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05/03/2010 Finance CommitteeSPECIAL MEETING OF THE EDMONDS CITY COUNCIL FINANCE COMMITTEE MINUTES August 30, 2010 Elected Officials Present: Committee Chair Plunkett Committee Member Buckshnis Councilmember Petso Staff Present: Lorenzo Hines, Finance Director Deb Sharp, Accountant Brian McIntosh, Parks and Recreation Director Sandy Chase, City Clerk Public Present: Darrol Haug Lee Northrop Harry Gatj ens Evelyn Wellington Ron Wambolt John Carlin Diane Talmadge Joan Bloom Committee Chair Plunkett called the meeting to order at 11:10 a.m. in the Fourtner Meeting Room, City Hall, 121 51h Avenue North, Edmonds. Mr. Plunkett explained that the purpose of the meeting was for the Finance Committee to consider the 2009-2010 Mid -Year Budget Adjustment, which was referred to the Committee by the City Council on August 24, 2010. Finance Director Hines explained that the city typically reviews and approves one to two budget amendments each year. The amendment is necessary to account for additional revenues/expenditures, interfund and intrafund adjustments, and final accounting for the sale of the Edmonds Fire Department to Snohomish County Fire District 1. Committee Member Buckshnis referred to Ordinance 3789, which enacted a new Chapter 3.04, Financial Reporting. She indicated that amendments are to come to the Finance Committee in order to be vetted prior to being forwarded to the full City Council. She stressed that it is the fiduciary responsibility of the City Council to see what is going on in all the funds and to make it as transparent as possible. Councilmember Petso had questions concerning the 2009 amendments, asking if Council has the ability to change that action. Mr. Hines responded that the proposed budget adjustment takes the actions that occurred in 2009 and brings them forward to 2010. The City Council does have the ability to change that action, however there would be consequences. 08-30-10 Finance Committee Minutes, Page 2 Ms. Petso stated that she would like to receive a breakdown of the Fire District I transaction. In addition, she would like an accounting of the 511 Fund. She asked for confirmation that there is an additional $700,000 that can be moved from the 511 Fund to the General Fund or another fund (reserve fund). Mr. Hines agreed. Ms. Petso stated that she preferred to hold off on approving the amendment until after the audit exit interview. She is hoping that she can nail down policy issues to help set ground rules for the budget. Mr. Hines discussed "residual fund balance" and "working capital" within the 001 Fund. Ms. Petso also asked for a breakdown of the 001 Fund. Ms. Buckshnis pointed out that Ordinance 3789 requests that the CAFR and budget reconcile. Mr. Plunkett commented that Ordinance 3789 interprets the policy that is in place. If administration was complying with the Ordinance, we would not be in this place. Mr. Hines disagreed, stating staff is following the policy. Ms. Petso asked further questions regarding: • Is the budget currently $5 million better than what was anticipated in 2008? Mr. Hines stated that is correct. • 125 Fund: Brian McIntosh, Parks and Recreation Director, referred to page 232 of the Budget Book and explained that the 162" d St. Park and 76th/75th Walkway was not completed in 2009. He noted that zero dollars were budgeted for 2010 because it was thought the project would be completed n 2009, which is the reason for the amendment. • B Fund: Ms. Petso would like a Council discussion on where the B Fund contributions are placed. Mr. Plunkett clarified that Ms. Petso will work with Mr. Hines on remaining accounting issues/questions. Mr. Hines explained how Transportation Benefit District (TBD) funds are received in the "non departmental" General Fund, and then transferred to the Street Fund. Between now and December, he intends to look at an improved manner to handle the TBD funds. Ms. Buckshnis preferred that the funds not be comingled with the General Fund. Mr. Plunkett questioned if outstanding policy issues will prevent Ms. Petso from approving the amendment. Ms. Petso responded affirmatively with regard to the B Fund contributions. Mr. Plunkett summarized that Ms. Buckshnis has concerns with the implementation of the existing policy and interpretation of the policy. Ms. Buckshnis stated the budget adjustment should have come to the Finance Committee first and been vetted (before the Quarterly Report). She reiterated this is the fiduciary responsibility of the City Council. 08-30-10 Finance Committee Minutes, Page 3 Public Comments: Ron Wambolt, Edmonds, pointed out that the City Council is to make amendments after things have happened. The $735,000 (B Fund dollars) would normally be put in the ending fund balance. As a citizen, he would not be looking favorably at a levy if the Council starts putting these dollars in other funds. Evelyn Wellington, Edmonds, asked questions concerning the B Fund and where it is identified. Mr. Hines responded to her questions. Mr. Plunkett commented that he is pleased that the concerns were policy issues. He pointed out this is Council's role (oversight). With regard to the implementation and interpretation of existing Council policy, he does not think it will be possible to resolve this issue before the amendment needs to be approved. It was the consensus of the Finance Committee that they are not ready to adopt the budget amendment on September 7. The meeting adjourned at 1:04 p.m.