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HomeMy WebLinkAbout03/27/2001 Study Session Minutes PLACE AND DATE Marana Town Hall, March 27, 2001 I. CALL TO ORDER By Mayor Bobby Sutton, Jr. at 5:34 p.m. II. PLEDGE OF ALLEGIANCE Led by Mayor Sutton III. ROLL CALL COUNCIL Bobby Sutton, Jr. Mayor Present Jim Blake Council Member Present Ora Mae Ham Council Member Present Ed Honea Council Member Present Herb Kai Council Member Excused Carol McGorray Council Member Present Roxanne Ziegler Council Member Excused STAFF Michael Hein Town Manager Michael Reuwsaat Assistant Town Manager Jocelyn Entz Town Clerk Roy Cuaron Finance Director The list of public attendees is attached. IV. APPROVAL OF AGENDA Upon motion by Council Member Ham, seconded by Council Member Blake, the agenda was unanimously approved. V. GENERAL ORDER OF BUSINESS A. Discussion - FY 2001-02 Budget Review (Roy Cuaron) Mayor Sutton began with an informal discussion of the budget process for Council Member McGorray's benefit and then asked Mr. Hein to recap the paradigm used in determining the sources of revenues and allocations included on the 2001-02 budget and fixed costs of debt service and insurance and fixed obligations. Mr. Hein talked about the capital improvements that are prioritized and funded through the discretionary funds based upon projections by the various departments. Mr. Cuaron started with the revenue budget comparison for the adopted 2000-01 budget versus what is being proposed. We are expecting a decrease of about 4%. Council Member Ham asked whether the new Wal-Mart would impact those numbers. Mr. Hein stated that the proposed Wal-Mart is not factored into the estimates for next fiscal year - the effect may be marginal as Wal-Mart would not open until the completion of the Cortaro Road improvements -- early first quarter 2002. Council Member Honea asked for clarification of hotel revenues - specifically regarding the new facility on Ina, which is fairly large. Are some of those things being factored in as well? Mr. Hein stated that budget versus projections, actuals compared to the budget, displays a 2.3% increase in retail sales activity which would capture the hotel industry. Overall, ifs a fairly stagnant economy even with the new hotels. Some of that may be based on the competition in the region - e.g. Wal-Mart in the Foothills Mall and Home Depot in Oro Valley. Mayor Sutton acknowledged that the Town has historically taken a conservative approach to the budget which helps the Town not overshoot. Council Member Blake added that room rates have decreased over the past two years which may be accounted for by the economy and by competition from other jurisdictions. Mr. Cuaron added that he felt the construction along the Frontage roads may have contributed to the lower than expected revenues from the hotel industry, and that construction will continue over a period of time of up to 18 months for transient lodging. Retail trade is the biggest component of our sales tax which is impacted by other jurisdictions. The other major component of the sales tax base is construction. The expected sales tax revenues was reduced by $2 million. The Council increased the sales tax rate to 4 percent and we took that and applied a 4 percent rate to that tax base and that's why you see the jump in the construction industry category. We are expecting a slow down in building permits. The forecast is for 50 a month and we are doing about 75 right now. The next category is state shared revenues. We estimated the population at 12,000 and we decreased per capita distribution by about $15 so the number you see there is Iow based on just what we just received as an official population base. We still don't know the per capita distribution but we can expect another $400,000 from what you see here. It was predicated on a per capita distribution of about $285 which is a decrease from our current per capita. We know we went to 13, 556 and only estimated 12,000. Permits, licenses and fees are again consistent with what we've seen and it is anticipated to decrease about 33% from the current year budget - assuming 50 permits issued per month and that's what we think is realistic. Court fines and forfeitures are showing a reduction in revenue as well. The Court's focus has shifted from sentence enforcement to customer service and has come in with a lower estimate in revenues. The only other big change is investment income. We may have been too conservative in this regard and should have taken a more realistic approach in regard to projecting interest earnings for the next fiscal year. On the surplus, the number is predicated on a $16 million fund balance. The next category is reimbursement of costs that we pay. On COPS, the reason that there is a reduction is our grant runs out and they were funding up to 75% and are now down to 25 percent, and that grant expires so the town will have to absorb that full cost. Mayor Sutton: do we reapply or is that done? Mr. Cuaron: We've had several extensions, but I'm not aware of further extensions. Mr. Hein: The program is still out there and we're at the tail end and don't anticipate receiving that type of funding for new officers. We've had several extensions Mr. Cuaron: The other big item is airport grants which I've combined with park grants. We are not anticipating a change in the number for water revenues. The PAG funding is for Cortaro Road or Silverbell Road and Ina Road. That offsets the CIP funding for those projects. We are anticipating about half of the impact fee income coming from the Continental Ranch area. We plugged in $7 million in bonds for water and water negotiations with Tucson Water. This does not include improvements districts. Mr. Hein. If Council sees that number change, it may be to increase the bond proceeds estimate to give us budget capacity to do bonds for private improvement districts in partnership with the Town, e.g. Tangerine Loop Road. 3 In terms of the total fiscal year income, we're expecting about a 15% increase and a large part of that is due to state shared revenues. In terms of what we need to carry forward for committed projects, we're intending to use $810,000 of transportation funds. Looking into next year we'll have a surplus of transportation fund proceeds because we haven't identified enough projects to use up the funding in that given year. We should have about a $1.2 million surplus in that fund at the end of next fiscal year if everything goes forward accordingly. The remaining proceeds of the 1997 bonds proceeds - about $900,000, and $4.6 of the 2000 bond series will be used for the design and construction of the new municipal complex. That leaves us about $5 million. Mr. Hein: Mr. Reuwsaat and ! expect by the end of May to have a public open house or a study session on the design report of the new town hall. ! think $4.6 is aggressive. I would expect us to get into design and complete design by next year and possibly start construction and maybe have one or two draws off of that. So the $4.6 will be for some construction. Mr. Cuaron: So the remaining item is the Council's commitment to using reserves. The council budgeted $5 million and we're carrying forward $2.5 million of reserves dedicated to park improvements that you'll see on the CIP process. Mr. Sutton:. Do we want or need to look at putting that back into spurring development up here? Mr. Hein: My recommendation will be to increase the bond proceeds to $15 million and leave the reserves. Mr. Cuaron concluded with a 121/2 percent increase in this year's budget. Mayor Sutton opened the discussion for questions from Council. Mr. Hein: We will move to fixed expenses on the last sheet in your packet. In the expenditure category if you look - there isn't much that isn't remarkable except employee benefits. Discussion ensued of the 25% increase in health care benefits. Mr. Hein's direction is to figure out how the lower paid wage earners would not receive a wage setback - what kind of benefit package could lead to breaking par or a little above par. There would be an increase in dependent coverage. He is recommending an increase from 50% to 66%, as well as a 3% COLA and an increase in the retirement rate. All numbers are cumulative in there. Market par for public sector varies, but 66% is not unreasonable. He would like to consider a cafeteria plan, but given the increase in the insurance rates this year, it would not be fruitful to have a discussion of that based on equity. The employee benefit package will cost about $350,000. Oro Valley and Casa Grande are at about 3%. Tucson is lower. Pima County is higher. Discussion followed as to whether the numbers would be equitable for all employees. The net increase for most employees would be about a 6.3% increase. And this is separate from merit opportunities. Council Member Honea: Last year we did big adjustment in the police force. Will other departments be brought up to at least county pay? Are there any proposed adjustments to bring those people in line with the county scale. Mr. Hein: There have been a lot of reclassifications and many of the new reclassifications and recommendations will bring the lower paid workers into a more equitable wage category. General discussion of wage disparity in jurisdictions followed. Turnover ratios are low which would indicate that most positions, with benefits, are commensurate with the market. But we will look at the positions where there are gaps. The employee survey reflected satisfaction at that level. Council Member Ham revisited the issue of public health coverage for a percentage of the town's workers. Again, this relates to a cafeteria style plan and equity. The issue is philosophical between the benefits for a single employee versus an employee with family coverage which promotes inequity. The question was posed as to whether there is a way to offset the rewards to an employee who costs less to the organization. The cafeteria plan is very attractive for many employees - but we need to ensure that it is appropriate for all employees. On the retirement issue, Mr. Cuaron explained that $160,000 is for an increase in the 401 plan. Currently the Town matches 4% and the recommendation is to raise that to 8% without requiring an increasing match from the employee. The police department doesn't participate in the 401 plan and the state this year says the employer has to match 10.02 percent for them. Council Member Blake spoke regarding insurance. The Town's cost or rate going up 26% is low. The fire district is, even though they are special districts, rose up to 47% or 49 % in one year. Amphi went up 99%. Council Member Ham was not sure what the increase was for the health center, nor was Council Member McGorray certain what the insurance was for the Marana School District. Mr. Hein then reviewed the new position recommendations. Mayor Sutton left the dais at 6:23 p.m. and Council Member Ham took the gavel. Mr. Hein: Expressed that even though we have taken a conservative look at the revenues, we still able to offer significant contributions in the fixed expenses with the employee benefits and are still able to deliver to Council a balanced budget while funding CIP with cash. The list attached shows the positions that are being recommended for approval by Council for departmental allocations. Discussion followed with regard to support for reclassifications and new positions. The majority of the position changes are in the planning, public works, police and parks and recreation departments. VI. ADJOURNMENT Upon motion by Council Member Blake and seconded by Council Member Honea, the Council voted unanimously to adjourn the meeting at 6:52 p.m. CERTIFICATION ! hereby certify that the foregoing are the true and correct minutes of the Marana Town Council study session held on March 27, 2001. I further certify that a quorum was present.