Agendas and Minutes

Citizens' Budget Committee (View All)

Budget Committee Meeting

Minutes
Thursday, May 19, 2005

                                                                                                       

                                                                                                       

 

 

Budget Committee Meeting

Draft Minutes

May 19, 2005, 7:00pm

Civic Center Council Chambers, 1175 East Main Street

 

 

CALL TO ORDER

 

Chairman Jim Moore called the Ashland Budget Committee meeting to order at 7:00 p.m. on May 19, 2005 in the Civic Center Council Chambers, 1175 E. Main Street Ashland, Oregon.

 

ROLL CALL

 

Mayor Morrison was present. Councilor Amarotico, Hardesty, Hartzell, Jackson, and Silbiger were present.  Budget Committee members Bond, Levine, Mackris, Olsen, Thompson, and Williams were present.

 

 

STAFF PRESENT:   GINO GRIMALDI, CITY ADMINISTRATOR

LEE TUNEBERG, FINANCE DIRECTOR

JOE STRAHL, INTERIM PUBLIC WORKS MANAGER

MIKE MORRISON, SUPERINTENDENT PUBLIC WORKS

DICKWANDERSCHEID,ELECTRIC& TELECOMMUNICATIONS

    DIRECTOR

ADAM HANKS, CODE COMPLIANCE SPECIALIST

STEVE GEIS, PARK SUPERINTENDENT

SCOTT JOHNSON, ELECTRIC SUPERINTENDENT

RICHARD HOLBO, TELECOMMUNICATIONS ENGINEER

MICHAEL AINSWORTH, CABLE TV MANAGER

RICH WALSH, DEPUTY POLICE CHIEF

GREG CASE, EMS/FIRE DIVISION CHIEF

DON ROBERTSON, PARKS DIRECTOR

TINA GRAY, HUMAN RESOURCES DIRECTOR

KEITH WOODLEY, FIRE CHIEF

JOHN McLAUGHLIN, COMMUNITY DEVELOPMENT DIRECTOR

MARGUERITTE HICKMAN, FIRE PREVENTION OFFICER

CINDY HANKS, PROJECT COORDINATOR

BRYN MORRISON, ADMINISTRATIVE SECRETARY

 

 

APPROVAL OF MINUTES

 

Approval of Budget Committee minutes dated:

                                    5/05/05

5/11/05

 

James Bond, Budget Committee Member/Councilor Kate Jackson m/s to approve minutes as presented. All Ayes.

 

 

 

PUBLIC INPUT

 

None

 

 

FINANCE (ADMINISTRATIVE SERVICES)                    page 3-17 to 3-27, 3-33 to 3-38

 

Lee Tuneberg, Finance Director, pointed to P. 3-25 and the Departmental Section. He noted the change in the Finance Department name to Administrative Services. He then gave an overview of the department. Committee commented on the Band Division in non-operating, being established in charter, and the increase clause in the charter to keep it funded every year.  

 

Mr. Tuneberg covered the Non-Operating section of the budget. He explained that non-operating does not cover staff members; it represents those activities that donít fit well into other activities.  He said miscellaneous is non collectables in the General Fund and the rest is money that is donated for public arts. The proposed 2006 SDC is for any properties to be acquired for park space, and is in the Capital Improvements Fund.  He then spoke to municipal buildings; the largest is $400,000 for work on fire station #2.  He said the Insurance Fund has a significant increase, representing additional money for PERS; money that was set aside a year and a half ago to help with the increase this year. Budget Committee asked about the $400,000 for a fire station; if voters do not approve, does the money revert into the ending fund balance.  Mr. Tuneberg said the money actually comes out of the Capital Improvement Fund. He said if we get approval and issue general obligation bonds, the proceeds go into this fund and not only pay for the $400,000, but the construction of the next year.

 

Lynn Thompson, Budget Committee Member /James Bond, Budget Committee Member m/s approval of Administrative Services Department.  All Ayes.

 

 

 

MOTION(S) TO ADJUST THE PROPOSED BUDGET

 

Mr. Tuneberg spoke to handouts provided.  He gave a general overview which includes a new departmental section to include the new Information Technology Department (P. 3-15) and the Administrative Services Department (P. 3-23).  He spoke to changes on the spreadsheet. He added there was no change in the proposed subsidy in the Electric Fund.  Committee asked about the added $90,000 for a new director, being all under computer services.  Mr. Tuneberg did not have the director and some other positions appropriately allocated on the first handout.  He said all the positions have been accounted for, and it is all correct now.  Looking at the handout, the net effect on the Telecommunications Fund is $7,000.  

 

Mr. Tuneberg went through the staff proration of time.   Director: 90% AFN and 10% Computer Services; Engineer: 50% AFN, and 50% Computer Services. Cable TV Manager: 100% AFN; Network Administrator: 100% AFN; Secretary: 15% AFN. Account Rep: 100% AFN; Head Tech: 100% AFN; 2 Telecommunications Techs: 100% AFN; .5 Support Tech: 50% AFN; Network Administration: 100%, and Computer Services, Database Programmer, Database Administration, Telecom Computer Tech, User Support, and 2 Computer Techs all 100%. Total staff is 15.65 FTE. Total for Personal Services including sales support, overtime, and temporary is $1,378,412.  Referencing the summary sheet, the Committee asked if Computer Services are in Central Services and not in the Telecommunications Fund. Mr. Tuneberg agreed. Committee noted the net effect in Computer Services which had no changes in personnel, but has a $160,000 net difference between last year and this year.  Mr. Tuneberg agreed. The Committee questioned the 37% increase in Computer Services with no changes in personnel.  Mr. Tuneberg said there is no change in personnel; what has changed is the mixture of people in AFN, along with more time of the dedicated director.  We did balance employees between divisions.  He said an example would be the Telecommunication engineer who is balanced between divisions. Committee noted the increase doesnít reflect new personnel just different allocations. 

 

The Committee addressed the possibility of showing AFN subsidy as part of the Electric Utility Tax.  Mr. Tuneberg said there may have been discussion by others, outside of this venue, but he is not aware of it.  He said they did not look at how to remodel the budget, but if directed by Council on how to fund the subsidy, he could attempt the change. He added their intention was not to hide anything, but identified that the rates would provide a subsidy amount. He said if regular rates increased, it would impact the General Fund through user tax and franchise fees. If it is treated like a surcharge, it could be exempted from the tax and franchise; and could be shown as a separate AFN line item on the bill. He added it could then be recorded directly as revenue into Telecommunications Fund.  He clarified they would like it to be shown as revenue in the General Fund, and transferred out of the General Fund as a subsidy into the Telecommunications Fund. Committee agreed.  Committee is not resistant to looking at the matter, but would like to hear more of what is wanted and offer that to the staff and see how they could accomplish those wants. 

 

The Committee asked about increased revenues of $500,000, which is attributed to proposed increased property tax rate, increased valuation of property, and the increased collection rate.  It seemed to the Committee there was an anticipated extra $500,000 in the General Fund.  The Committee added there was another sum of money for the proposed electric rate increase, and assumed the electric rate increase was a direct function of need to subsidize AFN.  Mr. Tuneberg said no, adding the property tax in the General Fund is a $.15 increase, and is for General Fund only.  He said the increase in rates in the Electric Fund is for costs in the fund. If we donít provide a subsidy, we might be able to lower rates or not raise rates as much.  Mr. Tuneberg said there was an increase in both areas, but they were not both related to AFN.   If the subsidy is ongoing, it would have an impact on rates next year.

 

David Williams, Budget Committee Member/Chairman James Moore m/s for the City to Subsidize AFN out of General Fund via Electric Tax Rate.  Mr. Williams withdrew the motion because there was not enough clarity.

 

Mr. Tuneberg explained the electric user tax and the franchise tax are calculated on revenues in the electric fund.  He said if we raise rates in the electric fund for subsidy, or any purpose, the amount that goes into the General Fund increases.  Which is why when we had to institute a surcharge for wholesale power, we called it a surcharge rather than an increase in rates.  Through Council action, we exempted it from the franchise fee and user tax calculation.  He added that Mr. Williams is proposing we put it in the user tax, so it isnít a part of rates, doesnít increase franchise fees and makes the General Fund healthier.  Mr. Tuneberg said whether they show it separately or as part of the user tax, they could put it directly into AFN without moving money twice. Mr. Williams didnít have a problem with that, as long as the financing mechanism is the electric utility tax rather than the electric utility rate.  

 

Mr. Tuneberg said we can identify the amounts we were sending to AFN were primarily coming from electric.  He said they identified the increase as a proposal to cover the costs that we see for electric operations for next year.  He stated they could raise the tax to make the subsidy and keep the electric fund balance higher.  He said they would have to look at a different rate to charge for costs next year. The electric rate is very susceptible to our contract and wholesale prices that change from day to day. He said it is difficult to say that there will not be an electric rate increase.  He stated to keep the fund balance low and not generate more revenues; a surcharge or user tax would mean a smaller fund balance.  He isnít sure they will have the revenues to cover the costs they are experiencing.  Mr. Williams said the purpose of his motion was to make clear the AFN subsidy as a source in electric utility taxes rather than a source as a higher utility rate. Mr. Tuneberg said with a recommendation from this group to Council, we can accomplish a proposal in future years that any subsidy is not contributed to franchise fees or taxes that it go to the General Fund. Committee said they understand the electric customers underwrite AFN shortages, and wondered if there was any idea as to charging AFN customers. Mr. Tuneberg said they are looking at rate increases for AFN now, and noted any raise would reduce the amount in subsidy use.   

 

Ms. Jackson understands that this year the underwriting amount is taken out of the ending fund balance; since weíre not changing rates to create $500,000. She added, if after raising AFN rates, once the department gets started on its own feet and looking at the next years budget, if there is a need to increase subsidy underwriting, then is when we will be discussing where it needs to come from and how we want it to show up on the bills. She understands what has been presented to be an important issue for the future.  Mr. Levine did not understand it that way.  He said if we didnít have the underwriting requirement of AFN, we wouldnĎt need the extra $500,000 in the ending fund balance at the electric utility.  So we could either use that money in some other way, or reduce rates, or cut property taxes, etc.  He added we are ignoring the fact that people are paying $500,000 more than they need to.  The Committee asked for a clarification on Mr. Levineís statement, along with the issue of franchise fees that AFN paid the General Fund that charter didnít have to, and how it fits into this picture now.

 

Mr. Tuneberg replied that AFN has paid franchise fees into the general fund that the competitor didnít have to.  He said they calculated rates for the Electric Fund based upon costs going up and looked at where funds would be.   He said they had enough fund balance in the Electric Fund to make a transfer to AFN to provide a subsidy.  He added if they werenít providing a subsidy, they could charge less. He said they recognize the Electric Fund could provide some subsidy now; or could hold rates close to the same, if it wasnít for the subsidy, we would be looking at rate increases in the long run that provide the subsidy from Electric to AFN.   He noted a significant increase in costs in the Electric Fund and expects those to continue to rise. He said that is what his rate increase is based upon.  Mr. Levine said if this was a private enterprise faced with the same situation; raising rates and projecting a surplus, then in this situation would provide dividend to the shareholders.  He added that weíre not doing that because we have to cover AFN losses.

 

Mr. Moore said he is confused, and thought there would be a full time person in charge of AFN.  Mr. Tuneberg said it is a full time position.  He added the position is divided 90% to AFN 10% to computers. The Committee agrees that this needs to be separate, but is concerned about the recommendation to raise rates by 5%, the impact it will have and wonders how they would accomplish that change. Mr. Tuneberg doesnít have the impact of the rate increase.  He said if they look at the differences of the amended and the proposed, they will see pretty healthy increases in all areas which have nothing to do with AFN costs.  Mr. Olsen said it is not clear why weíre talking about the electric rate to subsidize AFN, when we havenít talked very much about decreasing the rates to the users of AFN. Mr. Tuneberg said in Telecommunications they show a 10% increase in revenues, but they did not identify what rates would be charged. Mr. Olsen said at some point we have to say that AFN needs to pay its way, or customers need to, or we need to do something else. Mr. Tuneberg said they are studying options of what to charge for AFN services.  Mr. Gino Grimaldi said that Council has directed us to look at rate increases, and the rate increases may decrease revenue.  Mr. Bond stated trying to come up with a recommendation to Council that will serve its needs and can tell them what we donít want to happen, but there is not enough specificity that will allow us to react in a definitive way. The Committee said that private companies are suffering like ours. Council is moving forward with AFN, and that it is already different.  Mr. Morrison said they are committed to AFN and they have a first meeting in June for discussion.

 

 

 

MOTION TO APPROVE THE AMENDED BUDGET

 

Mr. Tuneberg spoke to changes of previous meetings.  Mr. Moore asked for a motion to approve the amended budget.

 

Councilor Cate Hartzell/James Bond, Budget Committee Member m/s to Approve Amendments to Budget. 

 

Amarotico y  Bond y  Hardesty y  Hartzell y  Jackson y  Levine n  Mackris y

Moore n  Morrison y  Olsen n  Silbiger n  Thompson y  Williams n

 

MOTION(S) TO APPROVE ALLOCATIONS, FY 2005-06 BUDGET

 

1. Motion to accept the recommendation of the subcommittee based on their written reports.

 

John Morrison, Mayor/Councilor Russ Silbiger m/s to Accept the Recommendation of the Subcommittee Based on their Written Reports.  All Ayes.  Levine abstained.

 

2.  Motion to approve the budget and convey to council for adoption.

 

Councilor Kate Jackson/James Bond, Budget Committee Member m/s to Approve the Budget and Convey to Council for Adoption.

 

Amarotico y  Bond y  Hardesty y  Hartzell y  Jackson y  Levine n  Mackris y

Moore n  Morrison y  Olsen n  Silbiger n  Thompson y  Williams n

 

3.  Motion to approve the property tax permanent levy to 3.71470/$1,000.

 

Councilor Cate Hartzell/James Bond, Budget Committee Member m/s to Approve the Property Tax Permanent Levy to 3.71470/$1,000.

 

Amarotico y  Bond y  Hardesty y  Hartzell y  Jackson y  Levine n  Mackris y

Moore n  Morrison y  Olsen n  Silbiger y  Thompson y  Williams n

 

4.  Motion to approve the bond levies of $529,500.

 

Committee asked to clarify what the bond levies are for.  Mr. Tuneberg pointed to a-3 and gave an explanation of the debt service and said the funds are separate. He said on a-3 where we add the two together to come up with 529,500 is what is supposed to be levied.  He added that they would go back and look at the other pages, and the disconnect for $10,000.

 

James Bond, Budget Committee Member/Councilor Cate Hartzell m/s to Approve the Bond Levy of $529,500.   All Ayes.

 

 

5.  Motion to approve local option tax levy at 1.38000/$1,000.

 

Councilor Kate Jackson/Lynn Thompson Budget Committee Member m/s to Approve the Local Option Tax Levy at 1.38000 per Thousand.  All ayes.

 

 

COMMITTEE COMMENTS

 

Mr. Olsen said theyíre looking for solutions for AFN, and he wants the City to succeed.  He expressed his hopes that things do turn around and that they come up with good solutions. He also hopes the process will move quickly, as we get information and urges Council to begin the process to evaluate quickly.

 

Mr. Levine thanks everyone for participation. Mr. Moore agreed and said he hopes the City Council understands their concerns.  Mr. Moore sees no way to increase revenues without business plan.

 

Mr. Tuneberg recapped the next meeting is The City Council public meeting on June 7 to adopt budget, recognizing state revenues, setting the tax rate and finalizing the budget. He said after that, they will rework book again with the anticipation that on July 15th it has to be submitted to the county as required by Oregon Budget Law.  He added they will receive the final book with survey asking to rate various areas, and appreciate their cooperation, honesty and returning the survey.  He thanked everyone involved in process.

 

 

ADJOURNMENT

 

This meeting was adjourned at 9:00 p.m.

 

Respectfully Submitted,

 

 

Deborah Fleishel

Administrative Secretary

 

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