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HomeMy WebLinkAbout1995-01-10 Minutes numberedCity of iowa City MEMORANDUM Date: To: From: Re: January 26, 1995 Mayor and City Council City Clerk Council Work Session, January 10, 1995 - 6:00 p.m. in Council Chambers Mayor Susan Horowitz presiding. Council present: Horowitz, Baker, Kubby, Lehman, Novick, Throgmorton, Pigott (6:30 p.m.). Staff present: Arkins, Helling, Karr, Yucuis, Mansfield, O'Malley. Tapes: 95-6, Side 2; 95-5, All; 95-7, Side 1. BUDGET DISCUSSION: City Manager Atkins presented Council with a detailed overview of the proposed financial plan and a summary of budget policy issues. Council received the document, Financial Trends Monitorin(~ Svstems. Atkins explained that the proposed budget is based on the following assumptions: Assumes no state-imposed freezes at least during the next three year period; Machinery and equipment revenue will be lost in accordance with the state plan; There are no new general revenues from any source; No dramatic change in road use tax; No change in tax policy by the state; No major changes in pensions, social security, public employee retirement systems; The taxpayers rights amendment will not likely be in front of the legislature; Most services maintained at current level of service, staffing and support services; Use of City's cash reserves during the three year plan for the purposes of balancing the General Fund budget; Budget estimations made on assumption the City will continue' to negotiate openly and reasonably with employee groups. Arkins noted that fringe benefits for employees are growing disproportionate to the cost of the City's payroll. Kubby suggested the City bring the bargaining unit and management together to discuss benefit costs· Arkins stated that the City has unlimited taxing authority with respect to employee benefits. EXPENDITURES. Arkins stated that expenditures are controlled by eight factors: 2. 3. 4. 5. 6. 7. 8. Inflation Private market influence Collective bargaining Cost of employee benefits Services you choose to expand Services you have no choice Services in General Fund Debt Council Work Session January 10, 1995 Atkins said the bottom line question with respect to expenditures is how does the City fulfill public expectation within the resources that are being made available· Kubby inquired abou~ the City's self-insurance program· Atkins explained that Workers Compensation is the state law and the City self-insures; police and fire pension is the state law and the City currently finances from its reserve; IPERS is not self-insured; social security is not self-insured; life insurance is not self-insured; and health insurance is self-insured. Atkins explained that the greatest exposure comes from health insurance and Workers Compensation. In response to Kubby, Atkins explained the City's general obligation debt is paid from the debt service levy. REVENUES. Atkins explained that state law regulates taxes the City chooses to levy; and the tax base is also regulated by the state. Atkins explained revenues are impacted by 2. 3. 4. Limited and choice of revenues, Tax base for available revenues regulated by.state, Growth and tax base regulated by state, and Stability of revenues - assured level of funding· Atkins noted that 83% of the money in the General Fund is subject to some kind of state or federal regulation with respect to the rate, base and growth. TOTAL ASSESSED AND TAXABLE VALUATION· Atkins reviewed the total assessed and t~xable valuation by commercial, industrial, utilities and residential for fiscal years 1 986-1996. Horowitz asked for an explanation regarding rollback. Atkins explained the rollback factor is based on two factors: 1) agricultural land values statewide and 2) a growth factor of 4% imposed by the state. In response to Novick, Arkins stated the rollback factor applies to only residential· Throgmorton noted that given the presented figures the taxable value of land in Iowa City has bebn remaining essentially stable in constant dollars. Arkins stated the concern is that the rollback as a trend is declining more rapidly than the offsetting growth in new construction and value for Iowa City. Atkins stated that property values are increasing but the City is losing ground quickly. Arkins stated that the City is keeping pace but the concern is that the City's growth in taxable values are just keeping pace with inflation· Atkins presented information about the rollback. Atkins explained that the rollback has declined steadily since FY90 and the City's growth is automatically wiped out by way of the rollback, Horowitz inquired about FY97. Atkins explained that there is a revaluation every two years and he assumes that the City will have about a 7% decline in the rollback factor in FY97. M AND E FISCAL IMPACT. Atkins reported that the state wants to remove machinery and equipment from commercial and industrial values· Atkins stated Iowa City's value for machinery and equipment is $53.6 million, and taxes generated through the General Fund are $693,000. Atkins explained the state's thinking is that Iowa will become more attractive for commercial and industrial property if the M and E is eliminated. Arkins stated the state predicts there will be growth in commercial and industrial property purchases to offset 2/3 of the tax money that is lost and the state will only have to make up 1/3 of the money. Arkins stated the state wants commercial an~l'industrial to grow and believes that communities gain the benefit of new industrial buildings as property tax base. Atkins stated that the state gains the most from the M&E exemption by way of income tax and sales tax, Atkins emphasized that the City Council is losing control over the ability to make decisions about the develop- ment character of the community. Kubby requested information regarding the two years before and the five years after when the M and E went from 100% to 30%. Council Work Session January 10, 1995 STATE POPULATION ALLOCATION. Arkins reviewed the schedule of state population allocation, monies and credits and personal property replacement tax revenues from FY88 through FY98 and as a percentage to the total General Fund revenues received. Atkins stated that he has trouble with the state's policy of telling local governments how they should grow through tax policy, promising certain reimbursements, and then not following through with it. TAX LEVIES AVAILABLE, Atkins explained that the $8.10 general levy can be used for any legitimate government purpose, is the primary levy for the General Fund, grows by way of increase in taxable value, is a maximum levy, and is a Council-initiated levy. Atkins stated that the .95¢ transit levy can only be used for transit, is Council-initiated, is a maximum levy which cannot exceed .95¢, and grows by way of increased taxable value. Atkins stated that the employee benefits levy grows by way of increase i~taxable value and increase in levy rate, has no upper limit, is Council-initiated, used to pay for employee benefits, and the City must be at the $8.10 general levy before it can be used. Atkins stated that the Police/Fire pension benefit is normally part of the employee benefits levy, however, due to the financial position of the City, the City uses available cash reserves to pay the City's share and thereby avoiding the levy for these expenses. Horowitz asked if the City is allowed to use the reserve for something else. Atkins stated no. Finance Department Director Yucuis explained that for Police and Fire, the employer contribution is actuarially figured and is currently at about 18.4% and the new rate is about 17.66 starting July 1. Yucuis explained that the City taxes for about 93.5% of the General Fund employers share of the contribution and the other 7% comes out of the General Fund. Atkins explained that the Library levy grows by way of increase in taxable value, is a maximum levy and cannot exceed .27¢, requires voter approval, and is used to support library operations. Atkins explained that the debt service grows by way of increase in taxable value and an increase in rate, the upper limit is determined by property value and limited to 5% of the assessed value, is Council-initiated and only used for debt payments. Arkins stated that 7% hotel tax is based on room rates at local hotels, is a maximum of 7%, requires voter approval, and is defined generally at referendum. Kubby asked how long the City is obligated to comply with the current application of the hotel tax. Atkins stated that he would have to get an opinion on the legal use of those monies. TAX LEVIES NON-VOTED. Atkins reviewed the non-voted tax levies including the $8.10 regular general, .675¢ contract for use of bridge, .27¢ aviation authority, the liab~ity, property and self-insurance tort, and the non-voted epecial revenues. Pigott asked what constitutes an emergency. Finance Director Yucuis stated that he has contacted the state regarding a definition for emergency; there's really no definition on how that can occur and there are no rules that say the City has to define emergency. TAX LEVIES VOTED. Horowitz asked where money would come from for flood mitigation and river basin planning. Atkins stated the General Fund right now. Horowitz asked if the emergencies could be used. Atkins stated that he will provide additional detail and reported Council Work Session January 10, 1995 that he received correspondence from the Corps of Engineers who are requesting funEs from Iowa City for a reservoir study. Atkins noted that council received the budget policy memorandum. Atkins reviewed that the total General Fund expenditures from FY95 to FY96 are proposed to increase 2.4 percent and the expenditure proposal for the general fund is 2.4%. Arkins stated that FY96-97 there is a payroll issue Council should be aware of, that being the City will need to plan to pay 27 PaY periods. NOTABLE CHANGES IN GENERAL FUND EXPENDITURES. Atkins stated he listed the notable new items in the General Fund Budget. Atkins stated that a notable change is Personnel for the monthly utility billing ($100,000); the General Fund subsidy to Transit is growing dramatically; the Risk Management position is proposed to be financed out of the City's reserves; the PCD Adminis.tration - Consultant for Near Southside; Forestry is proposing a new position; and an additional $6,000 for Police/School Crossing Guards. Atldns stated the City cannot get people to serve as crossing guards and therefore, a proposal to increase compensation. Atkins noted there is a 930,000 proposal to repay the weather alert sirens, and ~ 10,000 for the Mercer Park pool school district reduction in use. In response to Novick, Atkins stated that staff will check on the Parks and Recreation accounting for the school district use of Mercer Park pool. Atkins noted other notable changes in General Fund expenditures include the Police Emergency Communications due to a state change in the protocol for the communications center dispatch requiring new software. Kubby requested information about Transit costs including paratransit, other services and maintenance chargeback. PERCENT INCREASE BY PROGRAM FY95-FY96. Atkins reviewed the percent increase by program as listed by departments. Atkins noted that the Community Development nongrant are the monies that the City contributes to the General Fund for the operation of the CDBG program. Novick asked what is Risk Management? Atkins explained that the $200,000 transfer caused it to double. In response to Kubby, Arkins stated that he will obtain additional information regarding the HIS Administration program increase. Horowitz asked why there was a 19% decrease in landfill. Atkins stated because the City is not going to build a landfill cell. In response to Kubby, Yucuis explained that in HIS Administration one of the secretarial positions was originally budgeted in Housing Inspection and HIS Director Boothroy moved that position to HIS Administration. Atkins stated he would obtain more information about that item. Atkins explained that there was reduction in the landfill budget because in FY95 there were transfers to the CIPs and in FY96 transfers to the reserve. Kubby asked why. wastewater was low. Atkins stated because of the bigger base. FINANCIAL TRENDS MONITORING SYSTEM. At~(ins explained the Financial Trends Monitoring System is used to assess the City's overall financial strength and allows the City to use the historical information to its advantage. Atkins referred Council members to the Financial Trends Monitoring Systems (FTMS), page 9-10, Intergovernmental Revenues. Atkins stated there is a positive trend in the University Fire Contract and the Road Use taxes are doing fairly well. Kubby asked if it would be worth the City's while to do a mid-census count in 1995. Atkins stated that it is an expensive proposition, 950,000 - 980,000 and should be discussed at some time. Arkins noted the concern that intergovernmental revenues of the City's total net revenues is declining and will need to be made up somewhere else. Kubby raised concerns about not putting money into the fire equipment reserve. Atkins noted that in the year 2008 the City is going to have to replace the aerial truck and currently cannot ll0 Council Work Session January 10, 1995 5 afford to set aside that kind of cash. In response to Kubby, Arkins noted that the City can. buy a fire truck on Council's initiative, but buses are subject to referendum. Atkins reviewed the summary of expenditure indicators (FTMS), page 18 and employee per capita, page 21). Baker inquired about comparing employees per capita with other communities. Atkins stated that he did not know if other communities keep records the way Iowa City does. Atkins offered the example that Waterloo is a town of similar size to Iowa City and Waterloo has 120 police officers and Iowa City has 59. Arkins reviewed fringe benefits (FTMS), page 23, and stated that a concern is the jump in the cost of fringe benefits as a proportion of the personnel costs. Kubby suggested that management sit down with the City's bargaining unit to work on benefit cost issues. Finance Director Yucuis noted that on page 37 of the Financial Trends Monitoring System, paragraph 2, end of first sentence, 1995 should read 1985. Kubby referred to fund balances (FTMS, page 27). Kubby asked in the past five years what is the dollar amount the City has spent above and beyond the fourth quarter payroll. Kubby asked what else does the City spend from the cash balance. Arkins and Yucuis replied that monies were spent on the flood, and the Civic Center remodel. Arkins referred to the third paragraph of the fund balances in the FTMS. Atkins explained that the restricted fund balance is the total of the cash balances of debt service, employee benefits, road use tax and federal revenue sharing as well as a number of other smaller accounts. Atkins stated that it is unrestricted because the City can basically use them for other purposes. Kubby suggested that Council look at on the average of the last five years what has been spent out of the cash balance. Arkins noted that under fund balances them will be a decline because the City is using cash to balance the budget. Novick asked if the pure fund balance is the same as the unrestricted cash balance and do figures include next year's first quarter. Yucuis stated no, the pure fund balance is after the City backs out reserves for parkland acquisition, fire equipment reserve, etc. Atkins explained one of the reasons the City is allowing the pure fund balance to go down is to pay for payroll adjustments during the course of the year. Arkins explained that at the end of the fiscal year, the end of the year balance is transferred immediately to the fund balance. Kubby inquired about the contingency fund. Atkins stated the City has a contingency account of $250,000 that is strictly for contingencies. Novick raised concerns that percentages in the pure fund balance are decreasing. Atkins presented information about departmental budgets. Arkins explained that budgets for departments are done through computer projections, and the departments then amend based on trends. Kubby inquired about liquidity'(FTMS, page 29). Kubby asked if there is less money in long- term investments. Yucuis stated there are fewer liabilities and payables that affect the City. Kubby inquired about overlapping debt. Atkins stated ov?rlapping debt is an issue that applies to the community in general. Novick asked if the hotel/motel tax should be long or'the elastic tax revenues page (FTMS, page 11 ). Atkins stated that it could be located there because the base of the hotel/motel tax is determined by room values which is subject to increases in the cost of that particular industry. Kubby inquired about other possible taxes. Atkins stated a wheel tax is usually a flat fee, and income tax is an elastic revenue. Yucuis stated that a utility tax in illinois is a tax on telephone, electricity and gas and is a significant local revenue source. Kubby inquired about franchise fees with Iowa Illinois Gas and Electric Company. Arkins stated the City currently has existing right-of-way agreements with Iowa Illinois Gas and Electric. Horowitz asked if Council Work Session January 10, 1995 6 the City can charge Iowa Illinois Gas and Electric for use of the right-of-way. Assistant City Manager Helling stated research is being done on charges to telephone companies. Arkins stated that sales tax discussion can be scheduled as a separate item. ENTERPRISE FUNDS PARKING FUND. In response to Kubby, Yucuis explained that the departmental requests are not in the enterprise funds. Atkins stated that he can prepare that information for Council. Kubby stated she would like to look at the departmental requests. Atkins stated .that parking fund revenues are flat and there h~ve not been any dramatic change in receipts. Atkins stated there is decline in the operating reserve position. Arkins stated that the improvement reserve remains healthy. Arkins stated that it has been Council policy that parking now pay for itself and Council has chosen recently to subsidize transit through that. Baker inquired about funding for fiscal improvements on the ramps. Atkins stated that funding would come out of the parking renewal and improvement reserve. Atkins s. tated that that fund is used every other year to do major repairs on the existing ramps. Baker inquired about the projected costs about the budget for ramp ,improvements as previously discussed by Council. WASTEWATER, PAGE 100. Atkins noted there has been one rate adjustment, there is an accumulation of cash that grows from the FY95 estimation to almost $3 million in FY98. WATER, PAGE 102. Arkins noted there are no other major adjustments. Kubby asked how many years are left in the 1985 $40 million bond issuance. Atkins Yuculs etated that bond ends in the year 2012. Atkins stated that the water and wastewater debt is not governed by general obligations standard. Horowitz asked where the chargeback line item for City Attorney's office is located in the water treatment operation budget. Atkins stated that he will prepare those figures. Atkins noted a correction at the bottom of page 102 showing ending balance in water depreciation in improvement reserves, add 1.146 million. Atkins noted that the cash position within the water fund is excellent. Yucuis stated that personal services and water should read 1.5 positions. It was asked why the City would want to hire new staff and pay for them out of user fees. Throgmorton asked why not draw down the ending balances. Arkins stated that that can be done. REFUSE AND LANDFILL OPERATIONS, PAGE 103-104. Atkins raised concerns about the impact of the transfer station business on landfill operations and noted that a meeting is scheduled on January 17 in Des Moines with the DNR to discuss transfer station issues. AIRPORT, PAGE 107. Arkins reported that the City is beginning to spend money at the Airport and Council will need to address serious Airport issues including the possibility of buying another mobile home park and a bowling alley. Kubby asked if the rental fees on the hangar are going to reflect the real costs of building the $200,000 hangar. Atkins stated no. Arkins stated that the General Fund subsidies were beginning to increase at the Airport and it is primarily because Airport revenues are flat and they are beginning to incur some new expenses. Atkins provided information about an aviation authoriW. Throgmorton asked if the master plan looks at sources of revenue, Arkins stated Council would need to give a specific charge to the Airport Commission. Throgmorton suggested asking the Airport Commission to recommend sources or revenue to holp defray the costs of Airport improvements. Yucuis noted requested Airport improvements include improvements to a terminal building and asphalt around the T-hangars, costing approximately $114,000. In response to I(ubby, Arkins stated that staff will prepare the airport capital budget. /11 Council Work Session January 10, 1995 7 TRANSIT, PAGE 108. Arkins noted Council has asked for some additional information. Atkins emphasized that the General Fund subsidy is growing dramatically, the population served is not changing and ridership remains flat. Atkins expressed caution in additional routes and stated the City may face the loss of federal aid. Arkins noted that in FY97 the City will be purchasing a number of buses. Arkins noted that costs related to SEATS will be split out. Horowitz inquired about funds for computer equipment replacement. Atkins stated that monies are not set aside for computer replacement, but staff could prepare figures relating to computer replacement costs. Horowitz stated that the City should look at reserves for computer equipment replacement. Atkins stated that future budget discussions will include new capital projects and a number of budget policy issues including police staffing, federal grants, industrial park, library extension, cultural center, and cemetery. Atkins stated the next budget discussion is scheduled January 23. Kubby requested that time be scheduled for Council discussion. Kubby asked if a ClP prioritization is scheduled. Kubby stated that Council should do a prioritization on the CIP. COUNCIL AGENDA/TIME Reel 95-7, Side 1 Kubby inquired about flood damage to Santa Rosa, California. City Manager Arkins reported that the former mayor Darrel Courthey has been in contact with the former mayor of the City of Santa Rosa. //7 Kubby noted Council received a letter from the Free Medical Clinic regarding Council tours, and encouraged Council members to tour the ciinic. Novick stated that she has a list of water and sewer rates from Portland, Oregon. Arkins noted that a citizen summary of the budget has been prepared and mailed out to all Board and Commission members. Meeting adjourned at 8:45 p.m.