City Council Budget Committee Meeting - Minutes

Date: 
Thu., May. 18, 2017

At 6:00 pm Mayor Drotzmann opened the meeting of the Budget Committee to consider the proposed budget for the 2017-2018 fiscal year. Present were Budget Committee members: Rod Hardin, Jackie Myers, Doug Primmer, Clara Beas-Fitzgerald, John Douglass, Dave Wright, Laura Sterling, Jason McAndrew, Joshua Roberts, Joanna Hayden, Brian Misner, and Tim Beinert. Lori Davis, John Kirwan, Douglass Smith, Manuel Gutierrez, and Fred Allen, Jr., were excused.

City staff present included: City Manager Smith, Mark Morgan, Amy Palmer, Larry Fetter, Clint Spencer, Chief Edmiston, Ron Sivey, Chuck Woolsey, Bill Schmittle, Mark Rose, Nate Rivera, Roy Bicknell, Gary Luisi, Holly Lambert, Barb McMahon, Dalia Madrigal, and Lilly Alarcon-Strong. News media present was Jade McDowell of the East Oregonian (arrived at 6:26 pm).

Mayor Drotzmann stated the committee must elect a chairman and secretary.  Brian Misner was nominated and unanimously elected chairman. Laura Sterling was nominated and unanimously elected secretary.

Chairman Misner asked Budget Officer Byron Smith to present the budget message.

Mr. Smith reviewed his message stating it is an honor to present the City of Hermiston’s 2017-18 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 our employees is remarkable. The proposed budget is also a direct result of the Councils Goal Setting Session; where Council gives city staff direction on what and where they want to see the City move forward into the future. City Manager Smith thanked the Budget Committee for their willingness to give up their time and serve our community. It is an honor to work with professional and skilled City employees and dedicated community volunteers to implement the 2017-2018 budget.

The 2017-18 budget has been prepared in accordance with the State of Oregon budget law and best practices established by the Government Finance Officers Association. It has also been developed on the foundation of the city’s adopted financial policies. We continue to expect these changes to make the budget more transparent and easier to understand.

In February 2017 the City Council held a goal setting session during which it confirmed the City’s vision statement, its core values and established the goals for the 2017-18 budget. The new vision statement and values are included in this document and many appropriation recommendations are specifically targeted to address the goals. We continue to work to improve the budget process and the budget document.

There are only a few structural changes in this budget in comparison to the 2016-17 budget.  One of those changes is the addition of a new bonded debt fund.  Oregon budget law requires separate debt service funds for general obligation or full faith and credit bonds and revenue bonds.  This is to segregate obligations that are supported by property taxes from those supported by revenues typically generated by enterprise funds.

The 2017-18 budget continues and upholds the City’s adopted policies. The all funds budget is $57,349,641 which is approximately $200,000 smaller than the 2016-17 budget.

The 2017-18 budget includes a 2.5% cost of living adjustment for all City employees. This increase matches the negotiated wage being given to the Police Union. I will now walk through the major funds in the budget and provide highlights about each one.

General Fund

The general fund contains funding for some of the most basic operations of the City like our police department. It also contains many services that we call quality of life programs like parks and recreation and library. These two types of services work together to make a safe and inviting community.

General fund revenues and expenditures decreased by approximately 20% or $3,050,712. This decrease is almost completely driven by the one-time bond proceeds which will be repaid by the additional dollar of Tourism Promotion Assessment (TPA) funds.  The region’s hoteliers have supported this additional revenue source to support capital construction at the Eastern Oregon Trade and Event Center (EOTEC). Most of the other revenue sources are holding fairly steady with small amounts of growth. This level of general fund spending returns us to the 2015-16 fiscal year levels.

The following general fund items are of particular note:

Parks and Recreation

  • The Recreation budget is up slightly this year to add additional staff resources to assist in managing and providing programming to the Hermiston Community Center and the Harkenrider Center after its completion.  These facilities directly support the Council’s Livability Goal.
  • With the positive movement taken so far related to recreational immunity, we are hoping to begin more planning work on the skate park.
  • The West Highland Trail project has taken longer than anticipated due to ODOT involvement. We have carried over all of the accumulated funds and anticipate initial construction activities to take place sometime during the 2017-18 fiscal year.

Police

  • The Police Department has had a number of positions move around during the current fiscal year. The only major budget impact in FY2018 is a request for new vehicles. We have been replacing two patrol cars on a regular basis. We plan to continue that but also plan to replace the unmarked vehicles used by the detectives and the command staff.

Building Maintenance

  • For the past few years, the City has been teetering on the edge of needing a full-time dedicated building maintenance position. Right now we are having highly paid management level employees performing basic building maintenance. This budget proposes to hire a building maintenance position that will oversee all building maintenance activities in the general fund related buildings. One of the factors that tipped things over the edge was the movement of the Community Center to City responsibility on January 1, 2018.

Transportation

  • The new transit program has been successful. Grant funding is being sought to decrease the City’s direct investment in this new program.

Reorganization

  • A number of positions are going to be reassigned. The one that impacts the general fund the most is the reassignment of an existing employee to become the first human resource fully dedicated position in the City’s history. This will help us stay more current in a very complicated portion of City business. These changes will be funded through efficiency savings related to mailings and banking.

Utility Fund

The utility fund and its associated reserve and project funds will take on a couple of new projects this year. As approved by the Council through the sale of bonds, the water department will be installing new water meters throughout the City and the recycled water plant will be implementing a new solids treatment and handling process. Both of these have resulted in long-term operational savings for this fund and are key components of implementing the Council’s Capital Improvement Plan (CIP) Goal.

The projects also represent the first two items completed in our CIP process. Efforts to reinvigorate the process will begin in the first portion of fiscal year 2017-18 and will then be a part of future budget processes.

Street Fund

This fund is relatively stable. Maintenance activities have really stayed within budget. There will be efforts to pave one segment of gravel street. We are trying to work with property owners on this but may need to change our approach.

Hermiston Energy Services (HES) Fund

During the budget process we realized that a rate increase in this fund was not needed for the upcoming fiscal year. New bonds were issued and older bonds were refinanced which enabled us to allocate new funds to large capital project needs. The Bonneville Power Administration (BPA) is considering another rate increase. Projections indicate it won’t cause the need for a rate increase on our side. The one change in this fund is a reclassification of our Superintendent to a General Manager. The title change better indicates the duties that are being performed.

We have also identified more precisely the needs of HES related to working capital reserves and capital construction reserves. This proposed budget implements a new policy that will allow some more investment by the utility.

Transient Room Tax (TRT) Fund

This fund is only projecting a slight increase in revenues. Some regional assessment of the hotel market has indicated that the growth of this funding stream will slow down a little over past year to year increases.

Regional Water Fund

This fund is another very stable fund without many major changes. The analysis has been done and a proposed rate prepared. It will not be implemented until January 1, 2018 in order to respect the budgeting years of the large users of this system.

OTHER FUNDS

General Obligations Bonded Debt Fund

This fund has increased significantly due to the recent bonds issued for various projects. This fund houses the repayment of those bonds and the funding stream for repayment is also transferred in to this fund.

Reserve Fund

The reserve fund does not contain major changes. We are again proposing adding funds to the community enhancement fund to continue to serve as grant match. We are also adding funds to the city hall improvement fund. Those funds will assist in making more safety improvements to city hall itself as well as fund improvements to the Historic Carnegie Library building.

Harkenrider Center Construction

Due to some delays we are going to re-appropriate a large portion of the construction money for this project into the 2018 budget. Some will be completed this year but a majority of the work will be done in FY 2018.

EOTEC Construction

The only portion of this City budget that pertains to EOTEC construction is the transferring of TPA bond proceeds.

Upon review and completion of the budget presentation by Budget Officer Byron Smith and amendment clarifications presented by Finance Director Amy Palmer, after some discussion and answering questions regarding the budget, Dave Wright moved and Clara Beas-Fitzgerald seconded to approve the rate per thousand of $6.0860 for general fund operations. Motion carried unanimously. Doug Primmer moved and Joshua Roberts seconded to approve $328,000 for bonded debt. Motion carried unanimously.  Josh Roberts moved and Dave wright seconded to approve the proposed budget as amended for the 2017-2018 fiscal year. Motion carried unanimously.

The meeting was adjourned at 7:38 pm.


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