SR-202-001 (53)
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CM:LCB:bp ~
C~ty Council Meetin~anuary 17, 1984
Santa
'irica, Cal~forn~a
.:2Pz-pO/ / / - It:
JAH 1 7 1984
TO: Mayor and C~ty Council
FROM: Clty Staff
SUBJECT: 1984-85 Budget Guidellnes
INTRODUCTION
This report presents a suggested approach for preparat~on and
cons~deration
of
the
City's 1984-85 budget.
The review
encompasses
the maJor components of the Clty'S budget
operatlng,
capital and grants programs.
Again this year,
extenslve effort has gone into coordination and consolldation of
the varlOUS components of the Clty'S $90+ milllon budget to
provide a systematic means for both the Councll and publlC to
assess the Clty'S total operations. A time line accompanles this
report for ease of reference.
Prlor to d~strlbution of budget lnstructlons to the departments,
staff feels it is important for the Council to establlsh some
l.nitial
POllCY dlrectlon to serve as a basis for budget
preparation and analysis.
It is staff's lntent to contlnue reflning past budgeting
improvements ~n 1984-85. These have lncluded: modlficatlon of
Clty'S budget format to include performance obJectives wlth
detailed workplans for thelr accompllshment: re-lnstitutlon of a
thorough capital planning program:
implementatlon of quarterly
reportlng systems on operatlng budget and capital improvements
"
proJects'
status; lncreased reliance on word and data processlng
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capabilltles;
systeMS.
and closer llnkage of the budget and accountlng
BACKGROUND
The City's f1nancial cond1tion has been severely tested over the
last two to three years by a varlety of factors.
diff1cultles can be attributed to four primary causes:
These
1) an increaslng reliance 1n recent years on spend1ng from
reserves rather than current revenues~
2) Proposition 13 and the resulting inabil1ty of the C1ty to
ralse property taxes~ and
3) poor economlC conditlons.
4) a reduct10n by the state of over $2 million in local
subventlons:
These factors resulted in a cumulative revenue-expenditure gap of
over $7.5 ffilll10n Wh1Ch the City Councll successfully elim1nated
1n the span of two budget years.
Th1S accompl1shment was made posslble through several avenues of
approach:
1) Staffing reduct10ns totalllng
positions over 1982-83 levels~
18 full-tlme equlvalent
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2) The Farrell declsion WhlCh gave clties an opportunlty to
ralse local general purpose taxes.
To reduce contlnued future vulnerablllty to state legislatlve
perogative, the Council adopted an lncrease in the business
license
tax
to
rates
more
comparable
to
surroundlng
Jurlsdlctions.
A recent
Congress,
report submltted
entltled "Trends
to the Joint EconomlC committee of
In the Fiscal Conditlon of Clties:
1981-83"
conflrms that citles throughout
the same
steps as Santa Monica ln
the country have taken
holdlng the line on
expendltures whlle raislng rates on locally generated taxes to
support government operations.
3) Improved economlC conditions which have positlvely impacted
key Santa Monlca revenues.
Revenues based on econOffilC conditlons are of growlng lmportance
to the City's fiscal health in light of the continulng decllne In
lntergovernmental aid. As an example, according to the Census
Bureau, federal aid to state and local government fell $8.6
bllllon or 9% during 1982-83, a reductlon to 1978-79 levels.
A posltive note of the flrst one-half of 1983-84 has been the
upswlng in the economy. The forecasts are generally posltive for
1984 wlth Bank of America economists estimating 7% growth in the
Real Gross State Product. The State appears to be in an equally
strong posltlon wlth State Flnance Director Mlchae1 Franchettl
prO]ectlng a $3 bl1lion surplus by July 1, 1984.
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q) Although the State's role ~n long-term local government
financing ~s far from clarified, we feel that there wlll be no
further significant reductlons in City subventions.
PROPOSED APPROACH
Based on the resolutlon of problems ln enhancing the stabillty of
the C~ty's fiscal condlt~on over the last two years, we are
enterlng the 1984-85 budget preparation process w~th a feellng of
caut~ous optlmism. Three cornerstones of emphas~s are
recommended for 1984-85 budget dellberations:
Response to cltlzen input rece~ved from the needs assessment
survey regarding the lmportance of malntaining hlgh quality
basic services.
The City is already commltted to an amb~tious agenda of publlC
developments and staff energies need to be devoted to lnsurlng
successful lmplementat~on of those lnltiatives
Opportunltles for additional expenditures ln the areas of
cap~tal lnfrastructure and selected operating departments such
as Police, Recreatlon and Parks and Librarles should be
consldered.
More speclflcally:
1) Staff proposes a malntenance of effort budget which
emphasizes enhanc~ng basic service dellvery and
lmplementation of maJor plannlng and development proJects
which the Council has previously lnltiated, such as the
Alrport, Downtown Mall, pier and Land Use studies.
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Maintain~ng prudent reserves and l~mlting budget growth will
be the framework for budget dlScusslons.
2) Increases ln approprlation pr~orlties wlll for the most part
be Ilmlted to one-tlme investment In the C~ty's capital
lnfrastructure. Areas for cons~deration include
streetlights, street resurfacing, park maintenance, enhanced
freeway access, public buildings and traffic control
systems. publlC bu~ld~ngs and traff~c control systems.
Recommendations for capital improvements will be based on
the current condition analys~s being conducted by several
City departments as well as the development trends forecast
in the Land Use study. It 1S imperatlve that the groundwork
be lald for preserving and creat~ng an adequate
infrastructure for future res~dential and commerc~al growth.
3) Requests for serVlce enhancements ln other operatlng areas
wlll
be
considered
to
a llmited degree.
Valuable
lnformatlon
from the
not be
regardlng public prloritles has been recelved
community needs assessment process which should
overlooked. Staff will evaluate limlted
opportunlties partlcularly in the areas of crime prevention,
librar1es and recreatlon and parks.
4) In llght of the present flnanc~al forecasts, departments
wlll not be requested to submlt 5% serVlce level reduction
alternatives as they were ln 1983-84.
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5) Consideration by departments of how to achleve productiv1ty
improvements, particularly through lncreased use of
automation will be encouraged.
6) The emphasls on enhancing bas1c serVlce delivery and
~mplementation of maJor planning proJects will be reflected
in departmental Ob]ect1ves and performance measures. Th1S
effort will ~nclude contlnued 1dentif1cation and refinement
of 1nformat1on important to management of the many funct10ns
in this complex organlzation.
7) The Gann approprlations 11mit, adopted by the voters 10 1981
lS becomlog an 1ncreas1ngly slgniflcant factor in budget
analysis. As populatlon and econom1C growth have slowed in
recent years, we have approached the City's state-mandated
annual appropriat1ons limlt. During the 1984-85 budget
dellberat1ons, the Council w1ll be asked to cons1der
alternatives available to the Clty to work withln the Gann
guidelines.
8) The format of the primary budget documents -- Executive
Summary, Workplans, Detail Budget -- will remain essentlally
the same. Staff energles w1ll be devoted to further
reflnements and increased levels of analysls, part1cularly
on the revenue side.
9) Budget plann1ng has incorporated Boards and Commlssion
workplans and budget requests 1n a more structured manner
than 1n prev10us years.
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10) Community Development program developMent has also been
1ncorporated ln the citywide budget planning agenda again
this year.
As 1n past years,
General Revenue Shar1ng
revenues will be targeted to soc1al service actlvltles.
11) Lynne Barrette, Deputy City Manager, has re5ponslbllity for
the operatlng and Capital Improvements budgets.
Meganne
Steele wl1l work under her dlrection to manage the budget
analysis and preparatlon efforts.
Mlke Denn15, Flnance
D1rector, 15 responsible for prepar1ng revenue and financial
forecasting
information as well as prov1dlng valuable
technical aSS15tance In preparing summary tabulatlons.
CALENDAR FOR CITY COUNCIL REVIEW
January 17, 1984
ReVlew of Budget Guidel1nes
January 24, 1984
Community Development Grant Selection
Criteria to Councll
May 8, 1984
Community Development Plan submitted to
Councll
May 29 &
May 30, 1984
June 2,5,7 &
June 9, 1984
June 19, 1984
July 17, 1984
Public Hear1ngs & Approval of Community
Development Plan
Budget Study SeSS10ns
Public Hearlng & Budget Adoption
Gann Hearing on 1984-85 Budget
RECOMMENDATION
It 1S requested that the City Counc1l provide any additional
guidance or concerns for staff cons1deration dur1ng preparatlon
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of the proposed 1984-85 operat1ng and cap1tal budgets and comment
on the proposed budget calendar.
Prepared by:
John H. Alschuler
C1ty Manager
Lynne C. Barrette
Deputy City Manager
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