DBI reports $3.5 million shortfall covered by project closures, projects budget trimmed

Vivian Day, director of the Department of Building Inspection (DBI), and Financial Services Manager Pamela Levin told the Building Inspection Commission on Aug. 19 that DBI expects a discretionary fund balance of about $311,000 as of Aug. 10 and a projected net shortfall of roughly $3.5 million for FY2008–09.

Levin said total revenues are below budget by about $8.2 million, driven by an estimated $12 million shortfall in charges for services and a $500,000 decline in interest and investment revenue, offset by approximately $3.8 million in additional revenues and accounting adjustments, including $2.7 million in deferred credits and smaller items such as litigation transfers. Refunds related to project cancellations were projected at $1.4 million.

To cover the gap, DBI closed projects and used portions of project-derived fund balance; Levin said roughly $1.175 million of closed projects was used in the balancing plan in addition to the operating fund balance so the department would end the year “to the good.” She cautioned that the fiscal-year closing process continues through Aug. 26 and final revenues and expenditures could change.

Commissioners asked about near-term projections for 2009–10. Levin said July 2009 collections were about $150,000 higher than July 2008 but warned that one month of data is insufficient for a reliable projection. She also outlined the adjustments made during the budget process: the January-submitted budget of $42.8 million became a final budget of about $40.5 million after revenue revisions, non-personnel reductions and Board of Supervisors adjustments.

Levin described personnel and position changes: personnel costs fell from earlier projections, MOUs affected fringe costs, and the final budget reduced headcount from prior levels to a budgeted 233 positions with an expectation that roughly 25 of those would remain vacant during the year to realize attrition savings.

On capital projects, DBI’s permit-tracking system was reduced by $400,000 by the Board of Supervisors and a $460,000 reserve was placed on approved funding; Levin said that reserve must be released by the board as project costs become clearer.

Day and Levin said DBI will continue monitoring revenues and may seek recertification to the Controller and Board of Supervisors if additional receipts are certified. The commission requested future reports comparing inspection activity and average plan-check processing times to measure operational impacts from staffing reductions.