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HomeMy WebLinkAbout12/09/2008 Special Council Meeting MinutesSPECIAL COUNCIL MEETING MINUTES 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 REGULAR MEETING CALL TO ORDER AND ROLL CALL All Council Members were present PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE APPROVAL OF AGENDA Motion by Council Member Post, second by Council Member McGorray. Passed unanimously 7-0. CALL TO THE PUBLIC 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. Introduction by Gilbert Davidson of the general financial challenges facing the country and all municipalities. He indicated that this challenge is an opportunity to move forward with solutions in a positive way by being responsible and conservative through budget savings where possible. Over the past year, management has been looking at all the budget factors to cut expenditures without reducing necessary services. All department directors have been revisiting their budgets recently to get an overall 15% aggregate reduction. He noted the rapid economic downturn being the reason for management to escalate the budget reductions at this time. He then mentioned that having the strategic plan in place will be a helpful tool to manage the future appropriately for the benefit of the town citizens. Erik Montague then presented financial information with preliminary results through October of 2008. He also discussed state revenue projections, ongoing reduction targets and the ability to maintain a structural balance. He then presented a chart on actual Arizona revenue growth from 1999 through 2008 as well as the forecast for 2009-2012. Next was a summary of the state economy which continues to deteriorate. Projections are a shortfall from $1.2 billion - $1.5 billion for FY 2009 and $2.2 billion to $3.0 billion for FY 2010. Unanticipated was the reduction in urban revenue sharing. The state has levered their budget based on projected capital gains. Of great concern will be adjustments to the budget of one-time or permanent changes to state-shared revenues. The next slide showed Marana's major revenue with the highest being transaction privilege taxes which are basically sales taxes, then state shared revenues and then development related revenues. Building permits are lowest they have been in years. TPT is roughly 60% of the town's revenues made up primarily of contracting and retail sales tax. He showed month by month comparisons. For example, in October contracting collections were up 5.8%. In the same month, retail collections were down 11.4%. Mr. Montague then presented a comparison slide of TPT from the period 2007- 08 and 2008-09. A little over $1 million less has been collected this year over last year. Originally, it was intended to have one-time costs funded from the reserve fund of about $6 million. The amount needs to be adjusted to keep the integrity of the. Department directors have been asked to make 15% reductions rather than the 5% and 10% reductions requested earlier in the year structural balance or structural integrity Reduction targets are based on the best available information, forces in the economy which are changing daily and changes to shared revenue. Based on the identified targets, and adjustment of $2 million needs to be made for ongoing general fund obligations and $1.2 million for one-time projects for a total of $3.2 million. One time adjustment of $1.6 million from the Transportation fund and $.5 million one time adjustments from the HURF (Highway User Revenue Fund) monies. Within the general fund for ongoing reductions, 14 positions that are vacant or have been vacant, savings to not fill those positions comes to about $.70 million; operating expenditures of $1.3 million. One time cost-savings of $1.2 million preliminarily identified are for delayed vehicle acquisitions, reduced Honea Heights sewer connections, delayed Continental Reserve ballpark lighting, reduction of the Heritage Park Planning supplemental process of $300,000 for outside professional services and miscellaneous reductions of about $150,000. From the Transportation Fund aone-time savings of $1.6 million including Honea Heights pavement, Moore Road improvements, Rivulet Drive, Ina Road design and miscellaneous reductions. A one-time reduction of $.5 million in the HURF fund. The department directors will make every effort to meet the overall objective of meeting the integrity of the service delivery while cutting costs. Mr. Davidson then asked Council if they had questions and elaborated more on his approach to recession proofing the local budget. Vice Mayor Kai asked about construction sales tax from Spectrum and Westcor -are there delayed? Yes, although Spectrum would not affect revenue projections for another 2-3 years. Those substantial retail areas are not be considered to offset deficits. Mr. Davidson noted that staff has worked very hard, referencing page 8 of 14 in their packets. He noted that he has been talking to employees about the financial situation, especially during the holiday season. He stressed how important it was for them to have full acknowledgement of the situation. The first three items on page 8 are key -health and safety, keeping basic programs and essential services going before opening up new programs, expenditure revenue alignment (structural balance issues), and revenue diversification and cost recovery. He then discussed the Phase 1 and Phase 2 Plan. On Phase 1, we will implement the general fund operating budget reductions (15% reductions) -- the implementation of one- time expenditure savings in other funds such as transportation and HURF. Phase 2 will begin immediately to work on that approach (vacancy management, service levels and delivery and cost recovery). Staff will come back in January or February with a solid proposal for Phase 2. Many of the reductions aren't going to solve 2009 issues but will be focused on 2010, 2011 and 2012. The Mayor asked if new revenue sources have been identified. Mr. Davidson responded that there maybe some such as bed tax, Council Member Post asked if the sales tax revenue would rise to the 11 % loss? Mr. Montague reflected that this was a seasonability factor and had been calculated into the projections, but noted that it was difficult to predict. Council Member Post hoped that days off rather than layoffs would help prevent people from losing their jobs. When the town cycles back we will need that institutional knowledge to get back on track. The Vice Mayor concurred with Mr. Davidson that there's a lot of talented staff to do more work in-house. It's up to senior staff to motivate employees. Mr. Davidson stressed the value of the human capital in the organization. The greatest challenge is making sure that all team members at all levels understand what is before us. There are disconnects between the varying levels of the town. It will be incumbent upon the financial team to make sure that the employees understand what is being faced and become part of the solution. This should help build a stronger team for the future. The Mayor commented on the bed tax issue. If we raised our bed tax by 6% we would still be competitive to other municipalities in the area. It could generate $400,000, and we could put off bringing on an economic development director for another year. Mr. Montague elaborated that it's maximizing revenues under the existing structure, but it is also important to review and evaluate service delivery regularly. The Mayor noted that the bed tax is a transient tax so it wouldn't tax citizens. Council Member Ziegler stated she was not in favor of a bed tax. She pointed to vacancy savings of 14 positions. She questioned the need for the positions including police officers. Mr. Davidson noted that this process started over a year ago to see where positions could be delayed or eliminated completely. As it related to the police department, it's important to maintain a level of officer ratio to the community or there will be other issues that will occur if policing is not maintained. Within the police department there are still vacancy savings or an adjustment approach can be implemented. Council Member Ziegler asked if there is a list of mission critical positions. Deb Thalasitis stated that they will begin working on this list Thursday and Friday. Previously, they were looking at position by position. She gave examples. The potential for moving people around to utilize skill sets is being reviewed. Council Member Ziegler suggested that it's better to manage to the worst. She also wants to keep talent within the town. Mr. Davidson suggested looking at the recession management strategy -and the three areas -health and safety, investment in infrastructure and improvements -don't want to see a decline, and thirdly, looking at existing citizen programs and services. It is important to have accessible offices so that citizens can contact staff regarding programs that are positive (critical services and programs). Council Member Clanagan suggested deferring discussion of new bed tax for the next budget process. Council Member Post congratulated staff for recognizing that there is a problem. There are many things that we can continue to do and should spend money on even if we have to borrow to bring more jobs to the community and economic development. The businesses that succeed and grow are going to do it now. There are many things to do now to protect our financial security but be prepared for when moving forward. Council Member McGorray concurred in keeping the talent we have as being critical to conducting business in the future. The Vice Mayor suggested that staff should take the lowest bid for future projects. By being construction manager at risk for our projects it could save dollars. Council Member Comerford noted that this could be a great opportunity to utilize our own resources to the maximum and be creative. Council Member Ziegler asked what other miscellaneous reductions are on page 9. Mr. Montague will provide that and will include travel and training and non-essential travel. Training within the local region will be encouraged. ANNOUNCEMENTS/UPDATES PROCLAMATIONS MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS Council Member Clanagan discussed the fatal collision on Cortaro Road and the gridlock that ensued. Council Member Comerford congratulated staff on the Christmas Tree lighting ceremony. MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS No reports. STAFF REPORTS GENERAL ORDER OF BUSINESS 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. Motion to proceed as directed in executive session by Council Member Comerford, second by Council Member McGorray. Passed 5-0 with Vice Mayor Kai and Council Member Post being excused 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 ITEM5 ADJOURNMENT Motion by Council Member Clanagan, second by Council Member Comerford Passed S-0. CERTIFICATION I hereby certify that the foregoing are the true and correct minutes of the Marana Town Council meeting held on December 9, 2008. I further certify that a quorum was present. ocelyn C ronson, Town Clerk ~~~~~141~/,~~I ,,yO,~~`O~°Mq,4~s ite`9 e : F~ ~ CDAoc~o T~ .. C `~ aEAL .r 4 ~O ,