eir that was prepared in 2009 -- we received a lot of comments on that document. in particular, the fishery issues in the alameda creek watershed were of great interest to a number of groups, other resource agencies. as a result of responding to comments, we developed the calaveras dam project variant, which is a variant of the original project which incorporates specific actions to improve the access of steelhead to the alameda watershed. steelhead trout have historical used in alameda watershed, have been blocked from that portion of the watershed in the past eight years or so. the sfpuc has been working groups diligently to restore steelhead to the watershed. as part of this project, we will be releasing significant

additional flows into the watershed from the dam as well as from the alameda creek diversion dam. we will also be constructing a fish ladder around the alameda greek diversion than to allow passage of steelhead trout, past the diversion. we will also be installing fish screens to prevent entanglement of the steelhead. that was a major topic of discussion. with respect to the east bay regional parks district, they have brought up a number of issues that are related to traffic concerns, access of their personnel to the park, perception with respect to asbestos at the park, and a number of other concerns they have brought to us regarding

recreational impacts they perceive that the project would have on their operations of the park. from the full board next week, the planning department will be making a presentation demonstrating the adequacy of the eir, to address all of those issues. there are reported medications in place to address all of those issues. -- appropriate mitigation in place to address all those issues. however, puc recognizes there are some coordination actions. we have developed a settlement agreement to address those concerns. supervisor chu: thank you. let's go to the budget analyst report. >> madam chair, members of the committee, towards the bottom of page 6 of the report, we note

the $6 million in construction related costs detailed in table 3 -- again on page 6 of the report -- subject to approval of the proposed settlement agreement, the puc anticipates expanding a total of $2.5 million on that settlement agreement. that is between the puc and east bay regional park district. on page 9 of our report, we note the board of supervisors could continue the requested release of reserved funds until after the puc received construction bids for the calaveras dam replacement project, which are currently due on april 1, 2011. however, having said that, continuing the subject could result in delays to the project, due to the construction-related activities which i just

mentioned, listed on page 6 of the report, totaling $6.9 million. that must be completed prior to the commitment of construction on august 1, 2011. so therefore, our recommendations, on page 10 are as follows. we recommend the proposed resolution adopting findings under ceqa be approved. secondly, subject to approval of the proposed settlement agreement, we recommend that you release a total of $17 million from a budget finance committee reserve, including the $6.9 million i referenced for construction-related costs, including $2 million for settlement costs, not part of the construction contract, and again, that assumes this

committee would approve that summit agreement. we have not weighed in on that agreement. assuming that is so, we are recommending that release of the $17 million. it also includes, in addition to the $6.9 million, $10.7 million in estimated additional non- construction costs. we further recommend that you replace the existing budget finance committee reserve on the remaining $320 million with the controllers reserve and is struck the comptroller, after receiving supporting documentation from the puc, to release the amount of construction funds equal to the lowest responded construction bids received by the puc for the main construction project, plus a 10% construction contingency. we then recommend that you request the comptroller to return any of needed funds for

the calaveras dam replacement project to a budget and finance committee reserve. >> thank you -- supervisor chu: thank you. mr. harrington? >> first of all, we want to thank mr. vote rose for his work and we thank you for the recommendations. it is difficult to build a dam in california, as you might imagine. we talked about the issues with environmental organizations, regulatory issues. i am pleased to report that at the planning commission, many different organizations spoke in favor of the eir. when this was completed, we were in complete agreement with the organization's of which we work. we are improving the fisheries and the lives of people who are over there. happy to answer any questions. supervisor chu: thank you.

is there anyone from the public that would like to comment on items three, four, or five? >> good morning, supervisors. bright line defense project. there were discussions about how to maximize opportunities for residents, while balancing the interests of regional repairs and project impacted communities. as a result, the sfpuc had put for many innovative ideas and staff has provided input into the local hiring law. general manager harrington has been a strong supporter of that. we heard today about local hiring in regards to the tunnel training program that exists, but we would like to ask within two weeks time the puc provide an update on the local hiring program regarding hitachi, and

the calaveras dam. supervisor chu: thank you. next speaker please. >> good morning. i am with the a. and philip randolph institute. i know we have been hearing about a status report for this, but i am here to speak on behalf of my organization to let you know that our mission is to promote economic and racial equality for underserved communities, here in san francisco. we are in support of the water system improvement program. we see this program as a strategic and positive development for unemployed workers in the city and we also work directly with the northern california district council of labour is to provide the tunnel training and boot camp for the candidates that have been successful so far. we understand that this program

provides opportunity to develop long-term employment, here in san francisco, so we wanted to show our support. thank you. supervisor chu: thank you. is there any other speaker that would like to comment on item 3, 4, or five? seeing none, public comment is closed. there are a couple of items that we have to work through -- the first one, simply a hearing. i wonder if colleagues would simply entertain a motion to continue this to the call of the chair, updates to the puc water improvement program. without objection. item 4 is the item with regards to releasing the reserves. the budget analyst recommendations seem a corporate to me to allow only $17 million to be released from the reserves but to put the remainder on the

controllers reserve. to we have a motion to that effect? supervisor mirkarimi: approved with a budget analyst recommendations. supervisor chu: to be specific, we are accepting recommendations two, three, and four. item 5 is a ceqa funding that we are not able to approve today because we are waiting for action to be taken at the full board level with regards to the appeal. if i could entertain a motion to send item not without recommendation, pending final board action on the final eir appeal. supervisor mirkarimi: motion to advance. supervisor chu: without objection. thank you. please call item six. >> item six. resolution approving the settlement of the unlitigated claims between the city and county of san francisco and the east bay regional park district (ebrpd) related to the san francisco public utilities commission (sfpuc) water system improvement program, calaveras dam replacement project, in alameda county, calling for

sfpuc to pay ebrpd $2,000,000 related to project construction activities, and including other material terms and conditions in a settlement and release agreement. supervisor chu: thank you very much. this is an item that will be going under a closed session. in addition to that, we have a item 7 but is also in closed session beard could recall that also? >> item 7. ordinance for printing $2,809,000 from the general fund reserve to the department of public works for litigation expenses related to the santa clara superior court case between mitchell engineering/0 by asha corp. versus city and county of san francisco for the fourth street bridge project an fyi 2010-2011. supervisor chu: at this point,

we are going into closed session. members of the public, we have to clear the room. the only individuals that can remain are city staff providing information with regards to these thibodaux -- two items. >> i believe we need to take public comment on going into closed session. >> thomas pickering of. tenderloin resident. thank you. i want to speak on item 7. i do not believe that item 7 is a program for closed session. i do not believe it falls under administrative code 67-10. this manner is to appropriate to the city attorney $2.8 million out of the general fund. the matter has already been discussed in committee. i think it should not be heard

in closed session. i am here today to make a record and advise you that i will challenge you at the sunshine task force for holding this matter in closed session. thank you. supervisor chu: thank you for your comments. are there other individuals who wish to speak on going into closed session for items 6 and 7? seeing none, public comment is closed. just to the point that was made by the speaker, we have not specifically heard item 7 in committee. we had it on the agenda in a previous meeting, but the item was continued because we were advised by the city attorney that we needed to go into closed session. madam city attorney, could you elaborate on the necessity to do that? >> item 7 is an appropriation of proceeds that relate to pending claims and litigation -- anticipated litigation involving the city.

it is noted that way under the administrative code. supervisor chu: thank you. we have taken public comment. if there are no objections, we willll >> we met with the committee in closed session on anticipated litigation involving the city as well as pending claims involving the city. i understand the committee will move to move the item 6 forward without recommendation pending the outcome of the appeal of the feir which will be held at the board next week. the committee will move to item 74 with recommendations. >> correct. supervisor mirkarimi: the motion to move item 6 without recommendations.

supervisor chu: without objection. >> and then an order at this time regarding disclosure. supervisor chu: we have a motion not to disclose. without objection. do we have any other items before us? >> that completes the agenda for the subcommittee. supervisor chu: thank you. the subcommittee is adjourned.

[gave;] supervisor chu: hello, and welcome to the meeting of the budget and finance committee. i am joined by supervisor mirkarimi and supervisor wiener. mr. clerk, do we have any announcements? madam clerk -- clerk: yes, please turn off any devices. items will appear on the march 15, 2011, board of supervisors'

agenda unless otherwise noted. chair chu: next item. clerk youn: hearing the city's policies on set-asides in reserves. chair chu: i thought we would have a quick update on revenue numbers for the coming year and then to have lunch into the set- aside policies. >> at your request, madam chair, someone from our office will briefly walk through the presentation we have and provide hopefully some useful background as you begin working through this coming year's budget cycle. a bit of an overview of what revenues make up our budget, how

those compared to others, and then get into some of the nuances about the baselines and how our various reserves function. we hope you find this helpful, and i know we are in the process of getting this on the overhead screen as we speak. chair chu: we do have copies, but maybe we can put them somewhere for the public to take, if they like. >> i would just get started. supervisors, i am from the controller's office and the city

wide revenue manager, and as requested, we just wanted to give you an overview of some of the revenue sources that are contained in the city budget and then talk a little bit about the set-asides and other restrictions that we have on the use of those revenues and some of the reserves that get funded from those revenues. the first chart, this is the deal if you look at the city's entire budget during the current year. $6.50 billion, approximately. the largest funding source is fees for services, and that is because it includes things like airport landing fees, et -- feees, water, puc. this is the largest. approximately $3 billion constitutes the general fund. the largest one becomes property tax.

almost $1 billion out of the total $3 billion. followed closely by state revenue. also, business taxes, payroll tax, in a tiny amount of business-registration tax -- and a tiny amount of business- registration tax. this next slide is mostly for your reference. the top row shows the local tax rates in san francisco for hotels, utility users, parking, and others. for certain of our revenue sources, there are portions that are set aside for particular purposes, largely due to voter- approved consent to this. -- approved incentives. the largest we have is property tax. voters have approved allocating

part of the property tax to the children's fund, the library preservation fund, and the open space funds. this fiscal year, this is money not being deposited into the general fund but rather to a special fund for those particular purposes, and those are voter-approved mandates that have expiration dates between the six years from now and in fiscal year '31. there is also a slight amount that goes to the symphony. for the parking tax, as you know, an amount equivalent to 80% of the parking tax is dedicated to the mta, so it is deposited into the general fund, and then we transfer that over to the mta, and that is about $52 million per year, and there is no expiration on that, that set aside. there is a small set aside of

payroll tax some taxpayers can elect to have a small portion of their tax bill set aside for essentially graffiti abatement and other neighborhood beautification projects, and then, finally, the hotel tax. according to local code, it is allocated to a variety of cultural and housing and convention-related activities. every year, i would just kind of said way into this next slide, which shows in more detail -- i would just kind of segue into this next slide, which shows in more detail -- chair chu: revenues that come in, and majority of that being services, puc, water, airport,

and about $3 billion, almost half of that is general fund revenues that come in. what would you say is the percentage of that amount that is restricted? >> the $216 in tax set asides, and in addition to that, we have about 380 that go to baseline, so the total is $600 million, i guess. also, there are a few other expenditure requirements that have nothing to do with the amount of revenue that we get the things like fire station staffing, minimum staffing levels, the requirement of the office of economic analysis, another few hundred million dollars. the ones we are looking at just here, about 600.

>> just to briefly add to that, as well, the part of the fund that is discretionary, we have set asides and the baseline that michelle just alluded to, and we also have other areas where general fund money is restricted by either our charter or federal or state law, and we have cost payments which are, for example, required, and that is a portion of the general fund budget, and additionally, we have certain kinds of federal and state revenue that are coming into our general fund budget that are required to be expanded, so you can kill these numbers in different ways in terms of what we call discretionary -- are required to be expended, so you can count to these numbers in different ways it, what we call discretionary.

somewhere between $1 billion and $1.5 billion. chair chu: ok. so just for your reference, we have a slide showing how the hotel tax is allocated. chair chu: i think this slide does not correspond. it says "tax set-asides." >> what we are talking about is just the hotel tax. about $133 is for any general fund purpose, and the remainder is allocated for specific programs within budget. >> mr. levinson from the

comptroller's office, and i will just continue on the baselines that are in our chart, which are a part of our aggregate discretionary revenue. that is count deleted as the general fund revenue net of transfers, fees -- that is not counted as the general fund revenue, net of transfers, fees. this is another way of looking at what supervisor chu asked about before. it was about $1.90 billion out of the general fund, so about 70% in that case. even the so-called discretionary revenue, there are different ways of looking at what is extorted, as was mentioned. that will find things like police department staff and benefits that we may have limited discretion over, but that is our baseline.

but that $1.90 billion number. -- it is that $1.90 billion number. this was originally set up as two separate. it is really fungible from the perspective of the mta, that together add up to 1.96% of discretionary revenue, and you can see the numbers, about $175 million from the budget. and then the library has the other base line, -- baseline, $44 million. we see what actually comes in, and we will transfer these as a final percentage to those agencies. the other requirements in the charter are the children to baseline, of which -- are the

children's baseline. this would be $95 million in fiscal year 2010-2011. part of that funding has included the board's decision to provide rainy day money to the school district, which is a children's baseline eligible item. the public education in richmond fund -- education enrichment fund, known as prop h, and i have another slide of that coming up. they also have a baseline which is point to 9% of annual discretionary revenue. -- which is 2.9% of annual discretionary revenue.

this is out of the $1.90 billion of the aggregate discretionary income. and here is some more discussion, just a little bit of history on the requirement on the public " -- public enrichment. $60 million in 2009 to 2010, and after that point, like the muni base line and the school base line -- and library baseline, it varies. that has a provision in the charter that allows the mayor and the board to reduce this amount by 25%, basically differ it, because it is still owed. that is if the projected shortfall is at a certain number. the