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California City Solutions: Novato’s Online Tool Allows Residents to Model Sample Financial Scenarios

February 27, 2015
This story is part of an ongoing series featuring Helen Putnam Award entries.
 
Novato-tax-revenue-Per-resident.jpgThe 2014 entries are available on the League’s website as a resource for cities in a searchable database called California City Solutions. Novato’s Fiscal Sustainability Plan was submitted in 2014 for the Internal Administration award category.

The city of Novato had figured out how to survive on a budget deficit for more than half a decade, but when the Great Recession hit the city was forced to make painstaking cuts to its services and workforce. The city used this as an opportunity to develop a long-term financial sustainability strategy by analyzing all facets of the city’s core functions and investments.
 
Several circumstances make Novato fiscally vulnerable. The city receives the lowest property tax share in Marin County at 6.8 percent, does not receive waste hauler franchise fees or utility users tax and has limited sales tax opportunities. These factors forced Novato to make years of permanent and temporary reductions. Despite these reductions the city still faced a $6.7 million structural deficit in August 2009.
 
The city manager recommended a comprehensive two-year deficit reduction plan. The plan allowed staff to meet with residents, provide data and options to the city council, and transition to a smaller workforce in a deliberative and respectful manner. City staff met residents in their homes to understand priorities and provide feedback to the city council on which services to protect and where service level reductions could occur.
 Novato-Fiscal-Sustainability-Work-Sessions.jpg
This work enabled Novato to reduce its workforce by 25 percent, decrease employee compensation and benefits, as well as consolidate and eliminate several city services. In short, Novato saved $4 million, eliminated 34 staff positions and reduced part-time staff hours by 7,500. Even with these reductions, the city still faced a structural problem. Reluctant to cut further, the city council declared a fiscal emergency and placed a temporary five-year half-cent sales tax on the ballot, which was overwhelmingly passed by the voters.
 
City staff prioritized the city’s services and determined what level they should be funded, keeping in mind the objective to create organizational and operational sustainability, as well as fiscal sustainability.
 
In July 2012, the city’s staff and council launched a series of work sessions to publicly analyze all aspects of the city’s budget and financial position. Each session focused on a topic such as revenues, economic development, departments’ operations and service levels, employee compensation, pensions, infrastructure and facilities. Sessions also included detailed PowerPoints with recent research and several policy choices intended to improve operational and/or fiscal sustainability. These 13 work sessions formed the foundation for community outreach tools.
 
Novato-Sustainability-Report-Cover.jpgDraft Fiscal Sustainability Plan — A Draft Fiscal Sustainability Plan was released in June 2013. The plan provides the community and decision makers with detailed information, policy options, and context regarding the fiscal and organizational topics necessary to develop a road map and long term strategy for Novato’s sustainability.
 
Web-Based Options Tool — A web-based Fiscal Sustainability Options Tool was developed as a companion to the Draft Fiscal Sustainability Plan. It allowed users to see policy proposals under consideration, select their preferred long-range scenario for the city and see the impact on Novato’s bottom line. This interactive webpage assisted staff, council members, and the community to understand the tensions and implications of various strategies to solve the city’s long term deficit.
 
Community Outreach — Novato conducted an outreach campaign through the internet, Town Hall meetings, press releases, and more in June 2013. While more than 500 people tried the online Options Tool, less than 30 people attended Town Hall budget meetings. In an effort to increase outreach staff developed a presentation that could be delivered to any group in Novato.

Novato-s-Options-Tool-Screen.jpgThe presentation focused on three significant themes:
  1. Unsustainable nature of Novato’s revenue structure;
  2. Employee compensation and effects on recruiting and retaining quality staff; and
  3. Importance of infrastructure investment and maintenance. 
While city staff presented the plan to the residents, the city manager and finance manager shared it with dozens of groups throughout Novato, representing more than 600 residents. The groups included business and neighborhood associations, parent-teacher associations, service clubs, senior groups, youth athletic associations, environmental groups, and others.
 
In January 2014, the Novato City Council unanimously approved the following assumptions for the city’s long term Fiscal Sustainability Plan:
  • A long term fiscal and organizational sustainability plan;
  • Maintain existing service levels;
  • Maintain and improve the safety of existing infrastructure; and
  • Employee compensation to keep pace with the cost of living increase. 
The city council next approved a long term Fiscal Sustainability Strategy in February 2014. This strategy recognized that Novato needed a permanent and significant increase in revenue in order to fund the elements of the Fiscal Sustainability Plan by the end of 2015.
 
After more than five years of reductions, Novato is starting to move forward and invest in the community and organization. Based on the Fiscal Sustainability Plan, the draft FY 2014-15 Budget allocated $1 million for infrastructure maintenance investment. The plan also recommends a modest addition of core staffing positions and funding improvements, such as retrofitting streetlights with LED and installing synthetic turf to reduce costs. A consultant plans to meet with the city to determine other outlets for sustainable revenue.
 
Novato’s Fiscal Sustainability Plan created a road map for the city council’s vision and decision-making. This multi-year strategy strengthens the city’s goals and sets a clear path for improving the quality of life within the community.


 
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