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>> MAYOR NIRENBERG: ALL RIGHT. GOOD AFTERNOON, EVERYONE. WELCOME TO OUR CITY COUNCIL B SESSION.
WE'RE GOING TO HAVE A BUDGET BRIEFING TODAY. THE TIME IS 2:08 P.M. ON MAY 7TH, 2025. WE'LL CALL OUR MEETING TO ORDER.
MADAM CLERK, COULD YOU READ THE ROLL? >> CLERK: MAYOR, LET THE RECORD REFLECT COUNCILWOMAN ALDARETE GAVITO IS HERE
VIRTUALLY. WE HAVE A QUORUM. >> MAYOR NIRENBERG: ALL RIGHT. WE HAVE OUR SIX PLUS SIX TODAY, SO WITHOUT FURTHER
DELAY, ERIK, OVER TO YOU. >> WALSH: THANK YOU, MAYOR. ACTUALLY, A COUPLE OF PIECES OF TODAY'S PRESENTATION. SO TODAY WE'LL BE PROVIDING YOU A BRIEFING ON THE FINANCIAL FORECAST OF OUR CURRENT -- SORRY, THE FINANCIAL STATUS OF OUR CURRENT FISCAL YEAR, FISCAL YEAR '25 AND THE CITY'S FIVE-YEAR FINANCIAL FORECAST. AND JUST TO KIND OF LAY THE GROUNDWORK HERE A BIT, YOU KNOW, CURRENT ECONOMIC CONDITIONS HAVE CHANGED, AND WE'LL TALK ABOUT THIS DURING JUSTINA'S PRESENTATION. TWO MAJOR REVENUE SOURCES THAT WE'RE SEEING CHANGES IN ARE SALES TAX AND PROPERTY TAX, WHICH IN THIS FISCAL YEAR ARE NOT MEETING BUDGET PROJECTIONS.
THERE IS NO QUESTION THAT THERE IS SOME CONSUMER CONFIDENCE IN THE COUNTRY RIGHT NOW. WE'RE SEEING THAT IN A NUMBER OF DIFFERENT AREAS THAT YOU'LL SEE IN THE PRESENTATION. THE U.S. ECONOMY HAS CONTRACTED FOR THE FIRST TIME IN A LONG TIME, AND IN AREAS OF SALES TAX AND HOTEL OCCUPANCY TAX, THE AIRPORT, DEVELOPMENT SERVICES, RESIDENTIAL, COMMERCIAL PERMITS, WE'RE SEEING -- WE'RE SEEING THAT IMPACT.
REVENUE'S STILL HIGHER THAN LAST YEAR IN THOSE AREAS, BUT NOT AS HIGH AS WE PROJECTED FOR THIS YEAR'S BUDGET. SO THESE CHANGES IN REVENUE ARE RESULTING IN A MANAGEABLE ISSUE IN THIS YEAR'S BUDGET, BUT MORE IMPORTANTLY, THEY'RE COMPOUNDING AS WE PUT TOGETHER THE FORECAST LOOKING OUT FOR THE NEXT FIVE YEARS. I WILL REMIND EVERYBODY THAT THE FORECAST IS NOT THE BUDGET. IT IS JUST THE FORECAST.
AND WE STILL HAVE A LOT OF WORK TO DO IN THE UPCOMING WEEKS.
WE WILL HAVE ADDITIONAL INFORMATION IN TIME FOR THE JUNE GOAL-SETTING SESSION, BOTH IN TERMS OF PROPERTY TAX -- I'M SORRY, PROPERTY TAX, CPS AND SALES TAX. SO THIS IS THE INFORMATION WE HAVE UP TO THIS POINT. AND WE'LL BE DOING A FAIR AMOUNT OF WORK BETWEEN NOW AND THE END OF JUNE BEFORE THE WORK SESSION TO FURTHER REFINE REVENUE AND EXPENDITURE PROJECTIONS, BOTH FOR THIS YEAR, BUT ALSO FOR FISCAL YEAR '26 AND '27. THE SECOND PART OF THE PRESENTATION IS ON COMPREHENSIVE BUDGET REVIEWS, AND WE TALKED A LITTLE BIT ABOUT THIS LAST SUMMER. WE REINSTITUTED THOSE, WE HAD BEEN DOING THEM IN PREVIOUS YEARS, WE'D PUT A HOLD ON THEM DURING COVID, AND THE INNOVATION OFFICE AND THE BUDGET OFFICE HAVE BEEN WORKING TO DO FOUR COMPREHENSIVE BUDGET REVIEWS WITH THE CONCEPT THAT WE WILL ROTATE DEPARTMENTS ON AN ANNUAL BASIS. SO KATE WILL GIVE YOU AN UPDATE ON THAT.
ALL THOSE RECOMMENDATIONS WE ANTICIPATE BUILDING INTO THE FISCAL YEAR '26 BUDGET LATER ON THIS SUMMER. AND THEN THE LAST PART OF THE PRESENTATION IS BY PFM CONSULTING, AND LAST YEAR -- LAST -- AUGUST OF '24, THERE WAS A GOVERNANCE COUNCIL COMMITTEE THAT HEARD A CCR FROM COUNCILMAN WHYTE ON ZERO-BASED BUDGETING, AND PART OF THE CONVERSATION AND THE STAFF RECOMMENDATION WAS TO ATTAIN SOMEONE WHO COULD LOOK AT THE BUDGET PROCESS, OUR BUDGET PROCESS, THE DIFFERENT METHODOLOGIES AND INCORPORATE NOT ONLY ZERO-BASED BUDGETING, BUT OUTCOME-BASED BUDGETING, PRIORITY-BASED BUDGETING.
SO WE RETAINED PFM CONSULTING. WE SAID IN GOVERNANCE THAT WE WOULD
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COME BACK WHEN WE DID THE SIX BY SIX, DANIELLE PARKER WILL PRESENT THEIR REVIEW OF OUR BUDGET PROCESS, AS WELL AS SOME RECOMMENDATIONS ON HOW WE DO THIS PROCESS ANNUALLY. I'LL TELL YOU THAT PFM DID A VERY GOOD JOB OF ALIGNING OUT AND BEING -- RECOGNIZING THE THINGS WE DO WELL AND THE THINGS THAT MAYBE WE COULD DO BETTER.THEY'VE INCORPORATED A REVISED SCHEDULE, POTENTIAL SCHEDULE IN OUR ANNUAL BUDGET PROCESS. I THINK IT -- I THINK IT ALIGNS NICELY WITH FOUR-YEAR TERMS, AND I'LL LET HER KIND OF WALK THROUGH THAT JUSTIFICATION AS SHE GETS THERE. THIS IS NOT -- THIS IS A PERSPECTIVE CONVERSATION. WE MAY -- WE MAY UTILIZE SOME OF THAT STUFF AS WE WORK THROUGH THE BUDGET THIS YEAR, BUT IT WOULD REALLY BE ALIGNING OUR ENTIRE BUDGET WORK DIFFERENTLY GOING FORWARD AFTER THIS SUMMER. AND THAT'S CONSISTENT WITH COUNCILMAN WHYTE'S MEMO LAST YEAR -- OR -- YEAH, LAST YEAR AND THE GOVERNANCE CONVERSATION.
I DO ANTICIPATE US HAVING THIS CONVERSATION ABOUT THIS HYBRID APPROACH OR NEW BUDGET APPROACH WITH THE NEW MAYOR AND COUNCIL AS WELL, OBVIOUSLY IN JUNE, AND THEN PROBABLY AT THE CONCLUSION OF OUR BUDGET THIS SUMMER, STARTING THAT CONVERSATION UP, BECAUSE IF WE'RE GOING TO REALIGN CERTAIN THINGS, THERE'S AN IMPACT ON SOME OF THE WORKLOAD AND THE COUNCIL GOAL-SETTING WOULD NO LONGER BE IN MAY OR JUNE, IT WOULD BE IN OCTOBER, WHERE YOU ALL KIND OF HAVE THAT STRATEGIC CONVERSATION.
SO VERY DIFFERENT, AND WE'RE JUST LOOKING FOR SOME FEEDBACK, BUT IT CERTAINLY WON'T BE THE LAST TIME WE TALK ABOUT THAT.
SO THAT'S A LONG INTRO. JUSTINA, I'M GOING TO TURN IT OVER TO YOU.
>> TATE: THANK YOU. GOOD AFTERNOON, MAYOR AND CITY COUNCIL.
MY NAME'S JUSTINA TATE. I'M THE BUDGET DIRECTOR FOR THE CITY OF SAN ANTONIO. TODAY WE WILL COVER THE FISCAL YEAR 2025 SIX PLUS SIX FINANCIAL STATUS REPORT AS WELL AS PROJECTIONS FOR REVENUES AND EXPENDITURES FOR THE YEAR. WE WILL THEN MOVE INTO OUR FIVE-YEAR FINANCIAL FORECAST, AND THIS WILL INCLUDE FORECASTS FOR THE GENERAL FUND, OUR HOTEL OCCUPANCY TAX FUND, AND DEVELOPMENT SERVICES.
NEXT WE WILL PROVIDE, AS THE CITY MANAGER MENTIONED, AN UPDATE ON THE COMPREHENSIVE BUDGET REVIEWS, AND FINALLY I'LL PROVIDE AN OVERVIEW OF THE NEXT STEPS IN THE BUDGET PROCESS. BEFORE GETTING INTO THE PRESENTATION, I WANTED TO CALL YOUR ATTENTION TO THE BINDER IN FRONT OF YOU. THIS PROVIDES HARD COPIES OF THE MATERIAL THAT WAS SENT OUT ON MONDAY, AND INCLUDES THE PRESENTATIONS, THE SIX PLUS SIX FINANCIAL REPORT, THE MARCH STATUS REPORT ON OUR BUDGET INITIATIVES, THE 24/7 SECOND QUARTER PERFORMANCE MEASURE REPORT, THE FIVE-YEAR FORECAST DOCUMENTED, AND FINALLY THE FULL PFM REPORT THAT WAS PROVIDED. SO LET ME START BY PROVIDING AN OVERVIEW OF OUR CURRENT ECONOMIC AND FINANCIAL UNCERTAINTIES THAT MAY IMPACT OUR FINANCIAL PICTURE. AS REPORTED BY THE U.S.
BUREAU OF ECONOMIC ANALYSIS, THE ECONOMY CONTRACTED IN THE FIRST QUARTER OF 2025, WHICH IS THE FIRST TIME THE ECONOMY HAS CONTRACTED SINCE THE FIRST QUARTER OF 2022. U.S. GROSS DOMESTIC PRODUCT FELL AT AN ANNUAL RATE OF 0.3% -- ADDITIONALLY CONSUMER CONFIDENCE DECLINED FOR THE FIFTH MONTH IN A ROW IN APRIL, FALLING TO LEVELS NOT SEEN SINCE DURING THE PANDEMIC.
THE CONSUMER SHORT-TERM OUTLOOK FOR INCOME, BUSINESS AND LABOR MARKET CONDITIONS DROPPED 12.5 POINTS TO 54.4, WHICH IS THE LOWEST IT'S BEEN SINCE OCTOBER OF 2011. ADDITIONALLY, THE FEDERAL RESERVE HAS KEPT INTEREST RATES UNCHANGED, THEY HAD A MEETING YESTERDAY AND TODAY, THEY HAVE CONFIRMED THAT THE INTEREST RATES WILL REMAIN UNCHANGED.
AND THIS WAS AS EXPECTED, AS THEY HAD INDICATED THAT THEY WOULD KEEP SHORT-TERM RATES CURRENT, AS THEY HAVE MADE IT CLEAR THAT THEY WON'T MAKE ANY CHANGES TO MONETARY POLICY UNTIL THERE'S CLARITY ON OUR ECONOMIC POLICIES. THERE'S A BALANCE BETWEEN INTEREST RATES AND INFLATION AND OTHER RECESSIONARY INDICATORS THAT IF PRICES CONTINUE TO RISE AND THE ECONOMY CONTRACTS, THERE'S A FEAR OF STACKED FLAITION, WITH CHANGES AT THE FEDERAL LEVEL, THERE'S UNCERTAINTY AROUND CONTINUED FEDERAL FUNDING FOR OUR CITY'S PROGRAMS, INITIATIVES AND
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INFRASTRUCTURE. AND FINALLY, AS MENTIONED DURING LAST WEEK'S B B SESSION, THERE ARE A NUMBER OF STATE LEGISLATIVE BILLS THAT IF PASSED, COULD NEGATIVELY IMPACT THE CITY'S REVENUE AND LIMIT OUR ABILITY TO ISSUE DEBT. SOME OF THESE UNCERTAINTIES ARE IMPACTING OUR REVENUES ALREADY. FOR FISCAL YEAR 2025 AND IN OUR FIVE-YEAR FINANCIAL FORECAST. .MOST OF OUR MAJOR REVENUE SOURCES ARE GROWING, BUT AT A SLOWER PACE THAN WHAT WE HAD ANTICIPATED, AS WE DEVELOPED THE 2025 BUDGET.
THESE REVENUE SOURCES INCLUDE PROPERTY TAX, SALES TAX, AIRPORT AND OUR HOTEL OCCUPANCY TAX. HOWEVER, FOR DEVELOPMENT SERVICES, WE ARE SEEING THAT OUR 2025 REVENUE COLLECTION THROUGH MARCH IS LOWER THAN WHAT WE COLLECTED AT THE SAME PERIOD FOR 2024. AND THIS IS A RESULT OF A DECLINE IN RESIDENTIAL AND COMMERCIAL PERMITTING.
FOR THE GENERAL FUND FOR THE FIRST SIX MONTHS, WE ARE BELOW OUR PROJECTION BY ABOUT $1.4 MILLION, AND THIS IS DUE TO LESS REVENUES FROM SALES TAX AND PROPERTY TAX. AND WE'RE PROJECTING TO BE ABOUT 9.7 MILLION BELOW BUDGET BY THE END OF THE YEAR, WHICH IS APPROXIMATELY .6% OF THE GENERAL FUND. SALES TAX IS PROJECTED TO BE ABOUT 5.2 MILLION BELOW BUDGET DUE TO SLOWER THAN ANTICIPATED GROWTH, AND PROPERTY TAX IS PROJECTED TO BE $9.8 MILLION BELOW BUDGET, AND THIS IS DUE TO HIGHER THAN ANTICIPATED PROPERTY VALUE LOSS AS A RESULT OF ADDITIONAL HOMESTEAD EXEMPTIONS, PROTESTS, LITIGATION AND ARBITRATION. SO LET ME GO INTO A LITTLE BIT MORE DETAIL REGARDING OUR PROPERTY TAX REVENUES. WHEN WE DEVELOPED THE BUDGET IN THE SUMMER, IT IS BASED ON A 95% CERTIFIED ROLL THAT WE RECEIVE IN JULY. HISTORICALLY, THERE IS LITTLE TO NO MOVEMENT IN THIS CERTIFIED ROLL; HOWEVER, THAT'S NOT THE CASE THIS YEAR.
THE CERTIFIED ROLL, WHEN WE RECEIVE IT, INCORPORATES THE PROPERTY VALUE AND REMOVES EXEMPTED VALUE. THIS BECOMES OUR TOTAL TAXABLE VALUE. AT THE TIME OF OUR BUDGET, OUR TAXABLE VALUE WAS $160.7 BILLION. AS A RESULT OF ADDITIONAL EXEMPTIONS, PROTESTS AND LITIGATION, WE HAVE LOST $3.4 BILLION IN TAXABLE VALUE, WHICH EQUATES TO ABOUT $9.8 MILLION IMPACT ON OUR GENERAL FUND PROPERTY TAX REVENUES.
SO THE $3.4 BILLION LOSS IN TAXABLE VALUE AS A RESULT OF ABOUT $900 MILLION AS ADDITIONAL PROTESTS WERE RECEIVED AFTER THE CERTIFIED ROLL. $1.3BILLION WAS LOST FROM ADDITIONAL LITIGATION AND ARBITRATION, AND FINALLY, WE SAW AN INCREASE IN EXEMPTION, WHICH ACCOUNTS THAT LOST VALUE. THIS HAS AN IMPACT, AS I MENTIONED, ON 2025, BUT WILL ALSO HAVE AN IMPACT ON 2026 AND BEYOND AS THIS IS A RECURRING REVENUE FOR THE GENERAL FUND. THIS NEXT SLIDE ILLUSTRATES THE OVERALL IMPACT OF OUR REVENUES IN THE GENERAL FUND.
OUR TOTAL GENERAL FUND REVENUE BUDGET IS ABOUT $1.6 BILLION.
OF THAT, WE HAD ANTICIPATED TO RECEIVE ABOUT A BILLION DOLLARS IN THE FIRST SIX MONTHS. HOWEVER, THROUGH THE SECOND QUARTER, WE'RE ABOUT $1.4 MILLION LESS. WE ARE PROJECTING TO BE ABOUT $9.7 MILLION BELOW BUDGET, DRIVEN BY LESS PROPERTY TAX AND SALES TAX.
AS I'D MENTIONED, SALES TAX IS STILL GROWING, BUT AT A SLOWER RATE THAN WHAT WE HAD ANTICIPATED. WHEN WE DEVELOPED THE BUDGET, WE HAD ASSUMED ABOUT A 3.3% INCREASE OVER 2024; HOWEVER, WE ARE NOW SEEING ABOUT A 2% INCREASE OVER 2024 AND WE'RE ASSUMING THAT 2% FOR THE REST OF THE YEAR. I DO WANT TO NOTE THAT IN THE 2025 PROJECTION FOR CPS ADHERES TO THE CPS OFFSYSTEM SALES POLICY THAT WAS ADOPTED BY CITY COUNCIL AS PART OF THE 2025 BUDGET. THIS POLICY PLACES A CAP ON OFFSYSTEM SALES AT $10 MILLION. IF THE OFFSYSTEM SALES REVENUE EXCEEDS $10 MILLION, THE REMAINING FUNDS ARE TRANSFERRED TO A CAPITAL RESERVE FUND TO BE DISCUSSED WITH CITY COUNCIL AT THE END OF THE YEAR AND AFTER ANY SHORTFALL IN THE CITY'S
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BASE PAYMENT IS ADDRESSED. AS YOU CAN SEE WITH THIS TABLE, WE HAVE EXCEEDED THE $10 MILLION, ABOUT $4.6 MILLION, AND WE ANTICIPATE THAT THERE WILL BE APPROXIMATELY $22 MILLION AS A CAPITAL RESERVE BY THE END OF THE YEAR. BASED ON OUR UPDATED REVENUE AND EXPENSE PROJECTIONS FOR FISCAL YEAR 2025, THE GENERAL FUND FINANCIAL POSITION IS ABOUT $2.4 MILLION LESS THAN WHAT WE HAD ANTICIPATED WHEN WE ADOPTED THE BUDGET IN SEPTEMBER.THIS IS PRIMARILY DUE TO LESS PROPERTY TAX AND SALES TAX, WHICH ARE RECURRING AND WILL IMPACT 2026, BUT THIS LESS REVENUE IS OFFSET BY ONE TIME ADDITIONAL FUNDS AS PART OF OUR BEGINNING BALANCE AND SLIGHT SAVINGS IN OUR DEPARTMENT'S EXPENSES. AS PART OF OUR FINANCIAL MANAGEMENT PRACTICES, WE WILL CONTINUE TO MONITOR BOTH REVENUE AND EXPENSE, AND WE'LL UPDATE PROJECTIONS, AND AS ADDITIONAL DATA AND INFORMATION IS RECEIVED. WE WILL PROVIDE THESE UPDATED REVENUE AND EXPENDITURE PROJECTIONS FOR 2025 WITH THE TRIAL BUDGET THAT WILL BE PRESENTED TO CITY COUNCIL AS PART OF THE GOAL-SETTING SESSION ON JUNE 27TH. FOR OUR RESTRICTED FUNDS, WE ARE SEEING A SIMILAR SLOWDOWN IN OUR REVENUE COLLECTIONS, IMPACTING OUR HOTEL OCCUPANCY TAX, AIRPORT AND DEVELOPMENT SERVICES. FOR OUR HOTEL OCCUPANCY TAX, THE PRICE PER ROOM NIGHT, AS WELL AS OUR OCCUPANCY RATE IS LOWER THAN WE HAD ANTICIPATED FOR THE FIRST SIX MONTHS, AND WE'RE CONTINUING -- WE'RE ANTICIPATING THAT TREND TO CONTINUE THROUGHOUT THE YEAR.
FOR AIRPORT REVENUES, WE ARE BELOW BUDGET DUE TO LOWER PASSENGER ACTIVITY THAN WE PLANNED. FOR FISCAL YEAR 2025 BUDGET, WE HAD ASSUMED THAT AIRPORT PASSENGER ACTIVITY WOULD INCREASE 3.5% OVER 2024; HOWEVER, THAT GROWTH HAS SLOWED TO ABOUT .5% INCREASE IN PASSENGER ACTIVITY OVER 2024. AND FINALLY FOR OUR DEVELOPMENT SERVICES FUND, FOR THE FIRST SIX MONTHS, WE HAVE COLLECTED ABOUT $1.9 MILLION LESS THAN WHAT WE HAD ANTICIPATED, AND WE'RE PROJECTING TO END THE YEAR ABOUT $2.6 MILLION LESS IN REVENUE. THIS IS A RESULT OF OUR COMMERCIAL AND RESIDENTIAL ACTIVITY, WE DO PROJECT THAT OUR COMMERCIAL ACTIVITY WILL BE DOWN ABOUT 1.6% AS COMPARED TO 2024, AND OUR RESIDENTIAL ACTIVITY WILL BE -- IS PROJECTED TO BE DOWN ABOUT 13% COMPARED TO LAST YEAR. NOW, WITH THIS CONTEXT, I WANTED TO MOVE INTO OUR FINANCIAL FORECAST. THE FINANCIAL FOARK IS AN EARLY FINANCIAL OUTLOOK FOR THE CITY, AS THE BUDGET DEVELOPMENT PROCESS BEGINS FOR 2026.
IT IS JUST WHAT WE KNOW IN TERMS OF REVENUE AND EXPENDITURES BASED ON A CERTAIN SET OF ASSUMPTIONS. THIS SETS THE FRAMEWORK FOR UPCOMING DISCUSSIONS ON THE ANNUAL BUDGET, AND IT IS A MAJOR DELIVERABLE AS PART OF OUR PROPOSED BUDGET DEVELOPMENT, WHICH WILL BE PRESENTED TO CITY COUNCIL IN AUGUST. AND AS A REMINDER, AND THE CITY MANAGER MENTIONED THIS, THE FIVE-YEAR FORECAST IS NOT A BUDGET.
OUR FIVE-YEAR FORECAST IS NOT STRUCTURALLY BALANCED, AND IT PROJECTS DEFICITS FOR THE FIVE YEARS. AS WE SAW IN FISCAL YEAR 2025, OUR RECURRING REVENUE GROWTH IS NOT KEEPING UP WITH OUR PROJECTED EXPENSES. TO MITIGATE THIS DEFICIT AND ADDRESS THE STRUCTURAL IMBALANCE, SPENDING CUTS ARE NEEDED.
AND THOSE SPENDING CUTS ARE NEEDED TO ALIGN OUR SPENDING GROWTH WITH THE REVENUE GROWTH IN 2026 AND 2027. SO STARTING WITH OUR REVENUE ASSUMPTIONS, INCLUDING THE FIVE-YEAR FORECAST, THIS SLIDE ILLUSTRATES WHAT WE'RE PROJECTING FOR 2026 AS IT COMPARES TO 2025.
SO OVERALL, OUR REVENUES ARE GROWING BY ABOUT $25 MILLION OR 1.6%; HOWEVER, THEY'RE GROWING AT A SLOWER RATE. BASED ON CURRENT INFORMATION IN THE APPRAISAL DISTRICT, WE ARE PROJECTING THAT OUR BASE PROPERTY VALUES STAY FLAT, AND THE INCREASE IN OUR PROPERTY TAX REVENUES IS ATTRIBUTABLE TO NEW IMPROVEMENTS. FOR SALES TAX, WE ARE PROJECTING THAT THE GROWTH REMAINS AT ABOUT 2% AS COMPARED TO 2025.
AND FINALLY FOR CPS, THE FORECAST CONTINUES, THE OFFSYSTEM SALES POLICY AND ASSUMES THAT ANY OFFSYSTEM SALES RECEIVED OVER $10 MILLION IS
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RESERVED FOR FUTURE DISCUSSION WITH CITY COUNCIL.RESULT OF LOWER INTEREST INCOME AS WELL AS CONTINUED DECLINE IN OUR TELECOMMUNICATION TAX. THESE PROJECTIONS THAT WE'RE PROVIDING FOR FISCAL YEAR 2026 DO NOT INCLUDE ANY IMPACT OF STATE LEGISLATION, IF THOSE BILLS ARE PASSED. WE WILL CONTINUE TO UPDATE THESE REVENUES AS ADDITIONAL INFORMATION AND DATA IS OBTAINED AND RECEIVED AND THE OUTCOME OF OUR STATE LEGISLATIVE IS KNOWN. AS I MENTIONED, THESE UPDATED PROJECTIONS WILL BE PROVIDED AS PART OF THE TRIAL BUDGET IN JUNE. TO PROVIDE SOME MORE CONTEXT ON OUR PROPERTY TAX, THIS NEXT SLIDE ILLUSTRATES THE IMPACT ON TAXABLE VALUE IN FISCAL YEAR 2025 AND OUR CURRENT ASSUMPTIONS FOR 2026. WHEN THE BUDGET WAS ADOPTED, THE TAXABLE VALUE GROWTH WAS 6.56%. HOWEVER, THAT GROWTH HAS DECLINED TO 4.23%. AS I EXPLAINED EARLIER, OUR TAXABLE VALUE IS LOWER THAN ANTICIPATED AS A RESULT OF ADDITIONAL EXEMPTIONS THAT WERE RECEIVED, PROTESTS AND LITIGATION, AND THESE OCCURRED AFTER THE CERTIFIED ROLL WAS RECEIVED IN JULY. FOR FISCAL YEAR 2026, BASED ON THE INFORMATION WE HAVE TO DALE FROM THE BEXAR APPRAISAL DISTRICT, WE ARE ASSUMING NO GROWTH IN OUR BASE VALUES, AND A GROWTH OF ABOUT 1.8% ON NEW VALUES. THIS IS PRELIMINARY DATA, AND AS WE RECEIVE ADDITIONAL INFORMATION OVER THE NEXT MONTHS, WE WILL PROVIDE AN UPDATED PROPERTY TAX ESTIMATE. THE NEXT SLIDE ILLUSTRATES THE TOTAL PROPERTY TAX COLLECTED IN FISCAL YEAR 2019 THROUGH 2024, AND THE AMOUNTS WE ARE PROJECTING FOR 2025 THROUGH FISCAL YEAR 2030.
FOR FISCAL YEAR 2019 THROUGH 2024, OUR AVERAGE PROPERTY TAX REVENUE GROWTH WAS ABOUT 5%. AND DURING THE FORECAST, WE ARE ASSUMING A GROWTH OF ABOUT 1.8% OVER THE -- AN AVERAGE GROWTH OF 1.8% OVER THE FIVE YEARS.
AS A REMINDER WITH THE IMPLEMENTATION OF SB 2, PROPERTY TAX REVENUES ON BASE VALUE CANNOT GROW MORE THAN 3.5%. BUT WITH THE EXEMPTIONS, THE PROTESTS, APPEALS AND LITIGATION, THE FORECAST ASSUMES LITTLE GROWTH IN OUR PROPERTY TAX VALUES. FOR FISCAL YEAR 2026, WE ARE ASSUMING THAT OUR PROPERTY TAX GROWS ABOUT 1% AS COMPARED TO OUR 2025 COLLECTIONS.
NOW, THE CITY COULD INCREASE THE PROPERTY TAX RATE TO THE STATE-ALLOWED RATE BY UP TO 3.5%. AND AS WE RECEIVE ADDITIONAL INFORMATION FROM THE APPRAISAL DISTRICT, WE WILL BE PREPARED TO SHARE THIS INFORMATION WITH THE CITY COUNCIL DURING OUR GOAL-SETTING SESSION.
IN TERMS OF SALES TAX, THIS GROWTH -- THIS GRAPH ALSO SHOWS THE CHANGE IN OUR SALES TAX COLLECTION BETWEEN FISCAL YEAR 2019 AND 2024, AND WHAT WE ARE PROJECTING AS PART OF THE FIVE-YEAR FORECAST. BETWEEN 2019 AND 2024, SALES TAX GROWTH AVERAGED ABOUT 5.8%. HOWEVER, AS YOU CAN SEE FROM THIS GRAPH, WE HAD VERY LARGE INCREASES IN 2021 AND 2022, AS WE RECOVERED FROM THE PANDEMIC RANGING FROM ABOUT 12.5% GROWTH TO 14.2% GROWTH. IN 2023 AND '24, WE STARTED TO SEE A MORE MODERATE GROWTH WHERE WE AVERAGED ABOUT 2.5%. WITH THE UNCERTAINTY IN THE ECONOMY, WE ANTICIPATE THAT SALES TAX GROWTH FOR FISCAL YEAR 2026 WILL BE ABOUT 2% OVER 2025 COLLECTIONS. AS I MENTIONED, THE FIVE-YEAR FORECAST FOLLOWS OUR CPS OFFSYSTEM SALES POLICY THAT WAS ADOPTED AS PART OF THE 2025 BUDGET. ANY PAYMENTS RECEIVED -- WE'RE ASSUMING THAT ANY PAYMENTS RECEIVED OVER AND ABOVE THE $10 MILLION ARE RESERVED INTO A CAPITAL RESERVE FUND. AT THE END OF THE YEAR, ANY SHORTFALLS IN THE CITY'S BASE PAYMENT WILL BE DEDUCTED FROM THE FUND TO DETERMINE THE AMOUNT ELIGIBLE TO BE TRANSFERRED TO CPS ENERGY AFTER CITY COUNCIL DISCUSSION. FOR CONTEXT IN 2024, THE CITY TRANSFERRED $25.9 MILLION TO CPS, WHICH WAS CONSISTENT WITH
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CITY COUNCIL DIRECTION DURING THE FALL. FOR FISCAL YEAR 2025 TO 2030, WE ARE PROJECTING BETWEEN 32 MILLION TO $18 MILLION IN OFFSYSTEM SALES. AS PART OF THE FORECAST, $10 MILLION IS CITY REVENUES, AND THE REMAINDER IS TRANSFERRED TO A CPS CAPITAL RESERVE FUND. FOR YOUR REFERENCE, THE CHART ON THE RIGHT ILLUSTRATES THE AMOUNT THAT WE HAVE COLLECTED IN FISCAL YEAR 2025.OF THE 218 MILLION WE'VE COLLECTED THROUGH MARCH, 203 MILLION IS ON THE CITY'S BASE PAYMENT, WE HAVE $10 MILLION IN OFFSYSTEM SALES, CONSISTENT WITH OUR BUDGET, AND WE HAVE 4.6 MILLION IN THE CAPITAL RESERVE. FOR THE FIVE-YEAR FORECAST PRELIMINARILY OUR CPS PAYMENT FOR FISCAL YEAR 2026 IS ABOUT 3.8% OVER THE ESTIMATE.
AND FOR THE REMAINDER OF THE -- OF OUR FIVE-YEAR FORECAST, WE ANTICIPATE A MODERATE GROWTH. I DO WANT TO NOTE THAT THESE PROJECTIONS DO INCLUDE THE OFFSYSTEM SALES. THE INCREASE IN 2026 IS MAINLY DRIVEN BY SYSTEM GROWTH AND HIGHER FUEL PRICES.
AGAIN, THE FIVE-YEAR FORECAST IS BASED ON A SET OF ASSUMPTIONS TO FORM AN EARLY FINANCIAL OUTLOOK TO PROVIDE THE FRAMEWORK AS WE BEGIN THE 2026 BUDGET DISCUSSION. THIS SLIDE SHOWS THE EXPENDITURE ASSUMPTIONS THAT ARE INCLUDED IN OUR FIVE-YEAR THE FIVE-YEAR FORECAST FULLY FUNDS INITIATIVES THAT WERE ADDED IN 2025. IT REFLECTS FUNDING TO PROVIDE TODAY'S LEVEL OF CITY SERVICES, IT ALSO REMOVES ONE-TIME EXPENSES AND INCLUDES PROJECTED INCREASES FOR CONTRACTS, HEALTHCARE BENEFITS AND INFLATION. THE FORECAST DOES INCLUDE EMPLOYEE COMPENSATION INCREASES CONSISTENT WITH THE POLICE AND FIRE COLLECTIVE BARGAINING AGREEMENT, AND INCLUDES A 3% COMPENSATION FOR CIVILIANS.
THE FORECAST ALSO REFLECTS NEW OPERATING COSTS FOR COMPLETED CAPITAL PROJECTS, AND THESE INCLUDE CAPITAL PROJECTS SUCH AS THE NEW ANIMAL CARE VETERINARIAN HOSPITAL, THE D1 MULTIGENERATIONAL CENTER, THE DISTRICT THREE POLICE SUBSTATION, THE CARVER BRANCH LIBRARY EXPANSION AND NEW LINEAR CREEKWAYS AND PARKS. HOWEVER, THERE ARE NO NEW IMPROVEMENTS INCLUDED IN OUR FIVE-YEAR FORECAST. AND THE FIVE-YEAR FORECAST DOES MAINTAIN THE GENERAL FUND ENDING BALANCE AT A MINIMUM OF AT LEAST 15%. SO THE NEXT SLIDE ILLUSTRATES THE MAIN DRIVERS OF THE INCREASE AND EXPENSES BETWEEN 2025 AND -- AUDIO] -- AS YOU CAN SEE, COMPENSATION AND EMPLOYEE BENEFITS IS A MAJOR DRIVING FACTOR ACCOUNTING FOR $53.6 MILLION OF THE INCREASE.
WITH MANDATED COSTS ADDING ABOUT 9.2 MILLION.
AND THIS INCLUDES OPERATION MAINTENANCE FOR OUR PARK AND LINEAR CREEKWAYS THAT ARE PLANNING TO COME ONLINE IN 2026, AS WELL AS OUR CASH MATCHES FOR OUR 2023 AND 2024 24 COST GRANTS.
SO ALL THAT I MENTIONED, THE FIVE-YEAR FORECAST IS DEVELOPED.
THIS SLIDE ILLUSTRATES OUR PROJECTED REVENUES AND EXPENSES INCLUDED IN THE FIVE-YEAR FORECAST. I WANT TO MENTION THAT THIS SLIDE IS JUST A SUMMARY AND THE ACTUAL FUND SCHEDULE IS INCLUDED IN THE FIVE-YEAR FORECAST DOCUMENT. THE REVENUES REFLECT THE CITY'S OPERATING REVENUES TO INCLUDE CPS, SALES TAX AND PROPERTY TAX, AND ALSO INCLUDES OUR BEGINNING BALANCE. AS YOU CAN SEE, WE ARE NOT STRUCTURALLY BALANCED, AND WHEN YOU COMBINE OUR TOTAL RESOURCES AND EXPENDITURES, WE ARE FACING AN ALMOST $31 MILLION DEFICIT IN FISCAL YEAR 2026, WHICH GROWS TO ABOUT 148 MILLION IN 2027.
THIS IS A RESULT OF OUR AVERAGE ANNUAL GROWTH IN REVENUE INCREASING BY ABOUT 2.1%, BUT OUR EXPENSES AVERAGING ABOUT 3.6% GROWTH OVER THE FIVE YEARS. GOING BACK TO WHAT I MENTIONED EARLIER, WE MUST BEGIN THE WORK TO ALIGN OUR EXPENSE AND REVENUE GROWTH.
MOVING ON TO OUR RESTRICTED FUNDS, THE NEXT SLIDE ILLUSTRATES THE HOTEL OCCUPANCY TAX FIVE-YEAR FORECAST. AS A REMINDER, THE HOTEL OCCUPANCY TAX RATE IS 16.75% AND IT'S LEVIED AGAINST ALL ELIGIBLE HOTEL ROOM NIGHTS. OF THAT, THE CITY RECEIVES 9%, 7% SUPPORTS
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OUR ALAMODOME, CONVENTION CENTER, ARTS, VISIT SAN ANTONIO AND HISTORY AND PRESERVATION, AND 2% IS RESTRICTED SOURCE OF REVENUE FOR THE CONVENTION CENTER EXPANSION DEBT AS WELL AS FUTURE CONVENTION CENTER PROJECTS. OVERALL, THE HOTEL OCCUPANCY TAX IS BALANCED FOR THE FIVE YEARS. IN FISCAL YEAR 2025, OUR PROJECTIONS ARE ABOUT 11.3% HIGHER THAN WHAT WE COLLECTED IN 2024, AND THIS IS DUE TO AN INCREASE IN OUR SHORT-TERM RENTAL COLLECTIONS, THE IMPACT OF THE FINAL FOUR, AND A HIGHER AVERAGE DAILY RATE THAN WHAT WE SAW IN 2024. FOR THE REMAINDER OF THE FIVE-YEAR FORECAST, WE ARE SEEING A SLOWER GROWTH IN OUR HOTEL OCCUPANCY TAX, WHICH IS MORE IN LINE WITH OUR SALES TAX AND OTHER REVENUE SOURCES.WE ARE ASSUMING A 1.6% INCREASE IN 2026. AND THEN ABOUT 2.1% GROWTH OVER THE REMAINING FOUR YEARS. NEXT IS OUR DEVELOPMENT SERVICES ENTERPRISE FUND. THIS IS ROUGHLY A $54 MILLION FUND THAT IS SUPPORTED BY FEES PAID FOR BY DEVELOPERS FOR PLAN REVIEWS AND INSPECTIONS. THIS SLIDE ILLUSTRATES THE PERMIT ACTIVITY OVER THE PAST FIVE YEARS AND THE ESTIMATE FOR 2025.
FOR 2025, WE ARE PROJECTING THAT AS COMPARED TO '24 ACTUALS, OUR RESIDENTIAL PERMITS DECLINED BY ABOUT 13% AND OUR COMMERCIAL PERMITTING DECLINES BY ABOUT 1.6%. AS BUILDING PERMITS DECLINES, THE REVENUES WILL DECLINE AS WELL. SO WE ANTICIPATE THAT OUR RESIDENTIAL AND COMMERCIAL WILL CONTINUE TO DECLINE INTO FISCAL YEAR 2026, AND WE'RE PROJECTING A REDUCTION IN REVENUES FOR 2026 OF ABOUT 5.4%.
FOR THE REMAINING YEARS, WE DO ANTICIPATE THERE IS SLIGHT GROWTH IN OUR PERMITTING, AS WELL AS OUR REVENUES. SO WHEN THESE ASSUMPTIONS ARE COMBINED, THE REVENUES FOR DEVELOPMENT SERVICES ARE NOT KEEPING UP WITH EXPENSES. AND AS A RESULT, WE'RE ANTICIPATING A DEFICIT IN FISCAL YEAR 2027 IN THE AMOUNT OF $3.5 MILLION. THIS IS AN ENTERPRISE FUND AND IT IS SET UP TO EXPAND AND CONTRACT WITH ACTIVITY, SO BY THE PROPOSED BUDGET, THIS FUND WILL BE BALANCED AS WE CONTROL COSTS AND MANAGE EXPENSES TO REVENUES. SO IN SUMMARY, OUR GENERAL FUND IS NOT STRUCTURALLY BALANCED. WE WILL NEED TO REDUCE SPENDING IN FISCAL YEAR '26 AND '27 TO ALIGN REVENUE AND EXPENSE GROWTH. IN FISCAL YEAR 2025, WE HAVE A MANAGEABLE DEFICIT OF 2.4 MILLION THAT WE WILL BEGIN ADDRESSING NOW BY SLOWING SPENDING AND MAKING STRATEGIC REDUCTIONS IN AREAS THAT DO NOT IMPACT SERVICE DELIVERY. DURING THE GOAL-SETTING SESSION, WE WILL PRESENT THE FISCAL YEAR 2026 AND 2027 TRIAL BUDGET, AND THIS WILL INCLUDE UPDATED REVENUE AND EXPENDITURE ASSUMPTIONS BASED ON ADDITIONAL DATA THAT WE RECEIVE OVER THE NEXT SEVERAL MONTHS TO INCLUDE ADDITIONAL DETAILED WORK WITH CPS ON REVENUES AND ANY STATE LEGISLATIVE BILLS THAT MAY BE PASSED THAT WOULD IMPACT OUR REVENUES. ADDITIONALLY, THE TRIAL BUDGET WILL INCLUDE A REDUCTION TARGET FOR 2026 AND 2027.
NOW, AS PART OF THIS PRESENTATION, WE HAVE THE MIDYEAR BUDGET ADJUSTMENT. THE PROPOSED MIDYEAR BUDGET ADJUSTMENT RIGHT SIZES REVENUE AND EXPENSES FOR FUNDS PRESENTED TODAY.
AND WE WILL BE ASKING CITY COUNCIL TO CONSIDER APPROVING THESE CHANGES NEXT THURSDAY AT A SESSION ON MAY 15TH. AND FINALLY, MY LAST SLIDE, I WANTED TO PROVIDE A QUICK SUMMARY OF THE NEXT STEPS IN THE BUDGET PROCESS. ON MAY 12TH, WE WILL LAUNCH OUR COMMUNITY BUDGET SURVEY. AS IN PREVIOUS YEARS, THIS WILL BE A STATISTICALLY VALID SURVEY THAT GATHERS INPUT ABOUT THE COMMUNITY'S PRIORITIES FOR THE DEVELOPMENT OF THE 2026 BUDGET.
RESULTS FROM THIS SURVEY, ALONG WITH THE TRIAL BUDGET, WILL BE PRESENTED TO CITY COUNCIL DURING THE GOAL-SETTING SESSION ON JUNE 27TH.
THE FEEDBACK WE WILL RECEIVE -- THE FEEDBACK THAT WE RECEIVE AS PART OF THE GOAL-SETTING SESSION, AS WELL AS INPUT FROM THE COMMUNITY, WILL BE INCORPORATED INTO THE BUDGET THAT IS PRESENTED AND PROPOSED ON AUGUST 14TH. ONCE THE BUDGET IS PROPOSED, WE WILL HOST SEVERAL BUDGET WORK SESSIONS WITH THE CITY COUNCIL, AND WE WILL GATHER COMMUNITY INPUT ON THE PROPOSED BUDGET. THE FISCAL YEAR 2026
[00:35:03]
BUDGET IS SCHEDULED TO BE ADOPTED ON SEPTEMBER 18TH.AND THIS CONCLUDES MY PART OF THE PRESENTATION.
I'LL HAND IT OVER TO KATE FOR AN UPDATE ON OUR COMPREHENSIVE REVIEW
PROCESS. >> >> GOOD AFTERNOON.
GOOD AFTERNOON, MAYOR AND COUNCIL. KATE KINNISON, CHIEF INNOVATION OFFICER. TODAY I'M GOING TO GIVE YOU A BRIEF OVERVIEW, JUST FOUR SLIDES FOR ME. THE C COMPREHENSION BUDGET ANALYSIS IS STILL UNDERWAY, SO WE'RE GOING TO FOCUS TODAY ON FINDINGS AND RECOMMENDATION -- I'M SORRY, WE'RE GOING TO FOCUS ON THE PROCESS.
OVER THE SUMMER YOU'LL LEARN ABOUT FINDINGS AND RECOMMENDATIONS AS PART OF THE BUDGET PROCESS. AROUND THIS TIME LAST YEAR THE CITY MANAGER REINSTATED CBRS. THESE REVIEWS ARE IN RESPONSE TO FORECAST TRENDS AT THAT TIME AS WELL AS A CALL FROM THE CITY MANAGER TO GET BACK TO BASICS POSTCOVID. CBRS WERE FIRST IMPLEMENTED 15 YEAS AGO IN RESPONSE TO THE GREAT RECESSION. THEY ARE STRUCTURED TO BE SYSTEMATIC DATA-DRIVEN AND COLLABORATIVE, TO ENSURE THE PROBLEM IS SYSTEMATIC, WE USE A LEAN SIX SIGMA METHODOLOGY. TO ENSURE THAT IT'S DATA DRIVEN, WE USE TOOLS TO 'EM US GATHER, ORGANIZE, CLEANSE AND ORGANIZE DATA AND TO ENSURE THAT IT'S COLLABORATIVE, WE WORK WITH DEPARTMENT LEADERSHIP AND STAFF FROM START TO FINISH. THERE ARE THREE MAIN GOALS WE DRIVE TOWARDS FOR CBRS, COST SAVINGS, TIME SAVINGS AND PERFORMANCE IMPROVEMENT. IN THE FIRST FIVE YEARS OF CBRS FROM 2009 TO 2013, CBRS IDENTIFIED OVER 17 MILLION IN SAVINGS, HOWEVER, IT'S NOT ALL FOCUS DZ ON COST SAVINGS. SOME PROJECTS FOCUS SOLELY ON TIME SAVINGS AND PROCESS IMPROVEMENT. FOR EXAMPLE, IN 2012, HR RECRUITMENT PROCESS -- WOE SAW 105 STEPS THAT IT TOOK TO RECRUIT, AND WE WERE ABLE TO REDUCE THAT DOWN TO 55 STEPS, WHICH IS A 50% REDUCTION IN TIME.
THIS FISCAL YEAR, WE'RE LOOKING AT FOUR DEPARTMENTS SELECTED BY THE CITY MANAGER, PARKS AND RECREATION, METRO HEALTH, HUMAN SERVICES AND PUBLIC WORKS. THERE ARE TWO MAIN PHASES TO THE CBR PROCESS.
FIRST, WE LOOK COMPREHENSIVELY AND HOLISTICALLY AT THE DEPARTMENT, AND FROM THERE, WE DO A DEEPER DIVE IN CERTAIN FOCUS AREAS. FOR THE COMPREHENSIVE ANALYSIS, THERE'S THREE MAIN STEPS LISTED HERE. FIRST, WE ANALYZE BUDGET AND PROGRAM GROWTH OVER THE PREVIOUS FIVE YEARS. SECOND, IN CONJUNCTION WITH THE CITY ATTORNEY'S OFFICE, WE IDENTIFY WHICH SERVICES ARE MANDATED BASED ON CITY CHARTER, STATE AND FEDERAL LAWS AND CITY ORDINANCE. THIRD, WE CONDUCT DATA ANALYSIS AND PRODUCE VISUALIZATIONS TO UNDERSTAND ORGANIZATIONAL STRUCTURE AND HUMAN RESOURCE ALLOCATIONS. ONCE WE HAVE A CLEAR PICTURE OF THE CURRENT STATE OF A DEPARTMENT, WE IDENTIFY AREAS OF OPPORTUNITY FOR DEEPER ANALYSIS. THIS PHASE INVOLVES SIGNIFICANT DATA GATHERING AND ANALYSIS VIA INTERVIEWS, SITE VISITS, COMPARATIVE CITY RESEARCH AND UTILIZATION STATISTICS.
AND IT BORROWS ELEMENTS OF BOTH ZERO-BASED BUDGETING AND OUTCOME-BASED BUDGETING TO DETERMINE HOW EFFECTIVELY AND HOW EFFICIENTLY SERVICES ARE BEING DELIVERED. THIS SLIDE GIVES YOU THE 14 FOCUS AREAS CURRENTLY UNDER WAY, AND IN THE INTEREST OF TIME, I WILL SHARE A FEW EXAMPLES FROM THE LIST. SO FIRST, FOR PUBLIC WORKS, WE'RE CURRENTLY PROCESS MAPPING THE PROJECT MANAGEMENT PROCESS TO UNDERSTAND FROM BEGINNING TO END EACH PHASE AND STEP IN DETAIL, INCLUDING COST ESTIMATING, COMMUNICATION AND INSPECTIONS, THE PROCESS MAPS IDENTIFY OPPORTUNITIES TO IMPROVE EFFICIENCY, STANDARDIZATION, ACCOUNTABILITY AND OVERALL COMMUNICATION.
FOR PARKS, WE'RE LOOKING AT COMMUNITY-CENTERED PROGRAMMING AND ANALYZING UTILIZATION DATA AND CUSTOMER FEEDBACK TO IDENTIFY WAYS TO BETTER MEET DEMAND. FOR METRO HEALTH, WE'RE REVIEWING THE SA FORWARD PLAN, THIS IS THE DEPARTMENT'S FIVE-YEAR STRATEGIC PLAN LAUNCHED IN RESPONSE TO COVID. WE ARE ASSESSING PROGRESS TOWARDS GOAL AND PREPARING FOR THE CHANGING HEALTH LANDSCAPE.
FINALLY, FOR HUMAN SERVICES, WE'RE LOOKING AT DELEGATE AGENCIES, CONSOLIDATED FUNDING, CONDUCTING DATA ANALYSIS, BEST PRACTICE RESEARCH, STAKEHOLDER INTERVIEWS, ALL TO INFORM STRATEGIC ALIGNMENT AND IMPROVE EFFICIENCY. IN CONCLUSION, THE CBR RECOMMENDATIONS TO COUNCIL INCLUDE OPPORTUNITIES FOR PROCESS IMPROVEMENT AND MORE EFFECTIVE RESOURCE ALLOCATION, RECOMMENDATIONS AND
[00:40:03]
PROPOSED SAVINGS WILL BE INCLUDED AS PART OF THE UPCOMING FY 2026 BUDGET PROCESS. NOW I WILL HAND IT OVER TO DANIELLE PARKER TO REVIEW THE CITY OF SAN ANTONIO BUDGET METHODOLOGIESEVALUATION. >> THANK YOU. GOOD AFTERNOON, EVERYONE. MY NAME IS DANIELLE SCOTT PARKER, I'M A DIRECTOR AT PFM AND I'M ALSO I'M JOINED BY MY COLLEAGUE VICTORIA WHO WILL BE UP HERE IN JUST A SECOND TO GO OVER THE COURSE OF OUR PRESENTATION WHICH WE'VE HIGHLIGHTED HERE IN THIS FIRST SLIDE. WE'RE VERY EXCITED TO BE PARTNER WITH A CITY ON THIS IMPORTANT WORK. PFM HAS COLLABORATED WITH THE CITY OVER THE YEARS INCLUDING SOME WORK AROUND ARPA AND COLLECTIVE BARGAINING AND WORKFORCE. OVER THE COURSE OF OUR WORK, WE HAVE HAD THE OPPORTUNITY TO REALLY CONSIDER AND IN THE FULLER REPORT THAT YOU ALL HAVE IN FRONT OF YOU, CONSIDER FINDINGS AND RECOMMENDATIONS AROUND HOW THE CITY'S MANAGEMENT, BUDGET AND DEPARTMENTS CAN THINK ABOUT LEVERAGING BUDGETING FOR EQUITY, BUDGETING AND JUST GENERALLY HOW YOU CAN THINK ABOUT EVALUATING EACH OF THESE PIECES. OUR WORK REALLY SPANNED OVER FOUR PHASES, WE REVIEWED CORE SERVICES TO MAKE SURE THAT WE UNDERSTOOD HOW THE CITY'S CORE SERVICES ALIGNED WITH BUDGET PRIORITIES. WE EVALUATED THE CITY'S CURRENT BUDGET PROCESS BY LOOKING AT TIMELINES OF THE EXISTING PROCESS, KEY STEPS, ENGAGING WITH CITY STAFF, AND ALIGNING AND UNDERSTANDING HOW THE CITY'S CURRENT PROCESS ALIGNED WITH BEST AND PROMISING PRACTICES.
WE ALSO REVIEWED THE BUDGET METHODOLOGY. SO WE REVIEWED ZERO-BASED BUDGETING, PERFORMANCE-BASED BUDGETING, OUTCOMES BASED AS WELL AS OTHER METHODOLOGIES TO UNDERSTAND WHERE THERE MAY BE OPPORTUNITIES TO ENHANCE THE CITY'S CURRENT BUDGET PROCESS AND CONSIDER WAYS THAT THESE BUDGET PROCESSES MAY ALREADY BE -- MAY ALREADY BE A PART OF THE CITY. FINALLY, WE HAVE MADE A SERIES OF RECOMMENDATIONS FOR AN ALTERNATIVE BUDGET METHODOLOGY FOR COUNCIL CONSIDERATION FOR THE FY '27 BUDGET. I'LL LET MY COLLEAGUE VICTORIA TALK A LITTLE BIT ABOUT THE CORE SERVICES.
>> GOOD AFTERNOON, EVERYONE. I'M VICTORIA SARI AND I'M SENIOR MANAGING CONSULTANT WITH PFM. I'M GOING TO GO OVER SOME OF THE CORE SERVICES AND AN OVERVIEW OF OUR EVALUATION OF THE CITY'S EXISTING BUDGET PROCESS. AS WE CONDUCTED OUR REVIEW OF BOTH THE CITY'S EXISTING PROCESS AND RESEARCH ADDITIONAL METHODOLOGIES, WE ALSO SPENT A LOT OF TIME REVIEWING AND TRYING TO PICK OUT WHAT WE DEEM AS CORE SERVICES. WE'VE DEFINED CORE SERVICES FOR THE PURPOSES OF THIS WORK AS SERVICES THAT THE CITY IS REQUIRED TO PROVIDE.
THIS CAN BE MANDATED THROUGH VOTER REFERENDUM, THROUGH THE STATE D CODE AND THROUGH THE CITY CHARTER AS WELL. IN THE GRAPHIC YOU SEE ON THE SCREEN, WE TRIED TO HIGHLIGHT THE DIFFERENT MECHANISMS BY WHICH SERVICES AND PROGRAMS ARE PROVIDED. WITH THE BLUE BOXES INDICATING THOSE CORE SERVICES COMING FROM THE TEXAS CONSTITUTION, THE CITY CHARTER AND THE VOTER REFERENDUMS, AND THE ORANGE AND YELLOW BOXES BEING SERVICES THAT HAVE A BIT MORE DISCRETIONARY ABILITY TO THEM BECAUSE CITY COUNCIL CAN VOTE ON THOSE, SO THAT INCLUDES CONTRACT SHALL OBLIGATIONS AND -- CONTRACTUAL OBLIGATIONS AND ORDINANCES.
. THIS NEXT SLIDE GIVES A BIT MORE DETAIL INTO THE HIERARCHY OF AUTHORITY WITHIN THE CITY, STARTING WITH THE TEXAS CONSTITUTION WHICH IS WHERE ALL LOCAL GOVERNMENT DERIVES ITS POWER FROM. AT THE NEXT LEVEL, WE HAVE THE STATE STATUTE WHICH PROVIDES A BIT MORE SPECIFICITY AROUND POWERS.
WE HAVE THE CITY CHARTER, WHICH DEFINES D HOW THE CITY WILL OPERATE, AND ALSO OUTLINES THE POWERS OF THE MAYOR AND CITY COUNCIL.
THE CHARTER DIRECTLY STATES THAT CITY COUNCIL HAS THE ABILITY TO CREATE AND ELIMINATE DEPARTMENTS, AND IT ALSO GIVES A BIT MORE INSIGHT AS TO WHAT THE CITY IS REQUIRED TO PROVIDE BY INDICATING WHAT THE CITY SHALL PROVIDE. AND ALSO DISTINGUISHES THAT FROM WHAT THE CITY MAY PROVIDE. IN THE CITY CHARTER, THERE'S ALSO ROOM FOR INTERPRETING THE LEVEL OF SERVICE THAT IS PROVIDED FOR EACH OF THE PROGRAMS AND SERVICES. AND THEN WE GET DOWN TO THE VOTER-APPROVED BONDS AND REFERENDUMS, WHICH ARE ALSO CONSIDERED CORE SERVICES, BECAUSE THESE ARE VIEWED AS AGREEMENTS BETWEEN THE CITY AND ITS RESIDENTS.
AND THEN WE GET DOWN TO ORDINANCES, WHICH HAVE A BIT MORE FLEXIBILITY
[00:45:04]
AROUND THEM. WE'RE GOING TO QUICKLY GO THROUGH THE CITY'S EXISTING BUDGET PROCESS. AND YOU ALL ARE ALL FAMILIAR WITH THIS PROCESS, STARTING WITH THE BUDGET REVIEW AND FORECAST AND GOAL-SETTING PROCESS WITH CITY COUNCIL. AND THEN THE ADDITIONAL STEPS THAT TAKE INTO ACCOUNT FEEDBACK FROM COUNCIL, FROM RESIDENTS, FROM THE CITY MANAGER, FROM THE MAYOR THROUGH THE TRIAL BUDGET COMMUNITY SURVEY, PROPOSED BUDGET WORK SESSIONS AND PUBLIC INPUT IN ORDER TO ADOPT THE BUDGET. WE ALSO WANTED TO HIGHLIGHT THAT THE CITY IS CURRENTLY EMPLOYING A LOT OF EXISTING BEST PRACTICES, SUCH AS THE FIVE-YEAR FORECAST, GOAL-SETTING, GATHERING BUDGET DATA, THE USE OF THE COMMUNITY SURVEY AND PUBLIC INPUT PHASES OF THE BUDGET PROCESS, PERFORMANCE MANAGEMENT AND BUDGET MONITORING.WE ALSO CONDUCTED AN ANALYSIS OF THE EXISTING PROCESS TO HIGHLIGHT SOME OF THE STRENGTHS, WEAKNESSES AND OPPORTUNITIES AND THREATS THAT THE CURRENT PROCESS HAS, AS PREVIOUSLY STATED IN THE SLIDE BEFORE THIS, THERE ARE ALREADY A LOT OF EXISTING BEST PRACTICES EMPLOYED.
OBTAINING RESIDENT FEEDBACK IS REALLY IMPORTANT FOR ALLOWING FOR THE BUDGET TO BE REFLECTIVE OF THE COMMUNITY NEEDS.
ALSO THE TIME BUILT IN FOR OBTAINING THE PERSPECTIVES FROM COUNCIL, FROM THE MAYOR, FROM THE CITY MANAGER ALLOW FOR -- ALLOWS FOR THE BUDGET TO BE RESPONSIVE TO OTHER OPERATIONAL CHALLENGES, AND THE PROCESS IS ALSO DATA DRIVEN, WHICH CAN ENSURE THAT THE CITY IS ABLE TO ANTICIPATE ANY FUTURE BUDGET CHALLENGES.
THE MAIN WEAKNESS WE IDENTIFIED WITHIN THE CURRENT BUDGET PROCESS IS THAT AS NEW PROGRAMS OR EXISTING PROGRAMS CONTINUE TO GROW, WITHOUT AN EVALUATION OF WHERE THOSE PROGRAMS ARE, THIS CAN LEAD TO SOME INEFFICIENCIES AND IT ALSO IS HARD TO DETERMINE WHETHER OR NOT THOSE PROGRAMS NEED TO CONTINUE ON, IF THEY'VE COMPLETED THEIR GOAL; IF THEY NEED TO BE ADJUSTED -- OR IF THEY NEEDED TO BE ADJUSTED IN ANY OTHER WAY. FOR THE OPPORTUNITIES THAT WE SEE WITH THE EXISTING PROCESS, REALLY IS THE OPPORTUNITY TO CREATE MORE TIME FOR INPUT SO THAT ONCE PRIORITIES ARE SET, THEY'RE BETTER INFORMED AND CAN GUIDE STRONGER DECISION-MAKING. AND THERE'S ALSO THE OPPORTUNITY TO INCORPORATE MORE DATA AND PERFORMANCE MEASURES SO THAT YOU CAN REALLY SEE THE VALUE AND EFFECTIVENESS OF THE PROGRAMS THAT YOU ALL HAVE. AND LASTLY AND THE GREATEST THREAT WE'D LIKE TO HIGHLIGHT IS THAT WITHOUT A CLEAR WAY TO EVALUATE THE PROGRAMS, THERE COULD BE A SCENARIO IN WHICH PROGRAMS ARE SUPPORTED THAT MAYBE DON'T ALIGN WITH THE CITY'S PRIORITIES, OR NO LONGER ALIGN WITH THE CITY'S PRIORITIES, AND THIS CAN CREATE SOME INEFFICIENCIES. AND I WILL PASS IT OVER TO MY COLLEAGUE, DANIELLE SCOTT, TO GO OVER THE ADDITIONAL BUDGET METHODS.
>> SO AS A PART OF THIS PROCESS, WE EVALUATED A NUMBER OF EXISTING BUDGET METHODOLOGIES, INCREMENTAL, ZERO-BASED, PERFORMANCE BASED, OUTCOMES BASED, PRIORITY BASED AS WELL AS TARGET-BASED BUDGETING.
IT'S IMPORTANT TO KNOW THAT THERE ARE MULTIPLE APPROACHES AND THAT MANY MUNICIPALITIES OVER TIME EITHER APPLY ONE OR MORE AT THE SAME TIME, OR GO FROM ONE METHODOLOGY TO ANOTHER OVER THE COURSE OF A NUMBER OF FISCAL YEARS. EACH APPROACH HAS A SET OF PROS AND CONS THAT WE'VE IDENTIFIED, AND CERTAINLY HAVE DESCRIBED IN MORE DEPTH IN OUR FULL REPORT WITH SOME ADDITIONAL CASE STUDIES FOR YOUR CONSIDERATION.
I THINK THE THING TO KEEP IN MIND HERE IS THAT WE FIND VERY MUCH THAT AS YOU'RE LOOKING AT AND EVALUATING THESE APPROACHES, THAT YOU WILL SEE A NUMBER OF THEM ARE ALREADY IN EXISTENCE WITHIN THE CITY'S CURRENT BUDGET PROCESS. THE PRIOR PRESENTATION HIGHLIGHTED SORT OF THE ALIGNMENT OF THE COMPREHENSIVE BUDGET REVIEW AS A FORM OF THAT -- THAT REALLY TAKES A NUMBER OF ELEMENTS OF ZERO-BASED BUDGETING.
YOU'RE ALREADY OBVIOUSLY LEVERAGING PIECES OF INCREMENTAL-BASED BUDGETS AS WELL AS PERFORMANCE AND OUTCOMES BASE, AND BECAUSE SO MANY OF THESE
[00:50:01]
APPROACHES ARE ALREADY IN USE, WE BELIEVE THAT THE MOST SUCCESSFUL OF A HYBRID APPROACH CONTAINS MANY OF THESE COMPONENTS THAT HAVE BEEN DEEMED SUCCESSFUL FOR THE CITY. THE OTHER THING IS THERE IS REALLY NOT A ONE-SIZE-FITS-ALL FOR BUDGETING. WHEN THINKING ABOUT THE BUDGETING PROCESS AS WELL AS OPPORTUNITIES TO IMPROVE THE BUDGET PROCESS BASED ON THE RESEARCH AND ANALYSIS OUR TEAM HAS CONDUCTED, WHAT WE HEARD FROM DEPARTMENTS AND STAKEHOLDERS, AS WELL AS EVALUATING THE NUMBER OF OPPORTUNITIES THAT YOU ALL HAVE TO MAKE SURE THAT WE DON CONTINUE TO MOVE FORWARD WITH THE EXISTING BEST PRACTICES THAT ARE IN PLACE, BUT ALSO MAKE SOME TARGETED ADJUSTMENTS TO ENSURE THAT ALL OF THE GOALS, AS WELL AS EFFECTIVE DECISION-MAKING, STRATEGIC THINKING, AS WELL AS BEING MINDFUL OF CURRENT ECONOMICS AND CONSTRAINTS OF THE CURRENT BUDGET ARE ALL AT PLAY SO THAT YOU'RE ABLE TO REALLY MAKE THOSE INFORMED DECISIONS AROUND ANNUAL BUDGET ALLOCATIONS.SO I'LL TALK A LITTLE BIT AND SPEND MOST OF THE TIME HERE REALLY GETTING INTO THE NEED FOR A HYBRID APPROACH AND WHAT THAT APPROACH WE THINK MAKES THE MOST SENSE FOR THE CITY TO CONSIDER FOR THE FY 2027 BUDGET.
WE GOT TO THIS APPROACH BY REALLY MAKING SURE THAT WE WANTED TO HAVE AN OPPORTUNITY FOR THE MAYOR, COUNCIL AND DEPARTMENTS TO HAVE A COMMON UNDERSTANDING OF NOT ONLY WHAT GOALS ARE, BUT HOW DO YOU ALIGN TO THOSE GOALS WHILE ALSO MAINTAINING TRANSPARENCY AND ACCOUNTABILITY THAT YOU ALL HAVE INSTILLED WITH RESIDENTS AND STAKEHOLDERS, CONSIDERING ENHANCED EFFICIENCY AS WELL AS STRATEGIC ALLOCATIONS SO THAT ULTIMATELY YOUR BUDGET SYSTEM IS BOTH FLEXIBLE, RESULTS ORIENTED AND HAS THE ABILITY FOR IMPROVED DECISION-MAKING. SO KEY ELEMENTS OF THE CURRENT BUDGET SYSTEM THAT WE FELT STRONGLY ABOUT MAINTAINING AND THAT YOU WILL SEE HIGHLIGHTED OVER THE COURSE OF THE UPCOMING SLIDES ARE MAINTAINING THE BUDGET FORECASTING, WHICH IS VERY MUCH A BEST PRACTICE. GOAL AND PRIORITY SETTING, YOU'LL SEE SOME EXPANSION OF THAT IN THE UPCOMING SLIDES. MAINTAINING THE STRONG FOCUS ON COMMUNITY ENGAGEMENT AS WELL AS THE PUBLIC SURVEY, CONSIDERING PERFORMANCE MEASURES AND LEVERAGING THOSE PERFORMANCE MEASURES AND OUTCOMES IN PARTICULAR IN A MORE FOCUSED WAY, AND MAKING SURE THAT BUDGET TRANSPARENCY, ALONG WITH THE UTILIZATION OF DATA ARE ALWAYS AT THE FOREFRONT. SO OUR PRELIMINARY RECOMMENDATION IS A HYBRID APPROACH THAT STRATEGICALLY IMPLEMENTS MORE OUTCOMES BASED BUDGETING AS WELL AS TARGETED USE OF ZERO-BASED BUDGETING TO ENSURE THAT DEPARTMENTS ON THE FRONT END HAVE GREATER CLARITY ON WHICH SERVICES, PROGRAMS AND PRIORITIES ARE NEEDED, BUT THAT COUNCIL ALSO HAS MORE TIME TO SET THOSE PRIORITIES AND OUTCOMES SO THAT ALL INVOLVED FROM DEPARTMENTS TO THE BUDGET TEAM TO THE CITY MANAGEMENT HAVE THE ABILITY TO MAKE MUCH EARLIER CRAFT A BUDGET THAT IS IN ALIGNMENT WITH GOALS, AS WELL AS THINKING ABOUT HOW THOSE GOALS LIVE OVER A MULTIYEAR PERIOD. SO TO DO THAT, WE WILL BE DEPLOYING AND SUGGEST DEPLOYING A LONGER COUNCIL GOAL-SETTING SESSION TO REALLY NOT ONLY DEFINE THE COUNCIL'S PRIORITIES IN ONE YEAR, BUT OVER MULTIPLE YEARS. AND TARGETING THAT ZERO-BASED BUDGETING FOR THOSE AREAS AND SERVICES THAT ARE MOST CRITICAL, AND THOSE WOULD ALSO BE A SORT OF PART OF THE GOAL-SETTING PROCESS. AND THEN MAKING SURE TO CONTINUE THE IMPLEMENTATION OF THE COMPREHENSIVE BUDGET REVIEWS AS FROM DEPARTMENTS ON A ROLLING BASIS, AND THEN WORKING WITH DEPARTMENTS AS WELL AS STAFF TO DEPLOY A MORE RIGOROUS TRAINING -- HAVE IDENTIFIED ALIGNS WITH THE SORT OF -- WHAT WE CALL A TRANSITIONAL BUDGET PROCESS TO A REGULAR BUDGET PROCESS. AND THIS TRANSITIONAL BUDGET HELPS THE COUNCIL WITH THE EXPANDED MOVING INTO THE SORT OF NEW FOUR-YEAR TERM, HAVE A MUCH LONGER PERIOD OF HAVING A LONGER FORM GOAL SESSION IN THE FIRST YEAR AROUND ALLOWING YOU ALL TO SET PRIORITIES, RESET THAT BUDGET IN THE LONG-TERM GOALS AND FRAME THOSE OUTCOMES TO INFORM A MUCH MORE BROADER OR EVEN CONSIDER A MULTIYEAR BUDGET PLANNING.
THAT ONE-YEAR CYCLE ALLOWS DEPARTMENTS TO REGROUP AND REPRIORITIZE AND DEVELOP A BUDGET IN THE FIRST YEAR IN ALIGNMENT WITH THOSE GOALS, AND THEN AFTER THE FIRST TRANSITIONAL YEAR, THE BUDGET TEAM WOULD HAVE A SMALLER, BUT STILL VERY INTENTIONAL SESSION WHERE COUNCIL WOULD BASICALLY REAFFIRM, CONFIRM AND MAKE ANY UPDATES TO THE GOALS SET IN THE TRANSITIONAL YEAR, AND ALLOW DEPARTMENTS TIME TO REALIGN BUDGET PRIORITIES TO ENSURE THAT ALL OF THE PIECES THAT ARE IN THERE NEED TO BE OVER THE COURSE OF THAT FISCAL YEAR. SO HOW WE HAVE IDENTIFIED THIS, IF YOU NOTICE IN BLUE, THOSE ARE THE PIECES THAT ARE NEW AND THE PIECES IN TAN OR TAWPE ARE THE PIECES THAT VICTORIA HIGHLIGHTED
[00:55:03]
EARLIER. THE KEY ELEMENTS THAT ARE NEW YOU'LL SEE WE'VE REALLY ADDED ADDITIONAL TIME IN THE BEGINNING ELEMENTS OF THE BUDGET SO THAT FROM JUNE TO SEPTEMBER, DEFINING AND CORE AND SUPPLEMENTAL SERVICES IN LINE AROUND THAT SORT OF APPROACH AND METHODOLOGY THAT VICTORIA HIGHLIGHTED IN THE EARLY PART OF THE PRESENTATION HAPPENS FROM JUNE TO SEPTEMBER. PART OF THAT IS WHERE NOT ONLY THE CITY LEADERSHIP TEAM WITH THE SUPPORT OF THE CITY ATTORNEY'S OFFICE WILL DEFINE SORT OF WHAT THOSE CORE SERVICES ARE, WHAT SUPPLEMENTAL SERVICES AND THINK ABOUT A PRELIMINARY LIST OF DEPARTMENTS GOING INTO JULY AND AUGUST, THAT WOULD BE POSITIONED FOR THE COMPREHENSIVE BUDGET REVIEW THAT YEAR, AS WELL AS FOR THE ZERO-BASED BUDGETING. THEN GOING INTO THE GOAL SETTING FROM SEPTEMBER TO NOVEMBER, COUNCIL WOULD HAVE A LONGER-FORMED GOAL-SETTING SESSION WHERE THEY WOULD WORK TO OUTLINE NOT ONLY PRIORITIES BUT OUTCOMES THEY'RE LOOKING FOR FROM DEPARTMENTS, AND THAT IS A MULTIMONTH PROCESS THAT WOULD REALLY ALLOW THE DEPARTMENTS TO PROVIDE SOME FEEDBACK AROUND CURRENT PROCESSES, CURRENT SERVICE LEVELS, AND THEN ALLOW COUNCIL TO NAVIGATE AS WELL AS TO DEFINE WHAT THE MOST IMPORTANT PRECEDENTS ARE FOR DEPARTMENTS TO GO FORWARD.FROM NOVEMBER TO JANUARY, DEFINING THOSE KEY SERVICE LEVELS, PARTICULARLY FOR THE DEPARTMENTS THAT ARE UNDERGOING -- DEPARTMENTS OR PROGRAMS AND SERVICES THAT ARE UNDERGOING A ZERO-BASED AND THE COMPREHENSIVE BUDGET REVIEW, BUT FOR REALLY ALL MAJOR SERVICES AND DEPARTMENTS. THEN THE BUDGET REVIEW AND FORECAST WOULD HAPPEN AS NORMALLY SCHEDULED FROM DECEMBER TO APRIL. THE COMPREHENSIVE BUDGET REVIEW AND THE ZERO-BASED PROCESSES WOULD GO FROM DECEMBER TO JULY, AND THEN YOUR TRIAL BUDGET, COMMUNITY SURVEY, PROPOSED BUDGET AND WORK SESSIONS ALL WOULD SORT OF REALIGN WITH YOUR CURRENT BUDGET PROCESS.
SO IN THE SORT OF REGULAR BUDGET YEARS OUTSIDE OF THE TRANSITIONAL FIRST YEAR, YOU STILL HAVE A LITTLE BIT LONGER OF A GOAL-SETTING PROCESS, BUT IT'S -- I WOULD SAY A LITTLE BIT LESS INTENSIVE AND BUILDS UPON THE DEEPER WORK THAT YOU ALL ARE DOING IN THE TRANSITIONAL BUDGET YEAR. BUT STILL INCORPORATES IN ALLOWING COUNCIL TO HAVE THE OPPORTUNITY TO PROVIDE THOUGHTS AROUND NOT ONLY THE DEPARTMENTS AND PROGRAMS THAT ARE IDENTIFIED FOR ZBB, AS WELL AS FOR THE COMPREHENSIVE BUDGET REVIEW, BUT ENSURE THAT GOALS AND PRIORITIES STILL MAKE THE MOST SENSE SO THAT DEPARTMENTS AND CITY BUDGET STAFF HAVE TTHE ABILITY TO ALIGN THE BUDGET TO THOSE PRIORITIES AND OUTCOMES.
THE TRANSITION TO THE NEW BUDGET PROCESS CERTAINLY WILL REQUIRE DEEPER PRIORITIES AND OUTCOMES TO ASSURE THAT SPENDING ALIGNS.
WE HAVE THIS EXAMPLE UP HERE OF WHAT WE REALLY MEAN BY -- FROM TAKING A PRIORITY LIKE PUBLIC SAFETY AND DEFINING AN OUTCOME LIKE REDUCING THE AVERAGE RESPONSE TIME FOR HIGH PRIORITY EMERGENCY CALLS TO UNDER FIVE MINUTES. THAT SORT OF VERY CLEAR OUTCOME WOULD GIVE DEPARTMENTS, AS WELL AS BUDGET STAFF, THE ABILITY TO ALIGN BUDGET TO MEET THE OUTCOMES THAT COUNCIL FEEL ARE MOST IMPORTANT AND MOST CRITICAL, AND BE RESPONSIVE TO THE OUTCOMES THAT ARE MOST CRITICAL, IMPORTANT FOR RESIDENTS AS THEY'RE HEARING FROM THEIR CONSTITUENTS OVER TIME.
SO THERE IS A NUMBER OF ROLES FOR MANY STAKEHOLDERS AS A PART OF THIS PROCESS, AND WE SORT OF OUTLINE THEM HERE. WITH RESIDENTS REALLY CONTINUING TO PROVIDE INPUT AROUND GOALS AND PRIORITIES THROUGH THE COMMUNITY SURVEY, BUT ALSO THROUGH INPUT OF TOWN HALLS AND EVENTS AS A PART OF THE PROPOSED BUDGET PROCESS. WE SEE MAYOR AND CITY COUNCIL AS THE DEFINERS OF WHAT THOSE GOALS AND PRIORITIES ARE, AND HELPING TO REALLY DEFINE THOSE DESIRED OUTCOMES, AND THEN BEING SUPPORTIVE AND SELECTING THE LEVELS OF SERVICE, PARTICULARLY FOR SUPPLEMENTAL SERVICES THAT ALIGN WITH THE BUDGET TARGETS, AND DEFINING THE AREAS OF INVESTMENTS, AS WELL AS OBVIOUSLY ADOPTING THE ULTIMATE BUDGET.
THE CITY MANAGEMENT STAFF WOULD HELP TO FACILITATE THE COUNCIL DISCUSSIONS, IDENTIFY PROGRAMS POISED FOR ZERO-BASED BUDGETING, REVIEW AND CONFIRM THE DEPARTMENTS FOR COMPREHENSIVE BUDGET REVIEW, AND THEN ADJUST THE BUDGET TO ALIGN TO THOSE DESIRED OUTCOMES SET BY MAYOR AND COUNCIL, IN ADDITION TO PRESENTING THE PROPOSED BUDGET. THE BUDGET TEAM ITSELF IN ADDITION TO SORT OF DEVELOPING THE BUDGET REVIEW AND THE FIVE-YEAR FORECAST, WOULD BE WORKING TO ASSIST IN IDENTIFYING PROGRAMS TO GO UNDER THE ZERO-BASED BUDGETING REVIEW AND DEVELOPING THE TRIAL BUDGET AND PRIORITIZING THE DEPARTMENTS FOR THE CBR REVIEW EACH YEAR.
AND THE DEPARTMENTS THEMSELVES WOULD BE REALLY KEY IN PROVIDING THE STRATEGIC PLAN, INFORMATION AS WELL AS UPDATES AROUND EXISTING SERVICES TO COUNCIL, PROVIDING THE SUBJECT MATTER EXPERTISE AROUND CURRENT INITIATIVES AND PROGRAMS FOR GOAL SETTING, DEVELOPING THE SERVICE LEVEL PACKAGES UNDER THE ZERO-BASED BUDGETING FOR COUNCIL, PARTICIPATING IN CBB AS WELL AS PRESENTING THEIR BUDGET CBC.
SO AS WE DID A SWOT ANALYSIS ON THE CURRENT BUDGET PROCESS, WE ALSO
[01:00:03]
DID A SWOT ANALYSIS ON THIS NEW BUDGET PROCESS. A NUMBER OF STRENGTHS HERE, BUT WE THINK THE BIGGEST ONE IS THAT THIS WOULD PROVIDE MAYOR AND COUNCIL WITH A LONGER VIEW OF PRIORITIES FOR BETTER ALIGNMENT AND DECISION-MAKING. ONE THAT ALLOWS FOLKS TO REALLY HAVE A COLLECTIVE UNDERSTANDING OF NOT ONLY WHAT THE PRIORITIES AND OUTCOMES ARE, BUT LETTING THOSE OUTCOMES ESTABLISH THE EXPECTATIONS AROUND SERVICE LEVEL AND NOT VICE VERSA. WE'VE BEEN USING THIS SORT OF TIERED APPROACH ALLOWS FOR MORE INFORMED DECISION-MAKING, AS WELL AS PRIORITIZATION, AND LEVERAGES STRATEGIC PLANS, PERFORMANCE DATA, FINANCIAL FORECAST.THE CITY HAS A WEALTH OF INFORMATION, HAS DONE AND MADE A LOT OF INVESTMENTS IN DOING THIS PLANNING WORK, AND SO WE THINK THERE'S AN OPPORTUNITY TO CONTINUE TO LEVERAGE A LOT OF THE STRONG PLANNING DOCUMENTS THAT HAVE ALREADY BEEN PUT IN PLACE. I THINK SOME OF THE BIGGEST WEAKNESSES, THIS PROCESS WILL TAKE TIME. IT ADDS A MORE SIGNIFICANT BURDEN ON THE MAYOR AND COUNCIL TO MAKE MORE DIFFICULT DECISIONS ABOUT WHICH SERVICES AND PRIORITIES TO FUND, AND WHILE CBB PROCESS WOULD BE LIMITED TO SELECT PROGRAMS, IT WILL STILL REQUIRE TIME AND EFFORT FROM DEPARTMENT STAFF TO REVIEW THOSE SUPPLEMENTAL SERVICES AND DEVELOP DECISION PACKAGES. AND FINALLY, I THINK, IMPLEMENTING THIS NEW PROCESS AT SOME POINT, JUST BECAUSE OF THE ADDITIONAL WORKLOAD, MAY OVERWHELM NOT ONLY DEPARTMENTS OR CITY COUNCILMEMBERS AS THEY'RE GOING THROUGH IT. BUT THOSE WEAKNESSES, I THINK, THE OPPORTUNITIES SORT OF FAR OUTWEIGH SOME OF THE WEAKNESSES IDENTIFIED. WE THINK THAT THE TIERED SERVICE LEVELS OF THE DECISION PACKAGES WOULD GIVE THE CITY MOREOR FLEXIBILITY, PARTICULARLY WITH PROGRAMS TO ALLOW FOR SERVICES TO BE SCALED UP OR DOWN, WHICH WOULD BE ESSENTIAL IN FUTURE BUDGET YEARS. AND THE PROCESS ALSO INCREASES THE COLLABORATION BETWEEN THE BUDGET TEAM, MAYOR, COUNCIL, DEPARTMENTS TO DEVELOP MORE INFORMED DECISION-MAKING.
AND CAN HELP IDENTIFY DUPLICATED SERVICES ACROSS DEPARTMENTS, ALLOWING FOR MORE EFFICIENCY AND EFFECTIVENESS.
FINALLY, I THINK THE BIGGEST THREAT HERE TO HIGHLIGHT IS THAT THE EXTERNAL PRESSURE FROM VARIOUS STAKEHOLDERS WHO HAVE VESTED INTERESTS IN SPECIFIC SERVICES, SUCH AS LONG STANDING COMMUNITY PARTNERS, LOCAL RESIDENTS AND BUSINESSES, THERE MAY BE BACKLASH ASSETING THE OUTCOMES MAY NOT ALIGN TO EVERYONE'S FAVORITE PROGRAM OR SUPPLEMENTAL SERVICES THAT FOLKS HAVE REALLY COME TO KNOW AND TO ENJOY, AND SO WE DO IDENTIFY THAT AS A THREAT AS A PART OF THIS PROCESS FOR CONSIDERATION FOR THE TEAM. SO THAT'S TEND OF OUR PRESENTATION, AND WE'RE VERY MUCH HAPPY TO ANSWER QUESTIONS OVER THE COURSE OF THIS WORK AND LOOK FORWARD TO CONTINUING TO HEAR FROM YOU ALL ABOUT THIS.
THANK YOU FOR THE OPPORTUNITY. >> MAYOR NIRENBERG: GREAT.
THANK YOU VERY MUCH, DANIELLE AND JUSTINA, I THINK WE ALL EARNED THREE CREDIT HOURS IN ORGANIZATIONAL MANAGEMENT TODAY, SO WE APPRECIATE THAT. I REALLY APPRECIATED THE SWOT SLIDES AT THE END, BECAUSE AS WE CHANGE PROCESSES, I THINK ONE OF THE THINGS THAT -- SO FIRST OF ALL, I THINK OUR ORGANIZATION AND THIS COUNCIL IS REALLY SET UP WELL TO INNOVATE, BUT ONE OF THE PIECES OF CAUTIONARY ADVICE I WOULD GIVE EVERYBODY IS WE ALREADY HAVE OUR ESTABLISHED OUTCOMES, I THINK, IN LARGE MEASURE AS GUIDED BY THE PUBLIC. AND I SAY THAT BECAUSE WE HAVE PLANS UNDER WAY THAT ARE OUTCOMES DRIVEN. SPECIFICALLY OUR STATUS OF POVERTY REPORT, WHICH IS INFORMED THINGS LIKE OUR STRATEGIC HOUSING IMPLEMENTATION PLAN, WE HAVE OUR CLIMATE ACTION ADAPTATION PLAN, WE HAVE OUR STRATEGIC PLAN FOR METRO HEALTH. WE HAVE SOME MAJOR PLANS THAT HAVE BEEN INFORMED BY COMMUNITY PROCESSES ALREADY UNDER WAY THAT -- THAT HAVE OUTLINED THE OUTCOMES THAT OUR COMMUNITY EXPECTS.
I THINK OUR BUDGET ANNUALLY HAS BEEN INFORMED BY THOSE BUDGET SURVEYS WHERE WE GO IN AND KIND OF GET A SENSE OF WHERE THE COMMUNITY'S TEMPERATURE IS ON CERTAIN BASIC CORE SERVICES, AND THAT'S WHERE A LOT OF THESE THINGS OBVIOUSLY LOOK THE SAME. AND MAYBE WE USE AN INCREMENTAL APPROACH AT THAT POINT, BUT I WOULD JUST SAY IT'S HELPFUL TO RECALIBRATE, ESPECIALLY AS WE GO INTO A NEW ADMINISTRATION, BUT KEEP IN MIND, ALL OF THESE THINGS ARE ITERATIVE, AND THERE'S A LOT OF PLANS UNDER WAY THAT WE NEED TO STAY COMMITTED TO, BECAUSE THEY ARE BEGINNING TO MOVE THE NEEDLE. WITH RESPECT TO -- AND SO LET ME JUST SAY ON ONE THING, ONE OF THOSE AREAS, ERIK, THAT I'D JUST LIKE TO FLAG AS POSSIBLE EFFICIENCIES, I KNOW THAT OUR MUNICIPAL BENCHMARKING WAS LAST UPDATED IN 2019, AND THAT'S THE BENCHMARKING STUDY THAT SHOWS HOW EFFICIENT OUR MUNICIPAL FACILITIES ARE BEING RUN. AND SO IF THERE'S SUSTAINABILITY WINS THERE IN TERMS OF COST SAVINGS FOR MUNICIPAL ENERGY PURCHASES, I WOULD
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CERTAINLY BE SUPPORTIVE OF EXPLORING THAT. I MEAN, SOME BUILT-IN COST SAVINGS JUST BY GETTING MORE ENERGY EFFICIENT WITHIN OUR OWN FACILITIES. I THINK THE SIX PLUS SIX IS A SOBERING REPORT.I COMMEND OUR COMMUNITY FOR CONTINUING TO MAKE THE PROPER INVESTMENTS THAT HAVE BUILT SOME RESILIENCY TO CRISES LIKE WE'RE FACING.
WE KNOW THE HEAD WINDS UNFORTUNATELY NOW ARE BEING CAUSED BY CHANGES IN POLICY THAT HAVE RESULTED IN A SLOW DOWN IN OUR ECONOMY.
THAT IS BEING FELT RESIDUALLY JUST ABOUT EVERYWHERE, AND, YOU KNOW, ERIK, WE HAD A DISCUSSION IN MY OFFICE THE OTHER DAY ABOUT WHETHER OR NOT WE'RE LOOKING AT A RECESSION. IN MY VIEW, WE'RE ALREADY THERE. WHEN CONSUMER CONFIDENCE IS IN THE BASEMENT, PEOPLE DON'T KNOW HOW TO PLAN, THERE'S A REPORT TODAY FROM THE EXPRESS ABOUT BUSINESSES UNABLE TO MAKE FORECASTS AND REALLY PARALYZED BECAUSE OF THE UNCERTAINTY IN THE ECONOMY, I THINK WE HAVE SOME HEADWINDS FACING US AS A RESULT OF THAT THAT WE'RE GOING TO HAVE TO PLAN FOR AND TRIAGE AROUND. YOU KNOW, AND HOPEFULLY WE CAN GET SMART ABOUT POLICY AGAIN SOON ENOUGH. BUT THANK YOU, EVERYBODY, FOR THIS PRESENTATION. IT'S GOOD STEPS FORWARD AND I THINK THE NEW PROCESSES WILL HELP US TO MANAGE THROUGH EVEN BETTER.
WITH THAT, LET'S GO TO COUNCIL DISCUSSION. WE'LL START WITH
COUNCILMEMBER ROCHA GARCIA. >> GARCIA: THANK YOU, MAYOR. THANKS FOR THE PRESENTATION.
I GUESS I'LL START SPECIFICALLY FOR SOME QUESTIONS WITH JUSTINA.
AND THANK YOU TO THE BUDGET OFFICE FOR ALWAYS DOING SUCH GREAT WORK AND THE DEDICATION THAT YOU ALL HAVE TO MAKING SURE WE HAVE THAT BALANCED BUDGET. I'LL START OFF WITH THE THERE'S NEW HOTELS THAT ARE BEING BUILT ACROSS THE CITY AND WITH THE ADDED INVENTORY, THE OCCUPANCY, WE'RE STILL REMAINING STAGNANT, OR IT SEEMS LIKE. AND SO IN YOUR OPINION DOES
THAT NEW CONSTRUCTION HELP WITH OR HURT OUR HOT COLLECTION? >> SO WHEN WE LOOK AT OUR PROJECTED FOR 2026, WE TAKE INTO ACCOUNT SUPPLY. SO WHAT'S AVAILABLE.
AND WHAT THEY'RE ANTICIPATING WILL BE OCCUPIED OF THAT. SO WE ARE ASSUMING IN 2026, OUR OCCUPANCY RATE IS ABOUT 62% OF THE SUPPLY THAT WE'RE ANTICIPATING TO HAVE.
>> GARCIA: GOT IT. THANK YOU, JUSTINA. >> WALSH: WHAT WE'RE ALSO SEEING, COUNCILWOMAN -- AND YOU HEAR THIS AS PART OF THE VSA BOARD.
WE'RE SEEING A LOWER ADR, AVERAGE DAILY RATE FOR HOTELS. THAT'S ALSO IMPACTING OUR
REVENUE. >> GARCIA: YEAH. AND I THINK ONE OF THE THINGS THAT I HAVE ALSO NOTICED, LIKE AS WE LOOK AT OUR STRATEGY AND THE STRATEGY HAD BEEN WITH THE FOCUS ON, YOU KNOW, CERTAIN AREAS, AND THOSE VACATIONERS THAT ARE COMING FROM AROUND TEXAS. HOW DOES THAT PLAY IN? ARE THEY REALLY STAYING A LITTLE BIT LONGER? ARE THEY COMING DURING THE WEEK, ET CETERA? JUST SOME THINGS TO CONSIDER. I WOULD HOPE THAT JUSTINA IS WORKING HAND IN HAND WITH NATALIE OVER AT VISIT SAN ANTONIO. I DON'T KNOW HOW OFTEN YOU ALL
MEET BUT -- >> AS WE PROVIDE THESE QUARTERLY UPDATES AND AS WELL AS OUR BUDGET, WE DO WORK WITH VISIT SAN ANTONIO, AND NATALIE IN PARTICULAR.
AS WE'RE LOOKING AT THE PROJECTED AVERAGE DAILY RATES, AS WELL AS THE OCCUPANCY RATE.
>> GARCIA: GOOD. BECAUSE WE PIVOT OUR STRATEGY AT VSA BASED ON QUARTERLY REPORTING. AND SO WE CHANGE OUR WHOLE MARKETING STRATEGY BASED ON WHAT WAS REPORTED IN Q1, Q2, ET CETERA. IT JUST OCCURRED TO ME.
I WONDER HOW OFTEN THEY SHARE THAT. OKAY.
THANK YOU. AND THEN GIVEN THE UNCERTAINTY AT THE STATE AND FEDERAL FUNDING, DO YOU THINK THAT WE WOULD HAVE TO, ERIK, RAISE TO THE STATE ALLOWED?
>> WALSH: WE DIDN'T MAKE ASSUMPTIONS IN THE FORECAST BUT WE'RE GOING TO BE PREPARED AT THE WORK SESSION TO LAY THAT OUT TO THE COUNCIL. PART OF THAT IS WE'LL HAVE BETTER INFORMATION. THAT'S TWO MONTHS FROM NOW. WE'LL HAVE BETTER INFORMATION FROM THE APPRAISAL DISTRICT. I KNOW THAT'S BEEN A TOPIC OF CONVERSATION IN PAST COUNCILS.
SO WE'LL BE PREPARED TO KIND OF LAY OUT THE LATEST INFORMATION.
THAT IS A POTENTIAL THAT THE COUNCIL COULD ENACT AND WE'LL BE LOOKING FOR FEEDBACK IN
JUNE. >> GARCIA: HYPOTHETICALLY, HOW MUCH COULD BE RAISED?
ARE Y'ALL WORKING ON THOSE PROJECTIONS RIGHT NOW? >> WALSH: WHERE'S TROY?
>> GARCIA: THERE HE IS. >> WALSH: IT'S A COMPLICATED FORMULA.
THE NO NEW TAX RATE CALCULATION REQUIRED BY THE STATE BUT CITIES CAN INCREASE THAT RATE
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UP TO 3.5%. IF IT GOES OVER, IT'S GOT TO GO TO VOTER APPROVAL.TROY, YOU DIDN'T COME TO THE PODIUM. [LAUGHTER]
>> GARCIA: HE THOUGHT YOU HAD IT. >> WALSH: BUT GIVEN WHAT WE KNOW RIGHT NOW, WE'VE GOT 0% -- WE'RE PROJECTING 0%-BASED ADJUSTMENTS, 1.8% NEW IMPROVEMENTS. THE VALUE OF A POTENTIAL -- THE PERCENTAGE OF A POTENTIAL
ADJUSTMENT UNDER THAT STATUTE WOULD BE WHAT? >> NEIGHBORHOOD ABOUT $14 MILLION OVERALL. BUT ERIK IS RIGHT.
IT'S A VERY COMPLICATED FORMULA SO HOPEFULLY IN A COUPLE OF MONTHS AS WE GET MORE INFORMATION FROM BCAD, WE CAN NARROW DOWN THAT TAX RATE AND SHOW YOU WHAT THAT MARGIN IS.
>> GARCIA: THANK YOU, TROY. I APPRECIATE THAT. AND THEN I THINK THIS QUESTION MIGHT BE FOR ERIK TOO. AND SO WITH THE CCRS THAT WE HAVE THAT ARE REQUIRING SOME NEW FUNDING, ARE YOU ALREADY MAKING A PRESUMPTION THAT THOSE WILL PASS AND HOW MUCH THOSE
COSTS WILL AFFECT -- >> WALSH: SORRY. I CUT YOU OFF THERE.
SO THE LAST GOVERNANCE, THE LAST BIG GOVERNANCE MEETING WE HAD THERE WERE A HANDFUL OF COUNCIL CCRS THAT WE SAID WE WOULD TAKE TO BUDGET WORK SESSION.
OBVIOUSLY WE NEED TO CONTINUE TO DO THAT. THERE ARE SOME THAT HAD PROBABLY A LOWER POTENTIAL FISCAL IMPACT THAN OTHERS. SO WE NEED TO KIND OF RUN THAT PROCESS OUT WITH THE COUNCIL AT THE WORK SESSION. I DO THINK THAT PROBABLY THE ALIGNMENT OF CONVERSATION AROUND IMPROVEMENTS -- WHAT WE'RE GOING TO SPEND A SIGNIFICANT TIME ON BETWEEN NOW AND YOU KNOW IS HOW WE GET BACK IN LINE.
THE TWO KEY MEASURES THAT JUSTINA PRESENTED, OUR REVENUES ARE GROWING SLOWER THAN OUR EXPENSES SO WE'VE GOT TO ALIGN THOSE THINGS AND THAT MEANS WE'RE GOING TO HAVE TO REDUCE
SPENDING. >> GARCIA: HOW ARE WE PROJECTING FOR THE FEDERAL, OR POTENTIAL FEDERAL CUTS IN THERE? LIKE, ARE YOU GOING TO HAVE A
SCENARIO ONE, SCENARIO TWO? >> WALSH: SO THE FORECAST YOU SAW RIGHT NOW ASSUMES NO CHANGES AT THE STATE LEVEL AND NO CHANGES AT THE FEDERAL LEVEL.
THAT'S PART OF THE UNCERTAINTY OF THE POSITION WE'RE IN RIGHT NOW.
HOPEFULLY WE KNOW MORE. I'M SURE THE COUNCIL READ THAT THE PRESIDENT ISSUED A -- WHAT WAS TERMED A SKINNY BUDGET LAST FRIDAY, WITH NO DETAIL. YOU'LL BE GETTING A REPORT THAT WE GOT FROM MAYKIN GUMP HERE YESTERDAY THAT OUTLINED SOME OF THE KEY AREAS FOR POTENTIAL FOR REDUCTION. IT'S GOT MAJOR PROGRAMS LIKE CDBG, HOME, A LOT OF HEALTH RELATED. THAT WILL UNDOUBTEDLY NEED TO PLAY OUT THROUGH THE ADDITIONAL DETAIL THAT THE PRESIDENT WILL RELEASE BUT ALSO CONGRESS. RIGHT NOW WE'RE NOT ASSUMING
ANYTHING UNTIL WE KNOW FOR A FACT. >> GARCIA: HOW ARE WE WITH
SB 19? WHAT IS THE LATEST, JEFF? >> COYLE: COUNCILWOMAN, JEFF COYLE, ASSISTANT CITY MANAGER. HB 19, WHICH IS THE BILL THAT WOULD CAP THE DEBT THAT TAXING ENTITIES CAN ISSUE IS STILL IN HOUSE WAYS AND MEANS COMMITTEE.
IT WAS NOT ON A LIST OF BILLS TO BE VOTED OUT TODAY SO IT REMAINS IN THE SAME PLACE AS
WHEN WE TALKED LAST . >> GARCIA: ON SLIDE 26, ONE OF THE BULLET POINTS SAYS MANAGE FY25 BY SLOWING SPENDING AND MAKING STRATEGIC ADJUSTMENTS IN DEPARTMENTS NOW. IS ANY OF THAT RELATED TO EMPLOYEE OR STAFFING LEVELS?
>> WALSH: IT MAY BE VACANCIES. WE MAY HOLD SOME VACANCIES.
YEAH. BUT I THINK THE UNDERLYING -- IN THE GRAND SCALE OF THINGS THAT THIS COUNCIL AND WE HAVE DEALT WITH, ADJUSTING FOR $2.5 MILLION IN A $1.6 BILLION BUDGET IS MANAGEABLE. WE MAY -- THERE'S OBVIOUSLY SOME STRATEGIC POSITIONS THAT WE ALWAYS HAVE TO KEEP FILLED. WE'RE NOT GOING TO MAKE ANY ADJUSTMENTS THAT IMPACT CORE SERVICES OR PROGRAMS. BUT THERE'S UNDOUBTEDLY WAYS WE CAN SLOW SPENDING A LITTLE BIT
IN TERMS OF PROGRAMMING. >> GARCIA: CORE SERVICES, WOULD YOU CONSIDER HEAD START A
CORE SERVICE, LIKE A POTENTIAL $23 MILLION LOSS? >> WALSH: HEAD START IS NOT A
GENERAL FUNDED PROGRAM. >> GARCIA: RIGHT. HOW DO WE --
>> WALSH: I'M REFERRING TO THE GENERAL FUND. SO BASIC SERVICES --
>> GARCIA: I GUESS IT'S BASIC. >> WALSH: MAYBE THAT'S A
BETTER TERM I SHOULD BE USING. >> GARCIA: NO PROBLEM. AND THE LAST ONE IS ACTUALLY
[01:15:04]
FOR KATE. I DON'T KNOW HOW LONG -- I KNOW ERIK MENTIONED THIS, LIKE WE HAVE BEEN DOING A HYBRID APPROACH. AND SO HOW LONG HAS YOURDEPARTMENT BEEN DOING HYBRID APPROACHES? >> LIKE, HOW LONG IN THE
HISTORY OF -- OR DO YOU MEAN IN TERMS OF THIS FISCAL YEAR? >> GARCIA: NO, JUST IN THE HISTORY. HOW LONG HAVE Y'ALL BEEN LOOKING AT DEPARTMENTS THAT
ERIK PICKS? >> GARCIA: SINCE 2009. >> WALSH: BUT WE PAUSED IT DURING COVID AND THEN RIGHT AFTER COVID. SO THAT WAS THE REINSTITUTION OF, REALLY THE REALIGNMENT OF WHAT THE INNOVATION OFFICE DOES.
WE WENT BACK TO THAT COMPREHENSIVE BUDGET REVIEW. >> GARCIA: SO SINCE 2009 WE'VE BEEN KIND OF LOOKING AT THIS. WOULD YOU SAY HAS EVERY DEPARTMENT GONE THROUGH SOMETHING LIKE THIS ALREADY OR WHAT PERCENTAGE OF YOUR
DEPARTMENT? >> YEAH, I DON'T HAVE A PERCENTAGE.
WE CAN GET YOU A PERCENTAGE. BUT I DID LOOK AT THE HISTORICALS AND I WOULD SAY THAT THE MAJORITY OF THE DEPARTMENTS HAVE BEEN TOUCHED AT SOME POINT.
THERE HAVE BEEN DEPARTMENTS THAT HAVE BEEN LOOKED AT COMPREHENSIVELY.
EVERYTHING HAS BEEN LOOKED AT. THERE'S DEPARTMENTS THAT HAVE HAD CERTAIN PROGRAMS THAT ARE MORE IMPORTANT TO THE CITY COUNCIL, AND WE FOCUSED ON THAT.
BUT, I MEAN, IN THE TIME I HAVE BEEN WITH THE OFFICE 12 YEARS, I WORKED WITH ALMOST EVERY
SINGLE DEPARTMENT. >> GARCIA: AND THEN MY LAST QUESTION I THINK FOR ERIK, ALSO. WHEN I USED TO BE AT THE CITY, LIKE SHERYL WOULD MAKE EVERYBODY LOOK FOR EFFICIENCIES, LIKE A 5% TO 10% REDUCTION.
DO YOU STILL DO THAT? >> WALSH: YEAH, WE SEND OUT BUDGET INSTRUCTIONS TO THE DEPARTMENTS. IT DEPENDS. MY PHILOSOPHY IS A LITTLE BIT DIFFERENT IN THAT IT DEPENDS ON THE FINANCIAL POSITION WE'RE IN.
ALSO DEPENDS ON WHERE THE PRIORITIES ARE AT. I HAVE NOT FOUND A CITY MANAGER THAT ASKING FOR BLANKET PERCENTAGES ACROSS THE BOARD IS A PRODUCTIVE EXERCISE -- WELL, BECAUSE IT'S NOT. IN MY EXPERIENCE. GENERALLY A LITTLE BIT MORE DIRECTION IN TERMS OF AREAS. NOW, I THINK IT'S ALSO A GOOD EXERCISE FOR DEPARTMENTS TO GO THROUGH TO THINK THROUGH A 1% OR 2%. YOU KNOW, 1% IN THE WORLD HERITAGE OFFICE IS A LOT DIFFERENT THAN A 1% IN THE POLICE DEPARTMENT.
SO WE WILL GIVE THEM SOME GENERAL DISCUSSIONS. WE HAD AN ALL EXECUTIVE MEETING IN THIS ROOM THIS MORNING TO WALK THROUGH THE FORECAST AND FOR EVERYBODY TO START GETTING READY. AND WE'LL BE GIVING THEM THOSE DIRECTIONS.
>> GARCIA: AWESOME. THANK YOU. THANK YOU, MAYOR.
>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER ROCHA GARCIA.
AND THANK YOU, KATE FOR THE PRESENTATION. I FORGOT TO MENTION THAT
EARLIER. >> WHYTE: THANKS. THANKS, MAYOR.
I DON'T THINK THE IMPORTANCE OF THIS DAY CAN BE UNDERSTATED. TO ME, THIS IS REALLY KIND OF A HISTORIC DAY AS A CITY GOVERNMENT LOOK TO BETTER BUDGETING MOVING FORWARD FOR OUR CITY. AND THERE'S NO PLACE TO BEGIN, OTHER THAN TO THANK ERIK AND STAFF, AS WELL AS PFM FOR ALL OF THEIR DILIGENT WORK IN THIS REGARD TO HELP US CREATE A MORE TRANSPARENT AND ACCOUNTABLE BUDGETING PROCESS. THE RECOMMENDATION TO INCORPORATE COMPONENTS OF ZERO-BASED BUDGETING IS A POSITIVE AND NECESSARY STEP FOR THIS CITY GOVERNMENT, MOVING FORWARD. YOU KNOW, ZERO-BASED BUDGETING, AGAIN, SO WE'RE CLEAR OFF THE TOP, IS NOT ABOUT CUTTING MONEY FROM THE BUDGET.
RIGHT? IT'S ABOUT FINDING INEFFICIENCIES, FINDING DUPLICATION, AND THEN MOVING THAT MONEY TOWARDS THE CITIZENS' PRIORITIES.
AND WE SAY IT EVERY YEAR. THE MOST IMPORTANT THING WE DO IS BUDGET.
HOW WE SPEND OUR CITIZENS' TAX DOLLARS IS, I THINK, THE NUMBER ONE PRIORITY OF THIS COUNCIL.
IT'S CERTAINLY WHAT OUR CONSTITUENTS LOOK AT. AND THE FACT THAT WE ARE SITTING HERE TODAY TALKING ABOUT IMPLEMENTING A NEW BUDGETING PROCESS THAT'S GOING TO BETTER SPEND OUR CITIZENS' MONEY SHOULD BE PLEASING TO EVERYBODY.
AND I KNOW IT IS TO OUR CITIZENS. QUICKLY ON THE SIX BY SIX, I'LL JUST MAKE A COUPLE OF COMMENTS RELATED TO A COUPLE OF THE SLIDES.
WHEN WE TALK ABOUT PROPERTY TAXES ON SLIDE 16, I'LL NEVER SUPPORT ANY INCREASE IN THE PROPERTY TAX RATE. AND I HOPE THAT NONE OF MY COLLEAGUES WILL EITHER.
[01:20:01]
I DON'T BELIEVE WE HAVE A REVENUE PROBLEM. WHAT WE HAVE IS A SPENDING PROBLEM. AND THE NEW BUDGETING PROCESS THAT WE'RE LOOKING AT TODAY I THINK IS GOING TO GO A LONG WAY TO CORRECTING THIS SPENDING PROBLEM THAT WE HAVE.SLIDE 18, I JUST WANT TO HIGHLIGHT OUR RESPONSIBLE DECISION THAT WE MADE, THE ADOPTION OF THE NEW CPS OFF SYSTEM SALES POLICY. I'M REALLY PLEASED THAT WE WERE ABLE TO DO THAT LAST YEAR. AND THEN SLIDE 25, WHEN WE TALK ABOUT FEE INCREASES, I WANT TO AGAIN SAY I WILL NOT SUPPORT ANY NEW FEE INCREASES. WE NEED TO FOCUS ON EFFICIENT USE OF OUR CURRENT RESOURCES BEFORE WE ASK THE CITIZENS OF THIS CITY TO PAY ANYTHING MORE. LOOKING AT PFM'S PRESENTATION -- I THANK THEM FOR THAT. I DO WANT TO NOTE THE PROBLEMS THEY FOUND WITH OUR CURRENT BUDGETING PROCESS. IN ORDER TO KNOW WHERE YOU'RE GOING IT'S IMPORTANT TO UNDERSTAND WHY WHAT WE'RE DOING CURRENTLY ISN'T WORKING AS WELL AS IT SHOULD.
WHEN YOU LOOK AT WHAT THEY SAY HERE, THE BUDGETING PROCESS COULD STRUGGLE TO MEET THE COMMUNITY'S NEEDS WITHOUT EMPHASIS ON RESULTS. THIS MAY LEAD TO INEFFICIENCIES OR UNMET PRIORITIES WITHIN ESSENTIAL SERVICES. NUMBER TWO, WITHOUT A METHOD TO EVALUATE WHETHER SERVICES ARE ALIGNED AND OPTIMALLY PROVIDED, THE CITY MAY CONTINUE TO FUND FRAGMENTED OR OVERLAPPING SERVICES WHICH REDUCES THE OVERALL EFFECTIVENESS OF SERVICE DELIVERY. THREE, THE CURRENT INCREMENTAL BUDGETING METHOD FOCUSES ON SHORT-TERM ADJUSTMENTS, WHICH CAN LIMIT THE ABILITY TO PLAN FOR LONG-TERM GOALS OR EMERGING ISSUES. FOUR, AN INCONSISTENT UNDERSTANDING OF CORE AND IDEAL SERVICE LEVELS MAY JUSTIFY DEMAND FOR HIGHER LEVELS OF INVESTMENT, DESPITE ATTEMPTS TO IDENTIFY EFFICIENCIES IN SAVINGS. AND COUNCILWOMAN ROCHA GARCIA'S COMMENTS A MINUTE AGO, YOU KNOW, ASKING ERIK WHAT IS AND WHAT IS NOT A BASIC OR A CORE SERVICE. THAT'S EXACTLY THE DISCUSSION THAT WE NEED TO BE HAVING.
WE NEED TO BE HAVING THE DISCUSSION AS A BODY AS TO WHAT EXACTLY OUR CITIZENS ARE EXPECTING AND DEMANDING FROM US ON A DAY-TO-DAY BASIS. WHEN WE LOOK AT THE RECOMMENDATION FROM PFM, I AM SUPPORTIVE OF JUST ABOUT ALL OF IT AND I WANT TO NOTE THAT THE WEAKNESSES -- ONE OF THE WEAKNESSES THAT THEY SAY FROM THIS NEW POTENTIAL METHOD IS THE BURDEN THAT IT WILL PLACE ON THE MAYOR AND COUNCIL TO MAKE DIFFICULT DECISIONS ABOUT WHICH SERVICES TO PRIORITIZE AND FUND. AND WHILE THAT IS LISTED AS A WEAKNESS, I WILL RESPECTFULLY DISAGREE BECAUSE I BELIEVE THAT IS EXACTLY THE CONVERSATION THAT WE NEED TO BE HAVING AROUND THIS TABLE AND ON THE DAIS.
YOU KNOW, FOR TOO LONG WE -- OR AT LEAST IN MY TWO YEARS HERE, WE DO THESE BUDGET SURVEYS, WE GET THE FEEDBACK FROM THE CITIZENS ON WHAT THEY WANT AND THEN WE SORT OF ADD OUR OWN SPIN TO IT. THAT'S GOT TO STOP. WE ALL GET THE CALLS AND E-MAILS EVERY SINGLE DAY FROM OUR CITIZENS, AND I THINK IT'S PRETTY DARN CLEAR WHAT THEY WANT. AND IT STARTS WITH PUBLIC SAFETY AND IT GOES TO INFRASTRUCTURE NEEDS RIGHT AFTER THAT. ON SLIDE 34 OF THE PFM PRESENTATION, THEY TALK ABOUT OPPORTUNITIES. AND I WANT TO HIGHLIGHT THE OPPORTUNITY TO COLLABORATE BETWEEN THE BUDGET TEAM, MAYOR, COUNCIL, AND DEPARTMENT TO DEVELOP MORE INFORMED BUDGET DECISIONS. PROCESS CAN HELP IDENTIFY DUPLICATED SERVICES ACROSS DEPARTMENT, IMPROVING EFFICIENCY FOR SUPPLEMENTAL SERVICES AND ELIMINATING REDUNDANCIES. I DON'T KNOW WHO AROUND THIS TABLE COULD EVER ARGUE THAT WE DON'T WANT TO DO THAT. SO, AGAIN, I'M NOT GOING TO USE ALL OF MY TIME BUT I AM GOING TO AGAIN THANK EVERYBODY THAT WAS INVOLVED IN THIS.
I THANK THE GOVERNANCE COMMITTEE FOR GETTING THIS PASSED LAST YEAR AND I LOOK FORWARD TO MOVING OUR CITY FORWARD TO SPEND OUR MONEY BETTER.
ERIK'S NOTED MULTIPLE TIMES I THINK OVER THE PAST THREE OR FOUR MONTHS -- AND WE SAW IT IN
[01:25:05]
THE PRESENTATION EARLIER. DOLLARS ARE GOING TO BE TIGHT. AND WE NEED TO MAKE SURE THAT WE'RE SPENDING OUR TAXPAYERS' MONEY IN A WAY THAT MOST POSITIVELY AND DIRECTLY IMPACTS THEIR DAY-TO-DAY LIVES. AND I THINK THIS IS A GOOD STEP TOWARDS DOING THAT.THANKS, MAYOR. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER WHYTE.
ERIK. >> WALSH: TWO POINTS. THANK YOU, COUNCILMAN.
FOR THE VIEWING PUBLIC, I JUST WANT TO CLARIFY TWO THINGS THAT YOU SAID, BECAUSE I THINK YOU WERE STATING A POSITION. YOUR POSITION. THE FORECAST YOU SAW MAKES NO ASSUMPTIONS IN PROPERTY TAX RATE AND IT MAKES NO ASSUMPTIONS IN INCREASES TO FEES. AND I JUST WANT TO, FOR THOSE WHO MAY BE WATCHING, I JUST WANT TO MAKE SURE THAT THEY DON'T DISCERN OR CONFUSE YOUR COMMENTS AND YOUR POSITIONS
WITH WHAT THE ANALYSIS WAS. I JUST WANTED TO CLARIFY THAT. >> WHYTE: YOU'RE RIGHT.
I WAS JUST SAYING MY POSITION IS NOT TO INCREASE THE PROPERTY TAX RATE AND NOT TO INCREASE
FEES. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER WHYTE.
COUNCILMEMBER MCKEE-RODRIGUEZ. >> MCKEE-RODRIGUEZ: THANK YOU, MAYOR.
THANK YOU BOTH FOR THE PRESENTATION REGARDING THE BUDGET OUTLOOK AND THE FORECAST IS BLEAK AND IT'S CLEAR THE NEXT FOUR YEARS AND THIS INCOMING COUNCIL WILL EXPERIENCE CONDITIONS THAT ARE DIFFERENT FROM THE CONDITIONS MANY OF US HAVE NAVIGATED OVER THE YEARS. I HAVE HEARD IN MY TIME VERY CONSISTENT NEEDS THAT WE WANT TO ADDRESS AS A COUNCIL AND THAT WE NEED TO ADDRESS AS AN EXPECTATION OF OUR COMMUNITY.
THAT INCLUDES POVERTY, WHICH INCLUDES ACCESS TO AFFORDABLE HOUSING, TRANSPORTATION,EDUCATIY WELL-PAYING JOBS. SOCIAL SERVICES THAT INCLUDE ACCESS TO PHYSICAL AND MENTAL HEALTH CARE, EDUCATION AND WELLNESS PROGRAMMING, CHILDCARE, AND BASIC NEEDS.
WE HEARD WE NEED TO ADDRESS CLIMATE CHANGE AND SUSTAINABILITY, WHICH INCLUDES ACCESS TO GREEN SPACE THAT INCREASES ACCESS TO PHYSICAL ACTIVITY, PLAY, AND WELLNESS.
HOME WEATHERIZATION THAT MITIGATES AND PREVENTS HIGH UTILITY BILLS.
REDUCTION OF CARS ON THE ROAD BY INCREASING ACCESS TO PUBLIC TRANSIT.
WE NEED TO ADDRESS THE HOUSING CRISIS WHICH INCLUDES AFFORDABLE HOUSING, SUPPORTIVE SERVICES FOR THOSE WITHOUT HOUSING, HOUSING NAVIGATION SERVICES, AND RAPID REHOUSING, AND OTHER INTERVENTIONS TO PREVENT PEOPLE FROM BECOMING HOMELESS.
AS WELL AS ACCESS TO OUTREACH WORKERS, MENTAL HEALTH SERVICES, AND OTHER SOCIAL SERVICES THAT AGAIN ADDRESS OUR MOST BASIC NEEDS. WE HAVE ALSO HEARD ABOUT A MENTAL HEALTH CRISIS AND PHYSICAL HEALTH CRISIS AS WELL, AND THAT INCLUDES ACCESS TO SOCIAL AND SUPPORTIVE SERVICES THAT IMPROVE THE WELL-BEING OF RESIDENTS, INCLUDING OUR SENIORS, VETERANS, AND YOUTH OF ALL SORTS. IT INCLUDES INSULINS COST SHARE PROGRAM AND OTHER PROGRAMS RELATED TO MATERNAL MORTALITY RATES.
IT INCLUDES INFRASTRUCTURE INVESTMENT. SOME OF THE WORST INFRASTRUCTURE IN THE CITY IS ON THE EAST, WEST, AND SOUTH SIDE OF TOWN AND IF WE EVER WANT TO GET TO A POINT WHERE SAN ANTONIO ISN'T A HORRIFIC PLACE TO RIDE A BUS, BIKE, OR CAR OR TRAVEL TO DO LITERALLY ANYTHING, WE NEED TO COMMIT TO OUR EQUITY LENS AND TO ENSURING THE PARTS OF OUR CITY THAT HAVE BEEN NEGLECTED THE MOST RECEIVE A FAIR SHARE OF INVESTMENT, WHICH RESEARCH SHOWS IS NOT A 10% SPLIT ACROSS ALL DISTRICTS.
RESEARCH SHOWS THAT WHEN YOU ADDRESS ALL OF THESE ISSUES IN A MEANINGFUL WAY YOU SEE IMPROVED HEALTH OUTCOMES, IMPROVED QUALITY OF LIFE. YOU SEE REDUCED CRIME.
YOU SEE AN INCREASE IN THE NUMBER OF PEOPLE, ORGANIZATIONS, AND COMPANIES THAT WANT TO INVEST IN THE CITY. AND YOU SEE A CYCLE OF CARE AND SUCCESS THAT IS SYSTEMICALLY BAKED INTO OUR GOVERNMENT AND MAKES OUR COMMUNITY MUCH HARDER TO UPEND DURING TIMES OF POLITICAL, SOCIAL, AND ECONOMIC UNCERTAINTY.
I HATE TO SEE METRO HEALTH, PARKS, AND HUMAN SERVICES AS DEPARTMENTS THAT MAY FACE ADDITIONAL SCRUTINY AS PART OF THIS PROCESS, AS WELL AS DEPARTMENTS LIKE NHSD.
THE DECREASE IN CRIME THAT WE HAVE SEEN AND THAT WE TALKED ABOUT IT AT PUBLIC SAFETY CAN BE ATTRIBUTED GREATLY TO THE HISTORIC INVESTMENTS THAT WE HAVE MADE IN OUR COMMUNITY'S WELL-BEING IN LARGE PART THANKS TO THESE DEPARTMENTS. OVER THE PAST YEAR WE SPENT ARPA DOLLARS AND GENERAL FUND DOLLARS TO ADDRESS A LOT OF THESE NEEDS AND THAT'S NOT SOMETHING THAT SAPD, FOR EXAMPLE, CAN ADMINISTER. IF WE DID THE SAME STAFFING ANALYSIS OR THE SAME RESOURCE ANALYSIS THAT WE DID FOR THE POLICE DEPARTMENT, WE'D ALSO PROBABLY FIND THAT EVERY SINGLE ONE OF OUR CITY DEPARTMENTS IS UNDERSTAFFED AND UNDERRESOURCED. SO IF YOU THINK AS A RESULT OF ZERO-BASED BUDGET WE'RE GOING TO IDENTIFY WASTE IN A MEANINGFUL WAY, WE'RE PROBABLY LOOKING AT THE WRONG DEPARTMENTS. SO MY FEEDBACK ON THE BUDGET FOR STAFF IS THAT WE NEED TO BE SURE TO IDENTIFY AS METRICS, OUTCOMES IN CRIME, QUALITY OF LIFE, PEOPLE SERVED IN AREAS OF INCREASED NEED. I HAVE HEARD THE CRITIQUE THAT WE'RE SPENDING MONEY ON
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HOMELESSNESS IS AN ISSUE AND NOT SEEING IT DISAPPEAR. BUT THE REALITY IS WE'RE PROBABLY NOT SPENDING ENOUGH AND WE'RE PROBABLY NOT DOING ENOUGH OF THOSE RECOMMENDED INITIATIVES AND PROGRAMS THAT'S GOING TO MAKE A MEANINGFUL IMPACT.SO IF THERE'S AN ANALYSIS, IT NEEDS TO INCLUDE AS MUCH CONTEXT OF POSSIBLE ACROSS THE BOARD. IF WE'RE GOING TO BE MAKING CUTS OR SLOWING GROWTH, IT NEEDS TO BE ACROSS THE BOARD. THE BUDGET'S GROWING AT THE LARGEST RATE ARE NOT METRO HEALTH, IT'S NOT PARKS AND IT'S NOT HUMAN SERVICES. AND THE LIKELIHOOD THAT WE'LL SEE MAJOR IMPROVEMENTS BY SLOWING THEIR GROWTH WOULD BE MISGUIDED AND NAIVE.
IF WE'RE GOING TO BE MOVING ANY MONEY AROUND -- THIS IS A RECOMMENDATION I WOULD HAVE IF WE'RE GOING TO BE MOVING IN THIS DIRECTION. IF WE'RE GOING TO BE MOVING ANY MONEY AROUND IT NEEDS TO BE WITHIN THE DEPARTMENT ITSELF, NOT DEFUNDING HOME REPAIR, UTILITY ASSISTANCE, OR SERVICES . LET'S LOOK ALT AT THE INCENTIVES TO CORPORATIONS. THAT TAX REVENUE COULD BE MITIGATING A LOT OF THIS DEFICIT THAT WE'RE SEEING. I WILL ASK -- THIS WILL BE PROBABLY MY ONLY QUESTION.
DANIELLE OR VICTORIA. I HEARD COUNCILMEMBER WHYTE MENTION A PROBLEM IDENTIFIED IN THE REPORT. WERE YOU ABLE TO IDENTIFY A PROBLEM IN OUR SPENDING OR
BUDGETING PROCESS? >> WERE WE ABLE TO IDENTIFY A PROBLEM IN THE BUDGET PROCESS?
>> MCKEE-RODRIGUEZ: DOES THE CITY OF SAN ANTONIO HAVE A SPENDING PROBLEM OR A BUDGET PROBLEM THAT NEEDS TO BE ADDRESSED OR ON OUR ROAD TO DISASTER OR IS THIS JUST
RECOMMENDATIONS BASED OFF OF A POLICY IDEA THAT SOMEONE HAD? >> OUR REVIEW REALLY LOOKED AT THE CITY'S TOTAL BUDGET PROCESS AND APPROACH TO BUDGETING AS A WHOLE.
WE EVALUATED THE USE OF BEST AND PROMISING PRACTICES, WHICH THE CITY DEPLOYS A NUMBER OF THEM. WE DID NOT GO INTO INDIVIDUAL DETAIL ON THE CITY'S USE OF OPERATING DOLLARS OR GRANT FUNDS OR ENTERPRISE FUNDS. BUT LIKE WITH ANY REVIEW, WE ALWAYS IDENTIFY OPPORTUNITIES FOR BETTER EFFICIENCY AND EFFECTIVENESS.
WE HAD GREAT CONVERSATIONS WITH DEPARTMENTS. AND I THINK ALL OF THAT SORT OF CULTIVATED INTO NOT ONLY WAYS TO IMPROVE THE BUDGET PROCESS THAT WOULD SUPPORT BETTER DECISION MAKING FOR COUNCIL, BUT ALSO ALLOW DEPARTMENTS TO BE ABLE TO BE LEVERAGED AS SUBJECT MATTER EXPERTS TO HELP COUNCIL MAKE THOSE DECISIONS. BROADLY SPEAKING, THE CITY IS USING A LOT OF BEST AND PROMISING PRACTICES ALREADY BUT WITH EVERY PROCESS THERE'S
ALWAYS OPPORTUNITIES FOR IMPROVEMENT. >> MCKEE-RODRIGUEZ: THANK YOU FOR THAT. I WANTED TO BE CLEAR BECAUSE I DID HEAR IT MENTIONED WE HAD A PROBLEM. I WANT TO GIVE A LOT OF CREDIT TO THE STAFF THAT WORKS ON THE BUDGET EVERY YEAR AND THE DEPARTMENTS THAT DO HAVE TO MAKE THOSE DIFFICULT DECISIONS. AND HAVE TO MAKE RECOMMENDATIONS TO COUNCIL FOR OUR APPROVAL BASED OFF OUR GOALS AND OUR FEEDBACK TO THEM THAT WE DON'T NECESSARILY HAVE A PROBLEM. WE HAVE SOME DIFFICULT CONDITIONS THAT WE'RE GOING TO HAVE TO NAVIGATE BUT THOSE ARE GOING TO BE PROBLEMS FOR US TO SOLVE, NOT PROBLEMS THAT HAVE ALREADY BEEN IDENTIFIED. AND I WANT TO -- MAN, I DON'T WANT TO DO IT.
NO, I'M GOOD. THANK YOU. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER MCKEE-RODRIGUEZ. I DON'T HAVE MUCH OF A QUEUE HERE SO AS THOSE OF YOU WHO THINK YOU WANT TO SPEAK, THINK ABOUT WHAT YOU WANT TO SAY, GO AHEAD AND TAP IN. I WILL JUST SAY, COUNCILMEMBER MCKEE-RODRIGUEZ DID A VERY GOOD JOB OF LAYING OUT ALL THE DISPARATE ISSUES THAT COME TO US FROM CONSTITUENTS.
THIS IS AN INCREDIBLY COMPLEX CITY. ONE DISTRICT DOESN'T ALWAYS HAVE THE SAME NEEDS AS ANOTHER. AND SO THE DIFFICULT DECISIONS THAT HAVE BEEN REFERRED TO THAT MIGHT BE MADE HARDER IS NOT NECESSARILY THAT WE CAN'T MAKE DIFFICULT DECISIONS, IS THAT WE NEED TO HAVE THE RIGHT INPUTS AND THE RIGHT BALANCE OF A DISCUSSION TO BE ABLE TO MAKE THOSE DECISIONS AND THE PROPER WAY TO MOVE THE ENTIRE CITY FORWARD. THIS COUNCIL HAS NO LACK OF EXPERIENCE IN MAKING DIFFICULT DECISIONS. IN FACT, ONE OF THE REASONS WHY WE HAVE HAD CONTINUED HIGH RATES OF PUBLIC SATISFACTION IN THOSE REPORTS THAT ARE COMPARING US WITH OUR PEERS IS BECAUSE EVEN IN A CITY WITH SOME DEEP-SEATED HISTORICAL CHALLENGES, WE HAVE MANAGED TO FIGURE OUT WHERE TO PUT THOSE RESOURCES AND THE BEST WAY POSSIBLE TO BUILD UP EQUITY WITHIN OUR CITY, WHICH IS OUR GOAL AND IS OUR GOLD STANDARD. SO I THOUGHT IT WAS A VERY GOOD POINT. AND JUST SO FOR THE PUBLIC UNDERSTANDS, NOTHING HAS CHANGED. THIS IS INPUT AND RECOMMENDATIONS FROM PFM ON HOW WE CAN IMPROVE OUR PROCESSES. I THINK THERE'S A REAL CLEAR GUIDEPOST IN HOW WE CAN CHANGE THE TIMELINE OF BUDGETING, WHICH RIGHT OFF THE BAT SOUNDS LIKE A GOOD IDEA.
BUT THE STAFF NEEDS TO HEAR YOUR INPUT ON WHAT OF THIS YOU WANT TO INCORPORATE FROM THE
PFM STUDY. SO, COUNCILMEMBER VIAGRAN. >> VIAGRAN: THANK YOU.
THANK YOU, MAYOR. AS YOU TALKED ABOUT DEEP-SEATED HISTORICAL CHALLENGES -- AND YOU HAVE HEARD THIS TERM BEFORE. IT'S REDLINING.
[01:35:02]
IT WAS REDLINING. IT STILL IS IN DIFFERENT FORMS. DIGITAL, HEALTH -- I CAN GO ON. CHILDCARE.FOOD DESERTS. BUT I'LL STOP THERE. THANK YOU, PFM FOR THE PRESENTATION. I THINK THERE ARE PIECES THAT WE WILL LOOK AT TAKING, AS LONG AS IT ADDRESSES, ERIK, OUR POVERTY RATE, WHICH IS 20%. I WOULD REALLY LIKE US TO LOOK AT THE ZIP CODES WHERE THE POVERTY IS. ONE THING THAT I'M HEARING FROM MY RESIDENTS OVER AND OVER AGAIN IS THE COST OF LIVING, HOMELESS.
AND WE ALL KNOW THAT THERE'S LOTS OF PEOPLE IN OUR COMMUNITY THAT ARE ONE ACCIDENT, ONE DISEASE AWAY FROM LOSING THEIR HOME. AND SO I THINK WE AS A CITY HAVE TAKEN THE NECESSARY STEPS. WE HAVE REDUCED PROPERTY TAXES TO MAX OUT. WE HAVE WORKED TO TRY AND ALLEVIATE THAT TO OUR HOMEOWNERS. BUT WE DO HAVE RENTERS AND WE HAVE PEOPLE THAT JUST NEED HOMES. SO I THINK AS WE LOOK AT THIS METHODOLOGY AND WE LOOK AT THE DIFFERENT DEPARTMENTS, I AGREE WITH COUNCILMAN MCKEE-RODRIGUEZ THAT WE NEED TO LOOK WITHIN THE DEPARTMENTS. ALL OF THEM ARE UNDERSTAFFED. I REALLY DO WANT TO SEE HOW MUCH MORE WORK THIS IS GOING TO PUT ON A STAFF THAT IS ALREADY, I FEEL OVERWORKED, MANY OF THEM. AND THEN TO ASK THEM TO DO THIS WITH ONLY A 3% PAY INCREASE BECAUSE WE'RE FACING THE FINANCIAL TIMES THAT WE'RE FACING, I THINK IT IS A BIG ASK. SO WHAT WE CAN DO WITH THIS NEW METHOD, I WOULD LIKE TO SEE YOU COME WITH SOME IDEAS AND THE EXECUTIVE TEAM TO COME WITH SOME IDEAS.
RIGHT NOW I JUST DO NOT THINK THAT THIS IS THE MOMENT IN TIME, WITH THE LOOMING FINANCIAL CRISIS COMING. I JUST DON'T THINK THIS IS THE TIME TO PUT MORE WORK ON THEM WHEN WE WORKED SO HARD AT THE EQUITY LENS AND WHEN WE HAVE DEPARTMENTS WORKING SO HARD.
PARKS ARE CRITICAL BECAUSE IT'S ONE PLACE THEY CAN GO FOR FREE RIGHT NOW.
FAMILIES CAN GO FOR FREE. WE ALREADY SEE IT IN THE SALES TAX THAT PEOPLE ARE NOT SPENDING MONEY LIKE THEY USED TO. WE ARE FACING SOME VERY DIFFICULT TIMES AHEAD. WE KNEW THAT THEY WERE COMING. I THINK THEY'VE BEEN EXACERBATED BY SOME UNCERTAINTIES AT DIFFERENT LEVELS.
AND I THINK WE NEED TO REALLY THINK ABOUT WHAT WE ARE GOING TO TAKE ON.
AND NOW YOU HAVE A COUNCIL THAT'S GOING TO BE HERE FOR FOUR YEARS, SO IF WE PUT THIS ON PAUSE UNTIL NEXT BUDGET SO WE CAN GET THIS BUDGET SORTED, I'D LIKE TO SEE THAT.
BUT WHERE WE CAN MAKE A FEW ADJUSTMENTS I'M FINE WITH, AS LONG AS WE TAKE INTO CONSIDERATION THE FACT THAT OUR GOAL SHOULD BE REDUCING THAT 20% POVERTY RATE AND REDUCING IT SPECIFICALLY OF THAT 20% -- OVER 50% IS WOMEN, HEAD OF HOUSEHOLD.
SO HOW ARE WE GOING TO ADDRESS THAT? BECAUSE I THINK IF WE CAN ADDRESS THAT ISSUE, WE WILL SEE A MORE PROSPEROUS SAN ANTONIO. THANK YOU FOR THE PRESENTATION. JUSTINA IT'S GOOD TO HEAR THAT WE'RE DOING THE BEST PRACTICES AND THERE'S WORK AHEAD.
AND ALL THE REST OF YOU THAT PRESENTED, WE JUST REALLY APPRECIATE IT.
OF COURSE, WE WISH IT WAS BETTER NEWS BUT NONE OF US HERE ARE SURPRISED.
THANK YOU. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER VIAGRAN.
COUNCILMEMBER ALDERETE GAVITO. >> THANK YOU, MAYOR. >> MAYOR NIRENBERG: WE'RE NOT GETTING YOUR AUDIO, MARINA. LET'S WORK ON HER CONNECTION AND THEN WE'LL MOVE TO THE NEXT
PERSON. COUNCILMEMBER CASTILLO. >> CASTILLO: THANK YOU, MAYOR. THANK YOU ALL FOR THE PRESENTATION.
GIVEN WHAT WAS HIGHLIGHTED IN THE PRESENTATION, WHAT WE KNOW IN TERMS OF CONSUMER CONFIDENCE AND THE FORECAST, ASSUMING A MINIMAL INCREASE OF PROPERTY TAX REVENUE.
AS MENTIONED, FOR THE 2026 BUDGET AND IN THE FUTURE, THAT WE ARE GOING TO HAVE TO MAKE A POTENTIAL BUDGET CUTS. WHAT I KNOW SAN ANTONIO RESIDENTS AND MY CONSTITUENTS ARE GOING TO ASK IS WHY DO WE CONTINUE TO WANT TO KEEP UP WITH THE JONESES? WHAT THEY'RE GOING TO HIGHLIGHT IS WHILE WE'RE TALKING ABOUT POTENTIAL AND FUTURE BUDGET CUTS, WE'RE ALSO TALKING ABOUT MULTIBILLION DOLLAR PROJECTS THAT ARE VANITY PROJECTS.
I KNOW THIS IS SOMETHING I'M GOING TO HEAR AT A NEIGHBORHOOD ASSOCIATION TONIGHT, BECAUSE
[01:40:01]
MANY OF THEM ARE WATCHING THIS MEETING. AND THEY'RE GOING TO ASK HOW ARE WE TALKING ABOUT BILLION-DOLLAR INVESTMENTS FOR A SPORTS DISTRICTS WHEN WE'RE LOOKING FOR BASIC INFRASTRUCTURE, LOOKING FOR INVESTMENT.AND THE DEPARTMENT OF HUMAN SERVICES, NEIGHBORHOOD AND HOUSING SERVICES DEPARTMENT, AND THE PUBLIC WORKS TEAM, AND DEVELOPMENT SERVICES AS WELL. I'M GOING TO HAVE TO ENSURE THAT WE'RE PRIORITIZING THOSE NEEDS. BUT HOW ARE WE ALSO EVALUATING HOW THE HOT TAX CAN AND HAS BEEN UTILIZED? WHAT COMES TO MIND IS VISIT SAN ANTONIO AND HOW WE COULD POTENTIALLY TAP INTO THE HOT TAX TO SUPPORT THE SAN ANTONIO ARTS DEPARTMENT BUT ALSO LOOKING AT HOW WE CAN ALSO SUPPORT THE PARKS DEPARTMENT.
AND WHAT COMES TO MIND IS WE HAVE AN ANNUAL HANDBALL TOURNAMENT IN THE WEST SIDE.
WE HAVE THE ONLY HANDBALL WALL IN THE CITY OF SAN ANTONIO. AND THEY BRING IN FOLKS FROM LAS VEGAS, FROM NEW YORK CITY, FROM JUST PHOENIX, ARIZONA, SO MANY PLACES THEY'RE BRINGING AND THEY'RE STAYING IN HOTELS DOWNTOWN. HOW CAN WE USE THE HOT TAX TO FURTHER SUPPLEMENT THESE OTHER PARKS AND EVENTS THAT ARE ALSO BRINGING TOURISTS TO TAP IN AND SUPPORT THE GENERAL FUND BUDGET, OR TO SUPPORT PARKS PROGRAMMING AND ARTS PROGRAMMING. BUT I BELIEVE THERE'S OPPORTUNITY FOR US TO JUST REVISIT SOME OF THE CONTRACTS THAT WE HAVE AND IN TERMS HOW WE CAN SUPPLEMENT EXISTING CITY SERVICES. I UNDERSTAND THAT THERE'S CONFIDENCE IN THAT WITH THOSE BUDGET CUTS THAT THEY COULD BE MADE WITHOUT US NECESSARILY FEELING THEM BUT I'M CONCERNED IN TERMS OF THE 2027, 2028 PROJECTIONS THAT INCREASE THE AMOUNT OF POTENTIAL CUTS THAT WE'RE GOING TO SEE. BUT ULTIMATELY HAVING A LARGER CONVERSATION ABOUT OUR TIRZ STRUCTURES AND SPENDING, AGAIN GOING BACK TO HOW WE'VE SEEN THE TIRZ FINANCE PUBLIC SAFETY AND HOW WE CAN TAP INTO ENSURE THAT THOSE TIRZ ARE ALSO SUPPORTING THE NEEDS OF SAN ANTONIO RESIDENTS AND NOT NECESSARILY PLANNING FOR FOLKS TO COME VISIT.
I UNDERSTAND THE IMPACT OF THE HOT TAX BUT ALSO IF THERE'S CONVERSATION AND WE'RE IN THE POSITION WHERE IT'S NOT NECESSARILY BEING PROPOSED BUT A CONVERSATION ABOUT INCREASING THE PROPERTY TAX, I'M HESITANT FOR US TO HAVE THAT CONVERSATION WHEN THERE'S SO MANY OTHER BUCKETS OF FUNDING THAT WE CAN REEVALUATE TO ENSURE WE'RE MAKING THE GREATEST IMPACT. AND I THINK HOT, TIRZ, AND AS THE COUNCILMAN MENTIONED, LOOKING AT SOME OF THESE INCENTIVE PACKAGES. HOW ARE WE HAVING THE GREATEST IMPACT. WITH CPS REVENUE, I'M PLEASED TO SEE WE'RE FARING FAIRLY WELL THERE BUT WHEN WE LOOK AT A HOW WE'RE INCENTIVIZING BUSINESSES TO COME TO THE CITY OF SAN ANTONIO AND THEN THEY PAY A LOWER RATE THAN THE AVERAGE RESIDENTIAL RATEPAYER, I JUST FEEL THAT THE CONVERSATION ABOUT REDUCTIONS WHEN THERE'S OTHER BUCKETS THAT WE SHOULD BE EVALUATING ISN'T WHAT SAN ANTONIO RESIDENTS WANT TO HEAR IN TERMS OF WE NEED TO CONTINUE TO TIGHTEN THE BELT BUT WE'RE ALSO TALKING ABOUT VANITY PROJECTS.
THOSE ARE MY COMMENTS. THANK YOU, MAYOR. >> MAYOR NIRENBERG: THANK
YOU, COUNCILMEMBER CASTILLO. COUNCILMEMBER ALDERETE GAVITO. >> GAVITO: THANK YOU.
CAN YOU HEAR ME NOW? >> MAYOR NIRENBERG: YES. WE HEAR YOU.
>> GAVITO: YEAH. WHAT I WAS SAYING EARLIER IS THAT THANK YOU, JUSTINA, AND EVERYONE ELSE FOR THE PRESENTATION. OBVIOUSLY IT'S SOBERING NEWS BUT WE DO NEED TO TIGHTEN THE BELT. I DO HAVE ONE QUESTION.
ON SLIDE 20, WHEN WE'RE TALKING ABOUT NO IMPROVEMENTS INCLUDED IN THE FIVE-YEAR FORECAST, CAN
Y'ALL ELABORATE ON WHAT THAT WOULD MEAN? >> YES.
SO THE FIVE-YEAR FORECAST INCLUDES NO NEW IMPROVEMENTS. WE ARE JUST ASSUMING THAT OUR CURRENT LEVEL OF SERVICE IS INCLUDED IN THE FIVE-YEAR FORECAST.
AND THEN WE ARE INCLUDING -- WE ARE ALIGNING WITH OUR EMPLOYEE COMPENSATION, CONSISTENT WITH POLICE AND FIRE COLLECTIVE BARGAINING. AND WE HAVE A 3% FOR CIVILIAN COMPENSATION. BUT THERE ARE NO OTHER IMPROVEMENTS INCLUDED IN THE
FIVE-YEAR FORECAST. >> GAVITO: SO JUST TO CLARIFY, YOU KNOW, I KNOW THAT WE HAD HAD ON THE RADAR HIRING 200 POLICE OFFICERS OVER THE NEXT THREE YEARS.
WOULD THAT BE INCLUDED AS AN IMPROVEMENT? IT'S NOT GOING TO HAPPEN?
>> AT THIS POINT, NO. IT'S NOT INCLUDED IN THE FIVE-YEAR FORECAST.
WE NEED TO LOOK AT GETTING OUR FORECAST IS NOT THE BUDGET. IT'S AN INDICATOR OF ISSUES THAT WE'RE GOING TO NEED TO DEAL WITH, WHICH ARE STRUCTURAL IN NATURE. AND WE MADE NO ASSUMPTIONS ABOUT IMPROVEMENTS IN THE FORECAST PERIOD SO THAT IT'S EASIER FOR US TO BE FOCUSED IN
TERMS OF THOSE KEY AREAS. >> GAVITO: RIGHT. YEAH, THANK YOU, ERIK.
I'M ASKING FOR US TO CLARIFY BECAUSE, YES, AS THIS IS A FORECAST, WE DO NEED TO START THINKING ABOUT WHAT ELSE NEEDS TO BE CUT OR WHAT WE DO NEED TO TIGHTEN UP ON.
[01:45:07]
BECAUSE PUBLIC SAFETY IS MANY OF OUR RESIDENTS' TOP PRIORITY AND SO I JUST THINK WE NEED TO FIGURE OUT HOW WE STICK TO THE CORE COMPETENCIES THAT OUR RESIDENTS TRUST US WITH AND THAT WE'RE IN CHARGE OF TO MAKE THIS CITY RUN EFFECTIVELY AND EFFICIENTLY.GOING TO THE BUDGET METHODOLOGIES EVALUATION PRESENTATION, THANK YOU TO THE PFM TEAM FOR THEIR WORK. COUNCILMAN WHYTE, THANK YOU FOR YOUR EFFORTS IN LEADING THIS CHARGE. I THINK THAT SLIDE 14 REITERATES MY CONCERN THAT WE'RE NOT ALWAYS EVALUATING WHETHER GOALS HAVE BEEN ACHIEVED.
SO I'M GLAD WE'RE LOOKING CLOSELY AT THAT NOW TO MAKE SURE THAT WE'RE ON TARGET.
YOU KNOW, I KNOW I'VE ALSO BROUGHT UP A CONCERN ABOUT DUPLICATING SERVICES SO I'M GLAD THAT THE PFM TEAM IDENTIFIED THAT AS A THREAT AS WELL.
ON SLIDE 26 WHEN WE'RE IDENTIFYING CERTAIN DEPARTMENTS FOR ZERO-BASED BUDGETING, HOW ARE WE GOING TO ESTABLISH WHICH DEPARTMENTS GO FIRST OR WHAT THAT ORDER IS?
>> THANK YOU FOR YOUR QUESTION. SO ACTUALLY IN THE FULLER REPORT, I BELIEVE IT'S ON SLIDE 69 OF THE FULL REPORT, THERE'S SORT OF A CRITERIA AROUND HOW WE WOULD SUGGEST THE CITY CONSIDER -- NOT NECESSARILY DEPARTMENTS BUT REALLY PROGRAMS AND SERVICES THAT ARE POISED FOR ZERO-BASED BUDGETING. WE THINK THAT PARTICULARLY WITH THE USE OF THE COMPREHENSIVE BUDGET REVIEWS GOING ON IN A ROLLING BASIS, THE ZBB IS BEST LEVERAGED AT A PROGRAM AND SERVICE LEVEL SO YOU'RE ABLE TO IDENTIFY AND DIG INTO THE WEEDS AROUND SETTING THE RIGHT SERVICES, SERVICE LEVELS FOR THOSE PROGRAMS AND SERVICES.
SO I THINK THAT IS THE MAIN DISTINCTION WITH THE COMPREHENSIVE BUDGET REVIEW BEING THAT FULL DEPARTMENTAL LOOK AND THE ZERO-BASED BUDGETING FOCUSED ON PROGRAMS
AND SERVICES. >> GAVITO: OKAY. SOUNDS GOOD.
I'LL CHECK OUT THAT OTHER SLIDE, JUST SO WE CAN SEE HOW THAT WILL HAPPEN.
ALSO, TOO, ON SLIDE 27, I DO APPRECIATE HOW Y'ALL ARE TAKING THE ELECTION CYCLE INTO ACCOUNT. BECAUSE IT CAN HELP NEW COUNCIL MEMBERS REDUCE CONFUSION.
YOU KNOW, THEY ARE KIND OF THROWN IN AFTER THE ELECTION AND, BOOM, THEY GO INTO BUDGET. THAT WILL BE A GOOD SHAKEUP THAT WE WOULD CHANGE.
THANKS AGAIN FOR Y'ALL'S WORK ON THIS. I'M SUPPORTIVE OF THE RECOMMENDATIONS AND LOOKING FORWARD TO SEEING THEM IMPLEMENTED.
THANKS. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER ALDERETE
GAVITO. COUNCILMEMBER WHYTE. >> WHYTE: YEAH.
JUST BRIEFLY WAS GOING TO RESPOND TO A COUPLE OF THINGS COUNCILMAN MCKEE-RODRIGUEZ STATED. IF YOU WANT TO SEE THE PROBLEMS WITH THE CURRENT BUDGET PROCESS, YOU CAN LOOK AT SLIDE 16 OF PFM'S PRESENTATION. AND I'LL JUST POINT OUT ONE PARTICULAR LINE. WITHOUT A METHOD TO EVALUATE WHETHER SERVICES ARE ALIGNED AND OPTIMALLY PROVIDED, THE CITY MAY CONTINUE TO FUND FRAGMENTED OR OVERLAPPING SERVICES. SO I DON'T THINK ANY OF US WANT US TO CONTINUE TO FUND FRAGMENTED OR OVERLAPPING SERVICES. ANOTHER WEAKNESS THEY MENTION IS PROGRAMS CAN GROW RIGHT NOW WITHOUT AN ANALYSIS OF WHETHER THE GOAL OF THE PROGRAM IS ACTUALLY COMPLETE. I DON'T THINK WE WANT THAT EITHER.
AND IN TERMS OF COUNCILWOMAN VIAGRAN'S STATEMENT OF I'M NOT SURE THIS IS THE RIGHT TIME, THIS IS ACTUALLY THE EXACT RIGHT TIME TO BE LOOKING AT A NEW BUDGETING PROCESS, WHERE WE ARE FROM A FINANCIAL PERSPECTIVE. THANKS, MAYOR.
>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER WHYTE. COUNCILMEMBER KAUR.
>> KAUR: THANK YOU SO MUCH, MAYOR. AND THANK YOU SO MUCH FOR THIS PRESENTATION. I'VE BEEN DIGGING INTO THE SLIDES HERE.
I AM KIND OF A NERD ABOUT BUDGETING AND FINANCE SO I REALLY APPRECIATE ALL OF THE WORK THAT Y'ALL HAVE PUT IN TO DIFFERENTIATE MAKING A SIMPLE REQUEST I ALWAYS MAKE, AND I KNOW IT'S SUPER HARD FOR THESE BUDGET PRESENTATIONS, BUT IT'S SO HARD FOR ME TO GO THROUGH ALL THESE METRICS IN 24 HOURS IN THE MIDST OF A CAMPAIGN SEASON.
JUST FOR THE BUDGET, IF WE COULD GET THEM JUST A FEW DAYS EARLIER.
THAT WOULD BE MY ONLY REQUEST. AS FAR AS THE THINGS MENTIONED TODAY, I LOVE THE IDEA THAT WE CAN BE A MORE NIMBLE ORGANIZATION. I THINK THERE WAS A WEAKNESS MENTIONED THAT WE CAN'T CHANGE OUR BUDGETING BASED ON THE PRIORITIES, BECAUSE IT'S BASED
[01:50:01]
ON THE PRIORITIES THAT WE SET AND ONCE OUR BUDGET IS SET THAT'S FIXED FOR THE YEAR.I HAVE HEARD FROM DEPARTMENTS LIKE, OH, WE CAN'T HIRE AN ADDITIONAL PERSON BECAUSE IT WASN'T SET IN THE BUDGET. OR WE HAVE TO TRADE FOR IT OR SOMETHING LIKE THAT.
IT'S DIFFICULT TO CHANGE THE PATHWAY WE'RE ON IN THE MIDDLE OF A BUDGET YEAR.
SO I THINK TRYING TO BE MORE NIMBLE WOULD BE AN AMAZING OUTCOME OF THIS PROCESS.
AS FAR AS THE TRANSITIONAL YEAR TIMELINE, I WORRY THAT PUTS US INTO THE SAME SPACE OF NOT BEING ABLE TO BE NIMBLE. DURING THE TRANSITIONAL YEAR WE'RE DOING A LOT OF DEEP WORK ON FIGURING OUT WHAT OUR PRIORITIES ARE BUT THEN HOW DO WE ENSURE THAT PROCESS OF CONTINUOUS ITERATION CONTINUES THROUGHOUT THE FOUR YEARS, IF OUR PRIORITIES ARE SET, AND
THEN WE'RE GOING WITH THAT FOR THE NEXT FOUR YEARS. >> THANK YOU SO MUCH FOR THE QUESTION. WE THINK -- I MEAN, THE BUDGET IS ONE OF THE -- AND IS ARGUABLY THE MOST IMPORTANT POLICY DOCUMENT OF ANY MUNICIPALITY.
AND I THINK PART OF WHAT WE TRIED TO INSTILL IN THE REGULAR BUDGET PROCESS, AS IN THE TRANSITIONAL BUDGET PROCESS, IS THE ABILITY FOR YOU ALL TO SHIFT.
THE ECONOMY WILL SHIFT. THE FEDERAL LANDSCAPE WILL SHIFT.
THERE WILL BE KNOWN CHANGES THAT WILL HAVE TO ADJUST FROM YEAR TO YEAR.
WE HAVE CONTINUED TO -- IF YOU LOOK AT SLIDE 29 IN THE PRESENTATION, SORT OF IMPLEMENT STILL A TWO-MONTH PERIOD WHERE YOU'RE HAVING TO TAKE A HARD LOOK AT THE GOALS AND THE PRIORITIES THAT YOU'VE SET IN THE TRANSITIONAL YEAR SO THAT YOU'RE REAFFIRMING WHAT THE OUTCOMES ARE. DO THE OUTCOMES STILL MAKE SENSE.
THEY ALLOW YOU TO INTEGRATE SOME OF THE FEEDBACK YOU'RE HEARING FROM CONSTITUENTS AND RESIDENTS OVER THE COURSE OF THE PREVIOUS BUDGET YEAR, AS WELL AS CONTINUE TO HEAR FROM DEPARTMENTS AROUND PROGRESS TOWARDS THE OUTCOMES FROM THE FIRST YEAR.
AND SO I THINK THERE'S STILL AN ABILITY FOR YOU ALL TO BE NIMBLE AND TO MAKE ADJUSTMENTS IN REALTIME. AGAIN, AS A PART OF THE REGULAR BUDGET PROCESS YOU'LL HAVE MULTIPLE CRACKS AT THE APPLE. YOU'LL SEE THE TRIAL BUDGET AS WELL AS THE PROPOSED BUDGET THAT WILL ALLOW YOU TO CONTINUE TO WORK THROUGH WHAT THE APPROPRIATE BUDGET SETTING AND
PRIORITY SHOULD BE. >> KAUR: ARE THERE SYSTEMS THAT YOU WOULD RECOMMEND US PUTTING INTO PLACE WHERE ONCE WE DO -- I DON'T KNOW IF IT'S THE THREE BY SIX BUT MAYBE THE SIX BY SIX. THESE ARE THE CHANGES WE'RE GOING TO MAKE FOR THE REMAINDER OF THE BUDGET YEAR . ARE THOSE SYSTEMS YOU WOULD RECOMMEND OR YOU WOULD ESSENTIALLY HAVE US DECIDE WHAT WOULD BE BEST FOR THAT? ERIK, YOU WERE GOING TO CHIME
IN. >> WALSH: THAT DEPENDS ON THE FISCAL YEAR AND THE PRIORITIES AND OUR FINANCIAL CONDITION. FROM A PRACTITIONER'S STANDPOINT IS THIS IS STILL DISCIPLINE ALL THE WAY UP AND DOWN. AND AS WE THINK ABOUT THIS, ABOUT HOW WE IMPLEMENT IT, WE DON'T WANT TO -- WE WANT TO MAKE SURE THAT WE LEAVE OURSELVES THE ABILITY TO ADJUST TO CHANGED CONDITIONS AND THINGS WE SAID WE WERE GOING TO DO OR THINGS THAT THE COUNCIL SAID THEY WANT TO DO, YOU KNOW, IN ONE YEAR, BECAUSE OF FINANCIAL CONDITIONS, WE'VE GOT TO DIAL BACK. OR IF WE'RE IN A POSITION WHERE WE DIAL UP. BUT THE NOTION HERE IS REALLY ABOUT DISCIPLINE, NOT BEING NIMBLE. AND BUT I THINK OBVIOUSLY IT HAS TO BE A BALANCE.
AND I THINK TO YOUR POINT, THE FIRST YEAR WILL BE HARD. THIS MORNING I TALKED TO ALL THE EXECUTIVES AND I SAID THE GOOD NEWS IS WE'RE GOING TO DO A PRESENTATION.
THE BAD NEWS IS THEY'RE GOING TO BE TALKING ABOUT DOING BUDGET YEAR-ROUND.
I THINK WE ALL NEED A LITTLE BIT MORE LEG ROOM: COUNCIL, STAFF, THE BUDGET OFFICE, ALL OF US TO MAKE SURE WE'RE ALIGNED. BUT THE UNDERLYING FACETS OF IT WILL BE ROOTED BACK TO WHAT WE CAN AFFORD, WHAT WE COLLECT, AND WHAT OUR REVENUE IS.
>> KAUR: AS FAR AS THE COMMUNITY SURVEY GOES -- DID YOU GUYS LOOK AT THE COMMUNITY
SURVEY PROCESS THAT WE HAD DONE PREVIOUSLY? >> WE HAVE TAKEN A LOOK AT IT
BUT DIDN'T DIG SUPER DEEP INTO THE WEEDS. >> KAUR: I GUESS MY QUESTION WOULD BE WHAT WOULD YOUR RECOMMENDATION BE TO IMPROVE THAT PROCESS? I HAVE HAD QUESTIONS ABOUT IT IN TERMS OF ITS EFFICACY. WE TRY TO GET A SMALL SAMPLE AND EXTRAPOLATE IT OUT. I'M WONDERING FROM Y'ALL'S EXPERIENCE WHAT ARE SOME OF THE BEST WAYS TO ACTUALLY GET A GOOD REPRESENTATION OF INPUT? THE KEY THING ON YOUR SLIDE, IT'S INPUT ON GOALS AND PRIORITIES. HOW DO WE GET THAT GOOD INPUT?
>> WE COULD TAKE A DEEPER LOOK AT THE COMMUNITY SURVEY, PARTICULARLY AS THE COUNCI DECIDES TO MOVE FORWARD, AS WE'RE TRYING TO FLESH OUT MANY OF THE ADDITIONAL ELEMENTS.
I WILL SAY THERE IS AN OPPORTUNITY, IF YOU GO TO SLIDE 28, DURING THE SESSION.
[01:55:08]
IT'S NOT EXPLICITLY IN THERE BUT THERE CERTAINLY COULD BE MORE OPPORTUNITIES FOR COMMUNITY ENGAGEMENT TO BE A PART OF THOSE CONVERSATIONS AS ANOTHER SOURCE OF FEEDBACK, AS YOU ALL ARE THINKING ABOUT PRIORITIES AND OUTCOME SETTING.BUT IT'S CERTAINLY SOMETHING WE COULD TAKE A DEEPER LOOK AT. >> KAUR: I WOULD LOVE THAT.
LIKE ONE-WAY COMMUNICATION. REALLY JUST TRYING TO THINK ABOUT HOW DO WE GET TWO PEOPLE THAT AREN'T NECESSARILY MAKING IT OUT OR FOR WHATEVER TIME REASON, AND FOCUS ON EVERYTHING ELSE THAT'S GOING ON, TO GET TO THEM TO HEAR WHAT THEIR OPINIONS ARE ABOUT OUR BUDGETING AND WHAT THEY REALLY WANT US TO FOCUS ON. BUT HOW DO WE GET BETTER INPUT,
VERSUS JUST TAKE YOUR TOP FIVE. >> SURE.
>> KAUR: THAT'S ON COMMUNITY ENGAGEMENT. AND THEN MY LAST POINT THAT I'VE ALWAYS LOVED FOCUSING ON OUTCOMES AND REALLY THINKING ABOUT THE DIFFERENCE BETWEEN INPUT, OUTPUTS, OUTCOMES, AND EFFICIENCIES. THAT'S ALWAYS SOMETHING I CAN NEVER DISTINGUISH, WHENEVER I'M GOING THROUGH A BUDGET DOCUMENT, HOW A DEPARTMENT GETS TO DETERMINE WHAT THEIR MEASURE IS. RIGHT NOW IT'S JUST LISTED AS A METRIC, BUT SOMETIMES IT'S AN OUTPUT. SOMETIMES IT IS A HIGHER TARGET -- LIKE OUR UNHOUSED POPULATION, WE SET AN ACTUAL OUTCOME THIS LAST BUDGET CYCLE. HOW WOULD YOU RECOMMEND -- I'M GUESSING YOU SAW THE METRICS -- AND THEY'RE ALL OVER THE PLACE. HOW WOULD YOU RECOMMEND WHAT TYPE OF OUTCOME OR PERFORMANCE METRIC THAT A DEPARTMENT IS USING?
>> SURE. I THINK AS A PART OF THIS, PART OF THE LONGER FORM WORK DONE WITH COUNCIL BUT ALSO WITH DEPARTMENTS, WOULD BE REALLY SORT OF BRINGING IT IN AROUND WHAT WE MEAN BY PERFORMANCE MEASUREMENT, SETTING AN OUTPUT OR IF YOU'RE JUST TRACKING THE NUMBER VERSUS THE QUALITY OR WHO IS BETTER OFF. I THINK WE WOULD BE WORKING TO MAKE SURE THAT PART OF THE TRAINING AND GUIDANCE PROVIDES SOME CLARITY AROUND WHAT THE END GOAL IS, PARTICULARLY FOR THE PERFORMANCE MEASUREMENT. AND BEING ABLE TO ACKNOWLEDGE THAT YOU MAY NOT HAVE THE AVAILABLE DATA TO GET TO THE IDEAL MEASURE THAT YOU REALLY WANT TO. BUT THAT OFTEN, WITH THE MULTI-YEAR PERSPECTIVE, ALLOWS DEPARTMENTS TO SAY WE CAN'T TRACK IT NOW BUT IF WE START TRACKING IT TODAY, HOPEFULLY BY YEAR THREE OF THIS PROCESS, WE CAN ACTUALLY START PRESENTING THE DATA IN THE WAY THAT HELPS TO DEMONSTRATE THAT WE'RE MEETING THE OUTCOMES THAT THE COUNCIL HAS SET.
I THINK IT'S PROVIDING TRAINING, PROVIDING CLARITY, BUT ALSO JUST PROVIDING A MORE OF A STRUCTURE SO THAT DEPARTMENTS AND EVERYONE ELSE INVOLVED HAVE A MIX OF THE NUMBER OF PEOPLE WHO DO A THING, HOW WELL OFF A PERSON IS, AND HOW IT CONNECTS TO THE BROADER OUTCOME THAT YOU ALL WILL BE SETTING. SO THAT WOULD ALL BE PART OF THE WORK THAT REALLY WOULD BE HAPPENING FROM SEPTEMBER TO NOVEMBER.
>> KAUR: THANK YOU. I APPRECIATE THAT. I THINK THAT'S REALLY IMPORTANT. I KNOW I ONLY HAVE A MINUTE BUT SIGNIFICANT DIFFERENCE BETWEEN PERFORMANCE BASED AND OUTCOME BASED.
IF YOU HAVE SOMETHING I COULD READ ON THAT. I'M JUST CURIOUS HOW ALL OF THESE COMPONENTS WORK TOGETHER. I HAVE ALWAYS SAID -- I KNOW COUNCILMEMBER WHYTE HAS BEEN FOCUSED ON ZBB, AND I APPRECIATE THAT, BUT I THINK OUR FOCUS SHOULD MORE BE ON WHAT ARE THE GOALS THAT WE ARE TRYING TO ACHIEVE AND ARE WE ACHIEVING THEM VERSUS TRYING TO REBUILD. AND I THINK IT'S TWO WAYS OF GETTING AT THE SAME THING. MY GOAL -- I THINK MY FOCUS IS HOW DO WE UNDERSTAND BETTER WHAT IT IS THAT WE'RE ACTUALLY ACHIEVING, WHERE ARE WE SUCCESSFUL, AND WHERE ARE THERE GAPS. I WILL REITERATE WHAT COUNCILMAN MCKEE-RODRIGUEZ SAID IN HIS COMMENTS. OUR DISTRICTS ARE NOT ALL THE SAME.
OUR CITY IS NOT ALL THE SAME AND IF WE THINK ABOUT THIS AS AN INDIVIDUAL BASIS, WE'RE NOT ACTUALLY GOING TO MOVE THE NEEDLE ON REALLY BIG CHALLENGES THAT WE HAVE.
AND SO I THINK IF WE THINK A DEPARTMENT, WE PULL OUT THE DISTRICTS SEPARATELY.
THE MAYOR TALKS A LOT ABOUT OUR EQUITY-BASED BUDGET WE HAVE BEEN FOCUSING ON BUT I THINK THERE'S MORE WE CAN DO AROUND THAT. I THINK IF WE TRULY WANT TO ADDRESS THE FAILING STREETS AND SIDEWALKS AND INFRASTRUCTURE, LIKE YOU MENTIONED, LIKE YOU SAID EAST/SOUTHWEST, THERE'S SOME IN THE CENTER TOO. I JUST WANT TO SAY THANK YOU.
I THINK YOUR PRESENTATION WAS FANTASTIC. YOU DID AN AMAZING JOB, SO
THANK YOU SO MUCH. THANK YOU, MAYOR. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER KAUR. ALL RIGHT. ANY FURTHER DISCUSSION ON THIS? OKAY. GREAT JOB, EVERYBODY.
LOTS TO THINK ABOUT. LOTS TO POUR OVER. THERE IS NO EXECUTIVE SESSION
[02:00:02]
TODAY, SO HAVE A GREAT AFTERNOON. IT'S 4:03 P.M. ON MAY 7, 2025.
* This transcript was compiled from uncorrected Closed Captioning.