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HomeMy WebLinkAbout1997-06-03 TranscriptionJune 3, 1997 Council Work Session page 1 June 3, 1997 Council Work Session 4:10 PM Council: Nov, Baker, Kubby, Lehman, Norton, Thomberry, Vanderhoef. Staff: Atkins, Helling, Dilkes, Karr, Franklin, O'Malley, Mansfield, Craig, Eisenhofer. Tapes: 97-88, all; 97-89, Side 1. City Finances 97-88 S1 Atkins/Steve is ready .... put your microphone on .... Atkins/What I have planned today is an update of some information I presented to you last time. I will refer to it informally... get us through.. some sort of a policy position... policy direction .... I want to point out to the council and also the public that we are not off the deep end and we are not sinking and whatever. This is not out of control. This is a very manageable issue .... Part of the problem... local government has any number of rules and regulations applied to them which often in turn translated in how we apply them to you .... bottom line is that we have done what I believe to be accurate long term projections of our financial positions and that it is manageable .... very complex long term issue .... What I want to do is a couple of minutes of updates. What I show in this chart (refers to General Fund Current Budget Plan FY98, 99, 2000) is our adopted three year budget plan .... I want you to note that the budget is satisfactorily balanced, that our ending cash position for the three year budget as we now know it is satisfactory. One of the critical issues in our credit rating ....AAA ....we maintain an unrestricted fund balance in the neighborhood of 20% ..... Those three numbers added together are 19.6 .....fully satisfies existing policies ....reflects what we are doing right now .... An important thing... These numbers are shown to you in aggregate. It will be important for us to translate them... what it means to the average tax payer .... Our longer term projections indicated that in the year 2002, 2003, and 2004 our cash position would be declining rapidly, taxable value would be declining... rate of growth would begin to level off... loss of: reimbursement from the state for Machinery and equipment .... Aggregate M & E amounts to about 4% of our tax abate or about $60 million in taxable value. It is of some consequence. An important policy question to think about... is that all of our projections indicate there would be no service expansion .... Is that a realistic assessment in the long pull that services will not be expanded. There are many issues that are pending before you. Downtown initiatives, libraries, cultural centers, new gymnasiums, community policing .... This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 2 What I would like to do next is identify for you what I believe to be the issues at hand and the first issue is the simplest and most straight forward. (Refers to Nature of Issues) We simply do not have enough monkey to do all the things we want to do. Very simple bottom line. We cannot operate with a declining cash position .... have to maintain some stability in our cash position. We do not know what future State financial controls are out there .... 5:6_years ago the governor proposed a limit on the amount of cash that local governments could have .... I remember writing a letter explaining the importance of that with respect to credit ratings .... Problem we have is the accumulative affect o~f all of these issues. The next point is is it acceptable to assume no new or expanded services in the future. The projections we provided you recently indicated that we did not have that financial capability. That is a question we have to keep in the back of our minds as we discuss this issue. Property tax is our major source of revenue .... Charts I showed you earlier maximize the property tax as our major source of revenue .... How can we maximize that piece of property tax as a form of revenue? .... We cannot forget by maximizing the property tax, it also has a direct impact on the local tax payer .... It will have an affect upon the local property tax payer. Keep in mind, that as a community we have chosen, at least to date, not to use sales tax. We have chosen not to have gambling revenue. We have chosen not to use electric and gas franchise fees. We have chosen to use cable television revenues as a fee and a hotel motel tax .... chosen to dedicate them for specific purposes .... The next critical factor is how do these financial issues jive with your community vision .... We have in place many adopted plans... Comprehensive Land Use Plan .... Airport Master Plan, City Steps Plan... Near Southside Plan... discussed openly the need for a Parks and Recreation Plan .... Operations in the process of putting together their own plans and strategies, Fire and Police. You also have your own goals .... Downtown and long term fiscal health of the community are your top two goals ..... Do we have the ability in the long pull to fully carry out those expressions of policy. That I believe to be the questions that you need to ask yourself.... financial issues .... political questions .... Quickly to revisit a financial problem in the year 2003 and 2004 ....we have the potential for the declining cash position ....library coming on line ....cultural center. The question I pose to you is what can we do? .... going to look somewhere in between .... You either increase your revenue or you reduce your expenditures .... A successful financial program does not necessarily mean a successful program of public service .... You have the individual tax payers saying to you don't take anything away from me .... don't increase my taxes... What we need to develop is some sort of a balanced policy. I believe the scenarios are endless .... We can go on and on with these scenarios .... Important for me to have you identify what is an acceptable policy that we can build the financing around it .... The schools... This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 3 lobbying efforts... realized sometime ago that you cannot simply rely on one source of income with out it getting you into trouble... Schools... began changing the laws... Schools now have an income tax... half of their budget is substantially state aid. Ours is about 5% .... What I believe is that we have to build a budget policy, a comprehensive budget policy .... We can do most of what you want to see done .... choices... adjustments... have the underlying policy .... The next item... (refers to Build A Budget Policy For The Future). How can we build a budget policy for the future? I have identified eight questions... you need to answer so we can build a plan... Need to review all of our vision with respect to our comprehensive plan .... By adopting of these plans, you have indicated... these are things we want to see done .... price tag handle on each of these plans... We have plenty of general planning guidance... I need from you a budget policy to help make it happen .... I do want to move through this policy building process. 2- What are the new services on the horizon .... library expansion and a cultural center .... Our financial projections indicate we cannot provide new services or even minimally expanding our services in the future .... 3- We need to set an acceptable level of property tax ....We had a 6% policy ....property tax for the average property tax payer... would not increase more than 6% .... It is very difficult the aggregate number into the individual because your assessment goes up and yours goes down .... rollback .... We do need to settle upon some sort of acceptable level .... maybe inflation adjusted... We need a target .... Next point, reducing expenditures .... you need to set out for me guidelines. What is sacred, what is not... Can we shift expenses?... private contracts .... Fees and charges .... Next point. Build a budget policy. Do we need to seek a new source of revenue outside of the property tax? We have some flexibility in property tax .... We can expand the tort liability .... cultural center levy .... We can also... sales tax .... utility franchise fee .... In doing so we still need to... have to have some policy with respect to the level of property taxes you find acceptable .... You also have the ability to establish a more greater or aggressive growth policy. I assume, in your budget policy, you wish to preserve the financial strength to the fullest extent possible ..... You wish to maintain the AAA bond rating .... it may be difficult .... I assume in your budget... build in some flexibility for the minor service adjustments you might wish to make .... change the level of service and fund it in the future .... Finally... need to identify service changes which is different from reduction. There are different ways to do things ....City of Coralville... automatic fire response... That to me is a service change .... Kubby/Steve, in terms of the AAA bond rating, you have to do certain things to maintain it. Do we have to do... plan to go down a couple of years. Is it harder to get back up than to maintain it? This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 4 Atkins/The difficulty you have is recovering because they look at long term patterns of behavior that you have in terms of spending... Remember the AAA is in the stratosphere .... Something... riscally realistic that if you wish to see a change, we can address it but recovering from it is difficult. Baker/...What would be the quantifiable affect of a shift in a bond rating? .... What would the money figures be? ...Can you put that down on paper for us sometime? .... Atkins/I will lo6k that up for you... It does cost more to borrow .... Moving on. I believe these questions, some of them need to be answered sooner than later ..... Let me give you an idea on some things we can do .... The number of scenarios... your imagination .... (Refers to No Increase in Revenues Reduce Expenditures). Here is the year 2000 ..... If we were to propose no increase in revenues and meet our financial obligations in the out years by expenditure reduction, what is the magnitude of the changes that you might have to occur. I assume that we would make every effort to maintain our cash position so that our credit rating would remain what it is .... We begin the year 2000 with a $7,055- cash balance ..... shortfall of $1.7-, ending cash balance of $5.2 million .... Norton/ Atkins/This is exactly what you are doing right now and that we would balance our budget by way of a reduction of expenditure. Kubby/That doesn't count Mercer even though we have kind of made a commitment? Atkins/That is correct. Norton/Why does that $1.7- jump on us. Is that M & E dropping? Atkins/It is substantially M & E... accumulative affect ....of a variety of changes. Norton/One of the questions I am going to have to pursue is exactly how that happened, the process by which the M & E reduction occurred. Atkins/We can get into that. What I did is say to myself...maintain our credit... targeted goal of a 20% cash balance, $6.6- My actual ending cash balance is $5.2-. To keep that number, I need to have reductions in the neighborhood of $1.4 million or 4.4% of the General Fund ..... 4% of the General Fund .... Division of Parks... is $1 million .... Senior Center .... is $500,000 .... If we can reasonably maintain our This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 5 financial strengths, I believe we can make this scenario, reducing expenditures and no new revenues, we can make it work. (Refers to No Increase in Revenues Planned Four-Year Reduction in Expenditures).We can make it work over a four year period of time. Taking $1.4 million, if we were to reduce the budget annually for four years at $367,000 a year .... we could meet our targeted. We won't increase revenues. We will increase revenues in accordance with our projections. That allows us time to deal with the issue over the next 4-5 years. What will happen is that if you were to make that decision... no increase in revenues other than those we project out, a planned four year reduction in expenditures, by year 2006... ending cash position $7,598- (refers to Cash Balance As Part Of Planned Four-year Reduction in Expenditures in 000's) and your goal of $7,6-. You have returned us to that credit worthiness, 20% factor .... accumulative affect of the reductions .... spread this thing out... year 2003 shortfall disappears... re-accumulating cash... Kubby/And if you want to go faster, you can be more aggressive? Atkins/You can be more aggressive if you so choose. Norton/ Atkins/Keeping in mind no new services .... cutting back in a staged basis .... Continue to rely on the property taxes as our major source of income, reduce it over a period of time .... year 2006 you return to the credit worthiness goal .... If you were to add in library for operation cost, cultural center, Mercer. You can pretty well take those numbers a double them. So you would have to reduce $700,000 a year over a four year period .... Norton/Steve, is your growth assumption in this conservative? Atkins/Growth assumption is as originally projected ..... grew at about 4.4% on our taxable value. My projections were at 3.2% .... If we have to make a $1.4 reduction .... seems to me .... begin a plan of phasing out certain services .... You notice that in 2006 our position returns .... In 2007 and 2008 you would actually be in a position of possibly restoring some services .... and/or lowering some taxes. You can almost do the same thing .... just flip it and add $300,000 a year in new income and the projections are such... by year 2007 we are in the same position. Are you willing to add $367,000 a year in new income .... each year of new income. Where are you going to find that? That is part of the dilemma. This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 6 Baker/We would have to add $367,000 just to maintain status quo? Atkins/Just to maintain the status quo. Norton/Is that over and above the growth of building here? Atkins/Yes, it is. Norton/ Atkins/... You don't have to raise it in property taxes .... increase some fee .... I will get there. You can have a reduction... increase some ofth_e basis revenues. Another option is that we increase the tax base (refers to Increase Taxable Value). This one is a little more complex .... You would increase your taxable value .... is taxable value... tax rate... We have not changed the tax rate .... Will equal the money necessary to meet the shortfall plus maintaining our cash balance. We projected that our estimated taxable value- Assessed and taxable value are very different things .... We had an estimated taxable value of $1.690 billion. Now we need $367,000 in new income... use tax base theory. That means we would have to have a taxable value of $1.729 billion or an additional taxable value of $38, 800,000. In FY99 the tax value was $1.661-... growth rate of $30 million in taxable value. You would need to add $38 million in new taxable values in order to generate $367,000 in income that we would need i~ affect to balance the budget. Is that possible? I did a ten year analysis... average, our taxable value has grown at about $55 million a year .... What you would need is an annualized growth rate in the neighborhood of $70 million or about $15 million plus in new taxable value if you look at it historically .... A realistic assessment is that we would need- Our projected growth rate of 3.2%. We would need a growth rate in the neighborhood of about 4.5% because remember M & E is gone in the future .... To give you an idea, the taxable value of Proctor and Gamble .... last year was $17.8 million. The taxable value of Moore Business Forms is $8.6 million. Your principal tax payer is Mid American Energy at $49 million. If you were going to use these numbers it is like locating a new P & G every year. That is simply not going to happen. Nov/It is not going to happen with the non-taxable machinery .... Norton/Those current figures include M & E in P & G? This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 7 Atkins/Yes .... M & E .... declining. So you have an idea .... actual value of classes of property in Iowa City... where is your growth likely to occur... of our actual value, residential is 63.8%, commercial 29% and industrial 2% .... Historically, the growth is going to occur in residential .... residential... also subject to exemptions, rollbacks .... politics of property tax .... Kubby/Plus you have to increase services. Atkins/I haven't even gotten to that issue yet .... Clearly we would have residential growth as the underpinning of any kind of a policy if you were to say I want more aggressive growth and development .... There are... many many strategies available to you .... We need to decide sort of where we are going .... You have many political as well as financial questions you have to answer... cut services, raise new revenue, expand the tax base .... combination .... Quick analysis of the three options .... aggregate issue, the amount of money needed to run this government... We rely substantially on the property tax as the underpinning for our finances .... certainly the strongest .... According to state law, we are offered very few options with respect to the property tax ..... Sioux City .... has a property tax, a sale tax, gambling fees, utility franchise fees, hotel and motel tax. That broadens their base .... I mention these to you... important to point out to the public... We as a community do not levy a sales tax .... we do not use a franchise fee tax. We do not use gambling revenues ..... We choose not to do. We have relied on the property tax as a matter of policy for many many years. To give you some examples, sales tax .... amounts to about $4.4 million a year for the city. Gambling revenue. Do we want riverboat gambling? ..... City of Sioux City... non-profit management firm .... $1.50 head tax... receive 1/2 of 1% of all the gaming revenue... $1.3 million per year ....Franchise fee for gas and electric ....'86 we chose not to do that ....Already re-thinking about how we are going to go after that issue in the future ....We contacted Mid American .... gas and electric bill... for Iowa City citizens is about $55.5 million per year ....Sioux City uses a 2% fee ....generate $1.1 million annually. Nov/Do they have a similar property tax value to their electric utilities? CHANGE TAPE TO REEL 97-88 SIDE 2 Atkins/Simply because they are a larger community ..... Mid American now is a much larger company ....Their assets now are spread ....because of a much larger base. I am just trying to give you some rough numbers so you can think about the option. Another option is we do use other revenues, cable TV and Hotel Motel Tax ..... I think the important thing that we need to do .... you need to answer some of those This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 8 budget policy questions that we posed earlier. We then need to discuss what options of financing, either revenue or expenditure reduction that are acceptable to you .... I can frame a proposal .... options... endless... Have budget possible... some idea on services you wish to see now and in the future, I think I can put together a budget proposal for you that satisfies that. That is the end of my presentation .... Kubby/I now that we have shifted, for example, our r.o.w. forester to Road Use Tax ..... Are there other things like that that are out there... that we can either shift to another tax revenue so the General Fund moneys are freed up? Atkins/If you have an underlying policy that property tax is to remain the basis,... we would find those kinds of changes .... We pay for capital Parks and Recreation... I would probably propose to you immediately that we stop that .... and That Parks and Recreation Improvements that were normally financed by cash, would be financed by debt. It leaves the 8.10 and goes to the Debt Service Levy .... The undedicated policy, Hotel Motel Tax, you have dedicated a potion of moneys for Parkland Acquisition... don't do that anymore... moneys directly to the General Fund and Parkland Acquisition Projects will be dealt with as any other project that is presented to you ..... improves your operating position .... Currently our capital position is the one where we have the most flexibility now .... Nov/That does nothing to change the bottom line. So what is the advantage .... ? Atkins/General Fund moneys... that is cash out of the 8.10. Levy those moneys and it is $75,000 a year. I would say continue to levy the 8.10 ....go to the debt service levy... then available revenue in the 8.10 ..... Kubby/ Nov/It gives us some flexibility but .... Atkins/... You need to tell me what is an acceptable level of property tax ....I can build the financing around that particular level of taxation. Nov/ Norton/Steve, what have you assumed... roll back? Atkins/The rollback factor is considered at .59 where it is now .... it rolls into the whole policy... see that position improving somewhat .... That translates into more This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 9 income in aggregate but a high property tax bill if you maintain those tax breaks .... Norton/Is there also risk on the commercial? Atkins/Commercial and industrial is 100% .... Nov/ Atkins/Last year they had a slight rollback they applied to the utilities and to certain industrial properties .... Norton/In these figures... M & E, you showed a state reimbursement this year which they came through with. But you show zero in subsequent years .... Atkins/We projected out that is disappears in the year ....not a dime after 2004. Norton/No, but what about 19997 Atkins/Yes, we have projected a reimbursement. Norton/In the Three Year Plan that doesn't show. Atkins/We do have a reimbursement in there for M & E within the formula .... it phases out. There is a formula .... Norton/It relates to what you acquire in terms of industrial growth. Atkins/ Kubby/So if you lived out the policy by creating more development, you get nicked for it. Atkins/Yes, you do. I thought stiffed was a better word. Kubby/I am interesting in approaching it...giving ourselves a goal of the amount of money that we want to reduce our current budget .... responsibility to look at reduction in what we are spending ..... I want to put some really high standards and guidelines on the reduction in our budget... Can we provide services in a different way that cost us less? ...employees are going to give us some answers. This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 10 Norton/I need some goals .... Kubby/ .... I would like the goal to be like can we find 1/3 of our General Fund budget .... set the goal .... have a thermometer .... Nov/Without cutting services, I doubt it. Kubby/I don't know. Nov/ Kubby/...I don't know that the answer is we have to cut services. Maybe we provide them differently. Norton/There are some stretchouts that should be considered. Nov/You can do it with capital but it is difficult to do it with services. Baker/ We got two goals... cover the projected shortfall .... looking at efficiencies in the present budget. Other goal is new services .... are going to have to look at some other option... other source of income. We start with the search for efficiency but I Don't think we should spend a lot of time thinking that is going to solve our problem ..... Atkins/...Once you achieve the efficiencies, the next question I am going to ask you is what new service did you want to expand in the future. I think you ought to have them in front of you at the same time ..... You have to give me reasonable rules. Baker/ ....we want to cut our budget but at the same time we want to increase it .... Atkins/... I got to have them both in front of me at the same time. Kubby/ Atkins/I still need to know where you want to go. I can take care of it in the short term. We got to go somewhere in the long pull... we can make reductions... But is it realistic to say we are not going to have any service expansion in the future? .....I need these targets... then is it expenditure reductions? We are not going to get $1.4 million in expenditure reductions out of the General Fund. It is not going to happen... You can but you are going to inflict a lot of pain. I just don't think that is going to happen ..... Let's put together a plan that is a combination of both. This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 11 Expenditure reductions, new revenues, new services. How we are going to go about packaging this sometime in the future .... franchise fee... gambling .... Council/(All talking). Atkins/Gambling is out of the question, okay. I know that. Now I know you are limiting what packages of ideas I can put together for you... Baker/Before we start talking about additional revenue, we should finalize the savings... We can talk about savings... stabilizing the existing budget... We are going to need soon an additional source of revenue and we have to address that question now as well as the efficiency. Norton/I think we need to look at the sequence of things .... Atkins/I really have to believe you have to answer the question all at once. Are these comprehensive plans that we have put together .... most of them translate into the CIP in some fashion .... I need to put a number on those .... Are we still committed to that vision ....We expressions of your policy in those plans ....I can't translate those into action ....You also need to tell me realistically what do you have in mind for future services .... I believe that we want to do community policing ..... need to have Mercer Gymnasium .... I want an expended library .... give me that to work from... you decide that... What is an acceptable level of property taxes .... Nov/We might be better off.... accepted all of these plans... which one should we not do? Thomberry/A combination there... of reducing our level of our wants and also increasing the revenue .... Gambling.. have you really thought that through... A gambling head tax is a user fee and I would just off the top immediately rule that out ....I can see a lot more user fees than we have now. Lehman/... User fee in affect are no different than taxes .... serve the same .... I really think we need to get a handle on our expenses ..... If we can get a handle on what we are doing right now and live within our budget, then I think... we should be looking at the possibility of other revenue sources. I think we got to live within our income .... Thornberry/..User fee... I don't think it is like a tax. Kubby/You have control over whether you pay it or not ..... This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 12 Thomberry/ Lehman/ Thomberry/I am just saying a user fee isn't necessarily a tax .... Norton/But it cuts in a ftmny way socio-economically. It leaves people out .... Thornberry/But gambling is a head tax, a user fee .... Kubby/There are sociological expenses that go along .... I am not interested in ....immoral way for a government to raise money. Norton/ Atkins/I think there are a number of things you have to re-think .... Ernie, a 1% budget reduction each year, I think you are going to struggle vitally to reduce the budget in the General Fund by that much... very very difficult for you.. We do so many things .... major programs... very difficult to pick away... payroll is well over 60% of your budget ....There are things we may choose not to do anymore .... personnel costs .... Lehman/Steve, if we had no other sources of revenue ..... including raising taxes, what would you do? Atkins/.. You have enjoyed the benefits of the tax policies of the state... our tax base has grown. Now the state is changing the rules .... you don't have M & E .... $60 million of the tax base, gone ....You mentioned franchise fee, electric and gas utility .... Kubby/Quality of life issues. Atkins/There are many options. Be cautious about rejecting one out of hand .... sales tax... Maybe I will reduce some other tax... by the use of this one .... We did a calculation... If you take half of the sales tax revenue and you were apply it to the water rates .... We have a rate increase coming up in March. If you would do that, there is no more water rates increase after that becaus_e there is enough money and enough growth in sales tax .... Baker/We also have a question of timing... waiting... on their projects .... This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 13 Nov/Timing is an issue on utility franchise. Kubby/That is starting in '98 .... Atkins/Let's start .... I need to know where you want to go .... and we will put a plan together to get you there. Right now folks I am struggling as to where we are going. Nov/We need something that is going to occur relatively soon. Atkins/I would say to you that you don't have that available to you .... Thornberry/Only thing... cuts .... Atkins/The three year budget that you adopted is fine ....We are in good shape ....I want to stay that way .... Norton/M & E reduction hits all jurisdictions .... Atkins/I think communities .... they had better give it some real serious thought .... Nov/Cedar Rapids .... talking about putting in sales tax. Thomberry/ Atkins/Community like Cedar Rapids is going to have to do some real soul searching .... We are about 60/40 residential-other. They are 60 industrial/40-residential ..... Nov/I am saying that they are starting to think about the fact that they need new sources of revenue ..... Atkins/It needs to have a plan .... Vanderhoef/What is sitting out there fight now that will be paid off in the next three years that might give us some flexibility on our total bonding? Atkins/Not much .... Vanderhoef/What is going to be paid off during the next three years so that if we moved out capital plan up- This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 14 Atkins/I can do that projection for you .... IfI recall... we are in kind of a peak period of time for the next 4-5 years... capital projects. Baker/That is not the problem for the future. It is operation costs. Kubby/But it is part of that percentage of property tax ....debt service. Atkins/You got to remember, where do you want the level of property to be? Norton/Could you put together a matrix... number of projects... downtown enhancements, community policing, library expansion, cultural center, airport... Near Southside, Mercer Park. All of the projects that we are into in some extent and identify over a period of years what each of those is going to cost in terms of the two aspects, operating and debt .... decide.. stagger those somehow .... We must have ten of them that we want to try to do. Kubby/Maybe we need to start talking about... must haves .... Get numbers for all of them... Norton/I need to get a feel for how much they are impacting the operating, how much they are impacting that debt side. Atkins/We can project... anything... I need you to frame it for me on what you want to hear. I wrote down Comprehensive Plan, the operations of the debt. That is the note that I just made to myself to answer your question. D.V., I wrote down bond payoff schedule ..... What can I add to that? Kubby/ Lehman/According to your chart here... years 2001,2002, and 2003, we need to show a reduction of $367,000 per year. That is each year. That is not accumulative? Atkins/No, each year. Lehman/ Kubby/It is not a new $367,000 a year that we need? Atkins/Yes, it is .... The base you have to reduce is $1.4 million. I am saying... we can say that is the target... number of things you can do... 1% a year. This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session Thomberry/ Atkins/You must cut $360,000 a year, each year, four years. Lehman/But it is a total of 1%. Atkins/It will end up being a total of 4%... 1% a year, accumulative affect is 4% .... Lehman/ Thomberry/ Atkins/If you take 4% off the first year, the $1.4 million .... Thomberry/If you did 4% in one year, then you would just maintain. Atkins/...built into these things are all sorts of projections .... Lehman/I feel... that if we can show the public that we are able to live within our means, i.e. a 1% reduction each of three years. Then I think I don't have a problem in looking at new things .... franchise fee... sales tax... I need to know that we can live with the revenues that we currently have available. Atkins/... don't reduce something .... Lehman/... People ask us... have out hands out constantly .... Atkins/That is not easy... $360,000 is a big hit. Baker/... as far as good policy, do you want to do it that way ....trying to avoid.. confronting the necessity for new revenue. Norton/ Atkins/To me new revenue means a plan .... Norton/Shown against the projects that we are trying to propose. Atkins/We can't afford to do all the things that we want to do ..... Kubby/Let's start talking about some of the things that are acceptable .... making a list .... page 15 This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 16 Nov/ Atkins/Can't do this in the short term ....Let me look at those Comp Plans.. level of commitment .... Nov/There has to be a group commitment .... Norton/That is why we need those dollar figures on them. Atkins/We may have to get down to a nose count .... it takes four ....Of all the issues.. this kind of a budget policy is the most difficult ....political friction amongst you ....If you are going to seek new revenue, you have to have a plan .... reduce services... get the word out... Nov/It may be less painful... do it in terms of hours .... Atkins/That is a dilution of service .... Nov/May be easier to cut hours than a particular service. Atkins/...also denying certain people access to a particular public service ....Library... Sundays... Council/ Atkins/ Norton/I have heard of refuse collection every other week .... Kubby/That is not General Fund revenues. Atkins/ .....We have a package of services designed for our community .... think through the strategy. Of those three, which one is the most acceptable? Council/ Norton/ Atkins/ This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 17 Baker/... If you are waiting on the growth in the tax base to solve your problem ....you are misleading ourselves that that is going to be a significant factor .... Nov/Larry, what is your favorite option? .... Baker/Efficiencies and revenue are my favorite options .... present budget, make it more efficient.. reducing costs. And then confronting the necessity for an additional source of revenue soon .... Kubby/Today, we were going to start making some of these policy decision about the longer term financial interests of the city... detailed discussion about the library/cultural center .... Now we are kind of backtracking a little bit .... Vanderhoef/... I see this list ..... Library/Cultural, Mercer park, Southside, downtown, Transit, SEATS, airport. They are all sitting out there .... Thornberry/Philosophical question that this council needs to answer... Does this council want to be in the housing business? And I don't think we should as a city own houses .... and help maintain them .... Baker/It is a question that doesn't get at the heart of what we are trying to do today .... Thomberry/...it would save the city money... maintenance... It would put the houses back on the tax rolls. Norton/We are participating in a federal program. Thomberry/ Baker/ Thornberry/ Atkins/ Thornberry/... go down to five council members .... Kubby/City Charter .... Thornberry/ This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 18 Council/(All talking). Norton/I have a long list of places where I think we could make some efficiencies .... We have to do some of them. Atkins/I have two pages .... of budget issues that I could bring to you on how you could do things differently, save money, involved cuts .... We have done part of the work. But it has to be done within some kind of frame_work of where are you going. Thomberry/Give us your recommendations. Atkins/I have no trouble doing that. The bottom line is you guys run the city, you want me to make it happen. I got to know what you want me to make happen. Baker/ The policy is do we want him to help us prepare cuts, efficiencies .... Do we want him to help us make a decision about additional revenue? ... I say we do both of them. Atkins/I have no trouble preparing a proposal but I am doing it in a vacuum. Kubby/I am willing to say no to gambling, no to a sales tax and yes to a franchise fee. Norton/ CHANGE TAPE TO REEL 97-89 SIDE 1 Atkins/I need discussion of what kind of new services. I need to know what is available in the form of revenues, what is accept .... Kubby/Let's schedule three hours of discussion once a month with nothing else on the agenda in that order. Baker/Let's do it on a Saturday morning. Norton/... If we get these projects down, so that we can put the numbers associated with them and something in time .... separately would you would think is the bottom line in terms of property tax. I think that issue we can certainly come up with a number. This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 19 Atkins/We have informally used... keep it at or about inflation .... I can make that argument. If property tax is going to be the... foundation of our financing system, are you going to accept a little more growth of that? Or let's look for another alternate source of revenue .... Sales tax, you are taxing a different group of people .... franchise, something different. Gamblers, real different. Nov/The chances of the state commission granting a gambling license in Iowa City is somewhere between slim and none. I would like to eliminate that one, please. Atkins/I am trying to frame it into 5-6 keys issues... sort through each one of those ..... Baker/We can't keep putting everybody else on hold. Nov/Let's try to get a little bit more specific today, now. Baker/We have 15 minutes to get more specific. Nov/That is okay .... Baker/We re not talking in circles .... Nov/Larry has already said that he is willing to accept an increase in revenue and decrease expenses ..... Baker/A decision on both of those things in the immediate future.. particulars .... Nov/My notes say a revenue increase could come from franchise fees, sales tax and tax based growth. Is there anything else? Kubby/Undedicating the Hotel Motel Tax. Atkins/ Norton/ Atkins/We discussed a beer tax once. Norton/We gave up on a wheel tax. Atkins/A wheel tax is available to you. This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 20 Thomberry/I am not real excited about increasing property taxes. Atkins/That is what I need to hear ..... Thornberry/I don't want increase .... Nov/All right, somewhere near the rate of inflation? Is there anyone here who wants property tax to be increased in something other than the basic rate of inflation? Kubby/It matters. There may be a few years when it has to be because of debt service for new projects. I am willing to say yes under certain conditions. Atkins/Series of preferences .... Baker/Karen is right... there may be a time .... Norton/Peaks in debt service. Thornberry/For this scenario, I would say no, leave the percentage as it is now. Norton/She is saying there will be peaks of years of debt service where that part has to be up. Atkins/Are there other sources of revenue? Sure.. water and sewer revenues to subsidize the General Fund .... You have some flexibilities in there .... Are you fully prepared to say, I like a franchise fee? Lehman/I think we need a discussion. Norton/I don't know what the negatives are. Nov/I don't hear any strong arguments here saying we should not increase property tax based on growth, tax based growth ..... and that will happen. Atkins/You are saying that you expect the tax base to grow at the rate that it has in the past year on the average and that is the way we are going to leave it ....other two are a lot more difficult. Norton/I need to hear the negatives of the franchise. Atkins/I will be happy to do that. This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 21 Norton/ Nov/We will probably be able to get a decent acceptance of sales tax based on what it would go for .... to reduce property tax .... Atkins/Humongo debate ..... Nov/I think I hear people, except for Karen, saying write it off completely. A sales tax for various purposes including property tax help. Baker/... Unless that major source of revenue becomes available to us, kiss the library expansion good-bye .... Norton/ Kubby/Where does that come from? Baker/The cost of maintaining the expansion. Kubby/We can do the debt service. 'Steve has said that is not a problem. If we did a franchise fee along with cuts in the budget .... There are other options .... Baker/Unless you have a sales tax, you can kiss the library expansion good-bye. Kubby/You are wrong. Baker/I think I am right, I think you are wrong. Atkins/I think we need to create a forum so you can fight about that .... Kubby/First we have to decide, do we want those services in this community. Atkins/First thing, review your visions .... What are the services that you may wish to pursue. Folks, give me a list .... What are acceptable levels of taxation? Then we move to cut expenditures, what are the rules?... Increase revenue, what are the rules? Kubby/... agree that we are going to meet to focus on these questions in a reasonable time frame .... This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session Baker/Tell the public we have a goal 30, 60, 90 days .... It forced the issue .... Council/(All talking). Norton/I don't want to go down that list without money .... numbers in front of you .... Atkins/I am fine with that. Kubby/ Atkins/When you approve a Comprehensive Plan... it is a reflection of what you believe is in the community's best interest. Norton/There were never any doubters on that Southside Plan. Council/ Atkins/It is the accumulative affect of all the Comp Plans ....All of our projections indicate that we can't do anything new in the future ....initiatives ....increase revenues... reduce expenditures accordingly .... Norton/They are not going to happen without some additional resources ..... Baker/When can we meet again? .... Atkins/Need a session... even more than three hours... spend some really good time... Nov/What we need is a discussion outline .... Atkins/... I agree with you. Vanderhoef/ Atkins/We need a discussion outline .... I will give you a list of all the Comp Plans and a rough estimate on what it costs to do it. I can give you that ..... What new services .... give me a list, then I can relate .... Nov/We need a list of all possible new services. We need an outline on which to discuss new services .... Atkins/You have in mind... where you would like to see the community go .... page 22 This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 23 Thomberry/Two things .... riscally responsible ....maintain that AAA bond rating .... Atkins/I am assuming that statement that you wish to preserve financial strength to the fullest extent possible... AAA credit... No short term borrowing .... Baker/I want the council to see what I saw earlier... money advantages to AAA versus Norton/...getting the job done .... Atkins/Prestige is important to us in the sense of financial strength of the community .... budget is sound ..... Kubby/How will we figure out the scheduling for this series of focused discussions? Nov/Marian and I will figure out what days people are all in town. That is all we can do... send you a list of dates that are possible. Council/ Norton/Sooner rather than later. Council/ Atkins/What you are going to hear from me .... Lehman/Equally important .... to see if where and whatever we can do as far as containing or reducing some of our expenditures. Atkins/I don't have any trouble with that, Ernie. Lehman/To look at that .... Baker/... blue ribbon .... Kubby/Getting employees .... Atkins/The operational changes and the policy changes are... our responsibility .... Do you want a citizen group to review your decision? ..... This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397 June 3, 1997 Council Work Session page 24 Norton/Given the importance of financial juggling that are going on here... revenues and cuts... Might not be a bad idea to consider a blue ribbon review. Atkins/ Thornberry/Cedar Rapids had a study done... qualified team... Council/ Atkins/A discussion outline. We will schedule a meeting. Promise me you will give me a block of time. We will try to break it down into logical components for debate .... Kubby/May end up prioritizing new services .... Council/(All talking). Adjourned: 6:10 p.m. This represents only a reasonably accurate transcription of the Iowa City council meeting of June 3, 1997 WS060397