Questions on Measure A – The Finance Commission – for the 11-3-20 Election

Liza, these are very thoughtful questions and hopefully others who are following this string will get some answers too. Let’s see if I can answer them such that you understand my answer clearly.

1. There are not that many cities that have a finance commission that advise the Council. We modeled our Measure A after the Finance Commissions in Los Altos Hills, Los Altos, Newport Beach and Irvine and developed our set of “best practices” from these four cities. Newport and Irvine are bigger and Los Alto Hills is smaller. Los Altos is amazingly similar to us in many ways. With the help of a law firm that specializes in municipal initiatives, we customized the best from each of the cities to what we thought would work really well for Los Gatos. Almost all cities in California, and California itself, have serious financial problems. We thought it best to start fixing the problem now before the problem fixed us. 

 It’s important that you note the underlined words as the Finance Committee exists now, and the Finance Commission will exist once Measure A is passed.  The current Finance Committee is hamstrug in that they can only “see” or work on part of the finances.  They currently are not allowed to advise or recommend on the budget to the Council..

A group of us were instrumental in setting up the existing Finance Committee in 2017. Now we are shooting for a Finance Commission to be set up in 2021 assuming Measure A passes. The big issue at the time was that the Council, with advice from the Staff refused to let the Finance Committee advise or even discuss budget matters.  Our second reason for setting up the Commission is that the Sales Tax Oversight Committee is basically broken.  By combining it with the Finance Commission, we can eliminate one Committee that isn’t working.

The question you asked was whether or not other cities have paid financial commissions. I believe all cities with Finance Commissions or Committees are volunteers to the community, similar to our Finance Committee. Los Gatos is very fortunate to have a highly qualified citizens with financial backgrounds that can help the Council understand all of the financial data coming at them.  All of the  Finance Commission will be volunteers, exactly like our Town Council, our Planning Commission and all other Commissions. 

2. The way we have proposed the new Finance Commission would be as an “independent” Finance Commission. The present Finance Committee is essentially run by the Town Manager through the agenda process. Not only does she set the agenda, but the present rules set by the Council do not allow the Finance Committee to even look at the budget. If you think about it, the budget is where it all begins. The new Finance Commission will set their own agenda based on priorities they see and priorities that our Council, or for that matter,other departments, bring to their attention.  So the long answer to your question is that the Commission is mostly advisory to the Council. The only place where they are actually “oversight” would be taking over the Sales Tax Oversight Committee that has been dysfunctional under the Town’s supervision. Instead of having two meetings per year as they promised, we have had one meeting in two years. Instead of having 7 members, they have two. We saw the Finance Commission as an opportunity to clear up the missed meetings and fill the missing personnel. Putting them under the wing of the Finance Commission will reduce bureaucracy by one Committee. So other than this one oversight assignment the Commission will be advisory to the Council.

3. Liza, I am not totally sure that I understand your question but to attempt an answer for you, based on #2 above, the Council is the ultimate authority. They will have the same “liability” they have always had in that they are the final decision maker. The Finance Commission is only advisory to the Council and the Commission cannot make decisions to run the Town.

3 Responses

  1. Liza Lee

    Jak, this is very informative and I appreciate you addressing each of my questions.

    How ironic that a Finance Committee is not allowed to look at the budget and only parts of it. I can now understand your reasons for this measure. My concern over independence or lack of is that the Finance Commission would be selected by Town Council members themselves. If they did not want advisory input then, why would they seek it now?

    Sorry if my third question was unclear. I was concerned with the liability related to lawsuits and how the costs impact our town. From what I gather here, our town self-insures this type of risk (e.g. North 40 litigation comes to mind) as opposed to financing and transferring it to say through an insurance policy? My thought is that in private industry, financial consultants must insure themselves just as physicians insure themselves against malpractice. Is it the norm for all cities to not fund such liabilities in this manner or perhaps this type of coverage does not exist? Either way, it will be our taxpayer money on the line it seems. I’m beginning to see this measure as a potential solution to mitigate the impending risks on the horizon.

    • Jak

      Liza, The Council is in charge of Town business. Our measures, A & B (aka, initiatives) were our effort to get the Town to become more Transparent and forthright with the financial numbers. The Council permitted some basic steps forward, but has not budged on letting the Committee look at the budget. It’s like giving your mechanic a hammer and telling him/her to tune up the car. You have to have the right tools (information) and without the budget, you only have 1/2 of the information needed. When the Town wouldn’t allow the Committee to move forward with the budget the State of California gives the citizens the right to file an initiative. It is a costly, very delicate and a deliberative process, as well it should be. People who file initiatives have to be strongly convinced and financially capable to bring their initiative to the public. And we are. It should make Los Gatos more financially transparent in just the next year or two.

      As for the insurance, I’m out of my league here. I am of the opinion that our public officials, in this case I’ll speak of our Town Attorney and the Town Manager, have to make the judgement calls continually as to what can be done legally and what cannot. They need to be prepared to adjudicate anything brought by or against the town. You’re correct that the town has to rely upon funds brought in by revenues (eg, property tax, sales, tax, etc) to pay the legal bills. Sometimes they can recover those legal costs and in other cases, they can’t.

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