The URL can be used to link to this page

Home My WebLink AboutJANUARY 22,1997 I I I 39:0023 O/fO _ :0,-0 o/~c2.'f7 c.C' CITY COUNCIL PROCEEDINGS ARE TAPE RECORDED AND ON FILE IN THE OFFICE OF THE CITY CLERK I. ROLL CALL 2. 3. 4. 5. MID-YEAR BUDGET RPT. 03::JO _ >0 MINUTES CITY COUNCIL OF THE CITY OF ARCADIA ADJOURNED REGULAR MEETING (MID-YEAR BUDGET REVIEW) JANUARY 22, 1997 The City Council met in an Adjourned Regular Meeting on Wednesday, January 22, 1997, at 6:00 p.m. in the Council Chamber Conference Room for a presentation of the Mid-Year Budget Report. PRESENT: Council members Chang, Harbicht, Kovacic, Young, and Kuhn ABSENT: None SUPPLEMENTAL INFORMA nON FROM STAFF REGARDING AGENDA ITEMS None. QUESTIONS FROM CITY COUNCIL REGARDING AGENDA ITEMS None. AUDIENCE PARTICIPATION Drew Krvnieki, 321 LeRoy Avenue, oITered suggestions to balance the City's budget: The Arcadia Redevelopment Agency should phase out. He feels the Agency will not be able to meet its dcbt obligations and since the City guarantees those obligations, the City is not in a position to pay oIT Agency debt; an amendment to the City Charter thm would require expenditures to equal City income, with the exception ofa declared local emergency. Also, a ballot measure in 1998 to increase the utility tax. Fnrther, a bond issue for a new police station could be considered also; cuts could be made in employee medical benefits and pensions. Mr. Krynicki suggested that formation of a Citizen Finance and Budget Committee would be a good idea also. PRESENTATION (Summary follows) Consideration of the annual mid-year budget report and discussion of the City's current fiscal position, and projection of revenues and expenditures through FY 1998-1999. The City Manager reported that staIThas been studying the impact of Proposition 218 on the City's possible revenue increases in the future, StaITwill submit revenue enhancement programs to the Council at a later date, and seek Conncil's direction regarding reductions in expenditures and/or how and when to raise revenues. James Dale, Director of Administmtive Services, presented an overview of the Annual Budget. Geneml Fund, which is the primary operating fund for the City. The funds available for FY 1996-97 through FY 1998-99 indicated a projected decrease in revenues in all three fiscal years. This while projected expenditures increased to reflect an estimated deficit in the fund by the end of FY 1998-99 of $2,682,000. The current budget projected a deficit of $764,000 by the end of FY 1996-97. Mr. Dale noted staIT had serious concerns earlier this fiscal year about the 1 1/22/97 39 :.0024 performance of City revenues, in particular, sales tax revenues, which were down 12% in the first quarter of FY 1996-97 from the first quarter of the previous year, and utility tax down around 5%. By the end of the second quarter sales tax revenues were down 7% overall. This figure did not include sales tax generated by the Santa Anita Mall over the holiday season, which sales were reported to be 5% over the 1995 holiday season, Mr. Dale explained in detail the means and plans by which previous operating budgets were balanced beginning in 1992 when the recession began and the State took a significant amount of the City's properly tax revenues to balance the State budget. Mr. Dale expressed concern of the current fiscal year in which the economy and revenue groMh continues to be a major issue; sales tax gronth; deregulation of the utilities; a decline in property values; and the reduction in construction activities, all contributing to the decrease in revenues. Earlier revenue estimates for FY 1996-97 have been reworked to reflect a decline in estimated revenues of $1.6 million. The original figure was based on the premise of a one percent increase in the utility tax, which idea was tabled awaiting the outcome of Proposition 21B on the November 1996 ballot. This proposition was approved by the voters and the imposition of an increase in the utility tax now requires approval by a majority vote. Considerable discussion ensued centered on revenue estimates and subsequent projections from the major sources; properly tax revenue projection remains at $4 million for FY 1996-97; sales tax projection at $450,000, which is below the original estimate. The City Manager noted that figures are not in as yet for the holiday sales; utility tax projected at $800,000, which is below the original estimate. Staff noted this decrease came about due to deregulation and perhaps a change in the pattern of consumer buying habits, and competition between utility companies. Staff pointed out a number of other revenue funds indicating decreases in projected revenues from previous estimates, all contributing to the projected deficit in FY 1996-97. In further discussion, Mr. Dale noted the median price of housing in the City dropped some 12% from November 1995 to November 1996. He felt the City has two choices to resolve the budget deficit... revenue increases and expenditure cuts. If the budget is out $1.3 million next fiscal year, that equates to approximately 25 employee positions at $50,000 each. In the presentation, the City Manager commented that stafT are analyzing fees within departments that can be adjusted to reflect actual costs to provide the service. These fee increases will be presented at the February 18th Council meeting. A brief discussion centered on tax implementation, increases, or extended, and the regulations of Proposition 218. Staff distributed a survey of surrounding cities regarding various taxes and assessments in those cities for Council's information. Mr. Dale reported that Arcadia only receives about 9% of Arcadia property taxes paid. The local county and state governments get the remainder of the funds. Staff presented an illustration that, based on certain assumptions for a hypothetical household, staff estimates that property, utility, and sales taxes paid by one residential unit could amount to $660, while City services to that residential unit are estimated to be valued at $1,409. This based on an assessed property valuation of $300,000 for that unit. Council agreed they should consider long term solutions to the budget problems because of decreasing revenues and increasing expenditures, as the trends indicate, and requested that staff bring alternatives in cost savings for some major kinds of moves and some assessment of what the efTect would be on services; and how Arcadia services to residents compares to those offered by other cities. I I Councilmember Chang felt Council should seriously consider a 1% increase in the utility tax I which would increase revenues by $600,000 to $800,000 a year, and successfully achieve the goal of a decrease in expenditures by $400,000 this year, In the discussion stafT noted a measure could not be placed before the voters to increase taxes until the next general municipal election in 2 1/22/97 I I I. ADJOURN- MENT ATIEST: 39:0025 April, 1998, unless it is an emergency measure, according to Proposition 218. Staffwill prepare an analysis of this issue and an estimate of the funds to be generated by a 1% increase in the utility tax, and extending the utility tax to the water service. Also, a list of service cuts and alternatives to such cuts; a list of fees, assessments and taxes, and implementation of such. In a brief discussion of the requirements of Proposition 218, staff reported the City has provided a list and catalogue of all of the City's assessment districts and fees currently in place to WiIldan and Associates for an independent opinion of what the implementation of Proposition 218 means to the City... what we can and cannot do, and what fees are subject to Proposition 218. The City Managcr commented in response to Councilmember Kovacic, that staff will provide recommendations to the Council based upon Council's preference to cut expenses or increase revenues and a list of priorities, options and alternatives to consider. Council agreed to meet on February II, 1997 at 6:00 p.m. to consider these options, At 7:30 p.m. the City Council ADJOURNED to 6:30 p.m. on January 29, 1997, for a joint meeting with the City Council of the City of Sierra Madre at the Sierra Madre Women's Club, 550 West Sierra Madre Boulevard, Sierra Madre. g-<<~-d)~v J~. Alford, City CI " 3 1/22/97