« Desert Hot Springs 50th Anniversary Celebration, Nov. 30 | Main | Balloon Chain »
November 15, 2013
DHS City Council Study Session, November 12, 2013
City Councilmember-elect Joe McKee sat at the table with the City Council and city staff, but he didn't have a name tag.
Public Comments
Todd McAnce said the city should focus on the city that exists and keep it clean and beautiful. No new taxes, "with the exception to the parcel tax equitable." He suggested a 40% wage cut for all city workers. He said the city is paying "two-million plus, as is." A 40% cut will save approximately $1.25 million, he said. "There is not going to be any less crime if police officers make less pay." He suggested setting up a "business-artist district where the permit process is not erroneous." "One low permit, process only. The businesses will generate traffic." He also suggested allowing coffee shops, bars and restaurants to offer entertainment without extra permits. There should be no unnecessary permit processes. "Don't sell out the city to dirty businesses like the fuel storage facilities." Hire volunteers and interns.
[If you are curious about the math, $1.25 million is 40% of $3.125 million.]
Larry Buchanan acknowledged the difficult position the City Council is in. He wanted to make a personal apology to Councilmembers Betts and Sanchez because he had thought they were wrong because he had read the budget and what they said contradicted the information in the budget. "I was wrong and I apologize," he said. He also apologized to Joe McKee. The information Mr. Buchanan had differed from the information they had. He said he wanted to make a real pitch for public safety. He moved here because the city has been cleaned up and made more safe. A lot of his friends advised against Desert Hot Springs, saying it was a "mess." "It turns out it was not a mess," he said. He went on to say that we are all here to help and the City Council should ask for our help if needed. He suggested the City Council needs to look at all of public safety, not just a little piece. Suppression of graffiti is really important.
Kip Anderson said he was very disappointed that we had to be here. He is a COP, a volunteer with the Police Department. He does not want to see the police cut. He could perhaps see a freeze on their salaries, but not a cut. "We need our police and we need them with good morale." "We need our top people to work with the city and to work together." He has seen the council having problems getting along and agreeing. We don't need that right now. He suggested COPs could help with Code Enforcement by spotting violations while patrolling the city. They could bring that information back to Code Enforcement officers to write up. COPs could follow up on Code Enforcement notices to see if there is compliance. All subsides that we don't really need should be cut. We need to bring more business into the city. He said some people like Walmart, some don't, "but people shop at Walmart." The city needs to do whatever it can to bring in Walmart. He said it would attract more business and money. He sees DHS residents shopping at the Palm Springs Walmart all the time. He doesn't like taxes, but he wants to keep the city safe and growing. He said we should take a look at some taxes.
Paul Miller has lived here since 1995. He has prayed for "you folks." He prayed that they have wisdom and peace. He prayed they set aside personal issues, if possible. He is volunteer for the police and to think that affecting the morale of the police would not affect crime in this city is naive. To think that cutting police services or heaping on additional responsibilities would not affect the crime rate and the image perception that would result... He recalled what it was like before this incarnation of the Police Department. He said if we want to return to the days of the Sheriff's Department then we should rename ourselves "Dodge City." He encouraged the City Council to do their due diligence. He prayed that we all have open minds, rather than name-calling. He said he wold pray during the meeting. "God grant you peace, grant you wisdom, especially wisdom that will amount to good decisions to be made. Amen."
Dean Gray has lived here for 14 years. Since November 2012 he said he had missed only one meeting of the Finance Committee. They discussed finances and there were no surprises. No one was shocked, but "you didn't do anything to change it." He said that Jan Pye and Yvonne Parks were probably really nice people to socialize with. He doesn't blame them "as a person." "We knew what the problems were and we didn't fix it." He asked if we were spending $3 million or $6 million or $5 million from reserves. He wasn't sure. At the first meeting of the Finance Committee in November 2012 he asked "How much are we paying people? We found out one week before the election." The public was cheated and lied to when we were in trouble. "That's unfair." He said we are blessed with a new City Council and a new Mayor. He looks forward to solving these problems.
Vincent Selekia has been living here about 1½ years, but "we all know we have a problem here with crime." He does a lot of volunteer work. He wanted to ask the City Council just one thing. "Please, whatever you do, don't begin with an option to get rid of the Police Department or to reduce the pay of our police." You get what you pay for. He said the council's first responsibility is to keep the public safe.
Judy Shea has lived here for 22 years doing non-profit work since 1997. She has seen some wonderful things happen in the last six years. She looked at Jeff Bowman's analysis of the parcel tax. She thinks that needs to be looked at. She believes we can all work together as volunteers. We need more volunteers. "Maintain the Police Department as it is. The worst thing we can do is to do anything to the Boys & Girls Club." She suggested approaching the Desert Healthcare Foundation for funding the Boys & Girls Club for the next five years. She has been on the Finance Committee with Dean Gray and their viewpoints are very different from each other. The people who come to the Senior Center are dependent on it for services, including a meals program. The holiday parade is going well with volunteers and donations. This community deserves more good stuff.
Financial Update
Interim City Manager Bob Adams said he was aware that the City Council and outside consultants, specifically Urban Futures, had been looking at finances. He doesn't know the full history of the Finance Committee, but it was in October that there was a joint meeting between the committee and City Council. Since that meeting the Finance Department has been working the auditors. At the November 5 council meeting Interim Finance Director Amy Aguer told the council that the ending balance for FY 2012-13 was $3.1 million, about a million less than what we had thought. Ms. Aguer has also determined that some of the revenue projections were optimistic. Staff has not yet taken a second look at all expenditures to be absolutely sure of the numbers, so they need to be studied more. The city has had a deficit budget for a number of years. We've been balancing it with reserves. At this pace we may be out of money before the end of this fiscal year (June 30, 2014). The property tax revenue from the county won't arrive until late December or early January. The second piece of that comes in late April or early May. Sales tax from the holiday season will come later and tourist season has just started and that will mean a rise in TOT receipts.
Interim Finance Director Amy Aguer said she started in July 2013. The auditors were here in the last week of October. She is still researching the city's capital improvement projects back to 2008-09 to make sure that revenues are matched up correctly so no money is taken from the General Fund erroneously. She has met with the department heads to try to determine what our actual revenues will be. Our expenditures need to be refined. She believes we can come up with the cost savings to keep the city going forward.
Mr. Adams said the list of 102 suggestions in the agenda packet was a "blue-sky type thing" where everybody's input was included. It's unfiltered. A bad idea might generate a good idea. He has been out of town for the last three weeks, so has no specific recommendations for the council. He said we have gone "in and out, in and out of having our own [police] force." "That's sort of chaotic. We need to stay with one decision and move forward." He sought out suggestions from all levels of staff. Not all of them have been costed out, but if the City Council is interested in specific items, they can be fleshed out with cost estimates. Action needs to be taken now.
Councilmember Adam Sanchez said we should have started this about a month ago. He asked for a timeline. "How soon do we need to start making some incremental decisions on services that we don't have the money for?" Mr. Adams made an analogy with an asteroid coming at the Earth. If you start early the asteroid has to be nudged only a little, but the longer you wait the more the asteroid needs to be moved. "We need to take some rather significant action in order to avoid the fiscal cliff that we're headed for." He said he believes there's some time if everyone works cooperatively. He said "first there's denial, then there's mistrust, then there's 'let me check those numbers for myself.'" Everybody needs to be educated and on the same page. The best way to do that is "sunshine," he said, meaning a meeting such as this one.
Mr. Sanchez asked if the next regular meeting of the City Council on November 19 would be a good time. Mr. Adams said it could be, but staff had only 1½ days to prepare the agenda for that meeting. Mr. Sanchez said "For sure, December third we have to get moving on this." Mr. Adams agreed and said that at staff level some things have already been done, citing the fact that Chief Singer has not filled some vacancies in the Police Department. With 34 authorized positions, only 29 are filled. Hiring is on hold.
Mr. Sanchez asked if $3 million is the goal for reductions. Mr. Adams said the number should be close to $4 million because that's the structural deficit (the amount by which expenditures exceed revenue). He doesn't believe that all has to be achieved in this fiscal year. If we can project that there will be cash on hand at the end of this fiscal year, then that will give us another fiscal year to continue the effort. Changes in salaries and benefits are "meet and confer" items, so they can't be done immediately. The legal procedure must be followed.
Mayor Parks suggested asking all outside vendors for a 10% reduction would save about $900,000. Mr. Adams said it would be more like $650,000 to $700,000. Attorney Quintanilla said he would be the first vendor to volunteer to do that [applause]. Mayor Parks went on to say that before the City Council asks any employee to take a cut, the council itself should cut its own allowances, specifically the auto allowance. Earlier she had recommended a 50% cut, which would amount to $19,000. In one month she carefully tracked every mile she drove and it came to just under $300 worth. The allowance has been $600. No council member did as many miles as she did, so she thought they could be cut to $250.
Mayor Parks said the city also needs to take a look at the leave situation. A starting employee gets 216 hours of annual leave which covers both vacation and sick time. At 40 hours a week, 216 hours is 5 weeks and 2 days. Employees can "buy out" [I think they mean something more like "cash out"] their unused leave twice a year. That comes to $250,000 to $300,000 twice a year. IOW, up to $600,000 per year. Mayor Parks said this needed to be looked at. She suggested splitting it into sick and vacation leave. In her experience a starting employee would get one week of vacation a year, gradually building up to 2, 3 and 4 weeks after several years.
Councilmember Betts asked about payment obligations that aren't being made. Mr. Adams said he thought we were current at the moment. Mr. Betts said he needed information on payments that the city is contractually obligated to make in addition to payroll. He said we have a $4 million to $7 million deficit with $13 million in revenue. "There's nothing like a crisis to bring around some changes that are definitely needed." He said a 10% cut isn't going to solve the problem. He said that the city could take action immediately on unrepresented employees. He said vacation leave should be use-it-or-lose-it. The council's mileage rate is just a drop in the bucket, he said. PERS just increased by two percentage points and the city picked that up, but we can't do that anymore. As for contracting out, he thinks that if private industry can do it, then city government can do it, too. "It's time for this City Hall to get lean." He said the council will begin working on this on November 19 or December 3. "The city can't suffer the services that the community is looking for just because we've got a very bloated, in my estimation, city hall salary structure."
He said "we have a distraction of staff time for a developer who wants to continue what to me is nothing more than starting up a sand and gravel quarry, a surface mine out in Skyborne development, and that's a huge distraction of time." A week ago "somebody was talking about staff doing cartwheels to accomodate this one developer and, I'm sorry, all hands on deck for solving this budget problem, not helping somebody get a sand and gravel quarry started up in a residential development again."
Mayor Parks asked staff to confirm their view that the existing budget had been too optimistic. Mr. Adams said "In general, yes," but then talked about a one-time sales tax payment of $450,000 that the city had been expecting, but the Board of Equalization ruled that we are not going to get that. OTOH, it had been too optimistic to expect some things this fiscal year that will not happen in this fiscal year.
Mr. Sanchez asked what we have in reserves. Ms. Aguer said that if the council made no cuts, the ending fund balance would be a negative $3.077 million, which is an impossible figure because you can't actually go below zero. Checks start bouncing.
Mr. Adams said the reserves are the rainy day fund and "it's been raining for 3 or 4 years now."
Mr. Matas said that Jason Simpson had outlined a 3 to 5 year projection showing that revenue would be down in this fiscal year. A year ago staff estimated revenues for this fiscal year, but now the Finance Director has found those projections to be wrong. He said the $450,000 was tax expected from the Sentinel power plant. The deal made by Assemblyman Perez and Assemblyman Benoit was that Desert Hot Springs would receive a $3 million fee and some sales tax. Now the Board of Equalization has ruled that the $450,000 is not going to paid to the city. The city needs to Mr. Perez and Mr. Benoit to see if this can be appealed.
Mr. Matas said our administrative fees had been reduced from about $1.2 million to about $800,000. The Economic Development consultant has 19 projects in the works. Those need to be evaluated to see how many of those could produce revenue this year. He cited Pierson Plaza as an example. He said the developer who is trying to restart his project (Skyborne) would bring some revenue to the city.
The Animal Control contract with the county gave the city a credit of $50,000/year over the next two years. Ms. Aguer said that needs to be factored into expenditures. Staff needs to go through expenditures for every department to find any savings. The cost of Code Enforcement has dropped too, and that still needs to be factored in. Mr. Matas pointed out that the expected revenue from Code Enforcement fines has been reduced and said that needs to be justified.
Ms. Aguer said the finance staff has been working overtime with the auditors and it wasn't until the end of October that she began to have a real "comfort level" with the numbers. Prior to that she didn't want to bring the council inaccurate information. There are still staff working on things that need to be cleaned up.
Mr. Matas said he would like to see projections into the next couple of years as well.
He said the city can't reduce police, period. It's ridiculous to even consider disbanding the Police Department. Keeping the staffing at the Police Department at 29 will save the city over $1 million in the next two years. We can't cut the fire services, either. The staffing costs last year for all employees, including all benefits, was about $9.4 million. You can't just cut 10% across the board. There are too many moving parts. Within the executive staff there are two contracts. Public Works is understaffed. Should the city cut off irrigation of the grass in the parks? Cathedral City did it once and they had more complaints about that than anything else. We need to continue to work with our economic development plan, pushing those future projects which will produce revenue.
Mr. Matas said the Desert Recreation District is another option. Desert Hot Springs is not within the district, but they can do an administrative annexation which could produce over $1 million for recreational programs which could help fund the pool and the Health & Wellness Center. He pointed out that Michael Busch offered suggestions in his Urban Futures report as well. Mr. Matas said he's not in favor of any more taxation. He said the city will find ways to produce revenue.
Mr. Betts thanked Mr. Adams and Ms. Aguer for "bringing us some reliable numbers." He thanked Mr. Busch for the early warning [applause - later Mr. Busch said it's the first time he's ever been applauded]. Mr. Betts said he didn't think this was the time to talk about brining in Desert Recreation District because that's another tax on the property tax bill. [Some scattered applause.]
Mayor Parks said she heard them clapping but asked how many wanted to lose public safety, "police on the street." Silence, no hands go up. Mr. Betts said "That's not the question." Mayor Parks responded that "It is the question." There's a disparity on who pays what on the parcel tax, she said. Some pay an exorbitant amount, some pay less, "and simple land owners are paying practically nothing." The playing field needs to be leveled with the parcel tax and this will generate a lot more money, but it will be fair and equal.
Mr. Betts said the proposal a few years back would have produced $350,000/year. He said developers [holding vacant land] pay $8 while the rest of us pay $240.
Mayor Parks asked Ms. Aguer to confirm that as of November 5 (election day) she had not told the council about her determination that projected revenues would be $2.7 million lower. She did so confirm.
Ms. Pye said that the adjusted budget for 2012-13 was received November 5. She agrees with Mr. Betts that now is not the time to discuss the Desert Recreation District because she thinks we should look at the public safety tax and make it more equitable. This is a higher priority because our community is growing. She asked Ms. Aguer what percentage of the General Fund goes to public safety. Ms. Aguer said she would need to calculate that percentage. Ms. Aguer public safety personnel take up about 85% of the personnel budget. The total public safety budget takes 67% of the General Fund budget. Ms. Pye said that if we don't make the public safety [parcel] tax more equitable, then public safety will consume an even larger percentage. She said she didn't think any employee's base salary should be cut because she thought it would encourage staff to leave and reduce both morale and efficiency.
She suggested putting furloughs on the incentives for two years, saying this would save the city about $1 million. She asked if it would be possible to have interns from the high school or a college handle the video of the city meetings. She also said the city should pursue selling 7 acres (estimated at $1.3 million to $1.6 million), which would only be one-time money, but it would give the city some breathing room this year. She said the city should more aggressively pursue business licenses because it's more fair if all businesses have their licenses.
Ms. Pye said she supports suggestion #29 which is to increase the assessment in County Service Area 152 to cover the actual cost of street sweeping. Otherwise, it should be eliminated. She supports suggestion #37, completing the user fee study. She asked when was the last time the city performed a utility audit (suggestion #38). Ms. Aquer said it was about four years ago. Staff is preparing an RFP for that. The contractor would be paid according to how much money the city saves on utilities as a result.
As for suggestion #40, closing Wardman Park pool and buildings, she said she could agree with closing the building and pool (depending on what happens with the Furbee Aquatic Center), but she doesn't want to close the "Cabot Building" in Wardman Park. The youth sports leagues meet there.
She does not support suggestion #47, reducing the hours of the Senior Center. The current hours are only 9 to 3, and some seniors are completely dependent on it, plus it offers a nutrition program.
Ms. Pye agrees with suggestion #51, consultants reducing their fees by 10%. She supports suggestion #53, recruiting college-level interns, but she said they should only be recruited to existing temporary positions. She also agreed with suggestion #62, increasing the number of salary steps. Suggestion #72 has to do with the fire inspection program. Since Desert Hot Springs is the guinea pig for the county's fire inspection program, we should get the county to pay for the start up costs. She supports suggestion #73, getting the county to cover $150,000/year of our fire costs for the next three years. The city would then repay the county over 10 years. She said the city is already meeting with the Desert Healthcare District and PSUSD to try to get more funding for the Health & Wellness Center from them.
Suggestion #81 is to decommission the police camera system. Ms. Pye asked Chief Singer to tell the council how effective the camera system is. If it's effective, then Ms. Pye wants to keep it running. She said suggestion #98 would not mean much money, but she supports it. #98 would require the city to bill private parties for clean up after they use city facilities. Suggestion #100 would have public works clean up vacant lots and then bill the owner, but the city first has to go through a legal process before being allowed to go on private property to do a clean up. Attorney Quintanilla said that was intended only for RDA properties. The city would be able to bill the successor agency for clean up of RDA lots.
Mr. Matas said we have to look out for the next fiscal year as well as the current one. He understands the Desert Recreation District would be a tax to be decided upon by the voters. Most cities pay $30 to $40 per household per year. It puts recreational programs in the community for all ages. It could be part of keeping the Health & Wellness Center open. He thinks the DRD should be discussed. He agrees with Ms. Pye's views on the Senior Center.
It's not just about public safety, quality of life, parks or roads. The council has hard decisions to make, he said.
Mr. Sanchez said he is glad the Mayor also wants to cut contracts by 10%. He asked Mr. Adams if that could be placed on the agenda. Mr. Adams said it could be placed on the agenda, but what they want to do is give staff the authorization to proceed with negotiations to get those 10% cuts. He said staff could come back with that pretty quickly.
Mr. Adams said that where he has seen consensus, he will bring those items to the council as soon as he can.
Mr. Betts said cuts in outside contracts should not be restricted to just 10%.
Mayor Parks said that during negotiations with staff, one item that must be considered is having the staff pay a greater share of their benefits.
Councilmember-elect Joe McKee was congratulated and invited to speak by Mayor Parks. He said the political season is over. The council has to work as a team of five. He thinks there is a mathematical problem. If all the government except police and fire were eliminated, there would still be a deficit. He said we have to be open to everything. He supports keeping the Police Department. He thinks they do a good job, but they have to look for some efficiencies. We don't want a Police Department with low morale. OTOH we have to be realistic. He would like to keep the Senior Center open, as well as the Health & Wellness Center. He would like to maintain the current funding level for police. But we can't. The city needs help from everyone. He encouraged those with suggestions, they need to put together a cadre of volunteers to help with some of the things that need to be done.
I was concerned that none of the council members mentioned "fiscal emergency," and was afraid that meant it wouldn't come up on the next agenda. It has, however, been placed on the agenda for the regular November 19 City Council meeting. It has already been noticed as a public hearing, but the City Council is not required to conduct the public hearing. A unanimous vote of all five council members is required to declare a fiscal emergency. A declaration of fiscal emergency would permit the city to propose taxes before the November 2015 elections and give the city power to revise its labor contracts.
Filed under Desert Hot Springs | permalink | November 15, 2013 at 05:25 PM
Comments
Thanks Ron for your excellent recap of the study session. I feel honored that Judy Shea remembered my spreadsheet used at the 2/11/2010 Public Safety Commission regarding the parcel tax. I then re-read your account of that meeting. You wrote: "Chairman Bowman reminded us that pushing the tax renewal at the same rate will leave public safety a million dollars short in 2010-11."
The city NEVER increased this critical tax and so they've had to cover this shortfall by whatever means they could - each subsequent year. As I said then, we only get what we pay for.
I know the council must do all they can do to cut expenses AND to demonstrate to the citizens that they have done so. However at some point these taxes must be adjusted to meet the needs of the city.
May the new city council play team - "One for all, and all for ONE... Desert Hot Springs!" We the citizens and business owners are depending on you to do so.
Posted by: Jeff at Nov 16, 2013 11:22:49 AM
The comments to this entry are closed.
