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HomeMy WebLinkAbout02/01/1988 Meeting e e e M I NUT E S Eugene City Council Jacobs Room--Hult Center February 1, 1988 4 p.m. COUNCILORS PRESENT: Freeman Holmer, Ruth Bascom, Robert Bennett, Debra Ehrman, Jeff Miller, Roger Rutan, Emily Schue, Cynthia Wooten. The adjourned meeting of the Eugene City Council of January 27, 1988, was called to order by His Honor Mayor Brian B. Obie. I. WORK SESSION: STRATEGIC FINANCIAL PLAN A. Introduction Mayor Obie welcomed Budget Committee lay members Katherine Eaton, Joan Rich, Shawn Boles, Kay Robinhold, Don McLoud, John Rodda, and R. Kim Short. City Manager Micheal Gleason introduced the item. He said councilors had received a summation of work from the previous goal session and had asked for impact statements to affected programs from staff. Mr. Gleason said the proposed Strategic Financial Plan would achieve about 75 percent of the financial target for the first year and would result in a positive cash balance one year earlier than previously expected. He said Finance Director Warren Wong would describe the timing and sequence of the proposal, which was based on the rankings developed by the City Council at the November 3, 1987, goal session. B. Budget Committee Lay Member Comments Katherine Eaton noted that councilors had received a memo dated January 27, 1988, from Budget Committee lay members. She said members had discussed all alternatives, including program cuts, new revenues, and one-time adjustments. Lay members had not favored one-time adjustments as a means of balancing the budget, with fleet replacement funding being the only possibility favored for consideration. Ms. Eaton said members had discussed the full range of ways to balance cuts and new revenues, they did not favor increasing property taxes, and they had favored a restaurant tax of up to 5 percent as the most appropriate new revenue. She also reported that lay members had voted for rankings of City programs, and seven areas of difference between lay members and the council were described in the memo. MINUTES--Eugene City Council February 1, 1988 Page 1 e C. Notebook Material 1. Service Impact Statements Mr. Wong reviewed information in notebooks. He said that because of further analysis and adjustments for department overhead, service impact statements included, on the second page, all programs of the ballot results. 2. Revenue Statements Mr. Wong said revenue impact statements had been prepared for four preferred sources--a utility tax, a restaurant tax, a real estate transfer tax, and a service fee, which was analogous to a business and occupation tax but could apply to targeted segments. a. Real Estate Transfer Tax e Mr. Wong said the real estate transfer tax was being considered by Lane County. He said staff recommended that, because of extreme fluctuation in revenue, if this source was used, only a base amount be put into operations, and any balance be put into services that could be cut quickly or into the capital budget. He added that the County would administer the tax for the City and was considering a tax of .2 percent. Responding to Mr. Holmer's question, Mr. Wong said he was not aware that the County was considering any type of moratorium on property sales occurring within two or three years of a previous sale. b. Service Fee Mr. Wong reviewed the service fee. He said the City would attempt to identify a service or a business activity for which the City provides services and would charge an assessment for that. He said fees might be charged, for example, for maintenance of the downtown mall, or a tax on establishments serving alcohol might be used to fund law enforcement or social services. Mr. Wong added that Eugene was one of only a few cities that had neither a business and occupation tax nor a business registration program. Mr. Rutan asked how Eugene compared to other cities in terms of total City tax burden. Mr. Wong said staff would research that and should have a response in two or three weeks. Ms. Ehrman asked how a service fee would be collected. Mr. Wong said there would be administration costs because the City would have to establish a business registration or collection program. He added that the size and cost of the program would depend on the type of fee. He said a tax on serving alcoholic beverages would not be difficult, a restaurant tax was estimated to cost about $150,000 to set up, and a general business and occupation tax would be more complex. e MINUTES--Eugene City Council February 1, 1988 Page 2 e e e Ms. Schue expressed concerns about the complexity of liability with a service fee. Mayor Obie said he found it unclear whether the charge was a fee, a tax, or a license. Mr. Gleason said courts had preempted cities from charging a tax on alcohol use, but they had not preempted fees for related services, and he thought the relation between alcohol and public safety costs was defensible. Ms. Wooten said she had similar concerns about a surcharge that was not a tax but that went beyond a user fee. Mr. Gleason said fees might be charged at the point of wholesale distribution, and permit systems were another possibility. c. Utility Tax Mr. Wong said the utility tax would be a percentage of gross sales. He said the City already received franchise or in-lieu-of taxes from all public and private utilities except for sewer and water facilities. He said figures assumed an 8 percent tax, minus current receipts, for a net yield. That yield on a 1 percent increase would amount to more than $1 million, he said. Mr. Wong added that some utilities were subject to legal tax limits, such as 5 percent for cable TV. Mr. Holmer expressed concern about charging the tax only within the city limits. He asked whether the County was considering a utility tax. Mr. Wong said he was aware of no staff activity in that area. Ms. Bascom said the utility tax did not appear to provide a large source of revenue. She said cable TV and the Trojan power plant were limited by law, sewer rates recently had been raised, and the Pacific Northwest Bell franchise just had been renewed, leaving only the gas franchise. Mr. Wong said the EWES rate could be raised, and the gas franchise soon would be renegotiated. He also said PNB planned to introduce legislation that would significantly affect its franchise fee. Responding to Ms. Ehrman's question, Mr. Wong said collection probably would be done by utilities, and notations of pass-through costs to customers could be included on bills. d. Restaurant Tax Mr. Wong reviewed the revenue analysis for a restaurant tax. He said information for the local area was difficult to obtain, therefore State and County data had been disaggregated to the local level. He said data showed potential revenue of about $1 million for each 1 percent, and the addition of hotels, delis, and caterers probably would add another $60,000 to the yield. Mr. Wong said it was believed that approximately 400 to 500 establishments existed within city limits. A collection mechanism would be needed and could be similar to the method used for the room tax. He said the tax would apply to restaurants and fast food establishments, but application to other areas (e.g., catering, Saturday Market, church bazaars, supermarket delis, and salad bars) could be determined based on costs of collection versus yield. Mr. Wong said compensation to the restaurant operator for costs of collection would be included at some level less than 5 percent. He noted that states to the MINUTES--Eugene City Council February 1, 1988 Page 3 e north and south had a restaurant tax or sales tax, and the revenue would be cyclical with the economy. Mr. Holmer asked whether information was available for categories of restaurant, such as fast food. Mr. Wong said information was broken down only according to the standard industry code for restaurants, and if the tax were pursued, further analysis would be needed. He noted, for example, that because the City had no business registration fee, the number of restaurants in the city was not known, and the only information available was through the County health department. Ms. Schue asked whether consideration had been given to including Springfield and the County in the tax. Mr. Wong said staff had discussed the idea, and although Lane County was not enthusiastic, Springfield representatives had expressed interest. He added that he believed the issue would be discussed at the Metropolitan Policy Committee. 3. Strategic Financial Plan Mr. Wong reviewed Strategic Financial Plan impact statements for proposed program eliminations by department. e Responding to questions, Mr. Wong explained that programs listed on the second page of council service rankings had been included in the proposed eliminations after further analysis in order to reach the targets set by the council. Ms. Bascom asked whether it was possible to scale back the animal control program. Mr. Wong said the program included four FTEs for street patrols and the shelter costs, and any cuts would result in a significant impact to the entire program. Mr. Gleason added that if the City pulled out of the animal control program, the shelter would close. a. Development Ms. Ehrman asked about the need for refilling staff positions in the Development Department. Mr. Gleason said all vacant positions would be examined and analyzed. He said operations had been reduced for six years, and further reductions would affect program continuity. He said the position being vacated by Greg Byrne was needed to conduct effective negotiations on issues such as sales of property and tax increment programs. Mr. Gleason added that further reductions were not possible without completely eliminating programs. He said positions often were funded out of several funds, so each position required analysis. Ms. Wooten asked whether the items listed for the Community Development Division of the Development Department had been chosen from among programs or included all of that division. Mr. Whitlow and Mr. Gleason said the items had been chosen to be as comprehensive as possible according to council rankings and included all program capacity funded by the General Fund, with any remaining programs using dedicated funds. e Mr. Holmer said he thought other programs could absorb some impact, and funds could be rearranged to avoid cutting all General Fund programs. MINUTES--Eugene City Council February 1, 1988 Page 4 e Ms. Wooten said she agreed, adding that she found the impacts on the City's role in the Riverfront Research Park to be unclear. Mr. Gleason said the Riverfront Research Park was funded out of the tax allocation budget for the riverfront and was a loan from the Downtown Renewal District. Mr. Wong added that the interfund loan would be changed in the next supplemental budget. Ms. Wooten asked whether the impact on the Community Development Division would result in a reduction or elimination of the Downtown Commission activities. Mr. Wong said a reduction in General Fund support probably would result in a reduction of activities. Ms. Bascom asked about the impact of reductions to the Downtown Commission. Mr. Gleason said the Development Department was the most complex part of the discussion, because of the overlapping funds and duties. He said further reductions would have to include program eliminations, which would radically affect the City's general ability to deal with economic development. Responding to Ms. Wooten's question, Mr. Gleason said that because of limitations on overhead, items such as the Hilton hotel negotiations, 5th Avenue improvements, and Lincoln School could not be funded if they could not be billed to individual funds. He added that some impact on the Riverfront Research Park would occur, but the project would not be eliminated. e Responding to Ms. Wooten's question, Mr. Wong said the Southern Willamette Research Corridor contribution was only $950, with the rest of that account representing bookkeeping of pass-through dues from other agencies. b. PAReS Ms. Wooten said fees for athletics amounted to 30 percent of program costs, and she asked whether fees could be raised to cover costs. Mr. Wong said additional analysis on each program was needed to determine if alternative funding sources could be round. He said recreation fees generally were at their maximum levels without resulting in significant loss of demand. Mr. Gleason said that loss of demand had occurred with the last increase to swimming pool fees, but each program could be analyzed. Mr. Holmer asked about the wording of Item 1 on the second page of the Eugene Sports Program statement, regarding the lIalready overtaxed community." Ms. Ehrman asked how much of the Eugene Sports Program cost was for field maintenance. Mr. Wong said field maintenance accounted for more than $30,000, with the remaining $10,000 going for coordination and scheduling. e MINUTES--Eugene City Council February 1, 1988 Page 5 . c. Department of Public Safety Ms. Wooten noted that the Budget Committee had addressed the Juvenile Unit, or the Cops-In-Schools Program. Mr. Miller raised the issue of Community Affairs. Ms. Wooten requested more information about the effectiveness of the Juvenile Unit, about use of guns, and about whether civilians could be used at a lower cost, before revisiting the issue. Ms. Ehrman said that issue was related to Community Schools. Ms. Wooten said playing fields also were a related issue. Mr. Miller expressed concern about impacts that affected part of the city versus those that affected the entire city. He requested more information about the impact of cuts to Community Affairs and the Juvenile Unit on perceptions of crime. Mr. Gleason said he thought it would provide the greatest benefit to the community, and Public Safety staff would prefer, to concentrate scarce resources on prevention through the Career Criminal Unit, the Juvenile Unit, and Community Affairs, rather than on increasing direct response personnel. He added that he believed the Juvenile Unit had been very successful in diminishing problems. e Ms. Bascom said the Budget Committee previously had received a report on the Juvenile Unit. She also said the value of the water safety team had been stressed at the recent Public Safety awards ceremony, and she suggested that the Budget Committee receive information about the water safety team. Mr. Miller asked whether the full cost of the Juvenile Unit could be shifted to the school district, adding that the program served only a portion of the community. Mr. Gleason said he did not believe a shift in costs was possible because of other program costs and lack of consensus on the 4J school board. He added that the Juvenile Unit currently operates at two schools, Churchill and South Eugene high schools. d. Non-Departmental Mr. Wong said the six-year financial forecast and council policy predicted annual growth of $200,000 in Beginning Working Capital I and that growth would be eliminated under the proposal, for a six-year impact of $1,200,000. e. Exclusions e Mr. Wong said impact statements had been prepared for all of the programs listed on the second page of the service rankings, but not all of those services had been included in the proposed Strategic Financial Plan. The services not included in the plan were described on the second page of the memo from Mr. Wong, dated January 27, 1988, on the subject of the Strategic Financial Plan, and included 1) the Hazardous Materials Response Team; 2) Animal Control; 3) Wading Pools; 4) PSAP Equipment Replacement Reserve; 5) Southern Willamette Research Corridor; and 6) MINUTES--Eugene City Council February 1, 1988 Page 6 - Youth Competitive Swim Team Support. He said those services had not been included in the plan because savings were less or impacts were greater than expected. Mr. Gleason said the proposal would implement the majority of the council IS Strategic Financial Plan and would achieve a positive cash balance over five years, rather than six. He said the programs that were not included in the staff proposal could be brought back into the plan by the council, but upon further analysis, their impacts had differed from predictions. f. Response to Council Targets Mr. Wong referred councilors to the document titled Strategic Financial Plan--Response to Council Targets, dated January 27, 1988 (green page). He reviewed the information, noting that historical tax increases were included in revenues, that requirements included the impact of inflation, and that year one would begin in FY89. He added that overhead reductions were included and noted by asterisks. Mr. Rutan asked about the resulting balance in the capital bUdget. Mr. Wong said the proposal would leave a balance of about $2 million in the capital budget, about $550,000 in capital project reserves, and about $500,000 in General Fund contingency. e Mr. Wong said year one figures included existing revenues and assumed new revenues of $553,000, which have not been identified by the council. He said the plan also assumed program cuts of $1.3 million and one-time adjustments of $552,000. Staff members said differences between the proposal and council targets resulted from progressive calculations and actual program costs. Mr. Holmer said he found Table I confusing and he thought it should be more consistent in following a coherent program. Ms. Bascom noted that wading pools had not been taken out, but never had been included. Mr. Bennett said he believed the role of the council was in determining general direction about what to cut and what to keep, not in examining details of the day-to-day operations of the City. Mayor Obie said decisions about policy should be kept in the hands of the council. Mr. Holmer said he agreed that the council could not master all of the details, but it should give some direction to staff before proposals were presented. He said he favored council review up to the point of determining how much of the deficit should be addressed by revenues, expenditure cuts, and one-time adjustments, and staff should make the proposal from there. Mr. Bennett said he agreed. e Mayor Obie said he was unclear about the reason for the difference between the councills identification of $2.4 million in programs on the priority list and the total requirement adjustments of $1.3 million. MINUTES--Eugene City Council February 1, 1988 Page 7 e Mr. Wong said the costs associated with programs on the ballot had included the costs of departmental administration. Further analysis had found that the actual savings if a program were cut was lower. In order to meet the council's targets for program reductions over the six-year period, it was necessary to consider all programs on the second page of the priority list. Mr. Rutan said he thought the council now should look at the general picture, and specifics could be addressed during the coming Budget Committee process. g. Implementation Proposal Mr. Wong reviewed the Strategic Financial Plan--Implementation Proposal, dated January 27, 1988 (blue sheet). He said the proposal included sufficient time to plan for phasing out services and placing employees. Response to council targets and the Implementation Proposal are the same after year three. Mr. Wong said material included information about process and timeline. He said another meeting was possible in February, and staff recommended that public input on year one be taken at the Budget Committee public hearing in April, before revisiting the plan in June and adoption in July. e Mayor Obie said he believed staff had tried to keep within the council targets that had been voted on. He said the council had not yet asked staff for their opinions about better ways to implement the plan. That opportunity could be taken in the future and probably would be prudent, he added. Ms. Bascom invited councilors to an announcement of her political plans, at a press conference at noon tomorrow in the City Council Chamber. Mayor Obie recessed the meeting for dinner at 5:57 p.m. D. Strategic Financial Plan Mayor Obie reconvened the meeting at 6:30 p.m. Mr. Rutan said he favored discussing general direction and deferring discussion of specific items until the Budget Committee process. Mayor Obie said he thought the council needed solidarity with the process with regard to the general consensus, even if individual councilors were uncomfortable with parts of the plan. Ms. Bascom said she was uncomfortable with the proposed cuts and she would urge more work on new revenues. e Mr. Holmer said the proposed adjustments in capital projects were greater than he would prefer and he thought more impact should occur on programs, MINUTES--Eugene City Council February 1, 1988 Page 8 - but he was ready to go with the implementation proposal if a new revenue source could be identified. Mr. Miller said he felt the information provided a beginning. He said he shared the concerns about capital projects, and he favored looking at revenue sources, because he thought that would drive further decisions. Ms. Ehrman agreed with concerns about capital projects. She said she favored examining a combination of cuts and revenue, and she was committed to looking at another revenue source. Ms. Ehrman said she felt that two of the tax proposals, the real estate transfer tax and the utility tax, were too similar to property taxes, and she was not interested in those. She said she favored a restaurant tax as affecting those with a choice and expendable incomes, and she would favor an alcohol tax if it were across-the-board. Ms. Ehrman asked when specific cuts should be addressed. She noted that she had missed the second meeting of balloting and decisions, and she was concerned about the tendency to move ahead without the details. She said she felt that mall maintenance, for example, was a substantial impact, and she wondered about alternatives. - Ms. Wooten asked how the cuts for various years had been chosen. She said the impact statements still were unclear about staff and program reductions, but she did appreciate the information. She said original votes had been taken without the benefit of that data, and she now would vote differently. Ms. Wooten said she believed modifications would be made, and some items above the line should be considered, perhaps with another ballot. She said she was uncomfortable committing to a strategic financial plan without some agreement on revenue sources. Ms. Wooten said she did not think the service fee or a tax on alcohol would be plausible or efficient, and she continued to support a real estate transfer tax, but she primarily supported a restaurant tax, which, if implemented by January 1, would be a certain income factor against the cuts. Ms. Schue said she agreed with many of the concerns, but alternatives needed to be considered. She said she also had been frustrated about the lack of information when balloting, and she therefore was willing to allow staff flexibility in making actual" cuts. Ms. Schue said she was very interested in new revenues, and some cuts, such as mall maintenance, presented problems. She also noted that the library would be another factor to consider along with major capital projects on which preliminary work has already been done. She added that she agreed with the need to make a decision on the restaurant tax soon. e Mr. Rutan said he, too, was interested in looking at new revenues, and he thought it was important to look at general criteria such as costs of administration, revenues generated, affected population bases, equity, etc. He said the budget did represent growth in government, and he noted that total costs in year six were substantially higher than total costs in year one. He said he thought cuts were difficult but were the responsibility of the City Council and were healthy because they MINUTES--Eugene City Council February 1, 1988 Page 9 e encouraged examination and attempted to control growth in the total tax burden. Mr. Bennett said the goal session had included a lively discussion of how to approach the fiscal situation, and a strong commitment had been made to balance the budget. He said he recalled the City Manager saying that the $2.4 million goal could be accommodated without additional revenue, and although he did not support raising additional revenues in the first year, he would support the general plan. Mr. Bennett added that his support would be stronger if new revenues were allocated to capital projects, because he agreed with Mr. Holmerls concerns in that area. Mayor Obie said he favored moving ahead with the plan as the executive budget proposal, and while he personally did not favor a restaurant tax, he was not opposed to a restaurant tax as a new revenue source if that was the will of the community. Mayor Obie said the council should either move ahead and let Mr. Gleason use the plan as a general guideline, or ask staff to come back with additional recommendations. He said he is operating under the assumption that the City will fall short in its efforts to obtain new revenues. He predicted the cuts will not be enough, and the capital budget will ultimately suffer. Councilors did not reach a consensus that they needed to reballot the budget priorities. e Mayor Obie said the council should ask the executive managers to prepare an executive budget with the discussed guidelines. He asked Mr. Gleason how the priority choices were made. Mr. Gleason said City Managerls Office staff met with the executive managers on three occasions. He said the group made a commitment to follow the council's voting preferences as closely as possible. The process began with proposals developed by an executive managers subcommittee, the Budget Review Team. The proposals were presented to the executive managers, who debated their merits and eventually developed the "blue sheet." He said the blue sheet is an attempt to accomplish the budget balancing goal without a major disruption to the community and organization. Mr. Gleason said the managers were all willing to professionally respond to the need for cuts. He said cuts in one department often dramatically affect other departments. In response to a question from Mr. Miller, Mr. Gleason said executive managers had the same type of discussion over capital budgets. He reminded councilors that staff originally made the recommendation that the council establish an ongoing capital budget. Mr. Holmer asked if the council can be provided with an impact statement e MINUTES--Eugene City Council February 1, 1988 Page 10 ~ on the effect of the capital cutbacks. Mr. Gleason said staff can provide such a statement. Mr. Bennett asked if there is any chance that the projected revenue figures will be better than anticipated. Mr. Gleason said the restaurant tax is extensive enough that implementation of a 5 percent tax would solve the present problem as well as the library operation problem. He said a restaurant tax has come to be more of an opportunity than he originally thought. He added the tax would probably be easier to implement if Lane County approves a real estate transfer tax. Mayor Obie said he has difficulty supporting a real estate transfer tax because it is not necessarily economically driven. Mr. Rutan said there is no basis for a real estate transfer tax, and added he agrees with Ms. Ehrman that it is another form of property tax. Ms. Wooten said she supports an advisory vote on the restaurant tax. She said the council should proceed as soon as possible on the matter. Ms. Ehrman said she is in favor of the restaurant tax because it will affect people from out of town as well as locals. Mr. Bennett disagreed and said locals will be the primary group of people affected by a restaurant tax. e Ms. Ehrman said she does not know of any other revenue sources that is as viable an option as the restaurant tax. Ms. Bascom said the restaurant tax advisory vote should be tied to the library issue. Mr. Holmer said he favors putting the issue to an advisory vote because statistics show 65 percent of the population eat out. He said there is a great deal of single-parent families who frequent restaurants for convenience reasons, and who are not the ones the council should necessarily be targeting. Mr. Rutan said the council needs to discuss what the criteria should be for judging a revenue source. He said the restaurant tax is the least objectionable of all the alternatives. Although visitors will pay only a small percentage of the tax, he said it is the most discretionary of the options. Mayor Obie summarized the comments thus far and said that unless there is significant opposition, the council generally supports the City Manager's proposal. e Mr. Holmer disagreed. He said the City Manager1s proposal allows the council to later evaluate the issues through the budget process. Mr. Bennett said it is important for the council to reach a consensus on MINUTES--Eugene City Council February 1, 1988 Page 11 - the basic premise of the plan. He said those who favor a restaurant tax should be aware that if the tax is not supported by the council, the $553,000 in new revenue will have to be raised another way. Ms. Schue asked if Mr. Bennett has alternative ideas about how to raise the money. Mr. Bennett said he supports a new revenue source. However, he said he hopes that others who advocate a new revenue source are not doing so because they support only one of the options. Ms. Schue asked what revenue source Mr. Bennett favors. Mr. Bennett said he would support a real estate transfer tax over a restaurant tax. Ms. Ehrman said the council should be considering future needs as well as present shortfalls. She said a restaurant tax is a new alternative that can potentially provide for those needs. Mr. Gleason said he needs direction from the council so that the budget recommendation from his executive managers does not come as a surprise. He said the council balloting exercise is a novel way to give the council program authority. Like the capital improvement plan, the new process might be difficult to work with during the first few years. e Mr. Holmer said there are several other important issues such as fire redeployment and the library that are outside of the current budget package. Once the council has made a decision on the current issues, he said it should focus its attention on these other outside issues. Ms. Ehrman said she does not support a new revenue source to avoid making cuts. She said new revenue is needed to address the question of long-range stability. Ms. Wooten said she does not want others to think that she is irresponsible for not agreeing with the current process. She said she is tired of hearing the City compared to a business because the City is inherently a service organization. She said she is still interested in examining what effects the cuts will have. Mayor Obie asked if Ms. Wooten is frustrated with the decisions the council has had to make. Ms. Wooten said she feels strongly enough about the cuts that the council should consider raising $600,000 instead of $500,000, and perhaps raise the money sooner than it is planning. Ms. Bascom said long-range projects and new revenue source requests should be separated from other budget concerns. She said the restaurant tax would have a better chance of passing if it is focused on specific long-range items. Mr. Miller said the council is involved in attempts to reach decisions by consensus. council should look at other ways to reach sensitive. a delicate process when it He suggested that perhaps the a decision that are not as - MINUTES--Eugene City Council February 1, 1988 Page 12 e Mayor Obie agreed with Ms. Bascom that the long-range issues need to be considered separately from the present budget concerns. Between staff recommendations, the balloting process, and public hearings, he said the council does not have much choice about the cuts. Ms. Ehrman asked Mr. Gleason about other suggestions that came up during executive managers' discussions. Mr. Gleason said staff can produce formal recommendations, although he said he would want to draft one outside of the executive managers because of their closeness to the issues. Mr. Holmer said he is uncertain about the process because the council has not set aside a time to look at revenue sources. He suggested that the council make a decision on the matter by the end of this month if it wants to hold an advisory vote in May. Ms. Schue said the problem with putting the issue on the May ballot is that voters will want to know what the council plans to do with the money if it is approved. Mr. Holmer said the council can pledge that a major portion of the money go to the library. Ms. Schue cautioned that the council should keep faith with the library process. Mr. Gleason said the Strategic capital improvement plan where five years are forecasts based the City to have completed the Financial Plan the first year on the first. process by the proposal is set up like a is funded and the remaining He said he does not expect sixth year. e Mayor Obie said the community needs to know what the $553,000 is going to be used for. Mr. Rutan asked if there is a consensus that the blue sheet is a general guideline the council can follow. Mayor Obie said the council still has to find a revenue source and proceed with the budget process. Ms. Schue said the council is not accustomed to receiving revenue suggestions in the City Manager's budget. Mr. Holmer said he is uncertain about forwarding an unbalanced budget to the City Manager. He said the council should either tell the City Manager what kind of revenue source will be used, or allow him to make a recommendation. Mr. Bennett said it is important for the council to receive a budget balanced without a major new revenue source so the council has something to work with. Mr. Miller agreed the council should know how to balance the budget in the event that voters do not approve a new funding source. Ms. Bascom said it was her understanding there are a number of revenue options that do not require voter approval. Mayor Obie said the council e MINUTES--Eugene City Council February 1, 1988 Page 13 e will have to discuss that issue when it discusses the restaurant tax and other alternatives. Ms. Wooten suggested that February 15 be set aside as a work session for the council to discuss those issues. She said the council should discuss specifically $500,000 in unidentified revenue for FY89, and how new revenues should be incorporated for upcoming capital projects. Mayor Obie asked if anyone disagrees with the City Manager drafting a budget based on the blue sheet. Mr. Bennett said he does not agree with that proposal. Ms. Wooten said she would like the council to work on short-term and long-term projects. Ms. Schue asked if the council expects Mr. Gleason to return with a balanced or unbalanced budget. Mr. Gleason said he would not return with radically different projections if he was asked to balance the budget. However, he said the budget document has to be examined in periods of more than one year. He said the council is not experiencing a financial crisis because there are still significant cash reserves in all funds. If the council does nothing, it will run into serious problems by the third year. e Mr. Rutan moved, seconded by Mr. Miller, to direct the City Manager to prepare his executive budget utilizing the Strategic Financial Plan Implementation Proposal as a general guideline for developing the FY89 budget. Roll call vote; the motion carried unanimously, 8:0. Mayor Obie said a restaurant tax can be passed if the City installs a cap on property taxes. Ms. Bascom said she wants to submit the restaurant tax to voters when it has a chance of passing. Mr. Rutan said the average voter will view the tax as "just another tax. II He said the council should develop a good plan to ensure the tax passes if that is what it decides to support. Ms. Schue said she assumes the restaurant tax will be used instead of additional property taxes. She said it should be made clear what the tax will be used for because the public has hardly considered the issue. Mayor Obie said the public may not understand the magnitude of a $500,000 deficit in the FY89 budget as a result of not being able to find the additional revenue needed. But he said the public will understand a $2 million deficit in three years. Ms. Ehrman said the council should determine if the City of Springfield is interested in a restaurant tax. She said the council would not want to see Eugene residents traveling to Springfield to eat out. - Mr. Miller asked if a restaurant tax would be in place of the annual 6 percent property tax increase. Mayor Obie said his idea is that a MINUTES--Eugene City Council February 1, 1988 Page 14 e e e restaurant tax would reduce property tax by a certain percentage. Mayor Obie asked if there is any possibility that the annexations will increase income more than projected. Mr. Gleason said the value of the annexations is added to the Cityls tax base, but that the additional revenue covers approximately the cost of providing the additional services. Councilors agreed to meet from February 14 from 4-8 p.m. to discuss general revenue issues. Mr. Boles reminded the council that the Budget Committee unanimously agreed not to use one-time adjustments to balance the budget. He said it has been interesting to listen to committee members try and convice other members that they understand the public1s wishes. He noted there are mechanisms that the council can use to statistically measure public sentiment. Mr. McLoud encouraged the council to study the ballot results that Budget Committee lay members produced. Ms. Wooten said one of the reasons she suggested a new ballot is based on responses from the lay Budget Committee members. Mr. Rodda asked what the council plans to do with regard to the impact statements. Mayor Obie said at this point the statements are in the hands of the Budget Committee. Ms. Robinhold said not all of the Budget Committee members attended the lay member meeting where the unanimous decision was reached. The meeting was adjourned at 8:03 p.m. R~.ectfu y. SU~ .~.f.~-' Micheal D. Glea on, City Manager (Recorded by Leslie Scales and Todd Nissen) mncc020188 MINUTES--Eugene City Council February 1, 1988 Page 15