Preliminary Comprehensive Fiscal Analysis
The Preliminary Comprehensive Fiscal Analysis (PCFA) was developed by Berkson Associates under contract to the EDHCSD. The analysis concluded that given the expected expenses are revenues of the new city, that incorporation would be a feasible course of action. This is a rather remarkable conclusion given the number of errors and omissions contained in the analysis. In this section, we’ll take a closer look at the PCFA and do a deeper dive on the city budget forecast summary table that predicted that the city would generate sufficient revenue to maintain an acceptable level of services after incorporation.
The PCFA contains a table illustrating city services pre and post incorporation. This table sets forth the basis for the cost analysis and will be included in the incorporation proposal that is sent to LAFCO for approval. We will focus on the services that will be transitioned from the county to the new city of El Dorado Hills.
PCFA Basic Assumptions
The PCFA assumes that many of the new services provided by the city will be contracted while the services are being transitioned from the county to the city. For example, the city will be providing its own police service. Policing may be provided under a contract with the El Dorado County Sheriff Department on a temporary basis. However, contracted services may be continued for an extended period of time. For example, Rancho Cordova, incorporated in 2003, still contracts with the Sacramento County Sheriff Department for law enforcement services. Most of the cost estimates in the PCFA are based on prices for these contracts.
You can't fight City Hall -- There isn't one
The city would establish a five member city council to oversee city services. New city employees would include a city manager, board clerk. city attorney, and staff for human resources, finance, risk management, and information technology departments. The current CSD would continue on as the city Parks and Recreation Department.
The PCFA mentions Town Hall facilities but isn’t clear as to whether a new building would be built, or office space would be leased.
Incorporation is not expected to require changes to existing facilities or plans for new facilities different from current EDHCSD and other service providers’ plans. Additional staff will be needed to handle increased City responsibilities, but Town Hall facilities should house the new City’s additional staff.1
Later, in the discussion of public facilities and buildings, a reference is made to space for a permits and planning office.
The City will continue to maintain EDHCSD buildings and future new public buildings. No significant additional public facilities are assumed to be required by the new City, other than additional space for planning desk and offices, and space for contractors (e.g., Sheriff).2
In any event, the PCFA does not consider leased office expense for the new city employees nor does it mention capital construction of a City Hall.
Liability Insurance
Although the PCFA does state that risk management would be a function of the new city government, there are no expenses for casualty or liability insurance for the new city. It is assumed that insurance for the Parks Department (the former CSD) is included in CSD expenses, but the PCFA has no cost estimates for city insurance.
The PCFA compares the pro forma El Dorado Hills city budget to budgets from Folsom, Lincoln, and Placerville. The Lincoln budget contains an insurance expense of $904, 789. Based on a per capita allocation, the El Dorado Hills expense would be $854,813. It is assumed that insurance is included in the non-operational expense categories for the other cities. It is not clear why this expense was not included in the City of El Dorado Hills budget.
Police Services
The Police Services section 3 of the PCFA is filled with much hand waving. Some costs identified in the section are not carried forward to the budget calculation. For example, the PCFA correctly observes that traffic enforcement, currently provided by CHP, will become a responsibility of the city. The PCFA also notes that this will require additional training for officers and specialized equipment such as speed cameras and perhaps traffic enforcement motorcycles. None of these costs are considered in the final analysis.
The PCFA states that the estimated El Dorado Hills costs for police is based on a per capita cost from the El Dorado County Sheriff department for administration, operations, and support services in unincorporated areas of El Dorado County. This does not include traffic enforcement or any specialized services such as SWAT, dive teams, accident reconstruction, etc. The PCFA notes that the estimated cost is less than a similar “per resident” cost of police in the City of Folsom. No explanation is given, but this would imply that the cost estimate for police services is too low.
As noted above, police services would most likely be obtained by contracting with the El Dorado County Sheriff Department or a nearby police department, such as Folsom. Since both Folsom and El Dorado County are currently experiencing budget shortfalls, contracting police services could be a way to ease budget pressures. El Dorado Hills could wind up paying more than anticipated for police services.
City Operating Budget Forecast
The PCFA presented the results of their feasibility analysis as a summary Table 2 in the document. However, their supporting Table B-6 goes into greater depth. Looking at Table B-6 you’ll notice that where Berkson was unable to estimate revenue or cost growth, they just assumed the amounts would be constant. This is clearly wrong. At the very least, an inflation factor should be used to estimate future revenues and costs. Click on the button below to view Table B-6 as presented in the PCFA and a second table adjusted for inflation.