HomeMy WebLinkAbout12-20-1999spSPECIAL CITY COUNCIL MEETING
LONG-TERM FINANCIAL PLANNING
DECEMBER 20, 1999
Auburn City Hall
Council Work Area
Minutes
I. Introduction
Mayor Booth called the special meeting of the Auburn City Council to order at
4:00 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, Parks and Recreation Director
Dick Deal, Personnel Director Brenda Heineman, Assistant Fire Chief Russ
Vandver, Planning and Community Development Director Paul Krauss, City
Attorney Michael J. Reynolds, Assistant City Attorney Judith Ausman, Assistant
Police Chief Marion Dukes, Municipal Court Judge Pat Burns, and City Clerk
Danielle Daskam.
Mayor Booth explained that this evening the Council will review materials
prepared by staff on revenue forecasts and projections for the next three years
and discuss the potential impacts of Initiative 695 (1695).
Finance Director Supler explained that the passage of Initiative 695 represents a
$700 million motor vehicle excise tax loss statewide. She quoted from a survey
which revealed that a majority of the voters believe government should cut back
on spending to meet the revenue shortfall rather than using existing reserves.
The second part of the initiative requires voter approval of all new taxes and fees
or increases in taxes or fees. Many questions remain regarding the full impact of
1695, and Ms. Supler noted that several parties have already filed suit against
1695.
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December Z0, 1999
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Finance Director Supler reported on workshop she and other Finance staff
attended recently regarding Initiative 695 issues. ^ recommendation from the
workshop is to ensure that the Council listens to the voters. Mayor Booth
recommended utilizing a citizens survey or questionnaire in order to receive
feedback from the public on capital projects and service levels. Councilmember
Poe requested that the Councilmembers have an opportunity to participate in
formulating the survey questions.
Finance Director Supler also discussed the effect of 1695 on future bond issues.
Because the City cannot give assurances in the bond market, the City would pay
more in bond insurance and bond issuance costs. It is uncertain how the bond
market will respond to Washington State bond sales.
Finance Director Supler explained that the following forecasts were prepared
through 2003 assuming on estimated population growth in 2000 of 11.5% and
approximately 4% for each year thereafter. She noted the first year's population
growth includes the Lea Hill South annexation. Other considerations in
estimating population growth included approximately 500 new housing units per
year in Lakeland and approximately 300 other miscellaneous developments
occurring in the city each year.
II. Property Taxes
Finance Director Supler explained the effect of 1695 on the property tax levy.
Based upon an interpretation of 1695 by the State Department of Revenue, the
City cannot levy above the 2000 levy amount in future years unless the increase
is approved by the voters. Even though assessed values may increase, the levy
amount must remain the same. The only increase in the levy amount that can be
realized by the City is through annexation and new construction. Ms. Supler
distributed a chart reflecting the 2001 through 2003 property tax estimates and
calculations for levy rates.
III. General Fund
Finance Director Supler presented a handout on General Fund forecasts for
2001 through 2003. She explained that the focus of this evening's presentation
would be on the General Fund since the General Fund will sustain the greatest
impact from Initiative 695. The following assumptions were made in forecasting
the 2001 through 2003 General Fund revenues: population increase of 11% in
2001, 4.4% in 2002 and 4.6% in 2003; ongoing grants; 1.25% increase in sales
tax; and annual new construction of $80 million.
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Expenditures forecasts were developed assuming a 2.8% increase in general
expenditures and salary increases of 3% and regular step increases. Jail costs
are estimated to increase in 2000 to $720,000 and future years' costs are
estimated to increase at the rate of 6% per year. Ms. Supler identified the
General Fund Non-Departmental expenditures to include salary/benefit
retirements, pension benefits, long term health care insurance for LEOFF I,
library debt service, Valley Comm debt service, Arterial Street commitments,
ESAJfederal mandates, economic development, and fire equipment reserve.
Based on the revenue and expenditure assumptions without using reserves, Ms.
Supler revealed budget shortfalls in all years. Finance Director Supler presented
a chart for the estimated General Fund fund balances through 2003. The charts
reveal how the fund balances start using up the City's reserves.
Finance Director Supler advised of other funding issues to consider for future
planning: whether basic life support funding will be continued after 2000, the
possibility that state shared liquor profits may be redirected to help fund the
Municipal Research and Services Center; no increase in staffing in relation to
annexations; and the need for greater use of technology.
Assistant Finance Director Shelley Coleman reviewed the projected criminal
justice funding. In prior years, the City received approximately $12,500 under
Program 1 and approximately $18,500 from Programs 2 and 3. The passage of
1695 and the repeal of the MVET tax reduce available criminal justice funding by
approximately thirty-three percent. The remainder of the funding comes from
state general funds.
IV. Capital Projects Fund
Finance Director Supler presented the Council with the definitions of REET (real
estate excise tax) 1 and REET 2. REET 1 is more flexible and can be used for
library, administrative and judicial facilities, fire protection facilities, law
enforcement facilities, as well as street, read, highway, sidewalk construction
and repair, street lighting systems, traffic signals, bridges, domestic water
systems, and storm and sanitary sewer systems. REET 2 is more for
construction and repair of streets, roads, highways, sidewalks, street lighting,
traffic signals, bridges, water systems, storm and sanitary sewer systems, and
improvement of parks. Land acquisition for street, water and sewer projects is
permitted under REET 2 but land acquisition for parks is not.
REET 1 estimated beginning balance is $2.3 million with approximately $600,000
in 2000 revenues. A total of $960,000 will be expended in 2000; $860,000 for
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December 20, 1999
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streets and $100,000 for parks. The ending fund balance is estimated at $2
million. Ms. Supler estimated that at the end of the year 2003, the fund balance
for REET 1 would be $4.5 million.
The City began collecting REET 2 taxes in 1996. The estimated beginning
balance is $1.6 million. The estimated ending fund balance for the year 2003 is
$3.5 million.
Also contained in the capital projects fund (328 Fund) is the Boeing sales tax
money, which has been collected over a five-year period. The City will receive
the last Boeing sales tax distribution in the year 2000. The ending balance at
1999 is $1.7 million and combined with the downtown revitalization/economic
development funds will bring the balance to approximately $2.3 million.
The 328 Fund also includes accumulation of funding for acquisition of fire
equipment and technology upgrades.
V. Cumulative Reserve Fund
Finance Director Supler explained the origin of the City's Cumulative Reserve
Fund. The fund originated in 1989 with previous Councils setting up a
contingency fund, which in 1994 was combined with other capital equipment
reserves under the Cumulative Reserve Fund. However, the ordinance creating
the Cumulative Reserve Fund did not specify the proposed use for the funds.
The City Attorney has recommended the Council amend the ordinance
establishing the Cumulative Reserve Fund to specify its use.
VI. Capital Projects
Finance Director Supler presented the following list of capital projects for
Council's long-term financial planning discussion: Valley Comm (the City's
commitment is $2.5 - $3 million), senior center, public safety building, fire station,
3rd Street, transit station parking garage, jail, golf course, and cemetery niche
building. Councilmember Poe expressed opposition to the City contributing
funds to the transit station parking garage project. Councilmember Lewis spoke
in favor of improving the golf course clubhouse. Councilmember Poe spoke in
favor of a private/public partnership to make the clubhouse improvements.
Parks and Recreation Director Deal stated that a high priority for the golf course
is to improve the parking.
Councilmember Borden suggested holding another special Council meeting to
discuss the potential for a new public safety building in more detail.
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December 20, 1999
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VII. Adjournment
There being no further business to come before the Council this evening, the
meeting adjourned at 5:58 PM.
Approved on the ~ -~ day of
Charles A. Booth, Mayor
'Dan"telle Daskam, City Clerk