The Sebastopol City Council received a mid-year budget review presented by Administrative Services Director Ana Kwong at the Feb. 16 city council meeting, unanimously approving a resolution to adjust the city’s adopted operating budget for the fiscal year of 2020-21.
Before handing the presentation over to Kwong, Mayor Una Glass said she learned more about the reserve from the director.
Although the budget has a deficit, Glass said she found that the reserve the city built up from hardly any savings in 2014 to around $7.5 million “for a rainy day” is what championed Sebastopol through the torrent of the first year in the pandemic.
Glass said mapping the next fiscal year’s budget will begin in March, and will include convening with each department and hosting public hearings for feedback, but the mid-year budget adjustments are primarily recalibrations between the start of the fiscal year on July 1 to its end on June 30.
She said she and Councilmember Neysa Hinton had met with department leaders as members of the budget committee to take the financial pulse of the city’s operations.
“We’re not broke, but we really need to be very prudent about where we go from here,” she said.
Kwong presented the budget committee’s recommendations regarding the various departments’ budget adjustment requests. She introduced the mid-year budget adjustments calling back to when the council adopted an interim budget June 16, 2020, as the COVID-19 pandemic continued to shudder through the economy.
According to the temporary budget, the city would siphon from its reserve to fill the $1.5 million deficit, she said.
After the budget committee met with department leaders to review their budgets, the city council adopted a budget in October for the fiscal year, to address a now $2 million-plus shortfall with reserve funding.
Midway into the fiscal year, the general fund revenue has increased by 6.84%, per the agenda report.
Kwong said the formerly adopted budget made conservative projections for sales tax without data that, now available, indicates a 15.76% increase between the budget adopted in October and the newly adjusted one, as charted in the agenda report.
According to Kwong, the budget committee recommends declining a $60,000 adjustment request from the planning department to get started on the 2023 Housing Element with a consultant, since budgeting for a consultant can wait until the following fiscal year after the Request for Proposal process this year.
Meanwhile, she said the budget committee agreed with the building department’s finding of a $1,500 pandemic-related decrease in conference and training costs.
As for the engineering department, the budget committee gave the nod to a $36,000 budget reduction, Kwong said.
This adjustment involved some intense jargon in the agenda report, factoring in “accrual in lieu anticipated for engineer manager retirement payout of accrual leave of 40 hours of administrative leave per policy and 192 hours of anticipated vacation accrual.”
For a total $51,000 net savings, the engineering department will also outsource the emptied civil engineering position for the rest of the fiscal year, Kwong said.
The finance director said the Sebastopol Fire Department predicts California Governor’s Office of Emergency Services will reimburse $205,000 for vehicle utilization during fire disaster, to go towards the vehicle reserve fund.
“The department also requested $175,000 for a purchase of Type 3 Fire Engine using the reimbursement fund to pay for this,” Kwong said. Otherwise, the Sebastopol Fire Department spent $10,000 less under the pandemic on drills and calls.
“The Budget Committee recognized the need for an upgraded engine and is concerned about the safety of our volunteer firefighters and recommended for the fire chief to conduct a search for lower cost, used alternatives and can return to the city council for more cost effective options,” she said.
Numerous budget adjustment requests came from the Sebastopol Police Department.
Kwong said the budget committee recommended approval for $150,000 in overtime pay as the police department retains between 60 and 70% of its intended staffing across COVID-19 quarantines, sick leave, vacations, injuries and other absences, according to the agenda report.
Kwong said the budget committee also recommended approval for a $3,000 adjustment for expected uniform reimbursement ahead of likely hiring two officers, one a reserve member.
The police department also requested $60,000 for legal counsel covering “appeals, arbitration hearings, pending civil suit” and $6,000 for a 2019 invoice for Sonoma County ISD/IJS Access Line that the city didn’t get until October 2020, the agenda report said.
According to Kwong, the budget committee recommended approval for the $66,000 and for $1,000 to cover another invoice for May 2020 from the Sonoma County Animal Services that the city didn’t come by until November that year.
The budget report said the committee approved a budget reduction of $10,000 in services and supplies and another reduction for $20,000 in meeting and travel expenses.
Community member Kyle Falbo raised concern over the increased funding for the police department, which he said would dedicate nearly half of the city’s budget to its services.
He said the results of the Sebastopol Police Department’s independent audit haven’t been released yet. Among other issues, Falbo said he hoped the city would hold off on the police’s budget increases “until we have a better understanding of the effectiveness of the department.”
Kwong said over email Feb. 22 that her records of the most recent mid-year budget review update show 48% of the general fund expenditures were from the police department.
Interim Police Chief Don Mort said the funding request does not seek additional staffing but to achieve adequate staffing for community needs and officer safety. He said the department has 14 officers, including himself and a lieutenant and struggles with overtime maintaining 24-7 staffing of at least two officers.
The Public Works Department issued several requests, starting with an increase of $43,000 to maintain portable hand-wash stations and bathrooms for COVID-19 and another $8,600 in virus-related safety supplies for each government building, Kwong said. “And this item has a potential of FEMA eligibility for COVID reimbursement.”
She said the budget committee recommended approval for this increase.
The budget committee did approve a $20,000 reduction “delaying building facilities maintenance cost for Zero Waste upgrades” and a $6,000 decrease from fewer pool equipment chlorine generator repairs, she said.
Councilmember Diana Rich, a member of the Zero Waste Committee, asked for more information around the $20,000 reduction. Hinton said the reduction comes from delaying construction for a commercial-grade dishwasher in city hall, with few staff on-site and meetings no longer held there.
The risks of COVID-19 outweigh the need for that particular construction at the moment, according to Glass. The cost was that high because the update would involve the plumbing and electrical systems, renovating for a mini kitchenette and possibly a stackable washer-dryer for linens, Public Works Superintendent Dante Del Prete said.
Del Prete said that in the meantime, the department secured several grants for water bottle filling stations, downtown recycle cans and more to meet zero-waste goals.
Furthermore, the committee checked off a decrease of $12,000 for cheaper repairs than expected for a leaking fire department exterior wall and dry rot, according to Kwong.
The administrative services director said the Public Works Department asked to re-rank “current position of Maintenance Worker II to Senior Maintenance Worker - Sanitary Sewer System Operator.”
The budget committee approved the projected $8,000 increase in salary and benefits that would occur with the re-ranking.
As of the mid-year budget review, department expenses rose by 1.52% — $164,254 — in the general fund, Kwong said.
Kwong said water and sewer revenues aren’t expected to change because of cost reductions in the sewer pump replacement alternative and a well filter media replacement. “And all the other decreases in the water and sewer enterprise is due to direct general and admin G&A cost allocations from various departments,” she said.
According to Kwong, the city’s unassigned reserves fund balance is projected to sink to $2.49 million, or 22.6% of the city’s policy reserve, due to an estimated $1.78 million deficit culminating by June 30, 2021. The city-set reserve policy is to have unassigned funds dipping no less than 15% of the annual operating expenditures, with a multi-year goal of having 20% unassigned fund level.