Attachment 1 OFFICE OF THE INDEPENDENT BUDGET ANALYST REPORT Date Issued: February 4, 2021 IBA Report Number: 21-01 REV2 City Council Docket Date: February 2, 2021 Item Number: 333 FY 2022 City Council Budget Priorities OVERVIEW Per the City Charter, the first step for the City Council in the City’s annual budget process is the development of the annual Budget Priorities Resolution. This annual resolution has been approved by the City Council each year since 2006, and its development is included in the FY 2022 Budget Development and FY 2021 Budget Monitoring Key Dates, which were adopted by the City Council on December 8, 2020. On December 15, 2020, Budget and Government Efficiency Committee Chair Chris Cate issued a memorandum requesting that all Councilmembers submit their budget priorities for the FY 2022 Budget to the Office of the Independent Budget Analyst by January 6, 2021. All nine Council Districts submitted their priorities, and those memoranda are attached to this report. As in prior years, the FY 2022 Budget Priorities Resolution is compiled from the individual Councilmember memoranda that outline their budget priorities for the upcoming fiscal year. All Councilmember priorities were reviewed and those receiving majority support are summarized in this report. The Budget and Government Efficiency Committee reviewed and discussed the budget priorities highlighted in this report on January 20, 2021. The Committee made a modification, which is reflected in this report, and forwarded the priorities to the full City Council. City Council made a further modification and formally adopt the FY 2022 Budget Priorities Resolution on February 2, 2021. This report reflects the final FY 2022 City Council Budget Priorities as adopted by Council. The resolution will be submitted to the Mayor for consideration in development of the FY 2022 Proposed Budget. OFFICE OF THE INDEPENDENT BUDGET ANALYST 202 C STREET MS 3A SAN DIEGO, CA 92101 TEL (619) 236-6555 FAX (619)-236-6556 FISCAL/POLICY DISCUSSION This report identifies the highest priority fiscal and policy items recurring throughout Councilmember memoranda. Those receiving majority support (five or more Councilmembers) are discussed in this report as well as the items approved by the Budget and Government Efficiency Committee and City Council. We have categorized them into three major headings: operating budget priorities, infrastructure budget priorities, and budget mitigation priorities. For the FY 2022 department operating budgets, the items receiving support from a majority or more of Councilmembers have been grouped into the main categories listed below. There are specific activities and programs within these categories discussed in more detail in the next section of this report. City Council Operating Budget Priorities • Maintain Core Services/Clean Communities (unanimous) • Homelessness and Housing (unanimous) • Equity and Relief Programs (unanimous)1 • Climate Action • Human Capital and Employee Compensation • Arts and Cultural Programs Funding • Constituent Relations Management Platform2 The following infrastructure needs were listed as FY 2021 budget priorities by a majority or more of Councilmembers. These are discussed further later in this report. City Council Infrastructure Budget Priorities • Transportation Safety and Mobility (unanimous) • Sidewalks (unanimous) • Streets (unanimous) • Parks and Recreation Facilities • Storm Water • Library Facilities • Fire-Rescue Facilities • Transit Infrastructure Councilmembers also proposed a number of potential resources that could either fund new programs or partially mitigate the deficit projected for FY 2022 as reported in the Mayor’s FY 2022-2026 Five-Year Financial Outlook (Outlook) and also discussed in our review of the Mayor’s Outlook. The two resources mentioned by a majority of Councilmembers are listed below. City Council Budget Mitigation Priorities • Use of General Fund Reserve/Excess Equity • Use of Pension Payment Stabilization Reserve 1 Including the item approved by the City Council on February 2, 2021 2 Approved by the Budget and Government Efficiency Committee on January 20, 2021 2 In addition to these, later in our report we also discuss other options that received two or more mentions from Councilmembers that Council may want to consider as we move through the budget process. City Council Operating Budget Priorities Operating Budget Priorities • Following are discussions of all FY 2022 operating Maintain Core Services/Clean Communities Library budget priorities mentioned by a majority or more of o o Brush Management Councilmembers. o Neighborhood Code Enforcement o Parks & Recreation Maintain Core Services/Clean Communities o Weed Abatement in the ROW There was unanimous support among the • Homelessness & Housing o Homelessness Councilmembers for maintaining core General Fund Housing services in the FY 2022 Budget. The services that were o o Housing-Tenant & Landlord Outreach specifically discussed as a priority for a majority of • Equity & Relief Programs Councilmembers include the following: o Administer Budget Cuts Equitably o Commission on Police Practices Rental Relief • Library o o Small Business Relief Fund Support for maintaining the Library o Police Reform: Reallocate Funding & Department’s service levels, including library Reassigning Services hours and programming, was included in eight o Youth Services Councilmember priority memoranda. Office of Child & Youth Success . Youth Environmental/Rec Corps Digital Equity/Public Wi-Fi • o Brush Management o Office of Race & Equity Six Councilmember budget priority memoranda o Public Banking Feasibility Study included funding to maintain open space brush o Office of Labor Standards & Enforcement management service levels which are currently • Climate Action Climate Action Plan Implement/Update at 509 acres. o o Climate Equity Fund o Urban Forestry • Neighborhood Code Enforcement • Human Capital & Employee Compensation Six Councilmembers included support for • Arts & Cultural Programs Funding continued funding for Neighborhood Code • Constituent Relations Management Platform Enforcement, with support ranging from continuing existing service levels, to filling current Code Enforcement Officer vacancies, to adding additional Code Enforcement Officer positions. The FY 2021 Budget includes 42.00 Code Enforcement FTEs, though this represents a reduction from the FY 2020 Budget of 13.00 FTEs. • Parks and Recreation Five Councilmembers supported the maintenance of Parks and Recreation Department services, including Recreation Center hours and programming. • Weed Abatement in the Right-of-Way Five Councilmembers expressed a desire to maintain service levels for weed abatement in the right-of-way. This is an item that has been proposed for reduction in previous years and restored by the Council. 3 Homelessness and Housing There was unanimous support among the Councilmembers for different homelessness and housing activities and programs. The specific items which received majority support are: Homelessness Seven Councilmembers included homelessness in their budget priority memoranda. Specifically, a majority of Councilmembers prioritized the City’s homeless outreach program. Others expressed the need to maintain current homelessness programs and to successfully implement the Community Action Plan on Homelessness, including long-term housing solutions. • Housing - Tenant and Landlord Outreach Five Councilmembers included requests for tenant and landlord outreach in their budget priority memoranda. Funding would provide programs on housing education, counseling, and outreach to help deter evictions. In addition, it was mentioned that this program would ensure residents are aware of new assistance programs and new policies affecting tenant and housing rights. Equity and Relief Programs There was unanimous support among the Councilmembers for different equity and COVID-19 relief activities and programs. Implementation of the Independent Commission on Police Practices received unanimous support in Councilmember memorandum and Administering Budget Cuts Equitably was approved by City Council on February 2, 2021. The specific items which received majority support are: • Administer Budget Cuts Equitably During their review of the FY 2022 City Council Budget Priorities as presented in IBA Report 21-01 REV, the City Council approved adding a priority to pursue equity in spending and mitigate disparate impacts in opportunity, health, and safety by utilizing an equity analysis in administering any budget cuts across departments that will impact operations, programs, or services in low- and moderate-income communities and prioritizing the maintaining of current service levels in those communities. • Implementation of the Independent Commission on Police Practices All nine Councilmembers prioritized the funding and implementation of a new Commission on Police Practices, as approved by voters in November 2020 (Measure B). Our Office prepared the fiscal impact statement for this measure which estimated that the necessary staffing and annual budget for the new Commission could reasonably range between 7.00 FTEs and $1.2 million and up to 16.00 FTEs and $2.6 million. • Rental Relief Eight Councilmembers included a request to provide additional funds for rental relief to assist those who have been economically impacted by the COVID-19 pandemic. Several Councilmembers mentioned that assistance should be provided regardless of immigration status. We note that the recently enacted