The record · Transcript
Council session — 2026-03-05
Transcript from the session's official auto-captions (18,166 words), shown in readable case and split into speaker turns. Speakers are AI-suggested and editor-reviewed (low confidence — auto-captions garble names); each color marks a speaker.
Good afternoon friends. We are back in the same place for a different conversation. I'm calling to order the afternoon work session on the spring. Tao on this. What is it? Thursday, may 5th. March 5th. Why do I always do that? Gavel. We're here. Welcome our friends from cfo biery and budget director levine is your last name. There it is, I found it. Turn it over to you.
Great council president and council. Thank you. Good afternoon. For the record, jonas biery the city of chief financial officer. Everybody is fed, hydrated, happy, ready to go. So I think ruth's going to pull up, if you don't mind pulling up the slide deck while I get going. Kind of quickly walk through the agenda for our next few hours together. As this is coming up, I'll do a brief introduction. Kind of start with a recap of our prior discussions and actions, describing kind of how we got to here today to this work session. Share the primary goals of the work session. Provide a little context on the why of the why do we do a spring tao technical adjustment ordinance and preview what that is intended to achieve? City budget office director levine will walk through the numbers, including an update on the remaining fiscal 2526 deficit and some technical details. Reminder we're here to talk about 2526 the current year, and then I'll jump back in and review some recommendations and potential solutions to fill that deficit. We'll close with a heads up on a few more technical things that you can expect to see in the ordinance itself. Council president, I assume, will kind of naturally take a pause at some point around the 90 minute mark and have a little.
Absolutely. It's my intention to get us to have a bio break around 330.
Great. Perfect. Yeah. And I think we'll get through our prepared material and probably 30 minutes ish. And so we'll have plenty of time to navigate that quick preview that while a deficit I don't bury the lead here. Well, a deficit is never great news. There actually is a little bit of good news, at least in context. First, that the $18 million gap that was mentioned this morning that we're going to talk about today is on the lower end of what we previously communicated as an expectation. We previously said 15 to 25 was the range we thought we were in. We are at the lower end of that range, so that's at least a mild positive second quick preview of good news is that we believe there are viable solutions that avoid any reductions to staff or service levels in this fiscal year. So that was another primary objective as we as we thought about this work, I think we'll close also then with a slide kind of discuss council recommendations, sort of want to make sure we have space to obviously receive that feedback and then and then talk a little bit about some of those details that we will then draft into the actual ordinance that will come back to council in April. So really goal today is to get some of that feedback from you. Next slide please. So want to make sure and set the context of kind of how how did we get here. Council. Well past the 2526 budget. And then we previously discussed fall technical adjustment ordinance in November 2025. At that time in November, we talked about a variety of of potential solutions to try to bridge what we foresaw as a gap for the fiscal year. We talked about things like compensation set aside, which ultimately we we used a portion of, and we talked about other options, including uses of fund balance and reserves. Et-cetera following that November fall conversation, the city administrator dcas myself bureau leadership citywide began implementing, directing and implementing cost saving strategies for the remainder of this fiscal year. Those things included hiring freeze, with some exceptions that were that were allowable, but that was really to increase vacancy savings to help to help fill some of that gap. Variety of spending constraints and enhanced expense monitoring to make sure that we're keeping eyes on and making sure that those cost savings are being are materializing. And I think we'll see that we have that had some success here. We also reviewed various reserves to identify if there were any kind of no risk or low risk scenarios where we could pull a little bit of those reserves forward and use them to help bridge the gap, and then additionally began some review of contracts and works in progress that could potentially be paused or or delayed. And so, again, I think while particularly the hiring freeze and some of the spending limitations have presented challenges in management of workload and in kind of rethinking how folks maybe prioritize their day to day work, those strategies have been effective in creating meaningful current year cost savings that have reduced and contributed significantly to keeping us on the lower end of that, that gap. So that was November, subsequent to passage of the fall tao and November at the very end of the calendar year, the very last few days of the calendar year, we myself. City budget office identified an additional gap for this fiscal year, which was communicated in an email from city administrator lee to city council on January 7th, 2026. At that early stage, we had communicated a preliminary potential gap of up to 26 million. We subsequently had a work session with council on January 22nd. Thank you for making time for that so rapidly. And at that time, that gap was updated to the range of 15 to 25 million, which I mentioned previously, that work session. Also, if you recall, there was sort of a series of potential solutions that were identified, many of which required additional due diligence. And so we've now completed most of that due diligence and and are coming back with some suggestions. So today we'll put a little finer tip on on some of that. All right. Next slide please. So again just kind of reiterate the goals for this work session today. To be clear this is not a decision making moment. This is a conversation moment. The goals are to update you on the status, to discuss the options and recommendations or potential solutions that we've identified, and ultimately to support council's discussion to inform what will ultimately be in the actual ordinance for council adoption and consideration. Also want to note that we believe, while we believe, these numbers, that we're going to present today are reasonably close to final, but they are really point in time kind of grabs as of today, yesterday, technically. And so they will continue to evolve around the edges as they always do. And so just know if you see a number for a line item here, the number that's actually in the ordinance may be somewhat different. There's some rounding that we're doing here. And so just want to flag that for awareness. And additionally some of the numbers that we're going to talk about are in fact subject to change based upon input we get from council today or prior to the ordinance. So the goal today is to share information to get general guidance about priorities in the context of what we want to see in the tao and to and to address questions, and not so much to conduct laser surgery. All right. I think the last slide before I hand to ruth don't intend to go into the weeds here, but we wanted to do kind of a quick visual sort of simulating how we're continuing to evolve the city's budget process. In prior years, the spring tao was used for some purposes, like addressing carryover, allocating general fund, contingency returning general fund, and underspending to bureaus. Partially, we don't have that this year to do, but also this is reflective of of kind of our further aim to simplify the actions that we do under the budget process. So I wanted to just wave that concept in front of folks. I think just to keep things moving. I'll go ahead and pass to ruth. And if there's questions, happy to come back to those once once we're finished here.
Great. And for the record, ruth levine, I'm the budget director. So just I'm going to talk quickly about kind of where we are with the forecast information here. So on the revenue side, the number that we discussed in January was identified in the December 2025 general fund forecast. And again, that was primarily a forecast for 2627, but it included a current year deficit of 13.6. And that was kind of the moment where we started to have the conversation and look at the situation for the current fiscal year, but on the revenue side, it was 13.6. So we've got our total revenues budgeted, we have expense budgeted against that. And we and forecasted that it was going to come in low. A little bad news on the revenue side. We're tracking about 3.5 million below the December forecast for the current year, primarily driven by lower revenues. And I think, you know, this is obviously bad news, but I want to put this in context of something we talked about, I think, last week, in terms of the timing of the forecast. We regularly. So historically, we've put out the December forecast and updated it in February. This year we're doing one and then again in April this year we're doing a March update and a may update. So this isn't entirely unusual as we get, you know, actual revenue data in throughout the fiscal year. It informs our current year revenues. It's just that normally we have enough cushion to be able to absorb that without having to balance to that marginal number. So that's kind of where we are. So it it takes that that. Revenue gap number a little bit higher. Another thing to note is that these estimates are preliminary. As I just mentioned. We'll be updating the March forecast in a few weeks. And that will set the base line for the mayor's proposed. One other thing to call out is that blt is still roughly on track for the current fiscal year, that that was kind of the source of our shortfall in 2425. But we are basically on track for this fiscal year. Okay. So that was the revenue side. This is the expense side. And I want to put this these numbers in context. First of all these are just projections. We're going to talk in a couple of slides about what kind of what we would recommend pulling into the spring tao. But these are just like the actual projection numbers of revised current year revised budget to actual forecast. And. And so a couple of things to note about sort of what's assumed in here. This is based on accounting period seven data. So it's our best estimate at this point. But obviously every accounting period you get a little bit more information. It assumes no programmatic carryover which going back to that slide jonas just talked about in the in the spring. In the past we have done programmatic carryover for things where we haven't started a one time funded project, and we want to do it in the next year. This doesn't assume the bureaus are kind of holding on to that money, right? It assumes it's if they're not spending it in the current fiscal year, it's in this forecast. It's only general fund discretionary, and it includes the savings due to the hiring freeze and other spending reductions that jonas talked about that were directed earlier in the fiscal year. So it's sort of all in. And. Of course, the other thing to note is that we did not allocate compensation set aside to bureaus budgets in the fall. That's standard practice, is that we don't do that, which means that's a big part of the reason between if you're just looking at revised to forecast, a big part of that gap would be expected because they don't have that compensation set aside resource in there yet. So all of that is combined here. And it's just looking at the the delta of the forecast. I know there's a few questions I'm going to I'm going to keep going unless there's sort of immediate clarification I guess.
I have two clarifications on this slide. Council president, if you don't mind. Go ahead. I want to make sure that I'm reading this correctly. The black is underspend. The red is where we have overspend. Presumably that overspend is over time that they have not yet gotten money from the compensation set aside for.
Yeah, personnel expense basically. I mean it's it's all it's everything. So this is a net number net of like non-general fund revenue. There's a there's a lot that goes into this number. So I would hesitate to say that it's just over time. It's a big portion of it is compensation set aside that in public safety there's about 11 million of compensation set aside that would have that would sort of estimated for their for those bureaus. But there's other stuff that goes into here.
I'll have more questions about that later. But just wanted to clarify. And then you said that this does include things like the, the savings from the 20% reductions and the hiring freezes. Would the is it fair to take the net of these numbers and say that that is money that could decrease the gap that we're seeing? Or are we also counting those reductions in determining how big the gap is or isn't? And that would be double counting positive dollars.
Yeah. Great question. So we're we're going to get there in a couple of slides. But basically what we did is took the net overspending and counted that towards our total gap. So the you'll see it in a couple of slides I think it should be clear. But the 18.1 includes a net overspending number. And we've pulled out. Let me just go to this slide.
I can wait until you get there if I know it's coming. I just wanted to understand if we could do the math simply, or if that would be a double count. Yes. I'll wait. Thank you.
Yeah, sure.
Okay.
Okay. So. So, yeah, this this transitions just from like, pure forecast information to like now how do we take that and balance the current year for the general fund. And so. This is this is kind of how we did that essentially we we more or less just took out the council office and auditor's office underspending. And you'll see that on the next slides. But for, for now we did it this way to show that sort of those net things like savings from vacancies are just rolled up into this number. So they're not a separate decision point because it's basically we're already have a vacancy freeze in effect. It's just kind of recognizing the underspending from as a result of that and rolling it into this forecasted expenditure number. And I talked about some of those bullet points on the right hand side, compensation set aside and the enterprise efficiencies. Again, it's all kind of rolled into just the revised budget minus the projection.
Councilor Green.
Mitch Green: Thank you. Just to clarify on the slide, how much exactly is compensation set aside contributing to this projected deficit?
So we drew I'm looking to staff. We drew about 10 million from compensation set aside in the fall to balance the fall. Tao. So you could say like this deficit would be that much lower if we hadn't done that. But it's a little hard to pull out. Exactly, because we typically don't allocate the compensation set aside until spring for this reason. Right. For the reason that most of the bureaus wouldn't have needed it.
I understand that, I guess, and I know that there's a historical norm here. I don't I don't want to get mired in the detail, but just in terms of what we need to distribute now in the spring. Do we have a number for that?
So essentially, the way this would work and I'll show it on the next slide is we're in that number. If we say, say, you know, we were going with the the net number of 1.2. And there are some decisions for council to make in there. But if we were it's somebody described it as like you're pushing the pile of sand into the holes. You're just moving the money around to backfill the places that need them. And then compensation set aside becomes like a city wide offset at that point, which is kind of how it's it's budgeted in contingency. It's not budgeted in the individual bureaus. Right. So it it just kind of helps balance the general fund at that point. So I think the the way to think about this number is this is, you know, sort of all else equal, right. Just like continuing business as usual, we would end $18.1 million to the bad. And so that includes things like continuing to hold vacancies, continuing to reduce.
I understand all that. I think, you know, when we approve the fall tao last year, there's just a schedule that says this much money moves from this contingency to that. That's the number I'm looking for in the aggregate. We don't have to have that answer right now, but I'm not looking for the total effect in.
Councilor may be helpful if we get through this sort of solution slide, that may help also illuminate. I mean, anthony can give us an answer, but I want to help illuminate kind of all the pieces here to.
Colleagues to notes. And we will come. We will move to robust conversation.
Okay. I'm going to turn it back to jonas.
All right. So great. The conversation is naturally leading us to I think this is here. So we wanted to walk through the options that we think should be in the conversation to solve for that 18 million gap as a kind of lead in reminder. There's trade offs to any option. But but we've aimed to prioritize proposed solutions that avoid staffing or service impacts that don't force future replenishment requirements I.e. Kind of kick the can solutions and solutions that don't materially increase financial or program risks. So that's sort of the key that we've we've kind of tried to drive here in the presentation today. We've divided these into two buckets. There's different ways we could do that. But the way we've chosen is kind of using a first bucket here that's shown. That includes options that we believe can be accommodated most easily without with zero or limited impact. And so I'll quickly walk through each of these. And then there's just a second slide where there's kind of some more maybe more questions and decisions. But of course these are all subject to council input. So the first line item we we keep 3 million in unrestricted general fund contingency suggestion would be to go ahead and utilize 2 million of that. Now keeping a million kind of in pocket. There's still a few months left in the fiscal year. So that would be readjusted in the eo. But that at least gives us a little bit of cushion to continue managing through the rest of the fiscal year here. But but use 2 million of that in the prior number, I think was a 3.3, if I remember correctly. Number of that was a council or elected under spending includes council operations budget. So we went ahead and pulled that out like we're pulling back all of the general fund underspending from from citywide grabbing that point eight and underspending out of council ops. There is remaining compensation set aside that will not be used, will not be necessary to balance. And so we can reallocate that this time towards filling the gap. I think we mentioned this last time is that we were going to do due diligence, but we did look at the technology reserve and identified there's an amount that was kind of amounts or contributed in by bureaus. And so there's an amount contributed in over a couple of years that we've identified was actually probably in excess of what should have been charged to those general fund bureaus. So so that gets returned back in this in this line item, there's a fund. I think we maybe mentioned this in the past too, called the bancroft bond sinking fund a little bit complicated the way that works. But it has a balance of around 14 million. That reserve is really important because it protects us against we have to make debt service payments that rely on lid assessments being paid, and so that reserve ensures that if those lid assessments don't generate, we can continue to pay off the bonds. There's a unique piece in there of around 13 million that would become due in, I believe it's fiscal 29. And so this would actually drop the reserve a little bit lower than that 13 million. But we expect that it would pick up over a couple of years and be back to, to fill that, that risk. So we feel like 2 million is the appropriate number to pull from that fund right now without materially increasing risk. And then we've had conversations with pb about the asset forfeiture fund and, and identified that, that approximately 1.4 million could be pulled from that. So those were kind of the first bucket of things we felt like were, you know, as I said, kind of low, low or no impact that are connected to the general fund can be done without other legal, you know, considerations. And so that takes that 18 million. If we accepted that full bucket, it takes the 18 million down to 6.6 remaining. And we can talk about that on the next slide. Maybe if it's okay I'll just do the next slide and we can come back and great. All right. So then the second bucket where things where there's a lot more discretion I mean it's all question malleability around. So these are also things that have potentially more impactful trade offs relative to to no or minimal. And so certainly appreciate council's input as we think through these. The first item here is again these are options. There have been suggestions over the past few weeks, couple months in the context of the housing investment fund discussion to allocate between, I think, the three something million and five something million back to the general fund. Obviously, there was a robust discussion about that at the work session this morning. Our understanding is that the the 0 to 60 tlt is the most flexible bucket to return back to the general fund. And so this line item reflects that concept. We put a number of 4 million. But this number is obviously scalable to to whatever we chose. Whatever council might choose I would note that this does I think as we've talked in other forums related to the housing fund, that this does come with the trade off for reducing those dollars being available for future housing related priorities. So that's certainly a trade off here. But but we know it's been discussed and prior forums. And so we included that here as option to balance that remaining 6 million. Second item. Wanted to make sure we flagged this reflects the 2.2 million here reflects the aggregate total among all council offices excluding council operations. I believe the auditor as well, including the auditor, not excluding the auditor's office. And that's sort of a number pulled as currently projected in the city's expense monitoring system in line. What we believe has been the preference of council and certainly direction of the city administrator bureau's general fund bureau citywide, are are not having an option to keep their underspending. And so but we didn't feel like it was appropriate for us to make that call for you, for your offices. And so we left that on here as an option for consideration by council and feedback about how you would like us to to proceed, defer to your discretion about how to direct those those under spending dollars. Third item is when we talked about in the fall, this is the citywide obligation. Reserve fund has a portion in there. If you recall, that's related to cost cities potential future costs related to Portland harbor cleanup and mitigation. We can pull from this resource now, but there would be an expectation that these dollars get replenished at some point in the near future. And so we'd have to think about think about that now or think about in the forecast how we reflect that replenishment expectation. So kind of a little bit of a kick the can solution here. And I'd also just note that using this solution today to solve the current year also takes pushes a button that potentially takes that off as an option for next fiscal year. If we wanted to try to hold this in pocket and use it to help solve next year's deep, deep budget challenge. So a couple of trade offs with with that one that are of relevance. And then the last line item is, is just kind of reflecting that in doing that work of looking at that work that we could stop doing. And again, recognizing this is just within the general fund, there were sort of some packages of things or specific things that bureaus identified as possibilities. We haven't recommended it because, again, we tried to sort of avoid recommendations that actually stop doing things, that stop delivering services. But that's certainly something we could come back to and provide a little more detail about the specifics under there. If council was interested in that. I know we have a couple more slides about a little bit. What's next? But this might be a good natural pause because that's a lot to digest.
Councilor Kanal thank you. I have three questions. One is the 2.2 on this slide. And the 0.8 on that slide add up to to 3 million even. But before it talks about 3.39 and under spending is the 0.39 on the auditor side. Or is it just around.
Yeah. Sorry, I couldn't remember if the auditor was in there or not. It must be not there. So yeah.
Secondly, I would love more information about the targeted bureau reductions. That last line, what are the quote unquote, public safety programs that we're talking about?
Yeah. And we can pull something up. I mean, we we asked bureaus basically to identify general fund contracts and encumbrances that they could at least pause for the current fiscal year. And so we are just we kind of rolled those up. The ones that they said that they could potentially pause without, you know, having an issue with their contract or the like. So the biggest buckets in there are 500,000 roughly for graffiti reduction. And then do you want to speak to the ones that are in the in.
Sure. Anthony lock.
City budget office analyst, supplemental budget coordinator so we did an exercise in January for bureaus highlighting encumbrances over $100,000 and bureaus to see like what could possibly be paused or stopped. And so the two packages in pdx. One is and I know public safety is here, if they want to further comment on that, one is in the special programs special projects bureau. And it's for. The Portland opportunities industrial center incorporated. And there's $334,000 of possible savings there. And then there are video production services connected to to pccep that could be paused. They weren't recommending that necessarily, but they were. They just proposed that as possible possibilities.
Ginger and benjamin, I saw your eyebrows. And so the poic one is like in the process of an amendment. And so it sort of fell in the criteria of this could pause and, and move into next year. And then pccep had some underspend that was going to be used for video production that hasn't yet been encumbered. And so both of them kind of fell in that criteria of they're not encumbered yet.
Okay. And is the who holds the poic contract that we're talking about. Is it ovp or is it a different part of the public safety.
It's it's now under ceasefire.
Ceasefire. Okay. Yeah it's okay.
Yeah. I mean, and I think there were also a couple of encumbrances within police that we identified that there was some underspend. So it wasn't it wasn't just community safety.
Are those included in the 1.8.
They are. Yes. I think one of them, the wellness program.
Yeah. Police has had some one time dollars for a wellness program that is a multi-year project. And so there's amounts that are encumbered that they don't they're not going to spend this year. And so those were under the category. And then there's also we had some encumbrance carryover for the photo radar enforcement. And those bills have come in a little bit lower. So there was some underspend there that was identified okay.
So it's underspending it's not okay. Can you just clarify what the percentage is or the dollar amount. That's that's graffiti of the 1.8. About a half a million I think you said.
Half a million. Yeah.
And is that on the PBOT side, on the pmo side.
As council discussed recently, most of the graffiti abatements now and bts. So it would be contracts that those folks are managing.
Great. Thank you.
Any other questions colleagues?
I will say yeah the 500,000 for graffiti abatement would potentially represent a like a service level impact. But it was signaled that that work could be paused if directed.
So okay, no more questions. It seems right now.
All right. We'll have more time for questions. So in addition to rebalancing the general fund in the spring, tao, there will be a number of other adjustments. We wanted to run through some of what to expect there. As was discussed this morning, we did ask explicitly to have bureaus true up their beginning fund balance for 2526 to the 2425 ending fund balance in the act. For that's normal standard practice. And because the act for this year came out later than the fall tao, some of those didn't get fully incorporated. Sometimes folks need to have the need to ensure that the numbers align. And so we're expecting that to happen in multiple funds, not just in housing. And then we're also expecting some technical adjustments. I would say some of that is related to the rebalancing of the general fund, is how it's like literally how we will do that work. And some of it might just be in other areas in non-general fund bureaus and the like, where they're moving things either between kind of major object, between spending categories or. Or across funds like the water and sewer funds often make adjustments based on their construction costs and the like in the spring. Recognizing and adjusting revenues that have been received since the fall that haven't been budgeted, such as grants and or agencies or intergovernmental revenue, and then. The general fund contingency bullet is really about rebalancing the general fund. And then the other thing we wanted to highlight, we talked to you about this back in the fall. Tao is the health fund. So so you might recall we did briefings with every office, I think, on the status of the health fund. The health fund is is essentially what where we pay out all of our claims that all of our benefit dollars go into, and then we pay out directly out of the health fund because we're self-insured and the we've been steadily drawing down the reserve in the health fund over time, as you can see on this slide. And we have more than exhausted it at this point. And so we already knew we would have to make an inner fund loan for the current year to ensure that that fund ends in balance. The situation is a little bit worse than we anticipated. And so we had originally said we would be looking at a $10 million interfund loan. We're now looking at a $15 million interfund loan. The cost of repaying that loan are basically already included in the numbers we have been assuming since the fall for our health benefit increases for next year, so it doesn't cause a material change. But it, you know, is obviously problematic from the standpoint of rebuilding the reserves. So that's the main thing is it would take longer than we would have anticipated to rebuild those reserves, but it doesn't necessarily make our problem worse for 2627. But there will be an ordinance specifically to authorize this interfund loan that will be just traveling with the spring tao. And then the budget will be adjusted to recognize that interfund loan revenue in the spring. Tao. Any questions about that? Okay. All right. And then here's the calendar for the rest of this ordinance. So, you know, hoping to get all of your feedback here today, as jonas mentioned, so that we can take that and reflect it in a ordinance that comes to you all and a pair of ordinances that come to you all to discuss and then vote on on April 8th and 15th. And there was a question out about whether we would come back to a committee of the whole meeting at the end of March after spring break or not. And I think it depends on where you all land today. So I think we can pause there and turn it over for questions.
Okay, colleagues, feel free to jump in the q councilor Kanal.
Sameer Kanal: I'll start with a comment on might circle back on some questions. The comments is just for transparency. I have at least six hours of requested items, maybe more for the first committee. The whole meeting. I love the enthusiasm, but I just want to point that out. I'm not making any statements about what it's going to be at this moment, but I just want to I want everybody to be aware of that as they discuss the as needed for several items, and I'm looking forward to talking to everybody about them. And I'll circle back on questions later.
Okay. Thank you. Councilor Kanal councilor Morillo.
Angelita Morillo: Thank you. Appreciate all the folks running meetings and trying to schedule things. I know it's not an easy feat. I had a question regarding the police asset forfeiture funds in the fall. Tao I recommended that PPB or I suggested that PPB could use about $165,000 of asset forfeiture funds for capital purchases in order to save some of our money from the general fund. Certain political actors said that I was trying to attack the police bureau's budget, but now I see that there's not you guys other people. But now I see that there's a proposal to use police asset forfeiture funds to cover $1.4 million of event overtime. So I was just curious what changed there that allows us to use that funding.
Now I'll look to the public safety folks if they want to come up.
I have questions.
Ginger dameron I'm not sure I can answer the first part, but I can explain how we came to the 1.4 million in looking at the overall need for resources, 1.4 million is close to what has come in this year that wasn't yet obligated and planned for. And those dollars have specific things that they can't already be budgeted and and specific things that are eligible. So one thing that's eligible is overtime and overtime that's directly charged to it. And so what the 1.4 million is, is we are anticipating 400,000 for rose festival, maybe a little bit less with one less parade happening this year. And so we're just saying we're going to charge the rose festival directly to asset forfeiture. We also have been putting a million sort of holding in case something large happens in kind of a contingency. And police has reduced their other types of overtime. So we had that million in sort of their overall budget by their overtime reductions. And so that money may not actually have to get spent. It kind of depends on what happens in the next four months, but it just allows us to take that piece out of our general fund projections.
Okay. And I will say for the public that's listening, asset forfeiture I think is kind of a gross practice, but this is a state law that allows us to access these funds. So while we have them, we might as well use them across all the police revenue, sub funds and accounting for an updated beginning balancing fund. Pbb is going to have roughly $10 million in special revenues. So can we use more of that, more of that funding this year? Just given the crisis that we're in, or are those allocated based on what you just said?
I was asking nathan if he I didn't bring the paper in, I meant to they are they are planned for and like in different stages of procurement. So the 1.4 million is what we went through that this is not planned for and it can cover overtime. So there's one bucket of money that's specifically for region, which is a technology. It can only go for that bill. And that one is about $1 million. And so there's different there's eight different sub funds. And each of them have restrictions on what they can and can't be used for. And we we went through and identified what would what there was balance in and what could cover overtime. There's some limitations in I think police doesn't have other expenditures that it was easily identified of like that can cover it because we can't supplant the dollars. And nathan may correct me if I'm.
Manages this budget strategy, strategic planning and performance management for public safety. Yes. Agreed. I think the key thing there is for the asset forfeiture dollars, they can't be used to supplant existing budget. So if there is something that the bureaus already planned for and at this point, being two thirds of the way through the fiscal year, there is a lot of planning the bureau has already done. We couldn't reduce those dollars that have been budgeted for to instead use asset forfeiture dollars. So it has to be a bit more opportunistic when it's the asset forfeiture dollars for region. Ginger mentioned some of the other special revenue funds the police bureau has are a collection of about a dozen smaller projects. Some of these are dollars related to members of the public who have sent in resources for police dogs. So we have money that can go towards expenses around the canine unit. Those are being spent down. It's a small bucket around, I think $30,000. Each of those have their own restrictions tied to them. Those restrictions don't have the same sort of legal prohibitions around supplanting, but they do just require making sure that we're following through with the intent from whoever gave those dollars.
Thank you. That's helpful, and I would love to see later if you could email to us a breakdown of how those dollars are planning to be allocated. And I'm familiar with the I don't know how you pronounce this word supplementation issue regarding these funds. So given that we know that we can't supplant the bureau's budget, how do you plan to proactively incorporate these dollars in order to help address the deficit that the general fund is facing? Like, can we proactively do that so that there's so that we can use more of that fund? I mean, maybe that's a legal question. I'm not sure.
Well, I think there's a couple of things. There's the the projects that are already underway that we've already put in an order. There's things that are sort of essential to operations, deferred capital projects. And so whether or not we would want to pause those, I think if you're asking about next year, we are kind of asking that question of could we use this fund for special event overtime moving forward, and where does it fit in with the police bureau's overall budget and which it has been? But just really looking at that strategically on how can we incorporate it in one of the challenges with the funds is it's not predictable how much we're going to get in. So some years we get 600,000, another year we get 1.5 million. And it just and we don't fully know when it's going to come. And and so that makes it hard to like make it an operational part of their budget. But we are looking at sort of using those dollars to bridge a gap.
Yeah. I will say from a sort of longer term planning, the bureau has a fair number of capital assets around equipment or vehicles that do need to be replaced over time. One strategy for replacing those would be setting aside dollars in equipment replacement reserve fund and replacing those, or using general fund discretionary dollars. And historically, it hasn't done that for a lot of that equipment because they've known they've had asset forfeiture fund as a backstop. So it has over time, been a relief on the bureau's general fund requests, or in this case, the amount of overspend the bureau has because they're able to use those resources instead.
Okay. Thank you. That's very helpful. Very interested to see how that plays out. Just given the reception that it had during the fall. But perhaps seeing the new numbers for our budget is giving people a reality check this time around. I had another question, not regarding the special revenue fund. Thank you for coming up here and answering my questions regarding the technology replacement reserve for laptops. Will the use of any of the bts tech reserves put any bureaus in a position to be unable to meet their current technology replacement needs?
I don't believe so, and I'm not sure if somebody can speak to it more specifically, but I think my understanding was that this was truly excess, that they did kind of a retrospective look at the laptop replacements and determined that there was an amount that just wasn't needed for those replacements. And so I think the non-general fund amounts have already gone back to those non-general fund bureaus. And this is just kind of recognizing the general fund portion of that.
Gotcha. Okay. Thank you so much. I think that's all of my questions for now. Appreciate you.
Thank you. Councilor Morillo councilor Pirtle-guiney.
Elana Pirtle-Guiney: Thank you, council president. And thank you all for the update today. It looks to me like a lot of the funds that you are recommending or that you have on that not recommended, but other options list are funds that while we aren't allowing bureaus to carry over, we might have used as what I'll call beginning fund balance for lack of a better term in a different budget year. And so I'm concerned that what we're doing by not looking at program changes, and I understand the recommendation not to look at program changes, but by not looking at program changes, I'm concerned that what we're doing is creating an even more difficult situation for ourselves next fiscal year, because the release valves that we might have had, however small they are, won't be there at all. Is that an accurate reading of what I'm looking at?
Councilor it's a good question. In some cases I think that's true. Right. So like using a reserve now as opposed to holding it, finding a different solution and keeping that reserve in pocket to use later. Yes. You know, there are some of these buckets that would. You know, there's sort of decisions being made around that. Right? So the other reality about service reductions is the implementation timeline to have those cost savings materialize this fiscal year are really challenging. So if we're talking about something that's like a contract that we just say, you know, we were going to execute that contract in on may 15th, we're not going to do that. A little easier to grok that. I think those are the types of things that are reflected in the 1.8, whatever that million, million, whatever that number was versus. We now have to unwind a thing that we do. And so that takes a little bit of time. You're right fundamentally in the math. But but the implementation of those kinds of reductions is much more challenging. It you know, in a late stage fiscal year.
Even in the targeted bureau reductions, though, it sounds like those are not let's end this contract and not do it. It sounds like those are all this. We're still going to do it next year. So I'm not seeing anything before us that reduces services at all. And I want to be clear, I don't want to see in a perfect world or a reduction in services. But when we know that we're going to have 169, is that the number that we're outright at right now? Million dollars in deficit next budget year? I am a little bit concerned that everything before me. Gets rid of five, six, 10 million in what might be beginning fund balance to help close that gap, and doesn't start us having some of those hard conversations. I absolutely understand that recommendation, but I think we need to say out loud we're making the problem harder, not easier, for a few months from now. And I am wondering if there's anything two questions. One, just to hold, not to answer now, but I'm wondering if there's anything else we should be looking at that is that. Hey, mr. Mayor may not be recommending this in his budget anyway. It's a contract. Should we just stop it now? And should we be taking a hard look at that before we take any action on the spring? Tao. The other thing that I am wondering about is on the compensation set aside piece, and this would be great to get an answer now if possible. It looks like there's 3.3 million in compensation set aside that you're recommending to use to help fill the gap. Is that what you project to be in excess of? What will be needed for compensation? Set aside? Or do these numbers include what bureaus need out of compensation? Set aside and that's what's left. Help me understand how compensation set aside is being used here. And if we're going to have a later conversation about not having enough there, or if this is accounting for that.
I think the short answer is this is accounting for that. So I mean, the way to think about it is we drew an answer to councilor Greene's earlier question, $14.4 million from the overall $17 million pot that was compensation set aside. It's now down to 3.3 million. But in a normal year, we would have had enough for whatever the requests were. And if, you know this were what it looked like, we might have only given them 3.62 million out of that total pot, and the rest would have become beginning fund balance. To your other question for the subsequent budget year. So but but the narrow question is just essentially this is what's left. It's essentially we would have given it anyways. It is the compensation set aside need for these bureaus. It's just that it's not enough to cover the total need, which is why we're putting all these other things on the list.
So the.
3.62, I think you said I'm not looking at the slide right now, is the projected compensation set aside need through the end of the fiscal year? It's not a point in time where we are at right now.
Correct. So that's the this and again that aligns roughly with like the normal practice we would do for the spring tao is we would do projections sometimes a little bit later with like 1 or 2 more accounting periods in them. But we would do projections through the end of the fiscal year. Bureaus would say, this is what we project to need. Here's our request for compensation set aside. And yeah, I mean, we pushed them extra hard this year to to give a closer accounting than they normally would have. And so I'm fairly certain we would have had a bigger number if we hadn't done that. But but yeah, this is the projection through the end of the fiscal year of what they will need.
Okay. Thank you for clarifying.
Thank you, councilor Pirtle-guiney councilor Green.
Elana Pirtle-Guiney: Thank you, mr. President. Thanks for getting that exact number, I appreciate that. On the slide. Let's see where is it slide. Oh geez. There's no number. But it's the it's the last table before other spring tau actions. Thank you. That one. So in the narrative it says service areas identified roughly 2 million of ems reductions that could be implemented. But it would carry forward service impacts. And I think I guess my question is. Are those reductions to areas that were previously approved in the fall to as encumbrance carryovers?
Some of them.
We haven't done the analysis. There was some carryover for graffiti in the in the fall, but I couldn't tell you right now if these are expenses that were carried over, but we can get that to you.
That would be helpful. And I guess what I would ask for before we're asked to take a vote on, on this ordinance, is that spreadsheet that shows the current state of play of those ems contracts, because that was very helpful for me last time in the fall to to know that even though we appropriated but not, but did not execute ems contracts in a prior fiscal year, they were we were being presented with the case that if we don't approve this, it's going to have service impacts to the current year budget, which for me is really problematic because we approved a budget for 25, 26 to do certain things. And I didn't think when I was approving that budget, I was approving a budget to do those things, but only if I've I'm going to later approve encumbrance carryover carryovers from previous budgets. And so some of us tried to call that out in the fall. Tore and offer councilor Morillo offered an amendment. I co-sponsored that amendment that reduced that amount of policy carryover or, I'm sorry, encumbrance carryover, which would have left more money here, which we said would happen. And so I just really think that needs to be the focus. And I'm going to need to see that, like what are the actuals versus what we said we would need if they've been executed? Fine. You know, I'm not a denier of the facts, but I look at 1.8 here and then previously two, 2 million. And I just know that there was a lot more there. And so if there's only $3.8 million of unexecuted. Contract slack. Then that's what that's what it is. But just, you know, just a little frustrating. And I'll just leave it with this. And I hate to try not to take this tone, but when we were pushing that amendment last fall, there was some stuff in there that had policy implications that people didn't like. And reasonable people can disagree over that. But there was one half of it, which was very much about fiscal stewardship, which was we really should not spend our kitty down right now and hope that we get the savings through, through the materialization of these, because what we've seen is that it didn't happen. And now we have a spring towel that is being driven in large part by the fact that we don't have as much encumbrance care, I'm sorry, compensation set aside there to allocate to these bureaus. I think on average, historically, we've had about $14 million or so, 12 to $14 million that we need to do to make those bureaus whole. And we're squarely in that zone. And I'll just leave it at that. Thanks.
Thank you, councilor Green. Councilor Kanal.
Sameer Kanal: Thank you, council president. Thanks, everybody, for being here again. I have a ton of different questions here, but I wanted to kind of just stick to one clarifying question, which is. I guess is the is the the public safety overspending. Is that the amount is that comparable to what we've the numbers we've seen for previous years, not the amount of it, but are we are we comparing apples to apples? If we compare that 3.62 to the 7 to 10 million we've seen taken out of compensation set aside in the spring town proceeding years?
Yeah, I would say it's not exactly apples to apples, and I'm happy to have them come up and speak to it. But I think I think part of this overlaps a bit with councilor Greene's comments a moment ago, which is that we've really had a practice of, to some extent, assuming carryover in our year end projections. And that's both a combination of kind of policy carryover programs that haven't started or are only partway through. And also the encumbrance carryover pieces. And so rather so what we're what we did here is we said don't assume that we're essentially taking it back. And any amount that would have been carried over in a prior year needs to appear as funded in, in the adopted essentially in the proposed and approved and adopted. So it is not apples to apples in that I would say they have probably drawn more in prior years, in part because they weren't kind of returning amounts that they expected to carry over. And so that's to some extent a change that we're making this year in response to, to to some of the frustration that councilor Greene was just speaking to in the fall and the feeling that that we sort of kept assumed too much carryover in, in our previous practice. And so the combination of that with the fact that we don't have any money to carry over anyways is means that we essentially would be taking back more from those bureaus, which equates to giving them less in compensation. Set aside. Does that make some sense?
So you're assuming that the money we take, we would be taking back in other parts of the budget is effectively given to cover. And then we separately are covering the rest with the compensation. Correct. Not necessarily that overtime is actually reduced.
That may also be true. And I can I can speak.
To that. It looks like that that overtime is reduced at the moment. I'm trying to that's that's my underlying question here.
It isn't police. It is not this year in fire. And I I'll there's a combination of things. So the 3.6 million has a lot of things rolled up into it. And I'm just going to kind of go through specifically fire delayed a boat purchase because we knew that there was going to be this was a tighter year. And so they had some underspend in that area that then helps with their overall budget. Their overtime is up, but that is because staffing targets haven't quite met. And so their salary and benefits portion that's not overtime is a little bit the overspend is not as much as you would anticipate without comp set aside. So that's kind of looking at fire in police. Their overtime is down and they have implemented some reductions in overtime. And then they've also had some reductions in external materials and services to help with their overall. And just like for I think police's compensation set aside was 6.7 million, but we only have them overspent by 3 million. So they've already done some things and it's all of public safety. So while we had a hiring freeze and other areas of public safety, there's some underspend and vacancy savings and other external materials and services, underspend throughout public safety. So I think.
That number.
Yeah. Yeah. So things have been done to kind of make it not as big as it, it could have been at this point.
Okay. That's sorry nathan I want to let you jump in if.
You want. We talked about fire and police. In addition, boec has been substantially down in their overtime. We had forecast for them to be down, but they're down even further than we had forecast.
Yeah, I know, I know, boec is a little bit significantly further along the curve of in terms of the way staffing up will diminish over time usage relative to fire. So I think the answer on both fire and actually all three, each one fits the the correct answer in my opinion, of what I'm looking for. So thank you for that. And thanks to the mayor because I know that's a high priority for you as well. I. I wanted to just kind of first say I agree with councilor Pirtle-guiney comments about contracts. This is why I've been asking in the administrator's reports for the list of big contracts going forward that cross the fiscal year. I think this is this list is what the bureau has offered up in the ems reductions. But I know that there are some contracts that are bigger than this entire line item. That and I've also just note that we've been told that every city contract effectively has an opt out. If we don't budget for it the following year, which means we're not obligated to keep existing contracts on the books. If we're willing to give up the service, there will be a service impact, you know, obviously in those cases. But just it offers a decision point for council in the future. On councilor Greene's point, I wanted to say I agree on the assessment that our budgets should not be based on carryover assumptions, particularly programmatic carryovers. But I'll note that some of the encumbrance carryovers serve a similar last year served, and I think this is true in the past as well, served a similar purpose to programmatic carryovers. And so I think there are times where an encumbrance carryover is meaningful and good. But this is I disagreed about the best way to deal with that at the time of the fall towel. But I do want to just note, I agree that at this stage of the of the cycle, it makes sense to get to that point at minimum, to say we're going to assess the impacts of a budget request based off of the budget request, not based off of the budget request, and an assumption that hasn't yet been voted on and won't be voted on until November in the fall. And I agree, I wrote this before councilor Green said it, but but they councilors Green and aye, Morillo were right about the problem we're facing with with compensation set aside being diminished. They predicted it back then. And that's worth noting here. I did want to ask a clarifier and comment on it with relation to the 0.8 slide. It's I want to say nine, but I may be completely off. Ten. It's about the council ops underspending I wanted to understand does that presume that we are filling the vacant positions we have? Like does the idea that there is a $0.8 million to to potentially use in this way? Does that presume that we're leaving the vacant positions vacant for the rest of the year, or does it presume that we're filling them going forward?
I don't know, I don't I will have to get an answer back to you about what the assumptions are on that one in particular.
Just know underspending here does not preclude ems or underspending in other places. It's not exclusively personnel.
Sure, but there are vacant positions in council ops right now. And I know you're extrapolating from the the seventh accounting period. Right. And I wanted to know if that extrapolation presumes status quo, where one position was partially filled for the year and one has not been filled the whole year so far, or if it presumed that we're keeping the status quo but filling the two positions.
Councilor, we can follow up with you, because it would essentially assume, in conjunction with working with the council manager, their expectations around that hiring. And so we don't know at this table what that what that is. But we can follow up with you on.
Yeah. I mean, I. Think my, my broader point is that if council approved a budget for particular roles in council operations, we should be assuming that those are going to be filled, because that's something we already voted on. And I agree with councilor Green. I know councilor Smith has brought this up in the past. Are we don't want to vote on something that's and then say that's contingent upon voting on the same thing again later. And then potentially a portion of it is on a third part later. So with the exception of that caveat, your this slide seems like a good place to start. And I appreciate you bringing that forward. I did want to note, given that I'm about to talk about the harbor reserve, that there was a little bit of a red flag there on fire, not getting a boat, because I imagine that's all in my district. The boats, I think, are there's some in d4 as well, and d1, but most of the fire boats relate to d2. So a little bit of an alarm there. I want to get that boat repaired up in hayden island, so or replace. But that's my pivot, my segue. Can you tell us more about the harbor reserve fund?
Do you want.
Yeah. So so we talked a little bit about this in the fall as well. And I'll as I think I said then every time this conversation comes up, attorneys start like banging the hammers in the back of my head to be be mindful of what I say. But because that is still a legal negotiation that's under underway. But essentially, you know, this city anticipates some type of obligation related to harbor cleanup activities, cleanup mitigation activities, and that may be borne by different areas within the city, right, to the extent it's stormwater related or has other connectivity. A number of years ago, I don't remember exactly what year it was, but the city started putting some dollars kind of in that reserve to anticipate a nest egg to help pay for some of those ultimate liability when those costs, payouts, whatever form that takes, do start to materialize. And so that's what's sitting in that fund, is some of those general fund contributions that have been put in over time to address that future cost.
So I wouldn't be I don't say this in a negative way, but but effectively draining this would require the future year replenishment. And we'd be without without saying it in a negative way. We would be kicking.
The can. Yeah. Councilor. That's that's correct. I mean, it's a little you know, we've sort of put it on as a. Possibility because it's not the type of thing where we anticipate we will have to replenish it next year. When we know we have a problem, we might have some different flexibility around when that replenishes. But yeah, you're absolutely right. It definitely just kicks that expectation that at some point that bill is going to become due, so to speak, and we either have money sitting in reserve to cover that or we or we don't, and we have to find it. And frankly, that's true of most reserves have that sort of same dynamic in it. But because this is one where we don't anticipate that use potentially for another couple of years, a couple three years, and we have probably some ability to build it back up. It's more feasible than than other options. Does that answer your question?
Does it looks like ruth wants to say something?
One other quick thing to add to that is there still is an ongoing contribution going into the reserve. So this would be like a one time drawdown, but it would still it would maintain that ongoing general fund contribution.
So it's super helpful to know. Yeah, I appreciate that a lot. And I think that's the first place I want to look. Although I will take the chance again to to note that the the general fund conversation we were having in the morning work session is basically the $4 million up here at the top of, of slide 11, and I think highlights the importance of what has been said here. The only thing that I think is maybe not on here that I'm aware of, there may be more that I'm not aware of as places to look is really those other contracts. And I still would like to have that conversation, but I really appreciate the starting point that you've given us here. I will just note that there are some lines on here that are by design, backloaded. And so I think the projections presume a higher level of potential savings than actually exist. I know, for example, in my office, we know that our workload is significantly higher at the end of the fiscal year because of the budget. And so I think taking past projections like there will need to be conversations about how much of that is actually real, how much is not. I imagine that's the case for at least four other lines on here, as three other lines on here as well. So I just wanted to flag that. But thank you.
Yeah. Thank you. Councilor. It's a great note. No. You know, recognize noted. I mean, that's often the case for many bureaus. I mean, that's another reason why we didn't want to make the decision and put it as a sort of full recognition because we need council's input on that specifically. That is a reality. Other places, too, where there's that nuanced, you know, spending throughout the fiscal year and sometimes escalation at the end of the year. So I want to make sure we make space for that conversation with regards to this line item as well.
And just one other thing to note on that, I think the these numbers that we got from the the finance leads are have been vetted and are we attempted to ensure that they accounted for those those end of year costs. So it's not just like a straight line projection. We have a straight line projection. You'd get a very different answer. And so we worked. This isn't like just cbo doing this by ourselves. We worked directly with the finance managers, and they provided all of the projections through the end of the year on all of these, and in many cases, doing that kind of position level analysis. I, you know, obviously the you know, we pulled out the council one because that's obviously a slightly different conversation. But for other bureaus outside of council, I don't want you to think that we were just like, okay, all the vacant positions done. Like here's your number. We did actually do a pretty thorough job working with all of them to try to do those projections as best we can, given that it's ap seven. Yeah.
This is going to sound like a negative. I actually mean it as a positive. It's never that I know. It's never that simple with the city budget. But also I know that you do a lot to to to take that modeling. And I appreciate the clarity because obviously ours is different in terms of we haven't weighed in on that yet. Thank you. Council president.
Just real quick. As an example of that, we got information about the council ops underspending. And that does include that number includes projected hiring of two positions starting in mid April. So like that's an example of we're assuming that two positions are going to start in April.
We'll have 0.8.
And still have zero point. Exactly. So and that's the same for the council members. The council numbers is based off of what your offices have communicated with staff about projected spending through the end of the year.
Okay. I know we haven't given that information, so I think that's separate. But for council ops council has voted on the list. So I think that's fair. And that's very good news because that means that theoretically, this entire $11.4 million on slide ten is available. And I think a good place to start the conversation.
Thank you. Councilor Kanal councilor Novick.
Steve Novick: Thank you, mr. President. This frankly, might be just my bad memory, but this morning I thought that when the the pot of housing money that was easier to shift to the general fund was the, quote short term rental 2% 8.6 million and I forgot my notes on my desk. I might be wrong, but because I thought that I was surprised to see that short term rental 0 to 60 pot is being the pot referred to for this 4 million.
I will triple check, but I'm pretty sure it's the 0 to 60 sub fund. I have a hard time because the names are the same, but we will triple check and confirm with you. But I'm pretty sure that's the one.
Yeah, and I'll acknowledge councilor. I heard the same thing this morning and had a question about it, because that was not the way I understood it. The way I understood it is it's the 0 to 60 as described here.
Okay. So and again, does that mean that theoretically we could take 11 million and put it into the general fund, the whole 0 to 60 thing?
I think technically I would want to be. And then my caution councilor is I want to make sure that as, as the housing bureau is looking at those spending plans, that there aren't pieces of that that might have some firmer expectations around it. I think legally that's probably true, but I want to make sure before I say that definitively that there's not, you know, bits of that that might have some other intended commitments that would have, you know, real, real trade offs, outside future nofa, etc.
Thank you.
Thank you. Councilor Novick councilor Clark, vice president Clark.
Thank you, president Dunphy, just to follow up on that same vein on the page 11, the housing investment fund, how did you come to 4 million as opposed to the full 6.6?
Yeah. Councilor great question. I knew that there was a three point something number that had been spoken and a five point something number that had been spoken, and four was right in the middle.
Okay.
It's very scientific. Okay.
And to be clear, I'm joking a little bit, but that's why we picked that number. But recognizing it is somewhat somewhat scalable, you know, to to fill however we choose.
Okay. It just seemed like it'd be a lot easier. Here's an exercise to just do the full 6.6. But in any event, and I also echo councilor Kanal comment about council underspending. I don't remember being asked about this, but I think this is an overestimation. Definitely. Let's see. I have one other question. Oh, the on the harbor reserve does that completely empty it?
No. We can get the the total number. But there's there's more than that in there. That was just the estimated amount that of general fund excess that we could pull. But the harbor reserve combines multiple different colors of money into the reserve pot. So there's there's significantly more than that.
And yeah, and it's a good observation. Yeah. This is the general fund portion. And there's you know a couple ways to think about this too. Because on this slide, the 15.2 is more than it needed to fill the gap that, you know, a couple of these, whether it's the housing investment fund or corp could be used as sort of balancers, right. To say, well, we're just going to take whatever amount we're going to set these other amounts and then use one of these line items, for example, to say whatever is needed to continue getting to zero balance, net zero balance. And so I know there's an iteration where we did this, where we thought of the corf in that way. But we could certainly, you know, there's some of these are scalable in different, different ways.
Just curious about it. And but I appreciate that you gave us options or you didn't just do 16.6. And I had actually a question for councilor Kanal, if you don't mind, when you're talking about the other contracts, which contracts are you talking about?
I think I'm going to hold off on naming specific ones until the list comes out. Okay. But I know that there are. I've referred to it. I'll give you the sort of descriptive term which is there's contracts we have for people who think for us, who write reports that, frankly, historically have not been read by anybody in this chamber, but only by operational staff in the bureau's. That kind of contracting, I think, is is worth looking at, unless we're committing to actually read the reports and act on them. I don't think that we should necessarily go pay somebody to write it for us. I think that's the first place I'd talk about, and we talk about this in budget savings quite a bit. Okay. My two colleagues heard me talk about this at city club yesterday, so I'm sure it's. Yeah.
Okay. Great. I was just curious. Thank you. Thank you for today's presentation. Appreciate it.
Thank you. Vice president Clark councilor Morillo.
Angelita Morillo: Thank you, council president, I appreciate this presentation and the work that's been put into it. But I do want to express some frustration. And I just regarding the feasibility and the service reductions that we're going to have before us, because I think choices that were made before are going to make it a lot harder for the fy 20 2627 budget. In the fall, I offered an amendment that would have required a relook at service reductions and given us time to actually enact them, and the amendment would have put us in a very different position today. Instead of an $18 million shortfall, we would have a $7 million shortfall. And make no mistake, we would have still had, you know, that 7 million to find, but it would have positioned us a lot better to meet the needs that we have next year. And so I don't look forward to service reductions. I don't think any of us up here or out there do. And we have structural deficits that need to be addressed ongoing. And I worry that we could find ourselves in a similar situation next fall. So I guess this is just my, at this point firm ask that we really have a more proactive approach and that we work on it together as the legislative and administrative arm so that we can be less reactive moving forward, because I think these cuts are going to be very painful. And had my amendment passed, it would have been less painful than it is right now. And I just had to state my piece on that. So thank you.
Thank you, counselor Morillo counselor Green.
Thank you, mr. President. So I have a question about I'm just trying to think ahead to the next step, like we're going to be in the budget. We're going to get through this. We're going to adopt something. It'll be fine. Well, maybe it won't be fine, but we will. We will solve this very specific legislative action. And then we're going to go into this budget and we will have to consider an overexpenditure ordinance, probably very near to the end of the fiscal year. If I recall correctly, if if a bureau wants to carry something forward, is that the place to do it? If we want to be very explicit about what it is we're going to adopt in the 2627.
So, yeah, I mean, I'm, I'm sort of generally cautious cautioning against carrying over as a practice because basically what we do when we carry something over is we appropriate the funding in the current fiscal year, we add it to the adopted budget, and we recognize the revenue as beginning fund balance to back that expense in the adopted budget. I would say, you know, it's probably more prudent to just allow those funds to fall to balance rather than appropriating them in the given in the current fiscal year and and recognizing them as beginning fund balance, given how tight we are, normally there's enough sort of things coming out in the wash that it's not a concern to appropriate the money and put it in as beginning fund balance. We're fairly confident that it's going to show up, but I just I worry even in June, you know, there's still there's there's actually 16 accounting periods, right. That like I worry in given this fiscal year about about having that practice available at all. So that that's my kind of advice. Obviously council can choose to do it if, if there are discrete things where there's like truly underspending, we're confident it's there. And and then yeah, all we're doing in the eo at that point is sort of cleaning up the current fiscal year and appropriating it just to show this is where this is kind of what happened to clean up the record, but you know it from a balancing standpoint, I, I it makes me a little uncomfortable this fiscal year given the situation that we're in.
I appreciate that answer. And colleagues, mr. Mayor, the city manager, the reason I'm asking that is because I would like this budget to be the one where we never again assume that we are going to do these encumbrance carryovers, that we will sort of just pay forward beginning fund balance in the next fall. Tau I think at some point you got to rip the band aid off. This is the year I recognize. However, we had some conversations councilor Kanal specifically specifically related to public safety, that there were really crucial reasons why that contract maybe have been paid for in 2425. It's still in the phase of being executed. Get that? But it seems that should be the exception rather than the rule. And I think if we if we met, it's mark, it's March 5th. If we start thinking that way on March 5th, I think we can enable our bureaus to say, give me the very short list of things that absolutely are critical. They're going to set us up this five year get well plan. Let's think about appropriating them in the eo ahead of it. And then that way when we adopt the budget council knows what we've paid for in fy 2526. That's just a suggestion. I know of no other way other than saying everything falls to balance, to control for that. And I think that might be too much of a blunt instrument. So I'm just offering in the spirit of. As we got into this cycle, I said I would try to lay as much on the table as possible. So we're not reacting to the mayor's budget on a very short timeline. I'm I'm messaging now colleagues. That's the direction I think I'd like to go. And I would like your thought partnership and and getting there. Thanks.
Thank you. Councilor Green looking to the queue, seeing no one else.
Council president, I appreciate that. I just wanted to correct one thing real quick that I did look back and have some dialog that it is councilor Novick the 2% is the flexible bucket. So that's the 8.6 I think is the is the amount there. So just wanted to correct that while I had a quick minute that it's not the 0 to 60 shown here, it is in fact a 2%.
Sorry.
You just cost the general fund $3.5 million.
My bad.
Councilor Kanal thanks. I agree with the broad thrust of everything councilor Green said. I'm not sure about the eo specifically, but I do understand that that is the thing you do before the fiscal year starts. I agree also that we should retain some flexibility. I think there are good carryovers. There's not maybe as many as have historically been used, but I think broader the broader idea is that when people are assessing a budget, that we are looking at the dollar amount in the eventual adopted budget as the thing that will guide your service provision, and without adding an assumption that if there is an assumption, then that's a separate service that comes with a separate pot of money through a carryover. I think as long as that communication is clear, the mechanism is whatever it needs to be. But I think that's meeting the underlying need there. I did have one question that is not on here, but I need to bring up as someone who is, we talked a lot about the the 9.5% reduction, the first year of the 20% reduction in those seven streams of businesses. And we heard a little while ago, a few months now, two months now, that the projected savings associated with that had not fully manifested. And my questions relate to a. If that's already built in here, how much we're talking about, and b how that's going to affect what happens next in terms of is this part of the 1.2, is that what I'm. Yeah I'll let you.
It's okay. No it's fine. Finish. You can finish.
So yeah I think I think the the it's disappointing as someone who did not support the, the reduction in this way, I nonetheless believe that if council voted to do it we should have seen it. And I'm a little bit disappointed to not see that conversation. I think it was a bit of a blunt instrument, but I think that was part of part of its intent. And so I'm trying to just understand that I know it's not in your hands. You're not the bureau directors, you're not the dca. So I don't mean to imply that, but if you could just get a little more, give us a little more information on that.
Sure. Yeah. So the placeholder reduction that was implemented in the budget of the 10% was about, I think, 3.7 million of general fund in, in fiscal year 25, 26. That reduction is there. Right. It's it's out of the budget side of the equation. And so to to the extent that those positions are still filled and they're, you know, generating cost, it is in the forecast already, I don't have a breakout of exactly which of those positions that are potentially in those buckets are still filled versus vacant right now, but that it is already assumed any kind of overspending compared to what the plan was, is already in the 1.2. The ones it is still the case that the the only function that's really been effectively fully implemented is communications. And so the rest of them are not there. Now, has there been attrition related to it? Probably. But the the like actual realignment decisions have only been implemented, have only been done for communications so far.
So if that's.
I don't know if this is 1 to 1. So if, if we're looking at it was supposed to generate $3.7 million of savings, we're seeing a 1.2 overspend. That means it resulted in a $2.5 million, roughly reduction in spending when it was projected to to do 3.7 is that.
I would not draw that conclusion again. There's the hard thing is that there's just a lot going on in these numbers because they're just a net overspend or underspend number. And so it's the 10%. It's the not having compensation set aside. It's police and fire overtime and revenues coming in high or low. So we can get you certainly more details on that specifically. We'd have to do a little bit of analysis to try to get at it, but I wouldn't I don't think I don't think we can draw that conclusion from the numbers we have here.
That's fair. And I, I don't need it right now. So I appreciate that. But it is helpful to understand because I, I I'll be honest, I put up an amendment that that had a similar it didn't pass, but it had a similar approach to it of of achieve a reduction in this way. And I think there may be something to learn in terms of being more granular. And instead of a blunt instrument, to use a colleague's words on a different item, the and that's, that's for us up here. But I think also as part of the the decision making process, it would be helpful to to have for this year's budget an understanding of what the current fiscal year's budget that we adopted last June, how successful that could have been versus what ended up happening. So thank you, council president.
Thank you. Councilor Kanal counselor Ryan.
Sameer Kanal: Thank you. Thank you, council president. I came in 15 minutes late and I it felt like I came in an hour late. So I hope that you were able to finish your presentation. I think from listening to this, which has been a little bit challenging to track, two things I want to ask. One is I suddenly have a lot of concerns about our bond rating. That's something that I try to pay attention to in such conversations. Do you have any concerns about it at this point with these numbers?
Thank you counselor. From the seat I sit in, I always have concern about our bond rating, but I think I'm comfortable with this approach. I mean, we've communicated to the rating agencies at the last conversation we had with them in 2025, the end of 2025, the reality. And so that was recognized in that rating. We're currently having a new 2026 iteration of that conversation, and we'll have those rating results here actually hopefully tomorrow or beginning of next week. And so I can't can't speak to that. But but I you know I think. Among the things they care deeply about are strong financial management and and fund balances. And we score pretty well on the former. We're putting some of the latter at risk. I think that's a natural circumstance of where we are. And so we have to be really, really mindful of that. You know, they've certainly flagged that as a risk in their reading reports that they've provided us. So I think it's a long answer to your question. Short answer is yes. You know, it is something we have to be mindful of. I think their understanding of the of the rating agencies are understanding of the financial environment and appreciative of the actions that we're taking to correct that without, you know, really doing ill advised strategies.
That's fair. Thank you. Jonas. I also know that we do we vote on this before we get the last revenue forecast, so we'll know what what the business tax revenue.
We'll have an updated revenue forecast in a few weeks before you vote on this. And then the last revenue forecast this year will be the first week of may. And so that will reflect any additional data that comes in during the last two weeks of April, when we get a lot of their return data.
So we can expect that we will have some adjustments in a few weeks before the vote.
Yes, the the numbers on this slide are more or less what we would expect. I don't know if you have specific questions. Peter can come up.
Yeah. And maybe councilor Just flag. I think we'll have an updated forecast. Our indications are it will probably be on net materially different than what we're seeing today. Is that fair.
Yeah. Yeah. For for the general fund for the current fiscal year it's looking slightly worse. And yeah, not expecting huge movement from there.
Okay. That's all. That's all I need at the moment. I couldn't track all of the amendments we should have passed if that would have happened. And everything would have been better because that didn't happen. This is where we are. I just need to say it was difficult to track that as a conversation was going on. And so I look forward to more dialog with a couple of my colleagues that were making those points. Thanks.
Thank you, counselor Ryan. Seeing no one else in the queue, I'll ask my question. What more do you need from us at this stage?
Yeah, a great question. I was thank you. Council president. This is a great conversation. I think we're you know, we're mostly there, I guess the way I might frame the bodies of questions that we would be helpful to identify, one is, I think, at least. Kind of a nod of the head, that the options that are up on the screen are generally acceptable. And things that we can think about implementing into the actual ordinance document I think we need, I'd be helpful to have a little bit of clarity, whatever that looks like on the next body. How do we fill the remaining 6.6? And and we don't have to have that necessarily today. But we'll need to know that certainly before we prepare the documents. And then the third question, third question I have is just around that timing, right? I mean, I hear councilor Kanal, chair of the committee, the whole feedback about the challenge on that agenda, we do have some, I think, collective shared motivation to keep the technical adjustment ordinance on this schedule so it can be completed prior to the mayor's proposed. And there's only one meeting of the committee of the whole that fits that schedule. So that's the third piece I'd love feedback about, you know, is that something a date we should be targeting, in which case we need to get documents really completed here in the next couple of weeks? Or are we moving to that first council date? So I don't know if you want to take a pause, but those are the kind of three, I think, pieces of feedback that would be really helpful to get from from you all today.
Okay. Great colleagues, we have some additional things to weigh in on. So folks want to jump into the q councilor Smith.
Loretta Smith: Thank you, council president. Thank you for the presentation. I think I sent you and ruth city administrator, an email. I do not support your suggested cuts specifically for the council, for the council, and specifically, I can say for me, we're going to spend our budget and I appreciate if you take mine out of your calculation.
Yeah. Thank you. Council will look at that email. And I would just say, I think to ruth's point earlier, I know that there's work done to look at each individual budget. And so if that's the expectation then that should be what you should do.
That we're going to spend our entire budget. I also gave you gave you a suggestion to look into the materials and services budget in the city administrator's budget. I think you all had a $55 million beginning balance.
We'll look into it. The the. I'm not I'm not sure what the beginning fund balance is that you're talking about. I'm reminder that we're just looking at the general fund right now. And anything that would be it.
Was it was general fund. I think they had a July 1st. They had a carryover of 55 million.
I'll look into that. We yeah, I don't know it off the top of my head, but yeah, we can certainly put that on the list. And I'm hearing a lot of interest in looking generally at the encumbrance carryovers from the fall. So we will certainly pull up that detailed list and, and get information from folks on where those stand. And we will check specifically on city administrator.
Thank you. Because I noticed you didn't take anything out of the mayor's budget either. But you took council's out, so you need to be really fair. But but the other issue is I think you just need to do a constraint across the board. Just do a 1% constraint. And then you'll get your money. This I've never seen this nitpicking of a way to to get money and picking individual offices and departments to take money from in the in the current fiscal year, not for next year, but for the current fiscal year. We have either been getting bad advice from you and we should not be getting it anymore, because for you to ask us to take budget money out of this year and we're in March already. I would say we've been given bad advice. And. Generally people do just a constraint period to to figure out the hole. You're making this so much harder than you really need to, in my opinion. I don't know what kind of direction you've been getting. I don't know where this direction came from, but it is not the direction that I would have given you.
Sorry, just one point of clarification. The mayor's projected underspending is counted in here. I just didn't pull it out. So we pulled out count council offices and the auditor's office. But we didn't pull out the mayor's office. We're just assuming it gets returned.
So put it down like you do everybody else's. Don't make any. Don't do this. Don't malign us while you protect the mayor's office and his budget. Don't do that. That is not fair at all. Just do a constraint. Could you go back for. For me? I don't know if you work for me or you work for the mayor, but if you could go back and just do a 1% constraint or a 0.05% constraint and see what that looks like across the board.
So, I mean, I think that's a question for you all is, you know, is it.
I can't ask you anything you say you are I'm asking you, can you please do that for me.
And tell you the amount? Yeah, certainly.
I can.
Certainly do that. I can do that. Yes, please.
Thank you. Put that up as an option.
Thank you, councilor Smith. Councilor Green.
Mitch Green: I got in the queue because I was just going to ask my colleagues if they would tolerate a considering a $2.2 million cut to council offices, because we don't want to waste any time. I think I know the answer. I know personally, I don't really got the bandwidth, so just trying to be helpful here. I guess I don't need to. Yeah. I'm done. I just wanted to know what you guys thought. I think I think I've got my answer.
Okay, colleagues, I did promise we were going to take a bio break. It being 340, I'm actually ten minutes past. But I also know it kind of feels like we are starting to see the end with folks. Rather we barrel through and maybe end early. Okay, great. Councilor pirtle-guiney.
Elana Pirtle-Guiney: Thank you, council president. In answer to the questions that you asked, I am prepared to need to support everything. On your first slide. There are things there where I, I think there might be other options that I would like more, but I am prepared to support all of these. I am not prepared to support a loan from our funds for the out of the core. Given what I see as our fiscal realities for the next few years. If we were looking at a one time need and then a flush year two years from now, where I had assurances that. I guess not assurances, but but belief that there was a good chance that we could repay it quickly. I may have a different answer there, but in our current fiscal situation, that is not something that I am comfortable doing. If we get really stuck and we're talking about a half $1 million, something like that, I'm willing to reconsider that. But I'm certainly not willing to to vote for that at the $7 million level or anything close to it. I would be interested in seeing if there are things that the mayor will be cutting next year anyway that we could cut now, even if it's not significant savings. Two months starts and helps to replace some of the funds that you're hearing from us. On that second slide we're not interested in. And I think it would be good for us to look at that. I believe that my team has updated our numbers recently with our with our support staff who are looking at our budget and my budget. My office budget may be able to spare a little bit of money. I don't know how much you've pulled from each office in that 2.2. I am happy to work with the internal teams to make sure that the numbers from my office are accurate, though, so that you have an accurate read there. Thank you.
Thank you, counselor pirtle-guiney councilor Kanal.
Sameer Kanal: Thanks, I appreciate that. And it's your question that led to this, counselor Dunphy. No, it's I think it's really good that we're having this conversation when when you asked when you verbally asked what whether or not we were prepared to support what's on the slide. The slide was changing. So I'm going to be super clear here. I am also prepared to support what's on the first slide, the one that starts with the unrestricted general fund contingency. I think the second slide has clearly at least one counselor on two different things that are nonstarters for them, and I think that's good. I also would like to see for the remaining unspent money what a constraint across the board would look like, just from a percentage perspective. I'm also interested in councilor Pirtle-guiney request of of trying to see if we can scale down something that's going to get cut anyway, theoretically a little earlier. I am more open, I think, on the the loan from the corf. Given the piece that you, ruth, said earlier about how it is an ongoing replenishment that's already built in and that's already projected, that helps put my mind at ease. I wouldn't want to do the whole seven either, so but I'm a little more open to to that particular piece of the conversation. And then finally can't find. Here we go I am I'm also still pretty interested in looking at the the targeted bureau reductions. Beyond. Beyond what's in in this particular list, just because there's some things that that can be potentially cut next year that that maybe the mayor would know as he develops his budget. There's some things that the bureaus can put up, but there's also some things that maybe are outside of that universe that are worth exploring, too. It's hard to to say. I don't know what I, you know, to we don't know what we don't know. But I think more options are are helpful in that. And I just wanted to offer to. So thank you.
Thank you. Councilor Kanal vice president Clark.
Sameer Kanal: Thank you, council president. Ditto on the first 11.4. All good. I'm good with that. On making up the next 6.6. I'd be fine to take it all from housing. If not that, that's not possible. Take. You know, some portion of the harbor reserve, although we're going to have to make that up someday. So we're just kicking the can. But I definitely don't want the targeted bureau reductions or the council underspending. And I am curious about councilor Smith's 1% constraint, just to see what that would look like. But that's all I have to offer. But thank you.
Thank you. Vice president Clark councilor Novick.
Steve Novick: I agree with councilor Pirtle-guiney. I'm very worried about dipping into the corf, and I also agree with councilor Pirtle-guiney that if we're since we know we're going to have to be making some cuts next year, real cuts, then if we can identify some that we know are going to be making, we might as well start making them now. And here actually, I would ask the mayor, I assume at this point in your budget development process, you've already identified some cuts for next year, and if you were willing to put some of them on the table saying, look, here are things I know I definitely am going to cut, then we can start cutting them now instead of waiting for a couple of months. And finally, on the targeted reductions, I think I missed. How were those arrived at? Was each bureau given some sort of rubric to work, to run through and require to come up with something? Or is it more, hey, bureaus are the things ems stuff you could cut? Let us know. I'm just curious how that 1.8 million was arrived at.
Do you want to speak to that?
The $1.2 million.
The 1.8, the the purchase order, closing pose?
Oh, sure. Yeah. So we got to the $1.8 million number by pulling all city encumbrances over $100,000 that's currently in our system. And we asked bureaus to review each purchase order based on a series of questions similar to what you all saw in the fall. Tao. So questions like, what's the justification for this work? What is what could be stopped? What could be like? What could be canceled, what could be paused and maybe delayed to next year? And then we asked for possible like what the net savings would be if a purchase order could be stopped or could be paused. Again, we looked at purchase orders over 100,000 just for to to make sure that the juice was worth the squeeze for the exercise.
So does the 1.8 million represent all of the. I mean, how did you pick which ones to go with? It was based on the bureau's recommendation. Yes. This is what we could live with based on just your analysis saying, all right, based on what they've told us, this is what we think they can live with.
I think it was all the ones where they said that that it could be stopped or paused.
Okay. Thank you.
Thank you. Councilor Novick. Councilor Ryan.
Dan Ryan: Thank you, thank you, council president. I just wanted to say that I'm uncomfortable with any cuts to any dipping further into any reserves. Our rainy day is here, sadly, and there's no economic report that I've seen that says we're going to get out of this in the next six months to a year. So I just wanted to underscore the points I've been hearing from a couple of my colleagues. Thank you.
Thank you, councilor Ryan. Colleagues seeing no one else in the queue. Oh, I see you just have to say that. And then they get back in the queue. That's how we do it.
Mr. President, I. Probably yeah, I maybe this goes without saying, but of course I'm always up for cutting council budgets.
And councilor Green.
Mitch Green: I'm in the same page with that. I didn't want Mitch or councilor Novick to think they're alone. Thanks.
Councilor Green.
Mitch Green: Thanks for the record. I'm not trying to cut council offices. No, I just want to note that the general reserve reserve fund, the general fund, reserve fund is for triggering an a rainy day. So you trigger it when you you're in a recession. I don't think we should do that. I want to be very clear, but I, I just want to note that that's what that is for. It's not for flush times.
Thank you, councilor Green.
Mitch Green: Councilor Avalos just because it keeps coming up. I also do not support cutting the council budget, our council budgets, and I mean that very seriously. I work really hard to use all of my budget. I've been putting it in community. We put on a lot of events. We provide child care and food at those events that cost a lot of money. I also have five staff, and I have those staff because they have to execute all of my programs, and we've got our district one office opening up soon. So on a serious note, I know it's been mentioned in a joking way, but I talked with the budget office about this. Like the like not this budget office. But when they were talking about my budget and they were like, your budget is one of the ones that you're using almost every single penny. And so if y'all's budgets get cut, you're going to have to cut staff. So I'm telling you that, seriously, please do not do that. I need my staff and I need my programs. And I also will just say as it relates to doing, you know, across the board cuts, I know that sounds easier, but it's not. I don't think that that's the right option. I think that providing targeted cuts to things that, you know, need to be cut, for example, or overspends like that is a more equitable way to go about it. Because once you start doing across the board cuts, then budgets that are already running on thin margins have to go under, while budgets that are in surplus, they get off easy. And these are hard decisions. And so making a 1% cut is the easy route. And I don't want to take that route. Thanks.
Thank you all so much for being here today. Thank you, colleagues for a good discussion. Did you get enough what you need at this moment?
Yeah, I think the only other question I just want to circle back on is process. I mean, I think we have certainly have enough to go on to bring forward a proposal and we can follow up with with you and councilor Kanal on whether we should come back, try to come back that last week of March, first week of April.
We will treat this with as much urgency as it deserves, and we will figure it out with our really stupid schedule. So, colleagues, with that, we are adjourned.