CALL TO ORDER
Budget Committee Meeting
April 18, 2011 6:00 p.m.
Civic Center Council Chambers, 1175 East Main Street
The Budget Committee meeting was called to order at 6:00 PM
Mayor John Stromberg, Committee Members Keith Baldwin, David Chapman, Dee Anne Everson, Douglas Gentry, Chuck Keil, Greg Lemhouse, Michael Morris, David Runkel, Russ Silbiger, Dennis Slattery, Roberta Stebbins, Lynn Thompson, and Carol Voisin were present.
APPROVAL OF MINUTES DATED:
February 7, 2011 Budget Committee Meeting.
Stebbins/Silbiger m/s to approve minutes. All Ayes.
REVIEW OF CALENDAR
Staff went over the budget calendar presentation dates and the public hearing dates. Stebbins stated she would be absent for the May 2, 2011, Chapman stated he will be absent for the April 21st
and Lemhouse will be absent for the April 21st
Budget Committee Meetings.
Bill Heimann, 647 Siskiyou Boulevard, Ashland, OR 97520. Mr. Heimann thanked the Committee for their service. He spoke to not seeing any cost cutting measures in the budget. He stated that the Citizens were told that if the meals tax was renewed, there wouldn’t be higher sewer rates, yet rates have jumped by huge amounts. The City needs to find ways to work on conservation. The last Council agreed to spend $75,000 to study homeless issue with no consideration for the cost of implementing any of its recommendations. The Federal Government, State and Schools are cutting budgets while Ashland is raising the budget, he felt something is wrong with this picture. He felt this proposed budget does not serve the citizens. He felt that this is not a zero based budget. Cannot afford to expand the size of our government, we should be reducing it. He suggested that the Budget Committee reject this budget and go back and restudy and have a zero based budget.
Martha Bennett, City Administrator, and Lee Tuneberg, Administrative Services/Finance Director, presented the Budget Message (see attached slide). Ms. Bennett stated that the overall financial health of the City is about the same as last year. This year outcomes are a big focus. Some of the tourist based revenues are growing but not at same rate as early 2000s or in the 1990s. Other revenues are flat. She stated that last year it was predicted that 2012 would be worse than 2011, which did not turn out to be true, except for in the Utility Funds. The cuts made in 2009 have not been restored. The Ending Fund Balance is the healthiest it has been in a while. Ms. Bennett stated that department budgets were capped to existing programs and activities. The budget includes Cost of Living increases for Fire and Police employees and a proposed 2% Cost of Living Adjustment (COLA) for Parks. There has been a 0% increase in the cost of health insurance.
All departments were asked to report on and budget to achieve the outcome based performance measures developed in FY 2011. This year the City is trying to get closer to outcomes. Staff asked Departments to be descriptive and to talk about what is being accomplished in the Community and how to achieve it. The City wants to be accountable to the Citizens and the way property tax money is spent.
Ms. Bennett spoke on the City’s citizen satisfactory survey that was conducted in January and February 2011. We picked the National Citizens Survey because it allows us to benchmark against other comparable university communities. 83% of respondents rate that the City of Ashland provides excellent or good services, which is higher than other comparable communities and 60% of respondents rated the value of services for the taxes paid to Ashland as good or excellent.
Mr. Tuneberg went over the Total Budget Over Time (see slide). He stated that this slide compares actual numbers to the budget. Ten years of budgets have been both higher and lower than the current budget. Each year the City looks at the Capital Improvement Plan (CIP) and looks at total budgets.
Mr. Tuneberg spoke to the Historical Adopted Budgets Slide (see slide). This slide shows what was spent and what was budgeted. Where you see changes could be due to refinancing that was not anticipated, it could also be due to a CIP that was not completed. Mr. Tuneberg went over the distribution of budget by fund for FY 2011-12 which shows the breakup of different funds throughout the City. He stated that the larger budget amounts as a group are the enterprises. The budgeted resources and requirements in millions were discussed (see slides). The budgeted requirements show that debt service is reduced by $1 million from the previous year. Mr. Tuneberg discussed the operating budget comparison slide and stated that the Debt Service Fund budget is lower because of refinancing DEQ loans and the State loan on the Community Development Engineering Services building was pre-paid.
Mr. Tuneberg spoke to changes in Personal Services and Materials and Services (see slide). There was an increase in personal services of $1,002,614. The largest increase was $559,760 due to the additional cost to fund PERS. This is a mandatory assessment from the State. Mr. Stromberg questioned if this was a onetime payment or permanent. Ms. Bennett answered it is at least two years. Mr. Runkel questioned what the total City PERS cost was. Staff stated they would get that answer to the Committee at the next meeting. Mr. Tuneberg stated that other increases in Personal Services are labor contracts, added overtime and step increases. Overtime is used as needed depending on anticipated projects such as the computer conversion.
Mr. Stromberg stated that he wanted to make it clear to the citizens that feel the City is spending too much, that some of the increase is not all money coming from local tax payers, it’s money from other sources and it is not represented in the data. Ms. Bennett stated the concern of total spending is taken seriously.
Mr. Tuneberg discussed the changes in staff budgeted (see slide). He went over the Funds Projected in the Long-Term which shows what the City used to build the 2012 Budget. Mr. Tuneberg stated when looking at the CIP section of the Budget, they will see unfunded projects out there that used to be put in the budget, now they do not include those in the budget which helps to get budget numbers closer together. This chart shows what is happening on the operations side.
Ms. Bennett went over the General Fund Over Time (see slide). She stated that for the last few years, the City has been working on getting the General Fund (GF) back on track. In 2008-2009 the City spent more than what was brought in. In 2010 the City was able to correct this issue and will continue to in 2011. The General Fund in 2012 Budget should be even. Ms. Stebbins questioned a revenue increase in 2011. Ms. Bennett stated that revenue did increase in 2011 and tourism related revenues are increasing too. She stated that the property tax collections were higher than budgeted last year.
Ms. Bennett discussed General Fund Revenues (see slide). The proposed budget GF revenue is 6% more than projected for FY 2011. General Fund Expenditures were discussed. Ms. Bennett spoke to the differences between FY 2011 Adopted Budget to the FY 2012 Proposed Budget.
The General Fund Ending Balance Over Time was discussed (see slide). Mr. Tuneberg identified the processes used over the years. The slide shows that the City has been doing better budgeting and also anticipating what the Ending Fund Balance (EFB) will be. He stated that in the GF there is about $500,000 for contingency which is 3-4 % of the total budget. If contingency isn’t used, it will add on to the total of the EFB. Mr. Gentry questioned the difference between Contingency verses using EFB. Ms. Bennett stated that money cannot be spent if it is in the EFB during the coming fiscal year. It is to be used only if there is a disaster or emergency. Contingency is like cash in a wallet whereas EFB is like savings or retirement.
Mr. Tuneberg went over the property tax rate per $1,000 of assessed valuation (see slide). Ms. Stebbins questioned the GO Bond and if it will it be paid off in 2011-12. Ms. Bennett stated she believes the City will be paying off the GO Bonds in 2011-12. If the bonds are sold in July, the City will start to see debt service on it. The slide also shows the amount that was not assessed.
Mr. Tuneberg discussed the proposed property tax and un-levied amount before discounts (see slide). Ms. Stebbins questioned if the projections are based on the passage of the vote. Mr. Tuneberg answered yes. Ms. Stebbins asked if it wasn’t based on a vote, would we have a $.122 less amount in the tax rate. Mr. Tuneberg answered yes. Ms. Stebbins questioned if Council can certify a different amount after the Budget Committee approves. Mr. Tuneberg answered yes.
Mr. Tuneberg went over the utility rate adjustments (see slide). This slide showed the rate increases from 2008 to current and projected rates for 2012, 2013 and 2014. Ms. Bennett discussed the Water and Wastewater Funds. She stated that neither fund meets EFB policy. Both funds have a need for treatment costs. There are proposed rate increases for each fund that will take place next year. Both funds are in the middle of Master Planning Projects.
Ms. Bennett discussed the Central Services Fund. She stated this fund does not meet EFB target. The proposed budget does not increase charges for departments for the 6th
consecutive fiscal year. She stated the Central Services Fund is in better shape than it was last year. Ms. Bennett went over the Parks and Recreation Fund (see slide). The fund balance exceeds their needed $1.4 million for summer carry-over. Parks proposed budget includes the only service increase which is the restoration of summer park patrol. Ms. Bennett stated she feels this is critical.
Highlights were discussed (see slide). Ms. Bennett stated the Water Fund includes one-time money for a part of Ashland Forest Resiliency. Electric Fund includes an amount for purchase of the North Mountain Substation and the Economic Development budget in Administration is a placeholder, pending Council action.
Ms. Bennett discussed Add packages. She stated that staff considered eight Add packages and of the eight, recommends four. Staff did not recommend any that require a permanent increase in Full Time Employees over 2011 levels or increase in taxes. None of the Add packages are in the budget, they are for the Budget Committee to decide. Ms. Bennett went over the recommended Add packages. One is to replace Electric Director with an Assistant City Administrator. Currently the City Administrator has eleven direct reports, three to seven reports are ideal. Adding this position will help the City to be more efficient. If this Add package is not approved, the City will need to hire a full time Electric Director. The next recommended Add package is weed abatement, which would cost $9,000 dollars in June and $11,000 in the next fiscal year. This would be a summer temporary job. Next recommendation is a Conservation Manager, which would help with three Council goals. The last recommended add package is an informational item which is if Council decides to proceed with Urban Renewal Plan, there would be $85,000 worth of consulting fees that would have to be approved to make it happen. Ms. Bennett discussed the Add packages that were not included but are essential, which include a half time Court Clerk, restoration of a Police Officer, restoration of a Fire Fighter and Fire Department equipment. She stated the last four mentioned were not put in because these Adds could not be put in the budget without increasing taxes and feels this is not the year to do so.
In conclusion, Ms. Bennett stated that the proposed budget is status quo (see slide). Staff will continue to focus on core programs and recommends spending time talking about utility funds.
Parks Director, Don Robertson and JoAnne Eggers, Chair of Ashland Parks and Recreation Commission, presented the Parks and Recreation Budget (see attached slides). Ms. Eggers spoke to the recent theft. She stated that three employees took advantage of their positions. The vast majority of Parks’ workers are honest and hard working. This situation has been difficult for all. The intent of the Parks Department is to be supportive of employees as steps are taken to insure this will not happen again. The Parks Department examined how business is done and their practices. Their challenge is to tighten the system, while strengthening the trust factors. She stated that in January the Commission stated their commitment to taking care of this issue. Theft is unacceptable behavior and will be reported. New management policies have been established and the Parks Department will remain committed to rebuild trust.
Ms. Eggers advised that the Parks Department budget process starts in November and at this time the Commission reviews fees and services for the recreation programs. All portions of operations and revenue streams are reviewed. The Commission also evaluates the scope of services. The next part of the budget process starts in January and the Commission goals are reviewed. Ms. Eggers stated that as a part of budget development process, the Commission met in February to discuss issues, agreeing to keep the tax rate the same.
The budget over time slide illustrates a remarkably stable budget with a little growth. There is a spike in the proposed 2012 Budget, which is the transfer of $349,000 to the City’s Reserve Fund. Total proposed 2012 Budget is $5,435,170.
A 2% increase for employees is projected, but COLA has not been set. Materials and Services included in this category are related to the hard cost of our services. (see slide). Goal is to reduce pesticides. Recent review showed nearly a 50% reduction in use of pesticides. Plan is to switch from synthetic to organic. As a result of recruiting and planning by the new volunteer coordinator, more volunteer hours have been added and they are working on new projects. Employees formed an employee association for the first time in 100 years and after a year, employees have decided to take action to dissolve it.
They see coming in FY 2012: organic pesticides, increase Park patrol, resurface the Calle Guanajuato, review and update parks, trails and open space plan and to explore bonding as it relates to the CIP.
The Parks and Recreation Matrix (see slide) was reviewed. Park patrol consistent reinforcement is critical. A citywide survey was completed. It showed that 98% of all citizens have visited an Ashland park in the last 12 months. This is above the national standard. Certain key services within every city elevate the perception of all services the city provides and parks and recreation, along with the outreach programs, are those key services for the City of Ashland.
Ms. Eggers reviewed the significant budget changes from 2011 slide. Preparing for FY 2013, Commission will consider: retirement of key staff members in the near future, which creates the opportunity to re-evaluate the staffing positions and build Equipment Reserve Fund.
Mr. Lemhouse stated he appreciates the fact they re-evaluate all positions upon vacancies. When you look at replacing people through attrition, do you look at contracted labor to save on costs? Mr. Robertson answered, yes they do, they look at different ways to fill the positions. They also consider if it is classified appropriately. For example, when they had a couple of vacancies, they took a look at those positions and the duties along with assignments. Based on that information, they were able to shift some responsibilities and reclassify the positions. Ms. Stebbins spoke to approving figures. She stated that tax payers will ask why a certain thing is endorsed and the 2% COLA is a concern as other city employees will not get it. Mr. Robertson replied the Commission is very much aware that the last time a COLA was received was in 2008. That’s the case for many. The Commission had an executive session and was to meet with employees and go through their entire compensation packages, and review the potential of a COLA increase. The Commission has not said there will be a COLA. The question was raised on not budgeting anything, or budget something with the ability to go backwards. Police and Fire both have contracts that will give them 3% COLA. There were no dollars budgeted for the other bargaining units, but they are in a bargaining process. COLAs across the board for all employees had not been budgeted and would not be determined until June. Mr. Keil asked what COLAs had been for the last 5 budgets. Mr. Robertson answered zero since 2008. Believes in 2007 there was a 3% COLA, but, will have to get back to confirm that figure.
Ms. Thompson commented that COLA across the board framework is always a question mark and is that the best way to distribute whatever available resources you have. They have to look at comparability in the Rogue Valley. She commended them for putting money in reserve. She also thanked them for providing cost center breakouts for different activities they are engaged in. She stated the Nature Center is costly and not clear how many people are benefitting from it. Ms. Eggers responded that all of the grade school students have sessions at the Nature Center, so it is huge and the school district used to participate in its funding in the past. There are fees for the services.
Mr. Runkel asked where the 2% came from for the COLA. Mr. Robertson answered it was an estimate due to inflation rate.
Mr. Runkel commented that the Nature Center is a terrific facility and they could do more in Outreach. Mr. Robertson replied the bulk of funding comes from local tax payers. They have to balance how much of the resources are dedicated to citizens or guests in the community. They do work hard on Outreach. One of the most widely read pieces of information in the Valley is the Recreation Guide. Mr. Slattery pointed out the chart shows golf course revenues up $24,000 and expenses up $75,000. He asked why. Mr. Robertson replied that an employee retired and there was a lot of vacation time on the books owed to him and supplementing a lot of work that was going on with temp employees to enhance the conditions. Mr. Lemhouse inquired if they had explored the option of outsourcing fleet maintenance. Mr. Robertson answered, no, they may want to have a discussion with the Public Works Department.
Mr. Gentry asked what the difference was between FTE headcount and benefit eligible headcount. Was there a sense of shifts and are they considering part time employees. Mr. Robertson answered they have stayed steady with the use of a few part time employees without benefits on a case by case basis. Not much change over time. Recreation is the biggest use of part time temps in the City.
Ms. Everson thanked Ms. Eggers and Mr. Robertson and announced Mr. Silbiger had a suggestion for the Budget Committee
Mr. Silbiger advised he sent everyone an email with a proposal to bring a budget comparison of the City Water Fund to Roseburg’s Water Fund. He asked that they include revenue, expenses, employee costs and do a spot check from a few years ago to see if the rate of change is equivalent. The purpose, he explained, was to compare a similar system and allow the Budget Committee, staff and citizens to compare as a utility and to prepare for future years. He suggested keeping the time allotted to the Public Works Department the same. It was asked if a motion should be made and Ms. Everson suggested it could be discussed.
Mr. Stromberg commented that the community needs to have a better understanding of what is going on with utility rates. He suggested they look at budget categories and how the City factors in spreading fixed costs for different sized populations. Simply the economics of how big the fixed cost is for each system. Fixed costs are not necessarily comparable. Mr. Silbiger replied that the budget breakdown will show where those changes are.
Mr. Runkel asked if it was fair to compare just two cities, and suggested a third. Mr. Silbiger replied that one would be enough work for staff. Roseburg is a reasonable comparable city. Mr. Gentry commented that it is an opportunity to compare figures to something else rather than just comparing year to year. Mr. Baldwin liked it for benchmarking purposes. Ms Bennett thought it was fine and would have some work to do. There are issues due to different infrastructures. Staff did not mind doing this on the annual basis with a select fund or department. Staff can try as an experiment and see how it goes. Mr. Stromberg asked how they will decide if it is a successful experiment. Ms. Everson replied in the debrief meeting at the end of the budget process. They would look for general consensus if it was useful for staff and the City as a whole. Ms. Bennett commented they would be looking for whether it was relevant and for a better understanding of control of numbers and are they being both efficient and effective with the dollars they are spending. They will not address differences in rate structure, but can show how much revenue comes from different categories and what they spend it on.
Ms. Everson announced there was no opposition and it was agreed to move forward with the Water Fund. No other business.
The Budget Committee Meeting was adjourned 8:40 p.m.
Temporary Administrative Assistant