be used. So we isolated each one of those elements in a very lengthy battery of 43 items, in fact.

We randomized the list so not everyone everyone heard different orders, and certain items were asked of half the samples. Certain items were asked of the other half the samples. For example, the general the general measure would expand to beyond just infrastructure to services. So in that one, we ask some services. We know from our past research, and I'm pretty sure if you you live and work or recreate in Fullerton, you know that's the the condition of the streets is a is a big deal for the community.

And so we try to test the framing of the streets in a variety of ways. As you go down the list, you will notice a variety of ways that we talk about it. So we said to them after, regardless of whether you support your respective ballot question that you heard, how important would it be to include this use of the funding or a provision in the measure? That dark blue is extremely important. The mid color blue is very important.

The dull blue is somewhat important, and the red is not too important, and the gray are the folks who said they didn't know enough to offer an opinion. And what I've done was I have aggregated and ranked the extremely and very important on the right hand side. Of the four 43 items, two are in the nineties, six are in the eighties, and seven are in the seventies for extremely or very important combination. You could see the top three items all relate to different framings of streets, and I'm looking at the intensity that repairing the main streets at 60, repairing paving puddles at 63, and then if you jump down a few, you'll see improving and repairing streets. All of them have the strongest intensities in the survey, and clearly streets is a very high priority among likely November 2026 voters in the city.

There are other items including maintaining nine one one emergency medical police and fire response that are, valued highly for preventing property crimes, thefts, burglaries. And this will be available as a public document. You'll be able to review it. As we go down the list, you'll notice that dark blue is starting to shrink. It was in the sixties and high forties.

It's now in the high thirties and in twenties. And you can see towards the end of this list, addressing homelessness, improving and repairing streetlights. But there are certainly a lot more items. This is at the bottom of the list just so you could see. Now it doesn't mean these not are not important, but they are not as high a priority among your community, and that is maintaining youth after school programs.

If I don't have a child in my household, perhaps I don't consider it to be as a higher priority as something that maybe directly affects me as a voter. Again, I'm speaking third hand. I'm not was not part of the survey. Maintaining senior programs is low. Again, if I don't have a senior in the household, I may not even know what's available.

Adding storm drains where there are none, improving and maintaining aging playgrounds, and repairing and maintaining alleys are among the lowest scoring items of this very long list. Continuing to simulate education, we presented them with a number of statements, and after each one, we asked them is does would this statement make you convinced to vote yes on the measure? If they said it would, we ask them, is that very convincing that dark blue or somewhat convincing that bright blue? And the themes are demonstrated on the left hand side. The street condition is by far the strongest of the messages.

We saw that in your January survey, which I'll be presenting shortly, but this again validates that issue. The issue of accountability. Every measure is required to have accountability. Voters don't always know that. People don't vote for a measure because there's accountability, but they will vote against the measure if there isn't.

And then another message related to potholes and connected to car repairs and preparing for and responding to wildfires are among some of the top messages. So what happens when we simulate education? This is the dedicated measure. Remember the two thirds plus one ballot question by law, you need to get that. On the initial vote, we saw this earlier.

It was 67312% undecided. That's the left hand side. That's when they just heard the ballot title and summary, telling them what the money could be used for and some educational messages because the city cannot advocate. We reask the ballot question, and pretty much the overall total sort of stays flat. It drops by, you know, one point.

That that effectively is just a that's basically three to four people who have moved outside of the yes and gone to either no, but more likely to the undecided now that they've thought more. And the definitely yes moves up four points but within margin of error. Remembering this is a two thirds measure, it's just on the line at 66%, but we will follow that again after we introduce some critical statements. Thinking now about the general sales tax, the 50 plus one on that initial vote on the left hand side which you saw earlier which is ballot title and summary. The yes was 57.

No was 43 undecided. Telling them what the money could be used for and also the educational statements, support goes up five points to 62%. And the definitely yes is that is a much healthier 45%. Remember, the threshold is 50 plus one, so it is above the threshold and above the margin of error. Now we introduce some oppositional statements.

And after each one, we tell us tell them as we randomize it, we tell them to tell us if they this message is convincing to vote no on the measure. That dark blue the dark red is very convincing. The pink is somewhat convincing. I've aggregated the total convincing on the right hand side to vote no. And I'll remind you in the case of just so you know, in the case of the dedicated measure, it's two thirds of, you know, strong messages that knock it down.

These some of these are very strong, and the general purpose is 50 plus one. So we wanna think about that in terms of the impact of the messages. Opponents in a dedicated measure only need a third to be successful. We introduced issues related to budget deficit, that this is a measure that is asked to voters are asked to support it until ended by voters. So voters at any time could place a measure on the ballot to overturn it.

Cost we mentioned cost of living. I suspect for very few people, we need to remind them of it, but yet we did. These are very impactful messages. And then we reask that ballot question you saw earlier. So right in front of you is the simulation of an election in real time.

The this is the dedicated two thirds measure on the initial vote you saw. Ballot title and summary was sixty seven thirty one after telling them a little bit about the measure and what the what the money could be used for it goes down by one to sixty six twenty seven with a relatively weak definitely as of 39 And then after critical statements, it drops to 58 by eight points and that definitely is at 33. If I were to do that margin of error test of plus or minus 5.7, but let's say six four simple math on the high end adding six to 58 that last vote is 64, and at the low end it's 52, not hitting that threshold of two thirds and certainly the outside of that margin of error. What happens to the general sales tax? That initial vote ballot title and summary on the left hand side is fifty seven forty telling them what the money could be used for and some educational statements.

You saw it went up to sixty two thirty five with a relatively strong definitely s of 45 because it's a 50 plus one measure. And then vote after critical statements, it drops to 54% with a again, the margin of error is close to six. So if we add six, it's on the high end at 60, and at the low end, it's at 48. This one appears to be a little bit more viable. And the other one, I'm gonna show you the one on the left hand side, you will see in a moment because on the January 1, we did a dedicated measure for streets which scored better than a public safety measure.

I'll I'll share both of them in a moment. But in the middle and the right hand side, you see the vote trajectory over the three votes. The top bar is the total yes. The middle bar, the red, is the total no, and the gray is undecided reminding you again that the dedicated measure is required at two thirds to pass the general purpose at 50 plus one. So in conclusion for this particular slide deck, both measures are potentially viable for November 2026.

However, the dedicated measure will be challenging to pass given the history of opposition in the city. There's a lot of soft voters on this measure. Support begins at 67, which is just at the two thirds needed for passage, but still within the margin of error. However, it is vulnerable to opposition as support drops to 58% after critical statements. This is below the two thirds and outside the margin of error needed for passage.

So if there is no opposition, this may have a chance. The the history in your city suggests that that might not be the case, and then it will be definitely more challenging. The general purpose measure is viable with a sustained educational effort and minimal organized opposition. Support throughout the survey remains above the simple majority requirement. However, with a 50 force 54% support after critical statements, support is within the margin of error but is, more likely, to be successful than the dedicated measure.

I'm gonna stop sharing, and I'm going to switch to the first presentation or the first survey we did earlier in the year. Please bear with me for a moment as I try to locate that on my computer. And thank you for your patience. I much appreciate it. And I believe this is it. Yes. And I'm hoping you can see a slide in a moment. Alright. This is the first survey we did in January. We conducted the survey.

Again, we're using the same methodological approach of going to your voter vendor, getting voters who are likely to vote in a November, making sure their demographics mirror the demographics of the respondents of voters so that I can give you an accurate reading of the vote. Remember, this is in January before the war. You know, gas prices weren't a big deal. The first survey was during the war where gas prices are considerably higher. So there's a little bit of difference of economic activity going on.

So this was conducted between January. It was among a random sample of 521 Fullerton registered voters who are likely to vote in the November. For the full sample, questions asked of everyone, the margin of error is plus or minus 4.4. This time, we did split again the set the universe or the sample into two. That margin of error will be 6.2.

I'll talk about that in a moment. The methodology is the same. We contacted folks by telephone, email, and text, and we of course offered to survey in English, Spanish, and Korean. This is how I would like to explain this survey. Half the sample, our charge here was to test 2 half cent sales taxes.

Both of them were dedicated. So one of them was dedicated for public safety, so police and fire, and anything associated with public safety that falls into that realm. And the other one was all about streets. So the if you look at the top part, half the sample in their own lane are hearing the initial vote. They're gonna ask we're gonna ask them a ballot question on public safety first, half cent sales tax.

Then we're gonna ask them a streets measure, half another half cent sales tax. We're gonna introduce some education about the public safety measure, and we're going to ask about that public safety measure again, the one that we initially asked before education. We are then gonna introduce education about the street measure, and we're going to ask them about the streets. We're gonna come back and ask critical statements of both measures simultaneously because we didn't want the survey to be longer than twenty minutes. And then we're gonna have them vote again on the public safety measure and again on the streets measure So that we're not putting the thumb on the scale, the other half will hear the on the bottom will hear the streets measure first, then the public safety.

Because sometimes when there's multiple things on the ballot, people may sort of pick and choose. Sometimes they'll go for the first item, but not the second. So we wanted to make sure the placement of the measure did not necessarily impact the outcome, and that's why we randomized it. So we introduce education, about the street measure. We ask about the street measure again in the vote.

We introduce public safety messages. We ask about public safety measure again, and then we introduce critical statements, and then we get a vote on the street measure and the public safety measure. So that's sort of the intent of the serve. These are the two ballot questions that we asked. Again, our charge was to test two on the same ballot so everyone heard both.

Both of them were a half cent. Each one generated 15,000,000. The public safety, you can see we test pithy items that relate to how that money could be spent from a public safety perspective. It's neighborhood policing, first responders, gang prevention, keeping public areas safe and clean, addressing the homeless, retaining and attracting well trained police, fire, paramedics repond rep preparing for responding to wildfires, etcetera. On the streets measure, it's funding, repairing paving streets, keeping streets in good condition, upgrading aging bridges, sidewalks, cut gutters, curbs, helping prevent streets from flooding, improving traffic flow and safety, addressing speeding and unsafe driving, improving pedestrian safety.

All kind of the complete streets element that we and, again, we we worked with your legal counsel to ensure that these ballots were legally permissible. And we introduced these ballots, and, again, we asked them to tell us if they're if based on the description, would they vote yes in favor or no to oppose. In this case, when we collectively added the public safety respondents together and the streets responses together, you see them in front of you. The public safety measure received 52%. Totally yes.

43% no. These are dedicated, those two thirds measures that I talked about earlier because it's very for a specific cause. On the right hand side, that street measure opened up at 69 with a very healthy definitely s at 49 and a combination of the definitely, and probably at 66. So we then introduced some educational statements. We had a very long list of items that you saw in the most recent survey, so I'm not gonna show them again.

We tested the relevant ones again, but you get a sense you have now from the from the, May, recent May, survey, April, May. You have the most up to date responses on all those elements. But we did introduce, the educational statements for the public safety, and, again, we asked how convincing is are these messages for you to vote yes on the measure. If they said they were convincing, we said, is that very convincing, that dark blue, or somewhat convincing, that bright blue? And we've aggregated the total convincing to vote yes on the right hand side.

The intensities of this measure of the messages that dark blue is kind of modest for a two thirds measure. Nonetheless, you could see on the right hand side numbers that are exceeding those two thirds, themes about response times and that a significant number of calls to the fire department are for medical emergencies. Again, the importance of accountability, wildfire, and crime. Looking at the public safety measure, what happens when we introduce education? The initial vote with ballot title and summary is on the right hand side at fifty two thirty two, yes, no.

After telling them what the money could be used for and served at some education, support only goes up two points. The definitely yes doesn't move. And the no mode goes down, but we haven't said anything negative yet. And we will because we need to simulate, a reality election in the city of Fullerton. Remember, two thirds measure.

We'll come back to this. We introduced some educational statements related to streets, and that street condition argument just telling them how the pavement management plan is indicated that nearly half of the 100 miles of roads in the city of Fullerton are rated as very poor, poor, or fair. That one was the strongest message. In the survey, 80% said it was very or somewhat convincing to vote yes on the roads measure. Accountability again becomes important.

But those intensities, that that bright blue or that darker, the left hand blue is kind of modest for those other messages. What happens when we introduce the education, telling them what the money could be used for and then telling the story in a non advocacy way? It started high at 69. It drops down a couple of points. We're just talking about a small number of people.

Basically, we're talking about six people who have decided to go from the yes to the undecided because now they're thinking more about the measure. The intensity drops down similarly by two. It's at that threshold of two thirds, but we haven't introduced any oppositional statements yet, which we provided a paragraph, which talked about high cost of living in the state of the economy. That was before I'll remind you before gas prices were at the $6.07, and depending on where you fill up $8 range. Citi has tens of millions of reserve in reserves and receives money from OCTA.

They have the money to do the roads. They have the money to manage public safety. And then all they need to do is cut waste and inefficiency. And we also have to be mindful that the city might be considering raising water rates. Those were the oppositional statements that we introduced, and then we reasked that ballot question for yet a third time.

Again, right in front of you is the simulation of an education of an election in January. For the public safety measure, two thirds vote requirement plus one. Initial vote was fifty two forty three after ballot title and summary. Telling them what the money could be used for in the education. It goes up 50 four-thirty eight, and then after critical statements, it drops nine points to 40 five-forty five, and that definitely is too low.

In fact, there's a ratio of definitely yes to definitely no of one to one. Considering that opponent supporters need two thirds and opponents need one third to win, that doesn't work. Two thirds plus one versus one third, that doesn't work well when you have an even definitely yes, definitely no. The introduction of the critical statements to the street measure that was doing quite well early on in the survey. Just ballot title and summary on the left hand side was sixty nine twenty seven.

And a little bit of education, it dropped two points to sixty seven twenty seven, but still doing quite well. After that modest oppositional effort, it drops down eight points to 59. But definitely, yes, is a lot lower than it needs to be for a two thirds measure, and the no is already close to its one third at 32%. Using that margin of error in this case, plus or minus 4.4, Let's say simple math four. On the high end, it's 63.

Let's say 64 for being generous. On the low end, it's 55 or 54, but never miss ends up making that two thirds. The streets measure does better than the public safety measure but doesn't quite get there from this. And then you could statistically see or visually see the comparative. The top line is the total yes, we asked it.

Initial vote, vote after education, and vote after critical statements. The red bar is total no, and the gray is the undecided. You can see basically a forty five forty five draw after critical statements on the left hand side for public safety, you see a pretty healthy differential of fifty nine thirty two. If my math is right, that's 27 differential, but it doesn't make the two thirds after critical state. And so if no one's opposing this, it may have a shot, but the history of the city suggests that that's probably not likely.

And then in conclusion, again, thank you for being so patient. I know we talked a lot, and I threw in a lot of data to you. The public safety measure is not viable. However, the street improvement measure could be viable with a strong and sustained education effort with the absence of any organized opposition. As the highest level support hovers around two thirds, however, it should be noted the past city history has shown there may be a strong opposition effort, which will most likely lead to the results below that super majority.

I could tell you in any city, and I've worked on a lot of measures, both from special districts to school measures to city measures, two thirds is very daunting amount in any city to pass. There certainly has done. There's a slew of history of being successful, but there are challenges in your city that make it, a little bit more challenging than most. Support for the street improvement measure begins at 69%, which is over the two thirds needed to pass it for passage, but still within the margin of error. There isn't much movement after education statements, but after critical statements, support drops by 10 points down to 59, which is below the two thirds outside the margin of error.

I think people know the conditions of your streets, and education may not buffer them or push the measure to a much healthier view than the high sixties and maybe not enough for a two thirds measure since it was susceptible to opposition. And with that, I'm happy to answer any questions.

Thank you so much. Do committee members have any questions for FM three?

On the, I don't I think there was two separate decks that you presented. But on the the first one on page 15, there was an item that said

I'm happy to bring it up. Just bear with me for a moment so I can be responsive.

I'll I'll I won't jump between the first and the second.

Well, you could do whatever you want, and I'll I'll work with your your needs, not mine. So okay. So let me just bring it in full screen and then slide 15. I think I'm there. Is that right?

Yep.

Okay. Please go ahead. Thank you.

Okay. So the it's it's about street conditions and street repairs. We have most convincing reasons to support sales tax.

Yeah.

What I didn't understand was the near the bottom, the budget cuts row.

So that's the opposition one? Is that what you're referring to? This one? No. You're sorry. Oh, I see. I apologize. So you wanna basically know what you like, what's the what what is that message? That would be helpful for you. Is that correct?

Yeah.

Okay. Sure. Let me find it. Okay. As a as a result of reduced state and federal funding, unfunded mandates, and state regulations, the city has lost over 80,000,000 in the last five years alone.

The city projects that over the next several years, it will have to cut millions of dollars annually to balance its budget. Without additional funding, our streets will get worse, and we'll have to delay infrastructure improvements to our parks, aging stormwater pipes, street lighting, as well as significantly reduce hours that our libraries passing this measure helps prevent cuts to local services Fullerton residents count on. That wasn't as an effective message as just telling them the quality of the streets or talking about the impact of the potholes on car repairs. Hope I answered your question.

Yeah. Yeah.

That was my that was my only question. Question.

Sure.

Yeah. Stay on that. Actually, two slides 17, I believe it is.

Sure. Bear with me for a minute. Okay.

Here we go. Go to the battery of negatives on this measure.

Here we go.

Here we go. So similar question.

Yeah.

Yeah. What what are the exact questions that you're asking on, let's just say, the most viable negatives, the first three.

You want the the budget deficit? Okay. Sure. Okay. Bear with me, please. Okay. As a result of the re well, the sorry. That's the budget cut. Sorry. I I'm in the wrong section of mine. Please bear with me. Okay. Bulletin's reserve fund has dropped by over $10,000,000 in the past year alone, the result of budget miscalculations and overspending by city staff. By next year, some expect the city to be experiencing a significant budget deficit. The city's politicians have shown that we cannot trust them to manage our hard earned tax dollars.

You could see that we were not soft on these measures. And while one might argue this is not factual, I asked the city to tell me what do they expect opponents to say. And they shared, you know, their view of the city. And many of these are not factual, but they you know, you can't control opponents bully pulpit. And so you need to know from a city perspective the viability of a particular measure, and I can't be soft on it because your opponents won't be soft.

Right. But the 10,000,000 unassigned budget was not pulled on. Right?

Well, exactly what I read was pulled on.

Okay. Forever tax, what was the language on that?

The forever tax is effectively the discussion about we're by law, you're the the city or any city or any measure is required to have a duration. You'll notice here it says until ended by voters. Every measure, in fact, can be ended by voters by getting enough signatures to place it on the ballot. And if it's on a ballot, it's 50 plus one of voters who cast the ballot choose to repeal the the the measure. It is it's ended.

And so some would argue that they want a definitive sunset for the length of the measure rather than leave it in the hands of voters to make that decision. So that's that. And then lastly, because well, the cost of living, I just loaded it up. You know, cost of housing, cost of food, cost of gas, this is not the time to raise sales taxes. I don't think that's a rocket science science argument. I think we hear it every day, and we experience it when we go to the grocery store, fill our gas tank up.

Got it. And I think I got the blank check question probably in my head, and then the the waste mismanagement question.

Every not specific to Fullerton. Every I I I work I've done this work with governments for twenty four years, and every there's always naysayers in the community saying, if they just cut waste and misman you know, the, like, excess, you know, salaries and all the wasteful spending, they'll have enough money. You know, we hear this on the federal level, the state level, and the local level. So we have to use that as an argument because we would expect to hear it from the opposition.

Thank you. One last question. What were the filters? You you said likely to vote. What what are the filters you used to determine that?

Yeah. We looked at the last four the last two general and two primary to see the they had they had we looked at the last two primaries. So and the last two generals in 2024 and 2022, and they had to, I believe, had to have voted in at least two of the last four.

Two of the last four?

Yeah. I believe it's either two of the last four or three of the last four, but it was a high it was a high bar. So if you're a registered voter in Fullerton and you maybe voted once in the four election cycles that you had to vote in, you weren't counted. Or if you're registered to vote but never went to vote, you were not included in the sample. We need to be able to only ask of folks who are likely to vote in November. And also, by the way, if they have recently registered to vote Because if they have, it's it often suggests there's an interest in an upcoming election for whatever reason they might have.

So you accounted for newly registered voters?

I do. Yeah. Because there there are new people. Like, they move into the city or whatever. They're they're eligible. And we don't have a voter history on them, so it's important to at least give them a shot at it.

Okay. Thank you.

Sure. My pleasure.

Thank you for the segue. That's actually one of the questions that I had as well. I did notice the use of until, to be voted, to be removed. So did you mention anything about a sunset clause or the understanding of what a sunset clause is and how it is used in any of the questions or only a vote to remove? Okay.

Yeah. We we well, no. We just we incorporated it in the ballot question that's pretty standard. In in fact, in a focus group that I use I was part of in 2012, a voter said to me when I was asking them what would get them to vote. I, you know, I just wanna learn the feasibility.

And I said, well, what would get you to vote on a on a measure in favor of it? And they and they said to me, if I had a a say as to whether and when I can end it, then I'd be interested in it. And we have used that, and it has been supported by any there I think there was one legal challenge in the courts that supported that. And if you notice in almost all sales tax measures, the things that aren't bonds, which are outstanding and therefore it's based on when the bonds are paid at paid back, you'll notice in almost every measure now that phrase until ended by voters is used and is accepted legally as a duration.

Okay. Have you had any repeat sample participants in the different polling cycles that you used, or these were completely randomized and you don't think that you

What what

re question?

They are randomized, but we would have, I don't have those numbers here, but we would add some people who would I mean, you're not the state of California in terms of population size. Right?

Right.

And if you think of the fact that we have conducted let's see. We've conducted a ton of surveys over the years in your city, one, two, three, four, and very large sample sizes, so we have small margins of error, the odds of us getting summoned more than once is pretty high.

Okay. I just haven't come across anyone that has been questioned, so I was just wondering. Also too, could you go back and tell us the questions in regards to failed measure? What was used in regards to the Oh,

well, we mentioned the fact that yeah. Well, you're aware that in 2020 in 2020 during COVID, that measure was a sales tax was introduced to the public, and it went down. So we reminded folks of that.

Okay. And that was for general use. Correct?

That that, I believe, was for yes. It was for general use. It was also the weakest of the arguments.

K. K. I think that's That's the only question that I have right now. Yeah. I mean, I I I think that, you know, for all of our residents, obviously, these issues of quality of life for the residents and providing basic necessary services is very foremost at mind of of many of our residents. So I thank you.

Sure. Thank you for the opportunity.

So do we have any member or online member? Member Bouchala have any comments, questions? I

really don't have any questions, but I'll just wait till the end to give my I guess, my deliberation on the issue.

Okay. So we will now move to discussion item one, consideration of local funding options. Does staff have a presentation?

Thank you. Yes. We do. We'll have ASD director Avalos will be running the, the PowerPoint. When we get to the when we get to the actual numbers piece of this presentation, we'll be going back and forth between some raw numbers and what those are showing us.

And then we'll also and then we'll also be discussing kinda what that means in terms of service impact. So with that, the agenda for this presentation is we are going to review potential future local funding options over the five year forecast period and the potential impacts. K. Over the past several years, the city has implemented numerous cost containment strategies, including vacancy holds and delayed hiring, department restructuring and other operational efficiencies, reduction of discretionary spending, deferred equipment purchases and operational costs, and use of one time funding strategies to maintain operations. Despite these efforts, the city continues to face a significant projected structural general fund deficit, rising operational pension infrastructure and service delivery costs, continued pressure on staffing and organizational capacity.

Future reductions increasingly move beyond administrative efficiencies and into areas that may directly impact service levels, staffing levels, public safety operations, emergency response capabilities, and infrastructure investment and maintenance. So the purpose of tonight's discussion is we wanna illustrate the impacts associated with varying reduction scenarios. We wanna evaluate the potential long term staffing and service implications. We wanna discuss the trade offs between service levels, staffing impacts, infrastructure investment, and long term fiscal sustainability. And we wanna review how future local funding options may impact the city's long term outlook.

An important topic is the city must adopt a fiscal year twenty twenty six, twenty seven budget without the benefit of knowing whether a sales tax measure, if any, would pass. For purposes of this presentation, arrival of potential sales tax revenue is assumed to begin in fiscal year twenty seven, twenty eight. And because of that, budget balancing actions are necessary for fiscal year twenty six, twenty seven. Again, to highlight, even if a sales tax measure were to be successful in November, revenue would not come in until April of the following year. And just a quick reminder of why the fiscal sustainability ad hoc committee has been assembled.

The committee was reestablished by the city council to assist with the development of sales tax measure options, which could include none. The committee serves in an advisory capacity. Final decisions will be made by the Fullerton City Council. So staff is requesting of the committee to review the scenarios presented, discuss areas of support or concern, and provide recommendations for city council consideration. I know that in the agenda and in in this statement that I just made, we have the lofty goal of receiving your recommendations to the council this evening.

I am aware that a lot has been thrown at you already this evening and more is coming. So if further deliberation and consideration is needed by the ad hoc committee, I certainly understand, and we can discuss it if a future meeting is required. Next slide. Okay. We're gonna go over six scenarios that indicate various levels of do nothing, expenditure reductions, and revenue enhancements vis a vis sales tax measures. So for the first scenario one, I'm gonna have Steven kinda walk you through that at this time.

Thank you, Eddie. This first baseline scenario is our represents our base budget, for fiscal year twenty six twenty seven, which was presented at the midyear q two report, that was taken back to city council back on 03/17/2026. After looking at baseline revenues and transfers in, which is on the the far left of the the chart, and baseline expenditures and transfers out, including our infrastructure obligation. Further, on the columns on the right, which are columns I and j, this represents, net changes in fund balance, which is your your operating either surplus or deficit. And then the fall the the farthest column on the right represents which is column j, which represents your projection projected ending general fund reserves level.

So after looking at the baseline revenues in and transfers in against expenditures and transfers out, you will see the original 13,700,000 operating deficit and the 2.3 ending 2,300,000 ending fund balance, that we presented back on 03/17/2026. Just, to kind of highlight in, you know, some of these terms, a deficit means that we're utilizing and drawing down, our reserves. A surplus, which would be represented by a positive number and not red, that would represent an increase in revenues. So, again, this is our baseline budget, and this, represents if our budget continues, if we do nothing and not further reduce our budget, as well as identify any new revenues, we'll continue to to see decline in the red and, which will worsen and grow towards the end of the deficit as you see in the chart.

Thank you, Steven. So some takeaways for scenario one. Most importantly, this is not considered financially sustainable and is pre presented primarily as a baseline comparison against the other scenarios presented tonight. As Steven said, this is the do nothing scenario, which I don't find acceptable. So from a financial outlook perspective, the structural deficit continues throughout the five year forecast.

Available general fund reserves are ultimately exhausted, and there's no significant corrective operational or revenue actions implemented. As far as staffing and service, continued staffing pressure citywide, ongoing vacancy holds and delayed hiring, reduced organizational capacity, longer wait times for city services, also reduced customer service, responsiveness, and operational flexibility. On a public safety standpoint, continued pressure on police and fire operations, increasing strain on emergency response capabilities, and reduced organizational flexibility during emergencies or economic downturns. As far as infrastructure, continued deterioration of streets and infrastructure conditions, reduced ability to address long term capital maintenance needs, and the increased risk of not meeting measure m two, maintenance of effort requirements, which is a potential risk to millions of dollars in regional street funding. Now Steven will go over scenario number two, which is a 5% expenditure reductions, which we reviewed with you at the last meeting, but we wanna go over one more time just so it stays fresh.

Steven?

Okay. So this scenario, as Eddie mentioned, is our 5% expenditure reductions or operating reductions, scenario. All baseline revenues and transfers in as well as expenditures and transfer baseline expenditures and transfers out remain the same. As you can see, under column g, 5% redact net reductions total $7.77600000 upwards annually in savings to the general fund. And looking at the column j and the final column in the chart, this will keep us positive in the fund balance position for a few years, which our general fund reserves go from 9,900,000 and lower down to 1,200,000 and thus showing essentially utilizing or further depleting of our general fund reserves.

Then in years four and five, we will eventually go on go on go in the red, and and this is not a long term sustainable strategy. Further, I'd just like to mention again that, under this scenario, there are no additional, new revenues or or or potential sales tax revenue in this scenario.

Thank you, Steven. So, you know, the takeaway from this scenario, as we addressed, at our last meeting is, yeah, this achieved some moderate fiscal stabilization but has very visible impacts to staffing, service delivery, and public safety operations. From a financial outlook standpoint, it does reduce expenditures citywide, but structural fiscal pressures remain despite those reductions. As far as staffing and service, this would impact almost 40 positions citywide, which would obviously result in increased workload on remaining staff, reduced operational administrative support capacity, longer wait times for permits, inspections, and development review, reduced staffing at city facilities and customer service counters, reduced proactive neighborhood and quality of life services. On the public safety front, slower operational response times across departments, elimination of operation clean streets program and dedicated downtown enforcement, elimination of police department front counter staffing and 10 non sworn police service representatives, reduction of the crossing guard services at select locations, and the potential closure of one fire station or the elimination of approximately 12 firefighter positions.

On the infrastructure front, continued pressure on infrastructure funding levels, delayed street and capital improvement projects, increased risk of not meeting measure m two, maintenance of effort requirements, and potential long term risks to regional m two funding eligibility.

Okay.

So so now we're gonna go into scenario three, which is a a further expenditure reduction equating to 10%. And, again, I'll have Steven go through that scenario.

Okay. So this next scenario is the 10% expenditure or operating reductions only. Similar to the 5% expenditure reduction scenario, all baseline revenues transfers in and expenditures and transfers out, remain the same. And, again, similar to the 5% scenario, I will direct you to, column g, and this will reflect the net reductions of approximately 15,000,000, and upward in annual savings, to the general fund. And, you know, looking at column j, well, the numbers do mathematically work to resolve the deficit, and, you know, we'll we'll we'll show a positive fund balance of 17,000,000 plus in the general fund.

There will be significant service level and organizational impacts in the services we provide our community and, you know, which may not be sustainable or optimal in what we services we provide. And I'll pass it over to Eddie to elaborate a little more on that.

Yeah. Thank you, Steven. Yeah. The only thing good about scenario three is that the members are black, but it's a different city. It it it will not be a a pretty situation.

So from a financial outlook, it would result in significant organizational expenditure reductions, which would be implemented citywide. Significant operational impacts would accompany these reductions from a staffing and service perspective, significant frontline staffing reductions citywide, service consolidation and reduced organizational capacity, reduced service availability across multiple departments, reduced proactive programs, outreach, maintenance, inspection, and enforcement capacity, reduced customer facing operational support. The public safety impacts are severe, closure of up to two fire stations or the elimination of approximately 24 firefighter positions, elimination of 14 sworn police officer positions including SROs, closures of the jail, PD community services division eliminated, which would result in increased emergency response times and slower response to neighborhood concerns and quality of life issues. On infrastructure, again, ongoing pressure on infrastructure funding levels, significantly delayed or deferred street and capital improvement contract projects, and then more increased risk of not meeting measure m two, maintenance of effort requirements, which again risks millions of dollars in street funding. Again, not what I would say is a recommendation, just what 10% looks like from a budgetary and operational standpoint.

Okay. So now we're going to move into some scenarios that actually show some revenue growth, albeit these are from sales tax measures. But we wanted to show you what those impacts look like from a five year perspective. So with that, I'll turn it over to Steven to go over scenario four.

So the first scenarios, as as Eddie mentioned, covered cuts and reduction scenarios. So now we're looking at the various add on sales tax, scenarios. This first add on, scenario reflects a half cent dedicated infrastructure as well as a 5% expenditure reductions in this scenario. I will direct you to column c. This will generate 19,300,000 in the first year, which represents fiscal year twenty seven, twenty eight.

As I believe Eddie mentioned earlier, if a sales tax did pass was successful and passed, the first tranche of sales tax revenue would occur in late April of fiscal year twenty six, twenty seven. So we wouldn't factor that into our next year's budget. So for forecasting purposes, we included it in fiscal year twenty seven twenty eight. And then thereafter, sales annual sales tax generated would reflect 15,900,000 plus. And then I will also direct you to, column d because since this is a dedicated, sales tax, measure for infrastructure, all that revenue generated would go towards, infrastructure.

So in column c and d, you'll see the first year of 19,300,000, and then to the right of that, you'll see in red a negative 19,300,000. That just means that, you know, these funds will be applied towards infrastructure. And then in the years thereafter, it goes to the 59,000,000 annual plus and you'll see the same allocation of those funds. It like the other scenarios, we we did factor in additional budget reductions of 5%. This will yield annual net savings of about 7,600,000 upwards in each of the forecast years.

So overall, in doing that, this will yield a positive general fund reserves starting at 9,900,000 in 2627, and that will stay relatively stable and increase slightly and end the forecast at $12,000,000. Well, this is positive to be, you know, at this reserve level projected to be at the reserve level. This is well below the city's 17% reserves target, which is approximately 24,000,000, and the city will still have moderate service impacts.

Thank you, Steven. It's a little bit more on that. So some of the challenges with this scenario are, as we heard from our pollster, is that this dedicated tax is a much higher bar. It would require two thirds of voter approval. So so that's just a challenge in terms of whether that revenue would even come in.

The other thing is, again, while the while the slide refers to the 5% expenditure reductions as moderate, I think we have shown in prior presentation that they are significant, albeit perhaps not catastrophic. These are sustained 5% cuts throughout the entire five year forecast period and beyond. So I just wanna make that clear. So in this scenario, again, it assumes voter approval at a two thirds level of a half cent infrastructure sales tax measure, includes 5% expenditure reductions, and then infrastructure funding becomes more directly tied to a dedicated revenue source. So it's good for the streets.

From a financial outlook, dedicated infrastructure revenue source improves long term infrastructure funding stability. However, expenditure reductions are still required to address operational deficits. Staffing and service, you've already seen this. The the 5% reduction remains in place. So, again, longer wait times for permits, inspections, development review, reduced customer service, responsiveness, reduced staffing at city facilities, reduced proactive neighborhood and quality of life services.

Again, to reiterate with public safety, slower operational response times. Again, the the elimination of operation clean streets and the dedicated downtown enforcement, elimination of police department front counter staffing, reduction of crossing guard services at select locations, and again, potential closure of one fire station, which is approximately 12 firefighters. Infrastructure, again, now you have a more stable long term infrastructure funding source. You have improved ability to maintain compliance with measure m two maintenance of effort requirements. We have now reduced risk to regional m two funding eligibility, and we have an improved ability to address street sidewalk, alley drainage, and facility improvement needs.

But again, you're you're you're starting to right the ship on an infrastructure basis, but you're still at a 5% reduction on service levels, which is has to be sustained throughout the life of this model. Alright. Steven, scenario five.

Alright. So this next sales tax scenario model forecast is the 1¢ general, sales tax, and it also factors in a 5% expect expenditure reduction in year one only, which is in fiscal year twenty six twenty seven. So, again, I'll direct you to column c's column c and d. This will generate, $3,038,000,000 in the first year, which includes, the 31,000,000 of of new annual revenue And like the half cent sales tax forecast, this includes the and the first year is higher because it includes the last quarter of if a sales tax is successful, this includes an additional 7 to 8,000,000, for sales tax received in fiscal year twenty six twenty seven. From there, thereafter, this this CellFX revenue would generate 31,000,000 to the general fund.

Approximately half of that 15 to 16,000,000, will be diverted to the infrastructure fund on top of its regular $4,000,000 allocation. So in total, with the 1% sales tax general sales tax, this will potentially generate potentially contribute 20,000,000 towards infrastructure improvements. In column g is where you see the additional budget reductions. As I mentioned in my first, bullet, 7,600,000 will will will be reflected in year one. And again, it's because if the sales tax is successful, we won't see that potential sales tax revenue to the last in April of towards the end of fiscal year twenty six, twenty seven.

So, we when considering to adopt a budget, we cannot rely on that revenue. So we will be proposing to reduce the budget by 5% to contribute some savings to the general fund. After year one, those savings will be will will be restored in fiscal year twenty seven twenty eight and onward in the financial forecast. Overall, this will you this will yield positive general fund reserves, starting at 9,900,000 in fiscal year twenty six, twenty seven and grow upwards, every year thereafter. And we'll end the forecast with a positive fund balance of $30,000,000, at the end of fiscal year thirty thirty one.

So in this sales tax scenario, this represents the the most viable and, you know, best financial position for the for the city in terms of maintaining its general health, its reserve level, meeting its financial policies and reserve requirements. And now I'll pass it back to Eddie to explain the other.

Yeah. Thank you, Steven. So this you know, the the positives of this are that it's it's a 50% plus one voter threshold. It would provide the largest source of general fund revenue among all these options, and it would provide stability for the city staffing and service levels. Just to reiterate, it would require a a 5% cut for approximately one year period of time to allow for the revenue stream to actually arrive.

So, again, the assumes approval of a 1¢ general sales tax measure includes 5% expenditure reductions for approximately one year. And, again, on ongoing additional revenue would help stabilize long term operations and service levels. Think I've already covered this in the financial outlook. As far as staffing and service impacts, it allows us to maintain existing staffing following a period of short term reductions. It would improve our long term operational stability.

It would allow us to maintain our customer service levels, operational support functions, and core city programs. It avoids long term operational reductions beyond the initial period of corrective action. Public safety and response impacts, it would maintain existing fire station operations and firefighter staffing levels. It would maintain police department front counter staffing. It would maintain operation clean streets.

It would maintain existing crossing guard service levels. It would maintain PD front counter staffing, and it would help avoid additional increases to emergency and operational response times. Infrastructure wise, it would improve our ability to sustain and expand street rehabilitation efforts. It would improve our ability to address sidewalk, alley drainage, and public right of way improvements, and provide us increased flexibility to address deferred capital maintenance and aging facilities. It would improve our ability to maintain parking infrastructure, street lighting, and other city owned infrastructure assets, and it would provide greater long term flexibility to address citywide infrastructure needs and capital improvement priorities.

And lastly, would significantly improve our long term infrastructure funding capacity to meet long term m two maintenance of effort requirements. And one last scenario for you.

Yes. So this is our our third and last scenario for an an add on sales tax, and this is a 1¢ dedicated tax for infrastructure. Again, I'll I will direct you to columns, c and d. And for a 1¢, dedicated infrastructure sales tax, this would generate annual revenue of 31,000,000 upwards of every year. Like the other add on sales tax scenarios, that first year will be a little bit higher to to to include the fiscal year twenty six, twenty seven quarter allocation of that.

So that's why you're gonna see the 38,700,000 for fiscal year twenty seven twenty eight. And since this is a dedicated sales tax, all the funds generated from the sales tax would go be transferred towards the infrastructure fund. So in column d, you're gonna see the same negative contra amount that's identified in column c. Further, this would this would yield additional savings of approximately $4,000,000. That $4,000,000 of savings is the current infrastructure fund allocation that we we currently receive.

And if we had a dedicated infrastructure sales tax, that essentially would replace that ordinance. In addition, there would be, additional operating costs, that can be diverted, that are related to, you know, public works, maintenance costs associated associated with infrastructure. So that amount is approximately $6,000,000 and that is reflected in column g. So then in fiscal year twenty seven, twenty eight onward, $6,000,000 savings plus is factored into this forecast scenario. And then in looking at column j, the ending general fund reserves financial position, you know, we start off with the same 2,300,000 in the first year.

But due to both the the the savings generated, this will slowly build our reserves and upwards every year, and it would be projected to end fiscal 3031 in the positive of $24,900,000.

Alright. Thank you, Steven. So again, this one being a dedicated sales tax means it is a very high bar, two thirds of voter threshold. And this one, although it wouldn't require a 5% sustained budget reduction, it would require some level of sustained budget reduction on an ongoing basis. So the in this scenario, the current infrastructure fund ordinance would be replaced by the dedicated funding source towards infrastructure.

Again, it starts after the a peer after a period of about nine months, so in April. So we would have to to get through that period of time. And and, again, would require some additional operational efficiencies to make this scenario work out on a long term basis. However, it would it would allow us to to, for the most part, maintain our staffing levels. We would have to continue on operational efficiencies.

However, some minor reductions or operational adjustments might still be necessary, but it does maintain the city's core services and operational support functions. It would maintain fire operation staffing levels. It would maintain the police department front counter staffing. It would maintain some of these other operations that we've said would possibly have to go away. And then from an infrastructure, it it provides significant increase in long term infrastructure investment capacity, a long term dedicated funding source for infrastructure maintenance and capital improvements, improved ability to invest in parks and recreational facilities, which currently receive limited infrastructure funding due to existing funding levels, and an improved ability to main term, to maintain long term compliance with measure m two, maintenance of effort requirements.

Before we move on, can we go back? I just wanna add one more context for you to understand how this would actually maintain and help public safety. So police department has a fairly large historic building, which is very expensive to maintain. The fire station has six fire stations. Many of those were built in the fifties and sixties. Again, very expensive to maintain. So with the infrastructure fund that can support maintenance, the cost of maintaining those facilities would not have to be taken on by public safety. They can be absorbed by the infrastructure fund.

Thanks, Daisy. And then there is, at the end of your of your slide deck, a scenario comparison summary that just kinda lays them all out in one in one table. So with that, I will turn it over to the ad hoc committee.

Real real quick. At what point is there gonna be public comments allowed?

After questions for staff.

Yep.

I have no questions.

Alright. Then we can go to public comment.

At this time, I'll open public comment on discussion item one. Members of the public wishing to address the committee on this item may come forward and line up on the north side of the chambers. Speakers will have up to three minutes to make their remarks. Thank you.

Howdy. Howdy. Howdy. Another ninety minutes. It could have been an email. Man, how much money would this city stay save if we stopped paying staff to show up and read PowerPoint presentations endlessly? I mean, tonight was was useless. We got a presentation from the auditors that the city's hired that is that told you that you're gonna have a report in five weeks for phase one, eight weeks for phase two, which phase three is contingent upon phase one. So we don't even know what the numbers are. And because we don't have their audit and they haven't done a soft audit or standard operating procedures audit to actually see if the positions that might be cut are actually necessary, etcetera, etcetera, all the numbers that staff provided, which are the same numbers as the last meeting, are just an insult.

This is them just giving you and us all the finger going, how can we scare you into a sales tax with fake numbers that don't amount to anything because the audit hasn't even happened yet? That's mind boggling. They're asking you to present something to counsel without the data that you should have before you present something to counsel. The this whole meeting should have been Grant Thornton Advisors LLC coming coming up and saying, here's what we plan to do. Here's the stop audit half of it. Here's the economic audit half of it. Here's what happens in phase one. Here's the staff members specifically in the departments that we talk to. Here's how we're going to talk to them. Here's what they've here's how we've they already said they've met with people already. Who do they meet with? What have they found out already? What data can they present to you? None of that was granted. None of that was given.

We went right from that to the survey where I don't think I had to walk out to take a call. I don't think they gave us the questions still, which we were promised at the last one of these meetings. My wife got that got that call. She recorded it because we do that because it's funny to us. It was the most biased nonsense possible. It was like, well, if you don't pass the sales tax, what will happen? So I've been waiting for these questions to show up just see if we actually get them because I I know what the questions are. I I recorded them. It's funny to me. So why do we still not have that?

We were promised all the documentation from the last meeting before this meeting. We still don't have that. Why is staff hiding the ball on all of these issues instead of just being transparent? And then we sit through another presentation where we have a staff member read you a PowerPoint presentation, and then the city manager rereads the same lines to the PowerPoint presentation that added nothing from a month ago. What is happening? Please push back on them. When you have your questions, ask them what is grant authority advisors going to do? What staff members have they talked to? Who are they going to talk to? What are they actually looking at? Dig into the details so you know how much of the other nonsense is just nonsense. I would say one final thing. I know they started the clock late. I don't wanna take up all that time. It's not fair to everybody else.

But I would say one more thing. They can't look into things the way they promised you. They're saying they're gonna look into how these things happened. The $2,900,000 that goes back to pre 2020 is actually much more than that I have to get into later. But all the problems actually go further back than the city's current retention policy. They have a two to three year retention policy on communications, then they delete them. Meanwhile, all these problems predate all of that. So, really, if they care about fiscal sustainability and accountability, all those in transparency, why is a longer retention policy not part of our standard operating procedures so we can actually dig into these things so the, oh, lack of institutional knowledge and turnover doesn't bite us in the ass every year? That's all I have. Thank you.

Next member.

Thank you all for your participation in this challenging exercise. My name is Chris Norby. 2820 Street in Fullerton, former mayor. I was up there for eighteen years. I know the challenges that you face, and I wanna help you in this.

Fullerton faces a 13,700,000 budget gap adding to a 65,000,000 in backlog street repairs. If a sales tax ballot measure is is the sales tax ballot measure the answer? A study shows sales tax is to be highly regressive, impacting struggling families hardest since they spend a higher percentage of their income on taxable goods than do the wealthy. In filling the gap without new taxes, let's learn from two neighboring cities, Yorba Linda. Yorba Linda's annual police cost is $240 per resident.

That's about half of Fullerton's four seventy three because they contract with the Orange County Sheriff's Department. The sheriff is happy to give us a bid if our city council asks for it. I think it's time they should. Placentia's annual fire cost is a $104 per resident compared to Fullerton's two sixty eight. Why?

Fullerton operates its own in house paramedics while Placentia contacts contracts that out to an ambulance company at a competitive rate. Following these models alone would save us 66,000,000 in annual savings doing it like Placentia and Yorba Linda. We should also look at the highest and best use for city owned properties. We're sitting on four vacant parcels in Northwest Fullerton, two along Bastion Sherry, one at the top of Euclid, and one West of Rolling Hills, totaling about 21.3 acres and valued at around 60 to $80,000,000. We should sell them.

And lastly, we have to look honestly at the Fullerton Airport. That 86 acres could be transformed into a planned walkable community of mixed housing types, parks, and neighborhood businesses. A sale would bring in 350 to $500,000,000 to the city as well as ongoing property taxes that provide the city with and local school districts plus new students to bolster sagging enrollment. The sale would be contingent upon remediation and and settling federal FAA loans, but it's still a huge potential windfall for the city. Now the airport has served Fullerton well for over a century, but long term trends for general aviation are not positive.

They're going down, and Fullerton airports like Fullerton do not have well, we have to reimagine their future, and I think it's time to do it. The last time a sales tax hike was proposed in 2020, Fullerton voters solidly defeated it. Before the city puts us another sales tax back on the ballot, we need to look at real savings and tangible assets that can be utilized. Now none of these ideas I presented here are new. They've all been discussed before. Now it's time to act on them. Thank you. And I have a copy here for you. I know that I let out some figures, Cheryl.

Thank you.

So I think it's good to just start with the fact that you guys, the city council needs to pass a budget in a month. So, a lot of novel ideas are being presented, but you guys have a budget to pass and recommend changes, one month from now. So we're gonna have to make cuts, and we don't have enough revenue. I mean, we went through all of the, all of our services about two meetings ago, or was it last meeting? And it was obvious that every department is punching above their weight when compared to other cities.

So, we do need revenue. That's a long term solution. I don't know if there's political will for it on the council, and there is someone on your committee who spent a lot of money, opposing that tax measure. So maybe if he could agree to not do that this time, that could be, it could actually pass. So we, yeah, we need to, we need to increase our tax. We need to increase the sales tax. Another part of it is just the way how sales tax is, allocated. A lot of it goes to the state at 7.75 and below. Everything's 7.75. But everything above that, the city gets a bigger share of it.

So we also need the revenue for that purpose. Lastly, a lot of these solutions are onetime funds, and we need a solution that actually addresses the annual structural deficit. So whether it's, you know, privatizing water or, selling land, I mean, I think that should be explored long term, but, it's not going to solve the actual structural deficit. You need to make cuts, and as staff showed you, 10% is what you would need to make. And that's a lot of, service reductions, which as the poll showed, is not what people want.

They do not want service reductions. That's what the survey showed. You guys got to ask questions about the specific questions they asked, and, you got to interview that person. So I hope that that's not going to be, undermined, that survey, because you had your chances to ask them already. Lastly, I would just say that, if you want to not do sales tax revenue, then say where the $13,700,000 are gonna come from.

5% from the police department is only $3,000,000, and that's our biggest fund. So where are you going to find the other 10,000,000? Are we just gonna it's a lot of money that we would have to cut from this, department. People don't want it. Just put the put the sales tax on the ballot, please. Thank you.

Hi, committee. My name is Steven Sherry, resident, District 2. I just wanted to give my, sort of thoughts and prayers for, commissioner Tony Boushala, who must be at the hantavirus, biocontainment lab in Nebraska because he hasn't been at any of these commission meetings in person I've been coming in February. So, I don't know what's going on with Tony, but he can't seem to to make a presence for such an important topic. For the sales tax, yes.

You are here. For the sales techs, I believe this is clearly a potential solution, a part of a solution. But like I mentioned last meeting, somebody has to be the champion for this. So if there's divisions, on this commission, on this committee, if there's divisions at council, I don't think that plays well to the public. You know?

There needs to be unanimous recommendations out of this committee, and there needs to be sort of unanimous votes from council to signal to the public that a sales tax is something that's in the best interest. And there's been a couple suggestions, some that I don't necessarily agree with, savings from going contract, but, from mister Norby. But where are those massive savings coming from? You know, we had both of our chiefs talking, about, our departments last meeting. There's not a lot of administrative fat.

There's not a lot of, you know, things that we can cut. So if you're if you're saying that you can get 50% savings by going contract, are you getting 50% less work by Orange County sheriffs? Are we getting 50% worse response times? You know, I could see some percentage of savings, but, you know, savings of 50%, I think, is it it leads to questions of what are we getting, from that contract. And I think that those questions need to be answered too.

It's not just as easy as getting a a quote from the sheriff's department. It's, you know, having those discussions with, the public that would, you know, see response times decline potentially, etcetera. So I think that would be a much broader discussion. I think that's all I have for today, but thank you for your time.

Do we have anyone online or anyone else that would like to share? Any raised hands? Okay. Okay. Can we have a bio break? Can we have a five minute recess? Thank you.

Absolutely. Thank you.

Accounted for?

Yep. We're all here.

Okay. So I guess are we coming back to committee?

Yeah. This is the point in the agenda where, if you have further questions, please ask. If you have just commentary please provide. Like I said, we had originally intended that this would be the time where we would get recommendations from the ad hoc committee, but I do recognize that we threw a lot of material at you. So depending on what the will of the committee members is, if we wanted to consider a follow-up meeting for the purposes of, you know, getting those recommendations and decisions from from this body at a at a future time, we could go through some available dates, but I'll leave it up to you at this time.

Okay. Yes. So committee members, please.

Mister city manager, is there a hard set date that you need the recommendation from the committee?

So there's a there's a hard date to put any, ballot measure on the ballot, and that right now set by the ROV is July 17. So we would want to get that in front of council, obviously, than that. There is a challenge in that the the only meeting in July is July 21. So now we're looking at we have two possible meetings in June, June 2 and June 16. Or the possibility, which I have not cleared with counsel, is do we have a special meeting either in late June or early July, for purposes of them, deciding on whether to put something on on the ballot.

So, I do think you have time for for one more meeting, but it should be scheduled within the next couple of weeks, if that's helpful.

Personally, being the junior most member of this ad hoc committee, I know that you guys have put in a tremendous amount you members have put a tremendous amount of time along with member Boushala as well, previously. Do you have anything that you would like to share as, you know, what are you went through this process prior. Is there anything that you would like to share from your previous service at all?

Are you talking to me?

I'm You You are you are you are welcome to I'm speaking to to the four previous members.

Okay. So I'll I'll go ahead and start. In our last ad hoc committee meeting, co chair Eric Wynn, he introduced the idea of creating an independent water district, Fullerton Water District. To me, that idea should be explored to the fullest extent. It may or may it may or may not be financial financially fruitful for the city. However, the only way to determine its viability is to thorough thoroughly analyze it. Tonight, mister Norby brought up another good idea that makes complete sense. Selling off the land at the Fullerton Airport. Close it down. Sell it, you know, sell it for housing, for industrial, for commercial.

Maybe a small portion of the land can stay for aviation, for, like, emergency helicopters, law enforcement, rescue, and fire, and so on. They don't need that entire area, but so helicopters just need a small section of that of that land. Now based on my research of the idea of a water district, the municipal district of Orange County, also known as the MWD, serves nearly 3,200,000 Orange County residents through 27 retail water agencies, which includes 13 cities, 13 water districts, and one groundwater wholesale agency. There are 27 independent special districts and seven dependent dependent special districts located in Orange County that provides municipal services, including water. There are 13 water districts in Orange County that are not run by city governments.

The MWD serves portions of Placentia, Cypress, Los Alamitos, Stanton, Buena Park, Garden Grove, La Palma, Rossmoor, Seal Beach, Orange, and Yorba Linda. The MWD service area covers all of Orange County with the exception of the cities of Anaheim, Fullerton, and Santa Ana. In closing, folks, five of us on this committee, we were summoned by the city council members, and I was summoned in the last round to provide some input, some fiscal input to the city council and to make some recommendations on how Fullerton could fund our aging infrastructure. When I was asked to be on this committee, I was thinking about the roads of Fullerton. That was kinda, like, in my idea.

The roads, the infrastructure. I did not actually, I didn't even realize we were in such, you know, financial hardship at that time. I just knew we were, you know, we were in a a world of hurt, our streets are. And so I thought, well, shoot. You know, the idea of creating a a private water district in Fullerton kind of appealing.

It could be possible funding source without raising taxes. I was supportive of a half a cent road tax and road and infrastructure dedicated sales tax. And I and I believe, and I truly believe right now as I'm speaking, that we would get, if it was on the ballot, that two third majority of the voters of Fullerton would vote it in because the voters that drive these streets every day, they're just like you and I. They hit those yeah. There's some good I gotta tell you.

Engineering department in the last, like, five years between Steven and David Gratham, they've done an amazing job. They paid more streaks in the last five years than I can remember that's been done in the last, like, forty years, but, it's it's been happening. You know? So people have been putting more, you know, council have been putting more emphasis into, hey. Let's let's fix the roads.

People are pissed off at us. So the roads have been slowly but if we're gonna do this, unfortunately, you know, there's gonna be have to be attached. And I truly agree with mister Norby. A a sales tax is totally regressive, and it harms the low income people. And the family the seniors that are on a fixed income, you know, small families, it doesn't affect, you know, probably most of the people in this room.

I'm sure it doesn't, that half a cent. But, you know, to those folks out there that are living on freak you know, they're living week to week paycheck to paycheck, It that it all adds up, man. And and now with the price of gas going up, and I can totally see. I've been around for quite a number of years. I've lived through two I've lived through a depression and a recession, not the great depression of the twenties.

But the one in '94, I called that a recession. That was bad. That was really bad. And, you know, I I can see that is starting, you know, with with, you know, I hope I don't insult anybody here, but, president, Trump and his cabinet and these wars and all it's it's ridiculous, and it's it's raising the cost of everything from a to z. And there's no reason why we should be in any wars.

You know? Everybody knows that. But, you know, it's it's not gonna stop. You know, it's just one war after the next after the next. And so I could see it. We're heading into recession. I I I felt it before, and I'm feeling it now. And I, you know, I I could just tell you guys because I'm I'm in the real estate business, and, you know, that's, that's my my business. So I I I'm feeling it right now, and other people are feeling it too. So, I guess, in closing, I would just say that the a 1% sales tax is gonna hurt poor people a lot more than a half a cent.

Well and now I know you're saying, well, we only need 50%, and we should get that 1¢. But that's that's not I I'm on this committee to make my to give you guys my my opinion, my thoughts, and and and those are them. And I appreciate everybody's input, even the folks that don't like me to come up here and blast me every every few weeks here. That's that's fine. I I it's all good. But, yeah, that's that's what I got. No. I'll I'll end it there. Thank you.

Thank you, member Bershala.

First, I wanted to just thank staff and everyone that presented tonight for a very comprehensive presentation. When I first looked into how I can give back to the community, that's how I came upon the, fiscal sustainability committee opening, and that's why I applied. I really wanted to make a difference. I have a young family here in Fullerton. My husband grew up in Fullerton, so I want the city to continue to grow and be sustainable and have a vibrant future.

I would have to say that hearing all the various presentation of this issue that we're facing right now is something we are inheriting from decades of decisions, policies, decisions, and things that were out of our control, that we really have the opportunity now to address the issue and make a difference. So I think, in my opinion, you have to look at this issue in a holistic way. I actually appreciate I think it was mister Hockey who went over, like, looking at it in an economic service funding, revenue, efficiency, growth, and communication standpoint and really addressing all those areas as a city as a whole. Because it's not just about raising revenue or cutting the budget, but we're gonna have to look at all the different areas that we need to improve on. So out of all the scenarios that staff have presented tonight, I think scenario five makes the most sense.

That's the $01 general sales tax with a 5% short term expenditure reduction. But just because it's a one year 5% doesn't mean that, you know, the sales tax passed and we're great, we're good, and we don't look at how we're deficient as a city and where we can improve upon. So I'm hoping that even after, certain things come into play and that if we do get a sales tax, $50 or $01 that the city continues to look at ways that we can become more efficient and just something that is more long term and sustainable. Those are my comments.

Thank you. And I too want to thank the staff. I really do appreciate all the time you put into to these reports and these presentations. I'm struck by the impossibility of trying to develop solutions for five years with a real lack of expertise and knowledge. And and I think it's legitimate we have paid for a fiscal auditor who's going to come up with good recommendations, and I I I suppose those recommendations should be considered before I would weigh in on my thoughts about privatization or selling off public land.

And I do have thoughts about those, but that feels like that's the thing that's gotta get done first. Where I guess I feel my role here is is that we are in a particular emergency. And the emergency is that we have a fiscal crisis ahead of us. And so I feel like I've been asked to weigh in about what's some stopgap things that I would recommend as well as some revenue enhancement that at least can instruct the council as they consider what the next fiscal year budget is going to be. So to that end, I thought the last time I served on this and and this time that I I I'm struck by the fact that the people that were surveyed, it looks like they are that's a pretty content group of people about their city.

They have things that they would like to change. Everybody does in their city, but I think people I have looked at many polls for many cities, and and those are generally people that are pretty happy with the quality of life in Fullerton. I certainly don't wanna be the one to change it with austerity measures. I believe that sales tax is the right way to go. I think the polling has demonstrated that there's not a lot of outs that we have nor avenues that we have.

I don't think that a designated tax is realistic from a from an electability standpoint, but I think a general tax is. And I agree with the sentiment, I think, that was expressed in the floor that we had all better kind of row together because it doesn't take a whole lot to sink a tax measure, especially when people are feeling uneasy about the war and gas prices, etcetera, etcetera, etcetera. So I would certainly favor a 1% sales tax, and I think it is critical that we examine an equitable 5% sounds like I think is about the right way to go reduction of of of of our budget because we can't be sure that that is going to pass, and it seems ridiculous to not do anything and hope that the thing passes and then be in a real bad bind as worse than we are right now if it doesn't. So I think I would land, and this, I think, is is is where, my fellow commissioners landed, which is the sales tax but with a five or so percent reduction. Thank you.

I'm kinda going back to, what one of the the commenters mentioned, in regards to, Grant Thornton. I I have had this issue in the past with records requests where, you know, you look for something older and the retention policy cuts that off. The the public commenter made that that same comment. And, so that's part of my question is how how, are you planning on, navigating that with getting information about about what happened and and who did it, considering that there's probably a lot of the probably a lot of the, emails, at least, of those things are are long since deleted.

Thank you very much for your question and I appreciate the the opportunity to to answer that. Communications, particularly email communications, are just one set of records. And while email retention records tend to be less than others, there's a lot of other documentation that is still available and still accessible for us to look at. And that can include things like entries into the accounting system. Those don't go away.

We can see who made the journal entries. We can see when the journal entries were made. We can look at property records. We can look at sales of properties. We can look at all of these things that are held for much longer than two to three years to try to determine when things happened, how they happened, how they were entered into the accounting system, and get context from there if the communications are not available. Does that answer your question?

That answers that part of it. Yes.

Okay.

The the other, the other consideration is, in in general, like, typically, if I wanna find something out, I I have to do records request. And and it's not just for for email communications. It's also financial documents or or things of that nature. Are are you going to be reliant on records request, or is there some other, process by which you get the documentation from the city? That might be a question for the city manager or

or I mean, when we hire a consultant, to do something like an audit, they don't have to put it in a PRA. They'll tell us what documents they want us to look for, and we'll do our best to try to find them if they're available.

Okay. Yeah. Okay. Got it.

And then, the the other thing, is that gonna would that include on, like, staff member interviews and, discussions with any specific staff members? And have have any of those been done?

Yes. We have been holding discussions with staff members and city council members. We've had multiple discussions in the past week. We have more scheduled for next week. Wait. I think we've had, what, five in the last week? And then we have plenty more scheduled next week. So those are in process and occurring as we speak.

Okay. And I I would assume that would be some of the major department heads.

The mayor, city manager, city council members, major department heads. We'll we'll talk to everybody.

Okay. I think that was all my questions about about you guys, so thank you. Okay.

No problem.

Going going back to the different scenarios, just to I always love my hypotheticals. Let's say that this this committee can't make any kind of a decision, and we just say, we just don't know what to do. And it goes to the council, and they just say, well, gosh, we can't either. We just don't know what to do, and nothing changes. At some point in 2027, cash reserves run down to zero. Aside from what what happens at that point, essentially? Is that state conservation kicks in at that point, or what what happens if that were to happen?

So I've been asked that question many times. You know, people talk about municipal bankruptcy, which is a unique process. I would ask if any members of the Grant Thornton team have have any observations on when a city runs out of its cash, kinda how that how that death process, if you wanna call it, how that plays out and what mechanisms there might be for addressing that. Obviously, it's my hope that we never get there, but it's it's a fair question to address.

I think it's important to make a clarification of what what we're talking about when we're talking about reserves because there's been a lot of talk about fund balance, which is what shows up on your financial statements and that is contains a lot of things that aren't necessarily related to cash. So there's a difference between what you have in your bank account and what's reported in your financial statements as fund balance. And there's a lot of different things that affect those two different buckets, so to speak. And there are things that affect fund balance that are not going to affect what's actually in the city's bank account and what cash you hold. In addition to cash, there's also assets.

So as has been discussed, there are things that can be sold. There are things that can be liquidated to increase cash flow and cash reserves. So while you may show a deficit in fund balance, that doesn't mean that you don't have any money in your bank account. And those two things happen at different points in time. So I think if you're showing a deficit in your fund balance but you still have cash, you're you're not gonna be at the point where you need to worry about bankruptcy actions.

You get to the point where your cash account is negative, then that's a different story. And again, it's a very complicated process. And to discuss when that process would start and how it would start would be something for a legal counsel to address, not not us. But I can tell you that cash and fund balance are two different things. So when we're we're talking about reserves and we're talking about how those are being spent, we need to be clear about the balance in the bank account versus fund balance on the financial.

Thank you.

I I I would say I I feel like this kinda moved into a little bit of a deliberation on with the the previous comments, and that's that's fine if if we're if we're ready to attempt that or to go there. I'd I'd curious if we'll be able to get a a majority on a decision tonight. But but I either way, if if we're doing some deliberating, then I for me, I think the dedicated sales tax, makes zero sense to me. The I I see that as a, as a possibly reasonable solution for a city with decent financial health, but a certain special problem. Maybe if it's infrastructure, maybe if it's a a police or fire, what whatever that may be.

But that's not where that's not where Fullerton's at right now. Our roads are in in not great shape. That is that is definitely true, but we also just have a overall city budget that is not healthy. The the idea of passing a special sales tax, and having either 15,000,000 or 30,000,000 going towards that infrastructure fund, that sounds great, but what I'm noticing from these these scenarios is that that somehow heals the rest of the budget. And I think what's going on there is the the money that is currently being transferred to that to those funds, stops because now we have the special sales tax funding that.

So now we can take that, and that can go over to spend it on non things, on things that aren't aren't relevant to that special sales tax, which to me is just being dishonest to to the taxpayers and the voters. So I I I would not be supportive of a a special sales tax. The the general sales tax, for me, it's it's it's too much. It's too big of a bite. You know, the the polling that we looked at in the past about the cost of living, it's only gotten drastically worse since that polling was done.

That hasn't improved. And the the idea of extracting that from the taxpayer when there's already so much pressure on them, I just think of all the people that are barely getting by. And just that that little nudge, that could be enough. That could be enough to have them not getting by. And then they're they're homeless, and they're then they're they're going into, you know, needing government assistance to get by.

And and the government assistance, the nasty little thing about that is every every million dollars you give out, a giant chunk of that's going to the bureaucracy to run that. And so there's a there's a big inefficiency in doing that versus just letting people keep their money. So that's that's where I am with those. I I think for me, the thing that makes the most sense is to explore, like I mentioned, the the previous meeting, the sell off of the water system. There's a there's a lot of things that can be done with that.

Just just to go over some benefits because that's that's kind of the industry I worked in for so long. Right now, Fullerton Water has to charge everybody. Everybody kinda has the same rate structure. That's required by law. You can't you can't charge one person one thing and another different.

With private companies, that's not the case. And what most of them do is have something like like with Southern California Edison. If you are a low income person, you get a special discounted rate. Well, most of them do that with water. I'm giving those people that are just on the on the brink of not being able to pay their bills, giving them a 25% discount on their water.

That sounds that sounds really good to me. When I brought that up last week, I had brought that up as the possibility of not having any layoffs, and I wanted to make to make sure that it was missed that it was understood correctly. That includes the the current water employees. Having worked with them, they're fantastic. We have a a a great a great water department in the city, and that would absolutely be one of the very first things, on the demands of anyone that might potentially purchase would be retention of all those employees.

It's kind of a funny position right now because the previous water production supervisor, I won't name him, but he's a he's a good dude. About a year and a half ago, he left the city of Fullerton, and he went to one of the private water companies that I assume would probably want to bid on this if if it was a possibility. And he likes to come around and talk to the other employees and talks about his pay and his benefits and his company car. And so that's a that's a another benefit that could come with that. And, again, that's without without asking people to pay more.

It's giving it's giving some employees a a nice advantage, and it's not cutting the rest. The the other thing I would say about that is just making that recommendation to look into it doesn't have a cost to it. Whether it's an RFP or an RFQ or whatever the route for that, that doesn't mean it's going to happen. There's all kinds of off ramps to take if this doesn't make sense or if it's not gonna work out time wise or or anything of that nature. There's there's a ton of different off ramps if this doesn't if this isn't looking like it's gonna be right for us.

And and in the end, this probably would have to be voted on anyways in a referendum. So just putting that up and giving the voters a choice on that seems to me like it would be the least the least painful. And as as far as, like, a one time sale, it's not really a onetime sale from the perspective of right now, any property that the city has water resources on, the city gets no property tax on. Well, if a private company buys that, they're now paying property tax. So there's an increase in your property tax from that.

Most cities that have done this will add on a a franchise fee so the city does collect revenue from that. And that's that's one of the things that we can determine potentially on what what that what that amount might be. And I I I don't know. I mean, this is just from working with different water departments and seeing what others have sold for and all that. We could probably get about $200,000,000.

That's just that's just my my guess right now. It's probably about $200,000,000. And what we have, I'd about a $100,000,000 shortfall in infrastructure right now. Imagine every street being paved within a couple years. Don't have a heart attack, mister Graham.

It's a it's a possibility. Is it sure to happen? Well, I I I don't have a way of knowing that, but it seems to me like that is the least costly, most advantageous option we have in front of us. I'll I'll kinda go back to what we talked about, like, during the polling, you know, the the possibility of a of a general sales tax being being passed. It seemed like there was some, some indication from the polling like that was possible.

But I'll I'll remind you this is this is echoes of 2020. I I heard the same thing in 2020. And if staff just spends money on education, well, that's exactly what happened in 2020. There's a whole bunch of spending on education. And for for as a taxpayer that was under a lot of financial pressure at the time, just kind of knowing that my taxes were going to staff to try to raise taxes on me was it was kind of a dirty feeling. But in in spite of all that, all the money that was spent, voters still 57% said no. That's on a general sales tax. 57% no. That wasn't really close. That wasn't really close.

That was a that was a pretty loud answer from them that that that was not acceptable to them. So I I don't I don't think the sales tax is the way to go. I think we have a better option in front of us, And that's that's where I would be that's where I would be going with this.

Thank you. So I just wanna really thank staff. Obviously, there's a lot of information to consider and findings. Staff has made some really good suggestions. I know that at the last meeting, they were saying this is a first pass.

I don't know if, there's been any changes in their thoughts since the initial first pass or they've come up with anything else, that they would like to share. I'm assuming that that was shared tonight. But with Grant Thornton analysis, we we really we have so much that's supposed to that will be forthcoming. So we need to use the findings to help break the cycle and make movement towards long long term sustainable changes to improve our financial stability. We need some structural changes.

Obviously, we talked about this tax and obviously it's about a nine month period until we would see an income from the tax. Decisions need to be made and action needs to be taken now. I look at this having served one term on infrastructure and having been the chair of the water bill dispute panel. This is something that I am particularly interested in and passionate for as a lifelong resident of Fullerton. One of the things that I really value and and love about my town is is the history, the richness, the architectural integrity, our beautiful police department building, which obviously needs it needs some love.

And we have, you know, aging we have aging facilities and all of this coming, and and it's coming at us quickly. We have obligations, with the MOE. I actually attended last month's, infrastructure meeting where and please, mister Grantham, correct me if I'm wrong, but I have a benchmark requirement of 5,000,890, thousand $993 is about the benchmark requirement that we have to hit, annually to be able to keep that m two funding and have that threshold. And also to the presentation about the water infrastructure projects. They basically had to say within the CIP, there's no money for water infrastructure projects at the time.

Is that correct, mister Grantham? I'm sorry. I just wanna make sure that I have it all factually correct.

Very close.

Very

close. MOE is higher. It's 5,900,000.

5,900,000.

So we're calling it 6,000,000. Okay. And the water, they do have money. It's just significantly reduced from previous years. Our revenue is going down.

Mhmm.

Previous years, we had used some of our available cash from balance. We are moving away from using a lot of that now. And so our available budget or our proposed budget for next year is greatly reduced than the previous years.

Okay. Thank you. And and for myself, and and all of you know, for all of our residents, quality of life issues for residents, none of that diminishes their expectation for meeting the basic, requirements that we have as a local, you know, as a local municipality and providing them taxpayers what they feel that they are are giving to. And as a commercial and a residential rate payer, I see both sides, and I experienced some rate differences. And the current economic and, business climate for our residences residents are being impacted and but and and I feel that as well.

I think that we have MOE thresholds to be maintained. I feel that there's deliverables. I think communication to residents really needs to be improved. One of the things that I've been passionate about and, oh, thank you, miss the honorable Mr. Norby has joined us again. I wanted to thank you, Mr. Norby. These are great suggestions and and you really put a lot of time into this along with Doctor. Sue Ling Chen who emailed the city manager and myself with some great suggestions. We have amazing residents that passionately love their community and want to serve it.

And so at I will say at this time, I mean, I believe we have daunting infrastructure needs. I personally I really would like to see what the what the findings from Grant Thornton comes comes back. At this time, I'm not ready to make any type of recommendation. I could say that I would be leaning more towards, scenario four, and that would have to be a dedicated infrastructure tax. I think that we have we have some trust issues with with our residents, and I think that we need to kind of shore shore that up.

I think that many times there's issues that are coming to people sitting on the dais that didn't even make those decisions, you know, especially, like, when you talk about CIPs and things like that, projects that went in the the duration of the time that it takes to put out the RFP, go through the process, put it into InDesign. Many times it could have been another city manager that was was heading that or or or that department. We have an amazing staff, really dedicated, and I really truly appreciate the fact that many of you have really been wearing multiple hats and and and truly care. And so at this time, I I hope that I'm not disappointing any of my committee members, but I really really want to see what you bring back. That's I I don't wanna hold anything up, but I I do think that this is this this is very important.

I think that this is we're we're really at an inflection point, and we have to make some changes. And, I think you have amazing staff and dedicated staff that are here, and council care about the city. We have so much to offer. This is an amazing, proud town, and I just I wanna see it shine again. So, at this time, I'm I'm sorry. I hope I don't disappoint the committee, but I'm not ready to I'm not ready to commit with the without hearing more findings. Is that okay, mister city manager?

I'm gonna say yes. We're we're here to to get your your honest thoughts and concerns, about this budget situation. You are correct that, having the value of Grant Thornton's findings, I think, would be valuable. However, time is not on our side when it comes to placement of a ballot measure. So at least as far as I can tell from from this evening, I don't I don't know if there'd be much additional information that staff could provide at any future meeting.

If if the if the committee felt it was valuable to come back one more time, I would entertain it. But if if if nothing is really going to change in the next two weeks, I would say that I probably just go through the record of our three meetings and distill those comments, concerns, recommendations that that we've heard thus far. And I'll get them to the to the city council and start the the conversations with them. What what I've seen in your deliberations does not surprise me. Chair Wozab, you and I spoke earlier, and I I kinda told you essentially welcome to the party.

This is kind of an impossible task. The you asked me also well, you asked out loud just now whether staff had any kind of additional thoughts after a first pass. I can tell you we've struggled as a as a staff, much like you're struggling on the dais. Right now, the the 5% reductions are not substantively different than what they were during the last, presentation. So there is there is pain to be had.

That doesn't mean we don't still go through our budget with a fine tooth comb and still look for some some answers from Grant Thornton through through the audit process. We will continue to do that. But we are kind of in a scenario where while we are still looking for budget balancing measures, we also have to if we're gonna try to get on the ballot, we have to move that forward. So I personally would consider the work of the ad hoc committee to be essentially be done. If council wants to to reconvene the ad hoc committee at some future time based on new information, based on a new charge, then I think we'll we'll just have to see what what their what their will is.

So I personally, thank you, all of you, for your for your time and your your thoughtfulness and your your your love for the city. But I think, again, my my understanding is that we were here to get your input. I feel like we have received the input that you are able to give at this point, and so I would, at this point, just thank you for your service to the city. And I I think we're done, but, again, if you if you believe otherwise, please let me know.

If if I could just, just a brief comment on that. The at the the last meeting, it was a very long presentation, and I I I understood there was a lot to get through, and that that was fine. What I kind of expected for tonight was to have the Grant Thornton portion, the polling, and then kinda get into the the deliberation. I I didn't expect it to be, like, kind of another almost two hours of of presentation. And for me, that kinda pushed us back into not having time to deliberate or or discuss.

And I I'm I'm not complaining about how that how that happened, but I would say if we did convene another meeting, I I would certainly prefer the presentation portion to be very brief and then for us to have ample time to kinda talk and discuss and and and argue and and get somewhere.

I appreciate that. I'm I'm more than willing to come back one more time. The focus would be to hear the focus of of any follow-up meeting would be your deliberations. I think a presentation at at a next meeting would simply be kind of a a quick overview of maybe some of the comments and concerns you have raised previously just so that they're fresh in your mind, but we'll have all the presentations available. But certainly, I'm I would not I would not burden you with having to to sit through another two hours of of presentations.

So it it would really be, hopefully, you've had a couple weeks to to digest and maybe ask us some questions, you know, on offline ahead of the meeting, but then come back prepared to to dig in and and give us your your final thoughts.

I would just ask a committee member when this specific committee was set up to gather your input on a sales tax measure. If there's no additional input regarding that sales tax measure, that would adjourn the ad hoc committee. This is not a standing committee to just have additional conversations, regarding our fiscal sustainability. Even though that's in the name, the specific charge was on the sales tax measures. It had a much broader iteration on the first round. So it would be dependent on council to bring back an ad hoc committee or a standing committee for further discussions on other topics if you'd like to discuss other topics.

Okay. I think it was made really clear to us, especially just in an email yesterday that other recommendations would be entertained. If if it was just for feedback on the sales tax, then I I think I said no about me. So you have that. And if you're not interested in hearing about the rest, then that is noted.

Yeah. I don't, you know, I don't wanna slam the door, on any further dialogue. I I I don't think that's, productive. But but, again, I am going to defer to the to the majority here on the committee. I I feel like I've heard two firm votes of support for moving forward with placement of a sales tax on the ballot.

I've heard two but I've well, I've heard one firm against, and I've heard one for a special and then one undecided. So if if again, if we think a little reflection and and one more round of dialogue can can move the needle in any way, I'm happy to to come back and and get it done.

Committee member one one one more item. While we're here tonight and we have the privilege of having the full Grant Thornton team here, I'm sure they're happy to provide some broad perspective from a timeline perspective what selling off and privatizing our water looks like to give you an idea of how much time we'd have to find other solutions before we can, count on any revenue from that if it were to come through. Would you would you like them to present that information?

I I said I was already aware.

Oh, thank you. I

also think that I've shared feeling this sense of urgency for a while. We've had three canceled meetings. We started these meetings later than we had anticipated. So I do feel that this is a truncated amount of time. And for me, this is it's almost kind of like drinking out of a fire hose each time we have this these meetings.

It's a tremendous amount of information. I as you know, I contact you you, other other, staff members when I have questions because I need clarification. I think we all take this very seriously. It has been said that it's been you know, we're a dog and pony show or we're supposed to rubber stamp something, and I don't think any of us feel that way. And I I'm well aware of the what it takes, with the deadline of ballot measure coming up, what it takes to put, the verbiage on, and it's it's it's a daunting task.

We also have a, I guess, a city council meeting that's not gonna be that's being moved. And so I know that we're on a tight timeline. I I just you know, I'm very interested in finding out what their findings are. I was not a supporter of a general sales tax in 2020. I see very specific and dire needs that we have in the infrastructure, and, I do think that something needs to be done.

I just would like to have a little bit more information, but I don't wanna hold up. I I, you know, I don't know if I need to abstain. I don't know if we're taking an an official an official an official vote. So I I I'll be honest with you. I think that I was under the impression that we were gonna be getting more information, and and it seems like we're coming to a a quick close. So but I I expect the fact that you have a lot to get accomplished in this short amount of time.

I mean, if I could just ask what if there's additional information you you need, we're happy to bring it back.

There's there's one, two, three, possibly three phases of what they're gonna be doing. I don't think I mean, I in all honesty, I we you want to do it well and not fast. So it's not something that we may get, and I

I understand now.

Okay. You you see what I'm saying? So

I think just echoing what Daisy was saying, if the purpose of this was for our recommendation on a sales tax measure, I think you got our recommendation already. And then if there's anything else further that we need to explore, then that's something,

I guess, council's gonna have

to decide if they want the committee to have input on. Are you mister city manager, are you presenting all of our various recommendation to city council?

I will.

Yeah. Okay. Then I would recommend we just vote and see if we're all, at least get a majority of being good with the recommendations that we have stated tonight and move forward or if we would have a majority that wants to meet for a final time.

I think that's a proper vote at this time.

I have a question for staff. If there was a specific tax that was on the ballot and it got approved, let's say it was a infrastructure tax and two thirds of the voters approved it, Is is it true that the city could stop sending the amount of money that they send currently every year? And I I don't know. Maybe there's certain a amount that has to be sent because of measure m, or I I I don't know how or is that just up to the council to determine what percentage of the of the budget goes to the roads or goes to other departments as, you know or is there a specific amount that has been by by policy or by something, by ordinance or resolution that a certain percentage of the budget goes to the maintenance department or, yeah, goes to maintaining the city's roads. Is is that is that not true?

They could just cut off the funding if if it did if a special tax, a two thirds utility tab excuse me, infrastructure road tax was approved, could the city council just say, okay. They got their money. Now we're gonna start using the money for other things. Could they do that? Eddie?

I can answer that.

Daisy's gonna jump in, but right now, we do have an infrastructure ordinance in place that has a specified formula as to how much money goes to roads. I don't think necessarily that a a special tax would undo that ordinance, but there is there has been dialogue as to if there was a special tax that now completely funded infrastructure, would that ordinance need to be need to remain in place as that funding source? So there is there is a decision, I think, to be made by by the council when placing an item on the ballot as to what kind of guardrails or other measures they would include with that placement.

Uh-huh. Okay. Well, could could our I mean, I know that we're not gonna come up with the language that's gonna be on the ballot, but perhaps we could. We could maybe craft it so that when people voted for it, they were voting for the special tags and also knowing that the city you know, the current funds that are going to the infrastructure for maintenance and engineering, it's gonna continue. Could could we draft a if if we if we got a if we got a majority of the council with two thirds, I think it would take two thirds of the council to put a a special tax on the ballot, but it would take four fifths to put a general is it a general tax on the ballot.

Is that true? Is that correct?

That is Yeah. We need three for a special and four for a general. Okay.

Okay.

Member, Bischalla, if I could just add some more context. So there is the city council may decide if they decided, let's say, hypothetical, they wanted to put an infrastructure, ballot measure on the ballot. They could decide in that ordinance if they would like to repeal and replace the existing infrastructure ordinance with an infrastructure tax. But it takes three votes to put the sales tax on there, but it takes four votes to repeal and replace the infrastructure ordinance. So that would if council wanted to do that, they would need four votes for both.

Okay. Okay.

Or four

Thank you.

They could so it it would be it would have to be a two pronged question or two separate items, in order for an infrastructure tax to replace the infrastructure ordinance. Now if your recommendation is that an infrastructure tax be in addition to an infrastructure ordinance, we're happy to take that recommendation and provide that to the city council.

I would like to change my well, I didn't I guess there was no recommendation, but I would like to change my position to require that be the case. If there was a infrastructure tax, a specific road tax that was approved, that along with that that the amount of funds that are now in place by ordinance or by resolution stay in place. So so that that would be my that would be my recommendation because yeah. For sure. Thank you.

And then committee member Boushalo with that recommendation, is there a amount of infrastructure tax that you would be supportive of?

A half a cent.

Thank you.

Mister city manager, I think from all of our recommendations that we heard tonight, we have a majority of for a no for a dedicated sales tax.

So what we can do is go down the list of each scenario and just get a initial vote. You can just say yes or no to each of those, and then we can provide the final list to counsel so that they can see the support for each scenario. So we can say scenario one, how many are you in many yes, how many no, scenario two, and just go down the full list if you'd like. Or if there's if you only wanna vote on a couple, we're happy to do that as well.

So I was a little agnostic about the idea of meeting again. I wonder, and and maybe I'll I'll put it to my colleagues here, if there are elements of this whether I know you've brought up Sunset. I have brought up Sunset. There are are aspects of attacks that we haven't even pulled on but may be worth discussion. And there may be a battery of these things, and I think you just brought up one and Commissioner Bashalla brought up another.

Would it be worth having a subsequent meeting where some of those options were laid out and thought through when we could properly ask questions about the consequence, fiscal and otherwise, and so that we could come to some having consensus with a tax that met certain parameters.

One of the things one of the things that I requested, and I think that I was not the only one, I thought that we were gonna be receiving the questions so that we would be able to see what those polling questions were, not just necessarily the the percentages of am I am I correct?

That was

that was specifically requested, the questions.

So I'm gonna have to get back to the committee members on whether that's going to be feasible. It's not it's not been offered, by the pollster that I need to check with legal and see if that is even possible.

I actually, I did have a question that I thought about for m three. I wanted to know if the pollster felt that it is a too tight of a timeline for education messaging to residents and and and to voters. I want I actually wanted to ask him that. I mean, I know that he did education before a question, after a question, but I was just I mean, the messaging to our voters and getting that out and and if we're gonna do I know that I saw something about, like, there would be a study session or community meetings and things like that, and I I completely understand we are on a tight timeline for that, but I also think it's very I'm sorry if I go back to 2020, but I also think that clear messaging is really important for our voters and for our residents. And I'm not sure exactly how to do that, but I I do think that it's very important so they clearly understand, what it is.

If we add something to it in the way of making sure that people understand that there is an existing infrastructure fund that needs to be kept in place. I I just think that sometimes the wording on a ballot measure can it's it's important to have it as clear as possible.

I I understand and, that the language is important, the education is important. It's it's essential for for the success of a measure. But those are all items that that staff, would deal with if and when it actually gets placed on the ballot, and and we're not there yet.

I I wanna follow-up about the, the the polling questions. Did you say it might not be legally possible to share with us what those polling questions were?

I did say I wanna check with legal just to make sure that would be okay.

Under what circumstances would a committee be given poll results and and have the polling questions be forbidden from them?

I don't know, but I will be asking.

Okay.

I mean, I I am in agreement. We have we have some consensus, And so I I go ahead. Member DeWong.

So I guess, Daisy, to answer your question that you were starting, if we can just vote on if a 5% or a half cent dedicated sales tax, yes or no on that, a 1¢ general sales tax? I guess we can start there because, really, it's about the sales tax measure. Right?

I'm sorry. Can you you repeat the three?

Oh, it's just the two.

Oh, so a half cent infrastructure or

Dedicated. Right.

And a 1¢ general?

I I would say that if if we could make that half a cent sales tax contingent on the the

Existing infrastructure ordinance?

Yes. Exactly.

Okay. And then I did receive a message from our polling consultant who let us know that the questions are listed in small print at the bottom of each slide. So I will email the his presentation to you so that you can see those.

So are we are we taking a vote here? What are we doing?

Yeah. If the chair is ready to call the vote, we can do that.

Can I try one more time on this? Yeah. Because, look. I I sort of see that some movement is happening, and so I if we take a vote, I suspect I know where it's all going to land, and we're gonna be locked out and sort of similar to the last time we did this. And so, again, I I would ask the question if there are parameters.

Commissioner Bushaw was sort of laying out one. I I gotta think about it, and I probably wanna ask more questions about it. There may be others. If it's worth it, then I would recommend we have a short meeting or another meeting to discuss some of those various parameters that, you know, half a percent or 1% or what have you with sunsets or other things. I just kind of wanted direction from my colleagues here about whether that actually could help us reach a majority.

I I guess my recommendation is why don't we take the preliminary vote? And then after that, we can decide on an additional meeting with some of the questions or stuff that the city manager said he will get back to

us on.

And and I've I've I'm totally fine with that. And and I would think that initial vote can include some of those conditionals like mister Bushal was was mentioning. Right. There's no harm in that.

Okay. So the action is for a half cent dedicated sales tax with existing infrastructure funding maintained. Committee member Buscola?

Aye.

Committee member Duong?

No.

Committee member Smith?

No.

Vice chair Wayne?

No.

Chair Wozab?

So that would be half a cent with existing keeping the infrastructure existing infrastructure ordinance in place. Yes. Yes.

So the motion fails. Two three vote.

I believe there was also a request to call the vote for a 1¢ general. Was there any other discussion before the chair would like to call that vote?

Mr. Bushana, were there were there any conditions you wanted to place on that, or are you ready to vote?

No. I'm I'm I'm not gonna vote for that, so no conditions.

Okay. Go ahead and call the vote, please.

Committee member Bushala?

No. Committee member Dua?

Yes.

Committee member Smith?

Yes.

Vice chair Wing?

No.

Chair Wozam?

No.

And the motion, fails. Two three vote.

So at this time, it really is just about whether or not any of the committee members feel like an additional meeting would be fruitful.

Maybe maybe before doing that, if we would also have a vote on the the idea to look at the the water sale. I would I would move to recommend that to exploring that.

Is there a second?

A second.

Okay. So let's take the vote. Committee member Broussala?

Aye.

Committee member Duong?

No. Committee

member Smith?

No.

Vice chair Wayne?

Aye.

Chair Wozab? Yes.

And the motion passes. Three two vote.

So, again, I I feel like the, at least the the consensus opinions of of the committee have been teased out here with this discussion and these votes. But, again, if there is a if there's a desire to come back for any particular reason, let us know. Otherwise, I think we can probably conclude.

There being no further business, the 05/14/2026 regular meeting of the fiscal sustainability ad hoc committee is adjourned at 09:17.

Thank you very much for

your time.