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HomeMy WebLinkAbout2007-01-04 Transcription January 4, 2007 City Council Budget Work Session Page 1 January 4, 2007 City Council Budget Work Session 8:00 AM Council: Bailey, Champion, Correia, Elliott, O'Donnell, Vanderhoef, Wilburn Staff: Atkins, Helling, Dulek, Karr, O'Malley, Mansfield, Lewis, Goers UISG Rep: Volland Tapes: 07-01, Both Sides; 07-02, Side 1 BUDGET SESSION: Atkins/ Ready to go? Wilburn! Ready to go. Atkins/ Okay, I gave you a handout, which is simply a copy of the overheads I'll be using, excuse me... that a number ofthem were just taken directly from the budget. You can doodle on those or your budget. Couple things to start off with - late, was it late, Deb, late yesterday afternoon we got our new valuations? And we've not calculated those in. That's the reason we dynamic number....that were overstated in the General Fund by $130,000 on the revenue side. So, we'll have to make an adjustment there, and the tax rate is about 3 cents. I'll calculate... those have not been calculated into any information I'm going to give you, and that, again, the three's going to be dynamic and may change a little bit. But those are numbers we have to get from the auditor. Just kind oftuck it away, and I'll flag it for you as we go through. Assume the same process, I have a flipchart, you ask a question... we'll get it recorded and get back with you. Today's presentation is substantially an overview. We have planned for the 16th. That will be the Capital Project. We'll go over debt service today, as far as from a tax policy standpoint, but the actual projects are being prepared for the 16th.. .in here. So, and I assume you have that on the calendar. Everyone in the audience get one of these? Okay (unable to hear). Okay, fiscal policies...in the front of your budget book is a list of our fiscal policies. There's a couple of them that I will call your attention to now. Our debt service levy, based on our 25% policy, has exceeded in the year 2010. We'll talk about that and what the implications are on that. It could be dramatic in the number of projects, if we wanted to reduce them. Weare proj ecting - that's three, almost four years out, on what valuations are going to be so there.. .it's flagged in your budget. Cash balance - you have a 30% cash balance policy. Also, something I'll go over with you. In balancing the budget we take the expense side, balance it, put it together, compare it to the revenues, add and subtract, and it comes down to 31 %, 30... that does have some implications for you and I'll take you through that shortly. One of the bigger issues we'll have, as far as fiscal policy, is the Road Use Tax. It's just simply not growing at any reasonable rate to allow us to use it for Capital Proj ects, given This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 2 some of our operating policies. The budget is fiscally sound. The growth in the tax base continues to be a critical issue for us. Also another topic we'll talk about are the Governor's Task Force on commercial evaluations; just exactly what they're going to do - we don't know, and I have some projections for you on the implications ofthat. Okay. Inflation and market adjustments - we use a variety of sources. There's a Kiplinger Forecast that we use to adjust our expense side. The indications are modest inflation, about 2 v,%; fairly steady in our interest rates. We projected those accordingly. We have in services and commodities, they've indicated that a 3% adjustment, which we did apply to various commodities, other than some real specific ones, such as fuel that I'll call out for you. You have on your agenda for next week a three-year labor agreement with our large...union in the 3% area. That's also been calculated in. There is an increase in the benefit levy. The State has put together, and again, I'll show you in more detail the employer/employee contributions to IPERS. It will go up over the next four years. Police and Fire - pensions are also up there. Our property and casualty insurance - we've had to increase by 35%. Good bit of that is a reflection of the storm. Well, it is what it is - we were covered; that's the important thing. And our liability insurance, projected to increase at 10%; postage at about 10%; fuels, we have bumped up to where we're at our current level and then added another 10% on top of that. It's just, and I have a chart that I'll show you. So, all kinds of inflation adjustments have been made into the, into the operating budget. If you look at chart, second one, just to give you a feel for.. .oops...you're doing real good, Steve. Give you a feel for...sometimes these adjustments that have to be made can be somewhat insidious. I mean, we're doing basically the same... this budget is substantially unchanged as far as its program of service. Do pretty much what we're doing right now; for example, with respect to our fuel costs, seven budgets ago it was $1.00 a gallon or less. We're double that. That's a pretty dramatic increase. And we don't, we see that sort ofratcheting up, level off, ratchet up, level off. We don't see it going back. Elliott! What percentage of our vehicles use ethanol? Atkins/ Most ofthem, yeah. Elliott! Do most ofthem? Atkins! Yeah, I'm pretty sure. Elliott! Have you figured what price gasoline, ethanol, diesel would have to get before we start putting, buying smaller vehicles that are high-mileage vehicles for buses? Atkins! The buses, no not at the...I don't see how we could buy smaller buses. Because there's a certain demand that occurs when you're running those routes. You'd end up turning passengers away. Elliott! But it just, as a business practice... This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 3 Atkins/ That's diesel fuel, by the way. Elliott! Yeah, as a business practice, gearing up to meet peak demands is, there is not some way that you can use small vehicles from morning until evening, and late at night? Atkins/ We've gone through the calculations on that, Bob, and it'd be swapping out buses, changing drivers. . ..it' s just simply. . . Elliott! .. .it's the personnel costs? Okay. Atkins/ Biggest part of operating the buses, the guy - man or woman - driving the thing. That's your biggest cost. (female)/ How do we control the fuel costs? Do we buy fuel futures or... Atkins/No, we don't buy fuel futures. We bid...yeah, we buy in bulk. Yeah. To give you an idea of what our fuel costs. In 05, our fuel costs were about $660,000. We're going to project out 07 at just a tad bit over a million dollars, and that's the spike that occurred the last two years. And we get good prices! Because we (unable to hear), and I think that where we also buy fuel for the County, for the schools, and they fuel up at our pumps and then pay us. Correia! So this is actual market. . . Atkins/ It's actual...that's the market. (several talking at once) That's our market. Correia! .. .not the market. Atkins/ The bigger market, there's going to be other folks out there going to pay a little bit more than we do. But we can buy in sufficient volume that we can save... Elliott! What's approximate savings? We talking about 10%? 5%? 20%? Ten...thank you. Atkins/ Thanks, Kevin, 10%. Champion! And we don't pay taxes on all that on fuel, do we? Atkins/ We do not pay taxes. Okay. (several talking at once) Correia! Do we use bio-diesel at all? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 4 Atkins/ Bio-diesel? We do? Bio, I don't think we do, but we use diesel and the eth...in fact, the ethanol is a matter of law. Don't we have to...yeah, that's a State law that requires us to use that. Correia! Ethanol? Atkins/ Yeah. Okay. State aid in our General Fund budget - we've assumed that we're not going to get any new State aid. , commercial property, state allocation, bank franchise - all ofthose are gone. Added together, that's well over a million and a half dollars that has not been replaced, or we need to replace that revenue through out taxing authority, which has not been changed. Capital Projects - we think we have a good Capital Plan for you. I'm not going to spend a lot of time on it today. Road Use Tax will be one of our bigger issues. I'm going to go over it briefly, but at the end of.. . near the end of the meeting I want to have a more substantive discussion about it. This will give you, this is one of your charts, to give you a feel for our concerns. Fiscal 07 was 82.20. We're projecting it out to be.. . and those are the State's numbers. We've learned recently that they may be a little generous. So, the cost of, for projects supported by Road Use Tax where you have construction costs generally growing at a tad bit higher than inflation. As you can see, our Road Use Tax money, which is about $5 million a year that we receive, is not keeping pace. Very little growth, as I pointed out. If you have $5 million worth of Road Use Tax and you spend $4 upon the Street's operations the more routine kind of snow removal, maintenance, etc., that leaves very little for use in Capital Projects, as is you'll see it when we do our Capital Projects, we don't use much Road Use Tax for Capital Projects in this budget. We just simply don't have the money to do it. The offset is debt, and I'll show you that. Okay? I always feel obligated to do this one. Champion! I don't like that one. Atkins/ I know you don't. (laughter) They're too high, but I feel compelled to point that one out to you. Not much has changed. This year it's.. .ag values went way up. That has an influence, but also remember, growth.. . overall growth is capped at 4% so whichever is less. Don't ask me to go through all the arithmetic, but we fortunately did not have a significant adjustment, but the bottom line is that inflation's about 3% and the rollback is declining at the rate of2.8 on an annual basis. You don't get yourself a lot of margin then. Wilburn! Well, and we don't know if the result of the Task Force is going to be recommendation to do a commercial rollback either. Atkins/ And we're going to have a discussion about that. Yep, that's exactly why...we have to protect our interests. Okay. Anyway... uh, our General Revenues... this comes directly from your budget. We won't spend a load of time on that. You can review that yourself. Bottom line: is that our General Fund budget is our largest. It's the one that always gets the most attention - media coverage in This represents only a reasonably accnrate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 5 particular. It is our most diverse, with respect to the income. It's also our most regulated, with respect to what the State says we can and cannot do with each of those items of revenue. And also often serves as a clearing account where you'll...for all practical purposes, a clearing account. You'll see certain spikes where we have to put something in the General Fund and just take it back out again. So, it's always difficult to measure.. . why did it go up this year. We may have had to an expense item; causes a spike - the next year it disappears. There's a number ofnotable...um, other sources of income. There's the Hotel/Motel Tax. There are contracts we have; for example, the contract with the University for fire protection is over a million dollars, in our General Fund. Our interest income, our long-standing policy is safety and liquidity of yield, with respect to how we manage our money. Our investments are the 90-day T -bill rate; we try to either meet or exceed that and we generally are able to do that. Elliott/ The year-end cash balance, is that part of the principle that provides interest? Atkins/ Yes. That is...that's the income, that's the base from which we invest. Of course, we aggregate all of our monies and put water money with sewer money and so forth, but that number for the General Fund, if you were to. . . in fact, if you were to lower that cash balance, you... Elliott/ Lower the income. Atkins/ .. .lowers your interest income, that's correct. So we track that very carefully. Anyway, operations generally in the budget are substantially unchanged. This is a chart, the next one up, is a chart that is not in your budget book. It's number five. This is just to give you some feel, and these numbers are now going to have to be amended slightly with the new valuations. I'd ask you to take a look at that hundred percent assessment on the top line, $3,923,000,000 - that's the value of the property. If you look down at 07 where you see $3,803,000...that's the value on 07. From 07 to 08, we've got approximately a 3% increase. Now, the previous year in 06, we see it at 3.294. That was the big year, last year, where we decided, I think it was, that was a dramatic increase in values, particularly residential. We would buy down the tax rate. There's some ofthose implications on that decision, some of the negative, that we'll show you as we proceed through here. Property values are in effect our base. They involve two.. . our property tax system, there's two important factors. One is the value, the actual assessed value, and the second is new construction. It did get...I just got it yesterday and it'll be in your packet. Had another hundred million dollar year with respect to our new construction, so that's eight years in a row over a hundred million. I backed it up to do a little. . . trying to figure out why we've been able to sustain that, other than just a general prosperity of the community. It was in 1998 that we were in the neighborhood of fifty million dollars a year. 1999, it jumped to the hundred million. That's the same year the Coral Ridge Mall opened, and there was this This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 6 supposed downturn in the,.. well, it didn't happen! Our new construction activity has been great over the last eight years. Elliott! What's the balance between residential and commercial? Does that generally hold? Atkins/ Residential property, yeah, for us, residential is about two-thirds the value; commercial/industrial is about one-third; then when you do the rollback, becomes fifty-fifty. That's why the commercial folks squawk. Elliott! You bet. Atkins/ That's.. .let's see. I have a couple.. . other charts to.. .just give you a feel. Important thing about these, this is our residential property. Broke it out. Important thing to remember on residential is that it's an every-other-year, year is a non-reassessment year. So our values are growing at about 3%. Previous year was 18. So if you track those...percentage change in the prior year, you'll see how it up, down, up... the little change just simply indicates that our new construction's been good. That's where most of that number comes from. And that's a State law that requires the assessor to do that, and of course, then you have to remember the roll. . . these values are rolled back to approximately half of what you see here. We've done well in our commercial activity. Those numbers remain healthy. Same principle applies - every-other-year. You will see some more dramatic variations in here because you'll get a new, new warehouse will open, an $8 or $9 million project, and next year you won't have anything on that one, so you are going to see variations in there, but if you look at the trend, we're trending real well, with respect to our commercial and industrial activity. Okay? Now, in the General Fund there are a variety of influences on our property tax base. For example, non-profits don't pay property tax. Elliott! Some do. Atkins/ Some do. ACT for example. Trying to calculate the influences that legislation has had over the last few years on our property tax base, and just to give you a couple quick numbers. When we lost M&E, Machinery and Equipment, which is arguably when you're thinking about the commercial/industrial task force, they got a pretty good break a number of years ago...not number of years ago, four, five years ago I think. That was lost income to us of$700,000 a year. When we lost the bank franchise in the State allocation, and personal property two years ago, three years ago, that was another million dollars. And then we did a calculation.. .on the... we're trying to figure out, because we get asked this question about the condo law. This is not in your packet; I'll be getting you a copy of it later. So, to Denny Baldridge's credit, he came up with an idea. What we did was that we took a look at where you have condos all in one name, like Connie Champion owns fifteen of these condos. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 7 Champion! Wish I did! (laughter) Atkins! Anyway, so we went through some calculations. Condos are usually a little more value than apartment buildings. Anyway, bottom line, calculating that the value of the deed holders that own more than one unit. You can only live in one condo at a time. That's always been one of our arguments, that the condo's a domicile. It's $209,000,000 in value. We rolled it back; we applied the tax rates; we went through those gyrations - bottom line: if we didn't have that condo law, it's about $1.2 million in General Fund revenue that we would have, taxing them routinely like we do other.. .so it's...I was surprised! It's a far more dramatic hit than I anticipated. Now, most of the new apartments in town are being built to condo standards, even though they're being rented, and they're applying for the residential rollback. It's a big deal, yeah, and particularly in a town like ours where rental property is an industry. Bailey! Have we provided that information to Representative Jacoby? He asked for that. Atkins! We have not. We just did it, and we will get it out. (unable to hear someone talking) I did give this to Kelly...Hayworth, because he was going to be representing us. Vanderhoefi' We were invited. Atkins! And so he did get this information. Champion! It must be a problem in Coralville, too. Atkins! Coralville's growth is fairly recent, by development standards and so...I would suspect that most of those units were built to condo standards going into the thing, so they never really knew it. Our result is the conversions. Vanderhoefi' This is something that League of Cities has tried to put in the tax bill, that they put together with the counties, is to recognize this loss and what we stated in that bill was that the first domicile was taxed as a condo. Anything more than the first one, we were going to try and pick up additional tax (unable to hear) and so far we haven't engaged anyone in the Legislature to take that one on. Bailey! Other communities are (unable to hear) Vanderhoef/ ... Cedar Rapids. Bailey! Okay. Vanderhoef/ Yeah, it's not just unique to us - probably a bigger bite to us, but I don't know that for sure. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 8 Atkins! What I would hope to do with this is that if we can get the other cities, get their assessors to run somewhat similar calculations. I mean, this is not scientific in the sense that I can absolutely guarantee, but it is a reasonably good measure of the implications ofthat condo law. It's also one of those things that occurs and you don't see it in your budget, because nothing gets cut out. It's just not there anymore. Elliott! It seems only reasonable, if you rent it, it's commercial. Atkins! That's.. .Bob, that's the underlying principle that's been argued, that if you're in the business of rental properties, then it's a business. Elliott! Right. Atkins! Yeah, if you don't live in it...then you... Correia! .. . owned the house that they rent out, that's commercial. Bailey! There are rules if you live on site and rent part of it, so yeah. Correia! Why wouldn't those same rules apply to. . . Atkins! Single-family residential? I would suspect they do. Ijust don't...(several talking at once) Correia! ...if you're renting it, if you own a house that you rent.. . Elliott! As they say, it makes sense, that's why! (laughter) Atkins! I just wanted you to have a number in your pocket, because when you add all of them in aggregate, you know, M & E 700, the million dollars from the State, plus this, you know, we're approaching almost $3 million in income to our General Fund that just went away, and was not replaced because the 8-10 levy wasn't changed, none of the other levies got changed. Okay. We live on growth. Elliott! Steve, do the smaller college towns, are they not interested also? I'm thinking of Mt. Pleasant and Graceland and...(several talking at once). Vanderhoef! The League is very interested. It's the Legislature that is not interested. (laughter) That's the problem! Atkins! That's the problem. The League's really interested. Vanderhoef! When you get all the counties to buy into this bill also, so we co-sign and take the bill for them, for the Legislature to react to, and we get nothing from them, no response at all about this. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 9 Bailey/ Is there a strong condo lobby? Atkins/ There is a strong... Vanderhoef/ Yeah, the Homebuilder...Homebuilders group, they can build more apartment/condos and make more money if they don't have to pay commercial rates on them, if they own it themselves. Bailey/ Oh, yeah, ifthey own it themselves in the construction industry. Elliott! So, they're more likely to find buyers, if the buyer knows that he's getting a break on that, or she's getting a break on that. Atkins/ Or the arguments we also make to them, when I had this discussion with friends of mine who are in the rental business. You've gotten a significant tax break, does that mean your rents are going to be lower? (several talking and laughing) And you get the chuckle and you move on. Elliott! If the taxes go up, the rent goes up, but if they go down... Correia! ...determined by the market. I mean, they're going to...the market is where the market is. Atkins/ Yep. Correia! People are paying their fair commercial taxes. Their rents aren't significantly higher than what the market. . . Vanderhoef/ But the market isn't playing fair in this, and the market is not going to be adjusting as we get more and more in the condo category. We're not going to get that adjustment, or see what is fair market. Atkins/ Well it... because of your, if you check our building statistics, the last two or three years, maybe three or four years, we really had a spike in apartment construction. Apartment/condo construction, and now our building activity has leveled off, and that seems to be the typical pattern, is that every four or five years there'll be a spike. You'll see a lot of apartments, then it drops off. I don't think we'll be seeing much new construction. Elliott! Lot of "for rent" signs around. Atkins/ Yeah, yeah, and then the market is...yes... Vanderhoef/ ... with occupancy numbers in our rental units, whether they're condo or apartments, and our building spikes? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 10 Atkins! No, I never asked that question. That's an interesting.. .we'll make a note of that. No, I never asked that question. I don't know if we can do anything... Vanderhoef! ...there might be, but if you see occupancies at 60%, versus 80%, you're not going to see any building, would be my. . . Atkins! I would think so, too. Champion! Depends on where. Atkins! Well, no, for example, a lot of the activity's been downtown because of one family investing heavily, but we've still got apartment construction in the hinterland, as well. Okay. Anyway, uh, we also need to be very. . . I did not make a chart on this, and I will give it to you in a handout. The commercial/industrial values, you'll remember that other chart, just to give you a feel for how profound this commercial task force...ifthey were to ever even think about a rollback. We did a calculation and if there was a 1% rollback.. .just 1%, it would cost our General Fund $200,000, so it's an important.. . and I have a handout for you on that. So if they start talking commercial/industrial rollback, we need to start waving our arms. This is another number that I'll get off to our legislators. But it's... .2%, $400,000, 3%, $600,000, I mean, it's really big money. Vanderhoef! And if we keep track of these kinds of numbers and look at where we're revenue neutral, if commercial is going to go down I % at $200,000, then what does our residential have to go back up to to be revenue neutral. Bailey! And the argument that high taxes, or high commercial taxes, are a barrier to growth - that doesn't play out in our community and it doesn't play out in the communities in the county, I would contend. So, I think that the problem is in other areas of the state, ifthere is indeed a problem. Vanderhoef! Well, the problem that I see, and that's part of this discussion that's going to happen in Des Moines today with the tax study committee is that if, for instance, the League of Cities goes in and says, 'We want a freeze or a floor,' on rollback, meaning the residential, and if we say that and then all at once the commercial thing comes up through the Legislature that we have not supported that rollback, although for economic development it makes sense, but they're going to look at cities and counties saying, 'Well, you signed off on this floor, or this freeze; you didn't say anything about the other.' And that's what is a real worrisome thing, so this caveat that Steve figured out these numbers for us for this particular meeting so that we can make sure that they see the upside-downside. (several talking at once) But someone saying I don't want to raise tax. Atkins! Your public position can be each I % rollback in a commercial!industrial value is $200,000 lost income. Where do we make it up? This represents only a reasonably accnrate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page II Bailey/ Well, and the question I would also ask is where is the problem? We don't see the problem. We don't see a barrier to growth, commercial and industrial in our county. Atkins/ Ours is done well. Bailey/ ... because of commercial taxes. So, and that group is supposed to report out next week, right? On the 8th? Atkins/ Much of our growth has been industrial. If you go out Scott Six, we're doing real well there. Commercial, we've certainly seen a shift where the Coral Ridge Mall area, which is overwhelmingly commercial. This is an important deal for them, as well. Yeah. Elliott! But when we talked about freeze, didn't we say that on the rollback, that we had asked for at least.. . give us three years to know what's happening, at least let us know now what we can count on for next year, and perhaps the year after. Atkins/ Machinery & Equipment, when that was changed, gave us the three years. They let us know that in three years they were going to take all the money away from us. Elliott! My question was, isn't that what we mentioned to our Legislators? Atkins/ (unable to hear) Vanderhoef! And Dave Jacoby mentioned in the legislative meeting in Coralville that he was still taking a look at uncoupling ag and residential, which is certainly something that the League has supported for many, many years. Elliott! Hello Farm Bureau. O'Donnell! It'll never happen. Vanderhoef/ ... the Farm Bureau is not as strong as it used to be. It doesn't... Atkins/ They have been quieter, I have to admit to that. When I was on the League board, they were really noisy, and that's been four or five years ago. Vanderhoef/ And that's when we were trying to uncouple. Atkins/ Okay, moving on. Tax rates. This is out of your budget book. I wanted you to be familiar with - you have a tax base, which we've had this conversation... .you take that times the tax rate, equals your tax revenue. We have a variety of tax rates available to us. If you look at, it says page 14, 08 in the comer, Fiscal Year This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 12 08. 8.10 is our General Levy, that's a maximum number that's set by State law. That's our broad, general category. That's the one that finances your Police and Fire and Parks and Rec and good piece of your Library. Those sort of expenditures. The next one is a 95 cent levy and that's for transit. An important thing about this budget year, we have historically been using some of our 8.10 to subsidize our transit operation. We do not have to do that this year. That the 95 cent levy and the other income that they have generated, covers their operational costs. That's a positive for us, because that opens a tad bit of room for us then. Wash't a lot of money, but we were using the General Fund to subsidize transit. Vanderhoef/ What was that figure last year? I was looking at that... Atkins/ I'd have to. . . well, we can check for you. Vanderhoef/ .. .how much we subsidized. Atkins/ Ifit was $100,000 I'd be surprised. It was a small number, reasonably small. Vanderhoeti' Because I was thinking I was seeing it in this budget. Atkins/ This budget, there isn't any part ofthe 8.10 levy subsidized in transit. We'll check and see if we can acquire that other number for you. Vanderhoeti' Okay. Atkins/ I think two things happened. We got an extraordinary amount of federal aid we didn't expect, and what we did do was we added two routes, from the expense side, and also Court Street. So we have those monies available. The next levy is called tort liability. That's an unlimited levy. That's our insurance program. Have a very bad chart.. .don't know if we'll be able to read.. . couldn't get it all on. The important number to look at is the levy in 2000 -- $381,000. This is market- driven, as well as experience-driven. These are one of the expenses that sneaks up on you. For example, the result ofthe tornado, we'll be paying higher rates at sometime in the future. We have not settled everything with our insurance folks on the tornado issues. We're not concerned about it. You'll note the self-insured retention, which is another word for deductible, we don't show that in the out years. That's a decision that Kevin and the staff make at the time we're putting together our insurance program, to see what we're willing, what risk we're willing to take. Back in 2000, for example, it was $100,000 for liability. We're now at half a million. Also important part of maintaining good reserves to help cover those things. So tort liability is an unlimited levy to cover for our insurance program, liability, workers comp, and property. Elliott! That's an unbelievable increase, isn't it? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 13 Atkinsl Yeah, it is. Yeah. I can remember, oh, ten or fifteen years ago, there was another...the market went wild. After 9/11, markets went because there were such huge claims that had to be settled. And.. .what's that? Wilburn! And once the reinsurance kicked in. . . Atkinsl What happened in 9/11 and those settlements affect the whole industry. We're part of that. We buy insurance from that industry. We pay. Yes, everybody pays. Vanderhoefl So was that 05 jump, was that finally the fallout from 9/11? Atkinsl Kevin, can you answer that. I don't know the... O'Malleyl Dee, that also included some losses we had, some liability losses that weren't part of9/11. So we do have some.. .that's part of the experience rating. We had two severe losses we had to pay for. Champion! But it doesn't make sense to me to decrease our self-insured retention, or whatever you call it, because you save that money so quickly. You know, if we're going to get.. . here, you have a... well, what am I trying to say? Atkinsl I don't know. (laughter) Champion! That when you have.. .that's the equivalent of a deductible. Atkinsl It is the deductible. Yeah. Champion! So, you make that up really quickly in a year that you don't use it. So it seems to me to carry a large deductible makes sense in the long run. Atkinsl We agree that. . . our financial condition is strong enough that we can carry a larger deductible. And we do that. Champion! But why aren't you using it in later year? Atkinsl And we may. Champion! Oh, okay. Atkinsl Remember, this is a budget, and we're anticipating these costs because this is what the industry is telling us it's going to be. When Kevin sits down with them, they may say, 'Look, for a heck of a deal if you'll take a million dollars of self- insured, I'll knock the bottom out of your rates.' Champion! Exactly! This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 14 Atkins! And we'll think about that. Champion! Okay, okay, I'm sorry. Atkins! Important thing for you to know is we have coverage. Secondly, if there is a deductible, the general size of it, and we've had to use these deductible mores so in the last few years than our previous years because of the market increases in insurance costs. Champion! Okay. Atkins! And also remember, it's more than just property. Workers comp is in there. Champion! Right. Atkins! We've had settlements with employees.. .injured on the job. We pay the first... O'Malley! We pay the first $400,000 to $500,000. Atkins! Okay, the first $400,000 to $500,000. Elliott! Now, that's each...we're talking about each claim. O'Malley! That's correct. Elliott! So it becomes a kind of a thoughtful crap shoot (laughter) really. O'Malley! That's correct, Bob. Atkins! (laughter) That's correct, Bob, it's a thoughtful crap shoot. Or a crappy thought. (laughter) Moving on. Wilburn! That's also the reason why you put so much effort into safety and training and etc., etc., to help. Atkins! And you really only need one employee, particularly a younger employee injured on the job, where we pay them.. . forever virtually. Vanderhoefj' And to me, this goes back to what we keep in reserves, that if our reserves drop, if we had another big storm next year, two in a row, we could be really in trouble, if we don't keep that reserve up where it needs to be. Atkins! The reserve needs to be maintained, as well as the insurance coverages. If we were to have the unfortunate. . . getting another storm, I suspect we would respond in a similar fashion, assuming it was very....we've got good insurance coverage This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 15 for that. Just in case. But we do.. . the reserve's important. Because often...an example of worker's compensation, they usually have an attorney. Our attorney's office.. ..when we go to self-insured, our attorneys get busier, but what we end up doing is we often settle with the employee. You make a lump sum payment and we're done, rather than...is that correct, Kevin? Yeah. Okay. Next one is the emergency levy. I'm sorry, excuse me, the Library. The Library has a 27 cent levy that was approved by referendum. That's applied directly. Over time will increase their expense side, in anticipation of what the 27 cents would bring in and it's been kept up there. The special revenue... Champion! .. . does that need to be voted on every so often? Atkins! No, no. The decision at the time was we're going to take the 27 cents, calculate it into a number, project it out. We'll take that number and immediately put it into the budget so the expense side of the Library went up all at once, and the 27 cents then continues to come in to support that. (TAPE ENDS) Special revenue levies is called the emergency levy. There's a 27 cent max you'll note in 07, very small. That was, remember, the buy-down. We chose to reduce the emergency levy that has been proposed with cash. Okay, coming back to you? Not coming back to you, Connie? Okay. We had a 27 cent emergency levy proposal in last year's budget. Champion! Uh-huh. Atkins! We had a big increase in value. The decision was made, let's use some of our cash reserve to buy down that tax rate. That's the tax rate we bought down. This budget has the emergency levy protected at 10 cents. It's something that we want to be cautious in its use. There's a couple things that you need to kind of tuck away because we don't know the answers. The University, for example, purchased a good piece of the Old Capital Town Center, about $8 million. That's over $130,000 in lost income for us because of that purchase. Elliott! Annually. Atkins! .. . annually, yeah. If you had a downturn in the economy, the commercial task force of the Governor, are we going to have to make up something that'd give you a little room in there. Some extraordinary expense, like a tornado. I mean, you can use your cash. It helps maintain those reserve positions. Correia! It says what if merit 6.2 cents? Atkins! Yeah, that's the question. Yeah, and we'll talk about that. Okay. Employee benefits. I think you're all pretty familiar with everything that's in there. IPERS will be going up. Police and Fire, their contribution, which is fixed statutorily at 17%. Last year was 27.7. This year it's 25.5. Done pretty well, I'm assuming, in their investments. The employee contribution does not change. That's all by This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 16 State law. They run the pensions. They approve them and send us a bill. Health insurance - health insurance.. .yes, Bob? Elliott! No, no! Atkins/ Okay! I did a calculation, just our of curiosity, in the year 2000 - it's in your handout - health insurance was $2.76 million. We projected this year at $6.1 million. 25% increase. And those are basically market -driven. They tell us what the numbers are. Okay. Elliott! Do we have a wellness program? Atkins/ Yes we do. Elliott! Active? Atkins/ Yes, we have a wellness program. We have occupational safety and, yeah, we do those things. Elliott! Good, good. Atkins/ We're kind of on the edge of being not quite big enough to support, but it really does make sense. An employee, like an ACT which has 1,000 employees, they can pretty well justify those kind of things. Our difficulty.. . the thing that helps sell me on the idea of occupational safety and health related issues to employees is the tremendous diversity. You know, we have people who put out fires and people who dig ditches and people.. ..such variety that we have a whole, a whole variety of exposure. Elliott! Well, I think not only is it a potential for saving some costs, but it's also a potential for a healthier workforce. Atkins/ Yes. Next up is the debt service levy. This is based on our projections on a planned Capital Improvement program. Important thing is to look at on this one...it's from your budget book...we've had somewhat ofa policy, at least operationally, that we retire debt, we add debt. If you'll look at the outstanding debt as ofJuly 1, that number over here.. .you can see our level of debt, 85, 85, 85, 87... we try to keep it at generally that number. Now, as we grow in value, our allowable margin improves. If you were to want to fund some additional capital projects, that taxed levy, which you have here, would go up. Fund less capital projects, you can pull it down. Elliott! Earlier the mention of the debt policy would be outgrown at 2010, were you relating to this? Atkins/ Say that again, Bob. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 17 Vanderhoef! 25%. .. Elliott! The City policy on debt. (several talking at once) Yeah. Okay. Good. Atkins! Ijust wanted to point out to you that we do try, I mean, that number is watched very carefully. We still have a really, pretty good, I think, capital plan, but you have practically speaking, you have loads of margin in there. Now let's talk about the tax implications, and that usually is the sobering aspect of it. But we do have a good position. That's also noticed by our. . . the people who rate us for bonds. If we retire it fast, we replace it with something that's substantially dollar for dollar. Our position then consistently improves with that kind of a policy. You'll see in the capital plan very little use of the Road Use Tax, but there is one little.. .little! That's a relative term... we have. We've had a long-standing policy of 25% ofthe tax rate to be used for debt purposes. As you can see, and that's our policy, it's noted by the people who evaluate our credit. That's the way we discipline ourselves with respect to our borrowing, or one of the policies on our borrowing. In the year 2010, when we go to the projects, we'll flag it for you. It bumps up a touch. It did the same in 04. 04 was... we had the big bond issue of almost $30 million, $18 of which was the Library, and the decision substantially at that time was, 'We're going to go ahead with our Capital Plan; the public has said...'. The Library, our plan, is in the neighborhood of 10-12, 10-12 plus the 18-30, that caused that spike. Elliott! Did you notice any fiscal repercussions from doing that? Atkins! Other than they...Moody's folks saw it and asked if, and they questioned us, yeah. Elliott! Did they question it because it was, it was over our policy, or were there concerns about the percent? Atkins! Both. Elliott! Both? Okay. Atkins! Yeah, both. Wilburn! So they look and see, you say. . . here's what your policies are. Are you doing what you say you're doing. If you're. going to deviate from that, did you do it, and we did it. Atkins! That's right, and we said we will deviate this year and we will bring it back. That's what we did. And they knew that. In fact, I even think they made a note to that effect in our valuation by them. There's.. .that's three years out, almost four. It's going to need some review. My goodness, we could get good bids. That This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 18 could change it dramatically. We could stage some of the projects a little more so than we're planning now over a couple years. Vanderhoef! New valuation could change that. Atkins! That valuation could change. Vanderhoef! Into the 25. Atkins! Remember, it's a percent of the tax rate. And I'll show you the implications on our tax rates. But anyway, that's debt service, and you'll hear more about that. Cash balance, we're down to the end ofthe year. Our projections... we have projected, your policy was 30%. Now, it's never going to be perfect because there's too many dynamics, as I already pointed one out to you, in our valuations. In our calculations, it came in at 32%, which means if you were to chose to do so, and instructed me to, you could say as a matter of policy we said we wanted a 30% reserve. That's okay. That means that we would have to reduce that reserve by a certain amount of money, which translates into unavailable expenditure, on your part. And it's in the neighborhood of about $300,000. Also, use it to buy down the tax rate, and then you see (unable to hear), but I'm saying there is flexibility in balancing this budget. After I submitted it to you, we went back and did the whole variety of machinations, trying to figure out all the implications. So there is room there - we brought it down to 30 - it creates in effect a revenue because you reduce your reserves accordingly. Elliott! That would be 2% of$15 million, right? You said...(several talking at once) Atkins! No, it's 2% of the. . .it's an expenditure based number, Bob. Elliott! But the year-end cash balance is $15 million. Atkins! Yes, it is. Elliott! Okay. Atkins! Yes, it's about 2%. Elliott! And what amount of income would that eliminate? We would...you say that would give us maybe $300,000. How much income would that eliminate from... Atkins! Well, you take a $300,000 Certificate of Deposit for 90 days times, times, times, and run it through, just a calculation. O'Malley! Roughly, we give up 5 Y, % on our... Atkins! That would go away, that's correct. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 19 Elliott! I just think... Atkins/ And that, Bob, that has to be factored in. Elliott! We have to look at more than what you get is what you lose while you're getting, or as a means of.... Atkins/ I think I understood what you said. (laughter) Elliott! I'm not sure I did! Correia! Could we get that calculation? Atkins/ Yeah, we'll do that for you. The important point is, your policy is 32. There's some room in there. You could leave it alone. You can buy down the tax rate. You could use it for an expense item. It's only one...good for one year, because then when we reduce that, when we do that, it'll get projected out and it'll be 30% across the board then. Or close to it. Correia! ... we put an extra roughly 500,000 into the reserve, that increased from 07 to 08? Atkins/ That's a percentage.. . yeah, it's a percentage of our expenditure. That's how that's calculated. So that number's going to go up. Correia! Okay, so that's, so that what I'm saying is does it need to go up that much this year? Can we use that to buy down... the tax rate or for other things? Atkins/ That's what I'm saying, or for other things. That's your call. Correia! So, what.. . about $500,000... Atkins/ That's about $300,000, because you have to calculate in... Bailey/ You're asking about the reserve point... Correia! I'm asking about the reserve. Bailey/ Not the unreserved. Correia! The reserved went up. Atkins/ The reserve is a percentage of expenditures. Champion! So it's going to go up. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 20 Atkins/ It's going to go up every year. Correia! What's that percentage? Atkins/ That's going to vary...urn... Correia! Why does it vary? Why's it not stay the same? Atkins/ Oh, let's say, we settle for 3% on wages in one year and 2.5 the next. We bought a, proposing an articulating loader, which is a $50,000 item in your capital outlay this year. You won't buy it next year. Correia! Right. Atkins/ It'll be those kinds of subtle changes throughout. Correia! Okay, okay. Bailey/ What's this...the reserve balance includes, and then you've got a little asterisk. Atkins/ Yeah. For, you know, our rolling stock, right. Okay? Most of our rolling stock is we pay into depreciation accounts. Bailey/ The reserved fund is... we're fully funding depreciation? Atkins/ The important thing to read is unrestricted balance. It's not a reserve. O'Malley/ I'm not sure what your question is. Bailey/ Well, it looks to be that the reserved is described as equipment and land, and it seems like it's funding depreciation. Is that.. . Mansfield! No, actually, that reserve has an amount for transit. Right now we have the transit grant for expanded service, and until I know completely what they're committed to, that balance, that grant is restricted. So it. . . Bailey/ So it can be restricted grant balances is what you've got. Atkins/ Right, yeah, thanks, Deb. Okay. We'll come back to that in summary. Next chart is, I just want to give you a feel.. .important thing I want to show you here is the summary of our tax rates. And if you'll look, beginning in Fiscal 04, on average, we have not changed the tax rate very much. It's been in the 17.6, 17.3, 17.7, 17.3, 17.7. Now, with the recent change, we will have to make an upward adjustment in 08 of about 3 cents, so that should be 17.78 in Fiscal 08. Now, back to the cash balance, back to the emergency levy, if you were to...you know, This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 21 if you did not use the emergency levy, that would reduce the 08 levy. If you wanted to buy it down, you could do that, as well. That's from using it from the revenue side. If you have some projects that you want to...and I would encourage you don't do that just yet! Think about it. Elliott! The cui. . . the major culprits in here appear to be tort liability and the insurance. Is that right? Atkins/ Those are the.. . yeah, they've gone up the most. The debt service levy made a jump from 02 to 03, and that was the big bond issue. If you look at this... Elliott! Oh, yeah, you're right! Atkins/ .. .it's pretty well leveled off. In fact, dropped a couple years. The debt service levy.. .in fact, our tax rates have been reasonably consistent over the last four years. Bailey/ ... valuations have gone up, and ours actually may be steady, but school and county... Wilburn! Well, that's important to remember too, because a lot of people don't.... Bailey/ ... was overlooked last year. We decrease and nobody noticed it because the other, the other entities (several talking at once) didn't and the overall tax rate didn't... Elliott! They don't notice if we don't raise, but they do notice if we do! (laughter) Atkins/ That's the system. Okay. That's all I have in just the General Fund summary. I do want to spend just a couple more minutes with you, and go into general questions...about the Road Use Tax. And the reason I'm flagging this is it just has a profound affect upon a whole bunch of issues. Got very little growth. Remember it isn't taxed on per gallon. We're substantially at the State's mercy. The Road Use Tax fund is now divided into 60% State, 20% county, 20% cities- give or take. The Legislature will make most ofthose decisions. Our expenditure, actual receipts, example - if you look under 08, of$5.341 million, that leaves us about a million dollars a year for use on capital projects, but that would also wipe out any reserve that we have. We've traditionally tried to maintain a million dollar reserve on our Road Use Tax, to take advantage of a grant that comes along. We've been pretty successful at that. Keeping in mind that we have a Capital Plan that's in 0.. .10. It's not out of balance, it's just we have to flag that. Think that's one of the reasons why it is what it is, is that our inability to use Road Use Tax monies for some of our capital projects. Vanderhoef! One of the things that sticks out here in Road Use Tax is the fact that State gasoline taxes have not been raised since 89. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 22 Atkins/ Correct. Vanderhoef! On the national level, also, which isn't Road Use Tax money, but it's other tax monies that we receive, it hasn't been raised since the early 90's. All of Congress and the State House keep saying they're not going to raise it, but we have to look at the increased costs on all of the infrastructure that we're trying to build and to maintain, or rebuild. If the federal highway trust fund money, which is funded by tax, is not replenished quicker, it will run out someplace between 2010 and 2012. So that means it's going to hit cities, and certainly, National League of Cities is working very hard to get this, and we do have Senator Oberstar from Minnesota who is a strong proponent for Road Use Tax and federal funding there, but we have.. . another issue is that we can't get back into the safety lieu bill and change this taxing problem, but remember that safety lieu was enacted at least two and a half years after it was supposed to have been, so the six year bill actually, it's going to come back around in that 09,010, when the federal monies are going to disappear. We've got to get it to our State House. Certainly, we can use changes in formula, but new funding is what we really, really need to move in here. (several talking at once) Well, one ofthe things that I've noticed in our use of Road Use Tax, there's a couple places that we use it that could be changed. Alternatives may not be a real positive kind ofthing, but we pay right now the benefit levy for our streets, maintenance, and operations out of Road Use Tax. I doubled checked on that to be sure that is a traditional thing that we have done, not because we're mandated to pay for it out of Road Use Tax. So, to increase the dollars available for street maintenance, we could shift the benefits levy into.. .into the benefits levy, which then has the...it becomes a new tax then off of benefit levies, so it...there's pros and cons both ways, and I'm not advocating.. . for one or the other... Champion! No, I know you're not, but I think the... .raise people's property taxes any more. I mean, we're just.. .I'm not willing to increase that employee levy at all. Vanderhoet7 The other place that we spend Road Use Tax is we have one FTE in forestry that comes out of Road Use Tax, which is for that street right-of-way area, and we did this, what.. . maybe three years ago? We... Atkins/ Oh, longer than that! Vanderhoef/ ...we hired and took it out of Road Use Tax. So there is one FTE coming out of there, and certainly we have some money for engineers, JCCOG administration, and those kinds of things. But it's rob Peter to pay Paul, which one, and the end result is going to be raising the taxes. Correia! There's...in the budget in the employee's benefits on page 101, and there's a beginning balance there. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 23 Atkins!! O!? Vanderhoef! Is that the one million.. . the holdover that he just asked us about, and says he tries to carry it so we can use it for grants? (several talking at once) Atkins! We have a million dollar balance in the Employee Benefits Fund. Why do we maintain it at that level? Correia! Yes. What I'm just wondering, you know.. .here (several talking at once) to try and keep the rate down... Atkins! Tell me, Kevin, what the thinking is on that. O'Malley! Well, we can buy it down. Atkins! We can buy it down. Correia! Why do we maintain it at that level? Is there any...what's your thinking about that? O'Malley! There's just some working capital needs, but it wouldn't be necessarily that high. Atkins! Okay. Correia! So there could be a decrease in the employee benefits levy because we have. . . Elliott! Can you tell us how much money we need to keep from raising taxes, basically. That's a figure to start with. Champion! Well I think we'd like...I'd like to decrease it. (several talking at once) I would like to decrease them. I mean, you could decrease them by not doing some capital projects. You could decrease it by reducing some of this employee levy, the benefit levy. Urn... Correia! I'm just wondering if there's a way to reduce the proposed, and not necessarily would do services this year, because, right, because you have some ofthese (unable to hear). Wilburn! Okay, can I ask a question before.. .just to, a summary type question over what you've.. . and I'm sorry, just bear with me Council, just so I make sure I'm awake and understanding. As you and staffhave presented the budget, if your residential properties about $100,000 - for a little over a dollar a month, we are maintaining our current level of staffing and City services. Weare still making some investments in our infrastructure through our Capital Improvement Program. Depending on what happens at the State House, or I'm sorry... before I get into This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 24 that, and at the end of the year, we're projecting we may have a little bit more cash than...than our self-imposed limit. Atkins/ Yes to everything you said. Wilburn! And so, and that's without any gyrations that are, I mean, that are seriously being considered at the State House, and so you're recommending, think about any reductions or deviations or new things until we have some firmer direction on where those are going to go. Is that... Atkins/ We do not know what the State will do with this commercial. Wilburn! Okay, and.. . and if those things don't look too bad, there may be a point, either during budget time.. .no, I guess it would have to be during budget time, that we may decide, 'Okay, it looks promising.' Do you want to do anything with the extra cash that's over? Do you want to further reduce that little over a dollar a month to 75 cents a month, or 50 cents a month, or nothing, or do you want to take a look.. .ifthere's still another type of investment you want to make in the community, based on the community need. Atkins/ That's the big policy question that I think you have to answer. Wilburn! All right. Atkins/ Yeah, just an overview to give you a feel, but the budget is substantially not changed, with respect to General Fund operation. And I want you to know sort of . the nuances...that's why (unable to understand) detail as we have to - as we can, I should say. Set that aside for a minute. I want you to get through the Capital Projects on the 16th. So you really have, you're thinking about both of them at the same time, because you may see a capital project that you might say, 'You know, a little infusion of short-term cash'... well, for example, one of the projects in Road Use Tax, page 60, and I'll just use this as an example. Look under transfers out, page 60, pavement rehab 350,000. We've been funding about 500,000 out of that. I mean, there's a reduction. So if you want to get that back up, and we figure for a couple years (unable to hear) because I'm assuming within a couple years, the Road Use Tax issue has to be resolved. They...they got to fix it some way, and then we can deal with it. So those are, there's some of those things in the budget - nothing dramatic - but that was reduced from 500 to 350 this year. Do you want to use your cash to do that? I want you to think about what you just heard, plus the capital projects, because if we're going to do something with some short-term cash, do something you'll get a big bang for your buck out of. I mean, we've got housing programs we've talked about. Can we initiate some funding there? I don't know, other than..J put a memo in your packet that has budget implications on housing programs. I've listed all the programs that we've used to give you an idea ofthe spending from them. So, but I think you need to see it all. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 25 Wilburn! Or, go ahead, I just wanted to make sure... Atkins/ Don't feel stampeded, but at the same time, feel stampeded. Elliott! But that's why I'd like to, to go through at least both ofthese initial preliminary sessions, but I would like to have a dollar figure. How many dollars do we have to come up with? We can keep that in the back of our mind to not raise taxes. Atkins/ To not raise taxes means you want a tax rate at 17.297? Elliott! Whatever. . . Atkins/ That means you do. Elliott! We don't raise anything.. .if we were to say... Atkins/ The tax rate. Elliott! ... we're holding no line. The peoples' tax bill. Atkins/ I can't promise that, because there's too many taxing jurisdictions. (several talking at once) If you use as a measurement the 100,000 value, we can do that, and I can give you... we can calculate a number for you on that, on what that tax rate would be. Elliott! So, a portion of the bill, that the taxpayer gets, that is City taxes, City property taxes. Atkins/ But I don't know what's value. Their value may have gone up 5%, the guy next door may have gone up 4. (unable to understand) break. Elliott! Well (several talking at once) Atkins/ I'm not trying to give you double talk, but... Elliott! No, but you must have had something in mind because there is, there is a recommendation to increase taxes by, by a certain amount, so what would we have to do to say, 'We're not going to increase.' Wilburn! The tax rate. Atkins/ The tax rate... Wilburn! You can't make the promise that someone's taxes aren't going to go up, because if their valuation went up...their rate may be the same, but they may be paying on (several talking at once). This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Wark Session Page 26 Elliott! Oh yeah, if! expand my house and I get increased taxes, but if everything is.. .if value is still the same.. . Atkins! We'll try. Elliott! At least give us an idea. Atkins! I got ya! Elliott! I understand you can't... Atkins! (unable to hear) Any other questions? Bailey! So, if we're going to look at capital projects, and try to figure all this out together, what are we going to do with the rest of the (unable to hear)? Atkins! Good overview. I mean, ifthere's specific things that you, such as, Bob, you can calculate, we'll do that. I'm saying to you that if that tax rate, it may have to change slightly because of new valuations, but that tax rate, you've got a budget substantially unchanged. Vanderhoef! I'd like an overview ofthe capital projects that would fall into Road Use Tax, and... Atkins! Could fall into... Vanderhoef! ...could fall into Road Use Tax, and what it would take in fusion of money just to get our maintenance up to where it ought to be, plus any new projects that we might want to. . . Atkins! New projects throws in a little dispute, because I don't know if.. .you may like that one and you may not. I can give you the current projects and run that number for you and give you some feel for that. Vanderhoeti' The current ones are there, but what is worrisome to me is when I look at the unfunded things, and some of them have been sitting there for years. So, what would it take for new funding to bring us up to some of those projects that have been delayed? What we're seeing nationally is deferred maintenance on all of the roads and bridges and so forth. Meanwhile, there's a demand for an expanded transportation system. There's a big project that's coming out of the ports in California that bring goods to Iowa, and the highways are not able to carry the load to bring them through, and they converge in Dallas and Houston, from the port, so what are we going to do for money to... we want the products on our retailers' shelves right now, and ifthey can't get it here. So it's a combination of This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 27 what will we be able to offer, well.. .as I see it now, we have nothing to offer to a big picture transportation system. We can't keep up with our... Atkins/ ... telling you the same thing. Vanderhoef/ Right, that survey out of the DOT yesterday said something like we're 2.4, 2.5 billion out of whack. Okay... Atkins/ You need an infusion of $200 million. Vanderhoef/ And that wasn't saying how much they were going to "look at" cities. I haven't seen the report yet to know whether they've calculated, whether part of that is within cities, or if they're just talking about their state highway system. Elliott! Go see the guy who just left CEO position at Home Depot. $210 million - he's got it! He's covered. (laughter and several talking at once) Correia! Well, I'm interested in opening for discussion looking at the reserve and the level. There's an article in the (unable to hear)...in the recommendation from the government Finance Officers' Association, reserve levels based on your expenditures, which is what we do, is anywhere from 8 to 17%. So, ours is high compared to that. I'm wondering, I mean, I'd be interested in an analysis of if we were at 25%, like above the government Finance Officers' Association, what that would do to the interest income, other kinds of issues, liability, health insurance- all of that, in terms oflooking at something more interested in doing, even some capital and some of those unfunded projects, and really (unable to hear). Champion! We reduce that reserve quite a bit from last budget year. And, I mean, I think that's a lot of work to come up with. I don't object to discussing it, but I'm not willing to reduce that reserve any more. It's not that much money. It keeps our rating up. It allows us flexibility when something like a storm comes in, it gives us money. I think you're talking dangerous ground for a very one-time infusion. Bailey/ Well, I'm not...I think if the recommendation is that level of percentage, I think that there's probably something in the middle that would still be very, very conservative that we could look at. I mean, essentially, our citizens are supporting our savings account, and to what degree are they willing to do that? Is that, I mean, and we need to be able to show them the benefits in doing that, in maintaining that level ofreserve. Ifit's interest benefit, ifit's bond rating benefits that saves us on debt service levy down the road, but I think that we need to be able to explain that. That's a pretty high level that most families in our community would love to have that level of savings and don't. Elliott! Or businesses. I think a business practice, if you had a reserve of 20%, you'd be feeling reasonably good. Uh, I also think that if we had that much, then it seems This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 28 to me, that we have reserves in a couple different categories also. And, but 1 agree with you. We have to look at the disadvantage of. . . Bailey! .. . have to be able to explain, and that's why 1 want to look at it, and then make an informed decision that we can, that we can explain. 1 mean, that makes sense. What are the benefits? Every, every expenditure, every reserve account in here, we should be able to explain to a citizen what the benefits are. Wilburn! Are places like, urn, excuse me for interrupting, are places like Moody's and those kind of.. .Moody's and.. . are they willing to share their thoughts on reserves. Maybe that might be something we could (several talking at once) Bailey! That would be very helpful too. 1 think we need to be able to articulate benefits because we can only control the levies. Taxes may go up for people, but if we can explain that, and the services that people are purchasing for their taxes, 1 think that's the accountability that we were committed to at the beginning of this year, in explaining more of these kinds of items to our citizens. Elliott! Yeah, and I. ..excuse me. Wilburn! 1 was just going to say, and 1...1 personally would like it if we can change the conversation into eXplaining to the public, you know, our tax rate in local government is about service delivery, as opposed to, and I'm not trying to.. .these were kind of the words, the conversation that were typically used to, 'no new taxes or tax and spend or liberal tax and spend,' those type of conversations aren't helpful in my opinion in terms of trying to show what, not only perform and do, but to show, 'This is about local service delivery,' and if we want certain services, they have to be paid for somehow, rather than, you know, 'no new taxes, 1 don't want the taxes to go up, or 1 want...' you know. Nobody likes paying taxes, but if we can keep the conversation about, 'Here's what you're getting for.' Bailey! I'd rather pay local than state. You get more services locally than we do from the state or from the feds, and 1 mean, if we can talk about that in a way, 1 think that that's important. Elliott! 1 think that 1 definitely do not want to raise taxes, but 1 also think that along with getting information on reserves, the health... the fiscal health benefit of reserves, we need to know what all goes into the AAA bond rating, too, because that's a vitally important aspect of our responsibilities. O'Donnell! And how does that 30% affect that...(several talking at once). Elliott! I'd like to know what are the items that they check off, when 1 say, when they say, 'Yes, you're AAA.' This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 29 Bailey/ So when we're foregoing a project, why, if we have these healthy reserves, are we doing this? Well, for these kinds of reasons, and in the long run, that makes sense. And those are the kinds of decisions we're supposed to be making, the long-run decisions. Elliott! And I think we need to talk about the services too. Vanderhoefi' Well, I would like some more accounting on the services that we provide. Sometimes we can get into this plan, well, we've always done it. Are we really getting the bang for our buck within the services that we're providing, and I think this is where our department heads certainly could come to us and say, 'This is what we're getting for this amount of money out of my budget.' And these are things that we could do, but they'll be some tradeoffs within those services, or combining of services. Bailey/ Well, and we had talked about in a previous discussion, exploring and I would like to do this ifthere's still three other people interested, exploring putting the services of the Senior Center into Parks and Rec, and if we look at our organization chart, that seems to make a lot of sense. We've got directors, but we've got a coordinator here with only one oversite responsibility. How can we look at providing those services in a different way, instead ofthe way we've traditionally provided it, and I heard that there were other people interested in looking at that, and it seems like this is the time to do that. Elliott! I'm interested in look at any move that could be both cost-efficient and productive. Bailey/ And service effective. Elliott! So I don't want to look at just that, but I think that's the only thing that comes to my mind. Bailey/ Couple of the ideas that I've come up with, I mean, it's a service that seems there's a natural affinity with another department, and yet we have two service delivery points, and I think we should look at what this might mean. So I would like to look at that, and see some numbers, and see some service implications, as well. Elliott! I'm interested in looking. (several talking at once) Correia! Going on what you were saying, Dee, one of the things that I would like, and I think it would be informative for the public, in the budget is a department head memo or something on, 'Here's our department's budget and here are the services that this department provides to the city, the community,' you know, and have it be a, you know, have it read like a story of the City's budget, how it relates to the Comprehensive Plan, you know, the vision and you know, what could we do or This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Wark Session Page 30 aren't we doing, that sort of thing, more description of, you know, we have the budget, but there's no (TAPE ENDS) and are we constrained by...that would be helpful for me making decisions on different things, but I also think it would be helpful for the public. Wilburn! ...get the information to the public, it's...these are the types of things that I think are helpful for us to explain, and a portion ofthe public will be accepting of that, but when it comes to budget time, no one's going to come up and say, 'I'm willing to do without,' you know. So that I can get, you know (several talking at once).. .it's. ..and that's understandable. Atkins/ If one more person tells me, 'Oh, you're saving a lot on your snow budget.' (several talking at once) I just kept saying, 'Could you just keep quiet?' (several talking at once) Bailey/ Yeah, it only takes one storm to spend the budget. Vanderhoef/ It's all right. We'll store the sand. It isn't going to go away. Elliott! Let the record show, you brought it up! (laughter) Vanderhoeti' Sometimes the report that comes out of departments might be in terms of response times, not necessarily a new service, but a few years ago, we were really looking at response time in housing and building, that how long did it take for a developer to walk through all ofthe steps to get their building permit and their occupancy permits and those kinds of things. Same thing with some of the things that goes through licensing through Marian's office, that the response time and what it takes, that our "within her purview". There may be things that are State purview that have to go, liquor licenses and so forth, but there are certain things like that, and those are good information people because there still are the continuing conversations in the community, 'Well, it's so hard to get this done,' or 'It's so hard to get this done,' and I find that not as true when I talk to the young developers who have come on the scene in the last five to eight years as to the traditional developers of many years ago. Bailey/ Hey, I'm beginning to include myself (several talking at once). Vanderhoeti' So. . . this kind of a report from the departments would be helpful, and any time they want to put a comparison, what it has been or if it's gone the other way, because of volume, then what happens? Atkins/ That is certainly something we'd want to schedule. Vanderhoef/ I'm sorry I didn't ask for it sooner because I know this is... This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 31 Wilburn! Well, you know, I suppose related to that, and even just thinking back about trying to change the dialogue with the public from our point of view, you know, there may be some, I would much rather for example, if it turns out that we went with the budget as proposed, then there's $300,000 what do we do with it - I would much rather. . . I find it encouraging to talk to the Chamber of Commerce and ICAD about, rather than, 'Here's the tax rate,' and getting in those gyrations, are they for or against. You know, we've been talking about some of these housing issues, Chamber of Commerce, ICAD, are you interested in helping us dialogue with your members about workforce housing? It certainly impacts Joe's ability recruit businesses to the area and that type of thing. So... Bailey/ And if we're hearing.. .one of the things that I'm interested in as a policy is we keep talking about increasing our recycling, recycling at the soccer park, we circle around multi-family dwelling recycling programs - it would be interesting to figure out what it would take. I don't know if we have time to do it in this budget year, but I'd like to put that on a "to do" list. What would it take. We have a recycling coordinator now. It seems, it seems feasible to expand our programs. Elliott! For multi-family, for apartment buildings? Bailey/ And in our parks. I read an article somewhere.. . maybe it was a Letter to the Editor that even recycling at gas stations, which is so true. I mean, I myself have been hauling around a lot of plastic bottles in my car just so I can recycle them at home. So, I think, you know, what can we do with our current staffing levels and how can we provide some additional services. What would it take? Elliott! We took one small step with the summer events for recycling. Bailey/ Yeah! I think that those are (several talking at once) Elliott! That's a first step! Vanderhoef/ It's a capital outlay, in some respects, to come up with all of the containers, which could be phased in if we chip away at it. Atkins/ Rick is in the... .asked him earlier this year to prepare for me a summary, we not only have Jen on board (unable to understand) positive feedback. They're preparing a memo for me, hopefully answers many of those questions, like here's not only where we are, but here's where we're going with that, and I would hope to have that next month. (unable to hear) Elliott! One of the pleasant surprises from Rick's presentation to us about the enviromnental work that is being done, are the cost savings involved, and... Bailey/ And we're taping our Capital Projects presentation. We talked (unable to hear; several talking at once). And we will broadcast it, right? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 32 Vanderhoef/ Well, you know. . . Wilburn! Sure, why not. Vanderhoef/ .. ..when we're talking recycling, we're talking an enterprise fund, too. So, we're not talking about the General Fund thing, but we've got to take a good look at the enterprise fund. Typically that one is in pretty good shape, but we're on schedule now for building a new cell and closing a cell, so... that's (several talking). . . Bailey/ .. . and I understand reasoning, but I would like to discuss that, because increasing fees and increasing...! just want to have a good... Atkins/ We're also planning to go to one more single-loaded truck. That's... Bailey/ Good. When are we going to see, are wejust...is that just sort ofa break-even proposition, as the City grows? Atkins/ We have not increased our routine refuge collection staff, I think, in 20 years. We made the districts bigger and... Elliott! Did you mean, Regenia, as our needs increase by lowering the cost for collection, we are able to not increase. . . yeah. I was very surprised to hear that the one- person operation is really less expensive. Because I thought it would be so much slower that.. . yeah. That's...! think that's great! Atkins/ They sold me on it. We've got plans to purchase another about 1,500 single pickup containers, so that'll take uS...we've got 14,000 stops. That'll take us to almost 7,000. Over half of our routes that'll be covered by the single pickup. (unable to hear) Vanderhoefl And are they still trying to figure out how they can do it in the older sections of town? Atkins/ Well, yes and no. Yes, we really would like to do it. No, you get into parking and...bottom line, I don't know how you'd do it on the north side. Elliott! When the cars along the curb, unless you could (unable to hear). Wilburn! A plasma burner on every comer! (several talking at once) Elliott! Those streets have no parking on one side, do they? Yeah, so you could, you could base your collection on the alternate days. Atkins/ Could, but there are people that simply park their car there. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Conncil Budget Wark Session Page 33 Correia! They just take the ticket. You can... Atkins! It's cheaper to take the ticket. Champion! Well, you know, there are cities that have nothing but those. There must be a way to do it. Atkins! It's parking. We've already checked. Champion! I think what they do, is it's actually a two-man operation in older neighborhoods. Atkins! Yeah. Champion! But they still.. . someone still has to actually take the hook, or whatever it is, to the trash can so you still might save on workmen's comp and... Atkins! I would feel just the opposite, Connie. The moment that you have a person begin to handle that trash container, up goes your worker's comp risk. Champion! No, they wouldn't handle it. Atkins! No, the machine handles it. It's just, drops off, picks it up, they move on to the next one. Champion! Yeah. Atkins! You can't get at it at the curb.. .in the older neighborhoods, because of parked cars and an arctic snow bank. You'll find that the one-person pickup is far more popular in the milder climates. That's what we discovered, because they don't have the snow removal. Champion! Well, Bettendorf must have. . . they have nothing but those things. Atkins! Okay, then they probably don't have the parking issues then, that I know of. I'll be happy to check Bettendorf's, they may have. Champion! I'm just saying that because I have a kid that lives there, and he lives in an older neighborhood with a very narrow street. It's much more narrow than my street. Atkins! Yeah, but do they permit parking? Champion! Yes, there's parking. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4,2007. January 4,2007 City Council Budget Work Session Page 34 Atkins/ I don't know how you can physically get that. . . Karr/ Steve, snow aside, I was over the holiday visiting a friend and they do it and parking is a problem, and it's a larger city, but they have little, for lack of a better term, gators, and the gators go up the driveways and pick up the, the little.. . okay? They pick up the machine and bring it back to the truck. Atkins/ These alligators? Karr/ No, they use little, you know, the little gator, what else is it? The little golf cart thing, and it's equipped and it goes into the driveway so nothing comes to the street so the little gators literally come in and come back to the. . . Atkins/ On the north side there are no driveways. Karr/ So, same type ofthing though. Elliott! I would think, if anything, on those northside streets especially where there's parking, not only do you defeat the purpose when you have somebody lift the stuff, but then lifting it and carrying it now when they come up our street, they pick it up and throw it right in. They'd have to go between cars sometimes, you can't even walk between the cars it's so tight. It's tough, Connie. I'm glad we're looking into it, but it's not easy. Champion! I don't have any idea. I'm just, you know, I've never lifted the trashcan actually. Bailey/ Are all new neighborhoods... Atkins/ Yes, most of the newer subdivisions we take care of them that way. It'sjust simpler that way. Bailey/ Just as soon as they come on line... Atkins/ We deliver to them (unable to hear). Vanderhoef/ What I'm finding with my new one, because my neighborhood was just added in the last six months, I guess, or something like that, is if you are really a big recycler, that this receptacle is so huge that truly I only need to take it out to the street once a month. Atkins/ Well, that was one ofthe earlier debates about how big the thing should be. Vanderhoefi' But the point is... This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 35 Atkins/ We used to just have one-bag pick up, and then anything beyond one, the second or third bag had to have a tag. Now you have the bin and you have to have a tag on anything else. Vanderhoeti' Uh-huh, well, I know my neighbor across the driveway doesn't always have a full one either and so rather than have the truck stop at multiple places, my husband drops his into the neighbor's. (several talking at once) Elliott! Did I point out that if this were the NFL, we'd have IS-yard penalty for trash talking? Would that be okay? Oh, okay, I'm sorry. (laughter) Champion! Well, I think, I mean, I love the idea of automatic trash pickup. I think it's really nice and I'd like to see it all over. Atkins/ And we will do our best, because it's simply to our own economic advantage. Vanderhoeti' It would be interesting to know, though, whether every other week would work. Champion! Oh, not for a lot of families! Bailey/ I think it would vary so much within the neighborhood, that it would be hard to charge, perhaps. Well, I mean, hard to consistently respond. Atkins/ Remember, it's.. . and that's the point. The first thing about a refuge collection, it's a sanitation policy, health and sanitation... we don't want you storing the stuff in your garage. Get it out of there! Vermin and critters and crud and... Elliott! You know, while we're at it, I think that...I don't think I've ever heard anybody complain about our trash collection, because almost anybody who's at home when they pick it up, see those guys hustling their buns off. And that's not an easy job. Wilburn! Any other.. . (several talking at once). Correia! I'm interested in knowing how projects that last year were on the unfunded list, made it to the funded list this year. Atkins/ Why? Correia! Yeah, what was the. .. Atkins/ Hopefully when the staff will be sending them they'll share them with you, but I'll make it a point to (unable to hear). Vanderhoeti' Something else that would be helpful to have and it has to do with growth, but if we knew and looked at the enterprise funds - the water, the waste water, the This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 36 storm water - in conjunction with the fees that are there and what the growth pattern looks like, and where we are on the bonding to have this growth. People will come up and say, 'Oh, well, that land is prime for development,' and I'll say, 'But it doesn't have services yet.' 'Well, when's that going to happen?' 'Well, I don't know.' and I'm not real clear always what the long-range plan is from those and the... Atkins/ Generally speaking, our history has been we've relied on the developer. If the developer has a piece of ground. Unfortunately, if you think about it, there's only four or five land owners in town. The Southgates... when you talk to those folks, we really rely on them. They come to us saying, 'I want to extend my subdivision in Southgate, would you be able to help.' Vanderhoefi' But it had to go through some virgin land to get to their land, coming up... the sewer did. Atkins/ .. . for example, Southeast.. . Southwest Estates, out Rohrat Road. Hunter's Run has now grown out to it, but for a long time, I believe the developer paid for that water and sewer line to run all the way out. Is that right... Vanderhoefi' The major trunk line isn't necessarily close enough because it's been serviced from a different direction, and the capacity on that one. Atkins/ Much of what we do on our water, water fund and in particular, is that our growth in the customer base usage, somewhat can be seasonal. If we have a drought, these are all sort of measurements. And our water fund is financially very secure. Waste water is not. I mean, we're not in trouble with anything. The waste water just simply does not have a lot of financial margin there. And quite frankly, it's one of the more difficult ones to manage because we have EPA and DNR and everybody wanting a piece ofthis (laughter), and as the cost of waste water treatment goes up, business and industry will respond accordingly. For example, the work that P&G's doing. P&G's going to do some on-site treatment, do their own thing (unable to understand) lessons of income for us. Now it opens up our ability to treat some other business somewhere. Elliott! We provided a bit of an impetus for that though, did we not? Atkins/ Yes we did. We worked with them...yeah...they said, they weren't being contrary about it, but said we've got to cut our costs with respect to our waste treatment. Particularly someone like P&G which goes through different products. They used to make shampoo and it had zinc in it or something that we had to deal with. Well, we don't do shampoo anymore - we make toothpaste. Well, but that causes this. There's a long established relationship with (unable to hear). Waste water is one of the concerns. Landfills healthy. Refuse is going to need (unable to hear). Airport funds are projected.. . subsidies, substantially the same as it has Tbis represents only a reasonably accurate transcription of tbe Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 37 been over a number of years, but starting to sell some property. The only one that I'm concerned about is waste water, and it's just... Vanderhoeti'The storm water. Atkins! Storm water we're fine. You know, we... Vanderhoef! But it's not covering all the projects that we... Atkins! No, and it never will. Vanderhoeti' But what. . . Atkins! Remember, we chose to do the minor amount. I think there's $2 and... Vanderhoeti' Right, but what... .do we have any accounting that shows how much we're being mandated to do now, as far as waste water. So, this is another piece ofthe infrastructure, like roads, that is sort of unknown to a lot of people. We've done a lot of this stuff for years when we build new or rebuilt old ones, and we've just absorbed it some place in the road... Atkins! Remember last summer we did Hollywood Boulevard, we had a big project to rebuild. Road... we did a rebuild, and cleaned Ellis up and did a rebuild, and we do those out of current revenue. Vanderhoef! That's what I'm trying to say. That when you look at your tax rate and what's coming out of GO Bonds because those are cheaper. Atkins! We will sell GO debt. . . with water. . . Vanderhoef! To do these projects. Uh-huh. Atkins! .. .you can do that, but we also will sell GO debt to finance the project, and that's when the taxpayer pays it, pays more. Vanderhoeti' Uh-huh, and how much of that is part of this new storm water mandate. Atkins! I don't know.. . you know... Vanderhoeti' That figure, that whole... Correia! I have a question about the Airport, in terms of the percent going to the (unable to hear). Is the rationale for that that she will be spending 10% of her time related to Airport issues? Okay, so it's not... Atkins! The economic development aspect of the thing. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 38 Correia! So that...because it just also seemed to me, that if you didn't want to mandate 10% of her time, otherwise keep it in the Airport and take it out, rather than just taking it out of the Airport for the economic development position. . . Atkins! I can't say we have that much thought into it. We had a halftime position, we have it in the budget, decided to go to full time. Correia! I get that, so... but in terms of the rationale, essentially... Atkins! She, Wendy, is responsible for marketing the Aviation Commerce Park. That's one of her jobs. She's supposed to do that. Correia! Okay. Atkins! And she'll be involved in Aviation Commerce Park South. Vanderhoef! And then the 20%.. . for water and sewer, which gets us that full time employee that we wanted, and we had been funding. Correia! I actually was wanting to know the rationale for why put it there, why not put it (several talking at once) or amount going to the Airport by the amount we want to go to the economic development coordinator, and just not have it be a transfer out, you know. But if she's spending...ifwe want to say, yeah, then that makes sense. Bailey! But I'm not sure our plan will reflect that necessarily, because I think the Committee has not necessarily prioritized that at that level oftime, so maybe we should look at that, because there are expectations. I've talked to some of the Airport Commissioners. There are some expectations about what that transfer out buys them. (several talking at once) Atkins! I'm okay with that. (several talking at once) Vanderhoefi' And this can change over the years... Bailey! ...ofpriorities. Vanderhoefi' Also, what activities the Airport is doing. If there are some more, say ten years from now, more different kinds of activities there. Bailey! Yeah, they seemed less interested in marketing Aviation Commerce Park South generally in an aggressive manner, than maybe just transfer out (unable to hear). Vanderhoeti' Well, at least some ofthat. Elliott! But we do have total control. . . of their financial budget, correct? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 39 Atkins! Total control (laughter). Elliott! No, they have control of the Airport; we have control of the purse strings. Atkins! They can virtually do anything they want, other than sell the land at the Airport. You must approve that. If they wanted to sell debt, they could begin... they could hire attorneys and.. . Elliott! But we are not legally required to provide x-number of dollars for them. Atkins! Oh no! O'Donnelll That's the only thing we have control over. Elliott! That's what I say! (several talking at once) But, I'm saying that if we wanted to take 10% off of what we provide them, that's up to us to do it. So, we would like to tell them that you're going to get some benefit from it, but that's for us to decide. (several talking at once) Atkins! I give Randy Hartwig a lot of the credit, he takes the time, he comes in. He'll go see the other staff, he'll go see Kevin. He'll talk to Rick. He just does it on his own initiative, and that has a lot to do with it. But that's what I read... Elliott! It was not beneficial the way it was. Atkins! No, it was not. Vanderhoef! Okay, changing subjects a little bit. On page 9, we're talking about several things, but what I'm... Elliott! 9 in the book? Vanderhoeti' Uh-huh.. .the...I don't have a feel for longevity of some of the employees, particularly in conjunction with the June 28, 85 date for.. .so it's, how much vacation time do we sitting out there, and how many of our employees are truly, prior to the 1985... Atkins! I remember when we originally chose not to fund the liability on this because it was not a huge deal. How we arrived in 1985.. . Kevin or Dale, can you answer that? Dale was involved in those... Vanderhoeti' Well, the end result is I want to know what the benefits. . . . Helling! The 1985 question came about as a payout of unused sick leave. It has nothing to do with vacation. And that was negotiated in our labor contracts. Most of This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 40 them had a payout of 50% of unused sick leave. That was negotiated away in 1985, but one of the provisions was that for those people who had accumulated something to that point, in other words, if they were to have left at that point in time, we would calculate what they'd be getting in that payout and that was frozen, and the new employees after that did not get the benefit. Vacation is separate, and we are obliged under, I think, State law for accumulated vacation, up to a point. We have an agreement where it's 192 hours in most cases. Firefighters are a little higher because of their schedules and the numbers of hours that they work, but by State law we have to pay a certain portion of that unused vacation. We capped it at 192 hours. Vanderhoef! Okay, so what's our liability in the future for some ofthese... Atkins/ Well, as these people keep quitting, then the liability goes down. That's really how it works. Elliott! But they get the payout when they leave. Bailey/ You're asking about the dollar amount... that would be shown on... Vanderhoef/ I think what I'm looking at is are we really, do we have a lot of these employees that are in that pre-85 that will be retiring? O'Malley/ I was looking at that number when we were doing the audit this year, and my recollection was that it was like $922,000 and it goes down about $50,000 to $70,000 every year. Vanderhoef! But has it been running pretty level then on the number of retirements per year? O'Malley/ Yes it has. Vanderhoef/ So you're not looking at some spike years. O'Malley/ Well, I think there will be. I think there will be, but... Vanderhoef! When do those come, roughly? O'Malley/ Well, on the accounting side, on the audit that was only just for that fiscal period, we didn't stretch it out. I don't know when that will be, but my assumption is whoever was...there was a lot ofpeople...it was prior to my coming. My assumption is probably about another five or six years you'll see a spike. Wilburn! I was just going to say, there's been a couple retirements like in Public Works and there's, I know there's a handful of them coming up. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 41 Atkins/ We had a police officer retire the other day. He was here 28 years. I'm assuming the end result (unable to hear). I recall it wasn't such a big number and it was being paid out at a rate that made us feel that we had to have a reserve for it. That's one of those things, right or wrong, that's how we've approached it. Vanderhoeti' Okay, so we have a reserve for when we have a spike.. Atkins/ No, we do not. We do not have a... this is an unfunded liability. But we have that (unable to hear) Mansfield! That's what your General Fund would cover. Vanderhoeti' Yeah...(several talking at once)...I thought he said you have a reserve. Elliott! We do not. . . we do not have a reserve. We're required to for vacation. I thought that's what Dale said. Atkins/ We don't have a reserve. (several talking at once) O'Malley/ We book it as a contingent liability in our books. We show it as an information, that this is how much money in the event this would occur would be in fact our financial statements, but we don't book any cash aside for it. Atkins/ And we chose not to do that because it would be a huge number. Correia! Do we encourage people to take vacation? I mean, if they (unable to hear). Atkins/ Yeah...I don't, personally, whenever you see unfunded liability, people get nervous. This is one that I'm not nervous about. Champion! On the other hand, there are expenses to people taking vacations, too, and 1.. . more and more companies, including myself, go to paid leave instead of sick days, vacation days, personal days. I mean, I provide paid time off, whatever you want to use it for, because when you don't pay sick leave that's not used, people tend to use their sick leave (unable to hear). Atkins/ Sick leave now is no payout. Champion! That's what I mean, so people tend to use it, when they're not sick. Elliott! Some do, many don't. Champion! Of course, but I mean it tends to be abused. Right. (several talking at once) This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Work Session Page 42 Atkins! It's generation. I mean, to me, my sick leave is one of the best insurance policies I have. Champion! Exactly! Atkins! I could be off for months. Elliott! Do we have long-term disability? City? Okay. Atkins! I don't think we insure for that, do we? O'Malley! No, we don't, and it works out that you have to exhaust your sick leave if you have.. .or 120 days, whichever is more. Elliott! But I do like the idea of, as a matter of fact, I would be interested in doing more than encouraging use of vacation time. I think vacation is important. Champion! Maybe to you it is. Elliott! No, no. I think psychologically it is important. And I don't think.. .you know, you get three weeks vacation you're required, but I think you should be required to take some amount of vacation. Champion! Oh, somebody usually takes some, a day, a Monday here or there. Wilburn! Are we ready to wind down or. . . Elliott! How close are we, Ross? Wilburn! I'm.. .I've asked a couple times. (several talking at once) Karr! Can we go through the schedule? Did you want to go through a couple things on the remaining schedule? Atkins! 16th, 8:00 here. I've got you booked for the whole day. I think whatever it takes. Bailey! But then we could begin that more comprehensive discussion about this budget once we... Atkins! We booked it for the day; if you want to finish CIP and go back into some of these things, that's fine. There's some items that I'll try and get some ofthis information prepared for you ahead of time. Elliott! January 16 at 8:00. Atkins! In here, yep; remember, Monday's a holiday. What was the next day? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4, 2007 City Council Budget Work Session Page 43 Karr/ 29th and 30th, and those are both, at the present time, open. We'd like to, and we are getting requests, we'd like to schedule one of those evenings for your traditional presentations from your events or boards and commissions. So, if.. .you know, we traditionally have them call in, make appointments, slot in approximately 15 minutes apart, 10 minutes for presentations, five minutes for questions. Elliott! The 29th and 30th, is that TBA? To be announced? Karr/ No, it's 6:30 is the time right now. It certainly can be changed up to, depending on your schedule. Champion! I wonder...(several talking at once)...is it, is it necessary to have all those presentations? Bailey/ There is one pat project that made it on to funded from Parks and Rec that I think we should talk to them about. Champion! I mean, if there's new things. Karr/ It's up to you on what we present, but we are getting questions from boards and commissions and events on when this is. Now, again, you always have your traditional, required public hearing, which will be February 20th at the present schedule, I believe. Atkins/ I would, my advice to you, people like to talk to you. Champion! They do? Atkins/ They really do like coming. No, I think they (several talking at once). Wilburn! Well, they get to brag. The press is here. It's typically something we'll hear in the paper. They get coverage. That's right, yeah. Elliott! I think that's the least....that we can do. (several talking at once) Karr/ We do limit it again to events and boards and commission requests, and not aid to agencies or not anything that.. . (several talking at once).. .if that's the interest of Council to do that, would you prefer the 29th and leave the 30th open? So we'd like to get that information out to the contact people so they can contact their boards. So 29t\ and the same type of format as in the past, the 15 minutes, 10 minutes presentation. Correia! What did you say the date of the budget hearing is? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4,2007. January 4, 2007 City Council Budget Wark Session Page 44 Karr/ At, well at the present time, I believe we'd be setting it on the first meeting in February and holding it the 20th Correia! Okay. Karr/ And then you'd pass and adopt it on March 6th. We had planned to have your packets ready when you concluded at noon. We had not planned on having your packets ready if you concluded at 10: 15. So (laughter and several talking at once) so they will be ready, as usual, this afternoon. Atkins/ This is that calculation on the condo law. Wilburn! All right. See ya! Bailey/ I just have a question. So, this information that we asked for, some of these numbers, when can we expect to have that information in a real, I mean, realistically? Did we... well, we asked for a whole bunch of different numbers and deductions, and those sorts ofthings. When can we expect to see those, so when will we have the opportunity. . . will we be able to see those by the 30th, before the meeting on the 30th? Atkins/ Oh, absolutely, I'm...I'd rather you have them on the 16th. Bailey/ Oh, me too, but we're asking a lot. Atkins/ Hopefully, I've got them all recorded here. We, as a staff, will go back now, make assignments and, looking at Leigh because she's always.. . (unable to hear). Elliott! One more quick question. Wilburn! Okay. Elliott! Uh, the request on the summarization from each department, I like that idea, but can they just, I certainly don't want them to spend a whole lot of time on that. Bailey/ Well, can that be part of the presentations on the 29th? I mean, if we hear Parks and Rec and Library. Atkins/ That'll be tough. Karr/ I have a feeling, if we got. . . Atkins/ ...take time and schedule them over a period of time and... Champion! Yeah, it'd be nice to have like one presentation at a work session. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007. January 4,2007 City Council Budget Wark Session Page 45 Elliott! I don't want that to be a drop-everything-and-do-this. It's just... Baileyl Well, I would have thought they would have done some of that before they prepared their budget. (several talking at once) Isn't it just a cut and paste job? Atkinsl No. What I'm handing out now, this is the 1 % thing on commercial, how we got that $200.. .it's $211,220. That's the number. Valuations are 1 %, if they roll back commercial. (several talking at once) Okay, I'm done. (several talking at once) Wilburn! Now are we done? Elliott! I'm all in favor of being done. Wilburn! Okay, we're done. (TAPE ENDS) This represents only a reasonably accurate transcription of the Iowa City City Council meeting of January 4, 2007.