Citizens Budget Committee 04-28-93CITIZENS' BUDGET COMMITTEE
APRIL 2E, 1993
3:30 P.M.
CONFERENCE ROOM A
10300 TORR1=; AVENUE
CUPERTIPJO, CA
MINUTES
Staff present:
Director of Finance Snyder
Also present:
Sam MacNeal
1. Minutes of the meeting of April 14, 1993.
Director of Finance Snyder stated that the first item to be taken care of would be
consideration of approving the minutes of April 14.
It was moved by Allan Bidwell, seconded by Darwin Throne and passed unanimously to
approve those minutes as submitted.
Mr. Snyder stated that Mr. Throne had requested employee salary information which he
then distributed. At any time during the meeting if any committee member needed
assistance, they could reach Mr. Snyder by dialing extension 226. Most department heads
would also be available. He requested that the committee write down any directions or
requests and give them to him at the end ~~f the meeting. In regard to employee
information, titles and hourly rates for the fast four years including the current and
projected rate were in the handout. The department does not have specific rates back to
1989-90, so those figures were calculated based on the percentage of increases. The first
and second page of the handout gives the ho~xrly rate for salaries; the third and fourth
pages list benefits, retirements, social securit•~/Medicare, long term disability, workers
compensation, and life insurance. The life insurance over $50,000 is tax deductible and
reported to the IRS.
He was then asked if, since it was one of the highest single salaries, the City Attorney's is
included.
Mr. Snyder responded that it was included; on the bottom of the second page is the
monthly rate and on the bottom of the followin;; page are the benefits. The city contracts
with the City Attorney; however, he is listed as ~~n employee.
Following a review of how the amount for the City Attorney is determined and the various
pages on which segments of it are listed, it was determined that the total amount budgeted
for use of the City Attorney is $247,675.00.
MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON APRIL 28, 1993
Director of Finance Snyder requested that the ~;ommittee call him when they have finished
meeting. He then left the room.
Sam MacNeal told the committee that he was at this time running the tape recorder. He
then explained why he was attending the mef;ting. He had heazd about the committee
when Mayor Szabo mentioned it in the State of the City address. He called City Hall but
got no response from staff. He then called Ma~~or Szabo and got a packet of material and,
appazently, was added to the mailing list. At that point, he assumed he was a member of
the committee. He thanked Mayor Szabo four the material. The Mayor said he would
meet with Mr. MacNeal about objectives in three weeks. In the meantime, Mr. MacNeal
called several adjoining municipalities and talked with their finance people. He stated he
found it interesting but non-productive. One finance man said that Mr. MacNeal was
probably the only one who did not know that t:he objectives are. Those on the committee
appointed by Council know what their princiipals want accomplished. The gentleman
stated that it was his strong guess that an unpleasant decision, either of Council's own
making or one they would like to get settled, was necessary and they wanted a citizens
committee to shaze the responsibility with them. Mr. MacNeal stated he was told that
staff would throw a lot of figures and people pit the committee. He stated that last week
he enjoyed listening to the managers and believes that they are thoroughly competent
people, but it seemed to him that if the same number of pazents were gathered and asked
to describe their children and family, they ~~vould give the committee just as much
information as it got. The committee is about t~~ interfere with the managers' environment.
He stated that the committee would not get any more information from him if he were
sitting up there where the department heads had been sitting. Mr. MacNeal said he is not
going to just sit and watch the committee work. He cannot make contributions in the azea
of recommended changes in revenue and operating. He is interested in capital projections.
Since he is retired, he could under the committee's direction, do some investigation
regazding procedures. He would be glad to undertake that project. He does not want to
impose himself on the committee or be privy to its deliberations.
The committee stated that it was an open meeti~Zg and he would be welcome to attend.
Mr. MacNeal replied that he did not just want to sit in the corner. If the committee could
use him, he would stay. Otherwise, he would leave.
It was decided that since there was only a short time left for the committee to meet, they
probably would not have time to use his expertise. Mr. MacNeal requested that if the
Citizens Budget Committee becomes a standing committee and the members have an
opportunity to recommend someone interested in an in-depth investigation, that the
committee mention his name.
Mr. Wheeler replied that he would because Mr. MacNeal does have the time and the
knowledge.
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MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON APRIL 28, 1993
Mr. Throne said that he had a list of things and he did not think the committee would have
time for an in-depth study. Members could 1:hink about where they want to go in the
future. There are some things the committee may wish to talk about, one of which is the
City Attorney.
Discussion followed regazding whether or not IVIr. MacNeal would stay and if it would be
useful to get information from outside of Mr. Snyder's office.
Mr. MacNeal stated he had reviewed a book recommended by one of those finance
professionals he had interviewed.
Mr. Wheeler stated he had had a conversation with Reed Sparks, former council member.
He said the City of Sunnyvale has the advantage of size. At 100,000 population, a city
becomes more efficient; at 30-40,000 population, it is reasonable to have the City
Attorney and law enforcement on a contract basis. With a larger population, the unit cost
goes down. (Mr. MacNeal leaves the meeting.;
At 4:00 p.m., roll call was taken.
Committee members present:
Allan Bidwell
Robert Hendrickson
Roberta Hollimon
Darwin Throne
David Wheeler
Committee members absent:
Bazbaza Jones
Stephanie Russell
The committee decided there would be no time for a line by line review of the proposed
budget, but felt they could give direction for next yeaz. Following a look at philosophical
types of things, they will then get down to more specifics.
Mr. Hendrickson said that he had heazd someone say that when a city hits a certain size,
things happen. It's almost like Cupertino tries t~~ be a Sunnyvale. He stated he did not get
that impression from staff, but Cupertino is in a gray area. He suggested that "sharing" of
certain things could be done and government should not compete with private enterprise.
Examples of this were cable television, the Cu~~ertino Scene, and public works. He felt it
does not do any good to have a governmental agency competing with private enterprise.
Mr. Throne felt that was a good place to start. He suggested a laundry list of what the
city does. Then, that could be reviewed to see i.f maybe Cupertino should be sharing more
with another agency or privatizing, or not doing;.
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MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON APRIL 28, 1993
Mr. Hendrickson expressed the opinion that st;~ff will become defensive when it comes to
privatizing.
Mr. Throne pointed out that's a problem that Happens with government. In fact, that's a
problem everywhere.
Another item discussed was the situation that << department must spend its budget or lose
it and certainly not come back and ask for more: the next year.
Mr. Wheeler said the committee has now heard the presentations and looked at the
budget. In some areas, maybe not enough is tieing spent and more should be spent. He
does not want people to lose the focus of the overall tax burden. Maybe the city is not
getting enough, but overall, citizens pay so much between federal and state. He would
like to get a message to the city officials to continue contacting the state and letting them
know that too much is being wasted at the top and more needs to come back to the city.
Cupertino may not have an extremely high tax rate, but at the same time, very little is
coming back.
Mr. Throne said that was one of the things he also had written down for discussion. He
does not believe that the citizens are aware of the tax structure. People probably get most
for their money right here in Cupertino.
Mr. Wheeler agreed with that.
There was a general feeling expressed that the (:ity Council and management have to keep
educating the people to help get action.
Mr. Wheeler pointed out that the Chamber h<<d sent out information in the last month.
This brochure was paid for by Apple, Tandem, and Hewlett Packard. It told citizens
about the sales tax and that it does make a d ifference where they shop. The brochure
went to every household.
Discussion followed regarding retail in Cuperl:ino and how sales could be increased at
Vallco.
Mr. Bidwell stated that Vallco has been pressin;; for 2-1/2 years for freeway signage. The
last hurdle is CalTrans. Legislation placing the four miles of the freeway section near
Vallco in the beautification program is due to expire about the middle of May. Perhaps
something could be done at that time. Concern was expressed regarding a potential
proliferation of billboards along the freeway. N[r. Bidwell said that Vallco is proposing a
monument sign indicating that the next exit leads to a shopping center. There are
indications that visibility could bring $50-75 million more in retail sales to Vallco. All of
the "hot" shopping centers except Stanford, have; high visibility from the freeway.
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MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON APRIL 28, 1993
The committee discussed the possibility of i~icreasing the real estate transfer tax and
expressed surprise at how busy the real estate lobby was when it was proposed previously.
It could be a good source of revenue in the future.
Mr. Wheeler said that some states don't have i~icome taxes, but have outrageous property
taxes. The state determines they need a cert~un amount of money and so they tax the
people enough to bring in that much money. F[e stated he had spent hours going through
the budget material, trying to make some sen:~e of it. At first, he thought the city had
$118 million of debt and that is not true. The interest is built into the next 15 years. The
city actually has $57 million of debt. His concern initially was they have a $20 million
budget and $118 million debt and can't make the payments. The debt is still one of the
biggest things that concerns Mr. Wheeler, but when the city has close to $20 million of
free cash and $57 million of debt, it's not too a~Hful. However, if anything can be done to
reduce the debt, it should be. When you look at: cash flow, $6-1/2 million per year goes to
reduce the city's debt.
There was general agreement that there is a laz~;e debt.
Mr. Wheeler felt that the committee should look at the easiest place to try to make an
impact, then, what can be done. What assets coin be liquidated? What assets can be sold?
He stated that Mr. Spazks had an interesting comment. One of the things the city should
consider is selling the water utility they own. IIe felt that the mazket value could be $4-7
million. Cupertino lost money on the water utility last yeaz. Mr. Wheeler wondered why
Cupertino even had to own it. It may be advan~:ageous to be with Cal Water. Appazently,
something in the past had made it advantageous>. The sales money could be earmazked to
reduce the debt.
There was general discussion regazding whether or not a vote of the people would be
necessary and the committee felt it would only take Council action.
Mr. Wheeler pointed out that the Director of Finance is outperforming the interest rate on
debt. Realistically, if the water company were :.old, the money could be put into the bank
and earn a higher interest than the city is paying on the bonds, but Cupertino would be
moving in the direction of reducing debt. Mr. ~JVheeler stated he did have one other thing
to bring up which the committee will hate rind that is development of the seminary
property. At one time, there had been a projection to build approximately 500 homes on
the azea; this would bring in about $8 million ire park dedication fees which could be used
to reduce the Blackberry Farm debt. However politically, he understood, that would be
difficult to do. However, if there are real revE;nue problems, it does make sense. (City
Clerk's Note: Tape #2 did not record.)
The committee discussed jobs and salaries. Mr. Bidwell stated that for cost savings where
he is employed, he reduced hours, from 40 hours to 32 hours a week on the high pay jobs.
It effectively saved 20%. The question to ask is, do all of these jobs really require a full
time person?
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MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON APRIL 28, 1993
The committee discussed the idea and felt that some part time people are really excellent
employees. They get in, get the job done, and leave. In general, the committee felt this
was a good idea With afour-day work week, the employee could be off Monday or
Friday to make a three-day weekend.
Possible revenue sources the committee felt should be reviewed included a parcel transfer
tax, completion of another hotel for TOT, abroad-based across the board entertainment
tax. The committee felt continuous education of the public regarding the tax/revenue
situation was important.
The committee discussed the Cupertino Scene publication. There seemed to be general
agreement that it is not really read and that it looks like a government publication. They
felt that perhaps the newspapers could do mc-re and more articles could be sent to the
papers.
Mr. Hendrickson felt they would also probably print the recreation schedule.
The concept of getting community information out without the government having to pay
for it was found to be interesting.
In regard to cable television, Mr. Hendrickson stated that apparently equipment needs to
be replaced and he read an article about Varian giving DeAnza College equipment.
During future negotiations with cable, perhaps they would agree to cover Council
meetings or perhaps the city could contract with DeAnza College.
Mr. Throne said there must be another way t~~ get the information out without the city
being in the television business.
It was determined that two things could be looked at. One is, provide information to the
newspapers and the other is to work with the (~hamber to get out the information two or
three times a year. It was suggested that the committee would recommend review of the
public information portion of city governmc;nt, including the Cupertino Scene, using
newspapers more, and including publication of information through the Chamber. In
regard to cable television, the committee would suggest investigating tying up with
DeAnza College or contracting with TCI for cable casting meetings and eliminate
television crew and equipment expenditure.
Mr. Bidwell stated that the Cupertino Scene is a perfect example of how Cupertino would
like to be a 100,000 population city and afford a television studio in our building. We
aren't that big. Do we have the ability to support that?
Mr. Throne said there are two local papers ~~nd possibly the whole public information
program could be done through the papers. H~~ feels that very few people really read the
Scene and most rely on newspapers for information.
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MINUTES OF THE CITIZENS' BUDGET COMMITTEE HELD ON APRIL 28, 1993
Ms. Hollimon pointed out that the city cannot ~~ontrol the papers the way it can control its
own publication, but she does really agree with Mr. Throne.
Another suggestion was that a subscription fee could be chazged for the Cupertino Scene.
That would give an indication of how many people really read it. Mr. Hendrickson stated
that the Cupertino Scene is perceived in City 13a11 as an important function and rightfully
so from staffs standpoint. However, he doe:; not feel it's worth $85,000. He felt the
money would be better spent getting another dc;puty or more patrols.
Mr. Bidwell said a good patrol system and low crime rate helps maintain property values.
That would not be a place to make cuts. lZeducing property values is looked at in
disfavor.
Mr. Throne brought up the City Attorney's budget. He introduced the idea of sharing the
cost of an attorney with another city. He felt tl~~at perhaps something could be worked out
over a period of time. He felt that the city ;should look very hazd at an in-house city
attorney for what it is spending. It could probably hire a good person.
There seemed to be general agreement on the committee that for $100,000 less than it is
currently spending, the city could get an in-house city attorney and staff. The committee
was awaze, in reality, one full time city attorney may have to contract out certain things,
such as litigation. There could be some problems, but it should be looked at seriously.
The question of who was paying for the law library was brought up. Another problem
with bringing an attorney in-house is that attorney would not have the resources of the law
offices available. However, since the City A,ttorney's budget is lazge enough to be a
noticeable number, certainly an in-house city attorney needs to be looked at. If the
$250,000 only covers one person, then it is a lot. It was pointed out that another member
of the firm was attending Planning Commission meetings, but this has been eliminated.
The committee felt it needed more information; including how much litigation is going on.
One of the things that could be looked at is having an in-house city attorney for
miscellaneous and day-to-day activities and contract out for special types of things. If
general counsel were in City Hall, staff would find that they would have more availability
to that person. Perhaps, an in-house attorney could also look into other things such as
contract administration. Also, if the city uses code enforcement officers rather than
deputies for some things, an attorney as backup there might save some costs in the long
run. The committee will suggest that the city :;hould look at having an in-house attorney.
The reason is money. At $247,000, this needs 1:o be visited.
The committee then reviewed the schedule for their next meeting This will be Tuesday,
May 4, at 3:30 p.m.
Mr. Throne stated just freezing personnel assts will save $570,000 in the projected
budget. He felt that would be the place he would start.
Mr. Hendrickson stated that he would add some of the little comfy, cozy things that have
been around a while.
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