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11/06/1999 City CouncilEDMONDS CITY COUNCIL APPROVED MINUTES Budget Workshop Special Saturday, November 6,1999, Council Meeting ELECTED OFFICIALS PRESENT STAFF PRESENT Tom Miller, Councilmember Peggy Hetzler, Admin. Services Director Dave Earling, Councilmember (left meeting at 9:30 a.m.) Doug Farmen, Accounting Manager Michael Plunkett, Councilmember Ray Miller, Dev. Services Director Dick Van Hollebeke, Councilmember Tom Tomberg, Fire Chief Jim White, Councilmember Robin Hickok, Police Chief Mayor Fahey Brent Hunter, Human Resources Director Arvilla Ohlde, Parks and Rees Director Absent: Gary Haakenson, Councilmember Noel Miller, Public Works Director Absent: John Nordquist, Councilmember Joan Ferebee, Court Administrator Jana Spellman, Recorder Council President Miller called the meeting to order at 9:05 a.m. First item was approval of the agenda. Motion was made, seconded, and passed unanimously. He explained to the staff and audience that the first hour of the Agenda would consist of a brief overview of the budgeting process for the year 2000, next have each Director give a presentation of the original year 2000 budget proposal and then the contingency plans based on the passage of Initiative 695 and the cost center reductions proposed by each of the departments.. He then explained that after each Director finishes his/her presentation he would ask the Council for questions pertaining to the budget proposals made by each Director. In the second hour he explained that he would ask Councilmembers to have a general question and answer period regarding the year 2000 budget for the staff and directors. He then explained to the audience that this session was a workshop and was not a public hearing further explaining that there would not be any audience portion and only staff and Councilmembers would be allowed to speak. He notified all present that the next Budget Workshop would be Monday, November 15, 1999, 7:00 p.m. in the Great Room. The Mayor started with an overview of the budget presentation made at the Monday, November 1, 1999, Council Meeting, before Initiative 695 passed. She explained that at that time she asked staff to put together a status quo budget at the 1999 level stating that in doing that a 6.8% increase would be needed because of negotiated salary increases and the 3% cost of living increase that is calculated in for supplies, etc., the items that Edmonds City Council Budget Workshop Approved Minutes Saturday, November 6, 1999 Page 1 1 the Council has asked be funded, the ability to fund items outside of the City, i.e., the contract at the Senior Center, Community Grants, 800 megahertz new debt service, and the cost of the expansion of the SNOCOM center to handle the equipment. She stated that these costs were non- debatable, normal, fixed expense increases. She further clarified that after an analysis showed that to just do a maintenance budget $758,000 would have to be generated in new revenue and in order to create a balance the concept was presented to the Council for their consideration. If the Council does not want to approve those new revenues, she stated the Council would have to assist the Administration in determining what the Council wanted to cut out of the City and the way it does business. Mayor Fahey continued that with the passage of I - 695 the City will lose 1.4 million dollars in revenue for the year .2000. She pointed out that approximately $885,000 comes from the sales equalization tax money and well over $550,000 is additional money that is specifically collected with license tab fees (MVET) which are used for police and fire services (required by law). She explained that further money is supplemented to these Departments by additional money from. the general fund. She clarified that with the passage of I -695, all City departments had to make cuts to supplement the loss in funds caused by I -605 to make up the 1.4 million dollars. She spelled out that the new proposal was put together to clarify for the Council everything that would have to be cut if the Council didn't approve any new revenue and if the Council decided not to approve any new revenues, that there would have to be an additional $758,000 out of the budget that was presented on Monday to compensate. She closed by explaining that she asked the Directors of each Department to give a scenario of cuts with a 2% cut (Council not approving the $758,000 in -new revenue). She asked the Directors to prepare a list of least negative cuts. Next, she asked what cuts would have to be made if another 5% (reflecting the loss of equalization tax - $885,000) was added'to the 2 %. She stated that virtually everything was taken out of the budget that was not a fixed expense and lastly made up the rest of the cuts by cutting staff positions. Mayor Fahey reiterated that reductions were made to supply lines, equipment lines, professional service lines. continuing to the difficult decisions of cutting positions that result in a diminishment of services. She said that some departments were so small that by the time an 8% cut was made, the department was without a budget thus eliminating them. She pointed out that by eliminating departments that generate fees the City loses revenue. She again clarified that these budget cuts were decisions made by the Directors in. a manner that would hopefully have the least negative impacts on what the City does. She then made a brief comment to her staff stating that after they had made their presentations, she asked the Council to make a brief statement as to what are and are not appropriate budget cuts and if they would be willing to .approve some of the potential revenue increases. or have alternative ideas than those presented by staff. Edmonds City Council Budget Workshop Approved Minutes Saturday, November 6, 1999 Page 2 PRESENTATION 1 DIRECTOR, ♦ 1 Ms. Hetzler presented an overview of the beginning cash, revenues, expenditures, and ending cash for actual 1998 budget, the 1999 budget, the projected 1999 budget, the effects of I - 695 on the estimates out to the year 2002. After Ms. Hetzler's presentation, Council President Miller explained that at this meeting the Council would gather information, clarify revenue and expenditures and focus on priorities. He then proceeded by asking Noel Miller, Director of Public Works, to start off the presentations. Each of the Directors made a presentation as follows: Noel Miller, Director of Public Works, Arvilla Ohlde, Director of Parks and Recreation, Joan Ferebee, Court Administrator, Fire Chief Tom Tomberg, Police Chief Hickok, Ray Miller, Director of Development Services, Brent Hunter, Director of Human Resources and Peggy Hetzler, Director, Administrative Services. Each Director addressed budget cuts from the least negative to the most negative. At the end of each Director's presentation, the Council were given clarifications to questions asked with the Mayor adding further interpretation where needed. At 11:00 a.m. a vote was taken and unanimously approved to continue the meeting for another 60 minutes. Peggy Hetzler was then asked to give an analysis of potential revenue sources. She presented an overhead that showed sources with amounts, impacts on business and residents, and assumptions. This overhead included property tax increases from 1% to 6 %, recapture of protected levy capacity (an extra 3 %), utility tax at 6% on current utilities, utility tax at 6% on garbage collection, and sanitary sewer, tax on pagers, an annual business excise tax showing the amount collected on $50 yearly to $100 yearly, non - resident business license fee, advanced life support, basic life support, and increased permit fees. She also suggested moving the telephone utility tax from the Emergency Reserve Fund to the General Fund. After her presentation, clarifications were made for Council. Council President Miller stated that because time was of the essence and the Council would again have budget sessions on November 9 and 15, that each Councilmember spend a short time talking about general themes and questions that they would want staff to pursue between now and next meetings so that staff may respond in written form. He asked the Council to focus in on priorities as mentioned earlier. Edmonds City Council Budget Workshop Approved Minutes Saturday, November 6, 1999 Page 3 The Mayor asked to be recognized. Council President Miller called on the Mayor. The Mayor stated that after looking at all of the presentations she realized that the Fire Department had done their presentation a little differently, based on Council President Miller's request, than the rest of the departments. She pointed out that the other departments had started at the point after the Budget Review Committee had made cuts to their budgets and the Fire Department had started with their first presentation to the Budget Review Committee and did not include the $60,000 budget cuts already made by the Budget Review Committee. and wanted to apprise the Council of. this situation. In Chief Tomberg's presentation he gave the FY00 I - 695 Proposed Cuts as $591,415. The Mayor stated that this figure should read $531,415 based on the cuts previously made by the Budget Review Committee. COUNCIL SUMINIATIONS AND REQUESTS Council President Miller then continued by asking the staff in the Finance Department to give him information regarding the exact amount in the reserve fund and what the difference is between 5% and where the City is now. His explanation for asking was that he wanted to provide some stability to the City and employees right now and also wanted to wait to see what the State Legislature might do by implementing any actions that might resolve some of the revenue shortfalls and carry existing operations in a status quo through at least March 31. He clarified that this was one of his personal objectives. Council President Miller stated that he liked to think outside of the box and then went on to talk about the contract with the Library. He felt that this contract needed review when it comes up for consideration. He asked how much time would be needed to terminate the contract with Sf10- Isle Library.. The Mayor stated that 365 days was required. He suggested that this might be a duplication of services indicating that might be one of the issues the citizens may want elected officials to look at when they voted in I -695. He wondered if there would be the possibility of exploring a contract (at a reduced price than what Sno -Isle receives) with Edmonds Community College, explaining that they had a wonderful library. He then brought up ESCA and stated that even if it was only $46,000, it was an employee. He suggested that if the City could contract with Snohomish County Emergency Management for free, that would be beneficial. He spoke to the Council Contingency Fund and received a later clarification from the Mayor. He mentioned the Senior. Center Contract proposed budget cut and stated that he would like to see that restored at $38,000. He then referred to two positions that were moved from the general fund to other funds clarifying one was the waste recycling, and a Fire Department mechanic and asked for another listing of what other positions that may have been moved out of the general fund and put into other funds and what the salary and benefits are. Edmonds City Council Budget Workshop Approved Minutes Saturday, November 6, 1999 Page 4 Council President Miller asked for a review of all of the vacant positions. He asked for written summary of all of the vacancies occurring at present which have not been filled due to I -695. He made further clarification by saying he would like a breakdown of layoffs which might occur and vacancies that had not been filled. The Council President stated that he would be interested in sharing with other Councilmembers the possibility of a property tax increase up to 3% and exploring the possibility of some of the new utility taxes outlined by Peggy Hetzler and moving the telephone utility tax from the Emergency Reserve Fund to the General Fund. Council President Miller reiterated his objectives as trying not to impact City services and employees at all at this point and continue to provide the existing or as close to existing level of services by looking at new revenue sources, by contracting to another library, by eliminating some of the intra - governmental agency contracts we have and possibly a property tax up to a certain percentage. Council President Miller then called on Mr. Plunkett. Mr. Plunkett stated that he appreciated some of Mr. Miller's out -of -the -box comments and felt they needed to be explored. He explained that he did not do well out of the box saying that his general thoughts were more for his colleagues than anybody else and'then stated that he was more interested in trying to come closer to fully funding police and fire to a level that they are more satisfied with and finished clarifying that it was just a broad general comment for his colleagues. Mr. Van Hollebeke felt he had most of the information he needed and commented that as the Council looks at all of the budgetary items there are a lot of difficult decisions that have to be made, some of which have tentatively been made with. regard to staffing. He said that when the City is looking at a dramatic increase in sales tax in our City, he believes that a good portion of that is because there is a newly stimulated business community. He stated that he felt Edmonds has become a most attractive community year by year and the flowers are a part of that attractiveness, the friendly attitude is a part of it, the Edmonds Alliance for Economic Development and the Chamber of Commerce are parts of that. He stated that he did not want to be penny wise and pound foolish. By cutting those things that enhance the business community and bring in sales tax because they cost something to initiate. He did not specify the things that concerned him but went on to say that we do things that stimulate the economy that are more than an offset in additional sales tax revenue. He said he hoped the Council would look at those amenities. Councilmember Van Hollebeke then asked Peggy Hetzler to clarify, not only for himself but for the audience, the deadlines on raising and taxes and fees with regard to the impact of I -695. He recognized that the Council was allowed to raise some taxes or fees by a certain date without falling under the auspices of I -695. Ms. Hetzler replied that if the Council has all fee and tax increases approved and in place before December 31, the City should be okay. She further stated that the City's bond counsel, Foster, Pepper has heavily advised. the City to have all taxes and fees approved and in place before Edmonds City Council Budget Workshop Approved Minutes Saturday, November 6, 1999 Page 5 December 2 because the State Constitution says that initiatives become effective 30 days after an initiative has been voted on. She stated that bond counsel may be erring on the side of conservatism by citing December 2 but clarified that the absolute, drop dead date for fee and tax increases to be in place before December 31. She also reminded Council of notification dates that may be required on certain types of revenue increases. As an example, she explained if there are any - resolutions in place that say we have to give 60 days notice, the Council needs to take that into account. She stated that it would be most helpful if the Council would make clear what type of revenues the Council would put in place so the deadlines could be met. Council President Miller then called on Mr. White. Mr. White stated that Mr. Miller covered his issues both within and outside of the box. The Mayor then stated that she wanted to understand the direction the Council,was heading and asked if the things that had been articulated are things that the Council wanted to be built back into the budget. She asked the Council if they were saying that those things be built back into the budget and then do an analysis of the new revenues to offset the things built back in. She asked if the Council was asking the Administration to look for more cuts in other departments in order to put positions back in. Council President Miller stated that he was trying to sustain the existing level -of service by plugging in what was talked about and by eliminating the positions that are vacant, which have been identified, where would that put the City on being short on revenue and then- the Council can debate potential revenue sources or taxes as the Council gets more finite to those issues. The Mayor then asked Council President Miller, with his statement being made, was he talking only in terms of the positions that have traditionally been here and that it is being said that the Administration is now going to have to cut those positions or did the Council also want the Administration to try to build back in the three battalion chiefs. Mt. Tom Miller stated that he thought there was some interest on the part of the Council in looking at building in the battalion chief program and he said the Mayor might give the Council a menu of option A — where it is, and option B — where it isn't, and option C — make sure that the Department Directors' needs have been looked at broadly across all the departments in terms of what they have presented and proposed. Council President Miller stated that he, as well as most Councilmembers, were most concerned with Public Safety, in particular, the Police Department, because of the decimation caused by Police Chief Hickok's presentation in which he had decimated his Department. Edmonds City Council Budget Workshop Approved Minutes Saturday, November 6, 1999 Page 6 He then went on to say that the Fire Chief has looked as his Department, and that Arvilla Ohlde, Parks and Recreation Director, has decimated hers, as they all have, and he wants to see services maintained as best as the City can. The Mayor stated that she felt that Administration needed to come forward with the worst case scenario hoping that the Council would realize that at this critical point the City would have to build some new revenues into the budget to carry the City forth in the following years. She clarified if there are no new revenues put into the budget now, with the cuts now proposed, if everyone looks at the whole issue, and maybe eliminating the Library next year, the City at least has the opportunity to give the voters a chance to become a library district so their library doesn't go away and that savings can help with the increases of the cost of doing business in 2001 and encouraged the Council to look farther into the future to balance the budget much further down the line. Council President Miller elucidated the message he wanted to communicate to the Mayor and the staff was to thank them for.the effort you put into the work stating that he realized it was no easy task and stated that he was very sensitive that the Directors were talking about peoples' lives and careers in the information presented to the Council. He then stated that he wanted to communicate to the employees, and more importantly to the citizens of Edmonds, that in spite of any pressures from I -695 the Council is committed to providing stable government service and will survive continuing to provide the best level of service that the City always has saying that was what the Council would be doing with the resources they have been given. The Mayor stated that she had been informed that even though I -695 passed statewide, it was voted down in the City of Edmonds and she felt that was an indication that the citizens of Edmonds value their quality of life and realized those funds were providing that quality of life and what the effects of I -695 are going to be. She stated that she thought the Council would be on solid ground in looking at generating other revenues and that the citizens of Edmonds are not going to be opposed to that as a way of trying to solve the problem. Mr. Miller then called on Mr. Van Hollebeke who congratulated those who had been elected or re- elected and pointed out that the two newly elected Councilmembers Dave Orvis and Lora Petso had been in the audience during the entire Budget Workshop and thanked them for being present and responsible in trying to understand the budget process. With no further business, the meeting was adjourned at 12:20 p.m. BARBARA S. FAHEY, MAY R SANDRA S. CHASE, CITY CLERK, Edmonds City Council Budget Workshop Approved Minutes Saturday, November 6, 1999 Page 7