The City Charter requires that a Public Hearing be held prior to the adoption of the FY 2003/2004 Budget and Resource Allocation Plan. A Public Hearing is also required on proposed adjustments to fees or service charges. As part of this hearing, staff has included the annual establishment of the appropriation limitation. No action is required on the part of the City Council other than what City Council itself initiates during the Public Hearing. Adoption of the Budget and Fee Schedule is scheduled for June 17, 2003.

Section 1303 of the City Charter states that "At the time so advertised, or at any time to which Public Hearing shall from time to time be adjourned, the City Council shall hold a Public Hearing on the proposed budget, at which interested persons desiring to be heard shall be given such opportunity."

Article XIIIB of the California Constitution established appropriation limitations on government agencies within California. Section 7910 of the Government Code requires that the City annually adopt an appropriation limitation for the coming year. Any challenges to the declared limit must be brought within 45 days of its adoption. The supporting documentation for the establishment of the limitation must be available for public review at least 15 days prior to the adoption of the appropriation limitation resolution. The required material, Attachment A, that provides detailed information on the appropriation limitation, has been available since May 20, 2003 as an attachment to the recommended FY 2003/2004 Budget and Resource Allocation Plan.

Section 66016 (a) of the Government Code provides that, prior to levying a new fee or service charge, or approving an increase in an existing fee or service charge, the City shall hold at least one public meeting at which time oral or written presentations can be made.

In accordance with the City Charter, California Constitution and State Code, a public hearing has been held annually for public comment on the budget and resource allocation plan, appropriation limitation and proposed increase in fees or service charges for the upcoming fiscal year.

The purpose of the hearing is to furnish an opportunity for citizens to be heard on the City's budget, the appropriation limitation, and the proposed increase in fees and charges. No action is required on the part of the City Council except for what the Council itself initiates. The FY 2003/2004 Budget is scheduled for adoption on June 17, 2003.

On May 20, 2003, the City Council held a Budget Workshop to review in detail the City Manager's recommended FY 2003/2004 Budget and Resource Allocation Plan. Although City Council is only required to adopt an annual budget, staff presented a ten-year resource allocation plan and a twenty-year financial plan for approval in concept as well.

In summary, the total recommended revenue for FY 2003/2004 is approximately $197 million, and total expenditures are approximately $209 million. The total recommended budget for operating expenditures is approximately $180 million. The total project and equipment budget is approximately $22 million. Debt Service totals approximately $7 million. Details of the revenues and expenditures are contained in the recommended FY 2003/2004 Budget and Resource Allocation Plan, distributed on May 13, 2003. Reductions to operating, rental rates, and projects resulting from the City Manager’s 6-Point Action Plan are included in the above totals.

At the Budget Workshop, Council requested further information from staff on a variety of topics. Staff has summarized the questions posed by Council and developed responses based upon available information. These responses have been consolidated and listed in Attachment B.

In addition to the topics mentioned in Attachment B there are additional areas of importance that staff is currently researching and will be bringing before Council in the coming months.

At the May 6th City Council meeting, Council directed staff to continue research on the following potential new fees and charges listed below. These potential new fees and charges will be presented to the City Council by January 1, 2004, for final action and implementation as directed:

• Emergency 911 Fee: Such fees are designed to recover the reasonable costs associated with acquiring, operating, maintaining and improving the 911-emergency communications system. This fee mainly consists of a small monthly charge to telephone subscribers. It is anticipated that this revenue source will generate $250,000 annually.
  
• Homeowner Sidewalk Repair Fee: Currently, Sunnyvale absorbs all costs associated with sidewalk, park strip and curb and gutter repair. However, under State law, these costs may be passed to property owners. A number of California cities, including San Jose, Redwood City and Gilroy have implemented some type of Sidewalk Repair Fee. The full cost of sidewalk repair to Sunnyvale is approximately $700,000 annually. City staff recommends that property owners pay 50% of sidewalk repair costs. The City of Sunnyvale would therefore recover approximately $350,000 annually.
  
• Trench Cut Fee: Such a fee would be paid by utility companies so that the City could recover the reasonable costs associated with resurfacing, maintaining and repairing paved streets that have been degraded by trench cutting. Studies have shown that trench cuts degrade and shorten the life of streets. The possible dollar recovery is estimated to be a minimum of $50,000 annually.
  
• Rent for SMaRT Station: Currently, the City’s General Fund receives no revenue from the Solid Waste Management Fund’s use of the land under the Sunnyvale Materials Recovery and Transfer Station (SMaRT Station), even though the Solid Waste Fund receives a benefit for its use. City staff is exploring charging rent to the Solid Waste Management Fund for the use of the land. Staff estimates that the market rent is approximately $250,000 per year.
  
• Municipal Utility Infrastructure Fee: City staff is exploring the possibility of adopting a fee to recover the impacts from a utility’s operations on City infrastructure. Potential revenue from this fee could be between $313,000 and $1,252,000 annually.

As a result of the presentation on May 6^th, Council has directed staff to form a 17 member ad-hoc advisory regarding local tax issues. The committee’s charge is to examine the potential for increasing existing local taxes or establishing new local taxes, to recommend to the City Council a package of increases to existing taxes and/or new taxes by July 1, 2003, and to develop a recommended public information campaign to inform and educate Sunnyvale residents about any proposed increases to existing taxes or new laws.

Staff is exploring the potential expansion of the City’s fee waiver program to the proposed sewer lateral and sidewalk curb and gutter repair fees. Through this extension staff hopes to mitigate the impact of these fees on citizens with limited financial means.

During its April 22^nd meeting Council passed a resolution extending a special extension of benefits and supplemental salary to employees called to Active Duty. The total cost of extending the benefits from six months to one year is $445,607. Council moved to fund the expenditures anticipated to incur in FY 2002/2003 at the cost of $141,292. Council directed staff to bring back the remaining funding necessary for FY 2003/2004 in the context of the budget process.

The total cost for Fiscal Year 2003/2004 would be $304,315. Funds are currently budgeted in the Benefits Fund for Military Relief at $26,426. Additional funds of $24,138 and $29,914 would come from the operating budgets of the Department of Public Safety and the Department of Parks and Recreation respectively. Contributions from the Department of Parks and Recreation and Public Safety would result from the savings in budgeted dollars vs. the less expensive cost of backfilling the positions with either overtime or temporary personnel. The $223,837 remaining would still require funding. Staff proposes the funding come from savings associated with the cancellation of management bonuses for FY 2002/2003. Staff requests policy direction on including this funding in the FY 2003/2004 budget.

There is no fiscal impact to this public hearing. Budget adoption is scheduled for June 17, 2003.