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12/08/1998 City CouncilEDMONDS CITY COUNCIL APPROVED MINUTES DECEMBER 8, 1998 The Edmonds City Council meeting was called to order at 7:00 p.m. by Council President Haakenson in the,Library Plaza Room, 650 Main Street, followed by the flag salute. ELECTED OFFICIALS PRESENT Barbara Fahey, Mayor (arrived 7:03 p.m.) Gary Haakenson, Council President Dave Earling, Councilmember John Nordquist, Councilmember Michael Plunkett, Councilmember Jim White, Councilmember Dick Van Hollebeke, Councilmember Thomas A. Miller, Councilmember 1. APPROVAL OF AGENDA STAFF PRESENT Kevin Taylor, Assistant Fire Chief Robin Hickok, Police Chief Paul Mar, Community Services Director Art Housler, Administrative Services Director James Walker, City Engineer Brent Hunter, Human Resources Director Doug Farmen, Accounting Manager Scott Snyder, City Attorney Sandy Chase, City Clerk Jeannie Dines, Recorder ange to Council President Haakenson requested a ten - minute Executive Session regarding a legal matter be added genda to the agenda as Item IA. COUNCILMEMBER NORDQUIST . MOVED, SECONDED BY COUNCILMEMBER MILLER, TO ADD A TEN - MINUTE EXECUTIVE SESSION REGARDING A LEGAL MATTER TO THE AGENDA AS ITEM IA. MOTION CARRIED. Council President Haakenson requested an additional ten minutes be added to the Item 8 Executive Session for consideration of labor negotiations. COUNCILMEMBER MILLER MOVED, SECONDED BY COUNCILMEMBER VAN HOLLEBEKE, TO ADD TEN MINUTES TO THE ITEM 8 EXECUTIVE SESSION FOR DISCUSSION OF LABOR NEGOTIATIONS. MOTION CARRIED. Councilmember Earling recalled the Council requested public hearings be scheduled prior to other items on the agenda; therefore, he requested the order of Item 3 (Budget Work Session) and 4 (Continued Hearing on Proposal to Increase the City of Edmonds Regular Property Tax Levy to 106% of the 1998 Levy Based upon a Finding of Special Need) be reversed. He commented this would give the Council the benefit of public comment regarding the proposed property tax levy increase prior to the budget work session. COUNCILMEMBER FARLING MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, TO REVERSE THE ORDER OF AGENDA ITEMS 3 AND 4. MOTION CARRIED. Edmonds City Council Approved Minutes December 8, 1998 Page 1 I r COUNCILMEMBER NORDQUIST MOVED, SECONDED BY COUNCILMEMBER VAN HOLLEBEKE, TO ADD A PRESENTATION BY THE MAYOR REGARDING SELECTION OF THE ADMINISTRATIVE SERVICES DIRECTOR AS AGENDA ITEM 3A. MOTION CARRIED. COUNCILMEMBER EARLING MOVED, SECONDED BY COUNCILMEMBER MILLER, FOR APPROVAL OF THE AGENDA AS AMENDED. MOTION CARRIED. IA. EXECUTIVE SESSION REGARDING A LEGAL MATTER Executive At 7:05 p.m., Mayor Fahey adjourned the Council to Executive Session for approximately ten minutes Session re: regarding a legal matter. At Council President Haakenson's request, City Clerk Sandy Chase extended the Legal Matter Executive Session five additional minutes. The meeting was reconvened at 7:18 p.m. 2. CONSENT AGENDA ITEMS COUNCILMEMBER EARLING MOVED, SECONDED BY COUNCILMEMBER VAN HOLLEBEKE, TO REMOVE ITEM D FROM THE CONSENT AGENDA. MOTION CARRIED. COUNCILMEMBER VAN HOLLEBEKE MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, FOR APPROVAL OF THE REMAINDER OF THE CONSENT AGENDA ITEMS. MOTION CARRIED. The agenda items approved are as follows: uthorize (R) AUTHORIZATION TO PURCHASE FIRE HOSE FOR 1999 QUINT FIRE APPARATUS ,Purchase of Fire Hose (n AUTHORIZATION TO PURCHASE 1999 FIRE HOSE Item D: Approval of City Council Meeting Minutes of December 1, 1998 Councilmember Earling said he would abstain from the vote, as he did not attend the December 1, 1998 meeting. :te:sof COUNCILMEMBER VAN HOLLEBEKE MOVED, SECONDED BY COUNCIL PRESIDENT HAAKENSON, FOR APPROVAL OF CONSENT AGENDA ITEM D. MOTION CARRIED. The item approved is as follows: Edmonds City Council Approved Minutes December 8, 1998 Page 2 (A) ROLL CALL _ ved F es of 11,19/98 (B) APPROVAL OF CITY COUNCIL MEETING MINUTES OF NOVEMBER 19, 1998 (C) APPROVAL OF CITY COUNCIL MEETING MINUTES OF NOVEMBER 24,1998 t�lved (E) APPROVAL OF CLAIM WARRANTS # 27817 THROUGH #29041 FOR THE WEEK OF NOVEMBER 23, 1998, IN THE AMOUNT OF $166,387.14. APPROVAL OF CLAIM WARRANTS #27822 THROUGH #29138 FOR THE WEEK OF NOVEMBER 30, 1998, IN THE AMOUNT OF $949,740.51. APPROVAL OF PAYROLL WARRANTS #22691 THROUGH #22816 FOR THE PERIOD NOVEMBER 16 THROUGH NOVEMBER 30, 1998, IN THE AMOUNT OF $344,594.57. APPROVAL OF PAYROLL WARRANTS #22818 THROUGH #22852 FOR FIRE DEPARTMENT 1998 HOLIDAY BUY -BACK IN THE AMOUNT OF $82,839.23. laim for Damages (F) ACKNOWLEDGE RECEIPT OF CLAIM FOR DAMAGES FROM GAIL JEWEL ($96.00 + TAX) pproved etty Cash (G) APPROVAL OF PETTY CASH EXPENDITURES FOR THE MONTH OF NOVEMBER 1998 uthorize (R) AUTHORIZATION TO PURCHASE FIRE HOSE FOR 1999 QUINT FIRE APPARATUS ,Purchase of Fire Hose (n AUTHORIZATION TO PURCHASE 1999 FIRE HOSE Item D: Approval of City Council Meeting Minutes of December 1, 1998 Councilmember Earling said he would abstain from the vote, as he did not attend the December 1, 1998 meeting. :te:sof COUNCILMEMBER VAN HOLLEBEKE MOVED, SECONDED BY COUNCIL PRESIDENT HAAKENSON, FOR APPROVAL OF CONSENT AGENDA ITEM D. MOTION CARRIED. The item approved is as follows: Edmonds City Council Approved Minutes December 8, 1998 Page 2 (D) APPROVAL OF CITY COUNCIL MEETING MINUTES OF DECEMBER 1, 1998 3A. PRESENTATION REGARDING SELECTION OF THE ADMINISTRATIVE SERVICES DIRECTOR Admin. Mayor Fahey explained this position was open as a result of Administrative Services Director Art Director Housler's upcoming retirement. She explained an extensive search process was undertaken that resulted in several very good applicants. A committee comprised of Councilmember Miller, Ken Markers, Mike Bailey, and Human Resources Manager Brent Hunter interviewed the candidates and recommended two candidates for the Council to interview, which was done prior to tonight's meeting. Mayor Fahey recommended the appointment of Peggy Hetzler, currently an Assistant Financial Director in Clark County and formerly Finance Director /Comptroller for Odessa, Texas (population of 90,000). Mayor Fahey explained Ms. Hetzler has a great deal of experience in city as well as county financial management in Washington State including knowledge of the state's RCW. Mayor Fahey believed she would serve the community well. COUNCILMEMBER NORDQUIST MOVED, SECONDED BY COUNCILMEMBER MILLER, TO APPROVE THE MAYOR'S APPOINTMENT OF PEGGY HETZLER AS ADMINISTRATIVE SERVICES DIRECTOR MOTION CARRIED. 3B. CONTINUED HEARING ON PROPOSAL TO INCREASE THE CITY OF EDMONDS REGULAR PROPERTY TAX LEVY TO 106% OF THE 1998 LEVY BASED UPON A FINDING OF SPECIAL NEED Continued Mayor Fahey opened the public participation portion of the hearing and advised any member of the public Baring on who spoke at the hearing on November 24 may not speak again at this continued hearing. Property Tax Levy Ruby Rockwell, 15619"' Avenue North, Edmonds, said property owners do not support any increase in taxes and she felt the increase was unnecessary. She commented increased taxes place a burden on everyone, particularly since other taxes are also increasing. She pointed out voters' defeat of the Ascent 21 proposal should have been an indication to the Council how citizens feel about tax increases. She reiterated an earlier suggestion she made for the City to "Hooverize" and suggested the Council consider this before voting on a tax increase. She said the City's "spending too much money" could be changed at the next election. She observed Public Defender Jim Feldman offered to take a cut in his pay and she suggested others do the same. She wished the Council a Merry Christmas and a healthful New Year. She hoped the City did not hire a new assistant and hoped the new Administrative Services Director had been hired at the former Director's pay rate. She indicated she spoke with most Councilmembers during the past week and hoped they would think about her comments tonight. She submitted additional petitions. Nikki Marshall, 7826 201" SW, Edmonds, said she first became aware of the proposed property tax increase a month ago. She feared the Council sometimes loses the prospective of the ordinary person in the City. She referred to the petition she circulated in her neighborhood indicating they did not want increased taxes. She read from a letter she received from a Councilmember that states, "Even without a property tax increase, the City's budget will increase by 8 %. The increase will pay for an additional $805,000 for police and fire, new administrative staff, increased employee benefits, and purchase of new software. In essence, an increase, upgrade and continuation of all City services without any new tax raise." She understood the Mayor was given a $500 salary increase last year and questioned whether this was to bring Mayor Fahey up to the level of other mayors. If not, she recommended only a cost of living increase be provided to the Mayor. Edmonds City Council Approved Minutes December 8, 1998 Page 3 Chris McDaniel, 24231 78th Place West, Edmonds, said as a result of the Council's suggestion at the December 1 meeting, he obtained a copy of the Mayor's proposed budget. He reviewed the budget and materials and felt it was a very good budget for the most part. However, he felt it was also a wasteful budget due to the City's expenditures on road improvement projects such as chip sealing which costs 40% as much as re- asphalting the streets. He said his 12 house cul -de -sac street has been chip sealed 5 times in 12 years - a cost 200% higher than re- paving, which would have a life span of 15 -20 years. He said this represented 40 years of road maintenance done in 12 years. He said the City continues to spend money on other projects that are less expensive than "doing the job right." He referred to the Mayor's $500 increase last year, noting he received only $0.35. He questioned the need for new positions in the City and more supervisors, commenting there are supervisors in the City now that make a great deal of money. He recalled Mayor Fahey said the supervisor's wages had been included in the budget as a blank figure. He summarized there was waste that could be eliminated from the budget to save the taxpayers money and allow the Council to save face. June Schertle, 811 Somerset Lane, Edmonds, said she circulated numerous petitions and could have gotten "scores more" to sign petitions if she had more time. She said the citizens do not want more taxes, they do not want big government; the Council should have gotten the message when the public defeated Propositions 1 -5. She observed companies throughout the nation are restructuring and reducing and she suggested Edmonds City government do the same. She said 42% of the public's income pays for taxes. She pointed out Boeing's elimination of 38,000 employees will have a trickle -down effect that everyone will feel; the Council should start managing with this in mind. She said young families as well as senior citizens are impacted by increased taxes. She observed Snohomish County approved a 6% property tax increase that she had "no say on." She said the City's proposed 6% property tax increase was poorly publicized and many people who signed the petition were not aware of the proposal. She stressed the importance of reducing and managing better. She understood the City had $20 million and did not need the increase. Charles Scobell, 19321 86' Avenue West, Edmonds, supported the comments made by the previous speaker, noting he and his wife signed her petition. He said he did not find out about the increase until recently. Although the increase has been referred to as just a few extra dollars for the ordinary household, he said the county's property tax increase will cost a few more dollars as will the 15 % increase in sewage charges. He questioned whether the proposal would be a 12% increase if the limit were 12 %. He did not want property values to increase and did not want to sell his house, as he likes living in Edmonds. Jim Orvis, 23529 93'd Avenue West, Edmonds, referred to a memo from the Finance Director indicating if taxes were not increased to the maximum 106 %, a financial crisis would result. He said that type of thinking actually leads to a financial crisis and suggested budget reductions were more appropriate than increasing taxes to the maximum to avoid a crisis. He observed sewer rates have increased, and Snohomish County approved a 6% increase without even a budget. He observed that the Council, as a group and as individuals, has always made decisions that are well thought out. However, few citizens have seen their wages increase as much as property taxes have increased and some have seen no increase in their salaries. He suggested the Council determine the minimum the City can get by with rather than what would staff like to have. He observed the Council receives conflicting messages from citizens, some do not want increased taxes but request additional services. He said quality of life in Edmonds means not only services but also money left over after the bills are paid. Richard Rentell, 8318th Avenue South, Edmonds, thanked the Council for giving the budget this much thought and was pleased a 6% increase was not being accepted carte blanche. He pointed out most citizens live within a budget; his salary increases have not equated to the percentage included in the Edmonds City Council Approved Minutes December 8, 1998 Page 4 proposed budget. He observed today's economy, sales, and property tax revenue must be recording - setting based on full employment, property tax increases, and the public's spending. He urged the Council to remember the citizens and to keep the increase to a minimum. Kevin Clarke, 23924 107 " Place West, Edmonds, complimented Council President Haakenson on his performance as Mayor Pro Tem at last week's meeting. Mr. Clarke was impressed the Council gave members of the public, who attended believing there was a public hearing, an opportunity to speak at last week's meeting. He was also impressed with the discussion regarding budget cuts, and with Mr. Feldman's offer to cut his salary if others cut theirs. When asked if the City should have a tax increase, Mr. Clarke said his wife suggested a 2% increase, acknowledging some increase is necessary. He acknowledged his business expenses are increasing and empathized with the City's need to replace software programs. As a real estate mediator, he recognizes the Consumer Price Index is nearly meaningless. He said the Mayor did a great job presenting the preliminary budget. Although he has reviewed the City's budget, there are many areas he does not understand and could not recommend areas that should be cut. He recalled he and his neighbors endured flooding at the end of their cul -de -sac, created by Snohomish County and the developer, until they were annexed into the City. He acknowledged this repair was not originally in the budget but was made when funds were available. Mr. Clarke said that possibly some of the City's reserves need to be used to address unforeseen costs such as medical insurance increases. He trusted the Council to make the right decision. Hearing no further comment, Mayor Fahey closed the public participation portion of the hearing. In response to questions raised by the public, she explained the Mayor's salary was increased from $60,000 to $65,000 last year, the first increase in three years which equated to a 8% increase (over three years, approximately the CPI for each year). She said the 1999 budget did not include an increase in the Mayor's salary. She agreed a Development Services Department was being created and a director hired to oversee the department. She said the consultant recommended this be done due to the size of the City and the complexity and number of permitting processes. She said this was done in collaboration. with the Council. She said $388,000 in property taxes from newly annexed areas is being used to fund services for those areas. She explained areas cannot be. annexed, their property taxes collected, and citizens expected to Accept diminished levels of service due to the increased population and geography. She explained the budget increase is approximately 1.8% if the services for the newly annexed areas are deduced. She advised an assistant to the Mayor is not included in the budget. The only new position is the Development Services position; the Community Services Director, who oversees capital projects, is being retained. Mayor Fahey referred to the remark that the director's salaries were not included in the budget, and said non - represented director's salaries that are known are included in the budget. The amount not clearly indicated in the line item is salaries for the four union contracts. Until those contracts are resolved and any salary increases are known, they cannot be added to individual salary lines and must be retained as a lump sum. Councilmember Plunkett asked the amount of the budget increase. Administrative Services Director Housler said the increase is 9.1 %. Council President Haakenson read from a petition Nikki Marshall circulated with Councilmember Plunkett's letterhead on the top, "thank you for listening and responding to my request to not raise property taxes unless absolutely necessary. I thank you too for your no vote when the issue comes up. Below you will find the signatures of my immediate neighbors who desire to express their wishes that property taxes not be raised as proposed by the Mayor." Council President Haakenson referred to more petitions circulated by Ruby Rockwell that were included in the Council packet that were entitled, Edmonds City Council Approved Minutes December 8, 1998 Page 5 "November 29, 1998 Property Tax Increase Proposed by the City of Edmonds City Council. We object to the property tax increase proposed by the City of Edmonds and its City Council. We are all property owners and/or voters in the City of Edmonds. Our names, addresses, and phone numbers are as follows." Council President Haakenson explained the Council takes these petitions very seriously as it is difficult for the Council to speak personally with each citizen. He recognized that by signing their name to the petition, these citizens were showing their concern. He said last Saturday, he called 25 of the 127 people who signed the petition; he spoke with 17 and left messages for 8 inviting them to call him to discuss property taxes. In speaking with the 17 citizens, he found some did not ever want a property tax increase. Most, however, just wanted more information and some were not aware of the proposed property tax increase although the hearing regarding the property tax levy occurs every year in November or December. He said most citizens just asked for a reasonable explanation and were thankful for the telephone call. He said there were also several citizens who did not understand how their taxes were figured or the impact of a 3 % -6% increase. He said his conversations were very informative for him as well as for those he spoke with. It was clear most citizens equate their entire property tax bill to the City of Edmonds, when in fact it is comprised of taxes levied by the state, school, county, hospital, city and in some cases, the Port. He said the City tax is 20 -22% of a citizens' total tax; for example, a property owner paying $2,000 in property taxes each year, pays approximately $400 in City taxes. A 3% increase equates to $12. Council President Haakenson said the Council is aware all the increases add up. When the Council reviews the budget, they consider how to increase revenues and reduce expenditures, not just how to raise taxes. Because the City does not have a large sales tax base, the City shares in Sales Tax Equalization. The City's share decreased from $1 million in 1997, to slightly over $400,000 for 1999 - a revenue loss to the City of approximately %s million dollars. He pointed out there are also several new expenses for 1999, a $232,000 increase in the cost of Medic 7 services, a $200,000 upgrade to the City's computer system, a $37,000 increase in the cost of library services, a $213,000 increase for salary contract settlements, $74,000 for the creation of the Development Services department, a total of $700,000 in new expenses over last year's budget. He said the reduction in Sales Tax Equalization, coupled with new expenses for 1999 results in a deficit of $1.2 million over 1998. His review of the budget indicates a substantial need for a property tax increase in 1999, and he was comfortable with a 3% increase. Mayor Fahey explained the total budget increased 9.1 %. Of that, 1.8% is associated with increases to items in the budget from last year, primarily salaries and benefits. The remaining' 7.3% is services and new staff positions included in the 1999 budget to provide services to newly annexed areas, which are offset by new revenues ($388,000 in property taxes from those areas as well as revenue from other sources). Councilmember Miller observed the public has referred to the difficulty citizens on fixed and low incomes face from increased property taxes. He asked Mr. Housler to address waivers available to these citizens. Mr. Housler explained the state RCW provides senior and low- income property tax breaks, which the City also provides for utility taxes. The state provides a senior citizen discount to citizens 62 years of age with an income of $14,000 for married couples. This law also allows deferment of property taxes and a lien for the taxes, which must be paid upon sale of the property. Councilmember Miller pointed out there are mechanisms in place for those citizens who are concerned with their ability to pay property taxes. He said the Council has done as much as possible to reduce expenses to "a bare bones budget" and balance it with a 2 % -3% property tax increase. He said nothing he has heard has convinced him otherwise. He said there has been some discussion regarding a 0% property tax increase and the use of the emergency reserve to balance the budget. He felt it would be irresponsible Edmonds City Council Approved Minutes December 8, 1998 Page 6 and reckless to use funds from the emergency reserve absent a true financial crisis and to maintain only the minimum amount to meet the state's requirements. City Attorney Scott Snyder read from RCW 84.36.381(5A), "individuals with a combined disposable income of $28,000 or less are exempt from all excess property taxes. Persons who have a combined disposable income of less than $18,000 but greater than $15,000 are exempt from all regular property taxes on a 30% evaluation of their residence not to exceed $50,000 in valuation. A person who otherwise qualifies and has a disposable income of $15,000 or less are exempt from all regular property taxes on up to 50% of the value of their residence." Mr. Snyder said the City, although not required to, has adopted similar breaks and exemptions on its utility rates. Councilmember Plunkett said this is the first time in 2 -3 years that the Council has so seriously and diligently made an effort not to increase property taxes by 6% and said each Councilmember was interested in raising taxes less than 6% if possible. He was, however, opposed to the 6% proposed in the Mayor's budget and was also opposed to 34%. He was opposed because, "once in a while, it's a good idea to stop feeding the beast ". He acknowledged Councilmember White's example at the November 24 meeting indicated the City would lose $250,000 - $500,000. Councilmember Plunkett stressed this is the point, taking money away from the City. He hoped that between the Mayor's proposed budget with a 6% increase and his recommendation for a 0% increase, the result would be less than 6 %. To accomplish a 0% increase, he suggested the City utilize $13,000 in unanticipated property tax revenue, $15,000 in unanticipated Sales Tax Equalization, amortize the $200,000 software expense, and utilize a portion of the $275,000 from the reserve account. He said a November 4 Enterprise article indicated Mayor Fahey stated the Council could consider spending part of these funds. He said City staff has traditionally projected low revenues so increased revenues can be anticipated during the year. By using these funds, the Council could save $342,000, which equates to the 6% property tax increase. He said with a 0% increase, the $805,000 in police and fire protection could be included in the budget, the new software purchased, and employee obligations and new assessments met. He stressed the $342,000 is out of a total $20 million budget. He said the City has a revenue stream from property taxes of $7 million; without an increase in the property tax increase, the City maintains a $20 million revenue. With a 6% property tax increase, the budget could increase 9 %, with a 0% increase in the property tax rate, the budget could still increase 8 %. Therefore, he opposed a property tax increase. He pointed out the $342,000 in library bonds will become available in the near future which could be used to fund fire and/or communications equipment. He said in 2001, an additional $500,000 in Sales Tax Equalization will also be available. Councilmember White observed the primary component of Councilmember Plunkett's proposal was funds from the City's $1.3 emergency fund. He said the City of Lynnwood, a smaller city with fewer residents, recently disclosed their city's emergency fund is $5.2 million. Councilmember White said Edmond's emergency fund is slightly over the minimum mandated by the state; to reduce it to the minimum would make the amount illegal if any was spent. He agreed with Councilmember Miller's assessment that this was not responsible. He stressed he has not forgotten the ordinary people during his deliberations on the budget. His parents and his in -laws are retired, are on fixed incomes, and live in the community. He explained the Council's goal is always to consider how not to raise taxes. Councilmember White observed the Council receives calls and letters throughout the year requesting repairs, construction of sidewalks, park maintenance, and increasing police and fire services. He recalled a month ago a petition was submitted requesting sidewalks on Maplewood Avenue and but others do not want increased taxes. Although it is easy to say do not increase taxes and cut the budget, he invited anyone to identify where additional cuts could be made. In response to the question, "what is the minimum we can get by with," Councilmember White said the Council relies on staff and administration to develop a budget that is the minimum the City can get by with and this is represented by the 106% Edmonds City Council Approved Minutes December 8, 1998 Page 7 increase included in the preliminary budget. However, he believed the Council would recommend a 103% increase and staff will need to determine how this would be accomplished. He stressed it would have an impact on the City's services -- whether it means fewer police officers, fewer firefighters, or less road maintenance. Councilmember White observed while Councilmember Plunkett is proposing a 0% tax increase, he was also the only Councilmember who has strongly supported providing a tax -based parking structure for the downtown business community. He questioned where those funds would come from. Councilmember Plunkett answered the current proposal would require $20,000 in funds from the City; the remainder is provided by different groups in the community. Councilmember White said he believed the Council has worked as earnestly as possible with the goal of reducing the budget as much as possible. He said there will be some very difficult times for City staff based upon a 103% property tax increase, although there were likely cuts that could be lived with. He hoped the 103% increase would not result in cuts in personnel. Councilmember Earling thanked Ruby Rockwell and her neighbors who took the time to circulate petitions in their neighborhoods. He said it was an opportunity for the Council to hear from citizens and had an impact on the Council's decision - making. He called some of the citizens who signed the petition in an effort to understand their reasons for signing the petition. He agreed some citizens did not want a property tax increase ever, others indicated various reasons for signing the petition including support for a 3% property tax increase. He understood the confusion due to the verbiage on the petition, "we object to a property tax increase proposed by the City of Edmonds and its City Council." He pointed out the City Council has not proposed a tax increase and were only responding to the tax increase included in the preliminary budget. He said it would be helpful if those circulating petitions were prepared, either by the verbiage on the petition or by explanation, to thoroughly explain the petition to those signing it. Councilmember Earling observed the passage of Referendum 47 requires the Council to identify substantial needs before increasing property taxes. He said the City has identified substantial needs to justify a 103% increase in the levy rate. He said the substantial need is the loss of revenue from Sales Tax Equalization, the continuing cost acceleration to provide emergency services and public safety, and unfunded mandates such as the software upgrade required to interface with state agencies. He recalled an adequate revenue stream did not exist the first few years he was on the Council and 'serious reductions in the budget were required. He said the testimony from Mr. Orvis and Mr. Clarke acknowledged there were some needs and requested the Council determine the necessary funds for those needs. He was comfortable with a 3% increase. Councilmember Earling recalled in 1994, the Council was aware there was a reserve account and there was great temptation by the Council, and possibly by staff, to use some of those funds. In 1994, the Council agreed to strengthen that ordinance to ensure the intention was clear. Section 1 states, "The City Council hereby states as its policy, purpose, and intent that the emergency reserve fund has been established to handle unanticipated emergencies with which the City may be confronted with." He said balancing the budget is not an emergency, it must be done every year. He was not willing to use funds from the emergency reserve fund to balance the budget. He said good accounting practices indicate a 5- 8% range should be maintained in the emergency fund; the City's fund has 6 %. He recommended a purpose for the library bonds funds not be identified until they are available at the end of 2000. He thanked citizens who spoke to the Council over the last few weeks. Councilmember Nordquist pointed out Council salaries have not increased for seven years. He said the public gets their money's worth for the Council's $400 - $500 per month salary, not only the time spent on Edmonds City Council Approved Minutes December 8, 1998 Page 8 the Council but also their service on other committees. He said he told Ms. Rockwell he would consider the 0% property tax increase but since then has been thinking about the pressures citizens place on the Council. He described improvements made in the City, since he has been on the Council, in areas such as emergency aid, fire equipment, construction of a bigger library, repairs to Anderson Center, the senior center the City purchased, parks, and requests to save the log cabin, etc. He recalled the public outcry when the flower program was eliminated from the budget, which was resolved when a member of the community agreed to fund the expense. He said the public asks for things and the City tries to provide them within the confines of the revenues available. If the Council approved a 0 %' increase, he questioned how the City could continue to provide the same services without recovering the property tax not accessed in the future. After considering the budget carefully and trying to give citizens the best value for their dollar, he supported a 102% -.103% increase in the property tax. Mr. Housler said the resolution in the Council packet is for a 106 %.increase and must be revised if the Council wishes to approve a 103% increase. COUNCILMEMBER MILLER MOVED, SECONDED BY COUNCILMEMBER VAN HOLLEBEKE, TO ADOPT RESOLUTION NO. 938, JUSTIFYING THE INCREASE IN PROPERTY TAXES AT A RATE EQUAL TO 103% OF THE ASSESSED VALUATION. Council President Haakenson responded to Mr. McDaniel's question, "what do I get for my property tax dollars ?" and the request for more information from the citizens he telephoned. Council President Haakenson explained citizens get a police office, a firefighter, and a paramedic on call 24 hours a day to show up at your house in relatively new vehicles -- the cost to the taxpayers, slightly over $10 million. To run the City efficiently and protect citizens' civil rights, citizens get a Mayor, City Council, Accounting Department, Personnel Department, City Clerk, City Attorney, Public Defender, insurance, election services, as well as various health and welfare payments the City must pay -- cost to the taxpayer, $3.6 million. For their recreational enjoyment, citizens get a swimming pool and many well - maintained parks and varied athletic, youth, and fitness programs -- cost $2.2 million. Citizens get a library for their own and their children's education - cost $862,000. To ensure their neighbor does not build a house that will fall over onto theirs, citizens get a planning, building, and engineering department who also assists with permits for building or remodeling of citizens' homes -- cost $1.4 million. Citizens get a Public Works Department that cleans'the streets, provides clean water, takes away stormwater and sewage -- cost $2 million. Add $0.5 million for debt service and that is what citizens get -- $20 million in services for $7 million in property tax. Mr. Snyder pointed out changes required to the motion in the Council packet: Line 5 of the resolution title would read, "103% or 171,000 Plus a Levy of $.50 per $1000" and Line 3 of Section 1 would be revised to read, "property tax levy by 103% and $171,000." Mr. Snyder clarified by passing this resolution in this format, the Council limits its ability to levy the taxes this year and waives the ability to get that extra 3% for the next three years. Ms. Chase restated the motion as follows: es. 938 re: RESOLUTION NO. 938. A RESOLUTION OF THE CITY COUNCIL FINDING THE Property Tax EXISTENCE OF SUBSTANTIAL NEEDS JUSTIFYING THE INCREASE OF CITY REGULAR `ry PROPERTY TAXES AT A RATE EQUAL TO 103% OR $171,000 PLUS A LEVY OF $.50 PER $1,000 OF ASSESSED VALUATION FOR EMERGENCY MEDICAL SERVICES AS APPROVED BY THE VOTERS AND STATING THE BASIS THEREFOR. MOTION CARRIED, COUNCILMEMBER PLUNKETT OPPOSED. Edmonds City Council Approved Minutes December 8, 1998 Page 9 Mayor Fahey observed the increase has been referred to as the Mayor's proposed 106% property tax increase. She acknowledged she recommended a 6% property tax increase but the Council did not (and has not) approved a 6% increase. She stressed the budget process was a collaborative effort as she indicated in her budget message. The 1060346 increase was included in the budget to fund items the Council wanted included in the budget and was the only way, the preliminary budget could be balanced and brought to the Council for deliberation. She explained she has brought forward, for the Council's consideration, places where revenues could be found and cuts that' could be made. She stated her willingness to follow the direction of the Council in implementing any changes they recommend. She said consensus for a 103% increase could only be reached by determining areas that could be cut from the budget to balance it with a 3% increase. She expressed her appreciation for the work done by the Council and was proud of the work done to reach this point. Councilmember Earling agreed Mayor Fahey has been proactive in the budget process and had presented what he believed to be a responsible budget, one that the Council reviewed and scrutinized and citizens have influenced. He agreed the budget process is a collaborative effort, all Councilmembers have worked together and made compromises and it has been a positive experience. Mayor Fahey declared a brief recess. (Councilmember Nordquist left the meeting at 8:47 p.m.) 4. BUDGET WORK SESSION Council President Haakenson recalled the last budget work session concluded with the need to identify u ork dget $171,000 in cuts; unresolved issues were to be discussed at this budget work session. ession Mayor Fahey referred to the memo identifying unanticipated revenues and expenses for . 1999 and explained the preliminary budget was based on Second Quarter Financials, revenue projection estimates, and estimated expenses that must be included in the budget for the coming year. She stressed the budget was a work in progress and subject to modification as new and more complete information becomes available. In response to comments the Council should have known taxpayers' feelings regarding tax increases as a result of the vote on Propositions 1 -5, she noted the preliminary budget was prepared and presented to the Council by the end of October and the vote on Propositions 1 -5 was not taken until November. Mayor Fahey explained Third Quarter Financials have shown there are additional unanticipated revenues for 1998 of $109,600. These revenues are a result of County property tax update of $74,300, increases in the billing and permitting fees of $20,000, and the refunding of bonds (which the Council authorized) of $15,300. Further, the passage of Referendum 49 increase the amount of Sales Tax Equalization the City receives by $13,000 in 1999 (and will only occur during the last quarter of 1999), which was not included in the preliminary budget. Regarding expenses, the City has been notified by Unocal that the lease on the Marina Beach property will be increased by $20,000. The City also needs to do additional lighting on 72 "d south of 212`' to provide better parking on this street for people using the Park 'n Ride. The City Engineer originally estimated the cost of the lighting at $25,000; however, PUD has since given the'City an estimated price of $12,500. This equates to $122,600 in unanticipated revenues, some from 1998 and some from 1999, and new expenses of $32,500 resulting in a total available offsetting revenue amount of $90,100. Mayor Fahey recalled the Council requested staff determine how the budget could be balanced by identifying $171,000 in cuts (to allow a 103% increase rather than 106 %). The offsetting revenue reduces the amount ($171,000) to $80,900. She referred to the list of proposed cuts and hoped they reflected items the Council discussed last week (during her absence) such as retaining some of the community Edmonds City Council Approved Minutes December 8, 1998 Page 10 grant funding and some of the economic development funding. She described the proposed cuts: $30,000 in police budget cuts; $11,000 in fire budget cuts; $6,000 in the Prosecutor's Appeal budget (which he recommended); a $10,000 reduction in the Street Fund Transfer (which will still provide a $74,700 transfer to the Street Fund #111); $10,000 from the Economic Development Matching Grants (leaving $10,000 for economic development grants); $10,000. from the Community Grants (leaving $15,000 for community grants); $1,000 from Parks & Recreation; $1,400 from Community Services; and $1,500 from Public Works, for a total of $80,900. Mayor Fahey described another addition to the budget, which does not impact the General Fund. It appears Chambers Cable will vacate the old Public Works site midyear 1999 and the City will be able to move forward with converting that building for Facilities Maintenance, which needs to be moved out of City Park. She said there are moneys in specific funds, unrelated to the General Fund, to cover the renovation costs which were not included in the preliminary 1999 budget as expenses because it was not known the facility would be available during 1999. She referred to Exhibit 3 which identifies the funding sources and said staff would like to hire a consultant to develop a remodeling plan and estimate for Council's evaluation. She requested those expenses be included in the 1999 budget. Councilmember Earling said the modified zero based budget program allows each department to build their budget in a proactive manner and holds the departments accountable for their expenses. Observing the Council approved a 3% property tax increase, he suggested consideration be given to 1% across -the- board reduction in each department (a total of $200,000 in cuts) rather than drastically weakening some programs via the recommended cuts. Exception would be areas that have already been identified such as the reduction in the Prosecutor's appeal budget and other reductions that have already been identified. He said his conversations with other .Councilmembers indicated many were supportive of this concept, including Councilmember Nordquist (who left the meeting). Mayor Fahey stressed the $80,900 in proposed cuts took cuts from all areas of the City. A 1% reduction ($200,000) would result in a larger reduction to the police and fire budgets as they make up 49% of the budget. She said reductions in Parks & Recreation would eliminate programs that have fees that offset the program costs and in some cases pay for themselves. She said a universal 1% reduction has a larger impact on departments who are trying to provide services on a very limited budget. She said the proposed cuts identified the most realistic way to accomplish the cuts, provide the same level of service, and maintain funding for most items in the budget. Councilmember Earling said $171,000 in cuts is needed to accomplish a 3% tax increase. Therefore, with the unanticipated revenue less unanticipated expenses, coupled with $80,900 in proposed cuts, an additional $29,000 must be identified. Council President Haakenson clarified Councilmember Earling's suggestion was to cut $200,000 from the budget less the unanticipated revenues. Councilmember Earling said the cuts would then be $109,900 ($80,900 plus $29,000) in across - the -board cuts. He said his intent was to avoid the proposed cuts in Mayor Fahey's memo, which make large reductions from specific areas and preferred 1% be cut across - the -board in all departments, exclusive of items such as the $6,000 from the Prosecutor's appeal budget. He said this would result in relatively small cuts that would not disable some programs. For Council President Haakenson, Councilmember Earling said his intent was to eliminate the cuts proposed on page 2 of Mayor Fahey's memo. Mayor Fahey explained there was no such thing as making a 1% across - the -board cuts in all departments. For example, a 1% reduction in the community grants is $250; therefore, $9,750 must be cut from another department's budget. She said there are some areas of the budget where a 1% cut cannot be made such as Edmonds City Council Approved Minutes December 8, 1998 Page I 1 intergovernmental where the assessments are already in place. Therefore, the method Councilmember Earling proposed would equate to more than 1% in some departments that provide services. Councilmember Earling recalled a percentage reduction was accomplished last year. COUNCILMEMBER EARLING MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, TO DIRECT THE MAYOR, THROUGH A PROCESS OF USING NEW UNANTICIPATED REVENUE AND CUTS FROM THE BUDGET, MODIFY THE BUDGET TO REFLECT $200,000 IN CUTS. MOTION CARRIED. (Councilmember Nordquist was not present for the vote.) Mayor Fahey said the ordinance passing the budget must be adopted by the end of the year. She understood next week (December 15) was the last Council meeting scheduled in 1998. City Attorney Scott Snyder indicated an ordinance has been prepared subject to final adjustment. Although the Council could hold a special meeting to adopt the budget, he said it was important for the Council to pass the tax levy. The County Assessor has indicated they must have the City's tax levy figures by December 17. He pointed out there were two actions -- the Council passed the resolution regarding how much they reserve to levy, the actual levy ordinance will be passed next week. 5. REVIEW MOTION FOR RECONSIDERATION REQUEST RECEIVED FROM PERKINS COIF, LLP, REPRESENTING EDMONDS SCHOOL DISTRICT econnsid- As he recused himself from consideration of this issue on November 19, Council President ration Haakenson recused himself again. Request from School District City Attorney Scott Snyder explained the Council received a Motion to Reconsider its prior announced decision. As the Council is aware, Findings of Fact and Conclusion of Law have not yet been adopted; the Council's decision will date from the day those Findings are adopted. He explained a Motion to Reconsider is a two part motion, if the Council wishes to consider the Motion for Reconsideration, a motion to reconsider would be made. If approved, none of the details of the reconsideration motion or the decision would be discussed tonight. The School District and members of the public who received notice in the past would be notified of the date of Council discussion. He reiterated the Council is limited to determining whether to accept or deny the Motion for Reconsideration. If the Council denies the Motion, he planned to bring Findings of Fact and Conclusions to the Council for adoption in February (due to their complexity). If the Council approves the Motion to Reconsider, a date must be-,established. COUNCILMEMBER WHITE MOVED, SECONDED BY COUNCILMEMBER MILLER, TO DENY THE REQUEST FOR RECONSIDERATION, DENY SETTING IT FOR RECONSIDERATION. MOTION CARRIED. (Councilmember Nordquist was not present for the vote and Council President Haakenson did not participate in the vote.) Mr. Snyder explained the Findings have been circulated to staff for comment and will be presented to the Council at the first or third meeting in February. He said the School District's appeal would date from the date of formal adoption of the written Findings. 6. MAYOR'S REPORT ational Mayor Fahey said she attended the National League of Cities conference last week in Kansas City, eague of Missouri. She learned a great deal in the workshops, particularly related to issues imposed on the City by sties Con f. the federal government such as stormwater as well as new technologies available to the City to assist in providing services in a more efficient, effective manner. She said the National League of Cities conference also includes setting policies and passing resolutions that direct staff on positions they take regarding issues that are being addressed by Congress. She explained she serves on the Community and Edmonds City Council Approved Minutes December 8, 1998 Page 12 Regulation Economic Development committee, which is addressing problems created by the Supreme Court's of Group decision on Edmonds v. Oxford House, which eliminated the City's ability to regulate group homes. Homes During the conference, an amended resolution was passed that reflects the terms of the proposed amendment to the Fair Housing Act to address this problem. Mayor Fahey advised she also proposed a resolution to the Environment and Energy Resources cgarks an Committee to encourage Congress to begin providing stateside funding from the Conservation Futures fParksand g tn' g� P g g pen Space Trust fund for acquisition of parks and open spaces. She said the funds in the Conservation Futures Trust fund come from offshore oil and have been allocated to federal projects, but they have refused to allocate funds to stateside projects. She said the City of Bellevue proposed a resolution (that passed) related to the ndangered Endangered Species Act and the possibility of salmon and other species being placed on the Endangered Species Act list. This will have significant ramifications to all cities due to additional mitigation that would be required for water runoff, etc. for any project. She noted although Bellevue proposed the resolution, cities throughout the nation spoke in favor of it due to the potential listing of species in their areas and associated impacts. She said the resolution calls for any decision to be scientifically based and that total efforts to resolve the problem be addressed and not just a narrow prospective such as improving habitat without regulating catches, determining indigenous species, etc. 7. COUNCIL REPORTS Councilmember Plunkett thanked the citizens who have attended Council meetings and who have been involved in the budget discussions. He acknowledged although the petitions and information may not be as exact as one would like, the Council understands the intent. He thanked most of his colleagues, noting taking a minority position on the property tax increase has not been easy but during the past few weeks, most Councilmembers have debated the issues in a constructive, positive manner -- a manner that is expected of the Council and that he and the citizens appreciate. ound Councilmember Earling reported he was in Washington D.C. last week to meet with Federal Transit ransit Administrator Linton regarding Sound Transit. He said the meeting was very productive and it was rewarding to have individuals at the federal level understand the scope and importance of the project. The Sound Transit project placed sixth in federal allocations for 1999. He referred to his comments a few weeks ago at the end of the meeting when the Mayor announced she was going to the National League of Cities conference and he said he was going to Washington, D.C., explaining his intent was to point out that Sound Transit (RTA) was paying for his trip. His comment may have been misinterpreted as criticism of the Mayor's attendance at the National League of Cities conference. He stressed nothing could be further from the truth; the work Mayor Fahey has done at the national level has served the City very well. He apologized for any misinterpretation regarding his comments. COUNCILMEMBER VAN HOLLEBEKE MOVED, SECONDED BY COUNCILMEMBER PLUNKETT, TO EXCUSE COUNCILMEMBER EARLING FROM THE DECEMBER 1 COUNCIL MEETING. MOTION CARRIED, COUNCILMEMBER EARLING ABSTAINED. Councilmember Van Hollebeke commented during the break following the discussion regarding the proposed increase in taxes, a constituent asked him why he did not speak. His intent in providing comment is to enhance the conversation or raise issues that have not been addressed. In this instance, other Councilmembers had spoken to all his concerns. Councilmember Van Hollebeke reported the Edmonds Alliance for Economic Development is sponsoring a speaker, Doyle Hyatt, co- founder of a Edmonds nationally recognized organization that assists cities in planning and visioning processes. He will present Hance for Economic information to assist the community in developing a vision for the future, strategize for implementation of Development the vision, and creating opportunities for improving the community and associated businesses. He said Speaker the presentation would focus primarily on the downtown and waterfront, two of the City's most important Edmonds City Council Approved Minutes December 8, 1998 Page 13 economic areas. He invited all citizens to the presentation on Thursday, December 17 at the Floral Arts Center at 6:30 p.m. He encouraged the Council and Mayor to attend due to the importance of this process. 8. EXECUTIVE SESSION REGARDING A LEGAL MATTER AND LABOR NEGOTIATIONS Exec Session - e Legal At 9:50 p.m. Mayor Fahey recessed the Council to Executive Session regarding a legal matter for 10 Matter Labor and minutes and labor negotiations for 10 minutes. She advised the Council would adjourn at the conclusion Negotiations of the Executive Session and no formal action was anticipated. BARBARA S. FFAH MAYO 1 16 SANDRA S. CHASE, CITY CLERK Edmonds City Council Approved Minutes December 8, 1998 Page 14 AGENDA EDMONDS CITY COUNCIL Plaza Meeting Room - Library Building 650 Main Street 7:00 -10:00 p.m. DECEMBER 8, 1998 SPECIAL MEETING 6:00 P.M. - INTERVIEW TWO CANDIDATES FOR THE POSITION OF ADMINISTRATIVE SERVICES DIRECTOR 7:00 P.M. - CALL TO ORDER FLAG SALUTE 1. APPROVAL OF AGENDA 2. CONSENT AGENDA ITEMS (A) ROLL CALL (B) APPROVAL OF CITY COUNCIL MEETING MINUTES OF NOVEMBER 19,1998 (C) APPROVAL OF CITY COUNCIL MEETING MINUTES OF NOVEMBER 24, 1998 (D) APPROVAL OF CITY COUNCIL MEETING MINUTES OF DECEMBER 1, 1998 (E) APPROVAL OF CLAIM WARRANTS #27817 THROUGH #29041 FOR THE WEEK OF NOVEMBER 23, 1998, IN THE AMOUNT OF $166,387.14. APPROVAL OF CLAIM WARRANTS #27822 THROUGH #29138 FOR THE WEEK OF NOVEMBER 30, 1998, IN THE AMOUNT OF $949,740.51. APPROVAL OF PAYROLL WARRANTS #22691 THROUGH #22816 FOR THE PERIOD NOVEMBER 16 THROUGH NOVEMBER 30, 1998, IN THE AMOUNT OF $344,594.57. APPROVAL OF PAYROLL WARRANTS #22818 THROUGH #22852 FOR FIRE DEPARTMENT 1998 HOLIDAY BUY -BACK IN THE AMOUNT OF $82,839.23. (F) ACKNOWLEDGE RECEIPT OF CLAIM FOR DAMAGES FROM GAIL JEWELL ($96.00 + TAX) (G) APPROVAL OF PETTY CASH EXPENDITURES FOR THE MONTH OF NOVEMBER 1998 (H) AUTHORIZATION TO PURCHASE FIRE HOSE FOR 1999 QUINT FIRE APPARATUS (1) AUTHORIZATION TO PURCHASE 1999 FIRE HOSE 3. (30 Min.) BUDGET WORK SESSION 4. (30 Min.) CONTINUED HEARING ON PROPOSAL TO INCREASE THE CITY OF EDMONDS REGULAR PROPERTY TAX LEVY TO 106% OF THE 1998 LEVY BASED UPON A FINDING OF SPECIAL NEED 5. (15 Min.) REVIEW MOTION FOR RECONSIDERATION REQUEST RECEIVED FROM PERKINS COTE, LLP, REPRESENTING EDMONDS SCHOOL DISTRICT 6. (5 Min.) MAYOR'S REPORT 7. (15 Min.) COUNCIL REPORT 8. (15 Min.) EXECUTIVE SESSION REGARDING A LEGAL MATTER Parking and meeting rooms are accessible for persons with disabilities. Contact the City Clerk at (425) 771 -0245 with 24 hours advance notice for special accommodations. The Council Agenda appears on Chambers Cable, Channel 32. Delayed telecast of this meeting appears the following Wednesday, Friday and Monday at noon on Channel 32.