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April 21, 2010

Living Within our Means

• CFO's April 26 Budget Presentation to Council (pdf)
• Administrative Report: Redesign Plan - FY 2010-11 (pdf)
  
• FY 2010-11 Line Item Adopted Budget  (pdf)

Honorable Mayor and Members of the City Council:

Unlike the State of California, the City of Ventura remains committed to living within our means. In accordance with the Ventura City Charter, I’m transmitting today the “proposed annual budget.” Since the Council last year adopted a two-year budget based on the Budgeting for Outcomes effort, my recommendations are in the form of revisions to that Redesign Plan. The Proposed FY 2010-11 Budget provides a balanced approach to delivering key services within the resources available.

Like government at all levels, the national recession has deeply reduced revenues to our City. Ventura has rejected the approach taken by many local governments to “muddle through” by resorting to budgetary gimmickry, borrowing or using one-time money for ongoing expenses.

To live within our means, our Budgeting for Outcomes efforts have focused on “the results that matter most.” Last spring, staff and community leaders analyzed and prioritized every City service and function. The Redesign Plan recommended changing the way we do business and reducing or eliminating lower-priority services. With the support of our entire city staff (who all reduced their compensation by at least 5%), the City Council reduced spending by $11.4 million to balance the General Fund budget. Nearly 40 permanent staff positions were eliminated from the previous General Fund workforce of 494.

The Redesign Plan adopted by the City Council involved the most significant changes in our city government in nearly 20 years. But the continued deterioration of the economy reduced revenues by another $4 million during the course of the current fiscal year. Additional temporary measures were put into place (including holding an additional 40 budgeted jobs vacant throughout most of this fiscal year) to ensure spending did not exceed actual revenue.

The Proposed FY 2010-11 Budget is balanced, based on projections of $80.4 million in revenue. It safeguards the key services that keep our streets safe, maintain our quality of life and protect our environment.

At the outset of the second year of this two-year budget cycle, the City Council posed five broad options for balancing the FY 2010-11 budget. At the March 6th community workshop, civic leaders and activists thoughtfully weighed the pros and cons of each alternative. Though individual opinions vary widely, there seems to be key points of agreement that living within our means requires:

1. Further reductions in lower-priority programs and expenses (although here views diverge widely on what is actually “lower” in priority).

2. Continuation of employee compensation reductions, particularly in the area of employee contributions toward pension costs.

3. “Re-inventing” services to reduce costs, with some recognition that this is often easier said than done.

4. Opposition to budget gimmickry or borrowing to meet operating costs, but some guarded support for prudent short-term measures to ease the transition to a sustainable balance between revenue and expenses.

5. Investing in sustainable economic development that is consistent with community values, although again, opinions vary on just what approaches make sense and how quickly to expect tangible results.

In continuing the Budget for Outcomes approach of last year, the Proposed FY 2010-11 Budget recognizes the need for “continuing to reduce lower-priority services and expenses,” including:

• Reducing City staff by another 40 positions, affecting virtually every function of city government, cutting the General Fund workforce from 494 to 415 over the last two years.
• Consolidating our two nearby Senior Centers into a single facility, transitioning the Downtown location to shared uses that would fully offset maintenance costs.
• Closing Fire Station #4 and redeploying the staffing to reduce overtime at our other five stations.
• Reducing Police sworn staffing assigned to special duties in order to fully staff police patrol.

A much longer and more comprehensive listing of reductions and restructurings is contained in the revised Redesign Plan.

All city staff and unions are currently working under agreements that have reduced compensation by at least 5% through the end of this fiscal year. The City Council's policy direction is to negotiate continuing cost reductions such as a two tiered retirement benefit system and returning to employees paying their share of CalPERS pension contributions. Savings in overall employee compensation should be used to offset the impacts of the Proposed FY 2010-11 Budget on the community we all serve – and to reduce the need for layoffs of staff members delivering those services. However, since more than 85% of staff costs are contingent on the outcome of union negotiations, savings from compensation reductions have not yet been included in the Proposed FY 2010-11 Budget.

The third approach of “reinventing services” to reduce costs is a primary focus on the Redesign Plan, including this year’s recommended revisions. There are a number of new elements proposed:

• Moving Building and Safety and Code Enforcement from the Fire Department to Community Development in light of the economic downturn to reduce overall planning and permit staffing and consolidate permit processing.
• Redesigning park maintenance to maximize use of existing resources and provide a balance of in-house, contract, seasonal and volunteer staff. Crews would be reduced from 4 to 2 and be deployed based on the type of service provided, not geographic location.
• Shifting our approach to tree trimming to rely more on contracting, retaining one in-house crew to respond to emergencies and provide basic service. The overall savings would allow the restoration of $25,000 for emergency sidewalk repair.
• Reducing the need for overtime coverage for out-of-town training in Camarillo or Santa Barbara by utilizing our refurbished training site in Ventura.
• Providing on-line reporting system for “unknown suspect” misdemeanor crimes to expedite report processing and free up patrol officer time crime fighting activities.
• Consolidating civic engagement, cultural and social service efforts into a new unit stressing partnerships with the community.

The most significant current “reinvention” effort is a virtually complete overhaul of our information technology support systems. We are implementing new systems for accounting; budgeting; payroll; planning and permitting; code enforcement; utility billing; telephones; email; police dispatch; records management; and website. While daunting in its scope, bringing all our systems current over a three-year period will allow them to work together to provide widely enhanced access and convenience our citizen and business customers. The successful implementation of these efforts will allow major reductions and redeployment of centralized administration, particularly in the areas of financial management.

In following Council policy for “living within our means,” the Proposed FY 2010-11 Budget includes no borrowing or funding ongoing operating expenses with one-time money to “muddle through.” It does, however, reflect savings in worker’s compensation costs that are reflected in lower self-insurance rates. I am also recommending the use of up to $411,952 in one-time funding to ensure the successful completion of the comprehensive overhaul of our information technology systems over the next twelve months. We are making the transition to a new web-based suite of information technology solutions from “legacy” software systems that have been in place for more than twenty years. The success of that transition is not only vital to future major operational savings, but essential for “mission critical” around-the-clock operations of every one of our front-line services to the community. While I recognize this may not be an obvious priority when we are making sharp reductions in other areas, the disruptive impact of not adequately funding this transition will cost far more.

Following Council’s direction that “high priority will be given to longer-run efforts to restore prosperity and rebuild revenue to restore desired community services and competitive compensation,” the Proposed FY 2010-11 Budget invests in supporting job and business recovery in Ventura. Quite simply, with Measure A, the public delivered a verdict that new revenue to restore city service levels will not come from increased taxes. With last May’s Economic Summit, the Council, business organizations and the community have made a renewed and urgent commitment to our General Plan’s focus on retaining and attracting high-value, high wage jobs. This Proposed FY 2010-11 Budget provides for the creation of a formal partnership with the Chamber of Commerce, the Downtown Ventura Organization, the Ventura Visitor and Convention Bureau and other community and regional partners to achieve that goal with both short-term actionFowler City of Ventura Website Redesign Project Lead 805-677-3943 s and long-term investment. We will fund expanding the Ventura Ventures Technology Center (already home to 13 high tech start-up businesses); assisting local business retention and expansion with our Business Ombudsman; pursuing “green” business opportunities; supporting the innovative Jobs and Investment Fund; and giving applicants real-time clarity and certainty for processing permits for both new and existing businesses.

I recognize that in these difficult and increasingly polarized times, many of the elements in the revised Redesign Plan will be controversial. While I have worked long and hard to ensure that the Proposed FY 2010-11 Budget reflects the revised budget “Operating Principles” adopted by the Council Fowler City of Ventura Website Redesign Project Lead 805-677-3943 in February, I accept that tough choices are never easy.

For example, in light of the number one priority on public safety set by the City Council, we obviously weighed alternatives to the proposed reductions in Police and Fire staffing. One such option was to suspend operations of our Aquatic Center. Such a course would be instantly unpopular – and for understandable reasons. The Aquatic Center was made possible by over $1 million in private donations. During the last full fiscal year, the pools drew 126,000 paid visits. The Aquatic Center is also a destination for four national weekend swim meets annually, as well as the regional Special Olympics and Ventura High School championship tournaments.

Closing the popular facility entirely would save the City approximately $571,000 in net annual salary and operations expenses, resulting in laying off four full-time and about 65 part-time staff. Closing the pools during all but the summer months is estimated to save a little less than $400,000. Even a permanent shutdown doesn’t relieve us of $505,000 in annual debt service for the construction of the facility. On balance, while the Council could adopt this option, shutting down the Aquatic Center does not appear to be a cost-effective approach in light of the benefits it provides and the community’s investment in creating this facility. Similar trade-offs were weighed among all our city services and functions.

These often agonizing choices are part of the changed terrain we operate in during this continuing national economic crisis. I must acknowledge that in the pursuit of efficiency and preserving direct services to the community, we are scrimping on oversight and capacity. This makes short-term sense, but catches up to organizations over the long haul. In the absence of a shorter list of key services, we risk “robbing Peter to pay Paul” in a way that degrades our ability to deliver overall excellence. The neglect of median landscaping as a result of the $11.4 million cuts adopted last year is simply the visible “tip of the iceberg.” Most of the trade-offs are more insidious because they will only reveal themselves down the road, during a natural disaster or other crisis -- or during routine operations when a preventable error goes unprevented.

With these sobering concerns acknowledged, I submit the Proposed FY 2010-11 Budget, recognizing that even a balanced approach to providing key services within available resources will draw intense scrutiny and debate. I look forward to working with the City Council to refine the ultimate outcome, particularly as we continue to work with our staff to adjust compensation to reflect the changed circumstances we find ourselves in during the worst economic crisis in seven decades.

Respectfully submitted,

Rick Cole
City Manager