10 Staff Report - Operating and Capital BudgetsiowN of MEETING DATE: 05-18-09
ITEM NO:
t°s an~os COUNCIL/AGENCY AGENDA REPORT
DATE: MAY 14, 2009
TO: MAYOR AND TOWN COUNCIL/
CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY
FROM: GREG LARSON TOWN MANAGER/EXECUTIVE DIRECTOR "PX
SUBJECT: OPERATING AND CAPITAL BUDGETS
A. CONSIDER THE TOWN OF LOS GATOS PROPOSED OPERATING AND
CAPITAL BUDGET FOR FISCAL YEAR 2009-2010
B. CONSIDER THE TOWN OF LOS GATOS PROPOSED CAPITAL
IMPROVEMENT PROGRAM FOR FISCAL YEAR 2009-2014
C. ADOPT RESOLUTION FINDING A SEVERE FISCAL HARDSHIP WILL
EXIST IF ADDITIONAL LOCAL PROPERTY TAX FUNDS ARE SEIZED
AND ADDITIONAL UNFUNDED MANDATES ARE ADOPTED BY THE
STATE OF CALIFORNIA
RECOMMENDATION:
1. Consider the Town of Los Gatos Proposed Operating and Capital Budget for Fiscal Year
2009-2010
2. Consider the Town of Los Gatos Proposed Capital Improvement Program for Fiscal Year
2009-2014
3. Adopt resolution finding a severe fiscal hardship will exist if additional local property tax
funds are seized and additional unfunded mandates are adopted by the State of California
BACKGROUND:
The Proposed Operating and Capital Budget for FY 2009/10 represents the Town Manager's
recommended comprehensive financial plan to provide services to the Town of Los Gatos given
limited resources. The Proposed FY 2009-2014 Capital Improvement Program is a
comprehensive five-year capital improvement plan identifying projects to construct and maintain
the Town's infrastructure.
PREPARED BY: PAMELA JACOBS
ASSISTANT TOWN MANAGER
NAMGR1PJacobs109-10 Budget109-10 Staff repurt,dac
Reviewed by: Assistant Town Manager/De uty Director Town Attorney/General
Counsel Cleric Administrator/Secretary Finance
Community Development
PAGE 2
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009/10
MAY 14, 2009
DISCUSSION:
Overview of Proposed Operating and Capital Budgets
The transmittal letter in the FY 2009/10 Proposed Operating Budget provides an executive
summary of the budget, including budget development principles and strategies, the prior Five-
Year Financial Plan, an overview of revenue and expenditure assumptions, and future challenges
affecting the Town's fiscal situation.
This staff report provides:
■ a summary of budget balancing actions recommended in the proposed budget
presentation of an updated Five-Year Financial Forecast
■ discussion of key issues addressed in the proposed budget and to be explored during FY
2009/10
discussion of the potential impacts of State budget actions on the Town's budget
■ a summary of the proposed Capital Improvement Program
■ information regarding the budget presentation to be made on May 18, 2009
The worldwide economic recession has directly impacted Los Gatos. For the first time in recent
history, revenues are down or flat across most categories. Most significant has been the multi-
year decline in the Town's largest revenue sources, including sales tax, property tax, and private
development fees and charges.
As detailed in this staff report and throughout the proposed budget, these revenue impacts
require adjustments in the Town budget totaling $2.7 million, approximately 8% of the General
Fund Operating budget.
Fortunately, the Town's past conservative financial practices and prompt action in response to
the economic crisis has positioned the Town relatively well to weather this current storm. Unlike
many local jurisdictions, the Town does not anticipate layoffs or severe public service reductions
for the next year or two, assuming there is an economic recovery within two years, rather than
continuing significant declines.
However, balancing next year's budget has not been easy, The most noticeable public impacts
will be limitations on new special projects and initiatives as well as longer response times for
non-priority calls for service and customer referrals. Health and safety response will take
priority over largely aesthetic concerns. Internally, the most significant impacts are a continuing
management pay freeze, workforce furloughs, and decreased management capacity to coordinate
special projects or further improve operating systems.
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MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009110
MAY 14, 2009
Of greatest concern, however, is the long-term fiscal outlook. Even with a modest recovery
starting in two to three years, continuing budget and service reductions are anticipated every year
for the foreseeable future. These future reductions will likely directly impact Town residents,
visitors, and businesses in significant ways. The inevitable loss of Netflix sales tax revenue and
potential infrastructure failure will only exacerbate these difficulties in the years ahead.
Nonetheless, the core assets of Los Gatos remain strong, including an enviable downtown, a
beautiful environmental setting, proximity to Silicon Valley, fundamentally strong real estate,
and an active and engaged population. Further, the economic crisis has not impacted those
special one-time projects with separate funding sources, including the new Police Operations
Building and Library, the General Plan Update, and new townwide sports facilities. These all
will enhance and preserve what makes Los Gatos so special.
Recommended Budget Balancing Actions
The proposed operating budget incorporates reductions in staffing and other expenses and
limited revenue enhancements totaling the $2.7 million necessary to balance the FY 2009110
budget. Attachment 3 is a listing of all the recommended budget balancing actions, which
include:
■ the elimination of nine full-time-equivalent positions for a cost savings of more than
$900,000;
■ other staffing, salary and benefit reductions totaling nearly $700,000;
■ reductions in operating expenses for a cost savings of approximately $600,000, and;
■ fund transfers and cost recovery fee increases totaling nearly $500,000.
In developing these recommended actions, staff considered reductions that would generate
ongoing savings while maintaining service levels to the greatest extent possible. In some cases,
alternative approaches are available to mitigate impacts on services; however, the community
will experience service impacts as a result of these reductions.
The impacts most visible to the public will be in Parks and Public Works, as maintenance
schedules and park opening times will be extended due to reduced resources and there will be
reduced capacity to respond to unscheduled customer requests. Staff will give priority to health
and safety issues, with delayed response to aesthetic concerns. Other impacts, including reduced
public counter service hours and management capacity, are discussed in the Issues for
Consideration section below.
Not included on the list are the limited recommended budget augmentations for FY 2009110,
which include continued shared funding of the School Resource Officer position with local
school districts and funding for two regional issues related to the new regional storm water
permit and to the Silicon Valley Regional Interoperability Project (public safety communication).
PAGE 4
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009/10
MAY 14, 2009
Five-Year Forecast
The Five-Year Financial Plan is an independent financial tool that is based on current and
projected costs and revenues. It is designed to be fluid in nature, allowing staff to build various
funding scenarios and test "what if' assumptions. Staff has updated the forecast last prepared in
January, 2009 to incorporate the FY 2009/10 budgetary adjustments.
The information presented in the forecast includes conservative estimates of revenues, based on
flat growth for FY 2009110, with low growth of i to 2% for most major revenue categories for
FY 2009/10, 3% for FY 2010111, and 5% for the following years which ass-unes some modest
level of recovery from the current recession. Fiscal Year 5 of the Plan explicitly include the
provision for a loss in sales tax revenue from Netflix for planning purposes only.
The expenditure forecast includes reductions of approximately $1.6 million in labor and benefits
costs and other operating expenditure reductions of about $600,000, which are recommended as
part of the proposed budget for FY 2009/10. FY 2011112 and beyond include significant cost
increases related to the expected increase in employer contribution rates (from 14% to 21 % of
"miscellaneous" covered payroll and from 33% to 42% for "public safety") to fund the 20% to
30% losses sustained by PERS in its investment portfolio in FY 2008/09. However, these
growing benefit cost increases are partially offset by the assumption of no COLA increases
beyond current contractual obligations.
The prior forecast that Council reviewed in the spring indicated an approximate $2.0 million
projected deficit in FY 2009/10. The proposed FY 2009/10 budget now projects a balanced
budget, eliminating the projected deficit for the upcoming fiscal year due to the reductions and
revenue enhancements recommended in the proposed budget. A deficit of approximately $2.4
million was projected for FY 2010111, the updated forecast now projects the deficit to be
approximately $1,000,000 due to the carry-forward adjustments recommended in the proposed
budget for next fiscal year.
The forecast continues to show ongoing challenges in the future. FY 2011112 projects a new
$1.3 million deficit, which must be proactively addressed unless the economy improves beyond
expectations. The forecast also includes no provision for a dedicated source of funding for
ongoing infrastructure needs. This means that the Town can expect not only service level
challenges for the fixture but also infrastructure challenges, barring a robust recovery in the local
economy.
PAGE 5
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009110
MAY 14, 2009
Town of Los Gatos General Fund
Updated Five-Year Financial Plan
FV 7 FV FV 4 FV 5
2008109
200940
2010/11
2011112
2012113
201.311.4
Account
Revenue Category
Est. Actual
Budget
Forecast
Forecast
Forecast
Forecast
4100
Property Tax
$
6.9
$ 6.9
$
7.0
$
7.2
$
7.6
$
7.9
4110
VLF BackfilI Property Tax
2.3
2.3
2.3
2.4
2.5
2.7
4200
Sales & Use Tax
j
8.7
8.7
8.8
9.1
9.5
7.7
4250
Franchise Fees
1.7
1.7
1.7
1.$
1.9
2.0
4251
- -
Transient Occupancy Tax-
1.1
1.1
1.1
1.1
1.2
1.2
4400
v
Business License Tax
1.1
1.1
1.1
1.2
1.2
1.3
4400
Licenses & Permits
1.$
2.2
2.2
2.3
2.4
2.6
4500
mm
Intergovernmental
0.8
0.8
0.8
0.8
0.9
0.9
4600
Charge for Services
2.0
2.4
2.2
2.2
2.2
2.4
4700
Fines & Forfeitures
0.5
OS
0.5
0.5
0.5
0.6
4800
Interest
1.8
X.6
1.6
1.6
1.6
1.6
4850
Other Sources
2.9
2.8
2.5
2.5
2.4
2.5
TOTAL REVENUES
31.5
32.0
32.0
32.8
34.0 =
33.3
_
~
Adopted Use of Reserves
1.3
1.0
0.7
0.5
0.5
0.5
4900
Fund Transfers In
0.6
0.5
.0.3
0.3
0.3
0.1
TOTAL R11N_EN>IJFS&'TRAN-SlfleuS
$
33.4
$ 33.5
$
33.0
$
33.6
$
34.9
$
33.9
Account
Expenditure Catcgory
1
Est. Actual
Budget
Z
Forecast
Forecast-
l~`orccasi
.371
Forecast.
5110
Salary
$
13.1
$ 13.8
$
14.1
$
14.4
$
15.1
$
15.6
5130
temporary Employees
0..6
0.5
0.5
0.5
0.5
0.5
5140
Overtime
0.7
0.4
OS
0.5
OS
0.5
5I70
Other Salary
0.5
0.1
0.2
0.2
0.2
0.2
5200
Benefits
5.7
5.8
6.3
7.6
7.8
8.0
6000
Supplies, Materials, & Services
5.2
5.5
5.5
5.4
5.6
5.9
7200
Orants & Awards
0.3
0.2
0.2
0.2
0.2
0.2
7400
Utilities
0.4
0.4
0.4
0.5
0.5
0.5
8060
Internal Service Charges
3.6
3.4
3.5
3.6
3.9
4.1
8900
Debt Service
0.9
0.9
0.9
0.9
0.9
0.9
TOTAL EXPENDITURES
$
31.0
$ 31.1
$
32.2
$
33.8
$
35.4
$
36.4
9900 Actuarial
9900 Reserve
9900 Transfer to OF Reserves
0.4
1.1
0.9
0.6
0.8
1.0
0.8
0.5
0.5
1.1
0.5
0.5
1.4
0.5
1.0
1.6
0.5
-
-TRi~NSFFRS
$
33.4 $
33.5
$
34.0 $
35.9 $
38.3
$ 38.5
REVENUES LESS EXPENDITURES
(1.0)
)
)
ONGOING SHOR`I'FAI,I: N41116/\TION
$
1.0 $
2.3
$ 3.4
NET REVENUES LESS; EXPITAJ)JTILJIZRE'S
$
0.0
$
(1.0) $
(1.3) $
(1.2)
$ (1.2
PAGE 6
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009110
MAY 14, 2009
Issues for Consideration
Following are a number of issues addressed in or raised by the proposed budget. They are
highlighted here because they may be of special interest to Council.
Management and Non-Management Salary Actions
The FY 2009110 proposed operating budget includes a $200,000 reduction resulting from a
salary freeze for management staff. Management staff is voluntarily foregoing a previously-
budgeted 3% cost of living increase and performance bonuses. This will be the second year in a
row with no cost of living increase for management staff.
A $250,000 reduction for non-management compensation is also incorporated into the budget.
Staff is working with the Town's three bargaining units to detennine which option they prefer
for meeting this targeted reduction. The options include reducing the level of cost of living
increases currently included in their bargaining agreements, taking unpaid furloughs from three
to five days in FY 2009110, or some combination of the two options. The unpaid furloughs for
most employees would occur in connection with national holidays, and non-essential Town
services (with the exception of the library) would be closed on the furlough days. Library,
dispatch and patrol staff would implement furloughs in a different manner.
Public Counter Reduced Hours
Introduced as a pilot program in March 2009, the public counter closure is recommended to
continue in FY 2009110. The reduced hours for public counters are Monday through Friday from
8:00 a.m. to 1:00 p.m. in Business Licenses, Planning, Building, and Engineering and from 9:00
a.m. to 4:00 p.m, in Police Records. The public counter closure has enabled staff to better
manage and prioritize workloads, and has not generated significant customer complaints.
Sustainability Initiatives
Staff will continue to focus on conservation, recycling, and sustainability initiatives throughout
FY 2009110, and is exploring two actions in this regard. The first is recycling services in the
Downtown. During the past several weeks, staff has been working with the Town's waste
hauler, West Valley Collection and Recycling, to minimize the litter and maximize recycling in
the Downtown without installing additional refuse cans or increasing collection frequencies.
Accommodating additional containers in the Downtown is difficult as the sidewalks are
relatively narrow and there is a general desire to keep the area clutter-free. Increasing collection
frequencies results in ongoing costs to ratepayers.
Following the national priorities of "Reduce, Reuse, and Recycle," the Town has initiated a
campaign to encourage consumers to bring their own mugs to local coffee shops rather than
PAGE 7
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009110
MAY 14, 2009
purchase coffee in disposable containers. Using the "bring your own bag" campaign as a model,
however, it is not likely that consumers will change their behavior in the short term. To augment
the "bring your own mug" effort, staff is working with the waste hauler to initiate the collection
of bottles and cans from clearly marked and strategically placed recycling cans that are smaller
than the existing refuse cans. Costs for the purchase and installation of the new cans are
estimated at $20,000. If Council concurs with this direction, staff will include funding for this
project in the final budget presented to Council for approval on June 1
The second effort is the exploration of using the General Fund Update fund to cover the costs for
a part-time, temporary Sustainability Coordinator. The coordinator would assist in the
development of sustainability plans, resource conservation strategies, and community outreach
and awareness of green practices as required for early and ongoing implementation of the
Environmental Sustainability focus for the General Plan Update. Current staff resources are not
sufficient or technically experienced to coordinate the Town's response to federal and state
legislation, community interest, and growing environmental challenges. A temporary position
would assist the Town in preparing for this critical issue as part of the General Plan Update
process.
Focus on Economic Vitality
Maintaining a strong, diversified economic base has always been an important goal for the
Town. In these challenging economic times, this becomes even more critical for the economic
well-being of the community. Accordingly, the proposed budget continues Redevelopment
Agency funding for the Economic Vitality Manager position and includes focused work effort on
the Los Gatos Boulevard plan and the North Forty plan. In addition, staff will continue to
partner with the Chamber of Commerce and merchants to maintain the vitality of the downtown
and neighborhood business districts. A new focus in FY 2009/10 will be assisting businesses in
the Town's Research and Development district to remain and expand in Los Gatos and
identifying new companies to locate in Los Gatos.
SupRort ofNon-Profits and Community Events, and In-Kind Donations
The Town`s proposed operating budget includes continued support of local non-profits and
community events through nearly $140,000 in direct grant funds. One grant request not included
in the proposed budget is from the Wildlife Center of Silicon Valley. For the past five years, the
Town has provided about $6,500 to the Wildlife Center for the handling of animals received
from people with a Los Gatos address (it is unknown how many of the people delivering animals
are actually Los Gatos residents). For the last three years, $2,000 of the grant has been paid
through the Town's contract with San Jose Animal Care and Services, leaving about $4,500 paid
directly by the Town. After last year's contribution, the Town advised the Wildlife Center to
apply for the $4,500 portion through the Town's grant process. The Center applied for
additional funding through this process, and also requested the $4,500 directly from the Town.
Due to the reduced funding available for community grants, the Community Services
Commission did not recommend funding for the Center, Staff also did not include direct funding
PAGE 8
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009110
MAY 14, 2009
of the Center in the proposed budget, as this request is one of many received from non-profits
and it is expected that these should go through the same process. Staff suggests that the Center
apply for funding through the grant process next year, and/or work with San Jose Animal Care
and Services to obtain additional funds.
The Town also provides in-kind donations through subsidized leases to three agencies: A Place
for Teens, the Los Gatos Museum Association and Los Gatos-Saratoga Community Education
and Recreation (LGS Recreation) at the following annual amounts (based on $3 per sq. ft. less
any direct rent paid by the organization):
The Venue/A Place for Teens 3,260 sq ft $ 97,799
LGS Recreation 6,479 sq ft $179,385
Tait & Forbes Mill Museums 5,160 sq ft $151,799
In FY 2009110, staff will explore additional partnerships with LGS Recreation in the areas of
senior services and Neighborhood Center services. It is expected that providing these services
through an effective partnership will enhance efficiencies and service levels while significantly
reducing Town costs.
Regarding special events, the Town has been tracking costs for the past several years.to
understand the costs associated with Town-sponsored, co-sponsored or non-Town events. For
example, the Town is a major provider of staff resources for the Holiday Tree Lighting and
Holiday Children's Parade, which have not been officially recognized as Town co-sponsored
events. Direct staff costs for the tree lighting are estimated at $1,600; direct staff costs for the
Holiday Parade are estimated at $25,000. These estimates include only expenses associated with
the events themselves and do not include planning time.
A significant change to a Town-sponsored special event is expected during FY 2009/10 when
coordination of the Music in the Park music series will be transferred from Town sponsorship to
a non-profit agency.
Management Capacity
A significant impact of reduced staffing over the past five years and proposed for next fiscal year
is decreased management capacity. The Town's management staff has traditionally served roles
as both managers/leaders and "doers," having responsibility to do substantial amounts of direct
staff work. With fewer employees, management staff often must absorb more direct staff work
as well as manage department or division services and projects. As a result, the capacity to
respond to unanticipated service requests or take on new projects is limited.
The proposed budget includes the identification of key projects in each department for FY
2009/10. These projects are in addition to the core services provided by the department to the
community on an ongoing basis. A list highlighting key special projects for next fiscal year is
included as Attachment 4. Given the large number of special projects on the departmental work
PAGE 9
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA .
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009110
MAY 14, 2009
plans, it will be necessary to reprioritize projects should new initiatives, projects, or analyses be
requested during the course of next year.
Ongoing responsibilities are also affected by the limitations on staff capacity. One of these
responsibilities is the management of board and commission meetings. These meetings require
staff resources to prepare for and conduct the meetings. With Council concurrence, staff
proposes to reduce the number of regularly-scheduled board and commission meetings next year
as feasible. While the work of the commissions is valuable, in many cases monthly meetings
are not necessary. Staff will discuss this idea with the commissions to identify an appropriate
schedule for the meetings. It is not expected that the schedule for the Planning Commission
would be reduced.
Revenue Enhancements
The proposed budget includes increases in or new fees and charges to recover costs for private
development and other user fee supported services, which Council approved in April, 2009.
Also included in the budget is approximately $25,000 in revenue expected to be generated from a
Tow Service Franchise Fee and a Taxicab Fee. Both of these fees will require separate
ordinance changes which will be the catalyst for Council consideration of the details for the
programs.
Donation Opportunities - FY 2409110 List of Town Needs
As part of the budget development process, the Donation and Solicitation Policy List of Town
Needs is updated to reflect goods, services, and other contributions that would help enhance
Town services, programs, and events. The attached FY 2009110 list (Attachment 5) has been
updated to include contributions that support the expansion of athletic fields.
State Budget Impacts
The Governor's FY 2009110 budget released in January 2009 included an expected budget gap of
approximately $42 billion, which the Governor declared as "the most challenging in the state's
history." Because of the length and depth of the current recession, state revenues have continued
to underperform and the state lacks funding to fulfill its current financial obligations.
The May Revised Governor's budget was released on Thursday May 14111, prior to the May 19ti1
special election in which six measures related to the state budget are before the voters. The May
Revised budget was released in the form of two revised summary budgets. One revised budget
portrays the state spending plan should the all six measures pass; the other shows the actions that
would be proposed if all the measures fail.
PAGE 10
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009110
MAY 14, 2009
provisions of Proposition lA (2004). This would enable the State to "borrow" up to 8% of the
ad valorem property taxes revenues allocated to all local agencies for the prior fiscal year,
resulting in a statewide impact of approximately $2 billion. Based on 2008109 estimated
property tax collections, the estimated impact to the Town in loss of property tax would be in the
range of $950,000 to $1,000,000 (including the property tax swaps for VLF and sales taxes) for
FY 2009110. Proposition IA stipulates that the Legislature must pass a law that would shift
these amounts, plus interest, back to the local jurisdictions within three years.
The property tax take must be approved by the legislature before it can be implemented. As its
status is uncertain, the loss of property taxis not included in the proposed FY 2009110 budget. If
a property tax take is sustained by the Town next fiscal year, sufficient funds are available from
the Revenue Stabilization Reserve to temporarily replace this lost property tax until it is repaid
with interest within three years by the State as required by law.
Both versions of the May Revised Budget included reductions to funding for statewide programs,
includng public safety and transportation. At the time of budget development, staff did not have
sufficient information to quantify specific impacts. The FY 2009/10 proposed budget resolution
provides flexibility to revise the adopted budget to reflect changes in estimates of State funding
of local governments programs like public safety (COP's Grant and booking fees) or
transportation funding (Proposition 42). If these resources are lost in FY 2009110, the Town will
need to further reduce services or draw down its reserves.
The proposed State property tax take will compound all local jurisdictions' fiscal challenges
resulting from the current severe economic recession. The League of California Cities is
suggesting that cities adopt a resolution declaring local severe fiscal hardship should the state
take this action. Staff is recommending that Council adopt the attached resolution (Attachment
6) to distribute to legislators and the Governor.
FY 2009-2014 Capital Improvement Program
The FY 2009-2014 Capital Improvement Program will also be presented at the May 10, Town
Council meeting. The five-year plan sets forth the schedule for street-related, parks and public
facility projects to be completed during this period. Only the first year of the plan is formally
adopted with fiends appropriated by the Town Council as part of the budget process.
Significant projects recommended for FY 2009/10 include:
Street Program Projects:
• Continued funding of approximately $1.1 million for street repair and rehabilitation.
• Continued funding of $150,000 for curb, gutter, and sidewalk repairs Townwide.
• Continued funding of $200,000 for retaining wall repairs.
• $25,000 for annual street restriping, $55,000 for storm drain rehabilitation projects, and a
$188,000 Caltrans grant funding for the Robert's Road Bridge.
PAGE II
MAYOR AND TOWN COUNCILICHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009110
MAY 14, 2009
Parks Projects:
Reallocated funding of $100,000 in State Park Bond funds from Monte Sereno - $87,000
for Town Plaza improvements and $13,000 for the Bachman Park Basketball Resurfacing
project. All projects using the Park Bond monies have been frozen by the State of
California until further notice due to the State budget situation.
Public Facilities Projects:
• Carryover funding of approximately $17.7 million for funding the new library project.
• Carryover funding of approximately $1.1 million to complete the new police services
building.
• New funding allocations for the Civic Center Site Improvements ($600,000), vehicle
canopy repainting project ($25,000) and $25,000 additional monies to the Town
Beautification project.
The challenge of finding a reliable ongoing revenue stream available for capital projects
continues to be a Town priority. Recognizing the realties of funding challenges and uncertain
local economic trends, the Town's Proposed FYs 2009110-2013114 Capital Improvement
Program continues a strategy of funding the Town's most urgent capital needs using prior fiend
balance allocations.
Budget Presentation
At the May 18, 2009 Town Council meeting, the Council will consider the proposed Operating
and Capital Improvement Program budgets. The review and discussion of the proposed budgets
will occur following the format outlined below:
Opening Comments
■ Operating Budget Overview
■ Operating Budget Highlights
■ Capital Budget Overview
Public Comment
Council direction
Town Manager
Finance Director
Town Manager
Assistant Finance/Budget Director
Public
Town Council
Any changes to the proposed operating and/or capital budget directed by Council and/or
identified by staff as a "clean-up" item will be included for Council consideration in the
resolution formally adopting the budget to be considered by Council on June 1, 2009.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required.
PAGE 12
MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA
SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009/10
MAY 14, 2009
FISCAL IMPACT:
The fiscal impact is presented in summary form in the Financial Summaries chapter of the
Proposed Operating and Capital Budget for FY 2009/10.
Attachments:
1. FY 2009/10 Proposed Operating and Capital Budget (Previously Submitted)
2. FY 2009 - 2014 Proposed Capital Improvement Program Budget (Previously Submitted)
1 Budget Balancing Recommendations
4. FY 2009/10 Special Projects
5. FY 2009/10 List of Town Needs
6. Resolution finding a severe fiscal hardship will exist if additional local property tax funds
are seized and additional unfunded mandates are adopted by the State of California
Manager's Budget Balancing Recommendations for 2009110 (based on departmental submissions)
(as of May 14, 2009)
ELIMINATED POSITIONS rSalarv plus overheadl I IMPACT PROJECTED BtIDGFT SAVINGS lannrox.l
1
Admin Svcs
Business License Tech (offset wl temp staff when needed)
0.75
50,000
2
Admin Svcs
Assistant to the Town Manager
1.00
157,500
3
CDD
Code Enforcement Officer (reassigned to Building Inspectors)
1.00
105,400
4
CDD
Associate Planner (restore when revenues return)
1.00
149,000
5
PD
Sergeant (return to prior staffing level)
1.00
230,000
s
PD
CSO intern
0.50
20,000
7
PD
Police Records Specialist (offset through Campbell sharing)
1.00
50,000
8
I
PPW
Parks Service Officer (offset by temporary PSO Asst)
0.50
55,000
9
PPw
Maintenance Worker (previous new position never filled)
1.00
113,000
7.75 $929,900
OTHER STAFFING AND SALARY REDUCTIONS
1
Townwide
Freeze management salaries (eliminate 3% COLA & bonuses
reduction
200,000
2
Townwide
Non-management furloughs or COLA reductions
reduction
250,000
3
Admin Svcs
Employee Disability Insurance Premium renegotiation
reduction
51,700
4
CDD
Reduce department temporary staffing and overtime
reduction
41,000
5
PD
Reduce hire-ahead funding (shift remaining $40K to OT)
reduction
50,000
6
PPW
Reclassify vacant Superintendent down to Supervisor
reduction
34,000
7
PPW
Reclassify vacant Equipment Mechanic down to Apprentice
reduction
20,000
a
PANE
Engineering: Reduce temporary hours
hours
10,000
Note: Recent Police Department overtime cost controls continue
$656,700
DEPARTMENT REDUCTIONS IN OPERATING EXPENSES
1
Admin Svcs
Manager's Contingency/Productivity Fund reduced one-half
100,000
2
Admin Svcs
Legal Fund reduction
40,000
3
Admin Svcs
Financial Services/Special Studies reduction
20,000
4
CDD
Technology reductions
19,000
5
CS
Special Events Fund reduction
14,000
s
CS
Solid Waste JPA Contract reduction
10,000
7
CS
SustainaUlity Fund utilizaton
4,000
a
LIB
Library Travel/Training reduction
5,000
10
PD
Police Travel/Training reduction
17,000
11
PPW
Facilities: Contractual Maintenance reduct on
18,000
12
PPW
Facilities: Maintenance Services reduction
72,450
13
PPW
Fleet: Fuel & Maintenance reductions
11,000
14
PPW
ExtendlReduce Vehicle Replacement Schedule (over 4 years)
200,000
15
PPW
PPW Software Licensing
10,200
16
PPW
Street Tree Lighting
10,000
17
PPW
Traffic Signal Cleaning Schedule
15,000
18
PPW
PPW Travel/Training reduction
3,900
19
PPW
Backflow Testing Contract (staff now certifed in-house)
5,000
20
PPW
Mowing Contract
30,000
$604,550
ra m n Tn1khJ*r9 Q ! nUr.RKnRr=n r:P:k'C A ruaRGFS
1
CDD
Increased staff charges to General Plan Special Fund
transfer
100,000
2
CDD
CDD Increase in Fees (COLA and overhead)
increase
132,000
3
CS
Increased staff charges to Housing Admin Special Fund
transfer
24,000
4
PD
Charge full costs for officers at high school events
increase
6,000
5
PD
Firearms Storage Fees for Protective Orders
new
3,000
7
PD
Holiday Valet parking charged to Parking Reserve Fund
transfer
19,000
e
PD
Tow & Taxi Fees implemented mid-year after Council review)
new
25,000
9
PD
Commercial Alarm Registration Fee/False Alarm fees
new
20,000
10
PPWICS
Solid Waste Vehicle Impact Fee (split between CS & PPW)
new
102,000
.it
PPW
Encroachment Permit Fees (from $200 to $220)
increase
15,000
12
PPW
Oak Meadow Parking (from $5 to $6 + frequency)
increase
20,000
13
PPW
Oak Meadow Reservation Fee
increase
6,000
$472,000
ATTACHMENTS
2,663,150
FY 2009/10 Special Projects
Administrative Services Department
■ Management of new library design and development
■ Identification and development of community and youth sports facilities
■ Comprehensive fee study
■ Expansion of online credit/debit card transactions
■ Implementation of financial /personnel information system upgrade
Downtown newspaper rack ordinance changes and enforcement
■ Records retention implementation
■ Sale/lease of idle public assets
■ Long-term fiscal realignments
Non-sworn employee contract negotiations
Community Development Department
■ General Plan & Housing Element Update (involves all departments)
■ North Forty Specific Plan
■ Los Gatos Boulevard Plan Update
■ Implementation of NPDES Mandates
■ Implementation of Affordable Housing Strategies
■ Adoption of the Hazardous Mitigation Plan
■ Adoption of the Repair and Reconstruction Ordinance
Police Department
■ Opening and use of new Police Operations Building
■ Microwave connection to Police Operations Building
■ Automatic license plate reader deployment
■ County Community Notification System implementation
■ Continued oversight of high school parking issues
■ Regional leadership of SVRIP
■ Reconfiguration of CERT and/or DART
Parks & Public Works Department
■ Construction of the Police Operations Building
■ Master plans for Balzer Field and Blossom Hill parks
■ Downtown sidewalk inspection program
■ Play lot ADA improvements
■ Friends of the Parks Program launch
■ Pageant Park planning
■ Bidding and construction of new Library
Completion of Grading Ordinance update
ATTACHMENT 4
■ Evaluation of off-leash pet opportunities
Identify opportunities for reduced maintenance for medians
■ Site viability and preliminary design for sports facilities
Community Services Department
■ Emergency Preparedness for homebound residents
■ Enhanced cooperation and partnerships for Senior Services
■ Transfer of the MIP concert series to Los Gatos Music and Art
■ Transfer of BMP and Rent Mediation Programs to Community Development.
■ Los Gatos Climate Change Action Plan
■ County changes for CDBG administration
■ Renegotiation of Town leases
■ Refocusing of Town Arts programs and Commissions
Library Department
■ Recruitment and Development of the Friends of the Library Board
■ Support of the Friends of the Library Capital Campaign for furniture, fixtures and
equipment for the new library building.
■ Operational review of the new library design
■ Completion and publication of the library's history database
■ Support of elementary school curriculum requirements in the area of local history
■ Development and implementation of process to name the "Poet Laureate of Los
Gatos"
Pending Special Projects to be Assigned/Scheduled
It is not anticipated that these projects will be completed in FY 2009110 unless other
projects are removed or delayed.
■ Comprehensive fleet management study
■ Almond Grove street improvement plan
■ Graffiti program review
■ Downtown employee parking program
■ Sign ordinance review
■ New resident permit parking zones
TOWN OF LOS GATOS DONATION OPPORTUNITIES
FY 2009/10 LIST OF TOWN NEEDS
To ensure that all donations and contributions are sought and accepted in an ethical
manner, the Council established a Donation and Solicitation Policy. A list of Town needs
was developed to identify goods, services, and other contributions to enhance Town
services, programs, and events. The recommended needs for FY 2009/10 are:
PUBLIC SAFETY
■ Volunteer Program Materials and Equipment
■ Specialized Public Safety Equipment and Supplies, including Support for Canine
Program
■ Training Support for Public Safety Staff and Volunteers
■ Equipment for New Police Operations Headquarters
■ Community Outreach Program Supplies
LIBRARY SERVICES
■ Children, Youth, and Adult Program Materials, Supplies and Services
■ Library Book and Audio/Visual Collections
■ Funding to Support Technological Enhancements
■ Equipment and Services to Support Historical Preservation Efforts
■ Funding to support furniture, fixtures and equipment for the new library
■ Funding to support public art for the new library
SENIOR SERVICES
■ Senior Program. Supplies, Materials, and Services
■ Cell Phone and other Telecommunications Equipment
COMMUNITY EVENTS
■ Supplies, Materials, and Services for Special Community and Volunteer Events
and Activities
TOWN PARKS AND FACILITIES
■ Beautification Materials and Services for Town Parks, Open Space, and
Infrastructure
■ Contributions that Support the Expansion of Athletic Fields
ATTACHMENT 5
A RESOLUTION FINDING A SEVERE FISCAL HARDSHIP WILL EXIST IF
ADDITIONAL CITY PROPERTY TAX FUNDS ARE SEIZED AND
ADDITIONAL UNFUNDED MANDATES ARE ADOPTED BY THE STATE OF
CALIFORNIA
WHEREAS, since the early 1990s the State of California has seized over $8.6
billion of city property tax revenues to fund the state budget even after deducting public
safety program payments to cities by the State; and
WHEREAS, in 2004 the voters by an 84% vote margin adopted substantial
constitutional protections for local revenues, but the legislature can still "borrow" local
property taxes to fund the state budget; and
WHEREAS, in FY 2007108, the State seized $895 million in city property taxes
statewide to fund the state budget after deducting public safety program payments and an
additional $350 million in local redevelopment funds were seized in FY 2008109; and
WHEREAS, on May 5, 2009, the Department of Finance announced it had
proposed to the Governor that the state "borrow" over $2 billion in local property taxes
from cities, counties and special districts to balance the State budget, causing deeper cuts
to vital services; and
WHEREAS, the proposal to borrow local government property tax would cost
the Town of Los Gatos an estimated $1 million; and
WHEREAS, the borrowing of $1 million from the Town of Los Gatos coupled
with the current economic crisis would create a serious fiscal hardship, jeopardizing vital
services to the community; and
WHEREAS, the State Legislature and other state agencies are considering
imposing new costs and unfunded mandates on local governments that can neither be
afforded nor sustained in this economic climate; and
WHEREAS, a majority of city financial commitments come from contracts,
including long term capital leases and debt obligations which support securities in the
public capital markets, that cities must honor unless modified by mutual agreement of the
parties.
NOW, THEREFORE, BE IT RESOLVED THAT THE LOS GATOS
TOWN COUNCIL has determined that it will experience a fiscal hardship if the
Governor and State Legislature vote to accept the recommendation of the Department of
Finance to "borrow" $2 billion in local property taxes statewide; and
ATTACHMENT 6
RESOLVED FURTHER, that the Town Council strongly opposes the May 5,
2009 Department of Finance proposal to borrow or seize any additional local funds,
including the property tax, redevelopment tax increment, and the Town's share of the
Proposition 42 Transportation Sales Tax; and
RESOLVED FURTHER, that the Town Council strongly urges the Governor
and the State legislature to suspend the enactment of any new mandates on local
governments until such time as the economy has recovered and urges the State to provide
complete funding for all existing and any new mandates.
RESOLVED FURTHER, that the Clerk Administrator shall send copies of this
resolution to the Governor, State Senator(s), State Assembly Member(s) and the League
of California Cities.
PASSED AND ADOPTED at a regular meeting of the Town Council of the
Town of Los Gatos held on the 181h day of May, 2009 by the following vote:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED :
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA