/-" S
CITY OF SAN TOSE CAPITAL OF SILICON VALLEY
2002 -
2003
OPERATING
x'"
BUDGET
OFFICE
OF THE
CITY MANAGER
J J
GOVERNMENT FINANCE OFFICERS ASSOCIATION
Distinguished
Budget Presentation
Award
PRESENTED TO
City of San Jose
California
Outstanding Policy Document
For the Fiscal Year Beginning
July 01, 2001
The Government Finance Officers Association of the United States and Canada ( GFOA)
presented an award of Distinguished Presentation to the Qty of San Jose for its annual
budget for the fiscal year beginning July 1,2001.
In order to receive this award, a governmental unit must publish a budget document that
meets program criteria as a policy document, as an operations guide, as a financial plan and
as a communication device.
The award is valid for a period of one year only. We believe our current budget continues to
conform to program requirements, and we are submitting it to GFOA to determine its
eligibility for another award.
California Society of
MunicipaC finance Officers
Certificate of Award
Excellence in Operational Budgeting 2001- 2002
Presented to
City of San Jose
This certificate recognizes the achievement of Excellence in Operational Budgeting and reflects an outstanding budget document
and the underlying budgeting process through which the budget is implemented.
February 21,2002
Chaiiy6Wgeting & Financial Management
Vice- Chair, Budgeting & Financial Management
Dedicated to Excellence In Municipal Financial Management
r
Mavor
Ron Gonzales
2002- 2003
OPERATING BUDGET
Citv Council
Linda J. Le Zotte
Forrest Williams
Cindy Chavez
Chuck Reed
Nora Campos
Ken Yeager
George Shirakawa, Jr.
David D. Cortese
John Diquisto
Pat Dando
SUBMITTED BY
DEL D. BORGSDORF
CITY MANAGER
2002- 2003
OPERATING BUDGET
OFFICE OF THE CTTY MANAGER
City Manager
Assistant City Manager
Sr. Deputy City Manager
Deputy City Managers
Budget Director
Asst. Budget Director
Principal Budget Analysts
Sr. Budget Analysts
Budget Analysts
JlM HOLGERSSON
DEL D. BORGSDORF
MARK LINDER
DARRELL DEARBORN
TERRY ROBERTS JESUS NAVA
KAY WINTER
LARRY D. LISENBEE
JENNIFER A. MAGUIRE
MARGARET K. MCCAHAN JAYNA L. No ANNE M. ORTIZ
CHRISTOPHER PETAK ROBIN H. K. SHINAGAWA VALIA TOLENTINO
ERIC BIOMORIA
PAK L. HUNG
TRESHA GRANT
CLAUDIA A. KWOK
SELENA E. UBANDO
KAREN A. GROVE
KENN LEE
Budget Production
QUEST Partnership
ELIZABETH C. ZAVALA SHARYON GONZALES
PAMELA. S. JACOBS
KiRKPENNINGTON
BROOKE A. MYHRE
DEBORAH POWELL
LISA M. FRANCISCO
PAGEBENWAY
ToNlHATFIELD
Special Assistance M/ VDHAVlDESAI TOMMANHEBM J. LlNDSEY WOLF
INFORMATION TECHNOLOGY MANAGER'S OFFICE ENVIRONMENATAL SERVICES
EHJEEN D. FENRICH RON HUNTER
FINANCE DEPARTMENT PARKS, REC & NEIGH SERVICES
PETERJENSEN
MANAGER'S OFFICE
KATHERINE J. POOL
AIRPORT
PHILIP M. PRINCE
PLAN. BUILD. & CODE ENFORCE.
CATHERINE KENNY
MANAGER'S OFFICE
WENDY WALKER
INFORMATION TECHNOLOGY
XOCHTTLYANEZ
NAT'L URBAN/ RURAL FELLOW
City of San Jose
__________ 2002- 2003 ADOPTED OPERATING BUDGET
TABLE OF CONTENTS PAGE
CITY MANAGER'S 2002- 2003 BUDGET MESSAGE . . . . . . . . . . . . . . . . . . . . . 1
Attachment A - General Fund Balancing Strategy Detail . . . . . . . . . . . . . . . . . . . 25
Attachment B — Status of Mayor and City Council Referrals . . . . . . . . . . . . . . . . . 35
Attachment C - Status of City Auditor Recommendations with Funding Impact .. 42
Attachment D — Adopted Strong Neighborhoods Initiative Funding Allocations ... 44
COMMUNITY PROFILE
City of San Jose at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I- 1
Roster of Elected Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I- 8
City Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I- 9
State and Local Legislative Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I- 10
BUDGET GUIDE
Annual Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Budget Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II- 1
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II- 6
Fund Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II- 9
2002- 2003 SUMMARY INFORMATION
• Total City Source and Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ill - 1
Summary of Transfers, Loans and Contributions . . . . . . . . . . . . . . . . . . . . . . . . . Ill - 7
Summary of Expenditures by Department/ Function ( All Funds) . . . . . . . . . . . . . . Ill - 11
Summary of Fund Activity ( All Funds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ill - 14
Summary of Total Operations by Department ( All Funds) ( Graph and Table) ... Ill - 17
Summary of Total Operations by City Service Area ( All Funds) ( Graph and Table) . Ill- 20
Summary of General Fund Sources ( Graph and Table) . . . . . . . . . . . . . . . . . . . . Ill - 25
Summary of General Fund Uses ( Graph and Table) . . . . . . . . . . . . . . . . . . . . . . . Ill - 27
Summary of General Fund Uses by Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ill - 30
Summary of Capital Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ill - 31
Summary of Total Staffing by Department ( Graph and Table) . . . . . . . . . . . . . . . Ill - 32
Summary of Total Staffing by City Service Area ( Graph and Table) . . . . . . . . . . . Ill- 35
HISTORY AND TREND INFORMATION
Five- Year Comparison of Key General Fund Sources ( Graph) . . . . . . . . . . . . . . . . IV- 1
Five- Year Comparison of General Fund Sources . . . . . . . . . . . . . . . . . . . . . . . . . . IV- 2
Five- Year Comparison of General Fund Uses ( Graph and Table) ............. TV - 3
Five- Year Comparison of Key Capital Sources ( Graph) . . . . . . . . . . . . . . . . . . . . . IV- 5
Five- Year Comparison of Staffing Totals ( Graph and Table) . . . . . . . . . . . . . . . . . IV - 6
BUDGET POLICIES AND PRACTICES
Budget Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V- 1
( ' i Significant Accounting Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V - 10
Debt Service Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V - 12
City of San Jose
__________ 2002- 2003 ADOPTED OPERATING BUDGET
TABLE OF CONTENTS PAGE
GENERAL FUND REVENUE ESTIMATES
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI- 1
General Fund Revenue Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI - 36
CITY SERVICE AREAS
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 1
Aviation Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 5
Economic and Neighborhood Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 15
Environmental and Utility Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 31
Public Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 39
Recreation and Cultural Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 49
Transportation Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 69
Strategic Support:
City Facilities and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 79
Employee Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 85
Finance and Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 93
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII - 103
Airport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
City Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
City Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
C/ Yy C/ fcr£ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
City Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
C/ p/ Y Service Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Conventions, Arts and Entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Economic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Emergency Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Employee Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Environmental Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Equality Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Hre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
General Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Independent Police Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351
Library . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385
Mayor and City Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405
Prfr& r, Recreation and Neighborhood Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411
Planning, Building and Code Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
Planning Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531
Redevelopment Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561
Retirement Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581
Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593
City of San Jose
__________ 2002- 2003 ADOPTED OPERATING BUDGET
TABLE OF CONTENTS PAGE
CITY- WIDE
City- Wide Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651
General Fund Capital, Transfers, Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685
INTER- DEPARTMENTAL PROGRAMS
Community Development Block Grant Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
Healthy Neighborhood Venture Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717
Integrated Waste Management Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741
Sewer Service and Use Charge Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751
Storm Sewer Operating Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 759
Transient Occupancy Tax Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 767
DETAIL OF DEPARTMENTAL POSITIONS . . . . . . . . . . . . . . . . . . . . . . . . 779
Please refer to the Table of Contents
SOURCE AND USE OF FUNDS STATEMENTS . . . . . . . . . . . . . . . . . . . . 819
Please refer to the Table of Contents
APPENDICES
1. Mayor's March Budget Message for Budget Year 2002- 2003
2. Mayor's June Budget Message for Budget Year 2002- 2003
3. Gann Limit
2002- 2003
OPERATING BUDGET
CITY MANAGER'S
2002- 2003
BUDGET MESSAGE
CITY OF SANJOSE CAPITAL OF SILICON VALLEY
Del D. Borgsdorf
CITY MANAGER
September 20, 2002
HONORABLE MAYOR AND CITY COUNCIL:
I am pleased to present the 2002- 2003 Adopted Operating Budget for the City of San Jose. This
budget was created under very challenging economic ckcumstances marked by the steepest revenue
decline in the City's recent history. Despite this challenge, we believe that this Adopted Budget
successfully balances projected revenues and expenditures while preserving essential services,
delivering on the City Council's adopted policy priorities, and protecting our employees in the face
of a significant budget reduction. This document, along with the 2002- 2003 Capital Budget and the
2003- 2007 Capital Improvement Program ( CIP), released under separate cover, provides a
comprehensive plan to accomplish these goals.
Just as they have nationally and regionally, the dual impacts of a recession and the events of
September 11th have dramatically altered the City's fiscal landscape. The full significance of the past
year's economic shift is detailed in the Genera/ Fund
Ba/ ancing Strategy Detail ( Attachment A). However,
some noteworthy trends are included here to
illustrate the magnitude of the change we have
experienced in the past 12 months. Towards the
end of the 2000- 2001 fiscal year, we began to see
clear signs on the horizon that revenues were
declining. Despite this fact, the City's General Fund
ended 2000- 2001 with its highest total revenue
performance ever — $ 662.4 million. Twelve
months later, we have estimated that 2001— 2002 revenues will total approximately $ 650.2 million,
and for 2002- 2003 this Adopted Budget assumes
a further drop, with collections of $ 635.0 million.
This represents a decline of $ 27.4 million in a
two year period. Leading the revenue reduction
list are Sales Tax, Airport revenues ( not part of
the General Fund) as shown in Figure 1, and
Transient Occupancy Tax ( TOT), and
Construction- related revenues as shown in
Figure 2. Sales tax revenues are projected to
have dropped 12.9% in the current year, and
grow only at a very modest 2.5% level next year. Transient Occupancy Tax revenues, which fell off
precipitously ( over 30%) following the events of September 11th have leveled off, but have shown
I1
Key Revenue ( Figure 1)
£ 1fiO 0
$ 160.0 -
$ 140.0 •
$ 120.0 -
$ 100.0 •
$ 80.0 -
$ 60.0 •
Trends
... . . .^ Jh-^_ ... ........ ...-
^--*^ ^~-— • —— ' —— •
—— U^^ m^'^^ ——— ————
^— —— —— ^ "-^ ——— r -—— A
1998- 1999 1999- 2000 2000- 2001
- i ——— \-
2001- 2002
Estimated
2002- 2003
Estimated
- B- General Sales Tax - A- Airport Revenue Fund J
$ 40.0
Key Revenue Trends
( Figure 2)
$ 5.0
1998- 1999 2002- 2003
Estimated
I -*- Transient Occupancy Tax -•- Construction & Conveyance Tax
- » - Building & Structure Construction Tax - A- Construction Excise Tax____
801 N. First St. San Jose, CA 95110 tel ( 408) 277- 5777 fax ( 408) 277- 3131 www. ci. san- jose. ca. us
2002- 2003 ADOPTED BUDGET MESSAGE
little sign of recovery. The construction and real estate- related taxes that fund much of our Capital
Improvement Program declined by 30- 45% in 2001- 2002 and are projected to remain at that
reduced level in 2002- 2003. Even as revenues have
declined, the cost of providing City services has
continued to rise, driven primarily by personal services
and the cost of supplies and services ( Figure 3).
General Fund Expenditures Trends
( Figure 3)
$ 550.0 •
$ 500.0 •
f $ 450.0 •
$ 400.0 •
$ 250.0 •
$ 200.0 •
^~~ -"""^
____^— • • — "
_— *
*^
1998- 1999 1999- 2000 2000- 2001 2001- 2002
Estimated
|-+- Departmental Operating Expenditures |
2002- 2003
Estimated
In formulating this year's Adopted Budget, we applied
the same fiscally conservative principles that kst year
won the City a significant bond rating upgrade to
AA+, the highest among California's large cities, even
as the economy was slowing down. This Adopted
Budget does assume that the national economy will
experience a modest near- term recovery, but that the
local economy will take longer to respond. The local downturn is projected to continue through
most of 2002- 2003. San Jose and the Silicon Valley are now experiencing the reverse of the trend
of two years ago when our regional economy continued strong even as the State and national
economies slowed. In fact, national and Statewide data suggest that an economic recovery has
begun nationally ( albeit very modest), with low growth likely in 2002- 2003. However, as expected
due to the heavy influence of the technology and telecommunications industries, our local economic
revival is projected to trail the national recovery by at least six to twelve months.
ECONOMIC OVERVIEW
To formulate revenue estimates for the upcoming fiscal year, it was necessary to make some difficult
judgments about how soon the pronounced economic slowdown that has impacted the region for
over a year will end. By the time the September 11th events occurred, a Silicon Valley recession was
in full effect, led by a pronounced falloff in business in the high tech sector impacting some of San
Jose's largest tax generators. This was akeady having a serious impact on City revenues. September
11th, and its repercussions deepened and exacerbated that impact, negatively and directly influencing
unemployment, travel and entertainment, and general consumer spending. These factors were
evident in the year- to- date data available to use
while formulating this budget, with significant
negative impacts on all of the City's
economically sensitive revenue categories such
as Sales Tax, Transient Occupancy Tax,
Disposal Facility Tax, and Construction and
Development- related fees and taxes.
While recovery at the national level seems to
have began on a small scale early in 2002 ( the
economy grew at a 5.8% annualized rate in the
first quarter of the year), no such signs have yet
appeared in the Silicon Valley economy.
San Jose Unemployment Rate
2002- 2003 ADOPTED BUDGET MESSAGE
ECONOMIC OVERVIEW ( CONT'D.)
If one single source of data could be used as an indicator of the change in the local economy it is the
unemployment rate. The graph ( above) illustrates the dramatic change that occurred over the period
of only one year. While in March of 2001, San Jose's unemployment rate was among the lowest in
the nation and the State, by March of 2002, the local economy's weakness was clearly reflected in the
local unemployment rate. The March 2002 San Jose unemployment rate of 7.4% ( unadjusted) was
over three times the rate of one year prior ( 2.2%). By March, our unemployment rate of 7.4% was
greater than both the California ( 6.5%) and the national ( 6.1%) rates. That rate has remained
basically unchanged, and has even risen slightly since that time.
In recent years we have become more and more reliant on the high tech industry for our economy
and in our revenue base, and it is the severe and continuing slump that has hit almost all of the high
technology and telecommunications industries that has caused such a disproportionate impact in this
Valley and to some of the City's krgest revenue generators such as Cisco Systems and Adobe
Systems. The collapse has not only had a direct affect on major corporations and their earnings, but
has also had a multiplier effect on other areas of the local economy: unemployment, spending ( e. g.,
related to business- to- business sales and general retail spending), and office vacancy rates.
The majority of the City's General Sales Tax revenue activity is generated by business- to- business
sales and general retail spending. The City's largest revenue source, General Sales Tax revenue, has
declined the most. In the first quarter of the 2001- 2002 fiscal year we experienced a 19.8% decline,
only the second quarterly decline in a decade. The second quarter brought another large decline,
this time of 18.2%. The third quarter was even worse, with a 24.0% fall- off.
Just as telling a sign was the fact that as we approached the end of the fiscal year, well- established
local companies continued to issue financial warnings indicating that fiscal improvement appears to
them to still be beyond the horizon, and that revenue and profits would continue to be below
expectations. Merrill Lynch reported that revenue declined in recent quarters in eight of 13
technology sectors, including double- digit drops in enterprise hardware, semiconductors, personal
computer hardware, communications equipment, connectors and semiconductor equipment. As we
were constructing this budget, Federal Reserve Chairman Akn Greenspan was quoted as saying:
" the recession was over a month ago, but at best, the high- tech tumble has merely slowed." ( San
Jose Mercury News, April 9, 2002)
This budget, and the revenue estimates on which it was built, therefore, assumes that the local
slowdown will continue to be pronounced for much of the coming budget year, with the resumption
of growth in City revenues lagging at least six months to a year behind a national economic upswing.
The presumption is that a significant recovery in the technology industry must occur in order for the
local economy to rebound.
Our own fiscal status was also not our only concern. As our budget was being considered the
Legislative Analyst's Office was projecting that California faced a shortfall of approximately $ 24
billion in the coming year. This is a full 25% of the State's existing General Fund budget. Balancing
a shortfall of that size would require significant action, and put local government revenue streams at
risk. For example, approximately 67.5% of the Motor Vehicle In- Lieu Fee ( MVLF) revenue
2002- 2003 ADOPTED BUDGET MESSAGE
ECONOMIC OVERVIEW ( CONT'D.)
currently received by cities is backfilled by the State. For San Jose, the State's MVLF at risk is
estimated to be $ 35.4 million ( adjusted) for 2002- 2003. Other State- funded programs that are at risk
for reduction or elimination include Public Library Funds, SB 90 reimbursements, and Jail Booking
Fee reimbursements. This budget assumes no negative impact from State budgetary actions, but we
will clearly need to watch carefully as events unfold at the State level.
BUDGET OVERVIEW
This year's budget was prepared by developing investment strategies in each of the seven City
Service Areas ( CSA). City Service Areas integrate services provided in individual departments into
the City's key lines of business as viewed from the community's perspective. The CSA Investment
Strategies then integrate departmental proposals along these same business lines. The City Service
Areas are: 1) Avktion Services; 2) Economic and Neighborhood Development; 3) Environmental
and Utility Services; 4) Public Safety; 5) Recreation and Cultural Services; 6) Transportation Services;
and, 7) Strategic Support.
In the 2002- 2003 Adopted Operating Budget, the total net adopted funding is $ 3,341,145,059 for all
City funds ( General, Special, and Capital). This is $ 679,329,655 or 25.5% higher than the current
2001- 2002 Adopted Operating Budget ( Table 1 below). Under this spending plan, the total
number of positions was decreased by approximately 0.5%, to a total of 7,418.
TABLE I
2002- 2003 ADOPTED BUDGET - ALL FUNDS
2001- 2002 2002- 2003 %
Adopted Adopted Change
General Fund
Special Funds
< Less: Operating Transfers>
Net Operating Funds
Capital Funds
< Less: Capital Transfers >
Net Capital Funds
^^ s^ Mif^ tiiW| ferditaS ^ M" S^!:'^ yl:':^' ff%^! 0^ ifyfXyti^ Kf$^ l^" A^ f
$ 817,107,260
$ 1,216,785,681
($ 520,090,652)
$ 1,513,802,289
$ 1,160,674,260
($ 12,661,145)
$ 1,148,013,115
^^ y^ y^ Kitx^ f « $ Sf?: Afl't! Vfiiiifgii"^
$ 833,522,844
$ 1,631,291,581
($ 862,999,093)
$ 1,601,815,332
$ 1,756,000,626
($ 16,670,899)
$ 1,739,329,727
^ ipl|| jliiit| ipl
2.0%
34.1%
65.9%
5.8%
51.3%
31.7%
51.5%
.•: H& W i !' "! ::''"" ^ spy ! i ; H' 1 ' f'-? S3JJ£:?&'.
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Net operating budget funding for 2002- 2003 increased by 5.8%. This increase, however, reflects
almost entirely increases in several specific speckl revenue fund programs, the largest being the
Housing program, Airport debt service requirements, and the Sewer program. The General Fund
portion of the City's Budget increased by only 2% from 2001- 2002, totaling $ 833,522,844. This
increase was solely the result of higher carryover fund balance, required to complete prior year
projects, as revenue collections for 2002- 2003 are projected to decline significantly as discussed
above. A krge increase ( 51.5%) in the capital program was approved for 2002- 2003. This reflects
the approval of several bond issues and the implementation of major Airport improvements.
General Fund Budget Balancing Strategies
The projected decline in 2002- 2003 General Fund revenues coupled with rising operating costs
created a projected General Fund budget shortfall of $ 35.9 million. In addition, the General Fund
development- fee programs faced a separate shortfall of $ 10.5 million, the result of declining
development activities and associated fee collections.
Signs of the approaching economic downturn were clearly evident kst June when the City Council
adopted the 2001- 2002 Operating Budget. In response, despite record revenues in 2000- 2001, the
2001- 2002 Adopted Operating Budget contained sharply reduced revenue projections for all of the
City's economically sensitive revenue categories, as well as a significant reserve to protect against the
approaching downturn. The wisdom of the City Council's conservative approach in its 2001- 2002
budget decision- making became clear in the fall, as the combined impacts of the September terrorist
attacks and the economic downturn pushed declining revenues even lower than already guarded
projections. By October, with significant growth in the shortfall a virtual certainty, the City Council
took two actions: an additional $ 4.33 million in unanticipated year- end revenues was set aside to
cover the already identified $ 10 million shortfall; and a $ 15.8 million reserve was established for
future economic uncertainties. At the same time, as the magnitude of the economic downturn
became clear, the City Administration took immediate steps to reduce expenditures approved in the
current fiscal year to soften the impact on 2002- 2003.
Specific reduction targets were established for each department, and hiring for non- sworn positions
in departments was frozen pending approval of a cost/ position management plan for each
department. Specifically, departments were directed to create plans that held a substantial majority
of currently vacant positions unfilled for the remainder of the year. Most positions that were not in
specialized ckssifications, but rather generic city- wide classifications, were held vacant to provide
redeployment flexibility to ensure that there would be positions available for any current employees
in positions that were eliminated. Further, departmental reductions were directed to produce
savings that could be included in the 2002- 2003 Adopted Budget. With these actions, the
Administration was able to increase the projected year- end balance for 2001— 2002 by $ 3.6 million.
In addition, the Administration established budgetary guidelines to protect priority service areas
while reducing expenditures as a roadmap for departments in preparing their 2002- 2003 proposals.
The budgetary actions approved as part of the 2002- 2003 Adopted Operating Budget reflect these
guidelines. Priorities established by the City Council in recent policy sessions were observed, as
were such priority service areas as public safety, traffic calming, the Strong Neighborhoods Initiative
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
General Fund Budget Balancing Strategies ( ContM.)
( SNI), and capital projects delivery. This Adopted Budget also protects and advances the City's six
corporate priorities: 1) performance- driven government; 2) support for effective Council policy-making:
3) neighborhood- focused service delivery; 4) customer service; 5) effective use of
technology; and, 6) becoming the best public- sector employer.
A number of specific principles detailed both in the March City Manager's Budget Request and the
Mayor's March Budget Message were followed in formulating the 2002- 2003 Adopted Operating
Budget ( Attachment B documents responses contained in this budget to the referrals and direction
contained in the Mayor's Message or separately from City Council action). Among these were:
• Utilization of a 24- 36 month horizon so that the budget could be balanced in a way that
minimizes the impact on service delivery in 2002- 2003;
• Use one- time revenues, one- time expenditure reductions, reserves designated for budget
balancing purposes, combined with targeted ongoing expenditure reductions to mitigate
reductions in direct services in 2002- 2003;
• Ensure that position reductions first target those positions that have been vacant for some
time, rather than filled positions, thus ensuring that there would be a position available for
every current City employee who wants to remain with the City ( although not necessarily the
same position);
• In order to preserve current public safety service levels, avoid the elimination of non-administrative
sworn positions;
• Ensure a maintenance of effort in basic service areas and in the implementation of current
policy direction, including the City's commitment to library funding, housing production,
and neighborhood investments;
• Ensure that all proposals that reduce the City's ability to serve San Jose customers reflected
the levels of use and demand for that service;
• Establish a reserve for capital expenditures related to security measures and investments;
• Ensure that requests for new resources, redeployment of existing resources, or service
reductions included clearly identified outcomes that include specific service levels ( cost,
quality, cycle time, and customer satisfaction) that would be achieved;
• Deferral of major new General Fund program commitments, unless they could be funded
through redeployment of existing resources; and,
• Utilization of fee increases in program areas where efficiencies and appropriate cost savings
had been achieved to assure that operating costs are fully covered by fee revenue.
The centerpiece of these strategies was the goal of preserving our City workforce's capacity to
maintain all priority services to the community. This Adopted Budget includes 7,418 positions, a net
reduction of 35. positions from the prior year. Only 23 of the eliminated positions were filled and it
is expected that through placements, all of those employees who wish to stay with the City will have
that opportunity.
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
General Fund Budget Balancing Strategies ( Cont'd.)
In addition, a review of Outstanding City Auditor Recommendations were considered in the
development of the Adopted Budget. See Attachment C for details on the Status of City Auditor
Recommendations with funding impact.
Fee Increases
The implementation of fee increases should only occur after all appropriate steps have been taken to
ensure that operations are run efficiently. In addition, fee increases should reflect longer- term
strategies to rely on existing reserves where possible and spread the increases over two or more fiscal
years. This Adopted Budget includes fee increases in three major program areas: Development
Services ( including the departments of Planning, Building and Code Enforcement, Public Works and
Fke); Recycle Plus; and Storm Sewer System Program.
Development Services includes a wide variety of service activities that allow for the entitlement and
improvement of land. Fee revenues from these services are, by policy of the City Council, intended
to recover the full costs of services and remain dedicated to covering those costs. Until 2001- 2002,
the surge in development activity over the past eight years generated reserves in excess of current
service costs. As development ' activity subsided and current fee revenues declined in relation to
service costs, the City has used those reserves to avoid declines in services that would otherwise
have been necessary.
The Adopted Budget assumes that slower development activity will continue all next year.
Accordingly, a three- pronged strategy was approved to equitably fund the costs of these services in
the three departments. This approach included: 1) deleting and reallocating staff positions from fee
programs ( total 39.7 positions); 2) drawing down remaining reserves to minimal levels ( by a total
$ 3.9 million); and, 3) a two- year phase in of fee increases coupled with a limited number of new fees
for existing services ( total $ 3.8 million for 2002- 2003). At projected activity levels and with the
staffing approved in this budget, these departments should be able to meet cycle time service levels.
The Recycle Plus program has raised fees only once since its inception nine years ago. The Adopted
Budget assumes a five- year program of moderate fee increases beginning in January, 2003, with an
increase of 45 cents per month for the average single- family household. Increases of between 3%
and 6% annually will transition residential service to full cost recovery by 2004- 2005. Coupled with
service enhancements approved by the City Council in conjunction with the recently completed
contractor selections process, these increases will pkce the program on a sound financial footing
with residential rates still among the lowest in the County.
Similarly, a multi- year program of moderate fee increases was approved for the Storm Sewer System
Program which funds operating and maintenance costs for the City's storm sewer system, federally
and State mandated pollution control activities and capital improvements to the system. Storm
Sewer System rates have not been raised since 1996. Despite operational efficiencies that have been
implemented over the past several years, continued cost increases for system activities have depleted
reserves and diminished funding for necessary capital improvements. Accordingly, this budget
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Fee Increases ( Cont'd.)
assumes annual increases of between 4.0% and 4.5% over the next three years to ensure that
operating costs are fully recovered and that an essential capital program is funded. The 4% increase
approved for 2002- 2003 will place the single- family residential rate at $ 42.10, which still is more than
$ 5.00 below the 1999 level. The three- year strategy will result in an increase for the average single-family
household of approximately $ 2 per year.
Public Safety
Despite declining General Fund revenues, the 2002- 2003 Adopted Operating Budget preserves
public safety services, largely through strong cooperation among the CSA partners ( Fire, Police,
Emergency Services and the Independent Police Auditor). Identification of budget strategies began
almost immediately following the September 11th terrorist attacks, since their potential impact on a
number of City resources and revenue streams was clear.
Even in this challenging fiscal environment, several investments were approved to enhance and
augment public safety services. The Adopted Budget includes $ 300,000 to cover the costs of a
firefighter academy class targeting the hiring of paramedics. Under this plan, paramedics will be
hired for a July 2002 Academy, with graduation scheduled for kte October. As directed in the
Mayor's Budget Message, the Office of Emergency Services ( OES) will be working to make every
neighborhood prepared for natural or man- made emergencies. OES will work through the Strong
Neighborhoods Initiative and involve Police and Fire personnel in making our neighborhoods and
residents the best prepared in the nation.
A new computerized records and information management system is expected to generate
efficiencies and lessen the demand for the Police Data Specialist positions in the Police Department.
The department has averaged 20 vacancies per year in this classification, and 12 of these are among
the 16 vacant non- sworn positions that are approved for deletion within the Public Safety CSA for a
savings in excess of $ 800,000 per year.
With the voter's approval this March of the $ 159 million San Jose 911- Fire- Police- Paramedic
Neighborhood Security Act Bond Measure, implementation will begin with the new fiscal year. The
full implementation plan is contained in the Adopted Capital Budget and CIP, with the projects
spread out over a six- year period. The Police and Fire Departments will each be allocated a position
to help manage this program, to ensure on- time, on- budget delivery of projects. Resolutions for the
first public safety bond sale were brought to the City Council in July. These funds will fund land
acquisition, project preparation work and the rehabilitation of existing fire stations. The
rehabilitation of existing fire stations will start immediately, to upgrade the stations to essential
facilities status, complete the gender privacy improvements and make much- needed repairs to
kitchens and living quarters.
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Public Safety ( Cont'd.)
State and federal funds are included in the budget to replace the mobile data computers in police
vehicles ($ 3.5 million). The data computer upgrade is part of the public safety computer- aided
dispatch system, new technology designed to help dispatch officers to citizen calls in as short a time
as possible.
Aviation Services
No City operation was more profoundly or immediately impacted by the events of September 11th
than our Airport. The events that shocked the world also altered the aviation landscape resulting in
stringent new security requirements and sharply reduced revenues from declining passenger traffic.
The 2002- 2003 investment strategy reflects this new world with altered near- term goals.
Implementation of the long- awaited Terminal Development program will be delayed while existing
facilities and operations are maintained and new security mandates are undertaken. This more
conservative focus is reflected in the Adopted Budget for 2002- 2003.
At the same time, the Airport has embraced fully its goal to be a good neighbor to the community.
During 2001- 2002, the Airport Neighborhood Services Group ( ANSG) was established under the
direction of the new Airport Ombudsman. The group works in the City's neighborhoods as a
partner with the SNI to minimize Airport impacts and serve as an advocate for residents. The
Adopted Budget sustains these new service levels.
As the new fiscal year begins, acoustical treatment work will be starting for the Washington
Elementary, Sacred Heart, and Center for Employment and Training schools. In addition, noise
contour maps are being updated to add homes in the Rosemary Gardens and Fairway Glen
neighborhoods. The Adopted Budget will redeploy 3.5 positions from the Airport Operating
Program to the Capital Program to ensure adequate staffing levels in the Acoustical Treatment
Program.
Additional programs and services in this Adopted Budget will address lower passenger traffic levels
over the intermediate term, while still attempting to provide customers with quality services at
reasonable rates. In addition, the Airport will continue to address new or expanded service needs,
such as additional acoustical treatment in neighborhoods, increased communication with both
internal and external customers, maintenance and operation of the Federal Inspection Security
Facility, and increased security mandates.
The financial situation resulting from a combination of lower passenger traffic, reduced revenues,
and higher security and other costs must be aggressively addressed. The Adopted Budget will
temporarily defund and freeze 31 vacant positions, and create a one- time savings of $ 6 million in
non- personal/ equipment expenditures. This should offset the dramatic drop in revenues, while
protecting critical customer services and filled positions and keeping rates reasonable. It is
anticipated that as activity and revenues increase, positions and non- personal/ equipment funding
will be added back to meet the demand for services.
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Transportation Services
The creation of the new Department of Transportation during the current fiscal year has better
equipped the City in its effort to build strategies that emphasize neighborhood livability and
pedestrian friendly transportation systems, while placing a greater emphasis on regional partnerships,
promotion of mass transportation.
The SNI planning process has helped to identify and more quickly begin addressing neighborhood
livability issues through traffic calming, enhancing pedestrian walkability and by moving more
quickly to expand trails and bikeways. To support traffic calming and school safety, an additional
engineer was funded who will work with schools in the SNI neighborhoods to identify needed
structural improvements, educate parents and drivers and bring in enforcement where necessary.
The Downtown Access Study, currently underway, will provide guidance to the City Council in
deciding how to calm traffic on the one- way couplets Downtown and in the surrounding
neighborhoods, while providing the access necessary to support this vital area. Implementation of
this effort will become a significant work effort during 2002— 2003.
The Adopted Budget continues the School Safety program under which City staff work with schools
to create a site- specific pkn to calm traffic and enhance school safety. Each plan incorporates the
school's and the surrounding neighborhood's needs through a specific combination of engineering,
enforcement, and education.
The Adopted Budget also provides for the continuance of the development of Intelligent Traffic
Systems and builds on regional cooperation such as joint jurisdiction freeway improvements, a
countywide expressway study and support for reauthorizing the federal Transportation Efficiency Act for
the 21st Century. Other regional partnerships efforts will focus on BART to San Jose, California High
Speed Rail, VTA Light rail, and other transportation alternatives.
Efficiencies have been identified that will provide savings to the General Fund while maintaining
existing service levels. One example that will save $ 250,000 is moving pavement crack sealing from
contracting to in- house service delivery.
The Adopted Budget allocates $ 16 million for street maintenance in 2002- 2003 to ensure that gains
achieved during the first six years of the 10- Year Recovery Pkn will be maintained during this
transitional year.
Significant funding for various capital improvements to City streets for additional median island
kndscaping, enhanced public safety from construction of several new sidewalks, crosswalks, street
lights and traffic signals have been included from the utilization of the Neighborhood Investment
Fund Reserve, established early in die budget process.
Project Delivery - Capital Improvements
Last year the City embarked on the " Decade of Investment," and this March, voters supported an
expansion of the City's improvement plan by approving the $ 159 million Neighborhood Security
10
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Project Delivery - Capital Improvements ( ContM.)
Act Bond Measure that added another 36 projects to the work plan. In addition, another 100- 150
SNI projects estimated at $ 30 - $ 40 million will be added within the next two years. Despite the
economic downturn, with an adopted $ 1.8 billion Capital Budget and $ 3.5 billion CIP, the City has
dedicated significant resources for investment in the community over the next five years.
To help manage this tremendous workload, staff has undertaken an accelerated, comprehensive
review of all CIP projects to confirm schedules and maximize on- time and on- budget project
delivery performance. This Adopted Budget maintains the efforts of the City Manager's new five-person
CIP Action Team, that was established with three primary goals: 1) assist departments with
project challenges and removal of barriers to project delivery; 2) monitor all CIP projects to ensure
the City is meeting its quality and on- time, on- budget goals; and, 3) provide a one- stop CIP
information resource for the public, the Mayor and City Council, and City staff. In addition,
monitoring teams are forming within each CSA to ensure timely project delivery. Development of a
comprehensive, reliable CIP database also is underway to help project managers work efficiently and
to provide accurate, real time information on project status to the Mayor, City Council and public
via the Internet. The system includes new tools for assigning and monitoring accountability for each
aspect of a project.
While system improvements are in process, we continue to be very aggressive in getting construction
contracts awarded. As 2001- 2002 closed, we were able to nearly double the number of projects
awarded from the previous year ( from 73 to 131), and we expect to continue this upward trend in
2002- 2003.
City Facilities and Equipment
Given the continued growth in the five- year CIP, including the addition of $ 159 million for public
safety projects, the Administration projects a 16% workload increase for the Public Works design
and construction staff. At the same time, efficiencies such as using master consultant agreements
and better teamwork will enable us to increase on- time performance targets from 70% to 80% and
increase on- budget targets from 70% to 75%. In addition, redeployment of some existing City staff
to the CIP will help expedite projects while maintaining the current workforce.
The approved investment strategies in equipment maintenance will translate into a reduced cost to
maintain the fleet and increased operational efficiencies by revising the fleet replacement schedule
and bringing the mobile fueling function in- house rather than using a contract. Reducing the City's
general fleet replacement funding by $ 1.25 million next year ( from $ 2.5 million) combined with
restricting fleet replacement this year, results in the performance targets for fleet availability being
reduced from 92% to 85% for non- emergency vehicles but maintained at 100% for emergency
vehicles. In addition, funding this reduced level of replacements with Vehicle Maintenance and
Operations Fund fund balance monies will allow us to help balance the budget by eliminating $ 2.5 in
General Fund monies currently allocated for vehicle replacement. A study of optimum fleet sizing is
due to be completed in the Fall, which may help mitigate the availability reduction for non-emergency
vehicles.
U
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Economic and Neighborhood Development
Even in the current budgetary climate, the City must maintain its commitment to preserving and
strengthening a strong economic base in order to provide a diverse range of housing opportunities
while maintaining a safe, healthy, attractive, and vital community. Silicon Valley's economic
situation has created challenges in each of these areas.
The economic downturn that began in 2001 has slowed anticipated levels of new construction, but
overall projections for the region, and San Jose in particular, remain strong. The current vacant
space inventory is expected to take at least two years to absorb, if not longer, inhibiting new office
construction during that time. In North Coyote Valley, infrastructure projects are expected to move
forward modestly over the next five years.
The most significant budgetary impact of this slowdown is reflected in departments that provide
development services. With a $ 10.5 million gap between the fee revenue projected from 2002- 2003
development permits and the work necessary to provide development services to new and ongoing
projects, the challenge is to continue to improve service delivery and to retain trained staff. Several
balancing strategies are reflected in this budget, including staff reductions and redeployments, a
phase- in of fee increases to approach cost recovery, use of most of the reserves in fee revenues built
from prior years. During 2002- 2003 the Administration will be using the results of a study of the
City's development service operations by Zucker Systems to identify any potential opportunities to
improve the efficiency and quality of services in this area.
In the face of these economic conditions, the City remains committed to retaining and attracting
new businesses in San Jose. For example, the City and Agency staffs are working together to
implement the Mayor's Ten Point Economic Plan to foster continued economic growth in San Jose,
supporting both large and small enterprises. The Plan includes several initiatives such as improving
small business lending programs, recruiting biotech companies, and establishing a " tenant
improvement" program to expedite plan check and reduce business costs - thereby giving San Jose
a competitive edge over other Silicon Valley cities.
San Jose also remains committed to being the regional leader in providing new affordable housing
for all income groups. While the construction of new market rate housing has slowed, the City's
affordable housing programs are less threatened because redevelopment tax increment revenues
remain strong. These programs include efforts such as the Housing Opportunity Study,
rehabilitation of existing housing stock, first time homebuyer programs, teacher housing assistance,
and aggressive pursuit of tax credits to leverage private capital. Additional numbers of affordable
units are included in largely market rate projects being built in the Downtown and surrounding
redevelopment project areas.
Building Strong Neighborhoods
As we enter 2002— 2003, investment priorities have been identified for 11 neighborhoods through
the SNI process and nine others have plans in progress. In the coming year, these neighborhoods
will be transitioning from planning to implementation. Included in the Adopted Budget are
12
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Building Strong Neighborhoods ( Cont'd.)
investments totaling approximately $ 129 million over the next three to five years using primarily
Redevelopment Agency funds, supplemented by parks and library bond funds, grants and normal
operating and capital budgets. Of the total amount, approximately $ 55 million has been set aside to
fund a reserve that would be used to implement " top ten" priorities identified in the SNI area plans,
as well as other SNI needs that may be identified as we proceed through the implementation phase.
A reserve of this magnitude is necessary to ensure adequate resources for the nine remaining SNI
plan areas, and to leverage initial investments that may require additional resources to achieve the
desired results in all neighborhoods. A summary of the approved SNI funding for 2002- 2003 is
provided in Attachment D.
In developing the Adopted Budget investments, staff followed these strategies:
• Fund top ten neighborhood priorities, as directed by City Council, with a special emphasis
on the first three that require additional monetary investments;
• Maximize the leveraging of resources to ensure that significant progress is made on the top
ten priorities within the next three to five years;
• Support priorities that will build and enhance the community's capacity to collaborate and
accomplish their goals independently of the City;
• Invest in priorities that leverage resources across multiple SNI areas ( e. g. the couplet
conversion); and
• Fund priorities that facilitate an improved, more responsive City service delivery system in
the neighborhoods.
The majority of priorities identified through the neighborhood planning process are for capital
projects and/ or the expansion of City services in order to better meet the needs of the
neighborhoods. Examples include streetscapes, sidewalks, parks, libraries, recreation programming,
childcare, community centers, housing, code enforcement, neighborhood safety and traffic.
Environmental and Utility Services
On July 1, new recycling and street sweeping contracts with terms of up to 11 years based on good
performance took effect. This is the Recycle Plus transition, which has as its theme " Clean ' n
Green." The service enhancements incorporated in these contracts, including a reduction in the
amount of sorting that customers have to perform, will be fully implemented by the end of the
calendar year and are expected to further increase residential recycling efforts and improve street
cleanliness. As discussed earlier, a five- year strategy of modest fee increases was approved to
transition the program to full cost recovery and maintain these enhanced service level. Recycle Plus
rates have been increased only once since the program's inception in 1993.
An adjustment to remove the current exemption in the Disposal Facility Tax for solid waste used as
Alternate Daily Cover ( ADC) was also approved. ADC currently serves as a cheaper alternative for
landfills to provide garbage cover, compared to dirt and other materials, but it also serves as an
13
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Environmental and Utility Services ( Cont'd.)
incentive for generators to dump waste rather than recycle yard waste material. With this change
being approved, effective next fiscal year, solid waste classified as ADC will be subject to the current
Disposal Facility Taxes ( DFT) of $ 13/ ton. It is anticipated that an additional $ 1.8 million in DFT
revenues will be collected in the General Fund in 2002- 2003.
In partnership with our neighborhood Business Districts, $ 300,000 of Redevelopment Agency
funding is included in the SNI investment strategy to better clean streets. This has the added benefit
of protecting local creeks and streams by removing debris from gutters and streets before storm
water runoff drains into them. To enhance parking compliance in conjunction with street sweeping,
a parking enforcement team of five is included who will work with willing neighborhoods to
educate, promote and, if necessary, enforce parking regulations. As a cost efficiency effort, fire
hydrant maintenance has been transferred from the Transportation CSA to water providers.
Additional efficiencies approved include a reduction of 13 positions at the Environmental Services
Department Laboratory for an ongoing savings of $ 788,000, and the elimination of a heavy
equipment operator (-$ 72,000) at the Water Pollution Control Plant.
The neighborhood planning efforts underway as part of the SNI reflect a need for storm water-related
improvements. We will be continuing our efforts with each neighborhood to identify and
construct solutions to drainage priorities. Strategies for addressing citywide storm water issues
including the impact of the new NPDES permit will also be addressed during the fiscal year. As
discussed in the fee section, a phase in over three years of fee increases was approved.
Continuing the City's effort to promote a " green community," the Adopted Budget includes the
utilization of a State grant to deploy additional Public Area Recycling bins throughout the City
($ 260,000) in addition to the ongoing " Clean ' n Green" recycling and street sweeping program. The
Adopted Budget also includes $ 150,000 for the development and incorporation of green building
practices into our Capital Improvements Program.
Recreation and Cultural Services
During challenging economic times, the City's ability to provide comprehensive recreational and
cultural programs plays an even more critical role in ensuring the livability of our community. This
Adopted Budget maintains a number of critical efforts in this area.
We continue the development and construction of parks and libraries throughout the
neighborhoods as part of the $ 440 million voter approved bond measures. When complete, nine
years from now, 80 parks, nine community centers, two sports complexes ( soccer and baseball), and
20 libraries will be built, renovated and/ or expanded. Added to the CIP implementation effort will
be the proposed system of trails. The Adopted Budget includes a new trails coordinator position
funded from existing resources to act as the primary contact point and work with an
interdepartmental tactical team to schedule and track to completion all trail projects. Significant
14
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Recreation and Cultural Services ( Cont'd.)
funding for various capital improvements to neighborhood parks, community and school facilities
have been included from the utilization of the Neighborhood Investment Fund Reserves.
Even as the Adopted Budget maintains efforts in these critical areas, the CSA departments have
committed to significant reductions. The Department of Parks, Recreation and Neighborhood
Services will achieve operational savings through efficiency improvements totaling $ 407,000.
Approved for the Conventions, Arts and Entertainment Department were a number of cost- cutting
measures totaling $ 227,000 that will reflect the decrease in revenue and service demands in the hard
hit travel related services.
Improving efficiencies and maximizing resources will be achieved by instituting joint facility
management of the Alviso Library and Community Center as well as the Biblioteca with the
Washington Youth Center. Wherever the opportunity presents itself we are leveraging resources
including such examples as the $ 3 million match for BEST, $ 2.7 million Work Force Investment
Youth grant, $ 1,585,150 California grant for the LEARNS After School program, $ 920,000 Santa
Clara County Juvenile Justice Grant for community- based aftercare, and the $ 620,000 Safe Schools
grant. A redeployed position of grant coordinator is included to provide greater capacity with grant
making. And the Recreation and Cultural Services CSA will continue to explore other service
delivery innovations. The Libraries Innovative Branch Services Model provides a path for how we
can meet the increasing service demands of a growing library system, and the use of E- technology
represents a major component of that effort.
Approved to assist in the implementation of the Blueprint for Bridging the Digital Divide is an
allocation of $ 77,000 for staffing. Also currently under development is a comprehensive strategy
linking the Mayors Four Point Smart Start Initiative with the Blueprint for Bridging the Digital
Divide. Some $ 1.1 million from the Healthy Neighborhoods Venture Fund will help continue the
Homework Center program and an additional $ 370,000 will expand the Safe Schools Program to the
rest of the middle and high schools. Finally, funding has been provided for the opening of the
Blossom Hill Library, Alviso Community Center and West Valley Branch Library. In addition,
funding has been set aside for the furniture, fixture, and equipment for the Blossom Hill Library due
to open in 2003- 2004.
Employee Services
In response to the current fiscal environment, the Employee Services CSA focused its resources for
the upcoming fiscal year on 1) retaining and developing the existing workforce, 2) ensuring that the
limited hiring that takes place produces highly qualified and committed employees and 3) enhancing
customer access to information. Two approaches were used in developing the budget reductions:
redeployment of current CSA staff to strengthen and broaden Citywide training programs; and
Grafting reductions that eliminated vacant positions and reduced least critical non- personal
expenditures, thus minimizing the need to reduce filled positions. By way of example, reductions
were approved in contractual expenses for the health and safety area without affecting the ability to
respond to emergencies and safety compliance issues by redeploying knowledgeable staff in that
15
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Employee Services ( Cont'd.)
division to conduct the training and assessments. The Employee Services CSA's budget reduction
strategy results in retaining adequate resources for its core services of hiring staff and redirects staff
to improve the level of training support.
Savings of $ 484,000 were achieved by reducing recruitment and marketing ($ 150,000) and by the
elimination of the Human Resources Improvement Reserve ($ 334,000).
During the past year, an assessment of the current delivery of employee- related services was also
completed, with the assistance of Arthur Andersen and input from employees through focus groups,
interviews and surveys. The result of the assessment is a new service delivery model that more
closely aligns employee- related services. An Employee Services Department that became
operational with the new fiscal year integrates related functions to improve day- to- day coordination,
the provision of services, and to create greater opportunities for strategic planning in employee
services areas.
Under the reorganization, the Workers' Compensation Program ( currently in the Finance
Department) has been consolidated with the Health & Safety Core Service to achieve three
improvements: 1) the facilitation of much- needed comprehensive planning; 2) to implement training
and safety programs; and, 3) to target problem areas that contribute to constantly rising costs in
workers' compensation claims. The creation of a new Customer Service unit will assist employees
and prospective employees seeking assistance. In addition, the training and development functions
will be elevated in the new Employee Services Department to facilitate development of a
comprehensive strategy to use the organization's training resources to better equip our employees to
respond to changing demands.
The new organizational structure also establishes a close working relationship between Employee
Services and Employee Relations, including a transfer of some staff from Equality Assurance to
Employee Relations. The enhanced coordination maintains the confidentiality required by Employee
Relations to carry out its responsibilities as a unit of the City Manager's Office. Employees in
Equality Assurance who perform discrimination and harassment investigations have been
transferred to Employee Relations to streamline diese efforts, which are currendy being handled by
both units. Other Equality Assurance functions that are directly related to kbor compliance have
been transferred to the Public Works Department for greater support of efforts in labor compliance.
Finance and Technology
Four underlying principles were followed by the Finance and Technology CSA in approaching the
budget process for fiscal 2002- 2003: 1) deferring consideration of any new programs or systems; 2)
maintaining staff positions that have a direct impact on revenue production; 3) reallocating direct
charges to operating departments for services provided; and, 4) decreasing CSA expenses by
transferring accountability to departments. Reductions in maintenance support have been targeted
to those areas that will not adversely affect the ability of employees to use technology in the
16
2002- 2003 ADOPTED BUDGET MESSAGE
BUDGET OVERVIEW ( CONT'D.)
Finance and Technology
performance of their job functions and to protect public access now and in the future as more
services are made available through additional e- government initiatives. Finally, opportunities were
sought to reduce insurance expenditures without increasing financial risk or liability.
CAPITAL BUDGET HIGHLIGHTS
Despite the fact that we are experiencing a weakened economy that has reduced revenues available
for both operations and capital investments, the 2003- 2007 Adopted CIP of $ 3.480 billion is still the
largest five- year plan in the City's history. This is a 71% increase from the $ 2.034 billion included in
the Adopted 2002- 2006 CIP. The Adopted 2002- 2003 Capital Budget totals $ 1.756 billion, an
increase of 51% ($ 595 million) from the Adopted 2001- 2002 Capital Budget, which totaled $ 1.161
billion.
The majority of the increase from the prior CIP occurs almost entirely in three programs: Airport,
Fire and Police. The Airport program is compared against a prior CIP that contained none of the
Master Plan construction or Security projects included in this CIP. Fire and Police program
• f*~ \ increases represent the inclusion of the Neighborhood Security Act Bond Measure funds approved
on March 5, 2002. The size of the CIP also reflects the fact that over the last two years, voters have
approved the issuance of a total of $ 599 million in General Obligation Bonds to support library
projects ($ 212 million), parks projects ($ 228 million), and public safety projects ($ 159 million).
These investments reflect voter approval of Measures O and P ( library and parks projects) on the
November 2000 ballot and Measure O ( Neighborhood Security Act Bond Measure) on the March
2002 ballot. The 2003- 2007 Adopted CIP includes bond proceeds of $ 481 million from these
sources, with the remaining proceeds budgeted outside this five- year period.
The current economic downturn has negatively impacted revenue collections in several of the largest
sources of funding for the City's CIP, however, resulting in a significant drop in the amount of
funding when compared to the most recent years. From the perspective of the current adopted
multi- year capital plan, however, this does not have as large an impact as might be expected. The
2003- 2007 revenue estimates for the three largest capital revenue categories ( Construction and
Conveyance Tax, Building and Structure Tax, and Construction Excise Tax) for example show only
moderate declines from the estimates included in the 2002- 2006 Adopted CIP. When the 2002-
2006 CIP was developed, a significant drop- off from the activity levels experienced in recent years
was assumed and the revenue estimates were adjusted downward accordingly. The foresight that led
to these conservative estimates is enabling the City to withstand the tremendous fall in these
revenues without significantly impacting its overall five- year plan.
Operating Budget Impact
f A number of the projects in the 2003- 2007 Capital Improvement Program will result in significant
future additional operating costs in the General Fund. Most of these costs, with the exception of
the programs included in the Neighborhood Security Act Bond Measure approved in March 2002,
TT
2002- 2003 ADOPTED BUDGET MESSAGE
CAPITAL BUDGET HIGHLIGHTS ( CONT'D.)
Operating Budget Impact ( Cont'd.)
were reflected in recent five- year forecasts, including the one released in February 2002. The costs
associated with the Neighborhood Security Act Bond Measure displayed in this document for the
first time will be added to future General Fund Forecasts.
The preliminary estimates of the ongoing annual impact of capital projects on the General Fund are
summari2ed in the following chart. Costs are shown starting in the year the projects will be finished
and for the remainder of the five- year period. ( It should be noted that, as in the case in the
Forecast, these estimates are provided by the departments and have not yet been fully analyzed by
the Budget Office. That analysis most likely will result in different costs when the actual budget for
the year in question is formulated.) All projects in the 2002- 2003 Capital Budget which result in
additional General Fund operating and maintenance costs, as well as costs associated with projects
currently under construction and anticipated to be operational in 2002- 2003, have been addressed at
some level in the Adopted Operating Budget. The costs displayed in the following chart are for
projects that come on line in the future years of the CIP.
Projected General Fund Operating and Maintenance Costs
Ptoiect Title 2003- 2004 2004- 2005 2005- 2006 2006- 2007
Fire Facilities
Library Facilities
Median Island Landscaping
Parks Facilities
Parks Facilities- Other Agencies
Police Facilities
Street Construction
Street Lighting
Traffic Signals
Total
$ 386,000
1,450,000
72,000
1,547,000
65,000
6,000
8,000
45,000
$ 2,201,000
2,916,000
74,000
3,242,000
220,000
22,000
44,000
62,000
86,000
$ 4,195,000
3,446,000
74,000
4,390,000
245,000
47,000
44,000
14,000
129,000
$ 6,384,000
5,717,000
74,000
4,619,000
257,000
549,000
44,000
68,000
171,000
$ 3,579,000 $ 8,867,000 $ 12,584,000 $ 17,883,000
Pf ogtam Highlights by City Service Atea
Each of the City's 16 capital programs is aligned to a particular City Service Area ( CSA). The
following discussion highlights significant issues and projects by CSA.
Aviation Services
The Aviation Services CSA includes the Airport Capital Program. The Norman Y. Mineta San Jose
International Airport's ( SJC) Adopted 2003- 2007 CIP totals $ 1.699 billion and contains 59 capital
projects. As a result of the September 2001 terrorist attacks on New York and Washington D. C.,
SJC's priorities have significantly changed. While the previous CIP focused on approval and design
18
2002- 2003 ADOPTED BUDGET MESSAGE
CAPITAL BUDGET HIGHLIGHTS ( CONT'D.)
Program Highlights by City Service Area ( Cont'd.)
Aviation Services ( Cont'd.)
of Master Plan projects, the current focus has shifted to the development of an airport that not only
meets customer and community needs, but also those of the newly heightened security
requirements.
In order to address both the financial needs associated with security compliance and be ready to
address new directives, the Adopted CIP establishes a $ 450 million reserve to meet security
requirements mandated by the Aviation and Transportation Security Act. New mandates include
explosive detection screening ( EDS) of checked bags, air cargo, and belly freight enplaned at the
Airport. In the later years of the CIP, funding is programmed to implement the Centralized
Terminal Concept as approved by the City Council on November 13, 2001. It is the
Administration's intent to comply fully with the security mandates while still meeting the
commitments included in the Airport Traffic Relief Act ( ATRA).
Economic and Neighborhood Development
The Economic and Neighborhood Development CSA includes the Developer Assisted Projects
Capital Program. This program reimburses residential developers for construction of major City
streets and encourages the undergrounding of existing overhead utilities. Several developer
reimbursements are programmed into the CIP.
In the Underground Utility Program, current priorities include an agreement with PG & E for the
Alma/ Almaden Underground Utility District, the design and construction of the McLaughlin
Avenue/ Senter Road Underground Utility District, and the design of the McKee/ Toyon
Underground Utility District.
Environmental and Utility Services
The Environmental and Utility Services CSA includes the Sanitary Sewer System, Storm Sewer
System, Water Pollution Control and Water Utility Capital Programs.
The most prominent projects in the 2003- 2007 CIP for the Sanitary Sewer system continue to be
those related to the construction and/ or rehabilitation of the North San Jose Interceptor System.
Other projects funded in this CIP include Sanitary Sewer System Master Planning, Flow Monitoring,
Inflow/ Infiltration ( I& I) Reduction, and Neighborhood Sewer Improvement Programs.
In the Storm Sewer System Program, existing revenues could only support a minimal level of storm
drain capital improvement projects. In order to generate sufficient revenues to maintain the overall
storm sewer system and to re- establish a modest capital program, the 2002- 2003 Adopted Budget
includes a multi- year Storm Sewer Use fee increase program of approximately 4 to 4.5% per year for
three years. These fee increases generate enough revenue in the fund to provide $ 4.1 million over
the five- year CIP for capital projects. The program will fund Phase II of the Willow Glen —
19
2002- 2003 ADOPTED BUDGET MESSAGE
CAPITAL BUDGET HIGHLIGHTS ( CONT'D.)
Ptogtam Highlights by City Service Area ( Cont'd.)
Environmental and Utility Services ( Cont'd.)
Guadalupe project ($ 2.2 million), and various smaller neighborhood projects including new inlet and
kteral construction as well as the reestablishment of flow- lines to provide relief for minor drainage
problems ($ 1.9 million). All of these projects will incorporate technologies and infrastructure
designed to improve the water quality of the storm runoff.
The major areas of investment for the Water Pollution Control Capital Program during the five- year
period are plant improvements and modifications, Revised South Bay Action Plan ( SBAP) projects,
and wet weather reliability improvements.
Capital projects to support the San Jose Municipal Water Utility System include the construction of
new facilities, maintenance of existing infrastructure, and improvements to the Water Utility System
facilities. One of the major expansion areas for the system is the primarily industrial North Coyote
Valley Service Area. The majority of funding for the North Coyote Valley water system is
programmed in the 2003- 2007 CIP ($ 6.7 million).
Public Safety
The Public Safety CSA includes the Fke and Police Capital Programs. On March 5, 2002, 71.7% of
the voters in San Jose approved Measure O, the " 9- 1- 1, Fire, Police, Paramedic and Neighborhood
Security Act" ( Neighborhood Security Act Bond Measure). This bond measure, which authorized
the City to issue General Obligation Bonds in an amount not to exceed $ 159 million to fund both
Police and Fke Department capital improvements, significantly increases the resources available to
add, relocate, and renovate public safety facilities. The following projects are funded:
• A Police Substation in the southern part of San Jose;
• Four Community Policing Centers;
• A Driver Safety Training Facility;
• A remodel of the City's current 9- 1- 1 Communications Center;
• Addition of four new fke stations;
• Essential facility remodels of 20 fire stations;
• Relocation of fire stations 12, 17, 23 and 25; and
• Expand/ rebuild Fke Training Center
The construction of a new Communications Hill Fke Station is also pknned during this five- year
period. This fke station is tentatively scheduled to open in the summer of 2004.
20
2002- 2003 ADOPTED BUDGET MESSAGE
CAPITAL BUDGET HIGHLIGHTS ( CONT'D.)
Ptogtam Highlights by City Service Area ( Cont'd.)
Recreation and Cultural Services
The Recreation and Cultural Services CSA includes the Library and the Park and Community
Facilities Development Capital Programs.
In November 2000, 75.7% of San Jose voters approved a $ 212 million Library bond measure to
improve the branch library system over a 10- year period in accordance with the Master Plan. Over
the course of the Adopted 2003- 2007 CIP, four new branches and six expansion/ relocation projects
will be completed. Three others will be under construction, and five will be in design.
Other major library projects include the West Valley Branch Library replacement that is expected to
be completed in December 2002 and the Joint Library involving the City of San Jose and San Jose
State University that is expected to be finished in 2003.
The Park and Community Facilities Development Capital Program plans for and implements the
acquisition, development, and protection of parks, recreation facilities, and open space to maintain a
high quality of life in San Jose. The program consists of 17 funds including 10 Council District
funds, a City- wide fund for city- wide/ regional facilities, a Parks Bond Fund, and five special purpose
funds.
The Parks Bond Fund provides a significant amount of resources to address capital needs in the
City's various park facilities. On November 7, 2000, City voters approved Measure P, a $ 228 million
general obligation bond for park and recreational facilities improvements. This bond program will
provide funding over a 10- year period to renovate 90 neighborhood park play areas, add a total of
164,000 square feet to nine community and senior centers, renovate 28 park restrooms, build two
new sports complexes, expand the City's trail system at five locations, enhance four regional park
facilities, including improvements and renovations at Happy Hollow Park and Zoo. The 2003- 2007
Adopted CIP includes $ 182.7 million in bond projects.
The Park and Community Facilities Development Program also continues to focus on proactive
development of trails and coordinating regional efforts toward a trail system extending throughout
Santa Ckra County and the Bay Area. The 2003- 2007 Adopted CIP includes $ 15.0 million in
funding for various trails throughout the City.
Transportation Services
The Transportation Services CSA includes the Parking and Traffic Capital Programs.
The Parking Program's primary capital responsibilities are the development of parking facilities,
maintenance and improvements to existing facilities, and the upgrade and replacement to both on-street
and off- street equipment. The 2002- 2003 Adopted Budget reflects a transfer of $ 7.75 million
from Parking Fund Reserves to the Redevelopment Agency to help finance the acquisition, design
21
2002- 2003 ADOPTED BUDGET MESSAGE
CAPITAL BUDGET HIGHLIGHTS ( CONT'D.)
Program Highlights by City Service Area ( Cont'd.)
Transportation Services ( Cont'd.)
and construction of two parking facilities. These facilities are anticipated to be built at the
intersection of Notre Dame/ St. John Streets and the intersection of Almaden Avenue/ Post Street.
In the 2003- 2007 CIP, it is assumed that the two New Civic Center Garages will be constructed
during this five- year period. These facilities will be financed through the sale of lease revenue bonds
and the City's General Fund will cover all debt service as well as operating and maintenance costs.
In the 2003- 2007 Traffic Capital Program, the City is dedicating over a quarter of a billion dollars to
expand and enhance the transportation system. These resources ensure that the transportation
system supports the economic competitiveness of San Jose and provides residents with safe and
attractive streets in their neighborhoods. The investments approved for 2003- 2007 include funding
for the build- out of the major street networks; enhancements to the environment; maintenance of
paved roadways; an array of benefits at the neighborhood level including traffic calming, sidewalk,
curb, and gutter repair, and bicycle and pedestrian facilities; heightened safety features including new
traffic signals and streetlights; and funding to support the City's contribution to regional highway
and alternative transit systems.
Street maintenance is an area of particular concern. In the Adopted CIP, $ 37.6 million is budgeted
for this purpose. This sum is comprised of $ 20.1 million for slurry seal and resurfacing, $ 8 million
for State- funded street maintenance, and $ 9.5 million in transfers to the General Fund for
maintenance and slurry seal. In addition, the Transportation Department is planning to spend
$ 21.75 million over the next five- year period from its Operating Budget to support street
maintenance. With the Capital and Operating Budget investments combined, the total amount that
is allocated to street maintenance over the next five years is $ 59.4 million. This funding level
represents a drop from the amount allocated in recent years.
A Ten- Year Street Maintenance Recovery Plan that began in 1996- 1997 has guided street
maintenance expenditures. The City has invested almost $ 130 million in street maintenance over the
first six years of the Ten- Year Recovery Plan — the largest such investment in its history — drawing
on funds from the City, regional, State, and Federal sources. The funding needed in 2002- 2003 to
maintain the aggressive pace set in the Ten- Year Recovery Plan is $ 29.8 million. Due to the
expiration of federal transportation funds for maintenance and the front- loading of Measure A/ B
street maintenance funds from a nine- year program into four years that ends this year, the City will
not be able to continue this pace with $ 16.0 million budgeted in 2002- 2003.
While revenue constraints mean that current funding will fall below the level of the last several years,
the Transportation Department staff identified additional funding opportunities to begin addressing
this shortfall in coming years. It is anticipated that beginning in 2004- 2005, the City will be eligible
to receive funds from the Valley Transportation Plan ( VTP) 2020 Expenditure Plan of
approximately $ 6 million annually. The City will also aggressively pursue funding for street
22
2002- 2003 ADOPTED BUDGET MESSAGE
CAPITAL BUDGET HIGHLIGHTS ( CONT'D.)
Program Highlights by City Setvice Atea ( Cont'd.)
Transportation Services ( Cont'd.)
maintenance purposes as a result of the affirmative outcome on Proposition 42. Beginning in 2008-
2009, it is expected that approximately $ 9 million annually will be made available through this
funding source. These two sources of funding will close a significant portion of the street
maintenance funding gap and should be the basis for establishing a new 10- Year Plan to continue
maintaining streets in good condition.
Strategic Support
The Strategic Support CSA includes the Civic Center, Municipal Improvements, Service Yards, and
Communications Capital Programs.
The new Civic Center will include approximately 530,000 square feet and will be constructed on a
4.9- acre site located on the south side of East Santa Clara Street, between Fourth and Sixth Streets.
Major components will include an 18- story office tower, a council chamber wing, an open public
plaza with a rotunda, plus a 400- vehicle underground parking garage to serve the visiting public and
some staff. The project also includes an off- site 1,250- vehicle employee parking garage located near
St. John Street, between Fourth and Fifth Street. The finished Civic Center facility will house
approximately 1,950 City staff.
The Civic Center project budget includes $ 244 million for the new Civic Center buildings, $ 44
million for parking facilities, and $ 54.6 million to reimburse the Redevelopment Agency for land
acquisition costs.
The Municipal Improvements Program typically provides General Fund allocations to address
various City facility needs. In the Adopted CIP, funding was rebudgeted to complete several
projects, including the Animal Shelter Facility, Historic Homes Renovations, and Miscellaneous
Building Repairs.
In the Service Yards Program, the majority of the resources are being set aside in a reserve to
improve the Central Service Yard and expand its existing capacity to accommodate services located
in other facilities. A plan for the build- out of this facility will be developed once the Service Yards
Study is completed. This study is currently being undertaken to evaluate all of the existing service
yards' capacity and utilization.
The Communications CIP's guiding objective is the provision of reliable, necessary public and non-public
safety- related communications equipment for all City employees who need communications
equipment for their jobs. The majority of the Communications capital budget is dedicated to
equipment replacement and upgrade.
23
2002- 2003 ADOPTED BUDGET MESSAGE
CONCLUSION
It is a mark of the City's conservative approach to budgeting that we have so far been able to
weather a precipitous drop in revenues with our workforce intact and our commitment to service
delivery strong. This 2002- 2003 Adopted Budget successfully closed a $ 35.9 million dollar shortfall
through preemptive action to reduce current year expenditures and the coordinated efforts of every
City Department to identify opportunities to be more efficient while reducing costs in 2002— 2003.
Having successfully overcome the significant operating fund shortfall projected for 2002- 2003, it is
imperative that we not lose sight of the significant fiscal challenges ahead. The most notable of
these is the continuing State fiscal crisis. While the Governor promised last December not to
balance the budget on the backs of local government, and seems to have kept that promise in the
recently signed budget, we remain concerned that financial repercussions at the local level are very
possible. While City reserves have helped cover our own shortfall, a new takeaway by the State
would undoubtedly require real cuts in direct service delivery. In addition, the local economic
recovery is expected to continue to lag behind that of the national economy. The length of that
delay and the speed of any recovery will together play a critical role in the City's efforts to balance
future budgets without significant service cuts.
This Adopted Budget, however, presents a sound fiscal plan that maintains the City's commitment
to our residents and to the programs and. policies that the City Council has established as
organizational priorities. It is a plan that positions the organization to deliver on its significant
commitments to the community and continues the sound financial discipline that has allowed us to
manage through the current economic downturn.
Balancing this budget in the midst of an economic slowdown presented significant challenges to the
organization. I would like to express my appreciation to our dedicated City employees and the City
Labor Alliance who partnered with the Administration during difficult decisions. I also want to
acknowledge the efforts of the many employees who made a direct contribution to the preparation
and production of this document and to express my sincere appreciation for a job well done.
Del D. Borgs
City Manager
24
Attachment A
General Fund Balancing Strategy Detail
INTRODUCTION
This Attachment is intended to provide a
brief, more detailed summary of the revenue
and expenditure estimates and key balancing
actions provided for in the General Fund in
the process of Grafting the 2002- 2003
Adopted Budget. Specifically, by each stage
of the process, both significant revisions to
the original March 2002 Forecast Base
Budget, as well as the key elements of the
strategy to bring the General Fund into
balance in the Adopted Budget are described.
In March 2002, the Administration presented
to the Council initial projections for 2002-
2003 in the General Fund Five- Year Economic
Forecast and Revenue Projections document. The
2002- 2003 " base- case" projections indicated
the presence of a shortfall totaling
approximately $ 36.4 million. This " shortfall"
represented the difference or gap between
projected 2002- 2003 General Fund resources
and the expected cost of both providing
current services in that year, and providing for
Council committed augmentations ( such as
the costs of staffing and maintaining new
facilities).
In addition to the basic projected shortfall in
the General Fund of $ 36.4 million, it was
pointed out at the time that an additional
shortfall of about $ 10.5 million existed in the
four development- rekted fee programs in the
General Fund ( Fire, Planning, Building and
Code Enforcement, and Public Works
Departments).
Subsequent to the release of the March
Forecast, a number of changes to both
expenditures and revenue estimates were
made, which combine to produce a Revised
Forecast estimate, reflecting the most current
information about economic conditions and
cost/ activity projections. Discussed in more
detail below, the revisions included net
reductions in revenue estimates of $ 320,000,
and a reduction in overall cost projections of
$ 870,000. The combined impact of these
changes produced a very small overall change
— a net downward adjustment of the shortfall
estimate of $ 550,000, to $ 35.9 million. The
revenue and expenditure adjustments included
in the Revised Forecast are described in more
detail below.
In addition to needing to develop a strategy to
eliminate the basic $ 35.9 million shortfall, the
strategy needed to also address the additional
shortfall ( gap) ($ 10.5 million) in the four
General Fund fee programs. In order to
isolate that problem to ensure that solutions
were made internal to the fee programs, that
gap was discussed separately from the basic
General Fund shortfall. In displays in the
Forecast, the gap was held separate by
understating expenditure requirements in the
General Fund by the $ 10.5 million, the
amount of excess costs ( expenditures in
excess of expected revenues) in the
development- related fee programs.
These fee programs are intended by the City
Council to recover 100% of the cost of
development review and inspection. While
individual fees have been added for new
services and some fees have been reduced or
eliminated, in general, fee increases have not
taken place in these programs in a number of
years. The unprecedented level of
development activity seen in recent years has
generated enough revenue to delay fee
increases and masked the slow erosion of the-cost
recovery basis of the fee programs. That
changed suddenly last year. In the aggregate,
cost recovery levels dropped below 80% in
25
Attachment A
General Fund Balancing Strategy Detail ( Cont'd.)
INTRODUCTION ( CONT'D.)
2001- 2002. The March Forecast assumed that
each of the fee programs would be required to
develop strategies that would completely
address their portion of the $ 10.5 million
shortfall.
The following Table I displays the overall
projections for the General Fund as it
changed between March and the Proposed
Budget.
In the process of formulating the Proposed
Budget, resources totaling $ 35.59 million and
reduced costs totaling $ 10.75 million were
developed as balancing strategies and added
to the Revised Forecast level. That resulted in
a balanced 2002- 2003 Proposed General Fund
Budget of $ 733.25 million.
The balancing strategy contained a
combination of ongoing and one- time
solutions. The overall strategy balanced
approximately 62% of the total shortfall ( with
fee gap) with ongoing solutions totaling $ 28.9
million. The remaining ongoing gap is $ 17.4
million. If all other assumptions built into our
forecast hold true, strategies to balance this
amount will still need to be formulated in the
coming year( s).
The specific elements of the Administration's
strategy are displayed in Table II, and
described in the material that follows.
Following the issuance of the Proposed
Budget, resources and costs totaling $ 100.27
million were added, resulting in a balanced
2002- 2003 Adopted Budget totaling $ 833.52
million and are described in Table III.
Table I
2002- 2003 PROPOSED OPERATING BUDGET
Forecast To Adopted Budget Reconciliation
Match Forecast
Forecast Revisions
Revised Forecast ( no fee impact)
$ 697.98
( 0.32)
697.66
$ 734.38 ($ 36.40)
( 0.87)
733.51
Development Fee Program Impact j 0.00 10.49
0.55
( 35.85)
10.49
Revised Forecast ( with fee impact)
Proposed Revisions
2002- 2003 Proposed Budget
Adopted Revisions
2002- 2003 Adopted Budget
697.66
35.59
$ 733.25
100.27
$ 833.52
744.00
( 10.75)
$ 733.25
( 46.34)
46.34
$ 0
100.27
$ 833.52
0
$ 0
26
Attachment A
General Fund Balancing Strategy Detail ( Cont'd.)
REVISED FORECAST BASE BUDGET presented in March were incorporated into a
new Revised Forecast. This new " Forecast
As discussed above, following the issuance of Base Budget ( no fee impact)" reflected a
the initial March Forecast, detailed analysis of shortfall of funds of $ 35.9 million, which was
the status of City revenues and expenditures down only slightly ($ 0.55 million) from the
continued. Based on this review, a series of March shortfall figure,
changes to the Base Budget estimates
Revisions to the revenue estimates incorporated into the Revised Forecast included the following:
Revenues Revision
Property Tax $ 675,000
Sales Tax ( 1,363,462)
Transient Occupancy Tax 300,000
Utility Tax ( 521,000)
Licenses & Permits 115,800
Fines, Forfeitures, & Penalties 391,000
Revenue from Local Agencies ( 326,840)
Revenue from State of California ( 135,000)
Revenue from the Federal Government 200,000
Departmental Charges ( 965,200)
Other Revenue 465,000
Transfers and Reimbursements 824.990
Net Change in Revenues $ ( 319,712)
Expenditure adjustments made from the March Forecast base included:
Expenditures Revision
Reimbursable Mid- Year Actions ( Metcalf Agreement) $ 750,000
Elimination of Non- Personal CPI Increase ( 360,000)
Elimination of Community Based Organization COLAs ( 370,000)
Vacancy Factor Adjustments ( 380,000)
Miscellaneous Revisions ( 510.000)
Net Change in Expenditures $ 870,000
27
Attachment A
General Fund Balancing Strategy Detail ( Cont'd.)
REVISED FORECAST BASE BUDGET
( CONT'D.)
The revenue revisions reflected more recent
information. The largest change, a 1%
decrease in the growth estimate for Sales Tax
( from 3.5% to 2.5%), represented a slightly
more pessimistic view of the length of time
the local recession will last. It is increasingly
apparent that the local economy has showed
little to no sign of improvement, and that
renewed growth of any significance is unlikely
until late next fiscal year, at best. The upward
adjustment in Property Tax receipts reflected
more recent information from the County
regarding expected Secured Property Tax Roll
growth. The other adjustments are relatively
minor changes, reflecting changing
ckcumstances with those particular revenue
sources.
All base expenditure estimates were also
carefully re- examined during the time between
the March Forecast and the issuance of the
Proposed Budget. Actions taken by Council
during the Mid- Year Budget Review resulted
in increased expenditures of $ 750,000, all of
which were reimbursable from the recent
agreement regarding the Metcalf Energy
Center.
Offsetting those increases were downward
adjustments to expenditure estimates that
reflected the elimination of the inflationary
adjustment to non- personal/ equipment ($. 36
million) and community- based organizations
($. 37 million) that had been previously
assumed in the March Forecast. The
condition of the General Fund has made clear
that such cot of living allowances were not
affordable in the upcoming fiscal year.
A further review was also performed of
departmental attrition rates. This resulted in
the ability to reduce expenditure totals slightly
in the aggregate, in the amount of $. 38
million. Revisions to the Public Works fee
program also resulted in savings to the
General Fund of $ 380,000.
PROPOSED BUDGET BALANCING
STRATEGY
Specific Council direction regarding the
preparation of the Proposed Budget was
provided in the Mayor's March Operating
Budget Message. The details of the specific
elements of that Message, along with other
Council Referrals, are provided in Attachment
B. Attachment C contains information
regarding the status of City Auditor
recommendations with funding impact.
As summarized in the following Table II and
discussed below, the budget balancing strategy
developed by the Administration resulted in a
balanced General Fund Proposed Budget
totaling $ 733.3 million. Following is a brief
discussion of the key elements of the budget
balancing actions that were included in the
Proposed Budget. Descriptions of most of
the elements of the strategy are spelled out in
much greater detail elsewhere in this
document, or in the Proposed Fees and
Charges document that was published in May.
Resource Changes
A total of $ 35.6 million in additional resources
with an ongoing value of $ 11.5 million, were
proposed to be available as part of the
balancing strategy. The major elements of
this increase are described below.
28
Attachment A
General Fund Balancing Strategy Detail ( Cont'd.)
PROPOSED BUDGET
STRATEGY ( CONT'D.)
BALANCING
Available Fund Balance
The Proposed Budget balancing strategy
included utilizing an increase in unrestricted
2001- 2002 Ending/ 2002- 2003 Beginning
Fund Balance funds in the amount of $ 22.95
million. This increase included several
different elements.
Included first was an upward adjustment in
the estimate for 2001- 2002 fiscal year
expenditure savings ($ 3.6 million) resulting
from cost/ position management plans ($ 2.063
million) and the carryover and use of the
following 2001- 2002 Earmarked Reserves:
Enhanced Parks Maintenance; ($ 112,000);
Fire Courier Service ($ 115,000); and Human
Resources Improvements ($ 310,000).
Also included was the use of several reserves
previously set aside: the first, as directed in
the Mayor's June 2001 Budget Message, to
address the projected 2002- 2003 shortfall
($ 9.98 million); and three others for
Development- Related Fee issues ($ 3.869
million). This included use of the following:
Fire Fee Reserve ($ 256,988); Building Fee
Reserve ($ 2.83 million); and the Planning Fee
Reserve ($ 783,793 million).
Finally, included was the use of $ 5.5 million in
funds received during the last year from the
County of Santa Clara. The City and the
County reached an agreement during the
spring of 2001 to settle various disputes. As a
result, one- time settlement funds of $ 5.5
million received from the County were
available for use in 2002- 2003.
Additional Development- Related Fee
Revenue
A number of fee increases and new fees were
proposed to restore cost- recovery levels to
100% in 2002- 2003 in the four General Fund
development fee programs ( Fire, Planning,
Building and Code Enforcement, and Public
Works Departments). Approval of these
proposals resulted in additional revenue
totaling approximately $ 3.8 million.
Commercial Solid Waste Franchise Fee
and Disposal Facility Tax
Through a combination of approved actions,
the Commercial Solid Waste Franchise Fee
( CSW) and Disposal Facility Tax ( DFT)
revenue will increase by $ 519,000 and $ 1.8
million, respectively.
The CSW revenue increase resulted from a
redistribution of Recycle Plus fee loads split,
at the current time, in an inequitable manner
between CSW and AB 939 fees. Fee increases
in the Residential Recycle Plus program will
bring the commercial and residential
programs into cost recovery status in a three-year
phase- in, increasing the portion of the
CSW portion of the fee that goes to the
General Fund. This redistribution will
generate an estimated annual increase of $ 1.3
million in additional revenue to the General
Fund after three years. In 2002- 2003, the first
year of the three- year phase- in, an additional
$ 519,000 is expected.
The DFT increase will result from an
approved removal of a current exemption
from taxation of waste materials currently
classified as Alternate Daily Cover. This
material will then be subject to the same $ 13
per ton tax that all other material already is.
29
Attachment A
General Fund Balancing Strategy Detail
PROPOSED BUDGET BALANCING
STRATEGY ( CONT'D.)
Commercial Solid Waste Franchise Fee
and Disposal Facility Tax ( Cont'd.)
This change is estimated to generate
approximately $ 1.8 million in additional DFT
General Fund revenue in 2002- 2003.
Cafdroom Tax Revenue
In accordance with Council direction to phase
out the City's ongoing reliance on cardroom
revenue over 6 years, an increasing portion of
this revenue ($ 3.75 million this year) is
allocated each year to meet one- time needs.
In 2002- 2003, at the half way point of this
phase- out, $ 3.75 million from this tax
continues to be utilized as an ongoing General
Fund revenue source.
Augmentation- Related Revenue and
Other Revenue Changes
Revenue of approximately $ 2.5 million from
various local agencies, as well as transfers and
reimbursements from other funds and
agencies were reflected in diis category.
Augmentation- related revenue included
overhead changes and reimbursement from
the Redevelopment Agency for several Strong
Neighborhoods Initiative efforts.
Expenditure Changes
Actions resulting in a net reduction of $ 10.75
million, with an ongoing value of $ 17.4
million were proposed as part of the balancing
strategy. Included were several major
augmentations, including the Mayor's Message
directed creation of a $ 6.0 million
Neighborhood Investment Fund, and a
$ 500,000 Security Improvement Reserve, as
well as the set aside of $ 900,000 for furniture,
fixtures and equipment for the new Blossom
Hill Library.
The remaining elements of the cost reduction
strategy are listed by City Service Area ( CSA)
in Table II below, and described in detail in
the CSA and departmental sections of this
document.
30
Attachment A
Table II
2002- 2003 PROPOSED OPERATING BUDGET
General Fund Funding Requirements and Balancing Strategy
Revised Forecast
Development Fee Program Impact
Revised Forecast
Balancing Strategy
Additional Resources
Available Fund Balance
Additional Savings/ Use of Reserves
Development- Related ( Use of Reserves)
Reserve for Future Deficit ( 2002- 2003)
County Settlement Funds
Total Available Fund Balance Increase
Development- Related Fee Revenue
Commercial Solid Waste Franchise Fee
Disposal Facility Tax
Cardroom Revenue
Augmentation- Related Revenue
Other Revenue Changes O Subtotal Additional Resources
Proposed Budget Funding Changes by City Service Area
Aviation
Environmental & Utility Services
Economic & Neighborhood Development
Non- Development Related
Development Related
Public Safety
Recreation & Cultural Services
Transportation
Strategic Support:
City Facilities & Equipment
Finance & Technology
Employee Services
Council Appointees
Reserves:
Elimination of Reserves
Neighborhood Investment Fund
Security Improvements Reserve
Blossom Hill Branch Library Furniture, Fixtures & Equip.
Total Funding Changes by City Service Area
Total Balancing Strategy
Remaining Balance
2002- 2003
($ 35,852)
( 10,491)
($ 46,343)
$ 3,600
3,869
9,983
5,500
$ 22,952
3,836
519
1,800
3,750
1,294
1.442
$ 35,593
$ 0
( 517)
( 184)
( 4,349)
( 1,465)
( 523)
870
( 3,171)
( 1,478)
( 933)
( 1,900)
( 4,500)
6,000
500
900
($ 10,750)
($ 46,343)
$ 0
Ongoing
($ 35,852)
( 10,491)
($ 46,343)
f 0
000
$ o
6,322
519
1,800
0
1,244
1.650
$ 11,535
$ 0
( 534)
( 706)
( 4,358)
( 1,397)
( 998)
( 392)
( 3,171)
( 1,478)
( 933)
( 896)
( 2,535)
00
0
($ 17,398)
($ 28,933)
($ 17,410)
31
Attachment A
General Fund Balancing Strategy Detail ( Cont'd.)
ADOPTED BUDGET BALANCING
STRATEGY
The final phase of the 2002- 2003 budget
process commenced following the issuance of
the City Manager's Proposed Budget
document and consisted of the following
major steps: review by the Mayor City
Council in Committee of the Whole sessions
of the Proposed Budget; issuance by
Administration of recommended revisions to
the Proposed Budget ( in the form of formal
Manager's Budget Addendums, or MBA's);
issuance by the Mayor in June of his Final
Budget Modifications memorandum; and
approval by the Council of a final Adopted
Budget. A significant number of revisions to
the Proposed Budget occurred in this final
phase of the process and are described in the
following section.
Summarized in the following table by general
category ( Table III) are the additional funding
requirements introduced by Manager's Budget
Addendum's or the Mayor's Final Budget
Modifications memorandum. ( Full text is
included as an Appendix to this document.)
Those additional requirements totaled $ 100.3
million. By far the largest component of the
increase was rebudgets of 2001- 2002 funds
($ 98.4 million) to be carried forward for the
completion of various projects. Detailed
descriptions of the changes and investments
that were approved are provided in the
specific department sections of this
document.
Savings to Support 2001- 2002 Projects
The unrestricted portion of the 2001- 2002
Ending/ 2002- 2003 Beginning Fund Balance
estimate was adjusted upward from earlier
estimates by an additional $ 98.4 million to
reflect the 2001- 2002 funding which is
estimated to be available to be carried over to
2002- 2003.
Augmentation- Related Revenue
Reimbursement from the State of California
was reflected along with a corresponding
budget augmentation for the San Jose
LEARNS program.
Other Revenue Changes
Reimbursements from various local and
federal grant programs, which were awarded
but not received in 2001- 2002, were reflected
along with corresponding budget changes.
This included reimbursement for various
public safety and healthy neighborhood
activities.
Reserve for Neighborhood Investment
Fund
Reflects the elimination/ utilization of the
Reserve for Neighborhood Investment Fund
($ 6.0 million). This reserve was established in
the Proposed Budget, per Council direction,
to be used during this phase of the budget
process to support a wide array of capital
investments throughout the community to
improve safety or quality of life, or to create a
better sense of pride in neighborhood
communities.
Expenditure Changes
Actions resulting in a net addition of $ 100.3
million, with an ongoing value of $ 1.6 million
were approved as part of the adopted phase.
The following highlights some of the more
significant General Fund augmentations that
were approved in the final phase of the
process and have been grouped by City
Service Area.
32
Attachment A
General Fund Balancing Strategy Detail
ADOPTED BUDGET
STRATEGY ( CONT'D.)
BALANCING
Expenditure Changes ( Cont'd.)
Economic and Neighborhood Development ($. 75
million) — Funding for improving two
neighborhoods, Richmond/ Menker ($ 65,000)
and Palm Haven ($ 10,000).
Public Safety ($. 89 million) — Funding for
expanding Special Operations training efforts
($ 60,000) and public education for the
Medical Assistance Treating Toddlers
program ($ 2,000) in the Fire Department and
purchasing School Crossing Guard Uniforms
($ 27,000). .
Recreation and Cultural Services ($ 5.56 million) -
Significant funding for various capital
improvements to neighborhood parks,
community and school facilities ($ 3,856,689).
Major projects include Almaden Winery
Center Conversion ($ 1,246,000), Computer
Facility at Southside Community and Senior
Center ($ 714,547), Tamien Station Skateboard
Park ($ 630,000), Community Center at former
Fire Station # 27 ($ 461,068) and Carrabelle
Park Play Area Improvements ($ 275,000). In
addition, funding was also approved for
continuation of die San Jose LEARNS After
School Program ($ 1,585,150), a Senior Citizen
Care Advocate in the Office on Aging
($ 77,676), expansion of the Senior Internet
Days and Workshop Program ($ 11,000),
Camden Youth Center Computer Program
($ 12,500) and Young People's Theater
($ 13,000).
Transportation ($ 1.79 million) - Significant
funding for various capital improvements to
City Streets. Major projects include Redmond
Avenue Median Island Landscaping
($ 350,000), Streetlighting Improvements in
schools ($ 110,102) and other streets
($ 298,213) in Council District 5, construction
of a traffic signal at Senter Road and Wool
Creek Drive ($ 275,000), construction of
sidewalks around the corner of San Tomas
Aquino Road and Payne Avenue ($ 215,000),
and Lincoln Avenue Crosswalk Uplights
($ 180,000).
Strategic Support ($. 07 million) — Funding for a
matching grant program for United Way
($ 250,000) and transition costs for two new
Council members ($ 30,000). Offsetting these
increases is a reduction to the operating hours
of the Customer Service Call Center
(-$ 210,000).
debudgeted 2001- 2002 Projects ($ 98.7 million) --
Funding for completion of programs and
projects authorized in the prior year. The
largest majority of the rebudgets occurred in
three areas: Capital ($ 24.20 million),
Earmarked Reserves ($ 53.69 million), and
City- Wide ($ 14.49 million).
33
Attachment A
Table III
2002- 2003 ADOPTED OPERATING BUDGET
General Fund Funding Requirements and Balancing Strategy
Balancing Strategy
Fund Balance Increases
Savings to Support 2001- 2002 Projects
Subtotal Fund Balance Increases
Augmentation- Related Revenue
Other Revenue Changes
Subtotal Additional Resources
Use of Earmarked Reserves
Reserve for Neighborhood Investment Fund
Subtotal Use of Reserve
Subtotal Additional Resources
Adopted Budget Funding Changes by City Service Area
Economic & Neighborhood Development
Public Safety
Recreation & Cultural Services
Transportation
Strategic Support:
Other
Council Appointees
Total Funding Changes by City Service Area
Rebudgeted 2001- 2002 Projects
Total Funding Changes by City Service Area
2002- 2003
$ 98.438
$ 98,438
1585
245
$ 100,268
5.996
$ 5,996
$ 106,264
$ 75
89
5,556
1,791
280
( 210)
$ 7,581
98.683
$ 106,264
Ongoing
$ 0
$ 0
1,585
0
1,585
0
$ 0
$ 1,585
$ 0
89
1,770
0
0
( 274^
$ 1,585
0
$ 1,585
Remaining Balance $ 0 $ 0
34
Attachment B
Status of Mayor and City Council Referrals
2002- 2003 Adopted Budget
Referral Resolution
Security and Safety Reserve
Airport Noise Mitigation
Airport Low or No Emission Shuttle
Buses/ Automated People Mover
Airport Security/ Passenger Convenience,
Government Reimbursement
Eliminate/ Defund Vacant Airport
Operations Positions
Airport as Federal Test Facility
Identify SNI Areas for Redevelopment
Work with City's Child Care Commission
A $ 500,000 Security Improvements reserve was
established in the Adopted Budget.
Allocation of $ 29.7 million in Noise Mitigation
activities was included in the Adopted Capital
Budget and $ 279,000 was included in the
Adopted Operating Budget.
Airport has undertaken a program to replace its
current shuttle fleet with compressed natural gas
( CNG) buses in order to improve air quality.
Shuttle fleet costs for CNG vehicles will be
approximately $ 615,000 ( lease and fuel). The
Automated People Mover Transit Connection to
lightrail is funded in 2002- 2003, with $ 1 million
proposed to continue an environment study and
$ 10.0 million in the 2003- 2004 CIP for future
project planning.
A $ 4.6 million Security Reserve was established in
the Adopted Budget for the Airport Department.
After reviewing vacant positions within the
Airport Department, over $ 6.0 million was
eliminated in both personal and non-personal/
equipment costs.
A $ 450.0 million reserve was established in the
Adopted Capital Budget for Airport Security
requirements.
A report will be issued after possible Strong
Neighborhoods Initiative areas have been
identified for potential redevelopment.
A report will be issued after an examination of
the City's Council Policy on the Guidelines for
Child Day Care and examination of the 2020
General Plan are conducted.
35
Attachment B
Status of Mayor and City Council Referrals
2002- 2003 Adopted Budget
Referral Resolution
Maintain Ombudsman Planner for Non-
Profits
Mayor's Homeless and Housing Fund
Improve Housing Inspections ( Multi- Family)
Housing Production- Establish Annual Target
Anti- Litter Campaign
Phase- In Convention Center Electrical
Project
Neighborhood Investment Fund
The Adopted Budget continues to fund an
Ombudsman Planner for Non- Profit
organizations.
A General Fund allocation of $ 300,000 was
included in the Adopted Budget for the Mayor's
Homeless and Housing Fund.
A shortfall in the existing Multiple Housing
Inspection program necessitates a two year phase-in
of a 5% fee increase per year to maintain
existing service levels. Any improvements in
performance would require a larger fee increase,
which is not considered advisable this fiscal year.
A report will be issued regarding establishing an
annual target for the level of affordable housing
production for future years.
The Adopted Budget included an allocation of
$ 450,000 from the Redevelopment Agency for an
expanded neighborhood clean- up program and
the Anti- Litter Campaign.
The Adopted Budget continued to assume the
phase in of the electrical project at the
Convention Center. As part of the phase- in, a
total of 8.5 positions in the Convention, Arts &
Entertainment Department, was recommended to
be held vacant until convention center revenues
and occupancy levels recover from the economic
recession.
Funding of $ 6.0 million was included in the
Proposed Budget for allocation later in the budget
process. This funding was utilized for specific
purposes per direction in the Mayor's Budget
Modification Memorandum.
36
Attachment B
Status of Mayor and City Council Referrals
2002- 2003 Adopted Budget
Referral Resolution
Compliance with State Law and Water
Pollution Control Discharge Permit
Requirements
Recycle Plus Program Transition
Street Sweeping Signage and Outreach
Uncertainty of State Funding for Public Area
Recycling
Green Building Practices and City Building
Measure O ( Neighborhood Security Act
Bond Measure) Implementation
San Jose Prepared Neighborhood Involvement
Equipment Adds Should Focus on Better
Protection for Public Safety Personnel
Safe Schools Campus Initiative- Inform
Schools
The Adopted Budget included the addition of a
Supervising Environmental Services Specialist
position to add technical and specialized support,
supervision and operation and contract oversight
for projects rekted to watershed protection and
the maintenance of NPDES permit requirements.
No additional funding was required. Sufficient
funding was akeady allocated to assure that the
transition would proceed smoothly.
Additional allocation of $ 200,000 was included in
the Adopted Budget for street sweeping signage.
One- time funding of $ 260,000 was allocated in
the Adopted Budget for one- time use to continue
making recycling available in public parks and
gathering spaces.
Funding of $ 150,000 for this program was
included in the Adopted Capital Budget.
Measure O projects were included in the Adopted
CIP. Additional staff resources were allocated ( in
Public Works, Fire and Police Departments) to
oversee program implementation. These actions
are intended to ensure that this new capital
program is implemented on time and on budget.
A plan to provide more effective and extensive
outreach, public education and training to help
residents be prepared for a disaster has been
formulated.
Funding for enhanced Public Safety equipment
was allocated in the Adopted Capital Budget.
City staff are preparing efforts to inform school
officials of the services available through the Safe
Schools Campus Initiative.
37
Attachment B
Status of Mayor and City Council Referrals
2002- 2003 Adopted Budget
Referral Resolution
Evaluate Transfer of Crossing Guard
Program
Proactive Safety Personnel Hiring
Digital Divide Blueprint
Smart Start Center Program Partners
Mayor's Child Care Initiative/ Office of Child
Care Structure
After- School Programs Inventory/ Analysis
Library Service Innovations/ Expanding and
Adjusting Library Hours
Bookmobile/ Disability Outreach Programs
A report will be issued during the year evaluating
the appropriateness of the transfer of the crossing
guard program to the Department of
Transportation.
An allocation of $ 300,000 for a special summer
Fire Academy designed especially to acquire
necessary additional paramedics is included in the
Adopted Budget.
Funding for an additional Analyst position was
included in the Parks, Recreation and
Neighborhood Services Department to oversee
projects and programs resulting from the Digital
Divide Blueprint.
Funding award was granted in 2001- 2002 to
support an additional 350 Smart Start spaces.
A report will be issued, which will address the
childcare crisis and reexamine the Office of Child
Care.
An analysis will be conducted on the City's
current after- school programs and a report will be
issued.
Opportunities to expand and adjust hours at
Branch Libraries are currently being explored. In
2002- 2003, after surveying the community, a
limited number of branches will be piloting
adjusted hours by opening and closing kter than
other branches several days per week. Depending
on the response from patrons, this service may
expand to adjusting hours at even more branches
in future years.
Funding is maintained for these programs in the
Adopted Budget.
38
Attachment B
Status of Mayor and City Council Referrals
2002- 2003 Adopted Budget
Referral Resolution
Parks Construction & Conveyance Revenues
for Capital Improvement Program
Implementation
Almaden Lake Federal Grants
Arts Venture Fund Continuation
Make Government Services More Accessible
Online
Multi- Year Phase- Out of Card Club Revenue
Support for the General Fund
Caution Regarding Information Technology
Maintenance Reductions
Transfer Budgets to Direct Service
Departments for Savings
Construction & Conveyance funding was
maintained in the Adopted Capital Budget, rather
than utilizing partial funding for parks
maintenance.
The availability of Federal grants for the Almaden
Lake is currently being explored.
An allocation of $ 250,000 was allocated for the
continuation of the Arts Venture Fund.
Opportunities to make government services
readily accessible online are currently being
explored. There are several services being
evaluated including allowing customers to make
online payments and allowing citizens to make
service requests online. A report will be issued at
a later date.
In a continuation of the directed phase- out, a
total of $ 3.75 million of the Card Club Revenue is
now restricted to use for one- time uses to reduce
the ongoing financial dependence on gambling
revenues.
After careful review of the Information
Technology Maintenance staff, only $ 155,000 in
reductions is included in the Adopted Budget.
The reductions have been carefully targeted to
limit the impact and will ensure sufficient levels
for maintenance support and security for
Information Technology systems and services.
Included in the Adopted Budget is the transfer of
telephone and cell phone budgets from the
Information Technology Department to the
direct service departments. A 5% reduction
( totaling $ 121,000) in each department's base
budget as well as the direct transfer of these bills
to the departments was approved. This transfer
of responsibility should encourage effective
39
Attachment B
Status of Mayor and City Council Referrals
2002- 2003 Adopted Budget
Referral Resolution
Transfer Budgets to Direct Service
Department for Savings ( Cont'd.)
Re- Engineer Processes and Re- Deploy
Review Encumbrance Policies
Review Insurance Coverages
Avoid Training Decreases for Safety and Risk
Improve Loan Management Services
demand management, and
incentives for cost savings.
provide more
Reorganization and redeployment opportunities
were explored city- wide. As an example, a review
was performed on the Environmental Services
Department Lab Management Plan, which
resulted in the elimination of eight and the
redeployment of five positions. The merger of
neighborhood and regional parks maintenance
that occurred last year in the Parks, Recreation
and Neighborhood Services Department also
allowed overall maintenance funding to be
reduced. Finally, Fleet Management is developing
utilization criteria, which will eventually downsize
the size of the general fleet and our maintenance
budget.
The Adopted Budget anticipates an additional
$ 2.9 million in fund balance would be generated
in 2001- 2002, for use in 2002- 2003, through the
liquidation of carry- over encumbrances.
After reviewing insurance coverages, a savings of
$ 400,000 was generated through the elimination
of excess worker's compensation insurance and
through prudent adjustment of various other
deductibles.
Training reductions, where recommended, have
been carefully targeted to avoid creating a reduced
risk exposure to employee health and safety.
Funding of $ 276,000 was included in the Adopted
Budget to help improve loan management
services to ensure housing projects will continue
on time.
40
Attachment B
Status of Mayor and City Council Referrals
2002- 2003 Adopted Budget
Referral Resolution
Housing Department Direct Charges
Traffic Calming- Aggressive Implementation
Traffic Citations- Avoid Adding Too Many
Positions
A total of $ 76,000 was reallocated to the Low and
Moderate Income Housing Fund to reflect the
actual level of housing debt and loan management
services provided by positions in the Finance
Department.
The addition of a Civil Engineer ($ 75,000) was
included in the Adopted Operating Budget. A
total of $ 1.5 million in Traffic Capital funding was
also included in the Adopted Capital Budget for
2002- 2003 with an additional $ 500,000
programmed in 2003- 2004.
The Adopted Budget includes the addition of
four parking enforcement officers. The officers
were added to meet the projected increased need
for enforcement resulting from the second
monthly street sweep, additional street miles that
will restrict parking during street sweeping times,
and two new Residential Permit Parking zones.
The new staff is focused on promoting
compliance with parking regulations as opposed
to aggressively ticketing non- compliant parkers.
41
Attachment C
Status of City Auditor Recommendations With Funding Impact
2002- 2003 Adopted Budget
Department Item Status Remarks
Fire
Finance
Finance/ BSD
Finance/ BSD
Public Works
Police
Finance/ Infor
mation
Technology
Hazardous Materials Storage
Permit Fees ( 93- 04, # 1)
Business Tax Collection
Process - Review Need for
Additional Staff and Non-
Personal Funding ( 96- 06, # 4)
Consider combining sewer
and storm drain fees with
Recycle Plus billings ( 97- 01,
# 4)
Recommendation to add a
data- base administrator as
part of the UBS Billing
System Replacement Project
( 97- 01, # 19)
Develop and propose
alternate methods to budget
and account for DPW costs
charged to capital projects
( 97- 05, # 2)
Investigate the feasibility of
using State or Federal grant
funds to procure police
staffing and deployment
software ( 00- 01, # 3)
Master Vender File
Improvements ( 00- 02, # 3)
Not Proposed
Funding Not
Included
Not Proposed
Funding Not
Included
Under Review
Funded
Funding Not
Included
Reviewed, but not included
due to detrimental impact on
potential fee payers
No additional funding
resources requested by
department in light of
financial situation.
Billing System replacement
project under way.
Feasibility of using system to
bill for storm drain and
sewer fees will be reviewed
during 18 month
implementation phase.
Project implementation will
take approximately 18
months. Request to add this
position will be considered
as part of the 2003- 2004
budget process.
New DPW Director will be
working with the Budget
Office in the coming year to
develop alternative strategies.
State Grant funds in the