Budget Committee Meeting

Agenda

May 11, 2009 6:00pm

Civic Center Council Chambers, 1175 East Main Street

CALL TO ORDER

The Budget Committee Meeting was called to order at 6:01 PM on Monday, May 11, 2009 in Council Chambers at 1175 East Main Street, Ashland Oregon.

ROLL CALL  

Mayor Stromberg was present.  Committee members Chapman, Douma, Everson, Gregorio, Heimann, Jackson, Lemhouse, Navickas, Silbiger, Slattery, Thompson, Voisin and Boenheim were present.  

STAFF PRESENT:    

MARTHA BENNETT, CITY ADMINISTRATOR

LEE TUNEBERG, FINANCE DIRECTOR/ADMINISTRATIVE SERVICES

MIKE FAUGHT, PUBLIC WORKS DIRECTOR

BETSY HARSHMAN, PW MANAGEMENT ASSISTANT

MIKE MORRISON, MAINTENANCE SAFETY SUPERVISOR

BRYN MORRISON, ACCOUNT REPRESENTATIVE

MELISSA HUHTALA, ADMINISTRATIVE SECRETARY

CAPITAL IMPROVEMENT PLAN OVERVIEW 

Public Works Director, Mike Faught was joined with Betsy Harshman, PW Management Assistant to present the Capital Improvement Program. 

Mr. Faught discussed the CIP document (see attached).  The CIP was adopted by Council on March 17, 2009.  Mr. Faught also discussed the 2010 availability of funds and the federal stimulus funded projects. 

The Committee questioned if the Stormwater, Ashland Creek Riparian Project has dealt with the fact that the City of Ashland runs the main sewer line along the edge of Ashland Creek.  Mr. Faught answered it is two separate projects. 

The Committee questioned the second fire house process.  Mr. Faught answered that they are currently proceeding to fill out applications for fire station two, once the application for stimulus is approved then the application goes to Council for approval. 

The Committee questioned if the Federal stimulus funded projects are in the budget.  Mr. Faught answered that the $458,000 for overlays and the $500,000 for the wastewater treatment plant is in the budget.  The water project, stormwater Ashland Creek, and public facilities and diesel retrofits are not in the budget.  The Committee questioned if the city is assured of getting the first two projects because the projects are in the budget.  Mr. Faught stated that the first project is assured and CIP will be getting an additional $200,000 for Hersey Street.  The water project given the number of applications is still questionable.  There wastewater project is questionable as to whether there will be enough money.  If the revenue does not come through the money would not be expended.

Mr. Faught discussed the master plans for CIP (see attached).

Mr. Faught discussed what was in the FY09 budget and what is anticipated to be spent (see attached).  Last year the Budget Committee and Council approved $11 million change worth of capital projects.  Revenue was not coming in to meet the schedules so staff did not construct those projects.  Anticipated spending for this year is $3.5 million. 

Mr. Faught gave an overview of the 2010 budget (see attached).  The Committee questioned where the $7.5 million dollars that wasn’t spent in the FY09 budget goes.  Mr. Faught answered that the funds weren’t there to construct projects so without the money there is not a large cash carryover. 

The Committee questioned whether or not CIP will be using full faith and credit bonds for capital projects in this FY09 or FY10.  Mr. Faught answered no, most projects are deferred. 

Mr. Faught went over the project details (see attached).  The TSP project will be starting within the next 2 years.  Grant applications have been submitted but will not know if the grant is received until June.  This project is a 100% eligible SDC project and the need is strong. 

The Jefferson Street Extension project has still not moved forward.  If the permits are received in time the project will go this year.  If not the project will be delayed another year. 

The Committee questioned if it is possible to direct these funds to local businesses so the money gets spent and kept in the community.  Mr. Faught answered that the biding process is handled through the state and has to follow federal funds and guidelines.  CIP does not have control for local companies to get the work. 

The Committee questioned what the criterion is to get federal stimulus money.   Mr. Faught stated that the projects that are ready to go are eligible.  Without stimulus money many projects would not be able to be funded.   

The Committee questioned the priorities for street work for example repaving Granite Street.  Mr. Faught answered that because these projects would not occur without stimulus money CIP would not be successful in funding the Granite Street work.  Mr. Faught stated that the best and most cost effective use for the money is to put all of the emphasis on overlays.  When you overlay a street it is good for a 20 year lifecycle, if you reconstruct a street it is only good for a 20 year lifecycle so Mr. Faught recommends that the limited funds are focused that way.  The reconstructs are much smaller then the roads that need to be overlaid.  The Committee questioned the average time period in doing overlays compared to reconstruct.  Mr. Faught answered if a road has a 20 year life it should be overlaid every 15 years. 

Mr. Faught discussed the Local Improvement District (LID) (see attached).  18% of LID’s total projects are SDC eligible. 

Mr. Faught went over the proposed Water Fund project list (see attached).   Staff was successful in getting $111,000 worth of grant money.  The water study is good for the right water for the right use. 

The Committee questioned the growth assumptions are built into the 2016 analysis.  Mr. Faught answered 1.4% per year growth rate. 

Mr. Faught discussed the proposed Wastewater Fund project list (see attached).   

The Committee questioned the cost to fees and rates.  Are they existing fees and rates.  Mr. Faught answered that they are fees and rates that are specifically charged for a service.

PUBLIC WORKS

Public Works Director, Mike Faught was joined with Betsy Harshman, PW Management Assistant to present the Public Works budget presentation. 

Mr. Faught discussed the summary of funds (see attached).  The Water Fund, Wastewater Fund, Street Fund, Capital Improvement Fund, Administration and Engineering, Equipment Fund, Airport Fund and Cemetery Fund equal $21,075,646. 

Mr. Faught gave an overview of the work coming for FY 2010.  He stated that master planning is the primary focus of the engineering staff.  There are some concerns long-term for the Public Works department 35% of staff is eligible for retirement in 5 years or less.  A concern is there are not enough people trained to work in treatment plants. 

Mr. Faught discussed significant budget changes that were made in December FY 2009 (see attached).  The General Fund was reduced by 5%. 

Mr. Faught gave an overview of the Water Fund (see attached).  The significant budget changes for the water fund were elimination of one water distribution position.  Due to a shortage of staff an employee will be moved to a water distribution position to the water treatment plant on Jan. 1, 2010.  There was a 7% reduction in personal services and materials.

Mr. Faught discussed the matrix for water supply, water treatment and water distribution (see attached). 

Mr. Faught gave an overview of the Wastewater Fund budget (see attached).  The distribution of the Wastewater Fund is 24% salaries 76% materials and supplies.  The FY 2010 significant budget changes for the Wastewater Fund were discussed (see attached).  One collection system position will be cut.  New projects have been reduced almost completely. 

Mr. Faught went over the matrix for the treatment plant and collection system Wastewater Fund (see attached).  

Mr. Faught gave an overview of the Street Fund budget (see attached).  The Street Fund is in better shape then both the Water and Sewer Fund.  The Street Fund is constant through time with spikes in capital projects.  The distribution between funds is 33% salaries and services and 67% materials and supplies.  New revenues for the Street fund were discussed. House Bill 2001 is going to move forward and Ashland will compete for these funds. 

Mr. Faught discussed significant budget changes for the Street Fund for FY 2010 (see attached). 

Committee questioned what the reduction in personnel services is.  Mr. Faught answered that there was a slight cut of 1.5-2 % cut in materials and supplies.

Mr. Faught discussed the matrix for the street fund (see attached).  In the Street Fund state federal mandates don’t apply as much as the other funds so it is all secondary. 

Mr. Faught gave an overview of the Capital Improvement/Facilities Maintenance Fund Budget (see attached).  The operational side over time it has held pretty flat.  The only fluctuation in this budget is capital projects.  The distribution of funds is 33% for salaries and benefits and 67% for materials and services. 

The FY 2010 budget changes for the Capital Improvement Fund is 4.5% reduction in personal services which is a cut in janitorial services. 

Mr. Faught gave an overview of the Administration & Engineering, Equipment, Airport, and Cemetery Funds (see attached). 

Mr. Faught explained that in the Airport Fund operation side there is no staff associated to the airport in terms of the budget.  There was a spike in FY 09 because of a $300,000 refinanced loan. 

Significant budget changes in the Cemetery Fund are an 11% reduction in water.  The Cemetery Fund is the only fund that uses General Fund. 

Mr. Faught gave an overview of the Matrix for Cemetery, Facilities, Fleet, and Airport. 

Ms. Bennett and Mr. Tuneberg gave an overview of the pages handed out with answers to questions proposed by the Committee either during the department presentations or via e-mail (see attached).  The Committee asked and received an overview of the outcome of proposed increases on the median household per month.  The increase depends on an individual’s water and power consumption and size of household. 

The Committee questioned how the rate increase was calculated for a median household.  Mr. Tuneberg answered that a test house hold and test water consumption was used and averaged for a year of consumption.  It was then compared to other samples and ages and sizes of households to create an average. 

Mr. Tuneberg gave an overview of how reconciliations for the budget document are implemented.

The Committee questioned if a reserve fund is created how is it encumbered, who is in charge of using them and under what circumstances.  Ms. Bennett answered that alternatives will be brought to the next meeting.  One option is to create separate funds. 

The Committee discussed clarity regarding Budget Committee responsibility. There is a document on the City’s website stating what the Budget Committees responsibilities.   

The Committee stated that it was understood that the Fire Chief feels that the 2 fire fighter positions are critical and that the insurance rate for the City could potentially be at risk.

The Committee questioned where Ms. Bennett stands based on the Budget message and the budget process.    Ms. Bennett answered that it is recommended that the Committee creates a Reserve Fund that is at least $130,000.  It was also recommended to restore half time police clerk, two fire fighters and the CERT coordinator. 

The Committee questioned if the two fire fighter positions are critical to restore or can we function without them.  Ms. Bennett answered that if the General Fund is going to be balanced with existing revenues then the staffing in the Fire Department will be adjusted.  The minimum staffing doesn’t happen all of the time in the Fire Department, however, the difficulty with having the minimum staffing is on infrequent severe incidences the City will be at greater risk.  On average there are 10 to 14 structure fires a year.  When all 3 trucks are out the City will be stuck with no one to respond to the next 911 call. 

The Committee wanted data to show what the City would be missing if there were 6 fire fighters as opposed to 7 on a structure fire.  Ms. Bennett answered that if there were only 6 fire fighters on duty during a structure fire they would be missing the person to stand back from the fire to observe and direct as to what’s going on and to instruct what the fire fighters need to do.  There would be no incident commander. 

The Committee discussed the budget process and alternatives.

The Committee questioned fire and safety being cut and if there are opportunities to look at other places to cut.  Ms. Bennett stated that the other places have already been cut.  For example by decreasing the quality and reliability of the electric service we do a great damage to the customers.  Ms. Bennett gave an option for the Committee to think about.  Last year there was an increase in franchise fees in Water and wastewater by 3% which all went to the General Fund.  Water and Wastewater still pay 2% of the 10% franchise they pay into the Street Fund.  For one year it is suggested that Committee could take that money from the Street Fund which is $215,000 and put it in the General Fund. 

The Committee questioned putting Reserve Fund money aside over saving personnel positions.  Ms. Bennett answered that the reason to make severe reductions is because the City has steadily spent down both department budgets and the General Fund as a whole.  The Reserve Fund would draw on to protect services and to stabilize the budget.  The Committee stated that we need to have a plan that goes beyond one year. 

The Committee discussed the status of the General Fund balance. 

The Committee thanked the staff for the hard work that has gone into the budget process.

The Committee discussed how to proceed with May 13^th and May 14^th agendas.

ADJOURNMENT

This meeting adjourned at 9:24 PM

Respectfully Submitted,

Melissa Huhtala

Administrative Secretary