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HomeMy WebLinkAboutRPT 1 BUDGET MATTERS 06-02-80DATE: MAY 21, 1980 REPORTS Inter-Corn TO: HONORABLE MAYOR AND CITY COUNCIL FROM: DAN BLANKENSHIP - CITY ADMINISTRATOR SUBJECT: BUDGET RELATED MATTERS The purpose of this memorandum is to give you additional time to study certain budget matters. These are by.no means the most critical and are not all inclusive, but should be hel~pful. TIMING The budget process is running significantly later this year due to the added complications of the Gann Initiative, Proposition 4, passed last year. In addition, the Finance Department is attempting to further divide the departmental budgets into divisions as a means of providing more information to Council. This develop- ment of divisions creates a special complexity the first year in which the sepa- ration is made. This experiment can become a regular part of the budget if Council .likes the approach. We are presently attempting to work toward a June 9th com- pletion date for submitting the Budget to Council. This will require a series of closely spaced Workshops for Council review before adoption the end of June or early in July. BUS SERVICE 'The news of the Orange County Transit District budget proposal to provide service to Tustin in December, 1980, is encouraging. I believe we should support that O.C.T.D. proposal by a Council letter. After reviewing budget priorities, I beli. eve we must seriously question attempting to continue this service to a limited section of our citizens. It would seem logical to continue the service until the start-up of O.C.T.D. service to avoid disruption of service. This will allow elimination of the bus driver position and dispatcher position at mid-year, allowing the addition of a maintenance man at mid-year for improving our maintenance capability and ability to assign a person to each park for better assistance, security, and van- dalism control. If we are going to eliminate the service, the staff needs to know as early as pos- sible in order to avoid hiring people who may have to be laid off. We presently are recruiting a bus driver and have a transfer of an existing employee pending as a dispatcher. Honorable Mayor and City Council Re: Budget related matters May 21, 1980 FIRE SERVICE ALTERNATIVES Council is considering a report regarding fire service alternatives for the City of Tustin. Dne factor which has not previously been dis- cussed is the impact of Proposition 4, which creates an expenditure limit. With the City's emphasis on capital improvements and the present rate of inflation, the City is going to experience problems with the expenditure limit. In fact, the City will probably have revenue in excess of the amount which can be legally spent. The point is that the duplicate first year costs and initial investment of forming a City "traditional" fire department or public safety department are excessive to the expenditure limit of the City. We cannot spend that much, even though we may have General Fdnd reserves adequate to do so. It would appear to require a vote of the people in Tustin to "raise" the City's expenditure limit (only good for four years) if the Council wished to pursue one of those alternatives. I would not anticipate a favorable public vote unless the economics and level of service of the re- commendation were so superior as to rally strong Council leadership and general community support. The present consideration of alternatives is assisting in making the County Fi re Department very receptive to reasonable arguments for adjustments to the future fire contract costs. Council may be best advised to delay any serious discussion of the alternatives, or rejection of the alternatives until a favor-- able fire contract is assured. The alternatives are valid approaches which some day may be a better answer for Tustin-but that time does not appear to be now. CAPITAL IMPROVEMENTS In past years, it has been the practice t° show any capital project which might feasibly be funded during the year through potential grants or cooperative projects with other agencies. It will now be necessary to show only those pro- jects for which funding is reasonably certain or to show the City's matching funds without the~other funding which is being sought. This is due to Proposi- tion 4 because showing such uncertain funding "uses up" the City's expenditure limit, which may prevent budgeting real funds for operating or other capital improvement purposes. The City is faced with some very large capital improvement projects. Bob Ledendecker has worked hard to apply for funding from other sources such as Federal Aid Urban (FAU) System funds, Arterial Highway Funding Program (AHFP) County funding, and County Flood Control funding. The City will need to keep some of its expenditure limit available so that some of the "other funding" can be added to the budget when it becomes morea reality. Some of the huge projects like Moulton Parkway, Bryan Avenue, Newport Avenue extension, and similar projects with large grant funding may require that the City go to the Honorable Mayor and City Council Re: Budget related matters May 21, 1980 voters for an increase in the expenditure limit in order to be able to spend the funds offered and accomplish the specific improvements. It is a strange situation to now be soliciting funds for desirable projects without knowing whether or not we can actually spend the money. The situation would be alleviated greatly if the FAU funds were to be classified as exempt from the expenditure limitation. Such large grants just cannot be assimilated within the tight limitations of Proposition 4. STREET LIGHTING The apparent bud§et surplus'of bevenues over the Proposition 4 expenditure limit may make possible the absorbtion of an existing service like street li§hti.ng,~ which carries with it an additional expenditure authorization, with- out imposing a new service charge or user assessment. This is true even though the street lighting district will no longer have adequate property tax funds to support the service, because the City may have "excess" revenues which could be used to make up the difference. True, these "excess" funds could be returned to the public by reducing the City's property tax requirement below its full allocation. Such a reduction may be possible in any event, once assessed valua- tion figures are available in August. But the use of some of these "excess" funds ~o avoid the need for an assessment procedure with a high set-up cost would appear'to also be in the public interest. The County will probably have to levy a benefit assessment on the street light- ing districts under its control in 1981-82 after using up the reserves of the various districts this coming year (1980-81).