04/23/2018 - Summary City of Tigard
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Budget Committee Summary
Monday,April.23, 2018, 6:30 PM
Public Works Auditorium,Tigard, Oregon 97223
MEMBERS PRESENT (11):
Stephanie Veal, Clifford Rone,Tim Cadman,Tom Schweizer, Chris Bence,Liz Newton,Marc Woodard,Jason
Snider,John Goodhouse,Tom Anderson,Mayor John Cook
MEMBERS ABSENT (0):
STAFF PRESENT:
Marty Wine-City Manager,Toby LaFrance-Finance and Information Services Director,Liz Lutz-Confidential
Executive Assistant, Steve Kang-Sr. Management Analyst,Eric Zimmerman-Assistant City-Manager,Lisa
Shaw-Police Department, Nadine Robinson-Central Services,Brian Rager-Public Works,Dana Bennett-City
Management,Margaret Barnes-Library,Jessica Williams-Public Works, Shelby Rihala-City Attorney,Lori Faha-
Public Works, Laura Barrie-Public Works
1. Call to Order:Toby LaFrance called the meeting to order.
2. Election of Officers: Stephanie Veal was elected as Chairperson and Clifford Rone was elected Secretary.
3. Budget Message-Marry Wine
• Recent survey showed that 96%were satisfied with the city overall, and 80% said they were pleased
with the value for their tax dollars.
• Tigard faces two challenges:Tigard is growing-as we grow, demand for more and different services
increases; the other challenge is that we have a structural budget problem in that we receive money
more slowly than funds received in the General Fund.
• Measures taken to curb costs are: held staff at almost same level for the last 10 years; asked staff to
contribute to their healthcare cost; not able to maintain current services with the options that we have.
• We can ask voters for additional revenue through a local option levy or adjust city services with the
revenues we receive. The budget presented to you reduces the city services to coincide with anticipated
revenues.
• General Fund revenues have grown at a rate of approximately 3.5%per year,while spending has grown
at 4%per year. This is not due to fiscal mismanagement,but it's due to the way revenues are
composed. 40% of our General Fund revenues come from property taxes,which are capped at 3%per
year due to Measure 50. City service costs like health insurance,personnel costs, energy costs, etc.,grow
at a rate higher than 3%per year, creating this gap problem. Couple this with increased growth that put
greater demand on our services, and it creates this problem.
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• The City Council voted last year to pursue a local option levy on the May 15,2018 ballot,which the
2017 budget committee recommended,in order to obtain additional resources. The levy would add
$1.18/$1,000 additional property tax for five;Tears. If it's approved, the majority cuts in this budget
would be avoided. Services funded by the General Fund,like Police and Parks. Some services would be
increased.
• Making reductions over the next two years,will result in lower service levels,but the levels are higher
than if we did not make the reductions now. This is the fiscally responsible approach.
• These reductions equate to $5-7 million over the next two years to sustain lower level services. This
budget has two goals: to make city services sustainable for up to 10 years and to match the level of city
service with Tigard's growth.
• Library reductions include fewer programs,longer wait times and reduced materials.
• Police reductions include focus on patrol,which includes affects the school resource officers, traffic
safety, and reduces vacant officer positions
• Public Works reductions will mean basic safety standards of park maintenance;reduce staff support for
the Community Emergency Response Team, as well as the Recreation program and includes accounting
changes to reduce Engineering and Administration costs on the General Fund.
• Community Development will see only mandated services,reduced economic development services
and the elimination of the Safe Routes to School program when their grant ends.Additionally,code
compliance reductions and slower permit coordination and permit counter wait times.
• General city service reductions include cutting the Social Service/Community Grant program in half
and its elimination in year two;reduction in other city services and elimination of vacant positions
(13.4) in 2018-19.
4. Financial Forecast-Toby LaFrance
• Tigard lives within its means and being financially responsible. Tigard has received high credit ratings
from two independent agencies-11loody's and Standard and Poor's.
• Tigard conducts six year forecasts on all 34 funds,which are detailed in the proposed budget.
Expenditures grow at about 4%but have not presumed future decisions of the budget committee and
council that could address growth,meaning the forecast expenses are based on the same number of
staff while our community grows. Services have steadily eroded as Tigard has grown.
• Previously, council has adopted smaller revenue growth proposals,like Park and Recreation Fee and
franchise fee increases. In the FY 2019 forecast revenue assumes the growth in Tigard and expenditures
assumes inflation on the annual budget.Also,the expenditure budget is altered for population growth
at 1.7%.
• The General Fund forecast is different in that it's a 10 year forecast to mirror two local option levy
periods, and includes FY2019 and 2020 cuts.After these cuts, the expenses will increase by inflation
and growth to maintain the newer lower service level. With these cuts,the gap between expenses and
revenues is now 2-2.5%.
• Highlights of the proposed General Fund forecast include the removal of Public Works.administration
and Engineering out of General Fund and into their own Central Service funds.Accompanying
General Fund revenue is also moved,which creates a revenue drop in FY 2019. However,there is a
General Fund savings by pulling these departments out of General Fund. Due to the discrepancy in
growth rates after the cuts have been made, expenses exceed revenues starting in FY 2025.
• Reserves:
1. Cash Requirement Reserve-New fiscal years start on July 1". Property taxes come in to the city
during the months of November and December.Therefore the city must have 25% of its operational
budget in the bank in order to pay bills until the property taxes are received. This reserve is not in any
danger during the 10 year forecast period.
2. Emergency Reserve-$1.0 Million reserve was set by Budget Committee/Council. This is an
emergency fund for operations during the time of a recession or community emergency to prevent
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budget reductions. It is a one-time fix to a one-time problem and is not intended to fund ongoing
operations in the long-term. The proposed budget meets this reserve requirement until the 10'year of
the forecast (2029).
3. Service Level Reserve-this is a new reserve to achieve the goal of sustaining the lower level of service
for up to 10 years while accommodating the growth in the Tigard community.To achieve this goal,
approximately$12 million in resources needs to be banked through 2024 so that services are
maintained in FY 2025 and beyond. This is accomplished by moving the savings represented by the gap
between revenues and expenses through FY 2024 and placing them in this reserve. In FY 2025, the city
will make withdrawals from this reserve to fund the gap when expenses will exceed revenues.
4. Undesignated Reserve-the amount of fund balance that remains after accounting for the three prior
reserves. It's a sign of a healthy organization to have reserves in access of designated reserves. The
proposed budget results in all undesignated reserves being.used by year 10 of the forecast (FY 2029).
• Non-General Fund Budget-these are restricted in some way-federal, state or local laws. These other
funds can't be used for General Fund services like Library or Police. These other funds make up 58°/o
of the operating budget for services like streets,water and sewer.Also, 100% of the capital program in
other funds support infrastructure in parks, transportation, etc. There are 74 projects over the next six
years in our Capital Improvement program,including street pavement,building sidewalks,water system
improvements and stream bank repairs. Approximately 3/4t' of this proposed budget is in funds
outside of the General Fund. Forecast for these funds are stable, except Gas Tax and Stormwater
Funds-needs to be monitored and managed.
• Tigard lives within its means. Cuts today will maintain service levels in the future. This proposed budget
represents needed choices without passage of a local option levy.
5. Public Comments:
• Jean Hart-Tigard-asked for consideration in retaining funding for library services.
• Steve Morris-Tigard-CERT volunteer-explained what this program (FEMA) is and asked the committee
to keep this program as it greatly benefits the city and does not have a high cost. Provides first aid and
traffic management for various city events.
• Carin Grover-Tigard-CERT volunteer-provided a handout with volunteer hours for last year (4,100)
and their monetary value.This year, they are on track to provide over 6,000 hours of volunteer work.
• Chris Middaugh-Tigard-provided support for the local option levy. He commended the city staff for
their work.
• Brian Conroy-Tigard-Asked the committee how the expense vs. revenue shortfall equates to the
amount requested for the local option levy.Also, asked why growth is not paying for itself, and asked if
there are pension issues.
• Kate Rogers-Tigard-Expressed concern about the budget cuts and supports the levy.
• Wayne Gross-Tigard-Chair of the Parks and Recreation committee-supports the Recreation program
and would like the committee to consider funding this department with at least.2 employees in this
department.
• Katie Macadam-Asked how much the city pays for federal lobbying services.
Public comments answers:
✓ The City Manager's office pays $65,000 for the federal lobby work. The city has obtained several
federal grants-Farmer's Market (USDA grant) and EPA's Brownfields to name a few.
✓ Revenue vs. expense gap-Property tax is capped and cannot grow more than 3%-Measure 5. There
are other revenue sources yet overall expenses grow greater than our revenues-PERS is not a
significant driver of cost growth. Only the 72 sworn officers have in Tigard have PERS. All other
staff have a defined contribution retirement plan. The result is that when PERS has an increase,
Tigard has a savings of 70% compared to the cost increase of what PERS if all staff were on PERS.
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✓ Why growth doesn't pay for itself-the city represents many entities. Most of the growth in the city is
residential,which has the Measure 5 property tax cap. Residential properties don't pay for all the
services they use. Commercial and industrial services provide more property tax revenue.
✓ Parks and Rec fee-this pays for a portion of the Parks &Recreation and nothing else. It is
accounted for in a separate special revenue fund where the operations of the city's Parks
Maintenance and Recreation divisions are located. However, the fee only pays for a portion of this
cost. The remaining 70% of the costs of parks and recreation comes from the General Fund.
6. Budget Committee Discussion/Questions:
1. What is the residential vs industrial mix within the city? Is there history available?
2. Indirect cost plan-what are the differences between the current budget and the proposed budget?
3. What has been spent on the Civic Center plan to date and what is the status?
4. How is this proposed budget affecting the council goals?
5. City attorney costs-is it costing more or less to have inside counsel?
Staff will answer these questions and get them to the committee.
The meeting was recessed at 8:25pm.
Liz Lutz,Con ntial Executive Assistant
ATTEST: Clifford Rone,Secretary
The next Budget Committee meeting will be held on Monday,May 7,2018 at the Public Works
Auditorium, beginning at 6.•30pm.
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