This week at council we discussed the upcoming 2008-2009 budget process.

The budget for San Jose is a year-round process tracking the revenue that comes into the city, like sales tax and construction and conveyance tax (C and C), and expenditures that come from the General Fund (non-restricted money), or capital expenditures (restricted money) like building new libraries.

The city’s budget is a topic that takes a considerable amount of time to master. To Mayor Reed’s credit, he is the first mayor who started a community process that helped share information regarding the budget process and the complexities that accompany it. For example, in January 2007, Mayor Reed held the Neighborhood Associations Priority Setting session, where neighborhood association presidents and others had a voice in the budget process. In January 2008, the mayor held the same meeting and went over the consultants report regarding budget options for San Jose.

During the 2008 meeting, the audience was asked to rank the choices that the consultants report came up with. I attended this meeting and had mixed feelings. I felt that our city staff was better versed on the topics then the consultant and that four hours is not enough time for the budget.

In addition, I also attended two of the mayor’s Budget Shortfall Taskforce meetings (similar to Mayor Hammer’s New Realities Taskforce in 1995) as well as three of labor’s community budget working group meetings. More people offering new ideas in the budget process is a good thing.

A broader discussion of the budget, where we can do a deep dive into ideas brought by the public, will be on the Rules agenda on March 5. This would allow the residents to understand the trade-offs of budget policy and allow more time to discuss good ideas.

Scenario:

There is a budget meeting at City Hall that you decide to attend with your neighbor. Your neighbor does not follow local government; he just knows that he pays his taxes and complains about potholes and hears about Little Saigon on TV. Knowing that both of you are attending and that you have two different levels of budget knowledge, what would you both want to learn from the meeting?

Do you want Budget 101?
Scholarly discussion?
PowerPoint mania?
Q & A?
Debate team?
Deep dive on only a few topics?

As some of you many know via Sal Pizarro of the Mercury News I have grown a beard. I stopped shaving the morning of the mayor’s State of the City speech. I joked with Sal that I was not going to shave until we fixed the structural budget deficit. Getting our city’s finances in order is the number one priority and will take hard work and more community outreach. By that time, my beard will end up competing with Moses or the members of the band ZZ Top.

So for now the beard remains, providing shock value to those who see me with it for the first time. It is also a great disguise, as I am now able to go to the grocery store without being asked to fix a pothole or other like matter.

It came in quite handy on Fat Tuesday. Our Tuesday evening council meeting was cancelled, so I chose to spend my time as I have done many nights on the streets of downtown with our SJPD and Mounted Unit. Mardi Gras has been a small curse for our downtown in past years with many people outside of San Jose looking and hoping for something out of a “Girls Gone Wild” video. Quite the opposite occurred on Fat Tuesday. The mostly young male crowd that traveled from other cities simply just roamed around the downtown.

My beard, along with my black beanie and trench coat, provided me the appearance of Al Pacino in the movie “Serpico.” This look allowed me to blend in instead of drawing attention by wearing a suit or dressed as a spokesperson for Banana Republic. Walking on the street with the crowd provides me a street level perspective that cannot be experienced in a police car.

This out-of-town crowd for the most part was not spending any money in the bars or restaurants. Early on, there were plenty of minors roaming, some even with beer in a bag. Later the crowds grew larger and older, but still they were not patronizing our downtown establishments, and, instead, just loitered.

Luckily, most of the convention visitors were in bed before the large crowd came. Mardi Gras and Cinco de Mayo have to be the worst PR nights for our downtown. To our SJPD’s credit and hard work, the crowds are lessening each year. I saw firsthand the effectiveness of the police on horses riding through the crowd, patrolling on bikes, riding motorcycles etc., but this comes at a cost to the taxpayer of police overtime.

Our downtown continues to evolve for the positive as we look forward to new residents in the residential towers and recently filled storefronts in restored historic buildings. There are currently three solid plays downtown at City Lights Theater, San Jose Repertory and San Jose Stage. I have seen each of them and recommend them. So come on downtown to see a play for Lent, as Fat Tuesday is over.

At the General Plan Task Force meeting last week, we discussed transportation and how future VTA projects will guide San Jose’s land use. The VTA budget for new projects is funded out of the voter-approved half-cent sales tax. The tax provides partial funding for BART, light rail extension, bus rapid transit improvements, some road paving, trails and bike lanes.

The big-ticket item is BART. The low estimate to bring BART to San Jose is $5 billion, but some say the amount is closer to $10 billion. Whether you are a BART cheerleader or a skeptic, one thing both sides agree on: BART is a huge investment. It is fair to say that BART will at least have a $1 billion overrun and that the $200 million that is budgeted for trails and bike lanes alone will not close the gap on the BART shortfall.

Trails and bike lanes are two of the most important transportation options available to us. They are the smallest items in terms of funding on the “to do” list at $200 million, versus $5 billion plus for BART.  I have had many different forums in my district where residents are constantly asking me about trails and bike lanes. These residents ask how they can help with grant writing, private/public partnerships, etc.

I ask myself: Why not spend the money on trails and bike lanes first since the money needed is much less than any other transportation options like BART? In addition, the talent that can be gained by working with volunteers and the community would be an asset for the VTA, city and county in our goals for trails and bike lanes.

One caveat with trail land is that for the city and county to get its best value, we must purchase land now because land appreciates in value. Trails can be expensive at around $1million a mile. However, in comparison, BART is around $500 million a mile, with an estimated completion of no sooner then 2017.

Another form of transportation discussed was the bus rapid transit lines. In addition to special preference at traffic signals, these buses travel major routes and have fewer stops. However, I would encourage that ALL the buses are equipped with real time GPS information. For example, the bus stop would have a display that would communicate to waiting passengers how many minutes till the next bus arrives. The GPS system has already been successful in Europe and many US cities today. Instead of passengers having to guess what time a bus will arrive by looking down the street from the gutter, they would simply look at the display. This would bring a higher level of consumer satisfaction and increase the number of bus riders.

I think it is prudent to pick off the lower hanging fruit for transportation projects while keeping an eye on the big picture.

What do you think?

Several months ago I wrote a blog “Try It Before You Buy It,” where I spoke about the importance of making sure that the city has the option of using technology before actually purchasing it. I shared how large organizations struggle with information technology (IT) implementations when dealing with vendors who often make promises that differ from the actual results received. I also pointed out how the VTA and City of San Jose have spent millions on unwise technology decisions to purchase software.

Since my first council meeting, I have asked “perspicacious” questions regarding software expenditures. Questions that I asked included: What is the return on investment (ROI)? Have references been checked? Was piloting the software allowed? If so, did city staff use the software? Was web-based software available?

Sometimes I think I might come off as “prickly.” However, it is important to me to ask these questions—to dig deep. In my opinion, if a company wants city money, then staff needs to make sure they drill the company hard so that at the council meeting, staff is ready to make the case.  From my private sector experience, a private company will not shell out dollars without making completely sure they are getting exactly what is promised, because if they don’t, they could go out of business or people would get fired.

Let me share an example of what I am talking about. In May 2007, the San Jose Parks Department proposed spending a one time, drop-in-the-bucket amount of $1.6 million on software to manage the scheduling of parks, reserving facilities and family camp. The scheduling and reservations were previously done by hand on paper.

I challenged the expenditure and asked the questions I mentioned above to staff. I wasn’t completely satisfied with their answers, and it appears when it came down to it, they were not satisfied with their answers either. They took on the challenge to investigate my questions further; they went looking to see if money could be saved and if there was a better, more efficient alternative out there.

I am happy to say that staff exceeded my expectations (and I think their own) and brought back a much better proposal in December 2007, which the council accepted.

Staff began by doing a very thorough ROI, justifying the expense by the amount of hours it would save city workers at the community centers. Then, staff chose a web-based solution which is hosted and reduces our upfront and ongoing costs. The amount for this new alternative: $125,000. Yes, indeed.  So, we might have—could have—spent $1.6 million in one-time money for the same solution that we are spending $125,000 on instead.

The $1.6 million proposal is the typical software sale of massive upfront license fees and servers. However, the $125,000 proposal does not require servers or massive upfront dollars. Instead, we spent $125,000 on implementation and training and received a better model.

The city would have owned the software with the $1.6 million dollar option. However, we do not want to own it. Ownership equals expensive and timely upgrades, bug fixes and daily maintenance. Plus, in five years the software and servers would be outdated and we would have to spend more money to update them. Thus the process of spending to keep up would be never ending.

Also important to mention is that the city does not pay any future fees for this purchase. The costs are covered by fees the users pay when they book a room or recreation area. So residents can make reservations from home on the internet vs. driving down to the community center. The vendor of the software company makes money over time based on a portion of individual user fees instead of $1.6 million up front.

My value-add is that I can do my part in trying to save the city money when I can. Every bit of money saved is a good thing in my book. With money saved—especially on technology—we can help pay off the deficit, hire public safety officers and fund traffic calming.

Last week the San Jose City Council discussed the issue of co-payments for retired city workers and their dependents. The recommendation from the city manager was to defer adding co-payments for one year to allow more time for this issue to be researched. Whatever the outcome, the decision will affect 3,000 retired city employees, including dependents, and the city budget.

The city would save $1,121,000 by applying co-payments to retirees and their dependents. This is quite a savings in itself—even more of a savings when you look at the city’s deficit.

Why is the topic of co-pay being discussed?  Well, the fact that applying co-pay could save the city money is a good reason. Also, co-pay makes those who choose to go to the doctor accountable. For example, if one does not have to pay to see a doctor, then the service might be overused since it is free. If the city applied co-pays for each doctor visit and prescription, it would make one think twice about the necessity of a doctor visit.

This is largely due to the effect of “consumerism.” Employers find that having co-payments reduces health insurance premiums; however, by doing so it increases out-of-pocket costs. I have always had a co-payment attached to any and all of my doctor’s appointments. In addition, both my parents, who are retired teachers, make co-payments with their Medicare and out-of-pocket private insurance—no exceptions.

The issue here is what the city has “promised” its retirees and making sure the city keeps its promise. An overhaul of retirement benefits will not happen soon; however, thoughtful ideas should not be ignored.  I think there is an opportunity for the city to keep its promise to retirees and save the city money.

One idea that I shared at the council meeting last week was to apply co-payments with the security of the city reimbursing the retirees and their dependents for them.  For instance, a retiree would go to the doctor and pay a $10 co-pay to see a physician.  The retiree would receive a receipt for the co-pay and mail it in to the city who would reimburse the retiree 90 percent, or in this case $9.

Let’s take, for example, that all 3,000 retirees/dependents go to the doctor four times a year and receive a monthly generic prescription twelve times a year. The twelve prescriptions would be $54 and four visits would be $36, which totals $90. (Original out of pocket for beneficiary is $100.) Therefore, $90 x 3,000 retires=$270,000. You then have the “difference,” or, better said, the “savings” to the city of $851,000 (the difference between $1,121,000 and $270,000).

Now, some of you out there are probably saying that it will cost the city more then $851,000 to manage the reimbursement.  I have an answer for you: No, it won’t.

The city could easily implement a system that allows for reimbursements of this nature. For example, we could spend a few hundred dollars for Quick Books online—a web based system. Then, the city could import, via Excel, the information of all those eligible for reimbursements—retirees and their dependents—into Quick Books. Then, when a retiree/dependent receives their receipt, they can mail it in to the city and the (one) accounts payable person will enter the receipt into the system and mail the reimbursement check. The city auditor could have real-time access to Quick Books to oversee the transactions. Another viable alternative is that we consider contracting with a reimbursement service as is done for State of California employees.

Of course there are variables; however, I think it is important to ask the question: How can we do both? How can we keep our commitments to retirees and save the city money?  The answer does not have to be one or the other.

Saving the city money and keeping promises can be accomplished.  It’s not easy, but those involved, including me, are going to have to try harder to find the middle ground.

As I bid 2007 goodbye and welcome 2008, I think of the many issues that my colleagues and I will be working on in one way or another. Whether balancing the budget, protecting our resources like industrial land or implementing the mayor’s Green Vision, among others, it will take collaboration, perseverance and, above all else, a good sense of humor to keep us all in check.

As I make my list of resolutions for 2008, I have decided to make an attempt to not get “stuck” in the office. If I really want to learn more about San Jose then I will need to spend time in the field and explore the different facets the city has to offer.

San Jose reminds me of a jigsaw puzzle where the neighborhoods are the pieces and we are trying to make them all fit together. Each neighborhood and district has its own history and demographics that are unique.

All ten districts are drawn according to population. Therefore, when the population changes in each district, the boundaries of the districts are then redrawn. For example, does anyone remember when former Mayor Hammer represented District 3?  Well, guess what? Susan hasn’t moved but she now she lives in District 6 because district lines fluctuate.

I love my district because I am familiar with it. I was born and raised here and now own a home here. However, insulation is not something that one should base citywide decisions on. I want to challenge myself to go outside of my comfort zone and explore San Jose and all its wonders.  Therefore, I have decided to tour each district with its councilmember. This is sort of like “shadowing” different occupations within a company like engineering, marketing, sales, operations, etc.

I could continue to go out on my own and investigate each district; however, I would rather look to the “experts”—my fellow elected colleagues—for their expertise regarding the districts they represent. Sure, I have lived in San Jose for 38 years, but so many things have changed and will continue to change that I feel touring the districts will be a good start for 2008.

I am in the process of scheduling a tour with each councilmember. I started my tour with Councilmember Madison Nguyen who represents District 7. It was good for me to listen to Madison explain the different areas, points of interest, etc. in her district. The opportunity to listen to my colleague outside of the office on her turf was a great experience for me. I learned so much more from actually being there than I would have by reading a memo.

Life is good in San Jose. I have a feeling that 2008 is going to be a productive year.