Budget Committee Meeting

Draft Minutes

May 4, 2006, 7:00pm

Civic Center Council Chambers, 1175 East Main Street

CALL TO ORDER

Chairman Marty Levine called the Ashland Budget Committee meeting to order at 7:00 p.m. on May 4, 2006 in the Civic Center Council Chambers, 1175 E. Main Street Ashland, Oregon.

ROLL CALL

Mayor Morrison was present.  Council members Amarotico, Chapman, Jackson, Hartzell, Silbiger, and Hardesty were present. Budget Committee members Bond, Everson, Stebbins, Levine, Gregorio, Thompson, Mackris were present.

STAFF PRESENT:     LEE TUNEBERG, AMINISTRATIVE SERVICES DIRECTOR

                                    DICK WANDERSCHIED, ELECTRIC DIRECTOR

                                    SCOTT JOHNSON, OPERATIONS SUPERINTENDENT

                                    CINDY HANKS, PROJECT MANAGER

                                    VERONICA WARD, ADMINISTRATIVE ASSISTANT

Chair Levine read quotes from Roberts Rules of Order.  At the previous Budget Committee meeting, the Committee questioned if the Chairperson had the right to vote or if the Chairperson only voted in a case of a tie.  The result was that the Chairperson does have the authority to vote; subject to rules or custom of a particular board if the Chairperson had never voted and the people believe the Chairperson should not vote then follow that custom.  It is best to discuss the rules and procedures with the board to have a clear understanding of the roles the Chairperson should follow.  The custom of the Ashland Budget Committee is that the Chairperson does have the right to vote.   

Chair Levine clarified the Committee has not approved the Fire Department’s budget and explained the motion made at the previous meeting did not pass because the vote resulted in a tie.

Thompson/ Gregorio m/s to amend the Fire Department’s budget in a manner that would permit a portion of the budget to be used to increase the CERT position to full time and allocate the dispatch costs to the Police Department. DISCUSSION: Mr. Tuneberg clarified the motion is contingent on there being sufficient funds in the Police Department’s budget for the dispatch service.  He stated he had spoken with the Fire Chief about this and recommended that the Fire Department’s budget be reduced by $43,000 for dispatch and add back $20,000 in order to make the CERT position full time. He added the remaining $23,000 would go to the fund balance.  Councilor Silbiger and Amarotico requested permission to abstain from the vote since they were not present for the presentation and discussion. Committee reached consensus to allow Silbiger and Amarotico to abstain. Voice Vote: Hardesty, Chapman, Jackson, Hartzell, Bond, Everson, Stebbins, Levine, Gregorio, Thompson, and Mackris, yes.  Silbiger and Amarotico abstained.  Motion passed.

Morrison / Thompson m/s to accept the Fire Department budget as presented and amended. Voice Vote: Hardesty, Chapman, Jackson, Hartzell, Bond, Everson, Stebbins, Levine, Gregorio, Thompson, and Mackris, yes.  Silbiger and Amarotico abstained.  Motion passed.

Bond / Everson m/s to approve the Budget Committee meeting minutes from April 20^th and 24^th, 2006.  DISCUSSION: Thompson proposed a correction to the minutes of April 20^th, 2006.  Thompson read the statement for page three, paragraph five that she intended to make for the record.

“Lynn Thompson Committee Member expressed her concern that a significant amount of unspent budgeted monies may reflect overly conservative budgeting particularly if property taxes were increased to fund the unspent budget. She noted that this year the budget committee is being asked to fund a number of staff positions by increasing property taxes and in that situation we should look carefully at areas where budget monies have traditionally been unspent before raising taxes. Thompson understood that Mr. Tuneberg explained that unspent money increases fund balances which can be used in the subsequent year and that staff would hold off on increases in fees and rates until the fund balances are know so they can be utilized.“

Bond / Everson accepted the amendment made by Thompson to the original minutes from April 20^th, 2006. DISCUSSION: Morrison did not support the m/s to amend the minutes, his understanding of the minutes is that often the Council or Committee members felt they might have been misrepresented yet the minutes reflect what was actually stated.  Morrison cautioned the Committee that they need to be careful of maintaining an accurate record of what was said rather than 20/20 hind sight.  Gregorio asked the custom of the Committee specifically in amending minutes.  Levine recalled that the Committee had amended minutes in the past and Morrison did not specifically recall if the Committee had or had not. Levine stated that generally amendments have been done before and recalled a specific example of a committee members name was incorrectly attributed to a statement that was then corrected.  Morrison stated that situation is where a statement was attributed to the wrong person was selected not a characterization error.  Thompson stated she felt the minutes were summarized in a way that conveyed a different impression than she thought she meant to convey.  She also stated that she would agree with Morrison’s statement if they were dealing with transcripts but the fact that the minutes are in a summary form. No other discussion.  Voice Vote: Silbiger, Amarotico Hardesty, Jackson, Hartzell, Bond, Stebbins, Levine, Gregorio, Thompson, Mackris YES.  Everson, Morrison, Chapman NO. Motion passed 11 to 3.

PUBLIC INPUT

None

ELECTRIC DEPARTMENT PRESENTATION:

Dick Wanderscheid, Director of the Electric department introduced Scott Johnson the Operations Superintendent and began with a brief history of the Electric Department.  Mr. Wanderscheid explained the relationship and contract between City of Ashland and Bonneville Power Association (BPA).  The City receives 98% of its power from BPA and the remaining 2% is generated by the City’s hydro-generator at the Water Treatment Plant. BPA has been in a legal rate case, these rates will affect the rates for the next three years and will take affect October 1, 2006.  Actual rates won’t be determined until August of 2006 and can be adjusted as late as September 2006, after the BPA third quarter financial report is released.

The proposed budget has a net 2% rate increase but the department has decided to hold off on rate changes until August when the department will be able to find out what the BPA rate would be and would have a better idea of the June 30, 2006 fund balance. He stated that the net 2% increase to rates would be the worst case scenario.  The City’s electric utility covers all of Electric departments operating cost and generates money for other City operations. In 2005 the City’s electric user’s tax generated $2.3 million for the general fund and the 10% franchise fee generated $1.1million.

Mr. Wanderscheid began speaking with the Capital Improvement Plan (CIP) on page 2-5 of the proposed budget.  He went over the items listed on page 2-4 for the next six years under CIP.  Mr. Wanderscheid expressed the need to repair the Enclosed Open Equipment Building at the service center.  $120,000 had been budgeted last year for the project to enclose the building, but the project was not able to be started due to lack of bids.  This year’s proposed budget included an additional $100,000 to enclose the building and contract most of the work to the Public Works department.  He referenced the Ten Year Electric System Planning Study book as to the improvements needed for the Electric Infrastructure.  The Electric Department proposed these projects for this fiscal year.

Ø      Upgrade the business district feeder line on Helman Street.

Ø      Underground the remainder of Oak Knoll

Ø      Complete the underground feed to the Water Treatment Plant

Ø      Begin shifting some of the load from one substation to another.

Mr. Wanderscheid noted that it is important that the repair to the line at the Water Treatment Plant is finished this coming budget year.  In a situation where the City is without power for an extended amount of time, the Water treatment Plant would not be able to function.  Mr. Wanderscheid touched on the other noted projects and the importance of each one.  He then directed the committee to look at page 3-114 in the proposed budget to see the breakdown of cost in “improvements other than buildings”.

The Committee questioned if the cost of “Install New Services & Transformers” under CIP is recuperated by SDC fees.  Mr. Wanderscheid responded that a good portion of the cost is recuperated through other fees charged for new development but they do not charge SDC fees for these services. 

The Committee asked for clarification to which project that was not listed in the Electric System Study report. Mr. Wanderscheid responded that the one project not in report the one for the Mountain Ave Substation to the low side for shifting the electric load. The Committee then asked if the equipment stored in the Open Equipment Building has been damaged when it had been moved for cleaning.  Mr. Wanderscheid responded that equipment is not typically damaged and that the equipment is made for the outdoors.  The moving of the equipment in and out of the building for cleaning is more of a time consuming and labor intensive project and a health concern for those working with the equipment.  

The Committee asked if the infrastructure costs associated with Ashland Fiber Network (AFN) are things that are built into the Electric budget, referenced page 2-91.  Mr. Wanderscheid replied that the AFN budget is separate. If AFN had capital projects the cost would be funded out of the AFN budget. If the Electric department does work for the AFN department, they are billed by Electric for that work. Anytime the departments have a project completed jointly the cost are also shared.  The Committee and Mr. Wanderscheid discussed the alternatives and long term goals of the repairs to the Electric Equipment Building.

Mr. Wanderscheid discussed the Supply Division in the proposed budget. He spoke about the detail of each line item listed on page 3-113 and noted the $45,000 is for the repair of the hydro facility.  He also stated that last year the City hired a firm to evaluate the repairs for the hydro facility when that went out to bid the bids came back much higher than expected.  The department reevaluated the project and decided to do much of the repairs in house.  The Electric department is going back to the public with a revised Request For Proposal (RFP) and believe the project will be completed at the budgeted $45,000. The Committee asked if the need is for general maintenance or if there was equipment failure.  Mr. Wanderscheid responded that there are both needs. The City does what they are able to do in both mechanical and electrical maintenance, but the department does not have the ability to do some of the required maintenance.  The RFP would allow a contracted company to provide scheduled maintenance and the City would continue to repair what they can to keep the cost down.

Mr. Wanderscheid explained the Transmission division detail on page 3-113; he also explained that the numbers in the proposed are very close to the prior year’s budget.  He continued to explain the Operations division (Distribution) budget which contains all personnel in Electric department except the Conservation Department. The Conservation Department has a separate budget.  Mr. Wanderscheid referred to page 3-111 and discussed the personnel costs that have risen in the proposed budget due to the Cost of Living Adjustment’s (COLA) and the addition of an additional line installer. Mr. Wanderscheid explained the regulations that are imposed by the PUC and the work load those regulations require. 

The Committee questioned the net cost of the additional position. Mr. Wanderscheid responded it is approximately an additional $75,000-80,000. It would allow them to bring in a lineman in year round and for 6 months of the year, a tree trimmer to assist staff. The Committee questioned the remainder of the increase. Mr. Wanderscheid responded it is the COLA, Healthcare, and PERS for the additional employee. Mr. Wanderscheid explained that the line installer will assist with new construction as well as daily duties and responsibilities within the department.  He explained that the fees that they are charging the developers cover the costs of putting infrastructures in. It has been a tremendous savings to the City that they no longer have to pay and put in the conduit, the developers do.

Arlen Gregorio asked if staff would explain the increase of the position to him at a later time.

The Committee asked if the projection for power sales would be about the same as the previous year for the General Fund. Mr. Wanderscheid explained that if the electric rate increase goes into affect, the franchise fee would go up another $100,000 which means more would go into the General Fund. If the amount of electricity that is sold increases, then the 10% franchise fee and the 25% users tax would also increase. The electric users tax goes directly into the General Fund and the franchise fee is 10% of sales and is in their budget.

The Committee asked to clarify that new construction does not pay for itself. Mr. Wanderscheid responded that the cost of servicing the new construction is covered by the fees charged.

Mr. Wanderscheid explained that beginning in 2006, a portion of his salary was no longer shared by AFN, his salary is reflected completely in the Electric budget.

Mr. Wanderscheid spoke to the increase in Materials and Services attributed to increased central service and facilities fees, and franchise fees. Part of Miscellaneous Charges and fees are $67,000 of the electric revenues going to low income assistance programs. Mr. Wanderscheid added that he has looked into buying green power and the response from BPA is that it won’t be any less expensive.

The Committee clarified that the administrative secretary position should only be .50 FTE in 2004 and 2005. 

Mr. Wanderscheid gave a brief overview of the conservation division.  The decrease in the Water Fund is due to the employee’s time is used more in the Electric Utility than the Water, therefore moving some of the Personal Services to Electric.  The Water Fund budget is mostly status quo. He spoke to the progress of the division and the future.  He said that they are doing well with the goal of 20% growth in the water plan. He explained that in the future, there will need to be an additional person in this division to help with the conservation plan. Mr. Wanderscheid added that the conservation staff is located in the new Community Development building and that causes higher facilities use fees in Miscellaneous Charges and Fees.

Mr. Tuneberg added that they do not see an increase in the facilities use fee for this division, only if there were additional costs attributable to the building.

The Committee asked where the commission move to. Mr. Wanderscheid did not know and will look into.

Mr. Wanderscheid spoke to the Electric Conservation budget.  The main increase is in Programs and is due to the Community Solar Pioneer Project. The City Council approved them to install 60 KWH of solar electric generation. It is in coordination with federal and state government in hopes to sell pieces of the system to community members.  The Committee asked them to clarify. Mr. Wanderscheid explained that the City would put the system out for bid, then get the tax credit, and then sell the bonds for individual to use the tax credit.

Mr. Wanderscheid spoke to the proposed rate increase and the differences of what the projection was in February and where they think they will actually be at the year end.  They looked at the BPA supply cost and the adjustments needed.  The new data is that the BPA cost are actually going to be $84,000 less than projected. Sales are expected to be down to $10.22 million. The reason for the loss of revenue is a mild winter. They are proposing to raise rates 10% and to eliminate the electric BPA surcharge. A true picture of what the rates will be are going to be available in August.  Mr. Wanderscheid proposed that they don’t do anything with the rates until they really know what they will be in July or August, worst case scenario would be 2% net increase.  The Committee clarified that the intent is to not eliminate the surcharge until they know the new rates and they would happen at the same time.

The Committee asked if the excess in the Electric Fund ending fund balance can be utilized for other functions. Mr. Tuneberg responded that Interfund loans have happened in the past and may be needed in the future. The Committee asked if they should use it on a one time expense. Mr. Tuneberg responded that is what the City needs to decide, and if they transfer one year for an ongoing expense, what will they do the following year.

Mr. Tuneberg added that the $4,000 that was not included for the commission’s budget was an input error and can be adjusted for the adopted budget. The Committee asked how the commission funds are used.  Mr. Wanderscheid responded they sponsor Earth day, world wellness, compost classes, and have paid Ashland Sanitary for disposal of florescent bulbs.  Mr. Wanderscheid will provide detail.

Mr. Wanderscheid spoke to some of the other budget projects. He would like to implement the Supervisory Control and Data Acquisition system. It is in the budget this year and it is their intention to implement it. They have been installing Electric Read Transmitters (ERT) meters and will be retro fitting meters that are not ERT.  These ERT meters allow the meter reader to be more efficient than the previous meters. They would like to purchase the Mountain Avenue substation from Bonneville also. There would be a cost savings for distribution.

The Committee clarified that the GIS specialist is distributed in two different departments, Electric and Public Works. Electric pays for the service to Public Works.

Everson/Hartzell ms to increase the electric conservation budget by the $4,000 for the commission and accept the electric department budget as presented. All Ayes.

Mr. Tuneberg explained that the Committee can make their recommended revisions to the budget in the introduction section on page 1-38.

ADJOURNMENT

The meeting was adjourned at 8.47 p.m.

Respectively Submitted,

Veronica Ward

Administrative Assistant