CORRESPONDENCE - 75A-1 - Laserfiche WebLink

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Orozco, Norma From: Tim Johnson <tjohnsoncpa65@gmail.com> Sent: Tuesday, June 04, 2019 9:51 AM To: eComment; Sarmiento, Vicente; Solorio, Jose; Villegas, Juan; Iglesias, Cecilia; Penaloza, David; Pulido, Miguel Cc: Ridge, Kristine; Downs, Kathryn Subject: Agenda Item 75A.1- 19/20 Budget Mayor and Council (cc City Manager Ridge & Exec Director Downs) ... I believe that you will be voting tonight (June 4) on the first reading of the 19/20 Budget for the City. This is of the utmost importance to our city. I anticipate that you each may have your own questions to ask of the city's finance department. The 19/20 fiscal year budget has a surplus in the general fund of about $1.4M which I suppose should be expected considering the $60M of anticipated additional revenue generated by Measure X. However, the item that concerns me the most is the 10-Year General Fund Outlook provided in your budget package. It is important to plan now for the financial future. The Outlook indicates that starting in the 20/21 fiscal year our expenditures will exceed our revenue. Initially, a small amount but expanding most years into the future. 20/21 $1.4M deficit (giving back our 19/20 surplus essentially), 21/22 $8.7M deficit, 22/23 $14.2M deficit, etc... Obviously, these are only projections and the future will be different than we expect it to be today but these deficits should be concerning to us all. The Outlook appears to show that we have a systemic overrun of expenditures compared to our anticipated revenue. We need to take a hard look at what we can do now in the fiscal 19/20 year that can help us increase our financial stability and meeting Goal #4 of the Strategic Plan. I would encourage you to request that the finance department provide recommendations as to actions that can take place now that may have long term and recurring adjustments into the future. You have some smart and talented people working for the city and they should be able to provide you this information. Obviously, the area that sticks out is the city's pension obligations- especially since we have a large unfunded obligation... it should be important to know how we can control those obligations now and into the future and understand how decisions we make regarding staffing and hiring today will impact our future obligations. Another concern to me is the recent news that Santa Ana may be out of compliance with Measure M/M2 general fund funding requirements for public works projects. I believe that this means that Santa Ana will not be eligible to receive base line M2 funding or compete for additional Measure M grant funding. It is my impression that most public works projects in the city are based upon receiving non -general fund funding (which is the inherent problem with being out of compliance in the first place), so this may have a large impact to our city. I am by no means an expert in Measure M though but it appears that based upon initial information, our city is out of compliance. This has major implications to our public works department and the funding we need to maintain our streets and other city assets that the public expects and deserves. I am also not sure if this information has been taken into account in the 19/20 general fund and reserve fund budgets but I believe it may be material to the budgeting process. Further, it appears that not only is the city in danger of not receiving this funding but we will have to incur additional costs associated with audits to show that we are back in compliance. Even if the reduced Measure M funding has been taken into account, this information should be a concern of all of ours since this is revenue that we should receive which we may not. I believe that it is appropriate at this time to ask the finance department for an update on how being out of compliance with Measure M spending requirements is impacting the 19/20 proposed budget, how much money