Loading...
05/01/2006 - Packet Tigard Budget Committee 2006 (Note: Items not completed at scheduled meeting will be held over to following meeting) May 1,2006 6:30 p.m. TWD Auditorium 8777 Burnham • Call to Order • Approval of Minutes • Discussion of Department Budgets o City Administration ➢ Mayor and Council ➢ City Management ■ Issue Paper#4- Performance Audits ■ Issue Paper#5- City-wide Public Information Officer ➢ Human Resources ➢ Risk Management ➢ Information Technology ■ Issue Paper#6- Geographical Information System ➢ General Government o Public Works • Issue Paper#7- Outsourcing Street Maintenance Operations ■ Issue Paper#8- Sewer Fund Balance ■ Issue Paper#9- Surface Water Management Fee o Library ■ Issue Paper# 10- Level of Service and Hours of Operation • Public Hearing on State Shared Revenues • Public Comment • Recess Meeting until May 8,2006 ice: Budget Committee Meeting May 1, 2006 Sign In Sheet 3. � 4. 5. .. 6. , 7. 8. 9. 10. 12. 13. 14. 15. 16. 17. 18. 19. 20. City of Tigard, Oregon Budget Committee Meeting Minutes April 24,2006 Members Present Mark Haldeman, Sally Harding,Kevin Luby,Rick Parker,Katie Schwab, Sydney Sherwood,Jason Snider,Nick Wilson, Tom Woodruff, and Susan Yesilada. Members Absent Craig Dirksen. Visitors:Pat Biggs,Henrietta Cochrun,Tom Coffee, Marco Cabanillas,Liz Newton,and Brian Rager. Staff Present Maureen Denny, Tom Imdieke, Craig Prosser,Bob Sesnon, and Michelle Wareing. Introduction: Bob Sesnon introduced himself as the new Finance Director. Everyone introduced themselves to the committee. The purpose of the meeting is to review the FY 2006-07 Proposed Budget and to approve the budget for adoption. Election of Officers: Katie Schwab motioned that Mark Haldeman retain the chair,the motion was seconded by Jason Snider.All were in favor of the motion. MSP Mark Haldeman asked for nomination for the Secretary. Katie Schwab nominated Jason Snider and Sue Yesilada seconded the motion. All were in favor. MSP Approval of Minutes: Councilor Wilson moved for approval of the minutes of May 16,2005. Councilor Sherwood seconded the motion. The minutes were approved. MSP FY 2006-07 Budget Overview. Craig Prosser presented the budget message. The budget was challenging and fun trying to respond to the needs of the citizens as expressed in the Vision Task Force Goals and the City Council Goals. In addition there were some major policy changes during the budget process. City Council set a number of goals in January. The fust goal is a carryover from last year to revise the Comprehensive Plan. A Senior Planner position was added last year and the position was filled mid-year. The City is now in the data collection phase. Craig Prosser recommended adding a Administrative Assistant position to the Long Range Planning Division. Rewriting this basic document for the City is a large task which will involve extensive citizen input and public involvement. The Long Range Planning Division of the Community Development Department currently has no clerical assistance,which requires the Senior Planner or other professional staff to take time away from critical tasks to track files,mail public notices,and process a large amount of basic data and information. The second goal was to implement the Downtown Plan.The election is on May 16th as to whether to formally create and approve an urban renewal levy. Even if the voters approve urban renewal levy, funds will not be available to the City for several years. The Proposed budget includes a 1 number of capital projects totaling nearly$3 million that will be financed with existing City funds to start the process of redeveloping the downtown and to encourage private investment. The third goal is to improve the 99W corridor. This is a goal from last year. The City improved Hall and McDonald intersection last year. Other intersections being looked at are Hall and 99W, it is a county project but is being followed very closely as it is a gateway to downtown and the City wants to have a lot of input in the ultimate design. The other project is Hall and Greenburg Road. The other factor is the Transportation and Growth Management grant. The grant is administered by the State and does not appear in the budget. The State is having a consultant perform a study which will provide recommendations to improve the corridor. Improving communication and relationships with citizens needs to be a constant focus of local government. This budget allows continued work on implementing a new neighborhood program with the creation of three pilot neighborhood organizations. In conjunction with the Comp Plan update,a citywide scientific survey will start May 17th. A polling firm has been hired to conduct the survey with 400 citizens. A number of questions will be asked that will feed directly into the Comp Plan update. Several other sets of questions are to get baseline data from citizens on how they feel about City services,the operation of the City,and what they see for the future of the City. The survey will be redone every other year to help track trends. Craig Prosser also recommends the continued funding for Cityscape,which is rated the number one source of information from citizens. The next goal is to look at opportunities for major Greenspaces purchases. The City is close to the purchase of a joint reservoir/park site across from Alberta Rider. This will be one of the first major additions to parks in a number of years. There are a number of other properties where the City is already discussing potential purchase with property owners and getting appraisals. None of these are close enough that they can be discussed. The budget includes the carryover of money that was set aside in the current year budget to be able to purchase property once a deal has been worked out with the property owners. The big issue for parks is funding. The Parks SDC rates is generating good revenue but because of state law the funds are restricted. Another goal was to clarify the City's position on the provision of providing urban services to unincorporated areas. On March 28th , both the City Council and Washington County Commission voted to end the 9-year old agreement between the two entities whereby the City provided building permits and inspections and development services to the unincorporated portions of Bull Mountain. That action came too late to be reflected in the Proposed Budget document. There are two positions in the Proposed Budget that Craig Prosser is now recommending be removed given the discussion to terminate the agreement. The City is in negotiations with the County over the implementation of the termination. The County has requested an extension of the termination date by approximately three weeks to give them more time to get ready to take over the services. The Budget Committee will need to look at the Urban Services Fund and the Traffic Impact Fee—Urban Services Fund which are both funds that track building permit revenues and traffic impact revenues from the unincorporated area. Those funds need to be returned to the County but the discussion needs to take place on whether the City should hold on to the fund balances for a *4,0' 2 short period of time, possibly two years, to allow the City to close out any expenses or any claims that may come up. The City needs to secure a long range water source. The City has entered into an Intergovernmental Agreement with Lake Oswego to do a study of their water system with the idea of getting into a position where the City could get ownership rights and a share of the water Lake Oswego water sourcing,possibly as much as 6 MGD (million gallons per day). The study will not be completed until September and the outcome is unknown. However,it looks promising. Portland has offered a 10 year water deal which the City may have to take. If Lake Oswego comes through, it may require a rebuild of their water treatment plant and other additional water mains. It would not be an immediate source. The City continues to be a member of the Joint Water Commission OWC). They are looking at a number of capacity increasing projects including raising the height of the dam at Hagg Lake. If they move forward with that,the City may be responsible for a share of the cost but it would be a source of water for the City. Finally,to stabilize the financial picture,the Financial Strategy Task Force was formed. Their recommendations included doing performance audits in General Fund programs such as Police and the Library. Craig Prosser has included$75,000 in the proposed budget which should pay for two audits. The scope of the audits would need to be defined. He is proposing the citizen members of the Budget Committee form a steering committee to guide the auditor to retain impartiality. Other highlights include the proposal of the first new revenue source for the General Fund in a number of years. Craig Prosser is asking the Budget Committee to consider charging the City's utility operations (Water and Sanitary Sewer) a franchise fee. Private utilities currently pay a franchise fee for the right to place their facilities within the public right-of-way. If public utilities operate the same as private utilities,there is a logic to charge for the use of the right-of way. It is not uncommon in Oregon for cities to charge their own utilities for this fee. Two new positions have been added in the Police budget, a patrol person and a School Resource Officer. One additional school has been added to the community. As a result of the Miranda Gaddis and Ashley Pond murders,the state is referring all child welfare claims to local police for investigation.These investigations are handled by the School Resource Officers and has created a major workload. Craig Prosser is also suggesting the addition of two half-time positions at the Library. Usage of the Library continues to increase greatly. With the new position in Long Range Planning,this increases FTE by 4 positions. The two other positions are in Building which are now being recommended to not fund. Katie Schwab asked when the last time the City did a rate study. The last rate study was done two years ago. Out of that study came the recommendation for a three year 7% increase in water rates. The Council approved that last June. Tom Woodruff asked if there was a Public Information Officer position that was added. This is one of the issue papers and is not proposed in the budget. It is not certain if the City is at the point of needing the position. The consideration is in support of the Council Goal to improve citizen communications. Craig Prosser would like feedback from the Budget Committee if the City needs the PIO and if so,when. 3 Financial Forecast/Budget Overview: Bob Sesnon stated that the charts on display around the room will be on display for each of the meetings and the members can refer to them throughout the process. Bob presented a PowerPoint based on the charts, showing different perspectives of looking at the budget. There are many ways to look at the budget- by funds,by programs,by departments,or by divisions. The total operating budget is approximately$34.5 million. There is an additional$21 million in Community Investment projects and another$12 million in debt service. The budget is primarily a program based budget. The document includes narratives for goals and objectives, performance indicators,and workload indicators. Next year the Finance staff will refine the document to help better tie goals and objectives with the Council Goals and the visioning process. Goals should be observable and measurable. A chart showing the General Fund sliced up by Division was presented. The total General Fund budget is approximately$24 million. The three Divisions making up Police take up a third of the General Fund with the Library taking another significant portion. Transfers out of 19% consist of funds to Central Services. The purpose of the Central Services Fund is to house and collect the costs of those operations of the City that serve the other programs. Costs are allocated to the other programs. Page 70 in the budget document provides a complete listing of the indirect costs and methodology of the allocation. The next slides showed fund balances with the minimum reserve balance. The fust issue paper will address this in more detail. Currently the minimum reserve is set at about $3.2 million for the General Fund. The chart shows a decrease in General Fund balance. From this year forward,the balance starts to sloop downward eating into the fund balance. This was addressed at length last year and the Financial Strategy Task Force was formed to attempt to address this issue. It continues to be of great concem to the City. Other slides showed the comparison of fund balances with and without the addition of the newly proposed franchise fees for water and sewer amounting to $287,500 additional General Fund revenues. By implementing the proposed fee the deficit in the General Fund balance will be pushed out another year. The next chart showed the expenditure budget for the General Fund. The actual expenditures were significantly below budget for several years. There is somewhat of a padding built into the budget, given that the budget always reflects full staffing which is almost impossible to have all positions filled at the same time. There will always be vacancies during which the City saves money. Revenues were not included in the chart as the City has been fairly accurate with projections. There have been increases to the fund balance that have been occurring for several years until last year. The gap is closing as the City improves on estimating and forecasting. Beginning in this year there is a gap of about$2.4 million staying constant for the next few years. This gap needs to be addressed to fix the General Fund. It starts to widen out in FY 2010-11. However the further out you go with projections the more difficult it is to get it right. In the short term there are issues that need to be addressed. Kevin Luby asked if the City was in the practice of deficit spending.Under Oregon law the City is prohibited from deficit spending,which is defined as spending more than your revenues plus the fund balances. 4 } There are two ways to deal with the budget shortfall. The City can either increase revenues or decrease spending or use a combination of both. Personal Services are the largest portion of expenses. Sydney Sherwood asked if all cities were unionized. The majority of the Oregon cities are unionized. In FY 2005-06 the decision was made to transfer the capital reserves out of the Water Fund into the Water CTP fund, making the Water Fund operating only. The Water CIP fund shows how much money is set aside and have available to pay for a major new water source. In FY 2007-08 and again in FY 2009-]0 there are a couple of spikes assuming revenue bond issues in each of these two fiscal years. This is a change in how the City is operating. In the past the Water Utility was operated on a "pay as you go" basis.This worked if there were no major capital needs. The City is now at the point where a major new water source is needed. Revenue bonds will need to be issued to pay for the cost of the capital projects. The Sewer operating fund continues to decline due to the sewer reimbursement programs continuing at an aggressive level due to the significant capital program. At the same time the City does not share in any rate increases over the last few years that have been implemented by the Clean Water Services (CWS) Board of Directors.Any rate increases are dedicated to pay down CWS debt, so the City's share is declining. CWS does not project any Stormwater increases which again negatively affects the City's revenues. There are issue papers on the Sanitary Sewer and the Stormwater being presented in a future meeting. Last year the Parks SDC fund was created and there was a major transfer of funds from the Parks Capital. The Parks SDC funds are restricted to the development of parks due to growth. There is a combination of projects being looked at. The Parks SDC can only be used for acquisition or development of parklands directly related to growth. In some cases the project can be funded by both Parks SDC and another source of revenue which are defined in the Parks Master Plan. The key for the City is going to be able to identify a non SDC revenue stream that can be used to match what is already in place.Mark Haldeman asked for clarification on growth. Tom Imdieke stated growth is a combination of area as well as population. Katie Schwab asked if the value of donated time could be used as a match. Staff will look into this and get back to the committee. Review of Existing Financial Policies: Bob Sesnon discussed the Financial Policies for the City. Financial Policies act as guidelines on how funds will be spent. He suggested the committee review them and ask questions throughout the budget process. Budget Issue Papers: The fust three issue papers are different than the rest of the papers to be presented later in the meetings. These first three are intended to alert the committee on over- arching issues that will appear in every division. Issue Paler#1 Stabilization Reserze Podicy- One policy he wanted to discuss was the fund balance reserve policy on page 344. He is not recommending a change to the policy rather to make the committee aware of what the policy does. Other cities are very similar to Tigard. This defines the level of reserve which is also referred to as a rain),day fund or a stabilization fund. Some smaller local jurisdictions have gotten their reserves so low they have to borrow money in order to meet 5 their cash flow needs. Tigard has never had to do this. Current policy is to have an average of two months operating expenditures in reserve,which is a fairly generous reserve compared to many other cities. Issue Paper# 1 will address this topic. Katie Schwab stated Rating Agencies tend to be happy with 8-10% of revenues or three months of expenditures in order to receive an"A' rating. Another part of the issue paper addresses and recommends the formation of a new reserve for equipment replacement. The reserve would allow funds to be put aside in anticipation of replacing equipment. In the long run this doesn't affect the City, but is does smooth out the peaks and valleys when equipment needs to be replaced. Bob Sesnon used the example of a sewer hydra flush unit used for cleaning sewer lines costing$250,000 with a life span of 10-15 years. When this needs to be replaced,the budget will have spikes due to the one-time expenditure. The City has used this method in the past with the Facility Fund for HVAC, remodeling,etc. Issue Boff#2 CiW4a Trawl and Training- Michelle Wareing presented the issue paper for Citywide Travel and Training. In recent years the funding for travel and training has been severely limited. Staff needs to remain current in training to provide services. The City has started to see personnel issues due to the lack of training. Craig Prosser has suggested increases to this budget and wanted to be sure the Budget Committee was aware of these increases at the beginning of the budget process. Due to the cuts in past years,there is a backlog of training to be done. Sally Harding asked if sending staff to conferences was cost-effective or if there were other methods for training. Craig Prosser responded that he felt staff attending conferences was the most cost-effective way so staff can participate in discussions as opposed to book learning. Some organizations, such as GFOA,offer satellite training and all of the finance people from the area will gather to take advantage of the training. Each department has its own requirements. IT with the changing technologies need to remain current to be effective,Police has extensive on-going certification *460 training, Public Works has required training for pesticides, commercial drivers licenses in order to keep current, Community Development needs to keep up with planning laws and changes in land use planning and building codes. The committee asked what the "standard"was for other cities for staff training. Mark Haldeman stated that this maybe better to be discussed during the different department's presentation. Issue Paler#3 Utility User Fps VS Pnzda Tax —This issue will be brought up to Council in the next month. Currently the City has a number of franchise fee agreements in place with various public utilities. This fee allows the companies to use the City's right-of-ways in the conduct of their business. The Privilege Tax is allowed under Oregon State law. This would be in addition to or as a replacement of the Franchise Fee. The main advantage with a privilege tax is that no agreement is required. Bob Sesnon referred to the chart included in the issue paper showing what the current fees and the maximum fees allowed. The difference could be additional General Fund revenue. Craig Prosser said state law provides two levels of a franchise fee or privilege tax. For example with electric,3.5% collected as either a franchise fee or a privilege tax,is defined by state law as a cost of doing business. These costs are built in to the rate base for electricity and the cost is recovered through rates to all of their customers. If the City was to go with 5%,under state law,the difference between the 3.5% and the 5% can be passed through as a direct charge to the customer. It will show as a city tax on the customer's bill for electric. Natural gas has a built in cost of 3% and for telecommunications it's 4% of their local exchange access. Each utility has a different rate. 6 Discussions will be held with Council about adopting a privilege tax for telecommunications. Verizon is currently operating in the City without a franchise. Their franchise expired in 2003 and they are unwilling to negotiate a new franchise. They continue to pay franchise fees but they refuse to sign a new franchise. However,about a year ago they came forward willing to enter into negotiations. They are asking for concessions that the City does.not feel are appropriate. At any time Verizon could decide to stop paying and it would put the City in a big legal battle. To simplify the situation the City should start charging a privilege tax. The question for Council would be if the City would put a privilege tax equal to 5%,which is what Verizon is currently paying,or to take the opportunity to charge the maximum allowed charge of 7% on this small revenue base. If the City charged the 7% it will produce $128,000 additional revenue for the General Fund. Sydney Sherwood asked if the City did implement the privilege tax would it nullify any current franchise agreements. Craig Prosser said if the City was to adopt a privilege tax for all the private utilities, up to the maximum allowed,credit for any franchise fee paid would be given. The reason to do it this way is if the City gets into a situation similar to Verizon. The termination provisions for the existing franchise agreements are awkward. Franchise fees and privilege taxes are very similar, the only real difference is franchise fees are by mutual agreement and privilege taxes are imposed. A portion of the privilege tax may show up on the customer's statement as a city tax. Tigard has never charged a franchise fee to sewer and water. About 50% of the cities in Oregon surveyed charge for the franchise fee for water and sewer. It is a policy decision for the committee. By maximizing all of the resources the need to go to voters for a local option levy could be pushed out longer. Craig Prosser stated he would like to avoid the local option levy as it expends political capital and it is only good for five years. At the end of the five years the funding goes away requiring another revenue source. If the City can find a variety of sources that have the ability to adapt with the economic up-turns and down-turns,the funding is far more stable. Mark Haldeman asked if this required action by the Budget Committee or if Council will make the decision. No revenues from a privilege tax on private utilities have been built in to the budget. The decision will need to be made by Council,however,a recommendation from the committee would be appreciated. 3'd Quarter FY 2005-06 Financial Review: Tom Imdieke presented a status update for financial activity through the 3' Quarter for the General Fund. Current Revenues are at 95% of budget. This primarily reflects the fact that the majority of property tax collections are in November and December. Under Other Agencies it shows 76% however,the City has recently received a check from WCCLS in the amount of$330,000 which is closing the gap. The transfers showing at 51% lag a little behind each of the accounting periods because actual expenditures need to be looked at to true up the fund transfers. This percentage will definitely change by year end. Street Maintenance shows 54% primarily due to the three vacant position. Long Range Planning at 57% of budget expended as it took time to fill the new positions. Council is showing at 96% and a budget amendment is anticipated due to the additional training for Council. Overall total operating expenses are at about 67% and compared to same time frame last year the City is at the same position. By year end it is expected that this percentage will increase to the more 7 traditional level. The projected fund balance on the charts reflects $6.9 million. The third quarter looks pretty good compared to budget and other previous fiscal years. Public Comment Pat Biggs stated there are several middle school aged students that want to come to the Budget Meeting and express their thanks for the efforts made on behalf of the Skate Park. Ms.Biggs asked that the public comment be allowed earlier in the meeting so they could share their thanks and be able to leave earlier rather than later. Mark Haldeman noted in previous year the same concession was made for another group and did not see why it couldn't happen again. The students are expected to come to the May 1St and the May 8th meeting. Marco Cabanillas also expressed his thanks on behalf of the Skate Park kids. The Budget Committee was recessed at 9:10 PM until May 1, 2006. 8 MEMORANDUM TIGARD TO: Budget Committee FROM: Dennis Koellermeier RE: FY 06/07 Budget Technical Adjustment for PW Vehicles DATE: May 1, 2006 The Public Works department budgeted for the purchase of four utility trucks in the FY 05/06 totaling$148,000. Two of the trucks are replacements for the Storm Water Division and two are replacements in the Streets Division. Staff solicited competitive quotes and ordered these vehicles in March 2006 and expected take possession of them well before June 30, 2006. Due to unexpected delays with the vehicle manufacturer the vehicles will not be delivered by the June 30th deadline, in order to be paid for from the FY 05/06 budget. Therefore, staff would like to request that appropriations in the amount of$148,000 be re- established for the FY 06/07 budget for the purchase of these vehicles. ♦ $78,000: 510-2130-703000 $70,000: 100-2140-703000 i N MEMORANDUM TO: Budget Committee FROM: Dennis Koellermeier RE: FY 06/07 Budget Technical Adjustments for WQF Enhancements DATE: May 1, 2006 Included in the FY 05/06 CIP budget request is a Storm Drainage Program project for Water Quality Facility Enhancements totaling $25,000. This project involves a water quality facility located on Steve Street. This unnamed tributary to Ash Creek is severely incised and the erosion of the creek bank in this area has created a safety hazard. This project will consist of piping the incised portion of the creek to eliminate the safety hazard and redesign the open area to gain additional storm water treatment and detention. Staff anticipated the completion of this project during the 05/06 fiscal year and projected expenditures accordingly. However, due to extensive permitting and mitigation requirements prior to construction, the project will not be completed in FY 05/06. Therefore, staff would like to request that appropriations in the amount of$25,000 be re- established in the FY 06/07 budget for the Water Quality Facility Enhancement project. ♦ $25,000: 520-6250-753000 CITYWIDE ENERGY COSTS FY 03/04 FY 04/05 FY 05/06 FY 06/07 Actual Actual Projected Proposed Fuel $146,183 $166,245 $170,330 $195,013 Electricity $550,442 $660,412 $777,350 $867,500 Natural Gas $26,305 $54,503 $75,000 $80,000 Citywide Energy Costs $1,000,000 $900,000 $800,000 $700,000 $600,000 ■Fuel $500,000 ■Electricity $400,000 ❑Natural Gas $300,000 $200,000 $100,000 _ $0 FY 03/04 Actual FY 04/05 Actual FY 05/06 FY 06/07 Projected Proposed Estimated Park Maintenance Costs - 2006* Recommended Current Cost at Current Acres Expenditure per Expenditure per Facility or Miles Acre/Mile** Acre/Mile Pocket Parks 1.2 $3,594 $4,313 Neighborhood Parks 22.8 $3,594 $81,943 Community Parks 109 $4,194 $457,146 Linear Parks 47.5 $2,995 $142,263 Trails 9 $4,194 $37,746 Greenways/Greenspaces/Natural Areas 183 $1,797 $328,851 Reservoirs 30.25 $2,396 $72,479 City Hall & Library 9 $14,618 $131,562 Total Estimated Maintenance Cost $1,256,303 Total Staffing (FTE) or Outsource Equivalent 17.91 Actual FTE for FY 05/06 10.75 *Source: 1998 Parks Master Plan **Expenditures updated from 1998 figures using the Oregon Department of Labor inflation calculator.