Budget Committee Meeting
May 13, 2010 6:00pm
Civic Center Council Chambers, 1175 East Main Street
CALL TO ORDER
The Budget Committee Meeting was called to order at 6:00 PM
Mayor Stromberg was present. Committee members Voisin, Thompson, Slattery, Silbiger, Runkle, Navickas, Lemhouse, Jackson, Everson, Douma, Chapman and Baldwin were present. Committee member Stebbins was absent.
APPROVAL OF MINUTES
Approval of minutes from previous meeting dated:
4/7/2010 Economic and Cultural Grant Presentations
4/8/2010 Economic and Cultural Grant Proposed Allocations
Everson/Jackson ms to approve minutes. All Ayes
Rhonda Lee- 2949 Barber Street Ashland, Oregon. She stated that she was here to report does not want property taxes to be raised. It is her understanding that Jackson County will raise taxes County wide this October. She feels it is the roll of City staff to come up with other ways to solve budget issues before defaulting to property tax owners as a solution. If this proposed tax increase is given the okay from the Council the Citizens will be taxed twice. She stated that she is a teacher and will retire soon. It is her belief after many years the service community has been nudged out of Ashland due to not affordable housing and fears may be nudged out of the City of Ashland with taxes and other resource increases. She encourages Council to find other means to satisfy the current increases proposed by staff without a property tax increase.
Rhonda Lee presented a letter from Ann Coyle-1746 Ashland Street Ashland, Oregon. In this letter Ann stated she opposes the current proposal to raise property taxes. Many have been impacted by the current recession. Business people are looking for ways to cut overhead as a way to save revenue. The community has to look at different ways at reducing expenses. This is hardly the time to ask people to raise taxes.
Mr. Tuneberg and Ms. Bennett gave a staff report on Health Care. Mr. Tuneberg spoke to the memo (see attached). At the beginning of this process the City identified in the Budget they had build by the assumption on the early information that was received from the insurance provider which is City County Insurance Trust (CCIS); that benefit packages was calculated including health care cost increase of 8%. By the time the budget was submitted to the Committee for consideration the City received more final information from CCIS that the increase would actually be 15%. A proposal was put together for two different approaches (see attached).
The Committee questioned what the alternatives are to absorb another 15% increase in the health plan. Ms. Bennett stated that it is not another 15% it is another 7% increase. With the exception of the non-represented people this coverage is negotiated already. There are not any open contracts at this time these are plans that go in effect August 1st of next year. The only group that has choices is the Management and Confidential Group and open enrollment starts on June 1st. The City does not get rate information from CCIS until well into the budget process. The City is taking this problem very seriously.
The Committee questioned if the City will look into self insurance. Ms. Bennett stated that the only way the City would like to go in this direction is if it saves money.
Mr. Slattery questioned if the City had known about the 15% increase at the beginning of the process what actions would have been taken. Mr. Tuneberg answered that the 15% would have been budgeted in the appropriate funds. Ms. Bennett stated the 15% would have probably been taken out of the Ending Fund Balance (EFB).
Mr. Runkel questioned what happened with the insurance company between March and May to come to the 15% increase. Ms. Bennett answered that the City is part of a large pool; the insurance company sets a pool rate. Based on experience you are either high or low on the pool. For the first time the City performed worse then the pool. Mr. Tuneberg stated that two years ago the City was much better then the pool and that was when we saw flat rates under a 2% increase. Last year we saw a 13% increase and this year it is 15%. The City does not know why we had this experience; the CCIS does not give the City the actual experience data.
Mr. Navickas suggested adding a 1% tax increase to address the three funds that have the worst problems with Ending Fund Balances which is Water, Equipment and Insurance Funds. The Committee discussed where to go with all that is on the table and to go forward with gathering information before decisions are made.
Mr. Silbiger discussed the AFN issue on page 464-465. He stated that there are two issues. First is the debt service payment, the fund essentially doubled from last year and by doing so it is lowering the debt and taking the load off the other funds. But by doing that much it took the City out of compliance for Ending Fund Balance (EFB) which is not good policy. He stated that the real problem happens next year because the projection in 2012 not a good, it is about a 30% increase from this year. If the City looks at a 10% increase then it would be possible to end up with an EFB of 0 next year. Mr. Silbiger suggested that at the very least the City should either cut debt service payment by $100,000 and put it in other departments, cut telecommunications budget by $100,000 or raise revenues another 6% increase on the internet.
Information Technology (IT) Director Rob Lloyd spoke to reducing budget. He stated that if the reduction is about $100,000. An increase in revenues from Wimax should be at least $15,000 and another $25,000 from a new cable contract. Also the IT Department will request another $30,000 of franchise that is paid to the City. He stated that FTE will reduce AFN payments by $30,000.
Ms. Thompson questioned Mr. Lloyd if the IT Departments Budget will expect to have the same excess carryover in the EFB like in past. Mr. Lloyd stated that he is good at spending budget according to projects. Some of this will come from what will be initiated with business partners. Ms. Bennett stated that the City is hopeful that project completion should be much higher than in the past.
Ms. Bennett discussed that the IT Department is expecting $40,000 of revenue to come in next fiscal year. She recommends $60,000 is transferred to the Electric Department instead of spreading it around. The other option would be to reduce $60,000 of expenditures. Mr. Silbiger stated he would choose to reduce expenditures.
Mayor Stromberg questioned if by taking the $60,000 out of expenditures will the AFN be crippled. Mr. Lloyd answered yes, in areas of new services so it would hurt the revenue side. Mayor Stromberg that he feels the best solution would be to put the $60,000 in the Electric Fund knowing it will require a rate impact.
Stromberg/Navickas m/s to move $40,000 new revenue and $30,000 from the Street Fund Ending Fund Balance to go to Debt Service. Discussion: Mr. Navickas doesnít feel this is a wise choice and is not necessary. Mayor Stromberg stated that his discussion will be based on the future of the AFN in terms of revenue and serving the community.
Roll Call Vote: Stromberg, Baldwin, Chapman, Douma, Everson, Lemhouse, Slattery, Thompson: YES; Jackson, Navickas, Silbiger, Runkel, Voisin: NO. Motion Passes 8-5.
Everson/Chapman m/s to accept Staffs proposal on dealing with the healthcare increase by adjusting Ending Fund Balance in contingency.
Roll Call Vote: Voison, Thompson, Slattery, Silbiger, Runkel, Navickas, Lemhouse, Jackson, Everson, Douma, Chapman, Baldwin, Stromberg: YES. Motion Passes 13-0.
Stromberg/Everson m/s to increase property tax by 1.6 cents for one year to fund fire hoses and turnout equipment. Discussion: Mayor Stromberg stated he is proposing this is due to accepting Staff analysis. Mr. Chapman stated that it is important that these funds should come out of the budget and not be added as a new tax and therefore will not vote yes. The Committee discussed the process of prioritizing items in the budget and how to choose order of importance. Mr. Slattery questioned if the Committee said no to increasing property taxes would the Fire Department still purchase the hoses and turnout equipment. Chief Karns answered that the Fire Department does not have the funds but will pursue grant opportunities. The situation with the fire hose is pretty extreme the majority of the hoses are substantially out of date and needs to be addressed.
Mayor Stromberg stated that the motion was not to permanently raise the tax rate to create an ongoing sinking fund for turnout and hoses. It is specifically for this coming year budget. Ms. Thompson questioned if the Committee is inclined to raise the tax rate if the City could be instructed to not levy the tax if grants could be obtained by a certain time frame. Ms. Bennett answered that they could make a decision by late September but could not guarantee an answer would be concluded in time from FEMA. Chief Karns spoke to how the FEMA Grant process works. The Fire Department would be more likely to get the grant award if they do a whole sale replacement which is what the Fire Department will do to satisfy the funding for the sinking fund for the hose. Ms. Bennett stated that the problem will still exist in the long run knowing that hoses need to be replaced every ten years.
Ms. Voisin stated she will not vote for a tax increase and would like the Committee to use the General Fund Contingency for one year. Mr. Navickas stated that the request by staff is reasonable and it is not a lot to ask an increase of 1.6 cents. This is a critical add package that all should support.
Mr. Douma stated he is in favor of getting hoses and turnouts and questioned if there would be an issue with having a dedicated tax to get a grant in the future because it is dedicated and paid for. Chief Karns answered no. Mr. Lemhouse stated that even though he would rather wait and see how grants work out and do a tax rate increase next year if need be he is willing to agree to this increase for one year and see see how it goes for next year.
Jackson/Everson m/s call for the question.
Roll call vote: Stromberg, Everson, Jackson, Lemhouse, Navickas and Slattery: YES; Baldwin, Chapman, Douma, Runkel, Silbiger, Thompson and Voison: NO. Motion Fails 6-7.
The Committee continued discussion: Mr. Silbiger stated that technically a rate increase is a onetime rate increase but when talking about creating a sinking fund and only doing it for one year seems unrealistic. Ms. Voisin spoke regarding using contingency. Ms. Bennett stated that contingency could be used but it would make the problem worse for next years budget and would not recommend using it.
Roll Call Vote: Thompson, Slattery, Silbiger, Runkel, Navickas, Lemhouse, Jackson, Everson, Baldwin, and Stromberg: YES; Voison, Douma and Champan: NO. Motion Passes 10-3.
The Committee discussed raising taxes by 7.32 cents to add to the Reserve Fund. It is recommended by Staff to restrict this money to be used for the PERS rate increase.
Navickas /Jackson m/s to levy an additional one cent to offset the health care increase.
Discussion: Navickas stated that the City has been using Ending Fund Balance as a source of revenue which is a risky means of budgeting. This one cent could target the funds with deficits which are the Water Fund, Equipment Fund and the Insurance Fund. One cent would raise $18,900. Ms. Everson stated she could not support the motion because she knows too many poor profits and not for profit businesses that had to cut health care benefits for employees and could not be in support of a tax increase to fund employee benefits.
Roll Call Vote: Navickas: YES; Stromberg, Baldwin, Chapman, Douma, Everson, Jackson, Lemhouse, Runkel, Silbiger, Slattery, Thompson and Voisin: NO. Motion Fails 1-12.
Everson/Chapman m/s to deny the request of the Amigo Club and the Siskiyou Violins.
Discussion: Ms. Everson stated that the Siskiyou Violins were reviewed by the subcommittee and the decision was to not allocate grant money. The Siskiyou Violins were not present for presentations and although they appealed the decision stands.
Roll Call Vote: Baldwin, Chapman, Douma, Everson, Jackson, Lemhouse, Navickas, Runkel, Silbiger, Slattery, Thompson, Voisin and Stromberg: YES. Motion Passes 13-0.
Everson/Silbiger m/s to accept the Economic and Cultural Grant proposed allocations.
Discussion: Ms. Everson stated that there were several members in the subcommittee and they chose to approve the allocations. Mr. Lemhouse stated he was on the subcommittee and voted no on the allocations. He doesnít feel that Economic grant funding should be increasing while the City is in difficult times. Mr. Stromberg spoke to Mr. Lemhouses statement saying that the issue of funding should be brought up with council.
Roll Call Vote: Stromberg, Baldwin, Chapman, Douma, Everson, Jackson, Silbiger, Slattery, Thompson, Navickas and Voisin: YES; Lemhouse and Runkel: NO. Motion Passes 11-2.
Mr. Slattery stated that next on the agenda was the request by staff to increase the tax rate by 7.32 cents to add into the Reserve Fund.
Everson/Navickas m/s to increase property tax by 7.32 cents and put it in the Reserve Fund to cover PERS cost.
Discussion: Mr. Slattery stated that he is in support of this discussion because if it isnít levied this year next year it will be doubled. Mr. Runkel stated he is not convinced that raising taxes is not the best option to take at this time. He feels it is better to see what happens when the PERS bill hits. He believes that increasing taxes would defer looking for alternatives if in fact the City is faced with this bill that may come in. Ms. Voisin agrees that we should push to not raise taxes she is suggesting the Council and/or Committee to construct a letter to other Cities and states and tell them to clean up what is happening in the treasury.
Mr. Navickas agrees that the City needs to do all to address the problems. He stated that the City should have a savings fund set aside regardless to ensure preparedness for a fiscal crisis. Mr. Jackson is in support of the motion and feels it is prudent for the Council and Committee to create some stability for staffing, management and the operations of the City by at least doing what can be done this year because we are aware there is a big cost ahead. Ms. Thompson stated she is torn with making this decision because it is difficult to have to increase taxes again and feels reluctant to go to the cap. She feels to raise taxes as part of a solution is offensive fundamentally. Mayor Stromberg stated this is a very difficult decision and feels that the financial situation were facing next year is serious and if we take this step we could gain a cushion. In respect to the citizenís economic conditions a tax increase could possibly cause a lack of confidence in Committeeís decision making. It is a very serious decision. Mr. Silbiger stated that he feels this issue is like a train, we see what is coming towards us so the Committee can either try moving out of the way now or let it hit us next year.
Roll Call Vote: Chapman, Douma, Lemhouse, Runkel, Thompson, Voisin, Stromberg, Baldwin: NO; Everson, Jackson, Navickas, Silbiger, Slattery: YES. Motion Fails 5-8.
Mr. Tuneberg went over the memo regarding consultant fees (see attached).
Voisin/Thompson m/s to approve the Budget and convey it to Council for adoption.
Discussion: Runkel stated that as a new member of the Committee he wanted to congratulate Martha and Lee for putting together such a sound budget proposal.
Roll Call Vote: Stromberg, Baldwin, Chapman, Douma, Everson, Jackson, Lemhouse, Navickas, Runkel, Silbiger, Slattery, and Thompson: YES. Motion Passes 13-0.
Jackson/Baldwin m/s to approve the Property Tax Permanent levy rate at $4.2133/$1,000.
Roll Call Vote: Voisin, Thompson, Slattery, Silbiger, Runkel, Navickas, Lemhouse, Jackson, Douma, Baldwin and Stromberg: YES; Chapman and Everson: NO. Motion Passes 11-2.
Thompson/Jackson m/s to approve the Bond Levy of $410,805
Roll Call Vote: Lemhouse, Navickas, Runkel, Silbiger, Slattery, Thompson, Voisin, Stromberg, Baldwin, Douma, Everson, Jackson: YES; Champan: NO. Motion Passes 12/1.
Lemhouse/Silbiger m/s to approve the Local Option Library Levy of $.1921/$1,000.
Roll Call Vote: Stromberg, Baldwin, Chapman, Douma, Everson, Jackson, Lemhouse, Navickas, Runkel, Silbiger, Slattery and Thompson: YES. Motion Passes 13-0.
The Committee went through a process debrief on what worked, what didnít, what would like to change for next year.
The Committee stated that the presentations were great this year. Lemhouse stated that he enjoyed where each Department had to project each worst case scenario. The committee felt the presentations were more concise and efficient. Everson stated that the presentations were better this year but didnít feel they were necessary. She feels that the Committee could have come together and had much more thorough discussions instead of having Department Head presentations. Ms. Bennett stated that if the Department Heads arenít allowed to present then they feel less engaged in the Budget. The Department Heads make the majority of the decisions. It was suggested that the Department Heads could come and have a Q&A instead of a presentation. Others felt the Department Head presentations were helpful.
Slattery thought that the Committee itself did a really good job this year. The Committee discussed the complexity and effort goes into this process and felt Staff did a great job.
The Committee discussed the grant process and whether or not grant applicants should present or just have Q&A regarding the application with the Subcommittee. Mr. Tuneberg said this can be discussed at the Budget Kickoff meeting next year. The Committee stated that since it was a recommendation from the Subcommittee that the Committee should abide by the suggestion.
Silbiger/Lemhouse m/s to omit grant presentations from the applicants for both Social Service and Economic and Cultural grants and have a Q&A from the Subcommittee instead.
Roll Call Vote: Voison, Thompson, Slattery, Silbiger, Runkel, Navickas, Lemhouse, Jackson, Everson, Douma, Baldwin, Stromberg. Motion Passes 12-0.
Mr. Runkel stated he would like to see the Budget Committee be more involved with setting the amount of money that goes to the grants not just to allocate the money. Ms. Bennett stated that is currently set by Council Policy so Council would have to make that change. Mayor Stromberg stated that he felt the process went well and smoothly. He felt that the prioritization scheme was not that strong and would like to see that change for next year.
Ms. Everson discussed how impressed she was that the budget was flat. One disappointment stated was that at the end of tax rate discussion she felt became political instead of a Budget Committee issue.
The Committee thanked Staff for all hard work. In Conclusion Ms. Bennett thanked Staff and the Committee.
The Meeting was adjourned at 9:00 PM