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HomeMy WebLinkAboutCC Minutes - 04/18/11 Work SessionMINUTES Eugene City Council McNutt Room —City Hall 777 Pearl Street — Eugene, Oregon April 18, 2011 5:30 p.m. COUNCILORS PRESENT: Betty Taylor, George Brown, Andrea Ortiz, Mike Clark, Alan Zelenka, Pat Farr. COUNCILORS ABSENT: George Poling, Chris Pryor. Honor Mayor Kitty Piercy called the April 18, 2011, City Council workshop to order. The council was joined by John Barofsky, David Funk, Gerry Gaydos, and Jean Tate of the Meeting the Challenge Task Force. Eugene Area Chamber of Commerce Director David Hauser was also present. Also present were Library, Recreation, and Cultural Services Director Renee Grube, Eugene Police Chief Pete Kerns, Planning and Development Department Director /Assistant City Manager Sarah Medary, Fire and Emergency Services Chief Randy Groves, City Attorney Glenn Klein, Public Works Director Kurt Corey, Central Services Director Kristi Hammitt and Finance Division staff Mia Cariaga, Pavel Gubanikhin, Twyla Miller, and Larry Hill. A. COUNCIL WORKSHOP: Long -Term Financial Stability At the request of City Manager Jon Ruiz, those present introduced themselves and discussed their perception about where the City had been in regard to City budgets and finances for the last five years and their feelings about that perception. City Manager Ruiz then provided some context for the discussion by identifying factors affecting the budget. Those factors included the recession, a structural imbalance in the budget, the City Council's policy decision to absorb the library levy inside the General Fund, and increases in the PERS system. He also reviewed the steps the City took the previous year to balance the budget and indicated the goals for the next budget were essentially the same. City Manager Ruiz solicited comments and questions. Mayor Piercy advocated for the City to set goals for its job recruitment efforts. Ms. Ortiz said she continued to receive requests for services from constituents. She asked if it was possible to set a goal for a core level of service, acknowledge the City was "not there" yet, and celebrate when the goal was achieved. Ms. Cariaga suggested the multi -year financial plan addressed Ms. Ortiz's questions by identifying unfunded needs. Ten of the unfunded needs were highlighted as priorities to inform the council's discussion. MINUTES — Eugene City Council April 18, 2010 Page 1 Work Session Mr. Farr wanted to be able to clearly articulate to constituents where the City spent its money so he could explain the costs and tradeoffs involved. Mr. Barofsky believed the City needed to address the condition of non - General Funds such as the Ambulance Transport Fund. He also suggested that political feasibility had led the task force to rule some funding options out, although they might be appropriate for the need. He thought each service had different political and funding strategies attached, and believed the public would be willing to support ambulance transport through a service district or some other creative funding mechanism. Ms. Tate noted the role that the Multi -Unit Property Tax Exemption played in the construction of housing near and in downtown, and pointed out that after the abatement period, such developments contributed significantly to the tax base. She said that such public investments eventually did get paid back. City Manager Ruiz then asked meeting participants to list their worst and best outcomes for the discussion on 3" x 5" cards. Those present then shared their best and worst outcomes with the rest of the group. Staff collected the cards at the conclusion of the exercise. City Manager Ruiz called for a brief break. Ms. Tate left during the break. Ms. Cariaga provided background on the Meeting the Challenge Task Force, which had been formed in 2009 to discuss a major new revenue source to fund general services. The task force discussed a restaurant tax, a utility fee or monthly fee for service, and a personal income tax. The latter idea was discarded because Ballot Measure 66 was on the ballot at the same time. She asked task force participants to comment on the work of the task force. Ms. Cariaga noted that other members of the task force included Merle Bottge, Jared Mason -Gere, Gretchen Pierce, Michael Redding, and David Tam. Mr. Gaydos expressed appreciation for the process and the staff support. He said the task force was concerned about the economy and agreed a strong economy was an important part of any proposal. He referred to the considerations listed on page 1 -2 of the task force report and asked the council to review them at a later time. Mr. Gaydos said that the task force had focused on the restaurant tax. Members recognized the cost of implementing such a tax. The task force had agreed it was important to work closely with the industry on a restaurant tax. Eugene had tourist attractions and sports events that drew people from across the region and they visited restaurants while in Eugene. He thought the recommendation was time -bound to some extent and needed to be considered in the context of the recession. However, Mr. Gaydos believed the task force still stood behind it. Mr. Funk said the task force was aware a restaurant tax failed before but did not let that affect its thinking. Given time, the task force believed a restaurant tax would be supported if the City offered the restaurants help to implement the tax. He suggested a percentage of a restaurant tax's yield could be dedicated both to providing restaurants with electronic cash registers that helped to collect the tax and to a marketing campaign that encouraged people to go out to eat. The task force believed that because Eugene was a County seat, many City services such as parks were used by non - residents. The task force wanted to find a way to have non- residents contribute to the cost of such services. Mr. Barofsky said the task force considered the political implications of different options under discussion and took those considered untenable off the table. The task force took a personal income tax MINUTES— Eugene City Council April 18, 2010 Page 2 Work Session off the table in early in the process. He said the mood of the community had changed to the degree that the council was now proposing an income tax for schools. He interpreted that to mean that some of the other discarded options should be re- examined. Mr. Hauser acknowledged the Eugene Area Chamber of Commerce was generally not supportive of industry - specific taxes. He believed that political feasibility was a consideration for new revenues, and that could conflict with another value, that of fairness. Ms. Taylor liked the idea of taxing nonresidents who used City services. She asked if the task force had considered an employment tax. She indicated her opposition to a restaurant tax. She did not think Eugene was like Ashland. She said that Ashland had a stronger entertainment focus and was a smaller city. People who went to Ashland were there on vacation and costs were less significant to people on vacation. Most of Eugene's restaurants served Eugene residents, and a restaurant tax might deter them from going out to eat. Ms. Taylor said the task force did not recommend a business license tax but it worked in Portland and was a major source of income. She asked why such a tax would not work in Eugene. Mr. Barofsky said staff indicated the business license tax would not yield the desired amount. He believed, however, that such small taxes could add up and have an impact. He noted his own suggestion to double the annual $10 rental unit fee to raise revenue. Mr. Funk added that different businesses worked at different profit margins and it was challenging to achieve parity in such a tax. He did not know how Portland implemented its business tax. Ms. Ortiz appreciated the work of the task force and said everything was taxed in California, the state she came from. She expressed support for a restaurant tax because she did not think it would have much of an impact on individuals but would capture revenue from nonresidents. Mr. Farr asked how much discussion the committee had about the potential of creating an unlevel playing field between restaurants inside and outside the community. Mr. Barofsky recalled it was a concern raised during discussion of the gas tax and he anticipated it would be raised if the council proposed a restaurant tax. He believed any funding source came with tradeoffs, however. He added the committee agreed it was important to identify what the City would pay for with the money, and that it would be useful if there was a nexus between the source of funding and the expenditures it paid for. Mr. Farr recalled that in 1997 the council proposed a one percent utility tax for low- income housing and it failed by a wide margin. City Manager Ruiz said the council would not see any of the task force recommendations reflected in the budget and staff was not asking the council to take action now or in the near term. He said he convened the task force because the City had a responsibility to consider all its fiscal options. City Manager Ruiz asked the group to discuss what sustainability in the budget meant to it from a policy perspective. Participants offered the following: • A stable budget balanced revenue with expenditures but did not take into consideration all unfunded or unmet needs, such as backlog of roads maintenance, ambulance fund, parking fund, parks maintenance, building maintenance, planning and development issues those costs would MINUTES— Eugene City Council April 18, 2010 Page 3 Work Session be addressed in a sustainable budget over a reasonable period of time. Putting the budget onto a path that allowed all those needs to be met would be sustainable. (Zelenka) • We go about budgeting backwards. Creating a sustainable budget was fundamentally different than creating a stable budget. Need to reorder our thinking about budgeting process to achieve sustainability. We make long -term commitments about services or organization size and then ask how we can afford them. A sustainable budget means we ask first what we can afford, what we can expect in terms of revenues, what are our highest priorities, and what can we achieve with the funding available. (Clark) • Two ways of thinking about it —what do we want to be and what do we want to have and how do we fund those things, or do we say this is how much money we have and how much can we fund. (Zelenka) • How you work a business —you envision what you want and figure out how to get it. Would not go the other way (look at what you have and what you can do with it) and expect to run a business that is sustainable. (Funk) • Perhaps the answer was in the middle —what you want versus what you can get, because you cannot always get what you want. (Farr) • Need to consider fire services and examine service district concept so users can support. Unsure it would help or hurt bottom line, but think we need to have that conversation to see if that approach was feasible. (Ortiz) • Believe the budget was a balance of what you can afford versus what you want, which is why we use the Triple Bottom Line (TBL) analysis. Need to do the complete analysis and recognize there are tradeoffs. (Piercy) • Particularly with finite resources—if you have finite resources and only funded police and fire, not many people would want to live here. The reason we embraced the TBL approach was because it made one think of aspects to issues beyond the dollars and cents aspect. (Zelenka) City Manager Ruiz then asked the council how it would like to involve the Budget Committee in the discussion for the next several months and beyond. • Useful to have the input of citizen members, who will be more helpful if they know where council is going. (Piercy) • Hope citizens members could be brought up to speed. Always appreciate their input. Hope they are aware of this conversation given their influence. Maybe it would be more beneficial to bring the committee in to talk to the council on a more regular basis. (Ortiz) • The Budget Committee was a thoughtful group of people who give advice but do not make final decisions. The committee's approach varied greatly depending on its membership. The committee gave the council some different perspectives. Think we meet far too much as the Budget Committee already. (Taylor) • Budget Committee lay members had an opportunity to focus on a relatively narrow aspect of what the City does, similar to Planning Commission, and appreciate that focus. They bring up issues that councilors might not have time to consider. Appreciate the input of Mr. Barofsky and past Budget Committee members such as Mr. Zelenka and Mr. Gaydos. (Farr) • Value Budget Committee —its added voices enhance the conversation and bring in other points of view the council had not thought about. Plus the lay members could do leg work the council could not do because of its work load, e.g., oversight of service improvement budgeting shift. Think future budget will be a mix of efficiencies and revenues and perhaps lay members could look into those areas in more depth. Committee adds to a more robust conversation. (Zelenka) • Agree with Mr. Zelenka about latter point. Structurally speaking, like and value committee, and think it was good to have committee's voices at the table before decisions were made. The MINUTES — Eugene City Council April 18, 2010 Page 4 Work Session committee was a valuable voice of the citizenry. Perceive the lay members' utility as more short - term or medium -term value rather than long -term vision or community direction, which is what this conversation is about. However, acknowledge example of Mr. Barofsky, who advocated for long -term capital needs. Perhaps there was more value in involving the committee lay members in the longer term discussion. (Clark) • No problem with individuals on committee but I do wish the composition of the committee was more reflective of the entire community. Everyone on the committee lived in south Eugene and I believe it would have more value if its members were more geographically diverse. (Clark) • Budget Committee lay members can bring public viewpoint to suggestions and recommendations. Creating that kind of opportunity makes sense. Historically committee members have liked being asked to do more regarding long -term strategies. (Piercy) • When I served on Budget Committee it had a subcommittee focused on how improvements to the Capital Improvement Program. Such tasks were worthwhile for the committee members. (Clark) • Committee necessary but insufficient in conversation —like urban growth boundary conversation. It was a broader conversation that called for another `Envision Eugene" sort of process. Such a process could serve as a model for how the community made tough decisions. Want to avoid community polarization. (Zelenka) • Recall that in past each councilor appointed a committee member, leading to more variety of opinions. Could reconsider that approach. Remember, committee members were not elected and were no more out in the community than councilors. (Taylor) City Manager Ruiz indicated that the workshop was the beginning of a larger conversation. He anticipated that staff would return with additional thoughts and recommendations. He thanked those who participated. Mayor Piercy adjourned the meeting at 8:17 p.m. Respectfully submitted, ,8-t� Jot A Beth Forrest City Recorder (Recorded by Kimberly Young) MINUTES— Eugene City Council April 18, 2010 Page 5 Work Session