On February 2, City Council discussed their Mid-Year budget. For readers unfamiliar with the budget process, a budget is passed (in most cases) in June for the second half of the year that it is passed and then for the first half of the following year. Generally, at some point in the middle of that same year around August or September, City Council looks at the budget to assess if their expenditures and revenues match their earlier projections then make some adjustments.
The City Council passed their budget early last year in May instead of June 2020 due to the pandemic. Essentially, they estimated a reduction in revenues for the first quarter of the new budget and the last quarter of the old budget. As the year progressed City Council grew worrisome as businesses remained closed. However, many businesses moved to online platforms allowing customers to continue purchasing and the City’s revenue from sales and transaction tax to grow.
Despite having many businesses close, the city’s revenue did not decline nearly as much as was previously projected. At mid-year, the City learned that they have tens of millions of dollars in excess. A discussion on how to spend the excess monies occurred during the City’s Budget and Audit Committee meeting on January 26.
During the City’s Budget and Audit Committee meeting, Dawn Holm, director of finance, provided an overview of findings from the Mid-Year Budget for Fiscal Year 2020-21. Holm reported that:
FY 2019-20 Year-End results have bolstered the City’s bottom line bringing $58.4 million in available one-time resources.
While the city’s sales tax revenues are above the approved budget estimates, they have not returned to pre-pandemic estimates.
Holm also noted that property tax revenue is expected to continue given the ability of working from home, allowing more people to move to more desirable areas like Sacramento and resulting in projections of Sacramento being the hottest real estate market for the coming year.
Cannabis revenues continue to be strong thus a recommendation was made to increase the budget by $3 million.
Holm also provided an overview of City Council initiatives and their dollar amounts. Initiatives included climate action plan funding for air monitors, legal aid services provided by the FUEL Network, Meadowview Shelter administration by SHRA, Tiny Homes, North Sacramento Library, Sacramento River Parkway Bike Trail, etc. The amount proposed for initiatives totaled $22.4 million.
As part of the Mid-Year budget process City Manager Howard Chan meets with each department to find out more about their budget needs. Holm discussed Chan’s mid-year recommendations, which totaled $16.6 million.
To no one’s surprise, the City Manager proposed using excess funds from Measure U to:
hire 10 full-time police officers
pay for their overtime expenses
fund internal affairs/professional standards unit (a.k.a. pay for police officer’s improper actions)
fund unmanned aerial systems unit (a.k.a. more surveillance and repression).
Mayor Darrell Steinberg expressed support for hiring more police to staff the internal affairs/professional standards unit. Chan requested that Holm provide clarification about numbers reported in the mid-year budget. Holm stated that there are 15 ongoing positions and funding for the Office of Community Response that amounts to $9 million in ongoing costs. The City Manager added that the City’s police department positions only total $1.1 million and there are one-time costs buried in the $3.6 million one-time funds being recommended for items such as new interview cubicles, redaction software, etc.
Per Chan’s request Brenda Delgadillo, police administrative manager, explained how Sacramento Police Department (SacPD) budgets and fills their vacant positions. Mayor Steinberg pointed out that SacPD started their academy in January without more funding from the City Council, which only highlighted Chan’s misrepresentation on SacPD’s budget needs.
Having two new councilmembers makes a difference. Period. Particularly, during budget discussions. It’s not just what happens, but how the conversation plays out.
After Chan’s proposal to fund 10 new police positions, Councilmember Mai Vang stated that she did not support a budget that included new police officers when there are many urgent needs in the community that need investment. This response created space for the other councilmembers to address why they do or do not want to do the right thing. We love to see it!
Other notable Mid-Year Budget Report items discussed at the Budget and Audit Committee included using General Funds to pay for the Golden 1 Center. Since the Golden 1 Center bonds are lease obligations of the City, the General Fund will be utilized to cover the shortfall. As shown in the following chart, funding associated with the debt service for the Golden 1 Center Bonds is projecting a shortfall of $11.7 million for FY20/21.
Mayor Steinberg presented his budget proposal on how to spend the City’s one-time excess funds at the City Council meeting on February 2. To be frank, he attempted to expedite a plan to use $46.5 million of taxpayer money without talking to all the council members. Mayor Steinberg proposed allocating
$40 million to the Affordable Housing Trust Fund
$6 million on Youth and Programming and Development
$500,000 on Climate Action Initiatives
council direction to the City Manager to include $1 million for the Participatory Budgeting Pilot Program in the upcoming FY 21/22 Proposed Budget.
A major concern with the mayor's proposal is that it represents only three members of the City Council: the Mayor, Councilmember Jay Schenirer, and Councilmember Eric Guerra. Ironically, for the last two years each of them have worked closely with one another on the UC Davis Aggie Square project and surrounding housing and economic development needs.
Before Mayor Steinberg’s motion was voted on, Councilmember Katie Valenzuela mentioned concerns about Councilmembers duties to comply with Brown Act rules. She asked Mayor Steinberg for direction and suggested that each of the councilmembers openly discuss in front of the public who they spoke to about the mid-year budget proposal to ensure transparency and that no one violated the Brown Act.
According to the Brown Act, conversations, whether in person, by telephone or other means, between a member of a legislative body and any other person do not constitute a meeting. However, such contacts may constitute a “serial meeting” in violation of the Brown Act if the individual makes a series of individual contacts with other members of the legislative body serving as an intermediary among them.
It’s possible a violation occurred if, for example, Councilmember Schenirer had a conversation with Councilmember Valenzuela about the affordable housing trust fund item in the budget proposal then made a series of individual contacts with Mayor Steinberg and Councilmember Jennings serving as an intermediary among them.
Without knowing more, we applaud Councilmember Valenzuela for seizing the opportunity to build public trust and put public service ethics into practice. Unfortunately, Mayor Steinberg gave a hard decline to an opportunity to be transparent and build trust with the public.
Councilmember Angelique Ashby expressed feeling frustrated that Mayor Steinberg started off the Budget discussion with a motion because it felt like it was stifling conversation. She further explained that she has repeatedly asked for more funding for shelter and services for women and children and it was disappointing to see it missing from his mid-year budget proposal.
After a meaningful debate amongst councilmembers on budget priorities and a few different motions proposed by Councilmember Vang, Councilmember Valenzuela, Councilmember Ashby, and Councilmember Guerra - what ends up being passed is a budget that is more representative of every district’s needs and not just a few.
$400,000 for City Districts ($50,000 per City Councilmember’s District)
$500,000 for Climate Action Initiatives
$1 million for Participatory Budgeting (supposedly binding)
$2.5 million for Women & Children (services and shelter)
$5 million for Public Works Matching Program
$6 million for Children and Youth
$31.5 million ($20 million from Measure U) for the Affordable Housing Trust Fund