HomeMy WebLinkAbout08/17/2010 07 2011 General Government Budget Guidelines and Policies BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
• Item No. 7
For Meeting Of : August 17, 2010
ITEM TITLE: Establishing /Reaffirming Budget Development Guidelines and Policies for the
2011 General Government Budget
SUBMITTED BY: Dick Zais, City Manager
Rita DeBord, Finance Director
Cindy Epperson, Deputy Director of Accounting & Budgeting
CONTACT PERSON/TELEPHONE: Dick Zais, 575 -6040
Cindy Epperson, 575 -6070
SUMMARY EXPLANATION:
In July 2010, Council adopted budget guidelines that established the Priorities of Government
(POG) model and use of reserves for General Government (i.e. tax supported) operations.
Throughout the year, the Council Budget Committee has been meeting and reviewing various
aspects of budget development. As the 2011 budget is currently in the development stage and
the economy has not yet shown signs of improvement, the Council Budget Committee wanted to
bring the POG model back to the full Council to reaffirm those policies.
The early projections for the 2011 budget were made by reviewing individual revenue accounts,
• and using the 2010 modified budget with known private sector increases (i.e. medical rates, fuel,
insurance, etc.) included. This "first look" indicated that there is potentially a $2.1 million gap in
which expenditures of $59.1 million exceeded revenues of $57.0 million. Keeping the
expenditure budget at this level would cause the year end reserve levels to be less than the
minimum 7 %, therefore budget reductions of at least $1.1 million are required to maintain
recommended reserves. In other words, about $1 million of reserves could be budgeted and still
maintain a reserve of $4.1 million or 7 %.
Resolution Ordinance Contract Other (Specify) Attachments
Funding Source: NA
APPROVED FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION: Staff respectfully requests Council direction on the
determination of the use of reserves to balance the 2011 budget, and the resultant targeted
reduction within the Priorities of Government model.
BOARD /COMMISSION /COMMITTEE RECOMMENDATION: The Council Budget Committee
agreed to forward these issues to the full Council at their August 9, 2010 meeting.
• COUNCIL ACTION:
A short summary of what is in and out of the 2011 budget at this point in time follows:
In:
• Freeze of all employee wages, with the exception of the Police Teamsters (Captains and
•
Lieutenants) settlement
• Private utilities, fuel, etc. increases
• Medical cost increases
• Mandates
Out/Unknown
• Unresolved labor contracts /settlements
• Impact of Initiatives
• No furloughs – yet
• The $300,000 reduction in the State High Crime revenue allocation.
• Mid -year 2010 personnel /non - personnel reductions have been extended into 2011
The Council Budget Committee expressed a desire to not only see budget reductions to
minimum ending reserve levels, but to develop budget reduction options that would require no
reliance on reserves —i.e. reductions of the full $2.1 million. Additionally, they desired to dialog
with the full Council about the adherence to the POG model and the percentage allocations to
the various categories /priorities.
Attached you will find:
• The minutes from the August 9 Council Budget Committee meeting
• A summary of the POG General Government Budget Allocation by percentage and a
listing of the issues for which staff is requesting direction;
• A chart detailing the 2011 General Government Budget, and the targeted reductions by
priority for scenarios illustrating different policy decisions; and
• A chart calculating the ending General Government reserve levels for the different
scenarios.
The Policy approved by Council for the 2010 budget development is the use of reserves to the
ending minimum level, which were allocated 100% to Public Safety. This corresponds with
Option B on the following charts. This approach does, however, result in a change to the
allocation percentages, directing a higher percentage of available resources to Public Safety.
These scenarios and revenue estimates do not include the potential reduction of revenues that
would be the result of the passage of Initiatives 1100 and 1105, regarding the transition of liquor
sales from the state to private retailers. It is unclear how this will affect the 2011 budget, as the
earliest the transition is to take place is July 1, 2011, but the City is on track to receive almost
$700,000 of Liquor Board Profits in 2010.
There are many pending issues which could negatively affect the 2011 budget. A number of
things could result in loss of revenue, such as the pending initiatives, State action, or continued
economic distress and falling interest revenue. Additionally, expenditures could rise depending
on actual labor settlements, or an increase in mandated costs, such as a proposed increase in
state retirement system pension rates. Any combination of these situations will require
corresponding budget reductions, and a comprehensive list of contingency budget reduction
options will be identified to be considered if underlying conditions require additional cuts.
Staff respectfully requests Council direction as the 2011 budget development goes forward. The
Budget Forecast is targeted for distribution on October 19.
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Council Budget Committee
CED Conference pom (2nd floor)
• City Mall
Monday, August 09, 2010
8:30 - 10:00 a.m.
Special Meeting Minutes
Attendance: Council Members: Micah Cawley, Kathy Coffey, Bill Lover
Staff: Dick Zais, Rita DeBord, Robin Dukart
Discussion:
➢ Dick Zais commenced the meeting by stating the City continues to project
approximately $2m revenue shortfall for the 2011 General Government
Budget. The 2011 projection includes approximately 2% reduction in general
sales tax and 2% increase in property taxes from 2010 year -end estimates.
➢ After considerable discussion, the Committee agreed to refer decisions
regarding the 2011 Budget to the full council, at their next regular meeting:
1) What amount, if any, of reserves should be utilized to balance
the 2011 General Government budget?
® 2) Should the City allocate projected revenues to each Budget
Priority in the same percentage as is currently in place (see
attached worksheet)?
3) Identify any "Untouchable" programs or projects that are not to
be reduced in the 2011 Budget from the 210 budget levels.
➢ CBC requested to have a discussion at the next meeting regarding revenue
options available to Council at Council's discretion: (Options include: Utility
Tax increase: City Utilities & Private Utilities: Business License: Gambling tax;
and Admissions tax)
Next Meeting: Due to scheduling conflicts, the next meeting date was rescheduled to:
Wednesday, September 1, 2010
8:30 - 10:00 a.m.
CED Conference Room
•
Committee Chair (Micah Cawley)
Rd 8 -9 -10 CBC Minutes
Priorities of Government (POG)
General Government Budget Allocation
< Budget
2010 as
Modified 2010 as 2009
Priority Mid -year Adopted Actual
Public Health & Safety 68.8% 68.7% 68.6%
Resource Management 14.6% 14.7% 15.1%
Economic Development 5.3% 5.3% 5.4%
Quality of Life 7.1% 7.2% 7.3%
Customer Service & Partnerships 4.2% 4.1% 3.6%
Staff Direction Requested:
1 Use of Reserves to balance the 2011 Budget
Option A: Prepare budget with no dependency on reserves (i.e.. revenues = expenditures) (1)
Option B: Prepare budget using reserves of about $1.0 million using less than 2% to the
minimum ending level of 7% of total expenditures. This would result in the use of about $1
million.
2 POG Model - Resource Allocation:
Option A: Utilize pure POG Allocation as shown above
Option B:. Reallocate among the priorities. Note: Allocating the use of reserves to one priority
modifies the relative use of total resources.
3 Are there any "Untouchable" programs / projects?
• Mandated programs are already exempted - examples include the City's LEOFF 1 medical
obligation; indigent defense; debt service; State audit; etc.
(1) Possible exception could be for one -time non- recurring expenses, such as retirement
cash outs.
8 -9 -10 - 2010 -2011 POG %
2011 General Government Budget
Priorities Model
Mid -Year Projections - as of 8/11/10
Option A ---- Option B
(1) (2) (3) (4) (7) (8) (9)
2011 2010 Targeted $1 Million Targeted
Preliminary Adopted No Reserve Adjustment Reserve Use Adjustment Updated
Budget 0 0 /o Use (3 -1) Public Safety (7 -1) /o
Resources
Projected Revenues $57,031,855 $57,031,855
Plus Reserve Allocation 0 1,000,000
Net Resources to be Allocated $57,031,855 $58,031,855
Budget Priorities
Public Health & Safety $40,847,765 $39,237,916 $39,237,916
Public H & S Reserve Allocation 0 0 $1,000,000
Total Public Health & Safety (1) 40,847,765 68.8% 39,237,916 (1,609,849) 40,237,916 (609,849) 69.3%
Resource Management 8,656,413 14.6% 8,326,651 (329,762) 8,326,651 (329,762) 14.3%
Economic Development 3,134,676 5.3% 3,022,688 (111,988) 3,022,688 (111,988) 5.2%
Quality of Life 4,083,238 7.1% 4,049,262 (33,976) 4,049,262 (33,976) 7.0%
Customer Service & Communications 1,802,829 3.2% 1,825,019 22,190 1,825,019 22,190 3.1%
Strategic Partnerships 566,228 1.0% 570,319 4,091 570,319 4,091 1.0%
Total $59,091,149 100.0% $57,031,855 ($2,059,294) $58,031,855 ($1,059,294) 100.0%
(1) 2011 Preliminary Budget includes $1.48 million of reserve carried forward from the 2010 budget process
Option A: No use of reserves
Option B: Maintaining minimum ending reserve of 7 %. This option allows the maximum use of $1.0 million in reserves to balance, but allocates the
use of reserves onlyto Public Health and Safety.
Summary: Option A maintains the relative percentage allocation in the priorities of Government model, while Option B shifts the resource allocation
more into Public Safety and non - recurring expenses. Option B was authorized by Council for the 2010 process.
8/13/2010
• •
2011 General Government Reserves
Mid -Year Projections - as of 8/11/10
Option Option
A B
Beg. Reserve Balance $5,118,867 $5,118,867
Revenue 57,031,855 57,031,855
Total Resources 62,150,722. 62,150,722
Expenditure Budget 57,031,855 58,031,855
End. Reserve Balance 5,118,867 4,118,867
% of Annual Expenditures 9.0% 7.1%
Incr. / (Decr.) in Reserves fr. Prior Year $0 ($1,000,000)
% of Expenditure Budget 0.0% -1.7%
8/13/2010
YAKIMA CITY COUNCIL
ADJOURNED MEETING — STUDY SESSION
AUGUST 10, 2010 — 8:00 -9:30 A.M.
COUNCIL CHAMBERS — YAKIMA CITY HALL
1. Roll CaII
Present:
Council: Mayor Micah Cawley, presiding, Assistant Mayor Kathy Coffey,
Council Members Maureen Adkison, Dave Edler, Rick Ensey,
Dave Ettl and Bill Lover
•
Staff: City Manager Zais, City Attorney Cutter and City Clerk Kloster
Guests: Richard Yukubousky, Executive Director of Municipal Research
Services Center (MRSC), and Mike McCarty, CEO of Association of Washington
Cities (AWC)
2. Mayor - Council / Council- Manager forms of government
City Manager Zais gave opening statements and introduced Mr. Yukubousky and
Mr. McCarty. Mr. Yukubousky described the services MRSC provides and
distributed information that compared /contrasted the Mayor /Council and
Council /Manager forms of government. By population in this state, about 56% of
residents live in cities that are under Mayor /Council and 44% are under
Council /Manager. The reason the smaller cities (population of less than 15,000)
usually have a Mayor /Council form of government is because they do not have the
resources to hire a city manager. He spoke to various comparison points of the
two forms:
Legislative authority — in both forms, it rests with the Council. They are the policy
making body, they set direction, adopt the budget, the capital improvement plan,
comprehensive plan, etc.
Executive authority — Mayor in the Mayor /Council form; the manager in
Council /Manager form.
Selection of CEO — In the Mayor /Council form, the mayor is popularly elected. In
the Council /Manager form, the manager is selected by Council usually through a
nationwide search for qualified candidates. In a mayoral election, the person
elected may have good political skills but may not have management and
administrative skills. Many times a mayor will hire administrative managers to help
with that role. They are hired by the mayor not the Council, therefore there is no
guarantee they will have a good relationship with the Council.
Removal of the CEO - Mayor /Council form requires a recall or delay until next
election. In the Council /Manager form the Council may remove the manager at
will.
•
AUGUST 10, 2010
STUDY SESSION — FORMS OF GOVERNMENT
•
Tenure of Executive — Mayor /Council is typically a 4 -year term; in
Council /Manager it is indefinite, usually based on performance.
Other major differences apply to areas such as the appointment of department
heads. It varies with the Mayor /Council plan; the mayor makes those
appointments but depending on the Charter it may or may not be with Council
confirmation. In Council /Manager there is no Council confirmation. The manager
is charged with finding the best people available to perform the functions. Another
key difference is veto power. Under Mayor /Council, the mayor has veto power.
The Council can override with a 2/3 majority vote. With regard to policy
development, the mayor can propose and the manager can recommend, but,
ultimately, it is a council decision. In both cases, the implementation is by the
mayor or the manager.
Mike McCarty explained the role of AWC and detailed the services his organization
provides, particularly advocating, education and providing cost - effective services,
such as the Employee Benefit Trust. He indicated AWC depends of the expertise
from both forms of government to. accomplish their goals. He described a new
•
"mayor's exchange" service. It grew out of the strong mayor system when they
•
expressed a need for the opportunity to exchange ideas. He commented that, in
the manager form it isn't necessary because that is a technical association with a
strong training and education program.
Underlying Principles
The Mayor /Council form is built upon the notion of a separation of powers, derived
out of our federal experience, placing a premium on political leadership. The
Council /Manager form places a premium on separation of politics and
administration and has been in place only about 100 years. It places a premium on
professional management with managers that are trained, usually with credentials.
MRSC will not recommend one form over another noting that it is a local decision.
He emphasized the need to look at history, tradition, and experience. Are there
problems not being addressed and, if so, are they the result of the form of
government or something else?
Council Comments /Questions (answers given by Mr. Yukubousky)
What is the average lifespan of a city manager?
Nationwide it is somewhere between 5 -7 years.
What about the pool of people being trained for city management? .
There are a number of college graduates that expect to pursue city
management. As far as I know, when management positions have opened up
there were a fair number of applications.
Under the strong mayor format, does the second chair administrator have the
same educational training as a city manager?
It can be but doesn't always work out that way. I've seen mayors appoint highly
" competent managers with experience as deputy mayors, and have also seen
2
AUGUST 10, 2010
STUDY SESSION — FORMS OF GOVERNMENT
them appoint managers with political agendas and not well- trained. You will
find administrators are very dedicated and many belong to the same
professional associations, therefore ascribe to the same code of ethics. The
difference is to whom they report. Under the Council /Manager form, Council
provides direction, while under the Mayor /Council form, direction is solely from
• the mayor.
Is there statistical data on how long an elected strong mayor survives?
I don't have that information but will ask,for it to be supplied.
What does a strong mayor do that the manager doesn't do?
One of the things the advocates for a strong mayor will argue is that you get
more political leadership out of an elected mayor because they are directly
accountable 'to the people and are elected to represent what their communities
stand for in various forms. A city manager is really not in a position to take on
that role. Their role is based on their expertise and training, experience in
management, and to address how to provide services cost effectively or in a
way that meets the outcomes that the council is expecting. There is dichotomy
when the mayor comes in with political skills but no management training.
Because both are needed, some cities develop the chief administrative officer
to provide the skills the mayor may lack.
How much assistance do you give a community if the electeds determine they
would like to change their form of government?
Change is tough and you must think about it not only from a community
context, but also in terms of its impact on your staff. You have a large staff
here, dedicated and committed to the citizens of the city. Going through the
process of change in and of itself is going to cause noticeable and significant
differences impacting all. That needs to be considered as you move forward
• with your decision.
Mr. McCarty offered to provide information on what went right or wrong from
other cities. Mr. Yukubousky commented that MRSC has attorneys on staff
who would work with Yakima's city attorney on questions of law. There are
important choices on how to approach this. It can be done by council referring
it to the voters directly or going through a freeholders' process which is more
challenging. Under the State constitution the County has to go the through the
freeholders process having to elect a group of freeholders to d'o a study at the
same time they are scheduling an election on whether or not to proceed with
the study. This causes some confusion. Cities may also use a freeholders'
process where they elect people to actually study the different government
formats and make a recommendation to the voters.
What is the potential of making all Council positions at- large? (It had been noted
that the Mayor would have to be an at -large position.)
That is a totally different issue that would require a Charter change. City
Manager Zais explained that all positions previously were at -large in Yakima; it
was changed with the expectation that there would be a more balanced
representation from the various locations within the city.
3
AUGUST 10, 2010
STUDY SESSION — FORMS OF GOVERNMENT
Mr. McCarty clarified that under the Council /Manager format a mayor can be
elected by the people or the Council. It is a struggle at times because even the
popular voted elected has no greater authority although there is a perception that
they do.
City Attorney Cutter explained the process of amending the Charter, which is
necessary to change the form of government. Council can initiate the change with
a resolution, filed with the Clerk, and then it must go through the election process.
Another method would be a petition of citizens of the city. Or, a group of
freeholders could be elected to study and draft a new Charter or amendments to
the Charter. To change from our current form of government would require a
significant revision of our Charter. If freeholders were elected to do this, they
would have a year to come back with recommended revision of the Charter, which
would then go to the people (a second election process). The state provides for
approximately six opportunities for elections a year with different preceding notices.
Most of the processes can be conducted through a special or general election.
Right now we have missed the opportunity to put anything on the November ballot.
The next opportunities would be Feb /March /April /May. Picking the date is
complicated. It was noted that special elections are more expensive.
An explanation of the petition method was given.
3. Audience Comments (9:15 — 9:30 a.m.)
Tom Allen thanked Mr. Zais for his thirty -seven years of service to the City of
Yakima. He suggested Council not make the decision to change the form of
government administratively, but to involve the community's input in their decision.
He also commented that making a change to have the mayor an elected position
under the current Council /Manager format would just add a layer of confusion.
Glenn Rice also thanked Mr. Zais and the Council for their service to the public.
He believes there are serious problems and much turmoil in cities that have a
Mayor /Council form of government. Our current form of government has worked
for many years and we should celebrate that form instead of changing it.
Jerry Foy stated he was a former mayor in Aberdeen, Washington under the
Mayor /Council form of government. As mayor, his position was not only political,
but required him to be a good negotiator with good business sense. He
emphasized the difficulty of the job.
Further Council Discussion:
In the strong mayor form of government, is the strong mayor a full time paid
individual?
That is a local decision of the people based on the duties. How much is paid is
decided by the process. One resource available is AWC's Annual Salary and
Benefit Survey that was recently distributed.
4
AUGUST 10, 2010
STUDY SESSION — FORMS OF GOVERNMENT
How do we engage the public? Or do we?
Council Member Ensey replied that we have to decide if we are interested in
changing and if so, develop a process to engage the public. Council. Member
Edler said he is very interested in getting the community involved in the
discussion because he is in favor of changing our form of government. He
would like the interaction of the community to determine if changing would cost .
a considerable amount of time /energy /money. Council Member Coffey also
feels the community needs an opportunity to comment through a public
hearing.
How does the petition method work?
The council cannot initiate the petition, they must do it by resolution. The
petition method comes from the citizens and it is important to note that the
Council has no authority to change any portion of that petition. Whatever is
submitted is what must be put to the voters. The third option is the freeholders'
method, which also does not allow changes by the Council.
EDLER MOVED AND ENSEY SECONDED TO HOLD A PUBLIC HEARING
DURING A REGULAR COUNCIL BUSINESS MEETING TO ASK FOR CITIZEN
INPUT ON OUR CURRENT FORM OF GOVERNMENT AND THE POSSIBILITY
OF CHANGING TO A MAYOR/COUNCIL FORM OF GOVERNMENT. The timing
would be based on the ability to communicate with the community. Prior to voting,
each Council member gave their thoughts on the various forms. The motion
carried by unanimous roll call vote.
4. Adjournment
EDLER MOVED AND ENSEY SECONDED TO ADJOURN. The motion carried
by unanimous voice vote. The meeting adjourned at 9:35 a.m.
READ AND CERTIFIED ACCURATE BY
COUNCIL MEMBER DATE
COUNCIL MEMBER DATE
ATTEST:
CITY CLERK MICAH CAWLEY, MAYOR
Minutes prepared by Linda Watkins. A CD and DVD of this meeting are available in the City Clerk's
Office
5
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2011 General Government Budget -�-t #
Priorities Model
Mid -Year Projections - as of 8/17/10
Option A --- -- Option B
(1) (2) (3) (4) (5) (6) (7)
2011 2010 Targeted $900,000 Targeted
Preliminary Amended No Reserve Adjustment Reserve Use Adjustment Updated
Exp. Budget % Use (3 -1) i Public Safety (5 -1)
Resources
Projected Revenues (1) $56,876,855 $56,876,855
Plus Reserve Allocation 0 900,000
Net Resources to be Allocated $56,876,855 $57,776,855
•
Budget Priorities
Public Health & Safety $40,847,765 $39,131,276 $39,131,276
Public H & S Reserve Allocation 0 0 1 900,000 I
Total Public Health & Safety (2) 40,847,765 68.8% 39,131,276 (1,716,489) 40,031,276 (816,489) 69.3%
Resource Management 8,656,413 14.6% 8,304,021 (352,392) 8,304,021 (352,392) 14.4%
Economic Development 3,134,676 5.3% 3,014,473 (120,203) 3,014,473 (120,203) 5.2%
Quality of Life 4,083,238 7.1% 4,038,257 (44,981) 4,038,257 (44,981) 7.0%
Customer Service & Communications 1,802,829 3.2% 1,820,059 17,230 1,820,059 17,230 3.1%
Strategic Partnerships 566,228 1.0% 568,769 2,541 568,769 2,541 1 1.0%
Total. $59,091,149 100.0% $56,876,855 1 ($2,214,294)1 $57,776,855 I ($1,314,294)1 100.0 %
(1) Reflects a decrease of $155,000 in interest income.
(2) 2011 Preliminary Budget includes $1.48 million of reserve carried forward from the 2010 budget process
Option A: No use of reserves
Option B: Maintaining minimum ending reserve of 7 %. This option allows the maximum use of $900,000 in reserves to balance, but allocates the
use of reserves only to Public Health and Safety.
Summary: Option A maintains the relative percentage allocation in the priorities of Government model, while Option B shifts the resource
allocation more into Public Safety and non - recurring expenses. Option B was authorized by Council for the 2010 budget process.
8/17/2010
•
2011 General Government Reserves
Mid -Year Projections - as of 8/17/10
Option Option
A B
Beg. Reserve Balance $5,118,867 w- $5,118,86 7 T
Revenue 56,876,855 56,876,855
Total Resources 61,995,722 61,995,722
Expenditure Budget $56,876,855 $57,776,855
End. Reserve Balance 5,118,867 4,218,867
% of Annual Expenditures 9.0% 7.3%
Incr. / (Decr.) in Reserves fr. Prior Year $0 ($900,000)
% of Expenditure Budget 0.0% _ -1.6%
8/17/2010
•
City of Yakima
General Government Actual Actual Estimate Preliminary Est
Revenues 2008 2009 2010 • 2011
General Fund $ 47,450,685 $ 47,615,448 $ 47,643,229 $ 47;519,560
Parks & Rec 4,176,409 4,096,632 4,108,985 4,084,485
Street & Traffic 5,808,278 5,578,638 5,264,313 5,272,810
Total $ 57,435,372 $ 57,290,718 $ 57,016,527 $ 56,876,855
Percentage Change -0.3% -0.5% -0.2%
Citywide Interest Earnings $ 2,020,813 $ 969,995 $ 669,500 $ 431,000
Percentage Change -52.0% -31.0% -35.6%
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