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HomeMy WebLinkAbout4a - Fiscal Sustainability PlanCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No.� January 12, 2010 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, City Manager 949/644 -3002 or dkiff @newportbeachca.gov SUBJECT: Resolution 2010 -_: Fiscal Sustainability Plan ISSUE: Should the Council refine or adopt specific guidelines to help ensure the City's fiscal sustainability? RECOMMENDATION: Adopt Resolution 2010 -_ relating to a Fiscal Sustainability Plan for the City of Newport Beach. DISCUSSION: The City's FY 2009 -10 General Fund deficit is roughly $5.8 million as of the date of this staff report. That equates to about 5% of the City's General Fund operations. In the short- and medium -term, addressing this structural deficit without significantly impacting reserves is a primary goal of our office. If we cannot effectively reduce expenditures and reasonably increase revenues, the long -term fiscal future for the City is uncertain, given obligations like the Facilities Replacement Plan (FRP) and burgeoning retirement costs associated with Cal -PERS losses in Fall and Winter of 2009. Mayor Curry has proposed elements of what he refers to as a "Fiscal Sustainability Plan" that would guide the City Council and the City Manager in examining City operations, expenditures, and revenue opportunities. A short synopsis of his Plan follows, along with strategies suggested by the City Manager to help accomplish each of the elements. Mayor Curry asks that the Council consider adopting the elements and Plan via resolution, allowing further details to be added to the Plan over the coming few months with the advice and assistance of the Administrative Services Director. Resolution 2010 = Fiscal Sustainability Plan January 12, 2010 Page 2 ELEMENTS OF A FISCAL SUSTAINABILITY PLAN 1. The City will proactively seek to protect and expand its tax base by encouraging a healthy underlying local economy. STRATEGIES: EDC, Economic Development staff, support of the NB Chamber of Commerce, CDM Chamber, and VisitNB.com, support of Business Improvement Districts, a business - friendly permit approach to businesses wishing to start or expand businesses in town; support of the Harbor's economic base. 2. The City will work to enhance and protect the property values of all Newport Beach residents and property owners. STRATEGIES: Strong City services, including public safety, code enforcement, library, public works, recreation, and general services. An emphasis on beautification opportunities and effective advanced planning in areas selected by the City Council each time the Council adopts its budget. 3. The City will encourage shopping, dining, and visiting at Newport Beach stores, restaurants, and hotels. STRATEGIES: EDC, support of the Restaurant BID, support of the NB and CDM Chambers of Commerce and VisitNB.com; support of Restaurant Week, the Film Festival, and more. 4. The City will establish and maintain appropriate cash reserves. STRATEGY: Regular compliance review and update by the City Council of Council Policy F -2 (ReservesiDesignations of Fund Balance). 5. The City will manage its Facilities Replacement Plan to not exceed the 5% of General Fund expenditures threshold. STRATEGY., Maintain the limits in Council Policy F -28. 6. City revenue performance will be reviewed no less than quarterly and appropriate budget adjustments will be made in advance of the end of a budget year if revenue performance is not meeting projections. STRATEGY: Provide more frequent and detailed budget presentations to the City Council. 7. The City will initiate a "results -based budgeting" approach that allows the public and the City Council to prioritize City expenditures strategically rather than simply adjusting legacy expenditures to reflect inflation. STRATEGY: Begin a practice of building departmental budgets from the base up, with a more detailed discussion of programs within each budget unit, including examining where the City should position itself 3 -5 years from now. 8. The City will implement a Performance Measurement/Management Strategy as part of an ongoing effort to ensure high - quality and efficient performance. STRATEGY: Incorporate performance measurements into the City's budget documents and City management, and report back to the Council accordingly. 9. The City will consider competitive contracting of services and equipment when appropriate and where clear, cost - effective alternatives exist. STRATEGY: Begin a continuous review Resolution 2010- Fiscal Sustainability Plan January 12, 2010 Page 3 of all City operations and programs, conducting studies or analyses of 3 -5 programs each year to examine whether a program could be more effectively done in another manner. Encourage City departments to submit their own proposals to improve a program. 10. The City will make it a priority to be energy efficient in its provision of public services. STRATEGIES: Seek LEED certification (or equivalent energy savings if the City chooses not to pay LEED fees) for new facilities on the Facilities Replacement Plan. Examine and implement the most energy - efficient (if cost - effective) ways to light, heat, and coot existing city facilities and to provide street lighting and traffic signal lighting. 11. The City will establish appropriate cost - recovery targets for its fee structure and will annually adjust its fee structure to ensure that the fees continue to meet cost recovery targets. STRATEGY: Continuously review the City's fee structure, including harbor fees, and discuss with Council at least annually via the adoption of the Master Fee Resolution. 12. The City will oppose efforts of the State and County governments to divert revenues from the City or to increase the unfunded service mandate of City taxpayers. STRATEGY.' Remain engaged in intergovernmental relations with our State Legislators and with the County Board of Supervisors to ensure minimal cost impacts from the State and County as they may relate to un- or under - funded mandates. 13. The City will work in partnership with its employees to ensure fair compensation and that costs related to pension and other benefits are appropriately allocated between employer and employees. STRATEGIES: Work with the bargaining units to establish retirement options that may include greater employee payment of the employee's share of PERS costs, a defined contribution plan or plans, and/or hybrids that blend defined benefit and defined contribution plans — provided that such plans enable the City to continue to attract and retain qualified candidates for jobs. Work with other municipalities and our legislators to enact a more sustainable retirement system statewide. 14. The City will vigorously defend itself and its taxpayers against frivolous lawsuits and other shakedown schemes. STRATEGY: Develop strategic approach to liability risks and implement it on an ongoing basis; encourage and support risk management initiatives in areas of significant exposure; and Allocate enough staff time and resources to the Risk Management function and in the City Attorney's Office to effectively address areas of risk at the management level and fight lawsuits and other claims that unfairly target the City and its taxpayers as deep pockets. The attached Resolution (Resolution 2010 -_J would memorialize the fourteen (14) elements as the formal guidance of the City Council from this point forward. Environmental Review: None required. Resolution 2010- Fiscal Sustainability Plan January 12, 2010 Page 4 Communication with Key Stakeholders: Stakeholder communication regarding this item included: 1. E- mailing this staff report to members of the Economic Development Committee (EDC); to the Newport Beach Chamber of Commerce and to Visit NB.com. 2. E- mailing the staff report to members of the Finance Committee. 3. E- mailing the staff report to the City's major labor groups. 4. Public notice as required by the Brown Act. 5. A comment and link posted by me to readers of the City's Facebook page. Submitted by: 11C :�� Dave Kiff City Manager Attachment: Resolution 2010 -_ relating to elements of a Fiscal Sustainability Plan Resolution 2010- Fiscal Sustainability Plan January 12, 2010 Page 5 RESOLUTION 2010- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH RELATING TO A FISCAL SUSTAINABILITY PLAN FOR NEWPORT BEACH CITY GOVERNMENT WHEREAS, the City of Newport Beach has remained a fiscally responsible municipality since its inception in 1906, carefully balancing its budget year -to -year despite changes in the regional and national economy; WHEREAS, the current economic recession has impacted the City's General Fund operations in a significant manner, causing reductions in sales tax and hotel bed tax revenue, among other sources of revenue; and WHEREAS, the City's preparation for the downturn, including budget reductions and the City's prudent reserve policies have assisted the City in weathering the current downturn, ensuring the continuation of the strong provision of essential services; and WHEREAS, even as the City and the region may slowly return to a period of economic growth, the City is cognizant of its responsibility to continuously improve the organization and its services to maximize efficiency and cost - effectiveness; and WHEREAS, even as the region may see new economic growth, the City faces significant and costly obligations in the future, including rapid increases in retirement costs and the maintenance, repair, and replacement of City facilities via the Facilities Replacement Plan and the City's capital improvement program; now, therefore be it RESOLVED by the City Council of the City of Newport Beach that it hereby adopts the following fourteen (14) elements of a Fiscal Sustainability Plan and directs that the Plan be the policy of the City Council going forward into 2010 and beyond: ELEMENTS OF THE CITY'S FISCAL SUSTAINABILITY PLAN 1. The City will proactively seek to protect and expand its tax base by encouraging a healthy underlying local economy. 2. The City will work to enhance and protect the property values of all Newport Beach residents and property owners. 3. The City will encourage shopping, dining, and visiting at Newport Beach stores, restaurants, and hotels. 4. The City will establish and maintain appropriate cash reserves. 5. The City will manage its Facilities Replacement Plan to not exceed the 5% of General Fund expenditures threshold. Resolution 2010 = Fiscal Sustainability Plan January 12, 2010 Page 6 6. City revenue performance will be reviewed no less than quarterly and appropriate budget adjustments will be made in advance of the end of a budget year if revenue performance is not meeting projections. 7. The City will initiate a 'results -based budgeting" approach that allows the public and the City Council to prioritize City expenditures strategically rather than simply adjusting legacy expenditures to reflect inflation. 8. The City will implement a Performance Measurement/Management Strategy as part of an ongoing effort to ensure high -quality and efficient performance. 9. The City will consider competitive contracting of services and equipment when appropriate and where clear, cost- effective alternatives exist. 10. The City will make it a priority to be energy efficient in its provision of public services. 11. The City will establish appropriate cost - recovery targets for its fee structure and will annually adjust its fee structure to ensure that the fees continue to meet cost recovery targets. 12. The City will oppose efforts of the State and County governments to divert revenues from the City or to increase the unfunded service mandate of City taxpayers. 13. The City will work in partnership with its employees to ensure fair compensation and that costs related to pension and other benefits are appropriately allocated between employer and employees. 14. The City will vigorously defend itself and its taxpayers against frivolous lawsuits and other shakedown schemes. ADOPTED this 12"' day of January, 2010. KEITH CURRY Mayor of Newport Beach ATTEST: LEILANI BROWN City Clerk