* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:57] ALL RIGHT, MADAM CLERK'S CALL TO ORDER THE SPECIAL MEETING OF THE LONG BEACH CITY COUNCIL ROLL CALL PLEASE. COUNCILWOMAN SINJA. COUNCILWOMAN ALLEN. COUNCIL MEMBER DUGGAN. HERE. COUNCILMAN SUPERMAN. HERE. COUNCILWOMAN KERR. HERE. COUNCILWOMAN SORROW VICE MAYOR URANGA. COUNCILWOMAN THRASH AND TUCK. PRESENT. [ROLL CALL] COUNCIL MEMBER RICK SODI HERE. MAYOR RICHARDSON. I AM HERE. WE HAVE A QUORUM. GREAT, THANK YOU. LET'S READ, READ OUR STUDY SESSION ITEM ONE, PLEASE. RECOMMENDATION TO RECEIVE AND FILE A PRESENTATION ON THE CITY'S FISCAL OUTLOOK AND FY 26 PROPOSED BUDGET DEVELOPMENT UPDATE. ALRIGHT, THANK YOU. SO TODAY, COUNCIL, WE ARE TAKING A DEEPER DIVE, A STUDY SESSION INTO [1. 25-54652 Recommendation to receive and file a presentation on the City’s Fiscal Outlook and FY 26 Proposed Budget Development Update. ] SOME OF OUR BROADER FINANCIAL GOALS AND HOW THE FY 26 BUDGET PROCESS FITS WITHIN, UH, SOME OF OUR BROADER, BROADER GOALS THAT YOU ALL KNOW ALREADY. UH, BRINGING IN NEW REVENUE TO OUR CITY, SHAPING, UH, UH, A CITY THAT'S LESS RELIANT ON OIL REVENUES AND, UM, AND ADDRESSING SOME OF THE, UH, SHORTFALLS FROM THE PANDEMIC. AND SO, UH, THAT SAID, TOM, PLEASE TAKE US AWAY. THANK YOU VERY MUCH. AND MR. MAYOR AND MEMBERS OF THE COUNCIL, THIS IS AN IMPORTANT, UH, STUDY SESSION THAT WE'RE HAVING, AS WE ALL KNOW, UH, FINANCES AND, AND, UH, OUR FISCAL RESPONSIBILITY IS VERY IMPORTANT TO THE COUNCIL. IT'S ONE OF YOUR CORE, UH, CORE SERVICES THAT, UH, YOU ASK US TO PAY ATTENTION TO. UH, THIS IS THE REALLY THE BEGINNING OF THE PROCESS, AS THE MAYOR SAID, AND WE'RE GONNA GO THROUGH A PRESENTATION, UH, BUDGET NUMBERS CHANGE, UH, AS YOU GO OVER THE YEARS, AS YOU LOOK AT DIFFERENT THINGS AND ASSUMPTIONS FOR REVENUES AND EXPENDITURES. AND SO WE'RE CONSTANTLY KEEPING YOU UPDATED. UM, UH, THE BOTTOM LINE THINGS THAT, UH, YOU'LL SEE TODAY HAVE GOTTEN A LITTLE BIT BETTER FROM ABOUT A YEAR AND A HALF AGO. SO WE HAD ABOUT AN $81 MILLION DEFICIT. WE'RE DOWN TO ABOUT 57 AND, UH, NEXT YEAR'S HAS IMPROVED A LITTLE BIT AS WELL, BUT WE'RE NOT OUT OF THE WOODS. UH, WE STILL HAVE, UM, SOME VERY, UH, VERY SERIOUS FINANCIAL CHALLENGES AHEAD OF US. UH, TODAY WE'RE GONNA OUTLINE KIND OF, UH, WHERE THOSE REVENUES AND EXPENSES ARE EXPECTED TO TAKE US, AND THEN WE WILL, UM, TALK ABOUT SOME PROPOSED DIRECTION AS THE CITY MANAGER, UH, BUILDS THE BUDGET WITH THE DEPARTMENT DIRECTORS AND THEN BRINGS THAT TO THE MAYOR AND COUNCIL LATER THIS YEAR FOR YOUR REVIEW. UH, SO I WILL TURN IT OVER TO REBECCA BERNSTORFF, OUR, UH, BUDGET MANAGER TO WALK THROUGH THE PRESENTATION. GOOD AFTERNOON, MAYOR AND MEMBERS OF THE CITY COUNCIL. THIS BUD STUDY SESSION WILL PROVIDE AN UPDATED FORECAST FOR FISCAL YEAR 26 AND BEYOND, AND WE'LL DISCUSS THE APPROACH TO DEVELOPING THE PROPOSED FISCAL YEAR 26 BUDGET. FIRST, I WANNA TAKE A MOMENT AND ACKNOWLEDGE THE FISCAL YEAR 25 BUDGETARY ACCOMPLISHMENTS OF THE MAYOR AND CITY COUNCIL WITH GUIDANCE FROM THE CITY MANAGER, UH, BALANCED THE 20.3 MILLION GENERAL FUND STRUCTURAL SHORTFALL AND FOCUSED ON TAKING, TOOK, TAKING ACTION TO ADDRESS THE CITY'S MOST URGENT ONE-TIME NEEDS BY INVESTING 10.4 MILLION IN CRITICAL ENHANCEMENTS AND EFFICIENCIES DEVELOPED TOWARDS ACHIEVING THE LONG BEACH STRATEGIC VISION. 2030. WITHOUT GROWING THE GENERAL FUND SHORTFALL, THE CITY ALSO ENLARGED ITS ELEVATE 28 PROGRAM FOR A TOTAL FIVE YEAR CAPITAL IMPROVEMENT PLAN OF 928 MILLION TO REVITALIZE THE CITY'S INFRASTRUCTURE. PREPARE FOR THE 2028 OLYMPICS, INVEST IN THE WEST SIDE PROMISE AND CONTINUE TO IMPROVE AND ENHANCE CITY PARKS, MAJOR CORRIDORS AND VISITORS SERVING AREAS. UH, NEXT, A RECAP OF THE FISCAL YEAR 24 YEAREND PERFORMANCE AND THE STATUS OF OUR CURRENT FISCAL YEAR 25 BUDGET. THE GENERAL FUND ENDED FISCAL YEAR 24 AFTER A SET ASIDE OF 7 MILLION FOR ADOPTED FISCAL YEAR 25 BUDGET FOR CRITICAL AND PRIORITY ONE-TIME USES WITH A 2.3 MILLION IN BUDGETARY FUNDS AVAILABLE THAT WAS PRIORITIZED FOR ONE-TIME CRITICAL PROJECTS AND USES. AS A RESULT OF THIS SURPLUS BALANCE, WE DID NOT NEED TO RELEASE THE 5.8 MILLION SECURING OUR CITY FUTURE RESERVE FUNDS, WHICH WILL BE CARRIED OVER TO BALANCE THE FISCAL YEAR 25 BUDGET. AS PLANNED. THE MEASURE A SALES TAX REVENUE UNDERPERFORMED DUE TO SIMILAR TRENDS IMPACTING SALES AND USE TAX REVENUE. AND THE FUND ENDED THE YEAR WITH A TWO 2.7 MILLION SHORTFALL AS ANTICIPATED AS A PART OF THE FISCAL YEAR 24 MIDYEAR PROJECTION AND TIDELANDS ENDED THE FISCAL [00:05:01] YEAR WITH A 21.8 MILLION IN BUDGETARY FUNDS AVAILABLE. THIS INCLUDES AN OPERATING SURPLUS OF 16.5 MILLION, PLUS A RELEASE OF 5.3 MILLION FUND RE FROM RESERVES NO LONGER OBLIGATED AND AVAILABLE FOR USE. AND 7 MILLION WAS ALLOCATED AS PART OF FISCAL YEAR 25 ADOPTED BUDGET AND THE REMAINING 14.8 MILLION WAS RECOMMENDED FOR CRITICAL CAPITAL PROJECTS. NEXT, LET'S REVIEW. WE ARE WHERE WE ARE AT TODAY WITH FISCAL YEAR 25. THE CITY ADOPTED THE FISCAL YEAR 25 BUDGET IN SEPTEMBER WITH A 20.3 MILLION SHORTFALL. THIS GAP IS BEING COVERED WITH ONE-TIME FUNDING FROM THE SECURING OUR CITY FUTURE RESERVE THAT IS AVAILABLE AT THE CLOSE OF THE LONG BEACH RECOVERY ACT PROGRAM. THE CURRENT ROUND OF ESTIMATES TO CLOSE WILL BE REVIEWED, REVIEWED IN THE MID-YEAR PERFORMANCE REPORT, ANTICIPATED TO GO TO COUNCIL AROUND MAY, JUNE. AND THIS REVIEW WILL HELP ASSESS IF THE ESTIMATES TO CLOSE ARE MEETING EXPECTATIONS AND CONTRIBUTING TO BUDGET SAVINGS. ACCURATE ATCS ARE CRUCIAL IN MANAGING PROJECTED PERFORMANCE AND PROTECTING SECURING OUR CITY FUTURE FUNDS FOR FISCAL YEAR 26. NOW ONTO FISCAL YEAR 26, WHEN THE CITY COUNCIL ADOPTED THE FISCAL YEAR 25 BUDGET IN SEPTEMBER, 2024, THE FISCAL YEAR 26 OUTLOOK PROJECTED A $30 MILLION STRUCTURAL SHORTFALL. IN NOVEMBER, 2024, VOTERS APPROVED MEASURE LB, WHICH FORECASTED NEW ANNUAL REVENUE THAT WILL GENERATE 15 MILLION TO PROVIDE CRITICAL STRUCTURAL SUPPORT FOR CITY SERVICES. WHILE THE GENERAL FI FISCAL YEAR 26 GENERAL FUND OUTLOOK IMPROVED, THERE WILL STILL BE A GENERAL FUND SHORTFALL. THE FISCAL YEAR 26 PROJECTED, UH, PROJECTION REFLECTS A GENERAL FUND SHORTFALL OF 19.8 MILLION, WHICH IS INCLUSIVE OF CARRY OVER A FISCAL YEAR 25 TO $20.3 MILLION. STRUCTURAL SHORTFALL SOLVED ON A ONE-TIME BASIS USING LONG BEACH RECOVERY ACT FUNDING FISCAL YEAR 26 IS IMPACTED BY RISING PENSION COSTS AND UNDERPERFORMANCE IN OTHER EXISTING REVENUE STREAMS ACROSS CALIFORNIA, INCLUDING LONG BEACH NEGATIVELY IMPACTING PROJECTIONS FOR FISCAL YEAR 26 AND BEYOND. THE NEXT FEW SLIDES WILL HIGHLIGHT KEY CHANGES SINCE THE LAST PROJECTION IN THE FISCAL YEAR 25 ADOPTED BUDGET, INCLUDING THE IMPROVED EXPENDITURE PROJECTION AND IMPROVED REVENUE PROJECTIONS. AS MENTIONED, THE OVERALL GENERAL FUND PROJECTION HAS IMPROVED BY 7.5 MILLION. AND SOME HIGHLIGHTS OF THAT NUMBER INCLUDE THE CITY'S INDIRECT COST PLAN, WHICH RECOUP GENERAL FUND COSTS FOR CENTRAL SERVICES SUCH AS FINANCIAL MANAGEMENT, CITY MANAGER, AND CITY ATTORNEY BY CHARGING NON-GENERAL FUND GROUPS, WHICH REFLECTS A 7.6 MILLION IMPROVEMENT SINCE THE PREVIOUS PROJECTION. IN FISCAL YEAR 24, INDIRECT COST CHARGES TO ELIGIBLE CAPITAL IMPROVEMENT PROJECTS WERE REINSTATED TO RECOUP CENTRAL SERVICES COSTS. ALTHOUGH CIP EXPENSES HISTORICALLY SUBJECT TO INDIRECT INDIRECT COST ALLOCATION CHARGES, THESE CHARGES WERE SUSPENDED FOR THE PREVIOUS SIX YEARS DUE TO THE CONVERSION TO THE CITY'S NEW FINANCIAL SYSTEM AND THE DEVELOPMENT OF THE NEW METHODOLOGY IN COMPLIANCE WITH FEDERAL RULES. ADDITIONALLY, IN NOVEMBER, 2024, VOTERS APPROVED MEASURE JB, WHICH COMBINES THE CIVIL SERVICE AND HUMAN RESOURCES DEPARTMENTS INTO ONE UNIFIED HIRING DEPARTMENT, OPERATED WITHIN THE DEPARTMENT OF HUMAN RESOURCES AS CHANGES TO THE BUDGET WILL BE NEEDED TO IMPLEMENT THE MERGER OF THE DEPARTMENTS. THE FISCAL YEAR 26 PROJECTION RECOGNIZES A SHIFT OF THE CIVIL SERVICE GENERAL FUND BUDGET INTO THE EMPLOYEE'S BENEFIT FUND. THE EMPLOYEE BENEFIT FUND IS FUNDED BY COLLECTIONS FROM CITYWIDE FUNDS AND NET OF THESE COLLECTIONS. THE SHIFT IMPROVED THE GENERAL FUND PROJECTION BY ABOUT 2.5 MILLION, BUT IT'S IMPORTANT TO NOTE THAT THE IMPROVEMENT IS ONLY SHORT TERM. AS CIVIL SERVICES GENERAL FUND COSTS TAPER OUT OF INDIRECT COST PLAN COLLECTIONS IN OUTER YEARS. ALTHOUGH THE EXPENDITURES PROJECTION HAS IMPROVED, THERE ARE STILL VARIOUS COST DRIVERS THAT CONTINUE TO INCREASE. MOST NOTABLY, CALPERS PENSION COSTS INCREASED MUCH HIGHER THAN ANTICIPATED. THIS IS DUE TO INFLATION CAUSING HIGHER PAY INCREASES FOR RETIREES. CITY PAY INCREASES LARGER THAN ACTUARILY ASSUMED BY CALPERS AND A 6.1% INVESTMENT RETURN FROM FISCAL YEAR 2223 RATES ARE ANTICIPATED TO CONTINUE TO RAMP UP. ADDITIONALLY, THE GENERAL FUND SHARE OF CITYWIDE INTERNAL SERVICES CONTINUE TO INCREASE PRIMARILY DUE TO LABOR INCREASES, ALSO INCLUDING NATURAL COST INCREASES TO CONTRACTS, MATERIALS AND EQUIPMENT, AND RISING COST OF VEHICLE ACQUISITIONS. IN ADDITION TO THE KEY EXPENDITURES HIGHLIGHTED TODAY, A NUMBER OF OTHER UPDATES WERE RECOGNIZED IN THE PROJECTION TO ALIGN RATES SUCH AS WORKERS' COMPENSATION AND EMPLOYEE HEALTH BENEFITS. ALSO RECOGNIZING GROWTH IN SALARIES, WHICH IS REFERRED TO AS SALARY CREEP AND ALIGNMENTS TO VARIOUS CRITICAL NEEDS. PROJECTIONS ARE BASED ON FISCAL YEAR 24 YEAR IN PERFORMANCE AND THE MOST UP-TO-DATE INFORMATION AVAILABLE FOR FISCAL YEAR 25. FISCAL YEAR 26 PROJECTIONS ASSUME NO RECESSION OR IMPACT FROM FEDERAL POLICIES LIKE TARIFFS AND STAFF IS MONITORING THESE FACTORS AND WILL ADJUST WHEN NEW INFORMATION BECOMES AVAILABLE. THE FOLLOWING WILL HIGHLIGHT THE SIGNIFICANT CHANGES ATTRIBUTING TO THE NET 2.7 MILLION INCREASE WHEN COMPARED TO THE PRIOR FISCAL YEAR 30 PROJECTION PRESENTED AS A PART OF THE ADOPTED FISCAL YEAR 25 BUDGET. UTILITIES USERS TAX IS A 5% TAX ON THE USAGE AND HEAVILY DEPENDENT ON CONSUMPTION AND RATES FOLLOWING THE FISCAL YEAR 25 BUDGET ADOPTION LONG BEACH VOTERS APPROVED MEASURE LB IN NOVEMBER, 2024, WHICH FORECASTED TO BRING IN NEW GAS UUT [00:10:01] REVENUE OF APPROXIMATELY 15 MILLION. ASIDE FROM MEASURE LB, TOTAL REVENUE FROM ELECTRIC GAS, TELEPHONE AND WATER UUT IS ANTICIPATED TO BE RELATIVELY FLAT FROM FISCAL YEAR 25 BUDGET LARGELY DUE TO A DECREASE TO CUSTOMER BILLS IN FISCAL YEAR 24 FOLLOWING THE PRICE HIKES IN EARLY FISCAL YEAR 23 AS WELL. AND AS ADJUSTMENT TO ELECTRIC UUT REVENUE BASED ON FISCAL YEAR 24 PERFORMANCE AND CURRENT YEAR ACTIVITIES INDICATING SLOW GROWTH SI SIMILAR TRENDS FOR GAS AND ELECTRIC ARE ALSO IMPACTING GAS AND ELECTRIC FRANCHISE FEES, WHICH ARE ALSO NOTED HERE ON THE SLIDE. BUSINESS LICENSE TAX CONTINUES TO GROW FROM BETTER THAN ANTICIPATED FISCAL YEAR 24 YEAR END PERFORMANCE FISCAL YEAR 26 PROJECTIONS ASSUME THE ANNUAL CPI ADJUSTMENT APPLIED TO RATES AS WELL AS INCREASED FIELD INSPECTION ACTIVITIES AND ENHANCED ENFORCEMENT EFFORTS, INCLUDING THE RESUMPTION OF PENALTIES AND LATE FEES. EMERGENCY AMBULANCE FEES INCREASED DUE TO PARTICIPATION IN THE P-P-G-E-M-T PROGRAM THAT WAS APPROVED BY CITY COUNCIL AND ALLOWS INCREASED RE REIMBURSEMENTS FOR MEDI-CAL EMERGENCY TRANSPORTATION ON A PER TRANSPORT BASIS. SALES AND USE TAX PROJECTIONS REFLECTS LOWER TAXABLE SALES, WHICH ARE OCCURRING THROUGHOUT THE STATE. WHILE SOME CATEGORIES LIKE RESTAURANTS AND HOTELS CONTINUE TO PERFORM WELL, PROJECTIONS REFLECT THE SLIGHT DECLINE IN OTHER CATEGORIES LIKE GENERAL CONSUMER GOODS AND AUTOS AND TRANSPORTATION DUE TO CUSTOMER BEHAVIOR INTEREST. POOLED CASH REVENUE IS SUBJECT TO INTEREST RATES AND THE CASH BALANCES EARNING INTEREST FROM THE CITY'S INVESTMENT POOL. WHILE THE CITY'S INVESTMENT POOL IS ANTICIPATED TO GROW IN FISCAL YEAR 26, THE GENERAL FUND SHARE OF THE TOTAL CITYWIDE INTEREST POOLED CASH REVENUE HAS REDUCED BASED ON FISCAL YEAR 24 YEAR END PERFORMANCE. AND LASTLY, PROPERTY TAX IS ANTICIPATING SLOWED GROWTH FROM PRIOR YEARS. AS WITH MANY COMMUNITIES, THE CITY'S EXPERIENCING THE IMPACTS OF A SLOWING DOWN IN HOME SALES AND PRICES DUE TO HIGHER INTEREST RATES. THE PROJECTIONS INCLUDE A CONTINUED 4% INCREASE FROM FISCAL YEAR 25 EXPECTED LEVELS. THE SLOWDOWN IS ALSO IMPACTING PROPERTY TAX IN LIEU OF VEHICLE LICENSE FEE REVENUES, WHICH IS 1.7 MILLION OF THE 5.1 MILLION DECREASE. NOW THE BUDGET BALANCING STRATEGY IN FISCAL YEAR 25. WE CAN TAKE STEPS NOW IN OUR CURRENT FISCAL YEAR TO HELP SUPPORT FISCAL YEAR 26 BY TIGHTENING THE BELT AND NOT CUTTING SERVICES OR PROGRAMS. WE ARE REQUESTING TO FOREGO ANY NON-CRITICAL USE OF FISCAL YEAR 25 OPERATING SAVINGS TO MAINTAIN FINANCIAL STABILITY AND ADDRESS FUTURE NEEDS. WE ARE ALSO EMPHASIZING THE IMPORTANCE OF PRESERVING THE ONE-TIME FUNDS FROM THE SECURING OUR CITY FUTURE RESERVE TO HELP ADDRESS BUDGET SHORTFALLS IN FISCAL YEAR 26. AND BY MANAGING RESOURCES CAREFULLY NOW WE CAN SUPPORT A MORE STABLE FISCAL YEAR 26 AND BUY TIME FOR OTHER REVENUES TO CATCH UP. THERE WILL BE NO REDUCTION TARGETS FOR THE GENERAL FUND IN FISCAL YEAR 26, BUT KEEP IN MIND THAT THE GOAL IS TO AVOID WORSENING THE DEFICIT. SO STRICT REVIEW APPROACH WILL BE TAKEN ABOUT IMPLEMENTING OFFSETS. ANY SHORTFALL NOT ADDRESSED IN ONE YEAR WILL CARRY OVER TO THE NEXT REQUIRING DISCIPLINE FINANCIAL MANAGEMENT TO SUPPORT FUTURE REVENUES FROM INITIATIVES LIKE GROW LONG BEACH MEASURE A IN THE OLYMPICS. IN FISCAL YEAR 28, THE FOCUS IS ON LIMITING SERVICE DELIVERY IMPACTS. NOW IN THE NEXT FEW SLIDES, WE WILL SHARE AN UPDATED LONG-TERM PROJECTION FOR THE GENERAL FUND. THIS TABLE SHOWS THE CHANGE IN THE UPDATED FORECAST. LAST MARCH, WE CAME TO YOU SAME TIME LAST YEAR WITH AN 81.3 MILLION SHORTFALL, WHICH THEN IMPROVED TO 61.5 MILLION. BY THE TIME THE FISCAL YEAR 25 BUDGET WAS ADOPTED. AND NOW A YEAR LATER, THE CUMULATIVE SHORTFALL THROUGH FISCAL YEAR 31 IS NOW 57.3 MILLION. ALTHOUGH THE FIVE YEAR PROJECTION REFLECTS A SIMILAR CHALLENGES AHEAD, THE CITY IS STILL HEADING IN THE RIGHT DIRECTION SINCE A YEAR AGO TODAY. KEY EXPENDITURE VARIABLES IN THE FORECAST INCLUDE SALARY AND BENEFIT COSTS FOR FUTURE YEARS. WITH NO AGREED LABOR CONTRACTS, ASSUMPTION IN THE PROJECTION RESULTED IN AN AVERAGE INCREASE OF 16.5 MILLION PER YEAR. THIS ALSO ASSUMES MORE OF A NORMAL LABOR MARKET AND LOWER VACANCY RATES THAN WE WERE 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. THERE'S A HIGHER UNFUNDED LIABILITY COST DUE TO INFLATION, AND AS A RESULT, HIGHER COLA FEES COLAS FOR RETIREES ALSO CITY PAY INCREASES ARE GREATER THAN ACTUARILY ASSUMED. AND AS A RESULT, THE 2223 INVESTMENT RETURN OF 6.1% FELL SHORT OF CALPERS 6.8 EXPECTED RETURN. THESE NEGATIVE IMPACTS CAUSED EMPLOYER CONTRIBUTION RATES TO INCREASE BETWEEN FISCAL YEAR 25 AND 26 BY NEARLY 10 PERCENTAGE POINTS AND PUBLIC SAFETY AND THREE PERCENTAGE POINTS FOR MISCELLANEOUS PLANS. ADDITIONALLY OUT YOUR COSTS ASSUME INCREASES DUE TO INFLATION. AND FINALLY, WHILE THERE IS UNCERTAINTY AT THE FEDERAL LEVEL, LOSS OF FEDERAL FUNDING IS NOT INCLUDED IN THE FORECAST AND WILL REQUIRE A CHANGE IN STRATEGY. KEY REVENUE VARIABLES IN THE FORECAST INCLUDE OUT YOUR PROJECTIONS IN FOLLOWING FISCAL YEAR 26, ASSUMING NORMAL GROWTH FACTORS, INCLUDING 3% AND 4% FOR SALES AND USE TAXES AND PROPERTY TAX RESPECTIVELY. AS IS THE CASE IN FISCAL YEAR 26 OUT YEAR PROJECTIONS INCLUDE NO ASSUMPTION OF A RECESSION OR ANY IMPACTS FROM FEDERAL POLICIES LIKE TARIFFS AND REVENUE MAXIMIZATION EFFORTS CONTINUE TO BE A FOCUS WITH ADJUSTMENTS REVIEWED AS PART OF THE BUDGET PROCESS. [00:15:01] THIS INCLUDES THE CITY'S EVALUATIONS OF FEES AND CHARGES THROUGH THE CITYWIDE COST OF SERVICE STUDY PROJECT AND APPLICATION OF THE CALCULATED INCREASE CALLED THE CITY COST INDEX, AS WELL AS OPERATIONAL EFFORTS AND EFFICIENCIES AS WE ARE SEEING IN BUSINESS LICENSE TAX REVENUE. FINALLY, ONETIME SOURCES MAY BE AVAILABLE FOLLOWING THE COMPLETION OF THE IMPACT PHOENIX NEXUS. STUDIES CURRENTLY IN PROGRESS ANTICIPATED TO CONCLUDE IN FALL OF THIS YEAR, WHICH CAN BE USED TO EVALUATE RATE ADJUSTMENTS TO DEFRAY THE COST RELATED TO EXPANDED SERVICES AND INFRASTRUCTURE TO SERVICE NEW DEVELOPMENT. THE OUT YEAR FORECAST CONTINUES THE CITY'S STRATEGY TO REDUCE GENERAL FUND SUPPORT FROM OIL PROCEEDS AND OIL PRODUCTION TAX REVENUES DOWN TO $0. STRUCTURALLY AND FISCAL YEAR 30 ANNUAL OIL REVENUE RECEIVED ABOVE THE BUDGETED LEVELS WILL BE AVAILABLE FOR ONE-TIME USES AND OR FUTURE OIL WELL ABANDONMENT. FISCAL YEAR 26 PROJECTIONS DOES INCLUDE A 1.4 MILLION INCREASE FROM FISCAL YEAR 25 STRUCTURAL BUDGET DUE TO AN EXTENDED PHASE IN PERIOD OF STATE REGULATORY ACTIONS. ON THIS SLIDE, THE TABLE ILLUSTRATES THE STRUCTURAL GAP WHERE OUR CURRENT REVENUE PROJECTION IS INSUFFICIENT TO KEEP PACE WITH EXPENDITURE INCREASES. WHAT YOU CAN ALSO SEE ON THIS SLIDE IS THE IMPACTS OF THE CALPERS RATE RAMP UP, WHICH PEAKS IN FISCAL YEAR 28, AND THEN AFTER START TO SEE PROJECTIONS OF REVENUE AND EXPENSE BECOME CLOSER ALIGNED. IN THE NEXT FEW SLIDES, I'LL BRIEFLY DISCUSS THE STATUS AND TRENDS FROM MEASURE A TIDELANDS AND OTHER KEY FUNDS. MEASURE A REVENUE TREND ASSUMES 3% GROWTH IN THE OUT YEARS, INCLUDING ADJUSTMENTS TO REFLECT LESS THAN ANTICIPATED PERFORMANCE FROM CERTAIN CATEGORIES SUCH AS GENERAL CONSUMER GOODS AND AUTOS AND TRANSPORTATION. THE PROJECTION REFLECTS MEASURE A INCREASING FROM 0.75% TO 1% IN FISCAL YEAR 28, ALIGNED WITH THE ORIGINAL SUNSET DATE OF COUNTY MEASURE H 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 AND A TRANSFER FROM THE HARBOR DEPARTMENT. IN FISCAL YEAR 24, HIGHER THAN BUDGETED OIL PRICES RESULTED IN SURPLUS, WHICH WAS SET ASIDE AND PROGRAMMED FOR ONE-TIME USES IN THE FISCAL YEAR 25 BUDGET. YEAR TO DATE ADDITIONAL ONE-TIME FUNDS ARE LIKELY AVAILABLE BECAUSE FISCAL YEAR 25 OIL PRICES ARE CURRENTLY AVERAGING 75 PER BARREL COMPARED TO THE BUDGETED 55. HOWEVER, A SIGNIFICANT FINANCIAL EFFECT ON THE TIDELANDS FUND IS THE IMPACT OF REGULATORY ACTIONS, WHICH REDUCED OIL PRODUCTION AS WELL AS SB 1137 STARTING IN FISCAL YEAR 25. UNDER THESE CONDITIONS, STRUCTURAL CHANGES TO TIDELANDS WILL LIKELY BE REQUIRED IN THE FISCAL YEAR 27 BUDGET. THE CITY FOCUSES ON STRATEGY TO SUPPORT THE DECLINING TIDELANDS FUND BALANCE IN FISCAL YEAR 25 AND BEYOND, INCLUDING THE RISE DIVISION WITHIN THE ECONOMIC DEVELOPMENT DEPARTMENT TO MANAGE THE CITY'S ASSETS, REAL ESTATE AND REVIEW OF FEES, ENERGY EFFICIENCY OPPORTUNITIES, MARKETING AND ADVERTISING, MUSIC AND ENTERTAINMENT EFFORTS. AND PROPO PROPOSED OIL INTEREST LEGISL FOR OTHER KEY FUNDS. AS MENTIONED EARLIER, RELATED FUNDS THAT IMPACT THE GENERAL FUND THROUGH INTERNAL SERVICE 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. THE SPECIAL ADVERTISING AND PROMOTIONS FUND IS LARGELY FUNDED BY TOT YEAR END FISCAL YEAR 24 TOT REVENUE CAME IN HIGHER THAN BUDGET AND IS ANTICIPATED TO EXPERIENCE STEADY GROWTH OF ABOUT 5% EACH YEAR, WHICH WILL POSSIBLY GROW FUNDS AVAILABLE. FINALLY, THE HEALTH FUNDS BUDGETARY FUNDS AVAILABLE HAD BEEN IN DECLINE AND IN FISCAL 24 WENT NEGATIVE REQUIRING A TRANSFER FROM THE GENERAL FUND. THE DEFICIT WAS DUE TO INCREASED LABOR COSTS AND GRANT RESTRICTIONS, WHICH LIMIT FUNDING TO COVER CERTAIN COSTS SUCH AS INTERNAL SERVICES FOR TECHNOLOGY NEEDS OR GENERAL OVERHEAD. A CONSULTANT IS EVALUATING THE FUND AND IDENTIFYING STRATEGIES TO ADDRESS THESE FUNDING CHALLENGES. NOW HERE ARE THINGS YOU CAN EXPECT NEXT IN THE BUDGET PROCESS. FIRST COMMUNITY ENGAGEMENT. IN JANUARY AND FEBRUARY OF THIS YEAR. WE HELD FIVE IN-PERSON COMMUNITY MEETINGS, ONE VIRTUAL MEETING, AND CONDUCTED A BUDGET SURVEY WHICH RECEIVED 1,145 RESPONSES RESPONSES, WHICH WAS A 35% INCREASE FROM LAST YEAR. THESE MEETINGS PRIORITIZE LANGUAGE ACCESS AND CONTINUE TO SEEK DEMOGRAPHIC SURVEY INFORMATION TO HELP INFORM THE PROCESS AND CONTINUE TO IMPROVE OUR OUTREACH. WE REVAMPED THE STRUCTURE TO PROVIDE MORE INTIMATE CONVERSATIONS BETWEEN THE COMMUNITY AND CITY STAFF AND PROVIDED DINNER. THE RESULTS OF THE OUTREACH AND THE SUMMARY OF DEMOGRAPHIC INFORMATION WAS A MADE AVAILABLE THROUGH A MEMO RECENTLY. AND THE PROPOSED BUDGET WILL ALSO CONNECT HOW ANY CHANGES LINKED BACK TO THE PRIORITIES IDENTIFIED BY THE COMMUNITY. ADDITIONALLY, WE CONTINUE TO ALIGN RESOURCES WITH THE STRATEGIC VISION 2030 PLAN. AS PART OF THE BUDGET PROCESS DEPARTMENTS CONTINUE ASSESSING HOW PROPOSED NEW PROGRAMS, ENHANCEMENTS OR SERVICE REDUCTIONS ALIGN WITH SV 2030 THEMES AND GOALS. AND NEW TO THE BUDGET PROCESS THIS YEAR IS THE BUDGET EQUITY TOOL TO INTEGRATE THE EQUITY LENS INTO THE FISCAL YEAR 26 BUDGET PROCESS. IT IS MEANT FOR DEPARTMENTS TO ANSWER A SPECIFIC SET OF QUESTIONS TO CRITICALLY AND THOUGHTFULLY ADDRESS DISPARITIES AND ASSESS POTENTIAL IMPACTS ON HISTORICALLY MARGINALIZED [00:20:01] COMMUNITIES USING DATA, EVIDENCE-BASED PRACTICES AND COMMUNITY INSIGHTS IN THE DEVELOPMENT OF THEIR BUDGET PROPOSALS. AND LASTLY, THE TIMELINE 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. AND THEN THERE ARE A SERIES OF BUDGET HEARINGS, BUDGET OVERSIGHT COMMITTEE MEETINGS, AND SECOND ROUND OF COMMUNITY ENGAGEMENT EFFORTS THROUGHOUT AUGUST AND EARLY SEPTEMBER. AND PER THE CHARTER, THE DEADLINE FOR CITY COUNCIL TO ADOPT THE BUDGET IS SEPTEMBER 15TH. AND WITH THAT, THAT CONCLUDES THE PRESENTATION AND WE ARE AVAILABLE FOR ANY QUESTIONS. ALL RIGHT, WELL THANK YOU FOR THAT PRESENTATION. I THINK OVERALL THE MESSAGE, UH, IS WE KNEW WHAT WE WERE FACING TWO YEARS AGO WHEN WE SAW, I THINK IT WAS MAYBE $87 MILLION DEFICIT OVER THESE PAST TWO YEARS. WE HAVE FOCUSED ON FIGURING OUT HOW TO CLOSE LOOPHOLES, FIND NEW REVENUE, AND THE PROJECTION HAS IMPROVED. UH, AND SO THAT NUMBER IS DOWN. THERE'S STILL MORE WORK TO DO. WE HAVE TO ALLOW SOME OF OUR INVESTMENTS TO, TO MATURE OUR INVESTMENTS IN, UH, ENTERTAINMENT AND, UH, BRINGING IN NEW REVENUE THROUGH LEASES AND OTHER THINGS IN TITLES. UM, AND WE NEED TO CONTINUE TO FIND MORE REVENUE OPPORTUNITIES. UH, AND, AND IT'S GOOD TO SEE THE IMPACTS BOTH OF MEASURE LB UH, IT WAS ADOPTED WITH MORE THAN 80% OF THE VOTE, UH, CLOSING A, AN IMPORTANT LOOPHOLE THAT WE ARE SEEING IMMEDIATE IMPACTS TO THIS BUDGET IN THIS UPCOMING FISCAL YEAR. BECAUSE OF THAT AND MEASURE JB THE LONG BEACH JOBS PROMISE, WE WERE ABLE TO SAVE MONEY AND RESOURCES THROUGH THAT CONSOLIDATION. UH, SO TOGETHER THAT'S ALMOST $18 MILLION IN, IN NEW REVENUE THAT WE'VE IDENTIFIED THROUGH THE BALLOT MEASURE PRO PROCESS WITHOUT RAISING TAXES ON OUR RESIDENTS. AND THAT'S IMPORTANT, UH, FOR US TO NOTE. SO THERE'S STILL MORE WORK TO DO. A BIG PART OF THIS IS, YOU KNOW, THESE NEXT COUPLE YEARS, WE WON'T BE ABLE TO MAKE ALL THE ENHANCEMENTS THAT FOLKS MAY BE ASKING FOR. UM, BECAUSE WE, WE DO NEED TO ACKNOWLEDGE THAT WE HAVE TO MAINTAIN THIS TRAJECTORY. SO WE HAVE TO LOOK AT IF WE'RE NOT, IF THERE'S NO DIRECT RETURN, WE, WE HAVE TO SAY NO TO CERTAIN CERTAIN REQUESTS THROUGH THESE NEXT FEW YEARS. OUR, OUR, YOU KNOW, FUTURE GENERATIONS OF CITY COUNCIL RESIDENTS CHILDREN WILL THANK US FOR THIS. AND IF WE HOLD THE LINE, WE'LL ACHIEVE SOME OF OUR GOALS. IT'S GREAT TO SEE WE'RE MAKING PROGRESS AND GETTING THE GENERAL FUND, UH, AND THE UPLANDS, UH, FUND OFF OF, OFF OF OIL INTO OUR GENERAL FUND BY 2030. IT'S GREAT TO SEE THAT WE'RE MAKING PROGRESS ON THAT GOAL. IT'LL BE THE FIRST TIME IN, I DON'T KNOW, A CENTURY. HOW LONG HAVE WE BEEN DOING, UM, UPLANDS? MAYBE 75 YEARS OR SOMETHING LIKE THAT. DOES ANYBODY KNOW? I MEAN, IT'S A LONG TIME WE'VE HAD THAT FUND. TOM, YOU GOT ANY INSIGHT ON THAT? I THINK OIL WAS FIRST DISCOVERED IN THE TWENTIES, SOMETHING LIKE THAT, RIGHT? SO YEAH, IT'S BEEN RIGHT. AND THE GENERAL FUND HAS BENEFITED IN ONE WAY OR THE OTHER FOR A CENTURY. AND SO THIS WILL BE THE FIRST TIME THAT UPLANDS WON'T BE CONTRIBUTING IF REVENUE COMES IN, USE IT ON ONE TIME BASIS, IMPROVE MORE STREETS, BUILD, YOU KNOW, BUILD POOLS AND INFRASTRUCTURE THAT OUR KIDS WILL LIKE, BUT WE'RE NOT SPENDING IT ON POLICE AND FIRE AND, AND THE CRITICAL SERVICES THAT WE NEED. THAT'S SUCH AN IMPORTANT GOAL AND WE'RE MAKING, I'M GLAD TO SEE THAT WE'RE MAKING PROGRESS. SO I THINK THE OVERALL MESSAGE IS WE'RE TAKING STEPS IN THE RIGHT DIRECTION, BUT THERE'S STILL MORE WORK TO DO IN THE NEXT THREE YEARS. UH, WE'LL NOW GO THROUGH, GO TO THE CITY COUNCIL, UH, LEMME SEE IF THERE'S A MAKER OF A MOTION FIRST. OKAY. UH, COUNCIL MEMBER RICK SODI. UH, THANK YOU MAYOR, AND THANK YOU FOR, UH, I THINK LAYING OUT WHAT IS THE, THE VISION AS WE MOVE FORWARD. UM, SOME OF MY QUESTIONS EARLY ON, UM, ARE JUST GONNA BE MORE KIND OF CLARIFICATION. UM, AND SOME OF IT FOR THE AUDIENCE AND ALSO SOME FOR MY COUNCIL COLLEAGUES ARE A LITTLE BIT NEWER. I KNOW SOMETIMES WE REFERENCE THINGS AND I KNEW WHEN I WAS A NEW COUNCIL MEMBER, YOU ALL WOULD REFERENCE THINGS IN THESE WONDERFUL PRESENTATIONS AND I'D BE LIKE, I'VE NEVER HEARD OF THAT IN MY ENTIRE LIFE. COULD YOU EXPLAIN THAT TO ME? SO WE'RE GONNA DO A LITTLE BIT OF THAT TODAY, . UH, SO ON SLIDE TWO, UM, CAN YOU JUST GIVE A BRIEF EXPLANATION OF HOW WE, HOW WE BALANCED OUR $20.3 MILLION GENERAL FUND STRUCTURAL SHORTFALL? THE $20.3 MILLION STRUCTURAL SHORTFALL WAS SOLVED ON A ONE-TIME BASIS USING SECURING OUR CITY'S FUTURE RESERVES. OKAY. AND WHAT ARE THE SECURING OUR CITY'S FUTURE RESERVES? THOSE ARE FUNDS THAT WERE, UM, FOUND DURING OUR LONG BEACH RECOVERY ACT TIME, UM, SET ASIDE FOR CRITICAL PRIORITY, UH, PROJECTS THAT AGAIN, WILL BE, UH, USED UP BY FISCAL YEAR 26. EXCELLENT. OKAY. UM, AND THEN ON THE SAME SLIDE, YOU MENTIONED THAT WE HAD MAJOR CRITICAL ENHANCEMENTS AND EFFICIENCIES DEVELOPED AS PART OF THAT $10.4 MILLION. CAN YOU JUST GIVE LIKE MAYBE TWO OR THREE EXAMPLES OF WHAT THOSE WERE? [00:25:12] WHICH SLIDE IS THAT AGAIN? CA THIS IS THE SAME SLIDE, THE SLIDE, UH, UH, SLIDE TWO SAYS WE INVESTED THE $10.4 MILLION IN CRITICAL ENHANCEMENTS AND EFFICIENCIES. I JUST WANTED A COUPLE OF EXAMPLES OF WHAT THOSE WERE. I THINK IT'S, OH, IS THIS OKAY IN THE, OH, THAT'S IT. OKAY. THERE YOU GO. SO I'LL GIVE SOME EXAMPLES. SO, UM, JUST OFF THE TOP OF MY HEAD, ONE OF THOSE WAS A COMMUNITY CRISIS RESPONSE TEAM. UM, SO WE LOOKED AT, UH, GETTING DIRECTION FROM THE COUNCIL TO HAVE, UH, DOLLARS FOR AN UNARMED RESPONSE TEAM. UH, PEAK LOAD, UH, STAFFING RESCUE TWO, UH, WAS IN THAT LIST AS WELL, UM, LAST YEAR AS WE LOOKED TO INVEST IN THAT AREA. UH, AND, UH, NADER, IF YOU HAVE ANY OTHER EXAMPLES? YEAH, SURE. SO THERE'S A LONG LIST OF ITEMS THAT WERE FUNDED IN THE, UH, 10 POINT, UH, $10 MILLION. A COUPLE OTHER EXAMPLES ARE, UH, THE JUSTICE FUND HAD AN ALLOCATION OF 500,000. ALSO, WE HAD A 200,000 FOR, UH, THE LONG BEACH ECONOMIC PARTNERSHIP AND THEN ALSO A TENANT IMPROVEMENT PROGRAM FOR, UM, A TENANT ASSISTANCE PROGRAM FOR 375,000. AND THE LIST GOES ON AND ON AND ON. BUT WE ALSO HAD THE, UH, FIRE RECRUIT, WHICH IS THE LARGER ACADEMY CLASS FOR, UH, $2 MILLION. SO WE HAVE THE FULL LIST OF THE 10 MILLION IN THE FY 25 ADOPTED BUDGET BOOK, WHICH CAN BE SEEN IN THE, UH, CITY MANAGERS ATTACHMENT AND PD HAD A GOOD PORTION OF THAT AS WELL. I THINK IT WAS ABOUT 101.5 MILLION OR SO FOR THE, UM, UH, HIGH PRIORITY CRIME RESPONSE TEAM THAT WE USED TO BE ABLE TO, TO COMBAT ADDITIONAL OVERTIME FOR CRIME. FANTASTIC. THANK YOU FOR THAT. UM, ON SLIDE FIVE, UM, WE TALKED ABOUT THE ESTIMATES TO CLOSE. 'CAUSE YOU JUST EXPLAIN TO EVERYBODY WHAT ETC IS. YES. SO ETC IS ESTIMATES TO CLOSE. SO THROUGHOUT OUR CURRENT FISCAL YEAR DEPARTMENTS ARE ANALYZING OUR PROJECTED EXPENDITURES AND REVENUES TO SEE WHERE WE WILL FALL WITHIN THE CURRENT FISCAL YEAR. OKAY. THANK YOU. UM, AND THEN I THINK I'M LOOKING AT, AND THEN THESE ARE A COUPLE OF MY QUESTIONS. SO SLIDE FOR SLIDE NINE OR YEAH OR NO, I'M SORRY. SLIDE EIGHT, THE ONE THAT'S THE PROJECTED FISCAL YEAR 26 SHORTFALL. UM, JUST FOR CLARIFICATION FOR ME, SO WE HAVE PRELIMINARY FISCAL YEAR 26 SHORTFALL PROJECTION 30 MILLION, AND THEN WHEN WE SAY PROJECTED ADDITIONAL EXPENDITURE IMPROVED, SO WE'RE SAYING REVENUE THAT'S INCREASED AND THEN, OR IS THAT REVENUE? IT SAYS ADDITIONAL EXPENDITURES, SO THAT MEANS WE'RE SPENDING LESS MONEY? CORRECT. OKAY. IT WAS JUST THE WAY IT, IT WAS ALMOST LIKE, IT ALMOST READ LIKE A DOUBLE NEGATIVE. I WAS LIKE, ADDITIONAL EXPENDITURE IMPROVED . SO, AND THEN PROJECTED ADDITIONAL REVENUE IMPROVED, MEANING WE, WE, UH, MONEY THAT WE MADE. GREAT. YEAH, THE WAY THAT WE SHOW THIS IS NEGATIVE IS A BAD NUMBER AND ANYTHING POSITIVE, EVEN IF IT'S EXPENSE GOING DOWN OR REVENUE GOING UP ARE SHOWN AS IMPROVING THAT NEGATIVE NUMBER. SO, UH, THAT IS TOGETHER, 7.5 MILLION REDUCTION IN, IN COSTS AND 2.7 INCREASE IN REVENUE. OKAY. GREAT. AND THEN, UM, ON SLIDE NINE, UM, I JUST HAD A CLARIFICATION. SO UNDER THE MEASURE, JB, UM, WE TALKED ABOUT FISCAL YEAR 26 PROJECTION REFLECTS CIVIL SERVICE FUNDING SHIFTING FROM THE GENERAL FUND TO THE EMPLOYEE BENEFITS FUND. AND SO THE WAY I READ THAT, SO DOES THAT MEAN THAT WE'RE THE CIVIL SERVICE, LIKE THOSE WHAT WE, WHAT WOULD ORIGINALLY BE CIVIL SERVICE COSTS WILL NO LONGER BE BORN BY THE GENERAL FUND? OR IS THIS, I THINK YOU MENTIONED IT'S JUST LIKE A ONE TIME THING THAT WILL HAPPEN JUST THIS YEAR? YEAH, LET ME START WITH THAT AND THEN REBECCA CAN JUMP IN. SO, UH, WE HAD TWO DIFFERENT SYSTEMS FOR HIRING. AS WE TALKED ABOUT, UM, HR DOES ALL THE HIRING AND THEY'RE FUNDED IN A DIFFERENT WAY THAN CIVIL SERVICE WAS. SO, UH, HR ACTUALLY TAKES THEIR COST AND USES THE EMPLOYEE BENEFITS FUND, WHICH HELPS TO SPREAD THAT TO ALL DIFFERENT FUNDS THAT BENEFIT FROM HR SERVICES. AND SO IT'S ABOUT 60 40, ABOUT 60% OF THOSE COSTS HIT THE GENERAL FUND DEPARTMENTS AND ABOUT 40% SUPPORT NON-GENERAL FUND DEPARTMENTS. UH, RECOGNIZING HR DOES THAT WORK THROUGHOUT EVERYONE ELSE? UH, THE WHOLE AREA, UM, CIVIL SERVICE FROM THE DAWN OF TIME HAS ALWAYS JUST BEEN ONLY IN THE GENERAL FUND AND THEY'VE OPERATED COMPLETELY SEPARATELY. SO, UM, WHEN, UH, WE LOOKED AT THIS MERGER, WE DECIDED, YOU KNOW, EVERYTHING SHOULD BE IN THE EMPLOYEE BENEFITS FUND SINCE THOSE DOLLARS, UH, GET ALLOCATED OUT. AND SO THAT IS A SHORT-TERM IMPROVEMENT TO THE GENERAL FUND. UH, LONG-TERM THOUGH, UM, WE HAVE SOMETHING ELSE CALLED A COST ALLOCATION PLAN, UH, WHICH BASICALLY HAD TAKEN THE GENERAL FUND COST OF, UM, OF CERTAIN SUPPORT FUNCTIONS LIKE CIVIL SERVICE AND SPREAD, SPREAD THEM OUT. AND SO EVENTUALLY THIS WILL BALANCE OUT. UM, IT WON'T BE A, A, YOU KNOW, A STRUCTURAL SAVINGS. UH, BUT ALSO WE, WE KNOW WE'RE GONNA HAVE SOME POSITIONS THAT WE'RE GONNA HAVE TO LOOK AT AS WE MOVE THE TWO TOGETHER AND THEN LOOK AT, AT EITHER ENHANCEMENTS OR INCREASES, UH, OF POSITIONS THAT WE'VE BEEN TRYING TO TO WORK ON, BOTH HR AND UM, UM, [00:30:01] AND CIVIL SERVICE. SO PART OF THAT WILL BE LOOKED AT IN THE FY 26 BUDGET. OKAY. AND SO THE, THE COMMENT THAT YOU'RE MAKING, UH, NOW, UH, CITY MANAGER AROUND THE KIND OF, UM, DIVERSIFICATION OF THOSE COSTS OVER TIME, UM, IS THAT WHAT'S REFERRED TO IN THE, THE THIRD BULLET POINT WHERE IT SAYS, UH, GENERAL FUND COST TAPER OUT OF INDIRECT TO COST PLAN AT COLLECTIONS? IS THAT, IS THAT WHAT YOU MEAN BY THAT? YES, AND REBECCA CAN EXPLAIN THAT. UM, OKAY. MUCH BETTER THAN I CAN. UH, TOM COVERED IT PRETTY WELL. UH, THE 2.5 WILL BE ASSUMED IN FISCAL YEAR 26 AS AN IMPROVEMENT, BUT AGAIN, AS A RESULT OF THE COST ALLOCATION OR THE INDIRECT COST PLAN, UH, THOSE COSTS WILL BE ASSUMED IN OUTER YEARS, UH, TAKING INTO ACCOUNT HOW IT GETS SERVICED OUT TO OTHER DEPARTMENTS. SO IMPROVEMENT NOW, IT WILL TAPER OUT LATER IN OUTER YEARS. OKAY. UM, THAT WAS ALL MY QUESTIONS. THANK YOU. ALRIGHT, NEXT COUNCIL MEMBER INTU. THANK YOU. UM, STAYING ON THAT SAME PAGE, JUST AS A NEW COUNCIL MEMBER, I WANNA MAKE SURE, UM, I UNDERSTAND THE CONCEPT OF THE INDIRECT COST PLAN. SO IF YOU WOULD JUST KIND OF SHARE WITH ME WHAT THAT MEANS IN MY FIELD, IT MEANS SOMETHING DIFFERENT. SO I WANNA MAKE SURE THAT I SWITCH MY BRAIN AND MAKE SURE I'M WORKING FOR THE CITY ON THIS ONE. GOOD AFTERNOON, COUNCIL MEMBER. UM, THE INDIRECT COST PLAN, UH, THE CITY HAS A CITYWIDE PLAN, WHICH, UH, INCLUDES OR, UH, ACCOUNTS FOR ALL THE CENTRAL SERVICES COSTS. SO THESE ARE GENERAL FUND COSTS USED FOR FINANCIAL MANAGEMENT, CITY CLERK, UH, ALSO CIVIL SERVICE, UM, AND, UH, A FEW OTHERS. SO, UH, THIS PLAN IS CALCULATED BY AN EXTERNAL CONSULTANT EACH YEAR. AND FROM THAT PLAN, WE DERIVE OVERHEAD RATES AND THAT IS WHAT THE GENERAL FUND, UH, USES TO RECOUP THESE COSTS FROM OTHER NON, UH, GENERAL FUND DEPARTMENTS. GOT IT. THANK YOU SO MUCH. AND IF I CAN ADD A, AN EXPLANATION ON THAT, WE, THE REASON IT'S SO DIFFERENT AND IT'S GONE UP IS WE WENT THROUGH VERY PURPOSEFULLY A REVIEW OF HOW WE DO THAT METHODOLOGY, PARTICULARLY AS IT RELATES TO OUR HEALTH DEPARTMENT. SO, UH, WE'VE ALL HEARD FROM THIS COUNCIL, WE SHOULD BE LOOKING AT WAYS TO SUPPORT OUR HEALTH DEPARTMENT AND GET THEM THE FUNDS THAT THEY NEED IN ORDER TO CHARGE INDIRECT COSTS TO GRANTS. YOU NEED TO HAVE AN APPROVED, FEDERALLY APPROVED, UM, COST PLAN. AND, UH, THERE WERE SOME AREAS THAT WE HAD NOT PUT INTO THAT, UM, TO THAT COST PLAN ACCORDING TO THE WAY, UH, THAT THE FEDERAL GOVERNMENT WANTS IT. SO WE WENT THROUGH THAT WHOLE PROCESS. WE ARE ABLE TO RECOUP MORE OF THOSE COSTS NOW GOING FORWARD. UH, BUT IT ALSO, WHEN YOU HAVE A COST PLAN, YOU CAN'T HAVE ONE JUST FOR HEALTH AND ONE FOR A DIFFERENT DEPARTMENT. IT HAS TO BE CITYWIDE. AND SO WE'VE NOW APPLIED THIS CITYWIDE, UH, IT ALSO HITS THE HEALTH FUND ITSELF. AND SO WE'VE, UH, HAD TO DO A NUMBER OF DIFFERENT THINGS. WE'VE RECOGNIZED SOME REVENUE HERE. WE'VE ALSO HAD TO PUT MORE MONEY FROM THIS PLAN BACK INTO THE HEALTH FUND TO MAKE SURE THAT IT STAYS HEALTHY, UM, BECAUSE WE'VE HAD TO COLLECT, UH, ADDITIONAL COSTS FROM THE HEALTH FUND AS WELL. EXCELLENT. THANK YOU FOR THAT. AND GLAD TO HEAR THAT WE HAVE OUR, OUR, WE HAVE A COST PLAN NUMBER OR PERCENTAGE FOR, UM, FOR THE CITY. SO LET'S MOVE TO SLIDE, I THINK IT'S 23. I JUST WANTED TO GET A SENSE OF WHAT, UM, THE CIRCLE ON HERE THAT IS LEAST FAMILIAR TO ME IS THE PROPO PROPOSED OIL INTEREST LEGISLATION. WHAT DOES THAT REFER TO? YES. SO, UH, WE'VE TALKED A LOT ABOUT TITLES AND, AND, UH, THE CHANGING SITUATION AND THAT WE'RE LOSING A LOT OF THE, THE NORMAL WAYS THAT WE'VE FUNDED TITLES IN THE PAST. AND SO YOU'VE TASKED US TO REALLY COME UP WITH SOME STRATEGIES, UH, AND YOU SEE WHAT MOST OF 'EM ARE THERE. ONE OF THE ONES THAT WE'RE LOOKING AT IS THE STATE HAS, HAS REALLY CAUSED A LOT OF THESE ISSUES WHERE WE'VE LOST A LOT OF REVENUE. UH, ONE OF THE THINGS THAT WE HAVE BEEN VERY PROACTIVE AT DOING OVER THE YEARS IS SETTING ASIDE FUNDING TO, UM, ABANDON OUR OIL LIABILITIES AND ALSO TO PAY FOR WHAT'S CALLED SUBSIDENCE. UM, SO, UH, BACK IN THE DAY, LONG BEACH HAD A BIG SINKING, UH, BECAUSE WE WEREN'T PUTTING ENOUGH WATER IN WHEN WE TOOK OIL OUT. UH, WE'VE, UH, ARRESTED THAT AND SOLVED THAT. UH, BUT WE ALSO KNOW THAT IT, WHEN OIL GOES AWAY, WE'RE GONNA CONTINUE TO DO SUBSIDENCE. AND SO WE'RE PUTTING ASIDE A HUGE AMOUNT OF RESOURCES TO DO THAT PER STATE LAW. BUT WE'RE, UH, COMING UP WITH SOME INTERESTING IDEAS TO GO TO THE STATE AND SAYING, IF YOU'RE CAUSING SOME OF THESE ISSUES FINANCIALLY, CAN YOU HELP US, UH, GET THROUGH THIS TERM? AND SO ONE OF OUR IDEAS IS THAT THERE'S INTEREST ON THOSE DOLLARS THAT WE'RE SETTING ASIDE THAT RIGHT NOW JUST GO BACK INTO THE FUND. IS THERE A WAY TO PARTNER WITH THE STATE TO HAVE SOME OF THOSE DOLLARS HELP US WITH OUR OIL TRANSITION? AND SO THAT'S SOMETHING THAT WE'RE ACTIVELY PURSUING RIGHT NOW, UH, WITH UH, UM, SENATOR GONZALEZ AND UH, THE STATE AS WELL. EXCELLENT. THANK YOU. UM, SO MOVING ON, UM, THE NEXT SLIDE, UM, I THINK THAT ONE'S 24. YES. SO THE HEALTH DEPARTMENT, I JUST WANTED TO MAKE SURE I UNDERSTOOD THE CONCEPT OF THE HEALTH FUND. I SEE THE OTHER FUNDS, I'VE HEARD, YOU KNOW, FAMILIAR WITH THOSE. SO THE HEALTH DEPARTMENT HAS ITS OWN HEALTH FUND. TALK WITH ME ABOUT THAT. SURE. SO, UM, UH, FOR AS LONG [00:35:01] AS MOST OF US CAN REMEMBER, THE HEALTH FUND HAS ALMOST EXCLUSIVELY BEEN, UM, UH, UH, FUNDED WITH EITHER GRANT REVENUES OR DOLLARS FROM THE STATE. UH, I THINK WE'VE HAD OUR HEALTH FUND IN THE AREA. HISTORICALLY, ABOUT 98% HAS BEEN FUNDED OUT OF THOSE TYPES OF FUNDS. UH, WE GET, UM, FUNDS FROM THE STATE. WE, UH, FROM THE VEHICLE LICENSE FEE COME INTO THE STATE. WE GET GENERAL HEALTH FUNDS. IT'S KIND OF LIKE THE GENERAL FUND, BUT ONLY FOR HEALTH THAT COMES FROM THE STATE. IT IS NOT ENOUGH THOUGH TO KEEP UP WITH NORMAL EXPENSES. AND SO, UH, THEY HAVE USED THAT, THOSE DOLLARS, UH, TO GO OUT AND GET GRANT DOLLARS. AND SO ALL THOSE ARE CAPTURED WITHIN THE HEALTH FUND AND THEY'RE RESTRICTED. IN THE LAST SEVERAL YEARS, WE HAVE BEEN REALLY INCREASING OUR GENERAL FUND SUPPORT FOR THE HEALTH TO FUND. SO TO HELP THEM WITH THEIR ADMINISTRATION AS WE DEAL WITH THINGS LIKE OUR INDIRECT COST PLAN, WE'VE BEEN, UH, MAKING SURE THAT THE FUND DOESN'T GO NEGATIVE. UH, AND THEN, UH, ALSO A LOT OF THE HOMELESSNESS IMPROVEMENTS HAVE GONE INTO THIS FUND AS WELL. SO, UH, IT IS A RESTRICTED FUND. IT CAN'T BE USED FOR ANY OTHER PURPOSE EXCEPT FOR HEALTH RELATED PURPOSES. THANK YOU. AND THEN, UM, I'M REALLY HAPPY TO SEE, UH, THE, THE SLIDE, LET'S SEE, I BELIEVE THAT SLIDE, IT'S EITHER 28 OR 20, MAYBE IT'S 28. UM, REGARDING THE RACIAL EQUITY AND RECONCILIATION, UH, I'M WONDERING WILL WE GET ADDITIONAL INFORMATION REGARDING, UM, HOW THIS BUDGETARY TOOL IS BEING USED BY EACH OF THE DEPARTMENTS? IT'S ONLY ONE SLIDE DEDICATED TO THE MATTER. I WAS HOPING THAT WE'D HAVE A LITTLE MORE DETAIL. YES, THANK YOU FOR THE QUESTION. AND I DO WANNA CLARIFY THAT WHILE THIS SPECIFIC TOOL IN OUR INTERNAL REVIEW PROCESS IS NEW, WE HAVE ALWAYS APPLIED AN EQUITY LENS WHEN DECISION MAKING AND, UH, REVIEWING BUDGET PROPOSALS. BUT IT'S A NEW TOOL WITHIN OUR INTERNAL PROCESS TO REVIEW. UM, WE'LL BE ABLE TO SHARE INFORMATION IN THE PROPOSED BOOK WHEN WE, UH, GET PROPOSALS TOGETHER. BUT, UM, IT ALIGNS A LOT OF OUR EXISTING RACIAL EQUITY PLANS, OUR EXISTING DEPARTMENT PLANS TOGETHER TO MAKE SURE THAT OUR, UH, DECISION MAKING PROCESS IS EQUITABLE. AND ESSENTIALLY HOW IT'LL WORK IS WE WILL BE ASKING AND USING THE TOOLKIT TO ASK A LOT MORE QUESTIONS WHEN WE GET BUDGET PROPOSALS. SO, UH, FOR ANYTHING THAT'S A NEW CHANGE OF SERVICE OR YOU KNOW, A, A SIGNIFICANT CHANGE TO A PROGRAM, WE'LL BE ASKING WHO SERVED BY THIS PROGRAM, WHO HAVE WE OUTREACHED TO? WHO'S AT THE TABLE? WHO ARE WE NOT? YOU KNOW, WHO ARE WE MISSING POTENTIALLY, UH, WHAT ARE SOME WAYS TO INCREASE SERVICE LEVELS TO, UM, TO, UH, BOTH PEOPLE WHO, UM, UH, TRADITIONALLY HAVE NOT BEEN AT THE TABLE, BUT ALSO JUST IN GENERAL. 'CAUSE SOME OF OUR SERVICES ARE VERY SPECIFIC AND SOME OF THEM ARE, ARE GENERAL TO ALL OF OUR POPULATION. AND SO IT'S A, A TOOL TO BE ABLE TO ASK THOSE QUESTIONS AND TO BE ABLE TO MAKE SOME PROGRAM TWEAKS THROUGH THE BUDGET IF WE SEE THINGS THAT COME UP THAT, UH, THAT NEED TO BE ADDRESSED. OKAY. VERY PLEASED TO SEE THAT. AND THEN MY FINAL COMMENT IS JUST A COMMENT, I'M NOT SURE WHO IT SHOULD BE DIRECTED TO. MAYOR, I'LL LET YOU HELP ME WITH THAT. UM, SO THIS IS REGARDING THE FACT THAT SEVERAL OF THE OPPORTUNITIES THAT WE HAVE HAD AS A CITY IN ORDER TO, UM, PLUG WHAT WOULD BE, YOU KNOW, OUR DEFICIT OR THE, THE SHORTFALL WE'VE USED ONE-TIME FUNDS, UM, TO THE EXTENT THAT WE HAVE IDENTIFIED ONE-TIME FUNDS, UM, I WOULD LIKE TO JUST HAVE MORE OF A CONVERSATION ABOUT HOW WE INVEST, UM, SOME OF THOSE IN SUCH A WAY TO CREATE LEVELS OF EVERGREEN FOR SOME OF OUR PRIORITY ACTIVITIES. SO THAT REALLY IS JUST A COMMENT. THANK YOU. ALRIGHT, NEXT IS COUNCIL MEMBER DUGGAN. ALL RIGHT, THANKS FOR THE, UH, PRESENTATION. I HAVE A QUESTION ABOUT THE TIDELANDS FUND. UM, TIDELANDS FUND TRANSFERS 20 MILLION EACH YEAR TO FIRE 12 MILLION TO POLICE. ARE WE ACCOUNTING FOR THE DECREASED TRANSFERS TO THE GENERAL FUND IN OUR FORECAST? THANK YOU COUNCIL MEMBER. SO IN OUR FORECAST, IN OUR GENERAL FUND FORECAST, WE ARE ACCOUNTING FOR THE, UH, REDUCE OIL SUPPORT, UH, YEAR OVER YEAR TILL, UH, AT ZERO TILL FISCAL YEAR 30. SO IS EACH YEAR UNTIL 30, ARE WE TAKING A PERCENTAGE? WHAT, YOU KNOW, THAT'S $32 MILLION THAT WE'RE TRANSFERRING TO THE GENERAL FUND. THAT'S A LOT. IT'S NOT A TRANSFER TO THE GENERAL FUND. SO IT IS COST FOR SERVICES THAT THEY'RE INCURRING IN THE TIDELANDS. AND SO RIGHT NOW WE ARE, WE HAVE A LARGE FUND BALANCE IN TIDELANDS. UM, IT IS PROJECTED TO GO DOWN THIS YEAR AND GO DOWN NEXT YEAR, STARTING IN ABOUT FY 27 IS WHEN WE'RE GONNA HAVE TO START LOOKING AT SOME STRUCTURAL REDUCTIONS. RIGHT NOW WE'RE FOCUSED ON, ON REVENUE. IF WE CAN GET MORE REVENUE, WE WON'T HAVE TO DO REDUCTIONS. BUT IN 27 IS WHEN THAT FUND STARTS TO GO, UH, YOU KNOW, IN THE END OF 26, BEGINNING OF 27 GOES, GOES DOWN. UH, THEN WE'D NEED TO LOOK JUST LIKE WE WOULD IN THE GENERAL FUND AT SERVICE REDUCTIONS, DO WE NEED TO LOOK AT REDUCING POLICE OR FIRE OR LIFEGUARDS, UM, IN THAT ARE FUNDED BY TIDELANDS THAT, UM, THAT WOULD BE LIKE A SERVICE REDUCTION OR ANY OTHER TYPES OF SERVICES THAT ARE IN THE TIDELANDS OR DO WE LOOK AT OTHER REVENUE [00:40:01] STRATEGIES OR, OR WAYS TO MAKE THAT UP SO IT'S NOT AN ACTUAL TRANSFER. I MEAN, THAT'S A LINE ITEM OF 20 MILLION TO PD OR 20 MILLION TO FIRE AND 12 TO PD? YEAH, IT GOES TO THE DEPARTMENT. SO IT FUNDS THE DEPARTMENT, BUT IT IS NOT LIKE A TRANSFER TO THE GENERAL FUND TO MAKE UP FOR THEIR SERVICES. THEY, THEY IDENTIFY WHAT SERVICES THEY'RE PROVIDING IN THE TITLES AND THEY CHARGE TO TITLES AND THEN THEY GET THE BUDGET FOR THAT. OKAY. UH, MY NEXT QUESTION HAS TO DO WITH HOW WE BASE OUR, UM, WE FORECAST AT $55 PER BARREL FOR OIL FOR STRUCTURAL EXPENSES. SO ANYTHING OVER $55 A BARREL IS SET ASIDE FOR CAPITAL PROJECTS. CAN YOU TALK ABOUT, I I HEARD THAT YES, ONE TIME FUNDS ANYTHING OVER $55 A BARREL, JUST SO EVERYONE IS CLEAR, GETS USED AS ONE-TIME FUNDS FOR CAPITAL PROJECTS. CORRECT? UH, NOT JUST CAPITAL PROJECTS, IT'S ANY ONE-TIME EXPENSE, BUT NOT A STRUCTURAL EXPENSE, BUT MOSTLY IT GOES TO CAPITAL. SO ONCE WE DO NOT HAVE, UH, OIL REVENUE, CAN YOU TALK ABOUT THE, DO WE HAVE A LONG-TERM PLAN FOR CAPITAL PROJECTS THAT ARE IN THE TIDELANDS AREA BECAUSE THEY'RE EXPANSIVE AND THAT THAT IS GOING TO TAP INTO OUR CAPITAL PROJECT? YEAH, SO, UM, WHILE WE DO BELIEVE THAT, UM, THAT OIL REVENUES WILL BE NOT AT THE SAME LEVEL THAT WE'VE SEEN, WE'RE ACTUALLY, WE DO BELIEVE THAT O UH, DOLLARS ARE GONNA COME IN FOR OIL. WE HAVE LONG TERM CONTRACTS FOR OIL PRODUCTION, UM, EVEN IF WE'RE NOT DOING ANY ADDITIONAL DRILLING, UM, THAT THOSE OPERATIONS ARE EXPECTED TO CONTINUE. UH, SO THAT IS ONE SOURCE THAT WOULD CONTINUE TO COME IN AND WE'RE LOOKING TO USE MORE OF THAT FOR ONE TIMES RATHER THAN, UM, RATHER THAN, UM, OPERATING, UH, THE PORT TRANSFER IS STILL FAIRLY HEALTHY. THAT ALSO HELPS FUND A, A GOOD PORTION OF THE ACTIVITY IN TIDELANDS. AND THAT'S PART OF ALSO WHY WE'RE LOOKING AT THINGS LIKE ENTERTAINMENT AND STRATEGIES AND, AND AMPHITHEATERS AND CONVENTION CENTERS TO BE ABLE TO GROW SOME OF THAT AS WELL AS OUR REAL ESTATE ASSETS. SO WE HAVE A LOT OF REAL ESTATE IN LONG, IN IN LONG BEACH, UM, ALONG THE, THE COAST THAT WE'RE ABLE, AS WE RENEGOTIATE THOSE DEALS TO BE ABLE TO GENERATE DOLLARS FOR, FOR TIDELANDS AS WELL AS FEES AND, AND, AND THOSE TYPES OF THINGS. UH, YOU KNOW, WE ARE NEARING KIND OF THE END OF OUR CURRENT, UM, YOU KNOW, PRIORITIES WITH, UM, WITH THE CAPITAL PROJECTS. WE'VE BEEN ON A FIVE OR SO YEAR CAPITAL PLAN. UH, BUT OBVIOUSLY WE STILL HAVE A NUMBER OF BIG REQUIREMENTS. WE, UH, NEED TO DO MORE ON OUR NAPL SEA WALLS. UH, WE NEED TO DO MORE ON OUR, UH, BELMONT PIER. UH, WE'RE GONNA NEED TO DO MORE, UM, ON THE QUEEN MARY, ALTHOUGH THAT'S IN THE QUEEN MARY FUND. UM, AND SO, UM, THERE ARE DEFINITELY SOME, UH, SOME LARGER PROJECTS OUT THERE THAT ARE GONNA HAVE TO BE, UH, LOOKED AT OVER THE NEXT SEVERAL YEARS. ALRIGHT, THANK YOU VERY MUCH. THANK YOU. NEXT IS COUNCIL MEMBER SORROW. THANK YOU MAYOR. UM, THANK YOU MY COLLEAGUES FOR THEIR QUESTIONS. UM, AND I ALSO JUST WANNA THANK STAFF FOR THE PRESENTATION AND THAT WE'RE HAVING THESE, UM, PRELIMINARY, UM, PROJECTION CONVERSATION NOW. YOU KNOW, ONE, ONE QUESTION I HAVE IS AROUND THE POTENTIAL IMPACT OF FEDERAL POLICY. I KNOW THAT THERE ARE A LOT OF UNCERTAINTY RIGHT NOW, UM, AND THAT STAFF IS MONITORING IT CLOSELY BASED ON, UM, FUNDING THEY RECEIVE, UH, FOR THEIR PROGRAMS. SO I'M JUST WONDERING IF THERE ARE SEVERAL SCENARIOS, UM, THAT IS BEING PROJECTED RIGHT NOW AND HOW WE WOULD ADDRESS IT IF THERE ARE IMPACTS FROM FEDERAL, UM, PROGRAMMING THAT'S GONNA STOP. YEAH, SO RIGHT NOW, BECAUSE EVERYTHING IS IN FLUX, UM, UH, IT IS DIFFICULT FOR US TO PROJECT AND, AND TO REALLY TAKE THE, THAT ACTION, UH, TO ADDRESS IT. UM, SO THE CURRENT PROJECTIONS THAT YOU'VE SEEN IN FRONT OF YOU, ASSUME THAT THINGS PRETTY MUCH STAY STATUS QUO. OF COURSE, WE ALWAYS HAVE GRANTS THAT EITHER COME OR GO. UM, THOSE, THOSE ARE ONES THAT ARE NORMALLY TIED TO A PROJECT AND NOT TO OPERATIONS, BUT WE DO HAVE A LOT, UM, YOU KNOW, THAT ARE TIED TO OPERATIONS, UH, THAT WE'RE COUNTING ON. UH, AND IF THOSE GO AWAY THAT THAT'LL HAVE TO BE A DECISION WITH THE COUNCIL. DO WE THEN WANNA SUPPLANT, UH, WITH GENERAL FUND OR ARE WE GONNA STOP DOING THAT SERVICE? UH, AN EXAMPLE IS IF WE DIDN'T GET ANY DOLLARS ANYMORE TO HOUSE PEOPLE THROUGH OUR HOUSING CHOICE VOUCHERS, THAT'S $80 MILLION THAT WE'RE CURRENT THAT WE, YOU KNOW, GET EVERY SINGLE YEAR. DO WE HAVE MAKE A DECISION TO SUPPLANT THAT? THAT WOULD BE REALLY IMPACTFUL BECAUSE THAT IS MORE MONEY THAN WE PUT INTO MOST DEPARTMENTS. UM, SO, UH, WE'LL HAVE TO TAKE THIS KIND OF ONE BY ONE STEP BY STEP. A LOT OF THE, UH, THE EFFORTS TO, TO DEFUND A LOT OF THE FEDERAL GRANTS ARE CURRENTLY ON HOLD BECAUSE OF THE, OF THE LITIGATION THAT THE NUMBER OF STATES HAVE APPLIED FOR. BUT THAT IS ONE THING WE WANNA DISCLOSE HERE IS THIS DOESN'T AS ASSUME THAT OR IT ASSUMES THAT THINGS CONTINUE, UH, TO BE FUNDED BY THE FEDERAL GOVERNMENT AT CURRENT LEVELS. UH, AND YES, AND THAT IS ADDRESSES [00:45:01] THAT, THE STRATEGY THAT WOULD CHANGE. BUT I ALSO JUST WANNA MAKE SURE THAT WE ARE REGULARLY, I KNOW THAT AS WE GET NEWS, IT'S SHARED WITH US, BUT I ALSO WANNA MAKE SURE WE HAVE SOME CONTROL OVER HOW WE MANAGE THE NEWS. SO I DON'T KNOW IF IT'S GONNA BE A REGULAR PROCESS OF UPDATES SO THAT, UM, IT'S NOT JUST, YOU KNOW, MEMOS THAT COME OUT BASED ON WHEN NEWS COME OUT. SO I WOULD APPRECIATE KIND OF A OVERVIEW OF FEDERAL DOLLARS THAT COULD POTENTIALLY BE IMPACTED, UM, JUST SO THAT WE GET, WE DON'T HAVE THAT STICKER SHOCK WHEN ALL OF A SUDDEN FUNDING JUST STOPS BECAUSE OF A DECISION THAT WAS MADE. YEAH, GOOD POINT. SO WE, WE DID THAT, UH, EXERCISE ABOUT A MONTH AGO WHERE WE ASKED ALL DEPARTMENTS WHAT WERE THE AREAS WE PUT THAT TOGETHER, UH, WE'RE GONNA BE WORKING TO CREATE SOME MORE FACT SHEETS AND SOME, YOU KNOW, SOME INFORMATIONAL MATERIAL TO SAY, DID YOU KNOW THIS IS WHERE YOUR FEDERAL DOLLARS GO? I THINK PEOPLE, FOR EXAMPLE, DON'T REALIZE THAT WE HAVE FEDERAL DOLLARS IN OUR POLICE DEPARTMENT, WE HAVE FEDERAL DOLLARS IN OUR FIRE DEPARTMENT, ESPECIALLY IN OUR HEALTH DEPARTMENT. YEAH, A LOT OF THE ROAD PROJECTS AND INFRASTRUCTURE PROJECTS THAT WE RELY ON, THOSE ARE FUNDED WITH FEDERAL DOLLARS. AND SO THESE ARE THINGS THAT, YOU KNOW, SEEM ETHEREAL THAT YOU KNOW, ARE HAPPENING IN, IN UH, WASHINGTON DC, UM, BUT THEY REALLY DO IMPACT PEOPLE RIGHT HERE, UH, AT HOME. AND THAT'S SUPER IMPORTANT. IF I, I JUST WANNA REITERATE, RIGHT, IT'S JUST NOT FOR US AS COUNCIL, BUT THE PUBLIC TO KNOW, UH, THAT THAT INFORMATION IS VERY IMPORTANT, UM, BECAUSE IT IS HARD TO EVEN UNDERSTAND, JUST GRASP WHERE OUR FUNDING COME FROM. YOU KNOW, AS WE SHARED TALK ABOUT THAILANDS, WE TALK ABOUT, YOU KNOW, OTHER REVENUES WE GENERATE. SO I JUST WANNA MAKE SURE THAT WE'RE PREPARING THE NEWS GRADUALLY TO THE PUBLIC IN CASE THAT DOES HAPPEN, RATHER THAN SAYING, WELL, WHEN IT COMES UP THEN WE'LL LET PEOPLE KNOW. SO THANK YOU VERY MUCH. ALRIGHT, THANK YOU. COUNCIL MEMBER KERR. YES. UM, THANK YOU TO THE TEAM FOR THE PRESENTATION. AND I'M ACTUALLY GONNA FOLLOW ALONG WITH COUNCILMAN SORO. 'CAUSE THAT WAS MY PRIMARY QUESTION. THANK YOU TO MY COLLEAGUES, UH, FOR DIGGING INTO SOME OF THE OTHER DETAILS FOR US. UM, I DON'T KNOW IF IT'S MY HISTORY ON THE SCHOOL BOARD WHERE THE BUDGET IS THE BUDGET AND WE DON'T GET TO HOPE FOR MORE REVENUE IN THE YEAR, AND WE, WE, WE SPEND WHAT WE HAVE. I'M NOT AS OPTIMISTIC ABOUT THE FEDERAL POLICY PIECE. UM, SO TO REITERATE, UH, WHAT COUNCILMAN SORROW STARTED TO TOUCH ON, WHICH IS I'M UNCOMFORTABLE WITH THE TERM WE WILL, THAT SUCH LOSS IN FEDERAL FUNDING WILL REQUIRE A CHANGE IN STRATEGY. THAT SOUNDS HUGE. LIKE, OH, THAT SOUNDS LIKE A MAJOR SHIFT. UM, I KNOW WE HAVE, UM, A COUNCIL, UH, RETREAT COMING UP TO TALK ABOUT PRIORITIZATION WORK, BUT WITH THE MEMO THAT WAS PUT OUT ABOUT WHERE OUR FEDERAL FUNDS ARE, WHERE POTENTIALLY WE COULD LOSE THEM, BE IT, UM, HOUSING, FIRE PD, UM, I THINK IT'S ESSENTIAL THAT WE HAVE CONVERSATIONS, UM, IN THE PUBLIC SPACE ABOUT HOW WE WILL PRIORITIZE CHANGES OF CAN WE ABSORB THAT OR NOT? IS IT SOMETHING THAT EVEN IF WE COULD, IS IT ON THE LIST OF THINGS THAT IF WE LOST EVERYTHING, WE'VE ALREADY IDENTIFIED THE TOP 10 THINGS WE WANT TO TRY AND BACKFILL WITH OUR OWN DOLLARS. SO, UM, I WISH I WAS MORE CONFIDENT THAT THAT THINGS WILL REMAIN STABLE. UM, I'M NOT IN ANY WAY, SHAPE OR FORM, UH, SURE THAT THAT IS TRUE. SO I DON'T KNOW WHAT THE PROCESS WOULD BE THROUGH THE BUDGET OFFICE AND THROUGH THIS BUDGET TIME TO MAKE SURE WE ARE STARTING TO IDENTIFY WHERE SHIFTS WOULD COME, UM, AND WHAT WE WOULD PRIORITIZE IN THE CATASTROPHIC CASE OF LOSING ALL OF OUR FEDERAL GRANT MONEY, BOTH FOR PROJECT BASED AND PROGRAM BASED. SO, UM, CAN WE TALK ABOUT WHAT WE CAN ANTICIPATE DOING, UM, AS A BODY AND IN PUBLIC TO REALLY ALIGN OUR VALUES AND OUR PRIORITIES WITH POTENTIAL FEDERAL CUTS? YEAH, SURE. UM, SO ONE, UH, WE DO DO CONTINGENCY PLANNING AND WE DO THINK ABOUT LIKE, YOU KNOW, SOME OF THE SCENARIOS, WHAT WOULD HAPPEN IN THIS CASE. UM, YOU KNOW, UH, GIVEN HOW MANY THINGS ARE BEING DISCUSSED, IT'S HARD TO REALLY FOCUS ON WHAT IS GOING TO HAPPEN AND WHEN IT'S GONNA HAPPEN. UH, BUT WE DO THINK ABOUT THAT. UH, UNFORTUNATELY WE HAVE HAD SOME EXPERIENCE WITH THIS TYPE OF THING HAPPENING. IT USED TO HAPPEN AT THE STATE LEVEL ALL THE TIME WHERE THE COUNTS WOULD PASS A BUDGET AND THE STATE WOULD COME IN AND SAY, NEVERMIND, WE'RE TAKING $40 MILLION FROM YOU TOMORROW. AND WE REACT. UM, THAT'S WHAT WE DO. SO, UH, WE NORMALLY IN THOSE CASES, UH, WE UM, WE USE SOME RESERVES TO GET THROUGH THE FIRST 1, 2, 3 MONTHS, UH, YOU KNOW, SO THAT WE CONTINUE OPERATIONS WHILE WE PLAN AND THEN WE MAKE THE REDUCTIONS THAT ARE NEEDED. AND, AND WE'VE HAD THAT EXPERIENCE HAPPEN, UNFORTUNATELY SEVERAL TIMES. WE HAD TO DO THAT THROUGH REDEVELOPMENT. WE LOST A HUGE AMOUNT OF SUPPORT AND REDEVELOPMENT. WE REACTED, WE, UH, WE FIGURED OUT WHAT WE WANTED TO KEEP AND WHAT WE NEEDED TO DO AWAY WITH AND THEN, AND THEN CONTINUE. SO, UM, UH, I DO FEEL THAT IF WE COME TO THAT DECISION POINT WHERE THE LITIGATION ISN'T SUCCESSFUL AND WE SAY THESE ARE THE THINGS THAT ARE [00:50:01] IMPACTED, WE WILL PRESENT YOU A PLAN ON WHAT THAT LOOKS LIKE. IF WE WANNA SPEND SOME TIME DURING OUR RETREAT TO TALK ABOUT, YOU KNOW, JUST GETTING AHEAD OF THE BALL. IF THE COUNCIL WANTS TO SAY, THESE ARE THE AREAS THAT IF IT GOES AWAY, WE THINK WE'LL HAVE THE MOST IMPACT ON OUR RESIDENTS, HAPPY TO HAVE THAT DISCUSSION. WE CAN DO SOME KIND OF PRE-GAME, YOU KNOW, PLANNING ON WHAT THAT MIGHT BE. THANK YOU. UM, I APPRECIATE THAT. AND I THINK OVER THE COURSE OF THE LAST FIVE YEARS, ONE-TIME DOLLARS RECOVERY ACT DOLLARS, COVID DOLLARS, UM, MUNICIPALITIES, SCHOOL DISTRICTS, EVERYONE GOT USED TO HAVING EXTRA ONE-TIME FUNDING. AND AS YOU SAY, I APPRECIATED THAT WE PUT ONE-TIME FUNDING ON ONE TIME NEED SO THAT WE'RE NOT, UM, USING OUR EVERYDAY, UH, RECURRING EXPENSES BEING PAID WITH ONE TIME. WE'VE LIVED IN THAT WORLD OF HAVING THOSE ONE TIME DOLLARS FOR ALMOST FIVE YEARS NOW FOR FIVE YEARS, AND THE PLAN WAS, UM, IN SCHOOL DISTRICTS, IT HAD TO BE SPENT BY 2024 CITIES. UVA WILL STRETCH IT OUT A LITTLE FARTHER, I THINK, IN THE THOUGHT PROCESS OF THE POPULATION. FOLKS OUT THERE LISTENING, THEY'RE JUST USED TO THE IDEA OF ONE-TIME DOLLARS. COULD YOU SPEAK A LITTLE BIT ABOUT THE RARITY OF, AND THE AMOUNT OF DOLLARS THAT CAME THROUGH THE BIDEN ADMINISTRATION TO CITIES AND MUNICIPALITIES FOR THAT ONE-TIME USE AND THAT IT TALK ABOUT HOW IT'S NOT THE NORM? YEAH, BECAUSE I THINK IT HAS JUST BECOME PART OF OUR VERNACULAR OVER THE LAST SEVERAL YEARS, AND PEOPLE, EVEN RESIDENTS WILL SAY, WE'LL, JUST USE ONE TIME MONEY FOR THAT. NOT REALLY UNDERSTANDING. SO IF YOU COULD JUST TALK A LITTLE BIT ABOUT THAT, PLEASE. NO, I THINK THAT'S AN EXCELLENT POINT AND I REALLY DO APPRECIATE THE COUNCIL RECOGNIZING THE, THE BENEFITS OF HAVING THOSE ONE-TIME DOLLARS, BUT ALSO THE, THE DANGER OF WHEN YOU GET INTO THAT, UM, THAT FEELING OF LIKE, WELL, LET'S JUST, YOU KNOW, PUSH IT DOWN ANOTHER YEAR. SO ARE YOUR FISCAL POLICIES ARE VERY STRONG. WE'VE HAD A LONG HISTORY AS A CITY CUTTING WHEN WE NEEDED TO CUT, WHEN THERE'S NO HOPE, WHEN YOU KNOW THAT YOU HAVE TO MAKE THOSE, UH, REDUCTIONS. WE'VE MADE THOSE REDUCTIONS OVER THE YEARS AND UNFORTUNATELY THAT NORMALLY RESULTS IN SOME PRETTY HEAVY SERVICE REDUCTIONS, WHICH WE ALL WANNA AVOID. UH, WHAT'S BEEN VERY INTERESTING IN THE PAST FIVE YEARS IS WE GOT MORE, UH, RESOURCES FROM THE ADMINISTRATION, FROM THE BIDEN ADMINISTRATION AT THE TIME, UH, THROUGH COVID THAN WE HAD EVER SEEN BEFORE. UM, IT WAS, UH, ALL TOTAL, IT ENDED UP WITH DIFFERENT FUNDS, ABOUT 296 MILLION, I BELIEVE WAS THE NUMBER. UM, BUT UH, THE ACTUAL AMOUNT THAT WENT JUST INTO THE GENERAL FUND THAT COULD BE USED FOR ANY PURPOSE WAS ABOUT 135 MILLION. A LOT OF CITIES TOOK THOSE DOLLARS AND JUST PLUGGED BUDGET HOLES AS AND, AND DIDN'T MAKE ANY TYPE OF, OF STRATEGY IN ORDER WHAT TO DO WITH THAT. WE WERE DIFFERENT. UH, WE PUT A LOT OF THAT INTO OUR BUSINESSES. UM, WE PUT A LOT OF THAT INTO OUR RESIDENTS TO HELP FUEL OUR RECOVERY SO THAT WE WOULD COME OUT OF IT. UM, UH, FOR EXAMPLE, TOURISM WAS A HUGE SECTOR FOR US THAT HAD A MASSIVE IMPACT. WE PUT MONEY IN, INTO TOURISM, WE MADE SURE THAT WE WERE, UH, PROTECTED. WE GOT OUR HOTELS AND OUR CONVENTIONS BACK UP AND RUNNING AGAIN, AND NOW OUR TOT IS HIGHER THAN WHAT IT WAS BEFORE. AND SO WE WERE VERY PURPOSEFUL IN, IN HOW WE DO THOSE DOLLARS. SAME THING WITH OUR BUSINESSES. WE DID A LOT OF GRANTS TO TRY TO KEEP BUSINESSES HERE, UM, THROUGH THOSE TOUGH TIMES SO THAT THEY COULD COME THROUGH AND, AND HELP, UH, CONTRIBUTE TO SALES TAX. AND SO, UH, BUT YES, WHERE I, AS YOUR MANAGER, I DO GET A LITTLE WORRIED WHEN WE UM, SAY, OKAY, WE'RE GONNA DO THIS, AGAIN, WITH ONE TIME DOLLARS, BUT WE LOOK AT THAT EVERY YEAR. RIGHT NOW. WE JUST WENT TO VOTERS AND WE ASKED FOR THEIR SUPPORT, UM, TO DO MEASURE LB AND, UH, AND THEY ALSO SUPPORTED MEASURE A AT THE COUNTY LEVEL, WHICH HAS SOME IMPACTS ON OUR LOCAL WEB MARE. AND SO THERE IS, THERE IS GOOD HOPE ON THE HORIZON AND WE'RE INVESTING IN, IN, IN REVENUES AND OTHER THINGS. SO I DON'T THINK RIGHT NOW, YOU KNOW, UH, I WOULD RECOMMEND MAKING THOSE CUTS BECAUSE WE DO HOPE IN A YEAR OR MAYBE TWO THINGS ARE GONNA LOOK DIFFERENT. IF THINGS CHANGE, IF WE HAVE A MAJOR RECESSION, IF WE, IF WE SEE A HUGE DROP IN REVENUE, THAT'S WHERE WE DO HAVE TO COME BACK AND SAY, WE NEED TO LOOK AT A DIFFERENT STRATEGY AS, AS UNPLEASANT AS THAT IS. THANK YOU. I APPRECIATE THE REMINDERS. ALL RIGHT. WELL, I WANNA THANK THE CITY COUNCIL FOR, UH, VERY, VERY THOUGHTFUL QUESTIONS. UH, JUST, JUST A FEW POINTS, UH, ON THE ISSUE ON TIGHTS. UH, THERE WILL BE A, A GO NO GO POINT ON, ON TIGHTS. UH, WHEN IT DOES BECOME, UH, A REAL LIABILITY TO GENERAL FUND, THAT'S NOT TODAY, THAT'S IN THE NEXT FEW, NEXT FEW YEARS, BUT THE INVESTMENTS IN THE STRATEGIES WE'RE DEPLOYING TODAY, WE NEED TO SUPPORT 'EM AND THEY NEED TO WORK. SO THE OIL, UH, THERE WAS A REFERENCE TO THE OIL INTEREST LEGISLATION THAT IS NOT A SLAM DUNK. UM, IT WAS, UH, WE MET WITH THE GOVERNOR TWO YEARS AGO, TALKED ABOUT THE IMPACTS WE WERE PLANNING FOR A 2035 TRANSITION. UH, THAT TRANSITION WAS ACCELERATED TO 2029 WITH SB 1137. UH, A PLAN TO GROW REVENUE IN ENTERTAINMENT OR WHATEVER CANNOT MATERIALIZE IN FOUR YEARS. THAT, THAT YOU NEED TIME FOR THOSE TO DEVELOP AND MATURE. AND IF WE SEE THE IMPACTS IN 2029, WE ARE GONNA NEED SOME HELP SMOOTHING OUT THOSE IMPACTS BECAUSE IT WAS BROUGHT DIRECTLY ON BY LEGISLATION SB 1137, UH, THAT WAS CHAMPIONED BY THE GOVERNOR AND OUR LOCAL SENATOR. AND SO THEY ASKED US FOR A PLAN. WE PUT FORWARD A PLAN. WE WORKED WITH, [00:55:01] UM, LABOR AND ENVIRONMENTAL GROUPS AND INDUSTRY AND DEVELOPED A PLAN. THE FIRST PHASE OF THE PLAN WAS ADOPTED THROUGH THE LEGISLATURE LAST YEAR, WHICH WAS TO INCREASE THE AMOUNT THAT GOES INTO AN ABANDONMENT FUND. 'CAUSE THERE'S ABOUT A BILLION DOLLARS IN LIABILITY, BUT THERE'S ONLY ABOUT $300 MILLION IN THAT FUND. THIS WAS A FUND THAT WAS CREATED BY LONG BEACH YEARS AGO, NOT PROMPTED BY THE STATE. UM, BUT IN THE EARLY TWO THOUSANDS, THE STATE SWEPT ALL THOSE FUNDS AND THEY MANAGE THAT NOW, UM, UNDER A VERY DIFFERENT GOVERNOR BACK THEN, ARNOLD SCHWARZENEGGER. AND, UH, THEY SWEPT, UH, THOSE FUNDS, THE STATE, THEY'RE MANAGING THEM. WE WERE INITIALLY, THE STATE BASED ON THE REVENUE GENERATED FROM THE OIL ISLANDS, WAS PUTTING ABOUT $2 MILLION A MONTH INTO THAT FUND. THAT'S 24 MILLION A YEAR TO GET TO A BILLION DOLLARS. THAT'S A LONG TIME. SO THE FIRST PIECE OF LEGISLATION WAS TO INCREASE FROM 2 MILLION TO 5 MILLION A MONTH. SO THE PROJECTION IS NO LONGER 24 MILLION. IT'S NOW 60 MILLION THAT GOES INTO THAT FUND IS MUCH BETTER. STILL COULD DO MORE, BUT MUCH BETTER. AND THEN THE INTEREST FROM THAT FUND, IT SPINS OFF 12 MILLION OR SO A YEAR. THAT ALSO GOES INTO THE FUND. THAT WAS PHASE ONE. THAT WAS, THAT WAS PASSED BY THE LEGISLATURE. THE NEXT PHASE NOW IS SINCE YOUR NET WENT FROM 24 MILLION PLUS 14, INTEREST FROM 40 MILLION UP TO ABOUT 80 MILLION, TAKE SOME OF THAT INTEREST AND REDEFINE ITS USE TO BE ABLE TO SMOOTH OUT SOME OF, OF THE IMPACTS OVER THIS NEXT DECADE CAUSED BY 1137. SO THAT'S THE SECOND PIECE THAT LEGISLATION, UH, THAT WE NEED THAT LEGISLATION IN THE NEXT YEAR OR TWO TO, TO HAPPEN THAT WILL HELP SMOOTH OUT THE IMPACTS IN TITANS, BUT IT IS NOT A SLAM DUNK. UM, SO WE ARE, WE ARE ADVOCATING, WE ARE GONNA ESCALATE OUR ADVOCACY. UM, BUT, BUT, UM, AND THERE MAY BE A ROLE FOR OUR STATE LEGISLATIVE COMMITTEES TO, TO ENGAGE IN, BUT THAT IS NOT A SLAM DUNK. UH, SOME OF THE OTHER PIECES, UM, THAT TAKE SOME TIME TO MATURE, BUT THEY SHOW PROMISE ARE GROW LONG BEACH INVESTMENTS AND TO ENTERTAINMENT. THE PROJECTIONS SHOW THAT THIS, THIS IS A SUSTAINABLE REVENUE SOURCE AND FRANKLY, WE'VE BENEFITED, WE'VE USED THE BENEFITS OF OUR ORAL REVENUE TO INVEST IN THINGS LIKE THE QUEEN MARY AND OUR INFRASTRUCTURE. AND WE STILL HAVE MORE CAPACITY TO TAP INTO THE REGIONAL ENTERTAINMENT ECONOMY. THE INVESTMENTS THAT THE CITY COUNCIL MADE THIS PAST YEAR INTO BOTH THE RISE TEAM AND THE SIGNATURE PROJECTS TEAM IN COMMUNITY DEVELOPMENT TOGETHER. THE RISE TEAM'S LOOKING AT OUR ASSETS, HOW CAN THEY GENERATE MORE REVENUE, THE ARENA, UM, EVEN, YOU KNOW, THINGS LIKE THE AQUARIUM AND THE QUEEN MARY, BUT THE SIGNATURE PROJECTS TEAM IS JUST AS IMPORTANT BECAUSE THEY'RE THINKING ABOUT HOW TO LOOK AT THE DEVELOPMENT OPPORTUNITIES THAT COMPLETELY TRANSFORM THE ECONOMIC PICTURE. THERE ARE SOME DEVELOPMENTS LIKE AROUND SHORELINE DRIVE AND, AND THE, THE CONVENTION CENTER AND, AND, UM, UH, ALAMITOS, UH, BAY AND SOME OF THESE AREAS COULD BE A GAME CHANGER. WHAT WE NEED TO PLAN THOSE AREAS OUT AND PRIORITIZE IT IF WE'RE GONNA SEE THOSE AND BE, YOU KNOW, COME TO FRUITION IN THE NEXT DECADE. SO WE HAVE TO PUT JUST AS MUCH FOCUS ON THOSE STRATEGIES, THE LONG-TERM PLANNING. UH, THE LAST THING I WANNA TALK ABOUT IS THE ONE TIMES. SO, THE ONE TIMES AND HOW WE USE UPLANDS AND PECKING IT AT $55 A BARREL. GIVEN THAT I, I STARTED COMING TO VIRTUALLY EVERY COUNCIL MEETING SINCE 2010. WE'VE SEEN A LOT OF ATTEMPTS TO USE ONETIME FUNDS ON STRUCTURAL FOR STRUCTURAL THINGS. AND WE'VE STUCK TO OUR FISCAL POLICY PRETTY, PRETTY WELL THAT WE, WE DON'T USE ONETIME DOLLARS ON STRUCTURAL USES BECAUSE, UM, ONETIME DOLLARS ARE, WE CAN'T COUNT ON THEM, RIGHT? OIL HILL IS A VOLATILE COMMODITY. WE BUDGET CONSERVATIVE FI CONSERVATIVELY AT $55. IF WE WERE BUDGETING AT 85.95. WE'VE SEEN WHEN SOMETHING HAPPENS AND IT GOES ALL THE WAY DOWN. UM, I RECOMMEND WE CONTINUE TO DO THAT. THE CHALLENGE IS THAT SOMETIMES WE HAVE A LOT OF ONETIME, SOMETIMES WE HAVE A LITTLE, AND IT'S HARD TO PLAN OUT ONETIME FUNDS THAT WAY, BUT WE CAN PLAN FOR A FINITE PERIOD OF TIME. A GREAT EXAMPLE IS THE ELEVATE 28, 5 YEAR CAPITAL PLAN. THOSE ARE ONETIME DOLLARS THAT WE CAN PROJECT OUT A CERTAIN AMOUNT OF TIME. WE WOULD BE USED TO DO THREE YEARS, NOW WE'RE GOING OUT FIVE YEARS AND WE DO THAT SO WE CAN BE MORE INTENTIONAL ON THE IMPACT AND TO LEVERAGE IT TO BRING IN MORE DOLLARS IF WE CAN PROJECT OUT THREE TO FIVE YEARS. BUT BEYOND THAT, IT GETS, IT, IT, UH, THE BOND RATING AGENCIES, THE CREDIT RATING AGENCIES WILL START LOOKING AT US DIFFERENTLY IF WE BEGIN TO LIKE, LIKE TRUCTURE, LIKE FUND STRUCTURAL, UM, COSTS WITH ONE TIME DOLLARS. AND I WANT TO ACTUALLY ASK IF STAFF CAN TALK A LITTLE BIT ABOUT HOW THE RATING AGENCIES FACTOR ACTIVITIES LIKE THAT. YEAH, ABSOLUTELY. I'LL ACTUALLY HAVE KEVIN COME AND TALK ABOUT THAT. 'CAUSE HE IS OUR EXPERT IN THAT AREA. I WILL SAY THAT'S EXACTLY RIGHT. UM, WE NEED TO, UH, TO PAY ATTENTION TO THAT. THERE ARE TIMES WHEN WE DO PILOT PROGRAMS AND WE ADDRESS CERTAIN ISSUES. UM, CCR IS ONE, WE'RE STARTING A NEW PROGRAM, BUT WE NEED TO FIGURE OUT HOW TO TRANSITION THAT EITHER TO GRANTS OR TO FIND A STRUCTURAL SOLUTION TO IT. RESCUE TWO IS THE EXACT SAME THING. THOSE ARE ONE TIME DOLLARS THAT WE INVESTED AND THEN WE SAW VERY QUICKLY THERE'S AN EXPECTATION TO [01:00:01] CONTINUE THAT. SO THEN WE NEED TO, YOU KNOW, WE CAN DO ANOTHER YEAR OF ONE TIME, BUT AT SOME POINT WE NEED TO EITHER STOP THE SERVICE OR FIND A WAY TO FUND IT STRUCTURALLY. AND SO WE'RE VERY COGNIZANT OF THAT IN THE BUDGET PROCESS. UH, BUT IT IS A, A KEY TENANT NOT TO SPEND MORE MONEY THAN YOU, THAN YOU HAVE. SO I WILL TURN THAT TO KEVIN TO EXPLAIN HOW THE, THE FINANCIAL MARKETS LOOK AT THAT. SO THE RATING AGENCIES AND BOND BUYERS, THE, UM, INVESTORS ACROSS THE COUNTRY WHO BUY OUR TAX EXEMPT BONDS WHEN IT COMES TO THE FINANCIAL HEALTH OF THE CITY, THEY, THEY KIND OF LOOK AT THREE, UH, DIFFERENT ASPECTS. UM, THE FIRST ONE IS THE, UM, STRUCTURAL BUDGET BALANCE, OR LACK THEREOF IS, ARE YOU, IS THE ISSUER, IS THE CITY SPENDING PRETTY MUCH IN ACCORD WITH ITS ONGOING REVENUE AMOUNTS? THE SECOND THING THEY LOOK AT IS YOUR RESERVE LEVEL. UM, FOR TIMES WHEN YOU HAVE A RECESSION OR NECESSARILY NEED TO SPEND MORE THAN, UH, THAT YEAR'S REVENUE IS COMING IN, DO YOU HAVE ADEQUATE RESERVES TO FUND THAT FOR A YEAR OR TWO? AND HISTORICALLY, LONG BEACH HAS HAD THOSE. AND AS, AS TOM MENTIONED A FEW MINUTES AGO, THE, UM, SECURING OUR CITY'S FUTURE PORTION OF THE LONG BEACH RECOVERY ACT CERTAINLY HELPED THAT, UH, RESERVE LEVEL A LOT IN THE LAST FIVE YEARS. BUT THE THIRD THING IS REALLY INTERESTING. UM, THE RATING AGENCIES AND THE CAPITAL MARKETS ALSO LOOK TO SEE IF THE CITY IS TAKING ITS ONGOING REVENUE AS WELL AS ITS BOND FINANCED CAPITAL PROJECT LIKE ELEVATE 28 AND INVESTING BACK IN THE COMMUNITY SO THAT THE INFRASTRUCTURE OF THE COMMUNITY AND THEREFORE THE UNDERLYING ECONOMY CAN ALSO GROW. SO IT'S KIND OF A, IT'S NOT A TENSION, BUT IT'S A, IT'S A DUAL LOOK BY BOTH THE RATING AGENCIES AND THE CAPITAL MARKETS AND BY BOND HOLDERS, THEY WANNA BE SURE YOU'RE INVESTING IN YOUR CITY'S PHYSICAL P-H-Y-S-I-C-A-L HEALTH AS WELL AS FISCAL F-I-S-C-A-L HEALTH. THEY DON'T LOOK SOLELY AT RESERVE LEVELS AND STRUCTURAL BUDGET LEVELS. SO THOSE ARE THE THREE. THANK YOU. SO I, SO I RAISE THESE THINGS UP TO SAY, JUST GIVE SOME CONFIDENCE TO THE COUNCIL. WE HAVE A GREAT TEAM AND THEY'RE MAKING, THEY'RE MAKING SOME SMART CHOICES. UH, AND UH, BUT THEY TAKE OUR CUES FROM CITY COUNCIL, RIGHT? AND SOMETIMES IT'S BETTER FOR THE HEALTH OF OUR CITY TO HOLD THE LINE ON SOME OF THESE ISSUES LONG TERM. UM, I WILL ALSO SAY, YOU KNOW, THERE ARE STRATEGIES IN PLACE. SOME OF THEM WILL WORK, SOME OF 'EM MAY NOT. AND THAT'S OKAY. WE'RE, WE'RE TRYING SOME THINGS. UH, THE SACRAMENTO SITUATION, SENATOR GONZALEZ HAS BEEN OUR, OUR CHAMPION, SHE'S LAST YEAR CARRIED THAT LEGISLATION THAT MADE IT THROUGH. THAT HELPS. BUT THERE'S MORE WORK TO DO. SO WE, WE CERTAINLY, UM, THIS YEAR AND NEXT YEAR NEED TO BE AGGRESSIVE. IF THOSE THINGS HAPPEN, WE'RE IN A MUCH BETTER, UH, COUNCIL MEMBER DUGGAN. UM, WE'RE GONNA BE IN A MUCH BETTER PLACE IN LINS IF THOSE THINGS HAPPEN. UH, IF NOT, YOU ALL SHOULD KNOW THAT THOSE SERVICES FOR POLICE AND FIRE AND LIFEGUARDS, WE CAN'T JUST LAY OFF POLICE AND FIRE AND LIFEGUARDS. IT'S GONNA IMPACT THE GENERAL FUND. SO WE'D RATHER GET AHEAD OF THESE THINGS. NOW, THIS IS OUR NUMBER ONE LEGISLATIVE PRIORITY IN SACRAMENTO. SO IF YOU ALL KNOW AND HAVE RELATIONSHIPS, WE NEED TO UNDERSTAND IT IS OUR NUMBER ONE LEGISLATIVE PRIORITY IS TO ADDRESS THIS CHALLENGE. OTHERWISE, IN TWO YEARS, WE'RE GONNA HAVE A VERY UGLY CONVERSATION ABOUT SERVICE REDUCTIONS THAT I'M PRETTY SURE NOBO NO MEMBER OF THIS COUNCIL WANTS TO HAVE. AND SO WE NEED THE STATE TO DO ITS PART. WE ARE DOING OUR PART. WE CAN'T DO IT ALONE. SO THERE, SO WE NEED TO USE OUR LEVERS, UH, AS A CITY COUNCIL TO MAKE SURE IS, WE'RE VERY CLEAR ON SOME OF THESE PRIORITIES NOW BEFORE IT'S TOO LATE. SO THOSE ARE MY COMMENTS. I WANNA THANK, UH, EVERYBODY FOR THEIR COMMENTS. WE'LL NOW GO TO PUBLIC COMMENT. I DON'T SEE ANYONE SIGNED UP. IS THERE ANY PUBLIC COMMENT? IF ANY MEMBERS OF THE PUBLIC WISH TO SPEAK ON THIS ITEM, PLEASE APPROACH THE PODIUM AT THIS TIME. THERE ARE NO PUBLIC COMMENT. ALL RIGHT, THANK YOU. WE'LL NOW VOTE TO RECEIVE AND FILE THE PRESENTATION. MOTION IS CARRIED. THANK YOU. WE HAVE A SECOND PUBLIC COMMENT. IF ANY MEMBERS OF THE PUBLIC WISH TO SPEAK, PLEASE APPROACH THE PODIUM AT THIS TIME. SEE NONE. ALL RIGHT. THANK YOU. UH, THIS MEETING IS NOW ADJOURNED. WE'LL BE BACK AT FIVE ISH. THANK YOU. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.