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HomeMy WebLinkAbout2000-01-13 Budget Committee Minutes Minutes for the Budget Committee January 13, 2000 Civic Center Council Chambers, 1175 E. Main Street Roll Call Present: Marty Levine, David Williams, Steve Hauck, Jim Moore David Fine, Cate Hartzell, Carole Wheeldon, Don Laws, Cathy Shaw, Beverly Kenefick, Howard Braham, and Regina Stepahin Councilors Absent: Susan Reid and Cameron Hansen Staff present: Jill Turner and Mike Freeman Cate Hartzell called the meeting to order 7:03 p.m., Civic Center Council Chambers. I. Introductions The budget committee members introduced themselves. Hartzell: review of the agenda. II. Approval of September 9, 1999 minutes Levine/Wheeldon - motion. No discussion. Motion passed unanimously III. Election of a Chair, Vice-chair/Secretary After several nominations and nominations withdrawn Regina Stepahin was elected the new chair and Jim Moore was elected vice-chair/secretary. IV. Public Input None. V. Review of the budget process Turner: a review of the budget committee schedule. This year the subcommittees would meet both during the day and the evening. Must be sure the schedule meets the majority needs of members A discussion of the number of subcommittee meetings followed. Shaw: the number of subcommittee meetings was confusing; all meetings should be full budget committee; the plan has been changed. Hartzell: review the process. Shaw: departments that traditionally presented to a full committee are now presenting to a subcommittee. Freeman: can be structured any way the committee chooses. Fine: the committee accepted that any member might choose to attend and be a full participating member in any subcommittee without prior written notice. It could be viewed as the entire budget committee dealing with every committee. Concluded: a wrap-up session will be required to ratify the decisions. Shaw: concerns over a quorum; without a set number per subcommittee then entire committee becomes the basis to determine a quorum. Laws: not necessary for a quorum at a subcommittee meeting because they only make recommendation to the full committee; will there be a full committee meeting regarding Budget Committee Meeting 1/13/2000 1 the general fund revenues? Freeman: should be at first budget committee meeting on 4/6; would be an overview of current issues, time to talk about several funds. Stepahin: best on budget message night, the first meeting? All agreed. Hartzell: opened discussion regarding Parks, a separate department. Turner: traditionally Parks was presented before a full committee; not everyone showed; deemed sufficient that it be a subcommittee. Laws: reviewed history of Parks Commission; separate financially so no analysis of their budget. Law required a change last year; a subcommittee for Parks is appropriate to give more attention to the Parks budget. Levine: under current law difficult to show explain different treatment for Parks. Wheeldon: the issue is the elected board that governs their budget and that hasn't changed. Williams: where do we stand with Parks as a separate entity and this body. Freeman: clarification. Williams and Laws: the Parks Commission is responsible to put together the proposed budget; then the budget committee's responsibility is to review their budget. Hauck: before Measure 50, Parks had control of what they would levy. That has changed. Now under budget committee authority; they create their budget and then come to budget committee for review like any other department. Fine: to facilitate the review of Parks budget - suggestion from last year - after this year if vacancies occur on the city budget committee, Parks Commissioners to put one of their members names forward. Levine: Turner has helped Parks develop budget. Turner: helps with the property tax calculations, but they independently prepare budget and follow up; her relationship is different with the Parks department. Wheeldon: currently Parks has lots of discretion regarding budget because of its elected body: need to do whatever we can do to acknowledge that the Parks' budget is a part of the whole, but no discussion with the Park commissioners; hopes to avoid frustration of last year. Levine and Wheeldon: changed relationship between Commissioners and budget committee needs work. Moore: committee's charge — is City efficient in managing and allocating the community's resources?— resources includes the Parks; their first meeting was scheduled at the same time as our meeting, a schedule conflict; needs a hard look. Shaw: the Parks Commission elected to implement their program and to get input from the public, but the money comes from same pocket—the Ashland taxpayers. So far we have a component that runs completely independent from anything else. Now we have a cap and projected deficits and Parks is part of our tax burden and we must bring into a discussion at a much earlier stage; appropriate for Parks Commission to set its own priorities, but appropriate for them to set their budget? Braham: should be a summit between council members to resolve these issues. Laws: one of strategic plan priorities is to review charter - opportunity for a clear statement of Parks Commission; delay action to change relationship. Shaw: monies are not Parks' money; state law requires budget committee be responsible. Wheeldon: agrees with Braham; need for a working session with Parks. Shaw: no reason to wait. Wheeldon: that would be a huge step forward. Hartzell: invite Parks Commission to 4/6 meeting, copy Parks on preview and strategic plan; supports a working session. Budget Committee Meeting 1/13/2000 2 Fine: two issues 1) a fiscal issue, within the budget committee realm —what part allocated to Parks 2) a public policy issue, in the realm of that elected commission — how funds are spent: supports Shaw's statement— our fiscal responsibility for the entire city. Hauck: historical information regarding Measure 50. Agreement between the Parks Commission and the city council stated - same division of general funding would go to the Parks Commission as before, assumption by which they do their budget. Change this? —then meet to discuss. Fine: if it is to be changed, should not have to go back to council. This greater body should do this. Shaw: agrees with Fine; added - that was before the commission grew 16% in one year, before we knew we had huge looming deficits, before we had an administrator committed to making cuts, rather than raising taxes. Our job is to help with this. Hauck: also support a decision that citizens of this town made to support Parks. Shaw: the voters changed that relationship by voting for Measure 50. Hauck: not in this City of Ashland. We are bound legally by Measure 50, but have to be sensitive to our voters, keep them involved. Shaw: nothing in the charter and state law that says this body oversees and expends tax monies of the citizens. Hauck: not arguing about that,just the allocation of resources. Shaw: had the authority to levy and no longer have that authority Wheeldon: committee does need to deal with this issue, and it needs to deal with it in the Charter and need to move toward this with the Parks Commission and respect the fact that they would be changing a major relationship. Hartzell, Fine: motion to set a date for a working session next month: two members of the budget committee and two council member members meet with Parks Commission members to share strategic plans, assumptions, the budget calendar, and extend a cordial invitation to our first full budget committee meeting. After discussion, motion was withdrawn. Committee agreed that Freeman and Mickelsen should begin the dialog. Hartzell: regarding the subcommittee process that was outlined for this year; anticipated CIP going to be part of a full budget meeting and not a subcommittee as shown on the schedule. Freeman: the committee didn't like that plan, so staff made it a subcommittee; trying to do the CIP on wrap-up night would be a disaster, especially with irregular attendance. Wheeldon: point of clarification — no sign up for subcommittee, no vote on recommendations?; committee should be clear; an incredible number of meetings; depends on the subcommittee to be very thorough. Freeman: recapped what he heard in September; first, the committee wants everything in writing beforehand; second, no departmental overview—can read it; dive right into the budgets. Committee agreed. Levine: departments should focus on things that are different. Freeman: agreed. Hartzell: performance reviews or performance measures - in the specifics. Freeman: still new, but will see more of what each department is trying to accomplish; not as far along in the performance measures as expected, but basics in place; that staff evaluating a software package to do performance-based budgeting. Budget Committee Meeting 1/13/2000 3 Williams, Wheeldon: motion that any member of this budget committee who shows up at a subcommittee meeting be considered a voting member of that subcommittee at that time. Discussion: Levine: decided that in September. Turner: caution - for the CDBG and Economic and Cultural Development Grant meetings a huge stack of information is distributed only to those who sign up for the subcommittee. Laws: situation if you have one set of people who get the presentations and have the decision on a different night for CDBG. Shaw: people who sign up for CDBG should be committed to both nights. Laws: should not be able to come to the second meeting and vote if you didn't come to the first meeting. Motion passed unanimously. Laws to Freeman: will results of the report to analyze the efficiency of our departments be presented to budget committee? Freeman: most recommendations are straightforward and will come with a recommendation from the staff; we will then respond to each of the recommendations through the budget process. Laws: concerned about a couple of them that have community-wide interest and adequate time will not be given. Freeman: they will talk about Fire at Tuesday's council meeting; understood the committee would require background information and discussion on the recommendations. Should have all the reports compiled and we will deliver them within two weeks. Wheeldon: notices for the subcommittee meetings? Turner: will list them with the first meeting notice and then put them in the community calendar. Freeman: would the committee like to have the meetings televised? Shaw: a good idea. Committee agreed to have them televised. Moore: regarding the 3 p.m. meetings. Freeman: is the 3 p.m. time okay?; there had been a problem and wants to resolve it. Fine: preferred any evening. Stepahin: any changes needed to be made? Discussion followed. Stepahin: the meeting time should be changed to 3:30 p.m. All agreed. Turner: Mickelson had the calendar; would check with him before the change was made. VI. Review of the Budget Assumptions Turner: overview of the 2000 budget assumptions. She went through items 1 through 4 of the handout (see attached document). Freeman: these are really important labor unions; changes in health caps, etc., would have to happen with these groups first. Health care costs are escalating. Fire Fighters union has agreed to a very accelerated schedule, beneficial because negotiations will be completed sooner and contract will be known. Levine: do they know how much is budgeted? Turner: a public document, so they do have access to it. Turner: legislation long-term in the workers' compensation area. Turner: on PERS and reminded the committee about the projected increases that were talked about a year ago. No changes in PERS so better to move to a full contribution as soon as possible because of the interest rate charged. One rate for all entities is being discussed. In five years, we will be at the average statewide for PERS. Full amount is assumed in this budget. Budget Committee Meeting 1/13/2000 4 Turner: health insurance costs would increase about 12% over this year's budget. This year, we didn't use the projected increase. We are next to cheapest city in state for health insurance costs per employee, so the margin to go down is not much and the margin to increase is quite high. Shaw: could carry over. Turner: yes, and that's why it's 12% and not 20%. Freeman: we've been trying to find out what the increase will be, so it's fortunate we have a reserve. Turner: we need to review health insurance costs. Freeman: Marsh consultants will be doing a review to be sure we are getting the best product for the money. This should be done in the next couple of months. Williams: is benefit package consistent with other cities? Turner: it is different Turner: General Fund assumptions; reviewed distributed memo explaining that the General Fund revenues would increase a little more than 5%. Property taxes will change quite a bit; the local option levy expires and will not be renewed. An explanation of bond indebtedness followed. Taxes could be higher or lower depending on the measures on the May ballot. Hotel/Motel taxes increase because more rooms will open up, including the Ashland Grand hotel. Fine: increase FTEs? Freeman: no. Turner: the overall view shows the General Fund to be in balance. In the long-term they still rely on electric utility users tax and if growth continues at 1.5% it means that overall revenues could be squeezed in the future. Freeman interjected. He wanted to be sure the committee understands that two significant things are taking place now: 1) growth rate of the city is higher than expected. 2) hotel\motel taxes up due to Festival. However, he said that they couldn't assume that in the long term these would continue. He wants to be sure that everyone understands that these are a function of the economy, and that these things have helped the General Fund this year. We could be in same situation that we saw last year if there is a blip in the economy. Hauck: are the increases that they estimated or carry over? Turner: increases in next year's budget; we are exceeding this year's budget and expected revenues. Hartzell: growth rate and impact on planning; staff demand doesn't increase even though the growth rate is going up? Turner: would probably see some increased staffing in the building department or contracting. Freeman: commercial plans are expensive to have reviewed; consequently contractors are used. Wheeldon: Community Development and planning is a volatile area requiring top people and constant update of ordinances/environmental practice; staff overloaded. Levine: carryover— is it net excess? Turner: working capital. Turner: Water Fund; water usage is increasing beyond budget expectations, caused by growth - revenues look good so lower rate increase projections. Fine: accelerate CIP elements relating to future water sources? Freeman: objective is to keep the rate increases low; too early to tell; trend would have to be analyzed. Law: may have to step up conservation program as usage continues to go up. Fine: concerned that we take any temporary revenue increase to the water fund and apply it to the water area, so we accelerate conservation or capital improvements. Turner: need this in the next year or the year after. Freeman: would see essentially the same CIP as last year; no plan to accelerate projects. Turner: Electric Fund. Usage has decreased due to mild weather in summer and fall; expects electric sales to increase 1.5%. Freeman: a good warning; if trend continues, Budget Committee Meeting 1/13/2000 5 the Electric Fund will have the same problem as the General Fund. Hauck: still on track with three-year plan? Turner: yes. Freeman: not meeting the revenue projections in the cost of service study; need to be aware. Turner: Wastewater Fund. Revenues are based on usage of water, so we've seen increases; increases in construction costs mainly due to postponements and delays; unless some other alternative is adopted our wastewater rates will remain stable for several years. Still require some financing. Levine: should revisit the accounting concept of sunk costs; the notion that we can't change our plans because we've already spent x dollars should be examined. Freeman: clarification. Levine: notion that just because we've spent money we can't change our minds, specifically the spray project. If changing something is justified, then it should be changed and sunk costs should not be considered. Shaw: agree. Wheeldon: an issue for the budget committee or is it a policy issue? Levine: would fall under the budget committee when staff is asking for a tax levy to fund it. Freeman: it is a user tax. Shaw: budget committee could increase a user tax. Wheeldon: not sure it's a budget committee issue. Levine: budget this year assumes we continue on the same path with regard to this spray thing. Freeman: absolutely. Turner: assumptions of the Street Fund. The projects will be some of the projects included in the transportation plan, etc. Turner: Telecommunications Fund. Continue the construction of the Ashland Fiber Network. Hartzell: increased time as specified in the article in the paper yesterday and whether this would mean increased costs? Freeman: it is budgeted. A discussion continued about the delays in the deployment of the Ashland Fiber Network. Fine: effects of overall financial projections from lost revenues due to delays, costs due to delays, and increases in personnel levels? Would these be clear when the committee looks at this budget? Turner: 10-year plan is being updated, not sure of the exact timing, probably spring. Freeman: not to assume lost revenues because AFN data is doing better than projected. Fine: since there have been changes from the original projections, they must be examined. Levine: when originally considered it was estimated that cost outlay would be recovered in 5 years. Freeman: no; the cash flow in 5 years and the debt paid off in 10. Levine: time delay would also extend beyond the 5-10 years, a lifetime in this industry; does city have the time left before it is obsolete technology and no one uses fiber? Freeman: bandwidth needs are more than doubling every 9 months. Levine: looking at what would be available in 10 years there may not be a need for point- to-point data transfer. Stepahin: questions? Hartzell: when the budget comes to the committee and we know that we have to make cuts, how would we know? Turner: we have a long-term goal to control staffing. Hartzell: there is no overriding staffing level cuts. Freeman: they are all different. Wheeldon: budget would be brought forth based on these assumptions and asked Hartzell what she meant by "if they had to make cuts." Hartzell: costs going up, we will hold the rate, so what is the strategy is for bringing in those additional costs but holding the budget to what is was last year? Freeman: must look at each different department and fund; budget would be based on these principles; so if there's a major disagreement Budget Committee Meeting 1/13/2000 6 we need to know now. These are the assumptions and the document will be based on these. Stepahin: anyone who signed up for the Economic and Cultural Development subcommittee would receive the information between the 28th and the 1st. Turner: concurred. Williams: bothered by the fact the city will always take advantage of the increase in Measure 50 values to increase tax revenue which causes perception that Ashland is a high cost city; we shouldn't take the increase if it is not necessary. Turner: we use the increase in value as a starting point. Consequently, we try to keep the tax rate equal from year to year. Laws: this was the best preliminary assumption meeting in his experience. Motion to adjourn by Levine/Laws. Motion passed unanimously. Meeting adjourned at 9:43 Budget Committee Meeting 1/13/2000 7