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HomeMy WebLinkAbout02/09/2010 Special Council Meeting Minutes~"; MAC. ' f ruw+.. ar w<~i.aa SPECIAL COUNCIL MEETING MINUTES 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, February 9, 2010, at or after 6:00 PM Ed Honea, Mayor, Present Herb Kai, Vice Mayor, Present Russell Clanagan, Council Member, Present Patti Comerford, Council Member, Excused Carol McGorray, Council Member, Present Jon Post, Council Member, Present Roxanne Ziegler, Council Member, Excused SPECIAL COUNCIL MEETING CALL TO ORDER AND ROLL CALL Mayor Honea called the meeting to order at 6:02 p.m. Town Clerk Bronson called roll. Council Members Comerford and Ziegler were excused. PLEDGE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE. Led by Mayor Honea. APPROVAL OF AGENDA Motion to approve moved by Council Member McGorray, second by Council Member Posh Motion carried unanimously S-0. CALL TO THE PUBLIC Ed Stolmaker, President and CEO of the Marana Chamber of Commerce, updated Council on the first Marana Can-Do SK run and walk held last Saturday at the Ora Mae Harn Park. He noted that nearly 500 people registered for the event. He also indicated that the event was so successful, that it was anticipated to be held for many years in the future. He acknowledged all of the parties who made the event possible, especially Jolene Campbell. PROCLAMATIONS MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS PRESENTATIONS P 1: Presentation: Relating to the Imagine Greater Tucson update and process Keri Silvyn from Lewis & Roca presented an overview of the work being done by the Imagine Greater Tucson (IGT) regional visioning project. IGT is a collaborative process being formed February 9, 2010 Council Meeting Minutes to guide the development of a publicly supported strategy for a vision to enhance and promote southern Arizona's environment, economic strength and quality of life. She discussed desired outcomes, the participants, where the resources are coming from and the models used. Ms. Silvyn ended her presentation with opportunities to become involved. Gilbert Davidson also noted the Town of Marana's efforts in this regard, and that this isn't just a project of one entity. P 2: Presentation: Relating to Economic Development; discussion and possible action regarding the Marana Economic Roadmap strategic plan. Presented by Josh Wright who noted that the public input process ended with two public forums and is now ready to go before the Planning & Zoning Commission for review and comment before it is brought to Council for final consideration. Over 20 people represented a variety of large and small businesses and organizations. He described the What, the Where and the How questions which cover the three major elements of the plan. The Target Industries being the "What" section of the plan - attracting, maintaining or expanding jobs in Marana. Transportation and Logistics, Tourism and Visitor Experience, and Regional Industry Cluster Support -supporting the southern Arizona business cluster -supply businesses that support local businesses. There are nine economic activity centers -that is what the "Where" question answers. The different activity centers are aligned with the industries. The Focus Areas is the final section -the "How" -how do we get the industries here or keep them here. Mr. Wright then reviewed the elements of this area, including infrastructure that is needed to support the program. He then reviewed with Council the public comments. A number of comments were received from the general public as well as staff. The (Planning) Commission will review all of the comments next week and then forward their recommendations to Council. The comments ranged identifying additional infrastructure improvements from Ina Road north to including another agency in Pinal County. They have a nonprofit economic development foundation. The Marana Airport had some recommended changes to the actual geographic overlay which would include the BOR park site which was not included in the original design. There are some areas in the geographic overlay zones that are not actually in the town -one of them is the Pinal Air Park. Those areas are now included in the language. Opening town facilities to school and community colleges was also a comment. There was discussion about whether the Heritage Center and the downtown were actually tourism centers. That was one of the major focuses of the plan. He presented some of the other areas including the single central business district and asked for questions. Upon motion by Council Member McGorray, second by Council Member Post, staff was directed to incorporate comments discussed at tonight's Council Meeting into the Marana Economic Roadmap draft plan and return with a final draft for consideration by the Mayor and Council at its March 2, 2010 regular meeting. Passed unanimously. P 3: Presentation: Relating to Finance; FY 2010 Revenue Update and FY 2011 Preliminary Revenue Projections. P 4: Presentation: Relating to the Budget; presentation on the FY 2011 Budget Process Framework. Items P3 and P4 were taken together and presented in tandem by Gilbert Davidson and Erik Montague. Mr. Montague began with the current status of this fiscal year, concentrating on the town's general fund. There are three main revenue sources -sales tax, state shared revenues and 2 February 9, 2010 Council Meeting Minutes development related revenues -comprising over 90% of the town's general fund. The largest - 64% is sales tax revenue. He showed numbers collected through December 2009 that do not include transactions in December -those are numbers which we don't have yet. He had anticipated roughly $20.6M budgeted for the current year. Collections through December are about $9M or 44%. One could expect that halfway through the year, you'd be at 50% revenue. Certain factors make this number fluctuate, which he discussed. Some of the transient lodging or hotel revenue during the busy season through spring is generally expected to be higher than what it was. There are two main areas of concern with respect to Transaction Privilege Tax - construction or contracting sales tax and hotel/motel tax. We continue to see this condition, with respect to commercial development, slide year over year for over 33-35% reduction in taxes collected. We're still 20-30% off projections, which is significant - a little over $1M in contracting sales tax. With respect to hotel/motel tax, we incorporated within that certain assumptions -but we've had to significantly revise the numbers lower. Depending on the trends, we're in the neighborhood of $2M under overall. State shared revenues are the second largest major revenue source for the town's general fund. State shared sales tax collection are about $957K or 46%, so we're a little under there. Those are collected through the state and then distributed back to jurisdictions. As the state collects less, there is less to distribute. Urban revenue sharing is the shared income tax. We get the amount that is actually what was collected two years prior, so that is a firm number. Auto lieu tax -vehicle registration tax - is dependent upon vehicle registrations, new car sales, etc., but we're close to what could be reasonably expected. We're about a percent off through December for total overall in this category or about $80K which is reasonably good. The third largest category is licenses and permits. These incorporated single family residences and other commercial activity. We are seeing more single family permits than what was anticipated. On the commercial side, we have not seen a significant improvement in conditions for projects being submitted or plans being reviewed. There are a number of public improvement projects, however. He then presented a slide of overall revenues showing what was budgeted for the current fiscal year and then the current status through December 2009. Total revenues through December are approximately $14M, about 45% of what had been budgeted. Revenues and expenditures are closely tracking through December. By broad category with personnel services, personnel and benefits costs -we're about $15M spent or about 45% of budget. We had anticipated dipping into reserves of about $1.SM. Keep in mind that $1.SM was anticipated for contingency. We've already had to come before you to approve the use of some of that contingency in the amount of $250K associated with the settlement with United Fire. That's part of the variance that you see. Through December, expenditures have exceeded revenues by about $796K, about 53%, slightly ahead of what we would expect. We are hoping to see some good news with the December sales tax in the January numbers. Finance has been working diligently with the Manager's office to make sure we are managing this year's revenues appropriately. For the FY 2011 budget, we've put together a preliminary revenue assessment. We anticipate coming back before Council in March with the final projections. The projections that we'll be discussing this evening will be making some significant assumptions. We'll be using the current structure -the taxing authority. It assumes no major disruption or changes in state shared revenues. With that, Mr. Montague went over a broad summary of the general fund 3 February 9, 2010 Council Meeting Minutes revenues. For the current fiscal year's budget, we had about $30.18M in projected revenues. Based on preliminary projections, we anticipated about $29.4M in revenue collections or a change of about $2.4M or about 8%. Some of the larger changes in those revenue streams have to do with state sales tax and other agency revenues which are really shared revenues. With the sales tax revenues, it does make an assumption that the additional one cent of contracting sales tax would be added to the general fund. So in FY 2010 budget, 50% of what we collect in contracting sales tax is incorporated within the general fund. Other Agency Revenue is changing by about 17%, attributable to urban revenue sharing. We anticipate some modest changes in licenses and permits. Charges for services, fines and forfeitures - we anticipate no major changes until we get into investment income and some miscellaneous revenues. Over the last few years we've tapped into our cash reserves for some major projects. There has also been a decrease in the average rate of return for some of our investments over the past few years. Miscellaneous revenues -we're working diligently to mine out all miscellaneous revenues. You'll see the adjustments. We're anticipating that of the $20.6M we budgeted to collect about $18.9M dependent upon the December sales as well as some of the numbers that we'll be getting from some of the lodging businesses, especially over the next several months. Preliminarily, about $19.3M. This assumes maintaining that allocation of that additional one cent in contracting sales tax to the general fund. Preliminary for state shared revenues (other agency) -the major change is attributable to the census. Those numbers will impact our budget. It will be next Fall by the time those numbers will be finalized -for the FY 2011 budget. State shared sales tax of about $237K or 12%. As the state collects less, so will we. Urban revenue sharing is going to be down 25% or about $850K. This is a number that is certain. This is attributable to the declines in income tax and corporate income tax collections. For auto lieu tax, we don't anticipate any significant change. For permits and fees, this shows the slowdown in the overall economy. For FY 2010 we had budgeted about 75 building permits, and through December we're in the neighborhood of 140. For January, we've issued 38, which is a positive number. We show no significant commercial activity for 2011. We don't anticipate any major projects currently. Council Member McGorray asked about collections from mining. Mr. Montague noted that the negative number is attributable to a refund. There are only two taxpayers in that category. He then turned the presentation back to Mr. Davidson. In response to the current budget deficit for FY 2010, Mr. Davidson stated that staff has been vigilant in taking appropriate actions and monitoring the town's limited resources. The Council approved a budget document last June. Contained within that document were provisions of green, yellow and red -the Level 1, 2 and 3 reduction options. As we have been monitoring the lack of revenues coming in, we have been implementing the Level 1 options. Those include the cell phones, mobile device reconfigurations -rethinking how we operate from a cell phone operations-centered environment. We're going back to using pagers, land lines and being creative in how we communicate. That is going to save on an annual basis between $24K and $43K. The reason for the difference is dependant on how broad we expand that particular program. For this fiscal year we'll be able to save approximately a quarter of that when it's fully implemented. We are analyzing fleet savings -purchases that had not been made. We broke up the overall fleet purchases into segments to make sure that if the revenues were not there, we still have opportunities to have a large savings. To date -almost $200K will be saved this fiscal year. We've been very aggressive in competitive bid savings -almost $100K, and we'll continue to look at opportunities along those lines. With that, there are a number of 4 February 9, 2010 Council Meeting Minutes things that we're going to continue to make sure we have the best pricing for. One is leases. This has been an item brought up in previous Council sessions. One of the issues is as we get into service levels before we actually lock into a lease, we want to make sure Council has authorized the service level that we'll be at for any particular program. We'll keep you apprised of where we are with that. Office supplies, printing, uniforms, car washes - we hope to save money on those. The employee benefits process is underway which will again be bid out. We are anticipating only a slight increase in those costs. We're doing a number of things in Technology Services with the network. We anticipate a savings next year of $40K bidding out various item -.with some reconfiguration. Another item is SAVE - a statewide cooperative purchasing agreement -partnering with other governmental agencies across Arizona for even greater savings. We've also been holding any vacant positions. We've been utilizing the WRAP program or not filling the position at all. As the numbers come in, we'll take another assessment and see where we are. If there's Council action that will be needed, we'll be bringing that back in March and apprising you of other modifications that have to be made. I believe all of these things will help us have a balanced budget through the end of this fiscal year. He then moved on to the strategic plan focus elements. He identified the three areas of community values as indicators of where we're going to make investment or maintain service levels. One will be having a safe community, two is a clean community, and three is a healthy community. He noted that staff has been out in the community and will continue through February and into March to meet with HOAs, civic groups, commissions of the town and any group willing to listen to budget issues. Through those sessions, staff has been getting feedback and comments and interest on the types of programs that we'll be able to provide and how we'll deal with the budget situation. Two formal Council public hearings have been scheduled in the community. This will be an opportunity for citizens and businesses to listen to what we're doing to manage our budget and the financial resources available. This information will be available on the town's website. As a way to approach this task of making sure we not only have a balanced budget, but a responsible budget and a budget that will meet the long term needs of our community, staff developed Marana First. Marana First will manage the point-in-time crisis in the economy and still meet the critical needs of our community. As with a household budget, it doesn't make sense to cut everything 20%. What we have to do is kind of the same approach. There are probably some things that have greater value, and we'll have to make those critical choices. Marana First is investing today to make sure we have good results for tomorrow. The first component is revenue enhancement. I do not think that this problem can be solved by raising taxes. That's not necessarily appropriate and is not being recommended, but it is something that needs to be added to the mix to make sure we maintain critical programs for the time being. The second will be looking at service level choices. Starting this week, we began meeting with every department, breaking down their budgets into very specific functions and programs and services. That will be delivered to Council. The final thing is how to encourage job creation, business development, expansion within and through the community. That will be very important. The message we give to our community and how we're managing this budget and the decisions the Council makes in terms of how we are trying to encourage future development and growth will lie in that third area. February 9, 2010 Council Meeting Minutes He then presented a slide on FY 2011 Preliminary Revenues showing how the budget functions. This will show how everything works together. Ongoing is expenses we incur year after year obligations of the town. -employees, maintenance requirements, etc. At the Revenue line are the same numbers shown earlier. The largest are sales tax and state shared revenue. The next column is Expenditures broken out by the major divisions where we allocate resources. The two largest are public safety and general government (mandated services). Those two numbers should be equal, but Structural must be added in. These are necessary replacements -vehicle replacements, technology replacements and equipment purchased over time. Traditionally, revenues have far exceeded expenditures and we've been able to cover all of the structural items. Vehicle replacements, technology and equipment replacement is not able to be funded out of the revenues we have now. If we don't manage this appropriately, it becomes a drain on our reserves. We can do some creative things in the structural arena -such as delay purchases of vehicles. That will have some ramifications down the road. You start building up a deferred maintenance vehicle line and replacement, so you have costs you're putting off into the future. In the green area -these are one-time revenues and expenditures. One time revenue is only coming in one time. You wouldn't hire anyone based on this. As an example -contracting sales tax. This is only generated once. Three-quarters of our contracting sales tax has been put back into one-time capital purchases. Only one percent put in the general fund. Licenses and permits -again someone comes in the development services with one thing, and that should be matched up with aone-time expenditure. With respect to Reserves, the beginning balance is $14.SM. We identified contingency money put into this year's budget. If that is all used, then our ending balance would be $13M. My hope is that we again have a slight surplus on the revenue that we are able to manage or contain our expenditures. We want to make sure that we don't tap into the contingency any further. There is a gap between we have between expected revenue and expenditures which is what we're trying to address over the next few week. Next, we'll start with the revenue options from Marana First. There is a list here that I know the Council is not going to want to move forward on. I wanted to make sure that we listed all the options, and I encourage that we have good discussion and clear direction on the items you do not want to move forward with. I'll highlight one -the property taxes. Rumors out in the community that we've heard from public hearings - is the Council looking at a property tax? I think it's important that the Council address that so that staff can say yes or no. Starting at the top there is the ability to actually increase the sales tax -the 2% today we could look at increasing that. Second is expanding or broadening the sales tax into other areas such as a tax on food. The third is new taxable items -Erik will talk about the Model City Tax Code approved by the Legislature where you can apply taxes to other types of things. Another is fees for various services, and property tax. Council Member Clanagan noted that one of the things he hasn't heard in Mr. Davidson's presentation is what are we doing to actually shrink the size of government, because that's what we have to address, and it hasn't been spoken of in those terms. And just looking at the structure for the vehicle replacement as an example -and I'm not talking about first responders - let's look at every other vehicle the town has. How many vehicles does the town actually have in its fleet? Because when you talk about not replacing vehicles, I want to look at cutting vehicles that are currently in the fleet and examining why do we need so many vehicles. We had a discussion once before and I asked the question. Do you have the total number? Mr. Davidson responded that it's well over 300 including police. Council Member Clanagan. Again, if you exclude law enforcement from the discussion, I'm at a loss to understand why we 6 February 9, 2010 Council Meeting Minutes have so many vehicles. Because when you talk about replacing vehicles, we're replacing vehicles that we probably don't need. And if we look at reducing the size of our fleet, I think there's room for savings there. And we need to look at reducing the size of government. In one of the earlier graphs that Erik had, he talked about where we were at in `04 and `O5. How much has the size of government grown from `04 and `OS to where we are now? I think that's the discussion that we have to have. And that's a discussion I want to have before we have any discussion before increasing taxes. Because everybody wants to increase taxes. The state wants to increase taxes. We want to increases taxes. I think we have to be very cautious of going the tax route to try to do this and I think we have an obligation to look at literally shrinking the size of our government. And you mentioned cell phones. I looked at one of the directories that we had, and we had a substantial number of administrative support people who work 9 to 5 jobs here in the building with cell phones. I don't understand that - I don't understand why clerical support needs to have a cell phone. Why can't we have a pool cell or a phone that's assigned to an office and when they need a phone they take the phone as opposed to everybody having cell phones. So these are questions that I would like to have answers for. Mr. Davidson responded that the cell phone issue has already been implemented. The vast majority of all cell phones, including his, is all going back to the town and returned to the vendor. Most of our staff will be utilizing their own cell phone or not have a cell phone at all. The reason that there has been a wide distribution of cell phones is the change in our environment -the insatiable need for 24-aces in calling staff and being able to follow up on issues. No matter where a staff member is -even if they're out in the field -there's been this need and desire to make sure that there is contact with them or the ability to communicate with them. We have re-thought many of those elements so there may be a pool phone in some departments. There maybe no phone, and we'll have to go back to the way it was prior to the life before cell phones. That is being implemented and I showed the cost savings that will be incurred for the fiscal year. Talking about the size of government -let me break down into a couple of different things. First, Marana has grown in size not necessarily because we were growing government, but we were growing programs and services and regulations. We were growing in response to the growth of the community. In development services it was a direct response to the need to process plats, submittals, building permits -all of those items. So over a period of years we ramped to accommodate the community's needs. I know that this Council has been very clear about customer service response, so that's why there was an increase. I can tell you from this past year we have definitely begun to shrink. We've not replaced most positions. From FTE, we've dropped 24 out of our budget. The only other way this Council can effect the size of government, you would have to make some very tough decisions of eliminating entire programs or services or changing ordinances that require certain things. So that's the option that the Council has in terms of reducing the size of government. So if we maintain all of the things that we have, that's what's going to drive this discussion on the revenue size and additional cuts if we're going to try to maintain the existing things that we have. I think the Town of Marana has been very responsive to the changing economic times. We've been aggressive about slowing down on spending. We have re-thought how we've operated and we've come up with some very innovative, creative solutions. So I think we've demonstrated that. But again it's going to be the Council's decision, the Council's direction on whether you want to reduce the actual purpose or size of government. With vehicles, I absolutely agree with you. I think we had this conversation that we want to make sure that we've got a sound fleet, awell-maintained fleet, but a responsible, appropriate 7 February 9, 2010 Council Meeting Minutes sized fleet for the needs and services that we provide or have to respond to. Some of the vehicles we're going to have to have because we have on-call personnel in multiple areas, whether it's our utilities division or something else, we have to respond with the right equipment, right tools to be able to deal with that. The same goes for our operations and maintenance crews that if there's an accident we have on-call people who have the right vehicles and tools to respond to that. In terms of administrative staff, again all of that is through the implementation of Level 1 as being re-thought and changed entirely. We eliminated stipends for the vast majority of all of our staff. At some point we have to provide a vehicle to be able to get to all the meetings -like PAG. Council Member Clanagan. And I understand -that's why I mentioned that. We have vehicles here to go to those things. I think we need to take a look at just how those vehicles are being used, and one of the things I would like from you in the future is a actual accountability of all of the town's fleet, of how many vehicles we have, and like you used the example of the police department, and I understand that; when they have a water main leak. But still, that leaves a lot of room for a lot of other vehicles that I would like to know where they are and how they're being used. Mr. Davidson. Okay. Vice Mayor Kai asked if there is a possibility that we could look into lease programs for some of these vehicles or large equipment purchases. I concur with Council Member Clanagan. If we have equipment that's not being used or we have an access or whatever, we need to do an inventory and either sell it. If we do need something, we need to look into leasing programs and see if that would work for a while. Mr. Davidson responded that we are looking at lease options. We've already received numbers if there are vehicles that are absolutely critical, whether for public safety purposes, that we could possibly lease them. That does have long- term ramifications. If we start -you've got a lease payment that's got to be made over a period of years and you've got to factor that in. But we are looking at that option if there are critical things that we have to have. Vice Mayor Kai stated that with the economy improves, we can pay them off early. Mr. Davidson concurred. Council Member Post stated that if you have a 10% shortfall in revenue -cut the budget 10%. We're continually told as Council Members not to micromanage staff, but here you want us to take this budget and pick it apart and tell you where to cut out 10%. I'm just telling you -you have a 10% shortfall in revenue, cut it 10% - I don't care how you do it. Cut it 10%. I mean obviously you can't cut out 10% of your debt service, but you can address every single one of those things -every single item in those columns by reducing 10%. You could still maintain many of the services by a 10% reduction. I'll tell you how to do it, but do you really want the Council to micromanage every little detail about how we do this? That's how ordinary people are doing their own budgets at home. They're saying that if they're short 10% they've got to cut 10% out of their budget. And they do it. They scrimp and they save and they figure out a way to do it. I think that's one of the issues that people are having with government is that government typically doesn't do that. They go around raising taxes and borrowing and stuff like that. I don't even want to see a presentation on how we can raise taxes. I'll go home. That's not even an option forme. I want to cut the budget until we have expenditures meet revenue. It's very simple. Mr. Davidson addressed Council Member Post by stating that it would make his job very easy if you gave him the authority to go in and just across the board 10%. That's a no-brainer. But he doubted Council would like the end result. You will get immediate phone calls from a vast 8 February 9, 2010 Council Meeting Minutes majority of different constituent groups. We are already at the bone throughout this entire organization. The past year we have reduced our operating expenses to the bare bone minimum. So there is no fluff left in any department. What will be left are people. So a 10% across the board is going to equate to multiple layoffs in areas you may not want to have layoffs. So the approach that we're trying to put together here is a thoughtful approach that's centered around the strategic plan that you have worked on over this past year. And it's to make sure that you have all the decision points -the information that goes into those decision points available to you. Whether you want to raise taxes or not, that's your prerogative. My job is to make sure that you have the information; you know what those options are, and if it's not the Council's prerogative to do that, that's fine. It does mean that we will have greater cuts, and if this Council wants to cut deeper into this organization, then we'll have to do that. Mayor Honea stated that he disagreed somewhat because he thinks that everyone pretty much agrees that we're not going to cut public safety, we're not going to cut personnel. That's half of our budget. If you have to make a 10% cut in the budget and you're not going to cut police, which I don't think anybody wants to cut, then you have to cut 20% from everybody else's budget to make it work, and if you cut 20% in some of our budgets -the water department or the parks - it could put us in a pretty serious situation. I think that's why we're trying to identify through the Council -are there programs that we don't want to do right now. And it's not that easy. We're really trying to cut 10% out of 50% of the budget. That makes it a lot more difficult. We're not going to cut police, and that's 50% of our budget. We have to work to balance our budget with the other 50%, and that's what makes it so difficult. Council Member Clanagan stated that like Council Member Post, he has no appetite for taxes or a tax increase. I think we have an obligation to prove that we've done everything we could possibly do before we have a discussion about taxes. Because I just think it sends the wrong message that that's on the table. And you heard the discussion at the police commission meeting earlier this afternoon that people are concerned about tax increase. Because everybody's asking for a tax increase, and nobody thinks anything is going to pass. The voter is not going to approve a tax increase. We have to do our due diligence and do what we have to do. And I'm not saying that the law enforcement community is untouchable. I'm saying that we need to make wise decisions as relates to the police department. But support staff -there are other avenues that perhaps could be looked at. But I think everything should be looked at. I'm not saying that they are not to be touched. Like Jon said, you have an obligation to look at everything and give us your recommendations. Council Member Post. Mr. Mayor, I would like to go on the record that I do disagree that the police department is untouchable as far as the budget goes. You just can't take something that is 50% of your budget and say, no we're not touching that. I have many, many people that I know -friends -that work in the police department. I know how important the safety of our community is, but you can't just set it on a pedestal and say we're not going to touch it when it is that large a percentage of our budget. Mr. Davidson. No one from the staff, including our Chief and our police officers have said that the police department is untouchable. I've been very resolute in all of my presentations that while public safety is a high priority, it doesn't mean that we're not going to be creative in how we do that policing and that the police department's not going to have to change the way they've operated over the past number of years at the level of budget that they have. We're not 9 February 9, 2010 Council Meeting Minutes saying that. So there will be definite impacts to the police department, but the focus has been how do we make sure we have a safe community, and I think we can do that in a number of creative ways, and that's what we're working through. You will get recommendations based on the types of cuts. But before we move on, if you don't want to discuss taxes, that's your decision. I'm not advocating for taxes, nor is the staff advocating for an increase in taxes. What we want to make sure is that you have all the information to make these decisions, so if we're not going to move down this road, then we've got a much greater challenge of cutting into the organization and not coupling it with any increase. Council Member McGorray asked if there is a way that we could identify areas of cutbacks and be educated in that before we proceed with talking about increasing taxes? I really feel we have far too little information on what we could do to really tighten that belt. Let's look at what we can cut back on before we anticipate what we might have to tax, because no matter, the citizens are going to be paying for it, and everybody is just scared to death with anybody talking additional taxes. Vice Mayor Kai noted to Mr. Davidson that he would like to say that property taxes increases definitely would not fly in Marana. Our town was incorporated with the promise that we would not implement a property tax in Marana.- But I think we might need to look into the franchise utility taxes that City of Tucson collects. We can collect it here in Marana, too, whether it's gas, electric, telephone or whatever. That might be a new taxable item that we're not depending on that other cities and towns collect. Mr. Davidson. We will move forward without talking about taxes. So let's talk about the service level options that will be before you. Hearing your comments, if you want me and the staff to come up with the initial set of targets, we can do that. I would advise that what we've laid out here is a way to try to balance all of the needs. If we're not going to do any sort of revenue enhancement, we're going to have to take the full burden of the $3 - 4M out of services and reduction of expense. So one thing that we had put together was breaking down large departments into their individual components. And I have two examples. I'm going to pick on the City Clerk and we're going to pick on the Parks & Recreation as highlights. Again, these are just examples. In the city clerk's department, you have a number of things that are regulatory-driven. They are mandated by the federal government or by the state government. Obviously, elections. The Council can't say we're not going to fund elections and not have them. That has to be done. We can do some creative things in that. You could probably try to renegotiate that -right now our provider is the county. You can maybe make a slight modification, but you're always, always going to have that expense. The Council, Boards and Commissions -again, we've got to staff these and make sure that we've got the resources to provide for each of you. Public records requests - mandated by state/federal law. Liquor licenses - there's a whole state process. And then obviously we've got to retain and manage our records for the long run. So as an example here, there's not much that we would be able to cut out. We can eliminate any one of those things. The staff that we have that does all of this is the appropriate size. So if there were a reduction, it's going to critically impact a number of other things that we do. Parks & Recreation is the other highlighted example. We're looking at aquatics and within aquatics you have the pool itself, we have swimming programs, we have swim meets. In this area the Council could say we really like the swimming pool, we don't want to eliminate it, but we want to reduce some of those service level options. So you could reduce the number of hours that the pool is open, or the number of days that the pool is open 10 February 9, 2010 Council Meeting Minutes and that will have a savings. If you were to eliminate it entirely, you're still going to have a cost, but obviously you're not going to just drain the pool and let that asset become destroyed. So we'd still have to have water and some level of chemicals that go into that. So this is the way we envision working through the budget and breaking down large departments and their functions into something that makes sense. The way that we would break it down in terms of recommendations would again be going back to your green, yellow and red levels. Green is the base level. That's what we're doing today. Yellow would be some set ofcost-savings and we're using again the example of the pool. So here what we're saying is open it for four days a week. The red option would be to close it entirely. So that's the way we envision working through each of these different things. If you want me to just come back with a budget, I don't think you will like the recommendations. I don't know each one of your preferences and the different constituent groups that you're representing, and I think that it would be healthy to have a dialog of the types of services and programs that we provide in this community -what they cost and we're going to manage them for the long run. Cutting out $4M is going to be huge chunks of personnel and programs, so that's going to be a daunting task whether it's myself or all of us working through it. Council Member Clanagan suggested to Mr. Davidson that in Continental Ranch there are two pools and swimming lessons and aquatic programs. But the homeowners of Continental Ranch don't assume those costs. They bring in a contractor who provides those swim lessons, the aerobic lessons, the various activities and it costs us nothing. I realize we have an active and a very successful parks and recreation department, but why do we as government need to do that service? There are private people who do that who are professionals in that field. And perhaps that's a way of shrinking government. I'm not saying we should abandon our facilities. We have those facilities - we need to maintain those facilities. They're a resource. They're in investment. But why do we have to provide every level of service, other than opening it and closing it? We can bring in contractors to provide everything else, at no charge to us. Mr. Davidson addressed Council Member Clanagan and Council by stating that is a good example, and we can certainly look across all departmental lines to see how we could restructure government. But that's got to be driven by the Council. Those are major shifts in how we've historically operated. So you have aprogram -and we're highlighting the pool - that has been a part of the community for a long time and it's operated with the lifeguards and it's been atown-run parks and recreation program. To shift to where we contract out that service, we can certainly explore those things, but I do think it's a Council direction, and the savings on the pool is going to be relatively small. Council Member McGorray stated she is curious about the programs that we offer and the cost involved and if the fees cover the cost. She would have no problem with Parks & Rec if the fees are covering the cost. She would like to see the people -say 60 of any age group -who use the programs pay the cost so that the community at large does not have to subsidize the 60. She asked if that's been looked into that as far as fees covering costs so we could continue with these programs? Mr. Davidson responded that there are a number of programs that the Town of Marana provides, especially in the recreation area. These are interest-based classes, special classes -for 11 February 9, 2010 Council Meeting Minutes which the costs are fully recouped. So someone signs up, they pay whatever that amount is and then take the class or do the activity, and it's a wash. There's large numbers of major programs that it would be impossible to recoup the costs and the pool is a good example. The number of swimmers that we have in north Marana that utilize this pool - if you were to charge the full true cost of labor, chemicals, water, the maintenance -you couldn't swim there on a daily basis. So, those are the items that the Council has provided to the community that have been subsidized so that it provides as much broad access to different age levels and different economic levels for our citizens. Council Member McGorray asked if the pool was heated. Mr. Davidson responded that it was not. Council Member McGorray noted she was looking for ways to make it work, stating that in her community they have a pool which is heated with a very expensive bill. They bought a cover and reduced the hours of use, and there was a considerable savings. With these different things, we need to know the circumstances in order to make a valid decision. Mr. Davidson noted that another example, one that is part of ongoing discussion, is that some of the after-school and youth programs, and as part of this fiscal year, there was a reduction that was to be made in December. There was a huge outcry from parents, and the staff shuffled money around and it compromised other things to keep that program open until May. That's a good example of a highly subsidized program that a lot of people like, but if you were to charge the true cost of that program it would be higher than what the private sector is able to charge in terms of the respective service. So those are the types of things where we've critically analyzed these things and said there are things in the private sector that are managing these things and doing a relatively good job and government shouldn't necessarily be doing that or duplicating that service, but you all as the elected officials are going to have to bear the brunt of that in letting those constituents know that the service is either going to be ended, or if you want that service provided by the Town of Marana, the true cost is "X" which much, much, much higher than what they're currently paying. Council Member McGorray stated that a lot of the emails coming through said they'd pay willing to pay "X" if you'd just keep the service. Mr. Davidson responded that they'd have to pay the `true" cost which would be a big jump from where they are today. Council Member Clanagan noted that he had Mr. Davidson's memo dated February 2 which he appreciated because it talks about the after school program and the preschool program that has been running, and until I saw this memo I never realized the actual cost and that the uses of this - at least 80 kids enrolled in the various after school and preschool programs, and the users are only paying 11 % of the actual cost -that's enlightening, and I appreciate you giving us, but we're going to have to make tough decisions with that. I don't know what we charge for that program, but clearly the users are going to have to pay a much larger percentage than 11 %. The town can't absorb the other 89% of that program, and I don't think anybody would expect us to absorb 89%, and that's one of the things government doesn't do as well as the private sector does because the private sector would institute any kind of program in which they were paying for the users to use it. Mayor Honea said that a couple of other things that the town does with the parks &rec programs is not draw boundary lines on the people that they serve. About half the people that use our parks and rec programs, both in south Marana and north Marana, are county residents 12 February 9, 2010 Council Meeting Minutes and not Marana residents. We might look at atwo-tiered thing there. If you're a Marana resident you pay 40% of what the cost of the program is, and if you're a countyresident it's 50 to 60%. If we're getting to the point where we're going to be canceling programs, if we're going to cut them back, we want to provide service to our citizens first and then if we have room we would take someone else. Another thing that's coming up -the state need to make up $1.SB this year, and they rolled $450M to next year, which means you still have the debt, and they borrowed $750M which means you still have the debt, and they did pay for shuffling $300M. Next year's Arizona state budget is going to be about $8B with a $SB deficit -over half the budget. The state is going to come after cities, towns and counties for as much money as they can take legally from us, and I think that this year's a picnic compared to what next year's going to be. You guys are all right - we may just have to make tough decisions, but it might mean closing the senior center, eliminating the park programs completely -just shutting those programs down, because if we're going to make those kind of cuts that's the decisions we're probably going to have to make. There's probably 560 elderly people in our community that go to our senior center. Now even if we doubled the rate or tripled the rate, it still would only pay about 5% or 10% of the costs if you look at the building and the utilities and everything. So to make up -we're looking at probably $2M to start, but if the state starts playing games with us and issuing IOUs -and Gilbert and I were told by an individual who works up there a lot that they could be issuing IOUs by June or July. They don't even have the cash flow; they don't have a rainy day fund. They don't have any money. They're selling all their buildings trying to come up with some one time money. They're probably going to come after every city and town in the state, and we're all going to be in a tough boat. So if you want to do it strictly by cuts, it's going to be pretty severe. Mr. Davidson stated that he would move on to the final part which was how do we begin to encourage job creation and job expansion within the community? Number one would be that we move forward with the Marana Economic Roadmap. Several of you participated with that over the past eight months. It's a great document that I think is going to really define Marana in terms of the types of business, the types of industry that we want to have here, the types of jobs that we want to try to attract. So moving forward with that would be Step 1. Two, we obviously don't have any money to hire new staff so my recommendation would be to reallocate or reassign internal staff to deal with this issue. We've done that to some degree. But if we want to the fullest potential on the roadmap we're going to need to have a couple of sets of hands that are actively working with the business community. It's very labor intensive. I can tell you we've been working with a company over the past couple of months. It hasn't been formalized yet, but it is taking a huge amount of effort to try to work with them and their needs and they stay here in the Town of Marana. The loss of this company would have been astronomical to our community, so that's a great example where you've got to have people out in the field listening and working with them on a day to day basis. Third, is that we begin to look at business friendly, business-centered incentives to encourage business development and expansion. There's a number of things that we could probably do -whether attracting a new business or retaining one - to be creative on how we incentivize their investment in Marana. There are things throughout the development services process to modify and enhance and then there's things for existing businesses that we should also explore. And finally, it's partnerships; how we leverage partnerships -whether it's in the education arena or the existing business arena. We certainly want to work with Pnnal County with their economic development group, the TREO group, other jurisdictions, and we want to try to leverage the limited resources that we have. I can tell you that I've been meeting with Oro Valley town leadership to talk about 13 February 9, 2010 Council Meeting Minutes how we can work together in north Pima County and share ideas and share resources to try to leverage the limited dollars that we have and make it go even further. That could be the issue centered around the third component. So to conclude for tonight, the Council action requested is for three things: First, the revenue options. I want to make sure that your direction is we are not to move forward at all with any of the revenue components. What we were talking about was not that we'd move forward with implementation with any tax - it was to do additional research. So if we're not going to do that, we're going to move on to the service levels. Any additional input on the taxing piece? Second, will be the affirmations, the approach that I've laid out on the service level. I've heard two things. One is some approach taken by staff on a recommendation of where to cut that will have a balanced budget, and the other is kind of going through and talking about all the various programs and services, so I'd like direction on that. Council Member Post. Well, I still like my idea. Council Member McGorray. I would like for us not to do 10% straight across of everybody, but let's look at the areas that we can cut back and still maintain services. Council Member Post. Last year we did that and you did a great job and staff did a great job but this year is the year that we're going to have to make some of those choices that we absolutely did not want to make last year. I think we've been beating around the bush here to tonight, but I think that we will be end up talking about some type of layoffs. I don't think it's our money to borrow from our community just so we don't have to make those kind of tough decisions, so I personally think that is the direction you're going to have to go in. Vice Mayor Kai. Gilbert, why don't we look at that additional 10%. Tell us how bad the news is. What are these cuts that we might be facing. That would be good for us to look at and we can make some hard decisions then. Mr. Davidson. So what I'm hearing is you want me to prepare legislative recommendations -basically prepare the budget, and it'll identify the areas, and certainly try to capture the value statements that you had adopted, having a safe, clean, healthy community, but there will be areas, and I want to make sure it's very clear, there will be impacts to personnel, no question about it; there will be reductions in programs and services and as Council Member Post said, those tough decisions are going to result in you guys having to listen and work with the community on how we move forward with that. Mayor Honea. I think what we're looking for is a recommendation if we are $2M short what we think we could be now, and if we were $4M short; so maybe kind of a backup plan. Mr. Davidson stated that he thinks it's going to be higher than $2M. We're further out than just the baseline, too. So we'll take whatever we can envision as the most conservative impact. Mayor Honea. What you're talking about now is if the state stays constant. We know that revenue sharing is going to be less, but we know what those figures are. If the state gets into the HURF money or into the vehicle tax money which are millions of dollars and takes a big chunk of money, you're not factoring that in right now. Mr. Davidson. No. If that were to happen, that's another scenario and we're talking major, drastic impacts if we do not have any money coming in from the state or much less an amount than what's anticipated. The final thing is if you want to move forward with the economic development job creation initiatives. We'll have the implementation plan of the roadmap which you're going to have for consideration in the next couple of weeks, reassigning some staff to start working on those things, and then 14 February 9, 2010 Council Meeting Minutes coming back to Council with a number of different policy recommendations of how we could encourage business expansion, business development. Is there concurrence? Council Member Clanagan. Let me just say, Gilbert, one of the things that I certainly appreciated that was done by you and the other employees was the concessions that the employees made to generate almost a half million dollars in savings. I hope you don't close the door for opportunities for you and your staff to come up with solutions and recommendations that will help us make these decisions. Don't utilize those same resources that you used in the past. We are a part of the solution. We are not saying "you figure it out and bring it back". I'm saying I want to help you out and make it work, but I want to do so at the lower staffing level and a lower resources level than what we've had in the past because we cannot maintain those levels that we've had in the past, and those levels aren't going to help us gear up once we hopefully start to see an uptake in the economy. Still having 300 cars is not going to help us do anything, and they're sitting around parked. And we're buying new cars. Does that make sense? Mr. Davidson. Absolutely, and that's a great segue to some of the creative things that we've tried to put together to encourage that spirit that we had last year amongst our employees, and I believe that's some of the next items that will be before you. CONSENT AGENDA LIQUOR LICENSES BOARDS, COMMISSIONS AND COMMITTEES .COUNCIL ACTION . Mayor Honea stated that Council will be handling the next three items as one and then go into executive session. A 1: Resolution No. 2010-16: Relating to Personnel; approving and authorizing staff to implement the Separation Incentive Plan (SIP) for fiscal year 2011; and declaring an emergency A 2: Resolution No. 2010-17: Relating to Personnel; authorizing staff to implement a sabbatical program for fiscal year 2011; and declaring an emergency A 3: Resolution No. 2010-18: Relating to Personnel; approving and adopting amendments to the Worker Recession Assignment Program (WRAP); and declaring an emergency Ms. Machain presented all items. The first two are creative programs implemented last year with some modifications this year. The sabbatical is a new program instituted this year. The WRAP program had some lessons learned from last year which are clarified and outlined in the packet materials. There are two voluntary programs: the SIP and the Sabbatical. Under SIP, there were 11 who took this last year. Two positions were refilled in order to meet critical needs of the town. As a side note, from our records we've identified 67 people eligible for a retirement in one way or another. It's probably unlikely for us to expect that all of those would take a retirement, but six employees are eligible for ASRS or the PSPRS; 13 are eligible for retirement under Social Security, and 48 who would be eligible for an early retirement. We estimate that we've achieved savings of $400K by those positions being left vacant. The other feature here is that we established two periods in which employees could elect a SIP. One involves a 100% package, the other is half of a package if someone was to elect at a later period of time. The new program is the sabbatical. It's open to full regular and part time classified and unclassified employees for not less than 30 days and no more than 180 days. Employees continue to maintain benefits and seniority, accrue sick leave and vacation, but operational 15 February 9, 2010 Council Meeting Minutes needs must be met. And the WRAP program can fill positions as well. This is open to classified employees only. We can direct a WRAP assignment or employees can compete for a WRAP assignment. What's presented tonight are the changes we made to the policy which are essentially performance evaluations and also be subject to a probationary period. We clarified what happens in a WRAP assignment if there is a reduction in force in the employee's home position. The employees who take a WRAP on a voluntary basis are somewhat protected from a layoff at that time. However, if employees are in a directed assignment, they would be subject to the layoff policy as provided in Town Policies, Chapter 8. Council Member Post asked that of the people eligible for the SIP, how many of those are designated essential positions? Ms. Machain responded that she'll need to bring that information back at the next meeting. Due to the lack of a supermajority vote of Council required because of the emergency clauses, Items Al-A3 will come back to Council for consideration at the February 16, 2010 meeting. Mayor Honea asked for a motion to extend these three items to the next regularly scheduled meeting. Upon motion by Council Member McGorray, second by Council Member Clanagan, passed unanimously. ITEMS FOR DISCUSSION/POSSIBLE ACTION D 1: Legislative Issues: Discussion/Direction/Action regarding all pending bills before the Legislature Steve Huffman gave a brief update on Legislative action. He noted a couple of things that have happened this week. We are in the sixth special session at the Legislature. They are looking at about a $1.SB hole. They took about half of that and filled it up just with shift containments that the state owes to K-12 and state universities from this fiscal year to the next fiscal year. The other half they filled up by authorizing additional state buildings to be leased out and also by collateralizing revenues from lottery. Where that is important to the town is that they're going to borrow about $450M using revenue from the Arizona Lotteries to pay back that borrowing. That means it basically wipes out LTAP 1 and LTAP 2-which goes into local transportation and transit services. So that will be an immediate and probably permanent impact on the town's revenues. The good news is that of the major revenue sources coming from the state, once you take LTAP 1 and 2 off the table, the rest are pretty much constitutionally tough for the Legislature to get at. If we see any decreases, they are largely going to come from decreases in revenue collection not from actual actions taken by the Legislature to reduce the formulas. If they did try to do that to any of the major funds that we consider state shared revenue, it would require a super majority vote in the Legislature, and the League would almost certainly sue the Legislature. Council Member Post asked the chance of the Legislature trying to give the town an IOU. Mr. Huffman replied that we're really in uncharted territory on almost everything happening in the state right now. I think the revenues that are being collected in the Treasurer's office should be safe. They keep telling us they're safe, but it's just one of those things - we have to keep watching this. We're almost up to a billion dollars in state property leasebacks to cover cash flow. We're not using this for big capital expenses anymore. We all need to be aware of that. 16 February 9, 2010 Council Meeting Minutes On the sales tax collections on our behalf in the state accounts, every representation we've had from the Treasurer's office is that we're safe, but I think it's healthy to be paranoid right now. EXECUTIVE SESSIONS Motion to go into executive session for Item E 2 moved by Council Member Clanagan, second by Council Member Posz Motion carried unanimously. Council left the dais at 8:29 p.m. Council returned to the dais at 8:58 p.m. E 1: Executive Session pursuant to A.R.S. §38-431.03 (A)(3), Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda E 2: Executive session pursuant to A.R.S. § 38-431.03(A)(4) to discuss and consult with the town's attorneys regarding the proposed Legacy Apartments project and the Town's fees applicable to Section 36 of Dove Mountain FUTURE AGENDA ITEMS ADJOURNMENT. Council Member Post left the meeting after the Executive Session. Upon motion by Council Member Clanagan, second by Council Member McGorray, the meeting was adjournea~ Passed 4-0. The meeting was adjourned at 8:58 p.m. CERTIFICATION I hereby certify that the foregoing is the Administrative Summary of the Marana Town Council meeting held on February 9, 2010. I further certify that a quoru ~~ ~u~mrrr ~~j r ~® ~a~ E o elyn C ronson, Town Clerk „ ~E~ .._ _.. _ 17 February 9, 2010 Council Meeting Minutes