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HomeMy WebLinkAbout11-12-2003 SpecialCI. TY OF WASHINGTON CITY COUNCIL SPECIAL MEETING MINUTES November 12,2003 4:00 PM 2004 Budget Work Session Call to Order Mayor Peter B. Lewis called the special meeting of the Auburn City Council to order at 4:05 p.m. in the Council Chambers of Auburn City Hall, 25 West Main Street. The following Councilmembers were present: Rich Wagner, Trish Borden, Sue Singer, Stacey Brothers, Gene Cerino, and Nancy Backus. Councilmember Poe was excused. Staff members in attendance included: Finance Director Shelley Coleman, Police Chief Jim Kelly, Assistant Police Chief Bob Lee, Assistant Fire Chief Russ Vandver, City Attorney Daniel B. Heid, IS Administrator Lorrie Rempher, Parks and Recreation Director Daryl Faber, Planning and Community Development Director Paul Krauss, Financial Planning Manager Dawna Truman, Fire Chief Bob Johnson, Public Works Director Dennis Dowdy, Human Resources/Risk Management Director Brenda Heineman, and City Clerk Danielle Daskam. Also present were Councilmembers-elect Bill Peloza and Roger Thordarson. The purpose of the meeting is to conduct a work session on the proposed 2004 budget. Mayor Lewis began the meeting by explaining that no new programs or personnel are included in the proposed budget unless an equal or greater income stream could be identified to justify the program or position. Because of the City's revenue constraints in property taxes, sales tax, and fines and permits, the administration will continue to monitor on a monthly basis, the revenue receipts and the allocation of personnel. Finance Director Coleman introduced Financial Planning Manager Dawna Truman who, together with Director Coleman, reviewed the budget for 2004 using PowerPoint slides. Page '1 City of Auburn Council Special Meeting Minutes November 12, 2003 I1. Budget Process Ms. Truman reviewed the budget process delineated on page 21 of 2004 preliminary budget document and the budget calendar. The budget process begins with a goal-setting meeting conducted by the Mayor and City Council. Departments develop annual work plans in July with proposed budgets submitted to the Mayor in August. The Finance Department prepares revenue projections, which are presented at the first public hearing on the proposed budget in September. The City Council Committees then review departments' preliminary budgets, and preliminary budget amounts are set by the end of September. The preliminary budget is filed with the City Clerk in October. The property tax levy is set by ordinance and the second public hearing on the proposed budget is held in November. The Council conducts a work session on the proposed 2004 budget and adopts the budget by ordinance in December. Finance Director Coleman announced that the budget process will begin approximately two months earlier next year. III. Budget Policy Finance Director Coleman presented budget policies (beginning on page 27 of the 2004 preliminary budget). Each year the Council evaluates the needs of the community, establishes a vision, and sets goals that are incorporated in the budget document. The general fiscal environment and economic trends also shape the budget. Presently, there is a high unemployment rate; initiatives and referenda that impact revenues; sales tax is improving this year, unlike the past three years; and transportation funding challenges. A stabilizing economy is predicted for the future, but revenues are still limited by the one percent property tax limit and the loss of other revenue sources such as the motor vehicle excise tax. Director Coleman reviewed the financial management policies (contained on pages 34-35 of the preliminary budget document) that guide the budget preparation and include policies on operations; accounting, auditing and reporting; revenues; budget reserves; cash management and investments; and capital budget. Director Coleman pointed out the City goals (beginning on page 36 of the preliminary budget document) and the progress on the 2003 goals. Councilmember Wagner noted that cooperation with the Muckleshoot Indian Tribe is omitted from the goals section. Director Coleman advised that staff would ensure that all goals have been included in the final budget document. Page 2 City of Auburn Council Special Meetinq Minutes November 12, 2003 IV. Budget Summary Finance Director Coleman directed the Council to the budget summary (pages 9-19 of the budget document). The budget summary contains graphs and tables identifying 2004 revenues by source and 2004 expenditures by fund type. Revenues for all funds are projected to increase 6.6% over 2003 to $85,803,200. Expenditures for all funds are budgeted at $98,877,123; an 8.5% increase over 2003. The total excludes fund balances. The General Fund revenues are projected at $39,226,200; a 5.0% increase over 2003 and expenditures are budgeted at $46,046,700; a 5.8% increase over 2003. Director Coleman stated a 4-5% residual is expected to roll over from 2003 to the 2004 budget. Ms. Coleman pointed out one-time monies included in the non- departmental budget, consist of retirement cash outs, Endangered Species Act expenses, video teleconferencing, and transfers out to downtown development for the transit garage parking and retail space. Ms. Coleman noted the following items of interest in the budget summary: Sales tax increase of 3% in 2003 from non-growth over the previous three years Miscellaneous revenue decrease due to less interest income and loss of one-time revenues An increase in the other financing sources due to system development charges and a Public Works Trust Fund loan The Finance Department budget deceased due to allocation of technology needs among departments rather than from the Information Systems division of the Finance Department The Police Department budget increased due to incarceration costs and cost of jail contracts Special revenue includes funding for arterial street projects The Capital Project Fund decreased by 20.4% because of last year's YMCA payments, fire equipment purchased in 2003, and retail space tenant improvements in 2003 Page 3 City of Auburn Council Special Meetin.q Minutes November 12~ 2003 The utility funds increase due to the Public Works Trust Fund loan Other enterprise funds include a Federal Aviation Administration grant of $810,000 for airport improvements The Internal Service Fund includes an increase in the insurance premium and a decrease in machinery and equipment purchases Total expenditures for all funds, including capital and operating expenditures, increased by 8.6% Financial Plan Finance Director Coleman directed the Council's attention to the Financial Plan beginning on page 49 of the 2004 preliminary budget document. The Financial Plan describes all City funds and identifies fund types. She noted page 73 of the budget document includes information on revenue trends by fund type and source and a six-year forecast. The Financial Plan also includes an analysis of revenues and expenditures. Director Coleman stated that the City's property tax levy rate is approximately $2.90 per $1,000 of assessed valuation based on a total assessed valuation of $4,421,855,481. The property tax revenue for 2004 is estimated to be $12,830,701. ($12,415,286 from base; $124,415 from the 1% increase; $291,000 from new construction value) Director Coleman presented a table depicting the components of the property tax rates from 2000 through 2003. She also presented a table analyzing the affects of the property tax components on a $200,000 house. Councilmember Wagner suggested staff prepare an analysis of property tax components and valuations for commercial properties for future comparisons. Councilmember Wagner noted that page 67 of the budget document includes a statement that no increases in utility rates are anticipated. He recommended deleting the statement as Council has the freedom to increase rates if necessary. Director Coleman reviewed the Six Year Planning Forecast for 2004-2009 beginning on page 71 of the budget document. She also reviewed long- term debt obligations and debt capacity. She noted that there is approximately $1.8 million in the LID Guarantee Fund, which is in excess of the amount required. She recommended transferring out $1,764,383 Page 4 City of Auburn Council Special Meeting Minutes November 12, 2003 VI. from the LID Guarantee Fund to the General Fund, and then transferring the same from the General Fund to the Capital Improvement Fund for future projects identified by Council. Director Coleman highlighted the affects of recent legislation. She presented a table identifying the legislation, its negative impact on the 2004 budget and its cumulative impact. The sales tax exemptions implemented in 1995 resulted in a $500,000 negative impact on the 2004 budget and a total cumulative impact of $4,500,000. Referendum 47 enacted in 1997, resulted in a negative impact on property tax revenues for 2004 in the amount of $526,400 with a total cumulative impact of $3,685,700. In 1999, Initiative 695 eliminated the vehicle excise tax resulting in $800,500 revenue loss for 2004 and a cumulative revenue loss of $3,773,000. Initiative 747, limiting property tax increases to 1%, reduced 2004 revenues by $112,200 and resulted in a $333,300 revenue loss since 2001. Also, Initiative 776 ($15 tab fee) results in a $425,000 negative impact and a $795,000 cumulative loss. Baseline Budget Finance Director Coleman directed the Council to the City Operations section of the budget document beginning on page 83, which provides an overview of the budget. She then reviewed the baseline budget beginning on page 97 of the budget document, which contains the department budgets, programs, goals and accomplishments. Director Coleman highlighted the non-departmental budget expenditures (page 178 of the budget document). The Non-department Fund is used to reflect the General Fund's ending balance and prior year adjustments, the transfer of money between funds, and one-time transaction not accounted for elsewhere. Expenditures include: $364,900 for retirement pay- off/salaries; $200,000 for executive department projects; $608,200 for LEOFF 1 benefits and long-term care insurance; $250,100 for Valley Communications debt service; $30,000 for the Gateway program; $40,000 for the Terminal Park neighborhood plan; $212,000 for ESA planning, engineering and construction expenses; $10,000 for a community center study; $467,000 for video conferencing/public safety building technology; and $811,000 in transfers out. The transfers out include $4,500 for Local Law Enforcement Block Grant matching share; $306,500 for Library bond debt; and $500,000 to the Downtown Revitalization (Fund 328). Ms. Coleman noted that the Valley Communications Executive Board recently voted to waive the Valley Communications debt service for member cities; however, the cities' per call rate has been increased. Director Coleman recommended moving $125,000 from the debt service fees to the police and fire budgets to cover the increase in the call rate. She proposed Page 5 City of Auburn Council Special Meeting Minutes November 127 2003 VII. dedicating the remaining $125,000 for public safety building technology improvements and furnishings. Director Coleman reviewed proposed cost of living increase for employee groups. Mayor Lewis noted that the percentage increases are not confirmed at this time, but are included for budgeting purposes. Director Coleman detailed the current vacant positions. She noted that of the vacant positions, the two correction officer positions for the alternatives to incarceration program have not been filled. It is recommended that the two correction officer positions be converted to two police officer positions. The net difference in pay is $28,000 per year and one-time capital cost of $50,000. The 2004 Capital Improvement Fund 328 includes the following: $265,000 for two aid cars (carried forward from 2003); $30,000 for fire pickup truck; $185,000 for West Beverly Park (carried forward from 2003); $30,000 for public art; $19,323 for downtown improvement; $702,000 for parking garage installment; $720,000 for ball fields (per YMCA agreement); $50,000 for City-paid transportation impact fees; $24,000 for the Small Business Assistance Center; $150,000 interest earnings to street preservation program; $600,000 REET 2 for Transportation Improvement Program street projects. Program Improvements Finance Director Coleman reviewed the suggested program improvements and budget changes. A new position for court collections is proposed for the Municipal Court. The position would be responsible for ensuring collection of court fines and fees. Mayor Lewis stated that the position is budget neutral. The program improvement cost is $57,100. Other recommended changes to the 2004 final budget include: $75,000 for the Cedar Lanes Park improvements; $13,300 to increase the hours for the museum curator for one year; $27,000 for a Parks mini-van; and $15,000 towards the update of the Park and Open Space Plan. Mayor Pro Tem Singer inquired regarding the vacant airport operations supervisor position and any impact on the budget for airport management. Finance Director Coleman stated a budget amendment may be required next year for airport management services. Negotiations are ongoing for airport management services, and she anticipates bringing forward a contract within the next few weeks. Page 6 City of Auburn Council Special Meeting Minutes November 12, 2003 VIII. IX. Capital Budget Finance Director Coleman explained that the Capital Facilities Plan is a six-year financially constrained plan. The projects scheduled for 2004 in the Capital Facilities Plan are included in the 2004 preliminary budget. The following amounts are budgeted for capital/construction projects in 2004: $350,000 from the General Fund, $185,000 from the Capital Improvement Fund, $900,000 from the Airport Fund, $200,000 from the Commercial Retail Fund, $165,000 from the Golf Course Fund, $6,082,000 from the Arterial Street Fund, $1,796,700 from the Water Fund, $3,300,000 from the Sewer Fund, $1,615,000 from the Storm Fund. Descriptions of the projects are included in the budget document. Mayor Pro Tem Singer inquired regarding improvements to the golf course clubhouse. Parks and Recreation Director Faber reported that a financial feasibility study is nearly complete. He anticipates that a plan will be presented to the Council in early 2004. Other Issues Finance Director Coleman proposed increasing the utility tax on outside utilities (electric, gas, cable and telephone) by one-half percent from 4.5% to 5.0%. The utility tax increase would result in $500,000 in increased revenue for the General Fund, which would be used for capital purposes. The maximum permitted tax is 6.0%. Director Coleman displayed a slide illustrating the impact of the tax increase on average residential utility bills. Councilmember Cerino suggested funding improvements to the Senior Center building to provide an additional handicap restroom near the dining area. Adjournment There being no further discussion, the meeting adjourned at 6:14 p.m. APPROVED THE /~-'"~['"-DAY OF "~.~( ~..~'/\ 1¥~'. ¥'~- , 2003. Danielle Daskam, City Clerk Page 7