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HomeMy WebLinkAbout02/03/1986 Meeting e e e M I NUT E S City Council Work Session Umpqua Room--Valley River Inn February 3, 1986 5:30 p.m. PRESENT: Brian Obie, Mayor; Richard Hansen, President; Debra Ehrman, Vice President; Cynthia Wooten, Ruth Bascom, Jeff Miller, Emily Schue, Roger Rutan, councilors; Mike Gleason, City Manager; Warren Wong, Dave Whitlow, Gary Long, Barb Bellamy, Cathy Freedman, Susan Smernoff, staff; Jim Boyd, The Register-Guard; John Selix, KUGN. The meeting was called to order by the Mayor at 5:50 p.m. I. CONTINUED DISCUSSION OF FINANCING STRATEGY FOR OPERATING AND CAPITAL BUDGETS Mr. Wong reviewed the financial strategy for the operating budget and the Capital Improvement Program (CIP), allowing for a $1.5 million operating fund gap and a minimal CIP budget. He explained that the planning number for the budget is a 3 percent increase, but the actual increase is probably between 4 percent to 4-1/2 percent. The strategy calls for transferring, in increas- ing 20-percent increments, each fiscal year's projected delinquent property taxes to the CIP. Currently the delinquent taxes are used to balance the operating side, so by moving them to capital, a funding gap is created in oper- ations. The proposal, as outlined in the materials distributed, also called for serial levies and funding the gap through user fees and charges, new revenue sources, and service reductions. If the revenue sources generate more than the amount needed to fill the funding gap, the excess will go to the CIP. The User Fee Study was outlined and explained by Mr. Wong. This study is being conducted now in all departments and will take from 6 to 18 months to complete. The study will include all General Fund departments as well as the Hult Center and Airport funds. The study will include all user fees that already exist as well as potential or enhanced user fee revenues. Mr. Wong projected the results of the study which include: generating revenue through increases in user fees; establishing new user fees; and identifying subsidiza- tion. User fees will be systematically updated and there will be a correlation between the service and the benefiting party. Mr. Wong referred the councilors to the "Time Frame for Implementation of New/ Enhanced Revenue Sources and User Revenues. II Mr. Miller commented that people will ask what their taxes are going for, and during such a study the council needs to address the minimal expectations citizens have for the taxes they pay. MINUTES--City Council Work Session February 3, 1986 Page 1 e Mr. Wong concluded his presentation by discussing "Existing User Revenues. II User fees now generate $4 million in revenue, which is ten percent of the General Fund operating budget. The proposal suggests increasing that figure by 15-25 percent or $6 million to $8 million. Ms. Ehrman asked if information about wage cuts had been produced as she requested. Mr. Gleason responded that it will take some time to do so. II. DISCUSSION OF THE PROPOSED STRATEGY BY THE CITY COUNCIL Mr. Rutan commented that the demise of General Revenue sharing has had a significant impact and that the way City government is financed needs to be changed. This will require educating the public. He said the council needed to address whether major service cuts need to be reviewed. Mr. Obie agreed that the question is whether to fund the operating fund gap through user fees and/or major service cuts. Ms. Schue expressed concern that capital funding is at issue and that with the conservative allowances in the staff's proposal, City property cannot be maintained at the level that it should be maintained, even with innovative financial planning. In response to Ms. Wooten1s question, Mr. Wong and Mr. Gleason defined the funding gap. e Mr. Obie asked that user fees be defined in terms of what property taxes buy in services and what services have to be funded in other ways. There is a danger in eroding the property tax basis of support if we depend on another basis of support. He asked if the fees were charged taking into account the difference between non-essential service fees and essential service fees. Ms. Wooten opposed any kind of surcharge on utility bills because it could create a situation where only those who could afford it could have utility service. She also opposes any kind of charge for library services. Mr. Obie commented that those who cannot afford fees should not have to pay, but, in the case of the library, those who can should perhaps pay for the service. Ms. Schue suggested that tax-exempt properties should be charged for public safety services. Ms. Wooten agreed. Ms. Ehrman suggested that by charging user fees for street repairs, the City could create a higher service demand. Mr. Miller commented that if street repair funds were dedicated, then there would be money to meet demand. In response to Ms. Bascom's questions, if the council were to implement the entire list of user fee proposals, there could be an increase in the range of 15-25 percent. Mr. Hansen asked that the council look at the fees realistically in light of their political feasibility. e MINUTES--City Council Work Session February 3, 1986 Page 2 e e e Ms. Wooten suggested a combination of service reductions, user fees that are appropriate and acceptable, and new revenue sources. Ms. Bascom agreed and added that pay cuts should be considered as well. Mr. Rutan said that the council must keep in mind the public's perception of the cost of government and how much they will be willing to pay for government services. Mr. Hansen suggested that rather than finding new revenue, the council concentrate on what kinds of cuts can be made based on the assumption that money is not available to pay for all services. Mr. Rutan agreed that substantial cuts will be necessary and asked for the responses of the councilors. Mr. Obie asked for comments. Ms. Wooten said that she was not ready to make wholesale service reductions without exploring avenues of generating revenue; she is also unwilling to raise user fees for those least able to afford them. Ms. Ehrman suggested across-the-board wage cuts instead of service cuts in order to establish credibility in the community. She is willing to look at some increase in user fees and implementation of new fees but is cautious about the communi ty perception of those fees. In this priority order, Mr. Hansen would: balance the budget; increase the CIP to the level at which it is funded now; eliminate programs in order to get to a balanced budget; and then seek implementation of new programs if there is available revenue. Ms. Ehrman agreed and said council should cut programs if necessary to fund the CIP and that the CIP should be funded with resources we currently have. Ms. Bascom suggested looking at the kinds of user fees that make sense and are acceptable, then cut programs the council can agree upon. Mr. Miller agreed that the CIP needs to be raised higher than the bare mlnlmum and that a combination of user fees and service reductions should be explored. He is not in favor of salary reductions, but a salary freeze could be consi dered. Ms. Schue agreed that the CIP should be maintained. She favors maintenance as a first priority, with new construction occurring if funding is available. She supported generating new revenue where possible. Mr. Rutan asked that the council live up to the challenge of not being able to count on user fees and creative financing. He said council will need to consider a combination of all the options being discussed. Ms. Wooten would rather backfill numbers through a variety of means to get to a balanced budget. She objected to the process described by Mr. Hansen. Mr. Obie added that he doesn't agree philosophically with the way Federal spending reductions are being accomplished but does believe that government at the Federal level is too large and needs to be reduced. The City will face increasing cuts in Federal funds. The cuts will be serious and beyond just a percentage across the board. Ms. Wooten's comments about the Eugene Agenda MINUTES--City Council Work Session February 3, 1986 Page 3 e e e led Mr. Obie to add that if cutting is not an acceptable answer, then increased and new user fees must be seriously considered. Mr. Obie also said that the services provided by the City to the community are desired, good services. In light of that, he would personally favor looking carefully and selectively at new revenue. In response to Ms. Ehrman's comment that four of the present councilors have not considered cuts, Mr. Obie responded that if they want to explore the service reduction process, that a time limit be set (90 days) and try it. However, he is more favorable toward City government becoming more entrepre- neurial and people buying services because they want them, or even contracting services. Mr. Miller encouraged looking carefully at the user fees to see if the City should recoup its losses through fees or eliminate services, if the losses are too heavy. He requested specific information in order to make those decisions. Mr. Hansen commented that if it were up to the building industry, there would be no user fees and that, therefore, we are asking people to pay for a service they don't want us to perform. He continued to subscribe to the policy of balancing the budget first and funding whatever is possible with the money available. Mr. Obie said that Mr. Hansen's proposal would require cuts and asked for specific suggestions for those cuts, which must be supported by five other councilors. Ms. Wooten suggested a proposal that included establishing what money is needed through FY93 to maintain a Tier 1 and Tier 2 Capital Budget without new construction; that the figure be adjusted at a five-percent level in order to get a fix on the dollar amount; and then looking at all three staff recom- mendations simultaneously: new revenue (affirmed entrepreneurial idea), some service cuts, and some user fees. This package would then be presented as a proposal. In response to both Mr. Rutan and Ms. Wooten, Mr. Gleason suggested that the first step was to determine the capital amount, which will then help identify the funding gap. Mr. Obie clarified that Ms. Wooten's suggested process would layout a conceptual path that would consider a level of capital, a level of adjusted revenues, and a level of spending cuts. Ms. Wooten said that by creating a matrix according to the numbers, the council could develop ways to fill the categories. She asked for a similar chart for revenues and cuts. Ms. Schue added that the council has already set budget priorities, and if we mean to change those, the staff needs to know before they can provide the information requested. Ms. Bascom repeated that an amount for CIP must be agreed upon first. Ms. Wooten charted her suggested process. Mr. Obie requested two decisions: to establish a level of funding for the CIP and to choose between closing the gaps with cuts or with a simultaneous approach of considering cuts and revenue, as suggested by Ms. Wooten. Mr. Rutan asked Mr. Gleason to clarify the $3 million capital funding needed and how much of the amount is for maintenance, as against new construction. Using a figure of $3 million, Mr. Gleason said that about 75 percent is for maintenance and replacement and that even at the $3 million level, the City is $5 million behind. MINUTES--City Council Work Session February 3, 1986 Page 4 - e e Mr. Hansen moved, and Mr. Rutan seconded, to allocate $3 million, or the same amount in 1987 as in 1986, for capital maintenance programs as previously defined, and then working on updating to match inflation; allocating that amount to the generally accepted areas of capital improvement, understanding that we not take on new projects that could be deferred and would not cost more money by deferring. Ms. Wooten objected, saying that the process needs to be discussed before making a decision on CIP. She asked Mr. Wong about current cuts in budget, and he responded that the proposed budget has $1 million in cuts. Ms. Bascom expressed discomfort with a proposal that is one-third more than that proposed by staff. Mr. Miller asked Mr. Gleason to comment on whether the $3 million could be spent on the basis of need versus postponable items. Mr. Gleason explained that the budget is a point of departure only and that he does not make policy decisions. He said a prudent CIP budget would be $8 million. The proposed budget is $1.5 million and is unquestionably a bare-bones budget for the CIP. Mr. Hansen clarified that he intended his motion to reflect the present figure, which is $2.31 million, not $3 million. Mr. Rutan agreed to change the motion to read $2.31 million instead of $3 million. Because Ms. Wooten wanted the process clarified before deciding on a number for the CIP, Mr. Rutan suggested that the figure is a starting point, not etched in concrete; it would be helpful in establishing a process. Ms. Bascom was not prepared to support the motion when the figure was so much higher than staff recommended and because there was no preliminary discussion on how to fill the funding gap. Mr. Gleason replied to Ms. Schue that $.5 million is set aside for CIP in the proposed FY87 budget with the possibility of filling the gap with user fees and with the excess operating budget going to CIP. The user fee could increase by 25 percent or an additional $1 million in the first year. Mr. Miller saw the notion as urging the council to recognize that even with the high CIP figure, the City is still behind where it needs to be. Ms. Wooten agreed that the CIP is a high priority but setting a level of expenditure before discussing how to pay for it is a reversal of her sugges- tions. Ms. Bascom saw the motion as an attempt to maintain a high CIP and cut programs. Mr. Hansen disagreed, saying the motion was intended to help maintain our current position; user fees could be considered. Mr. Obie called for the vote: establishing a level of capital of $2.31 million for budgeting purposes: YES: Richard Hansen, Jeff Miller, Roger Rutan, Debra Ehrman NO: Emily Schue, Ruth Bascom, Cynthia Wooten The motion passed: four yes, three no. MINUTES--City Council Work Session February 3, 1986 Page 5 e Mr. Obie commented that the vote would never hold in the Budget Committee process. Ms. Wooten agreed. Without a measure of unanimity from the City Council, the Budget Committee will not accept the proposal. Mr. Hansen conceded willingness to consider a process to generate revenue and recommend cuts in spending. Ms. Wooten questioned whether the council needed to direct staff to bring back options for both cuts and revenues. In response to Ms. Ehrman's question, Mr. Gleason affirmed that recommendations for imple- mentation of user fees would be periodically brought to the council and that individual recommendations would not be delayed until the whole study was completed. e Ms. Schue said that some tax ideas have merit, such as gas taxes and State car registration; all opportunities for new revenue have not been exhausted. User fees are not the only revenue opportunity. Mr. Obie agreed. After continued discussion, Mr. Obie asked the councilors what process they preferred: funding the $1.5 million gap by considering cuts only or con- sidering cuts, new revenue, and user fees simultaneously. He also asked how the staff is to make cut recommendations, which is not the City Manager's job. Ms. Schue pointed out that the budget priorities are already in place. Mr. Gleason responded by referring the council to a handout he distributed entitled "Approved General Funding Based for Municipal Service Priorities." After discussing the handouts, it was the general consensus of the council that all spending cuts could not come from Service Level 5 and that they would need to look at the whole budget. Ms. Wooten moved, and Ms. Ehrman seconded, that the staff be directed to: 1) bring the council a combination of cuts, user fee opportunities, and new revenues in three distinct categories in an effort to fill the $1.5 million gap; 2) go through depart- mental budgets and pull things that do not severely undermine the operation of individual programs; 3) consider service-level reductions; and 4) explore new revenue opportunities as yet not analyzed, as well as entrepreneurial opportunities, not includ- ing serial levies and new taxes. Ms. Schue requested enough options to allow even-handedness. Ms. Wooten clarified that the staff recommendations be according to their best jUdgment and that the council make decisions accordingly. In response to Mr. Hansen, Ms. Wooten requested enough options so that the council would have choices. The motion passed unanimously. At Mr. Gleason's suggestion and the agreement of the council, the staff was directed to brainstorm for 15 minutes in order to present a list of potential cuts that could fill the $1.5 million funding gap. Mr. Obie recessed the meeting for 15 minutes at 8:05 p.m. e MINUTES--City Council Work Session February 3, 1986 Page 6 e Mr. Obie reconvened the meeting at 8:20 p.m. Ms. Wooten charted some options for funding the $1.5 million gap. New revenues included $600,000 from a one-cent-per-gallon gas tax (which would require no vote); cuts included costs for hospitality (such as guests, recep- tions) and other "nickel-and-dime" cuts identified by staff, and renegotiating the funds for the Visitors and Convention Bureau ($100 000). If a $250,000 increase is projected in building permit revenues, then $300,000 could be projected in addition from user fees ($550,000 total). Mr. Obie disclaimed the process chosen by the councilors: that it is not a good way to design a budget and that a 15-minute staff session cannot be an objective process. Mr. Whitlow and Mr. Long went through the user fee increase expectations for those fees already in effect and for new or enhanced user fees. This original proposal, as presented, would fill about $1 million to $1.3 million of the $1.5 million gap. On the service-reduction side, Mr. Whitlow and Mr. Long listed the fo 11 owi ng: l. Close Library 2 days a week $ 1 25 ,000 2. Bookmobile 90,000 3. BATeam/Metro Partnership 200,000 4. Visitor/Convention Bureau 100,000 5. Neighborhood newsletters 30,000 e 6. Parks and Recreation cuts to i ncl ude outdoor, cultural, athletic, special (two of four) 200,000 7. Consolidate Human Rights 50,000 8. Fleet 100,000 9. Automation Pool 100,000 10. Joint Social Services 1 00, 000 ll. Consolidation of Cultural/Leisure Services (Hult, Library, Parks and Rec) 100,000 (two senior positions cut) 12. Unspecified line items 1 00, 000 TOTAL $1,295,000 e Ms. Ehrman asked how much across-the-board wage cuts would generate in revenue. Mr. Gleason responded that a wage cut of one percent of all employeess would generate about $250,000, but that $250,000 is protected under union contracts. Ms. Ehrman asked that a tentative vote be taken for each item in order to give the staff direction. Mr. Obie suggested that items be considered as potential unless someone identifies an item he or she would not consider and a majority agrees. Ms. Ehrman would not consider user fees for the Library. Only Ms. Wooten agreed; the other five councilors would consider Library user fees. MINUTES--City Council Work Session February 3, 1986 Page 7 e e e Ms. Wooten would not consider the Parks and Recreation increases in fees at the level of increase suggested in the proposal but would agree to look at them carefully. She suggested that the low side be changed from $58,000 to $25,000. Five approved her suggestion and three opposed. Ms. Wooten would not consider fees for utility districts. Two agreed and five disagreed. After further discussion of specific figures, it was agreed that the council would consider user fees proposed with the $25,000 change under Parks and Recreation. Ms. Wooten asked what the net result of user fees increases would provide, and Mr. Gleason said that the increases were projected at $1.3 million, which is a feasible financial and public acceptance target. Ms. Ehrman asked if public hearings would be required for each increase, and Mr. Gleason responded that the needs would be variable. Ms. Bascom asked about the gas tax suggestion, and Mr. Gleason said that he did not propose it because it was his perception that the council did not want to consider taxes. He believes the gas tax to be a kind of user fee and is very rational because the maintenance of streets should be supported by user fees or taxes that are related to streets. Mr. Rutan commented that the implication to the public is simply tax dollars, and the gas tax cannot be considered by itself. Ms. Ehrman asked that the staff contact Springfield again regarding the gas tax to see if it has changed its mind or would cooperate. Mr. Hansen questioned imposing a gas tax without going to citizens for a vote. Mr. Obie asked for a vote from those who would consider a gas tax. There was unanimous agreement to consider the gas tax. Ms. Schue asked that the County be contacted about the tax as well as Springfield. Mr. Rutan also requested that other tax opportunities such as a room tax be considered. Mr. Obie asked if there were any service-level-reduction suggestions that councilors would not consider. Mr. Rutan said that all the suggestions had merit and should be considered. Mr. Hansen requested that Mr. Gleason bring to the next council meeting a report, by department, of what is going to be eliminated under the current budget proposal and then provide a statement of the impact of the cuts suggested by the staff tonight. Mr. Miller said that he was not willing to consider cuts in social services. Mr. Obie questioned whether any of the cut items could receive five votes and does not consider the list a rational list of cuts; he would not consider the list in any form. MINUTES--City Council Work Session February 3, 1986 Page 8 e e -e Ms. Wooten suggested that the user fees are more reasonable than cuts and could be absorbed without anxiety. Mr. Rutan disagreed and said that the council would eventually have to face the unpalatable decisions. Mr. Obie summarized that the council had worked through the capital funding figure and agreed, had worked through the user fees with general agreement, but had not worked through the cuts. Impact statements on the service-level reductions have been suggested and the possibility of other revenue avenues are being explored. Mr. Rutan recommended that the staff bring back some ideas for logical, palatable cuts that the council can consider which would include a brief paragraph explaining the impact of that cut. Mr. Obie suggested that the staff try to find cuts where there will be no impact, such as council travel or entertainment. Mr. Gleason said that this is already being done to a degree all the time. Mr. Hansen affirmed Mr. Rutan's recommendation that the staff bring recom- mended cuts, associated dollars, and implications back for council recommendation. Six of the councilors agreed. Mr. Hansen suggested that councilors turn in other ideas for cuts to Mr. Gleason for consideration. Mr. Gleason recommended that a budget document be produced with a $1.5-million capital level, half of which will be in Tier 2 unfunded, and that any deci- sions on cuts or inclusion of the $2.31 million capital fund be put in a supplemental budget. Mr. Rutan recommended that the Budget Committee be filled in immediately on this process. The meeting was adjourned at 9:30 p.m. Respectfully submitted, 7~ Micheal D. Gleason Ci ty Manager (Recorded by Judy Jernberg) JJ:pvjST826 MINUTES--City Council Work Session February 3, 1986 Page 9