WEBVTT 1 00:08:23.197 --> 00:08:23.857 Welcome back. 2 00:08:23.937 --> 00:08:29.084 We are now calling to order the work session for the afternoon of April 1st. 3 00:08:31.158 --> 00:08:32.591 Welcome back to the, to the dais. 4 00:08:32.642 --> 00:08:35.235 It feels like you all have a full-time job sitting in front of us. 5 00:08:36.802 --> 00:08:40.693 Um, CFO Jonas Biery, Budget Director Ruth Levine, please take it away. 6 00:08:41.813 --> 00:08:44.495 Great, thank you, Council President. 7 00:08:44.575 --> 00:08:45.490 Thank you, Council President. 8 00:08:45.571 --> 00:08:56.615 I will start to kick us off and just note the laptop is choosing right now to restart, so we're gonna get the presentation pulled up one way or another, but I'll go ahead and start teeing up so we can make good use of our time here. 9 00:08:57.724 --> 00:09:03.921 So just quickly wanted to talk a little bit about expectations for today's update and today's conversation about the Spring TAO. 10 00:09:04.755 --> 00:09:10.486 I'll start with a quick reminder of where we're at from a timeline perspective and from a revenue forecast perspective. 11 00:09:11.015 --> 00:09:25.075 And then second kind of piece is we presented info at a work session on March 5th about the proposed solutions for the current fiscal year general fund gap that we are solving for in the spring TAO. 12 00:09:25.620 --> 00:09:34.436 So Ruth will review updates to the current numbers as filed in the technical adjustment ordinance or TAO for council consideration on April 8th. 13 00:09:35.221 --> 00:09:41.297 And then the spring TAO also includes a number of true-up changes to remain in technical balance at year end. 14 00:09:41.809 --> 00:09:42.740 So Ruth will discuss thank you, Councilor Smith. 15 00:09:42.740 --> 00:09:42.740 Thank you, Mayor. 16 00:09:42.740 --> 00:09:47.730 I'm going to describe those and highlight a few other key items that are included in the ordinance as filed. 17 00:09:48.019 --> 00:09:59.450 The full packet of information, including the presentation that we're working on getting up for you, the ordinance itself, and other supporting materials, those were all sent to council inboxes yesterday afternoon. 18 00:10:00.220 --> 00:10:05.309 Recognize that this doesn't allow as much time for review in advance as we would typically prefer. 19 00:10:05.600 --> 00:10:18.208 Appreciate your patience and understanding as numbers were literally still being finalized and worked out right up through yesterday, and that information was provided as soon it became available to us and ergo to you. 20 00:10:19.774 --> 00:10:22.404 There's a lot of technical detail in that full packet. 21 00:10:22.799 --> 00:10:33.500 We certainly don't anticipate that anyone will have read it thoroughly, but never fear, Ruth is going to frame the key content that we think is of greatest relevance and interest here today. 22 00:10:34.287 --> 00:10:36.135 And then lastly, we'll have plenty of space. 23 00:10:36.393 --> 00:10:46.453 We probably only take 20 minutes or so to go through the material, maybe 30 max, And then we can attempt to answer any questions that you have today, help prepare and support for council action next week. 24 00:10:46.727 --> 00:10:54.654 If there's anything we're not able to answer today, we'll come back either next week or in the meantime with follow-up. 25 00:10:54.703 --> 00:10:56.196 And it looks like the presentation's up. 26 00:10:56.794 --> 00:11:00.078 If we can skip forward a couple of slides, please. 27 00:11:00.320 --> 00:11:01.157 Yeah, so agenda. 28 00:11:01.865 --> 00:11:02.445 Yep, perfect. 29 00:11:02.509 --> 00:11:02.879 Thank you. 30 00:11:03.635 --> 00:11:13.005 So just wanted to quick, very quickly, we showed you a slide like this previously, reviewed the summary of prior actions and conversations about the current fiscal year that have led led us to here. 31 00:11:13.519 --> 00:11:15.110 We had the March 5th work session. 32 00:11:15.625 --> 00:11:30.048 We've now added another box to show that we are here today to continue that conversation and have a little more refined detail around what will be in the actual technical adjustment ordinance next week. 33 00:11:30.679 --> 00:11:31.292 Next slide, please. 34 00:11:32.996 --> 00:11:39.610 Very quickly, I think you saw a slide, maybe the same slide or very similar to the prior presentation. 35 00:11:40.207 --> 00:11:49.730 We do have a more robust conversation about the forecast at next week's work session on, which is more related to '26-'27. 36 00:11:50.562 --> 00:11:55.227 But we did wanna highlight the forecast related to '25-'26, current fiscal year. 37 00:11:56.094 --> 00:12:03.868 Previously previewed, we anticipated a revenue shortfall of $17.1 million shortfall relative to prior expectations. 38 00:12:04.428 --> 00:12:13.052 That number was in fact confirmed in the formal interim general fund forecast that was updated last week, published and distributed on March 24th. 39 00:12:13.630 --> 00:12:30.254 As previously previewed, the key takeaways here are business license taxes came in aligned with expectations for the year, and utility license fee revenues were lower than expected due to a milder than expected winter that resulted in reduced energy usage. 40 00:12:30.302 --> 00:12:32.208 Those are kind of the couple of big takeaways. 41 00:12:32.899 --> 00:12:33.860 Next slide. 42 00:12:34.308 --> 00:12:44.392 And again, we'll have more conversation about this, the forecast broadly next week, but relevant to this year, to '25-'26, the fiscal year we're currently in. 43 00:12:45.210 --> 00:12:49.859 This slide sort of zooms in a little bit on the various slices of general fund revenue. 44 00:12:50.437 --> 00:12:53.772 And I'll draw your attention to kind of the 2 highlighted boxes. 45 00:12:54.767 --> 00:12:59.113 The kind of middle highlighted box is the current forecast. 46 00:12:59.177 --> 00:13:05.431 So as of the March 24th updated forecast document, that's where we believe we are today. 47 00:13:06.057 --> 00:13:08.831 And that's the revenues that we're working from. 48 00:13:09.424 --> 00:13:22.375 And then the right-hand box is sort of the comparison of this March forecast relative to the prior forecast, which was kind of April last year, where the kind of starting point for looking at '25-'26. 49 00:13:22.764 --> 00:13:30.765 You can see the change within each of those line item revenue items and the net result at the bottom being that $17.1 million delta. 50 00:13:33.270 --> 00:13:39.813 I will note that the downward revenue that we're experiencing is not unique to the City of Portland. 51 00:13:40.217 --> 00:13:43.871 Many of the same factors that are driving these declines are occurring elsewhere. 52 00:13:46.327 --> 00:13:49.729 Certainly in the region and in some cases other places in the country. 53 00:13:50.322 --> 00:14:05.208 And while that's not exactly comforting information, I think it is important to acknowledge that many of the underlying factors driving these revenue declines are indicative of broader economic realities and not things that are necessarily specific directly to city actions. 54 00:14:05.962 --> 00:14:08.288 So that's just a quick snapshot reminder. 55 00:14:08.450 --> 00:14:14.938 We have Peter Holzman in the room, city economist Peter Holzman, but a reminder that we do have a full full work session, I anticipate. 56 00:14:15.198 --> 00:14:18.693 Well, another work session, a big portion of which we'll be talking about the forecast next week. 57 00:14:19.830 --> 00:14:26.692 With that, I'll hand to Ruth to talk about, I think, what the key information is today, which is what's actually in the spring TAO that'll be before you next week. 58 00:14:28.509 --> 00:14:29.169 Great, thank you. 59 00:14:29.267 --> 00:14:31.490 And for the record, Ruth Levine, Budget Director. 60 00:14:31.990 --> 00:14:37.778 And you can go to the next slide and then one more after that. 61 00:14:40.409 --> 00:14:59.030 So these next few slides should look somewhat familiar based on what we presented to you back in March, but we're going to highlight where there are some differences and then, and also give you the overall picture of what is going to be in the spring TAO. 62 00:14:59.337 --> 00:15:05.557 Just so everyone's clear, we've filed documents for the spring TAO. 63 00:15:05.865 --> 00:15:06.736 They're in eCouncil. 64 00:15:07.392 --> 00:15:11.697 They should appear because it's going to be heard next Wednesday the 8th. 65 00:15:13.192 --> 00:15:16.581 So changes from this will come as amendments. 66 00:15:18.440 --> 00:15:25.423 So the first line, the $17.1 million Jonas just spoke to, and that is aligned with what we presented to you back in March. 67 00:15:26.976 --> 00:15:39.447 The next line is, it's revenue that we already recognized in the fall TAO but is only now reflected in the March forecast, and so that shows up as a negative. 68 00:15:40.812 --> 00:15:48.513 And then the third line is the general fund overspending without compensation set aside. 69 00:15:48.561 --> 00:16:04.157 So it's just the projected general fund expenditures less the revised budget as of the fall, and that does not include compensation set aside, although I will talk on the next slide about the remaining compensation set aside contingency that we're using. 70 00:16:04.206 --> 00:16:04.450 Thank you. 71 00:16:05.062 --> 00:16:12.052 So when you add those together, we're at $21.9 million in terms of gap we have to solve. 72 00:16:12.471 --> 00:16:19.570 That looks a little bit different than the number we showed you back in the beginning of March. 73 00:16:19.908 --> 00:16:32.153 It's actually not as different, and the reason is we've pulled out some of the— we've shown the general fund overspending without the general fund underspending, and that's on the next slide. 74 00:16:32.203 --> 00:16:32.356 Thank you. 75 00:16:32.539 --> 00:16:36.017 So I'll show that to you in a second here. 76 00:16:38.379 --> 00:16:49.301 And just as a reminder, quickly on the right, again, this is unchanged, but some of the drivers of that overspending are not showing and not having compensation set aside in the budgets. 77 00:16:49.365 --> 00:16:57.289 And then also the 10% placeholder for the enterprise efficiencies, the core services realignment reductions. 78 00:16:57.405 --> 00:16:57.539 Thank you. 79 00:16:59.818 --> 00:17:01.153 Okay, you can go to the next slide. 80 00:17:04.170 --> 00:17:13.159 All right, and so here's a little bit more detail on how we're proposing to close the gap. 81 00:17:13.256 --> 00:17:25.038 So this slide and the next slide compare what's in the spring TAO as filed to what we showed you back at the beginning of March, and I'll just kind of go through it. 82 00:17:25.625 --> 00:17:33.178 We projected or we expected we might take about $2 million of the $3 million total unrestricted general fund contingency. 83 00:17:33.921 --> 00:17:37.133 We're proposing now to take $2.5 million of that. 84 00:17:39.450 --> 00:17:46.259 The council operations underspending amount of $800,000 is unchanged. 85 00:17:46.616 --> 00:17:48.205 That's just council operations. 86 00:17:50.847 --> 00:17:54.525 The remaining compensation set-aside contingency is unchanged. 87 00:17:54.718 --> 00:17:54.991 Councilor Smith. 88 00:17:55.640 --> 00:17:56.928 Still $3.3 million. 89 00:17:57.040 --> 00:18:01.680 That was just of the total amount of about $17 million that was there in the fall. 90 00:18:02.195 --> 00:18:04.821 The $3.3 is what was remaining after that. 91 00:18:04.869 --> 00:18:13.234 So we're using that to kind of offset the $3.6 of projected overspending, if that makes sense. 92 00:18:15.539 --> 00:18:22.554 The technology replacement reserve excess amount was a little bit higher than what we originally thought. 93 00:18:22.876 --> 00:18:24.089 It was going to be. 94 00:18:24.186 --> 00:18:26.579 It's now $2.3 million. 95 00:18:26.692 --> 00:18:33.316 The Bancroft Bond Fund available amount is $2 million, and that's unchanged since March. 96 00:18:34.345 --> 00:18:42.989 And then the PPB asset forfeiture being used for event overtime is also unchanged since March at $1.4 million. 97 00:18:45.183 --> 00:18:46.067 You can go to the next slide. 98 00:18:49.309 --> 00:18:53.103 This continues on the same as the previous slide. 99 00:18:54.430 --> 00:19:08.303 The Housing Investment Fund, there's the bucket in short-term rental that comes from transient lodging taxes, which is unrestricted except for by resolution by prior council. 100 00:19:08.691 --> 00:19:12.936 There's, oops, that should say $8.6, not $11, apologies. 101 00:19:14.079 --> 00:19:16.883 $8.6 million available in that fund and—. 102 00:19:17.076 --> 00:19:17.688 $8.6 million. 103 00:19:18.489 --> 00:19:20.646 We're proposing to use $4.3 million. 104 00:19:20.839 --> 00:19:22.224 That is up slightly. 105 00:19:22.548 --> 00:19:24.593 It's actually $4.25 million. 106 00:19:24.946 --> 00:19:28.617 That is up slightly from what we presented back in March. 107 00:19:30.807 --> 00:19:33.640 The next line is council underspending. 108 00:19:33.753 --> 00:19:36.993 This was based on that prior work session that we had. 109 00:19:37.930 --> 00:19:44.372 Staff returned and had conversations with offices that were interested in returning underspending. 110 00:19:44.420 --> 00:19:44.663 Thank you. 111 00:19:45.077 --> 00:19:49.065 And this reflects only those offices that are interested in returning underspending. 112 00:19:49.179 --> 00:19:51.375 It totals to $495,000. 113 00:19:55.182 --> 00:20:00.326 We had discussed using the citywide obligations reserve fund, the Portland Harbor Reserve. 114 00:20:01.195 --> 00:20:05.630 There's about $7 million in there that is discretionary in that reserve. 115 00:20:06.031 --> 00:20:10.417 We're not drawing— we're not proposing to draw that in the spring TAO as filed. 116 00:20:10.595 --> 00:20:10.674 Okay. 117 00:20:11.074 --> 00:20:11.336 Yes. 118 00:20:11.402 --> 00:20:12.384 Because we didn't need it. 119 00:20:14.717 --> 00:20:34.798 And then the bureau general fund returns and some sort of targeted reductions to encumbrances, which we can talk more about, total $4.8 million, which is an increase of $3 million over what we presented back in March. 120 00:20:35.124 --> 00:20:41.497 That's mostly due to the I unnetted a number so that it was clear what was happening. 121 00:20:42.241 --> 00:20:43.828 I, yeah. 122 00:20:45.916 --> 00:21:07.952 So the next slide, you can go to the next slide please, puts all of that together and just shows you at the top is the projected balance of negative $21.9 million, and then it goes through each of the different buckets in the spring TAO as filed that are the different types of sort of gap-closing strategies. 123 00:21:08.643 --> 00:21:13.576 So the first line there, that's returns from bureaus. 124 00:21:14.074 --> 00:21:17.286 That can be thought of more as kind of natural underspending. 125 00:21:19.398 --> 00:21:27.256 I say that with a small asterisk because it also reflects like hiring freeze and other kind of reductions to expenditures. 126 00:21:27.304 --> 00:21:33.307 So it's not sort of business as usual, but it's not making any additional reductions beyond that. 127 00:21:33.387 --> 00:21:33.534 Okay. 128 00:21:34.055 --> 00:21:43.892 The next line is the encumbrance reductions that would be kind of proactively reducing encumbrances by $800,000. 129 00:21:44.134 --> 00:21:59.597 And then the next 2 I spoke to on the previous slide and the others I've just kind of bucketed as contingency and reserve draws or other resource shifts from other funds. 130 00:22:06.778 --> 00:22:07.263 Councilor Green. 131 00:22:08.395 --> 00:22:09.722 Thank you, Mr. President. 132 00:22:09.884 --> 00:22:11.615 Thank you, Ruth, for the presentation. 133 00:22:11.891 --> 00:22:13.557 Can you go back to slide 7, please? 134 00:22:23.241 --> 00:22:23.936 One more back. 135 00:22:24.499 --> 00:22:27.074 It's just— it's the— I've got the PDF version. 136 00:22:27.122 --> 00:22:27.767 It's the 7 pages. 137 00:22:27.929 --> 00:22:30.640 It's the, uh, projected overspend. 138 00:22:30.751 --> 00:22:31.188 Yeah, that. 139 00:22:31.382 --> 00:22:31.703 Thank you. 140 00:22:31.785 --> 00:22:32.092 That one. 141 00:22:32.704 --> 00:22:39.938 Okay, so help me understand this a little bit because I'm trying to kind of follow along with the bullet point narratives on the side. 142 00:22:40.846 --> 00:22:45.116 So this is projected overspend. 143 00:22:45.471 --> 00:22:46.005 So this is—. 144 00:22:46.020 --> 00:22:46.327 That's right. 145 00:22:46.521 --> 00:22:49.298 We haven't— we're not like deficit spending right now. 146 00:22:49.830 --> 00:22:50.202 Correct. 147 00:22:50.299 --> 00:22:52.671 We're saying that if we don't change our budget yes. 148 00:22:53.249 --> 00:22:54.999 Then we will be overspending our authority. 149 00:22:55.979 --> 00:22:56.395 Correct. 150 00:22:56.492 --> 00:22:56.877 Okay. 151 00:22:57.103 --> 00:22:57.327 That's right. 152 00:22:58.307 --> 00:23:03.011 And so then I understand the compensation set-aside driver because I talked about that last fall. 153 00:23:03.685 --> 00:23:06.013 So that's— I don't need to understand that anymore. 154 00:23:06.335 --> 00:23:15.391 Um, but I do need to understand, so what is, what is, what is 10% placeholder reduction enterprise efficiencies and offset? 155 00:23:15.808 --> 00:23:25.432 Does that say that So an enterprise efficiency would be a savings, but is it driving the deficit because we didn't realize the savings? 156 00:23:25.865 --> 00:23:26.251 Correct. 157 00:23:26.347 --> 00:23:27.875 Yeah, in the current year. 158 00:23:27.971 --> 00:23:36.888 So this is where we put in a 10% placeholder assumption with the expectation of making those reductions in the fall, Tao. 159 00:23:38.142 --> 00:23:40.808 And we only made the reductions for communications. 160 00:23:40.890 --> 00:23:41.355 We didn't—. 161 00:23:41.451 --> 00:23:47.580 We haven't yet made them for the other functions because It's taken longer to get those decisions in line than was expected. 162 00:23:47.628 --> 00:23:50.962 And so for the current year, that just becomes a liability. 163 00:23:51.395 --> 00:23:52.198 Yeah. 164 00:23:52.501 --> 00:23:52.678 Okay. 165 00:23:52.919 --> 00:23:53.159 Thank you. 166 00:23:53.239 --> 00:23:54.232 Thanks for clarifying that. 167 00:23:54.362 --> 00:24:08.211 And then offset by vacancy savings, does that bullet suggest that the projected overspend would be larger if not for the offsets, or is the offset contributing to the deficit? 168 00:24:08.451 --> 00:24:09.478 I don't really understand that piece. 169 00:24:09.653 --> 00:24:12.315 It's working the It's saving us money. 170 00:24:12.364 --> 00:24:13.690 It's working the way you would expect. 171 00:24:13.739 --> 00:24:29.029 So the vacancy savings is basically, yeah, if we didn't— if we hadn't done the vacancy freeze, we would presumably be spending more on personnel, and that would drive the overspending higher. 172 00:24:29.539 --> 00:24:33.558 I mostly put that bullet point on there to show, like, we've included it already. 173 00:24:33.689 --> 00:24:35.568 It's not a separate item somewhere else. 174 00:24:35.634 --> 00:24:35.714 Okay. 175 00:24:36.097 --> 00:24:37.635 Okay, that's helpful. 176 00:24:37.683 --> 00:24:44.895 And so these are deltas relative to some previous forecast or some previous budget, and that's the fall TAO, right? 177 00:24:44.976 --> 00:24:45.104 That—. 178 00:24:45.200 --> 00:24:47.234 For that 3rd line, yes, it is the fall TAO. 179 00:24:47.394 --> 00:24:51.354 It's a little confusing because we don't typically update our revenue in the fall. 180 00:24:52.106 --> 00:24:52.330 Yeah. 181 00:24:52.490 --> 00:24:58.355 And so the expenditures were updated in the fall per all the decisions made by council in the fall. 182 00:24:58.980 --> 00:25:04.978 The revenue has not been changed since we adopted the budget last spring. 183 00:25:05.555 --> 00:25:07.143 And so that's where it gets a little confusing. 184 00:25:07.576 --> 00:25:19.943 Okay, so there were certain vacancy savings that we didn't like pre-code or pre-assume in the fall TAO that we're realizing now that then mitigates that, that negative $21.9 would be a larger number. 185 00:25:20.409 --> 00:25:23.327 It'd be about $25 million if not for—. 186 00:25:23.938 --> 00:25:24.692 Yes, that's right. 187 00:25:24.996 --> 00:25:29.247 All right, I had just very specific technical questions, so thanks for now. 188 00:25:30.079 --> 00:25:30.258 Yeah. 189 00:25:30.598 --> 00:25:31.376 Thank you, Councilor Green. 190 00:25:31.636 --> 00:25:32.463 Councilor Ryan. 191 00:25:32.707 --> 00:25:33.923 Thank you so much, Council President. 192 00:25:34.005 --> 00:25:34.945 I just have a quick question. 193 00:25:35.042 --> 00:25:40.753 I was kind of surprised to see the council underspending is only 0.5%. 194 00:25:40.801 --> 00:25:41.468 Is that correct? 195 00:25:42.099 --> 00:25:42.261 Yeah. 196 00:25:42.506 --> 00:25:43.721 Have you heard from every office? 197 00:25:45.838 --> 00:25:47.116 I don't know. 198 00:25:49.898 --> 00:25:56.696 I wasn't in those conversations directly, so we'd have to get back to you on, you know, who they spoke with. 199 00:25:56.778 --> 00:26:08.664 Yeah, my understanding, Councilor, is that Biz Ops, the person in Biz Ops who was works with your offices on your council budgets reached out to each individual council office and had that discussion directly with each council office. 200 00:26:09.356 --> 00:26:09.663 Okay. 201 00:26:09.904 --> 00:26:14.641 My chief of staff is out, so I can't verify the number, but I think our office is most of that. 202 00:26:14.770 --> 00:26:15.795 So I'm just kind of surprised. 203 00:26:15.844 --> 00:26:17.273 I thought that'd be a higher number. 204 00:26:19.415 --> 00:26:25.700 And I, you know, that's in line with— I was somebody that thought we were spending too much money in each council office when we—. 205 00:26:25.974 --> 00:26:26.444 Way back when. 206 00:26:27.221 --> 00:26:29.615 So anyway, I'm just kind of surprised at that number being so low. 207 00:26:30.576 --> 00:26:30.978 Thanks. 208 00:26:31.859 --> 00:26:32.549 Thank you, Councilor Ryan. 209 00:26:32.662 --> 00:26:33.432 Councilor Pirtle-Guiney. 210 00:26:34.346 --> 00:26:37.135 Thank you, Council President. 211 00:26:37.296 --> 00:26:39.750 Can we go forward one slide? 212 00:26:41.224 --> 00:26:47.303 I just want to make sure that I'm looking at these new numbers correctly. 213 00:26:48.121 --> 00:26:54.679 So the original proposal on this first-line unrestricted contingency was to take $2 of the $3 million. 214 00:26:55.523 --> 00:26:59.846 And you had a note when we first talked about this that there was a recommendation to leave $1 million. 215 00:27:00.490 --> 00:27:03.448 There's now a recommendation to take $2.5 million of the $3 million. 216 00:27:04.252 --> 00:27:21.015 Is that because your assessment of what we need to keep available for the OEO if needed has decreased, or is that because we are in such hard times that you feel like we need to move past your original recommendation because there just aren't other options? 217 00:27:22.509 --> 00:27:23.955 Yeah, good question, Councilor. 218 00:27:24.051 --> 00:27:27.071 I think it's a little bit of both, frankly. 219 00:27:27.183 --> 00:27:47.325 I mean, I think maybe as we're getting a little clearer vision on what the risks might be for the remainder of the fiscal year, you know, increasingly more comfort that we're able to, you know, manage that with a lower amount of contingency and recognizing the options that were available to solve, that that was a trade-off worth making at that additional $500,000 amount. 220 00:27:47.373 --> 00:27:47.484 Thank you. 221 00:27:49.720 --> 00:27:50.155 Okay. 222 00:27:50.704 --> 00:27:59.185 And then on the next page, can you just give us a little bit more detail about the additional $3 million in the last line there? 223 00:27:59.734 --> 00:28:01.817 Yeah, sorry, this was a little confusing. 224 00:28:02.737 --> 00:28:12.061 It sounded like there were a lot of different things there, and I just wanna make sure that we're hearing on the record what that, those targeted reductions. 225 00:28:12.659 --> 00:28:12.965 Yes. 226 00:28:13.208 --> 00:28:15.368 How we got the targeted reductions up. 227 00:28:16.314 --> 00:28:17.243 Pretty significantly. 228 00:28:17.596 --> 00:28:22.298 Yeah, so it's really the— sorry, if you go forward one slide. 229 00:28:23.308 --> 00:28:28.797 So really it's $4 million of that $4.8 is the general fund returns. 230 00:28:29.615 --> 00:28:43.959 I had previously netted the overspending with that number, so it— the overspending looked smaller in March, but really— but then now I've separated them out to try to make it a little clearer what's going on. 231 00:28:44.248 --> 00:28:49.500 So that number has not changed very much, that $4 million figure of the, like, returns. 232 00:28:50.159 --> 00:28:53.179 And then the $800,000 that's below it is new. 233 00:28:53.868 --> 00:28:59.586 So the $1.8 to $4.8 is not really that we found $3 million additional in targeted reductions. 234 00:28:59.715 --> 00:29:01.450 It's that we're accounting for it differently. 235 00:29:01.498 --> 00:29:01.932 Correct. 236 00:29:01.980 --> 00:29:07.441 The $800,000 is the additional in targeted reductions, and we can speak more to what those are. 237 00:29:07.520 --> 00:29:10.058 They're mostly in the public safety service area. 238 00:29:10.251 --> 00:29:11.769 But okay, great. 239 00:29:12.027 --> 00:29:13.285 Thank you for that clarification. 240 00:29:13.624 --> 00:29:19.592 And thank you also for zeroing out the transfer from the CORF. 241 00:29:19.849 --> 00:29:25.365 That was something that I was really going to struggle to vote for, and I appreciate that you've brought us a proposal that doesn't require it. 242 00:29:27.259 --> 00:29:28.211 Thank you, Councilor Pirtle-Guiney. 243 00:29:28.645 --> 00:29:29.179 Councilor Smith. 244 00:29:31.307 --> 00:29:32.922 Thank you, Council President. 245 00:29:33.243 --> 00:29:35.567 Thank you for putting this together. 246 00:29:36.374 --> 00:30:05.965 I just wanted to go back um, to the question that was asked if you all had talked to council about our budgets, um, I sent, um, CBO Director Ruth Levine, uh, Benjamin Smith, Jonas Biery, and Councilor Smith. 247 00:30:06.095 --> 00:30:22.440 I sent City Budget Office Chief Financial Officer Jonas Biery an email, and I sent it to the budget team, and I said, please take my office budget out of your projection to fill the gap to pay for '25-'26. 248 00:30:23.701 --> 00:30:26.029 We will be spending our budget. 249 00:30:27.241 --> 00:30:30.939 You should assume that we will spend all of our budget. 250 00:30:32.441 --> 00:30:42.326 And I suggested that you investigate the materials and services budget in the city administrator's budget to fill the gaps. 251 00:30:44.210 --> 00:30:56.750 And I didn't get a response, but just for the record, you all's office do not have any control over legislative budgets. 252 00:30:56.798 --> 00:30:57.009 That's correct. 253 00:30:58.211 --> 00:31:01.594 Only the executive and the city administrator and those bureaus. 254 00:31:02.273 --> 00:31:08.319 So you should never, ever, ever put our budgets as a part of your way to fill a gap. 255 00:31:09.076 --> 00:31:24.152 Secondly, you need to go line by line and tell me which bureaus are overspending, and you need to go send them a note via the city administrator and say to them, you are out of money. 256 00:31:24.201 --> 00:31:24.378 Thank you. 257 00:31:24.544 --> 00:31:25.041 Councilor Smith. 258 00:31:25.218 --> 00:31:26.454 You cannot spend anymore. 259 00:31:27.949 --> 00:31:40.541 To bring this forward to us in this kind of manner is irresponsible and disrespectful, and it is a relentless pursuit into always telling us that we are in a gap when we're not. 260 00:31:41.698 --> 00:31:50.211 There's lots of money that was rolled over from last year that we were not even told what the exact budget numbers were. 261 00:31:50.483 --> 00:31:51.413 Councilor Smith. 262 00:31:51.574 --> 00:31:58.532 And I suggest that you go back and do that instead of always giving us a blanket, oh, we're in trouble, we're in trouble. 263 00:31:58.614 --> 00:31:59.751 You did that at the last TAO. 264 00:32:00.394 --> 00:32:07.016 And yes, I am so irritated, irritated with this TAO, irritated that we were not given the final number. 265 00:32:07.689 --> 00:32:17.615 You play games with the numbers because you think you can make it back up by the time we get new numbers and tell us we didn't take enough property taxes or we didn't take enough BLT, which is not true. 266 00:32:18.450 --> 00:32:19.688 And I'm getting sick and tired of it. 267 00:32:20.667 --> 00:32:23.366 Go tell those bureaus to stop spending. 268 00:32:23.978 --> 00:32:31.835 Don't come back to me and give me a towel and say I got to pay $32 million, $21 million, and don't desegregate where, where the overspending is coming from. 269 00:32:32.333 --> 00:32:35.353 Because it's irritating to us to look at this. 270 00:32:36.734 --> 00:32:43.708 And make sure that you keep our budgets out of your balancing act, because this is not fair and it's not right. 271 00:32:43.772 --> 00:32:43.884 Thank you. 272 00:32:46.365 --> 00:32:47.787 Thank you, Councilor Smith. 273 00:32:47.964 --> 00:32:48.513 Councilor Kanal. 274 00:32:51.290 --> 00:32:52.340 Thank you, Council President. 275 00:32:52.404 --> 00:32:54.939 Thanks for the, uh, the presentation, the information here. 276 00:32:55.228 --> 00:33:10.578 I, um, I want to start by following up on a question that, uh, Councilor Pirtle-Guiney asked in the preceding slide about the $2.5 million out of general fund contingency when previously, uh, the idea was to leave a million in there. 277 00:33:10.724 --> 00:33:16.441 And my question effectively is CFO Biery, you mentioned trade-offs, and I understand that. 278 00:33:16.988 --> 00:33:23.294 Why is it less risky to take an additional half million beyond what was originally the, the max you wanted to take? 279 00:33:23.618 --> 00:33:29.055 Why is that less risky than taking even a single dollar out of the Harbor Fund, the CORF? 280 00:33:30.814 --> 00:33:34.479 Um, Councilor, I think, think it's a different level of risk. 281 00:33:34.559 --> 00:33:37.061 It's the same level of risk that would drive that decision. 282 00:33:37.191 --> 00:33:45.877 The, the delta is that— or the difference in those 2 buckets is that the CORF Ultimately, we'd have to find a way to refill that at some point down the road. 283 00:33:46.183 --> 00:33:50.534 General fund contingency, we do too, but it's already embedded in the forecast. 284 00:33:51.259 --> 00:34:07.045 So the difference is just that the general fund contingency is sort of naturally flowing through the forecast, whereas the CORF is a separate bucket that we would have to come back and have a separate conversation about how do we put that $500,000 back in to make that fund whole. 285 00:34:11.510 --> 00:34:11.702 Okay. 286 00:34:12.010 --> 00:34:22.438 I am disappointed to not see anything coming out of that fund, especially given that we are disinvesting in democracy through taking money out of council budgets in this. 287 00:34:23.001 --> 00:34:24.596 Democracy requires investment. 288 00:34:24.677 --> 00:34:32.126 And I understand that there's optional returns here, but I— and but there's also the operations piece. 289 00:34:32.190 --> 00:34:34.532 So I'd prefer to see that money instead of taking money out of council budgets. 290 00:34:34.581 --> 00:34:41.356 Councilor be kept in the council and council operations budget and instead taken from the Harbor Fund personally? 291 00:34:41.791 --> 00:34:48.719 But my broader question is, if we don't, is the expectation that that's going to get zeroed out in the, in next year's budget? 292 00:34:49.490 --> 00:34:57.280 Will this $7 million be used for other gaps in next year's, next fiscal year's budget? 293 00:34:59.416 --> 00:35:00.960 That hasn't been determined yet. 294 00:35:01.172 --> 00:35:04.684 We're still going through that analysis now of what the mayor's proposed budget will be. 295 00:35:06.384 --> 00:35:12.641 Okay, so there's no assumption built in as of right now that that money is going to be used for something else? 296 00:35:13.268 --> 00:35:23.088 As of right now, the penciling in is that it'll remain $7 million, or I mean, it's actually more in there, but, but the— that this $7 million will remain as of this moment? 297 00:35:23.313 --> 00:35:26.586 It's hard for me to answer that right now because we still have a gap. 298 00:35:26.940 --> 00:35:35.514 So as we were looking at trade-offs of what the budget would be moving forward from the mayor, it could be but we haven't finalized that yet. 299 00:35:36.896 --> 00:35:42.632 Okay, I guess maybe instead of framing this as a question that I don't want to make it difficult for you all to answer. 300 00:35:42.681 --> 00:35:44.934 By the way, I'm very appreciative that you are here, Mayor, as well. 301 00:35:46.528 --> 00:35:59.059 I think that it's— I'm a little concerned that we might be protecting this money for a different usage that is also non-harbor related by not taking it out here. 302 00:36:00.106 --> 00:36:16.106 And instead taking money out of things that might be harder to take money out of in the full budget, including not only council offices, but I think some of the money in the contingency funds, some of that sort of conversation. 303 00:36:17.034 --> 00:36:43.284 So just wanting to flag that, but in particular the housing dollars, because if we were able to take money from the $7 million in the Harbor Fund today, we might be able to not take $4.3 million out of the currently unbudgeted housing money and use that, or at least a lesser amount of it, and use the delta there to pay to keep people in their homes. 304 00:36:44.369 --> 00:36:44.985 Does that make sense? 305 00:36:45.099 --> 00:36:48.456 There's a supplantation thing for all dollars in some sense. 306 00:36:48.503 --> 00:36:49.849 So I understand that there's—. 307 00:36:49.947 --> 00:36:50.141 Yeah. 308 00:36:52.148 --> 00:37:18.413 Technically speaking, this is kind of everywhere, but, but in the context of this, hypothetically, if instead of being $4.3 million in the Housing Investment Fund short-term rental, the 060, the first line of the next slide here, if that was still $4 million and instead of being zero out of the Harbor Fund, it was $0.3 million, and that would, when we get to the housing dollars conversation, mean that there's $300,000 remaining there to do debt buydowns or whatever else may be in that conversation. 309 00:37:18.461 --> 00:37:19.918 So that's kind of my concern here. 310 00:37:19.974 --> 00:37:20.027 Okay. 311 00:37:20.380 --> 00:37:23.661 Especially if the $7 million is just gonna get zeroed out anyway in the full budget. 312 00:37:23.708 --> 00:37:29.385 So it's a little hard because no matter what, one of these decisions has to happen first and there are 3 of them, right? 313 00:37:29.449 --> 00:37:32.737 Or 2.5 depending on how the housing conversation gets combined. 314 00:37:32.833 --> 00:37:39.686 But I just wanted to daylight that concern to kind of get us started here. 315 00:37:40.155 --> 00:37:47.001 Can I ask a clarification around the $3.6 and $3.3 for the—. 316 00:37:47.034 --> 00:37:47.521 Yes. 317 00:37:49.373 --> 00:37:56.047 The overspending without compensation set aside is the $3.6 million, and then the $3.3 million is the remaining compensation set aside available to draw. 318 00:37:56.900 --> 00:37:59.543 You said those are not— are those the comparable numbers? 319 00:38:02.059 --> 00:38:05.481 Like, so we left $3.3 million in it after the fall TAO? 320 00:38:06.092 --> 00:38:06.318 Correct. 321 00:38:06.719 --> 00:38:11.951 What is the need as of this moment for compensation set aside? 322 00:38:12.353 --> 00:38:15.079 And I imagine most, if not all, of that is fire and police. 323 00:38:15.195 --> 00:38:16.012 Lease overtime, right? 324 00:38:16.574 --> 00:38:20.195 Yeah, I mean, you can think about it as $3.6 million being the need. 325 00:38:20.916 --> 00:38:25.739 Okay, so, and that, that is less than I, uh, think that we had projected. 326 00:38:25.788 --> 00:38:30.931 Is that because we already paid for some of it somewhere else, or is it because less overtime was actually used? 327 00:38:31.940 --> 00:38:35.675 Um, we didn't already pay for it, I don't think. 328 00:38:35.722 --> 00:38:36.268 I'm not sure. 329 00:38:36.427 --> 00:38:40.659 I'm not 100% sure I understand that question, but, um, I think it's a combination. 330 00:38:40.851 --> 00:38:49.635 So but as we said in the fall, we don't anticipate needing 100% of compensation set aside in any normal year. 331 00:38:50.150 --> 00:38:50.327 Right. 332 00:38:51.034 --> 00:38:53.282 So some of it is we just didn't need as much. 333 00:38:53.715 --> 00:39:03.722 Some of it is the vacancy savings are baked in there, and some of it probably is that fire and police overtime are down from what they probably projected. 334 00:39:04.221 --> 00:39:06.759 So I think it's a little bit of all of those things. 335 00:39:07.175 --> 00:39:19.530 Okay, so the, the— I would say that the use of vacancy savings and maybe the additional amount of vacancy savings, uh, caused by the hiring freeze or any other policies is what I meant by, uh, paying for it some other way. 336 00:39:19.692 --> 00:39:19.916 Got it. 337 00:39:20.317 --> 00:39:32.679 Um, and then to the degree that it is a reduction in overtime, uh, commendations to everybody involved in, in doing that, because I know that's been a policy goal for, for many years, uh, to do it, and including by, uh, filling vacancies at both bureaus. 338 00:39:32.746 --> 00:39:35.719 So, uh, commending those, those 2 chiefs as well. 339 00:39:36.487 --> 00:39:44.034 Um, the other question I had can— yeah, I think it can wait. 340 00:39:44.099 --> 00:39:45.081 So yeah, thank you. 341 00:39:45.856 --> 00:39:46.547 Thank you, Councilor Kanal. 342 00:39:46.757 --> 00:39:47.530 Councilor Smith again. 343 00:39:48.110 --> 00:39:49.219 Thank you. 344 00:39:49.896 --> 00:39:53.255 So I have a question, couple questions. 345 00:39:56.141 --> 00:40:05.556 There are some expected rollover money that each bureau has given to the mayor's office, correct? 346 00:40:06.824 --> 00:40:11.833 Like what they expect that they'll have left at the end of '25-'26? 347 00:40:13.086 --> 00:40:14.981 That's all reflected here. 348 00:40:15.206 --> 00:40:20.086 So it's the $4 million of the general fund returns on the next slide. 349 00:40:20.344 --> 00:40:23.909 So all we're expected to have left is $4 million? 350 00:40:27.590 --> 00:40:28.788 Yeah, roughly speaking. 351 00:40:28.967 --> 00:40:36.318 Out of all the, the 4 of the general fund money budgets, that's all we're expected to have left is $4 million? 352 00:40:36.806 --> 00:40:50.088 So the way, so the way to think about this is the total overspending in the general fund is projected to be $3.6 million. 353 00:40:50.969 --> 00:40:56.034 That is mostly driven by, in fact, exclusively driven by public safety bureaus. 354 00:40:56.550 --> 00:40:56.695 Okay. 355 00:40:57.115 --> 00:41:02.800 The other bureaus were told, come up with projections. 356 00:41:03.219 --> 00:41:10.333 How much do you think you'll either overspend or underspend by the end of this fiscal year compared to your revised budget? 357 00:41:10.641 --> 00:41:16.849 Everybody else who wasn't overspending was projected to underspend by a total of $4 million. 358 00:41:18.278 --> 00:41:31.733 That's based off of their personnel projections, where their contracts are and the like, and any external revenues that come into the general fund, like fee revenues and things like that. 359 00:41:32.184 --> 00:41:32.954 That's $4 million. 360 00:41:33.083 --> 00:41:42.813 So they just gave you a verbal and said, we're not— some of these, because we're talking about parks, we're talking about water, we're talking about fire, we're talking about police. 361 00:41:43.422 --> 00:41:54.114 And so out of all of those folks who get hundreds of millions of dollars, they're saying that they are not going to have anything left, and they've told you that, and you believe them? 362 00:41:54.483 --> 00:41:56.440 Well, we collected a spreadsheet. 363 00:41:56.505 --> 00:42:05.590 We have the full projections, and we shared a version of that spreadsheet as of, I think it was like the week after our last work session, so March 12th or so. 364 00:42:05.815 --> 00:42:08.641 We shared that out, and you should all have received that. 365 00:42:08.704 --> 00:42:10.599 That has the full detailed projections. 366 00:42:11.112 --> 00:42:14.222 At the major object level for every general fund bureau. 367 00:42:15.280 --> 00:42:17.188 Water doesn't receive any general fund, just to be clear. 368 00:42:18.150 --> 00:42:29.275 And so all of them made those projections and we did some vetting to try to make sure they made some sense and try to understand what was in them. 369 00:42:29.387 --> 00:42:36.505 So there was quite a bit of work that went into doing that exercise citywide to try to come up with the number that we expected. 370 00:42:38.030 --> 00:42:41.900 And so generally we have a general fund reserve, right? 371 00:42:42.543 --> 00:42:42.864 We do. 372 00:42:43.586 --> 00:42:56.112 So it would seem to me if we're overspending that the city administrator or the mayor would say then we need to get it out of the general fund reserve or we need to stop folks from spending money. 373 00:42:56.690 --> 00:43:07.063 If the money is coming from operations, that's one thing, but if the money— the overspending is coming from bureaus wouldn't it be wise to ask these bureaus to stop spending? 374 00:43:09.030 --> 00:43:09.992 I'm asking you a question. 375 00:43:11.885 --> 00:43:15.373 So, Councilor, it's a good question. 376 00:43:15.422 --> 00:43:22.768 I know we've had this discussion in various forms in this room before, dating back to, I think, around November or December. 377 00:43:22.849 --> 00:43:28.255 There was direction given by the city administrator to do exactly that, to reduce spending. 378 00:43:29.469 --> 00:43:32.552 We've talked a lot about the vacancy. 379 00:43:32.827 --> 00:43:33.704 The hiring freeze was one tool. 380 00:43:36.186 --> 00:43:38.382 That was identified to drive that. 381 00:43:39.489 --> 00:43:47.155 We did ask bureaus and service areas to look at all contracts and whether work could be paused or not, all other material and service spending. 382 00:43:47.844 --> 00:44:00.192 So that work has occurred over the last 6-plus months or 5-plus months and is reflected in the underspending, overspending number reflected here. 383 00:44:00.255 --> 00:44:06.900 So these numbers are minus the construction constraints that the mayor has put on all the bureaus to date. 384 00:44:07.702 --> 00:44:12.150 This is after they have taken the constraint off that the mayor required them to take off. 385 00:44:12.438 --> 00:44:15.954 That's what it appears to be, an overspending. 386 00:44:17.175 --> 00:44:22.297 Um, I, I think— let me say it another way and you tell me if this is what you— if this is what you mean. 387 00:44:22.875 --> 00:44:30.764 Um, that the, the net overspending/underspending number reflects the outcomes of those constraints that the mayor put on it? 388 00:44:30.942 --> 00:44:31.297 Correct. 389 00:44:31.686 --> 00:44:51.094 Well, then he needs to take the constraints off, and you, you guys need to pay for the bills that you need to pay for, because it is disingenuous to come here and say that we're overspending if that overspending is happening as a result of the mayor asking to take a 2%, a 5%, or a 10% constraint. 390 00:44:51.579 --> 00:44:57.188 It means that he can't take the constraint right now, and then you come back to us and say that we're overspending. 391 00:44:57.827 --> 00:45:06.932 So we— just to be clear, there was no direction to take money out of bureaus' budgets to fund any of the mayor's priorities this year? 392 00:45:07.108 --> 00:45:08.648 I'm not talking about the mayor's priorities. 393 00:45:08.711 --> 00:45:24.661 The mayor can put a constraint on a budget and then say he puts a 10% constraint on a budget, and then you say to a bureau, okay, with the 10% constraint taken that was asked, how much will you have left over after that 10% constraint is taken? 394 00:45:25.527 --> 00:45:31.307 And then you look at the way that they're spending and you'll say, oh, we're overspending, we don't have enough. 395 00:45:31.469 --> 00:45:35.547 Well, I'm saying take the constraint off and maybe you can pay the bills. 396 00:45:36.045 --> 00:45:39.753 There's no additional constraint on their budget. 397 00:45:40.300 --> 00:45:44.458 The only constraints that were put were operationally to reduce spending. 398 00:45:44.554 --> 00:46:15.067 So there was no— the revised budget, like, I guess another way to put it is If council does nothing, if they change no budgets, right, and we continue to staff all of the fire stations and have police on the streets and keep our parks open for the rest of the fiscal year, at some point before the end of the fiscal year, say in June sometime, there will not be enough money to do that. 399 00:46:15.387 --> 00:46:18.175 So I guess that's what I'm trying to understand. 400 00:46:18.369 --> 00:46:19.760 Help me understand this, Ruth. 401 00:46:20.617 --> 00:46:29.199