08/13/2013 Finance CommitteeFINANCE COMMITTEE MEETING MINUTES
August 13, 2013
Committee Members Present Staff Present
Councilmember Yamamoto Roger Neumaier, Finance Director
Councilmember Fraley - Monillas Phil Williams, Public Works Director
Doug Fair, Municipal Court Judge
Other Elected Officials Present Jeannie Dines, Recorder
Mayor Earling
Council President Petso
Public Present
Ron Wambolt
Bruce Witenberg
Council President Petso
Councilmember Yamamoto called the meeting to order at 6:01 p.m.
A. Salary Increase to Remain Eliaible for State Court Improvement Account Funds
Judge Doug Fair explained in 2006, following action by the legislature, the City Council passed
enabling legislation making the Municipal Court Judge an elected position and the City began
receiving Judicial Improvement Account funds from the State, approximately $12,000 /year. In order
for the City to be eligible for the funds, the judge's salary must be based on a pro rata share of 95% of
the salary for district courts. The Washington Citizens' Commission on Salaries for Elected Officials
approved a 2% increase for district court judges effective September 1, 2013, and a 3% increase
effective September 1, 2014. In order for the City to remain eligible for the Judicial Improvement
Account funds, his salary must be increased by that amount. The impact in 2013 is approximately
$500, $1700 in 2014, and $2200 /year thereafter.
Mr. Neumaier agreed if the Council does not approve the increase, the City will lose the Judicial
Improvement Account funds.
Action: Schedule for full Council with Finance Committee recommendation for approval.
B. Discussion Regarding Authorization to Recruit for Development Services Director
Councilmember Fraley - Monillas suggested this could be FTE neutral by filling the Development
Services Director position and reducing a position in the department. Mr. Neumaier suggested this
was a good thing to discuss as part of the 2014 budget. He noted the Mayor will present the
preliminary budget to the Council on October 1 including recommendations for staffing of this
department.
Mayor Earling referred to the handout he distributed at the August 6 Council meeting regarding his
proposal to name Rob Chave as the permanent Development Services Director. He commented on
Rob Chave's exemplary work as Acting Development Services Director. Mr. Chave is comfortable
continuing with much of his role as Planning Manager along with being the Director. Mayor Earling
also proposed Kernen Lien assume a portion of the Planning Manager role. The cost of this proposal
is $23,000 — $27,000 compared to $175,000 - $185,000 for a new Development Services Director
position plus $20,000 to conduct a search. He recommended direct appointment of these positions
and preferred to have the positions filled by September 1.
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Councilmember Fraley - Monillas recalled the Council's direction was for the Finance Committee to
determine the cost and report to Council. Mr. Neumaier offered to provide a memo summarizing the
alternative approaches.
Action: Schedule for full Council for further discussion.
C. Discussion and Recommendation on Proposed Utility Rate Adjustments
Phil Williams, Public Works Director, distributed a recommended 3 -Year rate package that compared
the proposed rate adjustment in water, sewer and stormwater to several other cities' rates. He
recommended adjusting utility rates to become bond independent in six years. Mayor Earling
expressed support for Mr. Williams' recommendation.
Mr. Neumaier pointed out advantages of not bonding include the City is not dependent on rates and is
not as committed to debt service in the event of an economic downturn. Mr. Williams will provide a
rate ordinance when this is presented to full Council. A brief discussion followed regarding the cities
used in the comparison.
Action: Schedule presentation to full Council.
D. June 2013 Budgetary Financial Report
Mr. Neumaier reviewed the June 2013 Budgetary Financial Report. He summarized the City is in a
solid position and the economy in the Puget Sound area is very strong. He highlighted REET revenue
and other General Fund revenues that are ahead of budget. He described the new report format,
explaining some graphs and fund balance analyses were removed, comparative information for prior
years was added, and graphs of key General Fund revenues were added. By October, the report will
include utility information. He responded to Council questions.
Action: Schedule on Consent Agenda
E. 2013 August Budget Amendment
Mr. Neumaier explained the Business Improvement District (BID) fund is included in the budget for
accounting and auditing purposes. The fund number and type will be changed in the future and it will
no longer be included in the budget.
With regard to the salary adjustment for the Mayor, Mr. Neumaier explained the Salary Commission
recommended the Mayor receive an increase consistent with other City employees. The Mayor was
not interested in the increase and it was not included in the 2014 budget. A question was raised in
January whether the Mayor was required to be paid at the level the Salary Commission
recommended; the City Attorney's initial direction to Finance was yes and the increase was included
beginning January 2013. When the Mayor discovered the increase had been given, he made a
contribution to a charity. In February the Council deferred action on a pay increase for the Mayor
pending research by the City Attorney. It recently came to the Finance Department's attention that the
Council had not approved the salary adjustment.
Mr. Neumaier highlighted several budget amendments including payment for accrued vacation for the
former Finance Director, compensation for the contracted Finance Director, $15,000 to restore the
Park's irrigation budget, $121,000 to fund the Risk Management Fund and additional funding for the
5th Avenue Overlay. Mr. Neumaier was asked to research funding separation payouts from Non -
Departmental.
Action: Schedule for full Council.
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F. Sharing 2014 Budget Approaches and Recommending Fund Balance Policy
Mr. Neumaier explained the Reserve Policy that the Council approved last fall includes a Contingency
Fund target of 16% and a Risk Management Fund target of 2 %. He provided an analysis of the City's
current General Fund fund balances that equate to 30.5% and recommended targeting a fund balance
of 32 %. He reviewed a worksheet provided by Moody's of General Fund balance as a percentage of
reserves for Aa -rated cities nationally. The City will have 3 -4% additional capacity in its 2014 budget
for additional appropriations. In addition, assuming the budget is under - expended by 2 %, he
recommended using those funds for one time projects. If the Council is interested, he will draft an
amendment to the Reserve Policy. A brief discussion followed regarding the previously stated reserve
target of 18 %.
Action: Schedule for full Council.
G. Bond Sale Report
Mr. Neumaier reported the bond sale was successful.
H. Public Comments
Ron Wambolt, Edmonds, thanked Mr. Neumaier for the expanded narrative in the Budgetary
Financial Report.
Bruce Witenberg, Edmonds, expressed concern with the Council's lack of transparency in reporting
claims paid on lawsuits. He recommended when approving settlements, the Council announce what
they are for and the amount.
Adjournment — The meeting adjourned at 7:07 p.m.