Budget Committee Meeting
March 4, 2004, 7:00 pm
Civic Center Council Chambers, 1175 E. Main Street
Committee Present: Amaratico, Christensen, DeBoer, Hearn, Laws, Levine, Moore, Olsen, Silbiger, and Williams.
Committee Absent: Hartzell, Jackson, Morrison, and Stepahin.
The meeting was called to order at 7:02 pm
0000The committee introduced themselves to audience.
ELECTION OF A CHAIR, VICE-CHAIR/SECRETARY
0000Moore/Olsen nominated Levine for Chair. All Ayes.
0000Laws/Amaratico nominated Moore for Vice Chair. All Ayes
APPROVAL OF MINUTES
0000Approval of minutes from previous budget subcommittee meetings dated:
000000009/18/03 Special Full Budget Committee: AFN Budget
DeBoer corrected p. 2, "in the last four years the City lost 2 high level position that are not being replaced."
0000Moore/Christensen m/s to accept minutes as revised. All Ayes.
BUDGET OFFICER PRESENTATION
00Process & Changes
Tuneberg spoke to handouts provided. There will be no Saturday meetings this year. He hopes to approve the Budget in June. He asked if anyone on the committee attended the local budget law training that was at SOU in February. No one did. Tuneberg is willing to review local budget law with committee if needed. He gave an update on AFN and TOT activities. An ad hoc committee for AFN met on 3/2 and the next meeting is on 3/10. On 3/18 they will present to the City Council and the Budget Committee their report. The goal is to present a budget that is acceptable to the Committee. The revisions will be integrated into the budget.
Tuneberg gave a review on the Transient Occupancy Tax (TOT). A subcommittee is looking at how the revenues are distributed and they may possibly change Resolution 2000-25. The Finance department will allocate the revenues and the subcommittee will decide individual allocations. Silbiger asked if the grant process had started. Tuneberg responded that they hope to distribute applications on 3/15 and have the applicant presentations on 4/15. Tuneberg added that the budget process has not been changed yet and the subcommittee is trying to put an emphasis on the elements of the resolution. Laws added that there is a the new state law, and it requires a certain portion given to tourism and any increase in the TOT tax has to be towards tourism promotion. Tuneberg referred to the state's definition of what tourism is, and the City can't spend any less than was spent at July 1, 2003. Levine asked if it only increased in the rate. Tuneberg clarified the states definition: 70% goes toward promoting tourism and it guarantees that the cities will not spend any less with the new legislation. The City will reconcile it each year and it would change with the change in revenues. Levine asked if the tax would be more or less this year. Tuneberg responded that last year was up 7.5% from the previous year, and this year should be lower. Levine added that is consistent with what his clients have said. DeBoer added that the increase may be due to Plaza Inn and Suites and Lithia Springs in which there was an addition of hotel rooms. Tuneberg responded that they have seen wide changes over the years. Food and Beverage is pretty consistent but does vary due to when the funds are received and whether they had to go through a process to collect them.
Please see attached presented documents.
Tuneberg stated since he has begun with the City the fund balances have been large. He added that the goal is to meet the fund balances. It will be based on operations needs within the funds. The focus is to try to make the incomes and outgoes meet and to maintain fund balances. In 03-04 they budgeted for decreases, and next year the goal is to maintain balances.Tuneberg added he has seen a large increase in personal services, debt is maintained, and interest is not existent. They struggle with differing costs in personal services. PERS is a struggle and they are maintaining the rate used this year for next year. Health care has grown in the 20% range. Materials and Services is an area that they can make improvements. Departments are working to maintain the budget increase to 2%. Capital outlay and projects are dependant on the activities that are needed for infrastructures and systems that are needed within the City and vary each year dependant on their schedule. Some of the revenues are not seen as guarantees any longer.
Tuneberg spoke to the 2004-05 assumptions document provided.
Olsen asked in Assumption 3# what 2% meant. Tuneberg responded in Measure 50, there is a limit on property tax per year, the 2% is the City trying to recognize new construction or remolding and the impact it will have on the revenue stream. He pointed to the footnote on the Comparison handout, that this excludes new construction exempt from taxation.
Olsen asked if the PERS rate change is separate from unfunded liability. Tuneberg responded that the unfunded liability doesn't go away unless the employee pays for it. There are two options: pay it currently by either financing it or by paying on the current rates and that increases the future liability. Currently they are setting some money aside for the future unfunded liability. Olsen asked if the return by the PERS fund impacts the unfunded liability. Tuneberg responded that it could either increase or decrease. Olsen added that it depends on the earnings on the funds. Tuneberg added that they are not trying to change it this year and it will be long-term solution when it is. DeBoer asked when the renewal will be. Tuneberg responded July 1. Moore added in the next four or five years we will see a doubling of costs. Hearn asked if they could run at a deficit. Tuneberg responded that they cannot. Levine asked if the City looked at self-insuring. Laws responded that they do self-insure on some things. Tuneberg added that a City near us who went with another source saw their rates decrease the first year and then increase the second year far past what they expected. He added that he is looking at how they could make it work for the City. Grimaldi added that another disadvantage is that we don't have access to a detail claim system and we are part of a pool and not able to have that system. Olsen asked about # 9, and what percent the employee's pay. Tuneberg responded that it is 95/5. Olsen asked who decided the sharing costs. Grimaldi responded that is their goal. Tuneberg added it is in negotiations.
Williams asked if in assumption #11, if SDC's are recovering costs associated in new construction, and do they pay their fair share of Parks, etc. Tuneberg believed it is close but they may need to do some updates. They need to reevaluate part to reimbursement and part to growth. Laws added that the SDC's that do pay for themselves only cover part of City services. Hearn asked what percent of City revenues is other than property tax. Tuneberg responded that of the $7 million from property taxes, $2 million is General Fund revenues, $500,000 is for debt service, and the remainder goes to parks. Out of $87 million budget, $2 million of revenue is property taxes. He added that is 5% of total revenues. DeBoer asked Don Robertson if Parks was doing an update to their SDC. Robertson responded that they are.
Tuneberg spoke to document provided. Levine asked in #1 why he is dropping the inflation from 3 to 2.25%. Tuneberg responded that in the last 3 years, it has been below 3%, and they are not sure when it will go back to 3%. They believe it is a reasonable number to use. Olsen asked if last year was1.6%. Tuneberg responded it was and it seemed acceptable to drop it to 2.25%. Levine thinks inflation will increase and we cannot avoid it, he thinks that they should keep it at 3%. Laws see the 3% as more conservative. Williams agreed. Tuneberg asked if they would like him to budget for interest earnings. DeBoer likes the 2.25%. Williams assumes that if costs are going up, then revenues will go up. Levine added that property taxes only represent a portion of the total and it goes up 5% per year. Olsen added that next year if inflation is higher, they could adjust it. Levine would like to be more conservative. DeBoer suggested to change it to 2.5%. All agreed.
Olson asked if the inflation rate is 2.5%, why in #4 is the assumption of a 5% an increase in salary. Tuneberg responded that represents pay and benefits. He added that 5% might be low.
Williams asked if the planning fees are at 75% currently. Tuneberg responded that it depends on the projects and they will strive for that target.
Olsen asked if in #13 if that included sin taxes. Tuneberg responded that it doesn't, that it is grants and other revenues.
DeBoer asked the committee to discuss raising the property tax rate. Grimaldi would prefer to balance the budget without raising property taxes, and he doesn't recommend raising it unless they offer new services. DeBoer responded that there will be pressure on water, sewer, and electric rates that could be relieved by property taxes that wouldn't effect the lower income as much. Silbiger responded that the property tax is a substantial part of a monthly payment, and it would be a substantial increase. Williams added that a low-income person has some control on their consumption and not on their property taxes.
Hearn asked about Measure 50 and the 3% per year, if they can accumulate it. Levine responded that it is not a rate change, and the value goes up 3%.
Levine asked if the City did a survey in connection with the goal setting. Grimaldi responded in October they did a survey mostly regarding customer satisfaction and the results were good. Levine sees a tie between customer satisfaction and increasing utility rates.
Moore would like to see department's budgets before raising property taxes. He is concerned about Health care at 95/5. DeBoer added that getting 5% is an immense challenge.
Williams clarified that they should say prior to recommending tax rate changes instead of increases in assumption #3. . Levine added that he thinks Grimaldi's commitment to balance the budget without increasing the property tax is a good goal to set.
DeBoer noticed that the social service grants are in the off year and asked if there is any thought to doing a two year grant with the economic and cultural development grants. Tuneberg responded that the ad hoc committee has not discussed it. DeBoer thinks it would be more helpful for grantees to have a two-year grant, and he wants to encourage it. Tuneberg will pose that to the ad hoc committee. Silbiger added that some grantees are more orientated to one year than two, and it doesn't seem as appropriate as it does to the social grantees. Levine added that they give the funds annually. Silbiger responded that there is more turnover in economic development. Levine responded that the reason is the social service group is more organized agencies, economic development are volunteer oriented. DeBoer added that the economic development grantees are supposed to be for start up costs.
Williams added that he is not comfortable with Parks getting 53% of the total tax picture because the City had to raise rates to cover the City services. DeBoer clarified that in #3 Parks should be at $2.09 period. Tuneberg responded that any raise would have to be accepted by committee. Levine added that if there were an increase it would be specific where the funds were to go from it. Williams asked if they even needed assumption 13.Tuneberg responded that they will use it for how to approach the intergovernmental revenues and they will report back any deviations.
Tuneberg is happy to provide tours and opportunities to speak with departments.
Tuneberg spoke to calendar. He added that they are not doing subcommittees this year, but they will use subcommittee for economic development grant reviews.
Hearn/Moore to accept calendar and assumptions as revised. All Ayes.
Olsen can attend 4/15 meeting, not 4/19. Tuneberg responded that it usually takes most of first night and the second is for carry over. It is possible there would not be second meeting.
Meeting was adjourned at 8:30 pm.
Bryn Morrison, Administrative Secretary, Finance Department
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