SPECIAL CITY COUNCIL MEETING (BUDGET WORKSHOP)

General Fund Stability and Financial Projections

• Staff presented long-term revenue and expenditure assumptions projecting a structural deficit beginning in fiscal year 2029-30.
• Approval of a proposed park assessment levy could delay the onset of this deficit to fiscal year 2031-32.
• Current reserves stand at 90% of expenditures, exceeding the 35% threshold required to maintain the city's Moody's AAA rating.
• Council members questioned forecasting accuracy and the timing of major revenue distributions like property taxes.

Recreation Cost Recovery and Library Funding

• Staff noted that some recreation programs are subsidized by profitable ones, with potential discontinuation for those missing cost recovery targets.
• The library receives an annual 22% property tax allocation based on historical precedent rather than a written mandate.
• A formal discussion on updating the recreation cost recovery policy is scheduled for the current year.

Health Insurance and Staffing Analysis

• Council members raised concerns about rising health insurance costs and requested a new benefits study.
• Staff confirmed an analysis is underway to evaluate optimal staffing levels and service delivery approaches.
• Future actions include comparing the feasibility of hiring full-time staff versus relying on external consultants.

Public Safety and Infrastructure Liabilities

• The Police Chief highlighted increasing service calls due to traffic and mental health issues despite consistent crime rates.
• Staff warned that the city may face future maintenance liabilities for roads and infrastructure as they age beyond initial CFD coverage.
• An additional 40-hour deputy position was discussed as a long-term investment addressing pending calls rather than immediate response time metrics.

Economic Development and Debt Management

• Revenue from major development projects like Beltramo is expected to appear in the 2027-28 budget once sales prices are finalized.
• The city carries no general fund debt but has redevelopment and CFD bonds with maturities extending to 2038.
• Staff acknowledged that a comprehensive equation for forecasting the net financial impact of economic development spending has not yet been developed.

Closed Session

• No closed session report was included in the provided meeting summary.

Agenda Item 5A: General Fund Stability Call (Special Budget Workshop on General Fund Sustainability)

Discussion

• The City Manager and Finance Director presented an overview of the city's long-term financial plan, including general fund revenues, expenditures, subsidy funds, and reserve status. Staff noted that specific budget reduction recommendations were not included as the current fiscal year (2025-26) remains open and data for the upcoming two-year cycle is unavailable. A more in-depth budget workshop is scheduled for January or February of the following year to align with the City Council retreat.
• Key financial projections included revenue assumptions of a 2% increase for property tax, 3% for franchise fees, 4% for transient occupancy tax, and 2% for other revenue. Expenditure assumptions included a 3% cost of living increase, 6% for health insurance, 3% for other operating expenses, and 4.2% for capital projects. Based on these figures, a structural deficit is projected to begin in fiscal year 2029-30; approval of a proposed park assessment levy would delay this deficit to fiscal year 2031-32. The city currently maintains reserves estimated at 90% of general fund expenditures as of June 30, 2027. Staff highlighted that while the Government Finance Officers Association recommends a reserve of at least 17% (two months of operating expenditures), Moody's AAA rating requires 35%. Cash flow risks were noted regarding the timing of major revenue sources, such as property tax distributions in December and April.
• Council members engaged in a question-and-answer session covering several topics:
• Impact Fees: The distinction between standardized impact fees restricted for specific uses and previous development agreements that allowed for negotiation and potential general fund contributions.
• Forecasting Accuracy: Concerns regarding the reliability of long-term forecasts given the inability to accurately project the current year's budget, and whether the forecast oversimplified economic development impacts.
• Park Assessment: Clarification on the proposed assessment amount, which was based on the 2026-27 budget to cover 75% of park maintenance obligations, with the city contributing the remaining 25%. The amount accounts for future maintenance needs and CPI increases but does not cover 100% of costs.
• Staffing and Contracts: Inquiries regarding the timeline for an evaluation of optimal staffing and service delivery approaches to balance project delivery with operational efficiency. Staff indicated this analysis is in progress.
• Public Safety: Questions regarding the return on investment for an additional 40-hour downtown deputy position. The Chief of Police noted the position addresses long-term public safety issues and pending calls, with a cost of approximately $323,000 for the 2025-26 fiscal year, though response time metrics may not show significant reduction.
• Development Projects: Discussion on incorporating property tax revenue from major projects like Hitch Ranch and Beltramo into long-term forecasts. Staff indicated revenue from completed projects is included once sales prices are known, with Beltramo revenue expected in the 2027-28 budget.
• Cash Flow: Concerns regarding constraints on undertaking additional projects if reserves dip below 40-50% of annual expenditures.

Motions, Decisions, and Votes

• No formal motions were moved, seconded, or voted upon during this portion of the meeting. The session was conducted as a workshop for information gathering and discussion. No decisions were made.

Agenda Item: Financial Forecasting, Budget Analysis, and Long-Term Planning

Discussion

• The meeting focused on the city's financial outlook, cost recovery policies, and long-term forecasting methodologies. Specific topics discussed included:
• Recreation Cost Recovery: Staff explained that some recreation programs are subsidized by profitable programs like camps and daycare. It was noted that the City Council may be recommended to discontinue programs that have not met cost recovery targets for an extended period. A discussion on the cost recovery policy is scheduled for the current year.
• Library Funding: Staff clarified that the 22% property tax allocation to the library fund is based on historical increases when the city assumed operations from the county. While there is no written mandate for exactly 22%, the city continues to transfer this portion annually to cover operations. Funds are commingled with the general fund.
• Health Insurance: Concerns were raised regarding rising costs. Staff confirmed a benefits study was conducted three years ago and indicated a new study could be initiated, potentially with assistance from Council members with relevant expertise.
• Park Maintenance Fund: A discrepancy in miscellaneous revenue was addressed. Staff explained the low figure represented reimbursement revenues from joint-use agreements with the Moorpark Unified School District and Homeowners Associations, attributed to a lack of major improvements requiring cost-sharing in the current period.
• Sales Tax and Point of Sale: Staff reported that state legislation currently favors the point of distribution for sales tax, benefiting cities with large distribution centers. The city continues to advocate for changes to point-of-sale taxation but has not seen favorable results.
• Reserve Policy and Moody's Rating: Discussion included the Moody's AAA rating requirement of a 35% reserve policy. While the city has no current plans for bond issuance, increasing reserves to meet this standard was noted as beneficial. Council members expressed a desire to evaluate the current policy, with suggestions to maintain reserves equal to one year of general fund expenses.
• Economic Development Impact: Staff confirmed that while data exists on businesses visited and retained, a comprehensive equation for forecasting the net financial impact of economic development spending has not yet been developed.
• Debt and Bonds: Clarification was provided that the city carries no general fund debt but has redevelopment agency bonds and Community Facility District (CFD) bonds. Redevelopment bonds are paid via property taxes with maturities expected around 2030 and 2038, with debt service payments accelerating after 2030.
• Infrastructure and Future Costs: Staff indicated that while CFDs cover initial infrastructure costs, the city may face future maintenance liabilities for roads and other infrastructure as they age (estimated useful life of 10–30 years).
• Public Safety and Demographics: The Police Chief discussed the impact of an aging population and increased housing on service needs. While reported crime remains consistent, calls for service are increasing due to traffic issues and mental health crises. An aging population is expected to increase susceptibility to cyber fraud and financial crimes.
• Consultant Usage: Council members debated the reliance on external consultants versus in-house staff. Staff agreed to present an analysis comparing consultant usage with the feasibility of hiring full-time staff.
• Playground Design: Staff explained that all playgrounds must meet ASTM safety specifications and undergo third-party inspection. A trend toward "natural recreation" playgrounds using logs and rocks was noted as an alternative that meets safety standards.

Action Items Identified

• Staff and Council identified several future action items, including conducting a benefits study for health insurance, evaluating the reserve policy, reviewing financial projection methodologies, providing updates on economic development metrics, analyzing consultant versus in-house staffing, aligning budget workshop timing, and preparing a report on recreation cost recovery policy.

Motions, Decisions, and Votes

• No formal motions were moved, seconded, or voted upon during this portion of the meeting. The session was dedicated to discussion, information gathering, and the identification of future action items.

Agenda Item: Adjournment

Discussion

• Following the conclusion of prior agenda items, the meeting proceeded to adjournment.

Motions, Decisions, and Votes

• A motion to adjourn the meeting was made and seconded. The vote was taken, and the motion passed. The meeting was subsequently adjourned.