Budget Committee Meeting
April 23, 2009 6:00pm
Civic Center Council Chambers,
CALL TO ORDER
The Budget meeting was called to order at 6:10 pm on Thursday, April 23, 2009 in Council Chambers at
Mayor Stromberg was present. Committee members Chapman, Douma, Everson, Gregorio, Heimann, Navickas, Silbiger, Slattery, Thompson, Voison and Jackson were present. Boenheim and Lemhouse were absent.
STAFF PRESENT: MARTHA BENNETT, CITY ADMINISTRATOR
LEE TUNEBERG, ADMINISTRATIVE SERVICES/FINANCE DIRECTOR
BRYN MORRISON, ACCOUNT REPRESENTATIVE
MELISSA HUHTALA, ADMINISTRATIVE SECRETARY
DON ROBERTSON, PARKS DIRECTOR
RACHEL DIALS, RECREATION SUPERINTENDENT
ELECION OF CHAIR
Slattery/Heimann ms Lynn and Douma as Chair and Vice Chair. All ayes
APPROVAL OF MINUTES
Approval of minutes from previous meeting dated:
2/19/09 Joint Budget Committee and Parks Commission Meeting
Everson/Silbiger ms to approve the minutes. All ayes
Connie Saldano and Jason Hauwk from KSKQ Community Radio spoke regarding the Economic and Cultural Grants. They are asking for KSKQ to be reconsidered in receiving a grant. Ms. Seldano stated that some thought the radio was not a cultural activity, however, KSKQ gives a wide range for culture. The station does not have a political view. A number of KSKQ programmers have interesting political view points.
Grant allocations will be discussed during the budget meeting on April 30, 2009.
City Administrator, Martha Bennett and Administrative Services/Finance Director, Lee Tuneberg, presented the City of
The City of
Ms. Bennett stated that the proposed General Fund budget is less then the budget that was proposed 3 years ago. Several other funds besides the General fund are weak. Ms. Bennett continued that in the proposed budget 14.35 fewer positions will be funded.
Ms. Bennett discussed what the Committee proposed in February which was to create a budget based on FY 2009 levels with the reductions made in December 2008 included. In most departments it was a 5% reduction in FY 2009 and a 3% reduction in others. Ms. Bennett spoke about the various assumptions for FY 2010(see attached handout).
Ms. Bennett talked about the highest, medium and lowest priority criteria.
Ms. Bennett stated that the proposed budget is about 81 million (80,870,973) which is about 14 million dollars less then last years budget.
Mr. Tuneberg discussed the distribution of budget by fund for FY 2009-2010. Mr. Tuneberg stated that total budget is what is being looked at, total of actual transfers and fund balances; none of the numbers represent total expenditures.
The Committee stated that in prior year’s capital projects that had not been spent were included in the funds and wondered how much of that is included in the 80 million. Mr. Tuneberg stated that each year the City looks at Ending Fund Balance. System development charges is one that is included, also included are the residual amounts from borrowing that is going to be used on projects for the following years.
The Committee questioned if the City expects to see a similar drop in the projected budget as scene in previous years. Ms. Bennett answered that there will be less of a drop and expenditures will be less then budget. Ms. Bennett explained that the City is getting closer to having this number represent operations as opposed to capital projects. The City is spending down a lot of fund balances and reserves. Mr. Tuneberg added that components will be less between years but some components can rise. For example if at the end of the year the City receives stimulus money for capital projects the Ending Fund Balance will grow for a short time until the money is spent on those projects.
Mr. Tuneberg discussed distribution of budget by fund for FY 09-10 (see attached). Mr. Tuneberg explained the differences of the components of the budget between the 2 years by looking at resources in millions as indicated in graph.
Mr. Tuneberg explained the 3 million dollar carryover. The carryover is because the financial situation is weaker in many funds. And this is how much unrestricted operating cash do we have. Mr. Tuneberg discussed borrowing which is typically for capital improvements. The City has budgeted 1.0 Million which is a big drop due to reducing the amount of projects that were actually budgeted and moved them into an unfunded column. The City will prioritize projects and add them to the budget.
Mr. Tuneberg explained the miscellaneous budgeted resources which are intergovernmental revenues, fines, permits, and fees. Next on the graph are charges for services. The City is a primarily charge for services organization. The taxes include Property Taxes, Food and Beverage, Transient Occupancy and franchises. The reductions are attributed to tourist related reductions and franchises. Mr. Tuneberg explained that the two offset numbers 2.9 and 2.1 million are contingency and interfund activity. The 13.1 million in 2009 is capital. In 2010 ending fund balance is down to 5.1 million which is due to a drop in capital improvements and equipment purchases. There will be a 6.6 million reduction in capital. Debt services are reducing in total amount to be paid and the City has budgeted less. Mr. Tuneberg explained that Materials and Services in 2009 is 30.4 million and there will be a reduction of 1.1 million in 2010 despite increases in cost the cuts amount to a net of a 1.1 million reduction between the two years. The same can be said for Personal Services.
Mr. Tuneberg discussed the operating budget comparison (see attached). The Materials and Services line shows that over 7% was cut last year.
The Committee questioned what the City will be saving since Parks and Recreation and non-bargaining units are getting no increase this year. Ms. Bennett explained that the budget was built with the two union contracts and included the union bargained salary increases in the budget, but for the three contracts that are open the City is budgeting the same as the non-bargaining. For Police, Fire and the Clerical Technical group the City is budgeting zero increase. There is no guarantee that there will be no increases as the City is still bargaining with the union groups. Ms. Bennett explained that if the City would have budgeted more then zero there would have been more layoffs. In the end the decision was made to maximize retention of employees rather then salary increases.
The Committee questioned inflation adjustments. Mr. Tuneberg discussed that when looking at the long term, assumptions are used such as in general things will grow 3%. When looking at revenue streams the history is looked at and predictions are made from there.
The Committee questioned discussions in recent bargaining in regards to step increases. Ms. Bennett explained that currently the City is in the middle of bargaining. Currently the City just implemented the Classification and Compensation study. This study will look at the City’s pay plan and step increases to see if the step model is what works best for the City. This will be completed after this budget cycle.
Mr. Tuneberg explained changes in personnel cost budgeted for this year between 2008 and 2009 budget. In the budget document for this year there is an anticipated 1.7% increase between the two years. Factors for this include the 8-10% increase in health insurance which was reduced to 1-2% also changes in staffing and benefit coverage’s. Personal Services were budgeted 1.7% higher and Materials and Services were budgeted at 7.3% lower.
Mr. Tuneberg discussed Capital Improvement Budgets for FY 2009 and 2010 the difference between Capital Improvements is restricted monies and or grants.
Ms. Bennett discussed the General Fund. In FY 2008 expenditures in the General Fund exceeded revenues. This is expected to happen in 2009 and 2010. The City tries to keep the gap as small as possible. There is a long term trend issue which expenditures exceed revenues which decrease the General Fund balance.
Ms. Bennett spoke regarding the General Fund revenue budget. Ms. Bennett gave an overview of why the proposed budget general fund revenue is 6.5 Million less than FY 09 adopted budget (see attached).
Reductions in the proposed budget were discussed (see attached). The 39.6% reduction in administration comes from Rogue Valley Television RVTV and the Economic and Development Planning.
Mr. Tuneberg discussed the General Fund ending balance over time. The handout provided showed the trend. He explained the differences in proposed budget and the actual budget. In each of the columns there is a contingency amount of 3%, if it is not used then the remainder will go into the Ending Fund Balance. Since the City has budgeted a higher ending fund balance the proposed and actual budget amounts are converging.
The Committee questioned how often the City uses the contingency. Mr. Tuneberg explained that it varies by fund. In some funds a higher percentage is used over 50%. In the general fund 20-25% of contingency is moved every year. Moving the funds does not necessarily mean the money is spent. The contingency is carried forward to the Ending Fund Balance.
Mr. Tuneberg discussed how property taxes are calculated and levied in 2008 and 2009 and proposed for 2010. The permanent approved rate is 4.2865 total for all of the City and Parks.
The only tax rate change proposed is the library levy which is a 6 cent increase. Each year the City levies what is needed to pay for the library contract.
Ms. Bennett went over what cuts were made and what the property tax rate increase would be in order to restore the positions. To add back everything it would be a total of 19.9 cents. Ms. Bennett gave recommendations of what should be done to the General Fund (see attached). The Committee commented that firefighters usually come in pairs to complete a shift. Ms. Bennett responded yes in order to restore fire service three firefighters would have to be added to fully fill fire service.
Mr. Tuneberg gave an overview of the enterprise activities actual, proposed and projected rate increases (see attached). Mr. Tuneberg explained that after the third year of low water sales and rising chemical costs the City had to get into the Ending Fund Balance because of this a 10% increase in Water and 20% increase in Wastewater rates was approved.
The Committee questioned how each adjustment would affect the average household. Mr. Tuneberg responded that in a 10% to 20% increase the average household costs would increase 5 to 6 dollars a month. However, it depends on how much water each household uses.
Ms. Bennett discussed Water and Wastewater funds. Ms. Bennett stated that both funds are financially questionable. In both funds the operating expenditures exceeds the annual revenue. For Wastewater this is due to with declining Food and Beverage tax collections, with Water it is because of flat water consumption. Neither fund meets Ending Fund Balance targets. Ms. Bennett stated that both funds have a significant increase in Materials and Services cost because Water treatment costs have gone up. Both funds have had reductions in staff. To increase staff or positions in these funds a rate increase of 1-1.5% would have to occur. The City is using stimulus funds anywhere possible and is applying for stimulus funds for both of these funds.
Ms. Bennett discussed the Central Service Fund. All departments in this fund hit the 5% spending deduction. The Ending Fund Balance for this fund is about $12,000. Central Service Fund is an internal fund so if possible the City does not want to increase charges or spend contingency. This is a fund where no additions are possible and reductions have been made.
Ms. Bennett discussed Parks and Recreation Fund. Parks and Recreation Fund hit the Ending Funding Balance target due to changes made (see attached).
In conclusion Ms. Bennett stated that there are positives and negatives in the economy. Once economic recovery begins it will take a while before it cycles through the City. The City will stay focused on core services and prepare for the long-term.
PARKS PAGE 3-121 through 3-136
Parks Director, Don Robertson, and Chair of Ashland Parks and Recreation Commission, Mike Gardner, presented the
Mr. Gardner discussed the Parks and Recreation Budget over time (see attached). During the current FY Parks made mid-year corrections to ensure carryover and that the beginning fund balances were up for the upcoming year. The most significant savings was eliminating three fulltime positions for the upcoming fiscal year.
Mr. Gardner continued by discussing the difference between labor and materials, 62% goes towards labor and 37% goes to materials leaving 1% for Capital. Mr. Gardner stated the importance of that 1% it will allow Parks and Recreation to replace existing playground equipment as it wears out. Delaying long term maintenance may save money in the short term but if a correction reaches a state of no return it could cost much more.
Mr. Gardner spoke about the loss of full time positions. Parks and Recreation has gone from 29 FTE in 2008 to 24 FTE positions with no increase and part-time temporary positions. By decreasing staff Parks and Recreation has decreased numbers of teams and assigned employees to provide more areas of responsibilities. With fewer bodies there will be less time spent on certain tasks such as mowing grass and City clean up. Mr. Gardner feels that there will not be noticeable drop off in quality this year, but as time progresses there will be.
Mr. Gardner gave an overview of the Matrix Analysis provided (see attached). Mr. Gardner stated that Parks and Recreation is in the quality of life business. The quality of life should be at the top of the list. It is what helps keep our economy strong, our citizens healthy and our crime rates low.
Mr. Gardner stated that Parks and Recreation has an impact on the economic health of the Community. For example when there is a weather emergency it is parks operated facilities that provides shelter.
Mr. Gardner gave an overview of the significant budget changes Parks and Recreation has made (see attached). Mr. Gardner stated that Parks and Recreation will continue to meet the demands upon recreational resources. Mr. Gardner continued to talk about what needs to be discussed with the Community. One is to continue to increase rental rates for parks and recreation facilities and the second is to discuss the renewal of the Food and Beverage Tax.
The Committee questioned the increase in rental rates. Mr. Robertson answered that the last three years Parks and Recreation has evaluated all the fees and charges and has strived to increase recovery rates yearly. Currently the goal is a recovery rate of 50%. The Commission has increased that rate to 75% and in
The Committee questioned how Parks is expanding the market. Mr. Robertson answered that Parks Markets down to the Talent area.
The Committee questioned the fees and loss of revenue from reduction of use. Mr. Robertson stated that pricing is done on an annual basis and Parks tries to keep program costs as low as possible and still provide the services needed.
The Committee questioned if the Parks and Recreation Department has looked into increasing their use of volunteers. Mr. Robertson answered yes, primarily in maintenance tasks that need to be done and at the
The Committee questioned if it was possible to get economic development funds to expand Parks. Mr. Robertson answered that Parks has tried to get some funds but have not yet been successful.
The Committee questioned the recreation growth. Mr. Robertson stated that some of things that can account for the recreational growth were the reorganization of how staffing levels were controlled and also this year Parks increased cost for rental space per foot for Kayak’s by 30 cents which helps to move things forward.
The Committee stated appreciation that Parks is doing a great job in maintaining all components of Parks and Recreational services while keeping spending down.
Mr. Robertson discussed the Food and Beverage Tax. Without Food and Beverage Tax it will be very difficult to expand Parks services especially land acquisition. The only way to expand would be to sell other land. For example Parks has made a commitment to the City Council that within the next 2 years Parks will purchase a portion of the lower
The Committee stated that preservation of what the City has needs to be discussed. Mr. Robertson agreed. There are many issues that need to be resolved.
The Committee questioned if Parks was any activities still continuing in the Parks Department from the Youth Activity Dollars that went away. Mr. Robertson answered no and that the dollars were used to supplement and subsidize some of the activities that Parks already does for example swimming lessons and water rafting. Parks also works with the Parks Foundation to operate a scholarship program which allows Parks to not have to turn away anyone away from a program regardless of age.
Meeting adjourned at 9:02 pm.