Finance Committee

City Hall Meeting Minutes 601 4th Avenue E Olympia, WA 98501 Finance Committee Information: 360.753.8244 Wednesday, August 15, 2018 5:30 PM Room 207 1. CALL TO ORDER Chair Cooper called the meeting to order at 5:30 p.m. 2. ROLL CALL Present: 3 - Chair Jim Cooper, Committee member Jessica Bateman and Committee member Lisa Parshley OTHERS PRESENT Community Planning & Development Senior Planner Stacey Ray Administrative Services Director Debbie Sullivan Economic Development Director Mike Reid Police Chief Ronnie Roberts Community Planning & Development Director Keith Stahley Mayor Pro Tem Nathaniel Jones 3. APPROVAL OF AGENDA The agenda was approved. 4. PUBLIC COMMENT - None 5. APPROVAL OF MINUTES 5.A 18-0775 Approval of July 31, 2018 Finance Committee Meeting Minutes The minutes were approved. 6. COMMITTEE BUSINESS 6.A 18-0661 Report on Input from Community Conversation Ms. Ray gave an overview of the recent Community Conversation regarding City budget priorities. The purpose of the Community Conversation was to listen to citizens' perspectives on top priorities to inform the City's budget investments over the next two years. City of Olympia Page 1 Finance Committee Meeting Minutes August 15, 2018 Participants in the Community Conversation worked on two primary activities; writing down individual reactions, ideas or challenges for each of the five focus areas and asking participants to break into discussion groups based on focus areas. Ms. Ray and intern Austin Raymond discussed their work to review and organize over 170 comments; which included looking across all five focus areas for trends and cross referencing them with 2018 current key initiatives and identified gaps. The top ten priorities which emerged included: walkability, housing, mental health and drug treatment, parks and green spaces, arts and recreation events for all, safety, workforce development, accessibility to services, transparency, engagement and long-term strategic planning. The following were identified as gaps in community needs: sidewalk construction in neighborhoods, green space in new developments, more free low-cost family-oriented events, a long-term approach to workforce and economic development, more services located in neighborhoods, and earlier consistent communication about plans and processes. Ms. Ray shared next steps which includes: Sharing analysis with conversation participants and inviting them to stay involved, sharing analysis with City staff, looking for opportunities to consider input in the budget process, identify possible future community conversation and study session topics and look at the timing of a conversation and the budget process next year. Committee members asked clarifying questions. The report was received. 6.B 18-0736 Washington State Investment Board (WSIB) Discussion Citizens Donna Albert and Bourtai Hargrove gave an overview of the risks of investing pension funds in fossil fuels and made a case for the Washington State Investment Board (WSIB) to divest from fossil fuel investments. Currently there are 17 pension funds ties to fossil fuels. Ms. Albert shared the impacts of fossil fuels on the environment. She noted in 2015, the Paris Climate agreement brought all nations together to strengthen the global response to climate change by working to keep global temperature rise this century below 2 degrees celsius. This will create a rapid decline of the use of fossil fuel, resulting in $22 trillion unburnable fossil fuel reserves. Ms. Hargrove shared that fossil fuel investments are increasingly risky for pension fund managers - since 2013 fossil fuel investments have performed poorly. She noted during 18 months of 2014-2015 the WSIB lost $650 Million due to fossil fuel investments. Ms. Hargrove noted the fossil fuel investments will someday crash. City of Olympia Page 2 Finance Committee Meeting Minutes August 15, 2018 Ms. Albert noted cheaper renewable energy is outcompeting fossil fuels; the price of wind power, batteries and solar power are dropping dramatically. Ms. Hargrove outlined multiple lawsuits from cities and states against major oil companies for willful destruction of the environment. She also discussed the loss of social acceptance of investing in fossil fuel, noting many cities have already committed to divestment. Loss of social acceptance is a risk to the value of fossil fuel investments. Ms. Hargrove summarized the investment risks in fossil fuels, including poor performance, stranded assets, government regulation, cheaper renewables and lawsuits for damages. Committee members asked clarifying questions. Chair Cooper noted if the resolution is approved by the full City Council, it should be forwarded to the WSIB with a letter cc’d to Governor Inslee and Olympia’s congressional delegation. Committee member Parshley moved, seconded by Committee member Bateman, to forward a resolution for responsible management of public trust funds to the full City Council for consideration. The motion carried by the following vote: Aye: 3 - Chair Cooper, Committee member Bateman and Committee member Parshley 6.C 18-0760 Recommendation on the State-Required Business License Threshold Language and Discussion of Options to Adjust the Business & Occupation (B&O) Tax Rates and Thresholds Ms. Sullivan reported, as a result of Engrossed House Bill 2005, the City must implement a Model Ordinance to simplify licensing for businesses who work in, but don’t have a physical presence, in the City and to establish a common threshold among jurisdictions to reduce confusion. The Model Ordinance language includes minor changes to “engaging business” definition and “exemptions” for out of City businesses which applies a minimum threshold of $2,000 per year; recommends requiring those businesses to obtain a license but not pay a fee and only applies to business licenses - not specialty or other specialized permits. Ms. Sullivan gave an overview of Olympia businesses and their annual tax revenue by category. The current B&O tax program has no license threshold, a $20,000 B&O threshold, no three year exemption and a .001 and .002 service rate. She also shared four options for adjusting B&O rates and thresholds. Option 1: License Threshold - $2000, B&O Threshold - $20,000, Exemption - not offered, Rate - no change, Revenue Impact - ($44,310), Rate Adjustment - 0.00102 (2%) City of Olympia Page 3 Finance Committee Meeting Minutes August 15, 2018 Option 2: License Threshold - $2000, B&O Threshold - $20,000, Exemption - $500,000, Rate - raise retail Service to .002, Revenue Impact - $77,690, Rate Adjustment - no change Option 3: License Threshold - $2000, B&O Threshold - $75,000, Exemption - $500,000, Rate - no change, Revenue Impact - ($150.610), Rate Adjustment - 0.0011 (10%) Option 4: License Threshold - $2000, B&O Threshold - $75,000, Exemption - $10,000,000, Rate - no change, Revenue Impact - ($150.610), Rate Adjustment - 0.0011 (10%) Economic Development Director Mike Reid shared the staff recommendation of moving forward with options three and four which create regional parity with incentive for microbusinesses and economic development incentive for new retail. Committee members asked clarifying questions. Committee members noted they would like special outreach to businesses and conversation with the community before changing B&O tax rates. Committee member Bateman moved, seconded by Committee member Parshley, to recommend language for the Business License & Fees Model Ordinance to the full City Council and to address adjustments in Business & Occupation Tax Rates during the 2019 budgeting process. The motion carried by the following vote: Aye: 3 - Chair Cooper, Committee member Bateman and Committee member Parshley 6.D 18-0761 Discussion on the Public Safety, Levy Lid-Lift and Banked Capacity Ms. Sullivan gave an overview of the Public Safety Levy Lid Lift that was approved by voters in 2017. The ballot measure authorized the City to levy regular property taxes up to $0.45 per $1,000 to fund community safety programs and services. The City raised property taxes $0.34 per $1,000 to generate $2.8 Million to fund additional law enforcement officers for the downtown walking patrol, neighborhood liaisons, code enforcement, a mental health response team, direct mental health services and Community Court. Ms. Sullivan shared, assuming a 3% growth of annual expenses, the annual increase increments, the cumulative increase and the banked levy remaining per year noting the banked capacity would expire by 2026. Chief Roberts discussed how the cost of services will increase over time. He noted in October a staffing analysis will occur to assist in formulating a long term staffing strategy. He stated even without having the analysis, the Department is challenged with delivering service based on increasing population. Chief Roberts discussed the options regarding whether to access banked capacity to meet public safety needs while maintaining adequate funds to ensure full continuation of City of Olympia Page 4 Finance Committee Meeting Minutes August 15, 2018 new programs into the future. The choices regarding accessing banked capacity are an incremental annual increase, an increase all at once or not accessing it at all. Committee members asked clarifying questions. The discussion was completed. 6.E 18-0770 Recommendation to Add Temporary Staffing to Support the City’s Homeless Response Work Mr. Stahley discussed the need for more staffing to support the City's homelessness response. He noted the City has adopted an aggressive strategy to address the immediate health crisis related to homelessness. In May, the City Council also launched short-term initiatives to address immediate needs. Mr. Stahley noted developing a direct response to homeless services and affordable housing is a new line of work for the City. In April staffing was realigned to create an internal Housing Action Team to better align the emerging work and in May, through a partnership with Evergreen Christian Community, hired the City’s first Homeless Response Coordinator. However despite staff realignment and the addition of the Homeless Response Coordinator, resources are still not enough to address the amount of coordination, public engagement and planning required. Mr. Stahley requested using City Council goal funds to fund an additional temporary staff for six months. This would require depleting the remaining $35,000 of Council goal funds for 2018. He noted this will help get through the end of the year and permanent funding can be addressed in the 2019 budget process. Committee members asked clarifying questions. Committee member Bateman moved, seconded by Committee member Parshley, to recommend approval of the use of Council goal money to add temporary staffing to support the City’s homeless response work. The motion carried by the following vote: Aye: 3 - Chair Cooper, Committee member Bateman and Committee member Parshley 7. REPORTS AND UPDATES - None 8. ADJOURNMENT The meeting adjourned at 7:00 p.m. City of Olympia Page 5