City Council - Regular Meeting

Great, thank you. Well, welcome to the City Council regular meeting for Tuesday, June 2nd at 6 p.m. We need to finish up some business from an earlier meeting. So with that, you have an announcement for us, City Attorney?

Yes, Mayor. As previously announced, the City Council went into closed session pursuant to the Brown Act on three separate items identified on the agenda. The City Council gave direction with respect to all three items. At this time, it would be appropriate to adjourn the 5 o'clock meeting.

Okay, so we adjourn the 5 o'clock meeting, and we are going to do the Pledge to the Flag, and we have some lovely guests that are going to help us with that. We have Ava Winterstrand-Penn from Robinson Elementary School and her teacher, 5th grade teacher, Megan Liestra. So there's your, just put it up close there. And when you're ready, go ahead and give the instructions and say the pledge. And here's your flag right there.

Please place your right hand over your heart. Ready, begin. I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.

Yeah.

Great job. You did a great job. So Megan, do you have some things to say about?

Thank you very much. So hello, Manhattan Beach City Council. My name is Megan Bladestra, and I am a fifth grade teacher at Robinson Elementary School. It is my honor to have Ava up here with me. She is one of my wonderful students. I met Ava on the very first day of elementary school, and from that moment she has stood out as an exceptional student. Ava is one of the most hardworking, responsible, and dedicated students that I have had the pleasure of teaching. She consistently puts forth her best effort, approaches challenges with determination, and takes great pride in her work. Beyond academic achievements, Ava is a kind and thoughtful classmate who leads by example and treats others with respect and compassion beyond her years. One of the most rewarding parts of teaching Ava this year has been watching her grow in her confidence. She has learned to embrace new challenges, she's found her voice in speaking up for herself and others, and she's developed a strong belief in her own abilities. I am incredibly proud of Ava. So thank you for allowing me to recognize her and give her a round of applause.

Well, that's wonderful, Ava. Thank you for taking time to come here tonight. So tell us about yourself. What are your best sports? What are your best subjects and favorite subjects in school?

I love to play soccer. I actually play club soccer at Beach and my favorite school subject in science.

Okay, and what position do you play on the soccer field?

I play left defense. Left defense.

So are you a righty or are you a lefty over there on the defense? Because that's going to be important when the other players come in towards you, right?

I'm a left. Yeah.

Well, that's good because that's going to confuse them, right? Yeah. Yeah, wonderful. And are you excited about the World Cup being in the area here?

Oh, yeah.

Okay, terrific.

Well, on behalf of my colleagues here on the City Council, the City of Manhattan Beach and the Manhattan Beach Unified School District, recognize Ava Wienerstrand Penn from Robinson Elementary School. So congratulations, and Mayor Pro Tem Tarney is going to give you a city pin. Okay, well, thank you. Stay here, because we're going to take some pictures. Oh, yeah, I forgot to ask. How about parents? Are your parents here?

Yeah, my mom's out there.

And then all your friends, are they terrific? Yes. All right. All right. Can we have the roll call, please?

Council Member Sherrillion?

Here.

Council Member Howarth? Here. Council Member Lesser? Here. Mayor Pro Tem Tarney? Here. Mayor Franklin?

Here. Okay, we're gonna move on to the ceremonial calendar, and this is a presentation of plaques to outgoing commissioners, Planning Commissioner Ngoko, if I call your name, please come on up, Parking and Public Improvements Commissioners Kirschenbaum and Marcy, Parks and Recreation Commissioner Agarwal, Library Commissioners Dahl and Cullen, and Board of Building Appeals Member Adamini, Freitag, and Yang. Thank you. Say all that three times fast. So we have some hardware for you here.

We're going to hand out.

that we're going to hand out. So thank you all very much. You know, it's, I think almost all of us on council made our ways up through commissions and boards and things like that. So we can measure you for the chair. Okay.

Careful what you wish for. Right.

So thank you so much. Can we get some help with the plaques and the pins? Or vice versa.

Okay.

Thank you.

Thank you, Sean, very much. But stick around, please.

And here's your city pin.

Congratulations.

Congratulations.

Thank you. Thank you so much. Really appreciate it. Thank you. Thank you.

Okay.

Okay, so council members, maybe we can stand behind them. Great. Well, I'm going to pass the microphone and if you can just say your name and just introduce yourself and say a few words.

Hi, nice to meet you guys. I'm Eshaan, and I'm on the Parks and Recreation Commission, or was. It was an awesome experience to be on there. Our whole commission felt like an entire family, and I loved going every once a month on Mondays, and it was just a terrific experience, and I'm so grateful that you guys elected me to be the student commissioner of it. It was just awesome.

Hi, I'm Dina Dahl. I was on library. I've been a resident of Manhattan Beach since 1998. It was a privilege to give back and serve this community, and as it continues to grow, I look forward to helping participate in other ways.

Hi, I'm Kylie Cullen. I was the student commissioner for the library commission, and it was such a great experience. It was definitely one of my favorite things I've done throughout high school, and I'm really grateful for the opportunity.

This is Dr. Cyrus Adami. I'm resident in Manhattan Beach for almost 40 years, but I look younger. And I'm commissioner for six times since 1999, and really, I love this position as a commissioner, and I appreciate it for all of the help I can do for the city.

Thank you for your service. Congratulations.

So on to item E, approval of the agenda and waiver of full reading of ordinances.

Your Honor? Yes. I do have a couple items to pull.

Mm-hmm.

Number 8 and number 12. Number 8 and number 12.

Okay, great. Anybody else? So we have a motion to accept by Council Member Lesser and seconded by Mayor Pro Tem Tarney.

Correct. And the motion is to approve the agenda with the exception of the consent calendar items 8 and 12, which will be heard separately.

Mayor Lesser. Mayor Franklin. They're trying to get your attention. Mayor Franklin, did you want to ask about a reordering of the agenda?

Oh yes, if it's okay with everyone, can we just switch the budget discussion and the CIP have the budget first so that we can, if there's any needs that come up in the budget that might require some cross funding from the CIP, we can go ahead and address that.

So just to clarify, that would be moving current item 16 ahead of item 15? Yes. I would agree. As the mover of the motion, would you, as the seconder, council member, return? Yes.

Okay.

Great.

Call for the vote.

Motion passes 5-0.

Okay, great, thank you. So moving on to city council and community organization announcements of upcoming events. One minute each.

Hello, Cassandra with your Manhattan Beach Library. Yesterday was the start of our summer discovery reading program. It's for all ages. You can stop by, pick up a reading log, and you can complete either books or activities to earn a book and a prize. However, we're starting our kickoff this Saturday from 11 to 1230. We'll have the juggler Michael Rainer. We'll have some art bag tote bags that you can decorate, lawn games, and frozen treats. So this is for all ages to come sign up on Saturday from 11 to 1230. Thank you.

Thank you, Amanda.

Honorable Mayor, Mayor Pro Tem, City Council Members, City Officials, Ted. Bobby Bell, WM Outreach and Educator for Recycling and Organics. Just wanted to get ahead of it, get out there early so everybody knows. Coming up on June 20th will be our second paper shred of the year, free to all residents and business owners. It'll begin at Maricosta High School in the student parking lot in the corner of Artesia and Peck. It runs from 9 to 11 or until the truck is full, which has not happened yet. Two box of banker boxes per person. Please, no clips, no CDs, nothing else. We shred paper safely and it's recycled. That's all I got. Wishing you guys all God's blessings.

Great. Thank you, Bobby.

Good evening, Mayor, members of the City Council, Mike Jenkins, longtime resident. City's annual Juneteenth celebration will take place this month on Sunday, June 21st in Poliwag Park. Juneteenth is a national holiday celebrating freedom, a holiday relevant to all Americans, and we hope the community will come out for what pretends to be a beautiful Sunday afternoon to commemorate the holiday and all that it represents. There will be food trucks, a vendor village, DJ curated music and dancing, a poetry slam, and for the first time, as part of the Juneteenth event, we will kick off the city's popular summer concert series with a performance by the band West Complex. The event opens at 2 p.m., the opening ceremony kicks off at 3, and the concert will be at 5 p.m. I applaud and thank Eric Brinkman and his team for putting together a fabulous event. I look forward to seeing the community out in force on Sunday afternoon, June 21st, Poliwag Park, to enjoy the festivities and celebrate Juneteenth.

Thank you. Thank you, Mr. Jenkins. That's on the city calendar as well. Anybody else? Colleagues? Any announcements? So I have one. Going to use some AV talent here. So I don't know if you saw Friday morning, the Marine Mammal Care Center released three sea lion pups that they had rehabilitated. And it was time to release them back into the ocean. There are three of them. There's Tortellini, Rotini, and and Cavatappi, and you can just see for yourselves how much fun they're having. I was joined by Councilman Cherillion up on the, up on the pier. They have been in rehabilitation for about three months. You can see they're very happy to be out there. But one more is coming, there we go. Say, hold up there. And I was taught by Jack May, resident. that they are faster than Olympic swimmers when they get going there. But good job, Marine Mammal Care Center. What I'm most proud about with my colleagues is the fact that we voted to provide support for them for the next three years. And it's so great to get some results to be able to view. So thank you all very much. And there, of course, is the information. And stay tuned on their site for other releases. Thank you.

Anybody else?

Oh, yes. If I could just make one quick. Councilman Sherrily.

I appreciate it. I don't know what's going on at Maricosa, but they won another championship. They make six in one month. Their baseball team just won the CAF title this last weekend, and it was a great game. Showed perseverance, and they came back to win from behind, so it was fantastic. But go Mustangs go. They're doing fantastic.

Thank you.

That's terrific.

I'd love to add. I'm not used to the microphone being on this side. And on that note, I also wanted to congratulate our boys' indoor volleyball team taking the state finals. I mean, they've been just amazing. And, of course, this is my son was on the 4x800 team at the state, and that's why I wasn't able to attend the SEAL release, but they took third place for the 4x800. In the state. In the state, yeah. So a lot of great competition. Our athletics program at MiraCosta is second to none, although in this case it was third.

Terrific. So any more committee announcements? I don't have an athlete.

I'm done too.

Okay, so we'll move on to public comments. Public comments are limited to three minutes per person. And if you discuss a coming up agenda item here, you cannot speak to that when it comes to council.

Good evening, Honorable Mayor, City Council, Staffan Compa. Just something I noticed in the last couple of meetings, I've had some comments on the consent calendar, but public comments come after you approve the overall calendar for the discussion. So I'm suggesting looking at the agenda and seeing if you can move public comments around so that the public can comment on your consent calendar for input for your decision on this agenda. Thank you.

Okay, thank you. Anybody else? Public comments? No? We'll close public comments. Whoops, I'm sorry.

My name is Fred Taylor, long time resident. My first house was $75,000, so they give you an idea how long I've been around this burg. I'd like to request one thing before I start, and that is would you all speak into the mic and kind of project? My ears aren't 30 years old anymore. Locally, here in the city, these are the times that can try men's souls, especially this one. Fiscally, our city is in a difficult situation. And this was disclosed for the first time on May 5th, just a few weeks ago. And it begs some questions to be asked. I took the time this week to write to MB Weekly, and I appreciate them that are a good sounding board for issues in our city. And I suggest that the council ask the staff these questions. When did you first realize that the city was going into the red where expenditures were exceeding our revenues? Especially in the light of a $6.5 million bump this past year with increased sales taxes. How did we go from an operating budget of $106 million just five years ago to $165 million this year? And that posts a 55% increase. Why wasn't the city informed about the growing deficit six months ago? This surely didn't happen overnight. What proposals has city staff submitted to council to turn this around besides revenue enhancement? Have there been any cost containing recommendations? 24 members of our staff earn more, way more than Ted Lieu does as a sitting US Congressman. And those 24 are in the top 2 to 3% of incomes nationwide. Finally, would you support a hiring and promotion freeze to start getting the city's financial house in order? And as I learned today, the staff is asking for three additional hires even tonight. And that sets me apoplectic, quite frankly. My head spins. We're watching a runaway financial train and my opinion is that it's driven by the city staff and not driven by the council. So I urge the council to perhaps appoint a task force to examine the situation and come up with solutions and recommendations. But we really need a reevaluation and a solution, just merely a rubber stamp to move on for the next year. This is unsustainable going forward.

Thank you. Anybody else? Public comment? No? Then we will close public comment and go back to consent. calendar item number eight and council members.

Thank you. I see my microphone is on. I'll need to speak into the microphone. I'm guilty of that a lot of times because I lean one way and the microphone is on the other side. So on this one, if I can have the sheet.

Mr. Mayor, there should be a motion to approve the consent calendar with the exception of, I Those two items polled by Councilmember Sherrillian. Eight and 12. So moved.

Okay, so that motion.

I so moved, and I believe that was seconded.

Okay, yes. So already moved by Councilmember Lesser and seconded by Mayor Pro Tem Tarnay. So as for the question, please. Yeah.

Motion passes 5-0.

Thank you. And now Council Member Sherrillian.

Thank you. Hi, Chief. Thank you for coming down. Just really quick, you know, this is on consent, and I read the report, and it's very, very clear just for the public seeing the consent item not being budgeted at $200,000 and waiving in the bidding process and going sole source. Can you just talk a little bit about why we're sole sourcing and just for the record?

Certainly. This item is to ask for Council's approval to expend monies to rent Meridian Barriers for the pendency of the World Cup to help us with security. As you might be aware, vehicle-borne attacks are something that we're always concerned about with any large-scale events, be it something like our fireworks show or something like the World Cup. We have traditionally used vehicles as significant barriers. As you might imagine, you know, you've seen them before in the street. We use vehicles to protect the public, but the studies have shown that a lot of vehicles that we can use aren't significant enough to protect or stop a car from a vehicle-borne attack. So these barriers allow us to have that confidence without using our vehicles, which we may need, and deploy for other reasons. They will allow us to lock down certain places or streets so that we can direct the public in the manner that we have according to our security plans. and they also are rated to stop the threat of vehicle-borne attacks. This is being requested as a sole source item due to the fact that Meridian Barriers are kind of the company that really does this in a significant fashion.

Great, thank you. That answers my question.

Yes, sir.

Great, thank you. So we need a motion to... We have to open it up to public comments. Oh, I'm sorry, public comments? Yes. Seeing none, we'll close public comments and ask for a motion to approve item number eight on the consent calendar.

Okay, it's been, it's, I moved it and it's already been inside.

Oh, okay. There we go.

And that's A, B, and C of the recommendation.

Okay.

Motion passes 5-0. Okay.

Great. I'll continue.

Now going to item 12.

Thank you, Mayor. Number 12, this grant not to exceed $2.89 million. First off, I want to just congratulate staff for... YOU KNOW, GOING OUT AND GETTING THIS GRANT. I'M SURE, YOU KNOW, READING THE REPORT, IT WAS A TEAM EFFORT. AND KUDOS TO EVERYONE INVOLVED IN GETTING THE GRANT. MY QUESTION IS MORE ALL THE COSTS THAT WE'RE INCURRING ARE BUILT INTO OUR CURRENT BUDGET. Is that correct? Meaning the cost that we've been incurring, because the grant period is for a long period of time. Right. So those are budgeted items that will potentially get reimbursed. Is that correct?

No, we, just the item we talked about, item eight, the Meridian Barriers, we do expect to seek reimbursement through this grant, so that is part of the reimbursement that will come forth. But for the most, these, all the grant, with the exception of the Meridian Barriers, all of the grant is related to personnel cost for our police and fire personnel and some of our ancillary personnel as well. And this is related to the security related to FIFA

And the west drift more than anything else got you so but the amount of personnel that we're going to put out there Potentially in an overtime or whatnot those costs of joke are going to be built into our proposed budget No, they are not.

No those costs will be borne by the grant. We expect to seek reimbursement For the personnel costs for our security posture related to the World Cup through the grant

And keep in mind it's split between two fiscal years because it's June and July. So we have some costs this fiscal year and some costs next fiscal year. And there are some overtime costs that we did come to council for during mid-year, particularly for our fire department that's in this fiscal year that are included in the budget.

Thank you.

Libby Brett, our finance director. I just wanted to add one other thing. So the amount that was requested in the grant is kind of a worst-case scenario of all the boots on the ground needed. So since there was some unknowns in how much staffing would actually be used, we decided it would be best to let the events play out, and then we'll return if a budget adjustment is needed to put the expenditures into the budget as well as the exact grant reimbursement that we submit.

So I saw the word FEMA on here and that just tells me it's going to take a long time to get the reimbursement. I'm just used to it in my...

I mean, not necessarily. We're hopeful the grant agreement lays out three due dates to submit the documentation, and we will certainly meet those deadlines, and we will expect funding as quickly as possible.

Yeah, no, and I appreciate that. I guess I'm referring to when it was COVID and we put in lot of reimbursements to fema maybe it was a different time but i just saw the word fema and i don't want to get you know uh i don't want to get everybody's hopes up that the money's just going to come in right after the because it takes time because it's the federal government that's all the questions i have okay thank you so uh i have a question um regarding the uh the contract the agreement

The Los Angeles World Cup 2026 host committee LLC grant agreement. That's in this section. And item number 13, which is on page 331 of the staff report. It says that, so the title is subject to availability of funds. And it says, this agreement is subject to the availability of funds as appropriated by the World Cup FWCGP, which stands for FIFA World Cup Grant Program Fund. So... That makes me a little nervous or a little concerned. So can someone explain?

I certainly can, Mr. Mayor. Yeah. So this happens often in grants where we are a subrecipient. A great example of that is our Office of Traffic Safety grant, which is actually a federal grant administered through the state, and then we are a subrecipient. And the same thing here with this grant is that we are a subrecipient of the grant. And essentially what this contract provision is saying is they will pay us as long as the government pays them. So the host committee will give us our money as long as the government gives them their money. So that's essentially very much standard contract language in grants like this where we are a subrecipient, that they are saying, yes, we will hold up our end of the bargain and we will give you your money as long as the federal government gives us our money that they have promised us.

Okay. So doesn't that open us up to some exposure as far as what if the government, FEMA, again, I share the concern of FEMA payments being late or they change or something like that or they're just not there, then we're not going to get reimbursed.

Certainly that possibility exists, but to get to this point where we are standing next to the people, standing next to the people who got the money, there's been a lot of vetting and a lot of planning to get to this point. And I'm as confident as one can be at this stage that as long as FEMA pays the host committee, we will get paid as well. And, you know, I understand the concerns with COVID. I dealt with that as well, filing claims in another jurisdiction and getting a lot of runaround. But I would say that absent COVID, for the most part, while it still takes government time, as I like to call it, which means, you know, when we send in a claim, it's not going to get paid the next week. But I would expect us to get paid in a decently timely fashion. That's typically the way it's gone is we get in a decently timely fashion in government terms is, you know, six months to a year.

Okay, but again, I just don't see the federal government as a party to this agreement.

The agreement is from the Department of Homeland Security through the FW, that acronym you referenced, to us. So the federal government is at the top, and as long as they pay the host committee, the host committee will pay us. That's what that provision says.

Okay.

Thank you.

Yes, sir.

Any other questions?

Yeah, I have to push my button. Chief, you might stay up. I think, would one difference be that this is planning ahead of an emergency? Yes, ma'am. Right, so a tornado for those Midwesterners in the audience, or earthquakes, or things that we apply for because they happen to us. But these are funds that are already budgeted, set aside, designated, correct? That's very accurate, Council Member Howard. FEMA, FIFA, World Cup program. Yes. Okay. And I also, I want to compliment, obviously compliment staff for all the work. And it's funny because y'all came to us and said, oh no, we're getting this grant, which nobody really ever should say out loud. So well done, you. But you were very confident because the FBI came to you, I think, and said, boy, this should be the model for everybody. And then thank you for all the continued work you're doing. I know staff is working so hard planning for every contingency that could happen. and I feel so comforted by that.

Thank you, ma'am. It's definitely been a team effort with the fire department and finance and public works and everyone. We're just very grateful for everyone jumping in to help us with this grant application.

But don't, you know, you set our expectations pretty high for the next grant, so.

Yes, ma'am. Keep that in mind.

Okay, thank you.

Thank you, Mr. Mayor.

All right. No further questions. Open it up for public comments. Seeing none, close public comments. Any comments, colleagues?

Pretty exciting. I saw the banner starting to go up. I got my jersey on the way.

Good. Okay. So let's call for a motion.

I think your screen isn't working. Oh, this is a problem. Oh, there we go.

So we've had... So we've moved it. We got a second. There's a motion by.

Okay. And I've seconded.

Okay.

Does someone need to fix.

Thank you. And call for the vote.

Motion passes five, zero fingers crossed.

Okay. Somebody stepped up here and is doing something to my computer.

Remember back in the old days, broadcast TV, and there'd be just a card, you know, a TV card? Please, it's, you know, technical difficulties.

I don't remember that. Yeah, you probably don't. I don't either. You don't, I don't.

You know what? I can handle it.

I do, I do.

Well played. Oh, did you not have a TV?

I didn't, I know. Black and white only.

I remember that.

Okay. So, moving on to item number 13, and Community Development Director Akira.

Good evening, Mayor Franklin and members of the City Council. Masa Alkair, Community Development Director Akira. As noted in the staff report, the recommendation is to continue the item. Mayor Franklin, would you like to open the public hearing?

Okay. So at this time, I'd like to open the public hearing. Are there any requests to speak in the council chambers? Seeing none. Closed public comments. Assistant City Clerk Mattson, are there any requests to speak on Zoom?

No requests on Zoom.

Okay, thank you. So seeing no further requests to speak, the public hearing will be continued to the June 16th to 2026 regular City Council meeting. Hearing no objection, it is so ordered. Thank you. So moving on to the next item. Number 14, conduct public hearing in consideration of renewing the city's military equipment policy by introducing ordinance number 26003, Police Chief Johnson.

Good evening. Again, Mayor Franklin, members of the City Council, Rachel Johnson, your Police Chief. Lieutenant Sabosky will be giving this presentation.

Good evening, Mayor and Council Members. I'm Matt Sabosky, and I'm currently Lieutenant overseeing our Professional Standards Office. Tonight I'm here to present the Manhattan Beach Police Department's 2025 Annual Military Equipment Use Report as required by Government Code Section 7072. This law is about transparency and ensures our community is informed about the specialized equipment used by their police department. By law and under our own city ordinance and military equipment policy, this report must include how each type of equipment was used, any complaints received, the results of internal audits, the annual costs, An updated list of our current inventory and any requests for equipment we may seek in the coming year. You'll find all this information in tonight's presentation, and it's also available on our city website. Before we begin, I want to clarify a few things for the city council and public. The term military equipment is defined by state law, not by the Manhattan Beach Police Department. In practice, it refers to tools that our officers don't carry every day. These are used in specific situations, for example, Our use of drones, which are commercially available and can be purchased by anybody, could still fall under this definition. Also, any request for new equipment tonight doesn't mean we're purchasing it right away. If council approves these requests, we still have to go through the regular budgeting and purchasing process. Think of this as a first step, basically a transparency step. Here's a quick summary of Manhattan Beach PD's military equipment. that was used in 2025. Drones, we deployed drones two times for training and 24 times for incidents and special events. Our Bearcat regional armor vehicle was used two times for training and five special events. Our mobile command post was deployed seven times for community events and one time for traffic collision. Our SWAT mobile command vehicle was used seven times for training and one search warrant. Our CNT, our crisis negotiation band was used, was not used because of being upgraded Reaching tools, tear gas, explosive projectiles were used one time for training. Rifles were only used in training for things like qualifications and team drills. And kinetic energy launchers were used two times for training purposes. As for audits and community input, no complaints were received in 2025. Our inventory was reviewed by each bureau. No significant issues were found. Regarding the cost summary, the total identified cost of equipment related expenses in 2025 was $46,718.75. That includes expenses for upgrades, maintenance, training, and ammo replacement. All these costs were covered within our existing police department budget. Regarding inventory, our full 2025 equipment log is attached to this presentation. It's kept current and updated throughout the year. Looking ahead to 2026, we request the availability to purchase additional drone systems as we incorporate the drones as first responders in 2026. And lastly, we're requesting approval to bring forward urgent equipment requests via staff report to council if a need comes up before our next public meeting in March 2027. Again, approval tonight just allows us to move forward with the process. Any purchases would still follow city procedures. In closing, staff recommends, one, holding this public meeting, which we're doing now. Two, that the council receive and file the 2025 military equipment report. Three, introducing ordinance 26-0003 to renew ordinance 25-0007. And four, approve the equipment request for 2026 as outlined. Thank you for your time. I'm happy to answer any questions you may have.

Okay. Council members, any questions?

Yeah. Press my button.

Council Member Holder.

Thank you. Thank you so much. And always thank you for everything you all do. I appreciate the summary of the use, the usage, you know, how many times a drone was deployed or whatever. And I see that in the back you have your military equipment usage log. Is the summary, like the simple thing that you just said, you know, drones were used seven times, four times. Is there a simple list like that? Because when I look at the military equipment log, like, I don't know what a UAS is. Like, it just, or, you know, it's just hard for me, like, if I have to go and look through it, it's hard for me to get the summary. Like, you just listed off. Is there a reason that's not... done here or is it just because that's not the format we use?

They were all attached to the staff report. The one you're referring to, I believe, is the one with the Excel spreadsheet version.

Like this one? Right. So, but like, and I know they're all there, but it would be nice for me, for my brain, it'd be nice just to see, like, just the list. Like, this was used seven times, this was used, just like what you just said.

A more simplified version of that.

Yeah, that's no problem. For dummies. Military equipment for dummies.

We're trying to be as detailed as possible for you. So, yeah. I appreciate that.

Not a criticism, just, you know, yeah. Great. Thank you. That's it.

Okay, great. Anybody else? Council? No? So open up public comments.

Stefan Kuppa here once again. Great report. I'd like to get a little story about how do we know we have enough or too much? How do we figure this out? Do we have too much or not enough? So what's the process that we went through to figure out what we need? And we want to make sure we're safe. But just give me a little story about how we figured that out, please.

Okay. Any more in chambers? Patty, how about Zoom?

No requests on Zoom.

Okay. So I'm going to close public comments and open it up for comments by my colleagues. So we have Council Member Lesser.

I have one, and I will ask the Chief the question that was asked by the member of the public, which is how did we arrive at the military equipment list that we have or the needs that we have?

How are they assessed? Yeah, the amount of equipment that we have and we use is very consistent with all other police agencies, our size and scope of what we practice. And depending on the units that we have, the specialty units that we have, we have equipment consistent with what our unit would need. And it's pretty straightforward across the board from city to city. With regards to anything specific, I can answer that.

I guess the larger question is, are there best practices for a city of our size related to where we're located? What are some of the criteria that goes into that determination of whether we have sufficient access to, I guess, military equipment? Is there sort of a mutual aid? sort of concept that applies to this equipment that we can get it from another agency that's close to us in the event of need? What goes into the decision to purchase the equipment that we do?

So thank you for the question, Council Member Loesser. Just as Lieutenant Sabosky said, we definitely go by industry standards and what is best practice here in the South Bay historically, right? We also are constrained by what we can afford and what we can store and what we can train our personnel on. So we certainly have mutual aid agreements in place with folks like the Los Angeles County Sheriff's Department. Let's just say, for instance, we had a bomb threat. They have a team of folks who do that sort of thing and do it very well because they do it all the time, and we would reach out to them for those type of things that would involve military equipment related to explosives. The same thing with anything related to SWAT or tactics. We do have our own SWAT team. They train very regularly, but if the incident either goes on too long or is just larger than we are really prepared to handle regularly, we can rely on LA Sheriff's Department, Special Enforcement Bureau to come out, take over, and help us resolve that incident peaceably. You know, to Mr. Kampa's question and your question on his behalf, is it enough? You don't know until you really need it, and when you need it, it will never feel like enough. So we do our best to make sure that we are, that we are, we... inventory and audit our equipment, make sure it's working, make sure we have personnel trained not only to use it, but to train those who need to be trained to use it. And we feel confident that we have what is reasonable and necessary for an agency of our size, given the infrastructure we have in our city and the businesses we have in our city. We are very much part of a mutual aid group in the South Bay that if we have something that either exceeds our capabilities or we need to buttress our capabilities with more, let's say we need a second armored vehicle, our relationships are such and our memorandums of understanding are such that in the South Bay, if we needed another armored vehicle, we could call one of our neighboring agencies and they certainly would provide us with that without hesitation.

Thank you.

Certainly. Okay. Council Member Shirley.

Thank you, Mayor, real quick, and thank you for bringing this report forward. Now, this is required to be kind of renewed how often?

Once a year.

Once a year. Yes, sir. But I appreciate you guys staying on top of it and keeping the community safe.

Certainly. Yeah, and Chief, I have a question. You mentioned the mutual aid. Yes, sir. Is there any effort like to meet with, you know, adjacent... police departments and actually go through and cross-check the inventory to see, I mean, because we're so close to everybody, to see if there's items, equipment that can be shared by all three, four, however many to find would be in our region right here to share equipment and help share the cost.

Certainly, our tactical commanders, our crisis response team commanders, that group for the South Bay meets regularly just to discuss things that are of interest to them related to deployments and tactics. And we do discuss sharing of equipment. For years, we've shared a regional armored vehicle. And that's worked out, and it'll probably work out until it doesn't, right? Which is why when the council approved... I believe last year, the purchase of an armored vehicle, which we hope to receive in 2027. We've been bumped a little bit on the priority list. That's why we requested that because, yes, we do think that there is value in regionalizing and sharing equipment until everybody needs the equipment at the same time. So there are certain things that maybe one agency has that others don't because it's maybe a really specialized piece of equipment that if you needed to, you could live without it. And we do talk a lot about what we all have as a collective. But generally speaking, a lot of things that we're doing regionally, like having a regional armored vehicle, a lot of the agencies that were participating in that have purchased their own just because you want to have what you need when you need it, especially in today's climate. So we do discuss that all the time. And we know what agencies have kind of really niche specialized equipment. But we typically are trying to make sure that we can at least hold our own for a while in the city.

Great. Thank you. Yes, sir. Any other questions? Okay. I'm going to open up public comments. Oh, I'm sorry. So we're going to close public comments. Patty, we already checked online, right, for Zoom? Okay. So we're going to close public comments. Thank you. And council discussion.

There's a motion, I've made a motion to approve. Oh, now I have to go back to it. Let's see. Oh, this is 14. Okay, to receive and file the 2025 Annual Military Equipment Report and to introduce ordinance number 26-0003, to renew ordinance number 22-006 again, which established our military equipment policy.

Okay, I can see that that's seconded by Council Member Sherrillian. Can we call for the vote, please?

Yeah, before the vote, I'll read the title. Ordinance number 26-0003. An ordinance of the city of Manhattan Beach renewing a previously approved military equipment use policy pursuant to Assembly Bill 481 and Government Code Section 7070 at SEC. Okay.

Motion passes 5-0.

Okay, colleagues, how we doing? Doing okay?

Thank you.

Okay, so move on to item number 15. I'm sorry, to number 16. We've switched, so conduct a public hearing in consideration of resolutions adopting the fiscal year 2027 operating budget and the GAN appropriations limit. Finance Director Bretthauer.

Thank you. Good evening, Mayor Franklin, members of the City Council. This might be a record for talking about the budget so early in the night, too, so quite a switch.

I aim to please. We want fresh minds.

That's right, and hopefully former Councilmember Montgomery is not going to miss it, talking about it so early. I want to text him. Absolutely. Okay, glad to start everyone off in a great mood too. So my name is Libby Bretthauer, I'm the city's finance director. I'm very pleased tonight to continue our budget discussions. I'd also like to thank our finance budget team as well as all of the other city departments for helping us get to this point tonight. As I said during the proposed budget presentation on May 5th, this has been a very challenging budget year. just like last year and through each presentation during our quarterly budget reports our mid-year budget updates as well as during this budget process for the new fiscal year our team has strived for full transparency on the city's financial position and i hope tonight's presentation provides some additional context and facts on our current budget situation So first, we do, of course, have all of our budget documents on our city website, as well as we have our open finance transparency page, which provides members of the public and city council nearly real-time revenue and expenditure data, so you can compare our budget to actual expenditures and revenues coming in throughout the fiscal year, as well as information on salaries, positions, and pensions, et cetera. So I invite everyone to take a look at our transparency pages. So tonight's presentation was noticed as a public hearing, and I will be recapping some budget information that's been already provided to date, as well as providing some requested follow-up information, and if we're ready to move forward, we do have the resolutions attached that would adopt the budget and the GAN appropriations limit tonight. So just to begin our recap of our fiscal outlook, our city budget is a spending plan and it should first and foremost reflect our community's priorities. Results of our budget survey confirm that our budget aligns with community priorities of public safety and emergency services, which totals about 52% of our general fund spending. The fiscal year 27 budget also includes funding to maintain essential services at our desired service levels. And as a service organization, we rely on our employees to maintain our outstanding services. And this year's budget continues to support our service oriented employees with the MOU salary adjustments that were approved last year. The proposed budget also prioritizes infrastructure and maintenance in line with the survey results, and at the outstanding service levels expected in the community. Now our revenues are stable in key areas, including property taxes, our largest general fund revenue source. And we're fortunate that voters approved Measure MMB last November, or in November 2024, to generate an additional $6.6 million in transactions and use tax. The city has also maintained our AAA credit rating for many years now, and S&P reaffirmed our rating last year. Overall, our financial position has allowed us to maintain our outstanding service levels and make strategic investments in infrastructure even during periods of revenue growth slowdown. Yet we still have our challenges and we have had budget challenges pretty much since the pandemic. And we've been doing some different budget balancing measures each of those years since then. But like I said, this has probably been one of the most challenging budget years since the pandemic because we have so many competing interests. And in this current era of economic uncertainty, slow revenue growth and high costs are painful for everyone, families, businesses, and even cities and school districts. So we absolutely acknowledge and agree with members of the public who have sent emails and made comments about concerns, and we share those concerns. BUT I JUST WANT TO HIGHLIGHT THAT OUR FIVE-YEAR FORECAST SECTION OF THE BUDGET DOCUMENT IS AN IMPORTANT TOOL FOR SEEING THESE TRENDS, WHICH WE DISCUSS EVERY YEAR. AND THEN THIS ALSO ALLOWS US THE ABILITY TO TAKE PREEMPTIVE ACTION. SO I JUST WANTED TO NOTE THAT SINCE 2023, THE FIVE-YEAR FORECAST HAS SHOWN A USE OF FUND BALANCE EACH YEAR AS WE ADOPTED THE BUDGET. HOWEVER, AT THE END OF EACH FISCAL YEAR, OUR ACTUALS USUALLY COME IN HIGHER AND IN A BETTER POSITION. So other challenges the city's facing include rising CalPERS UAL costs, which now total about $2.7 million in the general fund this year. And these are expected to increase up to $3.6 million in fiscal year 29. We'll also talk more about our insurance reserve fund, and there the costs continue to escalate due to premiums, as well as claims and litigation expenses. And finally, I've discussed in the prior presentations too that we've seen significant increases in the equipment and fleet replacement costs due to inflation, tariffs, and technology increases. And this will continue to be a problem in the next few years to come. So this is an important slide with big dollar impacts that if our revenues are only growing at 2 to 4% each year, then we just cannot continue to absorb some of these other bigger ticket items without some either further cost containment measures or revenue enhancements. So just kind of zooming out to the total citywide budget, overall our revenues are just under 200 million. Expenditures are showing at about $210 million, which can occur when we're looking at the budget for all funds, especially when you're talking about capital projects where we tend to accumulate revenues or funds over time and then spend those for larger projects. So it could be a normal occurrence for expenditures to exceed your revenues in your total citywide budget. But moving on to focus on the general fund, the next slide has just a bunch of numbers about the general fund budget. But before we get there, I wanted to just highlight some important trends on what's really driving the numbers on the next slide. And as we've already heard in the public comments too, there are real concerns about this deficit of 9.5 million that we're showing in the budget. But I want to make a few things clear to address these concerns. So to be clear, the 9.5 million that you're hearing about as a deficit is not a structural funding imbalance where ongoing expenditures are exceeding our ongoing revenues. This number includes, it's mainly due to a proposed $6 million one-time transfer to our insurance reserve fund, which is needed there due to underfunding in prior years as well. So, and we'll talk more about that in a moment too. But one of the biggest things that's impacting the general fund deficit are these transfers to other funds. And I see the mouse here. I did want to highlight one thing. Do you have a pocket slide that I wanted to share due to all of the questions we've been getting? If we could jump to slide 55, please. So as Patty's pulling it up, thank you, Patty. I just wanted to reiterate that this is not a new, this didn't come out of nowhere. This trend has been happening the last few years, but what has changed is our presentation in the budget and how we're speaking about our general fund revenues over expenditures calculation.

Libby, we don't have that slide in our packet, right?

Not yet, no. We'll post it after tonight. Thank you, Patty. So this slide is just showing a quick history on the adopted budget from starting in fiscal year 23 to tonight's proposed budget of fiscal year 27. So for many years we have focused on the structural budget surplus or deficit, and that's that top line number. And you can see in some years, particularly fiscal year 24 and 25, the budget was adopted with a very slim surplus. of about $500,000, which leaves very little to no room for things that always seem to pop up throughout the year that we have to come back to council and request budget appropriations. So one of my goals would be to increase that number over time, but that will take some work and collaboration for staff as well as with the city council's input. But what would not often be focused on is the last line, the adopted budget after inter-fund transfers. So you could see in each year from fiscal year 23 to now, that number's red. So after including the inter-fund transfers out of the general fund, we were actually showing a decrease of our general fund balance. And so I just wanted to share that to give some history to how our budget came to be where it is today, and that this is not a new change, but what has changed is our presentation, and here's why. So with the mid-year report we discussed a few times, or with our... First with our annual financial report, our ACFA report, that we completed in January and presented in January. Our outgoing audit firm recommended we make this change to our presentation of transfers. And if you recall, we also have an incoming audit firm, so we discussed it with the second external audit firm, and they also concurred with this change. So we did our own research and we felt it was very important to make this change where we were no longer doing these inter-fund transfers kind of below that line through our balance sheet. We wanted to bring it in, which is the best practice, to show it in our revenues and expenditures. and discuss this number in totality so that we're not just showing the structural surplus, but we're really truly showing the increase or decrease to our general fund balance each year and what we expect that number to be. So that's why you're hearing this big change from, hey, how did we go from a budget surplus of 6.6 to a negative 9.5, but really we're not comparing the same numbers. So I just wanted to try to point that out to show that we've We changed our methodology in our budget presentation. It was recommended by not one but two audit firms. We concurred after researching it with other AAA rated cities in California. They follow this best practice. We wanted to follow this best practice and what it's done then is given a better picture of our general fund position. And now we can really have better discussions to make better decisions for long-term fiscal sustainability. So that way we can work together to make that bottom number a positive over time. So with that, we can jump back to the regular presentation if we could. We were on slide seven. So there are a few other kind of big to get items that are also impacting our budget this year. And I wanted to point out, we're talking about this one time transfer to our insurance fund due to a need there. But I did want to highlight that we have increased the regular charge outs already by 1.8 million. And in our fleet fund, we've increased those charges by about $500,000. So we can get into a long conversation about internal service funding, but basically the expenditures in those funds are paid for by the other using departments. If costs are going up in our fleet fund to replace vehicles and one of the other presentations I gave an example of an ambulance that has more than doubled in cost since the last time we purchased it. So that will ultimately impact the general fund and we have to start discussing how we can build up some more funds in our fleet fund as well as our insurance fund for these rising costs in all of these areas. So the proposed budget also includes new debt service payments for the public safety radios that we purchased in the last year. And as I mentioned, our CalPERS UAL costs are increasing. And then the proposed budget also includes projected increases in all of our labor and materials and contract services contracts that as we know are increasing with inflation and other economic pressures. So all of that said, we can. Okay, there we go. So that said, the budget as presented in the proposed budget on May 5th showed our ongoing revenues of about $119 million, our ongoing expenditures at just under 117 million, and there's that structural surplus number of about $1.9 million. Then we have our incoming transfer from excess funds in the county lots fund estimated at $146,000 this year. We have planned to purchase some equipment replacements of about $400,000. And then we have transfers out to the street lighting fund due to the subsidy that's required there, and then we have our planned $5 million transfer to the CIP fund, and then this one-time transfer to the insurance fund that we're showing this year. That results in the decrease to fund balance of about $9.6 million. So with that, we projected our fund balance at the end of fiscal year 27 in the proposed budget at about 23.4 million, or that's our policy reserve. And then our unreserved fund balance would total about 1.5 million. And then as discussed, we are showing a temporary reduction or depletion of the economic uncertainty reserve that was previously $4 million. Outside of the general fund, I just wanted to point out at the bottom of the slide there, it does say our Section 115 trust fund, the fund sitting here, can only be used for pension costs. We are projecting the balance in that fund to be about $6.5 million at the end of the year. In previous years, on the slide that we jumped to, hopefully you noticed the transfers to the Section 115 Trust Fund in previous years. I did discuss in a previous presentation that we have put those on pause in this next year's budget. All right, so one of the questions raised earlier too was what have we done about these budget challenges? And first and foremost, before the budget was even presented on May 5th, staff got to work and looked for areas that we could reduce our controllable costs. And here's a depiction of the $1.1 million that was already reduced before we presented the budget on May 5th. You can see the various areas each department was able to identify. All of these areas were considered to be fairly easy reductions that would minimize or have no impact to services to the public. So we're happy to go in detail here, but in the interest of time, I'll probably just keep moving, but happy to answer questions if you have them.

Colleagues, do we have some questions?

I'm happy to let staff continue with the presentation.

Okay.

I think you have a pause somewhere here, don't you?

Yeah, it looks like- Yeah, we could, yeah, in a few seconds.

16. Yeah. Yeah, I'll pause in a few slides then. So the proposed budget also includes three new full-time positions. However, as you can see on the slide, we'll kind of go through each one, and the department staff is here to answer other questions. So we are proposing the addition of one new full-time human resources assistant. You'll see the zero cost there attributed to it because we are funding it through a reduction in part-time hours and contract services. So although it's adding a full-time position, the cost is neutral at this time. The next item is not a new position, it's just a position change from one title to another. There's a slight reduction in cost there in the Parks and Recreation Department. In the Fire Department, they're proposing an upgrade to one position that is minimal cost of $7,000 per year. In the Public Works Department, that's where we have the other two new full-time positions. one being a new full-time management analyst, and the other being a new full-time sewer maintenance worker. So regarding the management analyst, the total net change there is $88,000, but that is across multiple funds. So I wanna point out here, it's not on the slide, but the general fund impact here is actually negative because the department gave up part-time hours that were already budgeted in the general fund, But then really the position will be working across multiple programs, so that's why other funds are picking up some of the cost. Excuse me. And then the sewer maintenance worker, that position will be fully funded by sewer fund service charges in the sewer fund. The last item is an upgrade in the IT department for moving the office assistant to an administrative assistant classification. So altogether, these position changes would total $162,000. However, as I mentioned, it's not all in the general fund. It's spread out across multiple funds. Okay, and to quickly recap too, so this was discussed at the first presentation. The budget does include some new items that were identified by staff as being critical items to move forward in this next year's budget. So if you'd like, we can go through each one, or we could just kind of show it on the slide, and then if you have questions, we can refer back to it. Overall, there's 29 items across all the departments, and again, these items are all built into the proposed budget Here are the other items on this slide. But I do want to say that not only did we look at cost containment and reductions to the budget, there were other items starting on slide 14 that departments requested but due to budget constraints were identified as not immediate needs and not critical enough to be built into the proposed budget. So although the staff feels these are very important and they'll likely come back in a future budget year or possibly a mid-year depending on the need, at this time they have been deferred and are not included in the fiscal year 27 budget. And again, staff would be happy to answer any questions about any of these items. And slide 16 was just a recap slide of the itemized list presented earlier. There was a typo on the original slide, so this is a corrected slide that we will also be posting after the meeting with the other slide I showed earlier. So with that, so this is kind of a natural pause if you'd like. So tonight we would be looking for direction on the personnel requests included in the budget, the other budget requests that were included in the budget. If you have questions on the deferred items and the need, we'd be happy to discuss those. And then as I mentioned a few times now, we have already built in $1.1 million in budget reductions proactively into this year's budget.

Okay, so questions, council? Council Member Lesser.

Libby, I have one. Thank you for the presentation thus far. I wanted to review the urgency of hiring the three additional positions in addition to the three reclassifications, and whether or not we, what would be the implications if Council said, we don't want to hire any more employees at this time. We want to wait until our mid-year review, see what sort of revenues we have to offset some of these expenses, and defer the new hires, not the reclassifications, but the new hires.

Certainly, I think if the departments would like to provide some information on that, it's like our public works director is on the move first.

Great, thank you.

Thank you, Rob, the mayor and members of city council, Joe DeFrancesco, interim public works director. Councilman Lesser, I'll take the question for the two positions in Public Works. The first position we were asking for is the sewer maintenance worker who is funded out of the sewer rates. Right now, we have two sewer cleaning vehicles and we have the camera van. We have enough employees in the sewer maintenance to put two employees in the camera van, which is required, two employees in each of the vehicles that are cleaning the sewer system. Then what we were asking for is to turn one part-time position, we have two part-time positions, turn one into a full-time position, because a great deal of the year we also need to be cleaning all the storm catch basins and maintaining the storm system during the summer months, especially for the rainy season. We don't have enough employees currently to maintain our goal of cleaning the sewer system once a year. Our goal is to video the sewer system over a five year span, and those are both in our sewer system management plans requirements. And so it's a juggling act right now. We spend time videoing, we spend time cleaning, and then we spend a lot of time storm cleaning catch basins and storm vane system. And likely, I would say likely in the five year span we will probably not, would not get to the videoing. The priority would stay probably on the cleaning of the storm drain system and the sewer lines. But without the videoing, then we don't have a good idea of what the condition of the sewer system is. And that can lead to other problems because we're not keeping up with our condition assessment.

And the idea is that the videos catch potential blockage or leaks?

Yeah, they alert us to things that are gonna be maybe a problem now, maybe a problem in the future, and help us address those in a more timely manner. And instead of waiting for An overflow or some broken pipe that we react to instead of maybe being able to get out there proactively.

And does the department have access to contract employees to supplement city staff for this type of work or no?

Could you repeat the process?

Does the public works department have access to contract workers to supplement city staffs to complete this work?

We don't at the moment, we could go out and you know, RFP and try to hire someone to do that work. In my experience, videoing especially is generally much more expensive. I think the city invested in the camera van a couple years ago before I was here with the intention of bringing that activity in-house to have some control over it and some ability to... The camera van is really appreciated by the community because when there's an issue going on, and someone has a backup in their lateral, they like us to come out and make sure that it isn't a problem in our system before they spend hundreds or thousands of dollars doing something on their lateral so that we get a lot of really good feedback on our ability to utilize that van, the camera van, in situations like that. And the second one is our... senior, not senior, sorry, management analyst. It would primarily be in support of the water division, which has the water production and the treatment sites, and then it would be on our field operations, which is the parks, facilities, fleet, and field operations. At this current time, around 50 employees, and we have no management analyst working to support that, either any of that field operations and water operations. A couple of activities they would be undertaking right now, they could be providing a tremendous amount of support for, we have a water rate study going on, a sewer rate study going on, we don't have management support at the analyst position, so our managers have to do the management duties we require them to do, and then they also have to be able to provide the data support that an analyst would be generally doing. The same with the fleet. We don't have a person who can dedicate management analyst type duties to do an analysis for our fleet. As we get prepared next year, we'll be coming back with fleet recommendations, and so that'll be up to the manager. So we're pulling people away to do those activities constantly. And in my opinion, the managers need to be managing more. We have a lot of supervisors out there also, and they need the management support. And we tend to use our managers as managers and management analysts. Thank you.

Thank you. Mayor Pro Tem, turn it.

Can I just ask one question? Oh, I'm sorry. I believe the Human Resources Director wanted to address the third position, is that right? Or would be able to? We haven't rehearsed this, but... I wanted to better understand the urgency of hiring the additional personnel.

Good evening, Council. Lisa Jenkins, Human Resources Director. So I'll start by saying that the Human Resources Department has been very cautious over time in adding full-time staffing. We've had the same number of full-time staff since... 2015, actually. And so the request for HR is for an HR assistant position. And over time, we've been able to accommodate the needs of a growing city workforce and increase demands just in terms of compliance issues, so new legislation that requires ongoing staff work. You saw our vacancy report a month ago. We have additional laws for access to new hire orientation that requires tracking. Recently, new requirements as far as contracts and notification to our labor unions. So all that to say, it's a combination of increased complexity, increased workload, because with every additional employee who's added to the city, increase to benefits, administration increase to potential workplace support that we need to provide. We've also have become more proactive in certain areas like organizing a citywide and assisting with a public work safety committee. Just our workload on a day-to-day basis has increased is what I'm trying to say. and we've been able to supplement that with part-time staffing. Also, we've identified areas where typically we've decentralized work, and so different departments have performed that work. For consistency sake, moving forward, it would be more efficient and effective to centralize that in human resources. So examples of this are processing step increases for employees throughout the city to ensure consistency in timing and meet a regular schedule, departmental interviews that happen at later stages in the process rather than the first steps in the process. So these are also things that we would be adding to human resources workload with the addition of this new full-time position. So I would say as far as the urgency, we can continue with the part-time staffing that we've added over time to do the things that we've been doing to date. I don't think that we'd be able to add to our workload. The request that was put forward is fully offset, and that's a combination of we would be reallocating or reassigning duties in part that have been performed by some part-time staff that we've had, as well as we've looked at other areas of our budget, contract services, and other places where we could utilize that funding for the full-time position. So to address your specific question about the urgency and understanding the council's potential interest in revisiting this at mid-year, essentially we would just be operating under our status quo, what we've been doing now, and wouldn't be able to take on anything additional or expand our programs and offerings or centralize things that have currently been decentralized. Thank you.

Miguel is waiting online to discuss his, our IT director is waiting online to discuss his position.

I don't know, maybe you can clarify, Council Member Lester, I think you asked for the three new positions. Correct. Not the upgrades. Correct. Miguel's is an upgrade.

Then we don't need Miguel.

Thank you.

Okay. Mayor Pro Tem Tarnay.

Thank you, Mr. Mayor. Libby, I just have one question, a couple of questions actually, on, let's see, slide 14 of the presentation, item two under finance. Yes. These are deferred requests. I want to know if we defer that payment portal, will it impact collection?

Thank you for asking about this one. It was painful to put on the deferred list because it's something we really want and need. And it's something we've been working on. So currently we have a staff person dedicated to processing the manual payments of a about 100 short-term rental payments every month. And so we are continuing to work on this and we're hoping to bring it back to the city council at a later date. But we're also looking at ways that maybe we could either pass through the cost to the short-term rental operators to help pay for the online processing. So that way that would bring that $65,000 cost down. We're still researching it and finding ways to help pay for it and hope to bring it back to council at a later date.

Would the portal enable people who may not be paying, like avoiding it, where it's now easier and that there's more incentive for them to pay? I'm just wondering if we're trying to offset that $65,000, but we're also potentially losing out on collecting TOTs. Yeah.

Well, certainly there's kind of, there's different tracks there that you're talking about that, yes, hopefully it would make payment easier so more people would do it and it would make it more cost effective for us as well if they're paying online rather than mailing or submitting checks. But separately we are working to identify payers, or excuse me, operators who are not paying both in finance and then our code enforcement division is regularly working on this. So we are working actively to identify operators who are not paying TOT and not having, who do not have a business license. So we are continuing to work on that outside of this process of implementing an online payment portal.

Okay, thank you. And then my second question is, can you pull up the supplemental slide, please? Sure.

Number 55.

I really appreciate the deep dive that you're taking into how we're reporting and that it's gonna be in the long run. I think right now it looks a little painful because we're seeing numbers that didn't look like they existed before when in actuality it sounds based on your presentation is those numbers existed, those deficits existed. So if we were to continue to report in our former methodology, what would our numbers look like?

We would continue to highlight the top number there, the 1.9 million. But every year we would include the full transfer list and the adopted budget after transfers in our five year forecast file. So it just wasn't as highlighted as much as our new methodology, which it will be front and center because these transfers are part of our revenues and expenditures mix. And so it will be highlighted more in the budget document. in the future.

Okay, thank you. No, it's, you know, I'm looking at it and it really helps me to see to better understand what the realities of our budget looks like. So I appreciate it. Absolutely.

And that was one of the reasons why we felt we had to make this change because it's all in one place rather than expecting people to flip from this section of the budget back to another section of the budget. So now we'll be presented all in one easier place. Thank you. Mm-hmm.

Okay, Council Member Sherrill.

Thank you, Council Member Franklin. Oh, sorry, Mayor. It's still brand new. Yeah, we're not talking about news. So first, and you can leave the slide up, but I do want to appreciate my colleague, Council Member Lesser, bringing up the positions based on seeing our reserves kind of dwindle down our five-year forecast. I don't know if, you know, and I appreciate the input from the public, from the both directors, HR and Public Works, but I don't know if we're in a position, even though they're not all general fund items and there's some offsets, but they're still net new employees. So I appreciate you bringing that up. And then to follow up on what council, these are stuff on my list, but you guys brought them up about what Mayor Pro Tem Tarnapath, brought up is the short-term rentals. So I guess to me, and I was looking at that as a revenue kind of generator as well, having short-term rental properties, be able to submit those online and collect them for us versus there is something out there that sometimes people, they talk about, which is we don't get to see the TOT if somebody doesn't turn it in. Is that correct? Like if somebody rents something, if they don't come into City Hall and report it, can we make it so that they only do it electronically so we would get the remittance from whoever the vendor is versus if I rent my house and I'm in the coastal zone and I get 14% more on my $10,000 a month rental, it's up to me to come in and turn that in, right?

Yes, so what you're referring to is what the companies like Airbnb call an automatic collection agreement versus not having an automatic collection agreement that would be an agreement between say Airbnb and the city. So other cities do have these agreements in place and they have for a few years and it's something we've looked at first a couple years ago when short term rentals really started to grow in the city. So the benefit to an automatic collection agreement is that Airbnb collects the TOT for us and remits those funds directly to the city so the operator really doesn't have to do anything else. The downside, which is why we didn't further pursue it a few years ago, is that Airbnb and these companies refuse to give you any data with the payment. Which we verified with other cities who have these collection agreements, because we couldn't believe it at first. So it's like, you just send us a big check, but you don't tell us the property it's coming from, the operator, or give us any kind of data. We live on data behind these payments. And so at the time, the companies would not provide that information and backup. They would just remit to you whatever they collected in your city. So that is actually what prompted recent legislation, which, correct me if I'm wrong, was Senate Bill 346, maybe? So it was just approved in the last year, and it was to try to force companies like Airbnb, VRBO, however it's pronounced, to provide cities with that backup data. But what we've heard is that immediately companies like Airbnb went on record saying, you can try to force us to give you that data, but we're just going to sue the first city who tries. So our understanding in the last few months and talking about it at conferences and with other cities, to my knowledge, no one has pursued pushing the companies to give them that data yet. But that is why we haven't pursued it because we prefer to have that data submitted with the TOT payments to know how often they're renting the properties, what their average rental rates are, and then force the operators to have that contact with the city as well.

And I'll just add to that that we do actively pursue those actors who are trying to do this without coming forward and reporting to the city. And we have a lot of success in going after those individuals.

Oh, fantastic. So short answer in the sense of item number two, could that generate more revenue? Or the only way you would generate more revenue is if you put a fee on to offset like this cost. Is that correct?

Yeah, so we're looking at tacking on a processing fee that would offset the cost to the city to have this online payment portal, similar to what we do with our business license processing fee. So we're looking at that. And I think the other part of your question was whether it would generate other revenue. Yeah, probably not. I think from there, it's really just our other programs to find the operators who aren't paying and force them to pay.

Right, no, and I appreciate that part. I'm all for, because this will make things easier for staff that's processing 100 or plus, 150 a month, correct?

A month, yes.

So, seems like, I guess we can talk about this later when we talk about items. But one thing on the deferred request sheet, since we're still on that topic, there's a lot of things on here that you can kind of take a look at and say, wow, this looks really important. But I appreciate them being on here. The one thing that sticks out for me, just being a former employee, is the fact that the window shades for $20,000 on the west side of the building, which gets about 8 to 10 degrees hotter. I think a city manager could attest to that and community development staff. So when the time comes, I guess I'd want to talk about that because it's pretty bad. I appreciate it being on the deferred list, but that's something that I've experienced and it's not fun. So yeah, going back to this slide on 55, and I appreciate the new methodology, just for a little bit more clarity, this is the model that the cities brought forward, carefully curated budgets since the early 2000s with the same auditor as they were exiting proposed this new model. I've seen cities that There's a myriad of ways you can do this, but this does show the bottom line. But during those times that the previous model was intact, our economic uncertainty fund and our policy reserves we're never impacted. Looking at the five year forecast, when I say impacted, not to the extreme that we're seeing it now. So, but I appreciate modernizing it and finding, you know, I would say better way, but, you know, a better way to kind of show it. But again, this is something that, you know, it's building the foundation of where we are financially with getting our first AAA and all the building that we've done. And this was done, if you look at the previous years, the 23, 24, 25, that was done without the $6.5 million MMB. So if that 6.5 MMB was there, that would... those numbers would be black. But that's all I have to say about that. Can we see the five-year forecast slide?

Sure. I do have a second slide, too, that does show a chart that if we remove the one-time $6 million transfer to the insurance fund, then we do look somewhat consistent with the prior years. Right.

That's the anomaly is the $6 million. Yes. And we had a similar situation in 20, and this happens periodically with the insurance fund. We had a similar situation between 16 and 19, I believe, if the numbers were right around there, that the insurance fund needed money. But it was $2 million over three years. So this... This go-around, it's a little bit more of a sticker shock. That's a lot more than the $2 million that we did from 16 to 19, which was over a period of time. what I would have liked to see during this budget, but that's just.

And I'll just reiterate for the council that during mid-year, we did bring forward a request for 1.7 of that six million. But the council still wanted to kind of see how things played out with the economy, and so we were asked to bring that back. So that is, you know, adding to, it is included in that six million that we're asking for was that 1.7 million that we asked for at mid-year. Mm-hmm.

And then in addition to the $6 million, you're doing a charge-out for $1.8 million.

The $1.8 million that I referenced is an increase to the charge-out. So that does kind of bring me to this other slide that I believe I showed maybe on May 5th. But this is a history of the Insurance Reserve Fund. And the... the revenues starting in fiscal year 22 on the left. So in that area, you can see that revenues exceeded the expenditures of 10.8 million. But that was due to some recoveries from claims and cases that had settled in previous years. So as we've mentioned, as we have these ongoing cases and claims, the city has to spend out on legal expenses and other expenses. Once a case settles or closes, then we do recover those funds from our excess insurance. So in fiscal year 22, we got fairly large payouts, so that's why you see the revenues exceeding expenditures there. Unfortunately, in every year since then, expenditures have exceeded the revenues. And again, when I say revenues, it's those charge outs to other funds. And I believe I explained in a previous presentation too that we've come to realize that our methodology for funding the insurance fund, we've been using a five year average which usually, many years ago it worked because claims would go up and down and up and down and over time they averaged out to be minimal increases. But as you can see in the last few years, our expenditures have just continued to rise due to a few larger litigation claims against the city. And so those expenditures have been increasing and our charge-outs methodology just has not kept pace. So that's why this funding imbalance has grown over the last few years. And as City Manager mentioned, we discussed this at our mid-year report and proposed the transfer at that time, but we deferred it. And so Without the $6 million transfer that we're proposing, the fund balance in the insurance reserve fund is estimated to be the circle number, about 1.3 million at the end of the fiscal year. So that is considered to be fairly low for our insurance reserve fund. And also, I wanted to point out something that was mentioned in the staff report for tonight, which is that our insurance reserve fund expenditures as of the end of April have already reached the budget. which means we have the months of May and June to post. And so again, as with the last few years, we'll be having to come to you with a year in budget appropriation for what we overspend in the insurance reserve fund. So that is just another reason why this funding transfer, in our opinion, is needed.

And I appreciate and I agree that it's needed. Looking at the fund balance, as you could see in previous years, we had really good fund balance. But then it started, the expenditures started growing in 25, 26 in current terms. But I guess why not, why the $6 million all at once because of the state we're in with our reserves, losing economic uncertainty reserves. Sorry. Why would we do that when we know that workers' comp and liability and claims take a long period of time to develop? So I guess my question is why would it? Why all at once? And not come back as like a mid-year or quarterly and give us an update like I really do need, you know, why not do two-thirds and one-third, like a $4 million in and have $5.5 million working capital and fund balance?

I think that's a policy decision to be discussed. Our preference was to try to do kind of a one and done, fund what we think is necessary for the next year, see if any of the cases resolve and what we recover rather than coming every few months saying we need more money, we need more money in the insurance fund because that's I think a little harder to predict and project rather than doing it at one time. The approval of the transfer would be a policy decision by city council.

Okay, great. Last question on this item. How, was there any thought given to a charge out to the departments versus a one-time transfer? Because a one-time transfer is just, it's a transfer. It's an infusion of money into the account. Whereas charge outs, you can kind of see the the using departments. So I feel it's more transparent instead of just here's a $6 million.

So the increase to the charge outs of 1.8 million that's built into the budget is based on the methodology we've been using where we're looking at all the claims activity and increasing the charge outs to the departments. As you mentioned, we allocated out to the departments, excuse me, based on the claims activity assigned to each department. The problem is that the charge-outs have not kept pace with the claims activity over the last few years, so at some point it's difficult to then assign it to the departments because the six million is really kind of recovering for funds from the last few years as well.

Okay. So looking at this again, staff proactively cut 1%, correct, from the budget?

From the general fund budget, yes.

From the general fund budget, 1%, so it's about $1.1 million. And then did you look, you looked further on in this presentation, you looked at potentially cutting more because council directed to cut a little bit more.

Yes, I have many more slides if you'd like me to jump to those.

I don't know if all the questions, I'm trying to ask the questions to the slides previous to where we're pausing. So I can stop my questions and then come back to this if that's helpful. and let Libby finish her presentation, because I do have several questions.

Okay, yeah. So let's let Libby, I just have a question for you, if I may. Okay, so going back to short-term rental revenue, I've got my hand on a lot of different pages here. So how do we know, I mean, how do we verify that there are short-term rentals happening with a particular home?

I'll take that question, Mayor Franklin. I'll take that question. Okay, sure. We contract with a company called Deckard that their sole purpose is to go out there and find short-term rentals that are listed that are not also permitted by the city. And so they are constantly searching for on all the different websites, on the internet in general, for listings. And then they come back to us with a list. We compare that to our list of permitted rentals and then go after the ones who are not permitted.

Okay, and that's an ongoing? So you know exactly how many rentals they've had? Like three last month or something like that?

Yeah, I believe we have three right now, last I checked with our building official, that are not permitted and we are going after those.

Okay. But when we talked about the service that like Airbnb and VRBO, they will actually collect, right? They'll collect the TOT.

If we had an automatic collection agreement set up. One other thing to note too is that we would have to set up those agreements with each individual company. But my understanding is there's a lot of sites out there with various names that show potential rentals. So even if we had an agreement with Airbnb, the big ones, we would still have to try to collect taxes from any other site that operators are using.

But this service, excuse me again, the name.

Deckard.

Deckard. Okay, so how about all those others? How about if it's not short-term rental or Airbnb or VRBO? I mean, we saw that there's some management companies.

They're not just searching Airbnb and VRBO. It's every site on the Internet, and they have to sift through which ones are rentals listed for less than 30 days and which ones are rentals listed for more than 30 days, and then they focus on the ones that are less than 30 days. So they're not just limiting the search to Airbnb and VRBO.

Okay, great. Thank you. And then I have a question about... So on slide 12, there's right at the top under community development, consultant services for affordable housing monitoring program. I thought, am I confused? Didn't the COG offer that in that trust agreement?

Yes, let me see if the director of community development wants to take this one. It's a little complicated.

Hello, Mayor Franklin. Yes. No, good question. I mean, it came up in the discussion when we were talking about should we join the Regional Housing Trust.

Yeah.

From staff standpoint, we were asking that this type of service be included in what the Regional Housing Trust does.

Mm-hm.

Their comments at this hearing were, we would have staff available that could provide portions of this service, but no commitment was made that they would provide the service. So the suggestion is that we continue to push on the COG to do this, but if the COG doesn't do it, we're going to be stuck with doing it. We as a city will be responsible for this task.

Okay, but I thought that was the primary reason we joined the Regional Housing Trust. I mean, shouldn't we, if they're not going to provide it?

I think that was the point of the staff reports, was they should be providing a service like this to make it a reason why we would join.

And this is a safeguard, so you can look at this as a safeguard. If they aren't able to provide that in time... and they don't have things set up, we're still going to need those services. So we have to have a way to pay for them.

Okay. Thank you. No further questions. Hold on just a second. I see no more. So at this point, we just continue the presentation.

Sounds great. All right. So the next section of slides, we'll go through the additional cost containment measures and revenue enhancements we've looked at, as well as some modifications to the budget that staff identified. Every year we have some cleanup items that we need to bring. And then also wanted to remind everyone that the community emergency response team submitted a funding request for about $10,000 and many of them showed up to our initial proposed budget presentation, but we just wanted to make sure that that is also addressed tonight. So we can move through these fairly quickly. The next four slides are a follow up to a council member's request for a breakdown on the materials and services category, which is very broad. Some major increases include contract services for plan checks, engineering project management, and labor investigations. We also have an additional about 170,000 included in the budget for the November election. This slide includes some various materials, or excuse me, supplies and services that are included in the budget. And you can see we've highlighted the significant cost increases there. Bank service charges here, we've continued to right-size this expenditure budget. As you know, we've moved more and more services online, and currently the city is absorbing those credit card fees, which we'll talk about in a minute, on the revenue enhancements. Lastly, I wanted to note on utilities. There's some good news that the higher increases for electricity costs did not materialize, so we were able to reduce that budget by almost $200,000. At the previous meeting, Council also asked us to look at researching potentially refinancing any of our existing debt obligations. And we did do that research with our municipal advisors. And at the time, or currently, based on existing current market rates and our existing debt interest rates that were included in our existing debt obligations. It doesn't make sense to refinance at this time because our rates are so low on our existing obligations. Okay, now we're to the point of talking about the additional million dollars in expenditure reductions that staff was able to identify after our previous budget discussion. The request by the council member was to not just identify potentially million dollars in cuts, but to also assign an impact level to the category and to how it might impact our services. So staff decided to identify them as low, medium, or high impact, with low being little to no impact to the community or operations. medium might have some impact on our internal city operations or staff, but minor to no impact to services in the community. And then the high impact items we do feel would have a noticeable impact in our services to the community. And so at this time we're not recommending moving those forward, but they are options for council to consider. So if we approved the low and medium reductions, the general fund expenditures would be reduced by about $773,000. And for the high level impacts, we can talk through what some of those are and what the impacts might be. The largest item would be in the fire department. That $200,000 is attributed to some extrication tools that were included in the budget. Currently, the department relies on external agencies if those tools are needed in the event of a car accident. So this would be purchasing the tools for ourselves, but what's put on the list is potentially we could defer or not purchase those in the next year. The other large item in the police department includes staffing costs and CSC resources dedicated to the six-man volleyball tournament. So it would be reducing some public safety resources dedicated to that. And public works, the $57,000, that's almost all landscape services in our parks, deferring some city refuse and recycling container replacements as well. In the finance department, our $4,000 there is the city's long-standing business awards program, the plaques and certificates that we pay for every year. We are talking to this Chamber of Commerce. Maybe there's potential there to have them lead that program instead of the city bearing those costs. In the community development department, there's overtime for building division positions, such as building inspectors, plan check engineer, plans examiner, and permit technicians, which could delay completing projects. Also reducing some overtime in the code enforcement division, which would eliminate proactive construction monitoring on three holidays. Also included in the high impact column would be eliminating or deferring the volunteer dinner, the community police academy program, and reducing the public education materials and giveaways for our environmental program. So that's the majority of what those high level impact costs would be that we said that we could put them up to reduce from the budget, but at this time we're not necessarily recommending that unless directed by council. And I pretty much talked through all of them. The next few slides do give a little more detail on what the low and medium and high impact cuts would be. I do want to note on the low impact list here, the $80,000 in service agency contributions is the $80,000 directed to the Roundhouse Aquarium that was discussed at previous council meetings. Then we had a discussion on whether it should be in the general fund budget or the peer fund. We reviewed our agreement with the state on the peer fund and whether we could appropriately put those costs in the peer fund. But in the height of organizing the budget, we included it in the general fund, but I think our intention was to move it to the peer fund as directed by council. So that's what that $80,000 reduction in the general fund is, because we'll be moving it to the peer fund. So that's what I wanted to highlight there. The medium impact reductions span about 500,000 across all departments and we can go into detail there if you'd like or we could keep moving along. I've already discussed most of the high impact cuts. So this is the recap slide, and again, if you approve of staff's recommendation to reduce the budget by the low and medium impact, that would reduce the overall budget by about $773,000. So Council also directed us to bring back some revenue enhancement options. I do want to note that many of these are something we've already been working on because it is also a City Council work plan item to look at revenue enhancements. So I can kind of just skip over a lot of these if you'd like. I don't know if we need to discuss, but we just wanted to put them out on the table if there are items you'd like us to address. We can certainly continue to research these in the coming months.

Mr. Mayor.

Yes. Before we dive in, you'd like to take a quick break? Well, we're going to take a break.

Please. Okay.

Otherwise, we'll just give you everything you want.

I could have kept talking, but okay. Thank you.

Okay, so let's return back at 8.15.

Pegasus, we're ready to go live.

Oh, okay. Welcome back. And proceed. Okay.

Okay, thank you. So we're picking back up on our budget presentation and some follow-up items. The staff did look at some various revenue options. There we go. And I wanted to note that Revenue enhancements is one of our City Council work plan items. So some of these have been already in progress, and we're working through various stages, which is the case for the first three, credit card pass-through fees, parking meter citation fines, and business license tax. So we're currently working on bringing those back, as well as the last item on the list, parking meter rates at the bottom. The taxes listed on items four through six would take more thoughtful consideration and discussion. And lastly, I wanted to point out that number nine, reevaluating the special event fee waivers is already planned to come back to city council in the near future as well. So we can speed through or spend as much time on any of these as you'd like. So I'll just kind of move quickly, but feel free to stop me if you'd like to ask questions. The first item was the credit card pass through fees. As I mentioned, this is a growing cost to the city that we've been absorbing for many years. Other agencies pass on credit card convenience fees to consumers. It's something we've been looking at and plan to bring back to City Council for consideration, which is estimated to bring in revenues of about $350,000 to offset our current costs.

Mr. Mayor, I have just a question on that very quickly. Yes. So is staff already planning to bring this item back to a future council meeting? Thank you.

Yes, we are. Thank you. Oops. The second item, parking citation fines. Every year we've been just updating our survey of other cities. So our currently parking citation fine is $59. Potentially increasing it by another $6 could bring the city $300,000 to offset costs. The next slide does have a recent survey showing that our current rate at $59 is kind of middle of the pack here. Other cities go as high as $78, $79, but it would be an option to consider. The next item, the business license tax measure. Of course, we spent a lot of time on this recently. So I just am happy to report that we're nearly complete with drafting the ballot measure language to be prepared for polling to start in the next few weeks. So we are on track with this one coming back to council in July with those polling results. The next item is, we do have the capacity for another half percent sales tax measure, should we so choose. Of course, today is election day and the county's measure ER is on the ballot in the hands of our voters today. I guess polls are closed at this time. Even if it passes, the governor did sign AB 1768 yesterday, which means that measure ER would be exempt from the sales tax cap of 2%, which means that the city would maintain our additional capacity for this additional half percent, even if the county measure passes today. But our measure MMB is bringing in the city about six point six million dollars So if we went for another half cent we could potentially reach that as well Another option was a variable short transient occupancy tax in a previous discussion a council member asked about could we have a variable rate for hotels versus short-term rentals and And so we did look at that and confirmed that it is possible. It would have to be approved by voters, of course. Adjusting our TOT rate for short-term rentals only by 2%, we used as an estimate, would bring the city an estimated $225,000 based on our current information. And here is a survey of other cities, and you can see the couple highlighted there, Santa Monica and Huntington Beach currently do have a different rate for short-term rentals versus hotels. So that could be an option. And then we wanted to point out, too, on the ballot for the city of Los Angeles is proposing Measure TT. which would temporarily increase their TOT through December of 2028 to capture the Olympics travelers, but then their rate is adjusted back down. So it could be something to look at in the next few years before the Olympics. A utility user's tax has never been implemented in the city, but it is an option. UUT is a local voter approved tax levied by approximately 158 cities in California for services like electricity, gas, water, and telecommunications. On the next slide, it shows some of our neighboring agencies and the amounts they charge. I did want to note this has been an interesting one to watch because recently Disney sued the city of Santa Barbara for charging their UUT on streaming services and Disney took the city to court and lost actually. So we could see some changes in this space since the city won that case. And if cities do start charging streaming services for the tax, that could be a considerable amount of money to be considered. And it's something that cities are looking at because cable franchise fees and peg fees have decreased over time. We've also discussed potentially doing a short-term lease for the 400 Manhattan Beach Boulevard property. We've been approached by many entities interested in asking questions. However, at this point with the recent design shreds happening over the weekend, we think we'll wait until those design shreds results come back to City Council and we get the next... set of direction I believe in August. And then if we think it might be an option to do a short-term lease without jeopardizing our tax-exempt financing, that is something that we could consider. We were also asked to look at a potential bond measure to support capital infrastructure, similar to what school districts do. However, in talking with our municipal advisors, it was not recommended. Just due to a couple reasons, with our AAA credit rating, we are getting the best interest rates possible. But without the risk of potentially losing the election and then having to come up with an option B. So those were the main reasons they did not necessarily recommend this option. I mentioned earlier that the Parks and Recreation Department is already planning on bringing back the special event fee waiver policy. We have estimated that currently with the fee waivers in place, we are subsidizing about $600,000 for these various special events put on in the city for all of the staffing costs supporting these events. So this will be brought back at a future date as well. We've also discussed from time to time the potential street lighting and landscape fund Prop 218 ballot measure, or excuse me, a protest ballot. This would require an engineer's report, and then conducting a public hearing and a special mail-in ballot. Our goal would be to eliminate the annual transfer subsidy from the general fund, which has been about $300,000. And I believe since the beginning, When we had to start doing this in the late 2000s, we've transferred over $3.8 million from the general fund to the street lighting fund. So although it's only a few hundred thousand every year, that has added up over time. As I mentioned, we are already planning on bringing back potential parking meter rates with the other parking strategies already being researched. So this will be coming back to you soon as well after going to the PPI first in June or July. We've already discussed the grant, but we wanted to note, I mentioned earlier that currently the staffing costs are not included, or most of the staffing over time is not included in the budget due to so many variables and unknowns. So if a budget adjustment is needed at a later date, we will bring that to you with an update on the grant revenue we expect to recover. So this slide is a recap of all those potential revenue enhancements. And if you'd like, we could pause here to go through any questions on the cost containment slides or these potential revenue enhancements. Or I could keep going and finish up about the last ten slides.

I have a quick question, Your Honor. Sure. Thank you. I appreciate that. Council Member Sherrillian. Thank you, Mayor. So Libby, I know you mentioned this already. I just want to confirm what I heard. So the credit card pass-through fee, the parking meter citation, all these things, you're analyzing those to bring back to City Council to make a decision, or are you expecting some type of decision tonight?

No, so for items one, two, three, those are in progress and we'll bring those back to you with full details and a decision. As well as the special event fee waivers are coming back to you and the parking meter rates are coming back.

So for the other items, the big ticket items, the UUT, utility users tax, the sales tax, all those things.

Yes, the tax measures of the sales tax, the TOT, the utility users tax, and even the street lighting assessments, those are bigger projects that we would like some direction if you would like us to proceed with further research.

Perfect. And these potential amounts are annual amounts.

Correct.

Thank you. That's all.

Libby, I have a question on the UUT. Maybe it's because I haven't seen it on my bills. What is the justification by a city of taxing the utilities? Which utilities? What's considered a utility?

Let me get back to my notes there. So since we haven't had it in the city, we're obviously not experts in utility users taxes either, I'll be honest with that. But I believe the justification or philosophy behind them is that those are services and kind of like business being conducted in the city. that would go to support other city services. I guess those are questions that we would love to receive. If you'd like us to do more research, then we can certainly bring that back to you either in a memo format or in a future agenda item.

Okay, yeah, because it's quite significant. So is it, I realize what you said, we haven't had experience, but is it us taxing the utility and then they pass it on to the consumer?

So it would, let me get back to that slide. Just to kind of show the other cities, you could see some of them charge the same rate, others a variable rate, but it would be a percentage added on to your bill, say to the electricity company, it would be added to your electric bill, and then they would pass it on to us.

Okay. Is my understanding. Wow. Okay. Okay, thank you. Mm-hmm.

Can I follow up on that, Mayor? So can you explain briefly what the PEG fees are? And moreover, if there's direction from Council to study this further, it might be helpful to bring back a full staff report on what the PEG fees are, what revenue they traditionally generate, would more of us had cable services instead, and then maybe what's being explored by other cities with regard to the UUT.

Sure, happy to provide as much- Sort of an intro to that. Yeah, an introductory overview of what I know As of right now, so for franchise fees and the peg fees were meant to, or they are through cable companies that are obviously, those services have been reduced over time, so the city is receiving less and less peg fees. Those are only to be used for certain equipment costs related to technology with respect to broadcast services. So in the last year or two we did a lot of upgrades to this very room and that was largely paid for by PEG fees. But knowing that these revenues are reducing over time since a lot of people are eliminating their cable services, going to the internet and streaming services, We just won't be receiving those funds much in the future. I'm not sure if Miguel is still online or has anything he'd like to add.

If I might suggest, maybe this is something that can come back, is all I'm suggesting. And putting the two together is what I'm suggesting.

Thank you. If I can just follow up just one tad on this, Mayor. This could potentially be a substantial dollar amount. I think we looked at this. There was a survey done about seven years ago, and it was each 1% was around $1.1 million.

Yeah, I remember that.

Great, thank you.

Any further questions on these or the cost containment slides or we can finish up? So this slide includes a few other modifications to the budget. So every year, between presenting the proposed budget and bringing it forward for adoption, there's usually some cleanup items. And these are the items noted tonight include the community emergency response team or CERT funding request of $10,200. We wanted to make sure that gets addressed. The list of modifications includes a slight adjustment to the street lighting and landscape fund since we now have the engineer's report back. We also had a very small increase to gas tax revenues based on the state's revised budget numbers released in May. I noted the correction to move the roundhouse contribution from the general fund to the state peer fund. And then the last, number five is the cost containment measures that we're recommending the low and medium impact only at this time. And the CIP changes based on City Council direction, which will be maybe recapped after this item since we switched the order. But we did build in those CIP changes into the proposed budget, or excuse me, the list of modifications to the proposed budget. And so the budget resolution that gets adopted to this item allows for adoption of the proposed budget as amended with exhibit A. And so the next two slides detail each of these potential changes that could be, again, adopted as a modification to the proposed budget. And we'll pause here. The numbers eight and nine, the 4.7 million, that would be de-obligating certain CIP projects that were funded, including city facility renovations, the project of 400 Manhattan Beach Boulevard, big pool facility upgrades, and the Sand Dune Park improvement project, and then reallocating those funds to the senior and scout house project. So that will be included in the CIP presentation, but if we're moving forward with those, then we would be prepared to adopt those changes with the budget as well. And then the last few items are related to the CIP. Again, moving the roundhouse and then reallocating some of the upper pier parking lots project funds around as well. So we've included those on our list as potential modifications to the proposed budget. And if we move forward with all of those, then the first column, or excuse me, the middle column, the original proposed budget showing that deficit number of 9.5 million would then be reduced to 8.8 million. Also those modifications within, this is just kind of a recap slide of how the original expenditures and revenues would change with the proposed changes for the general fund and then the citywide budget as well. And then the second chart there towards the bottom is the projected general fund reserve ending balances in fiscal year 27. Again, if we adopt the budget with these modifications and these additional cost containment measures, our ending fund balance would be projected at 25.6 million instead of the 23 million is included in the proposed budget. And again, just as a reminder, we do also have those section 115 trust fund dollars sitting aside for future pension costs at estimated six and a half million. And then with that, it brings us to our recommendation with the list of what we would be seeking direction from city council on tonight, which would be opening the public hearing. incorporating any cost containment measures, moving forward with any revenue enhancements you'd like us to bring back in addition to the ones I've already noted, confirming the modifications that we're proposing to the fiscal year 27 budget, adopting resolution number 2649, which would adopt the budget as proposed in a minute, And then adopting resolution number 2650, establishing the GAN appropriations limit for fiscal year 27. We have noted here on the slide, and it's identified and further explained in the staff report, that we do have a remaining appropriations capacity of about 28.5 million, or about 25%. And that is the end of my presentation.

Happy to answer further questions. Okay. Oh, I meant to... Council Member Holder. Yeah. So, wait, did we have to... No, these are questions still. Okay, I'll wait for comments. Okay. So, sorry.

Anybody else for questions?

I've been asking a lot, so...

Yeah. Council Member Sherrillian. Thank you.

So we cut, the staff proposed, already cut 1% of the general fund expenditures, correct?

Yes.

And then the second is about three, almost 1% of the low and medium priority. So one of the things I was taking a look at is the general fund expenditures. This is on the slide that was provided on May 5th.

Can I ask, are you looking at this slide of general fund expenditures by department or category?

General fund expenditures by category. By category, okay. And then, I mean, I'll keep talking if you don't have the slide, but it has $23.7 million in material and services, approximately. So that's what this slide says on the pie chart. So 1% of that materials and services cost would be about $2.3 million. Now, $23 million is a big pot of money. Is there an opportunity? And I saw the items that you put to potentially cut that were in the high category. But how can we get more? SAVINGS FROM EXPENDITURES. IF OUR MATERIALS AND SERVICES CATEGORY IS ALMOST 20% OF OUR GENERAL FUND EXPENDITURES AT $23.7 MILLION. We've identified some and staff has looked at them and made decisions on these are ones that could be cut. But what else are we missing as part of this $23.7 million that you could kind of advise or tell council that these are the other items that you could potentially cut that won't impact core services, obviously.

Okay, if I could ask Patty to maybe switch back to the other PowerPoint slide and jump to slide 19, please.

That wasn't what, wasn't that what was presented as far as low impact?

If I could, I was going to refer back to slides 19 through 22 of the June 2nd PowerPoint slides. Because I believe you did ask a similar question at one of the previous meetings, and that's why we itemized on these slides what each, the account or object code, each account or object of contract services. So overall in the general fund across all departments, our contract services total $10.7 million. The change from the prior year budget is about $1.2 million, which is considerable. Excuse me, I'm jumping to my notes here. I can go through what some of those are if you'd like, what some of the big increases, but especially with respect to contract services, Those are contract obligations. No, I understand that. So cutting them would take a little more time and consideration to look at what contract obligations we could reduce.

And then I guess I was looking at the entire category of materials and services.

So that's these next few slides. So it includes audit services, software purchases and subscriptions. That right there is a million dollars. The elections I mentioned, the RCC, the South Bay Regional Communications, we pay them $2.3 million per year. I don't think... Reducing that any, we can't unless considerable changes are made there. Legal services is $1.8 million. Auto repair services that we contract out is about $140,000. We can keep looking at the next slide. With respect to departmental supplies, we have training and conferences and meetings. advertisements, uniforms, and safety equipment. So it really, it is a very broad category, materials and services. But these are line items, or not just accounts, but line items that, as you know, in our budget process, every year we start off by reviewing our line items in each department. And the departments review them, determine what's needed and what's not. Then we do a round of meetings with the finance department where finance looks at the trends and asks, do you need this? Why are you going up or down in this? Then we do a round of meetings with the city manager who questions each of the line items and accounts and trends. And then on top of that, we did this further cost containment budget reduction exercise where we were able to cut $1.1 million where we really said, okay, let's really reduce something proactively. Okay. and then we did another round after being asked by city council so that's no less than five times where staff has already sat down and looked at every line item and said what can we not do without and still maintain the service levels that were expected to maintain so we've reached the point where reducing the budget anymore will have noticeable impacts, which we can come back and discuss. So that way we can hopefully reset expectations if we're asked to reduce certain items. But those would be the discussions we would need to be having next if you're looking for further cost reductions.

I guess my biggest overall concern is it's on slide 25 of the May 5th PowerPoint presentation, which is the five-year forecast. And, you know, particularly, you know, dipping into economic uncertainty.

Oh, actually, sorry. I actually have, if I could show the five-year forecast with the proposed modifications, I have that in tonight's presentation as a pocket slide that wasn't in the currently published slides, but we will add it after.

So very...

Patty's a rock star. Okay, thank you. So with the May 5th meeting, we did present this slide as showing the proposed budget numbers. So this slide is modified that if we did move forward with the low and medium impact cost reductions, the total reserves for the general fund or the general fund fund balance of fiscal year 27 would be about the 25 million number. And this is what the five-year forecast looks like. assuming no major further cost reductions or revenue enhancements are made. Correct, so thank you for that. A reminder that every year we conservatively estimate our revenues and also conservatively estimate our expenditures as well. Of course these are just estimates based on the best of our ability at a point in time when we're preparing the budget. So it's always subject to change. For several years we've shown a reduction in fund balance in future years. or that the fund balance is showing as trending down. So it's something we're always looking at and the reason we do forecast is so that we can see those trends and then take measures to change the trajectory however we can.

Yeah, and I appreciate that. It's just, you know, looking at this with this trajectory and just not having that economic uncertainty buffer, which we placed in 20 years ago and we've only used it one time, and a previous council approved a temporary home loan for an assistant city manager at the time. And then just to see it wiped out because due to an anomaly in the insurance fund, which I understand, but I just don't feel comfortable not having that $4 million buffer. Maybe the undesignated, you know, maybe you put that in the economic uncertainty, would not show that unreserved, but have the economic uncertainty fund. We're using the economic uncertainty fund to transfer into the insurance due to a need, but something that might not need the entire $6 million immediately or a part of it you will need it but potentially not all of it because it's the long game with with insurance so Mike again my concern is I've done this a long time and I've never seen it like this, but I understand where it's going so I'm really looking for some you know strategic ways that we can cut cost and and figure that out, and whether that's a strategic hiring freeze of five positions or something very, very light. But this does not, because if we don't fix it now, it's going to propagate out to the future years. It just will. Because the one-time revenue is coming in, I just don't see it fixing that. But I guess my question to you is how do we... What else can we do outside of contract services to generate more cost cutting?

Well, it has been discussed looking at our list of authorized positions. Human Resources Director Jenkins presented the vacancy report at the last meeting or two meetings ago where she identified the current open positions and several of those are police officers or engineers. that are in various stages of recruitment and that are determined to be critical positions that we're constantly trying to fill. So we would need a little bit more time to really go back and re-look at that. So I guess, you know, the major parts of the budget are salaries and benefits, the materials and services, the internal service funds, which is what's really been hurting us the last few years and what will continue to hurt with the fleet fund replacements coming up that are needed. And then we have our debt service as well. So there are...

Yeah, I appreciate the answer, but just for clarity, I'm not advocating for any public safety positions that are open to be frozen. I think we have about 29 positions that are open. Strategically looking at that, I think we owe it to the residents. It's our fiscal stewardship, but that's all I have.

Okay, Council Member Hoerth.

Thank you, Mr. Mayor. I was going to ask something else, but on the vacancy rate, you were just talking about like 29 open positions. I mean, that's something that we, I mean, it's a little bit of a way. I mean, we can slow down certain position hirings, but I mean, that's often the case, right? I mean, do we know, I mean, you don't know off the top of your head like how many vacant positions we've had in years past, right? Sorry, that's me thinking out loud and not being quite articulate, but...

I would like to add that any time a position becomes vacant, staff is looking at that and asking those questions. Is this the right position for our current needs? What is needed for our current operations, future operations? So that's part of that process of a position becoming open and... seeing if it still makes sense. Right.

And then the slide that you showed, and you don't have to, well, that one, the estimated general fund balance, that's also not taking into consideration the revenue enhancements, not one-time revenue enhancements, but the ongoing, if we should move in those directions.

Correct. This does not include anything for the potential business license measure, any of the items listed in the potential revenue enhancements.

Okay. And I guess I'll have... comments later. Thank you. We're not in comments yet.

Mayor Pro Tem.

Thank you, Mr. Mayor. Thank you again for making these concepts digestible for someone who isn't as seasoned in finance as my colleague. My questions I hope aren't too rudimentary and I just want to make sure that I understand the concept. I You know, we're talking about how things are being shown and that we're moving to a kind of more transparent snapshot of where the funds or where the expenditures are shown. And, you know, I'm hearing my council colleagues say, like, can we... incrementally transfer things out so that it doesn't show such a huge deficit, but is that something then we're just deferring how that's shown and that in a year from now, two years from now, three years from now, we'll be in the same situation and maybe potentially worse if we're not anticipating the growth of those deficits? I mean, is that one way that I, am I looking at that correctly?

Yes, I would agree with what you said. With one potential change that I don't even know if it's one year from now, I would be worried that potentially at our quarterly or mid-year report we would have to come back and request additional funds if we're not transferring very much.

Yeah, which is what we did when we deferred that $1.7 million, because that could have been... At our last mid-year report. That could have been... We could have done that, and it would have shown...

It would have made the proposed budget for next year look better, yes.

It would look a little bit better, the forecast better. Okay, so just conceptually, I wanted to understand how that... You know, what's really in play here. Okay, thank you for clarifying that. Thank you.

Okay, no further questions, so we'll open it up for public comments.

First of all, I've got to give a lot of compliments to Libby and her team. I don't know how she sleeps at night with all those details in her head and everything going around and trying to anticipate what questions you guys have been asked, not only me. As I was listening to this, I was trying to think of an analogy. This is kind of like... Like going to a wealth advisor. Like, you know, I think maybe like if I went and this was a meeting, we'd say, well, Stefan, last time we met, we reviewed your budget and your expenses. And I told you that, you know, if you keep on spending like this, you're going to just consume all your wealth and you're not going to have anything left over and you're going to have a big issue in five to ten years and you might have to sell your house, you might have to do a bunch of things. It's nice that you came back with a 1% decrease in your expenses, but you need to come back with 3% to 5% decrease in your expenses. So we've talked about 1%, but I have not seen a discussion on where the big 3% to 5% reduction is. So we're not going to get that today. My suggestion is that we try to, maybe it's a future agenda item, that we say, what is a work plan item? Where can we find that 3% to 5%? What are the creative ideas on that? On the revenue side, I think those are good things, but as a resident, until I see something happening on trying to reduce our expenses, being asked to pay more in UUT or another half percent, that is a money grab, and that's not gonna feel good. So I encourage us to look at the expense side very seriously. On the revenue side, I think it's worthy looking at those things, but we have to make sure we're balanced on that. Thank you for your time.

Thank you. Anybody else? Chambers?

Good evening, Mayor and Chamber. Oh, good grief. Sorry. Jill Lampkin, Chamber of Commerce. I actually just wanted to echo what Stefan said. As I'm sitting here listening, I'm like, okay, how are we going to generate the revenue? How are we going to generate the revenue? But I'm not hearing anything on cost reduction. And I would like to really see some... deep cost reduction and some options and maybe there's some sort of forum where people can ask questions about the expenses and what we could do and those sorts of things. But I'd really like to not see it be all one way in terms of asking us for revenue versus asking the city for some cost reductions. Thanks.

Thank you. Anybody else in chambers? Seeing none, how about Zoom?

No requests on Zoom.

Okay, so we'll close public comments. Fellow council members?

I'm sorry.

Okay. Okay, Council Member Haworth.

I never want to just start talking, but I have been pressing my buttons. Thank you, Mr. Mayor. So I, and just some general comments. No answers yet. I really, this is reminding me of the first year I was on the school board, which was back in 2003. And we had a $45 million budget, and we had to cut 10% of that. I'm going back to that because I remember that we had an ethos on the board that we had to show conservative budgeting and conservative spending in order to get the community to trust us to then support whether it was the parcel tax or the Ed Foundation. you know, we had to, you know, my kid's first grade teacher got a pink slip, the whole thing. So I have had to do this really tough kind of budget process. I say that because invariably What the residents also want, I mean, they don't want a money grab. I agree with that. But, you know, we have a much higher touch community than we did even back in 2003. And by high touch, I think we know what that means, services, right? And we also know that, you know, Mr. Taylor got up to comment about some of the employee positions and some of the salaries. And, you know, they are usually our public safety employees, and I think you deserve every penny and more. That's an expensive position, and that's what people want because we want a very short response time. We also want our potholes filled right away. We want code enforcement there right away. We want so much. So I appreciate costs. I think that... I'm also comfortable that there's a lot of conservative assumptions in this budget, right? We haven't, we've been very, we, our staff has been very conservative on what the revenue is really going to be this year, which is smart. There's a lot of unknowns in the world. But as Henry Minster used to say, when it's bad out there, it's good in here. I'm holding on to that, Henry. So I'm making some general comments, which may sound like they don't ‑‑ they conflict each other, but two conflicting things can be true. This may, you know, be great to be able to reduce expenses, but let's approach it with ‑‑ I mean, what staff did is try to say, listen, here's some ways to cut costs. They gave us low, medium, and high impact. And I hear some, you know, folks here tonight saying, well, do more, but we haven't even decided to do some of those, right? And there's one other point I want to make. Service levels. I believe that conservative budgeting ‑‑ oh, I want to echo what Stefan said. Director Bretthauer, I think this process ‑‑ there's been so much iteration. There's been ‑‑ you know, we have ‑‑ we have a lot of ‑‑ we have a special ‑‑ a specially skilled finance person on the council. And you're responding to all those questions so thoroughly. and presenting this in a way that is so digestible. And I hope you can sleep after tonight for a little bit. So to kick it off, I think that I'm eager to hear from my colleagues if there's something really that they think that we shouldn't fund, that we shouldn't do. But I don't want us to get bogged down in how the budget, how we account for the accounting portion of this, right? How it's presented, how we're planning The real money, the real actuals are different than what this document is. And I appreciate the discussion about transfers and whether they're expressed in the insurance fund or in the general fund. But if we get bogged down in that, we won't make the decisions that actually affect our residents and our taxpayers. So I hope we will stick to that. And that's my opening babble. Okay.

Next.

Next. Well, I'll go ahead. All right, staff, thank you so much. You know, I think we've learned about your diligence and really looking through everything. I forget exactly what it was, you know, the area where you just said, okay, let's look at this, let's look at it again, and let's go back and look at it again. Those are things that we all do in our lives. The The challenges facing a city and its expenditures are the same that we face in our household. Costs go up. Now, when you're in a position or you sit around with your family and say, well, we can somehow bring in more money. Well, short of sending the kids out there to all get paper routes and the like, it's going to be difficult to do. I'm on fixed income, I'm on social security. The gap, and this is what concerns me, the gap between when the money that we get because of inflation is a huge gap between getting that money and actually going out and being able to spend it. Prices are rising, but I can't adjust my income as it's happening. So there's that gap. And that's where the hypothetical that Mr. Compo was talking about is your expenses are going up. you're going to go ahead and, you know, you're going to run out of the money. So that challenge is no different than just for the city because there's contracts that need to be negotiated. There's employment agreements that get worked on and agreed to. So the... The ways of getting more revenue, I want to take a good long look at those and, you know, look at them not just practically but, you know, politically because, you know, like for example, I'll give you a definite no for me is the sales tax. We already did it, okay? And it's been a godsend to get that $6.5 million. And we're not ready to go back. I feel like we're not ready to go back to our residents and even visitors and say, hey, let's do another half a percent. Because it's, what, 60% of that increase was borne by visitors. Same thing with when you increase... and you increase the parking tickets. Now, it looks like there's some room when we should come up with an acronym of all those cities that we compare ourselves to, you know, Santa Monica, Redondo, Rosa, Beverly Hills, that kind of thing. So I'm anxious to hear what everybody else has to say and to see what we can do to address these challenges in the near future. And we have Councilmember Lesser.

So for my opening comments, I would say I want to be careful that we don't lose our heads here. We have, as a starting point, at the recommendation of our auditors, funds transfers of $11 million off the top. It's part of an effort, as has been mentioned a number of times this evening, part of an effort of being greater transparent, to have greater transparency in our budget process. I still raise the question, because I'm not an accounting major, how it transfers an expense, but it is. That is what our auditors have requested that we do, so that is what staff has started to work with, and that is why some have represented that we start with a budget deficit, but I very much appreciated the slide earlier on in this presentation that showed the equivalent of the fund balance in fact, looking at how our budget, if we were to use apples to apples and comparatively look at the same sort of elements, where our budget would be. I appreciate staff first coming off with a million dollars in reductions and then coming back with the low and mid-level expenditure reductions of basically 1.75 million dollars. I think that's heading in the right direction. I think I do have some practical questions on adding staff, and this may be some questions I didn't have a chance to ask our finance director earlier, and that is to what extent if we didn't fill staff positions now, I'm not talking about the net neutral, but the addition, the three new positions, to what extent there would be costs for contract and outside services that might be higher than bringing those positions in-house? So that's the direction I'm heading now. I'm in favor of going forward with these requests for further study on these revenue enhancement measures, but I appreciate the presentation thus far. Thank you.

Okay. Council Member Shirley. Thank you, Mayor. I really appreciate this dialogue with everyone, the colleagues. I guess for me it all starts with the general fund, and structurally we have a surplus of $1.9 million. Let's say $2 million. Without any of the new model of transfers and transparency, the bottom line is that $2 million is held up with a $6.5 million sales tax measure that's in the general fund. And without it, you'd have $4.5 million. And that's a brand new revenue stream. So if you didn't have that you would have a four and a half million dollar structural deficit and that is my concerning part of this discussion not the accounting not everything else we're discussing but how did we go from having a structural balance budget to $6.5 million infusion from sales tax to only a $2 million surplus. So that's because costs are going up. We've hired a lot of employees. We've given generous MOUs, which is well-deserved, absolutely. Our staff does an incredible job, community, customer service, all of it. But we're financially stable today, but our five-year forecast shows expenditures growing faster than revenues. So structurally, we have a deficit if you take out the $6.5 million. So I'm focused on looking at a way of not impacting core services and what do we do to make sure that we have long-term fiscal strength and fiscal stewardship. And I think that's our responsibility. That's my rant.

Thank you. Mayor Pro Tem, turn it.

Thank you. I think I would, you know, echo that, what my council colleague has just said. However, the reality that I'm looking at based on the presentation, first of all, I do want to commend staff for going there because I know that this, where we are today, didn't just happen, that you really have all sat down, you've sat multiple iterations of trying to figure out where you can cut costs. So I do recognize that there have been tremendous efforts. Um, you know, there's a system in place that the city goes through to get to where we are now. And I'm sure this has been done in the past. It's being done now. And I appreciate the look, um, the anticipation that you're, the proactive anticipation that you're all taking to ensure that we don't have these huge blips, right? Because I think that's where part of the issue that I'm seeing is these were kind of unanticipated costs. Our insurance fund, our UAL, we're underfunding those things and we're not showing them when we should be anticipating them. So then we get in a year where we decide, oh, we really should be accounting for these things. So what I'm seeing from the report is the blip in our expenses, our expenditures is, and correct me if I'm wrong, is due to those unanticipated expenditures. I like Stefan's example of what goes on in your household. The one problem that we can't anticipate is lawsuits and liabilities. That's not something that we can decide, oh, well, that person just sued me, so I'm not going to pay that lawsuit. That's not something that's optional. These are the things that come up along the way that will impact all of our budget, whether it's a personal budget where you get sued in your household and you have to deal with it, or it's on the city side, on a larger side, which as a city, the reality of it is the cities are constantly... seeing these types of pressure. And what I appreciate is staff trying to anticipate these things and figure out a way to not ignore these costs and push them down the line and show them later on for somebody else to deal with, but really deal with it now and showing it now. At the end of the day, we do have to figure out what we can and can't afford. But I want our public to understand it's not that the ballooning costs isn't largely due to because we're over-hiring. You see the level of service. You see the level of review that staff is going to. The fact that they're willing to sit in a hot room and not pay for the blinds, shows you that they're willing to make personal sacrifices. So that's the kind of level that I'm looking at that they're doing. So, you know, that's the top of their list isn't something that will impact our residents, but really also look at, like, what sacrifices can I make? And so I appreciate that type of analysis. I know it's a difficult process. It's... And we'll have to find a path forward. But I also understand it's not just because we've been overspending. It's because there's a blip that we haven't been properly anticipating. And that this painful step of figuring out what we're doing now and how to move forward will hopefully help us avoid this pitfall in the future. And that's my take. Thank you.

Well done.

While we were on that topic, I just wanted to remind the council and the public, I know we've said this before in other budget discussions, but as it relates to the insurance fund issue, we are going to be bringing back a discussion about... how to appropriately fund that going into the future because we are underfunded in that particular fund even for a regular year. So obviously it compounds as you keep going forward into the future, and so we want to address that head on and bring back that discussion to the council in the future as to how to fix it going forward.

Could I address one of the questions, too, please? First, to your question about revenues and expenditures and how transfers relate to that, you could also think of it as inflows and outflows from the general fund. So any money coming into the general fund would be captured into revenues. Any money going out, we would under expenditures, just as a matter of presentation. But they're not technically expenditures, as you noted, even as a non-accountant, so thank you. The other question you had was about the three positions. And if those were not approved, there was a couple things to point out there. One, the HR position, again, was net neutral. So if we don't approve the full-time position, then we would add back the part-time hours and contract services. The second one was in the sewer fund, the sewer maintenance worker. I guess the broader question there, are we only talking about the general fund impacts or citywide positions, then we would need to decide about the sewer position. The last one is the management analyst that again would be spread, be working on multiple programs in public works. The two, it is offset by a reduction in part-time hours, but the thing to note there is those part-time hours were all in the general fund. So we reduced the general fund by $60,000 in the public works budget, but due to the reallocating the position out to these other funds, the new full-time position would only be charged to the general fund at $37,000. So if we unwind that, we would actually have an increase to the general fund of $22,000 if the full-time position was not approved. I don't know if that helps your question, but those are some of the things to weigh in that discussion. Thank you.

Sometimes there's a cost to a cut.

So let's see if we can sort of consider our next step. We got a lot of good and new information today. It's a lot to absorb. I think what I'd like to see is that we continue this discussion to the next council meeting. It's going to be well within the time limit, right? That'll be June 16th. And just, you know, digest what we've learned today and come up with. I particularly want to look at, you know, those revenue opportunities to see what, you know, assess a priority to that. And I just want to see how everybody feels about that at this time. Mayor Pro Tem Tarnik.

Thank you. I think that delaying this won't impact what we do on examining the revenue side of things. I think the question is, as presented, were there other areas that you want staff to cut to get to where we are? And I don't know that, for me, there are going to be additional information that's going to help make this less painful. I think from what's been presented, what I've heard, is that staff has gone through it with a fine tooth comb to make sure that we've cut costs wherever we can. I think looking forward is something that we can do. But as far as where we are in the budget, I don't know if that would help to delay it. If there's any additional information that we're going to get, that's going to make it less painful. So as far as the budget enhancing discussion, I think that's ongoing. And that reminds me about the previous sales tax. And I appreciate, you know, it... Council Member Sherrillian bringing it up. It was a lifesaver. It really is a lifesaver for our city. And I think part of that anticipation is knowing that we were going. So it's doing what it's supposed to do. So rather than getting into a further deficit, further debt problem, we're actually trying to figure out and it's come at a really pivotal time because it will help us kind of realign our finances, the way we're showing it, the way that it's the budget process that we're engaging in now that we hopefully going forward we won't have this painful of a session where we really, you know, the numbers don't look so great. So again, for me, I don't know if continuing it will help.

Mayor, may I make a recommendation? We have a list of things we need direction on from the council. So if the council is open to it, Libby can go through that list and then we can talk about each one of those items and see if there's a way to move forward or not so that we can attack this one item at a time.

I think that's a good idea. I mean, I was going to speak, I mean, because I was, so I was going to agree with my colleague, Mayor Pro Tem Turney in PTT, in that I don't, You know, I would want to be really prescriptive and specific, which would be going line by line. Like you say, you have things that you need direction on. So I'd be ready to do some of that. And I definitely, to the mayor's point, I mean, those revenue enhancements... We're all very interested in those, but I think that those are going to be ongoing, right? And it's not going to be something we can even decide at the next meeting. I do want to question, people are talking about the sales tax revenue. And please correct me if I'm wrong. I mean, to me, that we've sort of ‑‑ it was for facilities, I mean, even though it was a general tax. But we've been putting that towards the debt service and things like that, right? So keep in mind we also bought 400 MBB. And that's something that has added expense to our budget, which is going to be a future revenue generating piece of property. It's been a financial risk, but I think it's going to pay off. And so we haven't mentioned that either. So I want to really... you know, that's an asset. And that's something, though, that we, you know, we spent a lot of money on. And so that, again, that sales tax was for things like that or things like, you know, helping the CIEP and things like that, even though we could decide we need it in this general fund here or this there. So I just, I wanted to clarify that. I like the city manager's suggestion or the director's suggestion, but I am one. So there you go.

So, Council Member Sherman,

Thank you, Mayor. Libby, can you put out slide eight from tonight's presentation? Sure.

While Patty's doing that, I'll remind members of the public that legally we do have to adopt a budget before being able to conduct business on July 1st and pay any expenditures in the new fiscal year. So we have to adopt something in June.

So I think that I just wanted everyone to again see this slide because there's conversations about the transfers out which are below the structural surplus of $1.9 million. So I guess my question is year over year, what generated an additional $4 million? You've talked about it, $4.5 million in expenditures that If we didn't have the sales tax, again, I'm looking at the blue three lines on the top, we would have a $4.5 million deficit. And that's something, you know, we're very thankful that our residents voted for MMB. And we are using it in the right manner because we are transferring out to the CIP $5 million after the structural surplus. But I guess my question is, what has caused that $4.5 million? I know salaries, benefits, PERS, I mean, you said all that, but that's a lot to say. Right, but if we didn't have that $6.5 million, would we come to council with a $4.5 million structural deficit?

No, of course not. It would probably look a lot more like something... and that slide 55 and how those two previous years where the budget was adopted with a surplus of $475,000 or $500,000 and what other things come to mind from prior years are some of the budget balancing mechanisms that were done. to make a balanced budget, including things like reducing charge outs for internal service funds to the fleet fund or insurance fund. Those were some of the tools that staff would use to try to keep costs down and balance the budget. So I'd have to look at exactly what fiscal year it was, but it was sometime in the couple years after the pandemic where we completely eliminated charge-outs to the fleet fund because there was a fund balance in that fund. And so that was positive to the general fund of over $2 million that year. But then the following year, we didn't add any money back to the fleet fund, and that's what's contributed to our problem there now is that we were pulling from one pocket for another pocket, and over time, I wanna also add that we've been holding the line on controllable costs every year. And we reduced the budget last year. We've done a million this year already included in this number. And so at some point, it all kind of comes to a head where if you've kept these costs down year over year, it comes to a breaking point. And that's kind of where we are in some of these internal service funds like the insurance fund and fleet fund. It made the general fund look better in prior years because we kept those charge-outs low, but ultimately now it's leading to other problems.

Okay. Second, let me catch up. Okay. Mayor Pro Temp, your name.

I just have a question that made me think of, like, when we were taking that $4.6 or $4.7 million loan, that was previously dedicated to the Scout House, and then that was kind of, at some point, put back in the general fund. Had we kept that dedicated 4.6, we would have you know, at some point gone through the exercise of figuring out what we need. Did that come into play? Like, do you know what I'm asking?

You're referring back to funds that were transferred. Can you jump to that slide 55, please, again? That funds transferred from the general fund to the CIP fund for the initial funding of the scout house a few years ago? Right. Is that what you're referring to?

Right, right. How does that come into play? Because at one point, Council voted to dedicate, was it 4.6, 4.7 to the Scout House and was that sitting in a certain fund and then Then later on, we went through the exercise, or council went through the exercise of funding other things, like what we eventually ended up taking away from in order to put money back, right? So had we kept those dollars in the Scout House Fund and then gone through the exercise of finding funds to fund the other pocket that we eventually took away from, did that impact it? show how it gets reflected. I'm sorry, I don't know all the financial terminology there. No, you're good.

I think I followed the question. So fiscal year 23, we showed a transfer of $4 million to the CIP fund for projects, which included funding for the Scout House. Some prior years, we had dedicated other money to the Scout House. The CIP fund is only funded through general fund dollars, with the exception right now, the Friends donation is sitting in that fund as well. But so if I followed your question, then you're asking, we moved money from the general fund to the CIP fund, and then that did stay there in the CIP fund, but then was later reallocated to other projects. which now tonight's item or adopted resolution and CIP resolution would undo that and reallocate those funds back to the Scout House. Is that the question?

Yeah. I'm just, you know, my question is just kind of like the way that we've allocated and shown it in the past. So sometimes that it will impact how we look at it as snapshot later on. Do you know what I mean?

Yeah, I think that's an accurate statement that it is, and I think Council Member Haworth mentioned that the budget is a spending plan. It's kind of a snapshot in time. It's our best estimates and at the time that we're going through the process, things do change. That's why we come back with the quarterly report, the mid-year report, and then of course we have our finance subcommittee that could be meeting any time throughout the year if we'd like to discuss some deeper budget issues and maybe that's a path forward too if the budget is adopted, but you task the finance subcommittee with looking at achieving a higher structural surplus in the future. That again, as I noted earlier, I feel like staff has given it their best estimate to reduce the budget where we could. and maintain the expectations and service levels as currently desired. Any further reductions will take some time and effort. That would best be done as a collaborative process, I think, with either the finance subcommittee or through other council member interactions to try to get some guidance on what community services and programs we could potentially look at cutting, if that's the desired impact. Okay.

Thank you. And then I know one of the bigger expenditures is the UAL payment, right? That we didn't anticipate the shortfall on those payments. Is that correct? Or the deficit there?

We do anticipate those costs and rising costs. We get annual reports from CalPERS, but it can fluctuate based on good or bad year, CalPERS investment returns. There's a lag in that time, so we do have advance warning of that, but to your point, I think we could do a better job of communicating that and planning for it and just making it more of a public process and discussion rather than feeling like we're surprising everyone during the budget process.

And how much control do we have on that?

For the unfunded liability payments, very little control. But that's also the one mechanism we've done in the past is issuing the pension obligation bonds to basically refinance what was at the time a $90 million liability to CalPERS that we refinanced by issuing pension obligation bonds at a lower interest rate. But since then, now we're paying those bonds, and we have to pay CalPERS for additional unfunded liability payments. So that's the $2.7 million that's referencing in the general fund. Last year it was $200,000, so that increased by $700,000 in one year. Thank you.

So Council Member Lester, and then we'll get to the City Manager. Thank you.

So this has been an important conversation, a good conversation. This is our city's budget. But we have other items on our agenda and I'd like to see if we have consensus to move forward or if we need to continue this item as was mentioned in passing. I also want to pick up on something the finance director just mentioned and that is maybe this is an opportunity to task our finance subcommittee to explore additional reductions going forward so we can move forward with this budget.

Yeah.

Take some action. and move forward because we have other items as a city that we need to tackle. So just to confirm, to be able to go down the list, is staff recommending we look at page 52, slide 52, where there's recommendations with regard to our budget?

Yes, please. So we've already checked off number one, conducting the public hearing.

Step one, check.

Complete. Item two is to get direction on incorporating those cost containment measures. Which are on page... I'm missing.

Page 640. I'm missing. Should be the very last one.

No, but there's the list, but then to go to page... I pulled it.

Can we put the slide up?

This is maybe slide 28, is that right?

For cost containment.

Can we put slide 28 up?

So, colleagues, one way to move forward would be for motions on each of these items. So I would be happy to make a motion with regard to the second item, which is on the list, slide 52. which is incorporate any cost containment measures. So would that, for example, include the low and medium impact measures that are recommended by staff, which would total, it would be low impact of $257,600 plus the low and medium impact together would be $7,000. $73,978, and that would be in addition to the million dollars that staff has already discovered.

Yes. Or identified rather. Incorporated.

And then we would also add or task to the finance subcommittee to explore additional revenue reductions going forward.

And I would second that.

That would be my motion.

I'm sorry, did you say additional revenue reductions? To explore.

To explore.

Potentially. Expenditure reductions.

Reductions as well as enhancements.

Well, that's separate. Is that the next one? Revenue enhancements is the next one.

Which is coming next, correct.

You got it. So I seconded that motion. I think we just call for that, and if we can move forward.

Call for the vote. Call for the vote, please.

Motion passes 5-0.

Next is to move forward with revenue enhancements. And I think we've already given direction. That's why as the finance director was going through the presentation, I think a number of us were asking, is that already something that staff is exploring? I think we very much want to explore these items that were already identified. What direction does staff then need through this direction?

It is also a City Council work plan item as well, so it will be discussed as we make progress on the... identified the ones that we're already kind of getting closer on bringing back, and so we'll just keep working away. But at any time, if there are specific questions you'd like us to further research, we're happy to do that.

You don't need a further motion on that.

To that list, we'll add the UUT and PEG exploration.

Okay, without a motion. Correct. Staff has direction. Okay. Right.

And all those would come back to council so that, you know, some have expressed, you know, concern or, you know, opposition, and we'll have that opportunity to have those discussions as they come back. Okay. We're not saying go forward with all these.

Through the mayor, I'm trying to go through the list to move this, but I really want to respect your prerogative, sir, to lead this to the next level, the next step, if you'd like.

Yeah, so we've got, you know, these, what is it, one motion then, two?

We don't need a motion. We already went through one, two, three.

So now we're at item four, which is to confirm modifications to the budget. Patty, if you could jump back to slide 46, which kind of has an overview of those items.

We already did the revenue enhancements.

So the modifications to the budget, which are also further detailed in the subsequent slides to this one, would be to give us direction on whether or not to include this search funding. The street lighting, the gas tax, those are very minor modifications or just kind of corrections. Then we have the moving the warehouse. And, oh, I guess number five we just didn't discuss. So really the one in question is, that I don't believe has actually been discussed by the city council, is the CERT funding. But all of those are included in this Exhibit A to the Budget Adoption Resolution. So if you'd like us to move forward. I see a motion.

Your Honor, on number one, I made a motion, and it was seconded. If we can just take number one. Okay.

Oh, just number, you're just doing number one? Okay.

Or do you want to do them all? The increased expenditures.

No, item 46, modifications. CERT funding.

Yes. CERT funding. Oh, yes, CERT funding. Okay, let's call for the vote.

Great, and I was going to make a comment and just simply support that, so you've already done it.

Oh, we're cooking now.

If I could, sorry, I'm clarifying. Are you talking only about the CERT in the motion or all of them?

His motion is just for CERT, but we might do others later.

Can we go back on that slide?

All right.

All right. So next, increase expenditures.

Oh, wait.

I'm sorry. No, no. I'm sorry. Motion passes 5-0.

So, Mr. Mayor, my motion now, we're still on item number four, confirm modifications, because what Council Member Sherillian said, made a motion and we approved, was cert only. So I would like to say that I would propose items two through six. I would approve of items two through six. Is that your motion? It is. Okay, agreed. And it's been seconded by Council Member Sherrillian.

Okay, call for the vote.

We're cooking with gas over here. Yes, we are. Let's go. All right. Motion passes 5-0.

Thanks for letting me do so.

Thank you. And then if we could go back to slide 52, please, Patty. So unless there is further direction by the City Council for other modifications you would like to the budget, the last two items would be the resolutions to adopt the budget and the GAN appropriations limit.

Hey Libby, sorry, Director Redhauer, if we, that's item five is the resolution and the, just so everybody's clear, the positions are in the resolution. Correct. Is there a way to, I guess I'll ask the Mayor, since you're leading this, is there a way to bifurcate the positions and the actual resolution to the budget. So if council doesn't agree on the positions, we can still agree on the rest of the budget. I guess that's a legal question.

Yes. So on this vote, if there's a motion to adopt that resolution, you can say with the exception of the three positions. So in other words, one motion to adopt the budget and then Some of the council members can say, I'm approving the budget with or without the exception of those three positions.

Alternatively, we can talk about the positions first and then come back to five and six.

Thank you. That's a better approach. Thank you.

Since I have the mic, I just wanted to take a moment to respond to Council Member Sherrillian's earlier question about I believe your question was about the increased costs and where that was stemming from. So we've talked a lot about all of those throughout the conversation over the last several budget discussions. But to reiterate, increased costs in general, materials and services, and that includes contractual CPI increases to all of our contracts. our MOU increases, the CalPERS UAL increase. I'm missing two here. Our debt payments, not just for 400 MBB, but also for the radios, which were approved by council last year. So that's a big chunk. And then separate from that, obviously the insurance discussion. But I just wanted to make it clear that those are, that's the big chunk of our increased expenses.

Thank you.

Yeah, I actually had forgotten about, not forgotten about, but realizing that 400 MBB, that's a big, you know, that's all. It's so long ago. It's so long ago.

So can you walk me through? So we're going to look at these positions and vote on these positions and then vote on the rest of the budget. Oh, great. Thank you. We're going to vote on the positions.

Yeah.

So...

So we are going to, do we take them each individually?

Yep. It's up to the council, but that's one way to deal with it. If there's a motion to approve or not approve, position number one, two, and three.

Yes, sir.

Oh, go ahead, Nina. Council, I mean, sorry, Mayor Furtow. Okay.

Thank you. I mean, based on the presentation that we've heard tonight, it seems to me that these are positions that are either net neutral or that the funds are kind of distributed so that the cost of the general fund, the liability of the general fund isn't as significant, and these are positions, as I understand it, that if we don't fund and we don't do, it's something where we're either paying in the front end or we're paying in the back end, and how we characterize it. The work, as I understand it, needs to get done. So as far as, say, for instance, the sewer maintenance worker to have a sewer maintenance worker to ensure that we don't have breakdowns in our sewer system is so much cheaper than not having that work done and having an emergency situation where a sewer line breaks down somewhere. You've got residents who will be very unhappy and because of all the, you know, crap that's flowing out. So, so to me, it's, You know, I have heard sufficient information that justifies these positions. But I'm, you know, if you think otherwise, I'd love to hear your take.

If I could reiterate, too, that we currently have the water and sewer rate study underway. So if the sewer position is approved, we would certainly include that in the rate study and capture those costs, too. Okay.

Yeah. And I would say that, you know, I don't want to count on the sewer rate increase, although, you know, you could justify it because you're getting more service for it, right? Councilman Turner, you took the words out of my mouth. There's no way I'm not going to approve or vote for in favor of a sewer maintenance worker. Because the one thing, you hear about potholes, you hear about parking tickets. If you're not funding your trash, if your trash is piling up, and if you're not funding your sewers, like if your toilets are backing up, Sorry, folks. We're going to hear from that. I mean, that's going to be way more expensive. So I do think this amount of money, I think $162,399 for all these positions, my motion would be for these three positions or three new full-time positions and three position reclassifications because I think that it's penny wise and pound foolish to not do this, because like you say, we'll be paying contract services for a lot of these. So that's my motion.

Council Member Sherrillian.

Thank you. Yeah, I appreciate that motion, and I want to ask if we can separate it between net new positions and upgrades, because I feel differently if... of those two classifications. But before you do, I wanted to ask a question. A public works director. Thank you. So right now in the sewer program, you mentioned you had a camera, you mentioned a sewer camera we purchased years ago. How many people do you, like what's not getting done right now in the sewer program that this position is dire? And how are you potentially filling it? Is it with part-time or... maybe with maintenance worker one or two. How are you getting the program completed?

Currently, we don't have enough staff to have two people on each vehicle. So we have three vehicles that need two people. You need two people to run the sewer cleaning vehicles. So we have two of those. We have four staff available to do that. And we have two people available, you need two people to run the camera truck, van. So we have two staff filled to do that. Then we have two part time staff. But the, the issue comes up when we have like from about this time of year till the rainy season, we have to clean all the catch basins in the city. We have to maintain the storm water system to prevent flooding. And so we take the, we take some of the resources away from cleaning the sewer, so we run one sewer cleaning truck. The additional part-time or full-time position will do away with one part-time position. We'll have the ability to have a full-time position and a part-time position doing storm cleaning. And we'll still be able to run the three other vehicles.

Is there... I think the finance director mentioned the SUA rate study. I'm not sure what the timeline is for that. But is there... Will you be able to band-aid it until the sewer rate study, and during the sewer rate study, that position could be built in into the sewer rates position, possibly?

To answer your question, we'd continue the service level we are currently performing. Does that answer the question?

It does. Thank you. Thank you. That's all.

Thank you.

Okay, so we had a motion.

No, we don't have a motion right now. Okay. But I'm going to make one. Let's see. First, I'll start with, let's see if I get this right. For the, my motion is to convert the full-time transportation services operator to full-time recreation coordinator. Upgrade in the fire department, upgrade executive assistant to administrative analyst and any information technology, upgrade one office assistant. So those aren't the net new positions. I'm going to bifurcate it as my colleague requested. And so I'm saying let's do that. That's been moved and seconded.

Okay. So it's moved by Council Member Holworth and seconded by Council Member Lesser. Can we call for the vote, please?

Oh, nope.

What happened to my, here we go.

Motion passes 5-0.

Okay, great, so we got that.

So then, I know that.

Before your motion, can I ask a quick question?

Yeah, I wasn't going to, yeah, go ahead.

Thank you. Mayor, is that okay? Yes. Before our motion. Yes, sir. Finance Director Brett Hauer, when do you suspect the sewer rate study would come back?

I mean, might need Joe to speak on that.

Thank you, Councilman Charlene. We have the consultants on board for both the water and the sewer rate study. But we're just in the data gathering phase. It will not, it won't be before council probably until I would say January of 27.

And I appreciate that. And that's when we look at not just the SUA rates, but future capital improvement, and we look at positions. When we do those rate studies, we build all those things into the rate. Is that accurate?

We would build in all the existing salaries, benefits, and any capital projects we have planned going forward, we'd build that in. If we were looking at the potential for another sewer maintenance worker, we would have the consultant build in a model that would show you with and without that position so you could make that decision.

Correct. And at the same time, you would analyze the potential needs for anything in water because these are both enterprise funds and they don't impact the general fund.

That is correct, and they're two separate studies. Yeah, they'll be two separate studies. Oh, they're two separate studies.

Do we know which one's coming first?

They are being done concurrently, so they will, I don't know that they'll come before you at the same time, but they'll be done around the same time. Thank you very much.

Appreciate it. So my comment before I make the motion would be, I'm prepared to add these people, and You know, when you look at the management analysts in public works, that's coming from a few different funds, right? And then a sewer maintenance worker, I think, you know, obviously the public works department is going to work really hard to try to keep up with the maintenance and what they have to do now. But I hear the public works director saying, even before the sewer rate study, we need this position. And I just think it's... I think it could be money well spent. So I would support it. I mean, also with the human resources assistant, that's a zero dollar. I think I don't see any reason not to do that. If money is the issue, I don't see any reason not to do that. I'm not telling the directors how to staff their departments. But if it's a money issue and it's zero, then we should support that. That would be my comments.

Okay. Council Member Wilson.

I'm torn. I'm torn because I am seeking to not have a net addition of city employees, yet what's in the back of my mind is a mantra that I can't remember who originated it, is not having fear to flush. Who was it? Who was the great city employee? Walt Dewar, I think, our former council member, had that as a mantra. We owe it to our residents, as was mentioned by Council Member Hoeth, to ensure that we have reliable sewers, drains, trash service. It's part of what we do as a city. And in fact, to the extent that these systems fail, it costs far more to repair them. So we have a mid-year budget review as an opportunity to add additional positions. We may know a bit more. our subsequent follow-up in terms of what our revenue stream is and what our expenditures are. But I appreciate the questions and the comments made by my colleague, Councilmember Sherrillian, about seeking to distinguish between the net neutral positions and the additions. So I just want to say I'm really, I'm quite torn.

Okay. Councilmember Sherrillian.

So the net cost neutral, Libby... Director Redhauer, in HR, is that based on a fully, I was reviewing the line item detail, is that based on a fully burdened rate, or is the part-time hours just covers the salary, and because the benefits are above and beyond that, or is it covered, fully burdened rate?

Yes, to fully fund the position, other reductions were made in the department across part-time and contract services.

So fully burdened rate. Yes.

No, I get it, but I didn't know that, because I looked at the part-time hours and it didn't look like it was enough value to cover the position. Correct.

There was also a reduction in some contract services.

Is that normal that we do that, or do we just, if we don't need the contract service, we just, like, reduce that from the budget overhead? I don't know that we're including it. into the position. Every department could come down and say, I'm going to cut contract services. That makes me a little nervous.

I think those are the trade-offs that are done every year in a budget process. As I mentioned, we go through the line items. We see what's still needed for current operations and current projects and what's no longer needed. Trade-offs are made every year.

Any more questions?

Yeah, I'm glad, I mean, that they, I'm sorry, I'm just jumping ahead. Sorry, Mr. Mayor. Thank you, Mr. Mayor. Thank you. And I appreciate those questions, Council Member Shirley. And I would say that, again, like we're kind of asking, on the one hand, we're asking them, well, can you make a reduction in contract services? And I think Human Resources is saying, yeah, we could do that in order to get this. So here's my motion, taking in what my colleagues are saying. I appreciate, I thought Council Member Lesser really had a such a great point so I'm going to say my motion would be to add the full the human resource assistant cost neutral position and to wait to the mid-year for the public works positions and I hope I don't get a lot of crap for that but I'm sorry that's

So I would say that would be my compromise.

So let's add this human resource person and we could wait to the mid-year for sewage and management analyst.

If I could jump in for one moment on the management analyst. So again, that $88,000 is across multiple funds identified there. We did reduce part-time hours because currently the department is trying to work with two part-time employees and get the work that needs to be done, and that's just not efficient or effective. So that's why they've reduced two part-time positions that were currently in the general fund at a cost of $60,000. Again, the full-time position is spread out across other funds. So if we back out these changes, the cost of the general fund actually increases by $22,000.

Thank you. So thank you. Thank you for reminding us of that. That's fantastic. So I will also add that, the management analyst position, to my motion.

I want to flesh this out if I could, Mayor. So, Council Member Sherwin, is this the type of approach that you're comfortable with? Or if not this, then what would be another approach that would be a viable alternative, given that we're getting down to a pretty granule level of what's included in our budget and, moreover, a core function of city services?

Yeah, I mean, no, I'm comfortable with this process. I just... I'm sensitive to the things I've been saying of my concern of of this year and next year, and I just can't feel like it's fiscally responsible to add any positions during this year. But that's just my input. I appreciate the dialogue. I appreciate the upgrades. But we have a quarterly report coming up. Let's see how year end closes, because finance always does surprise to the upside, because we're so conservative. OR I SHOULD SAY THEY ARE SO CONSERVATIVE. SO IT'S JUST A MATTER OF, LIKE, LET'S SEE WHERE WE'RE AT. LET'S PACE OURSELVES. I'M NOT SAYING THESE POSITIONS AREN'T NEEDED. WE'RE GOING TO DO A SEWER RATE STUDY IF WE NEED SEWER OR WATER EMPLOYEES TO TACTICALLY GET BUILT INTO THOSE THINGS, THEN IT'S A BIGGER DIALOGUE. BUT FOR ME, RIGHT NOW, THIS IS A REAL GOOD PROCESS, AND I APPRECIATE THE DIALOGUE, BUT I JUST DON'T FEEL COMFORTABLE ADDING ANY NET NEW POSITIONS IN ANY FUND.

But, you know, the point of that, if we don't do the management analyst in public works, it's going to be an additional cost in the general fund.

Yeah, I just wanted to reiterate that because I wanted to try to understand that. So if we don't approve item four, it will cost us more money than what's proposed because... that is being paid through other funds.

Currently part-timers are doing necessary needed work to, as described by the Public Works Director earlier, but it's less efficient and effective to have two part-timers trying to do this workload when really it's appropriate for a management analyst.

But the part-timers are being paid into those, sorry to, they're getting paid out of general water, sewer, those same funds?

No, the two part-time positions were only in the general fund, totaling $60,000.

And then what's the value, $60,000 each?

No, total.

Total. So $60,000 in general fund versus $89,000 in multiple funds? Yes.