The City Budget and its Discontents
Sebastopol City Council meeting recap for June 20
All councilmembers were present for the June 20 Sebastopol City Council meeting, including Mayor Neysa Hinton (via Zoom), Vice Mayor Diana Rich, Councilmember Sandra Maurer, Councilmember Jill McLewis and Councilmember Stephen Zollman.
Note of Conflict of Interest: In addition to being the co-publisher of the Sebastopol Times, the author of this piece is also a part-time contractor for the city of Sebastopol, a contract which is ending at the end of this month. The news reported in this article, and any opinions reflected therein, are not dictated by or reflective of the opinions of the city council or staff of the city of Sebastopol.
CONSENT CALENDAR
In addition to the approval of meeting minutes, the council unanimously approved the following:
Approval of agreement with consultant, Fehr and Peer, Inc., to develop vehicle miles traveled standards for the city consistent with SB 743: Total cost: $29,085. This expenditure is required due to a change in how the state requires the city to collect traffic data for CEQA, the California Environmental Quality Act.
Approval of master agreement with Green Valley Consulting Engineers and approval of amendments for construction management services for Bodega Avenue bike lanes and pavement rehabilitation Phase 1 project and Hwy. 116 curb ramps and crosswalk safety improvements at Bodega at Florence Avenue and Bodega at Robinson Road.
Adoption of resolution approving the following SB 1 proposed project list for fiscal year 2023-24:
REGULAR CALENDAR AGENDA
City manager search continues. The search for a new city manager inched onward. Last night the city approved a contract, not to exceed $29,040, to Avery and Associates for recruitment for city manager position. This is down from the original estimate of $45,000, a savings of $15,000.
Improvements ahead for the library? The council approved a letter in response to Sonoma County Library Director Erika Thibault’s letter regarding more staff for the Sebastopol Regional Library. It also approved the creation of a city council ad hoc committee on ways to increase staffing and enlarge Sebastopol’s current library facilities. The council appointed Councilmember Stephen Zollman as the liaison to the ad hoc committee. In response to Councilmember Sandra Maurer’s inquiry about how this will be different from Lantern (a fundraising group devoted to expanding the Sebastopol Library), Zollman revealed that Lantern will be winding down and going dormant until plans for the library reach a later stage where fundraising is more appropriate.
PUBLIC HEARING: THE PRELIMINARY CITY BUDGET FOR 2023-24
The council held its first discussion of the Preliminary Operating Budget for 2023-24 and conducted a public hearing on the budget. Budget discussions are expected to take up several future council meetings, including a special council meeting on Tuesday, June 27. The budget is ideally supposed to be approved and adopted by June 30, but the council can stretch that until July 18.
Budget Basics
As the city staff report on the budget points out, “The budget is the primary policy document adopted by the City Council each year… It reflects the City Council’s goals and objectives and how resources are allocated to achieve these goals. Although adjustments are expected as needs arise, the budget ultimately maps out the City’s activities over the course of the next fiscal year.”
The budget is put together by the city council’s budget committee, which this year consisted of Councilmembers Diana Rich and Stephen Zollman, City Manager/City Attorney Larry McLaughlin, Assistant City Manager/City Clerk Mary Gourley and Administrative Services Director Ana Kwong.
You can find a draft copy of the preliminary city budget here.
The bottom line
There isn’t much good news in this budget: the city is projecting $10.87 million in revenue and $12.81 million in expenses, leading to a deficit of $1.94 million, which will be paid out of the city’s dwindling reserves.
The budget committee spent the last few months (15 meetings!) struggling to reduce this deficit. Hoping to reduce expenditures by $1.5 million, the committee asked department heads to reexamine their original requests for next year and cut anything they could. Department heads came back with a little over a million in cuts—significantly short of the committee’s goal.
“We asked for the reductions you see in the chart [above], but not all departments were able to achieve the cuts,” Vice Mayor and Budget Committee Member Diana Rich said. “First, some additional expenses were added by the budget committee: for example, the costs of ballot measures to address the revenue gap were added to the City Clerk and to the Administrative Services expenses, and the salary and benefits costs associated with paying a new City Manager and a new City Attorney market rate salaries and benefits were added to the City Manager and City Attorney expenses.”
“Second, there were departments where the primary expenses are “people” costs—City Manager, City Attorney, Assistant City Manager/City Clerk, Administrative Services, Engineering—and we would have had to cut staff to meet the proposed goals. With a staff already functioning beyond normal capacity, we couldn’t recommend cutting staff,” Rich said.
Community Benefit Grants take a big hit
The City Council managed to shave almost $121,000 from its budget, primarily by cutting Community Benefit Grants to local nonprofits down from the requested $103,000 to just $3,000. Every organization that applied for a community benefit grant this year—including groups like the Sea Serpents, Sebastopol World Friends, Sebastopol Center for the Arts and the local historical society—will receive just $500 each.
There was a long discussion about whether to include the Sebastopol Chamber of Commerce, which is a 501(c)6 instead of a 501(c)3, in this largesse. Mayor Neysa Hinton made the case for giving the chamber of commerce more money—maybe $1,500—to support town’s retail sector, in hopes of reaping more sales taxes for the city. In the end, the council made the choice to include the chamber after all, but gave it just $500, matching the amount given to the other nonprofits.
The Fire Department digs in its heels
While most departments played ball with the council and made the required cuts, one department refused to do so: the Sebastopol Fire Department. According to the staff report, “The Fire Chief met with the Budget Committee to answer questions and provide information, but declined to participate in discussion about possible reductions to balance the City’s FY 2023-24 budget.”
As a result the budget committee itself made $275,082 in cuts to the department budget, a move which enraged a broad range of citizens and volunteer firefighters, who came out to protest cuts to the fire department budget.
Several volunteer firefighters spoke during public comment, including Sebastopol Fire Captain Steve Thibodeau. After decrying rising salaries for the city’s administrators, Thibodeau said, “Our fire department personnel have always been the least compensated group in this city. Our fire department call pay has not changed in the last 17 years—and actually went down by a combined $20,000 in 2019 during COVID…And now the budget committee is ready to call yet again for a reduction in the firefighters’ call pay to the tune of $80,000. This would turn the clock back 20 years for fire call compensation. This $80,000 cut should never have been considered and should never be on the table. Compensation cuts should have started from top down and not the bottom up. The firefighters continue to carry their pagers 24/7/365—as you witnessed tonight as they got a call while we were in this meeting.”
He noted that Sebastopol spends about 11% of its budget on the fire department, while other similar-sized cities spend 25%.
For his part, after the meeting, Fire Chief Jack Piccinini disputed the staff report’s depiction of events. “It’s not necessarily inaccurate, but it is out of context,” he said. “What I told them was that I cannot in good faith as your department head and subject matter expert make these cuts. This budget [i.e., the one he submitted] fulfills two critical needs – expanding staffing and money for downpayment to replace an aging fire truck. I wasn’t willing to offer up those reductions.”
“It’s not a comfortable position to be in,” he said.
Like Thibodeau, Piccinini takes particular umbrage at the committee’s choice to cut $80,000 in firefighter retention pay.
“I can’t support that at all,” he said. “They are going to attempt to save $80,000 on the backs of these volunteers who are saving the city a million a year on salaries…It’s just not fair.”
It ain’t over yet…
Although we are nearing the finish line for the budget process, the dickering on the city council has just begun.
“On Tuesday, June 27, in the special City Council meeting, City Council will be continuing the deliberation process by the full City Council and reopening the public hearing,” said Sebastopol Mayor Neysa Hinton. “We’ll be taking it department by department with various discussion related to each department’s budget recommendations—department heads will be present for additional questions— moving through all nine departments within the city.”
“It is likely going to be another 5.5-hour meeting,” she said. “We’re hoping to finish up the General Fund budget and move to the Capitol Improvement Budget with a similar review process.”
When the whole city council has its final say on the budget, Hinton said things can shift.
“The Budget Sub-committee does the detail work in advance with recommendations, but it is up to the full council what decisions are made and finalized during this phase. In my experience in the past, there are usually some changes; council can get stuck on both small items and larger decisions resulting in a stalemate and vote.”
“This is the first opportunity for three members [those not on the budget committee] to let their opinions be known. It also goes without saying that even recommendations by the budget sub-committee members can change after hearing from the public and other council colleagues,”she said. “Some people may not be happy with all of the final decisions, but the process allows all opinions to be heard and considered.”
“This is a very difficult budget year for the city,” Hinton said. “City council has been talking about how difficult our budgets were for years. I was a member of previous budget sub-committees for five prior years, and we discussed the city’s structural budget deficit. Since 2019, we had either State flood monies, COVID relief revenue; and then last year a one-time gift to public safety departments from a private source. These things got us through.”
But now, in the absence of those one-time monies, the chickens are coming home to roost.
“Our expenses have been growing faster than our revenue,” Hinton said. “Projects that were scheduled to start that would already be producing revenue for the city got delayed (in part due to COVID). The city invested in revenue enhancing measures to support economic growth for the last three years.”
None of those efforts reaped the economic rewards the city had hoped for, alas. Still, Hinton struck a hopeful note.
“I’m confident that the city staff and council will work together to find solutions,” she said. “Naturally, we all want the best for our city.”
A QUICK LOOK AT THE BUDGET PROCESS
Wondering what the budget process looks like? Here’s a description from Administrative Services Director Ana Kwong:
City Council adopts a preliminary budget schedule
Budget Development – identifying budget objectives and operating budget requests
Budget Discussion and Review – Committee meets with various departments to review budget requests
Budget Committee conducts public meeting to hear Community Benefit Grant applicants’ request
Budget Committee, with input from City Manager and City staff, makes recommendations to the City Council at public hearing.
City Council hears Proposed Budget /Adopts Budget Prior to end of Fiscal Year (June 30th) or extends budget by Resolution into new fiscal year if budget is not adopted by June 30th.
After adoption, Council conducts a mid-year budget review if applicable for any major changes to the approved budget.
The council is currently on Step 6.
You can watch the full meeting here. https://livestream.com/accounts/14608643/events/10638292
Because of the budget process, there will be a special Sebastopol City Council meeting on Tuesday, June 27, at 6 pm. You can find information on that meeting, including the agenda and Zoom link, here.