Loading...
HomeMy WebLinkAbout12/08/1992 Meeting e M I NUT E S Eugene City Council Work Session McNutt Room--City Hall December 8, 1992 4 p.m. COUNCILORS PRESENT: Shawn Boles, Ruth Bascom, Debra Ehrman, Bobby Green, Randy MacDonald, Paul Nicholson, Kaye Robinette. COUNCILORS ABSENT: Roger Rutan. The work session of the Eugene City Council was called to order by His Honor Mayor Jeff Miller. I. PLANNING ISSUE: VAJGERT Cathy Czerniak of the Planning and Development Department provided background information on a permit issued in error by the City. The property owner sought a building permit in 1989 from the Permit and Information Center and was issued a permit for the construction of a house at 4355 Spring Boulevard. e Ms. Czerniak said the building permit was issued in error as the property in question was outside the urban growth boundary (UGB). Acknowledging the error, staff agreed to initiate a UGB change in the next Metropolitan Area General Plan update to include the property within the UGB. That update is scheduled to begin in July 1993. Ms. Czerniak said that the council could initiate the amendment prior to July, in tandem with an amendment being initiated in January 1993 for property near the airport. City Manager Mike Gleason offered some clarification regarding the incident. He said that the property owner had previously sought a building permit from the City which was not issued because the property was outside the UGB. Lane County staff referred the property owner back to the City with a notice that the property was inside the UGB. The City accepted the notice from Lane County without further research and issued the building permit. Mr. Gleason said that, subsequently, the City discovered that the property was outside the UGB. Responding to a question from Mr. Robinette, Ms. Czerniak said that there was no significant difference in cost between processing the amendment in January or July. The council agreed to initiate the amendment in January 1993. e MINUTES--City Council Work Session December 8, 1992 Page 1 4 p.m. - ---- - -- --.- e Mr. Boles noted for the record that the amendment was a one-time adjustment to the UGB to correct an error and was not a precedent for future action. Ms. Czerniak said that as a result of the council's action, the UGB would be moved 140 feet east from its present location to include the existing house. II. WORK SESSION: FY94-FY99 FINANCIAL FORECAST Tony Mounts, Financial Management Services Division, provided the staff presentation. He used a series of graphs to show the council a best case scenario in which the economy remained stable and State replacement revenue becomes available for school funding; a worst case scenario in which a recession occurs and no replacement revenue is available for schools; and the best case scenario overlaid with the Eugene Decisions strategies. Mr. Mounts reviewed the revenue and requirement assumptions underlying the three scenarios. Mr. MacDonald suggested that staff and council use the phrase proffered by Budget Committee member Tim Laue, "Eugene Transitions," when discussing the implementation phase of Eugene Decisions. Mr. Nicholson questioned why the scenarios did not include the possibility of unexpected revenues resulting from, for example, Clinton Administration decisions. Mr. Robinette suggested that the council had little experience e with such unexpected revenues. Mr. Mounts said that Warren Wong, Administra- tive Services Director, would discuss some of the potential "upsides" of the FY94 budget. Mr. Gleason noted that the council adopts the variables in the forecasting model employed in the process. He added that, while staff has attempted to incorporate all the possible revenues available, there has been little "upside" to the forecast in the past ten years. The City's work load continues to increase, which affects the results of the forecast. Mr. Mounts noted that generally, the forecast is not based on any elaborate financial modeling due to the dependence of local government on property taxes. The principal elements in the forecast are the inflation rate, existing revenues from outside agencies, and the service mix carried forward. The forecast indicates trends based upon those factors, and is not a precise projection. Mr. Mounts said for that reason, the forecast for earlier years in the forecast period are more accurate than for later years. Mr. Mounts reviewed the worst case/best case financial forecast completed prior to the Eugene Decisions process. Mr. Mounts compared the FY92 best case assumption with the FY93 best case assumption. He noted the significant difference in the inflation rate and slight difference in property tax collection rate, and pointed out that the combined rates drove the projection up to a small degree in out years. Responding to a question from Mr. MacDonald, Mr. Mounts said that the projec- e MINUTES--City Council Work Session December 8, 1992 Page 2 4 p.m. e tion assumed an inflation rate of 3.5 percent for the first three years, and 4.5 percent for the out years. Mr. Mounts compared the projected FY94 General Fund budget predicated upon the FY92 and FY93 forecasts, noting that the deficit based upon the FY92 forecast was $7.6 million, and the deficit based upon the FY93 forecast is $6.3 mill ion. He pointed out that the forecast did not include the results of implementing Eugene Decisions. Responding to a question from Mr. MacDonald, Mr. Mounts said that the forecasts used to predict the deficits were both "best case" scenarios, and did not include loss of State revenue, compression, or increased inflation. Mr. MacDonald considered such assumptions very optimistic. Mr. Nicholson asked if the City would be in compression if the Tax Court decided that those fees now collected outside the cap legally belonged inside the $10 per $1,000 cap dedicated to general purpose government. Mr. Gleason said yes. Mr. Gleason noted that the forecasts assumed that Trojan Nuclear Power Plant would continue to operate. Mr. Mounts said revenue estimates from Trojan were dropped by $600,000 as a result of conversations with Eugene Water & Electric Board (EWES) staff. Mr. Mounts reviewed a General Fund forecast from FY94 to FY99 based upon a best case scenario and implementing Eugene Decisions. e Responding to a question from Mr. Nicholson, Mr. Mounts said that the capital budget reduction was included in the category entitled "Requirement Changes. II Responding to a concern raised by Mr. Miller about the use of the term IIEnhancements," Mr. Nicholson said that the category was better termed "Additions to the Core." The council agreed. In response to a question from Mr. Nicholson, Mr. Mounts confirmed that "Resource Changes" referred to fee increases while "Requirements Changes" referred to service reductions. Mr. Nicholson asked if his proposal to accrue $500,000 each year to fund community policing was incorporated into the forecast. Mr. Mounts said no. Mr. Nicholson said that the council needed to decide if the proposal was a part of the implementation of Eugene Decisions. Mr. Robinette pointed out that the proposal constituted an increase in service level, and the forecast was based upon a constant service level. He termed the issue one of a difference between budgeting and forecasting. It was necessary to maintain consistency for the purposes of forecast comparison. Mr. Mounts said that were one to assume that the savings come within the existing budget and accrue from year-to-year and added to the core, there was no net difference. Ms. Ehrman arrived at the meeting at 5 p.m. Mr. Mounts concluded his presentation by showing the council the results of the implementation of Eugene Decisions on the FY93 forecast for FY94, which e MINUTES--City Council Work Session December 8, 1992 Page 3 4 p.m. e reduced the deficit from $6.3 million to $4.7 million. He noted that addi- tions to the core would not be budgeted until revenue is available. The only unfunded item included in the budget is the "Safer Schools" program. Mr. Gleason said that the funds for the program were in the Transition Reserve. He reminded the council that the City is required by State law to prepare a balanced budget document. Mr. Nicholson said that he had believed that the additions to the core were to be funded, and the council's priorities dictate what services be eliminated in order to do so. Mr. Gleason suggested that such an action would lead to considerable debate during the budget process when constituencies for various services questioned their elimination. That would lead to a debate that was not focused on strategy, but rather on a cut that might or might not happen. Mr. Boles said the council made a decision which should be reflected in the budget; such decisions would mean other services will not be funded in the FY94 budget, assuming no new revenues. Ms. Bascom objected, saying she believed that the decision had been to add to the core if revenues became available. Mr. Gleason said that the council's strategy was adopted with the under- standing that implementation of further reductions, based on council priori- ties, would occur if no new revenues were secured. He asked the council if it wished to direct him to develop a budget reflecting the additions to the core and service reductions based on the priorities in order to fund the additions. Mr. Miller said that the council had not decided its course of action if no e new revenues became available, and staff was required to prepare the budget document before that decision was made. Mr. Boles said that staff had council policies that would drive the service reductions. Mr. Robinette objected, saying he did not believe that the issue was so simple. Mr. Gleason said it was his recollection that the council had agreed to postpone a decision on a Strategy C (no revenue strategy) prior to going to the voters. Absent that decision, staff had no choice but to bring the council the budget document, based on the forecast. The council's choice of "zero" (a no new revenue strategy) could be implemented through a supplemental budget after the election. Mr. Robinette said that the Council Committee on Eugene Decisions had recom- mended that the council agree on Strategy C, because it did not feel that the council could place the decision on the City Manager through implementation of the council's priorities. Mr. Boles said that it was not easy to use the policies to create the budget, but it was the tool the council had placed in the City Manager's hands to do so. Mr. Robinette disagreed, saying that the priorities were not sufficiently defined to reach the level of detail reflect- ed in the budget. He reiterated that the council needed to agree as a body what "zero" means. He added that the council would not let the City Manager make those decisions if he wanted to. Mr. MacDonald agreed. Responding to a question from Ms. Bascom regarding the role of the Budget Committee, Mr. Robinette said that members present were receiving the same e MINUTES--City Council Work Session December 8, 1992 Page 4 4 p.m. e information as the council. Mr. MacDonald said that the committee could be instrumental in the creation of Strategy C, and involved in the management of the changes resulting from the Eugene Decisions process. He termed the meeting the beginning of Eugene Transitions. III. WORK SESSION: DIRECTION ON PREPARATION OF FY94 BUDGET Mr. Wong said that preparation of the FY94 budget was underway. In the next 60 to 90 days, staff will be refining revenue and expenditure projections. Mr. Wong referred the council to a packet of materials previously distributed entitled "FY94 Budget Options/Issues." He employed the materials in his presentation. Mr. Wong reviewed a chart in the handout that compared the FY94 six-year forecast with the proposed FY94 budget with and without the impact of Eugene Decisions. Mr. Wong noted that revenue assumptions on the chart included the increased user fees and charges previously discussed by the council. In addition, the council had approved the addition of $300,000 to working capital in Supplemen- tal Budget No.1, which was reflected in the chart. The departmental require- ments assumed a carry-forward service system, incorporating the first year of the Eugene Decisions implementation plan. Mr. MacDonald asked for information regarding the difference between the e forecasted beginning working capital and proposed budget working capital figure. Mr. Wong said that the forecast assumed the $500,000 transition contingency was not expended in FY93. The $8.5 million in the forecast is an $8 million base and $500,000 from the transition reserved carried over from FY93 to FY94. Ms. Bascom asked about the relationship of the amount in beginning working capital on the City's bond rating. Mr. Wong replied that there are two reasons for beginning working capital: 1) in order to make payroll and accounts payables, the City requires the cash; 2) it does help the City's credit rating by carrying "reserves" for various reasons. Mr. Gleason added that in a worst case scenario, it is the last source of funds to draw down. Mr. Wong reviewed information in the handout regarding General Fund actual resource and requirement figures for FY94. Mr. Boles asked Mr. Wong for clarification of the capital budget figure of $4.5 million in the forecast. Mr. Nicholson reminded Mr. Boles that the deficit was forecast by council direction with a capital budget of $4.5 million. Mr. Wong said that the $4.5 million was part of the original deficit forecast for Eugene Decisions of $8 million. That figure was carried forward to the initial planning for the budget; the council's most recently agreed- upon figure of $3.7 million was included in the third column on the chart showing the budget with the implementation of Eugene Decisions. e MINUTES--City Council Work Session December 8, 1992 Page 5 4 p.m. e Mr. Wong reviewed General Fund FY93 estimates for resources and requirements. Mr. Wong reviewed FY94 proposed budget figures reflecting the changes result- ing from Eugene Decisions. Responding to a question from Mr. Green regarding the difference between FY92 actuals ($1.1 million) and FY92 estimates ($4.5 million) for nondepartmental expenditures, Mr. Wong said that the $4.5 million included a transfer of $2.3 million for the capital budget and to address Fleet expenditures, $1.1 million in transition contingency discussed the previous evening by the council, and miscellaneous line items. Mr. MacDonald asked what accounted for increases between FY93 requirements and FY92 operating costs. Mr. Wong attributed a portion of the increase to carryover purchase orders and reappropriations for projects not completed in the fiscal year in which they were authorized ($2 million to $2.5 million). Another portion of the increase was the transition reserve ($1.1 million). He noted that increase also reflected the recent addition of $300,000 to begin- ning working capital. Mr. Wong discussed FY94 General Fund budget assumptions: I} implements first year of Eugene Decisions without enhancements (except Safer Schools); 2) attempt to carry-forward remaining service system; no dollars for increased demand or costs above inflation; 3} 3.5 percent baseline adjustment; 4} no loss of State or County funding; 5} property tax collection rate of 90.5 percent; 6} no significant economic upturn or downturn; and 7) continued e operation of Trojan at current levels. Mr. Green asked Mr. Wong what the uncollected property taxes represented in dollar value. Mr. Wong estimated the total at $3 million to $4 million, adding that the taxes were not collected in the year levied, but over a five- year period the City recovers most of that money. It is incorporated into the revenue assumption as "prior year's tax collections." Mr. Wong said that at this point in the budgeting process, projections indicate that the City will have a $3.9 million deficit on June 30, 1994. He said that the City is not legally allowed to adopt a budget with a deficit; the budget must be balanced. Mr. Wong reviewed "upside/downside" risks with a potential impact on the General Fund deficit as identified by staff. The meeting recessed at 5:45 p.m. and resumed at 6 p.m. Mr. Wong referred the council to a list in the handout of unfunded service additions and enhancements related to increased service demand and the Eugene Decisions process, noting that the items in the list were not included in the deficit figure. e MINUTES--City Council Work Session December 8, 1992 Page 6 4 p.m. e Responding to questions from the council regarding the items on the list, Mr. Wong said that, for example, the first item on the list, increased service demand for library circulation services at a cost of $42,000, represented 2.5 FTEs to shelve books. Staff is examining the process currently in use to shelve books in an effort to see if the work could be done differently. Mr. Robinette said that the cost of doing things differently would be appropriate- ly funded by the transition reserve of $1.5 million established by the council. Mr. Wong concurred. Responding to a question from Mr. Nicholson, Mr. Gleason said that staff assumed that the council's direction was that increased demand was a problem the organization was going to have to cope with as long as possible without increased funding. Mr. Boles asked Mr. Gleason if he believed the direction to staff from the council was to "swallow" increased service demand. Mr. Gleason said yes. Mr. Boles said that the City could not absorb demand and maintain a sustainable service system. He added that if the council gave Mr. Gleason that direction, it was in error and should rectify the error. Mr. Gleason agreed with Mr. Boles about system sustainability, but said that staff was not confronted by actual choices until it moved from the planning model to the operational model. He said that it was his judgment not to bring a proposal for addition- al employees without associated funding to the council and attempt to explain why the organization was adding FTEs. Mr. Gleason said that the organization will constrain its operations to the greatest extent possible. If constraint leads to degradation of the service system, it will be necessary to re-examine e the service mix. Ms. Ehrman suggested that it might be necessary to stop certain service components in the Library, such as record check-out, pointing out that the public has not actually experienced any evidence of the City's strained financial circumstances. She said she would like the council to discuss what services may be eliminated in order to address increased demand in other areas. Mr. Gleason said that Mr. Boles raised a legitimate question about system sustainabi1ity. Mr. Gleason suggested that the system was sustainable with a bias toward less cost-increase in the system than occurred in the past. He said he suspected that the circumstances will change, but in the foreseeable future the organization must get smaller in order to make Eugene Decisions work. Responding to a question from Mr. Nicholson, Mr. Gleason said that the budget projections did not include service demand outside of the 3.5 percent infla- tion factor. Additionally, there is $500,000 added each year to accommodate changes in the baseline. Mr. Nicholson maintained that the projections should include service demand and population growth. Mr. Wong said that the finan- cial forecast takes the existing system forward and holds demand assumptions constant. e MINUTES--City Council Work Session December 8, 1992 Page 7 4 p.m. e Mr. Robinette reminded the council that it had agreed to defer several issues related to "doing things differently," and that "doing things differently" would make the system sustainable. He maintained the council had recognized at that time service impacts would occur. Mr. Wong reviewed three options developed by staff that would balance the General Fund for the purposes of preparing the FY94 budget. Responding to a question from Mr. Robinette, Mr. Wong said that it was possible to adopt Strategy C as the budget-balancing option. Mr. Gleason said staff would submit a budget to the Budget Committee in April, and it would be adopted by the council in June. If the timing did not work, Strategy C could be adopted through the supplemental budget process. Mr. Wong added that the implementation of Strategy C would also require transition funding. The meeting recessed at 6:47 p.m. and resumed at 6:57 p.m. Mr. Miller summarized the proposed options as authorization for the staff to prepare a budget with the realization that the next council will be examining implementation strategies with or without a new revenue that could supersede the selected option. Mr. Miller emphasized that selecting an option did not preclude further adjustments to the budget, which is essentially a planning document. Mr. Robinette moved, seconded by Mr. Nicholson, to adopt Option 2 as the budget-balancing mechanism for document preparation. e Mr. Boles maintained that the three options would produce a budget document that did not reflect any aspects of the Eugene Decisions process. He asked where the document would reflect the adjustments made through that process outside of increased user fees and proposed service changes. Mr. Robinette responded that the implementation of the process would occur incrementally. Only the new council can actually decide what cuts will be made if no new revenues are secured. Mr. Robinette said that staff cannot make those decisions, and the council cannot provide staff with direction until the new council goes through that process. He pointed out that the budget will include many of the changes resulting from Eugene Decisions. Mr. MacDonald said that the council was committed to Eugene Decisions rather than the budget represented by the proposed options. He said that the options represented a device to produce a planning document, and did not reflect the council's closure on the Eugene Decisions process. Mr. MacDonald said he would like continuing councilors to indicate that a vote for the motion did not represent rejection of that process. Mr. Boles said that the option is being presented as a "plug" to move the process on until the council can make firm decisions at a later time about how to balance the budget without new revenues. However, the option selected will drive preparation of a budget. Mr. Boles stated his objection to the direc- tion represented by the options. e MINUTES--City Council Work Session December 8, 1992 Page 8 4 p.m. e Ms. Ehrman asked continuing councilors how soon preparation of Strategy C would occur: after the election? Mr. Robinette said no. He expressed the hope that the strategy could be prepared in January. Roll call vote; the motion passed, 5:2; Mr. Boles and Ms. Ehrman voting no. IV. RESTAURANT TAX CHARTER AMENDMENT Mr. Mounts provided the staff presentation. He referred the council to the draft charter amendment, ballot title, and resolution calling for the vote regarding the charter amendment in the meeting notebook. The council reviewed the charter amendment. Ms. Ehrman expressed concern about Section 54(1)(c) dedicating the taxes to a specific purpose. Mr. Robinette referred Ms. Ehrman to Section 54(1)(d) of the amendment, which stipulates the tax can be used for operations and capital construction. Mr. MacDonald referred to Section 54(I)(c) and asked if the word "dedicated" meant dedicated generally to capital or operations or a mix of the two. Glen Klein of the City Attorney's Office said the tax could be dedicated to a mix of capital and operations. Mr. MacDonald indicated a wish that the council go on record as accepting that intent. e Mr. Boles referred to Section 54(2)(c), which provided for imposition of the tax on January 1, 1994, and asked why the tax would not be in effect upon passage. Mr. Mounts pointed out that it was necessary to institute adminis- trative procedures and rules prior to imposition of the tax. Responding to a question from Mr. Robinette, Mr. Klein said that the amendment provides for the effective date unless the council, by ordinance, selects a different date. Responding to a question from Mr. Green, Mr. Klein said that the funds realized from the proposed tax could be used for any purpose for which the City is currently expending public funds. Ms. Ehrman asked why the amendment could not be revised to indicate the tax will be in effect on July 1, 1993. Mr. Mounts said that in order to produce administrative rules that will avoid an undue burden on industry, the City will need to assemble a citizen advisory committee to discuss the rules. Ms. Ehrman suggested that work could take place before the vote. Mr. Robinette and Ms. Bascom disagreed. Mr. Boles suggested that staff secure administra- tive models from other jurisdictions. Mr. Gleason said he was unsure that preparing administrative rules would take nine months, but he believed that the scope of the work was sufficiently large to require at least six months. Mr. Gleason said that further, staff working on those rules would continue to have its regular work load. e MINUTES--City Council Work Session December 8, 1992 Page 9 4 p.m. e Mr. Mounts reported that Arlington, Virginia, took six months to impose the tax, and Virginia already had a gross receipts and sales tax in place. The City has no system for collecting a sales tax that it can offer to industry. Further, the tax will require development of an automated system to collect and administer the tax. Mr. Robinette asked if the date could be set administratively. Mr. Klein did not know. Mr. Nicholson said that to set the date by ordinance raised the risk of referral, but the referral would be limited to the date the tax was to be imposed. The council agreed to retain the effective date of January 1, 1994. Res. No. 4354--A resolution of the City of Eugene, Lane County, Oregon, calling a special election to submit to the voters of the city an amendment to the Eugene Charter that prohibits imposition of a Restaurant Tax except under certain conditions and also imposes a 3 percent restaurant tax for ten years. Mr. Boles moved, seconded by Mr. Green, to adopt the resolu- tion. Roll call vote; the motion passed unanimously, 7:0. Barb Bellamy of the Eugene Decisions Team reviewed a memorandum entitled "Voter's Pamphlet" which reviewed past measures for which a pamphlet had been prepared, identified costs, and discussed the time line for preparation of the pamphlet by an advisory committee. She asked the council if it wished to e direct staff to proceed with development of a voter's pamphlet. Mr. MacDonald and Ms. Ehrman indicated support for a Voter's Pamphlet. Ms. Bascom said she did not favor a Voter's Pamphlet due to her belief that few voters referred to the pamphlet. Mr. Robinette said he believed the environmental, economic, and social impacts of the measure are sufficiently substantial to warrant the preparation of a Voter's Pamphlet as required by Section 2.993 of the Eugene Code. Mr. Green supported a Voter's Pamphlet due to the magnitude of the issue. Mr. Nicholson said that he believed it would be a mistake not to authorize a Voter's Pamphlet. He pointed to the success of the Library siting vote and maintained that the high quality of the Voter's Pamphlet prepared for the election was responsible for that success. Mr. Boles moved, seconded by Mr. Green, to authorize creation of a voter's pamphlet in conjunction with the March 1993 elec- tion, and that the funding for the pamphlet come from the transition contingency fund. e MINUTES--City Council Work Session December 8, 1992 Page 10 4 p.m. - -' e Ms. Bascom agreed with Mr. Robinette that the ordinance did appear to require a Voter's Pamphlet. However, she believed the council should discuss the issue in the future because she did not believe the pamphlet had been a useful tool. The motion passed unanimously, 7:0. Mr. Miller appointed Mr. MacDonald and Mr. Nicholson to serve on the advisory committee preparing the pamphlet. The council agreed to postpone discussion on the agenda control agenda item until January. The meeting adjourned at 8:10 p.m. R2~ Mich al Gleason , City Manager (Recorded by Kimberly Young) cc408.122 tit e MINUTES--City Council Work Session December 8, 1992 Page 11 4 p.m.