City of Irrigon
Budget Committee Meeting
May 14, 2013
Call to Order
Mayor David Burns called the Budget Committee meeting to order at 6:03 p.m.
Appointment of Chairperson
Councilor Simonis nominated Ken Matlack as chairperson, and the nomination was seconded by Mayor Burns.
Vote was taken and Ken Matlack was elected chairperson by a unanimous vote.
Members Present: Mayor David Burns, Mayor Pro-Tem Kathy Simonis, City CouncilorArnold“Joe” Theisen, City Councilor Ken Matlack, City CouncilorMichelle Hagenand City CouncilorSam Heath. Budget Committee Member Martin Brown arrived at 6:10 pm.
Members Absent: Budget Committee Member Yvette Whitbeck, Budget Committee Member Alan Carnahan, Budget Committee Member Andrew Hermanns and Budget Committee Member Merv Hussey.
It was declared that a quorum was present.
Staff Present: Public Works Director Keith White, Finance Officer Amanda Slawson and City Manager Gerald Breazeale
Approval of Minutes from May 8, 2012
Kathy Simonis moved to approve the minutes from the May 8, 2012 Budget Committee Meeting. Michelle Hagen seconded the motion. Vote was taken; David Burns, yes; Kathy Simonis, yes; Joe Theisen, yes; Ken Matlack, yes; Michelle Hagen, yes and Sam Heath, yes. Minutes were approved unanimously.
A requirement of Oregon Budget Law is that the budget officer delivers a budget message to the budget committee, which explains the budget in its basic form and any significant changes. City Manager Gerald Breazeale read all 7 pages of the budget message.
The City ofIrrigon Budgetfor the fiscal year beginning July 1, 2013 and ending June 30, 2014 has 21 self balancing funds. This budget is the result of planning for revenue and expenses necessary to provide the services that our citizens require and desire. The budget was designed to accommodate the goals set by the city council at goal setting sessions held at various times and subsequent city council meetings to the greatest extent possible.
Some significant changes in this year’s budget are the result to f the 2012 Septic Conversion Project which has nearly been completed, a readjustment in personnel services allocations and the inclusion of the automated meter reading infrastructure and billing from Global Waters. This is designed to create greater efficiencies in employee time, increase revenue, reduce billing errors and provide increased customer service.
The 2013-2014 budget reflects an overall increase of $83,000 from last year’s $7,157,100 to $7,240,465, an increase of 1.12%. Even with the proposed increase, this budget reflects a reduction in the total amount collected through property taxes for water and sewer bonded debt by 21%. Most of the increase is due to the expected System Development Charges assessed to the new Oregon Trail RV Park currently under construction.
The General Fund at $492,200 is $6,800 lower than the prior year largely du to no longer needing to account for the 9-1-1 excise fees that are paid directly to MorrowCounty. The amount for a police vehicle decreased from the $26,500 to $9,000 this year because a new vehicle is purchased every 3 years and $9,000 is one-third of the expected cost of a new vehicle.
The Vacation and Sick Leave Reserve reflects an increase of $7,500 to cover the potential liability of paying unused vacation and sick leave. The fund is considered to be fully funded and should be adequate to pay any vacation and/or sick leave liability, should it be necessary.
The Building Maintenance Fund was established to provide funding for routine maintenance of City Hall and other buildings. This fund reflects a slight increase due to an increased beginning net working capital and continued contributions from the General Fund, Water Operation and Development Fund and Sewer Operations & Development Fund. This fund will need to be built up over time as major repairs will eventually become necessary as the buildings age.
The State Street Fund reflects an increase of $29,000 due to a higher Small City Allotment Grant and an additional $5,000 transferred in from the General Fund. The budget includes $2,000,000 authority to allow for Local Improvement District (LID) projects which would allow neighborhoods desiring to improve the streets fronting their property the opportunity to pool resources to fund the improvements.
The Street Equipment Reserve Fund reflects a significant decrease due to lower working capital. The fund is provided to allow purchases of equipment for street work and capitol improvements. This fund may contribute to a shared purchase of equipment by the water and sewer reserve funds. The fund was drawn down to purchase a new backhoe.
The Bicycle and Foot Path Reserve Fund is where 1% of highway revenue received from the Oregon Department of Transportation is transferred to be used for bicycle or pedestrian improvements or maintenance. This fund is expected to grow slowly over time until these funds are used for capital improvements. The money accumulated here could be used for a match on a sidewalk or footpath project or to help with offsetting costs for an LID that included sidewalks.
The Parks Improvement Fund has increased substantially reflecting an application to Oregon Stake Parks for theIrrigonPeacePark. If the city receive the funding the city will have spending authority to put it to use. Another area of increase is in the System Development Charges Resources. This is due the SDC fees that have been assessed to the Oregon Trail RV Park being constructed.
The Water Operation and Development Fund reflects a $64,800 decrease from the previous year. This decrease is the result of lower than previously anticipated user fees, lower beginning working capital and reduced expected revenue from out of city surcharges. The expected requirements for this fund is reduced because the amount required to be transferred to a reserve for the replacement of undersized water lines and short lived assets is reduced. Included in the budget for this fund this year is a conversion to automated meter infrastructure and automatic billing services. All water meters would be equipped with radio telemetry systems to provide hourly reading of all water meters. Customers would have access to their accounts via smart phone technology. Meter reading can be performed from the office without sending someone to the location. The system would provide water users with more information and control of their water usage. I would also save on personnel costs in the future and will allow better use of existing personnel. The cost of the billing service would be shared with the Sewer Operation and Development Fund. The cost allocated to the Water Operation and Development fund for annual billing services is $21,500. The annual cost allocation the meter replacement and conversion to automated reading $38,500
The Water Connection Fees (SDC) Fund is used for System Development Charges (SDC) that is obtained when new services are installed. This fund shows a large increase do to the SDC Fees assessed on the new construction of the Oregon Trail RV Park.
The Water Reserve Fund is used to provide a cushion for expenses that would be considered outside normal operating maintenance. This fund is also where the water debt covenants requirements for small pipeline replacement and the replacement of short lived assets are accounted for.
The Water Equipment Reserve Fund is used to provide a mechanism where funds can be set aside for use in purchasing major capital assets such as a back hoe or dump truck. This fund may be used to purchase smaller equipment as well. It is essentially a savings account to build up funds for the replacement of equipment necessary to maintain the water system. Purchases from this fund may be shared with the street and sewer reserve funds. This fund was used in a shared purchase of a backhoe with Streets and Sewer in the 2012-2013 fiscal year.
The Water Debt Service has been divided into two separate funds; one fund for revenue bonds and the other funds for general obligation bonds. The Water Debt Service Fund for Revenue bonds accounts for incoming resources to be used for payment of principal and interest on revenue based bonds. The Water Debt Service for General Obligation Bonds is used to account for the incoming resources to be used for the payment of interest and principal on General Obligation Bonds. General Obligation Bonds may be paid by property tax. The amount of property tax needed to pay the city’s water bonds secured by property taxes is reduces from $81,000 to $78,317.
The Sewer Operation and Development Fund budget does reflect a large decrease due to the expected loan disbursements ceasing as the 2012 Septic Conversion Project is completed. The fund is in reasonably good shape with $236,600 in net working capital to start the year off.
The Sewer Connection Fees (SDC) Fund is used for System Development Charges (SDC) that is obtained when new services are installed. There has been an increase in building activity in the city but resolution no. 07-02 waived the SDCs applied to new construction on the new conventional sewer system. All of the new construction has taken place on the new system which is now more prevalent than it had been and therefore the revenue has not increased for this fund.
The Sewer Reserve is necessary to provide for emergency replacement and repairs to the sewer system. The city will need to access these funds when the city has major equipment or pump failures.
The Sewer Equipment Reserve Fund is used to provide a mechanism where funds can be set aside for use in purchasing major capital assets such as a back hoe or sewer truck. This fund may be used to purchase smaller equipment as well. It is essentially a savings account to build up funds for the replacement of equipment necessary to maintain the sewer system. Purchases from this fund may be shared with the street and sewer reserve funds. The fund was drawn upon this last year for the shared purchase of a backhoe as stated earlier.
The Sewer Debt Service has been divided into two separate funds; one fund for revenue bonds and the other funds for general obligation bonds. The Sewer Debt Service Fund for Revenue bonds accounts for incoming resources to be used for payment of principal and interest on revenue based bonds. The Sewer Debt Service for General Obligation Bonds is used to account for the incoming resources to be used for the payment of interest and principal on General Obligation Bonds. General Obligation Bonds may be paid by property tax. The property taxes needed to be levied to pay the bonds secured by property taxes are reduced from $93,000 to $58,500
The City ofIrrigon’s permanent governmental tax rate is $3.6782 per $1,000 assessed value. The voters approved general obligation bonds for water and sewer. This year it is proposed to continue with a modest tax on property to cover necessary payments on bonded sewer debt of $58,500. Since this tax can not be applied to sewer services provided outside the city limits, a surcharge of $6.42 is made on all sewer services outside the city limits. This year the general obligation property tax needed for the Water Debt Service is $78,317. As with the sewer service outside city limits, a surcharge of $10.88 be charged for water service provided outside city limits. The property tax levy for general obligation bonds debt service payments for the sewer system is $61,450 and general obligation bond tax levy for the water system is $82,266. The permanent tax base is expected to raise an estimated $167,500, allowing for uncollectible tax payments and for discounts for early payment.
Kathy Simonis stated that she appreciated the historical information in the budget message and felt that there were points that should be highlighted for thenew CityManager.
Joe Theisen stated that at several council meetings it had been advertised to the public that the city would reduce the property taxes levied to pay the general obligation bonds. City Manager Gerald Breazeale informed the budget committee that the proposed budget included a 21% reduction in the amount of property taxes levied to pay the bonds.
David Burns inquired into the System Development Charges received for the new construction of the Oregon RV Park and how the actual amount the city receives may be reduced. City Manager Gerald Breazeale explained that if the Oregon Trail RV Park were to install the water line that needs to be installed onThirteenth Street, that amount would be deducted from the amount assessed. The same would be for the Park System Development Charges. If they were to make approved improvements to the system, the amount of the improvements would be deducted from the total amount assessed.
David Burns also inquired into the $2,000,000 Local Improvement Districts (LID) and how citizens could use that, what would the process be? City Manager Gerald Breazeale explained that a property owner could get together with his/her neighbors and form an LID. The city would need to have the spending authority in the budget. Then the city would have to account for the intake of money and the cost of the project. That money could also be used as a match to get further funding, such as a grant from the state.
Joe Theisen inquired into the reason why the surcharge to users of city water/sewer services outside the city limits decreased. Finance Officer Amanda Slawson explained that the surcharge is for the portion of property taxes levied to property owners inside city limits to pay general obligation water and sewer bonds. The amount being levied for the 2013-2014 year has decreased from the prior year and as a result so will the surcharge to outside city limits users.
Finance Officer Amanda Slawson reviewed the General Fund, the Vacation and Sick Leave Reserve, The Utility Deposit Trust, Building Maintenance Reserve, the State Street Fund Resources, Water Operation and Development Resources, Water Reserve, Water Debt Service, Water General Obligation Debt Service, Sewer Operations and Development Resources, Sewer Reserve, Sewer Debt Service and Sewer General Obligation Debt Service.
The General Fund has a much higher projected beginning net working capital than the prior budget year. This is due to the Oregon Trail Library District’s contribution of $100,000 to the shared parking lot on the corner ofMain AvenueandDivision Street. It is difficult to estimate how much of the project will be completed in the 2013-2014 budget year, so to be conservative the budget projects that approximately $100,000 will be completed in the year. The resources from Sanitary Disposal Inc franchise fees are expected to increase due to the rate increase of approximately 11.5% that Sanitary Disposal, Inc. implemented January 1, 2013. The state is estimating that disbursements of cigarette tax to cities will decrease approximately 5%, while disbursements of liquor tax will increase approximately 3.3%. As of January 1, 2013 State Statue has changed how the 9-1-1 tax is disbursed. Now the 911 tax is distributed directly to the 9-1-1 jurisdiction instead of to the cities it serves. This means that the city will no longer need to account for the 9-1-1 tax disbursements to the county on the City ofIrrigon’s behalf and it is not included in this budget. The personnel services category has increased in the General Fund due to trying to allocate personnel expense to according to where employee hours are expected to be spent.
The Vacation and Sick Leave Reserve is essentially a savings for the payment of accrued leave that needs to be paid out to an employee, such as when employment is terminated. The budget for this fund show transfers in from the General Fund, Water Operation & Development Fund and the Sewer Operation and Development Fund allowing $101,500 to be paid in Vacation and Sick Leave if needed.
The Water Deposit Common Trust was created for the specified purpose of Utility Service Deposits. Since these deposits are neither revenue nor an expense to the city, they do not need to be included in the budget, but must be included in the budget documents until the 2016-2017 budget year.
The Building Maintenance estimated beginning working capital for the 2013-2014 budget year is an increase of $2,600 from the prior year’s estimate and is expected to grow with continued transfers in from the General Fund, Water Operation & Development Fund and the Sewer Operation and Development Fund with a potential of $19,100 being available for building maintenance and improvements.
Total projected State Street Resources have increased due to the Small City Allotment (SCA) Grant being increased from $25,000 to $50,000. The city has been approved to receive a $50,000 grant for sidewalks and lighting alongDivision Street.
Public Works Director Keith White reviewed the requirements for the State Street Fund, Street Equipment Reserve, Bicycle and Footpath Reserve, Park System Improvement Fund, Water Operation and Development requirements, Water Connection SDC Reserve, Water Equipment Reserve, Sewer Operation and Development Requirements Sewer Connection SDCs Reserve, and the Sewer Equipment Reserve.
The State Street Budget doesn’t have the resources available for paving or major repairs. Keith White strongly suggested equipment reserves be built up so that needed equipment can be purchased in the future, allowing more repairs done by city staff. Included in this budget is the transfer out of $7,000 to the Street Equipment Reserve. The Street Equipment reserve was used in the shared purchase of a backhoe that included the Water Equipment Reserve and the Sewer Equipment Reserve. The budgeted beginning balance is $12,100 less than the prior year due that purchase. The Bicycle and Foot Path Reserve consists of the 1% of highway revenues received from the state that must be used on the development bike and foot paths in the city. This fund is expected to increase continually until enough is accumulated to complete another project.
The Park System Improvement fund budget shows a large increase in the 2013-2014 Budget due to an Oregon State Parks Grant having been applied for in the approximate amount of $600,000 for theIrrigonPeacePark. If the grant were to be received, the city will have the authority to spend the money within the budget. Another increase in this fund’s budget is the increased SDC Fees. The expected increase is due to the new construction of the Oregon Trail RV Park.
Finance Officer Amanda Slawson reviewed the Resources for Water Operation and Development. Stating the beginning working capital is expected to be much less for the 2013-2014 fiscal year due to Water Sales being less than budgeted for in the current year. Even though city staff is expected to propose a 2% increase in water rates for the 2013-2014 fiscal year, the budgeted water sales is $10,000 less than the prior year’s budget. The resources coming in from surcharges on services to users outside city limits is expected to decrease because the amount of the property tax levied to pay general obligation bonds is expected to decrease.
Public Works Director Keith White explained that the Water Operation and Development fund shows a decrease in personnel services due to the reallocation of personnel expense with the different funds. The total for materials and services increased $18,000 which is mostly due to budgeting $21,500 for Global water services of water metering, Customer Service and Utility Billing. Total Capital Outlay increased $40,500 mostly due to the Automated Meter Infrastructure Lease Payment of $38,500. The amount being transferred out to other funds shows a dramatic decrease of $115,317. In the prior years budget $188,000 was budgeted to be transferred into the Water Reserve for undersized water line replacement, the replacement of short lived assets and for emergency repairs, this budgeted line item has $74,000 being transferred into Water Reserve for the 2013-2014 fiscal year. The reserve for Water Connection- System Development Charges in expected to receive at least $96,000 in SDC fees for the new construction of the Oregon Trail RV Park. These fees can be paid with approved in kind contributions.
Finance Officer Amanda Slawson explained that the debt covenants for the replacement of undersized water lines and short lived assets are accounted for in the Water Reserve. The amount for replacement of undersized water lines is smaller than the prior year because a portion of the money that has been set aside has been used for the replacement of undersized lines. The debt service funds for the Water system have total of $170,677 in debt service payments with $78,317 to be received in property taxes to balance the funds.
The Resources budgeted for Sewer Operation and Development started with a net working capital of $236,600 a much higher beginning balance than the prior year. This is mostly due to $117,000 not being transferred into the Sewer Reserve. The revenue from Sewer Sales is expected to increase approximately $100,000 if council approves the rate increases staff plans on recommending of 2% covering increased operating expenses and additional $8.69 for the bond payments that helped fund the 2012 Septic Conversion Project.
Public Works Director described the changes in the budgeted Sewer Operation and Development Requirements page, Personal Services increased $25,900, Materials and Services increased $13,000, Capital Outlay decreased $1,531,700, transfers out to other funds increased $196,600 and the amount available for an operating contingency decreased $6,900. Some Personnel expenses were reallocated to this fund resulting in an increase. The Global Water Customer Service and Utility Billing Fees in the amount of $15,000 were included in materials and Services while Office Supplies/Telephone/Postage/misc Utilities were decreased. The Septic Conversion is nearing completion resulting in less spending authority being needed in capital outlay. The Sewer Connection is not expecting much of an increase because SDC fees for new connections to the new sewer system are waived and most connections are on the new system.
Finance Officer Amanda Slawson stated that sewer reserve proposed budget authority is $112,200 less than the prior year. This is due to the debt service reserves required by debt covenants being accounted for in the corresponding debt service funds. The debt service funds for the Sewer System have total of $283,655 in debt service payments and with $58,500 to be received in property taxes to balance the funds.
Public Hearing on State Revenue Sharing
Ken Matlack opened the Public Hearing on State Revenue Sharing at 6:59.
State Revenue Sharing is a distribution from the Oregon Liquor Control Commission (OLCC) that is authorized under ORS 221.770. A public hearing must be held in front of the budget committee to receive comment on possible uses of the distributions. Another public hearing with the city council needs be held on possible uses of the distribution and then the city council must elect to receive the distribution by resolution or ordinance.
No comments were made.
Ken Matlack Closed the Public Hearing on State Revenue Sharing at 7:01
David Burns moved to accept the State Revenue Sharing. Michelle Hagen seconded the motion. Vote was taken: David Burns, yes; Kathy Simonis, yes; Joe Theisen, yes; Ken Matlack, yes; Michelle Hagen, yes and Sam Heath, yes. Motion passed unanimously.
Approval of Fiscal Year 2013-2014 Budget
Kathy Simonis made the motion to recommend the 2013-2014 budget as presented with the general tax levy of $3.6782 per $1,000 assessed value, a tax levy of $61,450 for Sewer General Obligation Bonds and a tax levy of $82,266 for Water General Obligation Bonds. Michelle Hagenseconded the motion. Vote was taken: David Burns, yes; Kathy Simonis, yes; Joe Theisen, yes; Ken Matlack, yes;Michelle Hagen, yes andSam Heath, yes. Motion passed by a unanimous vote.
Sam Heathmoved to adjourn the meeting, Kathy Simonis seconded the motion and it was passed by vote of David Burns, yes; Kathy Simonis, yes; Joe Theisen, yes; Ken Matlack, yes;Michelle Hagen, yes andSam Heath, yes.
Meeting was adjourned at 8:15 p.m.
Minutes prepared by: Amanda Slawson