City Council Committee Agendas

Mount Vernon City Council Finance Committee Minutes January 23, 2013 Present: Councilmembers Fiedler, Ragan, Urban, Molenaar, Quam, Lindquist and Hulst Staff present: Finance Director Alicia Huschka, Police Chief Dodd, Human Resources Director Bartlett, Mayor Jill Boudreau 1. October and November 2012 minutes were reviewed and approved. 2. Review Major Revenues. Alicia reviewed the major revenues received in 2012.  Property tax - in 2012 the City collected $96,595 more than budgeted. Alicia budgets slightly less than the amount levied by City Council to allow for delinquent payments of taxes. The City collected 99.9% of the budgeted property tax in 2012.  Sales tax - in 2012 the collections were 3.7% higher compared to 2011. January 2013 collections are up 3.2% over January 2012.  Criminal justice sales tax – in 2012 these revenues were 5.6% higher than 2011 collections.  Motor vehicle fuel tax – in 2012 this was down 1.6% compared to 2011.  Building Permits – budgeted revenue was $350,000 and actual collections were $541,000.  Utility Taxes - 2012 collections were down 1% compared to 2011  Real Estate Excise Tax (REET) - in 2012 the revenues collected were up 26% over 2011 but is still quite low compared to some previous years. City collected $262,063 for the 1st quarter percent and the 2nd quarter percent of REET. 3. Current and future obligations  LEOFF I long term care – The City has 22 Leoff I retirees which the City is obligated to cover 100% of medical coverage and costs for these retirees for the remainder of their lives. The City established a reserve fund specifically to address the future obligation of long-term healthcare for these 22 Leoff I retirees. This Leoff I Long-term Healthcare Reserve fund balance at January 1, 2013 is approximately $300,000. The City will spend $237,727 in 2013 to cover medical insurance premiums for these retirees which is funded by the General Fund and partially funded through the City’s Firemen’s Pension and Relief (FR&P) Fund. The City has an actuarial study performed every two years on the FR&P fund to ensure that there is enough money available to pay any future pension costs on pre-Leoff I firefighters and to determine how much can be dedicated annually towards medical premium costs. The last actuarial study concluded that the City can spend $94,000 per year towards non-pension costs in the FR&P Fund which helps to offset the $237,727 that the City will pay in medical premiums in 2013.  The largest future obligation is the cost of long-term care and assisted living. Eighteen months of long term care can cost in excess of $83,000.  Kandy Bartless, HR Director has researched purchasing medical City of Mount Vernon Finance Committee January 23, 2013 Page 2 insurance for retirees and long-term care insurance hoping to alleviate some of the long term care costs but the premium quotes were approximately $100,000 per year and not all of the potential retirees would be covered. The cost versus benefit of purchasing this LT Care insurance is not favorable to the city.  The City will continue to fund the LEOFF I long term healthcare reserve on an annual basis to address this future expense.  HR is also investigating implementing a cap on some of the potential expenses that are paid for LEOFF I retirees health care to bring them in line with what current insurance policies provide for active employees. 4. Passport Services:  The City Finance Department has offered passport processing services since prior to 2000, which is not a traditional function of a Finance Department; however at that time no other agency in the city limits was offering this service so the Finance Department stepped up to provide the service. In recent years the revenue and activity for this service has been trending downwards consistently, and it is a service that is offered at the Post Office and Skagit County Superior Court, both within blocks of City Hall. In order to redirect staff time for Finance Department functions and duties the Mayor and Finance Director are proposing eliminating this service. The Committee indicated their support for discontinuing this service, as this service is offered at two other agencies in the City. 5. Finance Department updates:  The City went live with on-line utility bill processing as of January 23, 2013.  The BARS Chart of accounts conversion is completed per the requirements of the Washington State Auditors.  The 2013 budget book is online and available for review.  The City is hosting a WFOA Finance class on federal grants and grant management on April 24th.  Cyber Security measures have been discussed and reviewed with the I.S. Manager and the Finance Department to ensure fiscal safety.  I.T. equipment purchases, often times, have the best deals available in the first quarter of the new year. Alicia asked for permission from Council to make these purchases should they be appropriate and included in the City I.S. budget, with an email notification to Council to keep them abreast of the purchase. This is particularly related to Council’s request to not make capital purchases in 2013 until the 2012 books were closed.  Skagit County is having an Economic Development (Distressed/Rural County) Grant Program meeting. Alicia will be attending this County meeting and will report back to Council regarding the program.. 6. Jail Development: Mayor Boudreau gave Council an update from the Jail Coordinating Council meetings and specifically gave an update on funding options being considered for the construction and operation of the proposed new jail facility. Adjourned at 6:58 pm City of Mount Vernon Finance Committee January 23, 2013 Page 2 Submitted by Rebecca J. Wade