Finance Committee - Regular Meeting

It is 01:00 so we will be on time and call our special finance committee meeting to order. We will start with public comment.

Public comment is now open for this item available in both English and Spanish. Call (951) 826-8686 and follow the prompts to access the meeting in either language. To request to speak, press 9. You can also join via Zoom. The meeting ID for both languages can be found on the agenda.

Alright. We have one card in the chamber. Miss Aurora Chavez,

thank you I've been sick pretty much on and off for eight months so I'm trying to come back to city council meetings and other committee meetings I've seen on a on a Facebook pictures of financial records, names of of companies that we've dealt with and amounts of money that we've dispersed. Seeing also purchase orders and I've come from a background of a school agency has, I can't say the word right now, Alfred Unified School District. I worked for twenty three years in the accounting office and our purchase orders were detailed. It would tell how much, what quantities we bought, the item itself and how much it's gonna cost us for that item. Very detailed as it went down.

But then I look at our city records and they don't give much detail. So, I'm wondering if, why isn't there much detail order because when you get audited, the auditors will want to see what the item is and if you think about if an audit, if they pick, let's say from two or three years back to see if the procedures are still being followed, won't be able know what that item was, what was it for, does the name and amount of money doesn't really cut it and if the purchase order doesn't give detail, how is that gonna be able to be audited? I'm just thinking from a financial standpoint, we have to be more detailed in our purchase orders so that if we ever get audited, we'll be able to go through a clean audit and not guessing what this is or what that is. Thank you. I just had to speak and say that.

Thank you. Thank you for that. Alright. We don't see any callers wishing to speak on item one here on line. So we will close public comment and we will move on to our workshop today. Item number two, this is our fiscal year twenty twenty six, twenty twenty eight biennial budget workshop. I think the city manager is gonna kick us off today. Thank you.

Yes. Thank you, mister chair and council members. It is with great pleasure that I present for your consideration the fiscal year twenty six, twenty seven, twenty seven, twenty eight budget for the city of Riverside. I did wanna open it mostly to thank the people behind me, Sergio and Peter, Julie from the finance department because they have been working on this for over six months recognizing that a likely decline in revenues in a very very unpredictable environment would make this a difficult task. So, it's been a collaborative transparent process with every department involved, every department offering up suggestions, ideas, where can we trim, and it is because of that effort that I'm very proud of this team and what they provided to you and we're very anxious to get your comments, suggestions as we are starting through the process.

We've already presented once to the Budget Engagement Commission. We presented last week to the RPU board who voted to approve their portion of the budget as written, but we'll also go back again once more. There's lots more public meetings to come. No, and you'll hear this in the presentation, in deciding where to trim, we are very purposeful. Those ideas again came from the department and the number one consideration is how do we make sure we minimize any impact on the public, the people that we serve.

We hope we have achieved that and now, I will turn it over to Sergio who will walk you through the process but know we've got plenty of folks here from the departments to answer any particular questions which they may be a specialist. Thank you. Sergio? Good job. Thank you.

Hi. Good afternoon, chair, council member, sir Dragler, deputy finance director. So this budget workshop is intended to provide you an overview and also initial opportunity for feedback for the general fund and measures z budgets as part of the proposed 2026 through 2020 biannual budget. Now there are about 52 slides as part of this deck, so I'm going to go through a few rather quickly just in the interest of time and to make sure we also have an opportunity for robust feedback and discussion. So starting off, which I know you are all very well familiar with our budget development process, but the budget team puts together a baseline budget that adjusts revenue assumptions and then also expenditures for current service levels.

At the same time, we started working with departments to put together list of critical needs. And then also, given where we were at with potential deficits, putting together a list of cost reduction options. When we also engaged the community in October, did some community forums throughout the city, subsequently also released an online survey to gather additional feedback. And then over the course of the past four months, just really working with the departments and the city manager's office to finalize a proposed budget that we presented to BC a couple of weeks ago. We're doing some additional engagement with other boards and commissions this month.

And then ultimately, we'll be going to full council with proposed in May and then hopefully getting adopted in June. This next slide, just really at a high level in a very simplistic manner, captures the strategy for the development of the preliminary budget. First, we determine the level of resources needed to maintain the current levels of service. Second, we compare the revenue and expenditure estimates developed as part of baseline analysis to see what could we actually afford. And then third, we work with departments to identify the priorities and needs to adjust the baseline with cost reductions or with increases and also, at the same time, being mindful of fiscal limitations and then including potential cost reductions.

So the city does perform community engagement to gather input from residents and business owners as a mechanism to foster both transparency and also inclusivity in the budget process. So the city did hold six community forums throughout the city and then had a survey online for about one month. The forums themselves were attended by about 50 residents, and then the online survey was completed by about two twenty seven respondents. There's an attachment as part of your packet that has a full detail of the feedback that was provided both in the online survey and then also the community forums. But I'll just make a couple notes at a high level.

As part of the survey, about 52 of the respondents identified that they were either somewhat satisfied or very satisfied with the quality of city services. When asked about areas for increased funding or decreased funding, the area that got the most kind of votes for increased funding was infrastructure. And then the area that got the most votes for decreased funding was culturally cultural and quality of life programs. And then we had a question on preference for revenue generating options, and the one option that did receive the highest level of votes was increase for fees for services. As part of the forums themselves, we strategically selected three themes and held two meetings per theme.

And one of the exercises as part of those forums was the attendees were able to vote on programs that were part of that theme. And so for public safety, PSET was a program that received the highest level of votes. For parks, library, and museum, park safety received the highest level of votes. And then for public works and community and economic development, street services received the highest level of votes. So starting off at a high level, the city is facing potential multiyear deficits due to both the rising costs and also slower revenue growth.

However, there is still a significant amount of uncertainty, and the forecast does get murkier the further out you go into the five years. So we are recommending taking some proactive measures now to balance the potential multiyear deficits with a strategic mix of solutions, and we'll walk through those in further detail. But given the uncertainty, we also want to be flexible in our approach. And if things do turn out to be better than what we are projecting, then we could also explore bringing back some of the reductions either midyear or as part of the second year of the budget. And all that being said, it is definitely not doom and gloom, and we still hold a very strong position with very strong reserves, that most of which we are remaining untouched as part of this proposal.

And to that last point, this slide here just demonstrates our current reserve levels with our policy reserves being $76,440,000 and that's 20% of the budget. And those would remain untouched as part of this proposal. We also have an additional about $161,800,000 in other reserves, and most of that is tied to pension liabilities. So as part of proposal, we are recommending to: one, use the unassigned balance you see here, which is, in essence, the remaining balance after fiscal year twenty four-twenty five after transfers to reserves. We also recommend to continue using the Section 115 Trust set aside as we have been using the past several years and then also starting to use the Section 115 in the second year, and we will go over that in detail.

In terms of the Measure Z, close to $30,000,000 in reserves, and that's when including the $5,000,000 policy reserve and that as part of the proposed five year plan would be drawn down over the five years. So we're going to show a few different viewpoints of the general fund and Measure subsequently get into the details of deficit and then also the proposed way to solve deficit. But just starting off at a high level, purpose of the slide is to show we are proposing a balanced budget across all five years with incremental growth across all five years. This next slide just breaks down at a high level the city's general fund revenue, and you could see property tax and sales tax combined are over half of our revenue. And so when there are changes in the economy that impact purchasing of homes and purchasing of goods, that will have can have a substantial impact on our total general fund revenue.

The general fund transfer is the next largest portion at about 16%, most of which is tied to electric. The water GFT, which is 3%, we are recommending to continue escrowing pending final resolution of the litigation. And then there's various other revenue sources that ultimately make up that difference. Just a high level breakdown of growth in revenues by category from prior the current year to next year, the first year, and then to twenty seventwenty eight. So you'll see that most revenues are continuing to grow, but at moderate levels.

Bottom line in year one, projected growth of about 0.3% and then 5.3% in year two. But when you remove some of the onetime revenue changes, if you just count for ongoing revenue, our growth is about 3.6% in year 13.9% in year two. This next slide just has a breakdown of expenditures by category. And what you see here is personnel is about 71% of our general fund expenditures, and it goes up to about 77% when you include UAL. So when there are changes in the budget that impact salaries and impact personnel, that could have a big impact on the general fund budget.

And then non personnel is about 17.6%. And then there's various other categories that make up the difference. In terms of expenditure by program area, so public safety is the largest share of general fund at about 56%, followed by community services, internal services and then some other expenditures. This slide here just has that program view broken down by department. So you can see, you know, in public safety, police having the higher share than fire.

And then community services, you know, parks and public works having among the highest share and then across the internal services, so just a high level breakdown prioritization. This next slide provides a breakdown of the general fund expenditures by department with year over year growth. And so the top line on this one is, although we are proposing some reductions as part of this budget, which we will get into, most departments' budgets are actually still growing in the first year and in the second year, with Police and Fire having the largest growth at about $15,800,000 combined in year one and then an additional $5,000,000 in year two. And then there are some departments that do have some decreases, and that is due of both some of the reductions that are being proposed. And then also as part of the last budget, there were some onetime expenditures that were approved that would be dropping off in 'twenty six, 'twenty seven.

So that artificially brings it down because they were intended to be onetime expenditures. So this next slide just demonstrates the year over year general fund growth by category. And so a couple of things I'll point out on this one. So personnel, you know, we referenced earlier that it's about 71% of our total general fund budget. You'll see here personnel growing at 3.3% in year one and then going to 5.9% in year two.

So, you know, which is one of the areas of caution is if the personnel expenditures grow at higher rates than the revenue growth, then that could present additional future challenges in the out years. For UAL, although you'll see high percentage changes there, we do have a strategy to how to address the UAL with the 115 Set Aside and the 115 Trust, and we'll get into those detail as well. And then some of the other categories like non personnel that have decreases, that's mostly tied to some of the proposed reductions that we will be talking through. This next slide has a just very high level overview of Measure Z. And Measure Z revenues have lagged behind general fund revenues in terms of growth.

In fiscal year 'twenty three, 'twenty four, it was the first year that we saw Measure Z revenue decline at about 2.5%. And then in 'twenty four, 'twenty five, this last fiscal year, we also saw a decline. But looking forward looking ahead, we are projecting some moderate projected increases. In terms of expenditures, a couple of things to note. So as part of the last final budget, Council strategically increased expenditures for the first two years to draw down on the large fund balance that we had in Measure Z.

But the intention was to bring down after drawing down on the balance, to bring down the expenditure levels closer to the revenues to align every fiscal year. So one of the reasons for the decrease is that intended decrease in expenditures as originally planned in addition to some additional expenditure reductions that we are proposing as part of this budget. And this is just that similar as in the general fund view of Measure Z broken down by department. This next one is broken down by program area. So what you'll see here is public safety, 72% of Measure Z.

So on the general fund, 56%. Measure Z, 72%. So a much larger share of Measure Z expenditures do go to public safety, followed by community services and departments. And then this has that same programmatic breakdown by department. And one thing I'll just point to here, the Measure Z to general fund service support transfer, that it was intended help offset increased costs in General Fund for public safety.

So we do count that as part of the public safety category. This next slide here just breaks down the growth by expenditure category in Measure Z. And just one thing to point out here, personnel costs, those are increasing, and that is primarily due to public safety, which is the largest FTE count within Measure Z. But here, as kind of pointed to earlier, personnel is a lower share in terms of the Measure Z compared to general fund. So ultimately, it does not have as a large impact as it does in the general fund.

And this to that point, this kind of shows that percent breakdown by category. So you'll see here in Measure Z, personnel is about 32%. The one thing that we always look at in terms of Measure Z is where there is potential flexibility to adjust. And so if you combine personnel, debt service, UAL and the general fund support transfer, that equals about 70% of Measures Z expenditures. And we consider those to be generally less flexible.

So there's only really about 30% of current Measure Z expenditures that we consider to be more flexible. Next slide here really just breaks down the FTE combined general fund and Measure Z with the related personnel costs. We're really not recommending many FTE changes. One of them is fully funding a fire marshal that was previously approved as part of the current budget. And then we are proposing to add four new FTEs to the museum budget in the second year in 2728, and that's tied to the reopening of the new main downtown museum.

Alright. So now getting into the deficit. So how do we get to a deficit? In June 2024, Council adopted the last biannual budget, and that budget included a five year plan. That five year plan was balanced.

So one thing that we did is we compared what changed from that balanced five year plan in our projections to what changed now. And what you'll see is we have experienced both slower revenue growth and then also higher expenditures, and that's what changes part of the forecast. So when you compare the revenues, we are lower by $8,100,000 now in 'twenty six, 'twenty seven than what we projected before. And then our expenditures, we are higher by $19,000,000 in 'twenty six, 'twenty seven than what we projected as part of the last biennial budget. So combined, twenty seven point one million deficit in year one, and then that grows in year two.

So just a couple things to point out here. Both property and sales tax, just a little bit lower revenue growth. For UUT and franchise fees, cable was one of the largest drivers with less residents going to cable. That decreases the revenue there. For license and non developer permits, business license tax was the largest driver because we had an assumption related to discovery program that did not fully materialize to the extent that it came in at.

In terms of expenditures, among the largest drivers is payroll, health and benefits and the UAL, so personnel related. Then for workers' comp and general liability, council does have a policy to maintain 50% of estimated claims and liabilities. And so that is in order to be able to get us to that 50%. On the positive side, in terms of special fund subsidies, you'll see that going the other way where we're subsidizing a little bit less, and that's mostly tied to the convention center that is bringing in a little bit more revenue. Now if you take a similar view on Measure Z, even though Measure Z is a little bit different because in Measure Z, we were strategically drawing down on the fund balance.

But under a kind of same comparison point, you'll see a similar trend where revenues were down, so by $5,200,000 in year one as the expenditures are up mostly personnel related, so about $9,800,000 in net deficit compared to what we were in the last proposed budget and then 12,400,000 in year two. So staff are proposing a multipronged approach to address a projected deficit, and this includes a mix of both a onetime and also ongoing solutions. And this approach was developed under a framework that protects core services that strategically phases reductions given that there's higher deficits in year two, some of the reductions that may be a little bit more painful, starting those in year two rather than year one, maximizing some onetime solutions, and also, at the same time, trying to minimize use of reserves and that leading to helping maintain some long term fiscal sustainability. So in terms of how we are proposing to solve the deficit, one area is cost reductions. And as Mike alluded to earlier, we did collaboratively work with the departments that had an open and transparent process with departments where they helped identify different areas to look at.

And so we took a couple of different steps. One is reviewed expenditures that historically generate some savings and then also evaluate where there are reductions that could be implemented without a significant impact in core services. And that includes strategically keeping some positions vacant. So total, when you combine General Fund and Medrissy, about $17,900,000 reduction year one, 22,200,000 in year two. One thing to note on the reductions is, in most cases, programs are still receiving budgets that are higher than historical levels even with these decreases.

And so as part of the last biannual budget, there were large increases or some large increases because of anticipated revenue. So we are, in essence, with some of these reductions, just going back to pre-twenty twenty four biannual budget, going back to more normalized historical levels of expenditures. Another strategy is using the unassigned fund balance, about $9,500,000 and that allowing us to not have to do further reductions to the budget. In terms of a general liability trust fund, so we have a methodology where all funds contribute to that trust. And there were a few years where there were supplemental transfers made to the trust from general fund and Measure Z in order to get to 50%.

And so in those cases, we did not allocate the equivalent share of cost to the other funds. So this one time true up allows us to, in essence, have those other funds pay their share. And then for a one time, the general fund would not have to contribute that $2,400,000 Also recommending a change to fees and charges to account for CPI, and we would recommend to put that as part of code where it would be an automatic increase in future years to most fees, which is consistent with how many other municipalities do it. And then also Section 115 Trust, and we'll go into that one in a future slide. So really just kind of high level here, purpose of this is showing that we are really living within our means, making close to $18,000,000 reductions in the budget, about 38 positions being maintained vacant, and all that while still making some critical additions to police, fire, claim liabilities, accounting for inflation costs, and then also additional required funding like our County Animal Service contract increase.

This slide here just breaks down those cost reductions by department. And so just kind of one thing to point out here, although you'll see the Police Department has among the highest dollar amount cost reduction in terms of percentage of budget, it's 0.8% of the budget, which is the second lowest after fire. And most departments, with a few exceptions, do have reductions under 4% of their respective budget. When looking at Measure Z, for Measure Z, you definitely will see a higher percentage of budget compared to the General Fund just given that Measure Z is a lower amount than the General Fund. And then there were also some additional reductions needed to be made there.

So going to Section 115 trust. So the intent of the trust was, in essence, to help smooth out general fund payments when we would anticipate years of highest increases in the combined UAL and pension obligation liability costs. So that blue line that you see is what General Fund would need to pay if we would not have this trust. And then the orange line is under the current budget proposal, what we would be paying. So we're smoothing out the cost.

Our initial goal was to get to $100,000,000 in the trust, and we would be reaching that goal for the general fund by next year. And under our proposal, we would begin drawing on that trust starting in fiscal year twenty eight, so in the second year of the budget. And the current balance of the trust, as you could see as part of the graph, will take us all the way through those years that we would otherwise see the peak, which helps offset about $11,000,000 on average annually. And then even though we did have to propose some cost reductions, there were some areas where there were critical needs to augment the budget. And so here you'll see a breakdown by department, and we'll go through a few examples as we get into the respective departments' budgets.

So the next few slides, and I'll probably go rather quickly on them, but it's breakdown by department for general fund and Measure Z. And we just kind of highlight some of the more significant changes, but there are attachments within your packet that have all of the detail of all the cost reductions and then all of the cost increases. So starting off with the city manager's office in the first year of $5,130,000 budget. There are some reductions proposed that which includes savings in personnel for maintaining vacancies, reductions in funding for as needed contracts, and then also reduction in funding for travel and meeting expense. For city clerk, in the first year, about $2,370,000 budget.

And there are some proposed reductions here as well associated with savings from a lease base and also a contract and the reduction in funding for annual board and commission reception, which would still be held but just at a little bit of a smaller scale than is currently held. For the Office of City Attorney, dollars 5,940,000 budget in the first year. And there are some proposed reductions associated with personnel savings. And then in the second year, some proposed reductions related to quality of life programs. For marketing and communications, dollars 2,760,000 budget in year one.

There are some proposed reductions, one related to translation services. The one thing want to make a specific point on this one is that this is to account for annual savings they've been having in the translation services budget. So it should not result in any service impact to translation services, just more so truing up to what actual expenditures have been. And then marketing is one of the examples of some extension of funding. So there were previously limited term funding provided for various efforts, and so what we are recommending here is to partially extend some of that previous limited term funding, about $430,000 in the first year, and that's tied to the Visit Riverside campaign, the Riverside TV content curation, city branding initiatives and also street pool banner and flags.

But even with this extension, it's at a lower level than what is currently in the current budget. Going on to human resources, dollars 6,280,000 budget in first year. The proposed reductions include personnel savings from maintaining vacant positions, decrease in the education reimbursements, and citywide training. But in those, they would still maintain amounts higher than what were included before the last biennial budget that had increases for those two related programs. And then for the Office of Inspector General, you know, formally putting that into the budget.

For general services, 8,630,000 proposed in year one. There are proposed reductions in citywide deferred maintenance, about $1,000,000 But even with that reduction, the Measure Z deferred maintenance would still remain at similar funding levels as before this last biennial budget. Also proposing reduction in nonpublic safety vehicle replacements, still maintaining about $600,000 which is this was a new program added as part of the last budget, so still has more funding than previously, which was zero. And then moving on to finance budget. So about $10,980,000 budget in year one.

There are some proposed reductions here related to professional services and ad hoc contracts, a reduction in printing of the budget book, which is now available digitally, so no longer need to be printed for libraries, which, you know, we checked and doesn't appear that folks have been checking out the budget books. There's also proposed $50,000 one time increase associated with an investment manager services contract that we entered into this year, which has one more year of that contract. Moving on to IT, dollars 17,320,000 proposed budget in year one. There are reductions associated with savings from various retiring systems or software reduction in technology replacement. For Measure Z technology funding as a whole, both software and replacement, we'll still maintain amounts that are greater than what we provided before this last bi biannual budget.

For housing and human services, dollars 8,920,000 budget in year one. There is a reduction in contracted services and also maintaining two outreach worker positions vacant, both in the PSEP program. But one thing we'll note is that even with this reduction, the total PSEP budget is still higher in the proposed budget than it is in the current year budget, and the amount maintained for contracted services, for professional services is still higher than the amount Citi has spent over the past few years in PSET professional services. Moving on to community development, 18,670,000 budget in the first year. Reduction in funding for various professional services and also maintaining vacant positions.

The budget does include extension of a previous limited term funding for economic development, marketing and implementation of about 125,000 Then going to the police department, dollars 167,480,000 budget in year one. There are some proposed reductions from vacant dispatcher positions and also vehicle replacements. Given the deficit does grow in the out years and as a percent of budget, the police department had a lower level of reduction, we are proposing that there would be an additional $2,000,000 unallocated reduction in year two. And so to the extent the revenue picture does not get better than as we present the second year of the budget next year, then the police department would need to come up with where they would reduce that $2,000,000 and you'll see something similar in the fire department a little bit later. For police, there was also proposed increase tied to overtime and then also increased cost to participate in the county public safety communication system.

So moving on to fire, 91,590,000 proposed budget in year one. Proposed reductions from maintaining non firefighter positions vacant and also vehicle replacement. For replacement, the proposed budget would still be higher than the previous budget and, you know, similar to PD unallocated reduction in year two, but it would be 500,000, whereas in PD, it's 2,000,000. And then for fire, there also were various critical needs that we are recommending to support at about $1,100,000 and that includes cardiac monitors, PPE, physicals for firefighters, and then funding for communication system licensing. So moving on to public works, 35,940,000 proposed budget in year one.

There are proposed saving reductions from savings of maintaining various positions vacant, reduction in contract guard funding. The one correction here is it actually should not result in a number of decrease in the number of crossing guard locations based off the numbers, in essence, should kind of more or less true up to what actual costs are. And then also reduction in Measure Z pavement funding, which we will get to in this next slide in a little bit more detail. There's also increased funding provided, and that's in large part due to new animal service county cost for the contract and then also partial extension of previous limited term funding for irrigation supplies, repairs, and replacement. So this slide shows the historical view of the pavement program budget going back from twenty twenty one-twenty two through the proposed twenty six-twenty seven and twenty seven-twenty eight budget.

So what we're trying to show here is even with the proposed Measure Z reductions in 'twenty six-'twenty seven and 'twenty seven-'twenty eight, Public Works identified that they could allocate a little bit more of their Measure A allocation in those first two years to partially help offset. And we're still finalizing that last CDBG number. But assuming that comes in at a similar level to what had been provided the past couple of years, then the proposed budget should remain at similar level that we have in the current year. So even though there's a Measure Z reduction, partial increase in Measure A that could help offset from a bottom line program perspective, still trying to maintain it as whole as possible. Moving on to library, dollars 14,440,000 budget in year one.

Here, proposed savings from maintaining strategically closing several libraries on Sundays, which my understanding, has just started but still maintaining, I believe, three open on Sundays. There's also a proposed extension of previous one time funding related to the purchase of books and materials, about $500,000 For Parks and Recreation, 38,080,000 proposed budget in year one. There are various reductions here, including citywide and ward events, contracted security services, parks capital improvements maintaining certain recreation positions vacant and also some reduction in capital expenditures related to Measure Z senior and disabled program. Important to note that even with these reductions, in most cases, the amounts maintained are still higher than they were before this approved biannual budget. And then going on to Museum, dollars $5,660,000 budget in year one.

Some proposed reductions for maintaining positions vacant. And then also proposed increase in funding in '27, '28, about one point four and four FTEs, and that is to support reopening of the new main downtown museum. And then going to the mayor's budget, 1,370,000 budget, and this does include a reduction in the mayor's travel funding that was allocated as part of the current year budget for big city mayors and U. S. Conference mayors.

So it reduces down to about $34,000 so it's about $10,000 less than what is in the current year budget. And then city council, no major changes other than the kind of baseline personnel and CPI changes. And with that, you know, we, of course, have all the departments here as well as myself to be able to answer any questions you have.

Alright. Thank you. You did it under time. You may have done this presentation a few times. Nothing like getting full of lunch and then coming to hear about numbers. Thank you for that. We we have no callers on the line and I don't see any cards. And we know that this of course is one of the many steps to make sure that everyone's aware of the budget coming down the line. You had community meetings. We've had budget engagement commission. So I will turn to the colleagues on the dais here for any questions, comments or thoughts. And I'll start with councilmember Falcone.

Thank you. Thank you, Mr. Chair. Mainly, it looks like mainly comments here as opposed to as opposed to questions. It's it's very thorough, so thank you for for that presentation.

And then, of course, for anyone at at home that would like to go line item by line item as as I've been doing, of course, it's it explains in more detail as as you shared. Few few things, I mean, of course, I hear everything that was said today Sergio. I'm just still overall concerned about cuts in particular to a lot of deferred maintenance and facilities and public works, general services which is where I always have my greatest concern just because as our survey alluded to and that is exactly what the residents want us to be spending money on. If that means then, I know everyone has to give a little, we can't always have everything but if that means that other departments make greater cuts to preserve the funds in general services and public works, think that's what really needs to happen and so that's really where I agree with you know probably 90% of this presentation just concerned about particularly public works and general services. And I really think when I look at when I look at the line item and I know it's relative because every budget is not the same in terms of size but public works is cutting the most by a large margin, $3,500,000 from public works.

While I know that their budget is different than finance, it's different than HR, it's still just still it's a large it's a large cut there and I think that sends a message to to our residents and so I I have concerns about that. The I I do though commend I wanna talk about particularly travel money and I do commend the Museum of Riverside, the city manager's office and the mayor's office for cutting travel because I think at a time when, we are making cuts and a time when we are going to be going to the voters to ask them what they think about an extension of measures even we can't afford to fund our fire department, that for us to be traveling or or using any kind of travel money I think is is wrong. So what I would urge is that and including the city council because I think it's also wrong that we there's no cuts to the city council budget that every department needs to cut their travel training conferences by at least 50% preferably 75%. I'm willing to do that with my travel budget even though it's very small and fairly insignificant.

I'm willing to cut it 75% because we should not be Our job is here at City Hall and we should not be traveling and and going around on the taxpayers dime when we're asking the voters to consider, upping measures z or other things, to to fund our fire department and other needs. And so, I I recognize it's small. It was small for the museum. Think $55. It was fairly small for the mayor's office, 34,000.

But I think it sends a message to the residents that we have our priorities right. That we recognize that we are here at City Hall working and doing their business is what they put us here to do. So supportive like I said of the majority of all this, not supportive of what's put forward for public works and general services. But and really think that city council should cut our own budgets as well again in a good faith measure. So that's all I have to say for right now, but may have more later. Thank you.

Alright. Thank you. Yes. The, you know, as we're going through the budget process and, know, we're looking at doing these one time cuts to balance the budget for the next two years. You know, as we see, the the biggest driver of this is increase in personnel costs and pension costs.

That's the biggest contributor of what is causing this as well as reduced revenues projected. And it is one thing to say we you know, we're cutting these onetime services, but where is that gonna leave us in two years from now? What are we gonna do to resolve the structural issue that we have where personnel costs are growing faster than our revenue revenues costs are growing? And, you know, you can cut your way a little bit, but it's not really fixing the issue. It's just a it's a Band Aid on a bigger issue.

And that's where it comes that we need to increase revenues to resolve this issue. And and that's where, you know, we're constantly focusing on on growing our jobs base, our tax base, property sales tax base. Those two sales tax and property taxes are two contribute biggest contributors to our general fund. Right? And small investments to boosting that revenue means millions of dollars in the city budget, and that solves a lot more problems than cutting smaller smaller things, one time things.

And so while I do appreciate this is strictly a fiscal budget as far as looking at how do we solve and how do we live within our means. I think it's important that we also identify what are we gonna do to fix the structural issue that lies underneath it. And that is, you know, obviously, take a look at our at our personnel cost, but how do we increase the revenues to start matching that growth rate. So that's kind of just more of a general comment but that's kind of underlying theme is why I picked up on it. Thank you.

Alright. Thank you all. Great comments. I think the presentation pretty much covered it all. We have seen this a few times and it's always that delicate balance of where do we make the cuts strategically. There is only a few ways to balance a budget. You can increase revenue, decrease expenses and restructure debt. But I think this has gotten us laser focused. I do hear my colleagues comments and it is important I think for us to remember and keep in the forefront. I think staff have done a great job of that and that's looking at any of our deferred maintenance and capital renewal plans to make sure that we're keeping the most egregious sort of offenders out at the forefront to make sure that those costs don't cost more down the way.

But and I hear from Robillard, don't want to cut your revenue generating capacity. So as long as we are strategically investing and sometimes that means spending money to make money, attract business to attract you know, work here, employees here. So I think it's a delicate work and you all have spent six months doing it. So thank you for that. But we'll just keep trying to make sure we keep the things that we're hearing from our residents out in front is the most important. We did get a speaker card even though we closed public comment. We should hear it. So I will call up April Glatzel, please.

Thank you. Hope everybody's doing well today. So I have two questions regarding the budget presentation that you presented. I can't remember your name. I'm very sorry. Sergio. Sergio. On the first one under the screen that said why the city is facing a general fund deficit, It said my question is why did the health and payroll benefits more than double from one year to another? That's the first question. Do you want to answer that first or do you want me to

We'll just take the comments and then we'll see if Okay.

And then number two, under public works, it said, increase animal service program costs due to new county contract went from 1,700,000 to 2,400,000. Just curious what the new contract is all about. Thank you.

All right. Thank you. Sergio, you probably have the answers for most of that.

Yes. On the payroll held with benefits and so there's approved MOUs that were approved by counsel this past year for, I think, all the bargaining groups. And so we include those assumptions of what were approved over those three years. And so you'll see kind of that growth in those three years. And that's in addition to the increased salary growth that you'll see on the natural for kind of most staff.

If you're still within your range of your classification, then you could kind of get that 5% bump up until you hit that max range depending on where you are. So the combination of those two factors are what's causing that continued out year increase. So that's, you know, just kind of high level on the personnel. The other one, the county animal service contract cost. Yeah. So contract that was entered into with the county in 2025. And so we're we're already starting to face those costs in the current year. So now we're just building that into the budget in accordance with contract.

Great. Council member Wood.

I'll just add, but the, the county contract.

Oh, yeah. Thank you. We'll reclose public comment. Thank you for that. Thank you. See this while we heat the attorney's office here. Thank you. We'll reclose it. Now we're getting to our questions. Thank you, sir.

And just for reference on the on the county, contract, the county passed a new, rules where they are no longer a no kill shelter, and so that increased their cost significantly. Yes. They are a no kill shelter. And so that increased their cost significantly because that that that's a lot more costs are involved with doing that. The city of Riverside is the biggest user and contributor to the animal shelters countywide, so we had the biggest increase in our revenue costs as our proportion of what the overall costs were. So that's kind of what drove that that cost.

Alright. I think that pretty much gets added. Yes. Edward, please.

Yeah. Edward Enriquez, assistant city manager. I think I wanna clarify something that the speaker had mentioned and I think I heard this correctly. She said that her payroll cost and benefit cost doubled. Is that what I heard her say? I just want to clarify that there's no way that they doubled because we'd be looking at tremendous issues if that occurred. I think there is there are increases, but not to that level. There's no way that our costs double. So we can clarify that for you after, but there's no way that the overall costs have not doubled in terms

of I

just want to clarify that.

That would be a big jump if we did that. Yeah, we'll see if we can find that but we'll get back to you on it as well. But no, I appreciate the conversation. I don't think, thank you all the staff that are here and all the difficult work that we do.

Mr. Chair, just would like to know for the education of the public what maybe process. So now, so it's come to the finance committee. What are ways that the public can remain involved in this process moving forward?

Right. So there are a couple more steps moving forward. So right now, we're taking the budget to the different boards and commissions. So the museum will get to see it, library and then parks. So if there's any kind of comments you have related to those three sections, then that would be a good place to do it.

Then going into May, we will go back to the BEC, the Budget Engagement Commission, with the proposed full budget. And so that would be a good opportunity for members of the public to come to the BEC and provide public comment. Then subsequently, we'll be coming to the full council also in May with the proposed budget. And that will be another opportunity for members of public to come to the chambers and provide comment. Then what we'll do is after we get all the feedback from the proposed budget meetings, then we'll make any final adjustments to take the council in the final adopted budget for June.

So that's the goal, you know, gather additional feedback through these different board and commission meetings through May, and then any kind of final changes would be included into the the June proposed budget.

Alright. Yeah. And there's a I think there's a calendar in the report as well. So that's helpful. All right. Any other questions? If not, we'll move on to the last item that would be items for future consideration by this committee? No? Alright, then we will adjourn at 01:51. Thank you all.