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05/01/2000 - Minutes City of Tigard, Oregon Revised Budget Committee Meeting Minutes May 1, 2000 Members Present: Mike Benner, George Burgess, Craig Dirksen (arrived late), Gene Farnstrom, Brian Moore, Jim Nicoli, Ken Scheckla (arrived late) and Joyce Patton. Members Absent: Paul Hunt and Darlene Stevens. Staff Present: Paul deBruyn, Tom Imdieke, Bill Monahan, Craig Prosser and Michelle Wareing. Visitor: Glen Scruggs Call to Order: Gene Farnstrom, Chair, called the meeting to order at 6:40pm. All members were present except Craig Dirksen, Paul Hunt, Ken Scheckla and Darlene Stevens. Ken Scheckla arrived at 6:50pm and Craig Dirksen arrived 7:10pm. Elections: Bill Monahan, City Manager, stated that nominations need to be made to elect a new Chair and Secretary. Jim Nicoli nominated Gene Farnstrom for Chair. Brian Moore seconded the motion. All were in favor of the motion. MSP Jim Nicoli nominated Mike Benner for Secretary. Brian Moore seconded the motion. All were in favor of the motion. MSP Budget Message: Bill Monahan presented the Budget Message for the 2000/01 budget. Bill highlighted the major issues facing the City in FY 2000/01. The City will need additional staffing due to the annexation of the Walnut Islands, which added an additional 1,100 new residents. Another issue is a downturn in building activity over the last 8 to 9 months, which has affected the building department funds. The proposed budget includes the elimination of three vacant positions in the Community Development department. It is anticipated that there will be a reduction in revenue. The City is looking at building fee increases, which will go to Council in June or July. Bill noted that building activity has begun to increase, so the downward trend maybe reversing itself. Bill stated that a new item in the budget this year is the Library construction reserve. A Library Construction Committee was created to design a new Library. The Library received two bequests over the last year totaling $850,000. The City is proposing to set aside those funds with an additional $400,000 transfer from the General Fund. This reserve will be used for hiring an architect to do design work and any startup costs. The City is deciding whether or not to go to the voters in November 2001 to fund the Library construction. Bill stated that there are several changes in the water supply options. The City has decided not to pursue the Willamette River as a water source at this time. The City is considering purchasing water from the Joint Water Commission or the South Fork Water Board along with continuing to examine the Portland option. Any of these options will require an increase in water rates. Bill noted that the Intergovernmental Water Board is currently considering these increases. The total operating budget increased only 1.9% over the adopted FY99/00 budget. This includes a total net increase of 2.05 FTE positions. The Police department is adding 2.5 positions — 1 to maintain staffing, .5 for the photo radar program, and 1 to serve the Walnut Island areas. The City is establishing a computer system reserve. These funds will be used to better budget major software program conversions and upgrades. There are two other General Fund transfers, one of$150,000 for City building improvements and the other for $10,000 to the Electrical Inspection Fund. Bill noted that staff has tried to reduce spending in the General Fund, so money can be set aside for the above mentioned reserves. Visioning Statements: Bill stated that the City started the Tigard Beyond Tomorrow visioning program a few years ago. The City has begun to reference how City programs/activities connect to the Visioning statement. The FY 00/01 includes more performance measurements that quantify the City's activities and shows that the City is meeting the Visioning goals. The six target areas set by the Visioning program are Public Safety; Urban and Public Services; Transportation and Traffic; Community Character and Quality of Life; Growth and Growth Management; and Schools and Education. Council Goals: Bill stated that Council goals are located on page 3. Many elements in the budget are reflective of these goals. Bill noted that Council carried over its goals from FY 99/00 to FY 00/01 and did not add any new ones. Gene Farnstrom asked if the Council goals were in order of priority. Bill responded that they were all of equal value and were not in priority order. Jim Nicoli stated that Council had decided to apply for a parks grant at its last meeting. Jim stated that he would like to discuss this issue at the next Budget Committee meeting, since it may affect the budget. 2 Craig Prosser noted that the City is in the process of changing its performance measurements. Currently, performance is based on workload processes and how many functions are being performed. FY 00/01 budget mostly shows these types of measurements. However, next year's budget will include effectiveness measurements. Effectiveness measurement shows how well the departments are doing at achieving their goals. Mike Benner asked who set the department's benchmarks. Craig P. responded that each department sets its own benchmarks. Craig P. noted that he reviews the department's benchmarks and makes recommendations. Mike asked if the departments are rewarded for achieving their goals. Craig responded that the departments are not rewarded beyond a "job well done". Financial Plan: Craig Prosser presented the City's Five-Year Financial Plan. Craig P. stated that the City puts together a financial plan that forecasts its needs for the next five years. This Plan is revised each year due to project program changes and department input. The General Fund Five Year Forecast Summary is located on pages 18 and 19. The Summary on page 19 shows that the Ending Fund Balance is projected to decline over the next five years. This decline was expected given the new tax revenue limitations. Craig P. noted that this year the City's other funds were reviewed to determine their condition. The Water Fund balance is projected to decline over the next five years. It is currently at $2.3 million and will drop to $1.3 million in five years. The two factors affecting this fund balance is a transfer of money from the Water Fund to the Willamette River CIP Fund, which is now the Water CIP Fund, and the other is peaking charges charged by City of Portland this last year. The decrease in this fund is the reason why the water rates need to be increased. The Storm and Sewer Funds are strong and will increase over the next five years. The Development Funds, which includes building, electrical inspection and urban services, are in a precarious state. A transfer of$150,000 will be made in FY 99/00 to the Building Fund to keep it positive. A transfer of$10,000 will be made in FY 00/01 to the Electrical Inspection Fund to keep it positive. The City is talking to Washington County to receive more money for the Urban Services Fund. Jim Nicoli stated that if building activity outside the City is strong, then the Urban Services Fund should be okay. Bill Monahan responded that building activity is 3 not as strong as anticipated and that the annexation of the Walnut Island takes away from the Urban Services revenues. Craig P. reiterated that the General Fund's outlook is reasonably okay and the Development Funds need immediate attention. A discussion regarding the water rate increase ensued. It was stated that the FY 00/01 budget includes a water rate increase of 3%. It is anticipated that another increase of 10% will be proposed after a rate study is completed and depending upon the outcome of the Taxpayer Protection Initiative that will be voted upon in November 2000. Upcoming Ballot Measures: Craig Prosser stated that there are several measures on the November ballot that could affect the City, if they pass. The first is a measure regarding the.deductibility of federal income taxes on state income taxes. This measure will primarily affect the State. However, the City receives State Revenue Sharing funds, which could be impacted, if the State has to cut back. Another measure, which is sponsored by Don McIntire, would limit the rate of increase of government spending to the rate of increase of personal income. Craig P. stated that he was not sure if this measure applied only to the State or all government agencies. Even if the measure is limited to the State, it would still impact the State Revenue Sharing funds that the City receives. The third measure is the Taxpayer Protection Initiative. This measure would prohibit increases of taxes, fees or charges greater than the rate of inflation without a vote of the people. Also, any future request for increases would have to pass by the same majority or greater than the Taxpayer Protection_Initiative passed. This measure is retroactive back to December 6, 1998, which means any increases to taxes, fees or charges beyond the allowed limit would have to be refunded to the payer with interest. Finally, this measure would require any future ballot measure requests to increase fees or charges to start off stating "A yes vote on this measure is a vote to increase taxes". This applies even if it is an increase that doesn't increase taxes. Craig P. stated that General Obligation bonds authorized prior to November 2000 are exempted. However, bonds on the November 2000 ballot are not exempt. The Taxpayer Protection Initiative would require that the total estimated costs of the bond be included in the bond measure. This means interest rates would have to be estimated over the life of the bond. This provision would have a major impact on all future bond measures, including the City's proposed transportation bond that will most likely be placed on the November 2000 ballot. A discussion regarding the Taxpayer Protection Initiative ramifications and its potential affect on local governments followed. Craig P. noted that even though 4 the measure has not formally been put on the November ballot, but likely will be, it is already affecting cities' decisions regarding fee increases, bonds and other financial decisions. Budget Summary: Craig Prosser presented a brief overview of the budget. The Operating Budget for FY 00/01 is up 1.9% and includes 2.05 FTE net new positions. Several departments including Police, Finance, Library and Water are adding new positions, while Community Development cut 3 positions. Craig P. stated that the budget did not include any operating property tax increases. However, the budget does include a 3% water rate increase with another potential 10% increase and a potential 51% Building Fee increase. The Police Department budget includes 2.5 new FTE positions. One position will serve the Walnut Islands and the other will maintain staffing ratios. The .5 FTE position is for the Photo Radar enforcement program. The Police budget includes $228,000 to pay the vendor of the photo radar equipment. The vendor receives a percentage of revenues from citations issued. Craig P. noted that the $228,000 is an estimate and that the program won't start until September. Craig P. noted that the City just received a grant to fund a third school resource officer. This position is not included in the budget at this time. Brian Moore asked if the grant was for one year. Bill Monahan responded that it was a multi-year grant and that when the grant runs out, the Tigard-Tualatin School District has agreed to fund half the position for the nine-month school year. Bill noted that this is the first time the School District has agreed to assist in funding the School Resource Officer program. Library is maintaining programs at the current level. FY 00/01 budget does include an additional .3 FTE positions for Volunteer support and computer services. The major event in the Library budget is the $400,000 contribution to Library construction reserve. Community Development budget includes a reduction of 3 FTE positions, which was discussed earlier. There are planned fee increases for FY 00/01. Water budget contains a 3% rate increase as recommended by the Intergovernmental Water Board, which was discussed earlier. There is a new Water Conservation position and a Utility Worker position was transferred to Finance's budget. This Utility Worker position performs turn-ons, turn-offs and service orders for the Utility Billing division, which is part of Finance. Finance's budget includes 1 FTE position that was added during FY 99/00, 1 new FTE for Municipal Court to assist with the Photo Radar program and .75 FTE Utility Worker position that was transferred from Water. 5 Craig P. stated that citywide expenses that were appropriated in the General Government budget have been reassigned to operating departments. Mayor & Council, City Management and Property Management budgets have increased, since they contain the citywide expenses. Craig P. noted that Total Materials & Services and Total Capital Outlay have slight decreases over FY 99/00. Capital Outlay decreases can be attributed to the change in the amount considered to be a capital outlay, which was increased to $2,500 per unit from $250 per unit. Total Personal Services increase is due to the addition of new positions. Major New Initiatives: Craig P. stated that the topics contained in this agenda item have already been discussed during this meeting, therefore, he would not review them again. Bill Monahan stated that Paul deBruyn, Director of Network Services, was available to discuss the computer systems reserve. The Committee decided that it would wait until Paul presented the Network Services budget at the next meeting. The Computer Systems Reserve prompted a discussion regarding the City's web page, need for system upgrades and the use of computer technology to reach more citizens. Jim Nicoli expressed concern that the City was not keeping up with technology and wasn't fully utilizing the full potential of the web page and Internet. Bill Monahan noted that the City is trying to make the web page better by putting GIS maps, forms and the Development Code on-line. Jim recommended hiring a private web page consultant to review the City's web page and provide recommendations to improve it. The City should consider putting money into the budget to pay for this consultant. Craig P. stated that he would try to get some consultant cost figures for the next meeting. Gene Farnstrom stated that the City should have defined goals and expectations before hiring a consultant. The Committee agreed that the City needs to become more technologically innovative in reaching its citizens. Bill Monahan noted that the City Council would be hearing a staff presentation on Tuesday, May 16 regarding the City's web page and computer technology. The Committee was invited to attend this meeting. Public Comment: There was no public comment. The Budget Committee was concluded at 8:OOpm and discussions will be continued at the May 8, 2000 meeting. 6