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HomeMy WebLinkAbout03/31/1998 Study Session MinutesIi. IIJ. IV. PLACE AND DATE Marana Police Department, March 31, 1998 CALL TO ORDER By Mayor Ora Harn at 6:12 P.M. PLEDGE OF ALLEGIANCE Led by Mayor Ora Harn ROLL CALL COUNCIL Ora Harn Bobby Sutton, Jr. Ed Honea Herb Kal Sherry Millner Michael Reuwsaat Roxanne Ziegler Mayor Vice Mayor, excused Council Member Council Member Council Member Council Member Council Member STAFF Hurvie Davis Michael Hain Jocelyn Entz Sandy Groseclose Jane Johnson Roy Cuaron Town Manager Assistant Town Manager Asst. to Town Manager Town Clerk Human Resources Director Finance Director APPROVAL OF AGENDA A motion was made by Mike Reuwsaat, seconded by Sherry Millner, to approve the agenda, as written. The motion carried 6/0. GENERAL ORDER OF BUSINESS A. Discussion and Review of Fiscal Year 1998-99 Bud_oet Mayor Harn: I was very pleased last time about the time I got home. I hope you gentlemen can do the same thing tonight. Hurvie Davis: As we indicated at the last meeting, this is step two. Mike and Roy are basicalJy running this process with my input from time to time. Since our last meeting there has been a lot of work put into the information we will present to you. I want to compliment Roy and Mike for working very hard on this, and at times I might even categorize it as struggling when the numbers did not quite balance. I think they have worked very hard on it and they have done an excallent job. So, I will turn it over to Mike. Roy will be doing most of the show this evening. Mike Hein: As Hurvie said, we did struggle a little bit. As we explain the process to you, it is going to be a little difficult the first year because we are not always comparing apples to apples. Roy and I found that out the hard way, but after several games of basketball yesterday evening we got back to work and our minds were clear and we figured it all out. As you can see on the spreadsheets, 5:07PM today is when we figured it all out. To go over the process again, instead of starting with departments asking for their wish list and then us having to cut down to match the resources, we are inverting the process. We started with revenues and went through, line item by line item, where all of the revenues are derived to run the engine, if you will. We went through that and Council expressed some concern about the conservative nature of our estimates. Roy has revised those. The next step, and what we are trying to achieve tonight, is to get everyone to agree on fixed expenses. Again, once you have your revenues, we are going to take the fixed expenses out, along with all of the grants and special revenues. That is going to reave you a net number and that is what you really have as far as discretionary income, if you will, to program out. Let's start with having Roy explain how we adjusted the revenues from the last time we met. Roy Cuaron: In response to the Council's concern that maybe some of the numbers were too conservative, we went back and revisited it. We adjusted the "Sales Tax" and the "Building and Development Fees." Within the "Sales Tax" we looked at the construction industry and adjusted that upward. We adjusted the "Transportation, Communications and Utilities" industry and "Retail Trade" into a lesser expense, as well as the "Restaurants & Bars" industry group. All within historical trends but not as conservative as last time. Perhaps I was a little too cautious but I think the new revenue numbers reflect more likely what will happen. Again, it is probably not consistent with the rural trend of the past but that is to be cautious, as well. The net result of that was that the "Sales Tax" increased $520,000 and "Building and Development Fees" increased $192,000. This gives us just under $800,000 in additional "Sales Tax" revenues. That was distributed to you, I believe in your packet on Friday. If anybody needs a revised "Sales Tax" estimate to show the industry groups, let me know and I will pass them out. Also, you should be referring to the worksheet titled Fixed Expenses FY1998-99. We just passed this out and it is dated today, hot off the press. So, it is the latest information we have. Mike Hein: We apologize again for the late information, I don't like getting information in front of you at a meeting so hopefully we can explain it clearly enough. The reason being, when we went through the numbers, we double counted something. We omitted some things that were kind of tucked away. Given the Council's clear direction to not use reserve funds, we had to make sure we were talking apples and apples and covered all of the expenses. Lets start with Fixed Expenses. FY1998-99, which is the top spreadsheet that was handed out to you. Fixed Expenses, again, are those things that are inflexible and we are obligated to pay. For "Insurance," which is pretty standard, you see an increase of $58,000. I assume that is because Roy is conservatively budgeting for that expense. We probably expect a little bit of an increase as we acquire more assets and we get more invoJved. I haven't seen how we have been performing to date, if we have had any issues with insurance companies. Roy Cuaron: We have had increases every year, particularly as we grow and particularly in our police department. As we acquire newer assets that cost more that also raises our insurance. I am not so sure that this is in line with the previous increases we have had, it is something that I feel comfortable in suggesting that we budget for. Mike Hein: When is the renewal date? Roy Cuaron: It runs from December to December. Mike Hein: "Debt Service" is probably the most significant singular increase. Again, that is a result of the recent bonds and it goes up about $600,000. That is a fixed expense. "Lease Costs - Existing" is rent. Mike Reuwsaat: When you are looking at "Debt Service," all of the bonds have been sold so we are looking at principal and interest. Have you figured any arbitrage in there? (no) Will that mat out any of that $850,000. Roy Cuaron: That $850,000 is per the bond debt schedule. Basically, it goes back into the interest reserve fund within the trustee and we really won't see that until the end. I suppose we could ask for the interest earned on that, but it will just go back into the fund. Mike Hein: Arbitrage - we are not going to see any of it because of the newer laws, over the last twenty years. The interest goes into a trust fund so we don't see that. "Lease Costs - Existing" Js for rental space, the Development Center, the Annex, this building and $75,000 is really right where it is at. "Lease Costs - New" is an arbitrary number Roy and I put in there. There has been several discussions about where are we going to put ali of the people we have currently on staff. The Development Center is stressed for space, the Administration is stressed for space. We do not have a recommendation yet from the committee, or from anybody, whether the answer is to go out and look at existing rental spaces within our community. Roy and the committee have been doing an excellent job of going out and looking at existing rental spaces, everything from the old Bank One building to house the Building Department to stores in the Michael's Plaza to house the Courts. They are really looking at all alternatives in addition to a couple of modular buildings. So, we put a $100,000 in there for "Lease Costs - New." That doesn't mean we intend to spend it but, again foreseeing that as a possibility, we put that in there. For example, to throw something out, when they looked at the idea of putting in two additional modular buildings, one next to the Development Center and one next to the existing Town Hall, to accommodate some of the growth, we were looking at $600,000 or $700,000. We did not feel that was a good alternative to propose to the Council, Given that we are talking about a new Town Facility in the future, we weren't sure it would be prudent to sink that much money into those kinds of assets. The $100,000 is an arbitrary number but both Roy and I feel it is a 3 good number based on some of the quotes we have been getting for existing lease space. Mike Reuwsaat: What did we put into the bond? Roy Cuaron: $290,000 for modular buildings and $200,000 for land acquisition. Mike Hein: Part of the problem with comparing apples and apples when we get to the operating is a lot of these costs were hidden in each of the department's budgets. For example, "Building Maintenance" was in Public Works but we couldn't leave that to the discretion of the department head because those are costs that have to be shared by all of the departments. For "Building Maintenance" we budgeted $55,000. If we are going to put in a new divider or lobby at the Town Hall, or do some other things that come out of this line item, we are prepared for that. "Refuse" is for disposal services, those fees are going up. For "Utilities" Roy budgeted a 10% increase based on potential fete increases, as well as consumption. The $62,760 from "Adopted FY97-98" totals the actual amount of the "Telephone" line item from each department. We took "Telephone" out of each department's budget and put $50,000 into this year under fixed. The reason being, the fixed cost is really the telephone service and the monthly fees. We are going to ask each department to budget cellular, long distance, etc. and we may have to adjust that but we want to make sure we accommodate enough money to pay for the basic fees and services. Roy Cuaron: It was hard to extract from the budget, of the $62,760, how much was long distance and how much was cellular. So, we just pulled the entire amount out. Mike Hein: These next two items I would like to spend a little time on, that is why I asked Jane to be here. She did not expect to be here tonight so I appreciate her staying. She can explain the next two items because I am not familiar with how the Town has done it in the past and for explanation. The first one is ~Salary Plan Adjustment." In the past the Town has adjusted salades and hasn't called it a cost of living adjustment per say, but called it a market adjustment. Last year it was 2.5%, based on a survey that Jane performed looking at neighboring jurisdictions and what the market had yielded. This number, $120,000, represents 3%. That is a maximum, we don't expect it to be 3% but for the purposes of budgeting we put it Jn there. What I want is for Jane to further explain that process, if I messed up, and get direction from you on whether or not to put in now. Obviously, if you put it in under fixed expense, everyone starts talking about, "Hey, we are going to see a market adjustment." You would have to finally vote on the exact percent and we would have that by budget time, Jane Johnson: I have called the different jurisdictions and some public sector entities, like Pima College, that are not part of the governmental process, to see what people are doing. This is what I have done in the past, also, and it looks like at this point 2%-2.5% is going to be the market. Ore 4 Valley is going to be doing 2%, Pima County is going to be doing 2.5% or 30¢, which ever is greater, South Tucson is not doing anything and they did not do anything last year and Tucson did not do anything last year and is still looking at what they are going to do this year. Mike Hein: Nothing obligates the Council, there is nothing contractually which would indicate to employees they are getting a raise or deserve an adjustment but in the past it was done on a market study so we put 3% on there. It is up to you guys. Roxanne Ziegler: If we wanted to do 4%, we could. Mike Hein: Sure, you could do 20% or 0%. Jane Johnson: I have looked at, from the League materials, 37 communities that are from 5,000 to 50,000 population because that is where we range. Last year thirteen of the jurisdictions did not do anything, out of the 37, and five of them did as much as 5%. So, it ranged in between those amounts, just to give you a ball park of what everybody else did last year. We did 2.5%. Mike Hein: If you would like we can make a recommendation once we have completed all of the study, or we can get direction tonight, or we can budget this and you can review it anytime you want. Roxanne Ziegler: Did you go outside the market study? These are raises for employees that work here in Marana. I guess I am thinking along the lines of keeping good people in the Town. A lot of people in the Town are employees, fortunately, but I know we have had trouble with a few people. Is it because we are not paying enough? I am not talking about the Public Works guy we fired, I am just talking about our regular guys out there working. Jane Johnson: We have really two pieces. We have the salary base amount, which everybody gets, and then on top of that they get from 1%-7% for merit increase, basically a COLA. Roxanne Ziegler: So, besides their COLA once a year, they'll also get from O%-7%. Mike Hein: There is nothing that entitles them to a cost of living adjustment. They are entitled, via the manual, to get between the 0%-7% on their anniversary date. Let me go to the next one because they are enveloped together. Herb Kal: Many years ago we really underpaid a lot of our staff. We have made some big jumps. It is not necessary that we still have to do it but we hope we are up to this level and that we are competitive. So, it is not a necessary matter, it is just something the Council needs to think about. 5 Mike Hein: The reason I want to talk about employee benefits is that it gets back to Roxanne's comment about what makes us attractive to other potential employees. The $50,000 that we are budgeting for employee benefits represents an increase in the dependent care coverage. Right now, we pay 0% for dependents, which is really below market. I don't think an argument can be made that that is par. This would increase dependent coverage to 50%, for what I consider not to be a lot, it is only $50,000. Hurvie can attest that when I was coming here I remarked upon the dependent coverage, insurance. Roxanne Ziegler: So, this will bring it up to where they will cover 50% of your children's care? Mike Hein: Jane has done a little comparative analysis on this, as well, with other jurisdictions and she can talk about what it means dollar wise to an employee with benefits. Jane Johnson: We are in the process of looking at the insurance rates. We have been told by Health Partners that if we keep what we have now, we can expect a 3% increase. There are some options that we can do to keep it down, and even dropping it below where we are now. We are in the process of doing all of that. If we were to take the amounts that we have right now, per pay period an employee plus one person pays $63.96 (per pay period). If it is for the full family, employee plus however many, it is $116.29 per pay period. If we were to pick up 50%, at the employee plus one, that would translate to the employee paying about $32.00 per pay period. For the family, it would be $58.00 per pay period. Right now what is happening, we have a single parent at the lower end of the pay scale and they can not afford $64.00 per pay period. What they are doing is going out and buying individual policies on their children, up to about twelve years old because then they don't gain anything with individual policies. But from a year old to twelve years old, they can go out and buy an individual policy with practically any of the carriers for what we would pick up as half. There are some down sides to them doing that, but when it comes down to the actual dollar amount, it makes more sense to them. I have to admit, I have been encouraging them to do this, rather than go with our coverage. We looked at this in the Town. Tucson pays 100% of their lowest plan and 85% of their dependent coverage. Pima County pays 62% of their dependent coverage. Oro Valley pays 50%. South Tucson doesn't pay them, but we don't really compete with South Tucson and we do compete with these others. I know we lost one good person for a position in the Public Works area at Parks and Rec. once that person looked at what their cost would be for their dependent coverage and they could not leave the City of Tucson. Right now we are planning on 50%. Part of the problem is we don't know if $50,000 is accurate. I think that is way over, it is very conservative and I think much more than we will really need. I don't know how many people, at this point, who will drop their individual plans once they get the opportunity and take advantage of this. Until we actually have an open enrollment with this opportunity for these people to come in at a better price than what we are offering right now, we don't have any accurate numbers. MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 Ed Honea: I think we should do it. I would be interested in even putting it on a three year schedule to pump it up even higher than that. As a self employed person, as a lot of us here are, I have forked out thousands of dollars a year just for my wife and I for insurance. A lot of employees would take a lesser pay if they thought they were going to get a 100% coverage for a family, or 100% for them and 60% or 70% for dependents. If we did 50% this year, we might look at going to 60% next year. Roxanne Ziegler: The money that is paying for this coverage, where is it coming from? Roy Cuaron: The dependent coverage. Roxanne Ziegler: How are we going to pay for that. Mayor Harn: I almost think that when we are talking about a raise like COLA, where you raise someone's pay $20 a pay period, or something, we might be better off talking about the benefit. It is more money in the pocket of the employee than to get a 2% raise in your paycheck. Ed Honea: The thing is, with COLA, we have a lot of single employees. It is not fair to say John and Joe do the same job and Joe gets an extra $200 a month worth of medical benefits because he has three or four children and John doesn't get any COLA or anything because he is a single guy. Basically, it says we will pay you more if you are married with three kids than if you are single, to do the same job. Mike Reuwsaat: I am willing to support 50% right now. Another flip side to the single, remember when you start adding $100 or $116 to another employee through group benefit for family, that single employee doesn't get that raise, in effect, that the person with the family life gets it. I think that, from history, we will see a lot of people come in on the coverage and we will probably loose employees at Kelly Green Trees because we have exactly the same plan you do. Do we have our own pool or are we pooled with other Municipalities or other major employees? Jane Johnson: There is no pool. Roy Cuaron: You hear year in and year out about health care rising. Our premiums, over the last three or four years, have gone up an average of 3% or 4%, which is pretty remarkable when you consider the rising cost of health care. Part of that was because three or four years ago we were not getting those attractive rates because we were only 50 employees and we have gone up to 125 employees so we have a little bit more leverage. They have actually maintained their prices pretty well below the market, I think. Roxanne Ziegler: We have this incredible budget going here and we are being very conservative. I know several years ago the Town didn't have it, but now the Town is being conservative and if we are going to put any money 7 MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 anywhere I really don't think it is fair to hold the budget at $22,000,000 and have employees paying for something like this. It seems like that is their money, we pay taxes, and if we are going to put money somewhere it ought to be in the care of the children and the spouses of the people who work in this town. As a tax payer and living in Marana, that is crap. I cannot believe it. I am not blaming anyone here, but health care is just ugh. Ed Honea: If we go to 50%, it will make it affordable, though. Then you are looking at $32.00 a pay day, not a hundred and something. Roxanne Ziegler: I am talking more than 50%. Ed Honea: The only thing is Roxanne, I bet you a third of our employees are single. Basically what you are going to do is give all of our married employees a $150 or $200 a month raise and the single people aren't going to get squat. You have to have some parity there. Roxanne Ziegler: I was single with a child and I was thankful for what I had. Now, I am single without a child and it doesn't bother me because I would rather see the children have that coverage. I can't believe that. I don't know how equitable that would be but they have got to be covered. Mayor Harn: I think we have given them some feeling for where we are so lets go on with the process. Mike Hein: I wanted to point out the interrelationship because if we come back and recommend a more modest COLA, we will make sure that people will recognize the benefit side of it, as well. Jane will conduct her market survey. Mayor Harn: Have we ever talked about a benefit package? Where my son used to work, there was so much attitude that they had a benefit package of so many dollars and then they decided what they wanted to do with their dollars in that package. If they wanted to take health care, they took health care. If they wanted a raise, they did that. That may be something we need to talk about in the future, if we have lots of single people. Ed Honea: Like a CAFETERIA Plan, that would be more equitable for single people. That way they could take that extra $100 and put into retirement or something like that. At least they would not be getting $200 less per month than the person right next to them doing the same job. Mike Hein: We appreciate your input and we will get back to you on what we are going to do in the final. Mayor Harn: If we are going to do something like that, we might even consider this 1%, or whatever we are talking about as COLA, for this program instead of COLA. I think people get more out of benefits because you don't pay the taxes on benefits. If you get a raise in your check, you MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 don't get half a good raise because by the time you pay the taxes on that, it is not much. Jane Johnson: Roxanne, we are really are very competitive with our salaries, even with Pima County. We will never be able to match the City of Tucson, but we really are competitive in a lot of ways and the trade offs people see when they consider coming to Marana, lifestyle benefits out weigh what is going on with Tucson, except the fact that they get such big support with their benefits package. We are not losing people like we were. We have a very Iow turn over rate. Mike Hein: The next item, "Fire Service," as you are well aware, represents the contract with Northwest Fire District. The $50,000 for proposed 98-99 is really a carry over from the previous contract. In the contract, apparently there was a provision where the Town paid a differential of wages for personnel hired in this area for the last fiscal year. Roy Cuaron: The current ICA we have with Northwest Fire allows them to pass on to us any increases in their benefit plans to their employees for the fiscal year. What we have done, knowing that the ICA is going to terminate and they are still going to bill us for retroactive pay adjustments they have given their employees during the contract period that will end in June. That is through the ICA. As you recall, when we first started to enter the ICA it was 435 and the difference between the 462 and the 435 represented the COLA increases that their employees were awarded. Northwest Fire originally wanted us to pay for that in advance and I said, "1 would really rather not do that, you can bill me after the fact." We are budgeting in the amount to allow that to happen in the next fiscal year, when they will know what the true cost was. Mike Hein: This should be the last year that you will see a fire service contract. We are all aware of the new "Transit Service," there was $77,000 budgeted for this year and it wasn't a full year. I will be honest, the $150,000 is an estimate, conservative estimate. If the Council wishes to expand the service, we are sure to see some increased cost. Mike Reuwsaat: We spent a lot of contingency fund for transit service, so what you are saying is that we will be going to contingency here for expansion. Roy Cuaron: If the Council wants to expand the service beyond what is budgeted, it should give us direction to do so. This $150,000 represents the current IGA with Pima County for two routes, rural transit and Sun Tran, as well as an anticipated full year of the newer rural transit that commenced operation just recently. Mayor Harn: I would say to wait on any expansion for awhile because we need to get what we have working well before we add something to it. If we can keep the transit consistent so people feel they can depend on it for a year then I think we might be able to really get it going well. I would feel MIN~ES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCtI 31, 1998 reluctant to start to increase something and get it to an unmanageable cost before we really get the basic service off the ground. Mike Hein: "Airport Expenses" is an arbitrary number, we had $100,000 in potential "Airport Revenue" and we put $200,000 in "Airport Expenses." Obviously, we don't expect, while I have some meetings this week, any deal to be forth coming. Roy is going to the airport tomorrow and will get introduced to their finance people so he can start examining their books. It will be a slow process and we may see expenses before we see revenue, as well. We will be coming to the Council for direction. Mike Reuwsaat: With budget going on, I want it to be slow enough that Roy is not overwhelmed. Mike Hein: We appreciate that and it is not a primary focus but we want to show that we have not lost sight of it. I have been saying that we would come over and look at the books, and we do want to look at the books. I know Councilman Kal has been very accurate in his concern about wanting us to find out the true cost. So, we are putting our foot in the door. Roxanne Ziegler: While you are putting your foot in there, how well do we know Gary Abrams? I think it would be worth our while to find out about Gary Abrams, I don't mean that in a funny way, I would like to know his background. I am not suggesting that they are not respectable people, at all. I just want to know what the problems were between him and Tucson Airport Authority and Pima County. It has nothing to do with his family. Ed Honea: The County says they have been subsidizing it for $150,000 to $200,000, they may not be counting the money they are making off the fuel and such against that $150,000. If it is an offset, it might be a wash. Mike Reuwsaat: My concern, too, is how tied in is Abrams into a long term deal. If it is a short term deal and we are banking on Abrams, I want to bank on airport potential, not on the Abrams family. Mayor Harn: Surely we all realize that what the Abrams are trying to do is jump out of Pima County and into Marana because they are squeezing them and in some areas rightfully so. We do need to be cautious, but I still think it is a good thing for the Town to go about, in the right process. Hurvie Davis: You could sum it up and say, "Can you really identify many people or groups that have had a good working relationship with Pima County? Ed Honea: Our relationship is getting better. Mike Hein: Is everybody fine with everything up to this point, with the understanding that we will come back to you on the salary plan adjustment recommendation. I am real confident on most of these. "Special Programs: Chamber of Commerce" shows an increase of $15,000. The rationale under ]0 MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL that is to pool some more things into that. The Mayor is asking the departments for an accounting of time spent of Founders Day because part of the money, $20,000, is for facilitation and coordination of Founder's Day in hopes to make some revenue for the Chamber and take a lot of the work or burden off the Town staff. I think there may be some concern about how successful that was, but I think the direction is clear. The additional $15,000 would be for them to also coordinate the Fourth of July. One of the concerns they have is that they have only hired a person for half the year to coordinate Founder's Day and then they loose that person because they haven't made money. My idea, and the approach I took in Nogales, is to give them increased funding up front and then have a contract. Then over time we can talk about reducing the amount of allocation to the Chamber to a point where they are self sufficient. The concern in Nogales was how the Chamber gets the money from the Town and doesn't do anything. What we did was tie the funding to performance and gave them five years to be self sufficient. The other problem is coordination. I know Jan had a hard time finding sponsors for Founder's Day because many of those potential sponsors were tapped by Town staff, me. I had already hit them up for Fourth of July or they were hit up for other things, like Home Depot. For purposes of putting a good face forward, as well as coordinating sources of funding, it should be under one house. In other words, I found out we are going to sponsor Fourth of July and any excess revenue from sponsorship rolls back to the Town. So we start thinking what makes sense, well Home Depot, because they are down on their corridor, Kirby and his bar, Drivers' Mart. Well, the Chamber is also thinking about them as Founder's Day sponsors. So, they are hit up by the Town and then by the Chamber and pretty soon they get a little disheartened about what we are trying to do to them. It should really be under one house. That is the recommendation for the increase in the Chamber, is to house not only Founder's Day, but also Fourth of July. There total funding would then increase from 40,000 to 55,0000. Mayor Harn: One of the reasons I asked Mike to do an accounting of time spent by Town staff is because if we do this and move it to the Chamber, then I certainly want to see a decrease in the dollars that the Town is spending. I am having Mike put a dollar figure to the time, because time is dollars. Herb Kai: If there is a budget on the Founder's Day expenditures for the Chamber, $20,000, where did this money go? It gives the Council a better idea of where it is going and increases. Sherry Millner: They are supposed to give us a quarterly report, and we haven't had them. Ed Honea: The report is coming on Founder's Day. What happened this year, the Chamber intended to make a certain amount of profit on sponsorships by doing the work on Founders Day. That is the advantage of them taking on the work, maybe they make a little bit of extra money so they can keep that second person on staff. The Chamber is getting so large now, there are 160 or 170 members, that is getting harder to keep track of all of ]] MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL these people and do the functions and stuff for them. They actually did not make any money on Founder's Day. By the time they paid for the flyers, the bands, and did all of the stuff, basically it came out a wash. What you have is people doing a lot of work and they weren't able to make any money. As Mike eluded to, one of the things that they thought they would make money on was going to Home Depot and some of the developers that have given before and a lot of them were tapped out and said, "No, we have already given to other Town functions and we are not going to give you any more." They did not get the sponsorships like they had been getting, so it did kind of squeeze them. Mike Reuwsaat: What I want a real clear line on is that we are not subsidizing the daily operation of the Chamber to support its membership. Membership fees should be doing that. When we are doing our homework, I want to make sure there is a clear delineation in terms of the Chambers revenue sources and their expenditures and how our revenues fit into that picture so that we can answer that question up front. Ed Honea: The way this thing started is when none of us had a bucket to go in. We were trying to annex the Ina/Thornydale/Orange Grove business area and we were having a rough time. We went to the Chamber of Commerce, and this was Rene Brazil Pierce, before Jan, and we said, "We are in trouble. We need to get this business area to make our town solvent. Will you help us?" The Chamber Director at that time said, "We'll go help you." They even had some members down there in the Ina/Thornydale area that had not signed. They went down, their director and some of their board of directors people, and walked the streets with the Town. They got about ten or fifteen signatures and we only had one more than we needed to get that annexation, and then we went to a law suit over that. Part of the deal was that if they would help us get that annexation, we would give them $20,000 a year. That was just part of the deal, "You, Chamber of Commerce, go down and talk to these business people in the Ina/-rhornydale area and if you can help us be successful, we will give you a little piece of the pie. Basically we get $6,000,000 in taxes and we give them $20,000, it is a half of a percent, or something. The Chamber has done other things that have been very beneficial, monetarily, to the Town. Some of you might not like the prison, but if you want to put it in perspective, that prison was brought to this Town solely by the Chamber of Commerce. Joe Riley was the president of the Chamber of Commerce. He did all the legwork. He did not take a commission for finding the land and he helped get that thing set up. In just that prison and revenue sharing alone for state revenue sharing is $125,000 a year for this Town. The Chamber has done things and brought business here and brought revenue sharing here to more than pay to help them run their administrative costs not their members. Mike Reuwsaat: I do not disagree with that. Where we do not have clear view in delineation. We are paying GTEC for services. I want it to be clear cut and, if we need to make a commitment to the Chamber for business development, which is the Chamber's sole responsibility, we need to discuss whether we need to contribute to the Chamber like we do for GTEC and do it 12 MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31 1998 for that reason. I can justify that reason a lot more than giving $20,000 for Founder's Day so that they can make some money to get another half- person. Ed Honea: The whole idea is to keep the business advocacy sound and to keep a good relationship. The Town of Marana has a very good relationship with our business people, either through the Business Advisory Committee and/or through the Chamber of Commerce. Mike Reuwsaat: I would like this Council to consider solidifying that and making a commitment to the Chamber in writing to make a clear message to the public about what we are doing and what our performance expectations are out of that. Ed Honea: The Chamber is doing something. The two motels that are going in at Cortaro Road came to the Chamber about 6 months ago. I am not sure that the Town is aware of this. They asked the Chamber to do some studies and get them some research, traffic patterns and things of that nature to see if it was feasible to do that. So the Chamber did expend a lot of time and effort and money and both of these motels are coming now. That is going to generate a lot of money. Mike Reuwsaat: Do you understand where I am coming from? It is easier for me to say that we are contributing to the Chamber because we are contributing to the viability of the business community here rather than trying to justify additional increases. I know I did, and other Council members had reservations in last year's budget for increasing money for fireworks and Founder's Day and stuff that doesn't hold the same type of credibility that funding for GTEC or the basic function that they are already performing. It is a packaging deal, perhaps, but I would like to look at it in terms of how our presentation is and our relationship that would solidify and put it more on a performance and business relationship in support of the business recruitment and retension function that the Chamber has, rather than on the programs that they are going to run for us. Mike Hein: One thing I would like to suggest, and I think this is good feedback for staff, is to budget a number and to actually spending it are different things. At minimum I think we need and, I think the Chamber will agree, they are going to need a contract tied to specific actions and specific goals and objectives. Mayor Harn: For this funding, they need to tell us what they need the money for and how they are going to spend the money and give us a budget so that we can look at it and say that this is legitimate budget. We will be able to see where this money is going to go. Mike Hein: The Mayor and I had this conversation and, basically, it came down to, it should all be under one house and it should all be coordinated, but we need a contract. 13 MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 Mike Reuwsaat: Good. What I am saying is tie the other performance things that they are already doing so this Council is getting a bang for the buck for the contribution it makes. Mike Hein: What I am hearing is that instead of $20,000 here $15,000 here, $20,000 here, even though tonight it is the night to talk about numbers, so let's say put the $55,000 together and tie it all together, including the business recruitment, including the business retension, the facilitation of workshops. Mayor Harn: And then have a budget for that so we know where the money is going. Mike Reuwsaat: For me that is so much easier to defend from a business standpoint. Mike Hein: Next year you would see a lump sum, Chamber. You may even see it this year, and probably will see a lump sum this year. Even though you approve the expenditure, you will have to approve the contract and the goals and everything else. So, for the tentative budget you will see Chamber, $55,000, and it will be tied to a performance contract. Roxanne Ziegler: How much does it cost, Ed, to join the Chamber? Ed Honea: For a small business, under 5 or something, it is like $100 a year. For an individual it is $55. For a large business with over 50 employees, it is $530 a year. Roxanne Ziegler: Have we ever increased that or has that been the same? Ed Honea: Do they increase the prices? They work independently of the Town on what they charge. Every couple years they go up a couple percent, and they have been very successful. They have almost all the major developers - all but two or three belong. They have the Price Club, Payless Cashways and most of the large companies belong. Mayor Harn: Let me see if I can phrase what I think the Council is trying to say here. We would like for you, Mike, to get with Jan and tell her to take the $55,000, if that is the figure that you want to use, and provide us a budget of how that $55,000 is going to be used and broken down so that we can see that this is what you need the money for. Is this what the Council is asking? Mike Reuwsaat: I think that is good, but I would just in more general add what are the general expectations in terms of the requirements. I would rather not deal with line items like fireworks in the budget. I would rather deal with Chamber of Commerce functions and community responsibilities because I believe we have responsibilities to the Chamber, just as we have to GTEC, for its business development and retention. This is what brings the sales tax to this community and what is funding the budget that we are talking about now. ]4 MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 Sherry Millner: This may not be the time to bring this up right now, but what about community promotion. Some of us have talked about this, Public Relations. The press comes in and gets information from this person and that person. The Explorer comes in and wants to hit us with $1,600 a month to put an article in their paper. All these folks are getting input from the Town - interviews are different - but anything that is a Town function, we do not have a person like that. I have heard in the past that there were not funds to do that. I was hoping that we could find some. I have someone in mind that would be great. Mayor Harn: We are working on that as well. Sherry Millner: Would that be under the Chamber of Commerce or not? Mayor Harn: I do not think so. I think that is something that the Town need to have input in. Mike Hein: I think we have had some discussions about it and you will see something. Mayor Harn: You will see something come up under that. We have talked to several different agencies and professionals in this area. That is a very good idea. Mike Hein: Fireworks. Bigger is better. That is why we increased it. You tell US. Mike Reuwsaat: I do not want to vote for a $5,000 increase. Just because we did it last year, I not want to do it two consecutive years. Mayor Harn: I say we keep it at $20,000. Mike Hein: Sounds good. We save $5,000. Rodeo Parade. The Float? How much did we actually spend this past year? Jocelyn Entz: We spent $500. Let me explain why it was $500. To rent the equipment from the Tucson Rodeo Parade Equipment Museum cost $450. That was the fixed fee because we did not have the wagon and we did not have to transport it down there and did not do anything, but rent their equipment. It was another $40 fee for a non-profit otganization. The students from Marana High School made everything for the float so they picked up the cost of everything except for the equipment. So our only ongoing fixed fee was the $450 plus the $40 entry, so it was $490. Mayor Harn: I suggest $1,000. Hurvie Davis: I think this gives a lot of good publicity to the Town of Marana. If anybody should have a float in that parade, it should be us. 15 MARANA TOWN COUNCIL MARCH 31, 1998 Mike Hein: Jail Costs. Obviously, that is the contract with Pima County. We expect it to increase. The Judge is working out a situation. They have been releasing a lot of our prisoners because they do not know the court system. We need to work that out and we expect more detainees, if you will. Roxanne Ziegier: They had an increase last year. Do we get an increase every year? Mike Hein: It is cheap compared to having your own jail. Roxanne Ziegler: I understand that, but will we be hit with that every year. Is that normal? Roy Cuaron: Our contract with the County allows for escalation, the costs are due in part to escalation in costs per day plus we are seeing an increase. We are sentencing more defendants to jail. Mike Hein: Animal Control. I have not seen Pima County Animal Control out here ever, but that cost is fiat. Outside Agencies. I mentioned it during the Revenues about the LTAF. The Lottery Transportation Assistance Fund allows by statute up to 5% of that money to be used for cultural and recreational programs. The rest Is used for street maintenance, etc. I am recommending 5% that amounts to about $6,000. I just arbitrarily upped it to $10,000. I would suggest then that we have a committee and evaluate once a year,. It has been very useful in other communities, so instead of the soccer kids and everyone else coming throughout the year, you have one or two rounds a year for this funding and they apply. I think we can get a lot more mileage out of this type of funding coming directly from the Town and show our regard for the attitude to help the kids along. The Town gets the funds from the Lottery and disperses them. There are some rules with the Lottery. They have to provide a cash match before they can get the money. Will you come back to Council with a simple policy outlining the fund matching. Do we want to spread it out $500 deals or otherwise? Mike Hein: What I did in Nogales was advertise in the newspapers and said that this was what we had available. People would call in and a committee would be formed with three of you and maybe a school person and someone active in the community to decide who gets the money. Ed Honea: Let's keep this out of Council. Once we open that door, if people get upset, they will be at Council. Mike Hein: I developed this in Nogales because they had a strong mayoral form of government and they kept coming to the mayor for soccer uniforms and he had no one to blame so we established this committee and this fund. MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 Sherry Millner: I would like to see the Town help the Alternative School out with the problems they are having. Would they need to come and apply to something like this. Do we need to let them know? Mike Hein: Yes, they would have 1o apply like anybody else. You can help them out. Basically that wraps this up, because, quickly, Contingent Expenses ties to Contingent Revenues and at the end of this whole budget process, I am going to ask you to program it based on what you hear from Departments. If police wanted 4 cars and we would get the money, then they could start buying cars. O'Reilly Rebate is based on the development agreement where they get a third of the sales tax rebated for the infrastructure they put in, and Northpointe Condemnation is the potential high end that could arise from the condemnation of the property of the Price Club Loop Road Mike Reuwsaat: We can reprogram that $600,000 if it comes in at $1,200,000. What was the O'Reilly Rebate? Roy Cuaron: It was in the neighborhood between $555,000 and $600,000. They submitted all the documentation about two weeks ago and it needs to be reviewed by the engineers for accuracy and so forth. That has been submitted. We pay this until it is paid off. It is about $600,000 to move the water underground. I believe that we were going to pay on this until it was paid off entirely. Hur~ie Davis: We estimated based on projections of revenue how long it would take to pay it off, approximately 5 or 6 years, and we may have cushioned it a little bit longer just in case it did take a down turn. I do not think revenues are up to where they expect when they get up and running, but it has been increasing. It is a pretty good revenue amount coming in from Driver's Mart. Mike Hein: Again, that kind of wraps up what we have said are Fixed Expenses. Now once you take Fixed Expenses away, where does the money come from. It is opportunity cost. If it is a Fixed Expense, it leaves less discretionary money and we are short. We are going to get to that subject in a second. So can you program money for a ladder to the moon. You also have money in the Mayor and Council budget for certain things, Town Manager will have money for some discretionary items, but if there is a single program that you think deserves funding or if there a certain project or venture that you want to tie us into, now is a good time to discuss this. Mayor Harn: Would we want to set an amount, I know that we have outside agencies, but $10,000 is not a whole lot if you are taking into account Boy Scouts, Girl Scouts, Cub Scout, and all those things. Would we want to talk about every year the school comes with some projects and many of the projects are worthy, but do not know how to say yes to one and no to the other. Would we want to take a certain amount and say this is the amount we would put into the budget for school projects and then tell the school this is how much money we have and let somebody come to the school and decide what projects they want. Make the school make the decision and let them come to the Town with the list and the amount for each. We are making good progress in a working ]7 MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 relationship with the school and we need to continue that and if we were to set aside $5,000 or something for school projects. Mike Hein: You just took $5,000 from Fireworks. What we can do is put $5,000 as Special Projects. Ed Honea: Do you want to limit it to the school, or do you want to get into FHA, Boy Scouts, etc., because some of the organizations are not tied into the school. Mayor Harn: That is what I am saying. We could call it Educational Projects or whatever, but that it we could go to the school and we could say, we have $5,000 on educational projects, but we would not try to decide and they would give us the projects. This would take it out of the political realm and it would give it more viability as it is coming from the school itself which says that these are good educational programs that the school would recommend. There should be some parameters that they are educational; otherwise they would fall under activities. Mike Hein: Let the Mayor, Roy and I get together and come up with some guidelines and definitions and we will bring this back to you in the tentative and final budget. As far as Chamber and things, you will have another chance when you approve contracts. Mayor Harn: I think it would be a very good public relations move to go to the school and tell them that we are putting this much money aside for the school district for educational programs and you get to decide how we are going to use that money to the best advantage. Mike Hein: Discretionary Spending. This will give you an overview of how this works. Total Revenue/Resources $22,974,405 with adjusted revenue estimated. You take out the HURF and LTAF, Transportation Fund, Restricted Development Fees, fees paid by developers for our engineering services. In the past that has been part of Atler's budget, so it looks like there is this huge number in contracted services for engineering. That is paid by outside people. Less Fixed Expenses. Basically, you just gave a fair amount of consensus to $5,327,000; Less Grant Revenues, because they are for specific purposes and we kind of went over those at the revenue; Less Special Revenues, which is mostly the bonds and some of the reserves which we went over last week. That gives you discretionary of $6,899,585. Last year, fiscal year 1997-98, and again , the reason you do not have it up here. To get to apples and apples of the $7,744,585, we actually went line item by line item through last year's budget highlighting and circling to make sure that we backed out all the items that are considered Fixed Expenses this year and things like that and this was your discretionary funding last year that was given to departments. What you will see is that we have a gap of $845,000. The reason for the gap can best be described by several major categories. While our recurring revenue and revenue in general has gone up modestly, we took out $3.4 million for reserves. We have increased grant revenues and fixed expenses. These are dedicated Also in that $7,744,585 was capital, cars, computers, and things of that nature. What we are saying is that without that, you have $845,000 gap. With a strict conservative 18 approach, which was one of the options under the proposals, but the numbers were wrong, would be to say we have to cut $845,000 from each department, is that practical? I do not think so. We are not unhealthy fiscally. I think the key is to try to get reserves dedicated toward specific uses like capital or contingency as opposed to blending it into the operating and I think that this is a good year to do this because revenues have increased so much. What we are recommending, and we are going to walk you through the expense side, is $1.8 million for North point Condemnation. Our appraisal on that is $115,000. Their appraisal is $1.8 million. We have to budget $1.8 million. Needless to say, we are lots apart. I do not think it is prudent, given that case, to obligate current revenues that are disposable to something which may never materialize. Plus, we are shod. After much deliberating, that is the easiest one to tie something to. So what we are recommending is taking $1.8 from reserves, matching that to the potential $1.8 million liability toward the Northpointe Condemnation. So when you asked earlier, if we don't spend $1.8 we don't use the reserves. Hurvie Davis: On that, I have met with the two principals of Northpointe and the vacant land to the north of Northpointe Shopping Center and we are trying to reach a compromise. We have an engineering study going on to look at maximizing the access to the businesses both from Thornydale as well as Horizon Hills while at the same time maintaining the integrity of the traffic flow on Thornydale and Horizon Hills and meeting all design for the 6 lanes on Thornydale, which will be under construction soon and Northpointe and Southpointe. We are trying to solve the whole thing rather than going to court. We have an impartial engineering firm looking at that and both sides have agreed to the 8 week study and they will get back to us. Mike Hein: Eventually this decision will be binding. Thero are a couple routes that can be taken. Hurvie Davis: We had even talked about going to Larry Fleichmann to try to get an arbitrator to try to settle it for whatever. We did not get to that point. They would still have an access problem. We would like to see them develop it and provide revenues, so we are working with them in a cooperative fashion to try to reach a compromise that they will agree to and we will agree to, How much bearing that has on the ultimate settlement, we have not been able to determine yet. If we do go to court after we have gone to all this effort to maximize it, it is really going to make us look a lot better. Mike Reuwsaat: It looks like our appraisal was done before the improvement went in and theirs is after the improvements have been made. Hurvie Davis: When I was with the city, when we were so far apart on the price, we would go ahead and condemn the property and go ahead to court to argue our case there. Mike Reuwsaat: I do not think it is in our best interest to go to court with Home Depot moving in and the value of that property is just going up. 19 MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCII 31, 1998 Hurvie Davis: That has been a good little roadway. It got us Price Club to sign the annexation agreement and Home Depot going in there, it is a good little tax generator. Mike Hein: So with the added $1.8 million, you have total discretionary spending of $8,699,585, so the difference between $7,744,585 and $8,699,585 is the increase. So if we were to keep departmental spending at the same level as last year, we would have a surplus or an amount of programmable resources, meaning whatever you want to do with about $900,000. That is exactly what we did. We will go to the next sheet. Remember that the numbers we have in the discretionary operating budget does not include the capital. That came out of special fund. Tonight I hope that we can agree on the numbers to give to the departments. Once the numbers are given to the departments, they have three or four weeks to work on all the detail and then we will set up meetings. Maybe one night we will have Public Works and Police, and another night we will have smaller departments. They will go through line item by line item to you and explain what they did. By keeping the number basically the same as last year with a few adjustments here and there, I am saying they can accommodate existing costs plus some increase in their salaries and other things, plus capital. You will see that there are some variances as to why I would believe they can do that. They may come to you and the police department may say I need 24 new cars and I cannot fit in my number. You will have that programmable resources available for that. You will also have that $1,000,000 of contingent revenue. One can also look at debt instruments too, lease purchases and other options. Again what we are recommending is to show you that ail the numbers do actually fit in the next sheet. This is the amount that we are recommending for each. Department for discretionary. Non-Departmental is the Fixed Expenses that you just agreed on. Nothing changes significantly from last year. Special Fund means, let's take, for example, Police, Chief Smith is going to get a total of $2.6 million, but of that amount $522,000 is special funded meaning grants, mostly those that we went over last week. He cannot spend that unless he gets the grant. That is tied to a specific category. He has $2.1 million and he is going to say "Wow!", but once he starts taking out personnel, telephones, pagers, vehicle maintenance, etc., he is going to be tight and when he comes back and submits to you, and you will have it in advance, then you will ask him to defend each line item and ask questions and this is when you will get a lot of answers. I know it is hard to ask you to set a number that is not necessarily tied to a number from the year before, but I think this will work Mike Reuwsaat: I think it will work too. Considering everything that has been pulled out. If we look at what the year-to-date projected expenditures and the conservative nature of the expenditures - Thank you very much. Mike Hein: One thing I want to draw your attention to. You now see a new number and that is $23,819,405. That is the new revenue budget and expense budget because we added $1.8 million. That $1.8 reserve is now added to the $22,974,405. Scrolling down, you take out the Fixed Expense that leaves your Discretionary Spending. It leaves Programmable Income and it is your Adjusted 2o MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 Discretionary Spending of $8,699,585. That is just to show you that it all fits. The next line item gives you the historical figure of Adopted versus Proposed. Non-Departmental - again, Fixed Expenses went up. Roy Cuaron: To get to the Departmental Allocation, we take the Discretionary Operating Budget from which we already pulled out all of the Fixed Expenses and that supposedly represents their true cost of operating, excluding the capital outlays and capital improvement projects. We then add the special funding sources that are dedicated for specific uses - they cannot be used any other way - and you add that to the Discretionary to get to your total budget allocation of this $23,819,405. If you turn the page, the Non- Departmental is $5,172.000 which is $1 million less than $6,172,000, but it is picked up under Contingent below. Mike Hein: Is that clear? On the last spread sheet you see the $6,172.00 which equates to Fixed Expenses plus CDBG. That is what the $845,00 is, CDBG and other. You go to the next page under Non-Departmental and you are going to get $6,172,000, but we took $1 million and put it under Contingent to make sure that people understand that that does not get funded unless the money comes in. The bad news is that as a department head, the money is all allocated and there is nothing for you to do. Ed Honea: I hate to ask the question. What are we expecting from this fund? Mike Hein: It is a wish fund. It is to budget in case in comes in Ed Honea: So that we are on the same sheet of music, if we are going to make a proactive approach toward the mall again, then we all need to be singing from the same sheet of music. I don't want to say the $1 million is for something and someone else says something else. Mike Hein: The reason annexation costs are listed is that if you add up from each department, there was a line item at the bottom, if you recall. The costs added up equalS1,210,533, plus some extra. This year, I am saying, let's assume that our conservative reoccurring revenues come in much higher than we anticipated, we will plug it in here and we will program it out. The other variance - Town Manager. We had to finesse that one a little bit to make the numbers work. Police went up $210,000 and that is the difference between last year's grants and this year's grants. Roy Cuaron: We actually had to cut the amount for the Court, to $4,000, to basically balance, but again I think you will see that this allocation that we are recommending is well within what they have spent to date and what they are projected to spend through the end of the year. Mike Hein: Public Works came out remarkably close considering their stream of funding changed somewhat radically because of bonds and because of the new transportation fund, which you will have to program later and decide whether you are going to spend it or save it or half and half. We will talk much more about that in the future, but that is pretty close even though it has changed a lot. 2! MINUTES OF COUNCIL STUDY SESSION MARANA TOWN COUNCIL MARCH 31, 1998 Water, the difference is in extra budgeted amount of anticipated revenue should we acquire the Tucson Water service area - $500,000. That is for the revenue side. The expense side is already programmed in the bond stuff. The extra $500,000 is a revenue source. Capital Outlays - you see zero. Basically what we are say is that it is going to be squeezed up, if you will. Hurvie Davis: Mike, I'm not sure how you did that. Our salaries are not that much different. Mike Hein: Actually I am going to bloat the budget a little bit because we are going to be changing some things. There was not a Town Manager budget nor a Town Clerk budget, so there will be some awkwardness dividing up the pie. There have been some personnel reallocations, grants used to be under Finance. Dick and Dan are going to be under the Town Manager's budget, so there will be some shifting here and there, but this was Roy's best effort at splitting them up. The last page shows the variance. This lends some creditability as to why we believe that they can squeeze the capital and some other expenses out. Now that is a big number and a lot is explainable. A lot of it is capital or projects that were not done. Roy Cuaron: What we have attempted to do is we know what our actual expenditures were through the end of February, we made an estimate of of what we think the end of the year will look like, and, as you can see, we are saying that we are going to come in at $11.3 million versus a budget of about $22 million. The biggest difference or variances occur in Public Works and Water and that is simply because of funding for certain projects has not been done. An example in Public Works, we have about $1. million in bonds of which $900,000 or so was reserved for modular building and land acquisition. Similarly in Water, we have $2.2 million reserved for acquisition and that has not happened as well, so those are the bigger variances. The others are general operating costs that have not come in at budget level. I think the marked parts of the saving probably is traced not to having full employment, full authorized employment, for four years so they have budget savings that have accumulated over the course of time. So our best guess of total expenditures for the year is going to be $11.3 million and you can see on a budget of $22 million we are going to spend about half of what we budgeted. The bottom portion shows that given the allocation. How does that compare to where we think we will end up. Roxanne Ziegler: Are we incredibly thrifty? I understand what you are saying. Roy Cuaron: $9 million is really the bond stuff that we did not use. $2.2 in Water for specific pumhases and Public Works $1 million that has not been spent that is earmarked for a modular building. Hurvie Davis: We also have the $1.8 million for the potential settlement of the right-of-way. We had a million or so for annexation of Foothills Mall for costs that we would incur this fiscal year for outlays. As the Town grows and you get more Public Works projects, streets, water, etc., historically you get these big three- year projects, a year for design, a year for right-of-way, and a year for construction. You have a $3 million project and you throw in that $3 million as you plan to get that underway around the beginning of the fiscal year so you need that. You find that you run into design problems, right-of-way problems, construction problems, you get a delay here and a delay here, so you may not spend all of the allocated funds for the year and they will have to be carried over.. Mike Hein: When we get the detail, you will have a better idea of the expenditures that are projected. I know it is a little awkward, but we are going to give numbers and some departments like Roy is going to say I need two more clerks because you are making me audit the airport. I will say, you have this much, where are you cutting? There is going to be a point where they are going to need more resources and that is where you are going to have to prioritize. There may be some departments where the manager may come and you may say, you really do not need this. I am going to take $30,000 or $40,000 away and we are going to add that to the Programmable pot. So there will be some shifting around and you are going to be real clear on the specific line items, and the department heads are really going to have to pare. The Town is financially healthy and this is a good opportunity to make sure that the operating growth grows with the Town proportionately and everything is held in check. You will be very familiar with each of the departments at the end of the process. Hurvie Davis: I am not too familiar with this budget process and I am not sure that Roy is and that is why it is new to him and he has been struggling with it to some extent, but Mike can correct me if I am wrong. Mike probably does not know the budget process that we had this year as well as Roy and I do, but to me when the department budgets came in I would issue direction to the departments - You basically start with your base budget that you have this year and then come in with new programs. Even though you start with your base budget, it does not mean that you will get your base budget. I may have given you a chipper for Public Works last year that you do not need this year, so I am going to reduce your base budget by that amount. We would have two or three rounds and then I would put together a Manager's recommended budget and come to the Council. In the past I did a lot of that work, this year they are going to be coming to you that they did not get the chipper that the Manager promised them for the past two years and now the Council has to give them money for it this year. Mike Hein: If you are comfortable with this process, Roy is going to give and communicate in person with each of the department heads tomorrow, and then he is going to meet with each of then individually to go over their line items and the historical. About half of the departments already have a lot of the work done and I think by the time it comes to Council, it will be pretty well flushed out. What is going to be left for you is really to decide some extra things. Ed Honea: I am used to the budget process and think there is enough flexibility left with Roy and the department heads and the way that you have pulled out figures. I do not foresee them coming with $6 million worth of additional requests. You have pulled Fixed Expenses out and you have budgets at the same level. Mike Hein: It controls their expectations. The big thing you need to understand is that the way we have structured; there is $700,000 less this year for capital. This amount is really in your Programmable Fund. Again, there will be changes just like there were to Revenues, and we saw a couple to the Fixed Expenses, but if you are in agreement, we are going to use those Fixed Expenses and that leaves the discretionary money to divide up. If those allocations for each department look O.K., Roy will sit down and meet with them and work things out. The next step of the process is really the department heads. You will not have to have another meeting for a month or so, and then we will spread it out. We will probably break it up into two or three nights. Ed Honea: One thing on that thing with school. That discretionary money needs to be spent in the Town of Marena, either at Coyote Trails, Estes, or Marana Junior High or something like that. I do not think we want to spend at Butte~eld in the County the Town's money. It needs to be kept in the Town including the High School. VI. ADJOURNMENT A motion was made by Sherry Millner, seconded by Ed Honea, to adjourn. The motion passed 6/0. The meeting was adjourned at 8:05 p.m. CERTIFICATION I hereby certify that the foregoing minutes are the true and correct minutes of the Marana Town Council held on March 31, 1998. I further certify that a quorum was present. '~S~~~E, TOWN CLERK