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1975/06/30Signed ~~.~ ' Y Cler~ Cit~, Hall, Ana]~eim California - C()Ui-..rCIL 'fI'iU'i'£~S - June 30 1975 10:00 A. Ti~e City Council of the City of Anahci~.~ met in adjourned regular session for the purpose of considerin~g tl~e 1975-76 Budget. ]~I(ESEi.~T- COUi.~CIL i~i~ERS- Kaywood, Ses~aour, Sneegas and AiISEi~T' COUNCIL ~fEi~'~ ERS® Pebley PiIESEi~T· CITY i~.~AGER· Keitl~ A. ~turdoch ASSISTAi~T CI~ ATTORi,iEY- Willia~a Hopkins CITY CLEi~<' Alona 1.~. Hougard PUBLIC WOiIKM DI~,~C~O~,. Thornton Piersail UTILITIES DIRECTOR: Gordon W. Hoyt DATA PROCESSING b~AGEII: Keith Parkyn ~,layor Thom called the meeting to order at 10:0:3 A.i~. C()i____~TI~.~UED PUBLIC i{EARI.__i__~G- 1975-7______~6 ]~UDGET FOR Tiii~ CITY OF ANAHEIi~'I: To consider ti~e proposed budget of the City of Anaheim f~r the FisCal Year of 1975-76 (continued from tl~e meetings of June 10, JUne 17, and June. °4, 1~)75 to tt~is date). ~ 'Ir. l~iurdoch submitted a proposed Budget Addendum dated June 30, 1975, whicl~ is briefly summarized below: liold Items - Capital Outlay (Items not to be ordered or autl~orized until January 10, 1976) Reduced AI~propriations Additional Revenues- Increased Water Fees $1,014,9~4 3 i"~d, 60q 120,000 - Increased Sanitation Fees Additional Appropriations - Sanitation Charges 268,600 26,j, 600 -Council Contingency Fund 120,000 75-5~9 City iiall, A~ai~ei,n~ Califor~i.a- C~U !(]iL ['i]~.~.~UT~S - Ju~e 3'~.~. 1.9~.7,3~ I:)'O.~..A.I4... ~',lr. ~-'iurdoci~ presented Council '~lembe'rs ~it~ t~e d~tailed infor;~ation on tae ite:-:~s ~.~ic[~ ~ere disct~sse~t ~t t~e last bud~et sessio~ t~at could potentially be utilized to create ti~e reserve rc.~uestcd ~y Co~ci.[. ,ie ~u:l.;~;ested that ti~ose ~'~'76 ~c actually included in capital o~tlay ite~,~s to t~e bud~;et itself as an addendun. It i~ proposed that a review of t'l~e City's financial situation be conducted at ti~at time to ascertain whether or not t,~e revenue projectio~s are accurate, a~d none of t!~e cai>itaJ, outlay itc:ns listed ~.~o~id be authorized until ~uci~ ~evi~--~. is co~'.q~lc, ted,. if ti~cn, i4r. 14urdoc~ advised t~at the list of capital outlawry ite~.~s ;~ubmitted t'~is date totals ~j 1, ~) 14, ~..~ '..J 4. .Ir. ~turdoc~ stated that it i.~ also r~:co~.~-~me~ded ti~at certain appropriatior~s reduced, thereby creating a bu~,l...,et reduction i~ the a~.~ount of $3~8,600. The iar~4est single item listed under these proposed reductions in appropriations is $300,0;[)0 frown l~orker's Compensation Reserve. .'-ir. ~[urdoch reported tl~at it is inter, tied to bz-i~g before Council s',~ortly a rcco~endation regardin~'~ increase in fees char[;ed in relation to construction. Tl~is ~as discussed in tl~e preli~i~ary Art~ur Young & Co~,~pany report. Some of t~.~e fees in question are below{ tl~e actual cost to t1'~e City. The Water Division is preparing a list and will submit t~is to t~e Council for possible action. ~t is esti~nated that an additional $1~U,Ou~) ~.a~uid be derived fro~ this source, and this should be sho~.~n in the budget. Also in connection ~-~ith additional appropriations, Mr. Hurdocl~ explained it is proposed to show an additional a~ount of $26.3,'-00 for increased sani- tation charges and to indicate under ad~[itional revenues this same amount. The a~'~ticipated additional revenue fro~ ti~e proposea i~crease in water fees men- tioned above ($120,000) is shown as an additional appropriation to the Council Contingency Fund. In response to Councilman Seymour, l'ir. ~;~iurdoc~.~ affir~ed that it is antici- ,~,ated tile sanitation disposal co~tractors ~ill request an increase in fees amounting to $268,600. He stated that the same amount s~o~zn under additional appropriations indicates that it is reco~mended t~at the fees charged by the City be increased as well. Councilman Sesnuour stated that tills was not the approach i~e l~ad in mind ~hen discussing a surplus fund. He indicated he had no qualms with the recom- nendations to increase construction ~ater fees charged to developers, but ~ould not sanction an increase in sanitation fees ci~arsed individual customers in the City. Brief discussion of sanitation fees was held during ~.~nich Councilwoman Ka~.~ood questioned i~ow the City can justify absorbing an increase in sanita- tions fees charged by contractors. Councilman Seymour replied t[~at he would not be willing to pass this increase cost along until he is satisfied that all excess a~,~ounts and all cut backs possible have been made to thc City's budget, to whicl~ Councilwoman Kaywood indicated that si~e felt the bud[~et had reached that point. ,ir. 'fhornton Piersall reported, in ans~.~er to Council duestions, that the City ~has received requests from bot]~ trasi'~ disposal contractors for increases as a result of the recent labor settlement as well a,~_~ t~e inflationary spiral. tie stated that t~e last increase given was four years ago and ti~at tl~e last time the contracts were due for renewal they were extended a period of five years to allo~ for amortizatioa of ~e~ equip~ent. ~-{r. i,'£urdoch pointed out t~at at ti~e ti;~e tl~a Council is requested to make a decision on sanitation ct~ar~es~, to ti~,2 Citv's~ cu,;to~,~ers~ they would have so~e flexibility in tt~eir approacl~, i~ ti~at thc $12,~',,~.).')3_ added to the Contingency ]~und need not be utilized as o~~. ite~.~. In vie~-~ of ti~e fact ti~at tl~e amount and effect of the increased sa~itatio~ fcc is an unknown at t~is ti~'~e, ti~e o~ly reasonable way to sl~ow it in ti~~. bud:.:~t ~as to i>lace ti~e .estimated amou~t on bota sides of tl~e ledger. 75-59O City t-Jail~ .... A_natleim, Californ. ia., co~J~,cI'i, '[£,iOTi.:J -June 3.~, lP75, lo'0.~ A.,.I. Cot~ncili.~an Sey:-~our state~t tibet ~is co,~cer~,. ~it ~ ti~e increase in sa'n'tation c~ar:;es to custoners is that tl~e i~tcnt in creati:~.~ a reserve was to buffer expected increases in sanitation, utility fuel co:.;t adjustments, and enployeu sal~ry increases. Councilwoman Seynour w~iced thc opinion teat by showing ti~e increased revenues to off-set t!~c increased sanitation fees, the City is layi~g tills ite~'a off to the consumer, lte a';reed t'~at rec~ l~ave to be charued in order to provide a service, i~owever i~c was ~t c~.~vi.~ced at this tinge that all of t~e excess has been tri~mne~.~ frora t:~e 197~-76 Sudget and ti~erefore, u~til sucl~ time as ne is sufficiently convi~ced, he will remain opposed to increases in sanitation fees, utility and water rates, and taxes. Councilwoman i[aywood :;rated that si~e had reached a different opinion in looi~ing through the budget, gila cited several exa~.~ples such as in l[echanical :~aintenance and other Public Works Divisions (sidewalks, curbs, and gutters, . si.:;ns and safety devices) where ti~ere is indicated a reduced level or no appre- ciable level of preventive maintenance beinil allo~zcd. She was of the opinion that this pattern could not be continued indefinitely as it will ultil~ately cost the City more in replacement. She also ~oted that costs of cement and other construction materials nave si~arply increased and alley reconstruction and other projects deferred at this time will ultimately cost more. Councilwoman Kaywood also pointed out tl~at the cost to process E.I.R. is more titan the City presently c'~:arges. She noted that when the City contin.ues to absorl~ the differential between the cost to 'provide tile service and the fee to the user, this ta~.:es funds away from some oti~er 'need She was of the opinion that such processing costs and any ii,crease in sanitation charges should not be absorbed by the City. Councilman Seymour stated he had not yet in tiais discussion heard any comments relative to savings which ~ight be accu:.~ulated through a freeze on all vacated employee positions, ile voiced the o~inion that if the City does not begin now to effect some economies, it will then be in the position some governmental agencies are currently facing, t~at of being forced to lay 'off employees, tte stated he would rather economize now to enable the City to get through the current critical economic period. .'.ir. ?lurdocll replied, in answer to Councilman Sesnnour, that he estimates the City will realize, by following a policy of non-automatic replacement of positions vacated, a savings of $500,000. However, this is not indicated as a precise line item because it is not know~'~ which positions would be vacated. He indicated that it is the intent of staff that every position vacated will be reviewed with a very tight attitude towards replacement and that perhaps this should be adopted as a policy along with the budget. }.lr. ilurdoch pointed out ti~at the $1,600,000 in unappropriated reserve from 1974-75 Fiscal Year was not included on ti~e bud~;et addendum either, but is incorporated into the reserve fund requested by Council. i.lr. liurdoch reviewed the suggested 1974-75 Revenue Sharing re-allocations as follows: $142,500 to be reduced froi',~ the acpropriation for construction of the libraries because of the bids received, and the amount scheduled will still provide for construction, landscaping and operation of tl~e facilities for two r.~ontils portion of the fiscal year, including the book budget; since there are no plans to proceed with tl~e satellite garage, $75,000 for construction of same and $25,000 allocated for the tooling ti~ereof casa be removed; the agreement between the City and County for joint funding of the l\,;ila Reid Park requires that the City not use revenue sharii~; funds, and this $1~'~- 323 can be re- allocated; $240,197 is remaining in the Civic Center Phase I appropriation. "ir. llurdoch suggested tl~at tile above outlined funds be re-allocated as follows' Paramedics $273,020 Financial/l b~nagement Auaits Park Purchase (6 acres adjacent to John i'~arshall School) Disposal Site, Public Works 55, O JO 165,000 175,000 , , .... ,i i ..... b , l'. i . I .... I I I I.II III [. IIIII II I ..... I 75-591 City Hall, .~nahe. im, .Calif.ornia...-.CO0.{C.I.L 'MIi~UTii:~, June 30, 197~.5, !.q.:O.q A.?~. At tile conclusion of the review of t~'~e l~ud~et addendum, Councilman Sey~our requested that the component savings, reduced appropriations, etc., w~ich are intended to make up tt~e reserve be identified and segregated as a reserve for t~e Contingency Fund so that as these proposed rate increases co~e about, Council can decide whether or not to use ti~is money to absorb a portion or all of the increased costs. Tile items in the reserve for contingencies were identified as follows' Anticipated ~avings from revised approaci~ to salary negotiations $2<jO, 000 Anticipated Savings - non-automatic replacement of Employee positions vacated 50U, 00 0 Hold items - Capital o~tlay Unappropriated balance 1974-75 Budget 1,014,904 1,600, Council Contingency Funds 270,000 Reduced appropriations $3, '~73, 504 Councilman Seymour questioned w~ether t1~e $3,973,504 figure' contemplates increased sanitation charges, to ~ici~ l~r. Ringer replied affirmatively an~l added that the figure also conte~nplates passins ti~e i~crease on to the con- oolll~ler, ~Ir. J-(urdoch advised the Council i.{e~,~bers that any deviation from the poli.cy of passing increases through to the custo~ner ~ould nave to be funded from this reserve account. He also explained that ti~ere will be some additional items wi~ich can be added to the reserve as a result Olf specific cost saving activities derived from the Arthur Youn~j & Co;-npany Audit. T~ese will be individually identified as they cone along. Councilman Se)n-~our asked for a description as to llow the Finance Director and City i~anager specifically reco~m~end the Contingency Account be set up. ~ir. Ringer explained that there is approximately $2,000,000 unappropriated reserve,. 1974-75 plus $3~,000 reduced appropriations 1975-76) on the books as of June 30, 1975. It would be their intention to indicate ti-~e l~old items in the budget document itself, and t~at no contract or purci~ase order will be issued on these itens prior to Ju~e 10, 1976. For ti~e re~ai~der of the items, such as tile $50~,0~0 in savin~s from the non-antomati¢ replace- ment policy, they are undecided but are considering monthly or quarterly reports to the Council to determine wi~ether or not ti~e anticipated remerve is beini~ built up. Councilman Seymour questioned what i~'~pact it would !lave on the budget if an increase in the trash contractors' fees w~re ~ranted without passiag t~is cost on to the Anaheim custo~'~ers and was infor~ed by >~r. Ri~ger that this would red~ce the reserve contingency by $200,C0~}. Councilman Seymour pointed out t'~at a more realistic reserve fund ligature, a~tcr re:-..~ovin~ the $200,000 antici- pated frcrm revised pay policy an~ ti~e $Z~,6~'~>~0 i~crease i~ sanitation fees, would be $3,503,904. Councilman Seymour further ?oi,~ted out that in t!xe budget addendum sub- mitted this date, the actual reduced appropriation fij-;ure of $3J~,600 is com- prised mostly of a ~300,000 reducti()n in the Wor~.Ler'scompenmation Account and $d~,600 represents what was actually cut fro~,~ t~.~'~e operating budget. l~r. ~urdoch noted that tl~e reduced appropriations do not reflect any input from the Arthur Young & Company audit. Councilwoman Kaywood reiterated her concern that cut backs in maintenance levels would eventually cost the City more. Sl~e stated that accordin~ to sta- tistics, with 1300 City-owned vehicles and miscellaneous motorized pieces of (_;ity ~[al.1, ..A..naheira~ Califor~ia - COU:'.ICIL i~.IIi'~IJ_TL5 - June 3.0., 19__75, _10:00' equii),~.~e~t, the City does not t~ave sufficient ~;ara~.~e floor area, and is under- staffed by 13 mechanics. She noted tibet there arc sor.~e costs ~itich the City de~art~'aents~ cannot absorb, for exa:ai~le increases of 175~,'J in anti-freeze., 2'O0"~o in ~ral:.e fluid and 5'~);:i in trucl- tires. She emphasized t['~at if adeqttate levels of service for these veI~icles are not ~nai~tained, they ~-~ill ~-mar out and need replaceraent rather than just repair. ~[r. iiurdoch explained ti~e reviex~ policy on replacement of vehicles and noted that early in the budget.. :~r,'~,,aration~ .~ the recor,~nended replacement number was 43 vehicles wi~ich was reduced to 24 follouing considerable screening. He advised that before the budget is complete, additional review ,~ill be done and in tills connection, a survey i~as been conducted of those vei~icles with an average monthly usage of less than 200 miles. Councilman Sey:nour suggested that in ti~ose inst.nnces of low milea{*e ve~icles, tim employee be paid tnileage rather than use a pool car and Mr. 2[urdoci~ stated that this is an alternative wl~ich possibly will occur follox~ing the review. One of the low ~aileage vciticles disclosed from the survey is assigned to i)ata Processing and ~lr. Keith Parkyn was questioned about its use. l.lr. Parkyn explained that because of the re:'.~ote location of the Data Pro~essing Offices, the vehicle is generally used to transport people to meetings ~ith various other City departments. Councilman Seymour stated tl~at it appears to him with the revised Contin- gency figure of $3,503,904, the Council is still $500,000 away from estab- lisi~ing the $4,000,000 surplus, ~hich in his estimation is a very conservative figure x.~hen considering the potential unkno;.m liabilities and costs the City may ~ave to face in the coming fiscal 7ear. In reply to ~lr. i-lurdoch's query aa to x.~.~at the Contingency Fund is meant to accomplish, Council~;~an Seymour read fror~ the bud:_[et ~aessage the section which indicated that the proposed budget did not include provision for any up- ward movement in salaries and wages; nor adjustments in sanitation c,~arges, ~mter or electric commodity costs. Councilman Seymour stated t'~tat if this is to be a balanced budget there sl~o~id be some provision to cover these items. Councilman Seymour requested verification frown tlm Utilities Director regard ' ~ · n~, the possibility of utility rate increases, and ilr. Hoyt reported that a 1:~'~o increase in retail electric rates has been requested by Southern California Edison for January 1, 1976. Because of the inflationary factors, he felt they will receive approval for an increase but could not guess at tl~e a~aount, ilr. }ioyt related that the ~,.~orst situation x~ould be if Edison receives no increase, which means that the City of Anaheim ~.zill have to hold retail rates while the wholesale rates increase. >fr. Murdoch stated that his concern is that tim Council is trying to fit figures into precise positions wltich is unrealistic in a budget situation. It is recognized tlmt during the course of the bud~:;et year there will be more savings over and above what is shown here. The analysis to identify these savings has not yet been done but traditionally the City does not spend every ruing in the budget. On the expenditure side of the ledger he indicated he would like to be able to provide for an adverse situation. He indicated he also prefers to take an approach to revenue estimation w~ich is not overly optimistic. 2-1r. ilurdoch stated that he believes there is some cushion in tills proposed 1975-76 Budget, and further that there is an identifiable amount which is ade- quate for what can be anticipated at tills point, tie stressed that there is no intent on the part of the City staff to relax the approac'h of saving funds wherever possi'ble. Councilwoman Kaywood stated that in view of the unpredictabl.e economic situation, in which it is unknown ~.~at future costs will be, she would prefer to remain on the conservative side rather than assuming the revenues will be more than actually come in. 75 59~ Councilwo,~an Kaywood moved t~at t',-z City Co~:~cil adopt t;~e proposed 1~75- 76 ~ud}~et witt~ t:~e addendm.~ discussed, said a~l,~e, nd~.~ to indicate a reserw?. account for contin~-~encies i~ ti~e Councilwoman Ka)n~,ood indicated ti.~at t~i:; figure i;~cludes the $3,503,904 as referred to above by Councilman Seymour, but also i~rovides for $268,600 to be derived from the increased sanitation fees to be ~assed on to the consumer. She voiced the opinion that ti~e sanitation ci~ari;e increase is.a direct cost fo.r a direct service which should bc pas:;ed a]on,~] and t[~a.t it is not unreasonable to do so. Co~ncilman Seymour started tl~at there is a direct conflic..t in philosophies reflected in Councilwo~aan Kaywood's ~-~otio~. lie stated t-hat what ~e has been talking about since the beginnin,~ of ti~e bud,;et discussion is the.creatio.n of a reserve for the express purpose of off-setting utility rates and other types of increases, including sanitation cl~arges and enployee salar~y increases. Now, .,.ellow Council .~.;embers wisi~ to set u'.p tl~e reserve but at the same time s~tart off wit;~ the policy,, of passin% on the increased sanitation, char~oas to the con- su~'~er, lie stated that if Councilwoman Kaywood's pl~ilosophy is that of passing on ti.'~e inc.reased costs of doing business, then there is~no need for the :~.~4,000,0()0 reserve which he "~as been trying to ac.~ieve. Councilman Seymour '~ ~'04 identified as a i~licated he would be amenable to acce. tin3 tt~e $3,503,~ reserve in lieu of t'he $4,0:)0,()i),7), but requested an exi_,ression of intent from the remainder of the City Council as to the expressed purpose of this fund. '~Tayor Thom stated that he views t~,~e reserve fu'ad as a pad against w~'~ich the Council may charge increases, without pas~;ing them on to the consumers. Councilwoman Kaywood agreed with t!:~is, to the extent ti:~at it is possible. She pointed out that ti~e Council 1~as already establisaed a policy that Anaaeim electric retail rates would be maintaine,i at a '~'~inimum of 5% ~nder Edison retail rates, and if the City is able to acco~plis'~ this, plus have a surplus enter t~e General Fund frora the electric utility to keep the tax rate at the current $1.05, tt~e Anaheim electric consumers will be receiving a good break. She further pointed out that the City is ?la~ni'~i; to install median land- scaping, support a paramedic progra-..-~ and buil~[ two libraries. She reiterated that if t'he cost of sanitation is 'i;oinf; to ~o u~ because of salary increases, that she did not think it unreasonab~ ~..e to l~ass t~at cost along to the user. Councilman Seymour stated that the difference in opinion is that he believes in passing increases on to t}~e customer and taxpayer only after he ads r.~ad.e every possible attempt to insure that tl',,e bureaucracy has been tri~-~ned to the size of efficiency, apd the consu~-~er is not carrying the extra load. The ~X~yor declared the foregoing ?aotio'~ had .~iied for a lack of a secoud. 1.~75-76 BUDGET APPP, OV~'. Councilman Seymour moved ti~at the 1975-76 Bud:;et as proposed be approved, together with thc budget addendu'~'~ as presen.ted and amended to show a contingency reserve o~ $3,5')3, ~ 'i)~.i)4 crea.ted for ti~e ~urpo~;e of absorbing to the greatest extent ?os~ible all increases in sanitation charges, ~.~ater and electric rates, as well as emolo~ee, ~ salary adjustments. Councilma~~ Thom seconded the motion. Prior to voting on the foreooomno' ° motion, Councilman Sneegas stat.ed th.at.. ti~e crux of the situation is the pi~rase "to t~e greatest extent possible" and indicated he would like a more specific definition. Councilman Seynour amended ti~e fo'regoi~i-; ~,~otion as follows' That the 1975-76 Budget as proposed be approved, toget,~er witl~ t~e 'budget addendu~a as presented and amended to si~ow a contingency reserve of $3,503,904 created for t~e purpose of absorb'- ~ · ,~ anticipated increases, specifically, that be utilized for e:~q~loyee wa~e and salary adjustments; and $1,903,934 be used to off-set increases in sanitation ci~arges, '~ater and electric rates., at the discretion of the City Council, until said reserve account is depleted. Councilman Thom seconded tl~e a:aended ~otion. Councilwoman Kaywood inquired w;~etl~er Councilman Seymour is indicating that it is equitable to charge everyone across-the-board for som.ethin~, w~ich is a user fee, to whici~ Councilmen Thom and Se~..naour replied affirmatively, uoting .~ . II I' iiiii iiiii ii1.._ i 75-594 , . ]1 '~ *' -r - .'! · · · City ~[all~ Anaheim~ California - C( ~,.~CIL ~'II~iJT~S - .lu~e ..)':)~_ .... 1975, 10 Oi) A ~I tJ~at utilities and sanitation ct~arges are levied t!~rou~i'~ floatin.~ sci.~edules of rates, and a ~)ercentage increase is laid off e~,~uallv among the custo]~ers Councilwoman Kaywood inquired whetl~er Co~ncil~an Seyr,~our is indi. catin.,i~ ~e would be willing to take $2,000,000 out of the General Fund and use it to off- set these user charges and tI~en be faced with the possibility of very higl~ increases in the coming year. Councilman Seymour stated that if he could not find additional savings, after all of the excess possible has been squeezed out of 'the City budget, then he would pass increased costs on to the consumer, but only at that point wl~ere t'he City has used all the reserve which it has established. i'..iayor Thom called for a vote on the foregoing motion. CouncilWoman liaywood voted "no". Councilman Pebley absent, i~.~OTION CARXIED. "~r. ~'~urdocl~ stated that the Council had approved a total budget amount of $99,003,703, with a reserve contingency of $3,5~3,904. A.UT!!ORIZATION FOR RE-ALLOCATIO~!~ .... 1974-75 REVENUE S}~IING FUNDS: On motion by Councilman ~h~a,' seconded by Councilman SeYmour,-t[~e City'aUt~horized the re- allocation of 1974-75 Revenue Sharing Funds as set forth herein above and recommended by the City lk~nager. Council~';~an Pebley absent. MOTION CARRIED. RECESS - EXECUTIVE SESSION: Councilman Thom moved to recess to Executive Session· Councilman Se~vmour seconded the motion. Councilman Pebley absent· ~OTION CAF~IED. ( 11' 40 A. ~.~. ) AFTER iiECESS' i,~yor Pro Tern Seymour called the meeting to order, all Council ;.~embers being present with tl~e exception of Councilman Pebley and Mayor Thom. (12'23 P.M.) ~0JOURi'fiIENT: Councilman Snee%as moved to adjourn. Councilman Seymour seconded the motion· Councilman Pebley and ~layor Thom absent. ?-{OTION CAPdtIED. Adjourned: 12: 24 P.M. Signed City Clerk