BET presses officials on internal‑service fund shortfall and RDA $500K request

At the April 15 meeting the Board of Estimate and Taxation questioned city staff about a multi‑million dollar shortfall in the internal‑service fund and asked for more detail before deciding whether to fund Redevelopment Agency requests.

City finance staff told the board the internal‑service fund (covering health care, workers’ comp and related liabilities) had a net negative position going into the current fiscal year and that the FY27 proposal includes approximately $14,000,000 in contributions to repair the deficit and cover contractual increases. Jared said that based on projections the net shortfall for the current year could reach about $8,000,000 and that the $14,000,000 figure includes contractual increases; an outside health‑care consultant indicated next year’s health‑care costs could be about $574,000 lower than budgeted, but staff recommended keeping the funding to avoid another hole.

"So the whole, I would argue, is somewhere around 8 is somewhere around 8,000,000 at the end," Jared said when describing the gap, and he added that the $14,000,000 figure is intended to get the internal‑service fund close to net zero by FY27. BET members asked whether lowering that contribution would simply defer the problem into FY28; staff said it could, because workers’ comp and liability (LAP) are volatile and the proposal uses an average-plus-20% assumption.

Separately, several members raised concerns about a $500,000 funding item for the Redevelopment Agency (RDA) and asked for clearer documentation. Member Anne Yang asked for headcount and grant lists for TMP and the RDA and cited an email alleging incomplete board approvals for certain RDA personnel arrangements. Members also asked whether RDA work had overlapped with redevelopment projects tied to enterprise-zone abatements (including mall-related abatements) and whether those abatements travel with a property sale; staff said they would circulate the abatement letter and legal counsel would attend Monday’s meeting to clarify legal issues.

Mayor and staff urged the board to focus on the finance question for the RDA request and to reserve personnel or governance concerns for the RDA board or separate inquiry, but BET members said those governance questions could affect whether the $500,000 is a prudent use of taxpayer funds. The chair directed staff to resend the RDA annual report, provide TMP and RDA headcount/grant detail, and to circulate abatement letters and related analysis before the April 20 meeting.

Next steps: Staff will circulate the requested RDA/TMP documentation, abatement letters and the city’s enterprise‑zone analysis; corporate counsel was invited to Monday’s meeting to advise on legal questions about abatements and any governance limitations on discussion.