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HomeMy WebLinkAboutJUNE 8,1994 I 'I 36:0190 tJ/If). ~o ()Go 1i4 V l (' CITY COUNCIL PROCEEDINGS ARE TAPE RECORDED AND ON FILE IN THE OFFICE OF THE CITY CLERK ROLL CALL 1. 2, BUDGET PRESENTATION, DISCUSSION, & DIRECTION (FY 1994-95) AND PROPOSED WATER RATE INCREASE ()3.!1.(I-S'O M I NUT E S CITY COUNCIL OF THE CITY OF ARCADIA and the ARCADIA REDEVELOPMENT AGENCY ADJOURNED REGULAR MEETING (STUDY SESSION) June 8, 1994 The City Council and the Arcadia Redevelopment Agency met in an Adjourned Regular Meeting (Study Session) on Wednesday, June 8, 1994, at 5:30 p.m. in the City Hall Council Chamber. PRESENT: ABSENT: Councilmembers Chang, Kuhn, Lojeski, and Young Councilmember Margett It was MOVED by Councilmember Lojeski, seconded by Councilmember Kuhn and CARRIED, to EXCUSE the absence of Councilmember Margett. ORAL COMMUNICATIONS None. The Acting City Manager stated, "Mayor and City Council, Mr. Dale, the Director of Finance, will begin with a discussion of special funds, and then Mr. Lopez will give you an overview of the water budget and the proposed water rate increases. The discussion of special funds, the Council can have questions on and give direction. On the water rate increase, that will be subject to a review on the June 21st meeting. This is simply a presentation of what's proposed. Mr. Dale will initially give you an overview of where we have been with the General Fund and where we are this evening. " The Finance Director reported that information was received earlier this month advising the City that the PERS rates for 1994- 95 have changed. The rate for miscellaneous employees ~s gone up about a percentage point, but the rate for safety employees was down 3 1/2 percent. When this is factored into the budget, a $330,000 savings will be reflected in the General Fund for retirement costs for the next year. However, the Finance Director cautioned that these situations are different every year. The Finance Director reviewed the Fiscal Year 1994-95 General Fund budget, which reflected a shortfall of $2,256,064. He indicated the, revenue enhancement/cost reduction suggestions that the Council, at its first budget study session, was interested in pursuing. Revenue enhancements such as increasing fees, penalty assessments for code enforcements, a park maintenance program, emergency medical subscription program, horse license fees, and sale of firewood amounted to $518,000. Cost reductions, including eliminating the donation to the Tournament of Roses, implementing a 9/80 work schedule at City Hall,' and implementing "2% at 55" for non-safety employees totaled $178,500. These two figures brought the $2,256,064 shortfall down to $1,559,564. Additional possible cost reductions are: eliminating funding for the positions of Community Development Director and Assistant to the City Manager by not filling those positions in the coming year, $161,000; changing assignments of Police and Fire personnel so that non-sworn employees may perform functions that are currently performed by safety personnel, $100,000; and an across- the-board cut in services and supplies of 5 percent, $250.000, With these additional cost reductions, the budget deficit was brought down to $1,048,564, -1- 6/8/94 36:0191 As previously suggested to Council, another cost reduction measure is to collect the interest payable to the City from the Redevelopment Agency and invest it, adding $300,000 to the budget, A reduction in the retirement contribution rate (PERS) as previously mentioned adds another $330,000. Those two cost reduction measures, plus use of an unexpended fund balance of $418,564, eliminates the deficit and brings the budget in balance. The Finance Director stated that this year there are significant savings in the Equipment Replacement Fund brought about by delaying or deferring the purchase of equipment, The Equipment Replacement Fund was established from monies being transferred from the General Fund to the Capi tal Outlay Fund. This year, deferment of the purchase of several Police units, Fire vehicles, and communication equipment in the emergency operations area adds up to a savings of almost $462,000. He explained that considering that the money which funds the Equipment Replacement Fund came from Capital Outlay, these are indirect savings to the General Fund. The Finance Director answered questions from Council regarding the budget. Councilmember Lojeski asked the newly elected Councilmembers how they felt about the use of the $418,564 unexpended fund balance, since they expressed displeasure during their campaigns for office regarding the use of reserve funds to balance the budget. Councilmember Kuhn stated that she does not recall making any campaign promises about using or not using reserve funds to balance the budget. Her contention was the City cannot continue to spend more than it brings in. She is not comfortable with the use of the $418,564 unexpended fund balance, but would like to leave the campaign behind and continue working on balancing the budget. Councilmember Lojeski pointed out that the City is not taking in as much as it is spending, and inquired of the other Councilmembers where the $418,564 would be coming from, Mayor Young commented that since this money is available by extending the use of some City vehicles, that is an acceptable way to handle the budget deficit. Councilmember Lojeski noted that the purpose of the Equipment Replacement Fund is to have enough money in that fund so that the interest generated would be enough to replace the equipment, but that is not yet the case. Mayor Pro tem Chang agreed with Mayor Young that deferring the unnecessary replacement of vehicles, and utilizing the money for daily operations, is a reasonable way to handle the budget shortfall, much the same way a family might put off buying items during a time of financial difficulty. In reply to Mayor Young's question as to what he would suggest, Councilmember Lojeski stated that his thought has always been that it would be necessary to balance the budget by going into some sort of reserve funds. The Finance Director presented the budget summary sheet for review, and answered Council's questions. ~' The Director of Public Works presented a report on the proposed water rate increase. Although there have been no substantial modifications made to the operation of the Water Division, several programs are proposed to ensure that the Division operates in a cost-effective manner. Most importantly is the proposed preparation of a Water Master Plan to ensure that the City's physical plants and distribution systems are guaranteed to meet future needs. Personnel changes proposed are reclassifications of Clerk Typist to Secretary and Engineering Aide to Senior Engineering Aide. Based upon the Water Division's proposed 1994- 95 budget, it is recommended that the Council consider increasing the water rate by five percent, from $.82 to $.86 per 100 cubic feet. Without implementing the recommended increase, the 1994-95 operating budget would have a shortfall of $258,796. Even with the proposed water rate increase, the City of Arcadia will continue to have one of the lowest water rates of the eight neighboring water agencies. If the proposed water rate is approved, the Water Division would have a balanced budget for Fiscal Year 1994.95 without reducing the current balance in the -2- 6/8/94 I I I ':1 " 36:0192 Facilities Replacement Fund. If the water rate increase is not approved, the Water Division would have to reduce the amount transferred to the Facilities Replacement Fund in order to have a balanced budget. The Director of Public Works and the Water Manager answered questions from Council. Councilmember Lojeski suggested he would like to see an explanation given to City residents regarding any water rate increase, so that they are made aware of the reasons for it. Perhaps something could be inserted into their water bills. Mayor Young agreed that the public relations aspect is very important. It was MOVED by Councilmember Lojeski, seconded by Councilmember Kuhn, and CARRIED on roll call vote as follows to place the resolution for a water rate increase on the agenda. AYES: NOES: ABSENT: Councilmembers Chang, Kuhn, Lojeski, and Young None Councilmember Margett 3. CIP BUDGET Acting City Manager, Bill Kelly, explained that the Capital PRESENTATION, Improvement Program (CIP) is not really a budget, it's the general DISCUSSION, financial plan for capital improvements for streets, water lines, & DIRECTION sewer lines, parks, and things of that nature. The intent is to 03':!f).. "f! forecast deficiencies in the infrastructure systems and to ensure that there are sufficient funds for the reconstruction, construction, or repair of the systems. The Acting City Manager reviewed four proposed master plans in this year's CIP. The first is the General Plan, which is the basis of all the master plans for the City. It forecasts population, land use, traffic, etcetera. The second is a new Water Master Plan. Third is a Sewer and Sanitation System Plan. The last master plan is the Civic Center Master Plan, which will look at an achievable plan for construction of a new Police Station and City Hall modification, as well as a financial plan to ensure that this can be achieved. 4. CAPITAL OUTLAY FUND PRESENTATION, DISCUSSION, & DIRECTION 5. OTHER GENERAL BUDGET DISCUSSION/ DIRECTION 03.:2" -:'t) The five-year CIP has been divided this year for the first time into the specific categories of Streets, Buildings and Grounds, Sewer and Storm Drains, Water, Parks, and Other. The five-year plan as outlined totals about $15.5 million. Funding for the projects comes from various sources, including gas tax, race track receipts, user charges, and development fees. After giving a detailed review of each category, the Acting City Manager answered questions from Council. A discussion ensued with regard to how to fund the CIP projects and the matter of prioritization. The Acting City Manager also reviewed the Capital Outlay Fund, which provides for office machines and furniture, computers and software, field and plant equipment, vehicles and major parts, and communications equipment. The five-year total of these items is approximately $5.6 million. The funding for this Fund comes from a variety of resources--in past years, the General Fund, Capital Outlay Fund, Water Fund--transfers from other funds. The Acting City Manager stated that the entire budget has now been reviewed except for the Redevelopment Agency, which will be presented on June 14, There will be a public hearing on June 21 at 7 p.m. on the Operating Budget and the Agency Budget, and Council may take action, or not. at that time. However, Council must act on the City budget by July 1; the Agency Budget can be postponed to a future date. "In conclusion, the one thing I want to say. as I've said before, regardless of how the Council balances the budget this year, beginning July 1 we have to address the more serious problem of probably a bigger deficiency or unbalanced budget next year. All information is, the State is not going to hit cities this year for dollars, but next year they will. As Mr. Dale pointed out in previous graphs and charts, we can expect at least a million- - 3- 6/8/94 6. CLOSED SESSION ~lllfJ..l/(" ADJOURNMENT ATTEST: ~ Alford, 36:0193 dollar hit from the State next year. So we're starting out again July I, $1.0 million upside down. We're going to have to become more pro-active. We're ;0ing to have to, as a City, put much more emphasis on economic de-.olopment in order to ensure that this City can start balancing its books and be more pro-active and protect itself, As I said before, there is legislation pending to change the sales tax distribution through a pay-per-capita basis. What that means, the difference is right now anything that is sold here, the money stays here. If it goes to a per-capita basis, it makes no difference where it's sold, we get a percentage by population. This City has high services because we had a sales tax for good production. If we lose that on a per-capita basis you will see significant changes in the level of services. It's to our benefit we get pro-active and hit everything we can very hard and create multi-year budgets. The year-by-year budgeting is not going to sustain this City with the level of service it has I right now. We're still not at the bottom.. .it is going to get worse not better. That's not a (inaudible) concluding comment, but I think it's a point of reality. (Inaudible) this year just gets us through. It doesn't solve future year problems." The City Attorney announced, "We're going to have a Closed Session pursuant to Government Code Section 54957,6 for a conference with labor negotiators - - it would be Gary Rogers in this case - - regarding unrepresented employees and AFSCME Local 22264, the Arcadia Firefighters Association, and the Arcadia Police Relief Association. And that is printed on this agenda form." At 6:40 p.m. the City Council entered a CLOSED SESSION, ~ and ADJOURNED at 6:55 p.m. to 5:30 p.m. on Tuesday, June 14, 1994, in the City Hall Council Chambers for an Adj ourned Regular Meeting (Study Session) to conduct the business of the Council and the Redevelopment Agency, and any Closed Session necessary to discuss personnel, litigation matters or evaluation of properties, m~~~/~ ~, I -4- 6/8/94