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3. Strategic Plan Goal #1: Achieve Financial Stability 8200 Westminster Boulevard City of Westminster Westminster, California 92683 Staff Report File #:22-105,Item #:3 Meeting Date: Westminster City Council SUBJECT Deferred from March 9, 2022 City Council Meeting: Strategic Plan Goal #1:Achieve Financial Stability. StrategicPlanObjective:ProvideinformationtotheCityCouncilontheimpactstothecityifthesales tax measure is not renewed. From:Christine Cordon, Interim City Manager; Erin Backs, Finance Director Prepared by:Erin Backs, Finance Director _____________________________________________________________________ RECOMMENDED ACTION Staffrecommends that theMayor and City Council receive and file the presentation. BACKGROUND This item was deferred from the March 9, 2022 City Council meeting without discussion. OnJanuary17,2022,theCityCouncilheldastrategicplanningworkshoptodevelopthe city’sfirst strategicplanandidentifyprioritiesforthecity.Theworkshopresultedinathree-yearstrategicplan comprisedofthreegoals;eachgoalconsistsofmultiplestrategicobjectivesintendedtoserveas benchmarks in the progress of each goal. Oneofthestrategic plan’sgoalisto “Achievefinancial stability,”anditsfirstobjectiveistoprovide information to the City Council on the impacts to the city if the sales tax measure is not renewed. In2016,votersapprovedlocallygeneratedrevenuethroughMeasureSS,aonecent(percent) transactions and use sales tax that is set to expire December 31, 2022. Locallycontrolledrevenuefundsstabilized Westminster’sfinancesandallowedthecitytocontinue providingthebasicandnecessaryservicesessentialtothesafetyandqualityoflifeforthe community including: City of WestminsterPage 1 of 7Printed on 3/14/2022 powered by Legistar™ File #:22-105,Item #:3 Meeting Date: Addressing homelessness through the hiring of two Homeless Liaison Officers Protecting drinking water supplies Maintaining fire protection Maintaining local jobs Preventing cuts to 9-1-1 emergency response PreventingtheeliminationofPoliceNarcotics,DomesticViolence,SexCrimes,Gang,and Human Trafficking units Preventing cuts to the number of firefighters Recruiting and retaining Spanish/Vietnamese-speaking police officers Supporting residents and local businesses Preventing the loss of trained officers to other cities Recruiting lateral police officers Investing $7.5 million in street improvement projects Asthelocallygeneratedrevenuesourceisexpiring,ithasbeenhardertoattractandretain employees.AsoftheendofJanuary2022,therewere24vacantpositions,including10police officers.ThroughexitinterviewsconductedbytheHumanResourcesDepartment,100%ofthe employeeswhoresignedidentifiedtheuncertaintyofthelocalfundssurroundingtheexpirationofthe localsalestaxmeasureandlowpayasthetwomajorfactorsintheirdecisiontoleave.Itisalso hardertorecruitqualifiedemployeestofillvacantpositions.Forexample,ontworecentrecruitments, dataprovidedthroughtheonlinehiringportalshowedtherewasinitialinterestfromprospective candidatestoviewthejoblistings.However,thepercentageofthosewhoactuallyappliedforthe position were extremely low at 1% for a part-time position and 4% for a full-time position. Five-Year Projections of Revenue, Expenditures and Reserves General Fund2021-222022-232023-242024-252025-26 EstimateAdoptedProjectedProjectedProjected Revenue 70,655,12561,084,23356,097,95757,104,89257,914,378 Expenditures 66,282,22171,631,99773,559,74075,564,03277,450,228 Contribution/(Use) of 4,372,904(10,547,764)(17,461,783)(18,459,140)(19,535,850) Reserves Reserve Balance 39,212,21628,664,45211,202,669(7,256,471)(26,792,320) Thelossoflocalfundswillincreasethe City’sdeficitbyover$16millionannually,andbyfiscalyear 2024-25,thecityiscompletelyoutofreserves.Notonlywillthissignificantlyimpact Westminster’s budget,thelossofrevenuethroughlocallygeneratedfundingwillresultindeepcutstobasiccity services,andaffectadditionalservicesandprogramsrelatedtoeconomicrecovery.Thelossoflocal fundswillreducetheCity'sabilitytosupporttheresidentsandbusinesscommunity.Withoutalocally fundedrevenuesourcededicatedtotheprioritiesoftheWestminstercommunity,serviceswillbe limitedtostrictlymandatedessentialsthatdonotprovideforenhancingqualityoflifeordevelopment of the community. City of WestminsterPage 2 of 7Printed on 3/14/2022 powered by Legistar™ File #:22-105,Item #:3 Meeting Date: Specific Reductions in Services and Staff Forover30years, Westminster’sfinancesreliedheavilyonStateofCaliforniaredevelopmentfunds tomaintainbasicservicesandstaffinglevels,aswellasprovideassistancetowardbusiness development,low-andmoderate-incomehousing,andcommunity-basedprograms.Whenthestate eliminatedtheredevelopmentprogramandretainedthefundingthathadbeengoingtolocalcities, Westminsterwasleftwithabudgetshortagethatresultedinmassivelayoffsacrosstheentire organization,reductionandeliminationofservicesthroughoutthecity,anddepletionofthe city’s reservefunds.In2016,throughthewillofthevotersandthecommunity,thecitywassavedfrom inevitable bankruptcy through the passage of Measure SS. SignificantcutstoservicesandstaffweremadepriortothepassageofMeasureSSinresponseto thelossofredevelopmentfunds.However,evenwiththepassageofMeasureSS,staffinglevels haveremainedatminimumlevelsandmanyprogramsthatwereeliminatedhavenotbeenreinstated toensurebasicservicesweremaintained.Withtheupcomingexpirationofthelocallycontrolled revenuefunds,thecitywillloseapproximately24%ofitsoperatingbudget.Toaddressthelossof revenue,thecitymustprioritizethemandatoryservicesneededtooperate,andeliminateallother functionsandstaff.Basedonthe ’scurrentstate,withthelossoflocallycontrolledrevenuefunds, cuts would result in the following scenario: Administration o City Council Eliminate all technology equipment and supplies Eliminate funding for conferences, training, and memberships Eliminatestipendforpaidcommissioners,anddisbandallcommissionsnot required by law o City Manager MaintainCityManagerpositionandeliminateallotherpositions:AssistantCity Manager,EconomicDevelopmentManager,ExecutiveAssistant,Administrative Analyst (Communications), and Administrative Assistant II o City Clerk MaintainCityClerkpositionasrequiredbystatelawandeliminateallother positions: Assistant City Clerk and Administrative Assistant II Departmentwillbeunabletomeetagendapreparationdeadlines,response timesforrequestsforpublicrecordswillbedelayed,andelectionfilingsand state-imposed deadlines will be impossible to meet o Human Resources/Risk Management MaintainHumanResources/RiskManagementDirectorpositionandeliminateall other staff: two human resources analysts, and one human resources specialist Responseandreviewtimesofclaimswillbedelayedwithpossibilityofincreased liability to city for payment of unresponsive claims Decrease in oversight will lead to increase in liability to the city o Finance MaintainFinanceDirector/Treasurerpositionasrequiredbylawandeliminate fouroutofsixemployeeswhocoveraccounting,payroll,accountspayable, purchasing, and cash receipts City of WestminsterPage 3 of 7Printed on 3/14/2022 powered by Legistar™ File #:22-105,Item #:3 Meeting Date: Lackofstaffwillcreateinabilitytosegregatedutiesandeliminatechecksand balances in finance processes Delayinpaymentofrefundsorservicestooutsidevendors,consultants, residents, and businesses Reducedcountercoverageandabilitytorespondtothepublic,including processing counter payments Community Development o Eliminate Community Preservation Unit (CPU) and the following services: Nohomelessliaisonoutreachassistance-CPUassistsWPDwithclean-upsof transientencampmentsthroughoutthecityonadailybasis.Someofthese outreachprogramsareconductedintotheeveninghoursandincludeslarge cleanupsatthefreewayunderpassesandfreewayaccessareas.CPUalso regularlyrespondstorequestsfrompolicedispatchregardingpick-upof discarded items left behind by transients. No shopping cart retrieval No staff to address public property issues such as: Inoperative vehicles Discarded trash and debris Graffiti Overgrown weeds and vegetation Trash bins in public view Publicright-of-wayissuesuchasunpermittedworkontheparkwayand sign removal Parking or storing vehicles on unpaved surface Unkempt trash enclosures Unpermitted signage such as flag banners and banners Excessive window coverage at store fronts o Eliminate Management Analyst position Nosupportforrealestate,businesslicense,outdoordiningprogram,andother operations No new grant applications or special projects could be initiated or administered o MaintainPlanningManagerorSeniorPlannerpositionandeliminateallassociateand assistant planners, which will result in: Significant reduction in available counter hours, phone, and email services Delaysinprocessingdevelopmentapplicationswillnegativelyimpactproperty owners and the development community Inabilitytomaintainstate-mandatedapplicationprocessingtimeswhilemeeting other required, legislative demands Significant extended wait times for scheduling of inspections Delays in Building Plan Check turn-around times No special projects or programs could be undertaken Necessary actions such as the zoning code update would be delayed City of WestminsterPage 4 of 7Printed on 3/14/2022 powered by Legistar™ File #:22-105,Item #:3 Meeting Date: Community Services and Recreation o EliminateCommunityServicesDirector,SeniorCenterSupervisor,andtwoCommunity Services Coordinators. o Senior Center becomes a part-time facility No activities, classes, events, transportation, outreach, or support services Essentials left as nutrition/meals only Eliminate Project SHUE program o Youth-centered programs and services are eliminated No youth sports, summer or afterschool programs Reduced access to Splash Pad due to lack of staff for supervision o Eliminate community promotions and programs Eliminate printed brochure and other marketing materials No city special events will be held Nooversightoverprivatespecialeventstakingplaceonpublicorprivate property requiring permits Nomanagementoroversightovercrossingguardsandreductionofcity-funded crossing guards Public Works o Eliminate 16 full-time positions and 14 part-time employees o Impacts to parks Close all parks No graffiti clean-up or median maintenance o Impacts to streets and street maintenance Reduceoreliminatepotholefilling,concreterepairs,drainagedevicesand sidewalk cleaning o Impacts to building and facilities maintenance No staff or budget for plumbing, electrical, HVAC repairs, and painting. No cleaning of buildings or set-ups for facility rentals or events o Impacts to fleet or vehicle maintenance Nostaffforrepairsandmaintenanceofcityvehicles,includingpublicsafety vehicles o Impacts to engineering No staff forengineering design, construction management, and inspections No longer able to pursue and obtain grant funds for new projects o Reductions in existing maintenance contracts Reduceparkmowingfromweeklytoonceamonthandeliminateweed abatement in public right-of-way Cut park watering in half Reduce a quarter of tree trimming budget, impacting claims for fallen trees Police o Reducingthepoliceforceby1/3,equivalentto24sworn,17non-swornand25part time positions o Addressing homelessness: City of WestminsterPage 5 of 7Printed on 3/14/2022 powered by Legistar™ File #:22-105,Item #:3 Meeting Date: Eliminate both Homeless Liaison Officer positions Nospecializedunitstocompletehomelessencampmentclean-upsoraddress other homelessness issues and complaints No HLOs to provide direct impacts and services to homeless residents Homelessness-related issues will increase o Emergency response: Response times to emergencies would increase Victimswouldbewaitlongerforpolicetoarrive,evenforemergencycallssuch as in-progress domestic violence, robbery, and assault Policewouldnothaveresourcestorespondtomostnon-emergencycrimes, such as thefts and non-violent disputes o Traffic Bureau and enforcement: WiththeeliminationoftheTrafficBureau,trafficcollisions,includingfatalities,will increase Parking issues will go unaddressed and associated revenue will be lost o Crimes, reports, and investigations: Elimination of jail services and staffing contract Patrolstaffwillspendlesstimepatrollingandrespondingtocallsforservice whentaskedwithbookingandhousingarresteesWithonlyafewexceptions, most crimes would not be investigated No crime prevention efforts No investigation of cold cases Delayedturnaroundtimeforpolicereports,information,orotherpaperworkfrom the WPD o Special programs and task force: All community outreach programs would be eliminated Revenuesreceivedfromseizureswouldbeeliminatedwiththeeliminationofthe detectivefromtheDEATaskForce,andanyresourcesassociatedwiththistask force will be eliminated Staffwouldnotbeavailabletoprovidepublicsafetypresenceforspecialevents andassignmentssuchascouncilmeetings,theannualTetparade,school events, National Night Out, Public Safety Day, and public memorial services FISCAL IMPACT Thereisnofiscalactionrequestedwiththisreport.Thisisanexampleofapproximately$17millionin general fund budget reductions. LEGAL REVIEW The City Attorney’s Office has reviewed and approved this report as to form. City of WestminsterPage 6 of 7Printed on 3/14/2022 powered by Legistar™ File #:22-105,Item #:3 Meeting Date: CONCLUSION Ifthesalestaxmeasureisnotrenewed,thechangestothewayservicesareprovidedandthequality oflifefortheresidentsandbusinesscommunitywillbenegativelyimpacted.Thelossofthislocally fundedrevenuesourcewillplacethecityinthesame,ifnotworse,positionpriortotheapprovalof MeasureSS.Thistakesintoaccounttheincreaseincostsofdoingbusiness,aswellasreductionsin revenueimposedbytheStateofCalifornia.Externalfactorssuchasinflationandrecessionmayalso contribute to additional budget shortages. Withover$17millionincuts,thestructureoftheorganizationandserviceswillbedrastically changed and the community will notice and be affected by these reductions. AspartoftheapprovedCityofWestminsterStrategicPlan,theCityCouncilhasprioritizedagoalof achievingfinancialstability.Thisreport,aspartoftheplan,providestheCityCouncilandthe communitywiththemostcurrentoverviewofwhatWestminstercouldpotentiallybecomeifthesales tax measure is not renewed. ATTACHMENTS None. REVIEWED BY Christian Bettenhausen, City Attorney Erin Backs, Finance Director Christine Cordon, Interim City Manager City of WestminsterPage 7 of 7Printed on 3/14/2022 powered by Legistar™