11/14/1998 City CouncilEDMONDS CITY COUNCIL APPROVED
Budget Workshop
Special Saturday, November 14,1998, Council Meeting
ELECTED OFFICIALS PRESENT
STAFF PRESENT
Gary Haakenson, Council President
Art Housler, Adm. Serv. Director
Dave Earling, Councilmember
Doug Farmen, Accounting Manager
Tom Miller, Councilmember
Paul Mar, Com. Serv. Director
John Nordquist, Councilmember
Ron Haworth, Fire Chief
Michael Plunkett, Councilmember
Robin Hickok, Police Chief
Dick Van Hollebeke, Councilmember (arrived 8:05)
Jim White, Councilmember (arrived 8:05)'
Jana Spellman, Recorder
Council President Haakenson called the meeting to order at 8:03 a.m.
COUNCILMEMBER MILLER MOVED, SECONDED BY COUNCILMEMBER
NORDQUIS.T TO APPROVE THE AGENDA, MOTION CARRIED.
Mr. Haakenson explained that this session would be started with Mr. Housler's answers to the
questions that Council asked at the Tuesday, November 11, 1998, Council Meeting. During and
following this presentation there would be a question and answer period for individual
Counciimembers.
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Mr. Housler, Administrative Services Director, handed out a packet which addressed the
concerns the Council expressed during the presentation of the 1999 Budget at the November 11,
1998, Council Meeting as follows:
1. Review information given to the Council at their Retreat last February that framed the issue
and concerns about the potential for declining revenue beginning in the year 2000 and 2001.
2. Explain the process in configuring the 106% tax increase.
3.. Review the change in the law that restricts us from collecting retroactively the percentage of
the 106% that is not taken.this year.
4. Year -end projects show a $1.3 million cash carryover which is redistributed in the. budget.
How was that money allocated?
Edmonds City Council Budget Workshop Approved Minutes
Saturday, November 14, 1998
Page i
5. How are the contracts negotiated with other entities, such as the Town of Woodway? How
did the City arrive at a contracted number for a year of service? When the contract figure is
put together does it include a portion of the bonding?
6.. Has staff thoroughly reviewed the income sources? This includes any fees, personal
services, permitting issues, etc. How does the City anticipate using the savings from
refinancing bonds?
7. Provide the figures for the total property assessed valuation of 1997 and 1998.
8. If the Council does not vote to exceed the IPD, how much money would have to be cut from
the budget? And, if the Council voted just to go to the IPD, how much money would that
represent in property taxes?
9. What services levels would be reduced, and how they would be reduced, in increments
starting at 3 %, 5 %, and 7% of the total budget?
10. Explain how property taxes revenues are calculated. Explain the issue of allocating changes
in the Fire Department. for EMS versus suppression.
He explained to the Council that he would give basic answers to questions asked with
attachments by way of further explanation.
Mr. Haakenson asked for clarification regarding the ending cash balances looking to the years
2000 and 2001. He stated that as the budget process was started this year, the ending cash
balance for 1998 (or the beginning cash start for 1999) appeared to be relatively low and as the
process proceeded, more dollars were found that may not necessarily be expended in the 1998
budget which increased the beginning cash balance for 1999. He asked Mr. Housler if this was a
correct assessment and received an affirmative answer. He wondered if this would apply to the
beginning cash balances in the years 2000 and 2001 which would then make the figures for those
years somewhat misleading. He again received an affirmative answer. Mr. Housler stated that
he could only remember a few years that 100% of the budget was expended. Mr. Haakenson
asked if the figures presented as starting cash balances for the years 2000 and 2001 were the
worst case scenario and Mr. Housler agreed.
During the explanation of item #2 of Mr. Housler's packet, Council President Haakenson asked
Mr. Housler if a home valued at $240,000 in 1998 tax dollars would pay an extra $30.24 in 1999
taxes. Mr. Housler stated that was correct. He also asked if that would be $30 more than last
year's taxes and Mr. Housler said yes. Mr. Haakenson clarified that those taxes were also at the
6% level and Mr. Housler agreed.
Councilmember Earling then commented that he had read that the Snohomish County Council
approved a 6% property tax increase and wondered how that would impact the City of Edmonds
taxpayers. He requested Mr. Housler provide him with more information regarding the increase
in taxes to the citizens of Edmonds that might occur from the County approving a 6% County tax
increase.
Edmonds City Council Budget Workshop Approved Minutes
Saturday, November 14, 1998
Page 2
Mr. Haakenson replied that he had a tax breakdown of a typical Edmonds' taxpayers total
property tax bill of which only 22% is City taxes and l l% goes to the County.
Fire Chief Haworth clarified this issue further by stating that those outside the cities would have
a higher rate of increase than those that live within the cities.
Mr. Earling stated that he would still like an answer from Mr. Housler.
Mr. Earling asked Mr. Housler if City Attorney Scott Snyder would be clarifying the issue of
recouping back taxes for the City Council. Art Housler, stated that in addition to clarification by
Mr. Snyder, he would be looking to other sources for clarification as well, i.e., County Assessor,
State Department of Revenue, and Attorney General's Office.
Mr: Nordquist notified Mr. Earling that he had spoken with Mr. Snyder and Mr. Snyder was in
the process of preparing a memo for Mr. Earling for Tuesday, November 17, 1998.
The Council requested a more detailed response to item #4 of Mr. Housler's packet.
Mr. Haakenson asked the Fire Chief if during the budgeting process he added some items that
were previously missing from the contracts negotiated with other entities (item #5 of Mr.
Housler's packet) specifically the Town of Woodway contract dealing with fire
suppression/EMS services. Fire Chief Haworth indicated that training and administrative costs
have been added. Mr. Haakenson asked if the formula had been updated and Chief Haworth
indicated it has.
Mr. Housler agreed to bring any unanswered questions back to the Council by the next budget
workshop on November 19, 1998, or earlier if possible.
Mr. Mar, Community Services Director, then spoke to the questions asked in item #6 of Mr.
Housler's packet.
Questions from Council were addressed as they arose.
Mr. Housler continued with the second part of item #6 regarding the use of anticipated savings
from refinancing bonds.
Clarifications requested by the Council were addressed as they arose.
Mr. Housler then briefly touched on item #7 and referred to the attachment included in the
packet. Mr. Haakenson stated that because the Council had just received the information
regarding item #7 that there would be more questions during the November 19, 1998, Budget
Workshop.
Item #8 was discussed briefly with questions answered as they arose.
Edmonds City Council Budget Workshop Approved Minutes
Saturday, November 14, 1998
Page 3
During the discussion of item #9, Councilmember Miller stated that his main concern was the
ending cash balance and would like to see the ending cash balance increased. He is interested in
seeing what staff can do to reduce expenditures to increase the ending cash balance. Mr. Mar
informed Councilmember Miller that the Mayor needed to be involved in this decision - making
process.
Councilmember Haakenson asked if Mr. Housler had programs in place to cut spending in the
event a recession occurred. Mr. Housler responded in the affirmative.
Mr. Miller stated that he would like to be able to explain to the citizens why the City of Edmonds
is anticipating a 9.1% increase in the budget when the rate of inflation is 3 %.
Mr. Haakenson asked Mr. Miller what percentage increase he would like to see in the 1999
budget. Mr. Miller indicated a 7% increase. Mr. Haakenson pointed out that this was a
$400,000 cut from the 1999 budget and clarified that the Mayor and staff would have to come up
with prioritizing the lower cost centers and that is where the $400,000 cut would come from.
Mr. Housler agreed. Mr. Housler referred to the process used last year indicating that a 1%
decrease across the board was taken instead of a cost center cut which was presented to the
Council but not approved.
Mr. Haakenson asked if Mr. Housler would have a brief discussion at the cabinet level with the
idea of looking at the lowest priority cost centers and come up with an answer to Councilmember
Miller's question.
Mr. Earling asked that both ways of cost cutting be brought to the Council, i.e., percentage cut
across the board and cost center cuts. That way the Council would have two pieces of
information to look at and then make a decision.
Mr. Miller agreed that is what he would like to see happen.
Mr. Haakenson asked Mr. Van Hollebeke if he still had a question that he would like to have
answered regarding property tax — 3% vs. 6 %.
Mr. Van Hollebeke replied that he felt this was a concern of the citizens, i.e., how is the increase
going to affect the individual citizen. He asked how the Council/Administration would respond
to the question of raising the taxes 6% when the inflation rate is 3 %.
Council President Haakenson replied that he felt not only was it a responsibility but a need do
prove to the Council and the citizens that there is a need to go over the 3% rate of inflation.
Chief Haworth explained to the Council when the Federal and State government puts out a
mandate, these can drive up costs of operation. These then have to be included in any budgeting
process. Mr. Haakenson asked whether these costs were reflected in the Fire Department's
budget. Chief Haworth said yes. Chief Haworth continued that some of the increases that are
Edmonds City Council Budget Workshop Approved Minutes
Saturday, November 14, 1998
Page 4
asked for are not all the City's fault. These increases come from areas which are not controlled
by the City.
Mr. Van Hollebeke stated that he would like something verbalized in the public hearing so that
the citizens understand what the Council has to consider when deciding whether to levy a 106%
tax increase. He would like to see a physical description explaining to the citizens in lay terms
the rational for increasing the 1999 budget anywhere from 3% to 6 %. He indicated this should
happen during a City Council Meeting.
Mr. Housler indicated that he would do that during the November 24, 1998, Council Meeting.
Mr. Nordquist indicated that he would like to hear the justification for the Cost Centers and how
they were structured and the priority within those centers. He feels there are some major
expenditures that possibly could be held over until another year.
Mr. Plunkett asked Mr. Housler if during the budget process the Council was bound by
ordinance to look at Cost Centers only. Mr. Housler replied in the negative. Mr. Plunkett gave
the example that if there was one too many administrators, in the Council's eyes, could that
administrator be eliminated from the budget. If there was a budget surplus, if there was
additional revenues, all those things could be looked at completely void of knowing or
understanding what a cost center is, could it not? Mr. Housler said absolutely.
Chief Haworth then explained item #10 to the Council. Mr. Haakenson informed Chief Haworth
that he had asked for that explanation due to a citizen request.
Mr. Haakenson asked Mr. Housler if he had anything further to discuss.
Mr. Housler indicated that the last thing to be discussed were the 1999 Budget change requests
that had been asked after the preparation of the preliminary budget.
At that point Councilmember Plunkett asked for clarification from Mr. Housler regarding
Item #2: - unanticipated revenue increase of $74,300
Item #6 - refinance and therefore a savings to the budget of $15,300
Item #7 — Referendum 49 — Sales tax equalization — that will be an increase to our budget
and unallocated money at the present time of $13,000.
Mr. Housler clarified these points. Mr. Plunkett then asked if these funds were coming into the
budget unallocated and Mr. Housler replied they were.
Mr. Housler wanted to remind the Council in the Preliminary Budget $155,000 was for the
Council Contingency Fund. He pointed out that the Council had approved an expenditure of
$34,000 for an ADB consultant and that there would be a $6,000 credit coming back for
unexpended .amounts from Economic Development. He indicated the balance at present is
$128,000.
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Saturday, November 14, 1998
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Mr. Farmen then addressed the requested changes to the 1999 budget from staff. Council had no
questions.
Mr. Haakenson informed the Council and staff the next Budget Workshop would be Thursday,
November 19, 1998, at 5:30 p.m. in the same room of City Hall and asked the Council if they
had any questions they would like to ask staff and have them reply by that meeting.
Mr. Miller asked about the sales tax revenue regarding the Chase Lake Elementary School
remodel and construction that will be occurring. Mr. Housler stated in 1999 the City would be
receiving approximately $12,000. He stated in the year 2000 that about would be approximately
$150,000. Councilmember Miller asked if these revenues were in Mr. Housler's revenue
forecasts and Mr. Housler replied they were.
Mr. Plunkett asked how many interest bearing accounts the City has and how many make funds
available to the General Fund. Mr. Farmen replied to Mr. Plunkett's satisfaction.
Mr. Plunkett directed a question toward Mr. Housler regarding Public Safety. He stated that in a
newspaper article the Mayor reported that there was an increase of $806,890 in Public Safety.
He asked, "Could we increase Public Safety police and fire to $806,000 and not increase
property taxes from a budgetary point of view ?: Mr. Housler replied, "Absolutely not unless you
cut something out." There was some confusion surround Mr. Plunkett's question. Mr. Plunkett
restated his question, "From a, not policy, but from a budgetary point of view could we fund an
$806,000 increase, police and fire, and not increase taxes. ?" Mr. Housler indicated that would
require some cuts.
Council President Haakenson stepped in to clarify the issue. Mr. Haakenson couched the
question as follows: "If we stay at the 3% level or 0% and don't increase taxes at all" ... Mr.
Plunkett then interjected, "would there still be enough money available ?" Mr. Haakenson said
the answer to that would be it is not a yes or no answer. He then continued the answer to that
would be sure we can do it but we would have to cut somewhere else. Mr. Plunkett indicated he
understood. Mr. Haakenson indicated a large cut would have to be made somewhere else. Mr.
Plunkett indicated $342,000 would have to be cut somewhere else. Mr. Haakenson then
reiterated that was a lot to cut.
Mr. Haakenson and Mr. Plunkett discussed Mr. Plunkett's question further with Mr. Plunkett
agreeing that Council President Haakenson had answered his question.
Mr. VanHollebeke asked the Council to consider increasing the sidewalk, bikeways portion of
the budget up to a total amount available of $100,000. This has been discussed in two of the
Committee meetings and the Committee would like to see this increased. Mr. Van Hollebeke
indicated that would be an additional $60,000 increase.
Mr. Earling indicated that each of the Councilmembers is going to have to set out any additional
requests like Mr. Van Hollebeke's in order for the Council to debate them and indicated if
additional money is allocated for one source it has to come out of another.
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Saturday, November 14, 1998
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Mr. Nordquist had a question about the 116 Fund which was answered.
Mr. Plunkett asked what procedures are followed for Councilmembers to make requests
concerning the budget.
Mr. Haakenson replied that any and all concerns they have regarding the budget should be
addressed during the budget sessions indicating that all questions need to be answered before the
Public Hearing.. Mr. Plunkett reiterated at any time he could bring his thoughts regarding the
budget, he needs to bring them up and put them on the table. Mr. Haakenson replied
affirmatively. Mr. Haakenson indicated that was what the work sessions were for.
Mr. Earling complimented the staff for their efforts in compiling the answers to Council's
questions. He then commented on Mr. Plunkett's question regarding the Mayor's presumption
that the property tax increase is tied to public safety. He stated that one could go through the
whole book and find a series of perceptions, one thing tied to another, just as any of the Council
might build an argument for. He stated he thought one of the beneficial parts of the budget
process is that just because the Mayor ties these two items together in an impassioned way
doesn't necessarily mean that he (Mr. Earling) agrees with it. Mr. Earling continued that the
bottom line for him in going through a number of budgets is that you allocate the amount of
money that is available establishing a realistic balance as to how you are going to spend it. He
suggested it was a combination of 8 people plus the staff of setting the priorities and coming to
some agreement on it. He indicated he doesn't disrespect what the Mayor said but stated that he
is looking a bottom line numbers not where anyone thinks the numbers should be or should not
be allocated.
Mr. Miller inquired about the Councilmatic bonds and received a satisfactory answer from Mr.
Housler.
Police Chief Hickok briefly addressed the 800 megahertz.
Mr. Haakenson did not see a need for Mayor or Council reports.
There being no further business, the meeting was adjourned at 9:55 a.m.
BARBARA S. FAHEY, MAYOR
c:wordata/jana/1998Budget WS for 1999.doc
SANDRA S. CHASE, CITY CLERK
Edmonds City Council Budget Workshop Approved Minutes
Saturday, November 14, 1998
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