City Council

Minutes of Work Session of Council of Ogden City, Utah, August 2, 2016 Page Minutes of the Work Session of the Ogden City Council held on Tuesday, August 2, 2016 at 3:31 p.m., in the Council Work Room located on the third floor of the Municipal Building, 2549 Washington Boulevard, Ogden City, Weber County, Utah. Present: Chair Marcia L. White Vice Chair Bart E. Blair Council members Neil K. Garner (arrived at 3:35 p.m.) Richard A. Hyer Luis Lopez Ben Nadolski Doug Stephens Council Executive Director Bill Cook Council Deputy Director Janene Eller-Smith Council Policy Analyst Glenn Symes Council Policy Analyst Amy Sue Mabey Communications Manager Brittany Griffin Also present: Chief Administrative Officer Mark Johnson Management Services Director David G. Buxton Comptroller Lisa Stout Deputy Comptroller Camille Cook City Treasurer Brandee Johnson Chief Deputy Recorder Lee Ann Peterson The purpose of the work session was to conduct a final review of the Fiscal Year 2017 budget; discuss preparations for the Truth-in-Taxation hearing; and discuss Council business. Final Review of Fiscal Year (FY) 2017 budget Council Executive Director Cook and Policy Analyst Mabey facilitated a review of the Council’s budget message document, which includes the message from the Council Chair to summarize the components of the proposed budget, as well as a message from each Council member focusing on issues specific to the proposed property tax increase, employee compensation, diversity affairs, recreation, community outreach, and transportation, roadways, and sidewalks. The document also includes information regarding the City’s branding initiative, City facilities, development of the Art and Culture Master Plan, development of a new City website, Community and Economic Development, and utility rates and fees. Ms. Mabey indicated the document also includes graphs and charts to illustrate the revenues and expenditures within the City budget, staffing, and Capital Improvement Plan (CIP) projects included in the budget. The Council offered their feedback for amendments to the document to be made upon adoption of the final budget in order to communicate accurate information to the residents of the City. There was a focus on concerns expressed by Council members about the appearance that the budget message document communicates that final decisions have been made regarding the budget and associated tax increase without public input. Mr. Cook noted there will be three versions of the budget message document and each version will include data based upon the three budget proposal options made by City Administration; the final version of the budget message document will not be published until the day following the August 9, 2016 meeting during which a final decision will be made. Council Deputy Director Eller-Smith then reviewed the Council’s budget goals and guidelines as summarized in the budget message document and scheduled to be adopted on August 9, 2016. This section of the document provides direction to City Administration relative to implementation of the current budget as well as the priorities of the Council for the next budget year. Mr. Cook added City Administration takes the goals and guidelines outlined by the Council very seriously and they provide regular reports regarding the status of addressing those goals and guidelines. General Fund Financial Model: Mr. Cook stated that Council staff and Administration staff has been working with the City’s financial advisor, Lewis Young Roberts Burningham (LYRB), since the last Council meeting to make adjustments to the recommendations for the General Fund Financial Model. The adjustments reflect the fact that the Council has three property tax increase options to consider: a 28 percent increase, a 31 percent increase, and the 36 percent increase recommended by the Mayor in the proposed budget. Fred Philpot of LYRB noted that he has prepared a summary document including scenarios that identify the potential property tax levy increases and illustrates how different options would impact the annual percentage change as well as the annual property tax that could be assessed on businesses and residential properties in the City. The first scenario is a baseline scenario and does not generate enough revenue to meet all expenditures across all departments and divisions of the City. The second scenario displays revenue sufficiency and provides the tax levy increase needed to fund all expenditures across all departments and divisions of the City. He noted it is important to understand the estimated revenues through 2022 are based on the tax levy increase that has been proposed in FY2017. Council member Stephens stated he is concerned about the proposed tax increases for the next five years and how those increases will impact residents that may be on a fixed income. Mr. Philpot answered that most communities have policies in place that would allow for those on fixed incomes to apply for a hardship waiver that would mitigate the impact they would experience as a result of a property tax increase. However, if the Council is concerned about how the increases would impact the entire community, it would be appropriate to consider all projected expenditures across the City and decide which expenditures will not be funded as a result of reduced tax increase revenue. He urged the Council to carefully consider the level of service they would like to provide to the community. Mr. Philpot then reviewed the third, fourth, and fifth scenarios illustrating revenue sufficiency and noted that the difference between these scenarios and scenario two is that they call for 28.71 percent, 30 percent, and 31 percent first year tax levy increase, respectively. Scenario two includes a 35 percent first year tax increase. Mr. Philpot stated that subsequent tax increases are based on the tax increase approved in FY2017, but they fluctuate between 12 percent and 19 percent. The most important decision before the Council with respect to the General Fund Financial Model is the tax levy increase to be approved in FY2017; this decision will influence all future year budgets and will provide some context in the discussion regarding the level of service to be provided by the City. Council discussion centered on the expenditures upon which the revenue projections are based. Council members Hyer and Lopez communicated that they have been open to considering a tax increase to fund public safety salary increases, but they are concerned about proposals to further increase taxes in future years to fund additional salary increases or expenditures as those issues have not been fully vetted by the current Council. Council member Lopez noted that the City has operated for the past 29 years without exuberant tax increases and he does not understand why such dramatic increases are suddenly needed each year. He does not feel he is ready to discuss the ‘wish lists’ of other departments of the City. Vice Chair Blair stated that City Administration submitted a proposed budget to the Council that included a property tax increase; when the certified tax rate was provided by the County, the Administration’s proposal was adjusted to increase revenue by $500,000. If the Council approves the higher tax levy increase, it will be necessary to determine how that additional $500,000 will be spent and that is why Administration has developed the ‘wish list’ of needed expenditures. He does not feel the Council has not been educated but kept informed and the Council always has the option of approving the lower tax rate that was initially recommended. The purpose of tonight’s discussion and Mr. Philpot’s presentation is to illustrate the manner in which the certified tax rate that is ultimately adopted by the Council will influence future budgets. The Council is not being asked to take action on future tax increases right now. Council member Lopez stated he feels Vice Chair Blair has been sympathetic to the Administration’s plea for increased revenues to cover certain needs in the City. He noted his stance has been in opposition to those requests and he believes that was the consensus of the remainder of the Council as well. He is comfortable considering a property tax increase to cover compensation increases for public safety and that is it. Chair White stated the Council must also consider the future and it is not possible to make a decision that only addresses the issues that are present today. She noted Mr. Philpot has been charged with working with each department in the City to identify City-wide needs aside from salary increases and developing a model that will accommodate those needs. Council member Lopez stated if that is the case, he feels the Council must engage the citizens of the City to get their buy-in on the program and associated tax increases. Council discussion and debate of the appropriate certified tax rate continued, with a focus on the impact information that has been provided to the City Council over the past several months to justify the recommended tax increase as well as the manner in which future tax increases will impact City residents. Chair White indicated that rather than simply considering just one year of budgeting at a time, she would prefer to plan for the future and consider up to five years of City budgeting at one time. She feels the General Fund Financial Model accomplishes that goal. Council Member Nadolski agreed that future planning is needed and he supports the Financial Model; however, he feels a message has already been sent to the residents that the Council would be considering a property tax increase sufficient to provide the amount of funding needed to cover increases in compensation for public safety. He stated he would prefer to adopt a certified tax rate that provides that amount of funding and consider future tax increase amounts based on other defined needs. He added that he hesitates to call the expenditures that have been identified by the department directors of the City a ‘wish list’ and something that is being ‘sold’ to the Council. Council member Garner agreed and stated he understands there are real needs in the City and he also hesitates to label them as a ‘wish list’. This led to continued discussion of the needs and associated expenditures that have been identified by City Administration, with a focus on the difference between one-time and ongoing costs. Mr. Philpot indicated that many entities are proceeding in the direction of developing a Financial Model to aid them in the development of their annual budgets. The meeting recessed at 5:01 p.m. The meeting reconvened at 5:09 p.m. Preparations for Truth-in-Taxation Hearing Council Executive Director Cook invited the Council to offer recommendations for the manner in which the body should proceed with considering the proposed tax increase. Council member Nadolski stated it would be his proposal that the Council approve the certified tax rate that would generate the amount of revenue needed to cover public safety compensation increases as identified in the tentative budget. Council member Stephens asked if that is the 35 percent amount, to which staff answered yes. Council member Garner stated that he agrees with Council member Nadolski’s proposal and he feels the Council would be fiscally responsible in proceeding in that manner. Council member Hyer asked Council member Nadolski if he is considering the funding for new positions as part of the overall public safety compensation needs. Council member Nadolski answered yes. This led to discussion regarding the current staffing levels of the Police and Fire Departments, after which Council member Stephens indicated he would support the 28 percent tax increase for the purpose of funding Public Safety tax increases. Chair White then noted that she would like to find funding for an additional management audit for the Police Department. Vice Chair Blair stated he would like to base the tax levy increase on scenario five in the information provided by Mr. Philpot during discussion of the General Fund Financial Model and approve a 31 percent tax increase. Mr. Cook summarized the three proposals for consideration: first is to approve the 35 percent tax increase, second is to approve the 28 percent tax increase, and third is to approve the 31 percent tax increase. All revenues associated with any of the three increases would be dedicated to increasing salaries in the Police and Fire Departments with a request that City Administration provide the Council with a proposal for how to spend the money generated by the tax increase. He noted Chair White would also like to use some of the money to fund a management audit or study in the Police Department. Council member Hyer asked if any member of the Council feels they cannot support the 31 percent tax increase as that seems to be a compromise between the two other proposals. The Council discussed the idea of supporting a 31 percent tax increase, ultimately settling to support the 31 percent tax increase pending additional information or input during the public hearing scheduled for August 9, 2016. Council member Nadolski stated this is a very difficult issue, but the process the Council has used to debate and consider it has been very rewarding and he thanked the entire Council for being open and honest and engaging in difficult discussions in order to reach a resolution. Several Council members echoed Council member Nadolski’s sentiments and offered their gratitude to Council and Administrative staff for the hard work they have put into this year’s budget process. Council Business Ms. Eller-Smith referenced the recent approval of the refunding action for the Sewer and Water bonds and noted that she needs a couple of Council members to participate on the pre-pricing committee for the bonds. The first item of business to be handled by the committee is a pricing call on August 24, 2016 at 3:30 p.m. and the final sale will take place August 25, 2016 between 11:00 a.m. and 1:00 p.m. Council members Hyer and Lopez volunteered to participate on the committee. The meeting adjourned at 5:30 p.m. ________________________________________ LEE ANN PETERSON, MMC CHIEF DEPUTY CITY RECORDER ________________________________________ MARCIA L. WHITE, CHAIR APPROVED: October 25, 2016