Council Budget and Finance Committee - Regular Meeting

Okay. Thank you. Good afternoon. Good evening. It is Wednesday, 12/17/2025. It is 05:35PM. This is council budget and finance committee. And if miss Hatfield can please call I call this meeting in order. And if miss Hatfield, can you please stay well?

Sure. Mayor Sweeney? Present. Councilmember Cyret?

Present.

Councilmember of Honiga and Judy? Thank you.

Thank you. We have quorum. Next is public comment. Is there anybody in the public that would like to make a public comment on something that is, that is not on the agenda. Is there anybody in the audience that would like to make a public comment on something that's on the agenda? But, mister Hernandez. Yeah.

Hi. I'm representing Houston Citizens, and we wanted to show our support for the new city manager. Mhmm. I'm here representing the group. And just to show your support, we're excited that you've been involved in fundraising and grant writing and all of that.

And the we can get pretty hopes that that will help. You know, by budget deficit and some of the things that you said last night at the city council meeting regarding needed cuts to make some decisions and then some furloughing of people who are fired, you know, for both the floor and so on, then we wanna support you and your decisions because we feel like, you know, you've you've been at a word. You're coming back. You have a lot of experience, and you just arrived. And we know that you're probably feeling some pressure from the unions, and we just wanna show our story of decisions. Thank you. You're welcome.

Thank you. Seeing no more. I oh, sorry.

One additional one printed out.

Oh, oh, this is the public comment. Okay. Great. I let the record acknowledge that we have a public comment that was printed by Cardinal. And so there's a request for feedback on the record. How do you think how long the.

Yeah.

This is

a very other

other. Yeah. Exactly. The one

totally accessible. Yes.

Well, if mister Snyder's watching, I'll I'll be referencing this in

the discussion. Don't worry. Great. Thank you. Okay. So moving on to moving on to so I'll close public comments and move on to approval of this.

Again. Moved by council member Second. Soterov, seconded by council member.

There are no objections. It will be unanimously passed. Thank you.

So the next item number

well, actually, item number one and two, can we just list them? I'll move that into two. Okay. Move my counselor up a second. Okay. Moving on to item number three with reported discussion. I said it's a fiscal year twenty twenty five, twenty six. Budget. I believe, will our

capable Presentation.

I can direct their take care.

Oh, no offense.

I can't even know.

Alright. So some of these items you've seen before, we're just gonna take them into a little bit more detail for you as the budget finance committee, walk us towards what's gonna happen over the next few months. So I think we're going to the next slide. So as we discussed last night, staff is rebuilding the budget. That's grand. So, basically, while we know that we're getting to zero, there's very specific line items that need to be modified in the budget. There I would say there's at least a 100. Nick might know better than me. Yeah. More than that.

So, for example and we'll get into that as we go to the next slide. So then we'll have a approved accurate budget that matches, what you've heard about, and then we'll be able to present new budget to actuals on a regular basis. And we'll show you what a sample of that looks like a little bit later. And department heads will have another report that's more detailed to review with the city manager on a regular basis. So if we go to the next slide. So, again, this is what you've seen. And just by way of example, like, additional vacancies and recovery reductions, that could be in many lines. And so we need to take those vacancies out of the salaries budget and benefits budget. So, yeah, it's hundreds of lines. For each employee, that's a vacancy.

That's a voluntary separation. And so that's what that time is that we're spending getting all those lines right. Otherwise, it's not meaningful for the department heads to look at their budget reports. So that's the big work that's going on in the background. It's it's some of them are less difficult, transit occupancy tax, measure c. From a budget perspective, those are one liners, but there is there are many of them that that are a number of more lines. So we just wanna share this that you've seen before as an example of kind of that activity that's going on.

I have a quick question. Yes. Of course. When are number two and three gonna begin and perhaps finish and be realized?

They've they've started. So for example, we're looking at deposits that have come in and making sure that if the expenses have occurred, we've brought the deposit money in. And so some of that's happening in our accounting team so far. So it's just a matter of making sure it reflected on this chart. We're doing business tax audit. And so if there's businesses that haven't paid, we'll be collecting from them. And so we'll show those as the actuals change. But we I think some of those are ready for the budget to get updated, and then we'll see how it's performing against the budget.

And what about the 1.9?

The the

The onetime transfer.

Yes. It's like the cost allocation. We're all looking at cost allocate. So these are items that the the the good news with that one is this can happen really any time in the year. It's just splitting out other funds and making sure that the if those funds have additional funds, we can move that over. If we're not appropriately reviewing, like, how we allocate, you know, our cost to different funds. So this can always go back retroactively too. So

Yes. That's just waiting for the it's waiting for the budget to begin there so we can see it.

Know when I start to

see those.

See those those

too pick up. Yeah. But the change we did make was in that personnel related savings. So last night, you saw it at 3,000,000, and now we're up at 5,000,000. Yeah.

So it's

gonna this this is going to be a very fluid document, which is always gonna be true of budget to actuals. The budget would change only if we bring you something to approve new appropriations, but the actuals would be changing constantly. That happens when we pay bills, when we do a payroll, when we do a bank reconciliation and change journals, when the property taxes come in, and we enter them into our system because it's a wire transfer. So it's just transactions happening, you know, absolutely daily, multiple times a day that are affecting the actions. So next slide.

This is a a preview of what the report we'll be looking at to share with you. So this is the revenue, so it's a little bit of a longer set of information. So we use for now, because we don't have the right budget in '26, we use '25 to give you an example. Revenue, you want to be over a 100%. Expenses, you don't.

So in this case, we have some revenues last year. Again, Sherry, as an example, that underperformed and some revenues that that were above you know, at the end of the year, we were 96% of our revenue. That's definitely an area we wanna see at more than a 100. And I think the important thing to understand in the revenues is quite a few of the revenues come in behind because they they come they they're collected after tax. So sales tax is during the two months. So in December, we're getting October sales tax or September. In In December or even September. September. Sorry about that. Yeah.

Property tax comes in December, April, July. So there'll be some some notes that'll explain, like, where we should be at as we do the revenues. Transit Oxygen Dance is another one. Hotels have a a month after the month ends to send it in, so you'll see that being a monthly

And the investment income gives you two to 5% there?

Yeah. Investment income because there was no money in the general fund. It wasn't earning interest. Got it. And, again, this is from last year. This year, we dropped that budget way down. We do still get a little bit of interest income from some specific transactions, but it'll be a very small number. We left it at zero because it'll be something very, small. Then expenses. So we'll be doing it at a high level salaries and benefits, maintenance and utilities. I don't know your level. So encumbrances, are you familiar with that's purchase orders where we've committed the funds but may or may not have spent them? As a more conservative measure, we include encumbrances. So you might see some things that are if, let's say, we're halfway through the year, you might see some things that are over 50% because we've encumbered it for the year. Maybe we paid every month.

But if we're not encumbering it, things like a utility bill, don't encumber. We just pay it when it comes in. You'll see those should be performing below 50% at halfway through the year because you're paying your electric bill after the month closes as an example.

So when you say this is what we're gonna be seeing, what what do you mean by that? We're gonna where where where are we gonna be seeing?

We'll bring those reports, I think, initially, on a, for example, a monthly basis. We'll we'll Mhmm. And we'll welcome welcome your feedback Mhmm. As we go through this year. But, hopefully, a more common is quarterly or midyear. Mhmm. I think in the situation we're in, we're we're talking through what that timing looks like, but we wanted to hear from you as well. Awesome.

Just

yes, also the format and just making sure you feel like this is the format you were thinking. Because there are ways we can tweak this, right,

in terms

of format. So it was also just, like, almost like a template.

Like, does

this Okay.

Yeah. Make sense to you? And then what is the cadence you wanna see this updated? I just wanna caution that because revenues and other things are a lumpy delay, I'm not sure it's gonna be really instructive to do it over two weeks, for instance. But every month or every committing a game, that that might be worthwhile. But I don't think there's a need to look at it so frequently because it's not it's gonna be too it'll fluctuate too much. Yeah. But does this format make sense to you and intuitive? Yeah. I think it may.

I think the the the is mostly intuitive. I think understanding by the department would be helpful too just so it's not in about more of this 200,000,000 block, but we certainly understand other departments where we're under budgeting, for example, and we're paying way more than we think other departments are budgeting a lot for that are calling other departments to receive less, and we have to be able to ask. There's lots of questions if we're trying to think about this structurally.

Yeah. I think that's fair. I I don't know that you wanna see do you wanna I don't know that we'd wanna see all this detail very well. This is more like rolled up. Yeah. So maybe there's a shorter, like, salaries. You know, like, maybe there's, three or four different items.

Yeah. I I think also it'd be, an overtime in the bottom. Know that's a big concern, We can do an overtime. Maybe they please fire an all other Yeah. And and look at that on that. That's a good idea. Yeah. That's that's gonna be where some of your and if if I I'll take a look and if there's some other areas that have been big drivers you know, overages, then we can add those. But I think for now, that might be a bottom line that says overtime. Mhmm. Again, please fire all others, and you can see where that's performing.

That makes sense to me. And the the only one that I mean, that's just helpful for us being to start having some metrics. And I know that suggestions are difficult, but we are able to look back, and we've received data before on historical trends. So making sure that this is just this is just a snapshot in time where

we have maybe a comparable year or two Mhmm.

Or fives, you know, so we're able to see, like, is this a trend that we've created that needs to be corrected, or is this a healthy, you know, path? Yeah.

So we can do that as a separate report, one that's kind of looking back five years Yeah. In actuals and one that's looking at budget versus actuals for the current year. Yeah. It gets confusing if you're commingling, like, past year's Yeah. Budget next year. Yeah.

We need actual information that allows us to to actually get guidance to make that decisions.

Yeah. Yeah.

Yeah. So we could do, for example, maybe every three months of well, the five year backlog won't change. Maybe we could do it as a separate

Yeah.

A separate slide or something. Yeah. And then these can be, like, their current year.

Thank you so much for this. One of the things that I that I would wanna see is sort of a month by month rolling, you know, view of this, and then we can get to the aggregate at the end. But I would love to see kind of what did January look like, February, you know, month by month, we'll just fill it in, right, versus an aggregate. And then the other thing is, you know, I agree because the revenue is kind lumpy, so I'm not as concerned with that. And our revenue projections haven't really been that off. Right? It's been more of our expense projections. Right. And I think we can probably do trending of budget to actuals on expenses on a monthly basis independent of revenue trends just to see, are we actually trending the way that we had expected?

I mean, I think

the majority is gonna be because the majority of things like salaries and benefits, those are every other week. And then the and then and I think as Diana said, the supplies and services and maintenance utilities will include the encumbrances, meaning that the department plans on spending that. So as, yeah, as she said, it's gonna look bigger. Like, yeah, it'll look like they spent more in the beginning of the year. We and we could maybe break out, like, the actual they've actually spent so far. We're gonna look

I mean, as long as it aligns with what the projection is, I don't really mind all of the ins and outs. Right? Like, yeah, basically, if we said we were gonna spend, you know, for $40,000 on salaries in September, did we spend 40,000? Right? And then if for whatever reason the variance, like, let's say, is plus or minus 5%, then maybe we can just get a very simple management explanation on what that variance has been driven by. Do you know what I mean? Do you think that, like, on a monthly basis, like, to start, or is that reasonable?

I think, for example, for salaries and benefits, that might make sense, especially as that's the largest item. Expenses are as lumpy as revenue or other expenses, service, and supplies. They also have that lumpiness, but salaries and benefits is clearly our, you know, largest expense by far. So I think that that would make sense. You could see it, and it and it does align monthly. We don't close months. So because payroll is kind of a regular thing, you'll see, like, a spike in the months that there's three pay days because you get paid every other week. You know, there's one month there's we might see you'll see a spike for sure in January as we're doing leave payouts. So my recommendation might be to do that just for salary and benefits and then just kind of an overarching of the other types of expenses in terms of our monthly.

Perfect. And then and then can we also maybe get, like, some kind of indicator? Like, what is a green budget look like? What would make it yellow, and what would make it red? And then very clearly, can we just get that indicator on the slide every time we see it so we know, like, where we're trying those?

Yeah. We're actually looking at, yeah, what's that magic number once we get all the budget done. Like, what's that magic number that a payroll should look like before we start to sweat?

Yeah. Because I think what you're gonna see, this is gonna be unique because the payroll before now until December is gonna be a lot higher than the payroll January through June. So we're gonna be over 50% threshold because we're reducing our workforce. So it's gonna be a weird year in that way where it's gonna be red, red, red, red, and

then hopefully yellow, yellow, yellow,

and maybe the last month we get into gray.

That's the whole thing. That's all we'll be payouts, and, yeah, then we'll have Yeah. All the VCEF or other things.

Next year, we should it should make more sense, but this year's gonna get a little. Yeah.

Yeah. Well, then at least we

can see that trend where the things actually

Where is it starting? Yeah.

We're starting to converge on a what our what our goal was. Yes.

Totally. Yeah. No. These are really good suggestions, especially the the green, yellow, red.

Well right. And then I think there was a conversation I wanted to understand legal liability, house settlements, inactive funds. Is there a safe fund that we're measuring around that? Like, how do we just get more transparency on employee liability?

But this Diana doesn't know, but it's on my list for her and I were not Okay. The

break Okay.

When I would get it all done. But I've chatted with city attorney Watson. Okay. I have a much better understanding of how that Yeah. How some of his Yeah. Liability funds work. And I just think, like, we just need to help do a little memo

Okay.

About how they work and how they

get budgeted.

Because they do get budgeted from actual from they have consultants to assess all of our liability, and then they create kind of liability. And so the way that we so I think Deanna and I need to chat about it.

Yeah. And then, you know, we're looking at this percent of budget received slash spent. That metric, especially around what we're predicting for liability would be really helpful. I don't know if there's some kind of interest in not necessarily revealing the full numbers so people don't understand how much it can come to the city for. So I I wanna be sensitive.

Yeah. I can explain what some of that is. Yes. Some of that doesn't even show up in this type of report because that's what we call liability account. Yeah. So it's not in our revenue and expense account, but we can we can talk to that. Okay.

But you'll see in some of our longer term discussions is that some of them have. And so similar to the other fund we're talking about,

Okay. Then Oh, that's fine. But

we wanna come to you with some sort of recommendation of, like, you know, is that the right fund us? Like, should we keep that? Because that that's based on someone's calculation of all our risk of all these different outstanding claims.

Mhmm.

Or is that too much?

Okay. We

should spend that down a little bit. Maybe we give departments kinda maybe we do a little late, like, a holiday for having to pay into that for a year or two to help us. Yeah. And so we don't have recommendations on that yet, but those are the only things we're looking at.

Okay. And that would be interesting for the full council to talk about because I think that there's a perception, at least very recently, that everything that we're paying for is getting paid out of the general fund. And now, like, I think the way that you just explained it is not the understanding that council has.

Yeah. And I met with city attorney Lawson last week, my first week. And so he kinda explained it. He and I went over it, and I just haven't had a chance to call back with Deanna. But I was gonna get a memo of some sort.

Yeah.

Well, I know we're able to get that to you over the break or sometime soon, but I think just some simple explanation of how that works. And then we could talk about it on January 6 or February, but I think

it'll be helpful to

have a memo form, I think.

It was definitely on the February list. Can work on getting it done sooner. And I think from my perspective, not looking at it in super detail, but spending a little bit of time with it, I think there was a little bit of disconnect between the transfers out and then what was actually there. Yeah. And so that's that's gotta be cleaned up as well. So that's that was all definitely within the February, but we can work on getting it done at least Right.

Are you

gonna fill that? A memo that should explain how

it's going to spread

that. Right?

And then it's budgeted because,

you know, there was a perception that these were unbudgeted funds.

Yeah. Right. Yeah.

And and I don't know. Beyond the memo, I also just want a slide check from practice where, you know, currently, we get presented with potential settlements that the council approves, and we're it you know, it could be 400,000 here or a million there. And, you know, some of it has insurance. I get that. But we one of the reasons we're in this deficit is, like, in your contracts with our settlements, we're not getting the full picture of, you know, how much liability you have we set aside for next year and how much we've spent down already.

Compare it to the fund to the fund balance. Yeah.

Some of the specific items, we wanna be careful.

I understand. And so so I understand that's been the closed session sometimes. But so, obviously, the fact is the public interest with sensitive information, but we just need that picture to understand.

Yeah.

Do we settle, or do we find a little bit harder to, you know, preserve taxpayer dollars?

Based on what the reserves are

Yeah. Under something. Yeah.

Okay. Yeah. There's usually, again, a liability set aside. They just give us a a lump number Yeah. That the attorney works through with, for example, our insurance carrier. And we we book that as a big number. It doesn't say that, oh, we think it's a million for this and two for that. They just say, put 7,300,000.0 in. And in theory, we should I don't know what we're doing now, we should reverse it and put the new number at the end of the next year.

Yeah. And, you know, we have data for the last, you know, however many years, what have our average liability been through settlements. And I and and I know those insurance costs have increased steadily, and, you know, we just need that kind of insight.

Yeah. And I think the bigger impact is the insurance cost. Yeah. A lot. Yeah. It's been pretty dramatic. Yeah. And and whether that's made it through the whole budget process and understood what I think has been one of the challenges.

Well, then because the insurance costs went up, we also changed our deductible. So now we pay out a higher amount before we file it. Like, so it kinda hit us on both ends of all the time. Yeah.

That was sad because even though we did that, the insurance cost still went

up compared to last year.

Though we reduced it even though we reduced it. And I think it was described as saving money, but it was saving from, like, what the bill would have been, not from what the budget was. And so then it just didn't get budgeted. Yeah. But, yeah, we can drop that into a memo and and then get get into the numbers later. We can do, like, what the what the what should happen, what will happen. Okay. And how we get there. Yes. So then any more questions? I did take down some notes as to what you'd like to see in the future. And what I wanna share with you next is just oops. I'm not driving here driving. This is what the departments are going to get. So this is way more detail.

They're gonna see specific so this is from my department. They're going to see specific line items, and they can look at where they're over. A good example of one of the challenges for us is this leave paid. You'll see that about five lines down. So that's not been budgeted. And so sometimes it's somebody leaving, so maybe you have savings in your base salaries. But a lot of times, the staff can buy out leave. They can, you know, buy out three weeks of leave. And so that needs to be budgeted because that staff person is still working. They're just taking cash instead of leave. This is common, for example, fees as well. And and then also end of like, when they retire, there's large payouts there. So that's Nick's working through that. That'll be in the budget correctly now, but that's kind of a quick example. So these are high level.

I mean, these are lower level that the department heads will need to manage and explain. Sometimes they have savings elsewhere, we but wanted to share with you what the departments are managing too.

Great. And I think you see it, but that they're lying down is up for time. So that's where especially for public safety, we'll be looking carefully at those line items and asking them questions if that's more than budgeted. Like, what's going on? So we'll be looking at

that quickly.

In each department so this is one of my division's administration. I think I have four or five accounting purchasing. PDE has a number of divisions. By resident divisions. So these they they kind of look at them. So that's where I'm talking about there's multiple lines. Somebody could be split between multiple divisions within the department, and then an employee has all of these lines that belong to them. So that's where all this work that that Nick and Fran are doing comes in. But we just wanna give you a quick visual of what staff is looking at that's that's different.

Thank you for living in the software. It's not so easy.

I know. Yeah. That's why we are we're creating different reports.

So Yeah. Okay. So

So the the department has

to have to, like, justify, like, you were saying any major things that are concerned, like, you know, any major variances to it.

Yes. Yeah. So if, you know, we were at December and they're at 75% of open. Out of the gate here, what are we doing? They shouldn't get that number. That would be like, we should have gone before that. That's

And just on on this note, you know, we've had conversations about why these metrics impacted based on organization. How are we setting performance based metrics for department heads or managers to help make sure that we're capping this while also being care of it? So then over time, it just can't be capped if it's mandated a contract, for example. Right? So I don't wanna be penalized fairly for that. But, mean, how do we build metrics like probability around the numbers that we're receiving? This is a question for you. Get Yeah. Asked right now. But this is it goes very top of mind.

Yeah. I mean, I've in all my one on ones that I've had, you know, I've made it clear with my expectations, they manage their budgets. Mhmm. That's part of their job. Yeah. I'll get so that's part of my my expectation setting up front, and then they and then there'll be performance management. There are ways that I'd like to get us to performance management where we create goals. Yeah. I work I meet with them six months. At end of the year, we do an evaluation. And and then that's when I say like, hey. You know, I've I've had department heads who struggle to Yeah. Balance their budgets or whatever or don't do a really good job doing the details, and that I would incorporate that into

my evaluation

of them. So it's not, like, a specific performance metric, but it is something that's just a baseline expectation that I have for department heads. We haven't gotten, you know, seven days. Yeah. Excuse me. I haven't gotten that far. Everything going on, I wanna be a little careful to overwhelm who every department is right now. But we will get probably next fiscal next not fiscal year, next year, start working towards some goals and getting there before and stuff. But either way, I've made clear in all my one on ones. So none of the budget management is

Okay.

Is baseline, including employee relations. Like, those are baseline expectations. Okay. And then I think just

as an organization against the management of student of your company, so I'm just sharing my my opinion. But, you know, there however you're coming back on the city, there were conversations with prior city manager managers about, you know, we have incubated on rep consistent raises similar to how we negotiate with different labor groups. No.

No. No.

And that would also include the executive team. And there was a whole conversation around, is this appropriate, or should we tie any executive compensation increases to performance metrics by the city manager, for example. Right. And so, you know, I don't want to turn into a week's about that here, but I think especially as the community is watching and we have really clear budget objectives we need to meet, like, I I just wanna express this is lie probably on this meeting after yesterday is that I really do think that any type of compensation should be tied to metrics rather than just assume because I

think that's part of the

reason why we found ourselves here too is is to assume I will be receiving a raise regardless after already being paid, like, triple the median income this year anyway.

Yeah. We can have more conversation about it. I I'm not opposed to be I was here for kind of the beginning of those conversations about baricitinib, which I think is cool and Yeah. A great concept. It will take some organizational, like Yeah. Thought of how to do that in a way, and I'm open to that. Sure. The way I normally would think about it is, I mean, assuming that someone's performing Yeah. And they're doing a good job. Yeah.

And then I don't know. I need to think about it because I I feel like I have a part of this too is I have a pretty high expectation about the executives is that they're working at pretty high levels.

So That's why I'm asking for you to assess it. Because right now that they're virtually wasn't an assessment. It was just a doom. Like, this is how it has been done in a city where executive and executive come together and are asked for this, which just felt a little off. Right. One being some of executive on rep with the executive on rep, first of all. But second of all, like, what is this based off of? Right.

And so that means there's gonna be some so I'll think about it. There could be some market, but also just some based on COLA. Got it. And so maybe we bifurcate it.

Like I'll I'll I'll give it to you guys. Yeah.

So just kinda I'll give it some more.

You know, within, like, the paid range. Right? Right. If, like, if an employ I mean, I I don't know. I'm just saying if an employee is underperforming and doesn't meet their goals, then maybe their raise is at 3%. It's, like, 1%. Because I think right now the perception is every year it's gonna be whatever no matter what your performance is.

Right.

Yeah.

Okay. I I can think about that.

Yeah. And it's just

especially in this critical time, we really need to drive results. Any incentive structure we can set up to achieve that versus just assuming that pay is coming down the pipeline.

Because the contrary would be what if I mean, obviously, what if they miss their budget and just I mean, because can we hold them accountable if there's not, like, a goal or something?

Just not I mean, all of our department has their at will, please. So they have no yeah. I mean, that obviously, I'm not trying to Yeah. But I have there is the ultimate accountability. I mean, I I'm gonna expect pretty high level performance from department heads. K. They're they're our highest paid employees, and I expect that we meet the budgets and other things. Now things happen. There are reasons things sometimes happen that that we should anticipate. Everyone either makes mistakes or other things. Yeah. But so let me think about it some more. But I guess what I don't wanna reinforce is, like, you could just get the mediocre. If you try harder, you get the merit. Because I'm kinda like, you should be if you're gonna be an executive and you're making the money that you're making, then I kind of expect you to be operating a peer.

Right? So I also don't wanna reinforce mediocrity either.

Like Yeah.

That that's an option.

Yeah. And we also don't wanna create a penitent environment.

Yeah. Exactly. So let me give it some more

thought. Okay. And compaction also occurs, meaning that you need some level of separation of pain.

Yeah. That's another another issue. Yeah. Yes.

That especially this. Yes.

Okay. Thank you. I mean,

my the ideal world is that you create a team that is very high performing, and then you retain them as long as you get. Right? I mean, that that is my goal. But how do we do that? Can we make sure about it?

So we started talking about this unintentionally, but I'll pause for a second. I'm make

sure there's

one online. The slides are not staging for the viewers. I was sharing the sorry. To the zoo in the Zoom.

Oh, we're not screen sharing to the Zoom.

We're not screen sharing to the scale.

Okay.

Sorry. I know. Could we

stop and restart? Because I can see it here that she shared.

Let me see.

We haven't changed slides recently. Do you think they're just gonna use the

Maybe. Got it. It says still on the first slide. Sorry. Let me turn the yeah. I mean, it's a I guess alternatively, we can just attach the slide deck later. Yeah.

I know. You know, if you Do

wanna keep going? I'm offering me. Yeah. Yeah. Yeah.

Do you

wanna Yep. So we've started talking about this already. This is the internal allocation. So we talked about general liability as an example, workers' comp. So these are internal service funds. So as part of our February update, we're looking at all of those funds. Again, internal service, also fleet, facilities. We're making sure the allocations make sense. So some things are done by a number of employees, workers' comp, their safety, nonsafety, people working in the field versus admin staff. There's different percentages you might allocate.

So we're gonna look at all of that in detail, make sure the allocations make sense, that we're not over allocating to the general fund. We're gonna identify we talked about this earlier. If there's funds like workers' comp, is there enough that we can maybe take a holiday from paying that identify any projects, for example, in the back end revenue or capital projects funds that we could that we could defer the projects. And then the cost allocation plan is the services the general fund provides. So the finance department gets allocated to the enterprise funds. It's allocated across all the funds, all the departments. There's different ways of doing that. So we're looking at that as well, making sure it's well aligned. And that'll be done both for '26 and then getting ready for '27. So, again, that's not an internal costing.

Again, some more opportunities to hopefully find money. I I suspect we'll also find some things that need to be cleared by the general fund, so we'll we'll be going through that. It'll take a little bit of time to go through. So any questions on that?

Just on the topic of compaction philosophy, is compaction is built into some contracts, I'm aware. Is it built into most of our labor contracts?

I don't know what band. I don't know if Mary knows.

Sorry. Say it one more time.

Compaction, I know, is built into some of our

labor laws. Some.

Yeah. Not all. And what I'm wondering is when we have conversation in February run.

Yeah. So one of the things we've been talking about is the compensation philosophy as well. Quite honestly, now that you're bringing that up, it was not on the agenda for the February 1.

That's confusing.

But I think that it so so it'd be a long meeting, but I think it'd be an initial conversation about what that looks like. I mean, a lot of these meetings would line up with the renegotiations of our complex. So we'd have another year ish for until any of those are starting again. But

So I guess my more precise question would be, are there areas where we have management authority to adjust compacting for certain employees that are outside of the contracts, or

does it encompass most employees?

It can Well, I I mean, you have the authority to approve the salary schedule. So sometimes how how what the compaction is between, like, different classifications or how how many steps you have, things like that, and you set all those.

Okay. So what I'm asking is, you know, with the current contracts we have, colds are gonna kick in with the New Year. Because of compaction, that's gonna, you know, spiral additional costs on top of

that. Yeah.

Right? And if there are certain ways for us to minimize that that ballooning cost by lowering compaction for employees where we have the authority to adjust the salary schedule for, which might be unlikely. But I'm just trying to look at every way possible for us not to get unexpected growing costs.

Okay. I'll need to think about it. I mean, if it I don't think compaction is an issue. It I mean, you have authority over any compaction that's not in a contract. So if it's in a contract that says, you know, your the timesheet said, like, 10% more than your captain, then it's in the contract. And we gotta, like

It's not like wage funds aren't.

Otherwise, everything else is set by salary schedule. It's my it's my understanding. So in in those cases, you determine salary schedules. Okay.

Yeah. Because that's happened a couple of times where, like, someone in the police, for an example, got a bump and then someone else did, and then it triggered something for, like, the police chief. And then there was something else recently where the city manager's salary triggered something for the police, not yours, but, like, somewhere else. Like, you

know?

We when we yes. But when we did the HPOA, the ADAs, they ran the trigger. So I

know he commented in public safety contracts.

Yeah. That's what he was he had just triggers abdominal. Yes. Yeah.

But but, yeah, I think

but I do think bringing back a conversation philosophy conversation at some point in

next Okay.

Certain amount of time.

So it's it's not even longer term,

but I

just didn't want him to fall off

the radar.

No. I think that's okay.

Okay. That's good point.

Any other questions on this? Alright. So, again, you'll see this at the big February workshop. Any changes we've made there. We're gonna look at updating our master b study.

So we may do a three month update to get through April, May, June because you do need a public hearing timeline for that, and then one for July forward depending on salary changes and how it impacts. Obviously, fee studies, those impact, you know, other things, economic development, other activities. So we're gonna have some recommendations around that once we look at what those numbers look like. But the fee study was done ahead of some of the salary changes, and so we think there's some potential revenue in there. Again, revenue with the other the other side of the coin as you know?

But it does impact users. Right? So whoever pays on fees. So we have to just be careful that we're not, you know, continually increasing our fees so that now users don't want to do business here or that you're impacting users in some way that ends up backfiring or having unintended consequences.

But But then maybe they don't get a building permit because it's too expensive, and you don't get enough there to inspect something. That is a safety issue. There's some there are some impacts there.

So I'm very supportive of the revenue measures being shared, at least some initial thinking. I I wanted to also throw out, like, the discussion about a Mello Roos tax. I I understand you're going so much time. But Yeah. If that's another potential pathway or additional thing we wanna pursue at the same time, there's also that, what was that infrastructure district?

The Yes. Finance. Yeah.

So I can we'll we'll talk to you guys.

Okay. I can talk to about that. Fine if he gets out referring to the the full public just because it's not us by the

But if it's something the public has been asking about, I don't have to stop.

I mean, you probably They got emailed out. Yeah. Yeah. Yeah. And that that just think it's something out of the box idea of having had a chance to analyze.

So are all financed through property tax. I see. Okay. So you actually need to impact your property tax Okay. To pay for

infrastructure. Yeah. Yeah.

Which It's little bit like redevelopment. The the

Yeah. So I can we can talk more about those options.

Yeah. Could bring, like, a matrix is what I picture. A matrix of, like, this is the list. This is the pros and cons, or we looked at this, but we we can't do it because Okay. That's that's kind of the visual I have in my mind, just the long list of of things and then what would we need to do. Yeah. Or we can't do it because

Potential revenue would be generated from this this route activated. Okay. Yeah. That's what I was gonna

Or we can't do it, or you'd have to change this other ordinance. Yeah. You know, you

have to make reducing property tax, in which case Yeah. You're kind of do yourselves in

what? Right?

Yeah.

Reducing property.

Yeah. Because it would be good to see the potential opportunities for all of these because, like, for an example, the business license tax, just heard so many different numbers. So it's like, what what do you, you know, what do you guys think the real number would So then we'll know if we should pursue it or not based off of what we see as the opportunity.

That one, I'm we're effectively pursuing that. We're gonna get a consultant and try to get some money in right away.

Gotta be very clear. We're not waiting until February to start the disco that one we're starting, but the others will probably bear a hand to the matrix. So this is like a snack for taking action pretty quickly, probably even during the break to the extent we can. The others are more like a list that needs some further conversation.

Requires a vote unless she's on public land. So we can go so some of those aren't, but business license tax and general tax. And so we're gonna look at that one immediately and see if we think it's really updated and how much money we potentially can project. Right? Yeah. Okay. Because if it's not that much, like, do you wanna go through the process? Exactly. If it's a ton of money, well, it's worth it. And so we we don't have enough information yet, but that one, I want we're gonna look at

really, really carefully.

That that makes sense.

I I do just want us

to be liberal with how many ideas we are putting forward. Have to short down. Like, this can have the most details in what I feel is most viable, but, you know, short Yeah. I just really need the public and especially other partners to understand we're exploring every option. Yep. And if they want to say this was before, I think we we owe it to them to say, okay. Here's what we think about it.

Yep. And they kinda wanted to be a part of the brainstorming of those agents. Remember they had said they wanted to have, like, a workshop or something where we bring them all together, and then they come up with a Yeah.

It's a little bit of how we saw the January 6 meeting. So brainstorming with the other brainstorming with the public.

Yeah. I meant that labor.

We know

that you're gonna we could do.

This is only one issue. I mean, that's up to you. We could invite them to come and and join that work session. Like, we could give them an invitation. Like, hey. We'd like you to do this meeting and brainstorm with us. You know? I don't know. I'm just brainstorming about that. But, like, that could be that January 6 meeting. Right?

Alright. But I don't know if I wanna do that, but I was just kidding. Maybe I don't wanna yeah. Maybe they can come to you. Because, like, when I was talking with, like, you know, nineteen o nine. Right? He was like, Andrew was saying, oh, we have all of these ideas, and we wanna work with you guys to, like, share all of

these things. With them. I I we could just start with Andrew and

We're already committed, definitely, at least. We're gonna meet with you. We're at least conversant with them before we bring this because we wanna give them an opportunity to let them let let you guys know and let us know some of their ideas are not before January 6 but before the February meeting. So that probably something we could do with labor as well and say, hey. These are the things we're thinking of, other things you were thinking of, just making sure that what we're bringing you on February is embedded by them, and they would have it there. Yeah. Yeah.

You can absolutely do that. Thank you.

And then just one more idea I wanted to throw out there is, you know, one of the recommendations from this semester's a veteran person is this person wants to schedule a future agenda item for us to discuss what would trigger this to include the slow emergency. I do think having clarity around that and let let me know what you think is the right menu, but it has been a question of, like, what are the specific triggers you guys did it so they get the problem with the council to have their idea of we will be in a position to have to declare this emergency if we can't do x, y, and z. And, ideally, we we never have to get there, but counsel should at least have those talking points to understand, especially if we're having conversations with our labor partners. If we don't accomplish this, we're gonna go down this path. But I don't feel like we're equipped with that blanket yet. Okay. Yeah.

Do you receive any memo or anything on that?

No. No.

No? Okay.

A little bit ahead of revenue measures. We're also preparing, like, a five or ten year projection. We're deciding what makes the most sense. As you get into further out years, you're just kind of making up numbers. Yeah. You don't know what your salaries are gonna be. So it's And we're we're more focused on a five year at the moment. Yeah. There are things that we do know. CalPERS gives us a ten year plan or estimate, but then the very next year, that estimate changes. More people retire, more people come in the system, more people go out. But we do have those UAL numbers. And so we at least those big fat fixed numbers, we can see them in the system. We can make some projections around those other high costs such as insurance and general liability. So those will be embedded into the model.

Again, we're already working on that from a model that we have. And then we'll be looking at some longer term plans, so measure c or k one. We wanna think about there were different kind of commitments made into those two different measures. We wanna just think about it a little bit differently. The OCAD trust we've started to talk about. Workers' compensation or liability, again, just just those things we've been talking about. So all these things will be will be in front of you in more detail. We're just trying to give you a high level of what we're planning.

At the end, the bottom bullet where it says, you know, c and k one, can we not combine c slash k one? Can we separate those two? Just when we present them. The reason why is because I don't want the public to commingle c with k one. I'm already hearing, in public and public comment, not only in in the general meeting, but I'm hearing it in the smaller committee meetings that people already think that we're, you know, drawing down on k one. And so if we can somehow distinguish distinguish those two because

Yeah. We could do a measure c plan and a measure k one then. Yes. K one's really an extension of c. Right? Yes. Because we don't have any money yet.

Well, it is a start, but, like, but what but there is a specific start year. Right? Yeah. 2031. Yeah. That's what I yeah.

2034.

Yeah. I mean, there know, you right now, I'm just giving you example. Right now, people think we're spending k one money right now.

Yeah. We can do that.

And and we haven't. Right? I mean, I've heard it. I've heard it. So so I just wanna, you know, I just wanna be clear as to when this thing starts, stops, K one start stops. Because Yeah. You know, because I have heard in meetings that, you know, the public believes that we're now using K one money to balance our best interest, and that's that's incorrect.

Great. We will do that. That's a great suggestion. Yes.

And then what about the property dispositions?

That is probably on the next one.

It's in

there somewhere. Or we've got another item that's on the February

Birthday.

Fiscal sustainability plan. Let's see what's there. Go ahead

and move on. Yep.

There it is. So these are the ongoing things we just have to keep doing. They just go on. So we're looking at changes to staffing, continuing to maintain and input new overtime controls, vacancy management, longer term structural, changes, maybe some departments need reorganization. The ACFR is still incomplete. We're, like, likely looking at February, March timeline just based on when our auditor can come back. But we've done a lot of the activities. So we're just working on calendaring. We're gonna be working on new financial policies and procedures. The department monitoring we've talked about, working with our labor partners, that'll continue.

We'll we'll still have a structural deficit. We still need to get to some changes. And then, of course, the property, just just what you're asking about. Got it. So you'll see that. I think we have that on Monday now under February 3.

Shoot for Tracy, the new real real profit profit manager, who's putting together kind of a plan for us to bring that to you with everything.

Where how many how many of the Caltrans properties are still outstanding? Is it isn't it I thought it was only, like

Four I bet I get four, five, six

Yeah.

And eight and nine. Five.

And five five and eight

are actively. There's, like, there's DAs. You have Where where is 5 and 8? 5 is Mary Anne. What's that?

Oh, okay. So the Grove Way Grove Way.

Well, that's 8. Grove Way is the residence since eight. 9 is the parcel about right across the street by the freeway. Okay. And I don't know if we're done even playing it out.

It's all so so they're so

So the

party part of yeah.

And 6 is is is probably gonna be yeah. Okay. And then and then the

I was

And and so so right now so right now, the the the the the majority of the properties, you know, most of the properties are North Foothill. Right? They're Grove And Main, the property of Rochester Street or Grove and and Foothill.

There's there's six. The four. Okay. And five is Bormarian wait. Five. Little

Oh, Bunker. Yeah.

Bunker Health.

Thank you.

I'm sorry.

I was bugging

on that. That one is in a DDA, but because of the market real estate market is, like, totally on pause right now. Okay. But I'm looking we'll find Okay.

So I guess I guess they're they're on it. Okay.

So one one two three and seven are

still Yeah.

Develops. There's good progress. And the two DEAs, and then the rest are still kinda

Yeah. Okay. Blocks.

Okay. Alright. Yeah.

Thanks. For the review and update financial policies procedure, I know we've named some here before in past meetings, you know, a desire to go on to, in the future, aim for a certain percentage of our overall general fund to be spent on salaries and benefits. Right? That is a target. Right? We we I'm curious see what other policies are are brought forward. Do you have a sense of what else you're working on?

Well, we just did this in Alameda, and so I was gonna take our draft. We just the council just approved a draft budget budget financial policy. Okay. So I'm happy we could circulate. Okay. So that, and you guys can take a look at that. We were thinking of putting a the draft Yeah. On for the February. You guys could take a look. You might say, oh, this is too much detail, or you might say you want something different, but just to get the conversation.

That would be helpful just so we can weigh in and work out for something. And then I I was curious. At the February meeting, we've been doing this independent audit or fiscal review. What's the status of that? Are we are we done with that partnership, or is this an ongoing contract we have with them?

Those are mostly concluded. Okay. We're meeting kind of concluding meetings with one of the two. Okay. So one did a cash flow analysis, and one looked at our those two balance sheet accounts or other funds. So they pointed us in the direction, and that's what our accounting team was working through now Yeah. As part of the audit. We'll we'll bring some of those findings forward. There there wasn't particularly anything forensic to be found. Really, this came down with salaries and benefits.

But we Understood.

And then the the contractor made

a note here that just wanted to get your tape on, which is they they're asking for the audit to include the end of career compensation review. Or include a kind of guide to end of end of career compensation, protect the city from pension liability risks identified in the Alameda Sheriff's case.

Yeah. Yeah. Those are kind of Yeah. Across the the board issues. I I think those I mean, there are some abuses, and that's what I think what that case probably was. Yeah. I don't know that that's what we're seeing. But Okay. And it wouldn't be part of, like, our this this audit is more of the financial books versus that might be a separate type of audit. Okay. So

Is it something that we're seeing that's driving up long term liability for the city? I mean, I I think it's a valid question for, you know, a long term federal deficit. And I recognize this to be a more of any larger questions. I'm not gonna do regulars here.

But Yeah. So this is, like, looking specifically at finally your spikes. So and we could run I mean, I think that's something we can even do in in house. Let's just see

if Yeah. We could look at the Yeah.

Okay. For

you guys to

know. Okay.

Just It's it's not mean, I've seen it in other agencies. You know, it's it's not super uncommon for somebody to kinda get that job they didn't want the very last year. Yeah. Some of that's getting cleared through Pepra, which is a three year average instead. Yeah. And so there's a little bit less of that.

Yeah.

Past job, I've seen people switch to night shift because they get a shift differential that's Yeah. That's pensionable. So Yeah. I mean, I think the one

of the principle that

this speaks

to is do we have good financial controls in place so that these kinds of things are happening under our watch? And this is just one example of some of the things that can happen when there's so many numbers moving around in an organization of this size. So I think you understand what the principle is.

I I think on the other side of it, you know, people do advance their career all the way to the end, so it's it's not necessarily kind of a nefarious effort to Sure. You know? Of course, people are mindful of their pensions as their goes on, but the fact that their highest year is their highest year at the end is is also, yeah, reflective of their experience. So but we can look to see if there's anything in there. We we definitely saw as we were making changes, you saw on the side letters that there are some things to kinda keep an eye and make sure we have some understandings as we go into changes. And I think this could

be easy enough to also, in the long term, be part of our conversation possibly. Yeah. So making sure that you guys are really aware of what items are personable versus not personable. Like, that does make a big difference. Don't know if we're giving someone a benefit that's personable, but that does match for Mhmm. Liabilities. So just you guys are all very aware of that before you go into the next round of negotiations.

That sounds good. And before the next round of negotiations too, I was thinking this is a policy that's less related to the budget specifically, but more of the council is when we were first elected, we were given the opportunity to go to a council use conference, and there's some training that's part of that that we were required to do by the state. But I think what would have really benefited the city and future councils is every council member should probably go to a labor negotiation training session at some kind of conference so that we're able to protect public interest while more effectively. The fact that we're gonna see that kind of training is kind of difficult for me in hindsight, you know, that we were asked to go and make these really large financial decisions about the appropriate understanding of the dynamics. Mhmm.

The best way is to negotiate what to say, not to say to avoid any potential curb charges. Right? There was a lot that got explained both and during the process and now after, but I feel like that's the policy that should definitely be in place today. Public elected for the city should receive this kind of training.

Yeah. I think, yeah, there's some best practices. There's you know, that nothing you could do about them today. Yeah. They, yeah, probably had you now in hindsight.

Organization that we contract with our commissioners that we can just do a two hour training or something, you know, just to check the boxes of understanding this is how these negotiations work. These are best practices. Yeah.

So that's it. We have another very short presentation, but that's kinda covering how we're getting to February. A lot of great work on the team here. Yeah. Accounting's I mean, the whole team's working really hard and really great. We're proud of our Mary and Jenna doing that as well. Yeah. You too, today.

Thanks. Jump right in. Yes. And those two have been going strong.

You're holding this together. Thank you.

So this is a much shorter presentation. Just kind of this is the kind of plan structure for February, so it'll kinda get redundant as we talk about it. But so in February, again, as soon we get the polling and we figure out the date we're doing that. So it's a fiscal sustainability plan with the long term plan for the city to become structurally sound. So, again, of course, we're starting with the financial assessment projections.

We just talked about that. And very specific in the revenue enhancement. So, again, I would picture something more like a table that says, here's a possibility. Like you said, the the laundry list and then maybe even some things that don't even make sense, but just for you to see that we consider them. Business tax review will be further along than the others. Any new suggestions we get, we got some from a staff survey. Some are expense side as well, but we'll look at those.

What about,

you know, when the council brainstormed up with those, like, orients that can be streamlined to help in building, like, development and downtown and things like that can Business friendlies. Yeah. Yeah. I

think that's on a separate track, but, yeah, I know that Sarah's working.

Okay. Yeah. I'm bringing that back. As part of that, she was rezoning specific parts of neighborhoods that allow for, you know, both ends in commercial fully in that commercial use. We have more waffle neighborhoods more often to use for salvage to thrive. Okay.

So, again, we'll picture on mood six that we're hearing from you. Any other brainstorm thoughts you have that maybe we'll hear from labor groups? That's not there. But and then, again, we had some of staff survey. We'll have to consider structural and program and service changes, especially as we're reducing staff. And then, again, the draft budget policy, we talked about that. We're I took a high level look at Alameda's, and it's definitely aligned with with with, you know, my intentions and experiences. So we will see a little bit more details on the next slide, and then we'll get some policy direction as we head into 2627.

And then just on the expenditure direction, some of these may be more operational. I think they keep we'll be reporting out to you. Like, here, these departments are gonna reship some of their stuff. In other cases, they may be large scale policy. Like we talked about, are we gonna keep doing the all the NASA that are gonna be fine? And we'll try to find the money. But if there'll be money in the meantime, are we going to are there some part of policy decisions that we might need you to make to reduce our expenditure? So we're all the life options for you.

And then when we explored the surplus properties, I know there's been some discussion around, you know, selling movie theaters. So I know we were gonna go and get

We're getting appraisals for No. You can

So right now, Tracey's getting appraisals for all the three the three main properties we've been talking about, and and they may not be done in well, they won't be done probably by February 3, which is when we're gonna do an update for you guys, but but but soon after, like, he's getting that. Yeah. Yeah.

But what what we've also talked about is that, well, we might come depending on how much analysis we get done by the third, like, some sort of format. Like, to me, there's there's always so many options here. One is we kinda retain it, but maybe we lease it, and it generates revenue to us. But that might and that might be financially beneficial to us, but it might come with risk. Right? Whereas we don't if someone leaves, the tenant leaves, now we're down revenue. Now the general fund is on the hook. That's so or one option is to maybe we spend a little more time leasing it up, and then it's worth more if it's leased up, and then you sell it when it's fully leased. Or but if that needs a lot of time, we need the money. So we'll come with some options like that, but the issue is gonna be risk.

Right? Because development is very risky. So maybe you get more money over the long term to do to do this lease, but that's gonna take staff time. It's gonna take you'll have to go through the downturns too, and maybe that risk isn't worth it to you. Right? So you might prefer to sell it at a little lower value or just sell it now just to minimize your risk because of and start building up your reserves. So that those are the types of things that I've asked Tracy to start you know, I was creating some options for you

to consider. Right. That's exactly what we wanna discuss. Yeah.

And then, again, this is just a little more details. We've actually much of this from Alameda to so this is what we're looking at in a budget policy at a high level. So best practices, clear policy, accountability. One the things that I would say is so by the time something gets to finance, it's already done. It's already spent.

Overtime's already happened. We can't just decide not to pay it. So we need some clear measures ahead of time and then, you know, to instill the culture of fiscal rooted citywide. I would say, though, as we're going through all of this, I mean, the department head team has has really understood it, sought to understand it even better, done done their parts in terms of submitting proposals and options. So, you know, it's it's not the best way to have to kinda get more engaged with the finances, but everybody truly has done that. So

Well, I love the idea of making finance just a core competency of the executive team. Oh, absolutely.

I love that idea. It

should be. But it's not an executive. It it should be.

You know, the other the other thing is is as you're as everyone's talking, just sort of reflecting on, you know, everything that we've been doing. You know, we've been talking about I think the central theme in all of our discussions has been structural. Everything we're doing right now, we want structural change and ongoing. Mhmm. It's kinda like the Yeah.

And and and I you know, in our conversation in February or even in May, you know, I think we should start incorporating structural ongoing. That should be that should be part of our vernacular structural ongoing because, I mean, you know, we can you know, it seems like even with our discussions with our labor partners, structural and ongoing, we're having you know, we're spending a lot of time talking about that. Like, what that means. Yeah. What does structural and ongoing mean?

And and what does it look like? Right? And and and so, you know, if if we're if we're putting everything on the table, right, we're putting all of our, you know, options on the table here, we should also have and we're talking about core competencies. We should also be we should also start adopting in our vernacular structural. Mhmm. We have been talking about structural for as long as I've been here on the council. Right. And and, clearly, we're not there yet.

Mhmm.

Right? Mhmm. And so that's one. Second part, I guess, what I'm trying to say too is is, you know, at what point do we see that pivot? Right? I mean, we're talking about, you know, red, yellow, green. You know, at you know, I know I'm sort of envisioning at the 2026 sort of a, you know, a website that would, you know, who bills and whistles going on saying, we've we've met structural and ongoing change. This is what it looks like. And so I guess I guess what I'm trying to say is, you know, what does structural and ongoing look like? And and how do we how do we define it? Okay. And what does it look like at the end? Because if we're talking about changing culture, we all have to see what structural and ongoing looks like.

Yeah. No. I think we can have this conversation. Any we could also create, like, tables for, like, ideas and have we can have a column or something, and these are one time ideas. There's a lot of I've had conversations even just today with some parking units where a lot of ideas are are great ideas, but they're onetime ideas. Right? So they save us money temporarily. And I told them, I'm like, why gets us to that in his fiscal year? But then now we're back at it in the summer, then now we're having those same kind of safety. So, like, really being clear which ideas fall into that onetime bucket.

What I imagine is gonna happen, and this is just my instinct, is that we're not gonna be able to get to a structural balance where your ongoing revenues cover your ongoing expenses by that next fiscal year that is gonna and then we're gonna have to use one time, like OPEB trust reserves or some of these other things to cut over I don't know what it's gonna be, three to five years to get us to those those numbers. So we're gonna have but, hopefully, we're using less and less one time to kind of figure out ways to get us to I don't know. That's just in my mind.

Because structural changes could be driven by all of your policy changes because that's all gonna manifest in structural ongoing sustainable change.

You know? Once you get there, I guess, but you still have to reduce your expenses sufficiently to come in with your budget. And so that's the painful part. Right? Because it means cutting services or or you or or if if we're able to do business license tax and Mhmm. You know, that those revenues. So it's gonna be both revenues and expenditures. I'm trying to get them to match up.

Yeah. So structural changes and only revenue.

Right? Right.

It's expensive.

But we

don't you know what? We'll keep

them up. Because that for example, you know, we have the, call it, hiring frost right now going on. Right? Eventually, that's

They can see vacancy. They can see

management. Eventually

Good job. You got

it. Yeah. That's gonna

have to Eventually, be

that would be lifted. Right? And then when that's lifted, hopefully, we'll have a policy in place that's a longer term sustainable way that we're gonna make sure we don't get into that. But I mean, so I do think that there's some short term things we're doing now like this vacancy management, but that's gonna be replaced by these longer term structural policy changes that are gonna be implemented so that these shorter term things eventually lift, and we run just more of a disciplined organization. Right?

And I think and and I think you'll hear us talking about, like, the the bridge options was to get

us like, because we'll

have these onetime things that we have to do just to stabilize and then sort of bridge options, and we've talked about a couple of them, sort of help us get to these long term structures that we know we know are are

And what is, like, Mayor's point, I think, you know, we said phase one was let's stop the bleeding. Right? The bleeding has now stopped. Now it's like, how do we revitalize this patient, and how do we get out of sort of the immediate triage and now into a phase of, like, recovery and rebuilding? And I know it's gonna take some time. But two or three years is fine. But as long as we kind of understand that we're out of that know, we're close to being out of

that

immediate aftermath, and now we're starting to be more strategic and thoughtful and long term and structural about how it is we're moving through these financial options. Yep.

My other questions for this phase two, I I really don't want there

to be a phase three. I think some

of the feedback that received from some of our labor partners is it would have been nice if you sort of demand it

off instead of going through

this one, two, shuffle. I get ready to get to this fiscal year, so there's not understanding, I think, or at least an acceptance of that that that point. But if we're gonna go structural, like, said, like, we have to have the salary to have people in there have that conversation with our partners. And I think they're aware of that. I think they would respect if we respected their intelligence and just said, this is what it's gonna take after we've punched all these numbers so that we're not presenting potential looming threat of phase three where we're

gonna have

to come back and have this conversation. Right.

And I

guess if you mean phase three or additional layoffs, then I can understand that. But I do think, like, there's some contracts Yeah. That we're in now that expire till Yeah. 2029. Right? Yeah. They're gonna I mean, so I I don't know. I think there's going to be ongoing. Of course. You may need to use the OPEB trust. Mhmm. We have sufficient valves. We need to use that $5,000,000 every year for the next three years. Eventually, you need to start putting money back into the trust. So I just think it's gonna take There'll

be long drawn out conversations. And we have a budget that we have to balance the next fiscal year that will require us to take short of an action. I'm very, very tired of that. I think there was just some frustration that was voiced around, you know, giving back one time and immediately going back. But we're, again, saying we're gonna have to have this conversation again. You know? I Well,

I think we've all I think Yeah. I think we I mean, honestly, I think we since the beginning of the year I mean, correct me if I'm wrong. I think from the beginning of the year, we have always been talking about this is not a what I mean

Yeah.

You know, this isn't a a '25 Yeah. Thing. I think we've always been talking about this is step one. Yeah. You know, this is, like, a three step. You know? I mean, I I see what you're saying. I know what their concerns are. But Yeah. But

And I totally totally appreciate that. And I think we didn't have you know, we but I think we're we're also staffing up. That's true. So I think, actually, that was probably the number one reason why we didn't have our permanent team in place.

I see.

We're we're we're ready to do it. Yeah.

We were so just trying to

I know. I I I this has been a hell of a year. I mean, I just just yeah. You know? I mean, this has been an incredible year. Yeah. And, you know, I'm it yeah. I think today

last night, I saw it last night.

I saw stability. I saw a voice. I saw you know, I I mean, there were you know, I saw about leadership. I I mean, I saw I mean, even you know, I get it that we were, you know, being yelled at from the from from the podium. I get it. But I'll tell you, I felt that, you know, that we were moving along. I I didn't feel that things were not handled or there was no grip on what was going on. And so I was, you know, I was pretty confident in looking at sort of where we were sort of moving towards. And so Yeah. But it's just that one. Yeah. You know what mean? Yeah. But it's just that one. And

Appreciate. We don't want a organization that's work versus constant, like, threat of major additional Yeah. Workforce reduction. Like, that's we will not it's not a Yeah. Recipe for success Yeah. Where there's I mean, it'll be a really big hit on morale. So I I think that's what the underlying concern is. Like, we don't want that looming over us Yeah. For us. Like, let's try and make some more bigger decisions sooner. Exactly.

Like, with the Band Aid off. Right? Like, if gonna tell me it's 3.5% versus something like 7%, it's still gonna feel pretty much the same to me. Yeah.

So don't

tell me two bad news twice. Just give me the bad news, and let's let's figure it out. Okay.

I think that was associated with

the Yeah. Option.

I mean, it was

'19 after we were done. That was the first question. Is there any more?

I mean, well, that's

an interesting perspective considering that some people came to the table with zero. So it's like, you wanna rip off the Band Aid and say 10. Well, that's fine. But you can't even give me three now, so I can say 20. And, I mean, it's I mean but I know what you're saying.

Yeah. But it's just not, and especially in in this meeting, I'm just I wanna commit our organization or at least in Nazareth to say, like, let's have a build conversation, especially now that we've wrapped up this phase one. Like, okay. Here we are. You know? Like, let's let's address this. Let's make it structural and ongoing. Yes. Agree. Yeah. Yeah. And the last thing I wanted to make here just to touch on one last piece of this public commentary was as we think about our compensation philosophy, one of the things they pointed out in their analysis was what they call an inequitable cost structure where the highest paid employee receives the largest amount of employee raises. And so I think having this bird's eye view, I think, through this philosophy understand how we're winning the raises, but it looks like across the board. I'm sure you've heard, like, some organizations, the highest paid is to get paid 26 times the lowest paid. Right?

I'm not saying we do that. That is a philosophy. How do you avoid what is a trend that happens to us here? And, yeah, I just wanna put that on our radar as one of our consideration events.

Yeah. I think we

can look at that. I mean, I can just say generally, like, the seems to be the biggest driver, at least this is my initial thought, is that the market should drive. Like, who do want? We actually define the market. Mhmm. So is that which, you know, who's in our pool that we compare to? And though that's where we'll need to come to some agreement about what who's in our pool? Yeah. Are we the median of the pool? Yeah. Where do we fall in that? And then really trying to use that to be like, look. We wanna keep you at market, which is that whatever that ends up being. Because otherwise, we're gonna lose employees. Right? But

I mean, I don't wanna accept it off base value, though, because just as an example, even cities having, you know, I think a lower pay scale for their officers and better retention. So something's different there.

I guess the population

is different. The work we're gonna get there between cities. So I'm not trying to dismiss the work and the value that that option will available.

We'll schedule organization. Yeah.

Exactly. But I'll I'll I guess I'm just

trying to get out.

The officer's just driving easily. But, you know, like, continue because

officer can see that we get a 30% raise, and he's a billion dollars of our budget.

Comes from that increase

in PD. Right? So, like, I just want to be cognizant of of our overall philosophy here, and that that's why I appreciate the the comments. You know? Yeah.

Think one of the things looking at from a budget perspective, the the salary surveys that don't that don't give you the opportunity to say, like, can we afford it? Yeah. Is is Right. Probably the the most difficult thing I look at. Yeah. Yeah. That makes sense.

Well, is it you price them at the time you enter into the contract. Right? Like, the so that you could I mean, I I don't know. I mean, the way that they're structured here is that that just gets built in. They're we don't know what that number is. Right? Whereas you could depending on the term of the contract, I mean, maybe we need to do shorter contracts for a period of time to minimize our risk, right, over a longer period of time. But you actually agree to the equity adjustment Yeah. The timing of the contract. Yeah. And then or you could cap it. Right? You could say or and then you so that way, alright, second year or third year, we're gonna do another equity adjustment based on this compensation survey, but no more like, we're gonna cap it at no more than something. So that way you can price it ahead of time and price the contract Yeah. So that you're not leaving it to some sort of

Well, your survey could be a part of your compensation philosophy versus being a part of your contract.

Yes. Ideal. Well, that is that's how I've done it. Okay. Because you do the surveys as part of the negotiation. Everyone's looking at the survey. You're transparent about it. Like, this we agree that this is how we're surveying. Yeah. And this is where we think you are, and I'll be at a median. Like, your median of this group of and we're not that is market. Mhmm. And then you price what that is, and you enter the contract knowing that that's the price. Now sometimes you may agree on a second or a third year Yeah. Market adjustment, but you can cap it if not you're sure what that is.

Because, you know, what's interesting with ours is, like, let's say if there's, like, eight on our salary survey, it doesn't really matter who the bottom four is if it's the average of the top four. Yeah. So, I mean, then you just start to you start to stack, you know, whoever the eight is. You just get four top ones in there, then you can say you know? And then you just say, give me the average of that. Now you're stacking on the time.

And you're not at median. You're at the top.

Yeah. Right? And then your bottom pool doesn't really matter because

And then if they need to then they do a survey whether they do it our way or a different way, then now they need to get out of bus. Now we need to get out of the And that

is then it's really building a Right? I mean, you know, we need to be looking like, if my understanding is that there's some Silicon Valley cities that are in our top. Like, we're we're in Silicon Valley. Like, we need to be looking at our property tax per capita versus there. I just don't like him. Yeah. And so we would afford to be Yeah. In Silicon Valley.

It is why I think the philosophy is especially important for us to consider and at least begin to give words to publicly is is this an issue blinds at anybody or if you don't have anything, it's to be consistent and fair with all of our employees. So it's one of the things that we've heard in these conversations from different groups that are feeling different kinds of frustration based on how they're being impacted by this deficit is, you know, activation of special treatment with them or others. Yep. And that's why we take a lot, and you have to be very consistent about what they will treat their vital abilities. I do.

I do think you're gonna do the conversation with that. It's not gonna be a Well,

it's not. Pesticide. Right? Because when when we talk about being structural and ongoing, like, I'm just trying to be towards, like, and not comprehend it out. What we may have to put in order to accomplish that?

And how it'd be consistent. Like, at least it's gonna be how we do our comp surveys or everybody. Yeah. Yeah. You know, utilities might be different because they're we'd have to compare it to special district. And so there might be some tweaks on how we do that. But a lot of these are same services that are being provided everywhere in the Bay Area. So okay.

I would just ask if we can take all these slides that we have and just make sure all the counsel gets them.

Oh, yeah.

Just send to all of us. Yep. Request.

PDF them right after this and

Okay.

Okay. Alright. And then, basically, we'll take a version of this to the January 6 meeting and then ask the rest of the council for their input and stuff like that. That sounds fantastic.

Future agenda items, I think we just discussed that. Mhmm. And then committee members, staff announcements. I just wanna make one announcement. Like I just said earlier, I just wanted to do, I guess, a compliment.

Last night, I thought it went well, and I wanted to thank staff and I thank the the budget team for, you know, for putting together a a presentation that, was, transparent, honest, and open. And and I think, that's it was a it was a good way to end the year and pivot to what's gonna happen for me next.

So Oh, good.

I just wanted to thank the team. You know,

you guys are great for the team as well.

And and and like I said, it has been it has been a bumpy to bumpy year. And Nicholas and Fran have been there on every bump.

They feel dragged to

my feet.

So thank you very much.

Yeah. I also wanna say thank you to to you, Mary. You've been fantastic this entire time holding everything together. I've just been so impressed with your transition and leadership and really just the way that you step up in theory. It's been a remarkable It an

honor to try and get my instructions for short period

of time. I'm relieved to do that.

Well, I mean, it is such a great gift to have Humana here too because her, like, world professionalism and what you bring to this really does elevate our financial situation. And I think having a professional like you is gonna help us rebuild the trust and credibility with the community and the finances too. So thank you for coming in and taking this by the helm and really being such a strong leader for the city. We appreciate it. Yeah.

Stay here. Thanks so much.

Nice to you.

We'll keep showing up and doing our best.

We will be able to do that.

Really appreciate you guys too for sipping my bed and asking me questions.

And if there are no other business, we need to.