Fiscal sustainability quest begins as Council hires consultants, plans 3-phase community outreach effort
Benicia City Hall soon could be unable to afford providing all the services it does to residents, the City Council learned Tuesday night.
What should be done? Cut back on those services? Increase revenue sources? Strive — or hope — for more prosperity?
To begin to answer those questions and develop the financial stability that can help the city withstand economic ups and downs, the Council hired San Jose-based Management Partners at $59,900 to assist city staff in launching a three-phase Sustainable Community Services Strategy (SCSS) project.
The Council also agreed to spend up to $35,000 with Lew Edwards Group, of Oakland, to assist with a proposed community survey.
Assistant City Manager Anne Cardwell said a sustainable organization is one that has the money and capability to provide the level of services a community wants, and can weather economic uncertainties while continuing to offer those services.
“Fiscal resiliency is a term that resonates with me the most,” Cardwell said in her presentation to the Council. However, she said, during the past few economically rocky years, “we took the opportunistic approach to respond to the recession.”
Initially making more surgical budget cuts, the Council finally used reductions in both city employee positions and their compensation to deal with various fiscal surprises that kept upsetting the city’s budget.
Locally, revenues aren’t recovering at levels seen elsewhere, Cardwell told the Council. In addition, Benicia soon will face rising California Public Employees Retirement System and workers compensation costs.
At the same time, some expenditures that have been postponed — maintenance as well as vehicle, technological and equipment replacement purchases — can’t be put off forever.
When the Council adopted its 2013-15 budget last year, it directed city employees to assess the city organization, so the city’s revenues may be spent in accord with residents’ service expectations.
As a response, Cardwell said, staff members have set the SCSS goal of determining service levels desired by residents as well as the finances that would be needed to provide those services in the long term.
To accomplish the goal, she said, city employees recommend the three-phase approach, starting with gathering information to provide context in anticipation with a long-term city services plan.
That information-gathering phase would involve preparing financial studies and a 10-year forecast, some of which already is under way.
In addition, staff and consultants will start a full examination of the city’s own operations, determining what would be each department’s best practices, as well as what it would do with, for example, 5 percent more money — as well as how it would cope with 5 percent less, as Councilmember Mark Hughes suggested.
Not only will employees be surveyed by department, they also will be surveyed outside their departments.
Those reviews are expected to determine the cost of existing programs and services, employees’ workloads, needs that remain unmet, how services can be delivered differently and how departments can operate more efficiently.
Residents will be asked about their satisfaction with city services, and to rank the services they value — or those they don’t. They’ll also be asked where Benicia should cut back on services, or how revenue can be raised to pay for services.
Benicia also will look to other cities for comparison. While conventional demographics will be used to select some of those benchmark cities, other standards will be used, too, Cardwell said; Mayor Elizabeth Patterson urged staff to “look at outstanding cities.”
In addition, the community at large also will be surveyed about thoughts on the city’s finances and services, Cardwell said.
The pension obligations, workers compensation, liability insurance and property tax appeals studies already are done, Cardwell said. Two more studies, on the California Public Employees Retirement Service Sustainability Plan and its impact on Benicia and the cost allocation plan, are close to completion, she said.
Two more studies have been started: one on user fees, and the other a second look at water and wastewater rates. In addition, she said, the city expects to look at deferred technology, capital and infrastructure expenditures, employee leases and the city’s capital improvement plan.
City employees also are developing a 10-year financial forecast of cost and revenue assumptions based on various scenarios, Cardwell said. The Council will see that forecast perhaps as soon as July.
Once that research is complete, the city and its consultants will launch community “conversations” about service expectations in light of city revenue limitations — and, where there are disparities, how they should be resolved, Cardwell said.
Ultimately, the surveys and community discussions will lead to a plan for long-term city services that would be the foundation for the comprehensive process to develop the city’s 2015-17 Strategic Plan and Budget Process, Cardwell said.
The preparatory studies are important, she said, because they modernize cost accounting, provide an appropriate and defensible basis for allocating administrative costs, improve long-term forecast assumptions and will become the basis for an analysis of user fees charged for some non-mandatory services.
Patterson urged staff to supply definitions of “effective” and “efficient,” words that kept cropping up as Cardwell outlined the financial sustainability project.
In the second phase of the SCSS, residents will be asked to review the 10-year forecast, learn more about the cost of providing services to the community and the limited city resources, and determine their top priorities for services.
Once those comments are received and combined with the earlier studies, that will “set the stage for a comprehensive strategic planning effort for the 2015-17 budget,” Cardwell said.
City Manager Brad Kilger reminded the Council that few Bay Area municipalities of Benicia’s size are full-service cities.
The first phase should be complete in August, Cardwell said. The second phase, seeking community engagement, should take place in September and October.
The third phase, preparing the financial plan, should be done by December. Work on the strategic plan and next two-year budget are expected to be done by June 2015.
“I’d be interested in tying in public safety and safe streets,” Patterson said.
She suggested other members of the Council email recommendations to staff members. City Attorney Heather McLaughlin expressed concern about those emails until Patterson explained they weren’t directives, just wish lists.
“I’ll call them ‘excellent suggestions,’” Kilger replied.
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This city is going to be facing very tough decisions in the next two years. I believe Council Member Campbell saw and pointed out what could be a very difficult financial state to over come. The wiggle roon is limited. You have the employee side or operation side which consists of wages, salary, CalPers and works compensation. Then you have the operatiion side which is services provided by the city both internally and externally.. At present the city is looking at a breakdown of about 69% for operations and about 31% for services. These are just quick reviews and where the money goes. There are many elements that make up each side. But when you look at flat revenue and increases on the operation side it quickly changes the equation and something will have to give.. A swing of just a few points on either side is where the problem becomes a decision making issue that could be very difficult and not politically very acceptible by the residents. Yes you could increase revenue with a 1/4 or 1/2 % increase in sales tax. That is the easy way out and that will not go over well in these tough times and it does not matter what other cities are doing. We are only interested in Benicia not other cities.. I learned a long time ago not to worry about the competition the competition shoul;d be looking at Benicia for new ideas and results. I realize we are not in competition with other cities. But just because they are doing something does not mean it is a fit for Benicia. I do have a lot of confidence in our City Manager , Assitant City Managetr and our interim Finance Director. I do believe they will steer the four council members in the right direction and those four will make the final decisions after all the work has been done and what the city should do. It is going to be a very well thought out plan and will be important for the city in the next ten years. Many things like a bike plan and other things will not more than likely be in that ten year plan. Just thoughts for future consideration. I have all the confidence that their plan will keep this city on track to still be the best city in our AREA to live. We must show confidence in this group and support them all the way through this process. It will be best for Benicia.