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HomeMy WebLinkAbout10-26-1999spSPECIAL CITY COUNCIL MEETING 2000 BUDGET WORKSHOP OCTOBER 26, 1999 Auburn City Hall Council Work Area Minutes i. Introduction Mayor Booth called the special meeting of the Auburn City Council to order at 4:30 PM in the Council Work Area of Auburn City Hall. Mayor Booth and the following members of the City Council were present: Pete Lewis, Jeanne Barber, Gene Cerino, Fred Poe, Trish Borden, Sue Singer, and Rich Wagner. Staff members present included: Finance Director Diane L. Supler, Assistant Finance Director Shelley Coleman, Financial Operations Manager Sherri Crawford, Public Works Director Christine Engler, City Engineer Dennis Dowdy, Traffic Engineer Steve Mullen, Water Utility Engineer Lara McKinnon, Storm Drainage Engineer Tim Carlaw, Sewer Engineer Jeff Roscoe, Parks and Recreation Director Dick Deal, Personnel Director Brenda Heineman, Fire Chief Bob Johnson, Assistant Fire Chief Russ Vandver, Planning and Community Development Director Paul Krauss, City Attorney Michael J. Reynolds, Assistant City Attorney Judith Ausman, Police Chief Jim Kelly, Assistant Police Chief Marion Dukes, and City Clerk Danielle Daskam. II. 1999 in Review Finance Director Supler presented a brief review of the 1999 accomplishments and program highlights. She noted that because of the strength of the economy, the City realized over $1 million in sales tax revenue per month during four months of the past year. Some of the accomplishments during the past year included the construction of the new library building, Y2K upgrades and · contingency planning, completion of the skateboard park, groundbreaking for the new transit station, the wholesale distribution of water to District 111 and ] I Special Meeting of the City Council October 26, 1999 Page 2 Covington, senior center project design, and upgrade of the City's revenue bond rating from A2 to Al. Ms. Supler reported on the 1999 revenues and expenditures to date. Through September, revenue collections are at eighty percent of estimates. Expenditures through September are at sixty-six percent of the budget. The Arterial Street Fund is below estimate due to the uncertainty of Initiative 695. The Water, Sewer, and Storm enterprise funds are operating at a net income. However, as of September, the Airport and Cemetery enterprise funds are operating at net losses. Ms. Supler summarized the status of the 1999 Program Improvements. The water meter readers have been hired; the hiring of a utility accountant is on hold by the Finance Department pending evaluation of the position; $500,000 targeted for downtown revitalization has been transferred from the General Fund to the capital projects fund; the sensitive areas and special areas ordinances will be rebudgeted for next year; the annual neighborhood grant programs were implemented; hangar construction is in progress; pre-incident planning is underway with most of the work to be completed next year; protective turnout clothing is ordered and will be received by the end of the year; two sworn police personnel were hired; a pilot study of the laptop project has been started and the majority of the funds for the project have been rebudgeted for next year; a permit technician was hired during the first quarter of 1999; hiring an additional custodian has been delayed pending a position evaluation; construction vehicles have been purchased; a building inspector was hired; the re-lighting for Brannan Park has been rebudgeted for next year as a contractor could not be secured; the curator of education was hired; the millennium commemoration has been rebudgeted; and the additional court clerk was hired. Ms. Supler explained that due to the pending vote in Initiative 695 next month, the timeline for adopting the budget has been extended until December. Staff will, however, be asking the Council to pass the property tax ordinance by November 1, 1999 in order submit the property tax levy to King County by November 15, 1999. The goals for the 2000 Budget process are similar to last year's and include maintaining essential programs at present levels of service, develop a workable strategy to achieve Council goals, recommend modifications to meet changes in city circumstances, and continue responsible financial management of City's resources. The 2000 budget assumptions included: baseline budgeting; no receipt of MVET funding; salaries based upon settled labor contracts or cost-of- living adjustment; selected program improvements are included in the baseline Special Meeting of the City Council October 26, 1999 Page 3 budget; discretionary expenses limited to a 2.5% increase; and items such as Valley Comm, King County Jail, RST Disposal, King County Metro and election costs are funded at their full level. Finance Director Supler explained there is a lot of uncertainty about the effect of 1695 on the proposed budget. According to the City's financial counsel, the City may not be able to increase the amount of its revenues beyond the baseline year. 1695 includes a statement that a government agency cannot change fee rates without voter approval and cannot increase its tax base. Tax base is defined by many as the revenues received. The 2000 Budget may need to be adjusted if it is determined the City cannot receive additional income above the baseline level. Ms. Supler reviewed the Council's 2000 Budget goals and activities as follows: Community Identity Retained and Preserved · Applied for a grant for street improvements to West Main Street from the Interurban Trail · New library building scheduled for completion in spring 2000 · Construction drawings for Senior Center renovation to be completed by April 2000 Community gateway funding recommended in 2000 Budget Downtown Plan to be completed in 2000 Site plan review ordinance which will provide a high level of design for future projects City neighborhood program expanded into Pioneer Elementary School Neighborhood planning in the Terminal Park area Revitalization of Downtown · Downtown Revitalization Plan to be completed in 2000 · Transit station work has begun · Increased police presence in downtown area · Economic Development Plan formulated · Assist in efforts to find alternatives for the Penney's building · Consultant hired to assist in placing art in the downtown area and transit station Economic Development · Staff continues to discuss the possibility of a wetlands program · Evaluating transit oriented development around the transit station · Encouragement, guidance and problem solving on future developments Special Meeting of the City Council October 26, 1999 Page 4 · Full-time individual assigned to economic development Resolve Water Issues · Completed the aquifer characterization study and groundwater flow model · IA2 financial commitment completed · City participating in Green River Recovery Plan (WRIA 9) · Joint projects at City Park, Isaac Evans Park and Fulmer Field. · Compliance with the Department of Health and moving the corrosion control program forward Successful Annexations · Phase I of Lea Hill Annexation nearly completed · Drafted an Interlocal Agreement with Fire District 44 for services in the Lea Hill annexation area · Continue to meet with the Lea Hill Task Force Councilmembers Borden and Wagner inquired regarding an economic analysis of the Lea Hill annexation. Ms. Supler offered to provide an information sheet to the Council. Healthy Environment for Youth · Completed the skate park facility at Brannon Park · Started a teen outdoor recreation program · Expanding teens in leadership training program · Working with the school district and youth agencies in implementing Asset Development Program · Police implemented school violence training and awareness program Transportation Issues Resolved · Major projects on hold pending 1695 · Increase use of REET money · Construction of B Street LID Project completed in 1999 · Grant submitted to TIB for "A" Street NW corridor · White River Trail to be completed in 2000 · Applied for a grant for "M" Street pre-design · Completed traffic signal at 29t~ and R Street SE · Upgraded traffic signal interconnect software Miscellaneous · Y2K upgrades to servers, voice mail system, email/calendar system, permit system, hardware upgrade on workstations. Special Meeting of the City Council October 26, 1999 Page 5 · Provided Internet services to employees · Pilot project for police laptops to be completed by end of 1999 · Evaluating options on accounting system software Councilmember Wagner inquired regarding the status of building a home page. Ms. Supier advised that the City just recently hired a information systems manager, and staff members are now beginning to meet and determine the format for the home page. Mayor Booth indicated Council may need to provide a policy on the City's home page and other legal and security issues need to be resolved. Initiative 695 · Increased uncertainty on providing new programs or continuing other programs · 277th and 3rd Street Projects on hold · Possible adverse effects in financial markets · Senior Center renovation on hold · Reduced funding for several activities · Reduced funding for several activities · Contingency planning, including long term rates to assure the viability of enterprise funds Counciimember Wagner questioned the reason there is no separate fund for the Downtown Revitalization capital outlay. Finance Director Supler explained that in order to keep the number of funds to a minimum, the 328 Fund is used for capital funds reserved for future use. Each amount is itemized in the 328 Fund and contained on page 133 of the 2000 Preliminary Budget. In response to a question from Councilmember Poe, Finance Director Supler explained that the 2000 Preliminary Budget does not assume any MVET taxes in anticipation of an affirmative vote on 1695. However, the budget does not take into account a freeze on base year revenues, which some believe may also result from the passage of 1695. Ms. Supler advised that the Municipal Research and Services Center (MRSC) is funded by MVET taxes. MRSC is a valuable tool for all cities and future funding for MRSC, if 1695 passes, is not known. III. 2000 Budget 2000__Q_Q.Q_~_pC a it a I Pro'~ects Assistant Finance Director Shelley Coleman presented an overview of the 2000 capital projects and funds. Special Meeting of the City Council October 26, 1999 Page 6 The Arterial Street Fund anticipates $22,829,000 in grants, $5,291,000 in other government contributions, and $1,654,000 in other revenue soumes. Ms. Coleman stressed that the anticipated grant funds are sensitive to the passage and subsequent implementation of 1695. The other government contributions represent funding from the Port of Seattle and the railroads. Other revenue sources include motor vehicle fuel tax, traffic mitigation, and general fund operating transfers. Some of the largest projects slated for funding from the Arterial Street Fund are the South 277th Grade Separation Project, 3rd Street SW Grade Separation Project, the Transit Center pedestrian bridge, and Kersey Way improvements. Councilmember Lewis asked that projects sensitive to Referendum 49 and Transportation Improvement Board funding be identified to help the Council in their review of the budget. The Water Fund includes $4,700,000 in available working capital, $2,887,500 from the Public Works Trust Fund loan, and $315,000 from system development charges and assessments. Major projects funded through the Water Fund are the Corrosion Control Facility, Interlocal Agreement No. 2 (IA2) project, water resources evaluation, Well #5B, and the Lakeland Hills rezone to bring Iow pressure areas up to standard. The Sewer Fund includes $2.8 million in working capital, $200,000 in system development charges, and $133,000 from other funds. Major projects slated for the Sewer Fund include the 2000 sewer replacements to upgrade and replace lines throughout the city, Auburn Way South Phase B-3, sewer main extensions, and 3rd Street SW line removal to hccommodate the 3rd Street SW grade separation. The Storm Fund includes $4,349,000 in working capital and $200,000 in system development charges. Major projects for 2000 include the Central Storm ImprovementJPSE ditch which serves the downtown area, the 21st Street (from A Street to H Street) project, the airport detention facility, and the Central Storm Improvement. Ms. Coleman presented a comparison of the 1999 and 2000 ending working capital. The 2000 Budget proposes utilizing a large portion of working capital. Councilmember Poe questioned the amount of ending working capital in the Solid Waste Fund. Public Works Director Engler stated that some of Special Meeting of the City Council October 26, 1999 Page 7 the funds will be used for construction of a solids handling/decant facility located at the maintenance and operations facility, and the Solid Waste Supervisor is conducting a solid waste survey to determine if other services could be offered by the utility. Councilmembers suggested City staff look at the current rate structure and the possibility of offering curbside recycling. Mayor Booth recessed the meeting at 6:00 PM for a dinner break. The meeting was reconvened at 6:27 PM. Assistant Finance Director Supler continued her review of enterprise funds capital projects. The Airport Fund includes $875,500 in working capital and $270,000 from a Federal Aviation Administration grant. Projects slated for 2000 includes hangar construction, 15th Street land acquisition, hangar roof repair, and Master Plan update. Councilmember Wagner questioned the General Fund loan to the Airport Fund. Financial Operations Manager Crawford stated the Airport Fund borrowed $45,000 from the General Fund. The loan repayment is scheduled at $10,000 per year depending on the revenue stream for the airport. Councilmember Wagner expressed concern with using the General Fund as a lending agency for the enterprise funds, and setting a precedent for borrowing funds from the General Fund for the enterprise funds. The Cemetery Fund includes $75,000 transferred from the Endowed Care Fund. Projects for 2000 include Section 9 development, private crypts, and a Master Plan for the niche building. The Golf Course Fund includes $130,000 in working capital. Projects for 2000 include rebuilding the 7th green and fairway and developing a Master Plan for the club house and parking. Revenue Assistant Finance Director Coleman presented information on the 2000 estimated revenues. The General Fund revenues include estimated property taxes of $9,636,000, $11 million in sales tax, $4,888,900 in utility and business taxes, $1.2 million in other taxes, $1,088,700 in licenses, permits and Special Meeting of the City Council October 26, 1999 Page 8 Co fines, $1.5 million in intergovernmental revenue, $1.4 million in charges for services, and $1.2 million from other sources. Ms. Coleman explained that the motor vehicle excise tax (MVET) is classified as an intergovernmental revenue as the tax is a state shared revenue. The MVET tax is not included in the 2000 Budget pending the outcome of 1695. The property tax revenue was increased by the amount of the IPD and estimated sales tax was increased by a little more than one percent. Other sources of income include transfers in and interest income. State law requires that the Council conduct a public hearing on property tax and other revenues and requires submission of adopted property tax ordinance to the County by November 15. Referendum 47 was passed in 1997, which limits property tax to lesser of 106% or the rate of inflation. The rate of inflation (IPD) for the 2000 property tax levy is 1.43%. However, with a finding of substantial need, the Council may increase the property tax up to 106%. The preliminary budget includes a 101.43% increase in property tax and the estimated levy rate is $3.04 per thousand. Assistant Finance Director Coleman briefly discussed a proposed ordinance, which would protect the additional property tax capacity for future years. Finance Director Supler stressed that although the Council could protect the excess amount of property tax and possibly utilize it in future years, the City cannot go above the $3.10 lid without a voted general obligation. The amount protected would be approximately $172,000 in 2000. Councilmember Borden requested staff prepare more detailed information on the impact of protecting the additional capacity. Councilmember Poe questioned the need to protect the excess capacity and spoke against the proposal. Ms. Coleman explained the components of the increase in property tax revenues. $137,136 comes from the levy increase of 1.43%, $243,405 from new construction, and $61,493 from new annexations. Ms. Coleman presented information related to water, sewer, and storm water rate increases net income for Council review. Expenditures Financial Operations Manager Sherri Crawford presented information on budget expenditures. She began with a comparison of 1999 and 2000 all Special Meeting of the City Council October 26, 1999 Page 9 fund expenditures. In 2000 there is a significant increase in capital expenditures because of the substantial projects scheduled for 2000 including the corrosion control facility, 3rd Street and 277th Street grade separation projects. Salaries and benefits have increased approximately four percent overall. Service expenditures including professional services, communications, utilities and miscellaneous items are increased by approximately five percent. Intergovernmental services, including King County Jail and election services, is increased by eleven percent. Interfund transfers represent transfers from the General Fund to the capital projects fund for such items as fire apparatus replacement and downtown revitalization. Supplies are increased by fourteen percent. Interfund leases represent equipment rental costs and printing costs. Within the General Fund, salaries and benefits represent sixty-six percent of the expenditures. Ms. Crawford noted that salaries and wages increased approximately two percent over last year. Services expenditures are increased to $6,146,900 and includes Valley Comm expenses. Transfers out are proposed at $2.2 million and will be itemized later in this discussion. General Fund capital includes $160,000 rebudgeted for Brannan Park relighting and $420,000 for the complete wireless Police Department project. Finance Director Supler noted that the City has experienced increased cost in the supplies area due to increases in postage and cost of paper supplies. Capital items budgeted for the 2000 General Fund include: a Court outdoor sitting area and office modification for $21,000, telephone upgrades for $25,000, printing press for $60,000, body bunker for $8,000, $11,000 for service weapons, $5,000 for Explorer Program radios, $6,500 for remodeling the Police reception area, $5,500 for a dishwasher for the jail, $32,000 for an air compressor and $7,500 for a Cascade system to fill Fire Department air packs, $7,500 for Fire Department physical conditioning equipment, $2,700 for a Fire Department outdoor canopy, $2,400 for a Fire Department washer and dryer, $43,000 for Public Works filing system and workstation and reception area remodel, $15,000 for regrouting and sealing the City Hall building, $28,000 for waterproofing and sealing the records area, $65,000 for recarpeting, $24,000 for traffic signal controller, $32,000 for auto scope replacement, $8,000 for a Parks Department equipment lift, $40,000 for a Parks Department mowing unit, and $20,000 for replacement chairs and furniture. Capital projects also includes computer hardware and software allocations. It is recommended to begin budgeting an amount each year for software upgrades that can be set aside in the 328 Fund for future software upgrades. $80,000 has Special Meeting of the City Council October 26, 1999 Page 10 been designated in the 2000 proposed budget for this year's software upgrades. $60,000 is budgeted for continuing upgrades for computers and printers. $50,000 is budgeted for server and network upgrades. $45,000 is budgeted for fiber connection for other sites. $10,000 is budgeted for professional services in developing a city web page. Councilmember Singer inquired whether technology could be included in equipment rental. Finance Director Supler stated that staff is aware of some cities that use equipment rental for technology, but staff has not had the opportunity to investigate the feasibility of such a program. Ms. Crawford reviewed the Non-Departmental Fund expenditures. It includes $401,900 for retirement payouts, $281,800 for LEOFF I benefits, $30,000 for an updated Capital Facilities Plan, $50,000 for Y2K, $100,000 for City Hall remodel and improvements, $50,000 rebudgeted for the Neighborhood Plan, $40,000 rebudgeted for the sensitive areas ordinance, $400,000 for Endangered Species Act (ESA) impacts for Public Works and Planning, $45,000 rebudgeted for the millennium commemoration, $110,000 for LEOFF I long term cato, $160,000 rebudgeted for relighting of Brannan Park, $420,000 for Police wireless communications. Councilmember Wagner inquired whether the City Hall remodel includes the use of the senior center. Mayor Booth indicated the rouse of the senior center is tied to the renovation of the current library building. If the library can be renovated, the present senior center facility, with some modification, could serve to house the parks and recreation staff and provide a usable space for different types of programs. Financial Operations Manager Crawford reviewed the General Fund transfers (Department 98). Proposed transfers from the General Fund include $300,000 for Arterial Street, $150,000 from Boeing sales tax, $500,000 for downtown revitalization, $800,000 for fire equipment, $307,200 for library bond servicing, $68,000 for maintenance and operations building and road improvements, and $115,000 for the solids handling/decant facility. Program improvements recommended for approval include $30,000 for telephone system upgrades, $13,200 for a color copier, $16,100 for a regular City Prosecutor (versus the current contract prosecutor), $42,100 for correctional officers (one officer and one home arrest), $141,600 for two patrol officers, $48,000 for two new police patrol cars, $120,000 for Special Meeting of the City Council October 26, 1999 Page 11 gateway programs, $30,000 for a Parks greenhouse, $30,000 for a Park 15-passenger van, and $230,000 for a solids handling/decant facility. Program improvements submitted but not recommended for funding included: $16,100 for a legal administrative coordinator, two correctional officers (in addition to the two recommended), four patrol officers (in addition to the two recommended), $649,000 for fire staffing and apparatus for a third aid unit, $141,500 for an additional Assistant Fire Chief, $47,000 for a Public Education Specialist, and $7,700 for a full-time Parks registration clerk. Fund Balances Financial Operations Manager Crawford presented information and details on fund balances and working capital. The purpose of fund balances and working capital is to provide cash flow resources, provide stability during a sluggish economy, mitigate effects of legislative impacts, and provide assurance of fiscal responsibility to bond raters and holders. The City uses three types of fund balances: designated (with an intended use), restricted (legally restricted use), and undesignated (available for operations). Councilmember Wagner questioned the status of the Cumulative Reserve Fund. Finance Director Supler stated the fund has been existence for some time and is a "rainy day" fund to be used for unanticipated emergencies. The fund contains $3 million, and Ms. Supler advised that no further contribution to the fund has been recommended. Financial Operations Manager Crawford explained the process in estimating the 2000 General Fund beginning and ending balances based on the projected 1999 ending balances. The proposed 2000 General Fund Beginning Balance includes $489,700 for designated retirement, $3.3 million for designated reserve, and $6,879,200 for the undesignated balance. The proposed 2000 General Fund Ending Balances include $485,700 in designated retirement, $3.3 million in designated reserve, and $4,014,100 in undesignated balance. Ms. Crawford reviewed the Arterial Street fund balances noting that the Motor Vehicle Excise Tax has been removed pending the outcome of 1695. The 2000 Arterial Street Ending Fund Balance is estimated at $166,600. Special Meeting of the City Council October 26, 1999 Page 12 The 2000 Cumulative Reserve Fund ending fund balance is estimated at $3,966,800. Finance Director Supler advised she would research the restrictions for use of the Cumulative Reserve Fund. Ms. Crawford reviewed the components of the Capital 328 Fund. The first component consists of the Council sales tax money received from the Boeing Company. The proposed 2000 ending balance for the Council sales tax is $1,540,300. The 2000 Downtown Revitalization ending balance is estimated to be $500,000. In 2000, the Fire Equipment Fund will have a $0.00 ending balance. Two aid cars will be purchased this year and a fire pumper will be purchased in 2000. The Computer Software component includes a beginning balance of $150,000 and expenditures of $150,000 for a $0.00 ending balance in 2000. The REET 1 (real estate excise tax) is estimated to have a $1,970,500 ending balance. The REET 2 is estimated to have a $2 million ending balance in 2000. There was discussion regarding the possible use of the REET funds. Finance Director Supler advised that REET 1 funds cannot be used to retire debt. The funds must be used for actual construction costs and there are specific restrictions on the use of REET 1 and 2 funds. Finance Director Supler offered to provide the definition of REET 1 and REET 2 funds and their restricted use at a later date. Mayor Booth and Councilmembers agreed that another workshop meeting would need to be held following the outcome of the November 2 general election. IV. Adjournment There being no further business to come before the Council this evening, the meeting adjourned at 8:34 PM. Approved on the ~O?-~ dayofL~.~ ,~ Charles A. Booth, Mayor D ~'hielle Daskam, City Clerk