At our 8.19.20 meeting, we had a discussion with no action taken regarding closing the City's long term budget deficit. The discussion focused on two sections - City's needs, and potential revenue options.
On the Needs front, the discussion focused on three areas: Infrastructure, Staff recruitment and retention, and rising operational costs.
Infrastructure: This includes things like streets, sidewalks, parks, and facilities.
Each year the city received approximately $1M from various sources to be used for transportation and road related activities. The City as a practice has accumulated these funds and every other year, performs road work with the sum of two years of funding, approximately $2M. At our 3.18.25 meeting, we received an engineer's report detailing the condition of our roads, and what it costs to maintain them.
Street quality is measured in terms of Pavement Condition Index (PCI). Overall Pavement Condition Index (PCI) of the City is approximately 73. The scale is out of 100, and is divided into four general condition categories. Pavements in “Good” condition have a PCI above 70, pavements in “Fair” condition have a PCI between 50 and 69, pavements in “Poor” condition have a PCI between 25 and 49, and finally pavements in “Failed” condition have a PCI below 25.
Based on the report presented, in order for the City to simply maintain a PCI of 73 that it currently has overall, the City would need to spend approximately $13M over 5 years, or $2.6M/year. This means that the City's current sources of income to fund road projects is not sufficient to maintain the road conditions that currently exist. The shortfall is approximately $1.6M/year.
That shortfall is just roads though. There are also numerous areas in the City where sidewalks need repair and maintenance as well. So the first question is whether or not as a matter of policy we wish to maintain our current road quality, or are okay with it being something less.
Staff Recruitment and Retention: This is regarding how we attract and retain talent.
Current city staff are approximately 15-45% below market in compensation. Jobs and requirements are not always apples to apples, however in comparing similar cities this is where Clayton compares. If we wish to continue to attract and retain talent, we will struggle if we are too far below market. Thus far we've been able to acquire staff when needed, however some positions are more difficult to fill. Often times staff will gain experience in Clayton and then turnover quickly when opportunity for increased compensation or greater experience is presented. Frequent turnover impacts the City's ability to deliver consistent services. So the next question is whether or not as a matter of policy we are comfortable being below market, and at what magnitude.
Rising Operational Costs: This is regarding the cost of day to day activities.
In the current environment, inflation is outpacing the City's revenue sources on a consistent basis. This affects contracted services, acquisition of goods and supplies, and all economic transactions. The next question is whether or not the City should seek a way to hedge against rising costs.
On the revenue options front, staff presented information on various methods for increasing revenue. Each had pros and cons, and potential revenue that could be generated. These methods included examples such as a parcel tax, a parcel assessment, parcel transfer tax, sales tax, utility user tax, and a cannabis development agreement. There may be others as well.
After discussion, we determined that the next step would be to focus on what the City needs and the level of funding required to provide the level of services as a policy matter. This will come back at either the mid September or mid October meeting.
