City Council Budget Committee Meeting - Minutes
At 6:00 pm Mayor Drotzmann opened the first meeting of the budget committee to consider the proposed budget for the 2016-2017 fiscal year. Present were budget committee members Rod Hardin, Douglas Smith, Jackie Myers, Manuel Gutierrez, Doug Primmer, Clara Beas-Fitzgerald (arrived at 6:30pm), Mary Corp, Fred Allen, Jr., Dave Wright, Laura Sterling, and Tim Beinert. Lori Davis, John Kirwan, and Brian Misner were excused; Joanna Hayden, DuWayne White, and Eric Carpenter were not present.
City staff present included City Manager Smith, Mark Morgan, Amy Palmer, Larry Fetter, Clint Spencer, Chief Edmiston, Ron Sivey, Chuck Woolsey, Bill Schmittle, Marie Baldo, Nate Rivera, Roy Bicknell, Gary Luisi, Heidi Florenzen, and Lilly Alarcon-Strong. News media present was Jade McDowell of the East Oregonian.
Mayor Drotzmann stated the committee must elect a chairman and secretary. Tim Beinert was nominated and unanimously elected chairman. Mary Corp was nominated and unanimously elected secretary.
Chairman Beinert asked Budget Officer Byron Smith to present the budget message.
Mr. Smith reviewed his message stating it is his honor to present the City of Hermiston’s 2016-17 Proposed Budget. The proposed budget and the budget document are the result of hard work from the City’s leadership team and their employees. The dedication of the City’s employees is impeccable.
The 2017 budget has been prepared in accordance with the State of Oregon budget law as well as the Government Accounting Standards. In addition, it has been prepared on the foundation of the City’s adopted financial policies. The City continues to expect these changes to make the budget more transparent and easier to understand. During the 2016 year the City Council held a goal setting. The new vision statement and values are included in this document and influence many individual appropriation recommendations. The City continues to work to improve the budget process and the budget document.
There have been only a few structural changes in this budget in comparison to the 2016 budget.
The 2017 budget continues and upholds the City’s adopted policies. The all funds budget is $49,181,898 which is $14 million smaller than the 2016 budget. This decrease is two-fold. First, many of the construction projects the City has been budgeting for are now completed and so are no longer included. The City has done some restructuring that reduced the number of fund transfers which artificially inflates the budget.
The 2017 budget proposes a 2.25% pay increase for all City employees. This increase matches the negotiated wage being given to the Police Union.
City Manager Smith provided additional information regarding each of the major funds in the budget.
The general fund contains funding for some of the most basic operations of the City like the police department. It also contains many services that the City calls quality of life programs like the parks and recreation and library. These services combine to make an inviting community to live in.
In the 2017 budget you will notice that the general fund revenues and expenditures grow by approximately 11% an increase of $1,508,391. This increase is mostly driven by the increased revenues from TPA and the associated debt related to EOTEC. Most of the other revenue sources are holding fairly steady with small amounts of growth.
The following general fund items are of particular note:
Parks and Recreation
- This will be the first full year for the Parks department to provide landscape maintenance services to the water and sewer departments. Staff discussed this idea and council approved implementation of this program at the end of the 2016 budget. This change will allow a higher level of service to be provided and to lessen the burden on the water and sewer staff to provide or manage these services.
- The Victory Square Park project is anticipated to be complete in the 2016 budget but the City has appropriated some funds in case it runs slightly over.
- The Skate Park and Sunset Park reserve fund accounts have additional funds allocated to continue to develop them in FY2017.
- A new reserve fund account was created in 2016 to gather funds for the West Highland Trail project. The City anticipates initial construction activities to take place toward the end of the 2017 budget.
- To enhance clarity on the Christmas Express project spearheaded by the police department, the City has separated those funds into their own fund. This allows very transparent tracking of those community donations.
- The Council recently approved an intergovernmental agreement with the City of Umatilla for the City to provide building inspection services. The City is not planning to add a new position at this time but it may be considered at a future date.
- The airport taxiway project has grown in scope and also funding from the Federal Aviation Administration (FAA). This additional funding is reflected in the proposed budget. The City anticipates the project to be completed in the 2016 calendar year.
- Funds are allocated within this program to purchase a bus that would enable the City to start a Dial-a-Ride service.
- The 2017 budget will contain funds to implement the newly adopted “Where Life is Sweet” brand. The City has allocated $25,000 to implement new letterhead, signage, bills, etc. There is also $75,000 to pay for a full repainting of the water tower.
- In the proposed 2017 budget the City has moved the expenses of the prosecutor and the public defender into the court budget. This will give us one spot where all of the court expenses are located.
The utility fund and its associated reserve and project funds will see a drastic change this year. The Recycled Water Treatment Plant project is now complete. The OSU water line extension project is now complete. These projects will now only be a part of the historical portion of the budget document.
There will not be anything directly in the utility fund in the 2017 budget related to an upcoming Capital Improvement Plan (CIP). This CIP was an action item that was adopted in the goal setting efforts. Both the water and sewer departments along with the street department are working on a CIP that will be included in future budgets. This change will help the departments to be more deliberate in their planning for future capital expenditures. This will require further discussions about utility rates.
This fund is relatively stable. The only major project associated with this fund is for an overlay on North 1st Place between Elm and Harper Road. This segment of road is poor shape and needs something to preserve the road and make it functional for the next five years. This overlay project will do that.
Hermiston Energy Services (HES) Fund
The City has plugged an 11% rate increase in here as the worst case scenario. This fund needs additional funding to provide means to address many capital needs. There are some different options under consideration at this time.
Transient Room Tax (TRT) Fund
This fund is projecting a modest increase in revenues. The major difference is that in the 2016 budget year an additional $1 of Tourism Promotion Assessment (TPA) has been added to the budget in order to fund additional capital construction at the Eastern Oregon Trade and Event Center (EOTEC). During 2017, this assessment will be capitalized and bonds will be sold to assist in constructing Phase 1 of the EOTEC.
Regional Water Fund
This fund is another very stable fund without many major changes. The City anticipates a new rate increase in 2017. It has been two years since these rates were last adjusted. That will have to be done in a budget amendment because the analysis has not been completed.
Bonded Debt Fund
The activities tracked in this fund have changed based on recommendations of the City’s new auditors. The debt in the utility fund will no longer come through this fund. That debt will be paid directly out of the utility fund. Only property tax funded debt will be paid out of this fund.
In the reserve fund, there are two accounts that were created in the 2016 budget. First, the community enhancement fund was established to provide funding for projects that enhance our community. This City is adding an additional $100,000 to the account to be used strictly for matching funds for various grants. The city hall improvement fund was used in the 2016 budget to make some improvements to the existing city hall as well as do a space needs assessment for a potential new city hall. The remaining $65,000 is budgeted to explore possible options for a new city hall.
Many of the other accounts in this fund have a balance and we have proposed to appropriate those amounts in order to allow the fund the flexibility to be able to address a need within the year the budget is in place.
Senior Center Construction
We anticipate that most of the senior center construction to take place in the 2017 budget year and funds are budgeted appropriately.
The initial $6.4 million lottery grant for EOTEC will be completely expended in the 2016 budget. This capital project will no longer show up in the city budget.
City Manager Smith thanked the department heads and managers especially Amy Palmer and the finance department staff for all the work they did to help complete the budget. And the City Council and the citizen members of the Budget Committee for their willingness to give up their time and serve the community. City Manager Smith stated it is an honor to work with professional and skilled City employees and dedicated community volunteers to implement the 2016-2017 budget.
Upon completion of the budget presentation and with no further comments or questions regarding the budget, Dave Drotzmann moved and Dave Wright seconded to approve the rate per thousand of $6.0860 for general fund operations. Motion carried unanimously. Fred Allen, Jr. moved and Douglas Smith seconded a tax levy of $260,000 for bonded debt. Motion carried unanimously. Dave Drotzmann moved and Doug Primmer seconded to approve the proposed budget for the 2016-2017 fiscal year. Motion carried unanimously.
The meeting was adjourned at 7:37 pm.