Budget Committee Meeting
May 3, 2001, 7:00pm
City Council Chambers, 1175 East Main Street
Present: Cate Hartzell, Chris Hearn, Don Laws, Susan Reid, Russ Silbiger, David Williams, John Morrison, Jim Moore, Cameron Hanson, Marty Levine, Howard Braham
Absent: Alan DeBoer, David Fine, Regina Stepahin
Staff: Greg Scoles, Lee Tuneberg, Kirsten Bakke, Ken Mickelsen, Keith Woodley, Paula Brown
CALL TO ORDER
Marty Levine called the meeting to order at 7:03pm.
Levine opened the meeting.
Review the calendar
Scoles pointed out the continuance on May 21st.
Overview of Agenda
Presentation of the Budget Message by Tuneberg and a kickoff of budget
Presentation by Brown of Public Works and CIP
Public and committee questions.
Tuneberg presented the budge message. Page 1-6 starts the message itself with an overview. Second paragraph identifies the major challenges the biggest being the electrical power crisis. $3 million added for power costs. Additionally there is an increase in the departments that are paying for power. Anticipate reduced water sales because of drought water crisis estimated that at about 9% down. Included in the increases were healthcare and retirement benefits for a 25 % increase of overall budget at about $425,000. And we had some capital projects that were carried over. Page 1-7 second set of bullets we identified new projects, and those that have been carried over. Above that set of bullets is another set that identifies our strategic plan priorities from our February meetings with council. Page 1-8 comparison of the budget adopted in 2001 and the proposed budget for 2002. Also dollar and percent differences note that we do have a reduction of $485,000 between the two years. Page 1-9 budget assumptions very similar to what we used in the prior year as the annual assumptions. The long-term assumptions are seen later in the long-term section on page 4-7. Part of preparing a five-year plan is identifying revenues, anticipated revenue changes, and expenditure changes. Departments identified projects that are coming up over the next five or six years also change in staffing. Along with the financial plan, on top of page 1-10 we have anticipated increases in rates and SDC changes. Both sets are geared toward costs of services or the appropriate rate model that goes along with financing the operation. In the increases, in the top set there are two entries for electric we identified the electric rate increase anticipated at 20% in July and 30.5 % in October. Those may change as we learn exactly what BPA is proposing and what the cost of supply energy will really be to us. We also show in 2003 an increase of 12% another estimate looking at costs and revenues. In 2005 there are two numbers, a 20% increase that goes with the rate increase and 100% decrease with the Electric surcharge. Our goal is to cover our costs on the rate increases even though we don't know exactly what they are. When asked about the electric utility tax and whether that would provide more money in the General Fund than we needed or wanted. So we have constructed the Electric fund long-term in this budget looking at the surcharge or an additional amount that we couldn't anticipate that will be charged for the next couple of years. We do not calculate the Utility Tax, nor the Franchise on the Surcharge. However in 2005 we show an increase in electric rates of 20%. What we know now is when increased rates do subside we anticipate some part of it to remain in our base rate. Transition as smoothly as possible. Under those are operational expense and a comparison on the operating budget These include Personal services, materials and services, and debt service. The total budget of 90 million includes transfers and fund balances. This table shows the Outlay Operational costs. In Personal services we are anticipating even with healthcare and retirement going up about 8%. Materials and Services at 3.9 million with an increase of 18.76%. Over 3 million of that is that power cost. Debt service related to the projects we are doing and the financing that goes along with them. 1-11 is a comparison of FTE’s, slight increase, some positions done away with, some added, and a projection out to 2004 on staffing throughout the City. A summary of the CIP follows this at the bottom of the page.
Tuneberg appreciated all help from staff and the Committee saying that the process had been a challenge and also very rewarding.
He talked about the tabs in the Proposed Budget document starting with the Capital Plans section, saying it was a listing of capital improvements in 2002 through 2006, their funding, what they are, and how they fit into the budget itself.
The next section, Departments was new to the budget process last year. Taking a departmental perspective, showing what is in each department, regardless of fund.
Next is the Resources and Long-Term Plan section, where we took two sections from last year and put them together balancing detailed Resources with the Long-Term Plan. The Long-Term Plan has two sections, it has the summary of the Resources, requirements, by fund and then we get into the different funds themselves going out through 2007. Preceding each long-term plan is resources and a narrative for that fund explaining what is used to calculate the revenues and also in the plan itself were the assumptions for increases. On page 4-7 we have the Long-Term Assumptions that we discussed back in January, and wherever possible we stuck to assumptions agreed upon, and only when we had better information or a change from that, we identified those in the margins on the Long-Term Plan.
Last section is the Appendix, which gives historical information regarding tax levies, future debt requirements, some of our accounting methodology and principles and a chart of accounts with descriptions, trying to help the reader understand that when we talk about contracted services what kind of expenses are located in there.
Scoles recalled the Budget Process agreed upon in January. One part of that process was to identify the baseline budget from the Long-Term Plan and reviewed resources and long-term plan for the various columns. What we have tried to do in the presentation with the various departments will be based on how closely we followed the baseline budget, which was the second year of last year's budget or this current fiscal years budget. So based on the discussion we had in January that's how those presentations will be developed. Presentations talking about program in general and where the discrepancies are between the baseline and the proposed. You'll find that as a constant theme throughout the various departments some of the personnel costs have gone up beyond what we anticipated when we created the Long-Term budget. We could not have anticipated those increases in PERS and medical costs, which are $450,000 over all. We had somewhat less increase proposed in there, so you'll see some discrepancies in there when there are no changes in personnel numbers and those kinds of things. Lee did talk about the Strategic Plan that the Council adopted and the Priorities. The various elements of the Strategic Plan were listed in the Budget Presentation but the actual strategic plan is included in your document. Many of the department's budgets developed their budget around the priorities developed by the Council, and the Departments speak to that when appropriate.
Tuneberg explained that in the budget packet we provided a two page listing of considerations for you this year. First page primarily covers potential staffing changes. For the most part those positions and costs are not included in the proposal if they are a new position. In some cases we identified if the position was a tradeoff from current levels of overtime or temporary employees. The one exception being wastewater treatment plant operator, that was in the baseline budget as part of last year's document. This year, year two, the year we are working with, and that dollar figure is in the budget itself, but the others are not. In some cases we have identified that in adding a position it may have an impact on revenues in some fashion.
On the second page there is a segment referring to projects, one being Strawberry Lane. A project that funding wise, it's difficult to include in the Street Fund for next year. Take into consideration if this is something we do this year or not. We also identified additional funding going to RV council of governments and you are aware of those requests. In the last item is the cash carried forward. We have a target in the General Fund of a certain level of fund balance and for several years we have gone above it. We anticipate that we will be above it for a few years, so we have a cash carry over larger than projected for ending fund balance for the year 2002. This is an opportunity for this community to consider that against property tax or the electric utility tax or some other use. Of course using that money at this time would bring that shortage sooner and we would have to deal with that in subsequent years.
Scoles said that the point of this memo was to deal with the issue that the Budget Committee Council has raised previously about trying to impact the areas within the budget. We have identified many decisions that you may wish to consider, and various departments will speak to those and as Lee said included on the project side is a projected carryover with a good opportunity to make a recommendation, which might include a reduction in property tax or rate relief. It has an impact in the future but it is an opportunity to look at very closely.
Reid asked about Strawberry Lane and policy decision to move forward at this level. Laws said unclear from study session as to where the Council stood on that issue. It was whether we wanted to spend the money on Strawberry Lane or on Tolman Creek Road. The fact that it is not in the budget at all is something we will want to have some questions about as we get to that point.
Scoles talked about the impact on the CIP program. Saying that when you push that project forward in the CIP it does create some out of balance in some of the other funds, where we have to either push something else off or increase rates, and some of the funds impacted would be water, streets, and storm. When Brown presents the CIP tonight that would be a good time to discuss that.
Reid concerned that DeBoer not here to be included in the discussion.
Moore not clear about page 1-10 when we talk about proposed increases where we have an electric rate surcharge at 20% and then we have an electric surcharge at 30.5%.
Tuneberg said we were anticipating substantial increases this next year, and in our financial calculations, given that BPA's increase would hit us around October 1st, we tried to split the two and raise the 20% in July. Given a renewal of the contract cost and also hedging a little on what the costs will be throughout the year and then the increases in October we calculated 30.5% based upon what we have been told to date. We treated the 30.5% separately rather than saying we were going to raise the rates 50% because we wanted to not include the utility tax nor the franchise on that.
Scoles said it would sit on the bill as a separate line item called BPA wholesale power surcharge. We anticipate that every six months BPA may have a different rate so we may have to adjust that wholesale surcharge. It will be ramping up and coming down. In the year 2005 we show minus 100%, which is subtracting out all the surcharge, so that surcharge would go away at that time.
Tuneberg said some information received showed the desire to raise rates immediately and a high level just to start conservation. The information we get changes routinely. We won't know until July what the proposal is which will be affecting in October and when that will be finalized.
Laws said he suspected we were being conservative.
Tuneberg said that in the Long-Term Plan we have used the assumptions for 3.5% increases. There are capital projects that will have to be done but 20% may not be the amount increased in 2005.
Scoles said that BPA said if all areas they provide power to conserve at rate of 5-10% their total increase could be half of what they have been talking about. This is our best guess.
Levine confirmed that 20% in 2002 and 12% 2003, and the 20% in 2005 those increases will also generate the 25% tax that the City charges. Tuneberg said yes. Levine said that the 30.5% surcharge in the year 2002 would not generate the 25%.
Scoles said that we could shift some of the money around from the carry over, because if you shift it, it will impact the General Fund carry over. Another way to give great relief.
Williams requested more information on rising medical costs. Scoles said the increase was not quite as significant as last year, but we've had a few years where it was 5-10%. Scoles discussed some of the measures being taking to erode rising of the costs.
Levine asked if there was any public input. There were no questions or comments.
Levine asked if there were any more questions from the Committee. There were none.
Public Works / CIP
Paula Brown, Director of Public Works began the presentation for CIP focusing on this fiscal year. $20 million capital improvements plan high because of budget theory, budgeted in one year and if not completed its rolled into next year. $20 million does reflect what we expect to spend this year and the total costs of the Hillah Temple, the Library and the Fire Station remodels have now surpassed the Wastewater Treatment Plant. Brown gave an overview of all the Divisions and projects for this fiscal year.
This next fiscal year looking at design only for Siskiyou Boulevard and construction in early July 2002. Also looking at the design of the intersection at Siskiyou and Lithia Way, a separate line item was added, as it was not intended to be part of the Siskiyou Boulevard project. Working with the School District to do parking lots, which is an expense with reimbursement. The Central Ashland Bikeway is a rollover project with this fiscal year being mostly for acquisition. The Water Street Bridge is being funded by a grant from the State.
Hartzell asked about bus shelters being pushed back. Brown said they got approval from RVTD to finish Siskiyou Boulevard before the bus shelters are started. Two sidewalk projects: 1) for the Helman Street sidewalk we are waiting for grant funds to roll into completion for next fiscal year, 2) Mountain Avenue, connection down to North Mountain park.
Tolman Creek project. $184,000 for intersection improvements. The airport construction has received approval for AIP grant this fiscal year. Transportation cost is 1.5 million.
Hartzell asked about Strawberry Lane. Brown said difficult to fund in this fiscal year. Laws asked borrowing through the State Bancroft Fund. Tunberg said yes, but we are waiting until we have right costs, current problem with cash needs in the street fund. Laws asked about the Street Department in position to do work. Brown said we would contract it out. Hard to make decision with these numbers at budget committee level. Moore said it is not in budget now. Levine said one of several items that was not in the budget and the Budget Committee might consider changing that fact and addressing funding. Tuneberg said we could add that appropriation back in and come up with financing for it. Laws said should be put on next council agenda and discussed at that level, asking that policy decision be put into the budget as it was supposed to have been. Tuneberg said then we can look at financing alternatives. Brown said bring back at last budget meeting.
Water Division pages 3-55
The Water program is split into three pieces: Water Supply, Water Treatment Plant, and Water Distribution. Water supply includes TAP project, from Medford to Talent only. Our share is roughly 1 million. This current FY01 purchasing 1,600 acre feet of Lost Creek water rights for $950,000. Hartzell asked if that was reflected in this number. Brown said 35% complete with project. Brown said $526,000 toward pipeline only. Brown said doing a feasibility study on the transmission line. Hartzell clarified $200,000. The big contract is Ashland Street Mainline phase II.
Wastewater pages 3-61
Completed first phase. Two pieces left: the Membrane Facility and the Biosolids portion. Open house 4-7pm all welcome on June 27th.
Storm drain pages 3-53
The focus this year is on water quality improvements. Such as the Bioswale we put in last year. Property acquisition for storm drain improvements. And $25,000 a year to do line upgrades, etc.
New services and transformers, the general Electric department is $500,000. Telecommunications has shrunk. Silbiger asked what is left in the Telecommunications. Tuneberg said looking at last few nodes for connecting and pockets, 70 - 80% constructed. On page 3-87 we budgeted $469,000 for improvements and most is construction. Laws asked about new business plan for telecommunications and if council has seen that yet. Tuneberg said did an estimate for business plan as part of budget process. Silbiger asked for copy of business plan. Williams said the Budget Committee would like to see that.
Administration pages 3-66
The Administration Division is divided into two pieces: City Facilities and Technology.
City Facilities - Heavy construction year. Hillah temple, B Street yard landscaping, fire station, library expansion, tracking parking structure, $900,000 place holder in the budget.
Technology - Continue to improve permit tracking, management information system, phone system upgrades, system improvements and GIS program. Scoles said grant and loan in conjunction with OSF show as expenditure. Laws said not have it in there now because it would make the budget larger. Scoles said we could just put it in the Debt Service.
Parks and Recreation
Brown said looking at improvement acquire property. Reid asked about new flooring in senior center.
Brown asked if there were any questions.
Levine asked besides the second fire station, what else is in the picture for the next 5 years. Brown said facility wise, the TAP project, and currently 8 million without updating 2 years ago. Hartzell asked about police building improvements. Brown said deferred. Tuneberg said work being done inside is for ADA requirements and security. Morrision asked about North Mountain lighting under Parks and Recreation. Mickelsen said it is in the budget and the Commission made decision last night. Moore asked about change from budget prior to last night. Reid asked about matching grants. Mickelsen said the soccer club was donating a substantial amount. Moore asked about total cost. Mickelsen said $68,000. Laws confirmed contract with company providing the lights payment will be spread out over five years.
Brown asked for comments or improvements on the CIP section of the budget document. Laws said great document. Williams agreed.
Levine motioned for a 5-minute break. All agreed.
Public Works total fund in public works over 22 million. Brown referred to handout. Laws asked for performance measures rather than just statistics.
Airport pages 3-44
The material and services increase due to central services fees increase due to activity level.
Street pages 3-49
The Street Fund is split last year into streets and storm drains. Coordinated effort for storm drains. Tracking getting better big change internal projects significantly higher. Hartzell asked to refer to the codes. Brown said 602 have a significant jump. Brown said pothole repairs, reevaluated entire street network maintains at 79 % rating in next couple of years. Moore asked how 79% relates to statewide figures. Brown said a little higher than state figures, looking at when street level fails so much have to rebuild rather than maintain. Brown said the paver is in the equipment fund. Internal projects 602 line not only maintenance, but also $140,000 more in internal maintenance. Brown continued line by line descriptions.
Cemeteries page 3-69
Tracking at the baseline. Landscaping and maintenance flat costs, cleaning facilities internal to custodial service. Watering to maximize the lawn, killing trees better irrigation 602 item not increased for water.
Fleet Maintenance page 3-70
Willaims asked efficiency between parks maintaining median strips and cemeteries. Brown said when finished with Siskiyou Boulevard. Reid said parks does the flower beds. Mickelsen said parks is not interested until Siskiyou Boulevard is finished because of irrigation problems. And cemetery maintenance by Parks is being discussed.
Equipment Purchases page 3-70
This does not track well with what we had been anticipated purchasing, primarily because we have one of the street vehicles postponed from this FY 01 deferred into next year, so it reflects an increased cost. We are buying a fire pumper engine for $400,000. Developing a 5-year capital purchase plan and long-term tracking. Budget does not always reflect exact purchases. Laws questioned that. Brown said same as with capital budget. 5-year plan would help for long-term to track that. There is a replacement plan based on the life of the vehicle. Integrating 7-year replacement plan with the budget goal. Replacement for used vehicle. Technology and acquisition show up in the Police Department in the equipment fund.
Silbiger asked bout phone upgrades. Brown said $20,000 for additional bank of lines, new hardware for call tracking and 911 tracking. Caller ID function.
Hartzell asked about permits and parcels and Financial Management Information System. Tuneberg said those are adjustments that will be discussed further in the Computers and Telecommunications. Permit tracking system for utility billing and planning and engineering.
Shop page 3-71
All maintenance on city vehicles, parts that are not sent out and tracking. Moore asked about fuel costs. Brown said every line item under 602 in all of the Divisions it include fuel costs and maintenance.
Brown asked if there were questions for Public Works. There were none.
Hartzell commended the Finance Department on having all the materials available for the public. Moore commended that this was a readable budget.
Williams said recommended to the Full Committee that the Capital Improvement budget and the Public Works budget be accepted as presented.
Seconded by Levine. Silbiger said that if there are individual capital items in other departments. If there was a change in at some other subcommittee that affected the capital budget then that subcommittee could recommend to the Full Committee when the they consider the whole budget.
Williams amended motion to recommend the approval to the Full Committee of the Public Works budget and the capital items pertaining to the Public Works budget.
Levine added that as the Subcommittees approve subsequent budgets that they include capital as they pertain to those subcommittees. Moore called for the question. All in favor. All ayes. Motion carried.
Tuneberg responded to the accolades to the Finance Department on the budget document.
Levine motioned to adjourn. ALL AYES. None opposed. Motion passed. Meeting ended at 10:15pm.
Respectfully submitted by Kirsten Bakke, Administrative Assistant