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HomeMy WebLinkAbout05/17/2006 Study Session Minutes MINUTES OF MARAN A STUDY SESSION MARANA MUNICIPAL COMPLEX, 2nd FLOOR CONFERENCE CENTER 4:00 P.M. MAY 17,2006 PLACE AND DATE Marana Municipal Complex, 2nd Floor Conference Center, May 17, 2006. CALL TO ORDER By Mayor Honea at 4:05 p.m. COUNCIL Ed Honea Herb Kai Bob Allen Jim Blake Patti Comerford Tim Escobedo Carol McGorray Mayor Vice Mayor Council Member Council Member Council Member Council Member Council Member Present Present Present Present Present Excused Present STAFF Mike Reuwsaat Gilbert Davidson Jim OeGrood Frank Cassidy Jocelyn Bronson Roy Cuaron Corrina Gill Town Manager Assistant Town Manager Assistant Town Manager Town Attorney Town Clerk Finance Director Budget Analyst Present Present Present Present Present Present Present GENERAL ORDER OF BUSINESS A. ITEMS FOR DISCUSSION 1. Budget Overview The Mayor introduced Mike Reuwsaat, Town Manager, who presented the budget overview. He said that it was to set the stage for senior management to work through the process that brings everyone to the table today. He wanted to present the overview before getting into the detail with the various departments in order to isolate any areas needing further discussion and review. First, growth in Marana, the current status. This frames the community where it is today. Current residential inventory is about 10,000 lots and many acres of commercial development. Identified areas - Gladden Farms Phases I and II, Saguaro Springs, San Lucas and Vanderbilt Farms, should elevate development activity over the next 18 months. The development projection for FY 06/07. We should see a reduction in entitlements; development activity will move from developing to platting. Although housing permits have slowed over the last few months, an expected MINUTES OF MARAN A STUDY SESSION MARANA MUNICIPAL COMPLEX, 2nd FLOOR CONFERENCE CENTER 4:00 P.M. MAY 17,2006 increase will occur as infrastructure is completed. Permit fees should remain stable due to increased housing and commercial development prices. General Fund Revenues and Expenses. Over the last five years, there has been a 10 percent increase in revenues over expenditures. This is the highest budget to date of about $120M. It is the most aggressive CIP program we have undertaken, assuming we can achieve everything on our plate. We have budgeted capacity to do the work. Mr. Reuwsaat cautioned that even though 2005 was a good year, we should be wary of overbudgeting based on the success of that period. Weare not coming into the current period with a budget deficit. One of the major shifts is to use HURF from the CIP to general fund (operating) expenses for street and the public works program. There is an allocation of $800K for public works salaries to the CIP. There was also a $1.8M gain from state shared revenues attributable to the mid-decade census that needs to be spread out over the next five years (until the next census). Budget Impact - Personnel. We will be more conservative in staffing levels than in previous years, which have been about 33 FTE per year over the last five years. Weare recommending a net increase of 12 FTE due to flat revenues. Our goal is to not add mid-year positions even if it squeezes some departments. Employee Compensation Recommendations. The evaluation/merit system needs to be changed to reflect actual value. This will correct some of the compression problem and provide more equity for employees who have been with the organization longer. Last year, we moved the police department into the step system to stay competitive. Management will recommend moving to the same system with smaller increases for all employees. All employees except for police will be eligible for a 2 12 percent increase plus 2 12 percent COLA to get to the five percent equity level. Will also recommend the police receive a 5 percent step increase, and no COLA. Officers ineligible for a step increase will receive a 2 12 percent COLA. Senior management with salaries over $75K will receive a COLA but no merit increase. Impact Fee Recommendations. Jim DeGrood will be working to complete the Northeast Area Transportation Study. As part ofthe RA, the Town had to commit to a percentage toward funding our obligation. This will bring this area into an impact fee area. The impact will help cover the debt service on some of the municipal complex. The debt service this year is about $2.4M and will be rising in coming years. This will help take some burden off the general fund. Transportation Issue Recommendations. With respect to the half cent sales tax issue, management would like direction from Council to pull back the $4.7M revenue. The attorney is reviewing the ordinance language relating to repealing the local tax. Mayor Honea inquired as to whether the Town would have to pass another ordinance to keep the current half cent tax until passage of the R T A half cent tax. The collection may not begin on July 1. There also may be a month MINUTES OF MARANA STUDY SESSION MARANA MUNICIPAL COMPLEX, 2nd FLOOR CONFERENCE CENTER 4:00 P.M. MAY 17,2006 overlap between rescinding the Town's half cent tax and the county's tax. Council's direction to staff is to repeal the half cent tax. The Manager recommends repealing effective June 30, 2006. This will not affect the new budget. Roy Cuaron noted that the budget is set up so that the half cent tax per ordinance is targeted for specific CIP projects. Next year's budget doesn't anticipate spending the full reserve. AD OR won't be able to implement the new tax before August 1, 2006, so we should probably take action in June. Jim DeGrood said that RT A funds will be budgeted through our system by entering into an IGA with the RTA to receive funds. Mr. Cuaron noted that it's possible the RTA may have more clout with ADOR than the Town in terms of the effective date. Mr. DeGrood said that from a business standpoint, we would want to do this as soon as possible. The RTA thinks implementation could occur July 1, 2006. The manager continued, saying that he is expecting about a $1.5M general fund surplus, bringing the general fund balance to about $15M. He is recommending the $15M fund balance. The bonds people could use less, but a healthy general fund balance could be significant for future bonding. He would like to see six months of operating revenue in reserve. Vice Mayor Kai inquired regarding surplus if there is a downturn in the economy, is there a conservative side to look at? Mr. Reuwsaat responded that yes, downturn activity will force management to look internally for cuts as well. The new Tangerine Loop Road will open more inventory for building, but we cannot project expenses that we can't support. The market is settling out with fewer flips. There are large companies wanting to develop, however, some are predicated on rooftops. All want to see the town center develop, probably in three to four years as more houses are built. Revenues - General Fund. Sales tax accounts for 55 percent of revenues. We are projecting a five percent increase from FY 06. Construction is dominant. Even though the Town gets four cents (on the dollar) for impact fees, one cent goes to the general fund. The rest goes to infrastructure. This continues to bring the development community to Marana. Incentives are: no property tax, and no commercial impact fees. We could increase the general fund revenues to $3M if we moved another penny to the general fund. Recurring Revenues. There is a two percent increase over last year. Weare projecting $1.8M over FY 06. Non-recurring Revenues. Although we have received a $225K health insurance rebate this year, we should not plan on this happening indefinitely. Other non- recurring revenues are: $100: from the Pima County level reimbursement; $71K from the State Heritage Park; $70K from the DES therapeutic grant; $75K from CFD fees; and $50K from miscellaneous grants. MINUTES OF MARANA STUDY SESSION MARANA MUNICIPAL COMPLEX, 2nd FLOOR CONFERENCE CENTER 4:00 P.M. MAY 17,2006 Restricted Revenues. Vice Mayor Kai asked about the status of the risk pool loss. Mr. Cuaron stated that the Town lost $711K, $125K of which has been returned, and that will probably be as much as we get back. Restricted revenues are earmarked for specific purposes, general capital improvements. $29.6M is anticipated from other agencies, primarily Pima County voter-approved bonds and the federal government. Major projects to be funded include: Cortaro Road, heritage Park, Santa Cruz bank protection, Airport sewer line and the Twin Peaks interchange. About $7.1M is anticipated from FAA and ADOT for airport-related projects. Cortaro Road will be done by the end of the year. Mr. Reuwsaat noted that groundbreaking for the new library will begin before the end of the calendar year. Weare working to get the airport sewer line in, and another $7M to widen Thornydale Road - half of which will be done this year. Expenditure. Capital Improvements account for about $85M of total estimated expenditures for the airport, transportation, parks, and water. Gilbert Davidson noted that Silverbell Road construction will begin as soon as Cortaro is done. Mike Reuwsaat said that there will be a presentation to Council in a study session about the Silverbell Road construction. Changes in Staffing. Twelve positions are being recommended as follows: 9 FTE for police @ $857K; 2 FTE for public works (backfill positions for Keith Brann and Kevin Thornton) @ $178K; 2.5 FTE for water @$153K; 2 FTE for finance @ $139K; and 2 mid-year FTE for building services @ $93K. Personnel Expenditures. Mr. Reuwsaat noted that the Town will be moving to an evaluation system rather than an award system. Management will be looking at the overall system to see where the Town is competitively with other jurisdictions. Mayor Honea raised the issue of Council budgeting for an administrative assistant to work directly for the Manager due to the increased workload. Council Member Comerford agreed, but wanted to see specific areas of responsibility attached to the position. Mr. Reuwsaat said that he appreciated Council's comments and noted that this had been an ongoing discussion for several years. He will also be recommending some structural changes within the organization. He felt that the Manager should be spending more time out of the office building relationships. Discussion on this issue was previously addressed under personnel compensation. Operating Expenditures. Mr. Reuwsaat noted that most departments are expected to operate in the coming year within the FY 2006 spending parameters. A few departments requested increases to accommodate expanded services and programs. MINUTES OF MARAN A STUDY SESSION MARANA MUNICIPAL COMPLEX, 2nd FLOOR CONFERENCE CENTER 4:00 P.M. MAY 17,2006 Proposed Tentative Budget. Mr. Reuwsaat concluded the overview for this session with a summary of the revenue forecast and revenue sources. He noted that he is recommending not taking over dispatch personnel for Northwest Fire District at this time. Total net increase is five percent for recurring revenues, and an amnesty program for the court. $150K audit revenues generated, and a 24 percent decrease in non-recurring revenues. The transportation fund generates $9M, Impact fees is where there is the greatest changes in revenues. Sales Tax History. Mr. Reuwsaat gave a brief overview of the Town's sales tax history. He stated that the next budget study session would be on May 25 to finish up with the department heads, personnel, operating and CIP. Mr. Reuwsaat asked that any suggestions be forwarded to him. The tentative adoption of the budget is scheduled for June 6 and the final budget adoption scheduled for June 20, 2006. B. ADJOURNMENT The meeting was adjourned at 6:09 p.m. CERTIFICATION I hereby certify that the foregoing are the true and correct minutes of the budget study session held on May 17, 2006. I further certify that a quorum was present. <:"\~,UUfffl,, ~'<OfM4 ~ ~. _\.~ i\.\\\""""~~~ S ~-~ ~ ~ ~ {? 8 CORPORATE" \. ::. == ooc:> == ~ S SEAL ii ... .... ~ 6;:: ~~. ~ s ~ "';"IIIIll"\\~ ~ ~ fY/Z '\ ~\'~ ~lJ8aaU\\\~