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10/25/2004 City Councili� M .. 19l Budget Workshop Monday, October 25, 2004 The Edmonds City Council meeting was called to order at 7:00 p.m. by Council President Plunkett in the Council Chambers, 250 5th Avenue North, Edmonds. The meeting was opened with the flag salute. ELECTED OFFICIALS PRESENT Gary Haakenson, Mayor Michael Plunkett, Council President Jeff Wilson, Councilmember Mauri Moore, Councilmember Peggy Pritchard Olson, Councilmember Dave Orvis, Councilmember Richard Marin, Councilmember Deanna Dawson, Councilmember BUDGET OVERVIEW STAFF PRESENT Dan Clements, Administrative Services Director Duane Bowman, Development Services Director Jennifer Gerend, Economic Development Dir. Tom Tomberg, Fire Chief David Stern, Chief of Police Stephen Clifton, Community Services Director Noel. Miller, Public Works Director Brian McIntosh, Parks & Recreation Director Kathleen Junglov, Asst. Admin. Services Dir. Dave Gebert, City Engineer Don Fiene, Assistant City Engineer Debi Humann, Human Resources Manager Rich Landsey, Parks Manager Mark Correira, Training and Safety Chief Scott James, Accountant Minh Truong, Accountant Debra Sharp, Accounting Assistant Sandy Chase, City Clerk Jana Spellman, Senior Executive Council. Asst. Administrative Services Director Dan Clements introduced and thanked the budget team who prepared the documentation, Kathleen Junglov, Assistant Administrative Services Director; Scott James, Accountant; Minh Truong, Accountant; and Debra Sharp, Accounting Assistant. Mr. Clements explained the City budget totaled $67 million, a 3.5% increase over the 2004 budget. The General. Fund budget totaled $27.4 million, a 3.9% increase over the 2004 budget. He explained there were no new taxes or fees; however, a Utility Rate Study was in process and there may be utility rate increases proposed as part of that study. He explained the 2005 budget was generally status quo, there were no major changes or initiatives. He described some of the more significant changes including an additional half-time clerical position in Human Resources to bring the position to full-time and an. increase of .3 FTE in planning to bring a planner position to full-time. He described one-time expenditures including replacement of the City telephone system, police taser replacement, search and rescue boat and paramedic training. He noted a new utility funded request will be presented as part of the Rate Study. Edmonds City Council Approved Minutes October 25, 2004 Page 1 Mr. Clements pointed out in the total City budget, taxes account for 37% of total revenue, and charges for service account for 23%. He noted because of the City's water and sewer utilities, service charges were a greater contributor to the total budget. With regard to expenditures, he explained personnel costs such as salaries and benefits accounted for 35% of the total budget while capital expenditures account for 31%. With regard to the General Fund budget, the source for most public safety, parks and general governmental programs, Mr. Clements explained in contrast with the total City budget, tax revenues, predominately sales, property and utility provide 73% of the revenue base and charges for service are a much smaller contributor. For 2005, he projected property taxes would generate approximately $11.2 million, sales tax would generate $5.2 million and utility taxes $3.5 million. With regard to expenditures, capital costs were a much smaller portion while personnel costs consume a much larger portion. He noted one of the General Fund budget drivers was public safety costs. The proposed 2005 budget allocates 54.5% of expenditures to public safety programs. He noted ten years ago, this percentage was slightly under 43%. In response to a frequently asked question regarding how much of citizens' property taxes were allocated to the City, Mr. Clements explained of each dollar, 21 cents went to the City, 17 cents for general City services and 4.6 cents for Emergency Medical. He pointed out approximately 60 cents of each dollar was used to support the Edmonds School District. He explained the general property tax reflected a 1% statutory increase. With regard to the amount of banked property tax capacity the City has remaining, Mr. Clements explained in past years, the City levied property taxes below the maximum levied by State law, resulting in banked capacity. The City has 3.4% or $274,000 of banked capacity remaining. Staff was asked to provide information regarding the amount of property tax revenues that would be raised if property taxes were increased by the amount of inflation; Washington State links property tax increases to the Implicit Price Deflator which increased 2.4% in the most recent period. A 2.4% property tax increase would generate an additional $111,900 over the 1% increase currently in the budget. With regard to the outlook for the City's finances in the future, Mr. Clements explained as Mayor Haakenson noted in his budget address, the City's finances have been stabilized in the short term for the next 2-3 years. If the current trend of 1% property tax increases combined with escalating medical costs continues and no remedial corrective action is taken, the City will have major financial hurdles to cross in 2008 and 2009. With regard to options for addressing long term financial stability, Mr. Clements displayed a matrix of the list of available revenue options that was provided at the Council's request during last spring's strategic planning retreat. He noted although the list included a broad range of approaches, the only options being researched by staff were sales tax sourcing, annexations and economic development. PROCESS AND DATES FOR FINAL ADOPTION OF 2005 BUDGET Mr. Clements reviewed dates when the proposed budget would be discussed and when citizens and businesses would have an opportunity to provide input. He explained budget -related ordinances were being provided for information purposes on the October 26 Council Consent Agenda. A public hearing on the budget will be held on Monday, November 1. At the November 9 Council meeting, the Council. will discuss property taxes and potentially adopt the 2005 property tax levy. Additional public testimony followed by consideration of budget adoption is scheduled for November 1.6. Staff plans to bring utility rate adjustment recommendations during the first quarter of 2005. Edmonds City Council Approved Minutes October 25, 2004 Page 2 Council President Plunkett noted the year that the City would encounter budget challenges was continually pushed back 1-2 years during every year's budget presentation. Mr. Clements answered the City would reach that point if nothing was done in the meantime; some efforts have been made such as expenditure controls, strong performance in building permits, and strong local economy generating sales tax. He noted if property taxes, the major source of revenue for the General Fund, continued to be increased by 1%, and labor costs increased 5-10%, at some point an adjustment would need to be made. He summarized as Mayor Haakenson mentioned in his budget address, the City's finances have been stabilized but at a much lower service level due to the reduction of 25 positions. Councilmember Orvis noted police and fire salaries were approximately level in the budget and questioned whether that was contingent on labor negotiations. Mr. Clements answered the City was currently in collective bargaining with all unions; funds for collective bargaining were in the Non - Departmental. Fund because the final settlements were unknown. When final settlements were reached, funds would be transferred into the departmental budgets. Councilmember Moore asked whether there were any Homeland Security funds available for tasers and/or the search and rescue boat. Police Chief Stern advised Homeland Security funds were allocated by Snohomish. County via the Department of Emergency Management. For the past two years, priorities are established on a county -wide basis and fund distributed to individual departments based on priorities. Councilmember Marin expressed concern with the $65,000 cost of the LIDAR and analysis and asked whether there was a way to trim those costs. Development Services Director Duane Bowman answered the LIDAR mapping would cover the entire City. He explained efforts were underway to pool funds with other jurisdictions for the southwest county area. He noted the budget included the full amount in the event efforts to obtain funds from other jurisdictions was not successful. In response to why the entire city was being flown, Mr. Bowman advised the City needed accurate topography information for critical area analysis. Councilmember Wilson asked whether the cost of the LIDAR could be recovered via the permit fee structure. Mr. Bowman agreed a surcharge was a possibility. Councilmember Wilson asked staff to research how fees would be impacted via a 3-10 year recovery. Councilmember Marin expressed interest in using $25,000 of banked capacity to fund a Hwy. 99 traffic study. Police Chief Stern responded to a question regarding downtown parking enforcement, explaining the best option was to restore the unit to the level it was at two years ago before one position was eliminated at a cost of approximately $46,500 for salary and benefits. The annual revenue generated via parking enforcement was approximately $30,000. He advised no additional equipment would need to be purchased. Councilmember Dawson asked staff to describe potential revenue streams to offset parking enforcement such as employee parking permits. Mr. Bowman explained the Council modified the employee parking permit ordinance to allow the funds generated by employee parking permits to be used for enforcement. Further, with the adopting of the parking study findings, the Council eliminated the in -lieu -of parking fund which had a balance of approximately $41,000. He estimated annual revenue from employee parking permits to be $16,000 per year and anticipated that could increase with enforcement. Edmonds City Council Approved Minutes October 25, 2004 Page 3 Councilmember Marin noted the Hwy. 99 Taskforce identified via studies the potential for $850,000 in tax income to the city as a result of development on Hwy. 99. He pointed out the studies determined the need for a traffic study along Hwy. 99. Community Transit has been asked to contribute $12,500 and the State has been asked to contribute analysis. He explained studies have identified the need for traffic signals on Hwy. 99 to provide vehicular and pedestrian access to properties along Hwy. 99. He suggested adding the traffic study to the budget, funded via $25,000 from banked capacity. It was the consensus of the Council to have a presentation regarding the need for the traffic study at the November 9 Council meeting. It was also suggested banked capacity could be used to fund downtown parking enforcement. Councilmember Marin requested staff illustrate the impact of using $50,000 from banked capacity. Councilmember Dawson suggested rather than using banked capacity for parking enforcement, sufficient funds could be available via employee parking permits, fines, increased sales tax revenue as a result of increased enforcement, and for 2005 using the in -lieu -of parking funds as a one-time option. Mr. Clements clarified the current balance in the in -lieu -of parking fund was approximately $73,000. A brief discussion followed regarding funding sources for parking enforcement. Council President Plunkett summarized additional information requested by the Council included funding for LIDAR via permits, a presentation regarding the need for a traffic study on Hwy. 99, revenue sources for parking enforcement and appropriate exhibits illustrating the proposed budget adjustments. Councilmember Wilson asked whether the pool operations were returned to the normal level in the 2005 budget. Parks & Recreation Director Brian McIntosh answered the full pool schedule, 100 days, had been restored in the 2005 budget. Council expressed their appreciation to staff and Mayor Haakenson for their preparation of the 2005 budget. Councilmember Dawson expressed her appreciation to the Council for continuing to look at the budget in a financially responsible manner and she hoped the Council would not find it necessary to dip into banked capacity as a show of faith to the citizenry in what were still difficult financial times. With no further business, the Council meeting was adjourned at 7:53 p.m. 4_7�� AR H rENSON, MAYOR SANDRA S. CHASE, CITY CLERK Edmonds City Council Approved Minutes October 25, 2004 Page 4 I AGENDA EDMONDS CITY COUNCIL Council Chambers, Public Safety Complex 250 51h Avenue North 7:00 - 9:00 p.m. Special Monday Meeting OCTOBER 25, 2004 WORK SESSION ON THE 2005 BUDGET 1. Budget Overview 2. Process and Dates for Final Adoption of 2005 Budget 3. Other Items, Issues, and Concerns ADJOURN Parking and meeting rooms are accessible for persons with disabilities. Please contact the City Clerk at (425) 771-0245 with 24 hours advance notice for special accommodations. A delayed telecast of the meeting appears on cable television - Government Access Channel 21.