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HomeMy WebLinkAbout2000-04-20 Budget Committee Minutes Budget Committee Meeting Council Chambers April 20, 2000 at 7:00 p.m. The above meeting was called to order by Chair Regina Stepahin. Members present were David Fine, Steve Hauck, Don Laws, Susan Reid, Carole Wheeldon, Howard Braham, Cate Hartzell, Martin Levine, James Moore, Beverly Kenefick, David Williams and Cathy Shaw. City Administrator Mike Freeman presented the overview of the budget document. He explained that the budget was organized by department instead of fund and hoped that the document was easier to review. Five-year projections are provided for all funds. A hand out of historical information was reviewed. Freeman noted that this information gives a general background of where the City has been for the last several years. Freeman noted that the General Fund is growing but reliance on taxes remains about the same as in the past. Jim Moore stated that while the percentage remains the same – 16% of the total budget – the budget continues to grow at a rapid rate. Williams stated that the increase is significant. Levine stated that anyone could look at their tax bill and know they are paying more. Wheeldon referred to the Table on page 203 in the appendix and noted the ratcheting in of Measure 5. Turner explained that there was an overlapping of rates that are not based on the same valuation system. Laws noted that if the Library and Fire Station were removed from the budget, the increase would be less in total dollars. Freeman noted that his overview was to give a big picture of the budget. The hotel/motel tax and building inspection revenues are strong, and combined with a planning fee increase the General Fund will be balanced. Freeman noted that there will be increases in the BPA transmission charges of 30-40%. This has not been a good revenue year for Electric due to mild weather. Freeman noted that AFN rolled out services in the last 90 days and short term borrowing needs increased as due to revenues not coming in as fast as originally anticipated. Major projects included in this budget are the construction of Fire Station #1, AFN, finalizing the riparian ordinance and development of a Comprehensive Transportation plan. These projects are listed on page 3 of the document. Page 2 Budget Committee Minutes April 20, 2000 Turner noted that long term projections for revenue start on page 131. The perception is that the General Fund is in a strong position. Water sales have been good. The Street fund is hard to project long term. The Street department has been very diligent in trying to hold down costs. Freeman noted that this fund has had a lot of difficulty staying in balance in the past and he feels good about it getting back on track. Revenues are good in the Water fund (pg. 155-156). There is a large list of capital projects and revenue related bond issue in 2001-2002. Wastewater fund has long term issues about rates and food and beverage renewal. Discussion on Ashland Fiber Network. Levine asked for the total dollar amount spent to date on AFN. Turner directed him to page 168. Levine noted that the business plan projects five years to break even after the build out and that the business plan needs to be adjusted. Freeman noted that the assumptions needed to be checked. Levine asked if staff has looked at selling AFN and getting the City’s money back. Freeman noted that the question needed to be directed to the Council. Fine posed the question of would the City be in default of the AFN loan if the business plan is not followed. Turner noted that the loan was pledged by revenues of the electric and CATV. Fine asked if there was any likelihood that the City would default on the loan. Turner noted that under the budget assumptions used in preparing this budget, we would not be in default. Freeman noted that he does not see concerns at this point. High speed Internet is very attractive and we are meeting our expectations for CATV. Levine asked if anyone had looked at what the budget would look like if AFN were sold. Levine stated that technology has been brought to this area and now all we have is a risky business. Wheeldon stated that Levine did not understand the passion the staff has put into this endeavor and really good service is being provided to the citizens of Ashland. Laws stated that passion, involvement and commitment are not the concern of the budget committee, but he wanted to go through the year with this project. Laws noted that he was worried about the amount of debt. Electric revenues would pay back the bank loan but the $2,766,000 loans from other funds would be lost. Laws stressed that Levine’s idea of selling AFN needed to be set aside. Braham asked if the revenue stream estimates are conservative. Freeman noted that he was constantly looking at information coming in and that the business plan was fairly conservative. Freeman noted that when customers are hooking up to the Internet, they take cable television also. Page 3 Budget Committee Minutes April 20, 2000 Williams stated that he saw the $500,000 loan from the Electric fund requested clarification on the other interfund loan amounts. Page 128 shows Equipment fund, $1,000,000; Wastewater fund, $766,000; Cemetery Trust, $500,000 as well as the Electric fund loan of $500,000. Laws stated that this is the best budget he has seen. He would like to see specific revenue sources rather than having them grouped, and would like to see the detail of the Street fund and the General fund. Discussion regarding memorandum from Michelsen and Freeman on the distribution of the city property taxes. Freeman noted that the recommendation is to continue with the allocation developed following Ballot Measure 50. This will preserve the historical charter requirements established years ago. Turner noted that the permanent tax rate is a combination of the General fund levy and the Parks levy, with 53% being allocated to the Parks and 47% being allocated to the General fund. In response to a question from Fine, Michelsen stated that the formula recommended would be used for the next five budget years. Michelsen noted that Parks has never used the full authority of the levy. Williams stated that he was uncomfortable in allocating a fixed amount to any department. He hoped that a good budget was prepared based on what was needed to run the department and not about the amount of money the levy generates. Laws stated that he would like to continue to see the Parks in a special position, as this where the voters put them. In tight budget sessions, Parks could be whittled away and the monies given to run some other department. Planning long-term projects require knowing what funds are available. Laws stated that he would like to see the recommendation accepted for the next few years. Reid stated that she was disappointed, not in the matter of what the Park spends, but rather that Ballot Measure 50 was being treated by the staff recommendation like it had never happened. Reality is very different than what staff is recommending. Laurie McGraw, Chair of the Parks Commission, spoke, stating that Parks is not trying to get as much as they can. They have prioritized projects and are being responsible and well based. Page 4 Budget Committee Minutes April 20, 2000 Laws asked how do we start the budget process with the Parks from a practical point. Since Freeman manages all departments other than the Park, they can be told where to start their budget process. The Parks needs to have a starting point and a formula would be that starting point. Levine stated that the budget process should start with the question of what is your charge and what does it take to make it happen. It is inappropriate that the Parks receives money in advance of defining that. Michelsen stated that there seems to be a misunderstanding about how the Parks budget is prepared. The Budget Committee has always had the right to set the tax levy. Requests to hold the line on budgets and the amount of the levy have always been honored. Michelsen stated that this system has worked well since the 1900’s and the memo is simply saying times look good right now. This gives the Parks a starting point in their budget process. Motion was made by Moore and seconded by Levine to reject the memo. Wheeldon noted that the 2000-01 Parks budget was prepared based on this assumption. Williams amended the motion to state that all City departments including the Parks will have a base line set by the City Administrator for each budget year. Moore seconded the amendment. Ayes: Fine, Moore, Levine, Kenefick, Williams. Nays: Stepahin, Braham, Shaw, Hauck, Laws, Reid, Wheeldon, Hartzell. Motion failed. Shaw asked Freeman his thoughts on this matter. Freeman stated that it puts him in the awkward position of putting him in charge of an elected board. Reid made a motion to accept the memo as presented. Shaw seconded. Ayes: Shaw, Hauck, Laws, Wheeldon, Hartzell, Stepahin. Nays: Reid, Braham, Levine, Moore, Kenefick, and Williams. Abstain: Fine. Motion died. Levine stated that he would like the record to reflect appreciation for all of the work that Jill Turner has done for the City and the budget committee. The meeting adjourned at 9:53 p.m.