HomeMy WebLinkAboutMinutes - City Council - unsigned - 1992-01-181
01/18/92
City Council, Adjourned Regular
Meeting
Council Workshop - Shasta House
8750 Wonderland Boulevard
Redding, California
January 18, 1992 8:30 a.m.
The Adjourned Regular 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, Electric Utility Director Lindley, Planning and Community
Development Director Perry, Public Works Director Galusha, General Services
Director Masingale, Finance Director Downing, Personnel Director Bristow,
Information Systems Director Kelley, Airports Director Ruff, Electric Utility
Operations Manager Ryan, Electric Utility Resource Manager Coleman, Tourism
and Convention Director Gorman, Electric Utility Power Plant Manager
Heckenberg, Budget Services Officer Starman, Public Information Officer
Bachman, and City Clerk Strohmayer.
City Manager Christofferson provided Council with an overview of the Workshop
agenda. He provided Council the final proof of the State of the City Report
for information, and a draft copy of the Mid-year Progress Report on status of
major projects, and a copy of the Project Tracking System Report.
GENERAL FUND UPDATE
(B-130-070)
Finance Director Downing reviewed the Interdepartment Communication to Council
dated January 17, 1992, incorporated herein by reference, of the City's
financial picture and outlined several positive impacts, as well as negative
impacts.
Positive Impacts
Ms. Downing explained that as part of the 1991-92 State budget process, PERS
employers were granted retirement contribution savings. AB702 eliminated two
special cost of living accounts within the PERS fund. The balances in these
accounts are required to be used as an offset to employer contributions to
PERS. PERS has indicated that the City's allocation is approximately
$2,600,000 (equivalent to one year's employer contributions), of which
$1,600,000 will directly benefit the General Fund.
Effective the first payroll period ending in December, the City is required to
offset employer contributions to the AB702 credit until exhausted. The City
also has the option to recapture any monies previously paid for employer
contributions retroactive to July 1, 1991 (approximately $988,000).
Ms. Downing also explained that in fiscal year 1990-91, the City was notified
by PERS of a surplus account balance of $1,509,932 which resulted from an
actuarial study. As part of this study, they looked at the number of
employees and prospective retirees. The funds were divided into two parts:
public safety and miscellaneous employees. All miscellaneous employee funds
were exhausted last year, but interest accruing on it amounted to about
$45,000. On the portion that dealt with Safety, we received approximately
$400,000 plus accrued interest. In the current year, we have $455,000 that
relates to that surplus for which the City received benefit this fiscal year.
The 1991-92 Annual Budget anticipated that it would be necessary to transfer
$100,000 from the General Fund to the Tourism/Convention Fund to fund
operating expenses in the Community Services Department. However, since
revenue from the transient occupancy tax has been higher than projected, it is
now anticipated that this transfer will not be necessary.
Council previously took action to implement $825,000 in budget cuts ($411,000
during "Round I" and $414,000 during "Round II"). Specifically, Council (1)
reduced expenditures by $675,000 and (2) reduced the reserve for employee
compensation increases by $150,000. In addition, Council has expressed its
desire to make additional budget cuts later this month.
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01/18/92
Negative Impacts
The State Legislature, in an attempt to balance its own budget, reduced local
revenues associated with the cigarette tax ($72,000) and fines and forfeitures
($150,000), for a total reduction of $222,000 in previously budgeted revenues
for fiscal year 1991-92. This action occurred several weeks after Council had
adopted a balanced budget for the City.
The State Legislature did not repeal booking fees or property tax
administration fees, despite strong repeated assurances and signals from some
key legislators (including Senator Ken Maddy, who sponsored SB2557) prior to
July 1, 1991, that SB2557 would be repealed.
Supplemental appropriations to date total $1,596,000. The majority of these
supplemental appropriations ($1,349,000) are prior year carryovers
(expenditures obligated but not paid at year end). These carryovers include
such items as purchase orders which were issued during, but not paid for in,
fiscal year 1990-91, contracts which obligate the City to make payments in
fiscal year 1991-92, etc. The remaining supplemental appropriations
($247,000) reflect actions taken by Council after July 1, 1991 (Buenaventura
EIR, Fish and Game Fees, booking fees, etc.)
The City Manager previously informed Council that sales tax revenue was off by
about $474,000 for the three month period ending October 31, 1991. The
Finance Department projects that the cumulative shortfall for the entire
fiscal year 1991-92 will total approximately $1,400,000.
Based on information received from the County Auditor-Controller, the Finance
Department has decreased the property tax revenue estimate by $452,000 (as
compared to the revenue estimate contained in the 1991-92 Annual Budget).
Part of this downward revision resulted from the fact that actual revenues
received in fiscal year 1990-91 were $315,000 less than the revised estimate;
therefore, the fiscal year 1991-92 revenue estimate was calculated based on an
"inflated" base, compounding the problem in the current year. It was
originally thought that the County had withheld booking and property tax
administration fees, which accounted for the difference. The City has
subsequently been advised by the County Auditor-Controller that only property
tax administration fees were offset against the property taxes remitted.
The business license revenue estimate for fiscal year 1991-92 was based on the
existing Municipal Code. Council subsequently took action to amend the
Municipal Code to exempt real estate agents from business license
requirements. The Finance Department projects that this action by Council to
provide such exemptions will result in the loss of about $52,000 in revenue.
Construction activity in the City has declined from last year. Based on the
most recent information available from the Building Division, the Finance
Department has reduced the revenue estimates associated with Building,
Electrical, Plumbing, and Mechanical Permits by $647,000. In a related area,
based on the same criteria, Building Plan Check Fee revenue estimates were
also decreased by $244,000.
Council authorized the movement of all revenue and related expenditures
associated with the Victor Avenue Extension Project from the General Fund to
the Development Fund. This action reduced revenue as well as expenditures by
$570,000 (resulting in no net effect to the General Fund).
Based on more recent information, the Finance Department has reduced various
other revenue estimates, in total, by $445,000. "Other revenue" includes such
things as revenue from miscellaneous licenses and permits, revenue from other
governmental agencies, charges for services, etc.
In the 1991-92 Annual Budget, the "beginning funds available" figure estimated
for the General Fund was approximately $2,800,000. However, the City's
Comprehensive Annual Financial Report, which was just recently completed,
revealed that the beginning funds available figure was actually $2,400,000
when adjusted for the PERS surplus.
Council was also provided with the following information:
A table of the revised General Fund summary reflecting the positive and
negative impacts, which indicated a negative reserve of $1,869,000 ending
fiscal year 1992 if no further adjustments are made.
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01/18/92
A list of expenditure alternatives to eliminate/mitigate theoretical negative
balance, and a list of resource alternatives to eliminate/mitigate theoretical
negative balance.
The General Fund could end fiscal year 1991-92 with a theoretical negative
balance. However, the Finance Department would stress that this potential
negative balance is still only "theoretical." It is a certainty that most of
the information contained in the report will continue to change as we get
further into the fiscal year. As such, the magnitude of the theoretical
negative balance will continue to fluctuate throughout the fiscal year. Ms.
Downing conveyed that Council should be aware of the following potential
issues:
Our revised revenue estimates are fairly conservative and are based on the
assumption that the economy will continue to experience an economic downturn
throughout the remainder of fiscal year 1991-92. Although this assumption
appears to be reasonable, it is possible that the economy could begin a
recovery sooner.
Although $38,100,000 has been appropriated from the General Fund as of January
1, 1992, it is highly likely that actual expenditures will be less than that
amount. The City typically has approximately $1,400,000 in carryovers each
year.
AB702 is being challenged in court. It is anticipated that a decision will be
reached sometime in February.
Staff recommends the following expenditure reductions and resource
enhancements:
Expenditure Reductions
Reduce all General Fund budgets by three percent representing savings of
approximately $1,000,000. Authorize department directors, in consultation
with the City Manager, to allocate the reductions. In some instances, these
reductions could result in the need to lay off existing employees.
Further reduce various General Fund departments' travel and training
expenditures representing savings of $25,000.
Eliminate purchase of police vehicles and related equipment representing
savings of $118,000.
Reduce park maintenance and recreation programs representing savings of
$50,000.
Defer acquisition of exhaust extraction system for Fire Hall #1 representing
savings of $20,900.
Eliminate traffic safety program when grant expires on February 19, 1992,
representing savings of $83,000.
Further reduce various General Fund departments' overtime expenditures
representing savings of $100,000.
Defer construction of stem walls in various fire halls representing savings of
$2,000.
Reduce General Fund contribution to City Hall capital project fund
representing savings of approximately $130,000.
Resource Enhancements
Implement in lieu franchise fees on City-owned utilities. If the fee was set
at three percent, this action would generate approximately $450,000 in fiscal
year 1991-92, and approximately $1,800,000 per year thereafter. Council
should also consider imposing franchise fees on other utilities operating
within the City (e.g., Pacific Gas & Electric (electric services) and
communication service providers).
Revised parking citation bail amount by $5.00 to provide full cost recovery of
program for prior year and future periods. This action would generate
approximately $17,000 in fiscal year 1991-92 ($50,000 per year thereafter).
This action requires prior court approval.
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01/18/92
Expand Transient Occupancy Tax ordinance to include overnight mobile
home/trailer park facilities. This action would generate approximately $9,000
in fiscal year 1991-92 and approximately $36,000 in future years.
Transfer surplus property sales revenues of approximately $750,000 from the
Development Fund to the General Fund for capital project purposes.
BUDGET POLICY ISSUES
(B-130-070 & E-120-300-700 & S-020-300)
Staff requested Council input and direction on the following budget policy
issues as enumerated in the City Manager's Report to Council dated January 16,
1992, incorporated herein by reference:
1. No modification was made to the City's Mission and Goal's Statement
adopted by Council on June 7, 1988.
2. No modification was made to the City's policy on the environment,
economic development, and growth management, as adopted by Council April
2, 1991.
3. Council directed staff to take the conservative approach when developing
the 1992-93 budget.
4. With regard to funding of community groups, i.e., S.H.A.R.E., the
community gardens, the County Library, it was the consensus of Council
to quantify all the community services/events the City subsidizes, and
directed staff to prepare a report on updated costs to the City for
community services/events.
5. Council indicated that Community Development Block Grant monies should
be expended in areas that provide traditional services.
6. No modification was made in implementing the Parks and Recreation Master
Plan.
7. Council directed staff to proceed with the acquisition of property in
the Southwest Oregon Gulch for ultimate use as a landfill site if it can
be arranged without impacting the rate structure.
8. Electric Department staff provided updates on the refurbishment of the
Redding Power Project and the Combustion Turbine Project.
Electric Utility Operations Manager Ryan reported that initially when
the bids came in, the cost was $148,000, however, Electric Utility Power
Plant Manager Heckenberg determined the initial work required was
excessive and narrowed the scope, which then reduced the cost to
$80,460.00, resulting in a significant savings. He added that they may
be able to realize additional savings by installing auxilliary boilers
to modify the existing boilers which would eliminate the need to shut
the plant down entirely. The cost would be about $1,500,000 versus
$3,200,000 for the conversion to natural gas if the City used the
auxilliary boiler method.
With regard to the sale of Redding Power's surplus materials and sawmill
equipment, Electric Utility Director Lindley advised that a
recommendation will be submitted to Council at its January 21, 1992
meeting.
Relative to the Industrial Power Technology (IPT) Combustion Turbine
Project, Electric Utility Resource Manager Coleman reported that a
contract with IPT, and an engineer's report are being developed. A
preliminary Official Statement for financing will be submitted to the
Electric Utility Commission (EUC) on February 6, 1992. In addition, the
California Energy Commission (CEC) will be making a presentation to the
EUC regarding the siting process and pitfalls.
Council Members Arness and Moss will attend the February 6, 1992 EUC
meeting for the presentation.
Council advised staff to continue on the current course of action.
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9. Council deferred any action on the Sports Complex to the January 20,
1992, adjourned meeting.
10. No action was taken on reinstating any of the deferred projects, such as
street resurfacing and slurry sealing.
11. Assuming appropriate funding mechanisms can be devised, Council
expressed a desire to proceed with needed repairs and renovation of the
Convention Center in 1992-93.
12. Airports Director Ruff gave a presentation regarding the recently-
authorized passenger facility charge (PFC) for the airport. He said the
implementation of the PFC program could generate an additional $180,000
per year. As a means of augmenting currently-available funding in order
to move in the direction of financial independence for the airport,
Council directed staff to proceed with the concept.
13. Council advised staff to continue with current efforts to eliminate
subsidy of the Downtown Mall.
14. In regard to the EDA infrastructure grant, approximately $1,000,000, and
required matching funds, several matching fund source possibilities were
discussed, such as borrowing from the property sales surplus funds or
water and sewer utility reserves.
15. Risk Manager Mlinarcik reviewed his memorandum to Council dated January
16, 1992, incorporated herein by reference, regarding a proposal to
establish new funding policy for self-insurance programs, and augment
the insurance reserves. It was the consensus of Council to take no
action on this item this fiscal year.
16. Council directed staff to include the addition of a safety officer
position into the 1992-93 budget for discussion during budget study
sessions.
17. With regard to financing the improvements associated with the closure of
Benton landfill, Council was advised the estimated cost to cap it is
close to $6,000,000. An additional $2.50/month per household would
generate the needed funds within five years. Council suggested a
portion of the cost be worked into the solid waste rates by November,
1992.
18. With regard to the costs associated with the City's various commissions,
Council was advised that a request went out to all departments to
evaluate the cost of commissions under their jurisdiction and that
information is due this week.
ADJOURNMENT
There being no further business, at the hour of 2:40 p.m., Mayor Dahl declared
the meeting adjourned to 5:15 p.m., Monday, January 20, 1992, at the City
Council Chambers, 1313 California Street, Redding, California, to consider the
award of bid for construction of the Sports Complex.
APPROVED:
__________________________________
Mayor
ATTEST:
______________________________
City Clerk