Last week’s Santa Clara City Council goal-setting meeting could be described as an intervention for the Council led by new City Manager Deanna Santana.
Instead of discussions of aspirational projects, Council Members got a two-day wake-up call from City staff about the costly inefficiency and risk inherent in the way Santa Clara currently operates.
Back office Santa Clara operations are understaffed. Many mission-critical systems and processes are antiquated or non-existent. City operations have outgrown a City Hall that was designed for a city half the size it is today and pre-digital work methods. Add to that Santa Clara’s pension liability, will consume the City’s entire revenue growth over the next 10 years.
The good news is that, with the exception of the pension liability, most of these things are not the case in the Santa Clara’s police and fire departments, where technology and communications advances have made those departments models for the rest of the county.
Santa Clara Mayor Lisa Gillmor said that she had “never experienced a session like this before” and called it “meaningful.” Council Member Debi Davis said she had “never seen anything like this before,” calling it “mind-blowing. “We weren’t really educated in some areas. It is just amazing. The transparency level has hit an all-time high,” she said.
Antiquated Systems and Processes
Although he was speaking about the Planning Dept., Community Development Director Andrew Crabtree could have been referring to Santa Clara’s entire office operations when he quipped, “We don’t have to worry about people hacking into our files because they’re stored in boxes in the basement.”
Here are some of the symptoms of what the City Manager called the lack of “management ‘grip'”:
- No automated contract management system, nor contract management staff
- No internal risk management, internal auditing or asset management functions—no “checks and balances,” said Santana
- Finance software isn’t designed for local government and maintenance and workarounds are costly
- No electronic discovery system for satisfying information requests from Council, management and the public, and no system for making those records available for future users to reduce the number of requests
- No Customer Relationship Management (CRM) system for tracking and analyzing service calls and delivery performance
- Not ready to implement open city data systems (for example, Mountain View’s and Palo Alto’s Open Budget applications)
- “Over de-centralized”—i.e. un-centralized and un-unified—systems, notably purchasing
- Many deferred mission-critical projects
The bottom line is that a lack of contemporary technology tools leads to time-consuming and labor-intensive processes, which in turn leave no time to implement new automated processes. “Severely antiquated manual processes and technologies are hindering many necessary streamlining efforts and it is difficult to dedicate the resources to update them when the workload continues to increase,” said Santana in the agenda report.
New Budgeting Methods and Structural Deficits
Santana wants to overhaul Santa Clara’s financial planning with a two-year budget, a 10-year financial plan and renaming the Capital Improvement Projects reserve fund the Budget Stabilization reserve fund.* The operating and budget stabilization reserves will be funded with one-time money, said Santana, although “we don’t know where those will come from.
The City’s first financial problem is that increases in the City’s pension contributions will consume all of the City’s currently projected revenue growth in the next 10 years, according to the City Manager’s report. At the peak, Santa Clara will be paying $0.50 (miscellaneous) to $0.75 (public safety) in pension fund payments for every compensation dollar. Santa Clara’s unfunded liability is $45 million and the plan is to pay it off over the next 22 years.
The second problem is that two of Santa Clara’s largest tax revenue sources are volatile and highly sensitive to the ups and downs of the technology business: sales tax (which is projected to drop from last year) and hotel tax.
The budgeting changes wil be implemented starting with the 2018-19 budget.
Next year’s budgets won’t begin with the status quo as a baseline. Also, budgets will be limited to projects that are well underway or can be completed during the year, and unfunded projects will be taken out of the budget. Whenever possible money will be used from other City funds instead of the general fund. Some projects will be postponed “for a more favorable bidding climate.”
Improved business processes will take precedence over new personnel and vehicle requests. And new budget requests will be expected to “self-solve”—i.e. find the money with cuts, reduced costs or new revenue. “Ongoing deficits will be solved with ongoing solutions,” is how the agenda report describes this.
Finally, the City will “manage changes in total compensation, specifically salary and pension.”
Addressing the structural deficit will take a more than “self-solving,” however, and possible solutions that were enumerated in the agenda report include:
- Increasing taxes levied by the City (hotel and business license), increasing existing fees and imposing new ones
- “Community benefits programs”—payments or public amenities from developers above what’s legally required
- Ballot measures, which presumably means selling bonds and imposing parcel taxes
- “Other revenues,” which presumably include additional property tax from development projects currently under way and new property tax and fee revenue from new development.
Swim Center Funding Measure Headed for Nov. Ballot
According to the goal-setting meeting agenda report, the City is planning to put a measure about funding an ambitious new International Swim Center and Community Recreation Center on November’s ballot. General obligation bonds—and the concomitant parcel taxes to pay them off—must be approved by two-thirds of voters.
You can watch the sessions from Jan. 19 and 20 on Santa Clara’s Facebook page.
*This is almost identical to Sunnyvale’s budgeting method, with the difference that Sunnyvale uses a 20-year financial plan.