HomeMy WebLinkAboutItem B: FY14 Plan on Action - City Service Fee Proposal
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Work Session: FY14 Plan of Action – City Service Fee Proposal
Meeting Date: January 14, 2013 Agenda Item Number: B
Department: Central Services Staff Contact: Sue Cutsogeorge
www.eugene-or.gov Contact Telephone Number: 541-682-5589
ISSUE STATEMENT
This work session is an opportunity for the council to provide input on a new City Service Fee
designed to maintain the current level of services to the community and prevent further cutbacks
in previously reduced service areas. The new fee is one piece of the four-part FY14 Plan of Action
to address a $6 million deficit.
BACKGROUND
At the November 14 council work session, the City Manager presented information as background
for the start of a financial strategy discussion, including discussion of a potential new revenue
source. He described the City’s efforts over the past several years to close a persistent structural
gap in the budget. Despite several years of hard work and decisions to live within our means, the
lingering impacts of the recession have widened the gap between revenues and expenses.
At the November 26 council work session, the council received an updated General Fund Six-Year
Financial Forecast that showed a projected budget gap of $6 million. The main reason for the
increased gap was the significantly lower property tax revenue to be received this fiscal year and
each year into the future, due to the depressed economy.
At the December 10 work session, the City Manager presented a four-part FY14 Plan of Action to
address the budget gap. The plan is included as Attachment A. The four parts of the plan are:
1.Economic Prosperity – Grow the Property Tax Base
2.Cost Control – Lower Costs and Find Efficiencies with Minimal Service Impacts
3.Transition Funding for Parks Costs to Stormwater Fee
4.New City Service Fee
The council voted 6-1 to move forward on the path identified by the City Manager for the financial
strategy.
The modest City Service Fee is proposed by the City Manager as a part of the Plan of Action in
order to maintain services and avoid further cutbacks in quality of life for the community. Over
the past several years, there have been discussions and examinations of possible mechanisms to
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use if the City were to look at increasing revenues to fund services. These examinations have
included the Meeting the Challenge Task Force, the Council Subcommittee on Human Service
Funding, and two community surveys. These efforts have provided a basis for the current four-
part Plan of Action, including the proposal for a monthly City Service Fee.
The Meeting the Challenge Task Force (MTC) was a group of citizens convened in 2009 by the City
Manager to talk about potential new revenue sources. MTC recommended an emphasis on
economic development that would grow the tax base and provide long-term financial stability to
the City. They recommended a restaurant tax as the top choice for a new revenue source, but also
suggested consideration of two other funding mechanisms – a utility consumption tax or a city-
wide monthly service fee. Additionally, MTC recommended that, in order to maintain the public’s
trust, when new revenue is proposed for specific services and the revenue is not generated
because it lacks public support, the services that would have been funded with that revenue
should be scaled back or eliminated.
In 2011, the Council Subcommittee on Human Service Funding was created, at the suggestion of
the Budget Committee, to explore options for stabilizing human service funding needs in the
community. The subcommittee started with the work of MTC and reviewed the recommended
revenue options along with several other mechanisms. The subcommittee as a group
recommended not pursuing a restaurant tax as it would not be politically feasible. They
supported pursuing the other two items in the MTC report – a utility consumption tax or a
monthly public service fee. Individual subcommittee members also mentioned other options that
could be pursued.
The two scientific surveys included questions about a preferred mechanism to fund important
community services. Responses in both the July and November surveys indicated a preference for
a monthly fee, as seen in the chart.
July 2012 Survey Results
As a result of this input over the past three years, the
“Given a choice [of funding mechanisms], which
alternative do you see as being the most
City Manager has proposed a modest, monthly City
appropriate?”
Service Fee for consideration by council. This particular
Monthly City Service Fee 28%
funding mechanism has become popular with Oregon
Restaurant Tax 20%
municipalities in the years since Measure 50 was
Personal Income Tax 13%
enacted, and the ability of local governments to
Utility Consumption Tax 11%
Business License Fee 11%
permanently increase property taxes was eliminated.
Refused 17%
Monthly city service fees (some called “utility fees”) have
been adopted by Oregon local governments of various
November 2012 Survey Results
sizes and for a variety of purposes. Some examples are a
“Given a choice … which alternative do you see
police, fire & parks fee in Gresham, fees in Corvallis for
as being the most appropriate?”
sidewalk maintenance and urban forest management, a
$10/Month City Service Fee 52%
Property Tax Increase 28%
fire protection fee in Jacksonville, and several others.
Neither One 14%
D/K or Refused 6%
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The basic features of the new City Service Fee proposed by the City Manager are:
A modest monthly fee that would be capped at $10 per month per fee payer.
The fee will be paid by residences and businesses in Eugene. It will be a flat fee for all fee
payers.
The fee will be administered in the most effective and efficient means possible. That may
mean that the Eugene Water & Electric Board (EWEB) acts as billing and collection agent,
or that the City uses another method for billing and collection.
The fee design will be simple, in order to keep costs for billing and collecting as low as
possible.
The fee should include appropriate measures to ensure accountability and transparency for
the community and fee payers.
The fee should be placed on the May 2013 ballot for voter approval.
Key Questions: The City Manager has proposed a City Service Fee that would be a maximum of
$10 per month and be designed to avoid further cutbacks in services. At this work session, the
council will consider several key components of the City Service Fee and provide input to staff as
the ordinance is drafted. Key questions are:
1.What services should be funded through a new City Service Fee?
2.What types of assurances should be built into the fee ordinance for accountability and
transparency?
3.Should the fee incorporate assistance for limited income individuals and families?
In putting together a proposal for the council to consider on a City Service Fee, surveys completed
in July and November 2012 provide information that has helped to shape the recommendation.
Services Funded Through New Fee: As discussed in the four-part plan, the City Service Fee is
needed to help close the budget gap and maintain services at their current level. Survey results
indicate the community is willing to pay a modest monthly service fee (up to $10 per month) to
maintain the present quality of life.
An important factor when choosing which services to fund with the new fee is ensuring that the
fee is used only for maintenance of current services or to avoid further cutbacks. When asked,
after some explanation of the City’s financial situation, whether they would prefer cutbacks in
services to avoid new taxes or fees, or to pay a modest fee to maintain services, respondents
preferred to maintain services even if it meant paying a modest fee – 58 percent in July and 61
percent in November preferred to avoid further service cutbacks. In July, community members
were asked if they wanted to maintain present services (39 percent), restore services to three
years ago (34 percent), or increase services (18 percent) with a new monthly fee.
Survey results also provide information about how the community would rank services that
should receive a high priority for funding. In July, respondents were asked to rank four service
areas that could be funded through a new fee. In the November survey, respondents were asked
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in several ways about their
July 2012 Survey Results
collective core values and issues
Rank Four Service Areas
of concern, as well as about their
% #1 or #2
Service Area Priority
spending priorities. Responses
Human Services 85%
from both surveys are shown in
Street/Bike Path Maintenance 62%
the table.
Quality of Life Services (such as parks, recreation & library) 47%
Public Safety 34%
At the January 14 council work
November 2012 Survey Results
session, the City Manager will
Priority Spending for Services and Programs
provide a recommendation about
% Top +
a package of services that would
Issue 2 Priority
nd
be funded through the new City Maintain fire protection and ambulance services 96%
Encourage economic and business development 94%
Service Fee.
Maintain funding for human services 89%
Increase police protection 85%
Accountability and
Increase jail capacity 84%
Transparency: It is essential to
Avoid cutbacks on City parks & recreation programs & 79%
facilities
provide assurances to voters and
Avoid cutting back further hours at public libraries 66%
taxpayers that the funds provided
Keep public swimming pools open 64%
through a new revenue source
are appropriately spent on programs that meet their expectations, and that caps are placed on
revenue generation. The success of building in such assurances can be seen in the recent approval
by voters of a second street bond measure that includes a number of accountability and
transparency features.
Survey data from July and November provide insight into some of the things that would be
important for accountability and transparency. The types of features tested in the survey mirror
the kinds of assurances that were built into the street bond measures and the Downtown Urban
Renewal District plan amendment processes.
Both surveys included questions about how the revenue source should be enacted, and about
dedication of the revenues, including how much discretion the council should have in enacting the
revenue source and determining how to spend the funds each year. It is very clear that the
community would expect that the council would bring a proposal for a new monthly City Service
Fee to the ballot, rather than authorizing the fee without a vote – 66 percent said that even a
modest fee must be placed on the ballot and approved by the voters.
In both July and November, voters were asked about their preferences for how the investment of
new revenues should be controlled, and in both cases, respondents were willing to provide the
council with some discretion in determining how those expenditures were allocated. The wording
of the questions was slightly different, but used the same concepts in asking the voters their
opinions, and in both cases, approximately 60 percent were willing to provide the council with
some ability to determine spending allocations, as can be seen in the chart on the following page.
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Preference for Controlling Investments
July November
Survey Survey
Allow council to determine spending 24% 17%
Dedicate a portion of spending and allow council to control the rest 36% 42%
Dedicate 100% to specific expenditures and not allow council to alter the allocation 25% 37%
Refused/Don’t Know 15% 4%
A number of arguments were proposed in the November survey to test the impact of additional
measure features related to accountability and transparency – restrictions on how the money
would be spent, a cap on the fee, an oversight committee, and five-year review clause. Voters were
asked if these features would make it more or less likely that they would support the measure. In
all cases, these features increased support for the new fee.
November 2012 Survey
Test of Arguments – Accountability and Transparency Measures
Much More or No Effect/ Doesn’t Much More or
Somewhat More Matter / Unsure / Somewhat More
Likely to Support Don’t Know Likely to Oppose
Restrictions on how the money is spent 73% 20% 7%
Cap on the amount of the fee 69% 21% 10%
Oversight committee 58% 29% 13%
5-year review clause 58% 28% 14%
In drafting an ordinance for the new City Service Fee, the council should consider which of these
features would be included as part of the accountability and transparency for the fee. At the
January 14 council work session, the City Manager will present recommendations for
accountability and transparency measures to be built into the ordinance for the new City Service
Fee.
Limited Income Assistance: Council members have indicated a concern about how the new City
Service Fee might affect residents with limited income. The new City Service Fee could include
features to mitigate or lessen the impact of the fee on those fee payers. The method for doing so
can be simple or complicated, and the impact on the cost of billing and collection will be affected
by the method chosen.
If the fee is billed and collected through EWEB, the City could participate in EWEB’s Customer
Care program which is targeted at individuals and ratepayers with limited incomes. The way the
program currently works is:
Up to $200 of bill-paying assistance is available per year.
Ratepayers at 60 percent of Oregon median income are eligible to apply.
There is similar assistance available for customers who are receiving unemployment
compensation.
There are a number of benefits from incorporating the City Service Fee into this program. First, it
is an already existing program that will be relatively simple to add to. Fee payers will have an easy
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way to access assistance through just one program that encompasses all of the items on the EWEB
bill, rather than having to go through different processes for different portions of the bill to
receive assistance. Infrastructure is in place which will mitigate start-up costs to administer. The
maximum amount of bill-paying assistance could be increased in order to accommodate the new
City Service Fee, if that amount were to be funded through proceeds from the fee.
If the fee is not billed and collected through EWEB, City staff would look for ways to achieve a
similar outcome for fee payers. Goals would be to provide assistance to fee payers who need it
most, and to make the application process simple and streamlined, which would also help to keep
billing and collections costs low.
At the January 14 council work session, the City Manager will present recommendations for
including limited income assistance into the new City Service Fee proposal.
Timeline and Next Steps: The focus of this work session is on the fourth item in the plan: a new
City Service Fee to maintain the present quality of life in Eugene. If the council should decide to
move forward with asking voters to consider such a fee, action must be taken no later than
February 13 to place the measure on the ballot. In order to meet that schedule, the following
dates have been set aside for council discussion and public input:
January 14 work session
January 28 work session
February 4 public hearing
February 11 work session and possible action
February 13 work session and possible action (if needed)
The council will also consider changes to the stormwater ordinance during this time period, which
is another key part of the four-part plan. That ordinance will provide for transitioning funding for
parks costs to the stormwater fee. The proposed schedule for considering those changes is:
January 22 public hearing
January 28 possible action
RELATED CITY POLICIES
Council Goal of Fair, Stable and Adequate Financial Resources.
COUNCIL OPTIONS
The council may accept the City Manager’s recommendation to move to a public hearing on an
ordinance for a monthly City Service Fee on February 4 as proposed at the January 14 work
session, or may choose to direct the City Manager to adjust the recommended approach.
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CITY MANAGER’S RECOMMENDATION
The City Manager recommends developing an ordinance for a monthly City Service Fee and
proceeding to a public hearing on February 4. Specific recommendations about services included,
accountability and transparency measures and limited income assistance will be presented by the
City Manager at the January 14 council work session.
SUGGESTED MOTION
Move to direct the City Manager to proceed to a public hearing on February 4 for ordinance for a
monthly City Service Fee as proposed at the January 14 council work session.
ATTACHMENTS
A.A Plan of Action to Address the Fiscal Challenge: Closing a $6 Million Deficit
FOR MORE INFORMATION
Staff Contact: Sue Cutsogeorge
Telephone: 541-682-5589
Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us
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%XXEGLQIRX%
CityofEugene
APlanofActiontoAddresstheFiscalChallenge:
Closinga$6MillionDeficit
CurrentSituation
TheCityofEugenehascontinuedtoexperiencethedistressingeffectsofthesteepeconomicdecline
thatbeganin2008.Thebusinessandpropertyimpactsexperiencedbythecommunityresultinreduced
revenuestosupportCityservices.Otherdifficultdecisionshaveledtoreducedrevenues,suchas
decidingtolettheLibraryLocalOptionLevyexpire.Overthepastfouryears,therevenuereductions
havebeenaddressedthroughspendingandpersonnelreductionswithafocusonmaintainingservices
tothecommunity.
Overthenextseveralyears,theCityofEugeneisanticipatinganadditional$6millionbudgetshortfall.
Thisprojection,generatedfromtherecentlyupdatedGeneralFundforecast,doubledthe$3milliongap
thatwasprojectedinMay2012.Propertytaxesmakeup66%oftheGeneralFundandchangescan
significantlyimpacttheabilityoftheCitytofundservicesinthecurrenteconomicenvironment.
Becauseofthedepressedeconomy:
TheCityreceivedsignificantlylessincomefromcurrentyearpropertytaxesthan
anticipated.
Cityofficialsexpectlowergrowthratesinfuturepropertytaxes.
WithoutactiontofilltheGeneralFundgapinFY14,theimpactoflowerthanexpectedrevenues
gapwilllikelygrowinfutureyears,resultingin
(income)overtheforecastperiodwillcompoundandthe
significantservicereductionsthatwillnegativelyimpactthequalityoflifefor ƵŐĞŶĞ͛Ɛresidents.
Likeothercommunities,theCityofEugenehasfaceddeficitsoverthelastseveralyears.Nonetheless,
byexercisingsoundstewardshipofpublicresources,theCityhasachievedbalancedbudgets,lived
withinitsmeans,andnotraisedtaxes.Atthesametime,wehavecontinuedtoinvestincommunity
goalsandminimizedimpactstocommunityservices.Stridesmadetoaddressthesefiscalchallenges
haveincluded:
fouryears.
Cutting$24millionfromtheGeneralFundbudget(about20%)overthepast
Eliminatingmorethan100fulltimepositions.
Maintainingprudentreservestoaddressunexpectedimpactsduetoshiftsinincomeand/or
expensesthatcouldnotbeanticipatedinadvance.
ManypartsoftheŝƚLJ͛Ɛorganizationwereaffectedbytheseactions.Twoexamplesofservicestothe
wereaffectedbytheactionsareparksmaintenanceandlibraryservices.Parksmaintenance
publicthat
serviceshavebeenreduced,suchasmowingofgrassintheparksandmaintenanceoftheOwenRose
December2012
Garden.Libraryserviceswerefirstaffectedbyreducingthebudgetforbooksandmaterials;lastyear,
branchlibraryhourswerealsoreduced,amongotherstaffefficienciesandchanges.
Thefinancialstrategychartbelowprovidesourfivepartframeworkformaintainingcommunityservices
revenues,hasbeenaddedfor
andachievingfinancialsustainability.Thefifthcomponent,creatingnew
thefirsttimeinseveralyearsandwillinteractwiththeotherfourcomponentstostabilizethebudget
overthenextseveralyears.However,giventhereductionsmadeoverthelastfouryears,closingthe
impactcommunityservicespresently
$6milliongapsolelybycuttingspendingfurtherwillnegatively
beingprovidedtoEugeneresidents.Therefore,newrevenuesarebeingconsideredasonecomponent
oftheoverallframeworktomaintainthoseimportantservicesatcurrentlevels.
FinancialStewardship
EconomicProsperity
Livewithinourmeans
Maintainadequate
InvestinCommunityGoals
Encourage
reserves
developmentofnew
CostControl
businessesand
ReduceProperty
constructioninorder
New
Crime
tocreatejobsand
Revenues
Lookforefficiencies
FixtheStreets
increasethetaxbase
andmakefootprint
tocontributetolong
RevitalizeDowntown
reductions
termfinancialstability
Focusfirstonstability,
SupportHuman
thensustainability
Slowgrowthin
Services
expenditures
ReestablishCityHall
Identifypartnerships
andotherwaysto
reducecostsand
maintainservices
FY14BudgetʹProposedPlanofAction
ThisplanisbaseduponcommunityfeedbackreceivedoverthelastthreeyearsviaEugeneCounts,
communitysurveysandEnvisionEugene.ItisalsoguidedinpartbyrecentsurveysofEugenevoters
conductedinJulyandNovember2012.Thekeyfindinginthesescientificsurveysisthatthecommunity
isopentopayingamodestfeetoavoidfurthercutbacksinCityservices.Themostrecentsurveyresults
indicatethataclearmajority(59%)ofEugenevotersarelikelytosupportsuchafeeinthe$10per
monthrange.
WewillcontinuetheapproachǁĞ͛ǀĞinstitutionalizedoverthepastfourbudgetyearstocontrolcosts
andinvestincommunitygoals,whilelivingwithinourmeansandbeinggoodfinancialstewards.The
proposedplanofactionisdesignedtofilltheGeneralFundgapof$6million,strengtheneconomic
prosperity,maintaincommunityservicesattheirpresentlevels,andprovidefuturefinancialstabilityto
ensurecontinuationofthoseeffortsinthelongrun.
December2012
1.EconomicProsperityʹGrowthePropertyTaxBase
Ultimately,ourpropertytaxbasemustgrowtoensurethatlongtermrevenuesareavailableto
maintainservicesattheirpresentlevels.Additionaleconomicprosperityactionswillbeimplemented,
guidedbytheRegionalEconomicProsperityPlan,EnvisionEugeneandCouncilgoalswithongoingfocus
onsupportingthelocalbusinesscommunity,employmentandwagegrowth.Theseactionswillalso
encouragenewandexpandedbusinessinvestmentinexistingvacantandunderutilizedindustrialand
commerciallands.However,growingthepropertytaxbasealonewillnotclosethe$6milliongapinthe
nearterm.Nearlyabilliondollarsofnewpropertyvaluewouldbeneededtoachieve$6millionof
additionalrevenue,whichismorethantwicethevalueof ƵŐĞŶĞ͛Ɛtoptentaxpayerscombined.
2.CostControlʹContinueFootprintReductions
TheCityhassuccessfullyreduceditsGeneralFundexpensesinrecentyears.Employeeswillagainbe
askedtofindadditionalefficiencies,includingcontinuedandexpandedcommunitypartnerships.This
willbedoneinawaythathasminimalimpactondirectservicestothecommunitybeingprovidedbyor
throughtheCity.
3.TransitioningFundingforParksCoststoStormwaterFee
TransitioningfundingfortheGeneralFundparksmaintenancebudgetintothestormwaterfundwillfree
upGeneralFundmoniestomaintainothercommunityservicesthatarecentraltothequalityoflifefor
allEugeneresidentsandpreventfurthererosionoftheseservices.Itwillalsoprovideamorestable
ongoingfundingsourceforparksmaintenance.
4.NewCityServiceFee
Unfortunately,theaboveactionswillnotclosetheentirebudgetgap.Asaresult,theCitywillneed
additionalrevenuestomaintainthecurrentlevelofservicesandmovetheorganizationforwardon
prioritygoals.Asnotedabove,thesurveyhasindicatedtheĐŽŵŵƵŶŝƚLJ͛Ɛwillingnesstopayamodest
monthlyservicefeeinordertomaintaintheirpresentqualityoflife.Baseduponthatinformation,the
proposedFY14PlanofActionrecommendsthattheremaininggapbeclosedbyaskingEugenevotersto
authorizesuchamodestfeeofupto$10permonth.
Thedepressedeconomyhasimpactedourcommunityandweknowmanypeoplearestillstruggling.
WehaveworkedhardtomaintainservicesweknowareimportanttothequalityoflifeinEugene.
However,wehavereachedapointinwhichwecannolongermaintaintheservicesweprovidetoday
withoutamodestfeeincrease.Weareputtingforthaplanforconsiderationthatcouldmeetthedesire
tohaveahealthy,vibrantplacetolive,balancedwithsensitivitytothefinancialimpactthatthese
proposalswouldhaveonEugeneresidents.WeareconfidentthattheconversationwiththeCity
Councilandthecommunitywillprovidevaluabledirectiononthesedifficultchoices.
December2012