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STUDY SESSION ON OUR PROPOSED BUDGET.UH, WE TYPICALLY LOOK ABOUT THREE YEARS OUT AT THE STATE OF THE CITY.
WE ASK TO ACTUALLY LOOK FIVE YEARS OUT.
SO WE'RE GONNA BE LOOKING A LITTLE BIT FURTHER OUT, AND WE'RE GONNA BE TALKING ABOUT SOME OF THE IMPACTS TO OUR BUDGET WITH RESPECT TO, UH, SB 1137 AND SOME OF OUR PLANS MOVING FORWARD, UH, TO REDUCE OUR DEPENDENCY IN OUR GENERAL FUND ON OIL REVENUE.
SO WE'LL BE DISCUSSING SOME OF THAT.
WE ALSO, I JUST WANT TO LET THE COUNCIL KNOW, THIS IS THE FIRST OF THREE PRESENTATIONS.
[CALL TO ORDER]
WHAT WE'RE UP AGAINST, AND[ROLL CALL]
THEN WE'LL HAVE A PRESENTATION THAT TALKS ABOUT OPPORTUNITIES WITH RESPECT TO GROW LONG BEACH, WHICH WE'RE, YOU KNOW, WE'RE, WE'RE, UH, MAKING SOME GREAT PROGRESS.AND WE'LL BE ABLE TO PUT SOME NUMBERS BEHIND THAT.
AND THEN WE'RE GONNA HAVE A THIRD PRESENTATION ABOUT WHAT ELSE, WHAT OTHER POTENTIAL OPPORTUNITIES WE HAVE TO
[1. 24-52536 Recommendation to receive and file a presentation on the City’s Fiscal Outlook and FY 25 Proposed Budget Development Update. ]
MAKE SURE THAT WE'RE NOT ONLY, UH, LOOKING AT A DEFICIT, BUT, BUT ALSO, UH, LOOKING FORWARD TO EXPANDING OUR SERVICES, DELIVERING BETTER SERVICES AS A CITY.SO THIS IS THE FIRST OF THREE PRESENTATIONS.
THAT SAID, I'LL PASS IT OVER TO CITY MANAGER MOCA.
THANK YOU VERY MUCH, MR. MAYOR.
UH, SO THAT WAS A REALLY GOOD, UH, INTRO.
I WILL JUST TURN IT RIGHT TO THE TEAM TO GET INTO IT, AND THEN I'LL MAKE SOME COMMENTS AT THE END ABOUT WHAT THOSE, UH, NEXT TWO STEPS LOOK LIKE, UH, IN APRIL.
AND AT THIS POINT, I'LL TURN IT OVER TO GERALDINE ALEJO, OUR ACTING BUDGET MANAGER, AND, UH, SHE'S SUPPORTED BY HER TEAM.
GOOD AFTERNOON MAYOR AND MEMBERS OF THE CITY COUNCIL.
THE BUDGET STUDY SESSION WILL PROVIDE AN UPDATED FORECAST FOR FY 25 AND BEYOND, AND WE'LL DISCUSS THE APPROACH TO DEVELOPING THE PROPOSED FY 25 BUDGET.
FIRST, I WANNA TAKE A MOMENT AND ACKNOWLEDGE THE FY 24 BUDGETARY ACCOMPLISHMENTS OF THE MAYOR AND CITY COUNCIL WITH GUIDANCE FROM THE CITY MANAGER, SUCH AS SIGNIFICANT ENHANCEMENTS AND EFFICIENCIES DEVELOPED TOWARDS ACHIEVING THE LONG BEACH STRATEGIC VISION 2030, INCLUDING 27 MILLION OF ONE-TIME USES FOR CRITICAL INVESTMENTS WITHOUT GROWING THE GENERAL FUND SHORTFALL.
ALSO, THE CITY LAUNCHED A NEW ELEVATE 28 PROGRAM FOR A TOTAL FIVE YEAR CAPITAL IMPROVEMENT PLAN OF 758 MILLION TO REVITALIZE CITY INFRASTRUCTURE, PREPARE FOR THE 2028 OLYMPICS AND CONTINUE TO IMPROVE AND ENHANCE CITY PARKS, MAJOR CORRIDORS AND VISITORS SERVING AREAS.
NEXT, A RECAP OF OUR FY 23 YEAREND PERFORMANCE OF THE GENERAL FUND AND THE STATUS OF OUR CURRENT FY 24 BUDGET.
THE FY 23 YEAREND PERFORMANCE REPORT SHOWED THE GENERAL FUND ENDED WITH SUFFICIENT FUNDING TO SUPPORT THE 19.5 MILLION IN ONE TIMES PROGRAMMED IN THE FY 24 BUDGET WITH AN ADDITIONAL 4.6 MILLION AVAILABLE FOR PRIORITY AND CRITICAL ONE-TIME PURPOSES.
AS PART OF THE FY 23 YEAR END ACTIONS, THE CITY UTILIZED THE FULL 15.5 MILLION OF RESERVES ORIGINALLY PLANNED TO BALANCE THE ADOPTED FY 23 BUDGET, BUT DID NOT NEED TO RELEASE LONG BEACH RECOVERY ACT FUNDING, WHICH REMAINS AVAILABLE TO HELP ADDRESS FUTURE SHORTFALLS FOR OUR CURRENT YEAR FY 24.
THE ADOPTED BUDGET INCLUDED A $8.8 MILLION SHORTFALL, WHICH IS PLANNED TO BE SOLVED ON A ONE-TIME BASIS USING LONG BEACH RECOVERY ACT FUNDING THE GENERAL FUND AS WELL AS OTHER FUNDS ARE CURRENTLY UNDER REVIEW.
A FY 24 MIDYEAR PERFORMANCE REPORT WILL BE BROUGHT TO CITY COUNCIL IN JUNE OF THIS YEAR.
NOW ONTO FISCAL YEAR 25, A PRELIMINARY GENERAL FUND PROJECTED OUTLOOK WAS PRESENTED ON AT THE JANUARY 16TH BUDGET STUDY SESSION.
OUR CURRENT OUTLOOK NOW INCLUDES MORE REFINED PROJECTIONS FOR EXPENDITURE AND REVENUES BASED ON FINAL DATA FROM FISCAL YEAR 23, AS WELL AS YEAR TO DATE INFORMATION AVAILABLE AS OF THE FIRST QUARTER OF FY 24.
AS A REMINDER, JANUARY'S PRELIMINARY SHORTFALL WAS PROJECTED AT 28.4 MILLION.
SINCE THEN, ESTIMATED EXPENDITURES INCREASED BY 14.9 MILLION, AND ESTIMATED REVENUES INCREASED BY 19.8 MILLION.
THESE UPDATES RESULTED IN AN IMPROVED SHORTFALL FOR FY 25, WHICH IS NOW AT 23.5 MILLION.
AS A REMINDER, THIS FY 25 PROJECTED SHORTFALL INCLUDES 8.8 MILLION, WHICH WAS SOLVED ON A ONE-TIME BASIS AND CARRIED OVER FROM FISCAL YEAR 24.
THE FOLLOWING SLIDES WILL COVER KEY EXPENSE AND REVENUE CHANGES SINCE THE PRELIMINARY PRELIMINARY PROJECTION PRESENTED IN JANUARY 1ST, AN OVERVIEW OF EXPENSE
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LABOR IS THE CITY'S LARGEST DRIVER OF EXPENDITURES.THE REVISED PROJECTIONS FOR SALARY COSTS REMAIN VERY SIMILAR TO WHAT WAS INCLUDED IN THE PROJECTIONS PRESENTED IN JANUARY.
HOWEVER, WHILE THE GENERAL FUND LABOR PROJECTIONS WERE CLOSE, THE JANUARY PROJECTION DID NOT FULLY ACCOUNT FOR THE LABOR AGREEMENT IMPACTS AND INTERNAL SERVICES FUNDS SUCH AS CIVIC CENTER FLEET AND TECHNOLOGY SERVICES, WHICH IMPACTS GENERAL FUND OPERATIONS.
THE COMBINED IMPACT FOR THE GENERAL FUND SHARE OF THESE SERVICES IS AN INCREASE OF 6.5 MILLION FROM PRIOR PROJECTIONS.
LASTLY, CALPERS PENSION COSTS INCREASE MUCH HIGHER THAN ANTICIPATED IN THE JANUARY PROJECTIONS.
THIS IS DUE TO A NEGATIVE 7.5% CALPERS INVESTMENT RETURN EXPERIENCED IN FISCAL YEAR 2122, WHICH WARRANTED RATES TO INCREASE TO RECOUP THESE COSTS DUE TO A HEALTHY BUDGETARY FUNDS AVAILABLE.
WE HAVE BEEN ABLE TO KEEP WORKERS' COMPENSATION RATES AND CHARGES TO DEPARTMENTS RELATIVELY FLAT IN PRIOR YEARS.
HOWEVER, DUE TO INCREASED EXPENDITURES IN THE FUND, INCLUDING CLAIMS COSTS, FY 25 REQUIRES A RATE RECALIBRATION TO BETTER ALIGN TO PROJECTED EXPENDITURES FOLLOWING THIS RATE RECALIBRATION IN FY 25, OUR OUT YEAR PROJECTIONS INCLUDE ONLY MINOR INCREASES OVER THE NEXT FEW YEARS.
FINALLY, A PLACEHOLDER OF 3 MILLION IS INCLUDED IN THE PROJECTIONS FOR OTHER CRITICAL NEEDS THAT MAY ARISE DURING THE BUDGET PROCESS.
AS TO REVENUE CHANGES, TO NOTE A FEW KEY ADJUSTMENTS SINCE THE JANUARY PROJECTION, TRANSIENT OCCUPANCY TAXES INCREASED BY 2.3 MILLION FROM THE JANUARY PROJECTION, PROPERTY TAX GENERATED FROM FORMER REDEVELOPMENT AREAS CONTRIBUTED TO AN INCREASE TO THE CITY'S SHARE OF REVENUE.
FOR INTEREST POOLED CASH, HIGHER INTEREST RATES APPLY TO SOMEWHAT HIGHER CASH BALANCES LEAD TO PROJECTED INCREASES IN INTEREST.
EARNINGS UTILITY USERS TAX HAS BEEN ADJUSTED BASED ON FY 23 PERFORMANCE AND FY 24 FIRST QUARTER PERFORMANCE ACROSS MOST UTS.
AND FINALLY, THE KEY REVENUE SOURCE THAT HAS REMAINED RELATIVELY FLAT FROM JANUARY IS SALES AND USE TAXES.
OVERALL, THE UPDATE UPDATED PROJECTION HAS IMPROVED SINCE JANUARY, AND THE FY 25 BUDGET BALANCING STRATEGY CAN UTILIZE THE REMAINING ONE-TIME LBRA FUNDING TO HELP ADDRESS THE SHORTFALL.
THERE WILL BE NO REDUCTION TARGETS ISSUED FOR THE GENERAL FUND OR RELATED FUNDS IN FISCAL YEAR 25.
AS THE TABLE ILLUSTRATES, ANY SHORTFALL NOT STRUCTURALLY SOLVED IN ONE YEAR WILL CARRY OVER TO THE NEXT YEAR.
IN THIS CASE, THE FY 26 TOTAL CUMULATIVE PROJECTED SHORTFALL TO BE SOLVED IS 35.9 MILLION, INCLUSIVE OF THE 23.5 MILLION FROM FISCAL YEAR 25, AND THE ANNUAL SHORTFALL OF 12.4 MILLION IN FISCAL YEAR 26.
THE FISCAL GOAL IS TO NOT INCREASE THE GENERAL FUND SHORTFALL, AND WE WILL BE MOVING FORWARD WITH CAUTION AND REMAINING FISCALLY DISCIPLINED.
IN ADDITION TO THE TYPICAL BUDGET PROCESS THAT REVIEWS CRITICAL AND PRIORITY ENHANCEMENTS TO ADDRESS LEGAL MANDATES HEALTH AND SAFETY REQUIREMENTS FOR THE UPCOMING BUDGET YEAR.
THIS BUDGET PROCESS WILL IDENTIFY STRATEGIC ENHANCEMENT PRIORITIES.
IF ADDITIONAL REVENUE IS MADE AVAILABLE OR IF A REALLOCATION OF RESOURCES IS MADE.
IN THE NEXT FEW SLIDES, WE WILL SHARE AN UPDATE.
UPDATED LONG-TERM PROJECTION FOR THE GENERAL FUND.
THIS TABLE SHOWS A CHANGE IN THE UPDATED FORECAST FROM THE JANUARY PROJECTION.
THE CUMULATIVE SHORTFALL CHANGE FROM FISCAL YEAR 25 THROUGH 30 HAS INCREASED SLIGHTLY FROM 71 MILLION TO 81 MILLION, WHICH IS A $10 MILLION INCREASE TO THE PROJECTED CUMULATIVE SHORTFALL FOR FUTURE YEARS WITH NO AGREED LABOR CONTRACTS.
ASSUMPTIONS IN THE PROJECTION RESULTED IN AN AVERAGE INCREASE OF 15 MILLION PER YEAR.
THIS ALSO ASSUMES A MORE NORMAL LABOR MARKET AND LOWER VACANCY RATES THAN WE ARE EXPERIENCING NOW.
THE VACANCY RATE ASSUMPTION IS THE MOST INFLUENTIAL VARIABLE ON THE FIVE YEAR GENERAL FUND FORECAST.
ANOTHER VARIABLE IS OUR CALPERS PENSION COSTS.
THESE COSTS ARE VERY SENSITIVE TO MARKET RETURNS, WHICH CREATES A LOT OF VOLATILITY IN OUR FORECAST.
AS PREVIOUSLY NOTED, THE NEGATIVE 7.5%
[00:10:02]
INVESTMENT RETURN FOR FY 2122 HAS INCREASED CONTRIBUTIONS WITH A FIVE YEAR RAMP UP, STARTING IN FISCAL YEAR 25.FINALLY, OUT YEAR COSTS ALSO ASSUMES INCREASES DUE TO INFLATION, AS WAS A CASE FOR FISCAL YEAR 25 OUT YEAR PROJECTIONS, ASSUME NORMAL GROWTH FACTORS AND NO RECESSION.
ALSO, ANY ANTICIPATED IMPACTS FROM GROW LONG BEACH EFFORTS ARE NOT YET INCLUDED, BUT WILL BE INCLUDED ONCE FISCAL IMPACTS ARE KNOWN.
THE FORECAST ALSO ASSUMES A NORMALIZED AND STEADY GROWTH IN STRUCTURAL SALES AND PROPERTY TAX REVENUE IN THE OUT YEARS, BOTH AT 3%.
THIS GRAPH ILLUSTRATES THE STRUCTURAL GAP WHERE OUR CURRENT REVENUE PROJECTION IS INSUFFICIENT TO KEEP PACE WITH EXPENDITURE INCREASES.
ALSO ILLUSTRATED ON THIS SLIDE IS A CALPERS RATE IMPACT, WHICH PEAKS IN FISCAL YEAR 29.
THE JANUARY GENERAL FUND FORECASTS ALREADY INCLUDED 4.77 MILLION OF IMPACTS FROM STATE REGULATORY ACTIONS, WHICH REDUCE OIL PRODUCTION STARTING IN FISCAL YEAR 23 AND THE UPCOMING SB 1137 IMPACTS STARTING IN FISCAL YEAR 25.
THE LATEST GENERAL FUND OUT YEAR FORECAST NOW INCLUDES A REDUCTION OF THE CITY'S STRUCTURAL RELIANCE ON OIL REVENUES IN TOTAL 8.3 MILLION IN OIL REVENUES WERE ORIGINALLY ASSUMED FOR FY 25.
STRUCTURALLY, THESE REVENUES SUPPORT CITY SERVICES AND ARE USED FOR INTENDED PURPOSES LIKE PROP H FOR PUBLIC SAFETY AND MEASURE US SUPPORTING YOUTH COMMUNITY HEALTH AND CLIMATE CHANGE PROGRAMS. STARTING IN FY 25, THE CITY WILL GRADUALLY REDUCE ITS STRUCTURAL DEPENDENCE ON OIL PROCEEDS EACH YEAR UNTIL IT IS FULLY PHASED OUT OF THE GENERAL FUND BUDGET BY FISCAL YEAR 30.
THIS APPROACH ASSUMES A REALLOCATION OF MEASURE A INFRASTRUCTURE, ONE TIMES TWO PUBLIC SAFETY MAINTENANCE TO AVOID HARMFUL REDUCTIONS TO CORE CITY SERVICES LIKE PUBLIC SAFETY AND CHILDREN AND YOUTH SERVICES.
THIS SLIDE SHOWS THE SHORTFALL PROJECTION UNDER TWO SCENARIOS, ONE WITH OIL AND THE OTHER WITHOUT OIL SUPPORTING THE GENERAL FUND.
THE TOP LINE SHOWS THE SAME SIX YEAR PROJECTION AS ON SLIDE 15 EARLIER, WITH A 81 MILLION CUMULATIVE PROJECTION SHORTFALL BY FISCAL YEAR 30.
THIS IS THE BASE FORECAST AS OF TODAY.
THE BOTTOM LINE SHOWS THE GENERAL FUND FORECAST IF OIL WERE STILL SUPPORTING THE GENERAL FUND THROUGHOUT THE NEXT SIX YEARS.
THE DIFFERENCE BETWEEN THE TWO LINES IS 17 MILLION BY FISCAL YEAR 30.
IN THE NEXT FEW SLIDES, I'LL BRIEFLY DISCUSS THE STATUS AND TRENDS FOR MEASURE A TIDELANDS AND OTHER KEY FUNDS IN THE FY 24 BUDGET.
THE CITY EXPANDED THE MEASURE A INFRASTRUCTURE INVESTMENT PLAN BY LAUNCHING THE ELEVATE 28 PLAN, WHICH IDENTIFIED AN ADDITIONAL 55.7 MILLION OF MEASURE A FUNDS OVER THE NEXT FOUR YEARS.
TO SUPPORT THE $758 MILLION PLAN MEASURE A REVENUE OUT, YOUR PERFORMANCE IS ANTICIPATED TO EXPERIENCE STEADY GROWTH AS MENTIONED.
CAN YOU, CAN YOU JUST GO BACK AND TALK ABOUT THAT ASTERISK THERE FOR FISCAL YEAR 28, THAT ASTERISK DENOTES WHEN THE, UH, RATE, THE MEASURE A RATE WILL RETURN TO 1%, AND SO YOU'LL SEE ALMOST WHAT IS THAT, A $25 MILLION DIFFERENCE THERE? CORRECT.
AND JUST SO EVERYBODY KNOWS, CAN YOU EXPLAIN WHY, WHY THAT HAPPENS OR THAT'S ANTICIPATED TO HAPPEN? YES.
UH, THE SALES TAX RATE FOR MEASURE A DROPPED FROM 1% TO 0.75% ON JANUARY 1ST, 2023.
AND IT'S SLATED TO STAY THERE FOR FOUR AND THREE QUARTER YEARS.
AND THEN ON OCTOBER 1ST, 2027, OR THE FIRST DAY OF FISCAL YEAR 28, IT BOUNCES BACK FROM 0.75% TO 1% UNDER THE CURRENT STRUCTURE.
SO WE'RE ONLY GETTING RIGHT NOW THREE QUARTERS OF THE DOLLAR TAX ON MEASURE A AND IT'LL GO TO THE FULL DOLLAR IN FY 28.
AS MENTIONED IN THE PRIOR SLIDES, THE STRATEGY TO REDUCE THE CITY'S RELIANCE ON OIL REVENUES TO FUND GENERAL FUND SERVICES WILL BE PHASED IN OVER FIVE YEARS.
THE TRANSITION PLAN FROM REVENUE RELIANCE ON OIL ASSUMES A REALLOCATION OF MEASURE
[00:15:01]
A FUNDING TO PUBLIC SAFETY MAINTENANCE.THE STRATEGY IN FISCAL YEAR 25 WILL RAMP UP THE TRANSITION FROM OIL REVENUES STARTING IN FISCAL YEAR 28, WHEN MEASURE A RETURNS TO THE FULL 1% TO ENSURE MINIMAL IMPACTS TO THE CITY'S INFRASTRUCTURE PLAN.
THE TIDELANDS OPERATING FUND IS USED TO ACCOUNT FOR OPERATIONS SUCH AS POLICE, FIRE, AND LIFEGUARDS, AS WELL AS PROGRAMS MAINTENANCE CAPITAL PROJECTS AND DEVELOPMENT OF THE CITY'S BEACHES AND WATERWAYS IN THE TIDELANDS AREA, REVENUE SOURCES INCLUDE CHARGES FOR SERVICES, PARKING FEES, AND PUBLIC SAFETY, CONTRACT REVENUE RECEIVED FOR SERVICES.
HOWEVER, THE FUND RELIES HEAVILY ON OIL REVENUES AS WELL AS A TRANSFER FROM THE HARBOR DEPARTMENT.
IN FISCAL YEAR 23, HIGHER THAN BUDGETED OIL PRICES RESULTED IN A SURPLUS WHICH WAS SET ASIDE AND PROGRAMMED FOR ONE-TIME USES IN THE FY 24 BUDGET.
YEAR TO DATE ADDITIONAL ONE-TIME FUNDS ARE LIKELY AVAILABLE BECAUSE FY 24 OIL PRICES ARE CURRENTLY AVERAGING AROUND $78 PER BARREL COMPARED TO THE BUDGETED 55.
HOWEVER, A SIGNIFICANT FINANCIAL EFFECT ON THE TIDELANDS FUND IS THE IMPACT OF REGULATORY ACTIONS, WHICH REDUCE OIL PRODUCTIONS STARTING IN FISCAL YEAR 23 AND THE UPCOMING SB 1137 IMPACTING FISCAL YEAR 25.
UNDER THESE CONDITIONS, THE AVAILABLE FUND BALANCE IS IN DANGER OF BEING DEPLETED AS SOON AS FISCAL YEAR 26 FOR OTHER KEY FUNDS.
AS MENTIONED EARLIER, RELATED FUNDS THAT IMPACT THE GENERAL FUND THROUGH INTERNAL SERVICES CHARGES WILL NOT BE RECEIVING BUDGET REDUCTION TARGETS, BUT LIKE THE GENERAL FUND RELATED FUNDS HAVE BEEN IMPACTED BY LABOR COST INCREASES AND ARE INSTRUCTED TO KEEP THEIR COSTS AS LOW AS POSSIBLE.
THIS SPECIAL ADVERTISING AND PROMOTIONS FUND, WHICH IS LARGELY FUNDED BY TOT, HAS FULLY RECOVERED FROM THE PANDEMIC IN TERMS OF REVENUES.
FISCAL YEAR 23 TOT REVENUE CAME IN HIGHER THAN ANTICIPATED, AND LIKE THE GENERAL FUND IS ANTICIPATED TO EXPERIENCE STUDY ANNUAL GROWTH.
FINALLY, THE HEALTH FUND CONTINUES TO SEE DECREASING FUNDS AVAILABLE DUE TO GRANT RESTRICTIONS, WHICH LIMIT FUNDING TO COVER CERTAIN COSTS, SUCH AS INTERNAL SERVICES FOR TECHNOLOGY NEEDS OR GENERAL OVERHEAD.
AND A CONSULTANT IS EVALUATING THE FUND AND IDENTIFYING STRATEGIES TO ADDRESS THESE FUNDING CHALLENGES.
HERE ARE THE THINGS YOU CAN EXPECT NEXT IN THE BUDGET PROCESS.
IN JANUARY, WE HELD FOUR IN-PERSON COMMUNITY MEETINGS, ONE VIRTUAL MEETING, AND CONDUCTED A BUDGET SURVEY, WHICH RECEIVED 846 SURVEY RESPONSES.
THESE MEETINGS PRIORITIZE LANGUAGE ACCESS AND CONTINUE TO SEEK DEMOGRAPHIC SURVEY INFORMATION TO HELP INFORM THE PROCESS AND CONTINUE TO IMPROVE OUR OUTREACH.
THE RESULTS OF THE OUTREACH AND THE SUMMARY OF DEMOGRAPHIC INFORMATION WILL BE MADE AVAILABLE THROUGH A MEMO IN THE COMING WEEKS.
THE PROPOSED BUDGET WILL ALSO CONNECT HOW ANY CHANGES LINKED BACK TO THE PRIORITIES IDENTIFIED BY THE COMMUNITY DEPARTMENTS ARE NOW PUTTING TOGETHER THEIR BUDGET PROPOSALS AND WILL BE REVIEWED WITH THE CITY MANAGER THROUGH MAY.
THE FULL BUDGET BOOK PRODUCTION CARRIES THROUGH JUNE AND IS DUE TO THE MAYOR PER CHARTER DEADLINE BY JULY 3RD.
THE MAYOR'S RECOMMENDATION AND COMMENTS WILL THEN BE TRANSMITTED ALONG WITH THE PROPOSED BUDGET TO THE CITY COUNCIL PER CHARTER DEADLINE BY AUGUST 2ND.
THEN THERE ARE THE SERIES OF BUDGET HEARINGS, BUDGET OVERSIGHT COMMITTEE MEETINGS, AND SECOND ROUND OF COMMUNITY ENGAGEMENT EFFORTS THROUGHOUT AUGUST AND EARLY SEPTEMBER.
PER THE CHARTER, THE DEADLINE FOR CITY COUNCIL TO ADOPT THE BUDGET IS SEPTEMBER 15TH.
NOW I WILL TURN IT OVER TO CITY MANAGER TOM MOCA FOR AN OVERVIEW OF GROW LONG BEACH.
SO, UH, THE COUNCIL HAS BEEN PROACTIVE, UH, AT LOOKING AT WHAT OUR STRATEGIES CAN BE, UH, OVER THE NEXT TWO YEARS.
AND SO LAST YEAR WE GOT DIRECTION, UH, TO REALLY LOOK AT WHAT IS CALLED GROW LONG BEACH.
THAT WAS SOMETHING THE MAYOR BROUGHT TO THE COUNCIL, ENDORSED BY THE WHOLE COUNCIL, AND IT'S GOT TWO COMPONENTS.
ONE IS, HOW DO WE GROW OUR ECONOMY AND HOW DO WE INVEST IN, IN SECTORS, UH, OF OUR ECONOMY THAT CAN HELP NOT ONLY EMPLOY PEOPLE AND BRING IN GOOD, UH, PAYING JOBS FOR OUR ECONOMY, BUT ALSO HOW DOES THAT TRANSLATE, UH, UM, AS MUCH AS POSSIBLE INTO TAX REVENUES? SOME AREAS OF OUR ECONOMY DIRECT, UM, UM, CONTRIBUTE DIRECTLY TO TAX REVENUES.
UH, BUT LOOKING AT ALL THOSE DIFFERENT SECTORS ARE REALLY IMPORTANT.
AND SO WE'RE GONNA BE COMING BACK TO YOU RIGHT NOW.
WE'RE ESTIMATING APRIL 9TH, UH, TO BASICALLY TALK ABOUT HOW DO WE GROW AND DIVERSIFY OUR ECONOMY OVER THE NEXT,
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UH, SEVERAL YEARS.WE'VE GOT FIVE TARGETED INDUSTRY SECTORS.
THOSE ARE AEROSPACE AND AVIATION, TRANSPORTATION, LOGISTICS AND SUPPLY CHAIN, HEALTH AND WELLNESS, TOURISM AND HOSPITALITY AND EDUCATION.
UH, ALSO A BIG FOCUS ON SMALL BUSINESS.
I KNOW WE, WE THINK OF OUR LARGE EMPLOYERS, BUT AS A GROUP, SMALL BUSINESS OF FAR OUTPACES, UH, BIG BUSINESS IN, IN JUST ABOUT EVERY CITY.
SO FOCUSING ON SMALL BUSINESS AS A, AS A UNIT IS IMPORTANT.
OBVIOUSLY ONE OF OUR HUGE ATTRACT IS TALENT, TALENT AND MORE TALENT, AND WE'LL TALK ABOUT SOME OF THAT AND HOW WE CAN ENCOURAGE IT, LEVERAGING PARTNERSHIPS, AND THEN ALSO DIVERSIFYING SOME OF OUR REVENUE STREAMS. SO THAT'S THE SECOND PRESENTATION.
UH, YOU PROVIDED SOME FUNDING IN THE FY 24 BUDGET, AND SO WE'LL COME GIVE YOU AN UPDATE OF WHERE WE ARE WITH THAT AND WHERE WE'RE GOING.
AND THEN, UM, UH, THE GROW LONG BEACH INITIATIVE DOES LOOK AT THAT WAY, UH, TO PROMOTE ECONOMIC DEVELOPMENT AND LOOK AT OUR ALTERNATE REVENUE STREAMS TO MOVE AWAY ALSO FROM THE RELIANCE ON OIL REVENUE.
A GREAT EXAMPLE IS WHAT WE DID AT THE QUEEN MARY.
UH, WE HAD LAND IN THE TIDELANDS THAT WAS OIL PRODUCING, BUT IT WASN'T PRODUCING VERY MUCH ANYMORE.
WE TURNED THAT INTO A LEASE OPPORTUNITY.
IT WAS NEW REVENUE THAT, UH, WAS SHARED BETWEEN THE PORT AND AND THE CITY.
AND THAT WAS WHAT FUNDED A LOT OF THE IMPROVEMENTS IN THE QUEEN MARY WITH NEW REVENUE.
SO, UH, THAT'S AN EXAMPLE OF WHAT WE CAN LOOK AT.
UH, PART OF WHAT THE FY 24 BUDGET DID IS INVEST IN SIGNIFICANT ONE TIMES AND STRUCTURAL ENHANCEMENTS FOR GROW LONG BEACH, INCLUDING WE'RE, UH, AT THE BEGINNING OF A DEVELOPMENT OF A DOWNTOWN ADVERTISING DISTRICT, WHICH WILL TAKE A LITTLE BIT OF TIME TO CREATE, BUT COULD CREATE AN, AN ONGOING REVENUE SOURCE.
WE'RE LOOKING AT HOW DO WE PROMOTE CONVENTIONS AND TOURISM AND SPECIAL EVENTS, UH, WHICH, UH, HAVE A DIRECT IMPACT ON OUR TOT THROUGH A VISIT LONG BEACH ADVERTISING CAMPAIGN.
UH, YOU FUNDED MARKETING AND BRANDING STRATEGIES, UH, THAT CENTER ON BUSINESS ATTRACTION, EXPANSION AND RETENTION.
AND THEN OF COURSE, UH, ONE OF OUR BIG OPPORTUNITY PARCELS OVER THE NEXT SEVERAL YEARS WILL BE THE, THE QUEEN MARY ITSELF, UH, AND THE DEVELOPMENT AND THE MANAGEMENT OF THAT.
AND THEN A THIRD PART OF GROW LONG BEACH, UH, WAS TO LOOK AT OTHER REVENUE SOURCES, UH, SOME OF WHICH COULD BE THINGS THAT WE WOULD GO AND ASK VOTERS IF THEY'RE INTERESTED IN, SOME OF WHICH COULD BE THINGS THAT WE HAVE CONTROL OVER.
UM, AND SO, UM, WE KNOW RIGHT NOW THAT THE PROJECTED SHORTFALL IS NOT GONNA GET SOLVED WITHOUT INTERVENTION.
UH, IN THE PAST INTERVENTION REALLY LOOKED LIKE CUTS REDUCTION.
UH, THERE ALSO IS EFFICIENCIES IN LOOKING AT AT WAYS WE CAN BE MORE EFFICIENT, BUT THEN ALSO, UH, PRESENTING POTENTIAL REVENUE OPPORTUNITIES, UH, TO SEE IF THERE'S, IF THERE'S INTEREST THERE, UH, AS AN ALTERNATIVE.
AND SO WE ARE LOOKING AT WHAT THOSE NEW REVENUES COULD BE.
UM, AND UH, THAT WORK IS STILL UNDERWAY AND IT'S, UH, IN DRAFT FORM.
UH, BUT WE DO WANT TO COME PRESENT THAT TO YOU WHEN IT'S READY.
UH, THAT COULD INCLUDE LOOKING AT, UM, SOME WAYS FOR RESIDENTS TO INVEST BACK INTO NOT ONLY COVERING THE SHORTFALL, BUT ALSO MAKING SOME MODEST IMPROVEMENTS, UH, IN OUR CRITICAL SERVICE PRIORITIES.
UH, AND THE FY 25 BUDGET PROCESS, I'M ASKING DEPARTMENTS TO HELP GENERATE THOSE IDEAS OF WHERE THEY THINK, UM, THEY WOULD WANNA PROPOSE TO YOU IF THERE WERE NEW REVENUE, UH, WHAT THAT COULD LOOK LIKE SO THAT WE WOULD HAVE A, A LIST OF POLICY OPTIONS IF THAT WAS, UH, A POSSIBILITY.
UH, SO WE'LL REPORT BACK ON THAT.
WE EXPECT, UH, NEAR THE, PROBABLY NEAR THE END OF APRIL.
AND SO THAT, UH, I THINK SUMMARIZES OUR BUDGET PRESENTATION.
WE'RE AVAILABLE TO ANSWER QUESTIONS.
UH, I APPRECIATE THE COUNCIL PUTTING US IN A REALLY GOOD POSITION, UH, THIS YEAR.
UH, UH, WE HAVE A YEAR TO, UH, ACKNOWLEDGE THE DEFICITS THAT ARE COMING.
WE'VE GOT ONE YEAR LEFT OF RECOVERY ACT MONEY 'CAUSE WE'VE BEEN VERY PRUDENT IN THAT MONEY INVESTING IN OUR BUSINESSES, INVESTING IN OUR RESIDENTS, BUT ALSO SAVING SOME OF IT, UH, TO BE ABLE TO, UH, UH, PREVENT SHORTFALLS, UM, FROM IMPACTING SERVICES.
WE ESTIMATED THAT WAS ONLY GONNA BE FOR TWO YEARS.
IT'S ACTUALLY BEEN FOR ALMOST FIVE NOW THROUGH GOOD MANAGEMENT.
AND NOW WE'VE GOT REALLY TWO YEARS TO FIGURE OUT WHERE WE WANT TO GO WITH, WITH THIS AND WHAT THE OPTIONS ARE TO, TO ADDRESS THE DEFICIT.
SO THANK YOU FOR YOUR LEADERSHIP ON THAT.
AND WE'RE AVAILABLE TO ANSWER QUESTIONS.
ALRIGHT, WELL THANK YOU FOR THE PRESENTATION, TOM AND TEAM.
I THINK IT'S IMPORTANT TO NOTE THAT, UM, BECAUSE OF SMART FISCAL PRACTICES, WE'RE IN A PLACE WHERE WE'RE PROTECTING SERVICES THIS YEAR AND REVENUES HAVE COME BACK STRONGER.
WE HAVEN'T HAD TO USE AS MUCH AS RECOVERY ACT DOLLARS, BUT WE KNOW THAT THAT HAS ITS LIMITS AND WE KNOW, UH, THAT A, UM, DEFICIT'S COMING.
AND SO THIS YEAR REALLY GIVES US AN OPPORTUNITY TO BEGIN TO FORECAST AND PREPARE, YOU KNOW, AS, AS, BECAUSE, YOU KNOW, AS PAT WEST WILL SAY, WINTER IS COMING, RIGHT? SO THIS GIVES AN OPPORTUNITY TO PREPARE.
I LIKE THAT WE'RE BEING COMPREHENSIVE.
WE'RE THINKING ABOUT HOW WE CAN ACCELERATE GROWTH.
YOU KNOW, JUST A FEW YEARS AGO WE WERE FACING A, A SIGNIFICANT, UM, ECONOMIC CHALLENGE WITH THE PANDEMIC.
AND WE, WE ARE STILL IN RECOVERY MODE.
SO HOW CAN WE ACCELERATE OUR RECOVERY TO PUT LONG BEACH IN A STRONGER POSITION? AND SO I REALLY LOOK FORWARD TO, TO SEEING HOW GROW LONG BEACH IS DOING AND, AND WHAT SOME OF OUR BIG OPPORTUNITIES ARE TO GO AFTER.
[00:25:01]
WE, WE COULD, THERE IS A CHOICE HERE.WE, WE DON'T HAVE TO GO OUT AND SAY WE'RE GOING TO, YOU KNOW, STOP BUDGETING OUR GENERAL FUND BASED ON OIL REVENUE.
WE COULD SAY, LET'S CONTINUE TO BUDGET AS LONG AS WE CAN UNTIL EVERY DO DROP IS GONE.
BUT I PERSONALLY BELIEVE THAT THAT WOULD BE IRRESPONSIBLE.
WE HAVE TO GET AHEAD OF IT NOW AND NOT PASS THIS BURDEN ON THE FUTURE COUNCILS.
AND SO BY GIVING US, GIVING OURSELVES FIVE YEARS TO DO IT, UH, I REALLY APPRECIATE THE THOUGHTFULNESS THAT'S GONE INTO, UH, LEVERAGING MEASURE A, UH, SAYING WE CAN SOLVE SOME OF THIS NOW.
AND WHILE OIL FUNDS COME IN, IT WON'T BE USED, UH, TO PAY FOR, YOU KNOW, SERVICES AND PEOPLE WITH A PENSION AND RETIREMENT AND ALL OF THOSE THINGS.
BUT INSTEAD LET THEM OFFSET SOME OF THE ONE-TIME COSTS OF MEASURE A AND HAVE, MEASURE A REALLY PROVIDE MORE SERVICES BECAUSE THAT IS A STRUCTURAL, UH, REVENUE SOURCE.
WE ALSO HAVE TO LOOK AT, UM, YOU KNOW, THE WAY THAT OUR CITY WAS JUST ESTABLISHED AND SET UP WITH TIGHTS AND ALL THOSE THINGS.
YOU KNOW, THE ANALOGY I USE WHEN I TALK WITH THE STATE IS WE'VE BEEN MARRIED FOR A LONG TIME AND NOW WE'RE GETTING A DIVORCE.
UH, AND NOW WE NEED TO FIGURE OUT WHO GETS, WHO GETS THE HOUSE, WHO GETS, WHO GETS THE KIDS, WHO GETS THE KEYS TO THE CAR AND ALL THAT.
BECAUSE REALITY IS, UH, YOU KNOW, THE AGREEMENTS THAT WE'VE HAD IN PLACE FOR A LONG TIME ALL NEEDS TO BE RENEGOTIATED.
SO THERE'S A PIECE TO THIS THAT'S CONNECTED TO STATE LEGISLATION AND HOW WE MAKE SURE THAT WE MADE WHOLE.
WE WERE THE COMMUNITY, YOU KNOW, THAT WAS ON THE FRONT LINE OF OIL PRODUCTION FOR MANY, MANY YEARS.
AND THE STATE CONTINUES TO GENERATE HUNDREDS OF MILLIONS OF DOLLARS BASED ON OIL IS PRODUCED HERE IN LONG BEACH.
WE'RE ON TOP OF THE WILMINGTON OIL FIELD, THE LARGEST OIL FIELD, NORTH AMERICA.
AND NOW THAT WE'RE ENDING THAT RELATIONSHIP, WE HAVE TO MAKE SURE THAT LONG BEACH IS BEING MADE WHOLE FROM THE STATE.
BUT ALSO WE NEED TO BE REAL WITH OUR RESIDENTS ABOUT WE NEED TO START THAT TRANSITION.
NOW, I KNOW THERE ARE SOME OPINIONS THAT MAY SAY, HEY, LET'S WAIT.
LET'S KEEP BUILDING BIG THINGS IN TIDELANDS AND KEEP DOING THIS AND DOING THAT.
BUT WE NEED TO BE REALISTIC ABOUT OUR ABILITY TO DELIVER PROJECTS AND TO DELIVER SERVICES.
AND MY PRIORITY IS GONNA BE SERVICES.
IT'S GONNA BE MAKING SURE THAT WE HAVE POLICE OFFICERS, FIREFIGHTERS THAT OUR PARKS ARE WELL MAINTAINED.
AND HOPEFULLY BY GETTING AHEAD OF THIS NOW, UH, WE CAN PUT OUR CITY IN A POSITION WHERE WE ACTUALLY COME OUT STRONGER FROM A SUSTAINABILITY STANDPOINT FISCALLY, AND WE'RE ABLE TO ENHANCE OUR SERVICES.
SO THAT'S THE BEGINNING OF THIS CONVERSATION AND I'M REALLY EXCITED ABOUT THE NEXT FEW CONVERSATIONS HERE.
SO NOW WE'LL TAKE IT BACK BEHIND THE DAAS COUNCIL MEMBER KERR.
UM, SO MUCH OF WHERE WE ARE TODAY IS BASED ON DECISIONS MADE OVER THE LAST FOUR AND FIVE YEARS, AND I'M REALLY GRATEFUL TO LEADERSHIP, UM, ON THIS COUNCIL AS WELL AS IN THE CITY, UH, FOR MAKING THOSE PRUDENT DECISIONS.
YOU KNOW, I COME FROM A SCHOOL BOARD WHERE, UM, THE BUDGET YOU GET IS THE BUDGET YOU GET AND IT DOESN'T GROW.
UM, AND WE CAN'T HOPE FOR MORE REVENUE IN A SCHOOL DISTRICT.
SO ADJUSTING MY THINKING TO THE OPPORTUNITY FOR REVENUE, UH, IS SOMETHING THAT I AM WORKING ON.
SO I TEND TO COME A LITTLE MORE SKEPTICALLY TO, UM, THE OPPORTUNITIES FOR REVENUE BECAUSE IT IS NEWER TO ME.
SO I'M LOOKING FORWARD TO THE GROW LONG BEACH PRESENTATION IN APRIL TO REALLY BE ABLE TO SUSS OUT FOR RESIDENTS WHO MIGHT NOT UNDERSTAND WHAT THOSE OPPORTUNITIES LOOK LIKE, HOW WE WILL, UM, HOW WE WILL FACE THE CHALLENGE OF AN $8.8 MILLION STRUCTURAL DEFICIT NEXT YEAR BEYOND, YOU KNOW, ONE TIME FUNDING.
UM, AND THERE'S A LOT OF WORK TO DO AND I THINK A LOT OF ROOM FOR CREATIVITY, BUT ALSO SOME REAL SERIOUSNESS IN WHAT WE FACE OVER THE NEXT SEVERAL YEARS.
SO I ALSO APPRECIATE THE PROJECTION OF NOT JUST THIS YEAR AND NEXT YEAR, BUT THE THREE, FOUR, AND FIVE YEARS OUT BECAUSE THEY'RE SO CRITICAL.
AND I DO APOLOGIZE TO COUNCILWOMAN RICK ODI, WHO IS THE BUDGET CHAIR, WHO SHOULD HAVE, UM, BEEN THE FIRST ON THIS.
I'LL RESERVE MY COMMENTS FOR LATER.
UM, YEAH, I THINK THE, THE MAYOR, UM, DID THE APPROPRIATE KIND OF FRAMING HERE.
UM, AND I REALLY APPRECIATE THE, THE PRESENTATION AND I JUST BASICALLY HAD A SERIES OF KINDA JUST CLARIFYING QUESTIONS FOR MY, FOR MYSELF AND THEN ANYONE WHO'S LISTENING.
UM, SO, UH, I THOUGHT IT, I ALSO APPRECIATED THE FACT THAT, UM, BECAUSE OF OUR FISCAL PRUDENCE, WE HAVEN'T BEEN ABLE TO REALLY COVER, UM, CONTINUE THOSE LONG BEACH RECOVERY ACT DOLLARS AND REALLY STRETCH THEM OUT OVER TIME, WHICH I THINK HAS BEEN, UM, KIND OF A TESTAMENT TO THE WAYS THAT WE DO OUR FISCAL PRUDENCE AND THE WAYS THAT WE DO OUR BUDGETING HERE IN THE CITY.
UM, AND SO I KNOW ON THAT FOURTH SLIDE IT TALKED ABOUT THE FACT THAT THE CITY'S RETAINED A LONG BEACH RECOVERY ACT FUNDING TO ADDRESS FUTURE FOOTFALLS.
AND IN THE LINE BEFORE THAT, IT SAYS YEAREND STATUS INCLUDED A RELEASE OF 15.5 MILLION IN PLANNED RESERVES.
CAN YOU TALK A LITTLE BIT ABOUT WHAT THOSE PLANNED RESERVES, WHAT THE SOURCE OF THAT THOSE DOLLARS WERE FROM AND WHAT THEY WERE USED FOR? YES, SORRY.
YES, COUNCIL MEMBER, UH, FOR THE 15.5 MILLION RESERVE, THAT WAS PART OF THAT SLIDE, THAT WAS A PLANNED RESERVE THAT
[00:30:01]
WAS PLANNED AS FAR AS THE FY 23 ADOPTED BUDGET, WHEN THE BUDGET WAS ACTUALLY ADOPTED WITHIN A SHORTFALL PART OF THAT, MAJORITY OF IT WAS A SET ASIDE FOR MEASURE M, WHICH WOULD'VE IMPACTED THE FISCAL YEAR BECAUSE THE TRANSFER WAS NOT ALLOWED.SO THAT HELPED MITIGATE THE IMPACTS OF THAT TRANSFER.
THE REMAINING BALANCE OF THAT 15.5 MILLION WAS ACTUALLY COMMITMENT FROM THE PRIOR YEAR FY 22 TO FIND FUNDS AVAILABLE TO FULLY FUND THE FULL PLAN OF FY 23.
SO BOTH THOSE SOURCES WERE PLANNED FOR FY 23, AND WE WERE STILL ABLE TO RESERVE THE LBRA PORTION FOR THE BUDGET BALANCING.
SO THOSE ARE, BUT I, I THINK, I GUESS THE, THE NARRATIVE THERE, RIGHT, THOSE ARE DOLLARS FROM PREVIOUS YEARS THAT WERE PLANNED, BUT AS WE THINK ABOUT LIKE THE IDEA OF ROUND AROUND US HAVING A STRUCTURAL DEFICIT, NOT DOLLARS THAT CAN BE USED PERPETUALLY INTO THE FUTURE.
UH, LET ME MOVE FORWARD IN MY SLIDE DECK TO LOOK AT MY, UH, TO LOOK AT MY NOTES HERE.
LET SEE WHAT MY NEXT SET OF QUESTIONS WERE.
OH, UM, SO I HAD A QUICK QUESTION.
SO I KNOW WE TALKED ABOUT THE CALPERS PENSION, AND I KNOW YOU HAD A COUPLE OF SLIDES.
SO THERE WAS SLIDE NUMBER NINE THAT TALKED ABOUT, AND STARTING IN FISCAL YEAR 25, WE HAD THE RATES RAMP UP OVER FIVE YEARS TO COVER THE LOSS.
AND THEN THERE WAS ANOTHER SLIDE THAT BASICALLY SHOWED THE, THE, THE TWO YEARS WHERE OUR, UM, EXPENDITURES WILL INCREASE BECAUSE OF THAT CALPERS RAMP UP.
UM, CAN YOU TALK JUST A LITTLE BIT OF HOW WE ARE GONNA RECOUP SOME OF THOSE DOLLARS AND HOW THAT IMPACTS OUR, UM, OUR DEFICIT AND OUR, LIKE, OUR EXPENDITURES IN THOSE YEARS? WELL, TECHNICALLY SPEAKING, WE WILL NOT RECOUP THOSE DOLLARS BECAUSE CALPERS, UH, RETURNED IN FY 2214 PERCENTAGE POINTS LESS ON THEIR INVESTMENT PORTFOLIO THAN THEY ASSUMED.
SO, YOU KNOW, THAT'S DONE AND GONE.
THAT'S IN THE BOOKS IN, IN ORDER TO RECOUP IT, I SUPPOSE WE WOULD HAVE TO ROOT, WE WOULD HAVE TO HOPE, WE WOULD HAVE TO PRAY THAT CALPERS EARNS, SAY 8.8% FOR A BUNCH OF YEARS INSTEAD OF THE 6.8% THAT THEY'RE ASSUMING.
SO THE CALPERS RAMP UP PROJECTIONS ARE PRETTY MUCH FIXED.
UNLESS CALPERS HAS SOME REALLY STRONG YEARS AND HEAVEN FORBID THAT THERE SHOULD BE ANOTHER POOR YEAR FOR CALPERS RETURNS, THEN WE WOULD BE REPEATING THAT SAME, UM, INVESTMENT RETURN DIP AND WE WOULD HAVE TO CONTRIBUTE EVEN MORE ON TOP OF WHAT'S ALREADY PROJECTED.
THANK YOU FOR CLARIFYING THAT.
UM, ON SLIDE 10, UM, THERE WAS A STATEMENT THAT SAID PROJECTED EXPENSES INCLUDE $3 MILLION FOR OTHER CRITICAL NEEDS TO BE IDENTIFIED THROUGH THE BUDGET PROCESS.
IS THAT ESSENTIALLY KIND OF A SET ASIDE IN ANTICIPATION THAT THERE MAY BE JUST UNEXPECTED, UM, NEEDS OF THE CITY THAT WE WILL THEN NEED FUNDING FOR? THAT IS CORRECT.
THAT I'LL JUST KEEP GOING UNTIL THE MAYOR TELLS ME TO BE QUIET.
UM, SO FOR SLIDE NUMBER 12, UM, THERE WERE TWO SETS OF, OF GRAPHS, RIGHT? SO BAR CHART, SO ONE SAYS ANNUAL SHORTFALLS, ASSUMING SOLVE STRUCTURALLY EACH YEAR.
AND ANOTHER SAYS CUMULATIVE SHORTFALLS, ASSUMING SOLVED WITH ONE TIMES EACH YEAR.
CAN YOU TALK A LITTLE BIT ABOUT THE, THE, THE FIRST SET OF BAR CHARTS THERE, THE ANNUAL SHORTFALLS ASSUMED, ASSUMING WE'RE SOLVING THEM STRUCTURALLY EACH YEAR, WHAT ARE THE ASSUMPTIONS THAT GO INTO THAT AS WE SEE THAT DECREASE OVER, UH, EACH YEAR? SO IN, UH, FISCAL YEAR 25, UH, UNDER THIS SCENARIO, FISCAL YEAR 25 INCLUDES THE STRUCTURAL IMPACTS FROM THE LABOR AGREEMENTS FROM BOTH 24 AND 25.
SO IT IS A LITTLE BIT LARGER AND IT ALSO INCLUDES THE RATE RECALIBRATIONS OF WORKERS' COMP AS WELL AS, UH, THE FIRST YEAR OF RAMP UP FOR THE PENSION COSTS AS, UH, PREVIOUSLY MENTIONED.
THEN IN THE OUT YEARS, UH, THEY ARE SMALLER BECAUSE IT'S MORE NORMALIZED, UH, GROWTH AND EXPENDITURES, UH, FROM 26 AND THEN OVER TO 27.
AND SO THE, UM, BUT THE IDEA IS THAT, SO LIKE THAT $8.8 MILLION WE SAY THAT STRUCTURAL, THE ASSUMPTION IS THAT WE'RE AFFIXING THAT YEAR TO YEAR SO THAT WE'RE NORMALIZING, UH, THOSE EXPENDITURES AND NOT CARRYING THOSE OVER.
OH, UH, SO ON SLIDE 13, YOU SAID DUE TO THE PROJECTED STRUCTURAL SHORTFALL AND LIMITED CURRENT RESOURCES, THESE ENHANCEMENT PRIORITIES MAY NOT BE ABLE TO BE FUNDED IN FISCAL YEAR 25.
MAYBE I MISSED IT, BUT WHAT WERE THE ENHANCEMENT PRIORITIES THAT YOU WERE REFERRING TO? THESE ENHANCEMENT PRIORITIES WILL BE SUBMITTED AND REVIEWED AS PART OF THE FISCAL YEAR 25 PROPOSED PROCESS.
SO THESE ARE THESE THAT WE DON'T KNOW YET.
SO I WASN'T MISSING, I WAS LIKE, DID I MISS SOMETHING?
[00:35:01]
WE TALKED ABOUT THAT.SORRY, I'M GOING THROUGH HERE AND FIGURING OUT WHICH THINGS YOU ALREADY DISCUSSED THAT WERE MY ORIGINAL QUESTIONS AND WHICH ONES WERE, OH, AND THEN THIS IS JUST AGAIN, A CLARIFICATION.
SO ON SLIDE 16 WHEN IT TALKS ABOUT THE CALPERS PENSION COSTS AND THERE'S A, A SLIDE THAT TALKS ABOUT THE PREVIOUS PROJECTIONS OF CHANGE AND THE UPDATED PROJECTIONS OF CHANGE, THE REASONS WHY WE GO OUT TO FISCAL YEAR 30 IS RELATED TO THE COMMENT THAT THE CITY MANAGER HAD MADE AROUND THAT BEING PART OF THE STATE OF THE CITY AND ASKING US TO GO THE ADDITIONAL FIVE YEARS OUT FOR PROJECTIONS.
IS THAT THE REASON OR IS THERE A DIFFERENT REASON? NO, THAT'S THE REASON.
AND BECAUSE CALPERS PENSION COST IS SUCH A HIGH PROPORTION OF GENERAL FUND EXPENDITURES.
THAT'S WHY IT GETS A SPECIAL SLIDE EACH TIME WE TALK TO YOU.
AND THEN JUST FOR ANYONE WATCHING, WHEN WE TALK ABOUT THE GENERAL FUND FORECAST, IT SAYS EXPENSES AND REVENUE GROWTH.
UM, AND AT THE BOTTOM IT HAS AN ASTERISK THAT SAYS EXPEND EXCLUDES MEASURE A REVENUE AND EXPENDITURES.
CAN YOU JUST TALK A LITTLE BIT ABOUT WHY THAT'S NOT INCLUDED HERE? YEAH.
UH, AS FAR AS MEASURE A, IT IS EVALUATED AS A STANDALONE, UH, FUND BECAUSE IT IS VERY RESTRICTED FOR ITS USE TO REINVEST IN THE PUBLIC SAFETY AND THE INFRASTRUCTURE FOR THE CIF, UH, CITY.
SO WHEN WE DO HAVE PROJECTED SURPLUS IN THE MEASURE A FUND, IT IS REVIEWED SEPARATELY TO REINVEST INTO THOSE PURPOSE.
SO WE DON'T COMBINE IT INTO OUR FORECAST, WHICH COULD LEAD TO SHOWING A DIFFERENT PROJECTION FOR THE CITY'S GENERAL FUND VERSUS THE MORE RESTRICTED MEASURE A FUND WHICH HAS BEEN INVESTED BACK INTO THE CITY FOR THOSE PURPOSES.
AND I'LL ADD TO THAT IF I CAN, BECAUSE THAT REALLY IS IMPORTANT.
MEASURE A FUND REALLY IS GENERAL FUND.
UH, IT COULD BE SPENT ON ANYTHING AT ANY TIME, BUT THAT WASN'T THE COMMITMENT WE MADE TO THE VOTERS.
WE WERE VERY CLEAR WHEN WE DID THIS, WE WERE GONNA PUT IT TOWARDS PUBLIC SAFETY AND INFRASTRUCTURE.
AND THE COUNCIL HAS BEEN VERY, VERY DISCIPLINED IN THAT.
AND SO THIS IS JUST ANOTHER POINT THAT INSTEAD OF COMMINGLING IT WITH GENERAL FUNDS, WE PURPOSELY SET IT ASIDE AND TREAT IT VERY SEP SEPARATELY BECAUSE THAT WAS OUR COMMITMENT AND WE'VE UPHELD THAT COMMITMENT EVERY SINGLE YEAR.
UM, AND THEN FOR SLIDE NUMBER 20, UM, WE'RE BASICALLY, IT'S KIND OF THE CRUX OF THE CONVERSATION, RIGHT? WHEN WE'RE TALKING ABOUT OIL AND OIL REVENUES AND HOW OUR, YOU KNOW, THE SHORTFALL PROJECTIONS, WHETHER THEY INCLUDE THAT OR NOT, RIGHT? AND I THINK IT'S CLEAR TO EVERYBODY WHO LOOKS AT THAT SLIDE THAT THE SLOPE IS MUCH HIGHER, RIGHT? LIKE WE'RE SEEING THIS REVENUE, UM, THE, THE, THE SHORTFALL INCREASES, RIGHT? SIGNIFICANTLY WITHOUT THE OIL REVENUE.
CAN YOU TALK ABOUT OVER TIME AS WE SEE THAT DEFICIT INCREASE IS THIS, IS THIS, UH, INVOLVING A CARRYOVER, A STRUCTURAL DEFICIT? IS THIS TAKING INTO ACCOUNT THE FACT THAT OUR, UM, EXPENDITURES ARE JUST GOING TO INCREASE AS WELL? CAN YOU JUST TALK A LITTLE BIT ABOUT WHAT WE'RE SEEING IN THAT SLIDE? SO ASIDE FROM FISCAL YEAR 25, THAT INCLUDES A CARRYOVER OF 8.8 MILLION FROM FISCAL YEAR 24 THAT WAS SOLVED ON A ONE-TIME BASIS.
EACH YEAR IS, UH, FROM 26 THROUGH 30 REPORTS, JUST THE ANNUAL, UH, SHORTFALL AMOUNTS UP TO THE CUMULATIVE TO, UH, 81.3 MILLION, UH, WITHOUT OIL, AND THEN 64.5 WITH THE OIL.
BUT SO, BUT AGAIN, THIS IS A BUDGET PROJECTIONS, CORRECT.
OR STANDARD BUDGET PROJECTIONS, BUT ALSO YES.
THE COMPOUNDING ISSUE OF THE THE NOT HAVING THE OIL PRODUCTION DOLLARS.
ONE MORE AND THEN, NOPE, THAT'S IT.
ALSO, UH, ON THAT TOPIC OF THAT, THE ONGOING PROJE PROJECTION, SO WE HAVE FUTURE RAISES OR EMPLOYEE COSTS, IS THAT CALCULATED IN THERE? OKAY, GOOD.
I KNOW THAT HAD WASN'T SOMETHING WE, WE HAD DONE IN THE PAST, BUT, UM, I THINK THAT'S IMPORTANT THAT WE HAVE THOSE, THOSE POTENTIAL COSTS, UH, THOSE FUTURE COSTS PROJECTED IN THERE.
I KNOW THESE NUMBERS MAY SEEM SCARY, BUT YOU KNOW, I'VE BEEN IN THE CITY A LONG TIME AND I CAN TELL YOU THIS IS MANAGEABLE.
UH, THIS YEAR IS SOMETHING THAT WE CAN, WE CAN, WE CAN, BY TAKING THESE EARLY STEPS AND LOOKING AT GROWTH AND HAVING AN HONEST ASSESSMENT ON, ON ABOUT OUR RES REVENUES, UH, I THINK THIS IS SOMETHING THAT WE CAN, WE CAN DO.
SO I'M, I STILL FEEL OPTIMISTIC, UM, SEEING THESE NUMBERS AND WE'RE GONNA, YOU KNOW, WE LOOK FORWARD TO THE FU TO THE ADDITIONAL CONVERSATIONS THAT WE'LL HAVE, UH, IN APRIL.
BUT THIS IS SOMETHING THAT WE SHOULD, YOU KNOW, AS A CITY COUNCIL, WE SHOULD, WE SHOULD BE, YOU KNOW, EMPOWERED RIGHT NOW THAT WE HAVE A CHALLENGE.
AND THE CHALLENGE IS REALLY WHAT KIND OF CITY ARE WE GONNA LEAVE FOR FUTURE GENERATIONS AND FUTURE COUNCILS? THAT'S REALLY THE QUESTION.
IS IT ONE THAT'S, THAT'S AGAIN, GONNA BE BALANCES OUR BUDGET BASED ON OIL, WHICH WE KNOW THE LEGISLATIVE, UM, LANDSCAPE AROUND OIL IS SHIFTING, IT CHANGES EVERY LEGISLATIVE CYCLE.
IS THAT SOMETHING WE'RE GONNA CONTINUE TO DOUBLE DOWN ON? ARE WE FINALLY GONNA IDENTIFY A WAY FOR OUR CITY TO BE, OUR SERVICES TO BE INDEPENDENT? AND THAT'S REALLY THE QUESTION.
THAT'S THE BIG WORK THAT THIS COUNCIL HAS TO DO OVER THE NEXT FIVE YEARS.
UM, AND I KNOW SOME OF YOU WERE JUST OUT IN, IN, UH, NEW YORK LAST WEEK WITH BLOOMBERG MAPPING OUT AND CHARTING OUT SOME OF THAT WORK.
A COUPLE OF YOU WERE, WERE THERE.
AND SO, YOU KNOW, WE'VE GOT OUR BEST AND BRIGHTEST MINDS
[00:40:01]
WORKING ON THE JOB.SO I FEEL CONFIDENT OUR CITY COUNCIL SHOULD FEEL CONFIDENT, BUT WE HAVE SOME WORK TO DO, UH, THIS YEAR AND IN THE COMING YEARS TO MAKE SURE THAT WE'RE PUTTING OUR CITY ON THE RIGHT TRAJECTORY.
JUST SEE, I THOUGHT I HAVE THE LAST WORD.
I KNOW, I JUST, A QUESTION POPPED UP BECAUSE I WAS JUST THINKING, YOU KNOW, HOW YOUR, WHAT YOU SAID INSPIRED THIS QUESTION IS, SO IF, IF, IF WE, YOU KNOW, I THINK THAT, UM, AGAIN, THANK YOU FOR ALL THE HARD WORK, UM, AND MAKING SURE THAT WE HAD A, WE HAVE A FORECASTING FIVE YEARS OUT, UM, AND I THINK IT'S EXCITING THAT WE ARE AT A PLACE WHERE WE'RE THINKING ABOUT ALTERNATIVE REVENUE.
AND I'M JUST WONDERING FOR PEOPLE OUT THERE WHO'S CURIOUS ABOUT HOW DO YOU STAY UP THAT, YOU KNOW, THE MAYOR TALKS A LOT ABOUT GROW LONG BEACH AND IT'S BEEN MENTIONED, BUT HOW DO, HOW DO THE, OUR RESIDENTS STAY UPDATED ON WHAT THAT MEANS AS WE'RE LOOKING AT REVENUE ALTERNATIVE REVENUE GENERATION? SO, UM, I'LL START WITH THAT.
UH, PART OF THAT IS FOLLOWING OUR BUDGET DISCUSSION.
WE, UM, WILL BE TALKING ABOUT THIS IN JANUARY.
UM, AS WE FIRST ENGAGE THE PUBLIC, IF WE DO HAVE SOME SORT OF, UM, REVENUE GENERATION DISCUSSION, IF THAT'S WHAT POLICY DECISION, WE'LL BE ABLE TO TALK ABOUT THAT AS PART OF THE BUDGET THAT YOU APPROVE.
UM, BUT THEN, UM, YOU KNOW, IF WE GET TO THAT POINT, WE'D BE ABLE TO DO SOME, UM, SOME EDUCATION.
OBVIOUSLY THE CITY CAN'T DO ANY ADVOCACY ABOUT THAT ONE WAY OR THE OTHER, BUT, UH, I'M SURE THAT WOULD BE REPORTED ON AS WELL.
AND, AND THAT, UM, WAS SOMETHING THAT PEOPLE WOULD, AND VOTERS WOULD INFORM THEMSELVES ON, ON.
BUT WE DO HAVE TO BE CAREFUL ONCE WE PUT SOMETHING ON THE BALLOT THAT WE'RE NOT ADVOCATING FOR OR AGAINST, BUT WE CAN PROVIDE INFORMATION.
AND JUST TO BE CLEAR, WE HAVEN'T TAKEN A POSITION TO PUT ANYTHING ON THE BALLOT, BUT WE KNOW THAT NOVEMBER, THERE IS A REFERENDUM SB 1137 THAT IMPACTS OUR BUDGET AND WE'RE PREPARING FOR THAT.
COULD BE A SCENARIO WHERE IT FAILS.
I DON'T THINK IT FAILS, BUT THERE COULD BE A SCENARIO WHERE, WHERE IT FAILS.
UH, BUT WHAT THIS DOES IS IT PREPARES US FOR THAT AND GETS US THINKING ABOUT, UM, YOU KNOW, IF WE'RE LOSING A, A REVENUE SOURCE THAT WE'VE COUNTED ON FOR, FOR DECADES FOR ALMOST A CENTURY, YEAH.
UH, WE HAVE TO HAVE AN HONEST CONVERSATION ABOUT ARE WE GOING TO BE A SMALLER CITY? ARE WE GOING TO CUT BACK OUR SERVICES? ARE WE GONNA REPLACE THAT REVENUE THROUGH A COMBINATION OF GROWTH OR NEW SOURCES? SO THAT'S THE CONVERSATION WE HAVE TO HAVE IN THE, IN THE, IN THE MONTHS TO COME.
SO, UH, FO BY FOLLOWING THE BUDGET CONVERSATION, THE BEST PLA BEST WAY THAT PEOPLE CAN FOLLOW ALONG.
THERE'S OTHER, WE'LL BE HAVING A LOT MORE CONVERSATIONS AROUND REVENUE GROWTH, UH, IN GROW LONG BEACH.
SO WE HAVE A GROW LONG BEACH EVENT THAT WE'RE DOING ONCE A YEAR, AND, UH, WE'LL BE WORKING WITH OUR PARTNERS TO DO, YOU KNOW, TO DO MORE, TO ATTRACT MORE TOURISM INTO OUR CITY.
SO THERE'S GONNA BE A LOT OF OPPORTUNITIES.
WELL, IT SOUNDS VERY EXCITING TO ME THAN OUR NORMAL BUDGET HEARING AND COMMUNITY ENGAGEMENT.
SO I THINK IT'S REALLY IMPORTANT THAT WE SHARE THIS AS A WAY WHERE, UM, YEAH.
SO BUDGET IS THE TIME TO TALK ABOUT GROW LONG BEACH.
SO I JUST WANNA MAKE SURE WE MAKE IT CLEAR THAT IT'S AS MUCH AS WE WILL GO THROUGH THE PROCESS OF SHARING WHAT THE PROPOSED BUDGET IS FOR THE NEXT YEAR, WE'RE REALLY FORWARD THINKING AND THINKING ABOUT THE FUTURE BECAUSE I THINK THAT THAT'S WHAT OUR RESIDENTS ARE ALWAYS WORRIED ABOUT AS FAR AS, YOU KNOW, QUESTIONS ABOUT QUALITY OF LIFE SERVICES, HOW DO WE CONTINUE, UM, GETTING MORE OF IT, OR HOW DO WE SUSTAIN WHAT WE HAVE, RIGHT? 'CAUSE I'M THINKING ABOUT, WELL, WE'RE GONNA BE BUILDING A LOT OF NEW THINGS, UM, IN THE NEXT FIVE YEAR.
AND THE ANOTHER EXPENSE IS GONNA BE THINKING ABOUT HOW DO WE SUSTAIN AND MAINTAIN THEM.
SO, UM, SO YES, BUDGET HEARINGS AND BUDGET CONVERSATION.
PLEASE MAKE SURE TO STAY ENGAGED BECAUSE IT'S NOT GONNA BE YOUR NORMAL BUDGET.
UM, SO I'M GONNA PUT IT OUT THERE TO GET PEOPLE MORE ENGAGED.
IS THERE ANY PUBLIC COMMENT? OKAY, SEEING NONE, UH, WE DON'T NEED TO VOTE ON THIS, RIGHT? DO WE NEED TO VOTE? RECEIVING FILE? OKAY.
ALL RIGHT, WELL, LET'S MEMBERS CAST YOUR VOTES.
YEAH, I JUST, YEP, COUNCILWOMAN.
UH, THE SPECIAL MEETING IS ADJOURNED.
WE WILL BE BACK FOR CITY COUNCIL.