Finance Commission

TOWN OF LOS GATOS MEETING DATE: 6/14/2021 FINANCE COMMISSION ITEM NO: 1 AGENDA REPORT Minutes of the Finance Commission Meeting May 10, 2021 The Finance Commission of the Town of Los Gatos conducted a regular meeting via teleconference via COVID-19 Shelter in Place Guidelines on Monday, May 10, 2021, at 5:00 p.m. MEETING CALLED TO ORDER AT 5:01 P.M. ROLL CALL Present: Chair Ron Dickel, Vice Chair Kyle Park, Commissioner Stacey Dell, Commissioner Loreen Huddleston, Commissioner Rick Tinsley, Vice Mayor Rob Rennie, and Council Member Matthew Hudes. (All participating remotely.) Absent: None Staff Present: Town Manager Laurel Prevetti, Town Attorney Rob Schultz, Assistant Town Manager Arn Andrews, Finance Director Stephen Conway, Human Resources Director Lisa Velasco, Parks and Public Works Director Matt Morley, Police Chief Peter Decena, Finance and Budget Manager Gitta Ungvari. CONSENT ITEM (TO BE ACTED UPON BY A SINGLE MOTION) 1. Approve Minutes of the May 3, 2021 Finance Commission Special Meeting. MOTION: Motion by Ron Dickel to approve the minutes Seconded by Commissioner Stacey Dell. VOTE: Motion passed unanimously. VERBAL COMMUNICATIONS Catherine Somers, Executive Director of the Los Gatos Chamber of Commerce - Commented that the Commission should have received three communications from the Chamber of Commerce, including the Chamber’s direct response to the staff report; explanation of the relationship of the Chamber, the Visitors Bureau and the Town; and the Chamber’s position that American Rescue Plan Act (ARPA) funds should not be used to close any Town budget gap. Commented that the $80,000 allocation from the Council for special events are not sufficient and that the staff did not provide support for destination marketing discussion. 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov PAGE 2 OF 4 SUBJECT: Draft Minutes of the Finance Commission Meeting of May 10, 2021 DATE: May 13, 2021 OTHER BUSINESS 2. Answers to Some of the Commissioner Questions and Comments Regarding the Proposed Operating and Capital Budgets 3. Discussion and Commission Recommendations to the Town Council Regarding the Proposed FY 2021/22 Capital Budget 4. Discussion and Commission Recommendations to the Town Council Regarding Revenue and Expense Assumptions Utilized in the Development of the FY 2021/22 Proposed Operating Budget 5. Discussion and Commission Recommendations to the Town Council for FY 2021/22 Budget Balancing Strategies 6. Discussion and Commission Recommendations to the Town Council regarding the Proposed FY 2021/22 Capital Budget. Assistant Town Manager Arn Andrews presented the staff report, including the additional sensitivity analyses completed on North 40 Phase I home sales, historical salary expenditures, and current open positions. The Commission discussed the analysis and staff responded to the Commissioners’ questions. Opened Public Comment. Amy Nishide, Los Gatos Anti-Racism Coalition - Commented she will advocate for additional mental health services during the budget discussions; requested Council consider freezing the Police Department budget other than pension and consider hiring social workers. Closed Public Comment. As part of the discussion, Finance Commission passed the following motions for Town Council consideration regarding the FY 2021/22 Proposed Operating and Capital Budgets. Commission opined that the continuation of the roadside vegetation management program was essential and should be included in the workplan for FY 2021/22. Motion by Chair Ron Dickel to add $500k from the previously recommended additional allocations to the Capital Budget for continuation of the roadside vegetation management project. Seconded by Commissioner Kyle Park. Motion passed unanimously. PAGE 3 OF 4 SUBJECT: Draft Minutes of the Finance Commission Meeting of May 10, 2021 DATE: May 13, 2021 The following recommendations are based on the Commission’s desire to slow the growth in expenses in FY 2021/22 and reflect historic trends in expense assumptions in the Five-Year Forecast: Motion by Commissioner Park to freeze headcount at 145 for the first six months of the fiscal year. Seconded by Chair Ron Dickel. Motion passed unanimously. Motion by Chair Ron Dickel to use a 2% inflation factor for development of base salary expenses for FY 2021/22 and the remaining forecast period, without implying a particular outcome for negotiations with bargaining units. Seconded by Stacey Dell. Motion passed unanimously. In addition, the Commission recommended the inclusion of a destination marketing allocation into the budget to expedite the return of Transient Occupancy Tax revenues. Motion by Chair Ron Dickel to allocate $55K to destination marketing utilizing ARPA funds. Seconded by Loreen Huddleston. Motion passed 4-0-1, Rick Tinsley abstained. Based on the Commission’s recommendation at a previous meeting to divide Measure G proceeds evenly (50%/50%) between eligible Operating and Capital uses, the Commission recommended utilizing anticipated Other Post-Employment Benefit (OPEB) actuarial contributions as the budget balancing strategy for FY 2021/22 through the forecast period. Motion by Commissioner Rick Tinsley to cancel the FY 2021/22 and future years’ Other Post-Employment Benefits (OPEB) actuarial contribution(s) to the extent necessary to close any gaps, fund the CIP, cover any increased salaries, and address uncertainties. Seconded by Chair Ron Dickel. Motion passed unanimously. At the conclusion of its discussion, the Commission took the following final action. Motion by Chair Ron Dickel to recommend to the Town Council the approval of the Proposed Operating and Capital Budgets with all individual motions and recommendations from the Finance Commission. Seconded Kyle Park. Motion passed unanimously. PAGE 4 OF 4 SUBJECT: Draft Minutes of the Finance Commission Meeting of May 10, 2021 DATE: May 13, 2021 ADJOURNMENT: The meeting adjourned at 7:37p.m. This is to certify that the foregoing is a true and correct copy of the minutes of the May 10, 2021 meeting as approved by the Finance Commission. /s/Gitta Ungvari, Finance and Budget Manager