City Council - Regular Meeting

to address ongoing fiscal pressures. After I had already written the statement, I found out that Kern County is actually passing a contingent budget because they're not ready to proceed. Communities, large and small, are making difficult decisions to align expenditures with available resources. The lesson for Hollister is clear. Fiscal sustainability requires discipline, foresight and a long-term commitment to sound financial management. Our responsibility is not simply to balance next year's budget. Our responsibility is to ensure that future councils, employees, and residents inherit a financially stable organization that can continue to provide essential services during economic downturns, emergencies, and unforeseen challenges. For that reason, tonight, I recommend that we establish a long-term goal of building and maintaining a general fund reserve equals to 20% of annual operating expenditures within the next eight years. Let me repeat, I am not recommending that we establish a 20% operating reserve for the next fiscal year, but instead that we build up towards that for a period of eight years. And I will show you in the screen some models that are for all purposes, a calculator so that together we can see what those forecasts are. Again, trust the information is there, but it's best to verify so we can together see what the formulas are and make sure that everything is the way it should be. A reserve at this level will provide several important benefits. 1. Protection against economic downturns and revenue volatility. 2. Capacity to respond to emergencies and natural disasters. 3. Improved financial credibility with investors, lenders, and rating agencies. 4. Reduced reliance on one-time solutions and deferred maintenance. And number five, it will provide greater stability for employees and the services our residents depend upon. Achieving a 20% reserve will not happen overnight. It will require difficult decisions, thoughtful prioritization, operational efficiencies, strategic investments, and potentially new revenue strategies and business model. We will reinvent government. It will also require us to evaluate programs and services through the lens of long-term sustainability rather than short-term convenience. In your report, I list measures that are being used to balance the general fund. It is highly likely that we will have to rely on expected cash in hand as of June 30th to balance next year's budget. Let me repeat, even with cost-cutting measures, I cannot give you expenses equal to revenue. I have to use some of the expected fund balance for this year. The path forward should be guided by three principles, and we continue to repeat that, predictability, consistency, and transparency. We must communicate openly with our residents about the financial realities we face. We have to make decisions based on data and long-term impacts and remain disciplined in executing the financial plan that we adopt. Hollister has many strengths. Our community continues to evolve. Our local economy has opportunities for expansion. We've been talking about the airport in the last few meetings and our employees remain committed to serving our residents. By taking deliberate action today, we can position the City for a stronger and more resilient future. I look forward to working in collaboration with the Council, employees, unions, middle managers, senior leadership team, and our community to develop a sustainable financial strategy that protects essential services while building the reserves necessary to secure the city's long-term fiscal health. Let me show you the 10-year forecast, which, as I indicated, we can manipulate the calculator All right, council members, Madam Mayor. So let me, that one. So what I'm showing you here, let me highlight it. This here, this table is what drives the calculations below it. So we start, and this is again, the general fund. We start with a fund balance expected cash in hand at the end of the fiscal year of $7.3 million. Please note, we do not have audits. We're making the best assumptions and analysis that we have in light of the fact we don't have audits. Sure, we could wait until the audits, but that is going to be sometime next year. And no, we don't have, unfortunately, time for that. At this point, we have to proceed with what we believe is a good estimate at the end of the year. Revenues, very conservative, predictable consistency taxes, 50 million. Expenditures, 56 million. So for process, we had asked the senior leadership team to give us a budget that would reflect the necessary cuts. And they did. But even then, we still have a delta of we're now at a negative 56%. So if we take the revenues of 50 minus the expenditures, and the revenues also include the fund balance, we are sitting on 1.3. So let me go down. So that's just to show you what is feeding the following numbers. So the 7.3 from above, the 50 million from above, the 56 million from above. And what we did here, I'm going to go up a bit. 20% reserves. Oh gosh, can you see it? You probably can't. Okay, here we go. So this calculation here is 20% reserves. This is for the next fiscal year. If we go to 20, even with all the cuts, still leaves me with almost $10 million in savings that I would have to find. Then in 27, 28, minus 22, minus 31, minus 40. So clearly I stopped this exercise. Again, these are formulas, you carry them. This is just not feasible. It is responsible. It is what we wish. It is wonderful. So then the question for the finance department and myself was, okay, so how do we get to 20% in a way that's actually realistic? We played with numbers. So what you see in yellow is basically what I enter. So let's pretend I do 20% here. And you can see the changes. All right, that's too high. Let's go to 15%. That's still too high, Anna. Let's go to 10%. No, not quite there yet. 5%. Not yet. 1%. Not yet. 0%. If I do that, In 2030, which is year eight, it gets me to the 20%. So by starting from zero and making a lot of assumptions, so let's go through the assumptions. This year, we'll present you a budget of $56 million, which is more than what we earn. Again, we're still kind of swiping credit cards here. Year two, notice that $53. I need to cut another $3 million next year. What are the assumptions, Ana? Okay, here are the assumptions. Revenues, 2.2. That's the growth. Given our global realities, we have wars, we have inflation, we have taxation, the list goes on. I think that revenue, the 2.2, is what the region is calculating. The expenditures, the assumption that I'm making after year three is that it goes up by 1.8. It's very tight. But I did not use 1.8 here because the math doesn't work out. So I had to say, okay, I'm a 56. I still have some money. I still have some cash. Let me use it the following year. Let me assume baby inflation for revenues and 53 million in cuts so that I can end up with minus 600,000 at the end of the year. I'm confident that we have to find the 600. Actually, it's not about confidence. We have to find the 600,000 because otherwise I can't balance the general fund. So we'll find the 600,000. The following year, year three, 2028, we start our, let's say zero in this case, 600,000. Here are the revenues. And again, I have to do another round of cuts, 56, 53, 51. Then in year four, finally, in year four, I began to grow once again. I began to spend more money. And from then on, I do have an upward trend. So I go from 51.9 to 52.8 to 53.8 and so on and so forth. So in year eight, the magic year, when we are able not only to afford more expenditures, but also that goal of the 20% reserve. We will be saving every day just about to get us to that point. So I am not saying we need to change the policy. I'm simply saying we need more time. We need more time to get us there. In the report, I mentioned that there are a number of measures that we're taking as part of the cost cutting process. And there's workforce reduction. There are furloughs. There are changes in the benefits. We are discussing decreasing our investment in IT, decreasing basically in just about every area where we can decrease. And at the same time, we still need to be aggressive about our economic development. Yes, we're not putting money aside for economic development. I had asked for $6 million. There's zero. We did not allocate anything. We had asked for $1 million for beautification. It's zero. We cannot allocate. The situation is what it is. And right now, I have to go back to the fundamentals I had to go back to the fundamentals of public administration. Municipal governments are about three things. Police, fire, potholes. Three things. Those are the fundamentals of what we do in local government. So trying to make sure that public safety is funded to the degree that we can. Understanding that the creation of the fire district has got to be priority number one. And also understanding that our streets have to be addressed and that all other things have to be juggled. The enterprise funds are supposed to be solvent. The airport is solvent. Sewer is. Water is not. And so, unfortunately, we have to make decisions regardless of the rates as to what is the proper level of staffing and operations for that fund. And with that, we do have to bring a rate increase to you as soon as possible. It will be part of our budget presentation next week. And it will be one of likely, if you count the first 30%, the bridge rate that we had, plus the one we're proposing on the 15, and likely another one in the summer. So it'll be about three rates to get us caught up. So, All of this is very challenging, and yet we had a young person from the Public Works Department in our meeting, so I've met with every department, with the unions, formal and informally, but he asked, is there a plan? And I think that's a great question. Mr. Gorman, I believe, is his name. And yes, here's the plan. The plan is one of time, of patience. of discipline, of, yes, tighten up the belt, but it's not just one year. It's multiple years. And staying true to that. Regardless of who sits in the dais, regardless of who the city manager is, regardless of who the finance director is, this plan has got to be in place. The numbers don't lie. Numbers are numbers. They don't have personalities. And this is what we have. Now, when we receive the audits, If they find something that we have not taken into consideration, that's fantastic. But the audits aren't coming anytime soon. So for now, this is what we have. Council members, this is not the message that I would like to provide you. Four months into my tenure, I'm sure that the finance director, three months into her tenure, wished that she had forgotten a zero here or there. But believe me, we looked. And just to reassure you, I was not about to stand in front of you to ask for reductions unless I could stand behind them 100%. We went employee by employee, literally. Employee by employee to make sure that those positions were allocated in the right funds, person by person. This is not an estimate. This is not, let's add 25% for benefits. We literally went through every single benefit for each person, each member of this organization. The work has been thorough. We sent it to another finance director for him to evaluate the work that we had done. And here we are. We do not take these decisions lightly. I do not envy your position. You have to give me direction. And then I have to execute. And we were not about to do that unless we had trusted but also verified. I trust the finance department, but we verify with outside sources as well.

Questions. Thank you for that. Questions? Any questions, comments? Okay, so we're going to move on to public comment. So do we have speakers? Okay, let's go ahead and go with public comment.

Caroline.

Hi. Hi, everybody. I'm Carolyn Roderick with SEIU 521. So I was here about a month ago. And since then, I know that at least two people have resigned and a few more folks have been on leave. It's really heartbreaking. But I just I wanted to say that. The city manager talked about transparency, but as a union, we don't know what the deficit is. We haven't gotten real numbers. We have not seen the budget. The city is proposing takeaways without showing us the data. The city manager says that she's data-driven, but we have not seen the data. She's asking us to agree to takeaways without... showing us the data. We can't trust what we're seeing. Initially, we were given the water budget with a negative $26 million. Our team asked for more questions, and then we found out that water deficit is actually closer to negative $4 to $6 million. So where did the $20 million go? go? Where were they found? We don't know. We haven't been able to get that answer. And so that's why we can't trust what we're seeing. And we're asking the city council to ask the hard questions so that we can work together. That's our goal, but we can't right now. Thank you.

Thank you, Caroline. Next speaker.

We have Rodrigo Aguilar on Zoom. Go ahead, Rodrigo.

Can you hear me?

Yes.

Oh, hello. Good afternoon, city mayor, council members. My name is Rodrigo Aguilera, and I prepared a little speech for you guys. I have worked for the city of Hollister in the water department for about 18 years. Right now, I'm serving as a chapter president of SCIU, Local 521, for the city of Hollister. Our department carries a sacred public trust, and Remaining silent is no longer an option. Every time a resident turns on a tap, pours water for their child, or calls out at 2 o'clock in the morning during an emergency, we are there, local employees. People who live in Hollister raise their families here and have dedicated their careers to the city. That commitment cannot be outsourced. Three employees from the city of Hollister have already been released. And the city is preparing to eliminate about another 25 more positions. At this rate, every essential service will be handed out to out-of-town contractors with no stake in the community and no accountability to you. Once that institutional knowledge walks out of the door, it does not come back. I'm asking this council to take two clean actions, no layoffs and no contracting out. Keep this work in house, keep it local, keep it accountable to the people of Hollister. And to our elected leaders, I want to say this directly, we hear in the city's financial concerns, We do not dismiss them. Our union is always ready to work through solutions that protect both the city budget and the workforce. Layoffs and privatization are not the only path forward. But our conversation must happen before employees lose their livelihoods, not after. I may lose my job for standing out here today. I accept that. but my integrity will remain intact. To every member of this council, we are your neighbors. We are the reason the water runs. Lead with transparency, lead with accountability, and treat the backbone of this community with the dignity this work demands. Thank you for your time.

Thank you, Mr. Aguilera.

My last speaker card is for Bill Avera.

Good evening, Mayor and Council. Fortunately, nobody's had to work for me other than Roland. So I'll try to make it sort of short and sweet. I appreciate what the city manager was trying to do with projections, but we all know that obviously when you're just projecting, you're projecting. The one thing I would... Hope you all realize is Measure W was adopted in 2016. It was a 20-year tax extension, right, of a 1% sales. That's about $9.4 million now. If that goes away in 2037, what's it going to look like then? And what you need is everybody in this room worked really hard with council to get that adopted. And if you start laying people off and there's no confidence, the community has no confidence in you or the staff that's here, they're never going to approve another extension. I shouldn't say never, you don't know, but I would hope that you take that into account because it gets worse, doesn't get better. And reserve kind of budgeting is probably 30, 40 years ago. Not a lot of people, I mean, people do it, but it shouldn't be the goal. Five, 10, 15, 20, they're just numbers, right? So they are what they are. I guess finally, I would say, You have, if the city manager is gonna go through a 218 process for water, I would hope you would also go through a 218 process with sewer, because when I left, we reduced sewer rates a little bit to offset the amount of money that we were getting. We had a conservative council. They didn't go down as low as they should have or what I thought would be appropriate. But you can't ask somebody to pay another $90 a month and not reduce your... You have $50 million sitting in a sewer enterprise account and a problem at the sewer plant? That's ridiculous. That should not happen, you guys. Not at all. Anyway, thank you for your time. Bye.

Thank you, Mr. Rivera.

I have no more speakers.

No more speakers. Okay, thank you for that. Okay, so I'm going to bring it back to the guys for any questions or comments. Go ahead, Dr. Morrison.

Sure. I don't really have that much questions. I just want to talk to the residents, the union members that came out here. I just want to say thank you for coming. I am the most senior city council person that's been up here. We've been through a lot together. I really appreciate your time. I really appreciate you guys being out here, to be honest with you. And I've been here eight years now. I've grown quite a bit. I've learned quite a bit. I received a doctorate degree since I've been here, and I wrote my entire dissertation on what happened at the sewer. So I'm very grateful for that. I've always stood up for the community since day one. Sometimes not the most appropriate ways, I'll be honest with you, because... I was a different person back then, but I'm very, very proud to have stood with the people of Hollister, to have fought for the people of Hollister. And I just want to let you guys know, number one, I'm not going to be seeking reelection. this coming november um but while i'm here for the next six months i want to thank you guys for all the work that you have done for our community members i want to thank our community members and i want to let you know that I look forward to working with you. I speak for myself and while I'm here, not today, not tomorrow, not in the six months that I leave from here, will I ever support laying off a unionized city employee for Hollister? Thank you.

Okay. Thank you. Um, any questions or comments? So city manager, can you put the slide back up that you had generated with the general fund numbers?

So, you know, when this slide comes up, well, we all saw the presentation, so it's going to take, I mean, even at 0%, if we went down to 0%, which is somewhat... Do cities do that? Do they actually not save money for another Loma Prieta? Because we're literally like the town is dissected by a fault or another COVID or some sort of super storm or whatever. Do cities actually not put stakes in the freezer or put money in the bank just to save?

Do cities do it? Yes. Is that a good practice? No. Is it prudent? No. Is it risky? Yes. Yes, we do sit on a fault. We are surrounded by vegetation. We are in California where every month is wildfire month. And we're an earthquake country. Does it make sense not to put money aside? No. I simply go back to... Where is the money? So GFOA tells us 17.6% is what we should have. The city has a policy of 20%. Let's go to 17.6%. 17.6%. There it is. So those negatives, those negatives are precisions. I'm trying to minimize this to the degree that we can. Not all positions are union. Yes, we do have management. Yes, we have non-representative. And there you have it.

So if we go to 0%, it's going to take us eight years to start building up to 20%. That is correct. If we go to 0%, it takes... Eight years. So how long does it take for a city to get into a situation like this where we're going to need to earn our way back? You know, we've dug a hole. So for how long did we dig this hole that is going to take us eight years to get out of it?

So you had furloughs in 2015. So that was 11 years ago. And then during the recession, there were reductions as well. So the city has been struggling. And you had... major investments that you have to make in sewer in the late 2000s. So the city has been struggling since 2000, let's just say. So you're looking at about 30 years to get into this situation. And yes, let me, please do understand that my revenue predictions are 2.2%. We don't know what's happening. If six months ago someone was going to ask if we were going to be in a war that was going to have such impact on oil, we had no way of knowing. However, let's just give an example. Let's say that we do bring a Carvana here to our city, and now we're selling vehicles, lots of them. That will help with the revenues. As for the expenditures... The red numbers are not assumptions. Those will be goals. If the revenues don't increase by a significant percentage, those are goals of reductions that I need to have in order to get to that eight-year reserve. These are projections. These are just numbers indeed. But we have to be guided by a map. This is the map. But we know, for example, that if we're not receiving revenues of 51.1 during fiscal year 2027, we have a problem. And if we receive 55, then it's great. Then I don't have to have this number. Give me a little cushion.

And those funds that are enterprise funds, right?

Enterprise funds are funds that are supposed to be, you know, the cost of providing the service is what we take in, usual and customary rates, something about what it costs us to provide water, for instance. How many funds do we have that don't perform like enterprise funds? Water I know is one. What else do we have?

waters are main fun, we have a second one, a second fun down finance director, if you could remind me, one of the CFDs I think it's underwater.

Can you go to the forum Jessica, thank you.

The green button. Oh.

Jessica O'Connell, Director of Finance for the record. The City of Hollister has several funds. There's a different structure that's used in creating funds here at the City of Hollister. They create funds for events, for grants. And so some of these funds are in the negative status when they're grant funds. due to waiting for reimbursement from grants and that's why they sit as negative until we receive the claim after the expenses have been reported. We also have funds that are collected for fees like fire impact, police. We also have tax revenue generating funds. So if you need specifics on particular funds that are negative, that are enterprise, we have, I believe it's the Street Sweep. So I guess what I want to say is it's okay to have funds, but if you don't maintain them and post the appropriate transactions to keep them above water, then it's really not a useful tool. And I think that's what's been happening here with the city of Hollister is there's quite a few funds that are in the negative status that we have like salaries hitting in those funds, but yet we don't have revenues covering those expenses. And so if you pull back and look at that, those costs need to be covered by a type of revenue. And in most cases, if they're not an enterprise fund, it will come from the general fund.

Okay, I just ask because, you know, when I see all these negatives and then I see a 0% in, you know, putting steaks in the freezer and saving for a rainy day or another Loma Prieta, it makes me uncomfortable. And then community members that are actually members of the, you know, the water team saying, you know, what was it, Christina Camarillo? She was like, yeah, we need to basically have our water fund We have to charge what it costs us to, when you turn on that tap and you use water, we need to charge what it costs. So I was just trying to see if it would make any appreciable difference to the numbers that we're seeing here. If we had all of the funds that aren't performing since 2000 or whatever, the last 26 years, that would make any kind of an appreciable difference to the numbers that we're seeing on the screen here.

So we will address all the funds at the next meeting. That's part of the budget. But the big obstacle to happiness is the water fund. We have been running a deficit since 2018. So that's eight years, eight years of swiping credit cards. So what does that mean? The credit card is the general fund. So again, how did we get here? Well, it's been a credit card. And we can say, you know, we didn't charge enough, et cetera, et cetera. We are here now. And so we have to pay for debt. We have to pay for capital investments. We have to pay for administration. We have to pay for personnel and O&M and reserves. So again, all the funds, the CIP funds, the utility funds have policies of reserves as well. And yes, we will be addressing the water fund. I can tell you that the last time that I read numbers, it was prohibitive. I'm not even going to say it. It was just not. So I sent it to the consultant, and I said, I must be doing something wrong. Please find it. And so that's what we're doing right now, going back and forth to try to figure out a number that actually makes sense. It was a struggle for us to present the 0%. I cannot emphasize council members. This is a disagreement between the finance director and myself. As a finance director, she would never, never support something like this. I'm struggling with the 0%. But it's either that or a lot of pink slips. So.

I'm not very comfortable with it myself, but that's all I have.

Okay. Thank you, Council Member Pichet.

Council Member Morales, go ahead. Yes. Thank you, everybody, for taking the time out of your day to be here. It's really important for us to hear your voice. Thank you to staff for working on these numbers. I know that these numbers, it's been challenging getting the numbers. So a few comments. I think One is I would like to see a timeline for when we're going to get our audits. I think it's going to be critical in order for us to have, for us to see the predictability, stability in numbers within a 5% error range. It's really challenging to make decisions. I think it's going to be easier to provide direction at least in a six month to a year, meaning if we agree to the 0%, we know that we can reevaluate at three months, at six months, at a year. That's not a 10-year decision. It's a short-term decision based on what we see in front of us. The uncertainty and unpredictability can be evaluated and assessed because numbers are being issued all the time. But I think for us to be able to move forward and provide direction not only for this, but for other decisions that are tied to this, it is going to be essential for us to make a decision based on what we have in front of us today, knowing that it can be re-evaluated and reassessed with data as the data becomes available, meaning our audits, the revenue cycle that comes in, and expenditures. And that includes looking at the cost of doing business, like water. So while I know that most people in finance would have a heart attack looking at these numbers, you know, it does translate into, you know, saving people's jobs at the end of the day. If we were to go to any other number other than zero, we're looking at a significant deficit that could only be addressed by eliminating positions, which I don't believe is to the best interest of our city of Hollister or employees or residents. So that's all I have to say. Thank you.

Okay. Thank you. Thanks, Mayor.

Thank you, and thank you, everybody, for being here. I share your concerns and worries and frustration. It shouldn't have to fall on you, especially you do all the hard labor. You are right there and on the front lines, and it's... Okay, I'm just, I'm probably, I'm going to go on a little rant, so excuse me, Mayor, but feel free to stop me at any time, but... This is one of the things that really pisses me off about bureaucracy and the system and our institutions that are in place because they are not meant to work for people like us. They are meant to protect whoever's at the top. And I... And this shouldn't be happening. It really should not be happening. There was some structural structural issue that's been going on for years here in the city. That's what we're trying to get to the bottom of. And we're literally uncovering all the cracks. do do whatever. And and this is where we're at. And either way it would have hit us. But we're, you know, going to do our best to do whatever we can to keep up because again, it should not fall on you seriously. And so I will ask now I'll ask the city manager. Okay. So what happens if we do nothing?

If, okay, so I can take the budget from last year, put it in an Excel sheet, put another budget, you know, fiscal year 25, 26, fiscal year 26, 27, and I can just carry it over and pretend that we don't have a money problem. So, Let me tell you how the difference between a finance director, a real finance director, and how city managers, how we balance budgets. The way I balance a budget, me and my colleagues, let's say Jeff, 30% sewer, 30% water, 30% general fund. Hopefully that's about right. You know why we do that? Not because we're lazy or because we're fraudulent. It's because that's how we make the general fund work. The ultimate goal of the finance director and the city manager is to protect the general fund. That's our baby. That's our baby. So we do 30-30-30. Problem with having competent finance directors is they remind you that in January, we got a cost allocation. Historically, we had had a finding. Our auditor had told us, you people, the 30-30-30 doesn't work. You have to have a cost allocation, which our consultant finished in January. So at one point, I said to the finance director, I'm not seeing the cost allocation. I just want to do 30-30-30. In her job, checks and balances is to say, no, you don't get to do 30-30-30. We have a cost allocation. You have to apply the cost allocation. That is the right thing to do. Or I can ignore the cost allocation and do 30-30-30 and I can probably give you a budget tomorrow because it's not that hard. All it is is numbers. What's hard is to go for the truth. What's hard is to verify what we have. But an Excel sheet can be done overnight.

Okay, hold on a second. Hold on. Oh, yeah.

Yes. Another question. Sorry. Okay. So let me see. Okay. What are the three biggest actions needed to fix right now? What are the

So from the council, and thank you for the question, because this is a lot of information and it's difficult to hear. I mean, I've spent all day communicating with various members of staff. And this morning we have an all hands on deck type of meeting. Number one, it is you who decides what our reserve is. You had told me 20 percent. So it is inappropriate for me to say we're doing zero. Only you can say that. So action number one is for you to tell me that it is okay to continue working on a zero reserve. Because right now, that's where our numbers are. Action number two is for you to accept the fact that we are not giving up on the 20%. We're just saying it's going to take longer. And action number three is to... Make sure that with that direction, we can now bring to you all of the funds on the 15th. We will have the budget ready on the 15th, which will include, for example, as part of the cost-saving measures, is incentives. We would much rather give employees incentives to retire than a pink slip. We want people to go out happy after giving decades of their life to the city. That would be a much better outcome, which is another reason why giving exact numbers for the actual pink slips is difficult. The more people that take the incentive, the less the impact is on unwilling separation. We want voluntary separation to the degree that we can have. This is that time.

Are there any employees in the audience that are set to retire the next few years? No, we can't ask that?

Oh, sorry. Sorry. No, no, no. Sorry, sorry, sorry.

My bad.

Sorry.

As I was asking it, I was even thinking, like, I don't know if this is ethical. Okay.

Okay. You can talk with them, however, after the meeting. You can, you know, from now until next week to get more information. I mean, you can do that. Got it. Right. Okay. Thank you. Thank you, Dr. Sanicoso.

Thank you, Mayor Stephens. I mean, that's a valid question. I would direct my question towards you. But here's the thing I don't like, City Manager. Number one, I totally agree with the Vice Mayor. This is something that pisses me off, too. I hate to use those words, sorry. But it just frustrates me, right? You guys, I think, know that about me. It really frustrates me that Whatever. The power is where the power is. And people are chasing money and making decisions, playing politics. Like, it's just really, really just frustrating. It drives me crazy. And I don't want to sit here and point blame at people. I just I'm so done with that toxicity, like that cycle. Right. We all know, you know, anyway, what the what the vice mayor said is true. It's all about money. It's all about power. And then who has to pay for it? Us, the working class, the people at the bottom of the pyramid, the people that have the less access to resources, right? And we need to break that cycle. I think that's what the Vice Mayor is saying. So guess what? We need more people like you to be in positions of power like this. And we, I think... should sit up here, go through this, take the lessons that we do, and then help to empower you guys to be up here one day too. You have to. Even if you don't think you could do the job, there's people out there that are going to help you to be part of this. Because guess what? The people standing, I'm not saying there's anybody here tonight, but the people that come here that fill the room normally, they have money, they have influence, they have relationships, and they get people elected. And then what happens? We get screwed every single time. I'm tired of it. I'm going to step aside. I'm willing to talk to anybody, anytime. That's my favorite thing to do, is to talk to the constituents, to talk to the people of Hollister. Absolutely loved it. It's time for me to move on, though. Aside from that... That's my rant, by the way. Aside from that... It sounds like that there's confusion about the data. There's confusion about the numbers, is what I'm hearing. This is what I've heard. This is the thing that I've heard. And I'm not placing blame on anybody. Again, it's not about placing blame. It's not about politics. What I've also heard from the union and from the workers, and this is all employees, administrators, non-unionized employees, and be very sincere about this. is that they want to work with us. The POA came up here and told us they want to work with us. SEIU came up here. They told us they want to work with us. I do have confidence in our city manager that she wants to work with us. Politicians, I don't always believe that about, but I believe it about these four people right here. I do believe it about these four people right here, the vice mayor, the mayor and council member Pache. They want to work with you. So let's work together. Let's get it done. Let's work together. Let's get it done. But I think we need more time. As Dolores Merlitz alluded to, because she often takes my ideas, we need more time to figure this out, to work with people and not play politics with their lives.

Thank you. Go ahead, and then just to go along with that, we will get more time for next week. Next week we will be hearing this, and then we make decisions next week about the particulars, right? So tonight, the information that you need in order to prepare that information for next week is the zero reserve. So here's my take. Agree that a zero percent reserve is not a good practice. However, just like in any other financial decision as a family, as a small business, as a small group, community group, you make decisions based on the totality of the situation. And I know that in my household, I am going to go, I'm going to lose my house because I'm trying to save the 20% that I've been so diligent in saving. Then I'm not going to do that. I'm going to drain my savings to make sure that I don't lose the house. And I think that's where we're at right now. So I think that I agree with our finance director, not a good practice. However, it's not a long-term practice. So thank you, Council Member Morales, for the explanation. I think that is what we all need to know, that a decision about how to approach reserves is not a permanent decision. It is a decision that we're doing for now. The goal is to with time make incremental changes so that we are in a better financial situation, even though during that time, it's going to be a little scary. And we are going to, with a hope and a prayer, hope that we don't need that reserve. But I think right now we don't have a choice. And or we will end up with a city that does not have the right any kind of services. We won't have a budget in any way that balances it. It will be a worse situation. So for me, I'm okay with starting there. And in fact, I know that on on, I think the proposal was. was zero this time is that city manager and then yeah so i think and and jessica i apologize i mean i know that's not good i i understand your concerns i think we all share that but i think i think starting with that next week we will see what that what in our budget and then we can continue with other decisions as needed next week based on that i'm good with with uh starting there

So just to summarize and to clarify, we will be bringing a budget document to you next Monday, which you may or may not adopt. We have two more Mondays in the month for further conversations and so on. There will be a public hearing next Monday. And once you approve the budget, whether it's next Monday, the following and so on, then and only then we will begin engaging in formal conversations with the unions. And just for the record, we had had a series of conversations with police, fire, and SEAU. So... Yeah, and I'm going to ask that...

to just like, let's just talk about today and next. Okay. And then we will get more information about what's happening in union negotiations at a later date. But I just want to start with the question at hand, which is, can we start with the zero percent reserve so that we can then build off of that? And for me, it's like, yes, let's start there. Thank you. Okay. Okay. And then go ahead, Dr. Rosetta.

i'm going to go off topic sorry just as a reminder to the public and to the workers we make the decisions up here us when we take a vote we give direction to the city manager to the attorneys to the negotiators we give that direction don't forget that okay so whatever happens is something that we've decided And I'm proud to say whatever's going to happen, I'm hoping, again, that we all come together on this, but we are the ones that wield that power. Don't forget that.

Yeah.

When I leave. No, I'm not done. When I leave, don't forget that. And you guys don't forget that when I leave as well.

Okay. Thank you, Dr. Wilson.

As far as the 0%, it doesn't matter. Like the city manager that was up here, the previous city manager alluded to, it really doesn't matter what it is at this point, whether it's 0, 5, 15. The only thing that it's going to hurt is it gives less percentage to them. But it doesn't matter, right, finance director? Because the numbers are what the numbers are. It's going to limit us if we don't go down to 0%. I understand that. It does matter. But we don't have exact numbers because the audits are out to date. And we should look at why they're out of date and who's responsibility that was. I'm not putting on anybody in this room, that's for sure. But I know it's going to limit you. But at this point, it doesn't really matter. It's a budget and the budget can change and we can come back and revisit it in six months from now.

Right. Jessica O'Connell, Director of Finance. The budget is a measuring tool. I agree. It is important to have a reserve for emergencies. I think in every personal household, we always have that, you know, in case of emergency. We are in a financial emergency here at the City of Hollister and we actually have a policy that says 20%. Are we at the 20%? No. Did we go to the dais and ask that we can reduce that? No. We actually have dipped into our reserves. I can't say unknowingly, but that's where we're at right now. At this point, we've already dipped into the reserves. So in order to stay afloat, yes, we have to go to zero. If there's an emergency, we can turn to FEMA, but chances that they respond are, you know, you have to think about those things. We do live on a fault line. There are a lot of things happening in the world right now. And, you know, like you said, a prayer and positive vibes.

Correct me if I'm wrong, Dr. Wilson. The question is that we make the decision tonight. We can change that. Yes. The policy can always be changed. It doesn't matter. It's not like it doesn't matter. Obviously, it matters something. Is that your question? That we can update it, amend it?

So here's my point. We're at 20% now. Are we at 20% now?

The policy reads 20%. Are we holding 20%? No.

Right. Doesn't matter.

Yeah.

Okay. Thank you. Thank you, Jessica. Okay. So let me check in with the rest of the council. So go ahead.

I just want to say something with respect to what Council Member Resendez said. We do give policy direction to the city manager and she executes. Right. But we are accountable to like everybody's accountable to somebody and we are accountable to the people, to our constituents, to the community of Hollister. And that's who we answer to. So I know that you know that. I'm just making that clear. And before in previous meetings when we have – we've had basically tough financial times the entire time I've been up here. I don't really know that a month's gone by when we didn't have a tough another roundabout challenging news when it came to financials. But I heard things like default on certain aspects. Like loans, reduced credit ratings, Moody's and Standard & Poor's came up. Being able to get potentially some other debts just in case we needed to get money from the outside. We might not be able to get that. I've heard some level of bankruptcy thrown around. So if we don't do anything, that is a decision. And something like that, I swear, unless I am totally crazy... I heard those types of things. Could you just back me up on that?

Yes, certainly, Councilman. Yes, indeed. So I think the question was, what if we do nothing? So there's the, you know, the technical part of it is I can go tonight and put together a budget out of Excel. It's not hard. But you are correct. The policy, the policy implication is that we're saying, yeah, let's see where we end up. Vallejo had that conversation. Stockton had that conversation. Those are the difficult conversations. Bankruptcy is not a small step. It sends a message to our merchants, to our residents, it cut services, city of Vallejo for example, half the firehouses were shut down, half the police department was laid off. There were serious conversations about defaulting on the pensions. Meaning if I retire from the city of Vallejo, I receive a letter saying, sorry, we can pay you. That's beyond. But that is what you do when you cannot afford your obligations. So let's talk about the obligations. If we were to go into bankruptcy, just like we would in a household, there are some debts that go away. MOUs with unions end. But our debt doesn't end. We still have to pay for the debt that we incurred for water, for sewer, for various CIPs. It means that we continue to decrease the workforce because at that point we are not credit worthy as it is right now. And I've shared this information with you. Actually, that was a new to me. I did not know that a city could be no rating, not even junk bond. We're not even junk bond rated. We don't have a rating. So what happens when you in your private lives are not credit worthy when you do need money? you can't have it. And no, our debt is not excessive, but we do rely on it. And the pain is real. Both the sewer loans and the successor agency loans have double in interest. These are millions of dollars. This is not double my interest on a $10,000 credit card. This is going from 2.5% to 5% in millions of dollars. So the impact is real. And when we spend more money paying our debt, we have less money for our employees. We have less money for benefits. We have less money for the public, for recreation programs, and the list goes on.

Okay.

Well, as uncomfortable as 0% is, losing employees and that harsh potential reality sounds a lot worse.

Okay. Anything? Okay. Okay. Okay. Go ahead. Go ahead.

Thank you, Mayor. Right, so these are the realities that we're facing, right? But you guys, the city of Hollister needs to understand one thing. These realities were inherited by this mayor and this council. Don't let anybody out there tell you anything different. Because when I was up here, For two years with the previous mayor and the previous council, one of them sitting here at the very end, did they ever tell you about any financial problems? Or were they spend, spend, spend, spend, spend, spend? And when they left here, all the money they had in their discretionary funds, they gave it out to their friends before they left. You want to know why we're broke? Mia, Casey, Dolores Morales, Rick Perez, and Tim Burns. Thank you.

PB, Lupita D Montoya, Okay, on that note let's go back to i'm going to go back to the decision and Okay, so we need to provide direction for the. PB, Lupita D Montoya, Reserves percent so let me just go down and see are you are we good with moving forward with the 00 i'm good with i'm good with starting their vice mayor okay. So we're going to go there and then we will reconvene next week and we will make the final decisions about specific budget items. Okay. All right. Okay. Anything else that we need to do before we can close this discussion and adjourn?

i think we're i think that's it right okay so we could just end on a positive note better things are to come you know losing employees is not the goal retaining employees and everything that you said in here today the tonight uh is not falling on deaf ears if we lose an employee that has a wealth of knowledge we lose all that knowledge with that employee and then we're left with the same amount of work to do with a reduced workforce. And then what happens with morale? So saving employees is the entire mission.

Thank you, Councilman. I appreciate it. Thank you, everyone, for being here tonight and for listening to this. We have some tough decisions to make, and it's always helpful when we have the public here with us as we're making these decisions, and so we appreciate you all being here, and we have more to come next week. Thank you all for all your comments and for your patience as we go through these difficult decisions. Meeting's adjourned.