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Home My WebLink AboutStaff Report 4.A - Late Document 1 05/20/2013 Agenda/.Iteriv;#4.A - DociMnevttreceived'after cpMwoli trihuttow RECEIVED Bryant R; Moynihan P. 0. Box 2210 MAY 2 0 2013' Petaluma; CA 94953-2210 CITY CLE May 20, 2013 Hand Delivered & emailed Petaluma City Council City of Petaluma 11 English St. Petaluma, CA 94952 RE::2013.05.20 Draft Budget lntragovernmental Charges Dear City Council: Ihave detailed to the city council the grave problems with this draft budget in letters dated April 5, 2013, April 22, 2013 and May 17 2013. You as a council have ignored these serious concerns which•threaten our community.; The proposed budget contains expendituresi;which exceed revenues by over 8 Million dollars,just like this year's budget;and last year's budget. The city's 2012 audited financial report discloses the unfunded PERS pension liabilities and the depletion of the internal service funds being spent on the general fund operating expenses. Why are you not discussing it and coming up with.a plan.of.action before having to declare bankruptcy? For the record, I wish to raise one additional issue. The draft budget also contains a number of false revenues. On,page A-2 thecity staff is proposing to take $4.5 million from other funds and stick it into the General Fund. This is an increase over last year's $426 million. There is no valid justification for such an increase or for that matter taking any of the funds to cover your general fund shortfall. Over$2_Million of these charges are to the water and sewer ratepayers. This is a problem because the State.Constitution requires that•the water and sewer ratepayer monies be spent:only`on the water and sewer services. 'This subjects the City to additional litigation by the ratepayers. The first 3 of the.4 columns which are entitled Info Services, General Services and • Liability have never been properly documented. Your staff is tweaking last year's • numlie`rs te,fabficate this year's numbers. There are no professional studies or reports supporting these numbers. How do I know that? Let me tell.you.a secret. A number of years ago I was bird hunting with the City's Risk Manager: I casually asked him how he calculated the intragovernmental charges. He responded to me that he has no idea how they are calculated, he has no part of it. I then asked;him,`Aren't the intragovernmental charges a revenue to your department". He responded to the effect that he doesn't see a dime of it. For a`number of years now,these charges are simply confiscating other funds to cover the general fund shortfall and these;charges arehot refunding the departments the overhead expenses they incur. Your consultant,:Nicole Kissam;,of Matrix Consulting, at the August 2°d 2010 city council meeting, said their reports need to be'updated every two to three years. Last, fiscal year, Governor Brown'eliminated thetity's Redevelopment Agency(PCDC) which had.a major impact on the adopted intragovernmental charges approved in the budget. We went from $516,360,in intragovernmental charges in 2012 to the PCDC to $387,705 of intragovernmental charges to the successor agen6yin this year's budget. In next year's draft budget that amount:has been reduced,to $98,690 from the successor agency. There is no documentation supporting,any of these charges. There are no professional reports supporting any intragovernmental charges to the Successor Agency. Despite assurances from your finance director to the contrary, your cost of service study and cost allocation report were outdated last fiscal year. Your City Manager's salary, one and a half years ago, was paid 50% by the general fund and 50% by the City's Redevelopment Agency. Last year after the elimination of redevelopment agency's, the city council allowed staff to reapportion the City Manager's salary to be paid 50% by the general fund, 15% by the Water Enterprise Fund, 15% by the sewer enterprise fund and 20%by the successor',agency. I am sure this will,come to a shock to the city's consultant Nicole Kissam as she has not reviewed any of these changes nor lowered the-Administrativ e Overhead charges to the water and sewer enterprise funds accordingly. Why is the sewer,and water enterprise funds now paying 30% of the City Manager's salary when he is not spending 30% of his time on Water:and Sewer Issues? In a recent deposition, The Finance Director suggested that he and the city manager looked at how other Cities were handling the matter. When asked which cities in particular, he hemmed and hawed and eventually could only come up with.the•City of Calistoga(where he was previously the city finance director). How is Petaluma like Calistoga? And even if Calistoga charges 15% of the city manager's salary to both water and sewer(which I doubt), isrthat-the actual cost of the city manager's"time being spent on Petaluma's water and sewer:utilities? Of course not! ` tl Your staff will now suggestithat.you adopt this flawed budget and make mid-year budget adjustments to reflect whatever the new cost of services study, and cost allocation report determines when completed. Why don't you have them,publically document each of the proposed Intragovernmental Charges Service Funds+first? I have abetter suggestion. Quit ripping=off,the•ratepayers and stop all intragovernmental charges: Make each department a cost.center. The City staff can adjust the draft budget to reflect this change (lowering revenues and expenditures) in the next couple of weeks which will add integrity to this budget. You can adopt a better budget in time for next fiscal year. I encourage this city council to"ask the appropriate questions and make the tough decisions to cut the unaffordable public employee compensation and serve this entire community instead of the public employees. Sincerely, Bryant R. M nihan Y Attch 3 pages City of Petaluma, California Fiscal Year 2012`Budget APPENDICES • INTRAGOVERNMENTAL:CHARGES' . SPECIAL REVENUE/DEBT/ENTERPRISE/INTERNAL SERVICE/PCDC FUNDS Info,Svcs. Gen;Svcs. Liability Admin. - Total FY 2012: Ovhd. FY Allocation;FY FY 2012 FY 2012 Department/Division 2012 2012 CDBG 1,300 3;000 5,900 10,200 Gas Tax - 1,000 1,000 General Government Donations•2270 - 1,500 1,500 Governmental CIPs 3100 - 98,550 98,550. Housing In-Lieu 6,100 8,900 8,000 23,000 Impact fees 21000 - 11,000 11,000 Landscape Assessment Districts 2;230 100 1,500 3,600 7,430 Public Safety Special Revenue 2300 - 2,150 2,150 Street Maintenance Funds 7,590 5,000 43,900 55,450 111,940 TOT -- - - - 1,750 1,750 Sub-totalSpecialRev.Funds 17,220 .5,100 57,300 188,900 268,520 Airport Operation 10,910 1,000 13,700 77,900 103,510 Airport CIP 750 750 Development Services 81,240 1,000 7,450 52,800 142,490 Marina 5,360 4,450 32,400 42,210 • Transit Operations 52,000 1,000 41,050, 91,550 185,600 Wastewater Administration 222,560 8,000 435,100 342,750 1,008,410 Wastewater CIP 41,000 41,000 Water Administration 326,840 8,000 150;550. 252,850 738;240 Water CIP = - 15,600 15,600 Sub-total'.Enterprise Funds 698,910 19.000. 652:300 907,600 2,277;810 Information Services 38,800 38,800 Employee Benefits 12,750 12,750 Workers Compensation 1,290 18,400 19,690. General Services 4,720 12,850 17,570 Risk Management 14,230 - - 25,700 - 39.930 ,Sub-total'Internal Service Funds 20 240 - 108 500 128,740. PCDCAdmin 26,160 1,000 195,700 155,500 378,360 PCDC Debt Service 5,000 5,000. PCDC CIP 35,200 35,200 Low/ModIncome Housing - 1.000 60,300 36;500 97,800 Sub=totatPCDC Funds 26.160 2:000'. 256,000 232,200 516,360 TOTALALLOCATIONS $ 1.446.640 $ 69.150 $ 1:370.400 $ 1.437.200 4.353.390 A-2 City;of Petaluma, California FiscalYear.2013 Budget APPENDICES . INTRAGOVERNMENTAL CHARGES SPECIAL REVENUE/DEBT/ENTERPRISE/INTERNAL SERVICE/PCDC FUNDS Info Svcs. FY Gen. Svcs. Liability Admin. Total 2013 FY 2013 FY 2013 Ovhd.. FY Allocation FY Department/Division 2013 2013 CDBG 1,300 3,000 5,900 10,200 Gas Tax - 1,000 1,000 General,Government Donations2270 - 1,500 1,500 Governmental CIPs 3100 - 134,500 134,500 Housing In-Lieu 6,100 8,900 8,000 23,000 Impact fees 21000 - 11,000 11,000 Landscape Assessment Districts 2230 100 1500 3,600 7,430 Public Safety Special Revenue 2300 - 2,150 2,150 Street Maintenance Funds 7,590 5,000 43,900 55,450 111,940 TOT - - 1,750 1,750 - Sub-total Special Rev.Funds 17.220 - 5,100. 57,300 224,850 304,470 Airport Operation 10,910 1,000 13;700 77,900 103,510 Development Services 81,240 1,000 7,450 52,800 142,490 Marina 5,360 4,450 32,400 42,210 Transit Operations 52,000 1,000 41,050 91,550 185,600 Wastewater Administration 222,560 8,000 435,100 342,750 1508,410 Wastewater CIP 41,000 41,000 Water Administration 326;840 8,000 150,550 252,850 738,240 Water CIP - - 15,600 15,600 Sub-total Enterprise Funds 698;910 19,000 . 652,300 906,850 2,277,060 Information Services 38,800 38,800 Employee Benefits 12,750 12,750 Workers Compensation 1,290 18,400 19,690 General Services 4;720 12,850 17,570 Risk Management 14230 _ - 25,700 39,930 Sub-total Internal.Service Funds. 20,240 - - 108,500 128,740 SuccessorAgency,Admin 26,160 1,000 195,700 62,045 284,905 Successor Agency Debt Service 5;000 5,000 Successor Agency Housing - - 1,000 60,300 36,500 97,800 Sub-total Successor Agency Funds 26,160 2;000 256,000 103.545 387,705 TOTAL ALLOCATIONS $ 1.446.64Q $ 99.150 $ 1.370.400 $ 1.343.745 4.259.935 A-2 City of Petaluma,California „ Fiscal Year 2014 Budget FISCAL'YEAR 2014 ALLOCATION OF INTERNAL SERVICE FUNDS AND ADMINISTRATIVE OVERHEAD,CHARGES Info Svcs,FY Gen.Svcs., 'Liability Admin. Total cs. 2014 FY 2014 FY-2014 Ovhd. FY Allocation FY Deparbnent/DIvislon 2014 2014 CDBG 1,600 3,240 5,900 10,740 Gas Tax I - 1,000 1,000 General Government Donations I - 1,500 1,500 Governmental CIPs I - 134,550 134,550 Housing In-lieu 7,010 9,340 8,000 24,350 Impact fees - 10,950 10,950 Landscape Assessment Districts 2,580 100 1,570 3,600 7,850 Public Safety Special Revenue , - 2,056 2,056 Street Maintenance Funds 11,650 5,000 70,650 45,700 133,000 TOT - - 1750 1.750 Sub-total Special Rev.Funds 22,840 6.100 84;600 216.006 327,746 Airport Operation 13,160 1,000 16;420 77,900 108,480 Development Services 111,070 1,000 9,760 52,800 174,630 Marina 5,950 5,980 32,400 44,330 f Transit,Operations 67,770 1,000 44,680 91;550 205,000 Wastewater Administration 311,440 8,000 467,770 342,750 1,129,980 Wastewater CIP 41,000 41,000 ' Water Administration 395,940 &,000 182,926 252,850 839,710 Water CIP - - - - 15,600 15,600 Sub-total Enterprise Funds 905,330 - 19,000. 727.530 906.850 2.558.710 Information Services 38,800 38,800 Employee Benefits 12,750 12,750 _ Workers Compensation 1,530 18,400 19,930 General Services 6,460 12,850 19,310 Risk Management • 16,790 - - - 25,700 42,490 Sub-total Internal Service Funds 24:780 108.500 133,280 Successor,Agency Housing - 1.000 61,190 36,500 98.690 Sub-total Successor Agency Fund: - 1,000 61.190 36,500 98,590 TOTAL ALLOCATIONS ; 1.668.330 S 96;15Q S 1.467.300 ; 1.266.858 4A98.638 ii• -2_4, , -A-2 1 DRAFT