The URL can be used to link to this page

Home My WebLink AboutItem 1: Local Option Levy for City Services ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Public Hearing: Local Option Levy for City Services Meeting Date: February 4, 2013 Agenda Item Number: 1 Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 541-682-5589 ISSUE STATEMENT This public hearing is an opportunity for council to hear from the community about the proposal to place a local option levy for City services on the May 2013 ballot. The levy 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 its means, the lingering impacts of the recession have widened the gap between revenues and expenses. Over the past four years, the City has driven down costs to balance the budget, live within its means, and not raise taxes. Over the past four years, the City has already: Cut $24 million from the General Fund budget (about 20 percent) over the past four years; • Eliminated more than 100 full-time positions; and • Maintained reasonable reserves to address unexpected impacts. • 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 and current state property tax structure. At the December 10 work session, the City Manager presented a four-part FY14 Plan of Action to address the gap. The four parts of the initial Plan were: 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 S:\CMO\2013 Council Agendas\M130204\S1302041.doc 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 was 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. On January 14, the City Manager presented a plan for a City Service Fee. The fee would generate approximately $3 million to pay for: fire and ambulance services, • human services, • economic development and • library services. • It would be capped at $10 per month and include accountability and transparency measures, including restrictions on the use of the funds, an oversight committee and a review by the council after five years. The council directed the City Manager (6-2) to bring that fee proposal to a public hearing on February 4. On January 22, the council held a public hearing on the proposed amendments to the stormwater fee ordinance to amend that fee to be a stormwater and parks services fee. After hearing testimony from 22 citizens, council expressed concerns in several areas about the overall Plan of Action and its components. The council concerns were: Total cost to households is too high. • The City Service Fee mechanism is regressive. • Collecting the City Service Fee would be complicated and the City doesn’t yet have an • agreement with the Eugene Water & Electric Board (EWEB) around billing and collecting. The monthly City Service Fee would not be deductible on people’s income taxes. • As a result of these concerns expressed by the council, the City Manager presented a revised recommendation at the council work session on January 28. The revised recommendation, as amended and approved by the council (6-2), is as follows: Changed the stormwater and parks services fee so that: • Only the council, rather than the City Manager, may set the fee for FY14. ‒ The council will determine the amount of fee, if any, for FY14 as part of the council's ‒ FY14 budget approval process. The council be limited to setting a fee that includes a progressive tiered rate ‒ structure with the following elements to the extent feasible: a low income program social equity component, a rate for residential and small commercial customers not to exceed $5 per month, and a rate for large commercial and industrial customers not to exceed $25 per month. Replaced the public hearing on February 4 with a public hearing on a local option levy to • fund the same services that would have been included in the City Service Fee proposal. S:\CMO\2013 Council Agendas\M130204\S1302041.doc Under the revised recommendation, the council would amend the stormwater ordinance to put the mechanism in place to add a parks services fee component. The decision about setting the initial fee level and funding from the new parks services fee would occur during the FY14 budget process this spring. It was understood that the proposed changes to the parks services fee would be developed in a way that matches EWEB’s current practices for billing customers in different tiers. The proposed local option levy to maintain City services would be a flat amount levied each year from FY14 through FY18. It would total $3.6 million per year, and would fund fire and ambulance services, human services, economic development and restoration of library services. It is estimated that the tax rate would be approximately $0.28 per $1000 of assessed value, and the median home (currently valued at $172,965 by the Lane County Assessor) would pay about $51 per year in additional property taxes for the levy. The levy would include a provision for an oversight committee that would review the levy each year to ensure that the dollars were spent in accordance with the ballot measure approving the levy. The council chose this direction over the option to balance the FY14 budget without new revenues. The City Manager presented information to the council that included a list of alternate budget reductions that would be the basis for preparing a no-new-revenue budget in FY14. That list is included as Attachment B. In addition, the City Manager pointed out that the revised recommendation does not fully close the anticipated $6 million budget gap. This would mean that the FY14 Proposed Budget will include additional measures to close the gap. Those measures could be identifying ongoing services from the alternate budget reduction list to reduce expenditures, or could include using one-time funding to temporarily support the additional services for one more year. Timeline and Next Steps: If the council should decide to move forward with asking voters to consider placing a local option levy to maintain services on the May ballot, action must be taken no later than February 13. Immediately following the public hearing on February 4, the council will be asked to provide any additional input or direction to the City Manager so that a resolution can be drafted ahead of the February 11 follow-up work session. RELATED CITY POLICIES Council Goal of Fair, Stable and Adequate Financial Resources. COUNCIL OPTIONS There are three options presented for the council: 1.Direct the City Manager to develop a resolution placing a $3.6 million local option levy for City services on the May 2013 ballot. The levy would pay for fire and ambulance services, human services, economic development services and restoration of library services, and would include an oversight committee to review spending. S:\CMO\2013 Council Agendas\M130204\S1302041.doc 2.Direct the City Manager to develop a resolution placing a local option levy on the May 2013 ballot, and define the services and funding level for that levy. 3.Direct the City Manager to develop the FY14 budget without a local option levy, understanding that the City Manager will use the list of FY14 alternate budget reductions presented to the council to help close the $6 million gap. CITY MANAGER’S RECOMMENDATION The City Manager recommends that the council direct staff to develop a resolution placing a $3.6 million local option levy for City services on the May 2013 ballot. The levy would pay for fire and ambulance services, human services, economic development services and restoration of library services, and would include an oversight committee to review spending. SUGGESTED MOTION Move to direct the City Manager to develop a resolution placing a $3.6 million local option levy for City services on the May 2013 ballot. The levy would pay for fire and ambulance services, human services, economic development services and restoration of library services, and would include an oversight committee to review spending. ATTACHMENTS A.List of Alternate Budget Reductions FOR MORE INFORMATION Staff Contact: Sue Cutsogeorge Telephone: 541-682-5589 Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us S:\CMO\2013 Council Agendas\M130204\S1302041.doc %XXEGLQIRX% FY14ALTERNATEBUDGETREDUCTIONS OngoingServices ItemAmount CSEliminateEquityandHumanRightsProgram$380,000 CSEliminateMentalHealthCourt$50,000 CSEliminateNeighborhoodServices$465,000 CSEliminateSustainabilityProgram$126,000 CSPutLCOGDuesintoAbeyanceIndefinitely$30,000 CSReduceCouncilTravelandSisterCitiesProgram$34,500 CSReduceFundingforJailBeds$350,000 EPDEliminate2ndCahootsVan$300,000 EPDReducePoliceInvestigations$420,000 FireEliminateFireCompanyatStation#2$400,000 FireEliminateHazMatTeam$200,000 LRCSCloseBranchLibraryatSheldon$275,000 LRCSCloseBranchLibraryinBethel$280,000 LRCSCloseDowntownLibraryforOneDayaWeek$500,000 LRCSEliminateTeenCourtProgram$100,000 LRCSMothballEchoHollowPool$450,000 LRCSMothballSheldonPool$450,000 LRCSReduceCommunityEvents&Partnerships(EugeneCelebration,LaneArtsCouncilGrants,JacobsGalleryetc.)$50,000 LRCSReduceRecreationPrograms&Services(Youth&Family,Adaptive&SeniorServices)$372,000 PDDEliminateFundingforMetroPartnership/SouthernWillametteAngelNetwork$55,000 PDDEliminateHSCDiscretionaryFundingfromtheGeneralFund$860,000 PDDEliminateLookingGlassFundingforStation7$36,000 VincentDePaulCarCampingContract$81,000 PDDEliminateSt. PWCloseNeighborhoodParkrestrooms$94,000 PWReduceParksMaintenance$510,000 PWSellLaurelwoodGolfCourse(ongoingoperationalsavings)$50,000 $6,918,500 OneTimeItemsThatWillNotBeContinuedWithoutAdditionalFunding ItemAmount 0 CSBuckleyHouse/GangPreventionPrograms$225,0 FireAmbulanceTransportFundSupport$300,00 FireFireCompanyatFireStation#2$320,00 PDDAdditionalHumanServiceFunding$100,00 PDDEconomicDevelopment/EconomicProsperity$200,00 PDDHSCFundingAdditioninFY13$175,00 PDDWinterHomelessStrategies$225,00 $1,545,00