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HomeMy WebLinkAbout12/09/2008 Special Council Meeting Agenda Packet~~~~f- '~~ a,,,~ or A,,.~. SPECIAL COUNCIL MEETING NOTICE AND AGENDA 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, December 9, 2008, at or after 6:00 PM Ed Honea, Mayor Herb Kai, Vice Mayor Russell Clanagan, Council Member Patti Comerford, Council Member Carol McGorray, Council Member Jon Post, Council Member Roxanne Ziegler, Council Member ACTION MAY BE TAKEN BY THE COUNCIL ON ANY ITEM LISTED ON THIS AGENDA. Revisions to the agenda can occur up to 24 hours prior to the meeting. Revised agenda items appear in italics. As a courtesy to others, please turn off out in.silent_mode all pagers and cell phones. Meeting Times Welcome to this Marana Council meeting. Regular Council meetings are usually held the first and third Tuesday of each month at 7:00 p.m. at the Marana Town Hall, although the date or time may change, or Special Meetings. may be called at other times and/or places. Contact Town Hall or watch for posted agendas for other meetings. This agenda may be revised up to 24 hours prior to the meeting. In such a case a new agenda will be posted in place of this agenda. Speaking at Meetings If you are interested in speaking to the Council during Call to the Public, Public Hearings, or other agenda items, you must fill out a speaker card (located in the lobby outside the Council Chambers) and deliver it to the Town Clerk prior to the convening of the meeting. All persons attending the Council meeting, whether speaking to the Council or not, are expected to observe the Council Rules, as well as the rules of politeness, propriety, decorum and good conduct. Any person interfering with the meeting in any way, or acting rudely or loudly will be removed from the meeting and will not be allowed to return. Accessibility To better serve the citizens of Marana and others attending our meetings, the Council Chambers are wheelchair and handicapped accessible. Any person who, by reason of any disability, is in need of special services as a result of their disability, such as assistive listening devices, agenda materials printed in Braille or large print, a signer for the hearing impaired, etc., will be accommodated. Such special services are available upon prior request to the Town Clerk at least 10 working days prior to the Council meeting. Agendas Copies of the agenda are available the day of the meeting in the lobby outside the Council Chambers or online at u•~~~w,marana.com, by linking to the Town Clerk page under Agendas, Minutes and Ordinances. For questions about the Council meetings, special services or procedures, please contact the Town Clerk, at 382-1999, Monday through Friday from 8:00 a.m. to 5:00 p.m. Posted noSP ~i4d41c'~~Sr~~~y,°fS~'~~gfi~i~~S,~~~$of6~b0 PM, at the Marana Municipal Complex, the Marana Operations Center and at ww~•v._maranacc~~~. under Town Clerk, Agendas, Minutes and Ordinances. REGULAR MEETING CALL TO ORDER AND ROLL CALL PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE APPROVAL OF AGENDA CALL TO THE PUBLIC At this time any member of the public is allowed to address the Town Council on any issue not already on tonight's agenda.. The speaker may have up to three minutes to speak. Any persons wishing to address the Council must complete a speaker card located outside the Council Chambers and deliver it to the Town Clerk prior to the commencement of the meeting. Pursuant to the Arizona Open Meeting Law, at the conclusion of Call to the Public, individual members of the council may respond to criticism made by those who have addressed the Council, may ask staff to review the matter, or may ask that the matter be placed on a future agenda. PRESENTATIONS P 1: Presentation: Relating to an update on the Town's financial status through the first four quarters of the fiscal year, discussion and concurrence on recession strategies and overview of PHASE 1 budget reduction targets (Gilbert Davidson) ANNOUNCEMENTS/UPDATES PROCLAMATIONS MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS STAFF REPORTS GENERAL ORDER OF BUSINESS CONSENT AGENDA The Consent Agenda contains items requiring action by the Council which are generally routine items not requiring Council discussion. A single motion will approve all items on the Consent agenda, including any resolutions or ordinances. A Council Member may remove any issue from the Consent agenda, and that issue will be discussed and voted upon separately, immediately following the Consent agenda. COUNCIL ACTION BOARDS, COMMISSIONS AND COMMITTEES ITEMS FOR DISCUSSION/POSSIBLE ACTION EXECUTIVE SESSIONS E 1: Executive Session pursuant to A.R.S. §38-431.03 (A)(3), Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda. E 2: Executive session pursuant to A.R.S. § 38-431.03(A)(3) and (4) to discuss and consult with the Town's attorneys and receive legal advice concerning legal issues affecting the possible annexation of property at the southeast corner of Avra Valley Road and I-10 Special Council Meeting -December 9, 2008 -Page 2 of 14 E 3: Executive Session pursuant to A.R.S. § 38-431.03(A)(3),(4) and (7), discussion or consultation for legal advice with the Town's attorneys and discussion and to consider its position and instruct the Town Manager and staff concerning (1) the lawsuit entitled Town of Marana v. Pima County/Pima County v. Marana (consolidated), Maricopa County Superior Court No. CV2008-001131, (2) pending legal issues, settlement discussions and contract negotiations relating to the transition of Marana wastewater collection and treatment to the Town of Marana. E 4: Executive session pursuant to A.R.S. § 38-431.03(A)(4), discussion or consultation with the Town's attorneys to consider its position and instruct its attorneys regarding a November 14, 2008 claim filed by Cortaro-Marana Irrigation District and Cortaro Water Users' Association. FUTURE AGENDA ITEMS Notwithstanding the mayor's discretion of what items to place on the agenda, if three or more council members request an item to be placed on the agenda, it must be placed. upon the agenda for the second regular town council meeting after the date of the request (Marana Town Code, Title 2, Chapter 2-4, Section 2-4-2 B) ADJOURNMENT Special Council Meeting -December 9, 2008 -Page 3 of 14 ~~~~ 11555 W. CIVIC CENTER DRIVE, MARANA, ARIZONA 85653 COUNCIL CHAMBERS, December 9, 2008, 6:00:00 PM To: Mayor and Council From: Gilbert Davidson ,Town Manager Item P 0 Subject: Presentation: Relating to an update on the Town's financial status through the first four quarters of the f scal year, discussion and concurrence on recession strategies and overview of PHASE 1 budget reduction targets Discussion: This study session item will focus on an in-depth update to the Council regarding the Town's budget status in light of the unprecedented economic climate we are now facing. The presentation this evening will cover four main areas: Background -review some key assumptions about the current budget and the current economic crisis Financial Status -report on key indicators for the FY 2009 budget through October, 2008 Recession Management Strategies -recommend foundational recession management strategies to provide Council direction to staff for managing the FY 2009 budget and FY 2010 budget preparation Management Action Plan -identify PHASE 1 and PHASE 2 management action steps undertaken by the Town Manager to implement recession management strategies The attached memorandum provides detailed information on each of the above topics. A Power Point presentation during the study session will provide additional information. ATTACHMENTS: Nanje: Description: Type: D Budget_Recession Strategies 12- 9-C18.pdf R~ernorandum from Gilbert l~aviclson Cover A~emo Staff Recommendation: Concur with staff recommendations for Recession Management Strategies. Suggested Motion: Special Council Meeting -December 9, 2008 -Page 4 of 14 MEMORANDUM MANAGER'S OFFICE December 5, 2008 TO: Mayor Ed Honea, Vice-Mayor Herb Kai, Councilmember Russell Clanagan, Councilmember Patti Comerford; Councilmember Carol McGorray, Council Member Jon Post, Councilmember Roxanne Ziegler FM: Gilbert Davidson, Town Manager, RE: Recession Strategies and Phase I Budget Reductions The main purpose of the December 9, 2008 study session is to provide a more in-depth update to the Council regarding the Town of Marana's budget status in light of the unprecedented economic climate this community and communities across the country are now facing. The presentation this evening will cover four main areas: • Background -review some key assumptions about the current budget and the current economic crisis (Gilbert Davidson).. • Financial Status.- report on key indicators and revised projections for FY 2009 through October, 2008 (Erik Montague). • Recession Management Strategies - recommend foundational recession management strategies to provide Council direction to staff for managing the FY 2009 budget and FY 2010 budget preparation. (Gilbert Davidson) • Management Action Plan -identify phase one and phase two management action steps undertaken by the Town Manager to implement recession management strategies. (Gilbert Davidson, Deb' Thalasitis, Erik Montague). Background Up until last week, the "economic downturn" that we've watched and experienced was not officially declared a recession. That changed on December 1, 2008, when the National Bureau of Economic Research officially declared that the United States had been in a recession since December 2007. Following that announcement, the stock market tumbled 680 points as the nation became re-focused on the harsh realities of a recession. MEMORANDUM December 5, 2008 Page 2 When considering the worsening economy's impacts on the current year budget, several factors need to be considered. First, when the FY 2009 budget was preliminarily adopted by the Council in May of 2008 (with final adoption in June), the Town was facing a much different set of revenue and economic assumptions. This included a significantly lower forecast of state revenue shortages which were originally projected to be approximately $400 million and are now estimated to be somewhere between $1.2 to $1.5 billion for fiscal year 2008-09 and between $2.2 to $3.0 billion in fiscal year 2009-10, depending upon how the current year's shortfall is resolved. The failure of major financial institutions across the United States, which have hurt lending and credit in an unprecedented way had not yet occurred and more importantly were not anticipated based on the economic information available to the Town, or for that matter, available to any municipality. The impact of these failures on an already struggling Arizona real. estate market, coupled with challenges for the automobile industry, loss of jobs and the ultimate belt-tightening in consumer spending has produced a significant and unanticipated impact on the Town's revenues particularly in the area of Transaction Privilege Taxes (construction, sales, retail, and automobile license fees): Given the economic information available in the spring of 2008, the Town Council adopted a fiscally responsible budget that included modest expenditure increases, primarily in one-time dollars, and aggressively revised revenue expectations. This conservative approach allowed the Town to weather the initial challenges of the economic crisis during the first quarter of FY 2009 (July through October}. A second factor that must be considered is the speed at which revenues have declined, and the number and domino effect of the financial events that continue to occur outside of the Town's control, particularly during the last fiscal quarter. These events have made it difficult to predict trends and project revenues with a reasonable level of assurance. In addition, we now must anticipate and prepare for revenue reductions resulting from decisions by the State Legislature. For this reason, staff is recommending a set of strategies to the Council that would provide policy direction to the Town Manager to begin to focus on the next level of budget reductions that will be required. Council concurrence with these strategies is being sought this evening. Finally, because of the severity of the recession, most economists .agree that we have not seen the bottom yet and when the recovery occurs, it will not be quick. This is clearly evidenced by the additional projected State revenue shortfall for FY 2009-10. The Town's management of revenue shortfalls during the current fiscal year must prepare us for the decisions and choices that will need to be made for FY 2010 and beyond. While the focus of this update is on immediate expenditure savings for FY 2009 ("PHASE I"), the action plan lays the foundation for decisions about further reductions in FY 2009 and consideration of strategies for the FY 2010 budget. By necessity, reductions will include elimination of positions in FY 2010 that are being held vacant in FY 2009 along with an examination of town's ability to fully recover costs through fees and charges, opportunities for revenue diversification, and potential adjustments to service levels. MEMORANDUM December 5, 2008 Page 3 Financial Status The conservative revenue projections utilized in the development of the fiscal year 2008-09 budget have allowed the Town to reasonably weather the economic uncertainty to date. However, as described in the development of the current year budget, the Town's major revenue streams are very sensitive to changes in the economy. For example, transaction privilege taxes (TPT), state-shared revenues and development-related fees, which comprise 90 percent of the General Fund's operating revenues have deteriorated significantly over the past four months. Attachment "A" to this memorandum contains detailed year-to-date financial information that will be covered fully during the presentation on Tuesday, December 9, 2008. This information represents the updated revenue and expenditure information available through October, 2008. Expectations have been significantly modified since the financial report presented to the Council in September due to rapidly declining revenue collections. A quick summary of the key indicators included in this information show the following trends that must be addressed immediately: • Actual year-to-date revenues collected for FY 2009 (July-October) compared to actual year to date expenditures through October, 2008 show that actual expenditures exceeded. actual revenues by $1.6 million. • Actual tax revenues collected between July and October 2008 are $1.1 million lower or 12% less than actual revenues collected during the same period last year (July -October 2007). • Actual sales tax revenues for July -October 2008 are $1.2 million or 13 percent lower than the amount of sales tax revenues that were budgeted for that time period. • Revenues from other tax categories (State Sales Tax, Urban Revenue Sharing, Vehicle License Taxes, HURF, LTAF are down a combined 7 percent under the amount of revenue that was budgeted. Although revenues such as HURF are down 22 percent year-to-date. These trends represent'key indicators for revenues through October, 2008 only and do not necessarily apply to subsequent quarters. There is an expectation that revenue, although remaining fairly flat, will improve somewhat during the second quarter due to the holiday shopping season. Taking the quarterly revenue fluctuations into account along with the trend information from the first four months of the year, the following are immediate reduction targets: • $2.0 million dollars or 6 percent of ongoing budgeted expenditures in the General Fund • $1.2 million dollars in one-time expenditures in the General Fund • $1.6 million dollars in one-time expenditures in the Transportation Fund ~ $.5 million dollars in one-time expenditures in the HURF This represents a total of $5.3 million in ongoing and one-time reductions, which brings actual expenditures in-line with actual revenues collected. MEMORANDUM December 5, 2008 Page 4 PHASE I ofManagement's Action plan achieves these reductions. These reductions do not address further dips in revenue trends or changes in state-shared revenue sources. Additional reductions for these shortfalls will be addressed in PHASE II. FY 2009 Recession Manasement Strategies Staff is seeking Council concurrence with the following six strategies and policy objectives that will guide decision-making to limit expenditures and address revenue shortfalls in the FY 2009 budget and serve as a foundation for the FY 2010 budget. While these items are not necessarily listed in priority order, a significant focus will be on the first three items. • Health and Safety -Resources are directed to services and programs that maintain the health and safety of the community. • Existing Basic Services and Programs -Maintenance of existing basic services and programs outside of public health and safety are a priority over new services, programs or projects (either ongoing or one-time). • Mission-Critical and Key Strategic Objectives -Resources are directed to projects, programs and systems that support key strategic objectives and mission-critical initiatives (i.e. water). • Organizational Health -Ensure the stability of the town's workforce, by maintaining and fully using the talent that exists within the organization. • ExnenditurelRevenue alignment (Structural balanced -One time dollars are aligned with one- time expenditures; and conversely ongoing revenue sources are aligned with ongoing expenditures. • Revenue diversification/cost recovery -Resources are directed to initiatives or projects that result in revenue diversification and recovery. of costs. Management's Action Plan PHASE I -Implement immediately The following activities will be undertaken immediately by the Town Manager to address the current expected revenue shortfall in the FY 2009 budget.to achieve the target reduction of $2.0 million in ongoing and one-time expenditures. These reductions are achieved by delaying one- time projects and through efficiency measures. They do not impact basic services or the service levels provided to residents. MEMORANDUM December 5, 2008 Page 5 1. Implement general fund operating budget reductions -Immediately implement the operating {ongoing) budget reductions in the General Fund proposed by departments. These reductions align with the recession management strategies regarding maintenance of programs and services. Savings in the general fund will be achieved as follows: Vacancy Savings: Operating Line Items: Total Ongoing Savings: $0.7 million in potential ongoing savings $1.3 million. {annualized) $2.0 million (annualized) Vacancy savings are based on 14 positions not filled at all during FY 2009 and four positions that are projected to be filled for only part of the fiscal year. Savings in operating line items include reductions to travel and training, professional and consultant fees, subscriptions and publications, small tools and equipment, office supplies, printing and reproduction, software products, furniture and fixtures, etc. 2. Implement general fund one-time expenditure savings -Immediately delay operating capital expenditures and one-time projects where existing basic services or service levels are not changed. • Delayed vehicle acquisitions $.50 million • Reduced Honea Heights sewer connections $.20 million • Delayed Continental Reserve Ballfield Lighting $.18 million • Reduced Heritage Park Planning Services $.17 million • Other Miscellaneous Reductions $.15 million Total One-time Reductions $1.2 million 3. Implement one-time expenditure savings in other funds -Staff is finalizing a list of projects that will be delayed to achieve the following reduction targets: • Transportation Fund - $1.6 million • HURF - $.5 million PHASE II (anticipated report to Council, February, 2009) 1. Vacancy Management - In addition to the vacant positions that are producing the current vacancy savings included in the operating budget reductions noted in PHASE I, the Town Manager will use the recession strategies to manage new vacancies as follows: a. Evaluate all remaining budgeted positions to determine which positions might not be filled if they should be come vacant. Criteria for filling positions will be based on recession management strategies (mission-critical, health and safety, maintenance of current services). MEMORANDUM December 5, 2008 Page 6 b. Assess the remaining vacancies not included in the operating budget reductions noted in number one (above) to determine if they should be filled using the recession strategies. c. If it is determined that a vacancy will be filled, identify "in-house talent," i.e. existing employees, wherever possible•to fill the vacancy, preferably selecting an employee from a position that is not expected to be filled if it shauld become vacant. 2. Service Levels and Service Delivery - Undertake a comprehensive review of services to identify where service levels can be adjusted to further maximize resources and maintain basic services. Additionally, review options that cut across department lines to continue service delivery with the same or fewer resources. This review will include opportunities to collaborate, consolidate and/or reorganize work efforts internally. Finally an examination of service delivery options and service levels will be undertaken in preparation for the possibility of additional reductions during FY 2009 and for FY 2010 budget planning. Staff anticipates discussing potential further reductions for the FY 2009 budget with the Council in early February. The Town and the Council will need to be prepared to fully articulate the service-level implications once the inevitable. state revenue reductions are known as legislators grapple with the state's revenue shortfall during upcoming legislative session. 3. Revenue Diversification/Cost Recovery - While needing to be sensitive to cost increases during these difficult economic times, there nonetheless may be opportunities for revenue diversification that would have minimal impact to residents while increasing revenue opportunities. Staff resources will be used to evaluate these opportunities as they occur. In addition, staff will be reviewing fees and charges for consistency and cost-recovery in preparation for the FY 2010 budget. The PHASE I reduction targets outlined in this memorandum do not impact services, service levels or town employment for current staff. The looming state budget crisis, with unknown revenue impacts, along with an economy that continues to spiral downward will likely force additional reductions during FY 2009 and most certainly in the proposed FY 2010 budget. In addition, reliance on reserves for a small portion of ongoing costs in the FY 2009 budget will have to be addressed since the anticipated recovery to offset the reserve expenditure will not occur as quickly as originally anticipated. Staff will continue to monitor actual expenditures compared to actual revenues and report this information regularly to the Council, and immediately as new developments occur. In addition, I will be meeting with Town employees to make sure the organization understands the impacts of this unprecedented. economic situation. The choices from here on will be difficult ones for management staff and the Council. While the priority will be to retain basic services and jobs, the level at which those services are provided and options for preserving jobs, including employee furlough, will need to be considered. Clearly, any additional, new or non-basic programs and services will need to be carefully scrutinized in light of the revenues that are available. Finally, the mission critical initiatives that have been identified through the strategic planning process will continue to serve as a focal point for directing resources during these MEMORANDUM December 5, 2008 Page 7 difficult economic times to ensure the future health and growth of the Town. Based on our discussions to date, we must continue to direct our efforts on the key priorities of securing water resources and infrastructure, and planning for future economic development. Please contact me, Deb Thalasitis or Erik Montague if you have any questions. c: General Managers Department Directors Town Manager's Office MEMORANDUM December 5, 2008 Page 8 ATTACHMENT "A" Town of Marana FY 2008-09 Revenues Budget to Actual through October 2008 July -October TPT Category Budget" Actual $ Variance °k Variance Mining 4,283 ~ 2,266.98 (2,016.02) -47°k Construction ~ 3,648,882 2,939,601.30 (709,280.70) -19% Manufacturing 56,554 49,493.47 (7,060.53) -12°~ Transportation, Communications, Utilities 922;671 951,304.35 .28,633.35 3°k Wholesale Trade 156,249 181;922.05 25,673.05 16% Retail Trade 3,329,033 2,862,432.78 {466,600.22) -14% Restaurant & Bars 502,209. 451,306.14 (50,902.86) -10% Fire, Insurance & Real Estate 354,310 333,664.33 {20,645.67) -6% Hotels & Other Lodging 215,108 135,871.49 {79,236.51) -37°k Services 255,291 312,601.04 57,310.04 22% AllOtiierS 30,539 41,864.56 11,325.56 37% Total ~ 9,475,129 8,262,328.49 (1,212,800.51) -13% . . Ju1v -October Revenue Category Budget" Actual $ Variance % Variance State Sales Tax 832,273 74$298.37 (83,974.63) -10°f° Urban Revenue Sharing 1,329,910 1,323,888.91 (6,021.09) 0% Vehcile License Taxes 399,093 399,439.16 346.16 0% Highway User Revenue Fund 770,503 602,218.92 (168,284.08) -22% Local Transportation Assistance Fund 62,819 70,573.98 7,754.98 12% 3,394,598 3,144,419 (250,178.66) -7% July -October Revenue Category Budget' Actual ~ $ Variance °k Variance Licenses, permits and fees 1,065,468 763,863.82 (301,604.18) -28% * Amount reflects 1/3 of ~e annual budget Town of Marana Transaction Privilege Tax Revenues (All Sources] Comparison of collections through October 2008 to October 2007 July -October Tax Category 2007-08 2008-09 $ Variance °~ Variance Mining 8,255.00 2,266.98 {5,988A2) -73% Construction 3,670,639.40 .2,939,601.30 (731,038.10) -2tl°k .Manufacturing 56,794.07 49,493.47 (7,300:60) -13°k Transportation, Communications, Utilities- 928,790.11 951,304.35 22,514.24 2°k Wholesale Trade 180,862.71 181,922.05 1,059.34 1% Retail Trade 3,226,849.14 2,862,432.78 ~ (364,416.36) -11% Restaurant & Bars 426,255.63 451,306.14 25,050.51. 6% Fire, Insurance & Reai Estate 413,304.22 333,664.33 (79,639.89) -19°~ Hotels & Other Lodging 158,250.25 135,871:49 (22,378.76) -14°~ Services ~ 336,739.14 312,601.04 (24,138.10) -7% All Others -1,843.73 41,864.56 43,708.29 2371% Total 9,404,895.94 8,262,328.49 {1,142,567.45) -12% Monthly Average 2,351,223.99 2,065,582.12 (285,641.87) -12°~