09/15/1986 Meeting (2) - Laserfiche WebLink

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B. Six Year Financial Forecast/Financial Environment and Short- and Long-Term Strategies e Mr. Wong distributed copies of "FY88 Operating and Capital Budget Fundingll and "November 1986 General Election Ballot Measures." He reviewewd the FY88 Operating and Capital Budget Funding page by page. Mr. Wong said the Six-Year Financial Forecast is the first step in the preparation of the FY88 budget. He discussed the Oregon property tax system. He said serial levies could be used to fund the capital budget. He said the City's debt service is decreasing because no General Obligation Bonds have been issued since 1980. He said the Eugene property tax rate probably will increase in the future and the percentage of the General Fund received from property taxes probably will continue to increase. Answering questions from Mr. Hansen and Ms. Bascom, Mr. Wong said none of the General Obligation Bonds have been used for urban renewal. The bonds are not included in the 6 percent increase in the tax base. The bonds that are maturing were approved by the voters in the 1960's, the 1970's, and 1980. Mr. Wong reviewed the assumptions for the forecasts, and said an increase in the City's expenses of 3 percent and 5 percent were forecast. He said the forecasts indicate a deficit starting in 1988 but the budget submitted by the Ci ty Manager wi 11 balance because State 1 aw requi res it to balance. He pointed out that the $3 million deficit forecast for 1988 is equal to the loss of Federal Revenue Sharing Funds. He said the projected deficits also result from bi ndi ng arbitration in labor disputes which raise wages 3.5 to 4.5 percent. Mr. Gleason added that wage settlements are being made at 3 percent e if binding arbitration is not involved. Answering a question from Mr. Pape', Mr. Gleason said some unions will not settle without binding arbitration. Mr. Wong said other reasons for the projected deficits are the reduction of State and Federal support for cities, the addition of programs such as the annexation program, inflation, and the use of one-time resources. He sa i d Eugene's financial condition is not disastrous and is similar to the condition of other Oregon cities. He said the staff intends to manage the situation so that major service reductions do not have to be made. Answering a question from Mr. Short, Mr. Wong said the revenues from annexations usually about equal the addit i ona 1 operating expenses. Mr. Gleason added that annexations are the only way the City can really increase the assessed value of the property in the city. Mr. Wong reviewed the financing strategy the council adopted last March. He said the council decided to gradually transfer delinquent property taxes into the Capital Budget and to consider serial levies for the Capital Improvement Program (CIP). He said the City's expenses are growing about 2 percent faster than its revenue. e MINUTES--Eugene City Council September 15, 1986 Page 3