HomeMy WebLinkAboutCC 2009-08-14 MinutesMINUTES OF BUDGET WORKSHOP OF THE
MIAMI CITY COMMISSION
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On the 14th day of August 2009, the Miami City Commission met at the historic Miami City
Hall, 3500 Pan American Drive, Miami, Florida, in special session.
The meeting was called to order at 2:16 p.m. by Chair Joe Sanchez, with the following members
of the City Commission found to be present:
Commissioner Marc David Sarnoff (District 2)
Commissioner Joe Sanchez (District 3)
Commissioner Tomas Regalado (District 4)
ABSENT
Commissioner Angel Gonzalez (District 1)
Commissioner Michelle Spence -Jones (District 5)
ALSO PRESENT:
Pedro G. Hernandez, City Manager
Julie O. Bru, City Attorney
Priscilla A. Thompson, City Clerk
Pamela E. Burns, Assistant City Clerk
1 August 14, 2009
Chair Sanchez: All right. Good afternoon, ladies and gentlemen. This is a meeting for the
budget workshop FY (Fiscal Year) 210 [sic] meeting. This is a public meeting, not a public
hearing. This was called for us to be able to address our budget, and it is a budget workshop.
So, at this time, I have been told that Commissioner Gonzalez might be joining us. I have been
informed that Vice Chair Spence -Jones will not be here. So let's go ahead and get the workshop
going. At this time, I'll recognize -- you're recognized for the record.
Michael Boudreaux: Thank you. Mike Boudreaux, director, Management & Budget. Good
afternoon, Commissioners. This year's budget workshop in preparation for the upcoming 2010
fiscal year is like no other fiscal year budget. The economic slowdown felt across the country
along with the declining job and real estate markets felt here in the City will require a different
approach in balancing the next year's fiscal year budget, an approach which will require the City
of Miami to tighten its belt and make substantial fiscal decisions which will impact the lives of
many City of Miami employees, while minimizing the impacts on the citizens of Miami who are
still trying to recover from a tough economic environment. This is why the goal of the fiscal
year 2010 budget is to provide a spending plan with no increase in the operating millage rate, no
use of fund balance, and to attempt to minimize impacts on services to City residents. The focus
of this year's budget workshop is to update you on the budget process, where we started, and
what's to come in order to complete the budget process and provide a balanced budget, the
revenues and expense outlooks for the next fiscal period, and highlighting the primary causes,
and finally, the reductions necessary in order to balance the budget. Some of these reductions
have been already included into the fiscal year 2010 budget proposal, but others will require the
support and cooperation of everyone to meet the goals of next year's budget. The fiscal year
2010 budget process started on April 13, when the Budget Department provided City
departments with their budget packages, outlined the issues affecting 2010 and later requesting
all departments and outside agencies to provide budget reductions of 10 and 15 percent. Since
that time, I have met with City departments to discuss their budgets, and the City Manager has
also met with department directors to get an idea on how to reduce spending with minimal
service impacts. As you are aware, on July 23, the operating millage rate was capped at 8.40000
mills, and since July 27 through today, I've been meeting with -- daily with -- 7 days a week
with the Mayor, City Manager, and CFO (Chief Financial Officer) to discuss the budget. Today
is the budget workshop, and after today's workshop, I will continue to meet daily with the
Mayor, City Manager, and CFO, along with specific departments to finalize their 2010 budget.
Also, request has been sent to have weekly meetings with each of you to discuss in detail the
budget leading up to the first public budget hearing scheduled for September 10 at 5:05 p.m. and
the second public budget hearing scheduled for September 24. Please remember that on or
before September 30, 2009 the City is required to present a balanced budget to the Miami -Dade
County tax collector, property appraiser, and the State of Florida Department of Revenues. I
would like to first go over the revenue outlook for fiscal year 2010. The bar chart on the screen
indicates the history of revenues and other financing sources in the general fund since fiscal year
2004. As you can see, between the periods of 2004 to 2007, the City realized growth in overall
collections of 30 percent from 425.7 million in fiscal year 2004 to its peak of 553 million in
fiscal year 2007. Collections began to slightly decline in fiscal year 2008 and have continued to
decline in the current fiscal year with declines primarily in the areas of property taxes, interest,
intergovernment -- and intergovernmental revenues. However, the City is also starting to realize
more collections in building permit revenues and other charges for services. Overall, total
2 August 14, 2009
collections in fiscal year 2010 are anticipated to decrease 2.4 percent or 14.2 million under the
projected FY '09 yearend total of 506 million and will be 6.4 percent or 33.6 million lower than
the FY '09 adopted budget. The first primary reason for lower collections is due to less property
tax collections anticipated in fiscal year 2010. The City should anticipate lower property tax
revenues as a result of a 6.4 percent or $2.5 billion decline in gross taxable values between tax
years 2008 and 2009 compared to a 1.6 percent increase in the prior year; $2.5 billion decrease,
one year.
Chair Sanchez: With a "B."
Mr. Boudreaux: The budget for the next fiscal year is also being prepared with the operating
millage rate at 7.6740 mills, which is the current approved millage rate. These two factors will
result in an estimated 10.9 million in lower property tax revenues under the fiscal year 2009
adopted budget, to be collected by the City in fiscal year 2010. The next reason for the overall
lower collections is due to interest revenues. Until this current fiscal year, the City realized total
interest revenues of 11.1 million in fiscal year 2006, 16.2 million in fiscal year 2007, and 10.1
million in fiscal year 2008. The current fiscal year is projecting interest collections at a little
over $3 million as a result of the market downturn experienced during the last quarter of 2008
and the first quarter of 2009. It is anticipated that the same collections projected at fiscal year
2009 will also remain in fiscal year 2010 and will result in a $5.6 million in lower interest
collections for next year. Other areas to be lower in fiscal year 2010 includes lower
intergovernmental revenues as a result of less distributions from the State's municipal revenue
sharing and half -cent sales tax programs, which are based on State estimates of these
distributions, lower licenses and permit revenue, primarily due to the decline in building permit
collections, which the first -- which the fiscal year 2010 budget anticipates 3.1 million in lower
collections. The fiscal year 2010 budget will be balanced with no use of general fund balance,
which $5 million was appropriated in the FY '09 adopted budget. And finally, lower collections
from charges for services revenues, primarily as a result of less building inspection fees
anticipated in fiscal year 2010.
Commissioner Sarnoff: Have you broken out the lower intergovernmental revenues, what that
number is separated from the 3.1 million?
Priscilla A. Thompson (City Clerk): I'm sorry, Commissioner. Is your mike on? `Cause we can
hardly hear you.
Commissioner Sarnoff: Yeah. Did you break out the lower intergovernmental revenues? You
have a number on that?
Mr. Boudreaux: I did break out the intergovernmental revenues by category, and I have the
different accounts that I can show to you, Commissioner.
Commissioner Sarnoff: You don't know what it is off -- right --?
Mr. Boudreaux: Let me pull it out right fast. Intergovernmental revenues, which is about 3.4
percent of the total budget, is estimated at 37.3 million for the entire category, compared to last
3 August 14, 2009
year. Last year -- I mean, the current projections are down where we're actually going to expect
to collect about $36 million overall in the category, but that is lower than what we had
anticipated in the adopted budget. The State has come back with its revised estimates, primarily
in the areas of the revenue sharing program and the half -cent sales tax program. This is the
second consecutive year that they have adjusted their estimates. It's primarily based on sales,
and as sales adjust, they come back and they adjust the distributions to municipalities.
Commissioner Sarnoff: I think I'm understanding you, and I want to make sure that I am. Right
now, you're telling me that you had projected 37.3 million?
Mr. Boudreaux: Yes.
Commissioner Sarnoff: But you're only going to be collecting -- anticipated 36 million, which
would be --?
Mr. Boudreaux: Last -- well, at the end of this fiscal year, we're anticipating $36 million worth
of -- those collections. However, the adopted budget has shown more, about 38 billion -- million
dollars worth of collections from intergovernmental revenues. We had to go back and adjust that
for fiscal year '09, so we're projecting lower collections from that, about 36 million. To
continue with that trend, we did not show an aggressive increase in intergovernmental revenues
for the year. We only show a slight increase to 37.3 billion -- million dollars for fiscal year '10.
So as we were seeing more and more state distribution of the shared revenues, they have adjusted
them and we've adjusted our estimates based on that.
Commissioner Sarnoff: And this is a consumption tax, right?
Mr. Boudreaux: This is a tax that's based on both the sales --
Commissioner Sarnoff: Right.
Mr. Boudreaux: -- various sales in the state, and it's apportioned to all municipalities based on
an apportionment factor.
Commissioner Sarnoff: Okay.
Commissioner Regalado: But because of the new Cash for Clunkers, the auto industry is going
up in terms of sales, and that means that the state gets a bigger share. So in the revenue sharing
adjustment, it could be more in the next three or four month [sic].
Mr. Boudreaux: Well, as the State constantly has done, they adjust their estimates and provide
revised estimates. Now we start off with preliminary estimates, for which we project a 95
percent collection of their preliminary estimates. Now if some things would change in the state
whereas they would realize more state sales, then of course they would revise their distribution to
municipalities according to that. But right now, the information is showing that, you know,
based on state estimates, we could expect about $37 million from this category.
4 August 14, 2009
Commissioner Regalado: Which is more than this year?
Mr. Boudreaux: It's slightly more than the end of this year, but our end of this year is also lower
than what we had started the year off with.
Commissioner Regalado: Okay.
Commissioner Sarnoff: What were your projections for this year?
Mr. Boudreaux: Thirty-six million dollars for the category. I would like to now proceed to the
expense outlook. As the chart indicates, total expenses and other uses have also increased
between fiscal year's 2004 to 2007. Between these periods, total expenses and uses have
increased 34.4 percent, with a peak of $578.8 million spent in fiscal year 2007. I want you to
please note that the substantial increase between fiscal years 2006 through 2007 are primarily
due to approved salary increases, which were mostly paid on a retroactive basis during that
period. This total slightly declined to 556.1 million in fiscal years 2008 and is projected to be
even lower in fiscal year 2009. These reductions in fiscal years 2008 and 2009 are primarily a
result of reductions in operating expenses and not in personnel expenses. This is why the two
primary reasons for the anticipated increase and total expenses and other uses in fiscal year 2010
are in salaries and pension -- salaries and related expenses in pension. Salaries and related
expenses are anticipated to increase 11 percent, or $33 million, in fiscal years [sic] 2010 as a
result of across-the-board increases scheduled for October 1, 2009. These across-the-board
increases will provide a 5 percent pay increase to IAFF (International Association of Fire
Fighters) members, a 3 percent increase to FOP (Fraternal Order of Police) members, and 3
percent increases to AFSCMEs (American Federal, State, County, and Municipal Employees)
1907 and 871 members, as agreed upon in each respective collective bargaining agreements.
The effects of these across-the-board increases will also increase the payouts of various special
pays, which occurs every fiscal year, most notably in the areas of vacation payouts,
compensatory or earned time payouts, and will increase the rate of payment for salary incentive
overtime. However, the fiscal year 2010 budget does not anticipate salary increases for
unclassified, managerial/confidential, and executive positions, as these positions previously
received increases as part of the City's Pay for Performance program. However, unclassified and
managerial/confidential positions were provided with across-the-board increases in fiscal years
2008 and 2009, but are not anticipated to be provided these increases in the 2010 budget. The
City's total pension costs are also anticipated to increase 56 percent, or $35 million, primarily as
a result of previously agreed upon salary increases provided in prior years which were higher
than the assumed rate and lower interest returns on pension investments due to poor performing
markets. As a result, the City's annual pension contribution, based on actuarial evaluations as of
September 30, 2008 and estimated at December 31, 2008, will increase 42.7 percent or $10
million for the GESE (General Employees Sanitation Employees) pension and GESE excess
benefit plans, 61.6, or $22.8 million, on the FIPO (Firefighters Police) pension, which includes a
$4.7 million payment to the FIPO COLA (Cost of Living Allowance), and 31.6, or $2 million
increase, to the elected officials retirement trust. Please note that the full impact of the poor
performing markets have not been fully realized in the fiscal year 2010 budget, but will most
likely be indicated in the September 30, 2009 actuary reports for both the GESE and FIPO plans
and will impact fiscal year 2011, most likely.
5 August 14, 2009
Commissioner Regalado: But they are doing the actuarial on -- based on the market performance
on September -- last September, or will they adjust due to the higher market in the next month?
Mr. Boudreaux: When the City receives its actuary report, it normally is on September 30, so
factors that influence the changes to the actuarial assumptions are taken in consideration as of
that date, and then any other factors are included in any subsequent actuarial reports. So with the
market decreasing in the last quarter of 2008 -- mainly decreasing in the last quarter of 2008, the
full effects of the market decline will not be fully realized until probably 2011, when we get the
actuarial report as of the close of September 30, 2009.
Commissioner Regalado: Yeah, but the market has turned around.
Mr. Boudreaux: There is some hope. There is some hope that if the market does continue in its
present track, that the decline will not be as traumatic. But, you know, once again, it will have to
be something way over the 10,000 mark in order for us to realize any equilibrium from what has
occurred in the last quarter and the first quarter of 2009.
Chair Sanchez: I have a question pertaining to the pensions. In the last four years, how much
has the taxpayers of the City of Miami paid towards the pensions?
Mr. Boudreaux: It was -- the exact number, I don't have in front of me, Commissioner, but I do
know there was a period of time before the actual market downturn that we were realizing some
stability in year-to-year pension costs. Hold on one second. Let me get the number for you right
fast.
Chair Sanchez: To make it --
Mr. Boudreaux: And --
Chair Sanchez: -- easier for you, just give us the days where -- give us the years where the
market did not do well.
Mr. Boudreaux: Typically, the market did not do well after 9/11, of course. It took a lot of time
to recover from that downturn, but we started -- the City had started to realize stability in year-to-
year changes in the pension cost. As a matter of fact, the pension cost at some point was going
down from one period to the next, so --
Chair Sanchez: Give me the years and how much the taxpayers have paid towards the pension
cost.
Mr. Boudreaux: I can -- I have information in front of me going back as far as fiscal year '06. I
can give you more detail later, but I --
Chair Sanchez: Okay. Start in 206 [sic].
6 August 14, 2009
Mr. Boudreaux: In 206 [sic], the City's actual pension cost was $78.9 million. The following
year, it went down to $70.7 million. And then this last actual period, it went to $65 million.
Chair Sanchez: And how much is it projected to be this year?
Mr. Boudreaux: Total pension costs, to include all advances and everything else associated with
the pension, $101 million. It doesn't take a lot of noise in which to change this cost. And, of
course, the two major factors that increased that cost was, of course, the salary increases given to
the members in the plan, which changes the assumption in the plan if it increases higher than that
rate. And then, of course, the market. And as these two things have substantial changes, so does
the cost on the City and also on the members `cause the members also have to take on that cost,
so -- but, yet, the brunt of the cost is placed on the City because of the share for which the City
has to take on. In order to balance next year's budget --
Commissioner Regalado: Before you --
Mr. Boudreaux: I'm sorry.
Commissioner Regalado: -- go on, why is the -- increase on the elected officials is because of
the market performance or --?
Mr. Boudreaux: Well, we received earlier estimates from the Finance Department about the
EORT (Elected Officials' Retirement Trust) and says -- and the information tells us, from
Mercer, that we should expect at least a nine -- $1.9 million increase in that particular trust. Now
the specific factors have not been completely provided to me yet, but we're still working on that
particular information with the Finance Department as they finalize their actuarial review `cause
we haven't received it at all, but I did receive preliminary information through Mercer, who does
the actuarial report for the City, that we should expect at least a $1.9 million increase because of
some information change in the plan itself.
Commissioner Regalado: And how many people are participating in that?
Mr. Boudreaux: In the EORT itself, I believe it's the current sitting Commissioners. Ms.
Gomez. Thank you.
Diana Gomez: Diana Gomez, Finance director. The EORT plan valuation has not been
completed. It's actually done as of December 31. We have gotten an estimate that the payment
for this fiscal 2010 will be approximately $1.9 million. Last year I believe it was around six
hundred some thousand dollars. So the increase is $1.4 million roughly -- or $1.3 million.
However -- and it is due to market conditions.
Commissioner Regalado: But do we know how many persons are --?
Ms. Gomez: Oh, I'm sorry. In the plan, there are -- it's about seven or eight. I can go back and
get the exact numbers, if you'd like.
7 August 14, 2009
Commissioner Regalado: You do that?
Ms. Gomez: Sure.
Commissioner Regalado: Because it's just interesting because the salary increase of the
members of the Commission didn't kick in until three or four years ago.
Mr. Boudreaux: We're ready?
Commissioner Regalado: Yeah.
Chair Sanchez: Yes.
Mr. Boudreaux: Okay. As a result of the lower anticipated collections and rising personnel
costs, the following budget reductions are in progress and other reductions needs to be
considered in order to balance next year's budget. These reductions include layoffs, elimination
of positions, salary reductions on a tiered system, continue the hiring freeze in fiscal year 2010,
no pay increases, no across-the-board increases, no anniversary and longevity increases, a 15
percent average reduction in departmental operating expenses in the area such as contractual
services, reducing or eliminating travel, rentals and leases, promotional activities, advertising,
office supplies, operating supplies, professional memberships, subscriptions, printing and
binding, City -issued cell phone, Blackberry and air card services, fleet reductions, fleet
reductions in 24-hour and take-home cars, departmental elimination and consolidation, reduce or
eliminate contributions to outside agencies, eliminate contributions to nonprofit agencies, reduce
or eliminate parks and recreation programs and services, reduce public work service, provide
unpaid furloughs, reduce the purchase of vehicle replacement, with the exception of emergency
vehicles and police fleet, tuition reimbursement programs, postpone or restructure bond sales,
reduce yard waste collections, change to a single -stream recycling program, eliminate support to
special events, require direct deposit of City employees, defer the living wage, which is
mandatory as of the end of October, change the pension contributions or discuss changes to
pensions contributions going forward, healthcare plan modification and redesign, eliminating
special pays. In conclusion, the City of Miami fiscal year 2010 budget will need to be a
barebones budget with no frills in order to balance it. I look forward to meeting with each of you
over the next few weeks to go over the details of next year's budget as we prepare to present a
balanced budget to the residents of the City of Miami at the first public budget hearing scheduled
for September 10. At this time, if you have any questions, I'll answer them to the best of my
knowledge.
Chair Sanchez: All right.
Commissioner Regalado: Twenty-seven options or twenty-seven actions that need to be done?
Mr. Boudreaux: In order to balance this budget, it has to be a combination of each. One may net
us a little bit more and may not require the actions of another, but in order for us to get this
balance budget, Commissioner, we have to look at salaries, primarily salaries, because salaries
are the issues that are creating the increase in the cost, and those related costs that connect to
8 August 14, 2009
salaries, such as, you know, group insurance, pensions, things like that that also increase costs
from year to year.
Commissioner Regalado: Question.
Chair Sanchez: Go ahead.
Commissioner Regalado: You have -- in the 27 options, you said something about operating
expenses. Is [sic] that includes elimination of consulting?
Mr. Boudreaux: That does include elimination of contractual services, which are normally tied
to consultants, and professional services, which is also tied to consultant services.
Commissioner Regalado: And, for instance, in Risk Management, we have employees, right, we
have a department --
Mr. Boudreaux: Yes, we do.
Commissioner Regalado: -- we have a department director, two assistant director [sic]?
Mr. Boudreaux: Well, as of today, sir, we've actually eliminated one of those assistant director
positions and proposing it for next year.
Commissioner Regalado: Okay. So we have one director, one assistant director, employees, but
we also have Gallagher Bassett that is a firm that works on the City building, and you have made
like three payments of 1.5 millions [sic] each to that agency because they charge every time that
they open a case. So, the question is, are we doubling the service because we do have a Risk
Management --
Pedro G. Hernandez (City Manager): Commissioner, I think it would --
Mr. Boudreaux: Well --
Mr. Hernandez: -- be better, if I may, to have Leann Brehm answer that question.
Leeann Brehm: Leeann Brehm, director of Risk Management. The Gallagher Bassett contract is
a third -party administrator. A number of years ago, the adjusting of worker's comp and liability
claims was outsourced. The department was reduced in size, and in order to revamp, to bring
back any type of adjusting or any type of services that Gallagher Bassett is currently providing
for us, we would have to basically -- my estimate would be hire eight to nine more adjusters, two
nurses to handle the managed care and the case management of worker's comp claims. There
would be a new case management software system that we would have to have. We have not
had the services of in-house adjusting in approximately six years. So we are not --
Commissioner Regalado: So what you're saying --
9 August 14, 2009
Ms. Brehm: -- fully staffed at this time to --
Commissioner Regalado: -- is that Gallagher Bassett is doing your job?
Ms. Brehm: No, sir. They're doing the adjusting of worker's comp and liability claims, and we
do not have those services in-house at this time.
Commissioner Regalado: Right, but you have a staff. You have a staff in --
Ms. Brehm: I have a staff.
Commissioner Regalado: Okay. And until today, you used to have two assistant director [sic].
Ms. Brehm: Yes, sir, I did.
Commissioner Regalado: So that position was eliminated or the person quit?
Ms. Brehm: The position -- the assistant --
Mr. Boudreaux: The position was eliminated.
Commissioner Regalado: So I just want to understand because you have also a broker, right, that
sells the insurance?
Ms. Brehm: There is a broker for the property and casualty program.
Commissioner Regalado: So you're saying that in order for the City to have your department run
things, you need to hire more people?
Ms. Brehm: Yes, sir.
Commissioner Regalado: But how many -- how much money does that firm gets [sic] every year
for the work?
Ms. Brehm: The brokerage services?
Commissioner Regalado: Yeah, the Gallagher Bassett firm.
Ms. Brehm: A hundred and six thousand dollars is the amount of their current contract.
Commissioner Regalado: A hundred?
Ms. Brehm: A hundred and six thousand.
Commissioner Regalado: But they charge for each case that they open, right?
10 August 14, 2009
Ms. Brehm: No, no. That's -- Oh, Gallagher Bassett?
Commissioner Regalado: Yes, yes.
Ms. Brehm: The contract for Gallagher Bassett is based on a per claim experience. So the total
amount of the contract -- I don't have the number in front of me. I can get it for you, but -- is 1.5
million. Mike, maybe you can help me?
Mr. Boudreaux: As far as the activity for --
Ms. Brehm: Just for the Gallagher Bassett.
Mr. Boudreaux: As far as the insurance claim itself, I don't have the exact numbers in front of
me, Leeann, but I'm sure we could get back with you, Commissioners, with that number and that
information. The breakdown of how much is provided to each one of these TPAs (Third -Party
Administrators), or areas that they use in Risk, I do have that information, and I will definitely
pass it along to you so you can see how much has been allocated for each one of these.
Commissioner Regalado: Well, I think I have it, but I just want to understand what is the job of
the department and the outside counsel and -- like, do we have consultants in-house or --?
Ms. Brehm: The -- let me back up on the worker's comp contract costs. It includes the per -
claim. The total contract works together with the claim amount -- with the individual claim
payment. Gallagher Bassett, as the third -party administrator, takes over all of the adjusting of
the claims. What my staff does is basically oversee. I have a claims manager that oversees the
work that Gallagher Bassett does. I have a back -to -work assistant that is assigned to getting
employees back to work as soon as possible after their injury. And we have an assistant that
works with -- basically, from an administrative standpoint. That is what we have in-house for
Risk Management. Please understand that included in Risk Management is my group benefits
division, and that's one division. To manage the property and casualty, I have one person that
oversees all of the contracts that come in on property and casualty and -- to review for insurance
requirements, plus work directly with the broker on placing our property casualty coverage.
Commissioner Regalado: Because, you know, this Commission had in -- throughout the years,
look at Risk Management and I have look at Risk Management through the little information that
I can get, and I just want to understand what -- how much money have we save since we may say
we privatized Risk Management. That's -- that could be the word. The word could be privatize,
right?
Ms. Brehm: Yes. I can provide you with the past three years analysis from --
Commissioner Regalado: But do we --
Ms. Brehm: -- our claims experience.
Commissioner Regalado: -- but do you know? I mean, do you sense that we have saved money?
11 August 14, 2009
Ms. Brehm: Oh, definitely. Definitely, there is a cost savings by doing it that way. We have a
much more accurate system in adjusting the claims, oversight. Our indemnity payments
currently are low. We have cut our worker's comp claims, in the past ten years, by 50 percent.
According to the numbers that were given to me, in 1999 we had over 2,000 open claims in
worker' s --
Commissioner Regalado: Yeah, but that's a job that the City Attorney does, and she brings --
now she has two staffers doing these cases, so --
Ms. Brehm: We definitely integrate closely with the City Attorney. We couldn't do it any other
way.
Commissioner Regalado: Well -- and I understand that. In my briefings with the City attorneys
that do those case [sic], they say that they have to do the research. I thought that Gallagher
Bassett was there to do the research and present to the City Attorney the cases that they're
recommending that they close with a settlement.
Ms. Brehm: The Gallagher Bassett adjustors do, in fact, do all the investigations on our claims.
After the claims have been fully investigated both for liability and for worker's comp, if the case
is not handled at the adjustor level and there is litigation that ensues afterwards, the adjustor will
then turn over the investigative file to the City Attorney's office for the litigated matter.
Commissioner Regalado: Okay. I just hope to have the information. And the reason is that like
the end of this, everything is on the table, so it's important to analyze whether -- what is the best
option; your staff, your department, or an outside firm? What is the best thing for the City? And
to me, it's -- I cannot -- I don't understand why today you eliminate a position. I guess it's
because of the budget, correct?
Ms. Brehm: Yes.
Commissioner Regalado: And -- but we knew that this was coming. We knew that we had a
tough time, so it was eliminated today. Fine by me, but -- okay. Thank you, Mr. Chairman.
Commissioner Sarnoff: You know, one of the things I did was just try to figure out where do we
stand in comparison to other cities, other jurisdictions, other states, so I picked a few cities that I
think we have something in common with, whether it's our size, our budget, regionally close,
and how they're dealing with getting their shortfalls -- `cause I think everybody knows that there
is shortfalls across-the-board pretty much in every state. I took city of Austin, for instance.
They have a 1,600 -- $13 million budget. They have a $32 million shortfall. They decided to do
124 eliminations of job positions and they're furloughing their folks three days. Not too painful.
City of Boston, they have a $2.38 billion budget, $130 million shortfall. The Mayor took a 3
percent cut, a one-year wage freeze, and essentially, they are eliminating 700 positions, of which
100 include teachers `cause they apparently include the teaching in their particular budget.
Chicago, $6.2 billion budget, a $519 million shortfall; 141 elimination of positions. They're
furloughed 24 days until 2011. Dallas, a $2.7 billion budget, a $190 million shortfall. They are
12 August 14, 2009
proposing cutbacks in salary of 20 to 30 percent. They are equally eliminating 840 positions,
and there are currently 560 vacancies that will not be filled. City of Detroit has a $3.6 billion
budget. It has a 275 to $300 million shortfall, and they have no plans how to fix that. Los
Angeles -- and Los Angeles is worth talking about, so I'm going to come back to them as well.
They have a $4.4 billion budget. They have a $530 million shortfall. They have between 400 to
2,800 employee positions that will be eliminated and 1,000 by vacancies. I'm going to come
back to Los Angeles. Raleigh, North Carolina, has a $697 million budget. They are facing a $20
million shortfall, and they're going to eliminate 85 vacant positions. San Diego, California, has
a $1.15 billion budget. They have an $83 million shortfall, and they are going to take 6 percent
pay cuts together with their benefits. San Francisco has a $2.8 billion budget. They have a $438
million shortfall, and they have no present plans on how to deal with that. San Jose, California,
they have an $880 million budget. They have an $85 million shortfall. They will be eliminating
982 positions, which they have been doing for a number of years. Seattle, $913 million budget,
$43 million shortfall. They are going to do a 1.5 percent to 3 point -- percent department pay
freeze and cuts. They're going to also do ten days of furloughs. And finally -- and I won't bore
you -- there are a lot more cities. Washington, D.C. has a $7.8 billion budget. They have a $662
million shortfall. They're going to increase taxes by 6 percent. It was 5.75 percent. I'd like to
read to you something that's written, and then I'll tell you what mayor wrote this. So we face a
simple, but stark choice in closing an estimated $530 million deficit. To achieve this, my budget
eliminates more than 1,000 vacant positions, trims less essential programs and services. These
services and solutions alone will not balance the budget. In total, if no other action is taken, the
remaining deficit would require the equivalent of 2,800 layoffs this year alone. I've already
asked the personnel department to begin the process for approximately 400 of these layoffs. But
layoffs of this magnitude and service cuts that they represent, in my view, are simply
unacceptable. The full menu of options we pursue in partnership with city employees and the
unions to save jobs and maintain services are listed in "Exhibit H" of my fiscal year 2009-2010
proposed city budget, and they include the following. If every employee just took one unpaid
hour per week, we could save $52 million and prevent more than 580 layoffs. If each employee
contributed just 2 percent more to our retirement benefits, we could save 63 million and prevent
more than 700 layoffs. By simply deferring automatic pay raises, we could save 117 million and
prevent 1,300 layoffs. Anybody want to take a guess what mayor said that? Antonio
Villaraigosa, the mayor of Los Angeles. Now there're a lot of ways of cutting a deficit, but the
big white elephant on the table here is we have an approximate $500 million budget, of which
400 million of that is salary compensation -- salary and compensation. There are 25 employees
in the City of Miami that cost the taxpayers more than $300,000 per year. There are 223
employees that cost the City of Miami more than $200,000 per year. And essentially, the
average City employee costs the citizens approximately $98,000 per year. That's the true white
elephant that's on the desk right now. You could do what Broward County Sherrif s Office did,
and they didn't have to lay off anyone. They did it through salary reduction and furloughs. They
said we were going to act like a family. On the other hand, you could do it like Broward County
has done it, and they have eliminated 1,000 positions and have laid off 400 people. I guess they
didn't act like a family. Inevitably, we have decisions to make. We are either all in this
together, we all act as partners, and we all realize that this budget got way too fat over way too
many years, or we can all act our own self-interest, or as I like to call it, WIIFM, what's in it for
me. That's the first thing somebody told me when I was running for office, remember WIIFM
`cause anybody you meet is going to say what's in it for me. So if we act in our own self-interest
13 August 14, 2009
and nobody is willing to bend and nobody is willing to be a partner at this table, then expect
layoffs. `Cause I could tell you a very simple way to close a $118 million budget. Layoff 1,018
people. You'll get there. Do it however you want. Or you could go about this a very smart way.
Instead of asking for 15 or 20 percent or 25 percent pay reductions, which you're going to have
to do, ask yourself what is the core services the City of Miami is expected to deliver. Ask
yourself principally what it is the people really want from their City government versus what you
want to give them. No longer can you afford, no longer should you provide, no longer is this
about what you think the people want. You're at a skeleton budget, and that skeleton budget
should very simply be the very essential services. I could suggest to you it's police `cause
nobody got here with the expectation or thought that they were anything but safe. I could
suggest to you it's fire -rescue because everybody here, when they believe they fall to the ground,
wants to be resuscitated and wants to come back. I can to suggest to you, to some degree, it is a
clean city. That's a tough one because we're probably going to have to have reduction to some
degree to sanitation services. And everything else after that is in play. And the shame of it is,
for every park program we cut, for every program dollar we cut, are we creating a crime? Are
we putting a child who then has nothing to do but to go outside and find whatever's on the
street? So are we in the same -- some respects, are we creating a bigger crime problem down the
road? I'm sure there are those on the dais that would argue that, and it's a very persuasive
argument. Equally, the elderly. This Commission decided that when murals went into effect,
that we were going to do everything we could do to feed the elderly. I suggest to you that the
four essential services for the City of Miami should be police, fire -rescue, feeding the elderly,
and doing whatever we can do to keep our children occupied. After that, everything else should
be in play. And instead of taking reductions, ask yourself, from a zero budget analysis, what is
the essential service of the City of Miami? What essentially must a city do? `Cause there's
Public Works out there -- and let me tell you something. People have an expectation when they
pay a $15,000 property tax bill, that the neutral ground and the lawns that the City of Miami are
expected to maintain are maintained. They expect to see a decorum in their government and a
decorum in their public facilities. So we can be the Broward County Sherriff s Office or we can
be Broward County; stark differences, stark realities. But if we act like we're all in this together
and we all take a long, hard look and ask ourselves how is it that we can have 25 employees
costing the taxpayers 300,000 a year? How is it we can have 223 employees costing the
taxpayers 200,000 a year? How is it that the average employee can cost the citizens 98 to
$100,000 per year? Think about this. The average citizen in the City of Miami earns $30,000 a
year. We do not own -- for -- work -- I'm sorry -- we do not earn 42,000 or $45,000, like the
County does. We're not that affluent. And ask yourself this, in closing. Is there another city
that has a salary structure similar to Miami? `Cause there is. It's New York City, a city of 8
million people. We're a city, on our best day, of 420,000 people. Thank you.
Chair Sanchez: You know, there are many cities besides us that are faced with this challenge
today of coming up with a balanced budget, which is required by Florida Statute [sic] before
September 30. I have not seen the numbers yet, as had been presented by the Mayor of the
budget; so, therefore, what I have in front of me is a mathematical question missing some
numbers. Well, I have not been able to come up with the numbers, but I can tell you this much.
If you look at our budget and what we all can agree on that it's -- we're going to keep the 7.6
millage as -- we're going to have significant cuts in this budget. Now, no government should live
beyond its means. We know that. What's shocking here is that for every dollar that comes into
14 August 14, 2009
the City, 80 cents of that dollar goes towards salary, pensions, and benefits. This City is being
run by 20 cents. It is very simple. It is expenditures versus revenues. It's like balancing your
checkbook in your house; you cannot spend more than what you have. The budget itself that is
in front of us, that has been presented, which, once again, we don't know the numbers. I have
been looking at it and going through it, and you know, I see that some of the recommendations to
balance the budget, they're all things that we could control. In other words, you talk about
layoffs, elimination of positions, salary reductions; those are things that cannot be controlled
based on contracts. I want to know the assurance that we have from the Administration that if
we don't get the unions to sit at the table to help us to resolve this issue, is the City going to be
able to at least present to us -- and we'll decide on the budget, to balance it -- what number are
you planning on getting close to with those numbers? Because, once again, I asked my
colleagues, have you seen the numbers? Have you seen the budget that has been presented by
the Administration? I have not seen it yet. So do you have a number close to that?
Mr. Boudreaux: Well, as we continue to take a look at the current circumstances with the
budget, we are trying, you know, as much as possible, to live up to the commitments that the
City Commission has put forward, and that means keeping the millage rate at 7.674, not utilizing
none of the City's general fund balance, and looking at every area to include cooperation with
the unions and also other areas that we can control or not control so that we can try to get down
to a balanced budget. Now, right now the preliminary numbers based on what we presented you
for the millage rate cap show a 7.674 will effectuate somewhat close to a 118, but since that
time, we have taken steps and we have now addressed most of that 118, which we will share in
our individual meetings with each one of you to show you all the steps that have been taken up to
the point and some of the options that we'd like to have considered going forward.
Mr. Hernandez: Mr. Chairman, if I may, to add to what our budget director has said. We will
present a budget based on a millage of 7.67. You will have that before you. It is predicated
upon, I would say, a series of building blocks that will cover and balance the budget. The most
significant one is departmental reductions. We have gone over the departmental budgets at least
twice and we're going to do it again, and that will yield in excess of maybe 60 million. We're
looking at block number two, and block number two deals with salaries, and that's a very
significant area. Whether you do it via a tier reduction in salaries, whether you do it with
furlough days or you do it with a combination of the two, whether you include no longevity
increases and no merit increases, that block, if we apply it to the non -union personnel, will give
us a certain amount that is small, but if we can apply it with the help of the unions to the full
workforce, it will give us another 30 million. And beyond that, we have a series of strategies
that will close and provide a balanced budget that you'll see as we go into our more detailed
briefings. We're still working on determining and quantifying what each one of those strategies
will yield, from some that are very insignificant, like, for example, having a direct deposit
mandated, which will save, let's say, $50,000, to things of more significance.
Chair Sanchez: Well --
Mr. Hernandez: You can rest assured that it will be based on a 7.67, and we're doing it trying to
minimize the impact on staffing because we know that's the last alternative. However, I know
15 August 14, 2009
that there will be minimal impact to staffing. We're trying to maintain that at a minimal level.
And our plan is to reduce government, and I've already started that action myself.
Chair Sanchez: -- once again, I don't have those numbers and I -- my office has had to work with
the materials that we've gotten. We're still waiting for some materials from your office to
provide us so we could work along you and everyone who wants to help us balance the budget,
but -- before I get to the pensions, let me just talk a little bit about the salaries that we talked
about. Now, there's been talk about reducing the executive salaries, and you know, if we took
the exec -- and I'm for reduction of salaries. We're going to have to deal with that to be able to
balance the budget, as long as everything else is on the table; there are no sacred cows in this
budget. But if we want to take the executives and made a commitment that salary would not be
more than $100,000 for the executive in the City, that's only a savings of approximately about $4
million. Let me assure you, that's not going far enough `cause we need to come up with more
money because the last thing that we want to do here is continue to pass the burden on to the
taxpayers of the City of Miami. Now, if you look at the average salary of a City executive,
which is about $137,000, there are a total of 112. Significant portion of those are the City
Attorney, whose average is much higher than non City Attorney executives. That's a total annual
cost of $15.3 million in those salaries. Now, not to pick on anybody `cause I looked at some of
the departments and I had to do my homework, and the department that really got my attention
was the Fire Department. The average annual salary of 133 fire lieutenants is $150,000. That's
not including overtime, which is estimated to be 12.6, $12,600, per person. That's a total cost to
this City of 12 -- $21.5 million. Now, the average annual salary of Fire executives is 243,000,
not including overtime or fire chief, which there are 15 of them, and the average overtime is
$26,000 per year. And fire captains, there's 61 of them. It's estimated at 29,000 per year, not to
mention the take-home car. Now, the average salary for a Police executive is $159,000. That's
almost $100,000 less than the Fire executives. Now, here's the alarming side of the salaries, if
you want to compare it: 9 Fire employees make more than the City Manager; 47 Fire employees
made more than the Mayor; 65 percent -- I'm sorry, 65, 10 percent of the Department of Fire
employees make more than our CFO. That is alarming. Highest paid executives are those that
we determine their compensation by the Commission. That is the City Attorney, the City Clerk,
the auditor general, and their average pay is $273,000 per year. Now, the average Fire union
employees' annual salary, all employees, including recent hires, is $125,000 per year; Police
average is 78.6 per year; AFSCME (American Federal, State, County, and Municipal
Employees), $56,200; and Solid Waste, an average of $41,400. The average annual salary of a
firefighter is $102,000, not including overtime. The average salary -- annual salary of a police
officer is $70,000 without overtime. Now, in fact, Fire and Police have almost equal number of
rank officers; yet, Police have more than twice the number of officers compared to firefighters,
and let me just touch a little bit on that. Police, their rank and file, they have 244 individuals,
from lieutenant to chief, out of 900 officers. The Fire Department, rank and file, they have 223
lieutenants to chief [sic] to 419 firefighters. In some case [sic], one lieutenant oversees three
firefighters. I just thought that it was important for you to compare. You know, they're both
noble professions. I have the outmost [sic] respect for both of them. I was a police officer. But
if you look at the comparison of the rank and file, that's something that needs to be looked at
because it's really costing us a lot of money. That's just one department. I have not had an
opportunity to look at all the departments because, basically, I'm still waiting for numbers from
the Administration. All those numbers are gotten from the City employees list, which is based
16 August 14, 2009
on salary and based compensation. Now, the pensions, which you heard the numbers, and I just
went back to 205 [sic]. If you go further than that, it's been costing the City much, much more in
pension costs to the City of Miami. The pensions is [sic] the fatal wound that's bleeding this city
to death, and we can no longer continue to put a Band-Aid on a fatal wound because that's all we
do. We fix it for the next three or four years and pray that someone else is going to come along
and fix it. We cannot continue to pass this responsibility to others when the voters of Miami
elected us to solve that problem, and it is our responsibility, yet salary is a problem; pension is a
big problem not only for our city, but for many, many cities. Today starts the process, at least
for us because -- well, not yet because we haven't gotten the numbers, and I'm still waiting for
those numbers. But it will be important, as we lay the foundation, that we say that we're drawing
the line on the sand to make sure that we fix this problem to make sure that whoever may be the
next Commissioner here or whoever may be the next Mayor here, it is a problem that we could
solve because you know what? We jeopardize other employees that are here. And as we speak
here today, I'm saddened that we don't have a full representation of the Commission on such an
important responsibility that we have to balance the budget, and I could say that I have been here
for about 11 years. This is the toughest budget that we'll have to face, and if we don't do it right,
then all we're doing is jeopardizing the future of this city, and this is just the start. So I just
wanted to put that because everything is on the table, Mr. City Manager. And since this is a
meeting that I cannot direct you to do anything, I think it is important that this Commission start
a process to cure this wound, and the first step is that I think that it is paramount that you and the
City Attorney start process to reopen the Gate settlement, which I think it's important. It's the
first step in the right direction. I think it is important for you to sit with the fire chief and review
the Fire Department's structure because I believe it is too top-heavy and come back with a
recommendation. Hopefully, there'll be an agreement. And I think, today, based on the
numbers that I have, it's a step of many that I will be proffering to you to try to solve this
problem that we cannot continue to exist in this city. So having said that, I think that --
Commissioner Regalado: Mr. Chairman.
Chair Sanchez: Before I recognize you, Commissioner, I'm also going to be -- ask the City
Manager to schedule another workshop. At that time, we should have the numbers because it
really puts us in a very awkward situation here. It is our responsibility, but still, I don't have
those numbers. I have even asked for an inventory of all our fleet cars, whether they have three
wheels, two wheels; whether they move or they don't move. I want to know who drives that car
and who takes it home; whether it's 24 or 7. Do they have the right to take that car home? Who
uses it? How much fuel they put in that car? And still, I have not gotten that information. I
played an important role here in this budget such as -- and all of us Commissioners do, to work
with the Administration because you know what? If you don't provide me the information at the
end of this budget process, don't expect a vote from me.
Mr. Hernandez: Commissioner, we'll make that information to all the Commissioners. As a
matter of fact, I've been working with GSA (General Services Administration) on updating it
because our direction is to, in essence, reduce the fleet. The challenge that we have at this point
is to reduce it by 250 vehicles, and Kelly Barket, from GSA, is working on that right now; and as
soon as I get it, I'll have it in your hands.
17 August 14, 2009
Chair Sanchez: But, Pete -- Mr. City Manager, with all due respect, in this meeting that we have
here today, those that are present, if I ask you a question, it is not to put you on the spot, and if I
do, I truly apologize. But if I asked anyone how many cars do we have in the City -- they're not
our cars; they're taxpayers' cars -- we should have a number. I have not gotten that number yet.
Mr. Hernandez: The number is 1,960, plus or minus.
Chair Sanchez: Are those all the cars that are operable, nonoperable?
Mr. Hernandez: For that, I would rather give you the inventory. And in essence, our direction,
as a result of this no -frills budget, is to take away as many 24-hour assignments as we can, if not
all, take away cars; reduce the fleet because that will give us, you know, less repairs and less
tires and less fuel, and we can get rid of those cars, and that, in itself, will be -- we are
quantifying that savings to be in the vicinity of maybe a million and a half. That's one of our
many line items that we need in order to achieve the balanced budget. But I'll give you -- I'll
provide to you and all the Commissioners the up-to-date inventory.
Chair Sanchez: Also, one more request that you could help me with. I want to know exactly
who's included and what's included in the special comps with all the benefits that are given. I
haven't figured that out. I mean, just by waking up in the morning, you get a percentage. So I
need to figure that one out. Mr. Regalado, you're recognized for the record.
Commissioner Regalado: Thank you. Thank you, Mr. Chairman. Mike said that you have been
meeting seven days a week with the Mayor --
Mr. Boudreaux: Yes, sir.
Commissioner Regalado: -- the City Manager, and the CFO. Have the unions been at that
meeting?
Mr. Boudreaux: Not at this time, sir, no.
Commissioner Regalado: What is "at this time"?
Mr. Boudreaux: Well, we would hope that, I think --
Mr. Hernandez: Michael, I think you'll -- you better let me answer that one.
Mr. Boudreaux: Okay.
Mr. Hernandez: In talking to the unions, the unions want us to be able to show them the
numbers before they will take any steps, and we are almost at that point where I can sit down
with all the unions and show them the numbers so that they can then help and participate. Up to
now they're saying "Oh, we're willing to help, but we can't do anything until we see what you
have." We will be able to provide them that information very soon.
18 August 14, 2009
Commissioner Regalado: Yeah. But let me see if I understand this. The union seems to be part
of the problem, but they have to be part of the solution; otherwise -- I mean, I fully support the
Gates case being reopened, but for that we need the votes of the unions and going to court, and
this is going to be -- it will not be possible before the budget process ends in September 30. So if
you guys are discussing -- and you know, something that you said triggered this question because
if you guys are discussing options -- and the Chairman is right; we don't know anything about
numbers -- but if you discuss option, shouldn't be the unions include in that table to discuss
options? I mean, it makes sense, right?
Mr. Boudreaux: Yes, it does.
Commissioner Regalado: Yes, it does. Fine. So my question is how many times have you met
formally or informally with the unions, Mr. Manager?
Mr. Hernandez: I met with both unions about maybe three, four weeks ago and told them
exactly that we needed help from them.
Commissioner Regalado: Okay, emergency. Remember, no cell phones allowed in City
chamber [sic]. Okay, so, Mr. CFO, would you think that meeting with the unions, you can
participate in --? Sorry.
Mr. Spring: I just wanted to say that he's on the phone with the Commissioner, so that's why he
took the call.
Commissioner Regalado: No, no. I mean, it's okay. I mean, the other thing is -- and, Mr.
Manager, don't worry about it; I'll direct the question to you. You just said that you have been
able to resolve the 118 figure -- not resolve, but change. How did you change -- what steps were
taken yesterday, this morning, two days ago to reduce the 118 alleged proposed deficit?
Mr. Boudreaux: Well, one of the things that we stated as we were meeting with the Mayor, City
Manager, CFO on a 24-hour -- almost 24-hour basis, it feels like, going over every individual
line item of each budget, looking at all of their positions, vacant positions mainly, and seeing
whether these positions need to be maintained for the next fiscal year, and at the same time
eliminating these vacant positions mainly as a result. Also, looking at their line item budgets in
detail, looking at what's inside the line item and seeing whether or not some of these operating
expenses are needed.
Commissioner Sarnoff: That's not the question. On the vacant positions, how many vacant
positions has the City of Miami carried for six months or more? Is there like an estimate you
could give me? Do you follow my question?
Mr. Boudreaux: Yeah. I would say out of the total estimated 4,000 positions that the City has,
about -- on average, about 300 positions that remain vacant (UNINTELLIGIBLE) year.
Commissioner Sarnoff: So --
19 August 14, 2009
Mr. Boudreaux: On average, in and out.
Commissioner Sarnoff: Pretty assuredly that that, correct me if I'm wrong, is about $30 million?
Mr. Boudreaux: That is correct.
Commissioner Sarnoff So -- there's an old saying, if we haven't missed Mr. Smith in six
months, let's not pay him.
Mr. Boudreaux: If Mr. Smith had that position, correct.
Commissioner Sarnoff: Correct. So we're $30 million in what I call not very painful cuts.
Mr. Boudreaux: Well, we've done what we can do up until this, you know, moment here,
Commissioner, where we can look at areas that we can do immediate reductions to and we've
taken those steps. We've taken a look at each department. We've taken a -- what the department
has already considered in the initial reductions request that we would -- they provided us, and
we've gone even a further step by looking at each individual line item.
Commissioner Sarnoff: And I apologize, Commissioner. I'll give it back -- the floor.
Commissioner Regalado: No, no. That's okay.
Commissioner Sarnoff: But have you -- see, the thing that always worries me -- and it's a
philosophical way of looking at things -- everybody likes to start with a haircut. You know, let's
cut this guy's hair five inches, four inches, three inches, and that's considered budget cutting.
Have you ever thought of how are we going to grow hair? And what I mean by that is instead of
cutting, building your budget from the ground up. What are your essential positions --?
Chair Sanchez: Zero -base budgets.
Commissioner Sarnoff Right. There are -- it's called zero -base budgeting. Have -- are you
looking at all doing it that way? What are the -- Public Works, what are the essential things
Public Works does? Parks, what are the essential services Parks give? Police and Fire are a little
bit easier. Although, you know, I certainly share the concerns that have been expressed up here,
but the other budgets -- or the other departments, what are the essential services that they give
and who gives those services?
Mr. Boudreaux: Well --
Mr. Hernandez: Commissioner, I think that you're totally right, and we have been, in essence,
getting to that approach by going back in years and seeing how we used to do things before when
we had less revenues, and also trying to -- well, trying to justify or try to identify the core
mission of the Public Works Department, the core mission of GSA, the core mission of Solid
20 August 14, 2009
Waste and make sure that those core missions for each one of those departments is addressed so
that helps us being be able to cut back.
Commissioner Sarnoff And Mr. Manager -- and I'll be done. I don't want to take too much time
-- what always worries me is when somebody says "You know what? I'm going to go look what
my 2002 budget looked like `cause I'm going to get it to my 2002 budget," and all that does is
cover up mistakes, whereas -- I think what Commissioner Sanchez was saying, start at a zero -
base budget.
Mr. Hernandez: Right.
Commissioner Sarnoff Find out the core mission of Public Works. We know we have to cut
300 lawns a month. You know you need so many people to cut that. I want them as employees,
I don't want them as employees, I prefer to have -- out -service them, whatever it is you're going
to do and how you've determined the best way to do it. It just seems to me by going back in
time to a budget cycle, you can cover up mistakes versus revealing them at zero -base budget.
Mr. Hernandez: We sort of did that in order to get some guidelines as to where we were just to
get an idea. But your approach is the correct approach to be sure that we do the core mission. If
I may, Commissioner Regalado, I profusely apologize. Just a few minutes ago -- first time that
this happened to me in three -plus years. It was Commissioner Gonzalez, and he was telling me
that he'd just gotten to his house from a medical test and wanted to be sure that you knew and the
people here knew that he was having these medical tests that were very significant, and he
couldn't make it here; otherwise, he would have been here, and he wanted me to state that on the
record.
Commissioner Regalado: No. And we know that. And if I may, just to finish.
Commissioner Sarnoff: I yield. It's your floor.
Commissioner Regalado: And, you know, we know that Commissioner Gonzalez is dedicated.
And last time he couldn't be here because of illness. But going back to the 118, it really stuck in
my mind what you said -- a phrase that you said, that during these meetings, you have been able
to reduce the 118 figure. Is that what you meant?
Mr. Boudreaux: Well, the 118 -- yes, this is what I meant.
Commissioner Regalado: Okay.
Mr. Boudreaux: The 118 figure when -- initially was the deficit that the City was facing, of
course, that included department spending and having the same number of positions, same
number of operations size, everything. So we've now taken a look at that and said, okay, well,
what do we need in order to keep this budget balanced and at the same time minimize impacts on
departments. And in doing so, we took a look at each position, maybe not looking at it from a
zero -base basis, but taking a look at them from a core basis and saying well, what are their core
services, what are they required to do, what are their -- needing to do, what does the City need
21 August 14, 2009
them to do, and focusing our attention on those areas, looking at positions that these departments
have and seeing whether or not we can scale back on these positions.
Commissioner Regalado: But, Mike, my question is without Commission action, you said that
you have been able to reduce the 118. Can you tell us -- doesn't have to be exact -- where are
you now in deficit in terms of millions and numbers after that you have been able to reduce? I
guess that you cut today. You just said that the person was -- a position was eliminated, so I'm
sure that if you do -- if you did that, Mr. Manager, in one department, you have done that in other
departments today. Is that correct?
Mr. Hernandez: Yes. And --
Commissioner Regalado: Okay, because only one person doesn't get the ax.
Mr. Hernandez: No.
Commissioner Regalado: So how many today, for instance?
Mr. Hernandez: Well, what I have done -- as I said before, there is no way that this budget can
be balanced without a minimal impact, and I consider a minimum impact to fill positions. I've
taken the initiative to start reducing the Administration, the executive, unclassified,
managerial/confidential, nonunion employees. I've reduced it already by 13, and I have another
similar number coming soon.
Commissioner Regalado: So it's 13. So that's what you mean, 13 new layoff, which is 13
savings, and that is what you meant when you said that you have been able to today reduce the
118 deficit, right?
Mr. Hernandez: Well, Commissioner, it's not really today. I think that -- a little while ago, I
spoke about two big blocks, and I know that we have many more strategies that will get us to
the 118, no doubt. They're not easy, they're not simple, but we know that we can do it, except
that some of them have still to be quantified as to how much can be expected for each one of
them to yield, and that's what we're still working on. But we know that be a combination of all
different strategies from the small ones to other more significant ones, but it can be done.
Commissioner Regalado: Okay.
Chair Sanchez: All right.
Commissioner Regalado: Okay.
Chair Sanchez: Any further questions?
Commissioner Regalado: No.
Chair Sanchez: If not --
22 August 14, 2009
Commissioner Regalado: When is the new -- the next, Mr. Chairman --?
Mr. Hernandez: If you want to, Commissioner, I'll contact the other Commissioners and work
with your office to set the date.
Chair Sanchez: And our office will send a memo out setting another workshop.
Mr. Hernandez: Yes.
Chair Sanchez: Hopefully, by then we should have maybe another number added to that
mathematical equation so we could sum it up.
Mr. Hernandez: Thank you, sir.
Chair Sanchez: All right. The workshop is in recess. Thank you. Good evening. Have a good
weekend, everyone.
23 August 14, 2009