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HomeMy WebLinkAbout112607CITY OF PORT TOWNSEND CITY COUNCIL MINUTES OF THE SPECIAL BUSINESS MEETING OF NOVEMBER 26, 2007 CALL TO ORDER AND PLEDGE OF ALLEGIANCE The City Council of the City of Port Townsend met in special session the twenty-sixth day of November 2007, at 6:30 p.m. in the Port Townsend City Council Chambers of City Hall, Mayor Mark Welch presiding. ROLL CALL Councii members present at roil call were Frank Benskin, Laurie Medlicott, Catharine Robinson, George Randels, Michelle Sandoval and Mark Welch. Geoff Masci was present by telephone. Staff members present were City Manager David Timmons, City Attorney John Watts, Finance Director Michael Legarsky, Public Works Director Ken Clow, Police Chief Conner Daily, and Legal Assistant Joanna Sanders. CHANGES TO THE AGENDA Motion: Mr. Benskin moved to allow Mr. Masci to participate in the meeting by telephone. Mr. Welch seconded. The motion carried, 6-0 by voice vote. UNFINISHED BUSINESS 2008 BUDGET; BANKED CAPACITY -VOTER APPROVAL; TAX LEVY; TRUST FUND FOR LIBRARY AND POOL; LETTER TO LEGISLATURE RE TAX LIMIT; AGREEMENT WITH MAKE WAVES AND LIBRARY FOUNDATION ORDINANCE 2961, REPEAL ORDINANCE 2781 BANKED CAPACITY -VOTER APPROVAL Referring to Council Rules (Section 3.9), Mr. Benskin questioned the Mayor's authority to place ordinances on the agenda independent of Council direction unless it was an extraordinary circumstance. Mr. Welch noted that necessity dictates the circumstances in coming up with the agenda, but it is up to Council to make the decision. City Council Special Meeting Page 7 November 26, 2007 Mr. Watts responded that Council Rules Section 3.9 does not address whether or not the mayor can have a matter placed on the agenda. Council rules allow the Mayor to establish the agenda. Mrs. Medlicott suggested that Council begin to address the ordinances rather than continue discussion on whether or not the Mayor's action was appropriate. Motion: Mr Welch moved to approve the agenda items as proposed on the agenda provided. Ms. Robinson seconded. Motion carried 6-1 by voice vote, Masci opposed. Staff Presentation City Manager David Timmons reviewed the packet information concerning different approaches regarding the 2008 budget, including required Council action in order to meet the November 30 deadline for submittal of a levy ordinance. The ordinances were a result of Council's request to consider various approaches to address the $136,000 budget shortfall. Ordinance 2961 would repeal Ordinance 2781 which placed aself- imposed restriction to obtain voter approval in order to use banked capacity. Ordinance 2955 is an amendment to the existing Council approved levy request. Ordinance 2962 establishes a trust fund for Pool Operation and Maintenance and capital project and a library capital project for the purpose of segregating the accounting from the general fund. Ordinance 2958 adopts and approves the 2008 City budget. Mr. Timmons reviewed the written budget reduction scenarios for across the board cuts (from 1-3%) as well as user fee increases in the Parks and the Pool. The steps also factored in the use of banked capacity from $130K in Step 4 and to $665K in Step 6. He provided a handout of construction cost indices and advised this be factored into the City's planning for future capital projects. Staffs recommendation is for budget reductions through a combination of fee adjustments, reallocations through an interlocal agreement, and across the board cost reductions in the general fund. He suggested Council discuss banked capacity in the property tax levy. If there were a decision to use the banked capacity, the recommendation was to use it for the library and pool. If choosing Step 4, given the fragility of the pool, pool maintenance might take priority over the library, which might go to a levy vote for support. Council discussion and questions centered on the likelihood the legislature would reverse its decision but allow municipalities to maintain their banked capacity prior to 2002 (for Port Townsend approximately $168,000). There was concern over budgeting more than reinstating $66K in addition to the $168K. Ms. Sandoval confirmed with Mr. Timmons that the library-restricted funds would be specifically for capital improvements and that there would still be no recovery of library hours or staffing. In response to questions about the pool, Mr. Timmons explained that to support the $256K pool budget, $156K is the general fund subsidy and the balance would come in user fees. An earmark of $100K would be for capital and/or emergency repairs for continued operation of the facility. The relationship with a nonprofit for operations would City Council Specra! Meeting Page 2 November 26, 2007 include the nonprofit charging, collecting and assessing the fees for use of the facility, but would not replace the need for partnerships including the school because this amount does not address future costs such as a more efficient heating system. Mr. Benskin recognized there might be concerns that Make Waves could have in moving too quickly into a relationship. He asked if the City could enter into an agreement with a citizens group without 501(c)3 status. Mr. Randels and Mr. Watts responded that incorporation of a nonprofit is a state level action. The 501(c)3 is granted by the IRS to provide charitable deduction status. It is understood that they are currently a legal corporation. Mr. Timmons added that the agreements are bullet point agreement terms and the intent is to get Council authorization to begin negotiations. Public Comment: Jack Molsness offered suggestions for how to save $500K in the City budget involving staffing levels. He suggested Council grant the City Manager the authority to sell $500k in bonds for Local Improvement Districts. Brigida Knauer urged caution in moving too quickly to use funds to support the pool and library, at the exclusion of other improvements and issues. Jim Hagen commented that voting to repeal this ordinance would in a sense overturn the results of three elections. Bob Sokol said taxpayers voted to hold tax increases to 1 % and rejected a lid lift. He suggested the City is creating library and pool districts without voter approval. He would like to know about the public process surrounding making these priorities. David Hero had serious concern with the proposal. He wants the pool remain operational, but because of many outstanding decisions, including plans of the school district and general budget concerns, he would rather see a proposal before the voters. Karen Nelson, Chair of Make Waves, concurred with comments by David Hero. The committee is concerned about this decision, but is supportive of finding a funding solution for continued pool operations. Council discussion continued about Ordinances 2961 and 2955 with Mr. Watts and Mr. Legarsky responding to questions. RECESS Mayor Welch declared a recess at 7:36 p.m., for the purpose of a break. RECONVENE The meeting was reconvened at 7:51 p.m. City Council Special Meeting Page 3 November 26, 2007 There was discussion about the function and timeline of an agreement on the pool. Mr. Timmons agreed a lot of additional discussion with the School District would need to take place. Given that this would occur in 2008, there are many issues, including a lot of support base to consider. Similar to support of the YMCA, he envisions it would take two years until the organization got up and operational. The City might also begin discussions with YMCA on the possibility of their involvement. Mrs. Medlicott requested Council address the repeal of Ordinance 2781. Motion: Ms. Robinson moved to approve first reading of Ordinance 2961, repealing Ordinance 2781 Banked Capacity -Voter Approval. Ms. Sandova! seconded. Mrs. Medlicott said, having worked hard at understanding the budget and listening to the voters, she would not support Ordinance 2961, repealing Ordinance 2781. Mr. Benskin said he has not heard from voters of their desire to be taxed. He would not support this ordinance, but believes there might be room in the budget to address the budget shortfall. Ms. Sandoval said she believes it is Council's responsibility to make a decision and to reach out to the community to better understand community values. She would vote to repeal the ordinance, but concurs there should be community dialogue and outreach about priorities. Mr. Randels said Olympia goes to great length to lay out rules or how local governments actiinteract with citizens. Initiatives superimpose themselves on what the legislature has dictated. The federal constitution requires each state when it forms to become a member of the union to have a republican form of government that is representative of the citizens. He believes Ordinance 2781 is contrary to this and he would vote to repeal it. Ms. Robinson said she would also vote to repeal 2781. She was asked when running for Council whether she would have the guts to raise taxes when needed. She takes her job seriously, but for six years it has been a challenge to figure out how to keep the City running with 1 % increase per year (roughly $16K this year). Mr. Welch said he was not in favor of this Ordinance 2781 and felt it was an abdication of Council responsibility. He explained the small amount (.04 cents) of property tax that supports fund General Services. He feels it is an elected official's responsibility to do what is necessary. Vote on motion to approve first reading of Ordinance 2961, repealing Ordinance 2781 Banked Capacity -Voter Approval. Motion carried. nth Benskin, Masci and Medlicott opposed. City Council Special Meeting Page 4 November 26, 2007 Mr. Benskin challenged that this is a budgetary amendment ordinance or a public emergency ordinance taking effect immediately that should require majority vote plus one. Mr. Watts said this is approval for first reading only and this ordinance is not taking effect immediately. ORDINANCE 2955 -TAX LEVY AMENDMENT Ms. Sandoval proposed that the banked capacity that is in question be put into the general fund. She commented that there has not been support/courage on the Council over the past few years to make this adjustment and keep pace with inflation and taxes we receive are inadequate. There is talk among Council about how it would address economic development. A community discussion does need to begin, She disagrees with Mayor Welch about Formula Stores. She does not believe there is a lot of fat in the budget and she is not prepared to go out and create the funding opportunity for these organizations. Motion: Ms. Sandoval moved to approve first reading of Ordinance 2955, to amend the previously adopted f % levy rate and modify Section 1 to replace $488, 997 with an amount of approximately $168K of the current banked capacity. Ms. Robinson seconded. Mrs. Medlicott objected to being called uncourageous and agreed to continue to participate in the discussion if that remark is withdrawn. Mr. Legarsky and Mr. Timmons responded to several questions about the tax levy amount to request and how the amount chosen might impact the City's bond rating. While they could not say how this change would affect the City's bond rating, Mr. Legarsky said the contingency fund has a large reserve in it. In a bond review, they look at a variety of factors -total finances of City, reserves, general fund, fund balance, and prior actions of Council and voters to address critical issues. In their last review, despite the low fund reserve, the fact that the City did have a banked capacity gave the City an A rating. In response to Ms. Robinson's comment that if Council considered taking $100K of the banked capacity, there would only be a $36K shortfall and we would still not be up to our minimum 5% fund balance. Mr. Timmons reviewed the Budget Option steps, which were intended to guide Ordinance discussion. He indicated a banked capacity of $100K would not balance the budget without the additional budget cutting measures. Mr. Benskin suggested going to Step 3 immediately would solve a great deal of what the City needs and would bring the City to a 5% fund balance level. He suggested considering how else the City might fund shortfalls. Several Councilors did not approve of any reallocation of liquor excise tax funds which support the substance abuse program. Mr. Timmons clarified that his proposal is not to see the program suffer a reduction, but believes the County should make up in these funds money held in their reserves (which are currently 22% of their general fund City Council Special Meeting Page 5 November 26, 2007 balance). He would like to ask why City jail costs are going up 50% with the parent agency with these reserves. He clarified that City and County need to discuss why the City must compromise its service and programs. Mr. Randels believes it makes sense for the City to contribute to domestic violence and Boiler Room, and it also makes sense for the County to contribute funds for the pool. While City is struggling with a miniscule fund balance, the County's has doubled. There needs to be reciprocity. Ms. Robinson commented that the Liquor Excise Tax was dedicated to pay for a prevention specialist. Blue Heron Middle School children are using drugs at a higher rate than in the state and the City is not funding its school resource officer. She does not want the City to miss the benefit of a prevention specialist. Discussions with County on these budget items should resume. She is not in favor of the reallocation of the Excise Tax. Mr. Welch expressed concern about the County growing reserves while the City is challenged to meet jail costs and considering cutting programs. Mr. Benskin spoke against any reallocation of liquor excise tax funds. He noted there is $30K in the Council budget alone that he believes could be pulled from Council contingency fund if needed. He believes there are small changes and modifications to plug budget gaps without cutting funding of these important programs. Ms. Robinson proposed going to Step 3 to reduce service levels because she does not see fat in this budget. Mr. Randels agreed with Ms. Robinson and does not believe across the board cuts make sense and have serious unintended consequences. Ms. Sandoval suggested taking the entire $488,997. She noted that some in the community did not vote for the levy, because they did not want to support increased police enforcement. She noted that cutting the School Resource Officer was not additional policing. Ms. Robinson pointed out that the individual tax burden would not increase 29% even if the City took the entire $488K on banked capacity. On the sheet with the current tax rates, it would increase by 4%. Mr. Timmons clarified that the City does not hide money in the budget, but defers, modifies or does not rehire positions. Service reductions are not found money or cleaning up the fat. There were cuts in 1999 and service delivery suffered. Even if Council agreed to take the banked capacity, the City would still need to address the level of service issues. Ms. Robinson suggested that by taking $466K in banked capacity and the Step 1 reduction in bargaining unit medical premiums, and a reduction in police overtime for City Council Special Meeting Page 6 November 26, 2007 event support would give $495,700K and with an allocation of $210K to library capital, and $100K to the pool, we would be left with about $185,700 to add to the fund balance which would then leave us to 5% fund balance. Without this action, she does not believe the City is going to be able to keep the pool open. Mr. Welch supported taking the banked capacity that the City believes it might more realistically be allowed to keep which would be more in line with Step 4 and could keep the pool open for a year allowing Make Waves to continue their efforts. While he would use the entire bond capacity, he is concerned about the bond rating. There was further discussion about the impact to the City's bond rating if Council decided to utilize the entire banked capacity. Mr. Timmons explained that if the legislature allowed the City to use 6% of the banked capacity, the City amount would be an increase $198,611, but if they recognize the I-747 decision, this amount would adjust to $168K, plus 1 % for this year. Amendment by Ms. Sandoval to amend the previously adopted 1 % levy rate and use the entire pre 1-747 banked capacity (approximately $168,540) plus 7% for this year. Mr. Randels seconded. Motion carried 4-3 by voice vote, with Benskin, Masci and Medlicott opposed. Vote on Original Motion: Ms. Sandoval moved to approve first reading of Ordinance 2955, to amend the previously adopted 1 % levy rate and use the entire pre I-747 banked capacity (approximately $168, 540) plus 1 % for this year. Ms. Robinson seconded. Motion carried 4-3 by voice vote, with Benskin, Masci and Medlicott opposed. Mr. Welch recommended Council discuss the remaining items pertaining to the 2008 Budget at its Tuesday, November 27 meeting. ADJOURN There being no further business, the meeting was adjourned at 9:31 p.m. Minutes prepared by Joanna Sanders, Legal Assistant ttest: r <.t'~~ ~~.~.~y,-, ~"- Pam Kolacy, MMC City Clerk City Council Special Meeting Page 7 November 26, 2007