A Tale of Two Budgets

Recap of the July 5 City Council Meeting

Note: Laura Hagar Rush, the author of this article, is a paid contractor for the city of Sebastopol, where her task is to market the city to tourists and new businesses. Her company, Townie Media, is a beneficiary of the annual city budget discussed below.

Unless you’re a dedicated number cruncher, you probably think city budgets are boring, but nothing tells a story about the values of a city more than the way they spend their money.

The Sebastopol City Council began their discussion of the city’s 2022/23 annual operating budget at their June 21 meeting, but there was so much ground to cover – and so many loose threads to tie up – that it was continued to the July 5 meeting.

That meant it shared the bill with the other essential budget in the world of city finance, the Capital Improvement Program budget. Both of these budgets had public hearings scheduled during the July 5th council meeting.

What’s the difference between the two budgets?

The annual city budget covers things like salaries and operating expenses of the city’s various departments, as well as public safety (police and fire), and arts, culture and recreation. It is funded primarily from revenue from business taxes, local property taxes, permits, intergovernmental funds and other smaller sources of revenue, all of which gets poured into the general fund. The city council, with the help of city staff, creates a city budget outlining how the money in the general fund will be spent. The city must adopt an annual budget at the beginning of each fiscal year. You can see the entire proposed 2022-23 budget here: https://bit.ly/3o8Q8W2

The Capital Improvement Program budget covers things like improvements to city streets, bike paths, crosswalks, water, sewer, storm water infrastructure, city facilities and parks. It is referenced in the city budget, but it is also part of a five-year Capital Improvement Program (CIP) that the state of California requires cities to create. The CIP then gets reviewed every year – and the council, in consultation with city staff, comes up with a CIP budget for the next fiscal year. The upcoming year, 2022/23, happens to be the beginning of a new Capital Improvement Program five-year cycle, so the council was voting to adopt the new five-year CIP - and its budget for 2022/23.  You can see the entire proposed CIP Budget here: https://bit.ly/3RA8mgV

What’s new in the annual city budget?

Let’s start with the basics. The City of Sebastopol’s 2022/23 budget is not a balanced budget. Expected revenues for 2022/23 are $11,449,060. Expected expenditures are $12,521,487, and the city is going to have to dip into its reserve to cover the deficit.

At the end of the last council meeting, the city was expected to have to pull $155,524 from its reserves — but that was before union negotiations with city employees had been settled and before the council had figured in items from what it called the Citywide Discussion List (AKA, the wish list).

By the time union negotiations with city workers had been completed, the deficit had risen to $594,179, according to Director of Administrative Service Ana Kwong.

When the city council decided it needed almost all of the items on the Citywide Discussion list (see list below), the deficit jumped to $1,121,790, and that drove the city’s reserves down to just 15% of the city’s operating budget — the lowest percentage allowed by city policy.

"That 15% makes me a little nervous," Mayor Patrick Slayter said. "At the same time I can see the benefit of using the reserves that we have built up over time for this very reason." he said, referring to the negotiated salary increases for city employees, which he characterized as “fair, reasonable and appropriate.”

Likewise, he defended the items on the City Discussion List, saying "There's not a lot of fat or fluff on that list. There's a lot of necessity that's noted there."

Noting that the city's revenue projections were historically conservative, he said he could accustom himself to a 15% reserve this year because "there is good work that can get done with this budget."

A little last-minute haggling brought the reserve up to 15.5%.

Final decision on the Citywide Discussion List

Here’s a summary of the Citywide Discussion items, from the staff report.  

1.     Continue to partner with West County Community Services for a wide range of services to address homelessness and the unhoused services program. Budget amount of $75,000.

2.     Additional funding for Relaunch Sebastopol consultant services to end of Fiscal Year 2023 to carry through the work to continue events/marketing/strategies to enhance community and economic vitality for Sebastopol and coordinate a variety of organizations and interests towards a common goal of increased community vitality. Budget amount $50,000.  (NOTE: These funds go to Townie Media, a company owned by the author of this article.)

3.     Safe Overnight Parking. Funding for organizations offering safe overnight parking for those living in their cars. Budget amount $6,000.

4.     The city will serve as the fiscal agent responsible for contracting with the part-time association clerk, as well as managing funds for Mayors and Councilmembers Association functions. Serving in this capacity will provide for a reduction in costs for the city. Budget amount $3,100.

5.     Set aside for pension funding. Budget amount $100,000.

6.     Funding for citywide grant writer obtaining grant funds to benefit the City. Budget amount of $60,000.

7.     Funding for one additional police officer position budget amount: $185,000. (There was some last-minute haggling over this item. The police department had originally asked for $234K for this position – an upper-level salary. Based on a city policy of hiring at entry-level, that number was reduced to $185K, with the option to go higher with the city manager’s approval.)

8.     Cooling and warming center. A cooling center helps prevent death or injury from exposure to the elements. A warming center also helps to prevent hypothermia which can be aggravated by factors such as age and homelessness. The funding request has been approved for the purchase of needed supplies and reimbursement of direct expenses for up to four events. Budget amount $8,000.

9.     City Hall front counter expansion to be reviewed at mid-year. Funding is not recommended at this time.

What’s up with the Capital Improvement Program Budget?

Here’s a summary of the capital improvements:

And here’s look at how they’re scheduled over the next five years:

A couple of interesting points:

• Some residents have objected to the proposed bike lane on Bodega Avenue, and the council asked Toni Bertolero, the engineering contractor for the CIP, whether it could be excised from the overall Bodega Avenue Improvement project. The answer was no, because most of the funds are coming from a grant that was awarded based on the existence of the bike lanes.

• Residents of a central stretch of Palm Avenue between Petaluma Boulevard and South Main Street can look forward to their street becoming a one-way street going west, so as to mitigate the current danger to pedestrians at the crosswalk across Petaluma Avenue. That stretch of Palm will also get new surfacing and striping and a connector sidewalk on the north side of the street.

• $85,000 is set aside to improve the parklet in front of Retrograde Coffee and the Sunshine Café. That money is for engineering, design and construction of a more attractive parklet, and does not include what the city recently learned may be a “rent” payment to Caltrans for the privilege of using that section of street for something other than parking. The new fee – actually an old fee that had been waived at the beginning of the pandemic – raised hackles all around on the city council. “It’s time we stopped letting Caltrans determine our quality of life,” Councilmember Sarah Gurney said, while Mayor Slayter joked that perhaps the city should charge Caltrans rent for using city streets as state highways.  Councilmember Neysa Hinton suggested that the city look at doing parklets on city-owned streets so they won’t have to deal with Caltrans.