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HomeMy WebLinkAboutMinutes - City Council - unsigned - 1991-07-301 7/30/91 City Council, Special Meeting Council Chambers Redding, California July 30, 1991 5:22 p.m. The meeting was called to order by Mayor Dahl with the following Council Members present: Arness, Fulton, Moss, and Dahl. Council Member Buffum was absent. Also present were City Manager Christofferson, Assistant City Manager McMurry, City Attorney Hays, Director of Public Works Galusha, Director of Electric Utility Lindley, Assistant Director of Finance Sundin, Director of Information Systems Kelley, Director of Utilities Customer Service Vokal, Housing Manager Maurer, Public Information Officer Bachman, Assistant City Clerk Strohmayer, and Secretary to the City Council Moscatello. CONSENT CALENDAR The following matters were considered inclusively under the Consent Calendar: Resolution - Purchase of TAB Furniture (B-050-100) It is the recommendation of the City Attorney that Resolution No. 91-297 be adopted, a resolution of the City Council of the City of Redding authorizing the purchase of modular furniture and a secretarial chair from Office Planning Group, not to exceed $10,220.00, pursuant to Redding Municipal Code Section 4.20.080(A)(4), and authorizing the City Manager to sign the appropriate documentation. Resolution - Cost Sharing of Litigation Expenses (L-100 & E-120-900) It is the recommendation of the City Attorney that Resolution No. 91-298 be adopted, a resolution of the City Council of the City of Redding authorizing continuing in the litigation process and the cost sharing of litigation expenses in the matter of The City of Santa Clara v. James D. Watkins. Resolution - Agreement for Work of Improvement for Redding Power Plant (E-120-300-700) It is the recommendation of the City Attorney that Resolution No. 91-299 be adopted, a resolution of the City Council of the City of Redding ratifying execution by the City Manager of the Agreement for work of improvement dated July 23, 1991, entered into between the City of Redding and Donald Clearwater (Receiver). The Agreement authorizes the City of Redding to undertake the building of facilities to connect the Redding Power Plant to the City's electric system. MOTION: Made by Council Member Moss, seconded by Council Member Fulton, that all the foregoing items on the Consent Calendar be approved and adopted as recommended. Voting was as follows: Ayes: Council Members - Arness, Fulton, Moss, and Dahl Noes: Council Members - None Absent: Council Members - Buffum Resolution Nos. 91-297, 91-298, and 91-299 are on file in the office of the City Clerk. IMPACTS OF STATE BUDGET (L-040-300 & B-130-070) City Manager Christofferson stated that the State Legislature "finished" its work on the State budget before adjourning on July 19, 1991. Mr. Christofferson summarized the effects of the State's budget on the City of Redding; and based on information from the League of California Cities, he conveyed the following: the City will lose 47% of its cigarette tax, (or approximately $75,000 per year); booking fees and property tax administration fees will continue; the City will lose one-half of its fines and forfeitures revenue (approximately $150,000), and there is the possibility of a fee being placed on landfill, water users, and water dischargers. Mr. Christofferson conveyed that there are nominal positive impacts to the City's budget because the State increased its sales tax to 7¼% and extended 2 7/30/91 coverage to include snack food and newspaper areas. Since the State transferred over a billion dollars from the Public Employees' Retirement System (PERS), there will be a one-time benefit accruing to the City in the form of a reduced payment to PERS. Mr. Christofferson added that the State Legislature will return to complete its work on August 19, 1991. It will be another month or two before the impact of the State's budget will be known; however, it appears that it will be more negative than positive. Staff will report back to Council when definitive information is available so whatever modifications to the budget that are necessary can be made. This was an information item and no action was required. RESOLUTION - Utility User Tax (T-010-900) City Manager Christofferson recalled that on July 9, 1991, Council adopted an ordinance providing for a utility user tax and directed staff to prepare a discussion paper on the concept of an exemption for low income taxpayers and a cap for major utility users. Mr. Christofferson reviewed the Report to City Council dated July 23, 1991, which is incorporated herein by reference. Mr. Christofferson offered several alternatives for exemptions for low-income individuals and families. Among those alternatives are the following: a 15% discount to families that fall within income guidelines set by the California Public Utilities Commission (used by PG&E and telephone companies to establish lifeline rates), and a full exemption to those that fall within the Housing and Urban Development (HUD) income guidelines (used by the City to determine eligibility for rental assistance and home improvements). Mr. Christofferson conveyed that, after meeting with utility representatives, it is staff's belief that it would be more practical to concentrate the entire exemption for the upper end cap in one utility area, both to spare other utilities the additional bookkeeping and avoid the complications of attempting to split a cap among five different utilities. The appropriate utility to select for this purpose would be electricity because it is City-owned and it represents a higher cost item for most taxpayers. He explained that the tax constitutes a business expense which businesses may deduct from their income tax. With regard to the effective date of the tax, Mr. Christofferson indicated that the telephone company is not able to implement the tax until November 1, 1991. He suggested that Council adopt this date as the effective date. Mr. Christofferson noted that a letter from Viacom Cable dated July 30, 1991, from Susie Evans, Director of Government Relations was received, and a letter from Viacom Cablevision dated July 26, 1991, from Terry Dillon, General Manager, was received. Mr. Christofferson submitted a letter from the Police Public Safety Task Force dated July 23, 1991, updating Council on work performed so far and encouraging Council to implement a utility user tax as a means to increase the public safety obligations that growth brings. A letter was also submitted to Council from the Fire Public Safety Task Force dated July 26, 1991, providing an interim report on recommendations for the Fire Department's staffing, equipment, and expansion needs. Council Member Moss suggested that Council set the rate of the utility user tax and then discuss the cap and low-income exemption. Council Member Moss made a motion to adopt a 5% utility user tax on the following utilities: telephone, electricity, gas, water, and cable television. City Manager Christofferson questioned if the effective date would be November 1, 1991. Council Member Moss expressed concern about losing revenue by waiting until November 1; however, he said the motion would be effective November 1, 1991. Council Member Arness seconded the motion. 3 7/30/91 Noting that the telephone company has a problem meeting an effective date earlier than November 1, Mayor Dahl asked if the electric utility would have a problem meeting an earlier date. Mr. Christofferson replied no, and he indicated that 4 7/30/91 Council could set two effective dates. He conveyed that the electric utility could be ready by September 1 to implement the tax. Council Member Moss amended his motion to commence the telephone utility user tax on November 1, 1991, and commence a tax on all other utilities on September 1, 1991. Council Member Arness said he does not have a problem with an effective date of November 1, but he does not approve of an earlier effective date. Council Member Moss' amended motion died for lack of a second. MOTION: Made by Council Member Moss, seconded by Council Member Arness, that Resolution No. 91-300 be adopted, a resolution of the City Council of the City of Redding establishing Utility Users' Tax rates pursuant to Chapter 4.06 of Title 4 of the Redding Municipal Code in the amount of 5% on the following utilities: telephone, electricity, gas, water, and cable, effective November 1, 1991. Voting was as follows: Ayes: Council Members - Arness, Moss, and Dahl Noes: Council Members - Fulton Absent: Council Members - Buffum Resolution No. 91-300 is on file in the office of the City Clerk. Council Member Fulton stated that cable television is not a utility, and Viacom will be hurt by this tax. Council Member Fulton made a motion to exempt cable television from the utility user tax. This motion died for lack of a second. Council Member Arness stated that it should be incumbent on the individual to apply for the exemption. A full exemption should apply to those who are very low income and handicapped. He pointed out that low income people are the benefactors of those things the utility tax would pay for--libraries, police and fire protection, roadways, parks, and social services. He also suggested that a 15% reduction in the tax be applied to those people that fall within the income guidelines established by the PUC. Council Member Arness suggested that a cap be applied to manufacturing industries. He explained that service industries compete on the local level; whereas, manufacturing industries compete on a national or regional level. Council Member Fulton suggested that the cap be a maximum $250 per month tax. He noted that this will exempt approximately 30 customers. Council Member Moss suggested that when considering this area, the HUD guidelines are more realistic than the PUC guidelines. Exempting individuals at the PUC levels would eliminate a substantial amount of the population, and a 15% reduction on a 5% utility tax is not doing enough for those on the bottom. Council Member Moss suggested that Council decide on two or three alternatives and ask staff to prepare a financial evaluation. Council Member Moss said there is some logic to exempting manufacturing businesses; however, he would prefer capping the tax above $750. He pointed out that businesses may write off a portion of the utility user tax on their taxes. Mayor Dahl noted that Council can review policies, exemptions, and rates on an annual basis. He suggested that Council keep it simple and give a full exemption to very low income individuals according to HUD guidelines. He further recommended that a cap be placed at $250 per month on electricity only. Mayor Dahl added that individuals would have to apply for the exemption. Noting that Council has heard several alternatives, Mayor Dahl suggested that staff evaluate the alternatives in terms of revenue and loss of revenue, and bring it back to Council as soon as possible. Mr. Christofferson conveyed that staff can try to do that; however, determining lost revenue will be difficult because it is unknown how many people will apply for the exemption. They will bring something back to Council, hopefully on the 6th of August. 5 7/30/91 MOTION: Made by Council Member Fulton, seconded by Council Member Moss, to grant a full exemption to those people that apply and qualify for an exemption from the Utility User Tax by meeting the Housing and Urban Development (HUD) guidelines for the very low income; and set a cap to cease calculating the electricity users' tax on bills over $5,000 per month; review these guidelines on an annual basis, and stay with the ongoing HUD figures. Voting was as follows: Ayes: Council Members - Arness, Fulton, Moss, and Dahl Noes: Council Members - None Absent: Council Members - Buffum Council Member Arness said this is not a message to staff to go back and rebudget. He supported strengthening the library and placing funds in the reserve so funds would be available for right-of-way acquisition and parks projects could move ahead. He stressed that he does not want this money to go toward salaries and staff. Council Member Fulton cautioned that once the money is placed in the general fund, Council could lose the flow. He expressed hope that it works out. Council Member Moss said there has not been any discussion against the policies that Council instituted to balance last year's budget. However, it is a budget that left many projects unfunded. He said he would be reluctant to approve any new personnel positions that are not absolutely necessary, and every department will not be rebudgeted. Council Member Moss hoped Council would concentrate on reconstructing the general fund reserve to the 5% level, make an increased commitment to the library, and prioritize traffic needs. Mayor Dahl stated that unfunded projects and specific areas of interest that Council Members have mentioned should be prioritized. He mentioned the Library, police and fire protection, traffic improvements (especially in the South Bonnyview area), and the park system. He pointed out that Enterprise has been waiting for a community park since it was annexed. He asked the public to provide input on how this money should be spent. Mr. Christofferson conveyed that a 5% tax would generate approximately $4,000,000 a year; and if the tax is implemented November 1, approximately $3,000,000 would be generated. There will be an unknown effect on the revenue stream because of the low income exemption and the cap; however, somewhere between $2 million and $3 million will be generated the first year. Staff will be glad to prepare a report that discusses examples. Mr. Christofferson emphasized that Council has effective control over these funds. Council Member Moss pointed out that the County is starting their budget process, and the Chief Executive Officer is suggesting to the Board that their commitment to the library be reduced from $403,000 to $303,000. He stressed that the City does not want to put more money into the library so someone else can reduce their contribution. Council Member Moss said he has a request to make of Council, and Council should respond to the Library Commission as soon as possible. City Manager Christofferson noted that if Council Member Moss can enunciate his request, staff can craft a policy. Council Member Fulton pointed out that the County is backing away from the library, the City of Anderson has not made any real gestures, and he does not want the City left holding the bag again. Better cooperation is needed from the other entities. Council Member Moss recalled that the Library Commission requested a budget in the amount of $761,000 for next year. The Library Commission also received a commitment from the County school system to provide 10% of the library's budget. He pointed out that this year's budget allows 32-hours per week service, and does not include repairs or the enhancement of what is a deteriorating book collection. The estimated budget to provide a 40-hour per week service level and start meaningful rehabilitation of the book collection is approximately $1 million. Council Member Moss requested that Council offer to fund 50% of an enhanced library budget subject to the County maintaining their commitment of $403,000. Noting that the City is already committed to giving the Library $150,000, he explained that this would increase the City's 6 7/30/91 commitment to $500,000. With the 10% commitment from the County School system, the library would have a $1 million budget. Mayor Dahl asked how soon a list of priorities can come back to Council. Mr. Christofferson responded that staff will probably bring it back by August 20. CLOSED SESSION (P-100 & L-100) Mayor Dahl stated that Council will adjourn to closed session pursuant to California Government Code Section 54957.6(a) to discuss a personnel matter, and California Government Code Section 54956.9(c) to discuss potential litigation. At the hour of 6:24 p.m., Mayor Dahl declared the meeting adjourned to closed session. At the hour of 6:54 p.m., Mayor Dahl reconvened the meeting to regular session. ADJOURNMENT There being no further business, at the hour of 6:54 p.m., Mayor Dahl declared the meeting adjourned. APPROVED: __________________________________ Mayor ATTEST: ___________________________________ Assistant City Clerk