Budget Committee Meeting
February 21, 2007, 6:00pm
CALL TO ORDER
The Citizenís Budget Committee meeting was called to order at 6:05 pm on February 21, 2007 in Siskiyou Room at
Mayor Morrison was present. Councilor Chapman, Hardesty, Hartzell ,Jackson, Navickas, and Silbiger were present. Budget Committee members Bond, Everson, Gregorio, Heimann, Levine, Stebbins, and Thompson were present.
STAFF PRESENT: MARTHA BENNETT, CITY ADMINISTRATOR
LEE TUNEBERG, ADMINISTRATIVE SERVICES/ FINANCE DIRECTOR
BRYN MORRISON, ACCOUNT REPRESENTATIVE
Hardesty/Everson nominated Thompson as chair. All ayes.
Morrison/Stebbins nominated as Levine as vice chair. All ayes.
Approval of minutes from previous Budget Committee meetings dated:
5/22/06 Budget Committee Meeting
5/24/06 Budget Committee Meeting
Everson/Silbiger ms approval of minutes as presented. All ayes.
Lee Tuneberg, Administrative Services/Finance Director spoke that staff just finished the financial reports for December 2006 and it is a basis for projections for the FY 2008 proposed budget. He spoke to the current year budget and that there is a Street Financing Task Force now that will look at the Capital Improvement Plan(CIP) and how it is financed. He added that staff is currently going through a review of the CIP and it would be presented at the next Council meeting.
Departments had evaluated year to date in operations and capital improvements and he had asked them to calculate their revenues and expenditures to the year end. He spoke to new assumptions and a new approach for developing the proposed budget. Staff is starting the budget as a baseline budget with add packages. He is proposing to use the current years budget as a base to create the next years budget and to extrapolate for the long term. This will be developed with no changes in rates, and then he will look at how much contingency would be needed and what the ending fund balance would be for financial viability. At the February 6th Council meeting staff presented a report on creating the budget. Staff and Council saw a need to show citizens the costs of services and control charges. Staff recommended capping revenue. This includes what to do with AFN debt. It was determined that for the initial proposed budget, debt would be internalized and departments would make room in their budgets without raising rates. Staff would then look at the impact on services. Staff was directed to build their budgets with todayís service levels. Staff will provide a balanced proposed budget with a list of additions or subtractions, if needed to adjust the budget.
The goal is to create a budget without rate increases being factored in. Any rate increase would have to be brought to Council for approval. Mr. Tuneberg explained that there are some things that are due to natural growth due to things like population growth and revenues and expenses could grow more than the 2% in some areas.
The Committee asked if the electric rate increase adopted in the FY 2006-07 budget happened. Mr. Tuneberg explained that electric rate adjustments have not occurred to date this year. He explained that utility rates and franchise rates are tied to them and the General Fund would not get more revenue without raising the rates. He explained that the General Fund has a larger fund balance than predicted at this point in the year. He is still looking at the impact of a rate increase. Martha Bennett, City Administrator explained that the revenues in the current fiscal year included the rate increases and are in the base budget for next year. The Committee asked if any other rate increases are planned for the next year. Mr. Tuneberg explained that most of the enterprise activities would need a rate increase in the next year. He pointed to the budget message and summary table on rate increases. Page 1-14.
The Committee asked what base budget meant. Mr. Tuneberg explained that base means that the departments built their budget using the current budget with an increase only for which is identified as natural growth or 2% for example.
Property taxes were raised last year, and will be proposed at the same rate in FY 2007-08. The Committee questioned other than the AFN debt, what other items did that rate go toward and if they were accomplished. Mr. Tuneberg explained the Council Visioning program will be rebudgeted and there were additional positions that still require funding. Ms. Bennett explained that departments did not begin building their budgets by cutting positions; they would look at the financial viability and determine if that same rate would continue to be levied.
Mr. Tuneberg explained that there would be no new positions in the base budget. Departments will use actual percentages for union contracts to build personnel costs and staff is anticipating an increase of 12-15% for health care and PERS. Staff may budget 10% for healthcare and PERS overall cost will be stable. The non bargaining union would have a 4% increase and the compression issue of salaries is being looked into. The Committee asked if there are increases required by departments if others would then be reduced. Ms. Bennett responded there might potentially be a reduction. Mr. Tuneberg explained that they would have to calculate the impacts.
Mr. Tuneberg explained that staff will look to hold Capital expenditures at the same level or less and will adhere to the fund balance policy. He added that they have established a Telecommunications fund balance policy and the General Fund and Central Service Fund at this point look to have a larger fund balance than anticipated. Staff is looking at industry standards and increases and decreases that may happen. The Long Term assumptions are difficult. Staff must determine how to deal with contingency in the long term and is aware that there will be challenges ahead. There are target fund balances to help adjust to swings in revenue.
The Committee questioned if staff under estimated revenue and overestimated expenses, what the cost would be to tax payers. Mr. Tuneberg explained that the goal is to come as close as possible and they use a consistent set of assumptions to build the budget. A bigger concern to them is when a budget ends up only 90% expended and they then have to look at were they budgeted wrong. The Committee and Staff discussed how the departments would ask for increases. Staff will be asked to look at what service would increase and what proposed funding source there would be for it. Staff will discuss together the priorities and come to the Budget Committee with those requests.
The Committee asked what would happen if a departmentís revenue increased without a corresponding expense. Mr. Tuneberg explained that it would depend on what it was that caused that increase and the revenue would go to the ending fund balance for a resource for the fund for the next year. The Committee discussed the CIP. Mr. Tuneberg explained that the CIP is reviewed and approved by Council and the Committee will see it after Council reviews it. The CIP that is adopted by Council will be the baseline and the debt for those projects will be built into the budget.
The Committee discussed the effect the O & C funds would have on the City budget. Mr. Tuneberg explained that staff is not certain on direct or indirect costs at this time but will be researching the actual cost through the budget process. The actual cost may not be known for a couple of years as it takes effect. The departments may bring the result of those cuts to the Committee as add packages. The Committee questioned if departments would be able to internalize that expense. Ms. Bennett explained that the O & C funds reduction will mostly affect the departments within the General Fund, and staff will need to look at the impact realistically on how it pertains to service levels. The General Fund departments will be asked to bring to the Committee add packages as well as cut packages.
The Committee discussed that the budget will be prepared with the same level of service and that they will be shown if a service will be eliminated and the impact on the citizen. It was discussed that staff has been instructed to build their budget with Materials and Services with the possibility of an increase only through natural growth that would not require an increase in rates. The general assumption is a 3% growth in assessed value and 2% in new construction.
Mayor Morrison suggested the City look at ways to maximize revenue possibilities. That staff should look into ways to keep the revenue in
Mr. Tuneberg spoke that tours would be available. There is local budget law training provided by the Oregon Department of Revenue on March 8 and Staff would offer a training on March 15. The Social Service grant meetings will be on March 5 and 7 at 7:00 pm. The Economic & Cultural is yet to be determined. Staff and Council are working on a Resolution and guidelines on the use of transient occupancy tax funds. Staff may have to distribute the applications without an updated set of guidelines.
The Committee discussed that they would prefer to begin the proposed Friday night meeting on 4/6 at 4:00 pm. Staff will confirm once date is secured.
Staff asked for volunteers for the Social Service grant subcommittee. Hartzell, Everson, Bond, Hardesty, Morrison, Heimann volunteered.
Mr. Heimann suggested to the Committee to hold a meeting after the process is completed to look at the results of this process. Mr. Tuneberg responded that Council asked to have a follow up meeting on 5/22 to discuss the process.
Mayor Morrison thanked the private citizens on the Committee and expressed the need for a greater sense of agreement in this years budget. Last year was too close.
The Committee discussed how they would make decisions on the add and cut packages. It was explained that the Committee would be given all the add packages at the budget message and then they could decide how to proceed with them. Mr. Tuneberg reminded the Committee that after each departmental presentation, they would tentatively approve the budget. The Committee asked how the priorities are ranked. Mr. Tuneberg explained that the department heads get together and talk about the pressures they will see and they come to a consensus on the ranking. Ms. Bennett added that the department heads will present the Committee with data on their request and how it will affect service levels.
The meeting was adjourned at 7:48 pm.