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HomeMy WebLinkAbout2009-02-19 Budget Committee MinutesJoint Budget and Parks Commission February 19, 2009-Page 1 of 5 ASHLAND BUDGET COMMITTEE ASHLAND PARKS COMMISSION DRAFT MINUTES February 19, 2009 Civic Center Council Chambers, 1175 East Main Street 7:00 p.m. Joint Meeting CALL TO ORDER The Joint Budget Committee and Ashland Parks Commission meeting was called to order at 7:10 p.m. on February 19, 2009 held at the Council Chambers, 1175 East Main Street, Ashland OR, 97520. ROLL CALL: Mayor Stromberg was present. Councilors Voisin, Navickas, Lemhouse, Jackson, Silbiger and Chapman were present. Commissioners Eggers, Lewis, Rosenthal, Noraas and Gardiner were present. Committee members Boenheim, Douma, Heimann, Slattery and Thompson were present. COMMITTEE ABSENT: Committee members Everson and Gregorio were absent. STAFF PRESENT: Martha Bennett, City Administrator Lee Tuneberg, Administrative Services/Finance Director Richard Appicello, City Attorney Don Robertson, Parks Director Mike Ainsworth, Interim Information Technology Director Jeff Rehbein, Financial Analyst Melissa Huhtala, Administrative Secretary APPROVAL OF MINUTES Approval of minutes from previous Joint Budget Committee meeting dated 2/2/2009. Slattery/Boenheim m/s to approve minutes as presented. All ayes. PRESENTATION BY STAFF City Administrator Martha Bennett gave an overview of what would be discussed. She stated projections by fund and fund health, decisions the elected bodies need to make, and budget assumptions would be the main focus. Mr. Tuneberg reviewed the General Fund Revenue Projection from 12/15/2008. He discussed the projections made from the December meeting. Property tax was higher then what was anticipated. Many other major categories in the General Fund are decreasing. There were also decreases in revenues in other funds so the City decided to take action then. Decisions were made based on information available at the time. Mr. Tuneberg explained that staff anticipated a $540,000 shortfall in the general fund. He discussed the FY 2008-2009 General Fund Spending Reduction Plan. To offset the Joint Budget and Parks Commission February 19, 2009-Page 2 of 5 shortfall in revenue, cuts were made in the General Fund and other funds. Departments were asked to hold expenditures to 95% of their budget for the year and Enterprise Funds were asked to hold their expenditures to 97%. Mr. Tuneberg discussed the impacts to the General Fund. There were changes in the City's estimations and carry forward from the time the budget was set. Mr. Tuneberg explained how the City calculates the General Fund. When the budget process was completed last year expenditures exceeded revenue projections by $556,000. He discussed the change in last years carry forward. The City budgeted a carry forward of about $1.7 million and the City ended up with $2.2 million. One element was the City under spent by $335,000. This was due to tightening the budget last spring and not using the entire contingency. The second element was the $215,000 that needed to be recognized in the General Fund. That constitutes for the $556,000 extra dollars that were brought forward for this year. However, in December the City's revenues were not coming in as anticipated which led to the $540,000 dollar shortfall. Management made $530,000 of lasting cuts to match the shortfall. Mr. Tuneberg discussed the key revenue trends for 2008-2009 currently (See slide). The City levied property tax 13.5% higher in the General Fund and is seeing 13% more revenue in taxes year to year. The other funds that rates remained the same are seeing 5% more revenue in taxes. This indicates that the conservative estimate of taxes levied is generating 3% additional revenue based upon property assessments growing. He explained that a complication in doing this calculation is the way people have been paying their taxes has changed. This year there was a larger influx of tax revenues earlier then ever before. Mr. Tuneberg gave an overview of the percentage changes of revenue in the major categories (See slide). Mr. Tuneberg discussed the City wide cash concern. There are constant changes. There have been highs and lows from January 2008 to current. There was a high in January 2008 because Parks was still managing the Youth Activity Levy. On October 2008 there was a low because it is right before disbursements begin. Mr. Tuneberg explained the Ending Fund Balance Chart which is projected with 3% Revenue Increases (See slide). The Committee questioned why the Street Fund is no longer a problem fund. Mr. Tuneberg explained that currently the Street Fund has no capital projects, no borrowing or debt service. Mr. Tuneberg explained the Ending Fund Balance Chart projected with larger adjustments. The chart shows what magnitude of changes that will have to occur in order to minimize negative Ending Fund Balance. Based on the assumptions used there are Joint Budget and Parks Commission February 19, 2009-Page 3 of 5 large increases. For example, if the Food and Beverage tax was not being renewed there would be a 20% increase in the Wastewater Fund, followed by 40% and 18%. Mr. Tuneberg discussed that Parks Ending Fund Balance could potentially go negative in 2014-2015. Parks tax revenue is the primary revenue stream for their general fund. The Parks Department has large amounts of cash on hand in December and not as much in October. He stated that Parks may have to borrow in October to meet the operating expenses that month. Mr. Tuneberg explained the Ending Fund Balance Chart comparison for potential solutions or adjustments. He stated that making substantial cuts would be most beneficial if the City ensures that the cuts last. Mr. Tuneberg discussed challenges in the Budget. One challenge is how to do affordable repairs. If the City does not do repairs it means there will be an increase in operational costs. He stated that most estimates will change by the time the Budget Message is presented in April. Mr. Tuneberg discussed the National Literature Suggestions (see slide). One suggestion is to identify services needed and wanted and to fund them. This means there may have to be an increase in rates to get the results the City needs. Ms. Bennett discussed issues for City Council. She stated that elected bodies need to make decisions. Debt load and financing options are a follow up on initial discussion on whether to sell bonds, and how else the City can finance projects. Elected bodies also need to decide utility rate adjustments, employee compensation packages and terms of employment. The Committee discussed their responsibilities in decision making. The Committee stated that it is important for officials and staffs to have information on what decisions need to be made. The Budget Committee discussed the criteria set for decision making, and feels that responsibilities should lie more on the elected bodies. Council stated there will be a meeting in March to set goals, and will let the Committee know what the goals and priorities are. Council discussed how to set goals and priorities for the City. Ms. Bennett suggested starting with a one year agreement on this approach. PUBLIC INPUT Keith Massey, 1615 Peachy Road, Ashland, OR 97520. Mr. Massey proposed reallocating a portion of the Ashland Food and Beverage Tax to Recreational Facilities. In his proposal he stated that 70% of Food and Beverage Tax goes to pay the DEQ loan Joint Budget and Parks Commission February 19, 2009-Page 4 of 5 and 30% goes to the Parks Department to be utilized for park land acquisition and recreation facility development (See attached). He added he was not attending or speaking on behalf of the School Board. PRESENTATION BY STAFF CONTINUED: Ms. Bennett presented the issues and assumptions for next year's budget. She explained that across the board cuts, hiring freezes etc. are ways to reduce spending but do not always yield the most effective results. Staff proposes there be screening criteria for making decisions about services to be protected in the budget process. Ms. Bennett discussed what things should be protected in high, medium and low priority categories (see slide). The Committee questioned if existing contractual obligations was just for contracts that could not be changed. Ms. Bennett responded that if it is possible for the City to alter or reduce the cost of a contractual obligation such as to refinance the DEQ loan the City would attempt to do that if not then the City would continue with the contractual obligation. The Committee questioned the definition of meeting basic health needs. Ms. Bennett answered that it includes things that the City does to prevent sickness such as sewer and water. The Committee expressed concern about the order of priorities. Others stated that it was a great idea to have a process for the City Council to establish a set of criteria. Martha stated that it is not perfect and that priorities on the list could be moved around. The Committee suggested that this would be a great tool for Department Heads to use to make choices of how to prioritize their budget. Ms. Bennett discussed specific FY 2010 assumptions. Base expenditures are FY 2009 levels including reductions implemented in December 2008 (minus 5% for some departments, 3% for other departments). All departments will build to that base. The Committee questioned the City's bond rating financial security on existing and future debt. Mr. Tuneberg responded that the City may have to levy taxes to maintain credibility in any full faith and credit debt that has been done or will be done. If there is a requirement that the City needs a certain level of revenue stream to get the appropriate interest rate for a project then the City will agree to levy that tax. Mr. Tuneberg discussed the change in the City's ability to insure for debt issues. He explained that there are changes in financing. Companies used to sell insurance so when bonds were issued insurance was bought to guarantee payment. These companies are no longer therefore the City cannot lower the interest rate by getting insurance when issuing bonds. Joint Budget and Parks Commission February 19, 2009-Page 5 of 5 DISCUSSION BY COMMITTEE- Committee proposed accepting the assumptions. m/s the accepting the assumptions Lemhouse/Slattery. All ayes. LOGISTICAL ISSUES FOR FY 2010 BUDGET PROCESS • Calendar -Lee explained budget calendar changes. • Subcommittee Volunteers for Social Service Grant Meetings on 3/11/09- 3/12/09 • Subcommittee Volunteers for Economic & Cultural Development Grant Meetings on 4/l/19-4/2/09 ADJOURNMENT 9:35 p.m. Respectfully Submitted, Melissa Huhtala Administrative Secretary Joint Meeting: Budget Committee & Ashland Parks & Recreation Commission February 19, 2009 Objectives for tonight • Discuss Projections by Fund of Fund Health • Discuss Decisions for Elected Bodies • Discuss Budget Assumptions FY 2008-2009 General Fund Revenue Projection from 12/15 Revenue Budget Projection Difference Prop Tax $3.935 m $4.100 m $1757000 TOT $1.723 m $1.636 m (90,000) Franchises $2.534 m $2.490 m (65,000) Electric User tax $2.786 m $2.620 m (166,000) Development Fees $1.132 m $.800 (332,000) Other fees $1.545 m $1.499 m (46,000) Misc $1.016 m $1.000 m (16,000) Total $(540,000) FY 2008-2009 General Fund Spending Reduction Plan Dept Budget Reduction Police $5.790 m $(150,000) Fire $5.117 m (150,000) Comm. Dev. (operating) $2.112 m (110,000) Muni. Court $.442 m (20,000) Admin (GF only) $334 (85,000) Cemetery $.332 m (15,000) Total 1 1 $(5307000) •00 •00 • • Spending Reduction Plan in Other Funds for FY 2008-2009 • Parks and Recreation Fund target is 95% of budget. Parks has already made several service reductions • Central Services Fund target is 95% of budget. Will help all funds next year • All other funds asked to hit 97% • Utility Funds will be closely tracked all year, esp. Wastewater, Water, and Electric Review of Impacts to the General Fund ... 000 0 00 .. • FY 2008-2009 Adopted Budget upside down by $556,000 —Expenditures over Revenue • Shortfall of target EFB by $464,000 • Larger carry forward from prior year of $550,000 including prior period adjustment • December projection of $540,000 less in revenue —continuing into FY 2009-2010 • Management did $530,000 in lasting cuts •00 •00 • • Key Revenue Trends for 2008-2009 - today Revenue Item: Percent Change* Property Tax (GF up by $0.1351$1000) 13% others 5% Electric User Tax 7% Transient Occupancy Tax (28%) 10% Food & Beverage Tax -3%-7% Ambulance (net) -17% Franchises 20% Planning 2% Building -30% Charges for Services (Sales) Flat SDC's -63% State Subventions -6% Interest -78% City-wide Cash Concern January 2008 October 2008 January 2009 Unrestricted $ 14,617,278 $ 5,677,105 $ 7,964,996 Asset Forfeiture 329,180 237,487 237,487 Other Reserved 241,400 241,400 241,400 Debt F;bserved 3,064,040 2,848,471 2,726,284 SDCs 6,355,404 6,076,688 6,570,807 Claims &Judgermnts 400,000 400,000 400,000 Trust 762,072 779,040 783,776 $25,769,374 $16,260,190 $18,924,750 Ending Fund Balance Chart — Projected with 3% Revenue Increases Ending Fund Balance Chart — Projected with Larger Adjustments Ending Fund Balance Chart Comparison - Potential Solutions or Adjustments Challenges • Cash Balances — Restricted & non -restricted • Funding Improvements & Repairs — Affordability • NO repairs generally means more operational costs • Meeting Requirements & Covenants • Virtually all estimates will vary by the time we present the Budget Message in April •00 •00 • • National Literature Suggests • Stop across the board cuts — Prioritize • Fund the services you need and want • Positively impact your local economy • Do CI P that offers best ROI • Build reserves or at least tread water • Be positive and strategic Issues for City Council • Debt load and financing options • Utility Rate adjustments • Employee compensation package and terms of employment 0000 Issues for City Council ::• and Parks & Recreation Commission • Split of the permanent rate • Request that the voters renew the Food and Beverage Tax • Potential for voter consideration of a local option levy for certain services Issues and Assumptions for FY 2010 Budget Preparation Recommended Overarching Assumptions • Across the board cuts and other "random" methods (e.g., hiring freezes, etc.) of reducing spending do not always yield most efficient or effective results • Staff proposes screening criteria for making decisions about services to be protected in budget process Highest Priority Criteria • Services mandated by Federal or State law • Services mandated by City Charter or Code • Existing contractual obligations (e.g., existing debt) • Emergency response • Meeting basic health needs Medium Priority Criteria • Long term financial responsibility/ efficiency/ reduction in risk to tax and rate payers • Support for the health of the local economy • Environmental protection beyond Federal and State Mandates • Prevention of emergencies and emergency preparedness for unexpected events Lowest Priority Criteria • Enhance quality of Ashland as a place to live • Support for resident's health beyond basic services • Provide high quality citizen service • Key issue of local control/ local decision making Example of Applied Criteria Criteria Response & Investigation of Crime Crime Prevention Non - Emerg.Dispute Res High Priority Federal and State Mandates City Charter and Code x Contractual obligations and bond covenants Emergency Response x Basic Needs Public Health & Welfare x Medium Priority Operational Efficiency/Risk Mgmt/ Fiscal Health x Support for local economic health x x x Environmental Protection above mandated levels Emergency prevention and/ or preparedness x Lower Priority Enhance Quality of Life/Desirability of Ashland x x x Support for residents' health beyond basics x x Quality Citizen Service x x x Key Issue of Local Control x Will this work? • Attempts to separate those things that truly are "core" from those things that are not • Attempts to prevent cutting programs to the point where they really don't make sense any more • Won't prevent discussions about whether something truly meets criteria • Will be exceptions. Sometimes decision - makers will say, "Yeah ... but . . . ." •00 •00 • • Specific FY 2010 Assumptions • Base expenditures are FY 2009 levels including reductions implemented in December 2008 • 0% COLA for non -bargaining and parks & recreation employees • PERS costs are reduced or flat • 15% increase in health insurance Specific FY 2010 Assumptions continued • Capital spending set by Council, predicated on available cash, the ability to affordably finance projects, federal/state stimulus funding packages, and impact on operating costs • Budget will adhere to existing ending fund balance policies • Technology debt will be allocated as in FY 2008 and FY 2009 Specific FY 2010 Assumptions continued • Recommendation about changing property tax rate will balance three factors: overall •00 •00 •• affordability for residents, impact on "priority" services and outcomes, and preservation of City's bond rating/ financial security on existing and future debt 16011111ad MOPOSM; 11) revisespae cuawu Nod & Bo.average Tax allocadon, so Ihat 30% -- an increase 1011 --- a,s aHocated to the Parks Deparlment (ieducing the w'dwer licahnent aflocation by the sarne anKmah) to be utdized for park Iwnd aapWon and recreational facility develc)pnierrt i. 'ro make Wnds avaihble Or both land acquishion aW recreahoira] flacility deveioprnent 2.1tecreatOnal kwOks can he p6ofifized hased upon need 3. Funds could be utdized Or rnamer planning oH',acihdes inipiovernenli and devOopilleffl 4, p°unds are not to be use,Ll i"or operational expenses 5.5051 inuvase in Rubs to Patts Ikpanment offsei by a 12 decrease in funds 1'61, Wastewater Bond payrnent F090 So BcvcrdI-,�e'j'fax �oward ,A Sougg paks and recmathrml WINes pwWe nuwe and enhanced recwthnal oppoilunifies Ii)r visitors 'And residerns of ewTy demographe B Paa we pwinotes healthier fifestyles, C. Engaging young pe(Q in healthy activifies is Wipmamt, obesily is as natkrYnal heakh assue p ) Attractive parks and WHOes adds appeal as a tourist deminatit),ni FQ'I'll"Ifity, ofhfe �n Ashkind and valries mv impaned in dkecl corrdaHon to parts irnpawentent SUPPOR"TING pa ese,,irch COUICILISiOTIS uffhe SHWY, "Ibe Benermits of Local Recreation and INrk Senims - At Nakmnvide to of the Perceptions of the Arnerican Public" by Pennsylvania State I Jniver'sily, * Tbe,vast rnajitiwrty asap the /knierican pubhc uses Mal recreation and park services. * Park and lAaygnnnid use is the rriost conli'llon u,,'se * Nuk anti recreational service'use confinues, lhrougjiout the W cycle Recrearionai pairticipation declUs with age, but park use does not, In Nct, poaple between the ages ol'65 and '74 usse loca,l parks nu')re firecuendy than amy cAher age pyoup kom Use 15 and Wder, * The in*rity o,f people that do meal tv'se parks and recreational services still PCIITOIV(a SUbstanfial henefi� from, thern * Sixt.'y percera of1he slu#s respwidents perceive as "WeW clear, orcunmnunky benuRt hwun such services, * I wal parks and recreation are asuWated withi as some of amnrnundy. Conitnunity level 1,)enefils are consicbred nwe uncap onato than individual: io'r household level benefits 0 Personal Benefits Exercise, fitness & condifioning 1% and emeaAment IQ Learningand ediication, Relaxatkw 0 SocW Benefits: * NOW to know people * (jump PmakQedon Inlcradii,,)n ot'adt,ilts a,'trrd kids Comintinity awareness, IQ A= sphtt 0 Facdhy BeneRm Locations lo Wd inmucUmml clames 'Me joy of'playing, panhipating, aa A place tci go; cornamnity budding A place Rw reamk)n Njx%ure to arts, & (.,�xafis, enterl,,Jnment Watching (rrgardzc('J sports 0 [,nvin,)nj'nentaI Benefit : o Resh ah A place to he or�tdoors P Exonomic Bcncfks� C--pnMroved Scililics %,vdhout direct cost to to 0 ImInoved Ashland pn)peay Met per above mentioned beneRls, Plant(W\A(141) Ftit)ds e, Ifpropos,al is appioved, the amount cMemed Ar the %VVVTP in, the caleridar year 201 d "'OUld slffl be greater than the amxwnt contWHY in 2004 undef the old End alhcatJon adsAshland's sewtv rales mv cuantly the same or Wer than, AM Wed chics W WcNcm: o Based on sevenrl WOW stipporting the Ycwdi AMMes Ovy rvacMuml Whics an: as h1h p6cwhy Or Udand Wdents Alte.ri-rative Sriggcstion� If Unsure ofthe univenal suppon 11m, this proposal, c(,)n(fi.jct as sm'vey mad" Ashland residc�,nts to ascerlairr if t1rey are saipporfive P NO NUM 16.15 Peachey Road MAW 5511771) I ¢ aro a a p r I k u l � I 0 CO — -- M N , Vm V) fn U4 ) ref) u� 1 I a e C1"1 r J a NT - ¢Xm r a D rI (x' � � Al mar Syr f us") us�a a- r�r✓ Ia� ry �k i u C. i W ci n . 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