HomeMy WebLinkAbout2008-01-07 TranscriptionJanuary 7, 2008 Special City Council Work Session Page 1
January 7, 2008 Special City Council Work Session 6:30 P.M.
Council Present/ Bailey, Champion, Correia, Hayek, O'Donnell, Wilburn, Wright
Staff/ Karr, Helling, O'Malley, Lewis, Mansfield
Other/ Volland, UISG Rep
Budget Overview:
Bailey/ I think we'll just do an overview with Dale and Kevin, and then questions at the
end. Marian distributed some of the questions that Amy submitted, and I thought
that would be helpful to have in front of you incase you have similar questions.
So, go to it. Dale.
Helling/ Ok, hopefully we can get through this all. Um.. .
Bailey/ Has the football game started?
Wilburn/ Seven o'clock.
Helling/ We might be just a tad behind that.
O'Donnell/ We're all very patient. (Laughs)
O'Malley/ If you brought your computer you could've watched it. (all talking)
Helling/ Um...in your packet, I apologize. Some of the screens look pretty good and
some don't look so good. Certainly focus on the hard copy that you have.'
Um...it will all be pretty clear there, and we'll try to get you to get to the right
line...The first page is just a transmittal letter, and I'm sure you've read it and
I've talked about two basic things you need to think about as we go through this
process and, uh, involving decisions that you'll have to make. One is having to
do with, uh, the fund balance dropping down to a level that's at least lower than a
level Council has been comfortable with in the past, and the second one has to do
with, uh, your policy, uh, of having your debt levy be no more than 25 percent of
the total tax levy, and the reasons why you may want to take a look at that and
consider maybe to change that. Uh...I've just illustrated the policies on the next
two pages-those are the policy pages on your budget. I won't go over them
again because I'm sure you're pretty familiar with them. Ah...those are the
things to keep in mind as we go through here. The one thing on the debt policies,
which is this page, ah...there's two different standards, er...two different sort of
yardsticks. One being the state requirement and that's based on the total taxable
assessed value, and that is unrestricted. That is the tax value before any rollback
is applied. As opposed to your own policy which is based on your tax levy which
is quite different because that is unrestricted. So when we get later talking about
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Council special work session meeting of January 7, 2008.
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the debt policy that's the thing we'd keep in mind as it's coming together. Now,
ah...one thing I want to spend a little bit of time on, and that's just basic
assumptions that we made putting the budget together. Ah...as you know a lot of
the things that we deal with in putting the budget together are either unanswered
at that time and or some things we don't even know until as we get into the fiscal
year so we have to make some certain assumptions about will or won't happen.
Ah...and what factors will or won't apply to a budget that doesn't start until next
July 1. We have assumed that the health insurance will remain a little more flat, a
little more constant at about five percent per year increase. Um...as you have
experienced in the past you know that can be somewhat volatile. Um...we've had
double digit increases in the past but it seems to have started to have leveled off,
or flatted off, so we're hoping that trend will remain. In terms of...Now, I guess I
should say these next two pages you might want to...we'll go to some screens and
then go back, so you might want to take these next two pages out and just refer to
them ah...just keep them handy so that you're not going back and forth from the
assumptions page to some of the screens that illustrate. Police and fire
pensions...um...ok, here the first. You tell me if you can see that up there.
O'Donnell/ Ok.
Helling/ Ok, police and fire pensions the MFPRSI it's called, just keep that handy so
you're not going back from the assumptions page to some of the screen that
illustrate. Ok, police and fire pensions, if you look at the employee rate, that has
remained constant and that's set by state law. I you look at the employer rate, the
rate that we pay towards that fund it's 17 percent is the minimum. We will
always pay at least 17 percent and that's the way it stayed for several years and
then it started to go up as interest rates went down as interest rates went down and
the fund wasn't earning uh...as much of a profit, and so they had to have some
way to make up that difference to keep the fund solvent and the way they do that
is go to the cities and just assess at a higher rate. Those decisions are made
annually so we never know until probably November, excuse me, what the rate is
going to be for the coming year. Interesting thing happened-it went up to 27.75
percent, which, we thought was extremely high. Uh...some of you will remember
that we had our legislative policies for the state to kick in more to keep our, our
share, down a little bit. I.t has started to go back down and went back down
drastically from 08 to 09 and that's based on the better earnings for the fund,
primarily, I think, due to interest rates improving, but as we are seeing now
interest rates are leveling out and maybe going down a little bit, so I think that
now even though its gone down to 18.75 for this year, which is a substantial
decrease, and I think it is a saving for our debt service, I mean our employee
benefits levy, we are experiencing that this year but we have to be very careful to
not anticipate that it is going to stay that low. Um...because we've found in the
past that the state will raise it in order to stay solvent. The other thing I think we
need to watch and be a little concerned with is the Legislature progresses in its
session because typically that's seen as a savings and sometimes that is then
interpreted to mean there's more money available to increase these benefits and
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Council special work session meeting of January 7, 2008.
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beef up the retirement benefits. If that occurs, then I'd assume you'd want to
weigh in on that. Um...that's probably something that will get the attention of the
Metropolitan Coalition because most of the employees are in the system, most of
the smaller ones are. So, it's a good thing right now, but I think you have to be
careful and not, uh, not anticipate it's going to stay that way-if it does for a
couple of years, that would be great. Ok, IPERS, IPERS is a little less volatile,
but if you'll recall, the same kind of impact was felt with IPERS a few years ago
in terms of the reduced earnings, and so there's a more systematic approach to
raising it. They're doing it over five years, well, actually over four years, um...
raising the employee rate by about two tenths of a percent per year, and the
employers rate by about four tenths of a percent per year, so what will happen
from 08 to 011 you'll see it's going to just nudge up each year. The end result
will be the employees rates will go up a total of eight tenths of a percent, while
the employer rate will go up about 1.2 percent, combined rate is an increase of
about two percent and so we'll see that level out then hopefully and it should after
FY11, but we will be paying a little bit more into that each year, so we have to
factor that into the budget.
Wright/ Those rates are also determined by the state?
Helling/ Yes. Yeah, the state sets those
Hayek/ Dale, are those rates also determined by the state?
Helling/ They are...
Hayek/ Rookie mistake.
Helling/ They are set by the state, and, I think, as it was indicated, they will monitor this
as they go through this process, and depending on what the trend looks like they
could nudge it up a little bit more, but right now the plan is to go to 2 percent and
not any higher. (Shuffling) What did I do? This is my first budget presentation
so you know, and my first power point. They set it all up for you...I try to work
one thing. Ok, um, the next thing I want to talk a little big about is, and the
assumptions we've made about the Joint Communications Center. We're
assuming that this will stay on track and it will open for business on July 1 of
2009. That's the projected opening, that's what everything is geared to right now,
and the budget, you'll see that in the budget, the Police Department
Communications Center employees go out of our budget at that point and you'll
see those five CSOs that we're proposing coming into the budget to provide some
sort of reception, somebody to make contact with the public. Um, you'll also see
that, um, that ah, we'll find out if we don't make that target. That's a problem for
us you'll look in the budget, when we get to the numbers, you'll see that it goes
down by several hundred thousand dollars annually, and if we don't make, make
that target, then well have to keep our communications center open until the Joint
Communications Center opens.
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Champion/ Is that realistic to think it will be open by then? Is that realistic to have it
open by then?
Bailey/ We haven't had any indication that out timeline is unrealistic. Um, we have a
meeting next week, so we should have a better idea. People are all determined to
have that schedule, so...
Helling/ Think it's about a little over a year, what, I think 14 months construction, so if it
doesn't, then, uh, we're going to have to keep ours open a little longer, and that
additional funding will have to come from the general. Another assumption we're
making is that, in terms of federal and state funding, that there will be nothing
new, at least in terms of supporting the general fund. Now, I will qualify that by
saying that I have been reading-maybe you've see them-in the National Cities
Weekly, there's some discussion of the possibility of renewing the Cops Grant
Program, and depending on what restrictions that might have, that could be
beneficial, very beneficial, in terms of officers. Uh...the last, the last go around
there were very few restrictions and we could use them for whatever and we
didn't have along-term commitment for those positions. If that's the case, then it
will help us enormously for adding some officers, but we just don't know at this
point how much will be involved. Well, first of all, we don't even know if it will
be voted in, and if so, how much will be involved, and what kind of restrictions
they will place. But, in terms of other things...
Champion/ I want to ask a quick question on that. Um, when we get a grant from police
officers, does that cover all their benefits and everything?
Helling/ It depends. Um, typically it's a dollar grant and because all police officers are
paid differently, we know how we can work that in the budget, but they try to
cover the total cost. Um, other than that though, I think one of the things we have
always hoped for was that maybe there'd be some Homeland Security funding
coming from the Feds, but I don't see that happening. In fact, those funds are
kind of being reduced and redistributed and whatever, so I don't anticipate that
we'll see, really, anything that else that would help us, you know, in FY09. Um,
looking at the screen again-the rollback. We're anticipating that the rollback
will continue to decline. Um, you can see the history. There are a couple of
screens here. The first one gives you about anine-year history, um, I guess it's
ten, and you can see this clearly declines. The average decline is about 2.9
percent per year. If you go to the next one it gives a longer history, and again it
tells you very clearly there is a decline. That has been the history both long and
shorter term. I think it's interesting if you, um, look at the third column, percent
change from prior years valuations, what you see happening there is, and then
look at the fourth column, when the valuations change very little, then, uh, you
don't see as big a decrease in the rollback, but when the valuations are high, for
instance, look at 1993, these valuations are state-wide, by the way, uh, come in at
11.22 percent, and you see the rollback dropping about 6 points. Now that's
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pretty much the trend all the way through. If you go to 2007 and look at that
18.25 percent, now that's our valuation, rollback is based on state wide, but the
column is our valuation. Um, you'll see that in that particular case our valuations
went up by over 18 percent, yet the rollback only dropped a couple of points. I
think that's an indicator that in some years our valuations stay higher than the
state'sin most years they do, they are higher than the state's average. This is an
example of the, uh, the difference that can make in terms of our revenue versus
some of those communities whose valuations don't go up at all and they still have
to live with the rollback. We've not had that problem or anything close to that at
this point, but in terms of the 100 percent assessed valuations, the second column,
those have about quadrupled since 1990, while our taxable assessed valuation has
only doubled, so that gives you a pretty strong idea of the impact of the rollback.
Correia/ But it did double?
Helling/ It did double. Also an assumption with our property valuations-we assume a
growth of about three percent annually. Now we have valuation review every
year and we have some years when it goes up and some when it is below. It's
quite a bit lower, and you can see that on the page here if you look over to the far
right there is percent change from prior years valuation, you'll see that sometimes
those are below the three percent. For the purpose of the budget, even though we
anticipate that the rollback will probably continue to decline we don't take that,
we don't try to estimate what that will be in the budget. We budget flat, but we
also look at the property valuations. We think three percent is a pretty
conservative estimate for those. I think that balances out, keeping in mind, that
the rollback, that the rollback will take us down to one of two levels. Either four
percent, which is state cap on valuations, or to a percent lower if that's the percent
of the increase in ag land values. So, the three percent is probably a pretty safe
number, um, in other words, we can budget three percent and probably be pretty
close because we know if it is significantly higher than that the rollback is going
to bring (can't hear). Next is road use taxes and our projection is that, uh, that,
well, it's not a projection, we know that there is...the state is projecting a slight
increase for FY09, uh, actually it's pretty substantial, it goes up to about 90 cents
per capita from FY08, but then it levels off and starts to decline just a little bit The
first page I'm showing you-look at the two columns--current IDOT forecast
and then the last column is then November 06 IDOT forecast. If you look at the
difference in the numbers there, I think that's a pretty good indicator of how it
changes at the state level, how the figures that they give us then change, so we
have to be very careful and not anticipate too far ahead. We were seeing
increases and it looks like it's going to level off because what we're hearing is,
and I'm sure you're hearing the same thing, is that there's not going to be any
increase in the, ah, gasoline or the diesel fuel tax. The Governor has that, our
Legislators has told us that when we met with them that there probably wouldn't
be any increases. Um, I think it's probably fairly unlikely that they're going to
change the formula. There's been some talk about that, which would, uh, shift
some of the money to urban areas and maybe away from the farm market, but that
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also is, at least, not getting a lot of conversation at this point, as I understand. The
most likely thing to happen which would not mean major money from that fund,
but it would maybe help a little bit, and that would be if they raised the
registration fee on pickup trucks. Right now it's a flat fee and it's much lower
than automobiles, so that would put some money in the fund and not this term that
an increase in the gas tax would. So, our assumption there is that it will flatten
out and maybe drop just a little bit over the next couple of years, and that's based
on state assumptions. The emergency levy we're maintaining that at ten percent,
I'm sorry, I mean ten cents. Um, it was at 27, which is the max until a couple of
years ago. We had, uh, a sharp increase in our valuations and we were able then
to reduce that down to bout, what was it, three cents, I think for 07, and we were
able to eliminate it for 08. Last year you passed the budget you projected it ten
cents, er, moving it back up to ten cents, and we put that in as a policy matter. I,
we, still have some flexibility there, but we were just going with what we, you,
projected. Ah, fuel costs. Who thinks fuel costs will go down? We don't either.
Wilburn/ I'm sorry I need to jump back a minute. Is the.. .
Helling/ Yeah.. .
Wilburn/ Is the max on emergency, is it .27?
Helling/ Yeah, yeah, .27. Fuel cost, if you look at, ah, page 12 you'll see as you probably
already knew that things are going up, up, up. We're anticipating, and again, I
think conservatively, and I hope we don't get burned, but, we're anticipating that
our fuel costs are up for FY09 15 percent above our actuals for FY07. Um, it's
very hard to predict, but what it looks like at this point is that we'll probably see
at least that much of an increase.
Correia/ Is this all gas paid by the city busses...ok, refuse...
O'Malley/ We have a fuel fund and they buy all the gas there...
Correia/ Right, right. This is ours...
O'Malley/ Those are the rack prices. We don't pay taxes on it.
Correia/ Right, right
O'Malley/ You can see that 2008 is over a ten percent increase from 2007, so...
Helling/ Yeah, this doesn't reflect pump price, so...
Correia/ Right, but I mean this increase reflects increased prices that are experienced in
both the general fund departments and our enterprise fund departments?
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Helling/ Yes.
O'Malley/ Correct.
Correia/ Is it all coming from the general fund?
O'Malley/ No, this is across the board.
Correia/ Across the board. Ok.
Helling/ Yeah, in fact some of our heaviest
Correia/ Yeah. General fund. Right, right.
Helling/ Um, and Amy you had a question we'll touch on later, but, um, certainly transit
gets hit very hard.
Correia/ Right.
Helling/ Ok, it terms of tax base, um, unless its labeled as a tax base erosion I'm not that,
um, that's what we want it to be, but we're in, we're hoping, and basing, basing our
budget on no anticipated increase in the commercial rollback. Now again, point of
concern there is some discussion amongst the Legislators that they need to do something
for tax relief, property tax relief for commercial owners and that's because of the
differential the rollback has created in terms of commercial properties being taxed at
nearly 100 percent of their assessed value...you, uh...residential has kept going down to
the point where there is now a huge deferential, and it's, uh...we'll they're getting a lot of
complaints and a lot of lobbying from commercial interests to lower that, so, if that
happens, and there is some sort of rollback so some sort of (coughing) commercial
properties, I doubt that there will be any corresponding increase, or, or relaxation or
rollback for uh, for residential properties, so in the absence of some other, ah, some other
way of doing, ah, giving us some relief, we'll simply see a decrease in our, in our, in our
general tax revenue if that occurs. There's one even more thing to be concerned about
and, for whatever reason we couldn't make this into a screen, and so we have some
copies to pass out. While you're passing that around...This came from the Iowa League
of Cities, and they are doing basically some survey work. This has to do with the
reclassification of apartments, and in this case nursing homes, and living facilities, and
mobile homes, also, ah, as residential, rather than commercial. Anyone need one back
there? And this is something that's been talked about for a number of years, and we've
experienced some loss in revenue through the conversion of apartments to
condominiums. Um, so these are state figures that we have verified that are applicable to
Iowa City, and they sent it out to all the communities. Looking at what are the losses in
revenue if this legislation should pass, and as you can see, for us a very scary number is
on the left hand side page, second column, go down to Iowa City. Total loss in tax
revenue would be 3.346 million dollars.
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Mansfield/ Just look at the bar graph, and look at the third highest one, and that's where
we are.
Hayek/ Is that over a certain period of time? Or is that...
Mansfield/ One year.
Hayek/ In one year.
Helling/ If it's...now, we'll talk about that for a minute, but yeah, that's one year.
Correia/ Is this before the Legislature now?
Helling/ This is, this is...
Hayek/ Reality...
Mansfield/ They're anticipating it going before the Legislature. It was at the Legislature
last year and didn't pass, but it's likely to come back to the Legislature, so we
have to be aware of what that impact would be to us...
Correia/ So it didn't pass, but it's on the floor now, or it didn't get out of committee?
O'Malley/ No, last year, last session...
Bailey/ She's asking how far it went, how far it got. Do we know?
Mansfield/ I don't think it got out of committee.
Helling/ No, I don't think it got out of committee.
Correia/ No, I'm just...I'm speculating...we didn't hear of it.
Helling/ It's one of those things...the, the, fact that the League is doing one this kind of
research indicates to me that they know of a pretty good likelihood, and I don't
think any of us should be surprised if it is addressed again. In this fashion, it's all
sort ofall-inclusive. Not only apartments, but when you take into account nursing
homes, assisted living facilities, mobile homes all as residential...
Correia/ Is this something that by, like, tomorrow we could get a bill number on?
Helling/ There wouldn't be a bill yet.
O'Malley/ It hasn't been...
Correia/ So it hasn't even been...
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O'Malley/ This year hasn't been created yet.. .
Correia/ No, but it's the second year of a two year session, and if it was a bill last year it
would still be...
Bailey/ Alive...(all talking)
Helling/ If it's the same bill...(all talking)
Wilburn/ That's correct. If it's the same bill...a concern I would have if there is some
attempt... since the League is putting this type of information together for all of us
a concern would be, ah, you know, some type of, ah, some kind of perceived
compromise that would, ah, essentially make some type of rollback or percentage
of this or some type of attempt mitigate the loss, which, as you see with rollbacks,
each year, as you see, would grow. That would be my personal concern that I
would have. But, ah, but, ah, they're just starting up this week, right?
Bailey/ Session opens Monday. We could certainly call the League and get this
information-if there is a bill number. (All talking) And how far it got last year.
That would be helpful. And then it would also be helpful to know who's lobbying
for this, and if we have a bill number we can go on-line and who signed in of
support of this and what committee its been assigned to.
Correia/ Right. Good.
Helling/ Ross was talking about so sort of a rollback or something. I suspect, and this is
all just suspicion, but because of the impact, and if you look at the, the longest
line that would be Des Moines, it's always nice to have them on our side...
Correia/ Although the percent to their budget is a lot less.
Helling/ It is a lot less but it's still...
Correia/ But yeah...
Helling/ I suspect that it would, that they would want to phase it some way. Um, and I
don't know how they would do that, but we've had some experience in the recent
past with phasing machinery and equipment, um, we've had experience with them
phasing the, uh, the last time municipal assistance was recreated it was...they
took several other assistance programs and rolled them into one a bank
franchising fee...
Mansfield/ Liquor fees...assistance
Wilburn/ And some liquor profits.. .
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Helling/ Yeah, liquor profits, and they rolled them into what was called Municipal
Assistance so we weren't getting a piece of this and a piece of that. They put it all
together and gave it to us that way until 04 when they needed they money so they
took it all away. Machinery and equipment was phased out over a period of time
and that was, that was taken away. Um, the, ah, the way we tax utilities-we
used to tax them on their value, on their assessed value, the same as other
properties and there was a substitute for that, that was supposed to be revenue
neutral but as we go along we find that if we calculate the taxes based upon their
assessed value versus what we're getting through the other formula it's not
revenue neutral (can't hear) so...I think we want to be very careful if it's going to
be phased and if somehow the state's going to make up for our loss, because that
only lasts for a period of time. So this is something I think we have to keep a
close eye on it. For the purposes of the budget we're not assuming that any of this
is going to happen, ah...we really couldn't do that, but if it does then it's a whole
new ball game.
Wilburn/ And this would hopefully be something the Metro Coalition would try...I mean,
just... I'm sure the other cities would be... ask for this not to happen to, but.. .
and I just did a quick calculation...it's...over 10 million dollar loss to cities... to
the top nine cities, I think. It's that type of contrast and emphasis that you're
really hitting the larger cities when you do something like this.
Helling/ Well, if you look at someplace like Council Bluffs it's like about a million and a
half a year, Davenport...it's substantial money for all of us. Because of unique
situation it's very hard. Ok, any other questions?
Champion/ I think a lot of those cities have a .O1 percent sales tax.
Helling/ Yeah. Let's go to the next page then this is, um, yeah...before we do that let me
just talk a little bit about the, uh...one thing that's occurring just the next year
after the end of this three year financial plan that we really need to keep in mind.
Um...many of you have heard us talk about the 27th pay period, which isn't really
a 27th pay period? We get paid every two weeks, or 26 times every 364 days, so
those days accumulate, that extra day or two days on the leap year accumulate so
the way it falls is that about every 12th year, I think it is, 11th or 12th, we actually,
within a fiscal year, we will have 27 paydays, and because of that we have to go
to the fund balance to fund that. So, for the general funded operations, the cost
for that 27th pay period in salaries and wages is about $1.05 million and another
$200,000 I the employee benefits levee that would have to come out of that, so, in
FY12, for the general funded operations we'll have to, we'll have to have a little
over a million dollars in there to pull out to pay that.
Hayek/ During the other 11 years is the City just not paying those extra days?
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Helling/ Right. We pay, but, but they fall into the first day of the pay period, or, say, fall
into the first day of the next year...and so the pay period is always...ah...in one
year or another...you know, it breaks out...it's only when you get to the point
where you have one day of a pay period is in one fiscal year and then one goes to
another one, and then that's how one of those fiscal years you'll have a pay day...
Mansfield/ Essentially, what you'll see is that in FY12 paychecks will be issued on July
1, at the very first day of the fiscal year, and June 30th, the last day of the fiscal
year, so, so, the paychecks coming out on July 1 are paying for two weeks, you
know, in an earlier, er... a prior fiscal year. And you know we're a cash basis and
that's, you know, that's a fact.
Helling/ This isn't unique to us.
Champion/ No, it's not unique...
Helling/ Everybody who pays.. .
Champion/ On this basis.. .
Correia/ But is it, but is it...so, is it everybody, so if we're...would we end up paying
less? No...we're just paying two?
Mansfield/ You're always paying, you're always paying every two weeks...
Correia/ Yes...(all talking)
Helling/ It's simply a matter of how it falls and that one day-it's eventually going to
fall...as long as it takes to accumulate 14 days...Okay? And then... now we're
getting more into the budget itself. So far we've covered the assumptions that
we've made. Um...those are subject to change. You'd be surprised, but
generally we've been able to project pretty well... and we, ah, haven't had too
many surprises, but occasionally we do. One of them was back in_ and that
was even after we certified the budget and the Legislature made the changes.
Hopefully that won't happen again, but keep in mind that we have to complete
our budget and send it off to Des Moines probably at least four to six weeks
before the Legislature convenes. It can happen. Um...ok, going to the, going to
the next page which is the page out the budget page, page 39, and this is entitled,
"Additional Positions Approved" and approved means, generally means
recommended. As you'll recall the resolution that was on your December 14
meeting, I think...I'm not sure.... I'm not sure what the date was...um...that
talked about whether or not you would direct us to put these positions in the
budget, and that was the Police Officers and the Fire Fighters, and at that time we
indicated to you we would have to any way because if we didn't and you passed a
resolution we wouldn't then be able to work that in and get a budget to you on
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time, so these, that's why these are in there. They don't necessarily, uh, represent
a recommendation from Staff. Um.. .
Correia/ Sorry, I was going to ask a question. Can we ask questions about this sheet?
Are you done?
Mansfield/ Sure.
Helling/ I just wanted to, uh...
Correia/ About this sheet...
Mansfield/ Go ahead...
Correia/ Oh. The Community Service Officers...five Community Service Officers...is it
total...
Helling/ For one quarter
Correia/ Oh. That's way I was...ok. That's why.
Helling/ It would be anticipated that they would need to be hired in advance of the switch
over...
Correia/ Right, right, that's why I was confused about that. So that's that.
Champion/ I'm sorry, what was that? I missed that.
Bailey/ It's just funding them for a portion of the year...one quarter.
Champion/ One quarter of the fiscal year.
Correia/ The Communications Center starts July 1. The recommendation is that we
would need these folks on board to staff.. .
Champion/ Oh, oh, okay. Got it.
Helling/ Not necessarily before the whole quarter, but hired them before, in advance of
that changeover.
Correia/ I thought how could five...$62,000? (all talking)
Helling/ Um...I just wanted to point out the Mass Transit Operators-that is funding
from partially from the JARC grant, and the rest of it would come from transit
revenues. There would be no direct, uh, charge to the general fund for those
positions. Ah...now keep in mind that Transit does still draw the 95-cent transit
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levy. But there is enough money in the transit reserves to fund that program,
including our share if it. Um, the Community Service Officers-that's an
offset-they would be paid of the money we now allocate for, for
communications in the Police Department. Five positions that really are new to
the general fund would be the Police Officers, and we put two in there, the Fire
Fighters, um, the Housing Inspector Assistant is actually funded in the Building
Inspection Department, which funds itself through the, uh, fees for the inspection
services, and the only cost to the general fund there would be a one time purchase
of another vehicle for that Inspector. Um, the Solid Waste Landfill Operator is
proposed due to the fact that we are significantly expanding our recycling
program, with the new recycling center, and the recyclables that we are taking in
at the landfill, we just need additional staff to handle all that, so that's where that
comes from. There are two Maintenance Workers II from streets-that's funded
from Road Use tax, and we'll talk about that a little bit as we talk about the Road
Use Tax because you'll se that the balance there is not, uh, not at, uh, the million
dollars that we need and tried to keep it at. But, nonetheless, that is not a direct
draw on the General Fund. I just wanted you to be aware of that if you look at the
second year, then, you'll see kind of a strange thing there, that's when, uh... the
Emergency Communications actually comes out of the police budget-that's
when you see the negatives, but then you look up the Community Service Officers
and that goes up to the full year funding, which is about $276,000 a year. And
then the third year, on the bottom, just the police officer, and then three firemen
lieutenant, and that's the time which we would be wanting to have those folks
ready to be ah, ah...not necessarily those newest folks, but nine people to go into
that new station, and that requires three officers, one for each shift. Pardon me?
Wilburn/ One per shift.
Helling/ One per shift, yeah. So that's how we...and those are the total of those positions
that are recommended to be added. Don't look too long at the ah... I can't read
it...
Correia/ So are we going to have, um...we had Andy come in and, uh, talk a lot about the
fourth fire station and the rational we need...and we had the memo from Sam in
the packet sometime in December. Um, I mean I'm interested I having both of
them come in, but particularly, to hear from Sam. There were a lot of options for
um, ah, police or safety service. Is it a Community Policing Officer or a
Neighborhood Watch Program I mean, I guess this is, like you said in here, based
on um...potential for resolution, um...but there's really no direction in here on if
we want to add these Public Safety Officers in what capacity. So is that
something we...
Wright/ I'd be interested in that.
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Bailey/ I think it would be helpful. Is there interest in having, sort of, a public safety
presentation so we understand a little bit...I mean, Andy has been in here before,
but I think it would be good.
Wright/ I think it's good. I'd really like to know what the Police Department is planning
for those positions, should they get them.
Helling/ The memo you got from the Police Chief I asked him to put that in my priorities,
so as you go through that memo, you got it several weeks ago, I think, as you go
through that memo, what he's proposing initially should be the highest priorities
and then as you go down the line do to the lowest ones, so...
Bailey/ And that's the memo from October 25 rd, right?
Helling/ Yeah.
Bailey/ So it's from the information packet in October 25th's packet for those of you who
want to go back and take a look at that.
Champion/ Um, I really think it would be a waste of time for the Fire Chief, I think we
know the needs and why he needs it and I don't think we need it
explained...maybe the new people would want to hear it though...
Bailey/ Well, I think maybe you were asking conceptually how they would be used, and I
have some specific questions given some of my discussions with the Community
Service Officer and this opportunity to redo the lobby...if our funding for
employees is better spent on officers on the street or officers at the desk...
Champion/ Oh, no, I'm talking about the Police Chief...
Bailey/ Oh, you were saying fire...
Champion/ Yeah...
Correia/ Yeah, I do, I agree with you. I think we've had, I mean we have new folks, but
we've had extensive presentations from Andy with the rational and the need, and I
think, I feel confident in those recommendations um...
Bailey/ I do have some questions about timing, however.
Correia/ I do have questions about timing as well.
Bailey/ So, I do think Andy could probably better answer those than anybody. I mean,
we're talking shovel in the ground in fiscal year ten.. .
Correia/ And I'd like to talk about that...
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Bailey/ And I, too. So, is anybody interested in talking about that timing? We're
bringing on three two years before the fire station will be completed.
Champion/ Well, we haven't brought them on yet.
Bailey/ Well, but were programming to bring on three. That was my interest in...
Helling/ That, that, and of course, if they're authorized for that year it doesn't mean they
have to be hired on July 1.
Champion/ Right. And I think the last time we hired three fire fighters, Andy said, well, I
can't remember exactly, but he wanted them here early because they get involved
with the design, especially the design and function. It's like you're building a
school and you want the Principal house broken. You have to train them, get
them into the system. But, I don't know, Regina, if that's important because I
don't mind hearing it, but I don't know if it's important.
Helling/ I think it's probably important to some extent, but it doesn't, you don't
necessarily have to hire that person, or that first group three years, or two...
Bailey/ Well, are others interested in hearing? I mean... we don't have to have a half an
hour.
Wright/ As one of the new kids I would be interest in the Fire Department and I also
wondered if at least Matt and I, and maybe other, could get a copy of that October
25`" memo?
Correia/ Can we have that for tomorrow?
Helling/ The next page, uh, it's just a little bit different depiction of the, the, the positions
that are included in the budget. I would, just quickly, point out, and don't try to
look at it up there because you'll never see straight again, but, um, if you look on
the, on the page before you there are a couple things. Right at the very top-City
Clerk, temporary employee, that's one that's approved, and Marian can tell you if
you want to hear specifically what that is, but I think it's basically somebody to,
as I recall, to do some updating, or catch-up on, uh, some records.
Champion/ Secretary?
Karr/ No, secretary we're doing in-house. This is someone were looking at to take some
old documents to a machine we don't have in-house, and I didn't want to release
the documents to anyone who wasn't a City employee. And they're
going...they'll have the documents until they're scanned and then bring them
back. It's ashort-term project.
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Helling/ And then the Senior Center is, is two program assistants, and what those would
be would be temporary employees working less than ten hours a week, and they
would be used just to cover the Senior Center on those evening and weekend
hours when there's not staff available. Um, it's not new programs necessarily, but
it's just to have somebody there to respond to any emergency that might occur or
to check back and make sure the building is secure.
Champion/ I don't know if you want comments on this now, but, um, I'm not willing to
hire anybody out of our general budget until we have these police and firemen
taken care of. And, to me, the Senior Center, if they want, I think they should
have some evening activities, but I think that could be a rotation of people who
are there. Not everybody gets to work eight to five. I don't get to work eight to
five. Um, and so I'm, I'm not willing to spend any more money out of the general
fund on any other employees until the police and fire department are take care of.
If they want to be open evening hours, they're going to have to switch some
hours. That's how I feel. I don't know how everybody else feels.
Helling/ We'11...I'm sure...
Bailey/ I think this will come up again.
Champion/ Yes.
Bailey/ I don't think Connie is going to be shy about that.
Helling/ Don't want you to be shy.
Bailey/ It's not a shy bunch.
Helling/ Moving into the financial plan then...ah...first we'll talk a little bit property
taxes highs. I don't like to give you a lot of narrative on these screens, but I think
in paragraph a there, property tax, right at the top. If you read that first paragraph,
that's probably the best explanation we can give you of the rollback, what kind of
an animal it is and, and how it applies. Um, so I just wanted to point that out, and
it does very clearly indicate what the, what the two limitations are. What the four
percent maximum in terms of new valuations, and also the tie to the ag land,
so...and noting that it's one or the other, so which ever is the lowest--not the
highest--the lowest. If you look at the chart then, I like this chart because it's
shows that the increasing gap between the actual valuations and the taxable
valuations. Inherent in the rollback isn't an increase in that gap. We are fortunate
in that if you look at the top, ah, the assessed valuations, we're fortunate that ours
have gone up considerably and consistently, yet taxable valuations remain much
flatter. If the assessed valuation were to flatten out, you know, I think you can
figure out what would happen to the taxable valuations. I don't think they would
flatten out with it. They would start to go down, and again that's what a lot of
other communities are experiencing that don't have the growth that we have. So,
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I think it's a good depiction, in that regard. Um, if you wanted to just get a little
bit of a re-education on the rollback, read that first paragraph.
Hayek/ Dale, a question on the residential property taxes, um, received by the City on
over, say, the last ten years. Do we know what the average increase, in terms of
percentage is over that time period? In other words, how much more money,
how, how great is the percentage increase, on average, from the residential
property tax revenues do we receive over that period of time versus, say,
inflation?
Helling/ So, look at the actual revenues?
Hayek/ Well, or at least...if, if we get a million dollars in year one and it goes up three
percent, on average, for the next ten years, but the inflation rate is 3.5 percent, I
mean, that's what I'm getting at. Um...so we can say whether or not the increase
in revenues we received thanks to the residential property tax is keeping up with
inflation.
Champion/ Isn't that what is on here?
Correia/ No, this is the value, not the amount we get.
Hayek/ Yeah, and I'm looking at actual...actually what we receive. Is it...
Helling/ I see. I see what you're saying...
Hayek/ I'm not explaining it well, but that's...
Helling/ No, but keep in mind that our property taxes aren't just residential. We also get
commercial property taxes, and that's at a different rate, so I'm just...You'd just
like to know the amount of revenue we've got from the residential property...I
don't know if that's broken up and we.. .
O'Malley/ We could take a look at it.
Hayek/ I mean, if it's difficult it's not...It would be interesting to know.
Several/ Uh-hmmm
Mansfield/ Oh, no, it doesn't break it up by class of property. It would be a combination
of looking at what percentage of our taxable value was residential and then, and
then, um, how much the levy rate changes, and you know, taking that percentage
times total revenues.
Correia/ So, it could be estimated based on...
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Mansfield/ It would only be an estimate.
Correia) Right
Mansfield) We do not have...
Correia/ Broken out by class...
Mansfield/ Right.
O'Malley/ We don't receive revenue that way. We receive it all 8.10 property tax, all
library property tax. We don't break it...we don't get it by classification, and, so
we could probably do it on gross dollars. That might help you with your, your
ah...you start doing estimates based on averages and dilute the...
Wilburn/ Well, would you be, would the purpose just be in, ah, in, ah, getting aself-
picture in to where this all goes in terms of inflation, or are you talking about
being able to explain something, like to a constituent, in terms of, you know, my
tax bill keeping going up, ya-to-ta.. .
Hayek/ Yeah, probably both to get some context to this.
Wilburn/ I think what a lot of us have probably said over the last, maybe, two or three
years, correct me if I'm wrong, was that we have held, or tried to hold the tax rate
flat-the city portion of it, but your value, your assessment may go up, so you
may, you know, more money be coming because your valuation has gone up, but
we held the rate flat over the last couple, the last couple three years.
Mansfield/ Right. The other aspect of that is, um, you're not just comparing the same
house over ten years because you have new construction though out all of that, so
you're not comparing the same player, you know, from time to time.
O'Malley/ Your base shifts. (all talking)
Helling/ I'm trying to think out how we could do that. At least we could show...if we
can't separate it out to know the exact impact of the residential, if we could show
at least an aggregate what our income from tax revenues are and compare that to
what you're talking about. The rollback obviously has an impact on that, and as
Deb is saying, we could probably extrapolate if we know the percentage...L ..we,
we can try to put something together and see what we can come up with.
Hayek/ Don't burn any midnight oil on this...
O'Malley/ Current tax collections we have a schedule in the CAFR that you received
tonight, and page 101 has, um, the tax collections for the last ten years...
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Wilburn/ And I was just trying to get at it...what the end game was, Matt, and if there
might be something comparable, or similar thing that may address to get towards
what you were hoping to learn or be able to explain to someone.
Hayek/ I think it would just help us explain how reliance on residential property taxes is
not keeping up with the ever-increasing cost of doing business.
Mansfield/ We can...
O'Malley/ It's been roughly 67 to 70 percent of our revenue stream for the last eight
yearsproperty taxes...property tax receipts.
Helling/ The next two pages...and one is residential property growth, and the other is
commercial property growth. It's just sort of a graphic depiction of an overlay of
what's happened with our revaluations in each of those areas, uh, since 2000, and
also what we've seen in new construction during that same period of time. Um,
probably the one message that this, uh, shows vividly is the variance in both new
construction, and, and even more so in the revaluations. Um, revaluations are
every to years so you can anticipate that the lower diamonds would be close to the
base line, but you can see it varies dramatically. Um, we talked before about the,
the increase in revaluation in 07 and that's when we, ha, actually able to eliminate
the, the, uh, emergency levy-bring that down to zero. Um, new construction,
residential construction, is much more, ah, much flatter, more consistent, although
it does vary, as you can see, but that has been pretty consistent over the years.
Um, on the next page, commercial property, tracks some of the same patterns as
far as revaluations go, not totally, but to some extent, but new commercial
construction has varied more, and uh, so it's very hard to predict our revenues. If
we know ahead of time that we have a big project coming and we'll get a building
permit-that's one thing. But, typically, we don't know that far in advance all the
time so, ah, there is some volatility there, there is some difficulty in projecting
and that's when we go back to looking at the three percent that I talked about. We
use a fairly conservative number when we approach those just for that reason.
Those ate just to help you understand, so you can grab it...ok...This page most of
you are familiar with because we use it, sort of dwell on it. It's, it's, ah, a very
good depiction of all the levies because it not only includes the levies, and the
levy rates, it includes the dollar figures, and that's what I like about it because you
can look right side by side and you can see what it means in terms of dollars. Um,
it's...the only thing I don't like about it is we have two years up and then two
years below and it's hard to track, but it does show that, that the consistency with
the general levy, the 8-1 O levy, the transit levy, library levy, all of which are
fixed, and you see just that regular increase based on regular increases based on
values. Um, you can look at the torte liability levy, and you'll see that, ah, it stays
relatively, relatively constant as well throughout the, ah, from the current fiscal
year, and throughout this, this our three year projection. You can see what
happens with the emergency levy when it goes down and how it affects the dollars
in, basically, ten cents is...if you look at FY09 we were back up at the ten cents
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and that basically $246,000.00, so it's a little under $25,000 for every penny that
we levy in the, uh, emergency levy. The one that does change significantly is
debt service, and that's what we'll be talking about a little bit later... it shows
you... again, I think what's important here is it shows you the dollars amounts as
well as the rates, because the rates don't mean much unless you can, uh, show
what that generates in terms of dollars. It is, uh, a pretty steady progression up
here a little higher jump from FY08 to FY09.
Mansfield/ Ah...Dale? We should mention that part of that increase between FY08 to
FY09 is because FY08 dollars are, were, ah, reduced by basically buying down
the tax rate on the general fund in FY08. Um, it's on one of the pages here.
Helling/ Yeah, we'll be, be getting to that...it's a bit little clearer on another page, but
keep that in mind that that did, but when you buy that down, and you buy it down
for two years in a row, which we did, ah, when you don't have the money to buy
it down again, ah, the debt that we've been selling has been pretty constant, but
going up a little bit. So, it's a spike when we bought it down the last three years.
The other thing on here that I always find interesting is, is, the second to last line.
A city this size, we have a tax revenue of about $4,600 this current fiscal year on
ag land. There is ag land in the city-not alot-but there is ag land in the city.
We tax it at the rate of 3.04. Guess what...
Wilburn/ ...subsidy out of that, or.. .
Helling/ Huh?
Wilburn/ Can we get any ethanol subsidy out of that or...(laughter).
Helling/ I don't think so! Eight dollars and 11 cents or...uh, the next page is the, our
houses, but it's a little bit different this year. We have a whole neighborhood
now. We have three houses instead of two. Um, we put the...the one in the
middle just as...to give you, again, a sort of a vision of what would happen...I
don't know that it's happened in Iowa City for a long time, but what would
happen if a particular residence, $100,000 valued residence, doesn't increase in
value. If it doesn't, and you apply the rollback, the taxes that we would get from
that property would go down by, what, 14...about $23.00 a year. Again, the
impact of the rollback. Um, if you look at the table right below the houses, you'll
see that the assessed valuation on the...on the house, based on this year's, um,
increased valuations, this goes up by about, um, $7,500.00. If you apply the
rollback to that, it...it reduces it down to that 4% level that we were talking about,
and then you apply that, so that same house valued at now $107,000 after the
rollback is applied would pay $845.00, or about, what, $36.00 more. So
that's...that's how our revaluations help us, and this is a revaluation year. Uh,
when that...when that's down on the non-revaluation years...um, if the rollback,
depending on what the rollback says, but if it...if it is at all substantial, we see
very little increase and I think there's a...well, we'll be looking...I thought it was
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in here. Maybe it isn't. But anyway, we've seen those years when the increase is
very small, less than (mumbling). So, for the purpose of what will happen under
this budget, forget about the middle house. Taxes will go up by, uh, that margin,
up to about $36.00 on that $100,000 house. Next we gave you a...a ten-year
history of the levy rates, and this is easier to read in terms of looking at the levies.
And you see somewhat the consistency...couple interesting things. Tort liability,
and I'm not sure why this is, but the tort liability is stated around 22, 23, 24-cents,
uh, through FY04 and then it jumped up to 34-cents, and now it's jumping up a
little bit more, and that's...I'm not sure what that's based on. I'll let you know...
O'Malley/ That's based on our insurance policies requiring higher SIR's after, uh
(mumbling)
Helling/ Um, but again, the one that I think you want to look at is debt service, and you'll
see what happens there, uh, in FY03 that's when the Library bond issue came on
line. That's when it jumped from $2.94 up to $4.16, roughly. And it pretty well
stayed at a higher level, uh, back down in the threes...39, or 3.95 in O5, and then
up to 4.14, back down to 3.87. And then in 09 it goes up to 4.38 and again, just
from a trending standpoint, if you look at that bottom, uh, debt service just from
OS through 09, you'll see it was at 39, uh, went to 41, or...$4.14, 4.15 almost, and
then in 07 is when you started to buy that down, and you bought it down to the
tune of about $600,000 I think in 07, and then in 08, 900 I think...935...$935,000
in 08. Now we don't have the money to buy it down, and so what you're seeing
is, it's going up. It looks like a...a big spike from $3.78 to $4.38, but if you were
to maintain the trend 05,06 and then not bought in down in 07,08 - I don't have
the actual numbers, but you can see that it would have progressed, fairly...fairly
consistently. So by buying down the debt...the debt in those years, if you can't
continue to do that, and you keep borrowing at, you know, at the rate that we
have, uh, which also is pretty consistent I think in terms of the rates...the amounts
we've been borrowing and you'll create that spike, and so that's...that's why that
jumps up. I think it's a little...pretty easy to see in that. General Fund revenue,
um, basically it is what it is. We have, uh, have the FY08 is amended, based on
our latest projections of where we'll be. Um...the total revenues, it actually...for
FY08 looks like it's gone down, but I think that's because of the moving of the
road use tax?
O'Malley/ That's correct.
Helling/ Yeah.
Champion/ I'm sorry. Because of what?
Helling/ Road...road use tax was in the General Fund, and then we moved it out, so it's a
separate fund now. And there are a couple reasons why we did that. Uh, one is
because it makes it easier to track, but also, number two is because of the required
reporting mechanisms for the State, it makes it easier to also generate those
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reports. So it...it seems to work better. Internally it really has no...no impact
once you've got it separated out. But for 07 and 08, there's kind of a glitch there
because, uh, it...it goes down and then back up again. Questions on that? Next
page is basically just a graphic depiction, again, driving home the fact that 68% of
our General Fund revenue comes from property taxes. Um, in terms of the rest of
the pie, I think you're pretty famil...I think we're pretty consistent in terms of
what we generate in terms of charges for services, um, that...the green section,
the intergovernmental, that's...that's the one that I think we may want to take a
little closer look at, and that's on the next page. And just, the reason I want to hit
on it a little bit is because that used to be a bigger slice of the pie. Um, what's
happened over time is that like I said the State Municipal Assistance, uh, that
they...they provided for us. At one time we had Federal Revenue Sharing as
well, which was just money from the Federal government, sharing with...with
both the states and the cities, Federal revenue. That was a long time ago. Um,
but if you look at the page on General Fund intergovernmental revenues, if you'll
look at about six lines down, University of Iowa fire protection. See where that
is? And go over, that's, uh, $1,442,000 roughly, projecting for 09. Then if you
go down to the State section and look at transit assistance. And go over, that's
$544,000 plus, and if you go down to the Federal revenue and look at transit FTA
operating grants, $873,000. If you add those three up, it comes to a little over
$2,800,000. So, those account for about three-fourths of the total
intergovernmental revenues. The other amounts, as you can see, are...are, um,
much smaller, and a lot of those are money that we actually get for providing, uh,
services, uh, or in the case of like the Senior Center for instance, that the County
provides us toward our operating costs for the Senior Center. Um, bottom line,
and the reason I point this out is because we don't get much money anymore from
the Federal government or the State government, other than in those instances
where we provide something back. We used to, used to be a substantial portion of
our budget.
Correia/ What accounts for the 19% increase in University of Iowa fire protection?
Mansfield/ Firefighters.
Helling/ That's factored in. Our operating costs are factored, based on the square
footage. So when we increase our operating costs...
Correia/ ...that's based on, even though...
Helling/ ...now there may also be some...
Correia/ ...I mean, they're serving an area of the City not heavily University property
mean, it's just, there's a formula?
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Helling/ Yeah, but if we have a fourth fire station, then we don't maybe have as...as
often, uh, structurally even the central station which means they're available for
closer... (mumbling)
Correia/ IJh-huh.
Helling/ ...uh, so it balances out.
Correia/ Uh-huh, sure.
Helling/ That's the formula, and that's...that's the way we've applied it, and it seems to
have worked very well. Um, there maybe some difference in...in footage too,
due to Library construction that may have an impact on that - I don't know.
Bailey/ It seems like they've increased their, um, square footage quite a bit, so that might,
I don't know.
Correia/ Just based on the University square footage?
Bailey/ Yeah.
Mansfield/ It's the relative percentage of the University square footage to total Iowa City
square footage. So both...
Bailey/ ...both numbers are going out, right?
Mansfield/ ...the agreement is amazing. This agreement was written in 1957. It's a very
short paragraph, and it is the most awesome thing we have!
Correia/ So when you're talking about square footage, you meant University's -not ours.
(several talking at once)
O'Malley/ ...percentage of the total.
Correia/ Right, right, but I...I just misheard you about...building the fire station.
Helling/ Yeah, we take our total square footage.
Correia/ But our.. .
Helling/ Take our total square footage.. .
Correial Gotcha!
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Helling/ ...and the total operating budget. We take the University's square footage,
figure out what percent of the total square footage that is, and then we apply that
same, that factor to come up with.. .
Correia/ I see.
Champion/ Are we just talking footprints, or actual square footage?
Helling/ No, we're talking actual square footage.
Champion/ Great!
O'Donnell/ Old Capitol Mall (mumbling)
Correial Right, right, the mall.
Helling/ Yeah, that has an impact. Um, new rec building that they'll be building, that
will.. .
Correia/ That's not in here now though?
Helling/ No.
Correia/ That will be.
O'Malley/ After actuals.
Correia/ Actuals, right.
O'Malley/ A year later.
Correia/ Okay. Huh.
Hayek/ Well, the rec building's on land the University already owned, right?
Correial But square foot would be, when it builds up...(several talking)
O'Malley/ ...as long as it's in the City limits.
Helling/ ...this is just for fire protection.
Correia/ Square footages.
Hayek/ This was not geographic land mass, it's square footage of...(several talking)
buildings.
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O'Donnell/ Interesting.
Champion/ (several talking) ...1956 did you say? (several responding)
Helling/ If we were drawing up that contract today, what do you think it would look like?
(several responding)
Wright/ Smile and protect it.
Helling/ But the end result would probably be very close to what it is now, I suspect. It
would just be we'd (mumbling)
Champion/ ...fire coverage for them too.
Helling/ Okay, the next page I'm sure you can't read up there, so, um, this is just a break
down of...of (coughing) of both revenues and expenditures in the General Fund,
and particularly the revenues. Looked through these in the past...they're...there's
a fairly consistent picture here that we see, but there are some things that are a
little bit different, um, and probably need some explanation. Um, again, looking
at current taxes, the top line, um, it's, again, just shows that such a large part of
our, uh, revenue comes from...from the property taxes. If you go down to, uh, the
probably the...well, let me see if I can get this arrow and show you just about
where it is. Um, I want to look at road use tax. (mumbling) Did you find it?
Champion/ Yes.
Helling/ Okay. Road use tax, that's the result of it coming out of the...the General Fund.
We showed road use tax as revenue under the General Fund in FY07 as over $3.7
million, $3.8 million and then it drops down to $55,000. That $55,000 is, I
believe, one position...in Forestry, um, that we still pay, it's in the General Fund
and we transfer that money into the...the, uh, from the road use tax into the
General Fund for Forestry. The rest of that is gone out of the General Fund and is
in that separate road use tax fund.
O'Donnell/ Dale, I probably ask every year, but was is the sale of assets?
Helling/ Where are you looking? Oh, I see.
O'Donnell/ Up from road use tax.
O'Malley/ $505,000?
O'Donnell/ Yeah, what is that?
O'Malley/ That could be equipment. It could be land, um, those kind of assets.
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O'Donnell/ Okay.
Helling/ We sell...some equipment we trade in, some equipment we sell, and some of the
larger pieces of equipment we could get a, a pretty good price.
Mansfield/ (mumbling)...police vehicles, the police...their turnover is about every two
years, you know, they'll get up to 60,000 miles on a vehicle or, and, um, we have
right-of--way sales, um (several talking)
Helling/ There are companies that buy used police vehicles and turn them into cabs. You
go to Chicago and get in a cab (mumbling). Um, other than that, I don't know
that there's anything...is there anything you wanted to point out on...as far as the
revenue?
O'Malley/ Just to say that, uh, the variances that happened on this page are usually due to
transfers, which is not new money. It's money from one other fund back to the
General Fund, and it kind of inflates things, so we're trying to get away from
transfers so that's why we're doing direct charges in the road use tax instead.
Transferring the money from road use tax into the General Fund, which inflates
the revenue, also inflates your expenditures. But we have that, um, in 2008, two
notable items are right below road use taxes -miscellaneous other, operating
transfers at $1 million. That, uh, is...this is very difficult to explain, um, years
ago some of you may remember the Transit was its own enterprise fund? And it
never had enough money so we were always transferring money from the General
Fund to Transit? Now we've got Transit inside the General Fund, but it acts like
its own fund still, so it's like a nested fund. So we transfer money from Transit
net rev...net operations to a Transit reserve, which is in the General Fund, and so
it's like a transfer and a transfer. It's like putting money in one pocket, and
putting it back in and counting it twice. That's what that one is, because of our
accounting. And it's...
Correia/ So is this $1 million what's later that $963,000 going into the Transit reserve?
Mansfield/ Yes.
Correia/ Okay.
Mansfield/ If you...if you go to page 26 of the hand...of the handout, and you look at,
um, the second to the last group of transfers, where it says reserve funding,
Library computer replacement reserve, equip...Library equipment replacement
reserve.
Correia/ iIh-huh.
Mansfield/ And the Transit improvement reserve -all three of those are, um, within your
General Fund balance, and so they're basically coming out of unrestricted cash
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and going to restricted cash, and that process of getting them...that, um, that
process to get them, to show them in restricted, is the miscellaneous other
operating transfer in, is basically them coming into the restricted part of cash, and
in the miscellaneous transfers...in the transfers out, it's taking them out of
unrestricted cash.
O'Malley/ So the accounting mechanism we use confuses, or inflates, things, and so it's
hard sometimes to make good comparisons when we do that. The other item that
I wanted you to note is that large interfront loan, uh, the last item on the receipts,
that $1 million. Of that, $975,000 of that million dollars is a loan from the
Landfill to pay for the overrun costs on the fire station #2 estimate. So, by law we
can only issue $700,000 in bonds, unless we go to a referendum. When it first
started out, the project was going to be about a million bucks. Now it's up to
about $2.5 million, and to do that, to finance it, we had to take $700,000 that
we're going to bond for, $975,000 out of our cash, and you take $975,000 from
the Landfill, stick it in the General Fund, pay it out to the CIP fund, so
it's...anyway, but it creates from an asset and liability point of view, it creates
another loan that the Fire Department has to pay back. So you have an operating
cost going forward. (mumbling) somewhat clear...somewhat.
Champion/ I get it.
Helling/ (mumbling) loan but it has to be paid back from somewhere, and that's over ten
years, right?
O'Malley/ Right.
Helling/ So, it's...with no interest it would be $100,000.
Champion/ Do we charge interest? On those loans?
Helling/ (several talking) ...I say without interest it would be.. .
Bailey/ That's an internal policy, that we pay it back and that we charge interest, and
it...there's no bond company requiring it, right?
Helling/ Correct.
Champion/ The Landfill has lots of money. (several talking)
O'Malley/ That's the City reserve.
Champion/ And we can borrow from. How much do they have to maintain in that...is it
$20 million or some ridiculous...
O'Malley/ About $12 or $13 million.
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Champion/ $12 or $13 million.
O'Malley/ It's adjusted every year, based on, uh, engineering calculations.
Champion/ We have to keep...we had like $25 or something...
Helling/ Okay, then going down to the next, to the next part of that page, which is
expenditures, where you have personnel services, supplies, capital outlay, so
forth. As you can see there, again, um, there's a lot of consistency there, uh,
things do vary a little bit. Again, the personnel costs have to do with the fact that
in 07 we had to restate that to show for comparison purposes with the road use tax
money out of there, so you don't want to look at that, in doing that comparison,
you don't want to look at that first column. You want to look at 2007 restated,
and then go from there. Um, we do have a fluctuation in supplies, as you can see,
uh, they...they do go up a little bit. There are inflation...inflationary cost. There
is, and one of the questions I think you had, Amy, was in terms of the 12%
increase in supplies from 08 to 09, and most of that is fuel and Transit. Uh, in
addition to that because Transit bought new vehicles and they are of a make that
we didn't previously have, um, they have to buy a certain amount of parts to keep
in stock so if something goes wrong that they have the parts. Otherwise it...to
eliminate those long (coughing, unable to hear). Um, those two things alone
account for probably more than that differential, but a supply cost, like...like a
number of other costs, do vary from year to year. A lot of our supplies are bought
maybe for longer than aone-year supply, and so they'll show up in this year and
not in that year. Um, but overall, it's...it tracks fairly consistently. Um, the other
one that's obviously, uh, out of whack by appearance is transfers out, and we
were just talking about some of that, um, because in 2008 we show expenditures
there of $6 million, um, a number of things that we've...we've funded in 2008 out
of the General Fund and that's not, again, it's inflated. It's not $6 million
additional expenditures, um, but some of the things that we've done for instance
are...are the fire station, second fire station, um, and $700,000 of that is debt and
the rest of it is...is almost $2 million. It comes out of the interfund loan, plus the,
uh, plus the reserve. The Senior Center, you'll recall the project we did there, that
was about a half million dollars for the bathrooms? Uh, that came out of the...of
the fund balance. Uh, the work that we anticipate doing over there on the
building, the chiller and boiler, that will...that will come out of debt. We have
capacity in the current FY08 debt issue because of the couple projects that you
didn't do, and so we can sell debt for that. Um, we bought that piece of land
adjacent to Sand Lake, the showers addition $350,000. We're able to fund that
from the...from the fund balance. Um, some remodeling that we anticipate doing
in the building, uh, this year still, which is the City Attorney's remodel down
there. That's about $230,000. That'll come out of the fund balance. Um, and
then as was indicated before, the fund balance also funded the $935,000 that you
used to write down the...your debt service levy in...in 2008. So those are some
of the bigger items. Um, end result, and the bottom...the percent of expenditures,
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um, the unreserved balance -that's your, that's your, uh, calculation of your
percent of your fund balance that, uh, optimally 30%. At this point in time that's
your policy, uh, minimum 15%, and you can see what happens there in 2008, uh,
that will go down to about 28.8%, um, it goes back up a little bit in...in 09, and
then in FY10 it goes down again, and then down considerably in FY11, as all
those positions of police officers and firefighters (mumbling).
Correia/ Both in the range though, `cause our range is 15, isn't it?
Helling/ Um...
O'Donnell/ Minimum of 15.
Helling/ Yeah, it's...it's in the range of 15, 15 being the minimum, but it's getting farther
and farther away from what you would say is optimal. Um...
Bailey/ Wait, we have another sheet in here that.. .
Mansfield/ It's got an error on it. Take a look at the reserves cash as being a plus rather
than a minus.
Bailey/ Okay.
Mansfield/ Sorry.
Helling/ Computer added instead of subtracted.
Mansfield/ Cross that page, yes.
Helling/ Would that it were right, I'd feel a lot better.
Bailey/ Well, it's probably going to...well, our actual...
Karr/ Which page are we crossing out?
Bailey/ 27.
Karr/ Thank you.
Helling/ Page 27.
O'Donnell/ We just cross that out?
Bailey/ And the actual page...
O'Malley/ 24 in the, page 24 in your book.
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Champion/ Oh, in this book, okay.
Bailey/ And tomorrow we'll see the actual versus budget? You'll have that chart for us?
Great, thanks.
Helling/ And in anticipation of that getting more discussion, we won't talk anymore
about that. Um, again, in terms of...of expenditures, a couple of other depictions.
Uh, the chart top of page 25 basically shows that in a little more detail, that
bottom part of what's on page 24, and then the graphic depiction and the...you'll
see that things are pretty consistent there in terms of all our costs, with the
exception of what looks like a big square cork on page, or on fiscal year 08, at the
top, and that's what I was just talking about, those additional expenditures
that...that were unanticipated and covered from those fund balance (mumbling).
Clear? And then the next page, 26, again is General Fund and it talks about other
financing uses. This is...this is transfers, and it's...it's in the budget because it's
part of the process and we have to have it in there, but it can be very confusing,
um, I think it's largely what Kevin just explained a little big ago in terms of how
transfers can, uh, show up in one place and then another, but what it does do is it
covers, again, those extraordinary costs that we've...we've incurred, uh, in FY08,
and also shows what will happen in FY09, a significant decrease in those
anticipated. The fact that the...a lot of what we show is unanticipated costs, uh,
in FY08, I'm assuming there will be some of that in FY09. There always are
some. We have a Contingency Fund, but that generally will cover our smaller
operating contingencies that we run into. Major, uh, projects like finding funding
for part of a fire station or the Senior Center repairs that seem to be ongoing over
there, um, we, uh, we would anticipate some additional things in FY09, but
hopefully not to the extent...and we'll have to plan a little better, or we'll have to
be able to plan those because we're not going to have the fund balance available.
Correial Can you remind me what we increase into the Airport operations, because the
budget we passed for FY (mumbling) $12,000?
Helling/ Um, I think that's...their 5% of whenever they get Federal money that comes in,
it's a 95/5, and so we(several talking)
Mansfield/ That's local...that is, um, transfers to the Airport for the local portion of grant
funding.
Bailey/ That comes out of our General...
Mansfield/ Yes it does.
Correia/ Those...that's happened (coughing, unable to hear) budget?
Mansfield/ Yes, that was in the budget, in the public hearing that we just had.
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Correia/ That's why I was asking, to remind me about that.
O'Malley/ Those are for the smaller projects, Amy. The bigger projects we bond for.
Helling/ And 27, we...page 28 then, talks a little bit about the amount that we need.
Most of you have heard this. We get paid twice a year, does that ring a bell? Um,
but we do get our tax revenue in October, and then get it in April. So we have
three, maybe a little bit in excess of three months at the beginning of each fiscal
year that we need to cover our expenses, and that's covered out of the fund
balance as well, uh, what this shows you is that over the last, about seven years,
what our shortfall in receipts for those first three months of the year has been. So
that...that ties somewhat to that idea of having a very minimum fund balance, to
cover our...our costs so that we don't have to borrow in order to meet our
expenses. Okay? Debt service - I wanted to just point this out a little bit because
this has to do with that notion that I talked about in the transmittal, and that is
whether or not we maintain...right now, um, we will not borrow, or our policy is
not to borrow, uh, to the point where we have to levy for debt service more than
25% of our total tax levy. And that has always worked pretty well, and we've had
that policy for quite a number of years. As...has always worked pretty well, um,
but some things are happening that sort of change the landscape. One of the
things that's happening is that we're going more towards debt, since the rollback
has restricted our general tax levy, our 8/10 levy, and so what we're doing is
we're borrowing to fund certain things that we used to fund our of Operations.
Um, examples, um, fire apparatus. We used to set money aside so that when it's
time to buy a pumper, we had the cash to go and buy it. Now, we're selling debt
to buy it, and that's fine because it's going to last. Our debt is ten years and that
pumper's going to last longer than ten years. It's...we're able to pay for it that
way to get the cash up front, but then again, it goes back into the...the operation,
and we have to pay that off, and so...but that goes then into the debt levy. So as
we have more of those kinds of things, um, um, small amount $50,000 for public
art, but that's also we borrow that on an annual basis, and then there are some
things in between. The bottom line is that we have more debt going to those
kinds of things so we have less ability, uh, under our policy to borrow for capital
projects. Also, keep in mind that because of the restrictions that we have and the
rollback, our overall tax levy is going down, the 8/10 levy, and so what's
happening is that is becoming a little bit larger proportion of our total, uh, revenue
from that is becoming a little bit larger proportion of our total expenditures, on an
annual basis, and so what's happening is we're...we're pushing up a little above
that 25, not because we're borrowing a lot more but because the other, the other
revenue is coming down. Okay? Does that make sense? So, in order to maintain
a capital improvements program that we think is consistent with what...what you
want and what we have done in the past, again, not borrowing more necessarily a
lot more money, but maintaining that and not having to cut into that to reduce that
debt back down. The only alternative is...is to go, you know, a nudge above that
25. If you'll look on, uh, the next page, the graph, and I think this...I think this
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depicts it very well because the blue is your total debt margin. That's...that's
your allowable debt, and that goes up unrestricted, because it's just based on
your...your valuations before, you know, any of the restrictions are applied. So,
and if you'll look at the purple then, that depicts essentially the level at which
we're borrowing, that's our outstanding debt. As you can see, we are...the
percentage of outstanding debt to our allowable margin is decreasing. The State
says we can borrow up to 5% of our total taxable value, we can have that much in
outstanding debt. Um, we're nowhere near that. So from that standpoint, it
appears as if...it wouldn't be the negative or a bad policy if we went ahead and
nudged that up to, you know (mumbling) um, if we don't, and you want to stay in
that 25, that's fine, but it will have a severe impact on the...on (mumbling).
Hayek/ Is, um, if we're borrowing more and doing so more frequently to pay for things
we didn't used to have to borrow money to pay for, e.g., fire equipment, but the
outstanding debt is relatively static over time. Does that mean we are doing fewer
capital improvement projects over the last number of years?
Helling/ Not necessarily fewer in number, but we're spending...we're able to spend less
money on it, but that's why we're talking about bumping that up a little, but if you
look, if you go back...uh, to the previous page, you can see in that second to last,
or second column from the right, our outstanding debt? That jumped up in FY04,
or FY03 actually, again, when we, uh, well actually it jumped up in FY02. The
Library's a good part of that. There were some, uh, other (mumbling)
O'Malley/ Library plus our annual operate...our annual capital was $29 million.
Helling/ Okay, okay. Um, since that time, we're looking at 85, it went down to 79, $85
million...last, in 09 we would go to $87.3 um, and stay at about 87. What we try
to do, and we don't restrict ourselves to it, but what we try to do is we try to
borrow roughly no more than what we retire in a given year, so that our
outstanding debt doesn't increase dramatically. And that's what you see depicted
here over the last...well, about the last four or five years, and then projecting out.
You can also see, even though we're borrowing a little bit more, the percent of
our allowable debt margin keeps going down.
Champion/ That's not bad.
Helling/ No, that's not bad at all, and that's...that's what we don't want to go, we knew
when we sold the Library bonds that that was going to jump up, above 50%, but
then it would start to ratchet back down, not because those bonds are being paid
off, just because those bonds are being paid off faster, but it's also because that
debt margin keeps going up, and that's unrestricted.
Bailey/ But, I mean, changing our policy isn't the only possible approach to this. We
have other options, I mean, because, I mean, I'm assuming because we can use
Landfill as a bank, I mean, we could look at that list and see what we might
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eliminate. I mean, there are other options. I mean, there aren't just two ways to
look at this. Am I correct?
Helling/ No, this is...this is our recommendation.
Bailey/ Right.
Wilburn/ So, if I were to use a credit card of my own, uh, every year according to the
State, our credit limit is increasing. We are...the total amount that we borrow
each year is relatively static. But we would like to be able to use our credit card a
little bit more, as opposed to cash, to accomplish about the same thing? Is
that...help me with my analogy...
O'Malley/ Everything is correct to the last statement.
Wilburn/ So we would like to use our credit card to do more...
Bailey/ Furniture rather than food?
Wilburn/ What's that?
Bailey/ Furniture rather than food?
O'Malley/ No, what's happening is that the, uh, our policy, years ago when this policy
was enacted, we had more than those nine levies you have there. We had money,
uh, machinery equipment levy, so we had more levies for this 25% to attack. For
the last ten or so years we've just had those frozen, almost frozen levies, but our
needs as a city, we're not a young city anymore, we're an older city, and now we
have maintenance issues, besides growth issues, that need to be financed. And so
the best way to finance improvements like that is for people to pay for them over
time, because the benefit lasts over time. So we do want to issue more debt, but
we have our own self-imposed restriction that won't be 25% of this fixed levy that
we have. So, I can't get that into your credit card analogy.
Wilburn/ But...but what you were getting at is a little closer...we're, we're...
Bailey/ Something we used to pay out of our pocket, right?
Wilburn/ ...something that's going to be useful over more years, as opposed to...we're
buying something that has...that has larger value than just, uh, we're not going to
restaurants to use our credit card. We're going to get equipment and...
Bailey/ But have we moved anything into...
O'Malley/ There's a few things...
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Bailey/ ...okay, that's what I'd be interested in knowing.
O'Malley/ ...used to have road, we used to have more road use tax revenue, and that
would help pay for some of these capital projects. That's gone. It's almost all in
operations now. So we have those road projects going into debt that we didn't
have before. And then we have...what's that?
Correia/ (several talking) Well, I thought part of your question, see if this is the right
question or not, is...is we either...so what we want to...we, um, only take in new
debt in a year at the same rate as we're retiring so let's just say $10,000. We
retire $10,000, we bring in $10,000. Is that.. .
Helling/ Roughly...not exactly.
O'Malley/ Close!
Correia/ That's sort of close, so is that analogy...so you're saying we want to bring in a
little bit more for some, we want to allow ourselves...
O'Malley/ No. I want to bring in the same amount of money, but...but I have an external
guideline.
Correia/ So I want to take in $15,000 and pay off $15,000.
O'Malley/ Correct.
Correia/ Okay, so that's what you're saying. And so you're saying you want to take in
that additional $5,000 through debt, and your question was could we take in this
additional $5,000 through interfund loans?
Bailey/ Right. I mean, it seems to me, I mean, just in studying this budget in the last
couple of days, I mean, we have enterprise funds that, well, I mean, we have
options. These are self-imposed policies.
O'Malley/ Yes, it is.
Helling/ Kevin described it as kind of you've got your own rollback...(several
talking)...on debt. But...but the thing is, if we use the interfund loans, then we
can't pay that out of debt service.
Bailey/ Right. Right.
Helling/ So we would have to pay it with...
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Bailey/ Well, I mean I think though...right, if we explore other options, we have to know
the implications of those options, and...and understanding the implication of this
option too is important.
Champion/ I'm not really willing to make a decision on that until we look at the Capital
Improvements Plan.
Bailey/ Oh, sure.
Helling/ Not asking you to make a decision tonight.
Bailey/ I think we should think about what the implications of different approaches are
(several talking) these are guidelines we impose on ourselves and what...what
does it mean to change them?
Helling/ I just wanted you to (mumbling) why we're recommending what we are.
Correia/ I see, we're still going to pay off at the same rate we did.
O'Malley/ Yeah, we usually...
Correia/ ...retire debt the same...
O'Malley/ I think as I've been looking at this longer, for many years we would roll off $6
million and we put on $6 million in debt. We pay off every year, but I think what
I'm looking at when I look at this close, I think this percentage that we define by,
the last couple of years, is also a part of the rollback, because when we look at
this one chart it's on total valuation, without respect to rollback. So we have
plenty of capacity, we're very judicious in the use of that point of view, the State
point of view, for good citizens, but because of the rollback, it eats at the taxable
value and that taxable value is where all those other levies are based at, and so
when that taxable value scrunches down like it's...like it's doing when the
rollback happens, our...and our debt levy rises, it's going to bump against that
25% policy. But I still think we're using judicious use of debt, it's just that
because of the rollback, it kind of throws a monkey wrench into that formula.
That's the best that I can describe it.
Wilburn/ So we're talking, we're not talking about not disciplining ourselves, we're
talking about...
O'Malley/ The rollback eating away at some other aspect of our...
Helling/ I think you're talking about a policy that was...is still a sound policy, but
because of the...the situation we have with other factors, that's right, uh, it...it
may not be as operationally functional as it was at one time.
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Wilburn/ The number may not, the concept is still the same. (several talking)
Bailey/ But you're still...
Wilburn/ ...some type of internal, uh, internal restriction is good.
O'Malley/ ..:whatever you want to issue, you have to roll off.
Wilburn/ Right, yeah.
O'Malley/ So you're not getting yourself too far into debt.
Bailey/ So you're not suggesting a new policy that is a new percentage. You're
suggesting a new policy that gives broader latitude. (several talking)
O'Malley/ ...aself-imposed percentage...
Bailey/ ...right...but, are you, you're just simply saying raise the percentage, you're not
saying...okay.
O'Malley/ Right. We'll come up with some other discipline.
Correia/ Can the percentage be related to what you were talking about...that...
O'Malley/ We could probably make it into a rollback. Whatever...if the rollback is X
then we would increase our percentage by a fractional amount. There's several
ways cities do this. Some cities say, `I want to take $4.00 on your valuation no
matter whatever it is,' and so they just take $4.00 times the tax rate and they put
all the money in and then they decide how they're going to spend it on capital
projects. I think that's collecting money without a purpose, and I think the way
we do it is good. We go through the policy. We figure out how much we can
afford each year, and we go out to the market and do it. But this rollback issue is
starting to creep into our debt. It's been in our operations for years. Now it's
starting to creep into our debt, well, math mechanics.
Bailey/ Got it.
Helling/ Just one other thing. I...I think Kevin and Deb will agree...we have transferred
to debt about everything we can in terms of our operations. I don't think there's a
lot more that we can do in terms of borrowing money for operations, that makes
sense, um, because those things that...and there may be a few things that...small
amounts of money, but, uh, typically those things that last longer than the ten
years that we retire debt, we pretty much found what those are and transferred
those over into debt, like the fire trucks and that type of thing. So, I don't...I
don't see a lot more happening there. Really, we've got three things going on.
We've got the pressures from the rollback in our general tax levy. We now have
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this...the debt service nudging up against our policy there, and the third thing is
we've got our road use tax revenue, which is also, uh, our fund balance in the
road use tax fund is going to be less than optimal. Those things aren't going to
get any better until something happens -either we get more revenue or uh,
rollback is frozen, or...or...the track we're on right now doesn't really make it
any better in the future.
Hayek/ So this approach gets us more money, but we pay more moriey for that money
mean there's a cost to the...expanding or borrowing to pay for these projects.
Right?
Correia/ It would affect the debt service levy. That's why we're.. .
Helling/ The debt service levy would.. .
Correia/ ...go up, and that's why we see your projection...
O'Malley/ Right, because...because of the taxed valuations that are being eroded by the
rollback, the levy has to increase. It's a mathematical percentage.
Correia/ And you showed that in what you recommended, `cause essentially you're
recommending this and so then, and you gave us the projections of the debt
service levy, because that was one of my questions (mumbling) service levy goes
up from 3.7 to 4.3 to 4.6, so that's showing that.
Mansfield/ That reflects a change in policy.
Correia/ That reflects...
Helling/ Big jump to 09 is...is a large jump because you bought it down.
Correia/ Right.
Helling/ After that it's.. .
O'Malley/ The problem you're going to face is actually when you come to the CIP
program is that the FY09...we're still okay, if you look at that graph, we're okay
for 2009 as far as our internal policy, but if we sell the debt that we have in C1P in
2009, it'll create the 26%, so we're going to have to cut some programs, some of
those CIP projects, in order for us to stay within our 25% policy.
Champion/ But the other thing about that is when you raise that percentage and so you
raise your debt, you're also raising people's property taxes.
O'Malley/ Right.
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Champion/ That's the problem I have with it.
Wilburn/ The other, um, that's true, and then you just need to balance that with, uh, what
is it that you are using it for. You are using it for long-term investments, which
effects our economic development, uh, if you're making investments with it, um,
then, uh, you know, uh, business, you know, it's a positive for the business
growth. It's a positive for, um, some of the, um, longer term recreational, those
types of needs. What your capital improvement...ifyowre investing it in roads
and...
Correia/ ...the rollback that same year, I mean a rollback, because you're...there's that
rollback factor, so you're...
Mansfield/ Not on commercial.
Bailey/ Well, and then, Kevin also pointed out that we have the challenges of a growing
community as well as an aging community, and I think we have to keep that in
mind, given infrastructure repair needs that we...you know, we have to balance
those issues. We have to think about safety and...and infrastructure and
maintenance, because it's irresponsible not to maintain our infrastructure, and you
know, feds aren't going to come to the rescue on that either, so...so is that what
you have for presentation? So, can we take aten-minute break and then start in
on some questions. I know we have, um, Amy developed some questions and we
have those in front, and then we'll go for a while longer, I think, to get some
questions and see what we need for tomorrow night. Does that sound like
something manageable for everybody? Okay, let's take ten minutes. (BREAK)
We could start with Amy's memo, if that's acceptable to everybody. You all have
a copy, and you might have similar questions in that, so...and I know that you've
seen this, Kevin and Dale, today so...if you want to just go through it, that'd be
great.
Helling/ You want to just go...
Bailey/ You have the reserve policies on page...
Helling/ ...been answered...
Correia/ ...quite a few things have been answered, thank you.
O'Malley/ I guess I can answer the first one. We actually have, I'll call it a mistake on
page 7, you're reading on the bottom there, reserves will be maintained and...it's
not existing bond ordinance. It's existing bond covenants.
Correia/ Okay.
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O'Malley/ And there're resolutions passed by City Council each time we do a, uh, bond
issue, and if you'd like to see one...one from our last water issue, but essentially
they're also...our auditors also look at them, uh, every audit, and if you want to
turn to the CAFR, they comment on page 58 in the notes, uh, about, they use the
same term unfortunately, the revenue bond ordinance is required at waste water
treatment, parking systems, water revenues be set aside in a separate and special
accounts as they are received, the use and the amounts to be included, and then
they go through different funds that we have to segment, and, Amy, if you look at
I think two pages back from that marker, it gets down to the last few uses that we
can. I think I mentioned to you earlier today, Regenia, the last statement and the
last paragraph says once you have all your other uses, water related uses done you
can use it for any legal purpose.
Correia/ So I guess the question would be, uh, where are we with that? So, each of
those...after we've...
O'Malley/ We're in compliance, first off we have to be in compliance.
Correia/ Right, so we're in compliance. I imagine we might be over...yeah...
O'Malley/ Yeah, in, the excess would be in the operating funds.
Correia) Okay.
O'Malley/ And so then you look at the operating funds, the operating enterprise funds,
from a reserve policy, what do they need for cash reserves. What are they going
to do with their cash reserves? And, uh, uh...right, that's one of the other pages.
That just goes back to the covenant though. That's on, it's in the statistical
section, on page...um, the only page I look for because I like to, it's on page 109.
Yes. The one that I've been looking at for the last three years is wastewater
treatment revenue. I've been dying for it to come back to 1.25. I mean, not too
many people are like me, but (laughter) that tells me I can now issue bonds and
take advantage of some market discrepancies, because I'm now back up to 1.33.
For those years, between 2002 and 2007, we could not issue any bonds. We were
restricted because the covenant said we had to have at least 125% of net revenues
to issue any more parity bonds. We have about four current issues, maybe five
current issues of our wastewater bonds outstanding. So, that's something I've
been...pacing.
Mansfield/ The short of that, Amy, is, you couldn't take advantage of the good interest
rates that he wanted to take advantage of.
O'Malley/ Yes, I could have saved like a million dollars, but I couldn't do it, and I didn't
want to raise rates to save a million dollars, it doesn't play in a newspaper, and
uh, so I had been waiting for our, our sewer operations to, and they've done a
great job! I gotta commend them. They've went to, uh, they've cut a few
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employees. We've shifted some employees, uh, expenses to storm water, because
they do clean out storm water basins, so we've been doing quite a few things, and
you may remember, we had some issues with revenue and wastewater from, uh,
some of our industrial users. If you remember some of those discussions. Any
event, that's the compliance aspect. These are credit enhancements that our
bondholders look to us to provide. Now, we do have excess revenues. We're
making more and we have, uh, we plan on spending some of those for capital
improvement programs, in those respective enterprise funds, but I think there are
some fund balances that we're...we had too much in, and I think you may
remember about two or three years ago I recommended cutting water rates by 5%
twice, so I was more or less trying to give money back to the...because I thought
we had set them too high, but obviously you can do what you like with them, but
they're solvent.
Bailey/ Okay.
O'Malley/ I'm sorry if that's the wrong answer.
Bailey/ Okay, then the next question is about the fleet. Um, and I think...
Helling/ Yep, um, this is one that I think we probably need a little bit of time to...in terms
of, um, we can tell you what the fleet size is and what we've (mumbling) but to
get into the, uh, the procedures, the policies and procedures we...we use, um, I
know we have a policy that talks about, it's kind of a user manual, how...how
equipment is leased out and...and operated and so forth. Um, but getting any
deeper into that, I'm not sure, um, I...I think we just need a little bit of time to do
that. I would just raise, uh, the, um, thing that we told you, what, just a couple
weeks ago, we put a little thing in the packet that showed that our fleet was
among the top one hundred in the country - it was thirty-fifth among the top one
hundred in the country -and that's scrutinized in terms of our operations and so
forth (mumbling).
O'Malley/ You could, uh, by the way, look at our Intranet web site. There is, uh, under
the Streets Department and Equipment Department quite a little synopsis of our
number of units and some of that stuff, and it also talks about the, the poll that
we...do you have access to the (unable to understand)? (unable to hear person
responding) Okay. (unable to hear person talking)
Helling/ That's the policy I was talking about, how users will operate and so forth. But
we'll...
Bailey/ We talked, um....quite a bit about that.
Correial ...other financing sources. The, um, just so...the road use tax money, how does
that come in? Like a one lump sum?
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O'Malley/ No, it comes in every month.
Correia/ Oh, okay.
O'Malley/Based on, uh, our...based on the receipts that come through the State, based
on our population.
Correia/ So it's not really something that we're able to hold to...I mean, I'm just
wondering do we, is there interest on those dollars while we're waiting...
O'Malley/ That's a good question, `cause road use tax has been around a long time and
I've been around a little while too in this business, and road use tax cannot earn
interest.
Champion/ What?
O'Malley/ Yes. So we would...
Correia/ That's a State law?
O'Malley/ ...but, so we would take the interest that it would make and stick it in the
General Fund. It's just one of these anomalies that the State has.
Correia/ You mean, we take it off the top?
O'Malley/ Well, we...the money that earns interest, we can't put it in that fund.
Correia/ Oh! (several talking) ...earn interest on it, but not for the road use fund.
O'Malley/ Exactly!
Correia/ Oh, okay. I thought you were saying we couldn't earn interest...
O'Malley/ No, it's one of those strange things in the State code.
Helling/ Most programs though that...
Correia/ We could spend the money on roads, but just not...
O'Malley/ Yes.
Helling/ Most programs when you get grant money or...they want it spent within a
certain amount of time.
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Correia/ Sure. They don't want people sitting on it. And using it. But, so, we are
earning interest. We are able to put it...it's reflected in the interest income.
Okay. That was my question.
Bailey/ We talked a little bit about supplies, but, um, the question about how departments
been asked to identify cost containment, and then, um, have we looked at best
practices for cost containment and conservation, which would also link to some
green practices potentially, and...
Helling/ Yeah, and you had...one of the things you had asked in terms of green practices
was, uh, our codes and we're (mumbling) um, internally, I'm not aware of
anything, any city-wide policy in terms of green practices. Um, but I think there
are some things that we have been doing and will continue to do, but I think we
want to look at some of the things like, you know, hybrid cars and... generally,
our policy has been not to do those things until they're cost effective, until the
payback is, you know, life of a vehicle or equipment, uh, but I think in terms of
hybrid cars, we're getting (mumbling) it's probably time to look at that again. We
also have had a...I guess an unwritten policy. Maybe it was written at some
point. A "buy American" policy, many years ago and so we didn't bid out our
vehicle, send our vehicle bids out to anybody other than Ford and Chrysler
and...um, maybe Nash way back (laughter).
Champion/ Well, I hope that policy has changed.
Helling/ Well, I think it's something that, it's not a hard fast policy. I think we can
probably.. .
Champion/ I don't know that there's an American car made in America.
Helling/ That's it, or the parts and...yeah, it's such a mixture now that it's just not...
Champion/ ...Japanese car made in Japan either. I mean, that policy's really outdated.
Helling/ And that's the way we've always felt, but now, you know, all the auto makers
are starting to do the, uh, the uh hybrid vehicles, so we may have a situation
where we'll be able to bid those more effectively, you know, more efficiently, get
better deals, if we can bid it out to, you know, five or six different auto makers.
So, it's probably time to start looking at that again, and then the question would
be, if we identify that we're close, then how close before...do the right thing so to
speak, and then (mumbling).
Correia/ Are there other...
Bailey/ What about...oh...
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Correia/ ...are there other things related to supplies, and I'll just use my...my dad as an
example, and his church. He's involved in the building and grounds, and so
they've really gone to a, and this is a small operation obviously, but to a paperless
system where they have mugs. They don't use paper napkins or...you know, and
they've really, they've brought down their costs in supplies, and they've also
brought down their costs in, this is a church, in...in refuse because they're not,
um, and so that's just sort of an example in that system. I don't know what types
of, and that's sort of why I was kind of wanting to know if there are other
municipal best practices on the ways of changing the way we use supplies, I
mean, sort of some of that other to try and get some...I don't know what they
would be, which is why I wanted to know if there were others...
Helling/ I'm not aware of any specific policies that we've had, as far as those kind of...
Correia/ Not that we've had, but that other cities or municipalities maybe looking at, to
both be green as well as, and then you have the other benefit of bringing down.. .
Helling/ Well, certainly we've seen more in terms of green policies and considerations.
(unable to hear clearly) that stuff, so, um.. .
Wilburn/ I will say, though, um, not in terms of things like supplies and things, but, uh, in
terms of things that might be closer related to public works that, uh, Rick Fosse
has been following some documents in other communities. He's...he printed out,
or they emailed him a big, I mean, the document's got to be 200 pages long of just
some other practices that cities, or projects that cities have done. So...
O'Donnell/ We're well ahead of a great number of communities, and thanks to Rick
we're.. .
Helling/ One example is the paint that we use, on crosswalks and that. You know, we've
gone to an epoxy paint that's more expensive but it lasts longer, and we had that
discussion a couple years ago when we started to use that, and those are the types
of things that we do on a regular basis. We're always looking for something that
lasts longer and costing it out, to make sure that it's...
Bailey/ Um, the parkland acquisition fund.
Helling/ Parkland acquisition fund...primarily it was meant to be acquisition of the land,
so the Parks...um, the fund itself is, has been supported from the General Fund,
uh, and then I think we actually sold debt (several talking)
Correia/ ...and I guess that's what I was sort of wondering, do we have a policy on not
having more than a certain amount in? Is there a policy related to...
Helling/ Well, we're not...we're not levying anymore.
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Mansfield/ Parkland acquisition originally got its money from hotel/motel tax, and um,
you know, over the years City Council revised how they wanted to distribute the
hotel/motel tax, and so at some point...the policy, um, at one point was putting
money into parkland acquisition and parkland development, two distinctions that
were made. And, so...each year we budget $50,000 out of the CIP plan for
parkland acquisition, but that only gets spent if they actually locate a piece of
property, um, so that carries forward.
Correia/ It's not really a fund.
O'Malley/ No, it's more or less a frozen balance now. We just budget $50,000 as the
placeholder, in case we manage to acquire...
Correia/ So it's not really sitting there, unless we use it.
Helling/ The balance, I think, is from previous debt.
O'Malley/ Well, yeah, the current...there is some current revenue going into it, because
we borrowed some money from that, uh, fund to help build Scanlon Gym, and as
we repay ourselves for that debt, for that expenditure, we...we replenish that
fund.
Helling/ And that last payment, I think, is in FY10.
O'Malley/ Correct. Right.
Helling/ Then there won't be any more revenue into that. So, the idea there is to, when
we use up what the balance then there won't be a parkland acquisition fund
anymore.
Wilburn/ ...2002 when the change, from the hotel/motel...(several talking)
Bailey/ We talked a little bit about our policy on interfund loans, but, I mean, do we have
an official policy, or is this once again the practice?
O'Malley/ It's more been a practice.
Helling/ Mainly that's...that's, uh, Landfill. That's about the only source we have.
Bailey/ Right. And the practice has been that we pay ourselves back, and we pay
ourselves back with interest.
Correia/ How much interest?
O'Malley/ 5%. Sometimes we fluctuate, if the fund has good credit.
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Bailey/ But once again that's...that's discretionary. I mean, we could actually take
money from that fund and not pay ourselves back, if we chose.
O'Malley/ Right.
Bailey/ Okay.
Helling/ I think, again, we're fairly judicious in how we use that money. We're very
careful (mumbling).
Bailey/ We have any practices on how much we will borrow...I mean, we keep the, we
keep enough in the reserve to, as required, to close it down, the $12 plus million.
O'Malley/ And whatever is in the CIl' plan, so there's always been sufficient revenue, uh,
it wasn't just until as of late when Rick was thinking about purchasing a couple
extra pieces of property (unable to hear) and he was concerned that we might be
loaning too much money out of there. (laughter)
Bailey/ So he wouldn't be able to buy his...okay.
Wright/ Just as an extension of that conversation, we...why do we pay ourselves back
with interest?
O'Malley/ Um, it's just a practice we do. If we issued bonds we'd be paying interest.
They feel that time, value and money, that those people who pay those rates to
support those funds should not be penalized.
Mansfield/ They would have been earning interest income.
O'Malley/ It's more or less an accounting debt, consideration. I mean, accepted
accounting principle.
Champion/ It would be stealing money from the fund if we didn't pay them interest.
O'Malley/ That's one way of (laughter).
Bailey/ That is one way to look at it, but it's the wrong way!
Champion/ I think it's called embezzlement! (laughter and several talking at once)
Bailey/ Okay. The improvement...the transit improvement reserve.
Correia/ This was that 900,000...(several talking) reference that earlier? Why it's so
large, the 900...
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O'Malley/ Oh, why it's so large? One of it was, it's the profit and loss in the Transit sub-
fund.
Correia/ Okay.
O'Malley/ Our nested fund. And they used to be...they used to be a poor farm, and that's
when we brought them into the General Fund so we were able to pay for their
employee benefits through tax dollars, and then once they built the Court Street
Transportation facility, they have cash in their pockets now, but we can't do
anything with it, but do it for Transit. So we want to segregate it away from the
General Fund so you guys don't think you have money to spend, so we put it in
the Transit reserve fund.
Bailey/ You're hiding money from us, is that what you're saying?
O'Malley/ No, I don't want you to mis-spend it. I don't want you to get in trouble.
Correia/ So that money, so that Transit... so that's my question. So that Transit reserve
money, that amount...
O'Malley/ Is available for Transit uses.
Correia/ I know, but it's coming from Transit.
O'Malley/ Correct.
Correia/ I mean, it's coming from rents at the Court Street Transit...okay.
O'Malley/ But because of how it's nested in the General Fund...
Correia/ Right, so it came from Transit and then we're transferring it into this reserve
fund that's for buses and what not, so that they continue to maintain their own
solvency, or pay their own way.
Mansfield/ And the amount is so high in FY08 because we did not get the FY07 net
income is occurring in FY08.
Correia/ I see.
Mansfield/ So that number is basically two years.
Champion/ Yeah, because we didn't want to spend it until we knew how much it was
going to produce, or something like that.
Correia/ Well, then why does it go down so much the next few years. It's like $100,000.
Is that just a placeholder, we don't know how much it will be?
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Mansfield/ You've got three and a half new people in this financial plan. You've got
expanded operations in Transit.
Correia/ In Transit...oh, I see.
O'Malley/ Plus we bought some buses.
Correia/ That's what you said, the Transit...gotcha.
Champion/ Um, that just brings up a quick question, and I can look it up myself, but if
you know off the top of your head, are we still putting money from the General
Fund into Transit?
O'Malley/ No.
Champion/ Okay, great.
Helling/ Well, no, the Transit levy goes (several talking at once)
Champion/ ...yes, but at one time we were.
O'Malley/ We used to do that, when it was in its own fund and couldn't afford making
payments.
Champion/ I guess we can't save any money there for a policeman.
O'Malley/ No, that's right. That's why we're taking it away from you and putting it in
the reserves, so you don't...(several talking)
Bailey/ And so we'll get this memo, um, on Tuesday about the police officers and the
staffing requirements. Um, oh yeah, building and development revenue. You
have that, Kevin?
O'Malley/ LJh, most of, is that on page 20, something like that?
Helling/ Yeah, it's...
Bailey/ It's found throughout, but it's also in the summary, listed as a revenue.
O'Malley/ I think...is that the, uh, $334,000 on page 20?
Correia/ Well, in the...
Bailey/ Yeah, $334,000 on page 20, building and development, but it's found throughout
and that might be...
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O'Malley/ Right, most of it is probably found in building inspection. Is that right...
Correia/ So I guess that was one of my questions...okay, yeah. Building inspections...
O'Malley/ At, um, $278,199 on page 53. I believe that's what the...when you go in for a
building permit, you...the building permit is based on the value of the property,
but many times they have to submit building plans, which our people have to
actually look at and go through, and that's the actual charges for those.
Correia/ Right, so that's the actual. So my question is when you see it in other
departments, is that...
O'Malley/ They have functions too.
Correia/ So what do you mean? Is that additional building and development revenue, that
those departments capture themselves or...
O'Malley/ None of them ever...these never get to capture anything.
Correia/ All right. That they...that they received.. .
O'Malley/ We display it there just to show that they have efforts.. .
Correia/ That was my question. They're not generating in that department, but we're.. .
O'Malley/ Well, no, they are generating, but we don't get, we don't let them keep it.
Correia/ I guess my question is...
O'Malley/ We give them credit for it.
Helling/ If it's a General Funded operation, and they generate this...
Correia/ All right, so I guess, then my question is, in building inspection we see
$278,199. Okay. So is the total amount of building and development funds that
we receive that amount, or is it that amount plus everything in the other
departments.
O'Malley/ Correct.
Correia/ Okay, so then, okay. And then my other question...
O'Malley/ Planning has some of it, and uh, engineering will have some of it because they
do plat review.
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Correial Okay, so then I guess my other question is, in this department there's more
receipts than expenditures...where...
Mansfield/ It goes to the General Fund balance, available for all General Fund operations.
Correia/ But I mean, where...in these individual budgets, where do we see it show up?
As a receipt?
O'Malley/ It shows up in the General Fund receipts. That's just...that's just a
representation that we show, just...
Correia/ I know, but I mean, in all of our budgets we show the money that's going in is
from these, you know, the General Fund levy or this or that or the other.
O'Malley/ Tax supported.
Correia/ Right, so if all these budgets have, all of the money in there, there's...where
does the $288,723 go? If it's not in these budges already? Where is it reflected?
Mansfield/ It is in, it is a receipt into the General Fund, and is reflected in total, right, in
this cost center, in that department.
Correia/ Right.
Mansfield/ Okay, if their revenues exceed expenditures, that benefits all of the General
Fund and is re...and is used...I'll stop, yeah.
O'Malley/ That's a question that we had some controversies from...let me back up. In
2004, we had the million dollars pulled out from under us, from the State
government. We came up with some revenue enhancements and some, uh,
reduction in force. One of the things we did is we raised building permit fees.
Subsequently, the last two, three years we've been getting letters from Iowa City
builders, saying that we are making too much money and we should give this
back to them. We've got some discussions that we're trying to say, well, they're
not...you know, housing and building are not paying any rent, you know, so it's
an indirect cost. Housing and building are not paying any electricity bills. That's
an indirect cost. So, we're trying to answer them in a fair statement, but we also
recognize that excess revenues here help also pay for housing inspection.
Champion/ I think we should raise their rent. (laughter)
O'Malley/ Any event, that's...so any activity, any cost center in the General Fund that
makes money, except the Library and Transit, does not get to keep its extra funds.
Correia/ No, I understand that part. I guess, but...where do we (several talking) where do
we, no, I...where in the budget do we pay our electric bill?
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O'Malley/ Out of supplies. No, services. (several talking) I mean, what cost center?
Correia/ So...that's where all of...
O'Malley/ ...that would be page...is it 10...oh, wait. (several talking) ...for City Hall,
yeah. It's not in finance. Admin...is that in with Terry's stuff? Oh, okay. Used
to have them in different order.
Helling/ Yeah, it's on page 76.
Correia/ So I guess (several talking) the question would be, would there be in terms of,
because I still...this, the excess isn't anywhere in any other individual budgets.
Mansfield/ Are you wanting a list of what our building and development.. .
Correia/ No, I don't want the, no I don't want to know what the fees are. I don't care
about the fees in that regard. I guess I'm wondering if, you know, if, you know, if
we can utilize some of the funds from the...to offset our, um, the utilities that they
use then would that free up General levy dollars ongoing to fund a firefighter?
Champion/ No, because it's already going (several talking at once)
Correia/ But I mean it's accounted for in the receipts, but...
Mansfield/ It's accounted for on your General Fund, all in one page. That...that page
summarizes all of the revenues for the entire General Fund.
Bailey/ (several talking)...page 20, we see...right.
Correia/ So then this money is our contingency?
Champion/ No, we spent it.
Mansfield/ No, it is...
O'Malley/ It's just revenue.
Mansfield/ It goes to...no, it is put into the General Fund.
O'Malley/ The General Fund supplies...
Bailey/ What are you trying to get at?
O'Malley/ Yeah.
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Correia/ Okay, so our General levy.
O'Malley/ The 8.10.
Correia/ The 8.10, anywhere that I'm looking at a department's budget, and it says
property tax general levy, that's the 8.10, and it's divided up, and so I.. .
O'Malley/ We don't actually put it in there. That's just for display purposes.
Bailey/ But that's how we understand it.
O'Malley/ Yes, right.
Bailey/ So let's just keep walking through Amy's question, because we understand it
different...
Correia/ You're assigning it to that department, and so when we assign the General levy,
which we...which we get every year, or you know, we can plan for the General
levy, when we are saying we don't have General levy dollars to fund ongoing
personnel, because it's assigned in these departments. So I guess what I'm
wondering is if the true cost of building and inspection includes the cost of the
utilities and the rent, we're generating that income. We assign it to the place
where we pay utilities and rent, or however that works, to free up our assignment
of a General levy expense into a public safety department. I don't know why
that.. .
Champion/ Well, it doesn't work because it's already being spent on utilities and rent.
Correia/ But we're not assigning it so...
Mansfield/ The right fund is paying it. What you're talking about, I believe, would work
if you were talking about two different funds. It...if you know, if you were
talking about, you know, the water and the General Fund or something.
O'Malley/ The reason we have the General Fund is to combine all of these activities that
are somewhat tax supported and some are not. And it's Police, uh, Library, Parks
and Rec, Senior Center, general government. All those activities are in the
General Fund. What you're saying is what you're kind of getting at is maybe
going back to each one of those departments having a separate fund. Because
that's what...and then we'd have to, and it's, I guess it goes back to the whole
concept, why do you have a General Fund? Well, because you don't want to
administer how much electricity finance is using, or how much electricity city
attorney's using. You want to have an economy scale. Now you can do that.
You can go in there and put meters in, but there's always the cost benefit ratio in
accounting. Is the cost worth it, the administrative cost worth it, trying to recoup
those dollars? And we get benefit from it, and this would be...
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Bailey/ So, we have these revenues from, um, these building inspection fees. And they
show up in this particular department, and then also by showing them in other
departments, you were trying to outline the additional cost that the City incurs
for.. .
Mansfield/ We're showing them in the department that generated the fee.
O'Malley/ Right, there's individuals in each one of those cost centers. That's how we
look at them.
Bailey/ Okay. Okay.
O'Malley/ ...within the General Fund, that actually do work with the public and generate
a certain fee. Now, we don't (coughing, unable to understand) total cost, it's not a
one-to-one. In fact, we lose money like in engineering. They spend hours and
hours on plats and they don't get recouped for that. So, it ends up, you know, the
costs that housing gets happens to be more than, they're getting a better deal, so it
ends up a wash when we're all in the same boat.
Bailey/ On the bottom line.
O'Malley/ On the bottom line. That's, the money comes in one place, a little higher, then
comes in another place, but overall it equals out. Now, we had this issue with the
building, so we had to come up with certain comments, and that's where indirect
costs came about.
Bailey/ Okay. I think that helps, because I think one of the things we think about is, that
we're just looking at one...
O'Malley/ Yeah, you can't look at it in isolation because we're all within this General
Fund. Now you can look at people in the water fund different than people in the
General Fund.
Helling/ Building inspections is the only place where we generate excess revenue.
Everything else, if you see it in the other budgets, it's all just a piece of the
total...and building inspection we actually cover our costs with that, the over run
just goes back into the General Fund for general purposes, and funds a little bit of
everything.
Bailey/ So code enforcement revenue (several talking) similar, yeah.
Correia/ My last question was the policies regarding intracity charges, and I was
specifically interested in those charges regarding services from General Fund
departments, providing services to the enterprise fund departments. So, I was
looking at...I'll just, considering personnel, so 24, if I do the math right, 24% of
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City staff are in enterprise funds, departments, but personnel, if I'm correct,
provides personnel services for all employees.
Mansfield/ What we do for, um, as a charge to all of the enterprise funds is we...um, take
the percentage that they are, we take the general government administrative
functions, and take what, I'm going to lose my, usually I can say it a little clearer.
We, um, we take the percentage that the enterprise funds are, of total expenses of
all City operations, and take that times our general government administrative
functions, which is personnel, accounting, finance, revenue, um, and recoup costs
that way. We also, for the revenue division, because they're so heavily involved
in billing, you know, taking money for utilities and water bills and things, um, and
for the Public Works, like...the...where Public Works Director. We also assess a
direct charge.
O'Malley/ We have an indirect charge and a direct charge. The direct charges usually
show up in our revenue division because they bill the customers and handle most
of (mumbling). The other general government cost centers, we do a ratio based
on the, uh, enterprise fund expenditures, versus the, uh, City administrative
expenses and collect a certain amount off of that. And we usually review that
every two years, to see if it's adequate.
Champion/ So when the walls fell down in the water plant, and that went to court, the
water...
O'Malley/ Water paid for all of it.
Champion/ ...paid our attorney fees, I mean, if we were using our attorneys. I don't
know if we did or not, but okay, so it just, okay.
O'Malley/ So if it's a direct issue, we do it that way, and then if (mumbling) Council, all
of the general government expenditures, budgets, are compared against the
enterprise funds, and that ratio is charged back, so you're, essentially some of
your time is indirectly charged. Or your costs, I should say.
Bailey/ So, um, charge backs are reviewed every two years? (several talking)
Mansfield/ I usually do it at the end of each budget. I do it based on each adopted
budget.
Correial So in personnel the intracity charges are $3,000, so that's...and then you just
assign it out.
Mansfield/ We will recover a portion of personnel costs, um, based on what ratio, um, the
enterprise funds are to total expenses. So if enterprise funds are 60% of our
expenses then 60% of that cost would be recouped.
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Hayek/ One question, and it came up while, Amy, you were asking your questions. Why,
uh, does, do Library operations and Transit operations that generate excess
revenues stay in those departments, but excess revenues in other departments are
not kept in those departments?
O'Malley/ For the Library it's City ordinance. City ordinance says that the Library
Commission and the Airport Commission, if we give them money, we can't do
anything, they get to do whatever they want. If we give them a budget, it's their
money.
Wilburn/ It's not just City though, that's State wasn't it.
O'Malley/ It was a City ordinance.
Champion/ But the Library Board and the Airport Commission are given special rights by
specific laws.
O'Malley/ There is some State ones (several talking) We've also got, we've even
restricted that more in our own ordinances. We have, by State law they have
more authority than normal boards and commissions, by City ordinance - I forget
which one it is, but it's...it was pointed out to me one time (mumbling) and then I
said, `Oh, okay,' so I found out. Those two, once we budget the money, we can't
take it back. And the Transit is all by statutory and Federal grants. If you accept
the money then you have to, any income...program income off of that money,
you have to keep it in that program.
Champion/ That's good. That's the way it has to be. For the Library at least.
Bailey/ It doesn't have to be. It's an ordinance that we created.
Champion/ I think it's fine.
Bailey/ Okay, other questions?
Champion/ Um, I...I have a couple questions, uh, not specific questions, but just some
general questions. When you did this budget, and I'm sure you did, did you take
into account, uh, stuff we have coming off of TIF? As they're paying more and
more taxes?
O'Malley/ We didn't get a schedule.
O'Donnell/ There's nothing that soon, I don't believe.
Champion/ No, there is.
O'Malley/ There's something two years from now.
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Champion/ But they're starting to pay their taxes. I mean, they're getting to the
maximum, some of them. I...and what about, did we take...I'm just looking for
police and fire money. What about the, uh, new Mercy, uh, Surgical outpatient...
Mansfield/ How we generate our revenue.. .
Champion/ With money you have.
Mansfield/ ...is a certified valuation from the County Auditor's office, okay? So, um,
and...and by December 1, all related parties that have TIF obligations have to let
the County Auditor know how much obligation they have against TIF. So the
County Auditor gives this valuation report that says you have this amount of
valuation that you can use for debt service. You have this amount of TIF
valuation that you can only use for debt service, and then the balance becomes
available for all of our other tax levies. So, um, I'm not sure if that answers your
question for TIF or not, but that's...that's how we calculate...
Bailey/ You're asking if in 2011 we've anticipated things rolling off of TIF, and it sounds
like no, we don't do that?
O'Malley/ It looked like on pages 85, 86, and 87 we have all our TIF projections.
Champion/ Oh, okay.
O'Malley/ It looks like we're still asking for TIF revenues to pay off TIF services. Oh, it
doesn't look like anything's freed up for the next few years.
Champion/ Oh.
Mansfield/ But we probably do owe you a schedule on that.
Champion/ Yeah, I think that might be very helpful to us to have a schedule of what's
going to be coming available, and maybe reserve some of those funds for police
and fire, and that new building. I can't remember what the valuation on that's
going to be, but it's going to be substantial, isn't it?
Mansfield/ Right. (several talking) When something becomes available, it...it becomes
available to all of your tax levies. You know, the 8.10, Transit...(several talking
and laughing)
O'Malley/ What you see here you won't get, you'll get maybe 30% of it.
Champion/ You know, I did totally forget that! I was really just coveting that money!
I'm sorry, you're right.
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O'Malley/ If it was imminent, I'd be knowing about it.
Helling/ Go ahead and covet the 40% that we (laughter and several talking) Remember
the 40/40/20 ration.
Bailey/ We can get a TIF schedule, can't we? That would be good.
Champion/ And then I'd like to know the implication sometime before we do anything
about reducing our, um, cash reserve fund. I mean, I'm not against reducing it
some. I'd like to know the implications and I hate to ask this question and don't
stare at me, about a hiring freeze. (laughter and several talking at once) And
uh...
Helling/ A hiring freeze means basically that we'll have attrition and we'll lose
employees, and if we do that, uh, and we can certainly do that.
Champion/ I was just wondering, I mean, I...I know there are some departments that
couldn't, but I'm just trying to find a way to get money for these police and
firemen without layoffs, and that's what I'm interested in is what the attritions
going to be like the next five...
Helling/ If you do that, you can do it. You won't have layoffs, but you will have service
reduction.
Champion/ Oh, I understand that.
Helling/ That's...that again is, you have to make those....
Champion/ Right, I totally understand.
Helling/ ...the service level.
Champion/ We'd be increasing one and decreasing another.
O'Donnell/ I'm interested...
O'Malley/ For example I know the Superintendent at the cemetery has got 45 years there.
If he goes, it's athree-man operation. What do you do? So we have to make
exceptions.
Champion/ We'd have to make exceptions, of course. Um, I'm just throwing it out.
Helling/ The other thing is that if you go just strictly by vacant positions, that's almost
like saying well, we're going to let fate tell us where to cut.
Champion/ No, no, no. You'd have to make...
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Helling/ Have to decide, yeah, where we're not going to hire additional people.
O'Donnell/ I would like to know how much the reserve, um, how much can reduce it
without it affecting the triple-A bond rating (mumbling).
Helling/ We talked about that before. I don't think there's...
O'Donnell/ Yeah, but I forget the figures.
Helling/ Well, there isn't really a magic number because you look at cities that, for
instance the triple-A cities in Iowa which are I believe Des Moines, Cedar Rapids,
and Iowa City.
O'Malley/ Ames.
Helling/ Or Ames, Cedar Rapids, and Iowa City, uh, we typically are around that 30%.
Um, if you look nation-wide, you'll see...there are some that are lower. Typically
those cities that are lower have a more diverse revenue than we have, um, so they
the ability to recoup and build back that reserve faster if they spend it down. Um,
so L ..I don't think, I know there's no magic number. I think what Moody's or a
rating agency will look at, if they see that going down, they'll probably...that's a
red flag, but I think they're going to look at why it's going down. Going down
because...because we consciously decided to spend it down to a certain
acceptable level, and that's one thing, but if we're using that money to fund
operations, that will continue as a, then I think we're...
Bailey/ Well, then I think what we'll see with the chart tomorrow too is consistently
actual versus budgeted reserve funds have been higher than our 30% goal, and I
think that's something we also need to talk about, is how...in this process as well
as budget amendment processes throughout the year, we adjust our aim at that
30% or 28% target, because we're hitting high on a fairly consistent basis, and so
if you were shooting like that, you would make some adjustments about how you
were aiming, I think, and I think we can do that.
Champion/ Well, then I have to have some talk about the future. Let's say if we decide to
use any new funds coming in to staff these police and fire, um, and we start
reducing our fund, what are we going to do when we don't have funds to replace
those funds, because employees are a yearly expense and they get more expensive
every year. So how far can we spend that down, without having to close the fire
station.
Bailey/ But consistently it seems that we've been taking in through taxes money that gets
us a higher reserve, so perhaps we are taking in enough money to have enough
funds to support one or two of those positions.
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Champion/ Oh, I'm not...one or two is not mne.
Bailey/ It's not, but I mean it gets us part of the way there, and I think that's something
we need to look at, because consistently we're above our reserve goals.
O'Donnell/ Substantially.
Bailey/ I mean, I don't know if, in the last couple of years we have been, but I don't
know.. .
O'Malley/ ...four or five years ago we...to answer your question a little more fully about
triple-A, they look at four factors, and one of them, fund balance, is significant.
They also look at the economy. If we have a good, strong, vibrant economy,
that's very important. That's one of the first things they look for. Second thing
they look at is debt repayment. We're very good about paying that debt in ten
years (mumbling) strong suit, and then besides fund balance which could be less
than the 30% in other cities, the fourth thing is management policies. How
consistently and how quickly we react to downturns in events, how judiciously we
handle that, so it's not something that I can say you do this you're going to have
it. It's kind of a combination - if we have a strong economy and fund balances go
down (mumbling) keep paying our debt. We start bringing more debt to the table,
they're going to start looking at us real close. So, hopefully that'll give you an
idea.
Hayek/ Yeah, if we tweak our policy on debt service levy, how does that impact our bond
rating outcome?
O'Malley/ I think if you keep this quick repayment, this ten-year repayment schedule, I
don't think it'll impact it that much.
Bailey/ Well, and isn't part of it being within our policies, rather than being out of, out of
step with our policies, I mean, being over what we say we're going to, I mean,
part of it is....
O'Malley/ Part of it...you know, a lot of times they ask me what are we going to use the
money for, and if I said well, we're going to add some commercial, some
commercial land to add to our tax base, boom, that's going to play out better. If
we're going maintenance, you know, we're just paying off deferred things that we
never had time to, they're going to start thinking how come you can't afford it out
of your operating.. .
Hayek/ But if we go up to 30 or 35% in policy, does that hurt our, uh, bond chances on
the market?
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O'Malley/ I don't think...I think it's what projects you take to them. If you're taking a
bunch of maintenance projects, and not new growth projects, I think they might,
that with those projects would, I think they'd consider that.
Wright/ That coupled with a significant draw down of reserves.
O'Malley/ Right, that there's a third layer of the....that's knocked out more or less.
Bailey/ Other questions or needs for information tomorrow? Were you done, Connie?
Champion/ Yes, I think so. Several more I'll continue later. (several talking)
Bailey/ You have questions, Mike?
Helling/ Before you go, let me pass this out. This is, we talked about a list of possible
ways to reallocate money or find new sources or whatever, and I said I would
come up with something. This is what I've come up with to date, and some of it's
obvious. Some of it we probably mentioned in conversations with some of you.
Um, and I just wanted to give it to you now so you'd have it to start
maybe...(several talking).
O'Donnell/ Can we leave our stuff here?
Karr/ Yes.
Champion/ Thank you, this is good.
O'Donnell/ That's really good.
Helling/ You may think of other things. Now what I didn't get into here is program cuts,
the kind of things where you're cutting staff and that sort of thing. Um, these,
again, are not recommendations. They're just identifying places where you have
some discretion. Now, you may perceive that you don't have discretion in certain
areas, but, um, in fact, technically, you do. So if you come up with anything else,
uh, the, you know, some of the staff had the suggestion that we add a dollar to
each parking fine and then at 180,000 parking tickets issued each year.
Champion/ That's great.
O'Donnell/ That's excellent.
Bailey/ Chicago thinks we charge too low. (several talking at once)
Helling/ Well, if you make it two dollars, you can get $360,000, but I mean, and that's
sustainable revenue. That's something...as long as you don't then not raise it
when it's time that Parking needs revenue. You raise it another buck or two or
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whatever. If you try to use it later to offset or fund Parking, and don't keep
transferring it to the General Fund, then you lose it. Otherwise, it's sustainable.
O'Donnell/ How many parking permits do we have in the parking ramps?
Hayek/ Can't raise those. We cannot raise those. (laughter) (several talking at once)
Champion/ And if we started fining those beer trucks on Dubuque, we could have a lot
more money than that.
Helling/ Now just as a devil's advocate thing, if you do something like that, you're going
to have this...this uh, accusation that, well, you know, the cops are out there
writing tickets to pay themselves, and most of these are done (several talking at
once).
Champion/ Well, maybe we should allocate it for fire so they...blamed for paying
themselves. (laughter)
Bailey/ Okay.
Champion/ Thank you for doing that.
Bailey/ Okay, so (several talking) great. Tomorrow night we're going to start at 6:30.
We have a revised agenda. We'll go, we'll start with the City Manager search
process, and bring calendars, and I would encourage people to just bring calendars
to all meetings, and then we're going to talk about some of the things that were in
the Info Packet, some are, somewhat related to budget, so I thought we'd get
those out on the table so we could further discuss them as a budget discussion,
and then tomorrow night it's just general discussion and questions, and we'll have
follow up of information. Thank you. I think this helped a lot.
O'Donnell/ Let me say one thing before we leave. I got several calls about the, uh, the
disabled parking down at the Library. Did anybody else get calls?
Bailey/ We probably should talk about that tomorrow at Council time, okay?
Helling/ Just from a standpoint of the budget, you'll have tomorrow night, and then the
only thing we have scheduled after that is your hearing with the board and
commission reps, and then the CIP, which is a day, and then your budget wrap up,
so based on tomorrow night, I think you'll have an idea of whether you're going
to need additional discussion before you do your wrap up, because once we get
into the end of the month and do the CIP and the boards and commissions, you'll
have that wrap up, then we're getting against a tight timeframe again as far as
getting everything put together so we can publish it or have it available for the
public hearing. Set the public hearing, have the public hearing, and get it
certified.
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Bailey/ Well, and I think particularly with this budget we have some additional questions
and concerns, and it might take us an extra meeting or two, and I think that this
might be the year that we should be willing to do it, and if we could get those on
the calendar tomorrow night, that would probably be helpful for everybody's busy
schedule. It's better to get it on and cancel and, you know, give you an evening.
(unable to hear person talking) Right, and we'll come with some suggestions for
that too. Um, any other comments or concerns before we break? Okay, thanks
for sticking with it, and see you tomorrow night at 6:30.
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