The meeting called to order at 6:01 P.M.
PRESENT: Chuck Kill - Chairman
Peter Lamm, - Vice-Chair
Bob Harris, Member
Dan Toth, Member
Jared Parks, Member
Council Member Bill Garner
Mr. Doug McKee a member of the Planning and Zoning Commission
spoke to Finance and Bond Committee regarding a proposal that was presented at the last Planning and Zoning Committee Meeting. A General Plan Amendment was approved allowing developer (Vistoso Partners) to build 474 more houses than he is currently allowed to build in Neighborhood 5. This kills a potential revenue source in the form of a golf course. A multi million dollar golf course in the future will not be able to develop if this amendment is passed and the land is rezoned. Mr. McKee stated the Golf Course would be a better revenue source than the 474 houses which will increase the net operating cost to the town and will further deplete the water supply. Mr. McKee asked the Committee to educate themselves on this amendment and to talk with the Planning and Zoning Committee regarding this amendment.
MOTION: A motion was made by Member Toth and seconded by Member Harris approve the minutes.
Chairman Kill welcomed Councilman Bill Garner as the Town Council Liasion to the Finance and Bond Committee.
Councilman Garner stated he looked forward to working with the Finance and Bond Committee and providing feedback between the Council and the Committee.
Stacey Lemos, Finance Director discussed the First Quarter Financial Status. The Mayor and Council asked for this report to be presented at the October 1st meeting.
The staff looked at the 1st quarter revenues and expenditures. The report focused on the main funds of General Fund, Bed Tax Fund, Highway Fund and Transit Fund. The budgeted amounts were then divided by 4 to compare 1st quarter actuals to the budgeted amounts in order to compare revenues. They then compared projected year end totals in order to show any anticipated deficits or surpluses in the budget.
Finance Director Lemos then went through the report fund by fund to report activities that are ahead and/or below projected budgets. The General Fund is currently 9.8% or $750,000 below budgeted amounts, due to several contributing factors including Residential Building Permits, lower than anticipated retail sales tax revenues and state sales taxes.
Ms. Lemos reviewed several cost savings measures being taken by the Town as presented in the packet materials.
Chairman Kill asked if the Bed Tax Fund was being put aside for the Naranja Town Site if the proposal passes. Finance Director Lemos responded that a portion of the Bed Taxes is being set aside for future operations and maintenance of the park if the bond passes. If the bond issue is delayed these monies can then be used for other purposes should the Town Council deem necessary. Member Harris asked if the Council has control over when the bonds are issued for the
. Finance Director Lemos stated yes, that the Town Council is required to pass a resolution to issue those bonds. Municipal Operations Center
Finance Director Lemos told the committee this was included in the Agenda at the request of the Committee members.
Member Harris stated the Town currently has a project budget that provides what funds are needed for the current year. The Performance Indicators are all historical and contain no projections for the coming year. A performance based budget would link the two with key indicators. Member Harris would like to suggest for the future 2009-2010 that we start out with a few but meaningful measurements. Member Harris would propose that the departments project for the performance indicators for the coming year and then for the following year, try to build the entire budget around performance indicators.
Finance Director Lemos enclosed information on this type budget in the F & B Committee packets. The Town is currently linking the Draft Strategic Plan and budget in order to measure outcome and performance.
Ms. Lemos stated the budget process will kick off in November. The Town would be able to start the performance based budget process in 09-10 and then a more fully developed performance based budget in the 2010-11 budget. This would be a more pervasive budget involving all depts.
Chairman Kill asked how much additional training would be needed for Deptartment Heads to adopt this type of budget. Ms. Lemos stated that the Town could invite other cities that have gone to this type budget and have them come in and do peer training.
Chairman Kill stated the importance to bring this up to each Department Head to start thinking along these lines. Chairman Kill also asked if we have a department liaison or a budget manager. Ms. Lemos answered that we do not have a department liasion or budget managers, but Wendy Gilden, Art Cuaron and Ms. Lemos answer budgeting questions. The Strategic Plan contains guidelines and offers suggestions for performance based measurements.
MOTION: A motion was made by Member Harris and seconded by Member Toth make a recommendation to the Town Council to develop a Performance Based Budget for the next fiscal year.
MOTION carried, 5-0.
Member Lamm presented the committee with a preliminary discussion regarding restrictions on Town spending. This is for discussion purposes only and is not ready to result in a motion and not ready for policy changes.
Item No. 5. on the Agenda discusses the ability of the Town to establish its own local expenditure limitation with voter approval.
Ms. Lemos stated the only restrictions on a home rule option would be if a no vote prevailed; then the Town would be subject to the State imposed expediture limitations.
Ms. Lemos reviewed a handout regarding State imposed expenditure limitations derived from the League of Cities and Towns and also explained the Home Rule Option.
Vice-Chair Lamm discussed the 3 variables that govern funds available for spending; population, inflation, and productivity or changes in standard of wealth. The formula used by the state carefully records 2 out of 3. This type of constraint properly constructed is better than not having one. Published income data for Oro Valley is not available but there is information for Tucson Metro Area. Obtaining personal income per capita will let you compute a personal income for Oro Valley times the population. These figures from Tucson Metro can serve as a proxy for information for Oro Valley. What could be used is a limitation somewhat like the State one for Tucson Metro Area, as long as the percent is chosen correctly you can capture the 3 variables that are used to govern spending.
As an example in 2007 the per capita personal income in Tucson Metro was $32,500. You can take that $32,500 and multiply it by 42,500 Oro Valley residents and what you come up with is around 1.3 billion dollars proxy personal income. If you take the general fund expenditures for the fiscal 2009 budget you come up with about a 2.4% ratio of general fund expenditures to total personal income. What would be a good idea would be to have the home rule option limitations modified so that they somewhat resemble this 2.4%, with a limitation comfortably higher than whatever we are running right now. This would put a hard cap on continual governmental growth. This will have to go back to the voters in 2010.
Chairman Kill asked how difficult would this be to implement. Ms. Lemos told the committee that this would probably require asking the voters for a permanent base adjustment. This does not take into account the services offered by the Town. To communicate this type of methodology to the voters, it needs to be easy to understand in order to receive a favorable vote. This would need to be looked into to see what the Statute allows the Town to do.
Chairman Kill asked that this be researched before going forward. Ms. Lemos stated 77 of the 90 incorporated towns in Arizona have some type of alternative expenditure limitations. The majority of the towns have home rule and the next higher number of towns have done a permanent base adjustment. The home rule is a system that is flawed due to the amount of growth over the last few years and the demand on program growth.
The election for this vote will be in May, 2010. Research will need to be done on this in order to bring it before the Town Council prior to the election.
Vice-Chair Lamm stated a lot of citizens are concered that government growth is driven by revenues available for spending.
Member Lamm - Requested this be placed on Agenda. How much can the town spend and what external restraints can be placed on spending. We have a substantial contingency fund/reserve. Many entities have failed in constraints on spending during difficult financial times. This may be able to be included in the Home Rule. This would allow the Town Council to dip into these funds by using a table of percentages i.e. 1/7 of 1% per year. Member Lamm stated this was voted on by the Town Council by a majority vote and a suggested 1/5 by a 5-2 super majority and 1/3rd by a vote of 6-1 and 100% by unanmious vote or by emergency declaration by te Governor. (Amended 11/24/2008 Finance and Bond Committee Meeting)
Ms. Lemos provided in the packet the Town Council’s current Budgetary Policies regarding dipping into the reserve fund. These are considered one time funds to only be used for one time expenses. Vice Chair Lamm stated this would be a more sophisticated way of managing these funds. If we have a prolonged economic downturn this could work to the Town’s advantage.
Ms. Lemos replied that this fund is also used for our bond ratings, thus use of this fund can drive our bond ratings. This would need to be a Council decision if they want to place parameters on our budget.
Chairman Kill commented this could cause taxes and fees to go up if there is a reluctance to dip into the contingency reserve.
Member Harris told the Committee he sees no problem with the spending of the Council regarding the contingency funds.
Member Parks asked if the purpose of the reserve is to tide us over during an economic downturn. Ms. Lemos replied it is there to provide for certain needs of the city and its residents for emergency situations and unplanned downturns in the economy.
Meeting Date - Member Harris cannot make Nov. 24th meeting.
Two topics will be presented.
MOTION: A motion was made by Member Parks and seconded by Member Harris schedule the November Finance and Bond Committe meeting on November 24, 2008.
Chairman Kill called for future agenda items.
The Financial Report through the month of October can be brought back to Committee next month at the November meeting as an additional Agenda Item E.
Member Harris asked Councilman Garner if it would be worthwhile if proposals related to funding this year and any cutbacks should come through this committee first before it goes to the Council for recommendation. Councilman Garner stated this has not been part of this Committee’s duties in the past, but he will relay this interest to the Council.
MOTION: A motion was made by - Vice-Chair Lamm and seconded by Member Harris adjourn meeting. Meeting adjourned at 7:45 p.m.
|Chuck Kill - Chairman |
Peter Lamm, - Vice-Chair
Bob Harris, Member
Dan Toth, Member
Jared Parks, Member
Council Liaison, William Garner