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HomeMy WebLinkAboutMAY 10,1994 I I . _ ,. .01/17. s~ J'J: 'J .- i)j,,-!iJ ~Y cc. CITY COUNCIL PROCEEDINGS ARE TAPE RECORDED AND ON FILE IN THE OFFICE OF THE CITY CLERK ROLL CALL 1. 2. OPERATING BUDCET PRESENTATION (IT 1994-95) () 3~ () -:;:<J MINUTES CITY COUNCIL OF THE CITY OF ARCADIA and the ARCADIA REDEVELOPMENT AGENCY ADJOU&~ED REGULAR MEETING (STUDY SESSION) May 10, 1994 The City Council and the Arcadia Redevelopment Agency met in an Adj ourned Regular Meeting (Study Sess ion) on Tuesday, May 10, 1994, at 5:30 p.m. in the City Hall Council Chamber. PRESENT: ABSENT: Councilmembers Chang. Kuhn, and Young Councilmembers Lojeski and Margett It was MOVED by Councilmember Kuhn, seconded by Mayor Pro tern Chang and CARRIED to EXCUSE the absence of Councilmember H,.'i.., ~~ and the absence of Councilmember Lojeski. ~q~,~n' ORAL COMMUNICATIONS None. Acting City Manager. William Kelly, stated in part that the budget review process presented at this meeting was the beginning of an information exchange between staff and the City Council. The Council requested that all City employees be invited to this budget meeting and all future budget reviews so that employees may be aware of the process; the issues involved; and to observe the discussion of the alternatives within the budget process; and to acquire an overview of the proposed budget for IT 1994-95. In his opening remarks the Acting City Manager noted that past City Councils have balanced previous budgets by utilizing reserve funds. Because of the expected decrease in funds from the state, at the January 1994 mid-year review, the City Council discussed the possibility of having to utilize reserves or reduce services and/or staff cuts. In the current fiscal year revenues have been decreasing while expenditures have somewhat increased. Last January projected expenditures exceeded revenues by $2.6 million. Some of the overall causes of this fiscal problem are the current recession and its impact on the City; state fiscal problems and the reallocation of Arcadia property tax to the state budget process; salary increases to multi-year contracts; increased health insurance costs; and increased liability and workers compensation claims and costs.. .a11 of which have had a significant impact on the budget. Mr. Kelly further explained that the proposed 1994-95 budget, as presented, has been balanced and incorporates reductions in expenditures for supplies and services; proposes revenue enhancement programs; proposed changes in staffing operations; and suggests utilization of reserve funds. It was noted that 80% of the General Fund budget is salaries and employee benefits, and 20% is supplies and services. The proposed budget for each department was reviewed with department heads and cuts made wi thin each department for an approximate total reduction of $345,000 from the General Fund for supplies and services; transit and redevelopment funds were reduced; and approximately $500,000 from the Water Fund by using a different cost analyses. In addition staff did more detailed cost accounting this year. In total, from the initial budget review. and cost allocating process, over $500.000 was cut from the General Fund budget. . I. 5/10/94 36:01-~ In reference to the proposed Capital Improvement Plan (CIP) and Capital Outlay Program the Acting City Manager explained in detail that the crp is a general financial plan for capital improvements and the proposed means of financing, rather than a budget. The proposed crp has a different format than prior years and has been reorganized. In this year's budget $5,000,000 was allocated toward renovation and reconstruction of the City library. Mr. Kelly suggested that the Council might prioritize all of the public buildings before authorizing expenditure of funds for the library project. A new police station should be considered; Fire Stations 1 and 3 need renovations and/or reconstruction, as well as City Hall and the library. Depending upon the type of work to be done at all of these facilities, it could cost approximately $15 million to upgrade all of these buildings. Staff recommends that the Council hold off the library renovation until priorities are established for improvements to all public buildings. A new reserve fund needs to be created for public buildings similar to the Equipment Replacement Fund. The Capital Outlay Program. which is referred to as the Equipment Replacement Fund, provides for office equipment, computer software. field equipment, vehicles and communication equipment. and has a balance of $9 million. Staff suggests that the life of such equipment be extended. and that the Equipment Replacement Fund not be funded in the coming fiscal year. This plan would then help to keep the General Fund in a positive cash flow position. I The Finance Director. Jim Dale. offered a slide presentation of multi-year financial forecasts for the City; the revenue enhancement program; the proposed cost reduction program; and the reserve funds that could be used to balance the $47 million plus budget for FY 1994-95. An overview of the proposed General Fund revenue and expenditure projections was explained in detail. All major revenue sources for the General Fund are primarily derived from taxes. Staff expects that $6,125,000 in ,ales tax will be added to this fund this next year. which would amount to 26% of the General Fund; property taxes, $4 million or 17%; utilities tax. $3.8 million or 16%. These revenue sources comprise approximately 60% of General Fund monies. Other revenue sources mentioned were motor vehicle in-lieu fees of $1.7 million. or 8%; business and other licenses and permit fees add another 3% to the fund. In preparation of a long range solution to budget projections over the next five years, staff developed a revenue enhancement program, which Mr. Dale briefly explained. A franchise fee could be implemented on trash collection which would return $115.000 annually to the City; the Redevelopment Agency could pay interest on City funds loaned to the Agency which would be paid back annually to the City rather than adding this figure to the principal; staff recommends a study of fees and charges to provide services, and increases implemented which could amount to as much as $100,000; imposing penalties for code enforcement violations.. .$10,000; contracting out park maintenance to private companies could save about $270,000. A medical subscription I program for ambulance/paramedic service could be considered with a flat rate imposed.. .this program could return about $270,000 to the City; and the use of $ 712,000 in reserves this year. Also mentioned was the possibility of raising the Transient Occupancy Tax another 1% which would generate $95.000 annually. Other considerations could be a City-wide street light and landscape assessment under the 1972 Act for such assessments; and a library assessment district could be considered also. Cost reductions were also suggested, such as, not funding the request from the Arcadia Tournament of Roses Association for $13,500 this year; reducing City Hall hours.. .or going to flex hours such as the 9/80 plan; or implementing a five-day furlough program without pay for all City employees for five days a year... this program would amount to a savings of $300,000 and would not be permanent; a 2% at age 55 retirement plan for all non-sworn employees could be considered. Such a plan would generate a savings in the hiring of a new employee at the A salary step; the vacation sell back provision for management employees could be eliminated which would save $30,000. reduce funding for the Arcadia Chamber of Commerce; - 2- 5/10/Q4 I I ADJOURNMENT ATTEST: ~~ 36:0l~:! eliminate employee support programs such as the awards banquet, exceptional service awards and the employee picnic; eliminate funding for police salaries at the Arcadia Band Review. Staff also noted that Council could implement a hiring freeze or postpone filling vacant positions.. .with benefits included, a position would probably equal approximately $50,000... if staff were reduced or layed off the savings would be the same. If Council wanted to consider salary reductions. 1% would equal $150,000, 5% would equal $750,000. Mr. Dale concluded that, based on the assumption that certain increases in revenues occur, and assumptions of further loss of property taxes to the state over the next few years, the City may still need to use reserve funds to balance the budget up to fiscal year 1998-99. The Acting City Manager stated, in par~, th~ the budget before 0,I)tL... the City Council was constructed by the~El'af(flgef\'t:r management team u . (EMT). The EMT first considered cost enhancements and then cost reductions, which could be considered permanent in some cases, and temporary in other cases. The budget, using the stated method, was balanced with the judicious use of reserve funds. Mr. Kelly noted that the most important message the EMT has to give to the Council is that this is a multi-year financial problem which may be resolved in one and one-half to two years if some reserve funds are used. At 6:13 p.m. the City Council Adjourned Regular Meeting (Study Session) ADJOURNED to 7:00 p.m. on Tuesday, May 17. 1994. in the City Hall Council Chambers for a Regular Meeting to conduct the business of the Council and the Redevelopment Agency, and any Closed Session neces~ary to discuss personnel, litigation matters or evaluation of properties. l?,J,~4,f~/71r - 3- 5/10/94