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HomeMy WebLinkAbout03/14/1984 Meeting (2) M I NUT E S . RECEIVED BY ./'\ ( CITY-l\IANAGER 7 .J UN 2 1 1984 AM PM ~1819IWllll~liI2,3,415,6 e Eugene Council Work Session McNutt Room, City Hall I March 14, 1984 5:30 p.m. PRESENT: Mayor "Gus" Keller, Freeman Holmer, Emily Schue, Joyce Nichols, Brian Obie, Dick Hansen, John Ball, City Councilors; Mike Gleason, City Manager; Dave Whitlow, Gary Long, Warren Wong, Tim Birr, Pat Lynch, Robert Deis, Bill Guenzler, Eugene staff; Springfield City Manager Steve Burkett, Data Processing Director Ray Anderson, Springfield Finance Director Ann Phlugg, Springfield staff. I. FINANCIAL PLANNING COMMITTEE Mr. Wong said it appeared that the consensus of the council is to eliminate the Financial Planning Committee and have the City Council take over the issues of alternative revenue sources and the service system mix/level for the City. The Financial Planning Committee is presently set up in the City Code. e Mr. Gleason added that the process for change would be in the form of an ordinance change unless staff is told differently by the councilors. No objection was made to such an ordinance change. II. SIX-YEAR FINANCIAL FORECAST (material distributed) -- Mr. Wong said that staff had prepared an update of the General/Federal Revenue Sharing Fund Financial Forecast that was done last year. It was updated on the basis of revised revenue and expenditure assumptions, including changes in the 1984 budget process. Mr. Wong reminded councilors that the FPC had identified service levels that they wished restored. Restored service levels were incorporated into the financial forecast ($2.9 million indentified by the Financial Planning Committee, plus the $500,000 in cuts made last July). The restoration was phased-in in FY86, FY87, and FY88. The forecast was prepared on a microcomputer. It is to a very low 1 eve1 of detail. A five- percent inflation rate was assumed. Utilities were assumed to be more than five percent. On the revenue side, each source was identified and projected. Assumed was an increased property tax collection rate in FY86-FY90. Mr. Wong reviewed the projected deficits. He showed the councilors a graph of the projected deficits. He reviewed the percentage of budget going to various departments. He identified the projections in the capital budqet. He said after taking out land and equipment (in the operating budget) it leaves $231 million in replaceable assets, primarily in infrastructure. Assuming an estimated useful life of 25 years, the City would need to replace the capital assets on an average of $9.3 million/year. In FY85, the City will be putting in $1.9 million toward the general capital project budget. This is a short- fall of $7.4 million. If the average useful life were 40 years, the shortfall would be $3.9 million. MINUTES--Eugene Council Work Session March 14, 1984 Page 1 III. ALTERNATE SOURCES OF REVENUE e Mr. Wong reviewed the findings of staff and the Bureau of Governmental Research and Service in projecting the yields on commonly used municipal revenue sources. Mr. Wong said that the report was in draft and would be available within the next month. There is an initiative petition circulating for a 1.5 percent limitation on property taxes. Mr. Wong explained how they calculated the number and the loss to the City. In the worst case scenario, $15 million would be lost by the City. In the best case scenario, it would be a loss of $10 million. This would be the equivalent of one-third the revenue, or the amount of the public safety budget. Mr. Gleason added that the tax increment district would also be affected. IV. METROPOLITAN MOTOR VEHICLE FUEL TAX (memorandum distributed) Mr. Wong explained the proposed three-cent-per-gallon fuel tax as outlined in the distributed memorandum. This tax had been proposed by the Springfield City Council. Mr. Wong reviewed the cost of street overlays which should be $765,000/year, and is presently $500,000/year, and last year was $160,000/year. He introduced Mr. Guenzler to answer questions. e Mr. Holmer was told by Mr. Burkett that the fuel tax would be used to release resources for other uses. Mr. Hansen asked about the bulk oil dealer being taxed and was told a business license tax would be the taxing device. He was told it was collectible. Mr. Holmer asked why send business to Glenwood. He was told there would be a six-cent difference. Mr. Burkett did not see it as a problem. There is presently quite a range in prices in the metropolitan area. Mr. Gleason reported his research on the county-wide tax indicated that the county road fund was not in need of money; therefore, they could not see the need to tax fuel. Creating special districts caused annexation problems and should be reviewed along with the whole urban growth policy. Mr. Hansen asked if the City Charter provided for taxing goods brought into the city. Mr. Long said that he had researched this question and the city has broad authority. Mr. Gleason concluded the presentation by asking if they could agree on the numbers presented. The council direction given to the manager was to neither cut nor add to the budget. In 1986 there will be a $2.5 million problem if services are restored and a $1 million problem with just the services presently offered. The choice is a tax or a decrease in service. Mr. Keller declared a ten-minute recess. e MINUTES--Eugene Council Work Session March 14, 1984 Page 2 e e e Members expressed their feelings and oplnlons on the material presented. Mr. Ball stated he was familiar with the numbers and agreed with them. The Motor Vehicle Fuel Tax made sense as did a restaurant tax. One issue needed to be identified currently--doub1e taxation. Tax equity should be pursued ,strongly and a meticulous math fonnul a worked out. Urban popul ati ons are subsidizing the rural populations, he said. Mr. Hansen said they should discuss the restorations list. There will be a shortfall and the problem will increase. He was interested in an employee payroll tax. He favored putting the revenue source to a vote of the people. Mr. Obie said he was not comfortable with the figures presented. Mr. Gleason told him why the figures presented were conservative. Mr. Obie said the figures did not represent sources of revenue/help from other sources, such as Federal. He noted that the 6th/7th avenue widening would be paid for by the State. Mr. Gleason cited the need for revenue to repair 20-year-old struc- tures. Mr. Obie asked for more precision in the figures. Mr. Guenzler stated that the City would be given Federal funds. He said staff had looked at the capital improvement program and threw out every item that was fundable by other jurisdictions. The total figure was close to $3.9 million. Mr. Obie called for a line-item review of the add-backs in order to get control of the "gap". He asked for current experience on property tax collection rates. He noted that the task force on the Hult Center would also be looking for a revenue source. He questioned whether the council should consider all these factors. Ms. Nichols agreed that there should be a line-by-line review of add-backs. She favored a tax approved by the voters, possibly a package. She would not support a single-item tax. Ms. Schue said the council needed to review the add-backs and needed to negotiate. She favored adding additional sources of revenue to close the IIgapll. She favored further study of the Motor Vehic1 e Fuel Tax and a restaurant tax. Mr. Holmer did not bel ieve the "gapll. He did not think the City needed additional revenue. He favored line-item review of the add-backs and service restoration. He said the council should review the forecast assumption such as the inflation rate of five percent and such as an average six-percent increase in salaries. Also, the assumption that revenue-sharing will not change should be explored. He said the Motor Vehicle Fuel Tax had merits but only if it was part of a package. The revenue sources or package should be reviewed by the voters and shoul d enhance the physical assets. It shoul d be a program of mai ntenance. The Motor Vehicl e Fuel Tax shoul d be eannarked. He agreed the Hu1t Center was part of the City's infrastructure and should be maintained as a part of all the City's assets. Mr. Keller concluded that they agreed there was a shortfall in 1986. There was concern about what the shortfall might be and staff could come up with a better answer. The City Council wanted to review the restored line items. The City Council was willing to discuss a package, such as the Eugene Plan. Mr. Keller favored the study of a utility tax. MINUTES--Eugene Council Work Session March 14, 1984 Page 3 e e - Mr. Ball did not favor Mr. Holmer's proposal to put the operation of the Hult Center in the general fund, since the Hult Center was not readily available to the general taxpayer. Councilors concurred that consideration of the Hult Center funding needed to be included in their future deliberations. Councilors agreed that there was a shortfall. Mr. Holmer sai d the only "gap" was for "infrastructure maintenance". That commitment is the only justifi- cation for added taxes. Mr. Obie saw a shortfall on the capital side of the budget, but did not know what it was. On the operating side, he said they needed to review it carefully and look at the add-backs. He favored the Hu1t Center being part of the City. He favored keying in on improving the capital side. Mr. Keller said he was convinced there would be a shortfall, but did not see an agreement on the degree. He favored using all of the room tax and not going to the general fund for the Hult Center. He did not favor a restaurant tax. Mr. Ball told why he favored the restaurant tax. He favored having revenue sharing funds put back into the capital fund. Mr. Obie expressed appreciation for Mr. Burkett and staff coming to the meeting. He favored helping Springfield with its problem. He would also go along with a three-cent Motor Vehicle Fuel Tax just to reduce property tax. He urged strong cooperation. Mr. Hansen favored sending a revenue source to the voters. He suggested a payroll/wage tax as a way to reduce property tax. He was concerned about co11 ections. Mr. Gl eason summari zed that all had agreed there was a II gap" and wanted more information and detail. Councilors wanted to look at the buybacks and all the assumptions. There were questions about the Motor Vehicle Fuel Tax. Four councilors were in favor; others had questions. The City Council was willing to talk. They favored aiming funds at the capital side of the budget. They would like details on how it will work. They would like details on gross receipts tax versus sales tax; a utility tax, a wage tax, and a tax package, such as the Eugene Plan, should also be considered. One issue not resolved was the property tax limitation measure. Mr. Burkett thanked the council for letting him come. He said Springfield did not get a tax base approved in 1980. They had deficits for the last two years and have to do something. Springfield needs new revenues. They strongly support the Motor Vehicle Fuel Tax and have to implement it with Eugene. They have to look at it for the next fiscal year. (Recorded by Beth Conant) BC:ky/CM8b20 MINUTES--Eugene Council Work Session March 14, 1984 Page 4