Budget Committee Meeting
CALL TO ORDER
February 13, 2008 7:00 PM
Civic Center Council Chambers, 1175 East Main Street
The Citizen’s Budget Committee meeting was called to order at 7:08 pm on February 13, 2008 in Council Chambers located at 1175 East Main Street, Ashland Oregon.
ROLL CALL & INTRODUCTIONS
Mayor Morrison was present. Councilor Chapman, Hardesty, Hartzell, Jackson, Navickas, and Silbiger were present. Budget Committee members Douma, Everson, Gregorio, Heimann, Slattery, Stebbins and Thompson were present.
STAFF PRESENT: MARTHA BENNETT, CITY ADMINISTRATOR
LEE TUNEBERG, ADMINISTRATIVE SERVICES/FINANCE DIRECTOR
BRYN MORRISON, ACCOUNT REPRESENTATIVE
GREG CASE, DIVISION CHIEF-EMS
MARGUERITTE HICKMAN, DIVISION CHIEF-FIRE & LIFE SAFETY
ELECTION OF A CHAIR
Douma/Stebbins ms for Lynn Thompson for chair. All Ayes.
Heimann/Everson ms for Allen Douma for vice chair. Douma/Jackson ms for Bill Heimann for vice chair. Chapman/Hartzell ms for Dee Anne Everson for vice chair. Heimann and Everson declined. All Ayes for Douma for vice chair.
APPROVAL OF MINUTES
Approval of minutes from previous Budget Committee meetings dated:
5/09/07 Budget Committee Meeting
5/17/07 Budget Committee Meeting
5/21/07 Budget Committee Meeting
5/22/07 Budget Committee Meeting
Everson/Silbiger ms to accept the minutes as presented. All Ayes.
There was no public input.
The Committee discussed a letter submitted from Karen Darling. See attached. Councilor Jackson mentioned that someone may need to contact her regarding the county assessment.
BUDGET OFFICER PRESENTATION OF FY 2008-2009 PROCESS
Lee Tuneberg, Administrative Services and Finance Director spoke to the packet and the schedule. He pointed to the process of the budget as presented and Oregon budget law. The Committee approved the presented calendar with the majority of the meetings starting at 6:00 PM. The wrap up meeting may be used by another department other than Public Works if needed. Martha Bennett, City Administrator suggested that it would be helpful to staff if the Committee would let them know earlier in the process if they had questions or items that they would like more information on.
Mr. Tuneberg explained that the Social Service grants would not be part of the process this year. They were approved in the FY 2007-08 budget and applications for the next cycle will not be available until the FY 2009-10 budget process. The Economic and Cultural Development grants would be a part of the process this year. The Committee discussed what the subcommittee’s direction is for the grants. Mr. Tuneberg explained that the subcommittee is to follow the established resolution. The final decision on the allocations is adopted with the final budget and the subcommittee provides tentative allocations. The Committee expressed a desire for the application process to be electronic. Mr. Tuneberg and Ms. Bennett responded that staff will look into the possibility of accepting the documents this year electronically and submitting them to the committee electronically. Allen Douma, Budget Committee Member asked if the adopted budget could be posted to the web by department rather than as a whole document. Staff responded that would be possible.
Budget Committee Members Douma, Everson, Heimann, and Stebbins volunteered for the Economic and Cultural Development grant subcommittee. Councilors Chapman, Hartzell, Navickas, and Silbiger volunteered for the Economic and Cultural Development grant subcommittee.
Mr. Tuneberg spoke to the appropriation level for the Library tax being reduced after the election in the FY 07-08 adopted budget. He spoke to the budget survey that was distributed after the last process and the low percentage of members completing the survey. The Committee asked about discussing the ambulance presentation made at a previous study session to resolve questions they had. Ms. Bennett asked the Committee to send questions regarding that discussion to staff.
Mr. Tuneberg spoke to the financial report presented and offered to answer any questions the Committee had. The Committee questioned the budgeted electric surcharge elimination and electric rate increase. Mr. Tuneberg responded that neither had taken place in this fiscal year. This will be a discussion of Council in March and staff is waiting for a court mandated pay out from BPA before raising rates. This will be a one time cash payment and may adjust how the city will need to raise rates.
Staff spoke to the direction that Council had given them in building the budget for FY 2009 through a slide presentation. See attached. They explained that the budget is in transition and Council pointed staff toward financial sustainability and employee continuity and retention. They spoke to the major economic transition and major shifts in cost centers. Fuel is up 150% in the last three years. Staff expressed to the Committee that they have every confidence in their ability to manage through this transition.
Mr. Tuneberg spoke to the chart on Ending Fund Balances. This looks at long term projections and how not raising rates affects the balances. Ms. Bennett explained that staff cannot use the same assumptions as in the previous year. The Committee questioned what the increase in Personal Services would be in 2009. Mr. Tuneberg explained that of the 7% increase in costs, about 50% is benefits. Mr. Douma felt that the 7% increase was too high. Ms. Bennett explained that union contracts have had rates behind in the market and now the City is catching up. Mr. Tuneberg added that the City has been able to keep the costs low by not having all of the adopted positions filled the entire year. Staff explained that the budget will not be built with any additional FTE.
It was explained to the Committee that in the past, staff has budgeted to spend down fund balances in the General Fund, where the savings were a result of vacant positions and under spending. Ms. Bennett explained that for the first time, the City will have to spend into the fund balance this year. The departments that were cut last year will spend 97-98% of budgets. By budgeting so tightly, this leaves no cushion if something unforeseen happens.
Last year the General Fund was cut $750,000. This year the Police department will leave some positions vacant. It was explained that the City cannot keep rates flat and maintain the existing service levels. In the General Fund, the City either needs to find new revenue or cut existing services, for example personnel. Ms. Bennett explained that the natural growth is not happening like expected. Mr. Tuneberg explained that in March, staff will know better how the increase will be from last year. The Committee discussed the impacts of the high fuel costs on tourism. Ms. Bennett explained that staff is trying its best not to assume fuel or any other single factor will affect tourism. The Committee discussed the Oregon Shakespeare Festival’s projections for attendance. Ms. Bennett explained that OSF is predicting that they will be at the same or more than last year. Mr. Tuneberg spoke to the changes in tourism and how people book their trips. He explained that the City does not have any long term modeling for tourism.
Ms. Bennett explained to the Committee that in this years budget process, they will need to make some hard decisions. Staff will present their budget and will be required to know how to explain the different aspects of it. Staff will be prepared to recommend cuts and describe the impact on citizens. Staff will also be able to speak to the Committee about revenues and rate increases. It was discussed that every service the City provides has people who care about it, so if programs get cut, they will have people who come out to the Committee or Council level to appose. These will be difficult decisions that Staff and the Committee will have to make in balancing the budget.
It was explained to the Committee that unfunded council goals will be submitted to the Committee as add packages. The Committee discussed what the word programs referred to. It was explained that one example of a program in the last years budget was an education program that was offered at the Nature Center.
Ms. Bennett proceeded to the slide explaining Base Services vs Base Revenue. Base Services is an optimistic approach and Base Revenue would have a negative affect on morale.
The Committee discussed if there could be more efficiencies throughout the City so the base revenue approach may work and expenditures could be reduced. Ms. Bennett explained that would be an assumption that staff is not doing things efficiently, and that staff cannot do things any more efficiently in some cases.
The Committee emphasized the need for all departments to really know their budgets when they present to the Committee and be prepare to answer where cuts or adds are appropriate. They also wanted staff to be prepared to speak to both base services and base revenue. Ms. Bennett explained the result of building a base revenue budget and if the Committee does not want to increase rates, departments will need to sell their budgets to the Committee.
Navickas/Hartzell ms to go with the base services budget approach
. Councilor Navickas added that the Parks Department is having to raise fees in order to keep services and if basic maintenance is put off, it will increase costs in the long run substantially. He encouraged the Committee to look at increasing the property tax rate and to listen to staff carefully. The Committee and Council have kept any excess out of the budget and the departments are running with a too tight budget.
The Committee discussed where the library portion was in the budget and the community voting on the Youth Activity Levy and any other library levies that may happen. Staff explained that the library is shown in the Administration Department budget and they do not expect to need all of the approved 25 cents in FY 08-09, but will ask the Council to possibly add a third year of funds and look at a long term option to help the county.
The Committee discussed the question of whether it is realistic to build the budget with expenses exceeding revenue. Staff explained the need to look at the revenue side in the beginning of the process. Mr. Tuneberg explained that staff will go through a balancing act , look at the disconnects, and then the departments will meet with the City Administrator and discuss what needs to be reduced before the proposed budget goes to the Committee.
The Committee discussed how some revenues are within the City’s control while some are affected by outside influences. It was discussed that the City, in the past, has chosen not to increase the property tax to bring in more revenue and that Staff will need to prove why there is a need to raise taxes and that rate increases are sometimes hard for Council to impose.
The Committee discussed that they need to have a clear picture on what they will be able to add on or get to keep and not cut, for the tax rate increase. Mr. Tuneberg explained that regardless of the process, eventually staff will have to deal with gaps or disconnects. He explained that staff would like to develop the budget with the services they are providing now, and calculate what the cost is. Then staff will identify any rate increases that will need to happen to balance that. If they cannot balance the budget that way, they will make cuts and bring those back as add packages. One of the problems for staff is that if they identify cuts immediately, before using the preferred approach, it will have a morale implication.
Staff explained to the Committee that the labor contracts dictate the wage increases that are built into the budget and only non bargaining employee’s rates can be altered.
Ms. Bennett explained to the Committee that if they chose to build the budget using the base revenue approach, the proposed budget will be presented to the Committee with personnel being cut. The Committee questioned if that is inevitable and if the City is just deferring the problem. It was discussed that a good first step would be if the City moved to a budget based on outcomes, so the community could see what the services actually cost.
It was explained to the Committee that in the previous budget process, the base revenue approach was used. Staff will not propose a wish list budget. Committee members discussed the possibility of finding a way to address the growth of expenditures in basic City operations and building the budget based on the previous year’s actual figures so true costs are known.
The Committee discussed the need to look at financial sustainability, employee retention, and institutional knowledge. Ms. Bennett spoke to the visioning process that will take place in the next few years and that the City should be in a better position after that. Some members of the Committee felt that staff should be allowed to build the budget the way they think and bring it to the Committee balanced that way.
The Committee asked Mr. Tuneberg what the difference is in taking the base revenue approach compared to base services. Mr. Tuneberg explained that the difference would be, it would be built under capped revenue, and could come with three positions already cut. As apposed to a budget with no positions cut in the beginning and a list of possible cuts if the Committee did not want to raise rates or taxes. They would have to prioritize and make cuts.
It was discussed that the City’s long term, internal policies, and levels of service needs to be looked at. Some Committee members did not want a budget built where only vacant positions were cut, they wanted to see what the departments really needed to provide the service. It was explained that staff will be prepared to explain what the impact on the citizens will be if cuts are made or if services are affected.
Motion passes 8 to 6, Chapman, Everson, Hartzell, Jackson, Morrison, Navickas, Silbiger, Slattery voted yes. Douma, Gregorio, Hardesty, Heimann, Stebbins, and Thompson voted no.
The Committee was notified that there will be local budget law training on February 27 in White City. Budget training with Mr. Tuneberg was offered as well as City tours.
Ms. Bennett explained that all public meetings need to be properly noticed and asked the Committee not to deliberate over emails.
Meeting adjourned at 10:06 pm.