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HomeMy WebLinkAbout09/20/1988 Meeting e M I NUT E S Eugene City Council Dinner/Work Session Jacobs Room--Hult Center September 20, 1988 5:30 p.m. COUNCILORS PRESENT: Ruth Bascom, Rob Bennett, Freeman Holmer, Jeff Miller, Emi ly Schue. COUNCILORS ABSENT: Debra Ehrman, Roger Rutan, Cynthia Wooten. The adjourned meeting of September 19, 1988, of the Eugene City Council was called to order by Mayor Brian Obie. 1. KEY SERVICE AREA POLICIES A. Policy Framework and Financial Strategy City Manager Mike Gleason gave an overview of a document containing a draft mission statement and policies for key service areas supported by the City.s - General Fund. He said the policy statements and background material represent an initial effort to develop a policy framewo~k so the council can address the General Fund's financial problem. Mr. Gleason said the goal of the City is to balance the General Fund; it currently faces a deficit of $1 million to $1.5 million per year. The primary cause of this shortfall is that expenditures continue to increase while revenue does not. Expenditures increase for several reasons: the cost of services and wages go up annually, there are both internal and external service additions (e.g., wetlands, hazardous materials, celebrations), and increased service demands caused by growth of the city. Mr. Gleason said that in order for the General Fund to remain neutral, its baseline must increase by 3.5 percent per year. He said if the General Fund were not increased for one year, it would amount to a six-percent cut. In response to a question from Ms. Bascom, Mr. Gleason explained that a six- percent increase in property tax represents an increase of approximately 2.75 percent to the General Fund. This does not offset the difference between the increase in expenditures and the revenue. Ms. Bascom asked why the strengthening economy does not have more of a positive effect on the General Fund. Mr. Gleason said none of the revenue sources in Eugene are elastic; they do not grow at a rate equal to, or greater than, the growth of the general economy. e MINUTES--Eugene City Council September 20, 1988 Page 1 - Mr. Gleason said Oregon has chosen to put all the capital of cities, school districts, counties, special districts, and the operation costs of all of these districts on the property tax. He feels this dislocates investment. People in Oregon spend less money on property tax investment because other investments are not so highly taxed. Mr. Bennett agreed, saying people who invest consider the potential for a long holding period on their investment. Because people in Oregon believe the property tax will continue to increase, property investment rates go down. Mr. Obie asked about the experience of cities that are sales tax dependent during recessions. Mr. Gleason said such cities typically design an in-cash balance cushion against this. If the growth rate drops, the equilibrium is automatically readjusted. Mr. Gleason said the main issues the council must address are productivity, revenue, and service level. He said all three of these issue are interdependent and must be solved together. With regard to productivity, he said the City must demonstrate to the council and the community that it is seriously interested in improving productivity in such areas as the number of managers, printing and buying patterns, use of space, wages, and other issues. Mr. Gleason said he favors a performance audit approach for gauging productivity. With regard to revenues, Mr. Gleason said the council has given staff latitude in the past on setting user fees for services. He added that the council has also expressed that there is no support for an increase in e property taxes or a major revenue switch. Mr. Gleason said it is not his experience that Eugene provides services that other cities do not. He does not feel Eugene is overly serviced. Mr. Gleason said the council has indicated that it wishes to use charges for service as the principal source of additional revenue. He said he will use that direction for establishing a five-year plan to ease the impact of service reductions as much as possible. He outlined several financing options and service adjustments that staff feels will assist in solving the projected General Fund deficit. These financing options and service adjustments included the following areas: street and road fund; event management, permit, regulatory, and economic development activities; downtown mall maintenance/programming; and public safety fees. B. General Fund Mission Statement Mr. Holmer expressed apprehension about this budget approach. He feels the council needs to look in detail at the budget to determine what services should be financed from the General Fund. He said there are too many interrelationships between the General Fund and other areas to approach the budget with such a limited focus. Mr. Holmer felt the language in this document is far too vague for the council to make any meaningful decisions about the budget. As an example, he cited the background material regarding capital projects. e MINUTES--Eugene City Council September 20, 1988 Page 2 - Mr. Bennett said he favors reviewing the mission statement of the General Fund as a starting point. He did not feel he was ready to begin a line-item scrutiny of the budget. Mayor Obie felt the document is thorough and well thought out. He also felt the council needs to discuss what type of city Eugene should be. He said he realizes, however, that there is not enough money to make Eugene the type of city the council wants. Mayor Obie felt it would be wise to discuss the funding policies and objectives with this in mind. Ms. Schue said she was not happy with last year1s efforts to deal with the budget because of the lack of specific information. She felt it was hard to know if the money allocated would provide the amount of services the council intended it to and whether one service was more important than another. Ms. Schue said she likes this approach, and feels it will be valuable for the council to decide what it feels is a reasonable level of service, as well as which services are most and least important. Mr. Boles felt the suggested approach is reasonable. He said in the long term, the council must address the question of which City-provided services "are truly critical. Mr. Boles felt it would be helpful to have input from the public about which services are most critical and what a basic service 1 eve 1 is. Mr. Bennett felt it would be pragmatic to see a report on the effect on e current General Fund programs if no solution to the revenue shortfall could be found. He felt it would be useful for the council to get a realistic idea of how the City would operate under the worst-case scenario. This would also give the council an idea of how much of the General Fund problem could be solved through user fee mitigations and service transfers. Mr. Bennett felt this would be a very different discussion for the council, because previous discussions have started with the premise that service reductions would occur. Mayor Obie asked council members what items they would like to see supported by the General Fund. Mr. Holmer suggested economic development. Mayor Obie feels health, safety, and maybe welfare are priorities. He said he was uncertain what welfare would include. Ms. Schue said a major factor in deciding which services are not financed through the General Fund should be which services have a potential for generating their own revenue and which do not. She felt it would be best to identify the services this way, rather than attempting to identify the most critical services. Mayor Obie pointed out that the expense of providing a service should be considered as carefully as the income generated by that service. Mayor Obie felt items financed through the General Fund should be impervious to political shifts. He feels the fundamental services include public safety, police, fire, courts, and streets. Mr. Bennett pointed out that all e MINUTES--Eugene City Council September 20, 1988 Page 3 e the services listed by Mayor Obie are the services currently financed by the General Fund. He said the City of Springfield is sharply cutting back to basic service levels. He felt the City of Eugene should consider what is in the General Fund at the same basic level. Mr. Holmer said one of the concerns he has about the General Fund is the sources from which it is now developed, such as franchise fees and admission fees. He felt this should influence the way in which the council identifies basic services. The General Fund should be used to finance operations that help the City fulfill its fundamental role. Mayor Obie feels the City relies greatly on productivity and is effective at what it does. Mr. Bennett said this is one reason he does not feel the council should get into a line-item budget approach. He said the councilors should not get into a discussion regarding how much contract help a certain department should have. Mr. Bennett said he was prepared to adopt the City Manager's general premise and approach to the mission statement of the General Fund. Mr. Miller felt Mr. Bennett was saying that he does not want to prioritize the services that should be included in the General Fund and he does not want .to use a line-item approach. Mr. Miller felt this would be avoiding the council's responsibility. He said he is not yet willing to commit to the City Manager's suggested prioritizations for the General Fund. Mayor Obie said he would segregate funds by service systems, instituting a e no-loss/no-gain relationship for those services the council considers critical. He added that there should be no additions to service without revenue outside of the General Fund contribution. Mr. Obie said this would still leave the $1 million deficit, but said under this scenario the council would be able to focus on a solution. He said the council would not be able to draw from the General Fund for additional money. Mr. Gleason said one purpose of the General Fund is for the City to have corporate capacity to make decisions. He said the more service systems become segregated, the more difficult it is for the organization to operate as an entity. He felt if the council could decide on a level of basic welfare for the community in several key services, and set policies reflecting this level, then the appropriate source of contribution could be assessed for services on a case-by-case basis. Mr. Gleason said if the City Council adopts a mission statement giving him specific direction regarding what should be supported by the General Fund, and adopts a series of statements to reflect the service expectations for those items, he will prepare a preliminary budget proposal. Mr. Gleason said he hopes to be able to achieve a balanced budget by reducing the number of services dependent on financing from the General Fund through the transfer of services, mitigating costs through user fees, and reducing services. e MINUTES--Eugene City Council September 20, 1988 Page 4 - -- e Mr. Bennett felt it would be beneficial to hear a presentation on the effect user fees would have on the community and how their implementation would make Eugene competitive with other communities. Mayor Obie asked if it would be possible for staff to make a presentation which begins with a "hold harmlessll in certain segregated accounts and includes suggestions for maintaining the integrity of the system and a method for calculating changes from year to year. Ms. Schue said she is uncomfortable with the ideal of a Ilhold harmless" in view of the projected $1 million shortfall. Mr. Holmer asked if staff could present a proposal in December which has $2 million worth of proposed cuts so the council can make a choice. Mr. Gleason said in his next presentation before council he will try to separate accounts. He said the budget proposal may include the notion of "cost centers," a statement about what the current system would look like under a hold-harmless situation, and what adjustments will have to be made to the baselines of the cost centers in terms of revenue and/or productivity to achieve balance in the future. Mr. Gleason said he could also propose a whole series of balances within a cost center, but not a series of programs within a balance. Mayor Obie said Mr. Gleason will present the document detailing the cost center concept on October 24, 1988. He said the councilors should suggest changes in the policies by that date. e At 8:10 p.m., Mayor Obie adjourned the work session to September 26, 1988. Respectfully submitted, .~~ Micheal Gleason City Manager (Recorded by Tanya Northman) mncc 092088 - MINUTES--Eugene City Council September 20, 1988 Page 5