20120611 Regular City Council Meeting - MinutesMINUTES OF THE SPECIAL CITY COUNCIL MEETING OF
THE CITY OF VERNON HELD MONDAY, JUNE 11, 2012,
IN THE COUNCIL CHAMBER OF THE CITY HALL LOCATED
AT 4305 SANTA FE AVENUE, VERNON, CALIFORNIA
MEMBERS PRESENT: Davis, McCormick, Maisano, Ybarra
MEMBERS ABSENT: None
The meeting was called to order at 9:00 a.m. by Mayor Pro-Tem
Davis.
Councilman McCormick led the flag salute.
The City Clerk announced that a second Public Comment section
will be added to the agenda after the discussion item.
Legal Counsel Dana Reed advised that the public is free to speak
at either Public Comment, both if they chose to.
The City Clerk announced that this was the time allotted for
public comment. Mayor Pro-Tem Davis inquired whether anyone in
the audience wished to address the City Council.
Marisa Olguin President of the Vernon Chamber announced that a
voluntary review panel had been assembled in an effort to work
with the City Council and City staff in order to resolve the
budget deficit issue. She suggested a tax increase that would
be more equitable for industry and a reduction in the budget.
She looked forward to being part of the process.
DISCUSSION ITEM
1. Review of Preliminary Proposed Light & Power Department
Budget for Fiscal Year 2012-2013.
Director of Light & Power Carlos Fandino announced that the most
noticeable change to the Light & Power budget is the bio methane
contracts. Fandino reported on pending state legislation
issues, including AB2196 and AB1900 which challenged the use of
bio methane gas for Bucket 1, renewable portfolio standards
("RPS").
Fandino explained that the City intends to lobby against the
bills. Should the bills pass, the contracts would be null and
,. void. In the event that the bio methane gas could be used as
part of the Bucket 1 RPS requirements, businesses will incur a
pass -through adder.
Fandino briefly mentioned a potential new source to offset the
RPS costs to businesses, which he advised will be discussed at
the June 19, 2012, City Council meeting.
Fandino summarized changes that affected the budget including
the issuance of the bonds for capital improvement projects over
the next three years, the transfer of 11.52s to the general fund,
and a reduction in personal service contracts.
Fandino advised that the budget includes the proposed rate
increases: 7.8% on July 1, 2012 and 7.8% on January 1, 2013.
Fandino explained the $100,000 increase in the Information
Special City Council Meeting Minutes
June 11, 2012
Technology account. He advised that the change is due to
increasing internet expenses, the hiring of a full-time employee
to replace contracted services, and a mass communication system
which the Police Department will no longer be handling.
In response to Councilman Ybarra's concerns over double
budgeting, Fandino explained the accounting of the fiber optic
network and advised that service repairs must be budgeted.
In response to Councilman Ybarra's inquiry on bad debt in
Account No. 7100 for Customer Service, Electric Resource
Planning & Development Manager, Abraham Alemu explained that
this was the amount billed but not paid. Finance Director Rory
Burnett advised that various clients leave town, or file for
bankruptcy. The figure is only a reserve and usually not
significant. He explained that fiscal year 2011-2012 had a
significant loss, but that the City has procedures, such as
turning off the electricity, to monitor bad debt expenses.
Fandino reported a $100,000 budget increase to Account No. 7200,
Energy Management. He explained that the increase is due to
AB1890 funds which will be used as a direct benefit to customers
as part of the public benefit rebate program.
Account No. 8000, experienced a $38,000 budget reduction due to
the retirement of an employee and replacing them with a less
costly employee.
Fandino explained that the $400,000 increase to Account No. 8100
for System Operations was due to the re -staffing of two new
employees and capturing the transfer of a third employee.
Fandino advised that a third party OSHA assessment is being
budgeted, but that the item could be cut, if necessary.
Fandino explained Account No. 8300 which covered transmission
and distribution, overhead and infrastructure costs for
emergency work. In response to Councilman Ybarra's inquiry,
Fandino confirmed that bond money is used to cover these
expenses. Burnett further clarified that the $30 million in
bond money sits in a trust fund until the actual expense is
incurred. Fandino advised that the expense is estimated based
on past incidents.
Fandino explained the $4,000 increase in Account No. 8400 for
Building and Maintenance. He advised that services would not be
performed without City Council approval.
Fandino explained that the $4 million budget increase in Account
No. 9000 for Administration was due to the increased transfer to
the general fund.
In City Engineering, Account No. 9100, there is a $1.9 million
increase. Fandino noted that total revenue is also anticipated
to increase. For new customers, the Department engineers and
executes plans. Labor and equipment is billable, but the City
incurs the material costs. Fandino reported that $120,000 was
due to the filling of a position. Again, Fandino noted that
City Council will need to approve any projects before expenses
are incurred.
Fandino explained that the $7 million difference in Account No.
9200 for Resource Management was due to the bio methane fuel
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June 11, 2012
contracts but that this was contingent on the state
legislature's decision on pending assembly bills.
Account No. 5600 for Gas Department saw a decrease due to the
costs in natural gas prices.
Fandino reported an $80,000 increase in Account No. 1057 for
Fiber Optics. He explained that the Department is accounting
for expenses that get passed on to City customers. Increase in
capital expenditures for the upgrade in switches has also
affected the budget.
In response to Mayor Pro Tom Davis' inquiry, Fiber
Optic/Internet System Manager, Ali Nour advised that the City
has services for businesses with multiple services and
buildings.
Fandino reported no changes in Account No. 5058 for the Vernon
Natural Gas Financing Authority. He then summarized the major
changes to the budget which included the bio methane gas
contracts, capital infrastructure projects, the 11.5% transfer
to the general fund, reduction in staff, and the proposed rate
increases.
In response to Councilman Maisano's inquiry on the reduction in
staff over the last three years, Fandino explained that
approximately 7 contract employees have been lost. The
department has been reorganized to offset the work load,
yielding a $3 million per year saving since 2008.
Mayor Pro-Tem Davis opened the second Public Comment section and
inquired whether anyone in the audience wished to address the
City council.
Robert Gutterman of Crown Poly commented that benefits accounted
for approximately 30% of all employee salaries. He advised that
in the private sector, businesses had to become more efficient.
Benefits costs will continue to increase. In order to remain
competitive, employers passed this cost down to its employees.
He opined that he does not see the same kind of behavior with
the City and that the City is reluctant to engage in the sharing
of these costs. Gutterman stated that there is a need to freeze
or role back the benefit costs the City absorbs.
Mayor Pro Tem Davis announced that there have been no cost of
living increases over the last four years. City Administrator
Mark Whitworth added that during the discussion of the general
fund budget the City will discuss some of its cost cutting
exercises in employee benefits.
Juliet Goff of Cal Plastics echoed Gutterman's remarks. Goff
reported on her business' challenges, which included workforce
reductions, salary cuts, and not compensating herself. She
advised that her business lives within a budget, and opined that
she doesn't see the same efforts being made by the City. She
stated that the city's efforts are limited to rate increases and
a proposed utility user tax.
Goff inquired whether the City has a contingency plan. In
response, Fandino confirmed that the City did, and has evaluated
services and staff if revenues are not approved. In addition to
Mayor Pro Tem Davis' comment about no cost of living increases,
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June 11, 2012
Fandino reported that employees have been asked to contribute St
of their PERS contribution, which was previously paid by the
City. Employees also pay a portion of their medical benefits.
Risk Manager Willard Yamaguchi summarized the City's employee
medical benefit allowances for each plan type.
Councilman Ybarra sought clarification on expenditures and the
capturing of the bond money. City Administrator Mark Whitworth
explained that the bond transaction was captured in fiscal year
2011-2012, and cannot be captured twice.
The City Clerk announced that there were no further items on the
agenda.
At 10:17 a.m., it was moved by McCormick and seconded by
Maisano, that the meeting be adjourned. Motion carried.
ATTE
i rd G. ma ch'
City Clerk
William J. Davis/
Mayor Pro-Tem
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