How Can We Best Assess Redlands’ Fiscal Health?

There are many factors to consider in assessing the fiscal health of a municipality such asRedlands, but the three most important all start with “R”: Reduced spending, Revenues, and Reserves.

The city started cutting back on spending several years ago.  To date almost 20 percent of the workforce has been eliminated.  For example, the police force has been reduced from 98 officers to 76 currently.   These reductions have not been without impact, but staff have worked hard to use technology and improved business processes to make up for the decreased resources.    Major costs for capital infrastructure projects such as street repair, and replacement vehicles have been deferred.   The overall goal has been to live within our means as much as possible.  This approach must continue as long as resources are tight.

Careful revenue projections are another important consideration.   As the economy improves, it can be tempting to project overly optimistic increased sales or property tax yields based on recent quarter or annual payments. Redlands leaders and staff have resisted this temptation, relying on a conservative approach, meaning the only surprises that occur will be positive, not negative changes.   Fee revenue also must be carefully estimated, and not counted until it is clear it will occur.   Prudent revenue projections are one definite strategy that has helped Redlands maintain better fiscal health.

Finally, building and protecting adequate reserves is critical to good financial management.   Several years ago the reserves had shrunk to very low levels.  Through disciplined and tough management, current reserves have increased to over $12 million, or 20 percent of the city’s proposed $60 million 2012-2013 General Fund budget.   These are “rainy day” funds that will not be touched unless there is truly a disaster or some other significant event justifying their use.   I hope to increase our reserves to 25 percent of the General Fund in the next few years.

Of course, this is not to say all this goes without some impact to city residents and businesses.   We are still well behind in investing in our infrastructure, namely our many streets, sidewalks, curbs, trees, and lights.   Many of our vehicles are well past their useful lives.   We are putting together some plans this fall to begin to focus in these areas, and will be sharing those plans later.   We are also working with our labor partners to agree on new contracts that will reflect current fiscal realities yet maintain our abilities to recruit and provide a competent and effective workforce.    

It’s a constant balancing act between living within our means, yet also looking to the future and investing to build Redlands even better than it is today.   I look forward to working with the Chamber as we face this challenge.

Late Friday night, July 13, the Chamber learned that the City Council was considering approving an ordinance referred to as the “Soda Tax” that would apply a 1 cent per ounce business license tax on sugar added drinks sold in the City of Redlands as a ballot proposal on the November election. It is suggested that the tax could be used to help fund recreational programs, provide health education materials, nutrition classes, additional sports fields, recreation staffing and activities. It further suggests the tax will aide in the battle against obesity, heart disease and diabetes by using the funds generated to pay for education campaigns and other obesity-related programs.

The revenue collected by implementing the sugar added business license tax would go into the general fund. An advisory committee would recommend how the money would be used. Because this is a general tax it would only require a simple majority of the voters.

The ordinance had not been completely detailed and a number of questions had been left unanswered. President Paul Barich called an emergency meeting of the Executive Committee Tuesday morning, July 17, to discuss the issue and take a position on the agenda item. The Committee unanimously opposed the ordinance and appeared before City Council that evening asking them to NOT approve the ordinance, what in essence appeared to be “a blank check” …. an ordinance with no detail. The committee decision was based on a number of facts. The business community had not had any input … the hasty action to move the ordinance forward was not consistent with the message of transparency in government that is being delivered by City leaders. The Chamber had not been allowed sufficient time to speak to those businesses who will be most impacted by the action and the Chamber has a significant list of questions that need to be addressed and City staff was unable to answer those questions as of the Council meeting.

The Chamber as an advocate of the business community took quick action to insure that a hasty decision did not forever impact the local small businesses of Redlands.

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City Council continues debate on increase to service fees; Sets public hearing on July 17, 2012 City Council Meeting

Recently, the Redlands Daily Facts newspaper published news articles on the City of Redlands proposal to increase certain service fees, ranging from pet adoption to building permits and construction.  At its City Council June 25, 2012 Fee Study Workshop, the Redlands Chamber of Commerce Fee Analysis Task Force, presented a list of questions for city staff, MGT of America, Inc. (Fee Study Consultants),  and/or the City Council to provide answers or clarification and supportive documentation/data.  The memoranda and the list of questions are attached at the end of this briefing.

As the Redlands Chamber of Commerce, representing the business community, the concern remains that our community will shoulder the burden of the City’s increase in fees while others receive and continue to enjoy general fund subsidies.

The “Economic & Policy Considerations” contained on Page 3 of the Consultant’s “revised June 21, 2012” report remain essentially unanswered as these considerations relate to the business community, the possible deterrent to establishment of new businesses and creation of  jobs, and an impediment to economic activity and vitality, all of which will reduce general fund revenues to the city and the level and quality of services to our community.

Please voice your concerns at the July 17^th, 2012 City Council public hearing on proposed  Fee Increase Resolution and ask the City Council where are the economic programs and incentives to support the business community.

 Date:          June 25, 2012

To:             City of Redlands City Council

From:         Redlands Chamber of Commerce Fee Analysis Task Force

Subject:     Fee Study Workshop, Comments and Recommendation for

 The Redlands Chamber of Commerce (“Chamber”) supports the City of Redlands(“Council”) in its efforts to update and complete its cost of services study in order to accurately report the true cost of providing various fee-related services to offset or eliminate any general fund subsidy in providing these services.  However, to understand and ascertain the accuracy of the data and the study methodology, the Chamber request that the Council continue the Public Hearing and action on this matter until its August or September Meeting.

 The additional time will provide the Chamber and its membership the opportunity to exam specific details of the study, the methodology, and allow a review of the Fee comparison with other cities as provided by MGT of America, Inc., in the June 21, 2012 revision copy.  The Chamber intends to compare this comparison with another similar report completed by the Kosmont-Rose Institute Survey which indicated that Redlands was “High” in terms of the cost of doing business and whether the recommended increase in fees and the addition of “new fees” would be a deterrent to the establishment of new businesses and industries and be counter to the city’s promotion of economic development, business retention, and economic activities that provides general fund revenues and jobs to the community.

 The Kosmont-Rose Institute Survey reported that two nearby cities were in the top of the list of least expensive cities to do business.  The cities are the City ofHesperiaand the Town ofApple Valleywhereas the cities of Fontana and San Bernardino were at the top of the most expensive cities in the area to do business in.

 The following page contains specific questions for Council, staff, and MGT to address with the Chamber.

Fee Study Questions and Comments 

1. Will the Council revisit the policy issue of cost recovery of recreation fees?

     Collecting 100% of adult services

     Increasing other services      4-10%

                                                                9-20%

2.  When was the date gathered? NPDES date suggests that the city   completely subsidizes this program. Fees are being collected and have been.

3. Why the significant subsidizing in dog license vs. business license? $48K vs.$9K

4. How much does it cost to review plans?

5. What do you mean by “plan review”, “construction”, and “inspection”? There appears to be redundancy.

6. Fire cost recovery ….what is it?

7. Is there a file of 2007/2006 fees that was used as a base? 

8. What is our break even?

9. Why are new fees included in the study? Should they not be considered independently? They appear to suggest the City is already subsidizing these costs.

10. Have some of the “new fees” been applied since the study? NPDES fees    are currently being collected yet not reflecting payment.

 It was agreed that Measure U must be an important part of the discussion as it will have a significant impact on fees and our ability to be competitive.