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HomeMy WebLinkAbout09-27-2002sp SPECIAL CITY COUNCIL MEETING SEPTEMBER 27, 2002 2003 REVENUE FORECASTS Minutes I. Call to Order Mayor Peter B. Lewis called the special meeting of the Auburn City Council to order at 3:00 PM in the City Council work area located in the Mayor's Office on the first floor of Auburn City Hall. Mayor Lewis and the following Councilmembers were present: Fred Poe, Sue Singer, Stacey Brothers and Gene Cerino. Councilmembers Rich Wagner, Jeanne Barber and Trish Borden were excused. Staff members present included: Finance Director Shelley Coleman, Executive Assistant Duanna Richards and City Clerk Danielle Daskam. II. Introduction Mayor Lewis announced the purpose of the meeting is to report on the status of revenues, discuss revenue forecasts for 2003 and 2004, and examine alternative revenue sources. Mayor Lewis stated that without additional revenues, personnel reductions would need to be made. Additionally, any program improvements that have not been implemented are on hold until at least next year. III. 2003 Revenue Forecast Finance Director Coleman presented information on revenue forecasts. Council reviewed the General Fund 2002 Budget as amended through June 30, 2002. She noted the beginning fund balance of $17 million was partially used to balance the 2002 Budget. Total new revenue in 2002 is estimated at approximately $36 million for a total of $53.5 million for General Fund revenues. She noted the 2002 expenditures are estimated at $44 million and an ending fund balance of $9 million. Ms. Coleman reported that sales tax revenues ara not keeping pace with this year's budget estimate. Sales tax revenues are lagging behind approximately 2.5% to 3% as of the end of July. Mayor Lewis added that there are three City Council Special Meeting September 27, 2002 Page 2 principal sources of funds for the General Fund: property tax, which is limited to a 1% increase, sales tax, and permits and fees. Mayor Lewis reported that the Auburn School District has asked the City to pay part or the entire deficit for the Forward Thrust Pool. If the City increased the property tax revenues by $400,000 to fund the pool, the cost to the property owner of a $150,000 home would be approximately $16.50 annually. The cost to the City to run an annual ballot measure to increase the property tax for such purpose would be approximately $30,000. Finance Director Coleman previewed the General Fund projected 2003 Preliminary Budget. The estimated beginning fund balance for 2003 is approximately $12.5 million. Estimated revenue for 2003 is $36 million for total resources of $49 million. Ms. Coleman estimated the 2003 ending fund balance at approximately $4 million. Mayor Lewis added that corrections need to be made now to ensure that the City is operating with an ending fund balance in 2004. Mayor Lewis reported that he requested department staff review applicable fees, permits and charges for possible increases. Mayor Lewis noted that proposed increased fees would be in line with other cities' charges. Council reviewed the following proposed fee and permit increases as illustrated in the handout: Fire Uniform Fire Code Permit, Fire Prevention Reinspection, Fire Plan Review Fees, Probation Fee, Parks Picnic Shelter Rents, Parks Youth Sports Field Rental, Tournament Fees, Police Fingerprinting, Conditional Use Permit, Environmental Checklist, Final Plat, Lot Line Adjustment, Preliminary Plat, Rezone, Shoreline Development, Short Subdivision, Surfacing Mining Permit, Variance Application, and Building Permits. Mayor Lewis noted that the proposed fees would generate approximately $400,000 per year. Councilmember Cerino commented that any fee increases would need to be accompanied by a public relations program to inform the residents and customers of the reason for the increases. Councilmember Singer spoke in favor of raising the nonessential services fees, such as park rentals, more so than other types permits and charges. Councilmember Poe inquired regarding the building permit fees and the plan check fees. He stated that generally the plan check fee is 65% of the building permit fee and should go towards funding personnel who review plans. Mayor City Council Special Meeting September 27, 2002 Page 3 Lewis requested Finance Director Coleman research the plan check fee revenues. Councilmembers then reviewed the City's utility tax rate structure. Mayor Lewis advised that King County is looking to implement a utility tax next year. King County's utility tax would take the difference between the existing City tax and the maximum allowed of six percent. The City would be required to bill the full six percent and remit the county's portion of the tax. Mayor Lewis and Finance Director Coleman explained that any utility tax increase on inside utilities (water, sewer, solid waste, and storm) would be absorbed by the utility and would have no impact on the customer. The tax would be a transfer from the utility enterprise fund to the General Fund. Finance Director Coleman presented the utility tax rates and potential tax rate increases for electricity, natural gas, telephone and cable television. The utility tax increases would generate approximately $2.1 million in additional revenues. Ms. Coleman noted additional research on cable franchise law is necessary before any utility tax is imposed on cable television. Council reviewed the impact of the utility tax on a customer's average bill. Councilmember Brothers commented that the proposed increases would be more palatable by the public if the public was assured that the City was operating at maximum efficiency. Mayor Lewis responded that positions that are vacated are not being filled. Mayor Lewis stated that emergency services and maintenance and operation crews would be the least affected employee groups by potential workforce reductions. Councilmembers discussed a potential increase in gambling tax from 12% to 15%. The additional tax would generate $200,000 in additional revenue. Councilmembers discussed Initiative 790 relating to the Law Enforcement Officers and Firefighters Plan 2 retirement system, which will appear on the November 2 ballot. Finance Director Coleman stated that the effect of the Initiative would be to increase the City's contribution to the retirement system up to 15%; currently the City's contribution is approximately 4%. The impact on the City would be $800,000 in 2003 and approximately $1.6 million in subsequent years. The Initiative changes governance of the pension system and increases contribution levels and benefits. The Initiative also provides that all earnings of the pension plan in excess of the rate of investment return shall be used exclusively for additional benefits. Councilmembers discussed other benefits that emergency services employees currently receive. City Council Special Meeting September 27, 2002 Page 4 Mayor Lewis stated that the Council would be looking at department budgets over the next two months, including possible increases in fees and charges. Finance Director Coleman reported that she will present the utility tax increases at future Finance and Public Works Committee meetings. Councilmember Poe questioned the $500,000 allocation for Endangered Species Act compliance. He suggested reducing the allocation to $50,000. Councilmembers and Mayor Lewis briefly discussed the status of the Forward Thrust Pools, the agreements with the YMCA, King County services, and the upcoming Council retreat and visioning for the City. IV. Adjournment There being no further discussion, the meeting adjourned at 4:42 PM. APPROVED THIS /,t~'~ DAY OF L.~~ , 2002. B. Lewis, Mayor Danielle Daskam, City Clerk