City Manager Villa justifies priorities in proposed budget
Editor’s note: When you’re preparing to manage a $74.8 million budget for a city of more than 100,000, the key word becomes priorities. Tha...
Our intent was to take a deeper dive into the numbers in the proposed 2021-22 city budget presented at a May 19 public workshop, which was attended by only three members of the public. We wanted clarity on exactly what went into the decisions on those priorities, to better inform residents. What follows is the result of that discussion, plus the highlights of staff’s presentation in the May 19 meeting.
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By Doug Spoon, Editor
The City of Menifee operating budget proposed for 2021-22 will be presented for approval at the June 2 City Council meeting. A total of $74.8 million in expected revenue was based on estimated tax and fee revenue projected by HdL Companies, an auditing and revenue solutions consultant. Taking into account requested additional staffing and further development, projected expenditures was also set at $74.8 million for a balanced budget.
The revenue amount was achieved by combining projected General Fund operating revenue of $56,268,636 with $14,776,000 from the “Quality of Life Measure” – a new name staff has given to the Measure DD public safety tax – and $3,616,644 from the American Rescue Plan.
The American Rescue Plan is funding similar to the CARES Act, with funds awarded by the federal government to individual cities to aid in recovery from the COVID-19 pandemic. Although the proposed budget currently lists $3.6 million in revenue from that fund, the City of Menifee has been promised an allocation of $13.2 million by May 2022. The City has received only half of the $6.6 million expected to be paid by the end of this month, according to the budget document.
Clayton said that the City has now actually received about $5.2 million in funding from the American Rescue Plan, however, and that City staff must prove that every dollar budgeted is a qualified expense. Thus, with only $3.6 qualified so far, an additional $9.6 million should be coming the City’s way in the next year from that federal plan. It is too early to project exactly how those funds would be added into the budget, Clayton said.
One of the budget categories of most interest to residents is Capital Projects – which includes road projects such as the long-awaited Holland Overpass across the 215 Freeway. The Capital Projects budget is $5.91 million.
The Capital Projects expenditures are not included in the General Funds expenditures category. Instead, that $5.91 million is listed separately. Clayton said this is because those are considered “one-time” expenses instead of ongoing expenses such as salary. Therefore, the $5.91 million is not included on a chart that shows each expenditure category’s percentage of the total budget.
A calculation shows that Capital Projects would be just 7.89 percent of the total city budget. According to the budget document chart, the highest percentage is spent on Public Safety (fire, police, code enforcement and animal control) at 56.69 percent. The next highest percentage is spent on Administration (staffing and staff operations) at 17.20 percent.
The Administration category includes a request for 25 additional staff positions, including 11 for the Menifee Police Department. Police Chief Pat Walsh said at the May 19 budget workshop that the list includes an additional lieutenant and sergeant over patrol and seven additional officers, including two more motorcycle traffic officers.
During that workshop, Mayor Pro Tem Lesa Sobek asked each department head to justify the necessity of staff additions in their department. This request has not been made in the past and could be seen as an attempt by Sobek to put each department head on the spot – except that she said later she had told many of them in advance that she would be making such a request.
The proposed Administration budget of $11.8 million is 15.5 percent less than the current Administration budget. However, the 2020-21 Administration budget of $14.03 million includes an addition of $2.5 million in midyear budget adjustments. That money came from savings realized in a renegotiated contract with Waste Management, Villa said.
Where was that $2.5 million taken from? Capital Projects.
The issue becomes somewhat clouded at this point. In the March 3 City Council meeting, Community Services Director Jonathan Nicks said the majority of the Waste Management Reserve Funds -- $2.15 million – was recommended by staff to close the funding gap for the Central Park Amphitheater. The project, which calls for a shade structure with a shell, separate arch covering, and sound and lighting fixtures, has an estimated design cost of $454,000 and an estimated total cost (including construction) of $3.9 million.
During that meeting, Mayor Bill Zimmerman questioned the huge increase in estimated cost of a project that originally was estimated at $200,000. Community Services Director Jonathan Nicks assured him that the vote that night was simply to approve the design concept. Council member Matt Liesemeyer later told Menifee 24/7 in an email that “I am not going to authorize spending until I know the all-in cost. That’s terrible business … and gross mismanagement of the people's money.”
Yet when the vote was taken, all five council members voted in favor of proposed plan. The question is, what were they approving? In response to residents’ complaints about the cost following a report of the action on the Menifee 24/7 Facebook page in Marcj, council member Bob Karwin commented, “City Council did not approve the cost or give the green light to start construction. We were asked to give guidance on which direction we wanted the project to go … We will look for cost cutting.”
When questioned about the amphitheater project last week, Villa said, “The project concept was approved, including the funding plan. I’m presuming the council approved all of that already.”
That remains unclear, as well as what the revised shortfall of the amphitheater project would be and the impact of a loss of $2.5 million from a Capital Projects budget that still lacks funding on several key infrastructure projects.
The City budget packet lists a total of $27.97 million under the heading “Fiscal Year 21/22 Capital Projects with New Funding.” Yet in another page of the budget document, total expenditures for Capital Projects is projected at $5.91 million, as previously mentioned. Some of the projects listed as new Capital Projects appear to be projects whose funding comes from the $7 million Engineering and Public Works budget. Further complicating matters is the fact that $10.5 million in proposed funding for the Holland Road Overpass for 2021-22 includes $7.7 million in Transportation Uniform Mitigation Fee (TUMF) funds, which are listed separately from the General Fund.
Villa insists the $31.2 million Holland Road Overpass project is fully funded. However, only $20.7 million of that amount has been approved to date, according to city documents. Villa is counting on the remaining $10.5 million to come as part of the 2021-22 budget, including the $7.7 million in TUMF funds – fees paid by developers to mitigate increased traffic.
According to Clayton, the $7.7 million will be approved by the Western Riverside Council of Governments (WRCOG) board next month. In addition, city staff is budgeting $1.5 million of its expected $14.8 million revenue from the Quality of Life Measure (Measure DD) to help complete funding of the overpass.
The next question, then, is this: If the funding gap will indeed be closed in the next couple months, why is the estimated start of construction for the overpass still listed as April 2022?
According to Villa, prolonged negotiations over the last parcel of land needed for right of way of the bridge caused the City to “lose our place in the queue with Caltrans”, meaning Menifee’s application for start of construction has to be resubmitted. He said the deal to purchase the parcel, located on the west side of the freeway, for a higher than anticipated cost was just finalized last week.
“The right of way delay really hurt our schedule,” Villa said. “We were hoping to have the right of way issue resolved in November. This delayed us about six months. Caltrans will not let us move forward unless we can demonstrate we are 100 percent ready. We have already submitted the docs about the completion of the right of way. Next comes the utility phase.
“Caltrans has over 60 projects right now. A year … well, in the life cycle of Caltrans, that’s a very short time.”
It should be noted that during the six-month delay in acquiring the final right of way parcel, the City was without a principal engineer and director of public works. Jonathan Smith, who served in that capacity for seven years, left the position last August. Villa said only that Smith resigned and was not fired. Smith has declined to comment on his departure.
In the interim, Nicks served both as community services director and public works director. Clayton said a portion of the savings of Smith’s salary went toward paying consultants to help in that department. Nick Fidler, who worked for the City of Bakersfield the last 22 years, began his new position as Menifee’s principal engineer and public works director this week.
Regarding the budgeting of more than $14 million in revenue expected to come in via the Quality of Life Measure: Of that amount, 20.8 percent will go toward Capital Projects. In addition, 42 percent will go to the Menifee PD, 35 percent to Cal Fire, and 2.5 percent to code enforcement.
Bottom line: Don’t try to figure out a $74.8 million budget without an advanced degree in finance, or without asking a whole lot of questions. Menifee 24/7 will continue to provide budget analysis and report on budget adjustments as the process continues.
