Budget Committee Meeting
CALL TO ORDER
April 26, 2010 6:00pm
Civic Center Council Chambers, 1175 East Main Street
The Budget Committee meeting was called to order at 6:05 PM on Monday, April 26, 2010 in Council Chambers at 1175 East Main Street, Ashland Oregon.
Mayor Stromberg was present. Committee members Baldwin, Douma, Everson, Lemhouse, Navickas, Runkel, Silbiger, Slattery, Thomspon, Stebbins and Voisin were present. Committee Members Chapman and Jackson were absent.
APPROVAL OF MINUTES DATED:
February 18, 2010 Budget Committee Meeting at 6:05
Everson/Thompson ms to approve the minutes. All ayes.
RECOMMENDATION FOR BUDGET COMMITTEE MEMBER TO BE APPOINTED TO AUDIT COMMITTEE
Mr. Tuneberg spoke to the resolution regarding the Audit Committee. The resolution includes that a member of the Budget Committee be appointed for the next year. Budget Committee member Slattery volunteered to represent the Budget Committee to be appointed to the Audit Committee.
Everson/Baldwin ms Slattery to be new Audit Committee member. All ayes.
REVIEW OF CALENDAR
Mr. Tuneberg spoke to the budget calendar. Due to changes in times of presentations there have been some conflicts. Some Committee members may be gone on May 13th
and May 17th
. He stated that the Committee could add a night perhaps May 10th
and have the wrap up May 12th
. Staff decided they would figure work out a plan and let the Committee know the decision at the upcoming meeting Thursday, April 29, 2010.
Roy Sutton 989 Gold Massen Place President of the board of Siskiyou Violins. He stated that the organization submitted an application but didnít make it to the presentation night on April 7th
. Siskiyou Violins is a youth ensemble ranging from 40-60 participants. He stated their proposal has two aspects one is tourism promotion which is to initiate a violin teacher workshop that would be held in Ashland and would bring in violin teachers from across the Western US and perhaps nationally to participate in the workshop. Advertising for this program Siskiyou Violins would include the benefits of coming to Ashland both culturally and naturally. The second project falls under cultural development which has four elements one is Ashland community performances. The second element is school visits. The other two elements are city sponsored events. Once a year solo recital marathons are performed which helps benefit the City of Ashland.
The Committee questioned the reason for hearing another Grant proposal even though the Grant process has passed. It was explained that public can come and present in front of the Budget Committee to try and get money allocated to an organization.
Mr. Tuneberg discussed the letter that was submitted to the Budget Committee from the Amigo Club wanting to receive grant money. Mr. Tuneberg suggested that the Committee receives the information and set it aside until the meeting where the tax rate is set.
BUDGET MESSAGE PAGE 1-6 through 1-20
Lee Tuneberg and Martha Bennett delivered the Budget Message for FY 2010-11. The overall message is that the financial situation is the same as last year. Over all the City is in no worse shape then it was last year thanks to the hard work of the Committee, City Council, Staff and Department Heads.
The proposed budget protects core programs, no lay offs were made but some positions were reduced and there have been retirements. The City has not restored any cuts that have been made in the last two fiscal years. The City is not in a position to recommend balancing existing services that property taxes or any other taxes are raised; however there are some utility tax increases (see attached).
Some revenues are very soft; anything related to construction is not looking up. Ms. Bennett spoke to FY 2012 being a year that can be daunting in terms of financial challenges. The City needs to focus on not only the upcoming year but need to think about decisions for FY 2012. Challenges include a dramatic rate increase from the Oregon Public Employee Retirement System (PERS), increases in electric rates, and inflation.
Ms. Bennett recommends to add 1.6 cents as an add package for fire equipment. There have not been funds set aside for fire hoses in the last 25 years. Ms. Bennett recommends building a replacement fund for those pieces of equipment. Staff also recommends having a discussion about the remaining property taxes and putting it in the Reserve Fund.
Ms. Bennett discussed FY 2011 Assumptions (see attached). Department budgets were capped at 2010 budget levels. There will be 0% COLA for non-bargaining, clerical & technical, parks & recreation, fire, and police employees. If Council opts to implement the classification compensation study then the departments will have to absorb the salary increases as there are no additional funds budgeted for the classification compensation study. For the last year the total PERS costs are reduced or flat. The City budgeted for premiums to increase by 8% but received a rate statement saying health insurance premiums are actually going to go up 15%.
The Committee questioned if there are any other alternatives for the 15% increase. Ms. Bennett answered that a long term and short term strategy will be developed. The short term strategy for this current year is to work with the non bargaining employees to see if City County insurance services have products that employees can be shifted to. The long term strategy will be to look at alternatives for our current way of providing insurance. There are constraints in state law about the City going self insured however, it will be looked into.
Ms. Bennett spoke to capital spending being capped by the CIP that the Council adopted in late February. Capital Spending is significantly higher for the upcoming FY then the previous year. The budget will adhere to ending fund balance policies where possible. The technology debt will be allocated the same as 2010.
Mr. Tuneberg spoke to the total budget over time which shows a historical look over the last five years (see attached). In 2009 there were changes in operations, some capital projects were stopped and costs were cut where possible. The City will try to be as conservative in budgeting as possible and would expect to spend less then the projected $89 million. In the $89 million there are many elements most of it is capital but there are other elements such as ending fund balance, borrowing, and debt service payments.
The Committee questioned the elements of each bar. Ms. Bennett stated that the operating budgets were capped by last yearís budgets but the capital budgets were set by the capital improvement program that the Council adopted.
Mr. Tuneberg discussed the distribution of budget by fund for FY 2010-11 which show how the $89 million is allocated (see attached). The FY 2010-11 Budgeted Resources slide shows comparisons between years. Total resources have to equal total requirements. Mr. Tuneberg spoke to requirements by category. There is a growth in ending fund balance which can be caused by unrestricted revenues, also other monies that are held as required through covenants. If the City does borrowing all the work may not be done by the end of 2011 so on June 30, 2011 the proceeds that have not been spent would be restricted in the ending fund balance and carried forward into the next year.
In order to use contingency funds the City has to go to Council and ask for approval. Debt service is pretty flat other then one change, which is to pay off one of the Cityís loans from the State early and in doing so there is savings in interest. The Committee questioned if any of the debt service includes the renegotiation of DEQ. Mr. Tuneberg answered no.
In the State of Oregon if you do financing or refinancing you can do it outside the budget process you just have to state it through a supplemental budget hearing process in order to change the appropriations in the current year.
Mr. Tuneberg went over the Operating Budget and changes in staff budgeted (see attached). Personal Services has increased 1.8% due to step increases, health care costs, and any negotiated cost of living increase.
The Committee questioned how money that is allocated for projects gets chosen. Ms. Bennett stated that Capital Improvement Program is set based on available funding, affordability, timeliness and need for a project, master plans, Council goals and the ability to get the work done.
Mr. Tuneberg discussed the Funds Projected in Long-Term chart with incorporated rate and fee adjustments (see attached). He explained that if a fund is in green that means the fund is close to meeting or exceeding the ending fund balance policy as required. If a fund is in yellow that indicates that a fund having trouble meeting ending fund balance or an element within the fund that is having trouble meeting requirements. If a fund is in red it means the fund has gone negative in the fund balance for not meeting targets. The chart shows from 2005-2010 the General Fund. The City anticipated meeting EFB targets, but in 2011-12 there is a softening of the EFB and after that in 2013 it shows we are going negative unless something different is done.
Ms. Bennett discussed the General Fund Over Time (see attached). In 2008 the trend reversed and the City spent more money then had revenue. The first year of the recession was 2008. With the adjustments made in FY 2009 got the City close to reversing the trend. The City has budgeted to allow that trend to go on for a while.
Ms. Bennett discussed the General Fund Revenues (see attached). The proposed General Fund budget suggests that the City is going to have less then half a percent more revenues in the General Fund then in the current years adopted budget. Mr. Tuneberg spoke to property taxes which are difficult to project. All the General Fund revenues that are related to construction are down and look like they are going to stay down. Revenues linked to tourism are slowly growing for the first time in two fiscal years. The revenues related to utility consumption such as user tax and franchise fees are expected to be flat. Ambulance transfer revenue appears to be flat.
Mr. Tuneberg spoke to tourism tax. The tax rate was increased for the Transient Occupancy Tax (TOT) 28% and those monies were allocated a year ago. Currently the City is about 20% ahead of the prior year numbers. The rate was increased from 7% to 9% tax which is a 28% increase and yet the City only sees a 20% increase of that revenue. Food and Beverage tax (F&B) is almost up 8%, which is approximately 4 to 4.5% more this year then last year but until the quarterly financial report comes out the City will not know for sure the exact percentage.
Ms. Bennett discussed General Fund Expenditures (see slide). The Police Department is 2.2% down from last years amended budget due to the shift to the Jackson county dispatch and the other is the Police Department does not budget drug forfeiture money. The Fire Department is up due to a reduction in dispatch charges to the police and an increase to the Fire Department so; the majority of the increase is dispatch services. When the dispatch center is fully operational there will be a net savings to the city of $100,000 a year. The Planning Departments budget is down due to no rehires when a position is vacant and reduced contractual services. The Building Departments budget is down due to reduced staffing. Court is up a little bit. The Administration portion of the General Fund is down 5%.
Mr. Tuneberg discussed tax revenue (see slide). The slide shows a historical look at the tax rates that have been employed. He went on to a second slide discussing proposed property taxes and un-levied amount before discounts. The Committee questioned who determines the increase in the assessed valuation. Mr. Tuneberg answered that the County Assessors determine that information.
Ms. Bennett discussed add packages. Since the new Fire Chief was hired Staff discovered that there has not been money set aside to replace hoses and turnout equipment. Staff recommends that the Budget Committee fund an add package for the Fire Department equipment by increasing the tax rate by 1.6 cents. This would be used specifically for fire hoses and fire turnout replacement. The City currently has hoses that are 35 years old. A fire hose has a ten year life span so this is highly recommended. The other recommendation is for the Committee to discuss levying the remaining 7.32 cents and setting aside funds in the Reserve Fund for FY 2012 PERS costs in the General Fund. Staff recommends setting aside money because the City expects that financial situations will be more difficult in 2012.
The Committee questioned if putting money in a Reserve Fund would the money carry over into the ending fund balance. Ms. Bennett recommends that the Committee segregate money in a Reserve Fund and ask the City Council to establish policies by which they would use the Reserve Fund.
The Committee questioned how big the project in total. Ms. Bennett answered that it is ten years worth of replacement. The turnout a 4 year cycle, the City received a grant to fund the last set of turnouts 18 months ago. This is a $300,000 project that the City will fund 1/10 of every year. The City has never budgeted for the turnouts. Receiving a grant is good but every 4 years the City needs to buy a new set and it wouldnít be safe to rely on a Grant that is not a guarantee.
Mr. Tuneberg discussed Utility Rates (see slide). In April of 2009 the Water and Wastewater rates were adjusted due to cost and revenue streams. Both Water and Wastewater funds have been struggling with Ending Fund Balance (EFB) in requirements. Both funds will be undergoing Master Plans, which will likely lead to rate restructuring and/or rate increases.
Ms. Bennett went over the Central Services Fund (see slide). All departments in Central Service hit the targeted EFB. The only way to balance the Central Service Fund is if no contingency is spent. Central Services is the overhead departments which include: Mayor and Council, Administration, Finance, Legal, Engineering, City Recorder and Computer Services. Over the last four years the Central Services Fund has made substantial reductions in budget. The Operating departments donít get a choice about using Central Services. The Central Service Departments have been holding their operating costs down.
Ms. Bennett spoke to the Parks and Recreation Fund. The Parks Department needs $1.4 million in their budget for summer carry-over. Parks does not get tax revenue until November. The Parks Department budget includes payment to Equipment Fund for the purchase of the Clay Street property.
Ms. Bennett went over some other highlights for the Budget. The Library Levy is proposed at 19.21 cents per thousand which is .21 cents more then last year. This is 50 and 60 cents per year for the median assessed value residential property. In conclusion the City appears to be at the bottom of the economic downturn however Municipal Governments are always the last to go into recession in Oregon and the last to come out of recession. There may be a 3 to 5 year time period where the City will be constrained by the economy. The City will stay focused on core programs and prepare for 2012. The City is looking forward to the budget process.
PARKS PAGE 3-139 through 3-161
Don Robertson and Mike Gardnier presented the Parks Budget. Mr. Gardnier gave an overview of the Parks Department. He stated that this budget year will be viewed as a transitional year. The Parks Department is hopeful that economy is transitioning back to the old economy. FY 2011-12 is shaping up to be critical which makes this years budget all that more important. When preparing the budget the Parks Department looked at the following guidelines given by the City Administrator, Finance Director and Parks Commission which included: Base the budget on a rate of 2 dollars and 9 cents per thousand, keep the budget expenditure level at the proposed budget at the same level as current budget level, respond to the desire of the community to reduce pesticide use, focus an ending fund balance of $1.5 million and will not budget any Cost of Living Allowances (COLA) raises. The Parks goals for the year are streamlining staff; respond to the Community desire of pesticide reduction or elimination, and protecting the valuable services that citizens have come to expect from Ashland Park and Recreations.
Mr. Gardnier went over the 2011 Proposed Budget (see slide). The Majority of Parks budget is Salaries and Benefits.
Mr. Gardnier discussed the Parks Department work coming for FY 2011 (see slide). He stated that Parks will work on pesticide reduction, increased volunteer hours, meals tax bond/loan for CIP, fuels reduction grant, reorganizing the Recreation Division, employee association and combining shops.
Mr. Gardnier spoke to the Matrix (see slide). He stated that 70% of operating budget is dedicated to keeping the resources of parks property going. A Parks Department goal is to develop and maintain a park within a ľ mile of every household. Parks provides economic, health, social and environmental benefits for the Community.
Mr. Gardnier went over the Significant Budget Changes for FY 2010 (see slide). The Parks Department will be taking a new policy stating that the Department will reduce or eliminate pesticide use. The effort to reduce or eliminate pesticides is the single largest impact upon the proposed budget. There will be a consolidation between the City and Parks fleet mechanics which will create savings over the years. Another key component in the Budget is the formation of an employee association. For many years Ashland Park and Recreation employees have not been part of a bargaining unit. For the first time this has changed. While Parks does not currently have a contract with the association but anticipate entering in negotiations soon.
The Parks Department will also be proposing and add package which is a .75 FTE Golf Course worker for club house operations. The total cost of the position will be less $25,000 including benefits.
The Committee questioned the Clay Street Purchase. Mr. Robertson stated that at the time the Clay Street property was purchased there were a number of funds that had to be borrowed in order to make the purchase complete. One was the Cityís Equipment Replacement Fund, Parks borrowed against that Fund to fulfill the purchase.
Mr. Robertson discussed the CIP program. He stated that Parks tends to accumulate needs over time because there is not enough money to fulfill the needs right away. Over the passed two years Parks has been adding to the CIP list instead of putting projects to the side. Since the Food and Beverage Tax money was approved it will give the Parks Department the opportunity to get started on some projects. Parks hopes to start working on improvement projects in a shorter time frame. Some improvements to be worked on are energy reduction and replacing three restrooms.
The Committee stated that the Parks Department provides many services to people throughout the valley and wondered if there is any percentages of how many locals attend local events. Mr. Robertson answered that the Parks Department continues to evaluate programs that are offered and may look into a fee differential such as a citizenís discount which could change the percentage of local attendance. Mr. Robertson stated that a lot of the Parks programs draw in money for the City and believe that creates an economic benefit.
The Committee gave thanks for the Volunteer Coordinator. Volunteers are very important for the community. Mr. Robertson stated his excitement for the volunteer help so the Department can do a better job of recruitment, training, managing and overseeing the volunteers.
The meeting was adjourned at 9:15 pm