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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 11/15/2002 * PLEASE NOTE: Since the Glendale City Council does not take formal action at the Workshops; Workshop minutes are not approved by the City Council. MINUTES COUNCIL GOAL SETTING SESSION Civic Center, Onyx Room 5750 West Glenn Drive Glendale, Arizona November 15, 2002 7:30 a.m. PRESENT: Mayor Elaine M. Scruggs, Vice Mayor Thomas R. Eggleston, and Councilmembers Steven E. Frate, David M. Goulet, H. Phillip Lieberman, and Manuel D. Martinez ABSENT: Councilmember Joyce V. Clark ALSO PRESENT: Ed Beasley, Assistant City Manager; Rick Flaaen, City Attorney; Terry Zerkle, Assistant City Manager; and Pamela Oliveira, City Clerk 1. CITY COUNCIL 2003-04 GOAL SETTING SESSION Mayor Scruggs stated that Councilmember Clark was ill and regretted not being able to attend today's meeting. CITY STAFF PRESENTING THIS ITEM: Mr. Ed Beasley, City Manager; Pilar Aguilar, Acting Budget Director; Ms. Amy Duffy, Director of Intergovernmental Relations; and Mr. Art Lynch, Finance Director. Each year the Mayor and City Council hold a special meeting to prioritize goals and objectives for the upcoming fiscal year. This goal-setting session is the first step in the Fiscal Year 2003-04 budget process. At this workshop the Mayor and City Council will discuss the Fiscal Year 2003-04 budget and begin the process of developing strategic priorities for Fiscal Year 2003-04. The recommendation was to discuss the issues presented and provide staff with direction. Mr. Ed Beasley, City Manager, stated that Glendale's existing financial planning policies have positioned us to successfully face current economic conditions and realize long- term success. However, the economic downturn and its effect on Glendale have required immediate implementation of administrative measures to curtail expenditures. Toward that end, we have carried over administrative measures from last year and taken steps in the first quarter of this fiscal year to reduce spending as a result of lower revenues. - 1 - Mr. Beasley stated many of our citizens are also facing difficult financial times. He said, regardless of international or state situations, when a person cannot find the services or help they need, they turn to the city. He stated sound fiscal policies; strategic planning, investment and growth; progressive marketing; significant citizen involvement; and futuristic thinking have transformed what was once thought of as prospects within the community into authentic projects and jobs. He said businesses have chosen to locate in our community, despite the current national economic situation, and have brought economic vitality and almost 1,000 jobs to the city. He stated the city's ability to provide quality city services is dependent on two major revenue sources, sales tax and state shared revenue. He stated the two western area projects and the expansion of strong retail markets are projected to add $3.5 million to the city's economy. He said an exceptional quality of life has been created as a result of municipal investment and delivery of services, as well as the construction of public amenities that exceed those found in most other cities. Mr. Beasley stated, as the city faces a fluid economy and an environment of declining revenues, everyone must work together to address current challenges and financial impacts from outside the city over which the city has limited control. He noted the city last experienced a significant decline in its economy a little more than ten years ago. He stated the city faced significant challenges and laid off some employees, resulting in service reductions to the citizens. He said the impact of some of those decisions can still be felt today and urged the Council to consider the long-term impacts of the options brought forward by staff. He stated they have to look both at what programs work and continue to be profitable for the city as well as the programs that no longer work and are no longer profitable. He said his intention is to work with Council and staff to ensure they do not minimize or adversely affect the quality of services citizens have come to expect. Mr. Beasley explained the City of Glendale responded immediately to indications two years ago that the economy was beginning to slide, implementing steps to curtail non- essential spending. He said he asked staff to work under the new business model scenario discussed last year. He stated staff conducted a review of impact fees, resulting in Council approval to increase fees. He said the Parks and Recreation Department, as well as Solid Waste, have been working on a comprehensive assessment of their entire operations, including fee studies and program evaluations and will do a zero-based exercise this year to provide additional information. He stated the Capital Improvement Plan has also been revamped to strengthen project needs, descriptions and financial estimates and to include the impact of future operating costs. He noted the Human Resources Department would come before Council next month to discuss a total compensation.package. Mr. Beasley noted that he had formed, and would lead, a cross-departmental budget team. Staff will continue to update business practices in a comprehensive manner to improve efficiency. As part of the budget process, recommended strategies will be developed for consideration by the Mayor and Council as we monitor revenue and expenditure trends. Mr. Beasley concluded his remarks, stating they analize long-term expenditures and enhanced revenue to determine what is successful and what has run its course and no longer serves its purpose. We need to look at partnerships the city has with other organizations, such as GPEC and WestMarc, to determine if they are sharing in the costs. He referred to a memo dated November 4, 2002 outlining administrative - 2 - measures that have already been taken, including changes to the overtime and standby policies and research into early retirement options. He stressed the need to look closely at steps being taken by the state, balancing them against the city's efforts. He said, over the next several weeks, they will bring forward different concepts for balancing the budget and increasing the city's revenue. Legislative Update Ms. Amy Duffy, Director of Intergovernmental Relations, said preliminary numbers for September indicate the state is down $46.2 million for the first three months of this fiscal year or $162 million below forecast. She cited weak performance on individual income tax as the primary cause of the shortfall. She stated FY 2005 is expected to be two to three percent worse than FY 2004 because of the two-year delay in income tax. She said, nationally, signs indicate the recession has ended; however, Arizona has not seen those signs as yet. She noted a Senate Appropriations meeting was held yesterday and it seemed possible that a special session would be called. She stated, at this point, the Senate Appropriations Chair and House Appropriations Chair seem to be driving the process as to how the actual legislative bill will look. She explained the House does not have a plan at this point, but is expected to have one within the next two weeks. She said, so far, the Senate has put out a letter in response to the Governor's plan. She stated both Appropriations Chairs said the House and Senate have agreement on delaying the renovation of the forensic facility and appropriating $50 million of the $150 million anticipated to come from the cigarette tax. She said they are also looking at using a portion of the Ladewig settlement for the special session, however, the House believes that money should be reserved in an account because it will be needed later. She stated they are also looking at all of the funds to see if any transfers are possible. Ms. Duffy cautioned the Council that some of the information reported in the newspapers concerning the special session has not been accurate. She stated the main purpose of yesterday's Senate Appropriations meeting was to hear from the agency heads as to their proposed cuts. She discussed some of the specific cuts suggested by State department heads and the impact those cuts would have on customer service. Councilmember Lieberman pointed out retail and automobile sales have increased and housing has had record-breaking sales, asking why these increases have not helped offset the decrease in income tax revenue. Ms. Aguilar explained the sales and use taxes total about $751 million for a single month and income tax totals approximately $579 million. She said they have only seen about 1.8 percent growth in sales tax, which is not sufficient to offset the decrease in income tax. Councilmember Lieberman noted the motel industry was the only one that reported a significant decrease. Mayor Scruggs pointed out Arizona depends on its tourist industry, which has been hit hard all around the state. She said corporate purchases have also decreased. - 3 - Councilmember Frate asked about the gaming compact. Ms. Duffy said there are legal issues that are being debated. She noted this would mean a projected $7 to $12 million per year available to cities and towns through the grant application process. Mayor Scruggs pointed out the Indian tribes have not reached a consensus as to where the money should go, stating a majority believe the money should go to communities closest to the casinos. Councilmember Lieberman asked what they expect incoming legislators to do, suggesting they will ignore any steps taken over the next two months. Ms. Duffy stated the electorate results have not been certified, therefore, they have not done a complete analysis. She said it appears the incoming body of legislators will be far more conservative than the current body, with a larger percentage of Republicans. Vice Mayor Eggleston asked if the K-12 School Funding made a negative impact on the state's budget. Ms. Duffy stated Proposition 301 is a hit to the General Fund and will be an expense to the state. She noted a two percent inflation factor has been built into the proposition. She said they anticipate a $50 to $75 million hit to the General Fund. She stated there have been some discussions about a tax reform next year. Ms. Duffy pointed out this is the first time in eight years, and only the second time in the state's history, that all executive offices have changed. She said there are 39 Republicans in the House and 17 in the Senate. She said the new Governor has appointed people to the following positions: Chief of Staff for Operations, Alan Stevens and Chief of Staff for Policy, Dennis Burke; and Director of Communications, Chris Mayes. She stated the following people from Glendale will hold chairmanships: Bob Burns, Senate Appropriations Chair; Jack Harper, Appropriations Sub-Committee Chair, and Jim Weiers, Chair of Fiduciary and Robert Landau, Rules Chair. Ms. Duffy stated the state shared revenue has already been reduced from 15 percent to 14.8 percent, totaling approximately $300,000 this year and $275,000 next year. She said state-shared revenue should return to 15 percent in FY 2005. She said state- shared revenue is not expected to be on the table should a special session be called, however, a reduction could be considered when the Legislature begins discussing the FY 2004 budget. Financial Cycle and Glendale Policies Mr. Art Lynch, Finance Director, reported revenue collections on a national level are the lowest they have been in 50 years. He said, in year's past, Glendale has successfully navigated the course of economic slowdowns and is in an excellent position now to face future challenges. He stressed the importance of focusing on basic financial management issues and reflecting on the city's goals during difficult economic times. He said the city has to focus on slowing capital expenditure activity, making it consistent with the current economic environment. We need to look at the operating costs associated with significant projects and identify new revenue sources. - 4 - He said they will have to make sure the costs associated with the long-term assets being acquired are spread over the useful life of the assets. Mr. Lynch stated they have identified deliberate approaches, involving two major policies: 1) focusing on long-term spending/investment trends; and 2) focusing on long- term revenue enhancement. He said the city has successfully implemented the necessary steps to maintain an extremely high bond rating in the past and he believes it can continue to do so even during the currently difficult economic times. Mr. Lynch reviewed Glendale's financial policies, stressing the importance of maintaining an adequate contingency fund. He identified strategic steps being taken, including the development of short and long-term strategic plans, reducing expenditures, enhancing revenues, redesigning business processes, prioritizing projects, stabilizing the sales tax base and reallocating resources. Councilmember Martinez asked if it is prudent for the city to continue reducing the primary property tax, given the city's current budget situation. Mr. Lynch said, while it is a good policy during good economic times, parts of the policy are not prudent during slower economic times. He clarified for Councilmember Martinez that the Truth in Taxation Regulations portion of the policy would remain applicable, but they are not recommending the city continue to lower property taxes during a declining cycle. Mayor Scruggs explained several years ago she pushed to have the policy implemented because she firmly believes the cost of the city doing business should be spread over the broadest base, whereas a property tax only effects Glendale residents. She pointed out that doing away with the primary property tax would leave the city with a secondary property tax that is equal to or larger than other cities across the valley, hampering the city's efforts to attract new business. Councilmember Martinez clarified that, while he has supported the policy in the past, he questions whether it would be prudent to continue with the policy given the current economic situation. Mayor Scruggs noted the city makes $3 million on the primary property tax. Economic Up-date Ms. Aguilar discussed the current fiscal year, stating the city is faced with an estimated $7.5 million shortfall. She said they have looked at cost saving measures and one-time revenue sources totaling $7.9 million, which would result in a potential savings of $400,000. Councilmember Lieberman asked for a breakdown of the $7.9 million in cost savings and one-time revenue sources. Ms. Aguilar explained the departments were asked to examine their budgets and cut 15 percent of their remaining non-salary items, resulting in nearly $2 million in savings. She said implementing a hiring freeze will save an additional $780,000. - 5 - Mayor Scruggs asked if the 15 percent reductions in departmental budgets are considered permanent cuts. Ms. Aguilar explained the 15 percent reduction was a cost saving measure implemented for this year, stating departments will be asked to cut 10 percent of their base next year. Mr. Beasley cautioned against looking at the budget only in terms of short-term fixes, stating staff will look to Council for direction as to what, if any, cuts should be done on a long-term or permanent basis. Councilmember Martinez asked if all departments, including Police and Fire, were asked to make a 15 percent reduction. Ms. Aguilar responded yes, pointing out none of the cuts were related to personnel. Ms. Aguilar continued her presentation, stating, year-to-date, vacancy savings total $480,000. She explained the carryover amount requested was reduced by $325,000, non-departmental expenditures decreased $19,000, PC Replacement charges decreased $370,000 and Equipment Replacement charges decreased $770,000. She said one-time capital project savings totaled $2.9 million. Ms. Aguilar stated the nation's consumer confidence is down, noting October saw the largest drop in consumer confidence since 1993. She reported job cuts announced by U.S. companies totaled 176,000 in October. She stated the federal government cut the Federal Funds Rate by half a point on November 6, but the market still indicates that uncertainty continues. She explained a lot of the uncertainty in the market can be attributed to the high number of job cuts, last year's terrorist attack and the wave of corporate accounting scandals. She said corporate spending, especially in terms of construction, is down considerably, noting the U.S. Department of Commerce reports non-residential construction dropped more than 18 percent over the last year, with industrial building dropping more than 15 percent, hotel and motel dropping by 35 percent and other commercial dropping 12 percent. She said, while the nation is not in an official recession, indicators suggest we are in a mild recession. She stated, according to the Bureau of Labor Statistics, employment has dropped steadily since March of 2001, with the largest drop occurring after September 2001. She explained the country loses goods and services that could have been produced when workers lose their jobs and the purchasing power of those workers is also lost, leading to unemployment for other workers. She reviewed a chart displaying unemployment cycles, pointing out they appear to occur every ten years. She said some recessions have been as short as six months, while others have lasted as long as 16 months. She explained unemployment tends to linger slightly longer than the recession period. Ms. Aguilar discussed Arizona's economy, stating personal income growth grew by less than one percent in the second quarter of the current year, as compared to a 3.3 percent increase in the prior year. She stated Arizona's manufacturing industry has been the hardest hit, with a $20 million drop in personal income in the second quarter of the current year. She noted Motorola cut over 2,000 jobs since October 2001, while - 6 - Honeywell cut 450 jobs, NextCard eliminated 204 jobs and Intel Corp cut 120 jobs. She stated retail sales continue to show weak growth statewide, with collections less than two percent over last year. Ms. Aguilar stated Arizona's unemployment trends tend to mirror the nation's, however, the service industry started adding positions in September in anticipation of the holiday season. She pointed out Arizona tends to lag behind the recession and unemployment remains at a higher rate longer than the rest of the nation. She said, while the State- Shared Income Tax distributions over the past ten years grew as much as 23 percent, the declining employment and effect of tax cuts implemented by the state legislature in 2002 are reflected in the distributions for FY 2004. She noted distributions are expected to drop another 16 percent this year, which will be felt in 2005. She pointed out individual income tax for October was 8.3 percent below the prior year and $34.5 million below the forecast. She said, therefore, they are looking at an additional $1 million decline in State Shared Income Tax for FY 2004/05. Ms. Aguilar reviewed how other cities around the valley are dealing with the revenue shortfall, noting the City of Phoenix will make $23 million in cuts for 2002/03 and up to $54 million in additional cuts for 2003/04. She stated the City of Tempe is looking at five percent reductions, totaling approximately $7 million, while the City of Mesa will make $21 million in cuts for 2003/04. She stated Scottsdale currently has a hiring freeze and are scrutinizing 200 programs and 90 positions for possible cuts. On the positive side in Glendale, Ms. Aguilar stated the Coyotes Arena is under construction and the city has secured an agreement for the Cardinals Stadium. She said new commercial development is occurring at 83rd and Union Hills, 95th and Camelback and at Northern Crossing, noting development fee revenue is up nearly 54 percent for the first quarter of the year when compared to a similar quarter in 2000. She said Glendale will benefit from the new jobs created as a result of the city's economic development efforts. Ms. Aguilar reported, though, that the city's sales tax collections are sluggish and interest earnings are at record lows. She pointed out, however, that the low interest earnings also mean the city's borrowing rate is down, benefiting the city's financing. She reviewed charts depicting the cycle of building permit revenue, construction/contracting sales tax, retail sales tax, auto sales tax and total sales tax revenue. She noted auto, truck and home sales have stayed fairly constant throughout the nation, stating experts warn that the continued sales mean there will not be an increase in sales due to a pent up demand once we begin to come out of the recession. Councilmember Frate emphasized the impact it would have on the state if Luke Air Force Base were to leave, pointing out they never reduce their workforce in response to economic downturns. Mayor Scruggs noted economists do not even include the military in their models. The meeting recessed for a short break. - 7 - FY 2004 & 2005 Forecast Ms. Aguilar presented the city's financial forecast for FY 2003/04, stating the city is looking at significant decreases in revenue. She said the city will realize a $3.8 million loss in state shared revenue, a $3.5 million increase in employee benefit costs and a $500,000 potential increase to risk insurance. She said other contractual obligations total $2.7 million and $1.7 million will be necessary to provide additional police staff. She noted, however, the $1.7 million will be offset by a COPS Grant for $1.1 million in FY 03/04, $750,000 in FY 04/05 and $375,000 in FY 05/06. She reviewed city facility operating costs totaling $477,000, including $350,000 for the Westside Public Safety facility, $15,000 for field operations, $60,000 for the Skunk Creek Linear Park, $20,000 for the Skate Park North and $32,000 for the West Area Regional Park. She stated the city is looking at new ongoing budgetary needs totaling $12.7 million and will likely need additional temporary development staff costing $1.5 million, bringing the total of projected budgetary needs to $14.2 million. Ms. Aguilar stated staff has identified cost-saving measures, including a 10 percent reduction in non-salary expenditures for a total cost savings of $5.2 million. She said they are also considering adjustments to standby, overtime and stability pay policies and looking at options that would maximize the utilization of vehicles. Mr. Zapata pointed out the comparisons being made place Glendale in line with other cities in terms of standby, overtime and stability pay. Ms. Aguilar said a reduction in pay-as- you-go capital projects also contributes to the $5.2 million savings. Councilmember Lieberman pointed out the city is currently benefiting from very low interest rates, stating spreading costs out over the life of a project could put the city in a position of having to pay higher interest rates. Mr. Lynch explained the city would actually benefit from spreading out the costs because the city would have the ability to lock in the current lower interest rates. Ms. Aguilar stated staff identified one-time expenditure reductions totaling $3.6 million, including a reduction in replacement fund payments and freezing position vacancies. Mayor Scruggs noted the city adjusted the vehicle replacement fund several years ago, using a model based on the number of miles put on a vehicle. She said no longer allowing employees to take city cars home would impact the number of miles put on a car and allow it to stay in use longer. Commander Henderlite said they had a large number of take-home vehicles, a majority of which, though, were not in the replacement fund. He said they have reduced the number of take-home vehicles in an attempt to reduce shop costs, which total approximately $1 million per year. He pointed out officers have to go to the station to pick up a vehicle before going on a call, resulting in minor response delays. - 8 - Councilmember Frate asked if there is sufficient parking for all of the vehicles. Commander Henderlite said, while there are spaces, other cars will be pushed out. He said, therefore, they are encouraging officers to carpool and/or use public transit. Councilmember Goulet asked how many position vacancies have been frozen and what the freeze equates to in terms of savings. He also asked if the positions would be brought back in mass or on a priority basis at a later date. Ms. Aguilar said all positions are being reviewed and they are looking at freezing 50 positions. She said the positions would be filled through the normal hiring process once the freeze is lifted. She said the freeze will result in an estimated $978,000 savings. Ms. Aguilar said staff has identified $6.4 million in new one-time revenue, comprised of sales taxes from new development, grant funding and improved delinquent court fine collections. She listed other potential revenue sources, including wireless facility revenue, implementation of a telecommunications tax, Parks and Recreation fee restructuring and improved City Court collections. Ms. Aguilar reviewed other potential impacts to the city, stating they are not eliminating the possibility of additional reductions to state-shared revenue ranging between $1.3 and $5.4 million. She said the potential costs associated with a MAG census would range between $1.8 million and $2.2 million if the city chooses to participate. She noted the results of the census could also result in a reduction in state-shared revenue to the city. In response to Councilmember Martinez's question, Ms. Aguilar stated all MAG agency cities have the option of participating or not in the census. She pointed out the cost to participating agencies increases when other agencies choose not to participate. Ms. Duffy reported money was set aside at the Regional Council meeting for the purpose of a Special Census in 2005. She said the City of Phoenix does not know if it will participate given the current economic climate, however, smaller cities in growth areas, are interested in participating. Mayor Scruggs pointed out the city would still have to live with the results of the census, even if it chose not to participate. Councilmember Lieberman asked if MAG is expected to participate. Mayor Scruggs responded yes. She expressed her opinion other cities would push much harder for the census if their attention were not diverted by other more pressing issues. Ms. Duffy agreed, stating they also see the costs associated with the census as being too daunting at this time. Ms. Aguilar explained the Council did not receive the Five-Year Forecast it normally gets because it has proven difficult to assess all of the options and forecast for future years. She stated they will continue to refine their model as information becomes available. She said they are looking at another potential $1 million reduction in state - 9 - shared revenue in FY 2004/05, as well as additional debt payments, restoring the replacement fund payment and reductions in COPS grant funding. Ms. Aguilar reviewed the preliminary Capital Plan summary. She said, while they do not have anything to present to Council today, they wanted to let them know the new CIP Division is doing estimates and improving coordination of projects and each department is being analyzed for operating and maintenance impacts. She said they will continue to develop recommendations to resolve immediate needs and to maintain long term stability, which they believe will come through expenditure reduction plans and revenue generation. Councilmember Lieberman asked if there has been any discussion about granting COLA increases. Mr. Beasley explained they traditionally try to work through the budget process, looking at the total benefits package, before making a recommendation to Council with regard to the COLA package. Mr. Beasley said that, under these scenarios and based on actions Council has previously directed staff to take, the budget is basically balanced. He said, however, they need to discuss what steps can be taken to ensure they do not have to revisit the same issues in the future. Council Discussion and Direction for FY2004 Councilmember Martinez said the city has a policy that states one percent of the Capital Improvement projects go to the Arts Commission. He said, therefore, the Coyotes Arena project would contribute $1.8 million to the Municipal Arts Fund. In an effort to assist with the current budget situation, he proposed deferring the contribution for the next two fiscal years. He also suggested each Council member contribute the $15,000 they are each allotted for Capital Improvement projects, noting that would total $90,000. Furthermore, Councilmember Martinez asked the Council to consider doing one grant cycle per year for the next two years in the Neighborhood Partnership Program. Vice Mayor Eggleston said staffs recommendations make sense. He emphasized the importance of carefully considering how money is spent, but cautioned against rushing into making cuts, such as those suggested by Councilmember Martinez. Mayor Scruggs asked if the Capital Improvement Funds and Neighborhood Partnership Grants are subject to the same policies that restrict new projects with ongoing operation and maintenance costs. Mr. Beasley responded yes, explaining staff has to be consistent in enforcing the policies to be able to show the true value of any action taken. Mayor Scruggs stated she would support a policy that directs funds to items that do not have new operating and maintenance costs or to eliminate them entirely. With regard to Councilmember Martinez's suggestion, Mayor Scruggs asked how the $1.8 million would help with the city's current situation if it were not placed in the Art's fund. Mr. Lynch explained the $1.8 million is built into the cost of the project, therefore, - 10 - eliminating it would decrease the amount of bonds needed. He said, however, it would not necessarily help the operating budget at all. Mr. Beasley asked if the $1.8 million could be taken out of the Municipal Arts Fund and placed in the General Fund. Mr. Lynch responded no. Mr. Lynch confirmed for Councilmember Lieberman that reducing the project amount by $1.8 million would reduce the amount paid out over the life of the project, stating, however, it would not improve the city's operating budget. Mayor Scruggs asked if the Municipal Arts Fund component was taken into consideration when the bond program was developed. Mr. Lynch explained the bond program calls for one percent of the value of public facilities projects to be set aside for art projects. Mr. Flaaen clarified the only time elimination of the one percent being set aside for the Municipal Arts Fund would help the General Fund is when a project is being paid for out of the General Fund. Mayor Scruggs said eliminating the $1.8 million contribution to the Municipal Arts Fund does not appear to address the problem. She suggested, however, they bring the issue up for future consideration in cooperation with the Arts Commission. Councilmember Lieberman agreed they should look at deferring the $1 million contribution to the Neighborhood Commission, if state-shared revenues are cut more drastically than projected over the next two years. He pointed out the funds come directly from the General Fund and would represent an immediate additional source of revenue. Councilmember Martinez stated Council was asked to look at all areas and consider all options. He expressed his opinion the $1.8 million going to the Municipal Arts Fund would be better spent addressing the shortfall. Mayor Scruggs pointed out deferring the Municipal Arts Fund contribution would free the $1.8 million up for use on other projects only. Councilmember Lieberman asked if deferring the contribution would lower the bond payments. Mr. Lynch said it could lower the bond payments or they could issue fewer bonds. Councilmember Goulet emphasized the importance of educating the public as to what needs to be done and why. He said he has been and continues to be opposed to cutting district funding because too much needs to be done. He stated cuts to the Neighborhood Partnership program would severely impact projects that directly affect the quality of life in Glendale. He agreed with Mayor Scruggs those new projects with ongoing operating and maintenance costs should not be approved. He suggested they continue to look for ways to enhance the downtown area without making the city the primary source of funding. He said, while he would consider placing a cap on the - 11 - amount directed towards the Municipal Arts Fund in the future, he would not support deferring the entire amount. He stated he wants to continue investing in in-fill home projects and right-of-way improvements because they directly impact how people feel about where they live. He pointed out a lot of people will visit Glendale for the first time once the arena and stadium are completed, stating their perception of the city will be critical. Councilmember Martinez left the meeting at 11:40 a.m. to attend a funeral. Mayor Scruggs asked Councilmember Goulet if he feels Neighborhood Partnership and individual district Capital Improvement projects should be restricted to those that do not have additional operating and maintenance costs. Councilmember Goulet said it would be the Commission's responsibility to determine if a project is appropriate based on its long-term costs. He confirmed he would not want the Neighborhood Partnership Program to be subject to the same policy as the rest of the city projects. Councilmember Frate said he would like to see the Neighborhood Partnership Program continue, with operating and maintenance costs looked at on a project-by-project basis. He said he would also like to keep his Capital Improvement Project funds. Mayor Scruggs asked Council to comment on Councilmember Martinez's suggestion to direct staff not to automatically build in a decrease in the Primary Property Tax. Ms. Aguilar noted that we can levy for new construction. Ms. Aguilar presented a scenario, which demonstrated the issues involved in increasing the Primary Property Tax. Mayor Scruggs asked Mr. Beasley if departments eliminated travel expenses as part of their 15 percent reduction or if he put out a specific directive. Mr. Beasley explained they put out a directive for departments to reduce their budgets by 15 percent and the departments determined how best to make the necessary cuts. He said they also asked departments to assess the value of all membership dues. The City Council will be giving direction regarding city memberships. Mayor Scruggs noted staff is looking at Human Resources issues, personnel related costs being the biggest expense of the General Fund. This review will be done as part of the total compensation analysis. Staff is following a policy to restrict or defer projects that have new ongoing costs. She said they are also redesigning business processes, will bring forward options for increasing revenue and will look at reallocating resources. Mr. Beasley said they will bring the concepts and ideas discussed back to Council as the budget process continues. Mayor Scruggs asked if Council would introduce the Municipal Arts Fund issue through the new process if it wanted to discuss establishing a cap on the maximum amount any given project can contribute. Mr. Beasley responded yes. ADJOURNMENT The meeting was adjourned at 12:00 p.m. - 12 -