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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 5/13/2003 (3) *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 GLENDALE CITY COUNCIL BUDGET WORKSHOP SESSION 5850 West Glendale Avenue May 13, 2003 2:00 p.m. PRESENT: Mayor Elaine M. Scruggs, Vice Mayor Thomas R. Eggleston and Councilmembers Joyce V. Clark, Steven E. Frate, David M. Goulet, and Manuel D. Martinez ABSENT: Councilmember H. Phillip Lieberman ALSO PRESENT: Ed Beasley, City Manager; Pam Kavanaugh, Assistant City Manager; Rick Flaaen, City Attorney; and Pamela Hanna, City Clerk 1. FISCAL YEAR 2003-04 BUDGET PROCESS CITY STAFF PRESENTING THIS ITEM: Ed Beasley, City Manager; Chris Zapata, Deputy City Manager; Pilar Aguilar, Acting Budget Director. This is the final scheduled City Council workshop to review the proposed Fiscal Year (FY) 2003-04 Annual Budget. Over the course of these workshops, the City Manager presented his recommended balanced budget for FY 2003-04. Budget presentations focused on budget reductions, cuts and service impacts, alternatives to address these service impacts and discussion of supplemental requests submitted. Today's meeting will include a summarization of the city's budget process for FY03-04, a discussion of stadium and arena related supplementals, wrap-up of outstanding issues raised during previous workshops, ongoing and one-time cost savings/revenue measures, final balancing of the FY 2003-04 budget, and options for FY04-05 and 05- 06. The November 15 City Council Goal-Setting Retreat was the first step in the FY 2003- 04 budget process. At that meeting, staff presented the economic forecast for the city and the Mayor and Council discussed the national and local economies and their effect on Glendale's FY 2003-04 budget. At the retreat, the City Manager discussed the measures the city has implemented to 1 address the revenue shortfall for both Fiscal Years 2002-03 and 2003-04. These measures included citywide budget reductions and revenue enhancements. Department heads presented their departmental budgets to the Leadership Team at a series of administrative review meetings in March. A series of City Council budget workshops have been held throughout April and early May to discuss the FY 2003-04 budget. The agenda for this City Council workshop has been posted and all legal requirements for notification have been met. The City Council has reviewed the FY 2003-04 budget at workshops during April and May. The recommendations made at these workshops will direct staff in preparing for final City Council budget review and adoption in June. The recommendation was to review the FY 2003-04 Proposed Annual Budget and provide staff with direction. Mr. Beasley stated it is important in the process of looking at the budget to look also at the challenges the city will face in the future. He thanked the Mayor and Council, stating their leadership and guidance has allowed staff to view business practices differently and to look at information in a different way. He explained an economic crisis occurs over a period of time and through a series of events. He said the current economic situation provides the city with an opportunity to look at its practices and, utilizing new and sound business practices, to redefine how it might go about doing business. He said a budget cannot anticipate unfunded mandates, fiscal transfers of obligations and state and federal government pass-throughs, therefore, the FY 2003/04 budget was balanced through conservative revenue projections, reductions in the number of part-time positions, 15 percent internal reductions and a continuation of the hiring freeze. He said, however, the city will have to face challenges it may encounter in the future, including a $7 or $8 million deficit and capital outlay costs. He stated the balanced budget being proposed will give the city 12 months to discuss how it can best address future challenges. Mr. Beasley explained Council identified the following strategic goals during its November retreat: 1) diversify the tax base to reduce reliance on state shared revenue; 2) make Glendale a destination community; 3) increase employment & retail opportunities to serve citizens & visitors; and 4) continue to ensure the public's safety & quality of life. He stated staff attempted to provide a level of flexibility that would allow for unknown variables and changes. He said they looked at how services are provided to citizens and the policies and practices currently in place. He pointed out this is the worse economy the country has seen since World War II. He stated the city has to recognize that the decline in State Shared Revenue, the drop in sales tax revenue and the increase in State Retirement costs cannot be avoided and must be anticipated to the greatest degree possible. In an attempt to meet the challenges, he said the city is reducing expenditures, developing a short and long term strategic plan, attempting to prioritize projects, advancing revenue where reasonable, reassessing the core service programs and performing a cost recovery analysis. He stated, based on those measures, the city is on target to reduce its expenditures by $9 million. 2 Ms. Aguilar reviewed measures staff put in place last October, including a 15 percent reduction in the current year budgets for a total savings of$2.3 million. Mayor Scruggs asked if the 15 percent non-personnel expenditure reduction made in October 2002 was restored when departments started to build their FY 03/04 budgets. Ms. Aguilar responded yes. Ms. Aguilar stated they also eliminated the carryover, saving $325,000. In response to Vice Mayor Eggleston's question, Ms. Aguilar explained only the carryovers that had not been previously budgeted were eliminated. Ms. Aguilar said some capital projects were also deferred, amounting to $2.7 million. She noted, to date, they are on track to save the full $2.7 million, if not $3 million. She said the reduction in stand-by pay saved $38,000 and pro-card expenditures have been reduced by $335,000. Councilmember Goulet asked if the pro-card reduction is included in the 15 percent non-personnel reduction. Ms. Aguilar responded yes. Councilmember Goulet asked what reductions are not included in the 15 percent reduction. Ms. Aguilar stated the pro-card reduction was the only measure not included. Ms. Aguilar stated all Replacement Fund repayments were deferred starting in November, through the end of this year, saving $1.7 million. In response to Councilmember Clark's question, Ms. Aguilar explained that the measures she referenced represent examples of steps taken to reduce the budget and do not total the full $9 million in savings. She explained some of the projected savings reflect only year-to-date savings and some are citywide and not just related to the General Fund. Ms. Aguilar confirmed for Mayor Scruggs that the change to the Stand-by Pay policy is a permanent change, noting the pro-card reduction could also be realized annually. Mayor Scruggs stated the $2.7 in capital project deferrals can be initiated again through a Council decision, but, as it stands now, they have been deferred for one year. Ms. Aguilar agreed, noting, however, the Replacement Fund referral was extended into next fiscal year. Mayor Scruggs asked if the Civic Center Maintenance Reserve was depleted or if there was a deferral of new money going into the reserve. Ms. Aguilar explained they removed the appropriation because funds were not available. Mayor Scruggs clarified the capital project deferrals do not represent any of the ongoing operating costs, but the capital projects that would have been paid for with General Fund dollars. Ms. Aguilar agreed. In response to Councilmember Martinez's question, Ms. Aguilar explained the $2.3 million includes any reductions that would have been made in the operating budget for right-of-way maintenance. 3 Ms. Aguilar continued her presentation, stating another measure put in place was to eliminate the use of vacancy savings. She said part of the elimination is being achieved through the Position Review Committee. She stated the hiring freeze, which excludes sworn uniform public safety personnel, impacts about 33 General Fund positions. She stated year-to-date vacancy savings are estimated at $2 million, pointing out current vacancies in uniformed public safety personnel are included in that figure. Mayor Scruggs said if the cost of additional fire fighters and police offers were budgeted for a full year. Ms. Aguilar responded yes, explaining a one time credit is budgeted if a trainee is not expected to enter the academy until April. Mayor Scruggs asked if the city will have enough money to hire all of the necessary officers on day one of the new budget. Ms. Aguilar responded yes. Chief Henderlite stated there are currently 15 vacancies within the Police Department, however, they are in the process of hiring 10 officers with the anticipation that five will go to the academy in June. He explained the city gets four slots each time an academy class starts, but has to ask permission to send more than four. He said academy classes occur four to six weeks apart, therefore, they should be able to send two groups through within the first quarter. Chief Henderlite clarified the Police Department self-imposed a freeze on sworn personnel within the Investigations area. He explained he asked every Commander to go into their bureau and ask: "Why are we doing it?", "Should we continue doing it?", and "How can we do it better?". He said the Commander in Investigations is undergoing a number of changes and five slots are being held closed until a need for those officers can be demonstrated. He explained once a demonstrated need is brought to him, he has to take the position before the Position Review Committee. In response to Mayor Scruggs' question, Chief Henderlite reported six civilian positions are frozen within the Police Department. He said injuries and other long-term vacancies in Detention have been filled through creative use of patrol officers. Mayor Scruggs pointed out that 20 percent of the frozen positions are civilian positions within the Police Department. Councilmember Clark asked how the Police Department is dealing with the vacant 911 dispatcher position. Chief Henderlite said dispatchers work a three day, 12-hour shift, providing some scheduling flexibility. He stated, while they have been able to deal with the vacancy so far, the department would have to request that any additional vacancies that might occur be filled. Councilmember Clark questioned whether a three day, 12- hour shift would be good for the employees, given the level of stress they are under at work. Mayor Scruggs asked if any non-uniform fire personnel positions have been frozen. Chief Burdick said they are limited by openings in the regional academy, noting eight recruits are enrolled in the academy class currently underway. He stated the next class could be deferred until September, leaving the department no alternative but to recruit 4 from other organizations. He stated one Service Worker position has been internally deferred. Ms. Aguilar reviewed examples of specific measures departments took to improve efficiencies. She stated the Police Department reduced the use of take home vehicles, the Fire Department has improved efficiencies with regard to how their vehicles are used and Field Operations modified custodial service scheduled at city facilities. She said, additionally, Code Compliance, the Library, Community Partnerships and the Tourism Office greatly expanded their use of volunteers. Ms. Aguilar pointed out they had to bridge an ongoing gap of $14.8 million when they started the process and one-time needs totaled almost $4 million. She said, therefore, they made $6.2 million in ongoing reductions and identified $13.9 million in other sources, including expenditure reductions and additional revenue sources. She recommended $550,000 of the amount identified be restored to the Contingency, leaving $727,040 available in one-time funds. Ms. Aguilar explained $3.4 million in savings reflects the 10% reductions made to every departments' non-personnel budgets for next year. She said they then went back to the departments and found another $2.1 million in additional cuts. In response to Mayor Scruggs' question, Ms. Aguilar explained the General Fund portion of the changes to pay policies totaled $38,000. Councilmember Martinez asked about the Cemetery Operations change. Ms. Aguilar explained the Cemetery budget for next year totaled approximately $400,000, however, they were able to reduce maintenance and other operations costs bringing the budget down to $220,000. Ms. Aguilar reviewed deferrals and other revenue sources used to balance the budget. She said they anticipate $220,000 can be recovered from outstanding court fees and that $2.6 million will be generated through sales tax from new development. She stated they will be coming to Council to request a transfer from the Vehicle Replacement Fund of the $502,000 Alternative Fuels balance. She said the $3 million in property disposition is in anticipation of the sale of parcels at Northern Crossing. She explained $2.4 million in savings is related to financing the Hickman Land purchase and Replacement Fund deferrals account for$2.6 million in savings. She stated the hiring freeze is estimated to save $1.1 million, reiterating their vacancy savings estimates are very conservative. She said financing of the WestCor Improvement District payment should save an additional $1.4 million. In response to Councilmember Martinez's question, Mr. Art Lynch, Chief Financial Officer, explained Property Disposition reflects revenues the city expects to receive from the Wal-Mart/Northern Crossings sales transaction as well as other Northern Crossings development expected to occur during the FY 03/04 timeframe. 5 Vice Mayor Eggleston asked if the $3 million expected from the sale of parcels at Northern Crossings will go to repay the Contingency fund which the city used to purchase the property. Mr. Lynch explained that, for purposes of expediency, the property was initially purchased out of the Contingency Fund, which was then reimbursed through a financing transaction. He said, therefore, proceeds from the sale of initial parcels will pay off the financing and additional revenue generated by the property will be put into the General Fund. Mayor Scruggs asked what is the amount of the loan repayment. She also asked in which year are the Wal-Mart proceeds reflected. Mr. Lynch explained the $3 million in proceeds are anticipated to come in during the upcoming budget year. He clarified the $3 million quoted for Property Disposition also includes proceeds expected from the development of a number of other parcels. He acknowledged that the FY 02/03 budget also reflected proceeds from Wal-Mart's activities. Ms. Aguilar explained staff planned on $2.8 million in revenue in FY 02/03 from the sale of the Wal-Mart parcel. She said the $3 million in FY 03/04 is for the sale of the Lowe's parcel. Councilmember Clark asked if the city has received the $2.8 million it expected from the sale of the Wal-Mart parcel. Mr. Lynch responded no, explaining Wal-Mart will close on the land in June, holding a portion of the proceeds back for site development and paying the remainder to the city. Councilmember Clark asked what would happen if Wal-Mart does not close on the property in June and the $2.8 million is not received during the current budget year. Ms. Aguilar stated there would be a lower beginning balance, however, the revenue would then be shown in the following year. Mayor Scruggs asked why the city will receive more proceeds from the sale of the Lowe's parcel than it will from the Wal-Mart parcel, which is larger. Mr. Lynch explained that, while the Wal-Mart gross proceeds are higher, the net amount the city receives is lower because of the amount held back for preparation of the overall site. Mayor Scruggs asked how much will the city pay next year in financing costs. Mr. Lynch stated the first principal payment of $525,625 will be due on June 1, 2004, noting, however, an interest payment could be due prior to that time. Mayor Scruggs asked if the payments were structured in a way the makes a lower amount due the first year. Mr. Lynch stated the average payment beginning June 2005 will total $2 million. Mr. Lynch confirmed for Councilmember Clark that the payment structure provided the city with an 18 month cushion. Mayor Scruggs asked if payments were structured in that manner because it is assumed sales tax revenue from the development will be coming to the city by June 2005. Mr. Lynch said the city should be receiving both sales tax and construction sales tax by that time. Mayor Scruggs asked why the city will receive $2.4 million in regards to the Hickman property. Mr. Lynch explained in an attempt to eliminate a noxious farm use in an area where the city wanted to attract development, staff brought a Pre-Annexation and 6 Development Agreement forward to Council in July 2001 for the purchase of the Hickman property. He said staff wanted to set up a financing structure that allowed the cost to be spread out over the period of time in which the city expects to benefit from the asset. He stated the financing plan established systematic payments over a 10- year period of time, evenly spread costs over a future time period when the property will be developed or sold, and allowed the city to take advantage of low interest rates. Mayor Scruggs asked Mr. Lynch to review how the city agreed to pay for the Hickman property. Mr. Lynch stated the initially proposed tax structure included a $500,000 cash payment paid shortly after closing, a $2.3 million payment due in FY 02/03, a $2.4 million payment due in FY 03/04, and a final balance payment of$1.8 million due in FY 04/05. He said, given the city's current economic situation, staff proposed a financing structure that spreads the remaining payments out over a 10 year period, starting with $800,000 due in FY 2005 and increasing to a maximum of$2.1 million by 2012. In response to Councilmember Clark's question, Mr. Lynch stated the city will pay approximately $2.6 million in interest over the 10 year period. He confirmed the interest amount is calculated into the payments. He pointed out the city is able to repay the loan at a tax exempt rate, stating improvements in the market over the life of the loan could put the city in a position where it is actually earning more money in interest than it is paying. Mayor Scruggs asked how much will the city borrow. Mr. Lynch stated the city would borrow the full $7 million and reimburse the General Fund to the level it would have been at had the funds been borrowed at the time of the Purchase Agreement. Councilmember Clark noted the city has already paid $2.8 million, asking how reimbursement of those funds and the remaining $4.2 million in additional revenue will be shown in the FY 03/04 budget. Mr. Lynch explained the funds would go back into the General Fund balance. Mayor Scruggs asked if the $14 million beginning fund balance will be increased by the additional $7 million. Mr. Lynch confirmed for Councilmember Frate that the city will pay, at most, $2.6 million in interest costs over the 10 year period. He said, should the city later decide to sell the property, staff would evaluate interest rates at that time to determine if it would be best to use the proceeds to pay off the loan or to invest the proceeds. Mayor Scruggs pointed out the city does not expect to get back the $7 million it spent for the Hickman property acquisition. She explained the city had to pay for structures located on the property which are or will be removed and for the hardship placed on the property owner and their business. She said, on the other hand, the city expects to recover almost all, if not all of its investment on the Northern Crossings development. Councilmember Clark asked if other means, such as further reductions in the General Fund, could have been utilized to deal with the $2.8 million shortfall. Mr. Lynch said, 7 while such a concept could have been utilized, allocating the costs over a period of time is a good business practice. In response to Mayor Scruggs' question, Mr. Lynch said, while they will pay the loan off over a 10 year period, there will actually only be eight payments. Mayor Scruggs asked Mr. Lynch to review the two Arrowhead Town Center Improvement District bonds. Mr. Lynch explained, in 1993, the city financed the Arrowhead Town Center infrastructure using Improvement District bonds set to mature in 2014. He explained the payment amount is broken into two parts, with a $1.4 million rebate payment made annually and any sales tax funds in excess of that amount maintained in a developer account that will be used to pay down the debt once maturity of the bonds gets closer. He said, as part of their examination of refinancing opportunities, staff believes an opportunity exists to end the rebate obligation and to potentially free up the development account funds, both those that have accumulated and on an ongoing basis. He explained refinancing and paying off the old debt would put a new payment structure in place that could save the city $700,000 annually over the ten year period. He said, furthermore, the development account balance could also be utilized to build the General Fund balance. Mr. Lynch clarified for Councilmember Clark that the proposed refinancing has not yet occurred. He said the refinancing would actually occur in FY 03/04 because of the time it will take to put refunding structures into place. He estimated the current balance of the developer account to be $6.7 million. Councilmember Martinez asked what was the original term of the loan. Mr. Lynch responded 20 years. He pointed out that, in an effort to adhere to the city's aggressive payback schedule, financings, except major facility financings, are repaid within 10 years. Councilmember Martinez noted the city originally expected to pay the debt off early. Mr. Lynch said staff will look at whether early repayment offers a substantial benefit. Mayor Scruggs asked if the purpose of the refinancing is to be able to utilize the $6.7 million in the development account. Councilmember Clark asked if it is critical for the city to be able to access the development account funds in the next fiscal year. Mr. Lynch responded no, noting they have actually been looking at refinancing the bonds for the past two years. The meeting recessed for a short break. Councilmember Clark asked what is the city's policy concerning debt ratio and if the city is at the high or low end of that ratio. Mr. Lynch stated the city is currently at the low end of the ratio. He explained the debt ratio policy, written about 18 years ago, is extremely conservative and states short-term debt shall not exceed five percent of the General Fund's revenue resources. Councilmember Clark asked what constitutes 8 short-term debt. Mr. Lynch explained short-term debt relates to operating debt, such as a lease purchase transaction or short term loan. He estimated the city's short term debt to be between one and two percent of total resources. Councilmember Clark asked about the city's policy concerning long-term debt. Mr. Lynch stated the city is required to meet statutory requirements with regard to General Obligation Bonds. He explained General Obligation debt is typically compared to the assessed value and currently totals 7.23 percent. Ms. Aguilar continued her presentation, reviewing the status of this year's General Fund budget as compared to that proposed for FY 03/04. Councilmember Clark asked for a list of all transfers out. Ms. Aguilar stated the final schedule includes all transfers. She explained transfers are no longer made into the General Fund because internal use of the funds is treated as an expense on the Enterprise Fund side. Ms. Aguilar stated they anticipate next year's beginning balance to total $6.2 million, total resources to equal $107 million and total uses to be approximately $124 million. In response to Councilmember Clark's question, Ms. Aguilar explained the decrease in capital expenditures relates to neighborhood grant obligations, VIP program obligations and the Building Maintenance reserve. Ms. Aguilar explained staff likes to keep 10 percent of revenues as part of the undesignated, unreserved fund balance. She said reductions in the Civic Center Fund and the Streets Fund will result in much lower transfers out. She said, ultimately. $727,000 will be available for use as a one-time funding source. Ms. Aguilar confirmed for Mayor Scruggs that the Contingency Fund will be at 7 percent versus the 10 percent necessary to maintain the city's financial rating. Mr. Lynch pointed out that one of the purposes of the Contingency Fund is to help offset difficult economic times. Ms. Aguilar asked if Council wants to use the $727,000 in available one-time funds to add some of the items previously recommended for potential funding into the budget or if they would prefer to roll the funds into the Contingency Fund. Councilmember Martinez asked Council to consider adding $160,000 for median maintenance into the budget. In response to Councilmember Clark's question, Ms. Aguilar stated the Court position and street overlay program were valued at $44,047 and $255,426, respectively. She pointed out the Court position would be an ongoing expense, requiring further reductions to other ongoing items. Councilmember Clark stated she would like to see $125,000 directed toward Neighborhood Grants and funds returned to the Street Overlay Maintenance program. 9 Councilmember Goulet asked if the Neighborhood Grants has indicated a minimum amount necessary to complete projects that have already been started or if the Street Overlay program has offered a minimum amount needed to carry on its operations. He pointed out it would be difficult to delay Neighborhood Grant projects that are already underway. Ms. Aguilar clarified carryover funding was set aside for obligated neighborhood grant projects. She was unable to suggested minimum amounts needed by either group. Mr. Stuart Kent, Field Operations Deputy Director, explained the original reduction to the Streets Overlay program totaled $455,000. He pointed out up to 40 miles of overlay work needs to be done, stating there is no way the city could approach doing all 40 miles in one year. He assured Councilmember Goulet they would put any amount returned to their budget to good use. He offered to provide a recommendation that shows the 10 to 11 miles that could be done with an additional $255,000 as referenced by the Budget Director. Mayor Scruggs asked if this would be the first year the fund is reduced. Mr. Kent reported $1.7 million in total funding two years ago, stating that amount has been reduced to $893,000 over the past two years. He said they believe they can effectively manage the program with an additional $255,000. Vice Mayor Eggleston stated he is hesitant to spend the one time funds, given their limited amount, expressing his opinion the funds should be held in reserve. Councilmember Martinez reiterated his position that median maintenance should be returned. He also supported Councilmember Clark's recommendation to put money back into the Street Overlay and Neighborhood Grants programs. He suggested, however, the money put back into the Neighborhood Grants program be reserved for neighborhoods that have not previously received funding. Vice Mayor Eggleston suggested they look for the $255,000 needed for the Streets Overlay program elsewhere in the budget, allowing the one-time funds to be placed in the Contingency Fund for emergency use. Councilmember Goulet stated he would support returning $100,000 to the Neighborhood Grants program, however, he would want the funds restricted based on a neighborhood's age or level of need rather than whether or not they have received funding in the past. He suggested the same criteria be used when determining which streets should be overlayed. Councilmember Clark said the value of the Neighborhood Grants program extends beyond physical improvements, explaining it acts as a catalyst for uniting neighborhoods. She agreed the funds should be reserved for new participants, suggesting that it be further restricted to those projects that only require one-cycle funding. She said she would gladly return $255,000 to the Streets Overlay program, pointing out the cost of repairing deteriorated streets in the future will be significantly higher. 10 Councilmember Frate said $700,000 is not a lot of money, expressing his opinion the money should be placed in the Contingency Fund. He said, while neighborhood grants are wonderful, they have to do what is best for the city as a whole. He stated the Street Overlay program is the only item he believes warrants additional funding, pointing out the city could face liability and safety issues if the streets are not properly maintained. Mayor Scruggs agreed with Councilmember Frate's position, stating the Streets Overlay program falls within the required services that the city must provide. She pointed out the program's original $1.7 million budget has effectively been reduced by half over the past two years, however, more streets have been added to the city. She said the Neighborhood Grants program, while wonderful, benefits only a few neighborhoods. She said, while she does not know what amount should be returned to the Streets Overlay program, she would support reserving the remaining funds in the Contingency Fund. Councilmember Clark reiterated her position that $100,000 should be returned to the Neighborhood Grants program, pointing out $327,000 could still be put into the Contingency. Mayor Scruggs said Council previously discussed how the city would keep the four employees in Neighborhood Partnership busy if the grants program was eliminated. She said the statement was made that they would have to look for creative ways to assist neighborhoods that go beyond giving money away. She expressed her opinion there are other ways to unite neighborhoods, therefore, she believes the $100,000 should be held in reserve in the Contingency Fund. Councilmember Clark said the grants, in addition to being a catalyst for uniting neighborhoods, provide physical infrastructure improvements that are important to the quality of life for residents within the neighborhoods. She pointed out the city does not hesitate to offer incentives to attract businesses and developments to the city, stating this is the only program that provides a direct physical benefit to small pockets of neighborhoods. Vice Mayor Eggleston asked if any other funds go into the Street Overlay program. Mr. Ken Reedy, Deputy City Manager, explained the program currently has $890,000 in its budget, noting it costs approximately $100,000 to overlay one mile of roadway. He stated the proposed increase of$255,000 would allow them to overlay approximately 11 miles of street. In response to Mayor Scruggs' question, Mr. Reedy stated there are approximately 750 miles of roadway in the city's system. Mayor Scruggs commented the city has never before included anticipated revenue in balancing the budget. She said, therefore, staff could return to Council in six months if the actual revenue collected is higher than originally anticipated. She asked if another budget meeting will be scheduled. Ms. Aguilar explained the tax levy is scheduled to occur on July 1, requiring adoption of the 11 final budget by June 24. She said publication will require two weeks, therefore, preliminary adoption will have to occur by June 10. She noted maximum expenditures will be set once preliminary adoption occurs. Water and Sewer Fund Ms. Aguilar stated Water and Sewer plans on $90.1 million in resources, including a beginning fund balance of$24 million and $13.875 million in bonds sold last month. She said, of the $90.1 million, $31.5 million will be spent on operating expenditures, $27 million in capital projects and $14.5 million on debt service. She said their anticipated ending balance totals $17.5 million. Ms. Aguilar stated next year's revenues total $50.1 million, development fees are expected to reach $5.3 million and bond proceeds are anticipated to total $90 million. She explained the $102.6 million in capital expenditures reflects what the Council reviewed in February, plus potential adjustments for carryover. She stated debt payments total about $12 million for next year and $2 million has been set aside in Contingency, leaving total resources of $148 million and resulting in a projected ending fund balance of$15 million. Sanitation Fund Ms. Aguilar explained the Sanitation Fund began the year with $2.5 million, with total revenues for the year anticipated to be $12.1 million. She said lease proceeds are estimated to be $775,000 for total resources of$15.4 million. She stated operating expenditures are planned at $12.8 million and capital expenditures total $774,000, leaving an ending fund balance of$1.8 million. Ms. Aguilar said they plan to generate $13.5 million in revenue next year, including the increase discussed during a previous Council workshop. She stated they anticipate lease proceeds at $737,000, resulting in total resources of$16 million. She said operating expenditures are planned at $13 million, capital expenditures are expected to reach $842,000 and $500,000 has been set aside in Contingency. She reported the ending fund balance should total $1.7 million. Landfill Fund Ms. Aguilar stated the Landfill Fund's beginning balance totaled $17.6 million, with revenues estimated at $19.1 million and total resources of$26 million. She stated operating expenditures are anticipated to total $8.3 million and capital expenditures are expected to be $256,000. She noted they also have $309,000 in debt service payments, leaving an ending balance of$17.8 million. Ms. Aguilar reported next year's revenues are estimated at $9.3 million, with total resources of $27 million and $8.3 million in operating expenditures, $310,00 in debt payments and $2 million set aside in Contingency. 12 In response to Vice Mayor Eggleston's question, Ms. Aguilar explained that, while they have budgeted a contingency, they do not intend to spend the Contingency funds this year. Transportation Fund Ms. Aguilar stated the beginning balance totaled $8 million, with $2.1 million in transfers in. She said there are total resources of$27 million, operating expenditures of$7.9 million and anticipated capital expenditures of $13.5 million. She said the ending balance should be at $5.8 million. Ms. Aguilar stated transfers in for next year are projected to be the same as the current year, however, operating revenues are expected to climb to $25,302,000. She reported $8.5 million in operating expenditures, $23 million in capital expenditures and a Contingency appropriation of $1 million. She stated they anticipate an ending balance of$950,000. Mayor Scruggs asked if the FY03/04 budget takes into account the city's agreement with Valley Metro whereby the city takes back a percentage of the cost of funding the routes currently being paid for by the half-cent sales tax. Ms. Aguilar offered to obtain an answer to the Mayor's question prior to her meeting with Valley Metro. Public Safety (Arena) Chief Randy Henderlite and Chief Mark Burdick discussed the public safety supplements with regard to arena safety. Chief Henderlite stated 70 events are expected to occur at the arena during the first six month period, each expected to last an average of five hours. Chief Burdick stated they are working under the assumption an average of five fire personnel and 25 police officers will be required per event. Councilmember Clark asked if the fire and police personnel would be taken off of their regular duty or if they would be brought in on their own time. Chief Henderlite stated the officers would be off-duty. Councilmember Martinez asked if the officers would be paid overtime. Chief Henderlite explained an hourly charge equal to time-and-a-half will be billed back to the arena. In response to Councilmember Clark's question, Mr. Flaaen explained the city has retained total responsibility for providing public safety at the arena, therefore, it is required to pay police officers and fire personnel time-and-a-half. Councilmember Clark pointed out that officers who work other off-duty jobs are not considered to be doing so as city employees. Mr. Flaaen agreed, explaining the hiring entity typically pays an officer at a rate set by the officer. Chief Henderlite pointed out in a typical off duty assignment, the city relinquishes its control over the employee. 13 Mayor Scruggs noted the arena security agreement calls for the city to be reimbursed for straight time only for police and fire staffing of arena events. She said, however, due to other staffing requirements, it will not be possible to staff arena events without the use of overtime. She expressed concern that the city is relying on the Arena Operator to provide additional revenue to cover all ongoing public safety costs, when the security agreement makes no such guarantee. Mr. Flaaen said staff has renegotiated several items since the time the agreements were originally put in place. He stated they are in ongoing discussions with the Arena Manager, the Coyotes Development, LLC, and the mixed use developer regarding a number of issues, including the public safety function and the need for the Arena Manager to reimburse the city for its actual costs. He admitted a signed amendment has not yet been obtained, stating, however, they anticipate the issue to be resolved prior to the arena's opening. Mayor Scruggs reiterated her position that, at least until such time as an amended contract has been signed, the $700,000 in one-time money would best be left in Contingency. Chief Burdick stated the contract plans review appropriation request is covered by permit fees, however, the appropriation is necessary to allow continuation of contract plans review for the arena and mixed use development. Building Safety (Stadium) Ms. Deborah Mazoyer, Building Safety Director, explained their supplemental requests are for staff to provide for plan review and inspection of the Cardinals' multi-purpose stadium. She said the Coyote's arena staff will transition into the stadium project in December, therefore, they already have appropriations for six positions. She stated the requests are for the first year of the project only and would provide two structural building inspectors, an electrical inspector, overtime for the Senior Inspectors, a Senior Structural Inspector, and contractual money for a Structural Engineer. Chief Burdick said, in addition to Building Safety's request, the Fire Department is requesting two Fire Inspectors. Engineering Mr. Larry Broyles, City Engineer, reported an appropriation of one-time funds totaling $570,696 for contract help to assist with off-site inspections. He explained approximately $50 million in infrastructure will be put in for the stadium, $34 million of which falls within the city's rights-of-way. He stated they need to ensure the designs are done in accordance with the city's standards and that the materials used and the actual construction meet city standards. He noted actual funding will come out of the Community Facilities District Bonds. Ms. Mazoyer stated the Fire and Building Safety positions will come out of Plan Review and Permit fees up to the $1,195,000 cap established by the TSA. She said, however, staff will have to return to Council in FY 04/05 and 05/06 for additional funding. Mr. Tim 14 Ernster, Deputy City Manager, stated it is their intention to treat the stadium project like every other project in the city, recovering all of the city's fees to cover the cost of inspections and plans review. He said the TSA has acknowledged that the fees in the agreement are insufficient to cover the costs and staff will go back to the TSA and request full funding. He noted the current agreement includes sufficient funding to cover the costs for FY 03/04 and additional funding will be available for a portion of the costs incurred in FY 04/05. Mr. Flaaen explained the TSA initially took the position that this was a state facility and, therefore, not subject to the City of Glendale's inspections. He said, however, staff has been informed by the TSA and the State Fire Marshall that the project is subject to the local jurisdiction, therefore, an increase in fees will be required. Mayor Scruggs expressed concern about a statement on Page 11 that reads, "Services will be funded through the Community Facilities Districts set up for the Cardinal's Stadium development", explaining a Community Facilities District has not yet been setup and the city's money also goes into the Community Facilities District. She said she would want some way of knowing that the city's money is not being used. Mr. Beasley explained various options, including an offset, an additional revenue source, or a staging of revenue sources based on improvements that need to be made as a result of the inspections, will be discussed with the TSA. He stated documentation that demonstrates how the TSA will handle the issue will be brought back to the Council. Mayor Scruggs pointed out the agreement included a stipulation that there will be no cost to the city. She said the sales tax generated on the site will go into the Community Facilities District and used to build the parking lots and other amenities for which the city accepted responsibility. She asked for assurances that the city's funds will not end up paying for the inspection services. Mr. Ernster assured Mayor Scruggs that they have sufficient permit revenues to cover all costs for FY 03/04. Councilmember Clark suggested staff update the Council on negotiations with the TSA when it meets to reassess the status of other items in six months. Mr. Jim Colson, Economic Development Director, stated numerous questions concerning the arena and stadium came up during the General Fund budget process. He said they were careful to emphasize that the projects did not have an impact on the General Fund and that they were funded through other sources. He stated they are asking for a $1.38 million appropriation to cover the cost of the arena consultants, legal fees, financial consulting fees and planning efforts. He noted the city spent $1.5 million of the $2 million appropriated last year. He said they are also asking for a second appropriation that will be covered by the Separate City Costs and will be paid for by the proceeds of the bond sale. He explained the appropriation is for costs specifically associated with the sale of the bonds. Budget Development Plan Ms. Pam Kavanaugh, Assistant City Manager, said staff believes enhancements can be made to the budget process, in terms of how information is provided to Council. She stated staff will speak with each Councilmember individually to obtain input on the 15 budget process. She said they will then go over every aspect of the budget process with staff and compile a calendar of items and issues that will have to be addressed. In response to Councilmember Clark's question, Ms. Graham explained staff is looking at the departmental core services and linking them to the Council's strategic goals and priorities as well as the budget. She said their analysis is intended to identify redundancies and where collaboration might be possible. Mayor Scruggs commented on the criticism Surprise is receiving for having increased the non-resident rate at their swimming pool, stating, in reality, what choice did the city have. She said it is essential for the Council and staff to begin to prioritize programs so that a plan can be put in place should additional cuts in programs be necessary. Ms. Graham agreed, stating the analysis should help Council members identify priorities among their constituents. She noted benchmarks and performance measures will be attached to every program to ensure a program continues to meet the city's needs. Councilmember Martinez suggested they amend the Arts Fund ordinance to allow Council to evaluate the percentage of funds set aside for the Arts Fund on a yearly basis. Mr. Flaaen agreed Councilmember Martinez's suggestion is feasible, stating, however, the funds could not be put into the General Fund. He pointed out the funds could help with other capital improvement projects. Councilmember Martinez expressed his opinion that, while the Arts program is a good program, during difficult economic times the money would be better directed towards essential services. Mayor Scruggs suggested the issue be brought up at a future time. Mr. Flaaen said a suspension of the Arts Fund contributions would be related to the budget, however, elimination of the Arts Fund should be addressed at a later date. Mayor Scruggs asked if Council can discuss changing an ordinance when the issue was not posted. Mr. Flaaen explained Council has the authority to suspend contributions to the Arts Fund on a proactive basis only, stating, the ordinance is already attached to existing projects, therefore, their contributions would have to continue. Mayor Scruggs asked if the Council has the authority to suspend any ordinance. Mr. Flaaen stated no ordinance can be suspended at a workshop, explaining staff would have to be directed to prepare an ordinance. Councilmember Clark suggested the issue be addressed during the Council's quarterly meeting wherein Council members identify items they would like staff to research. Mr. Flaaen agreed staff would have a better opportunity to provide full information to Council, stating, however, Councilmember Martinez's intent was to bring it forward as part of the budget discussion. He stated the legal action required to change the ordinance could be taken before June 30 when the budget will be finalized. Councilmember Clark stated she would not support moving forward with Councilmember Martinez's suggestion at this time. Mayor Scruggs expressed her opinion the suggestion has nothing to do with the budget process. Councilmember Martinez explained his intention was to bring the idea up for future Council consideration. Councilmember Goulet agreed the issue should be brought up during the quarterly meeting. Mr. Beasley said, once core priorities have been identified, staff will review 16 expenditures and reductions based on the workforce. He said those expenditures and reductions will be discussed throughout the year in an attempt to addressed future budget challenges. Councilmember Martinez stated it makes good business sense to plan for workforce reductions, even though the city hopes it never happens. He asked if layoffs, if necessary, would be done based on specific criteria. Mr. Beasley said, while general criteria have been established, they do not want to arbitrarily make a selection based on that general criteria. He said, should a situation occur that requires a workforce reduction, a work plan will be in place that will be able to meet legal challenges and ensure equity with regard to how people would be laid off. Councilmember Clark questioned whether the work plan would inspire employees whose positions are considered "less valuable" to leave prematurely. Mr. Beasley stated performance based measures are included in the criteria. He pointed out there are often opportunities to transfer and retrain employees. He expressed his opinion it is better to forewarn employees of the possibility that their position will be eliminated if layoffs are necessary than to surprise them at the time the layoffs actually occur. Councilmember Clark agreed the process appears to be more fair than other processes used in the past, stating, however, she believes the city will have to find ways to let employees whose positions are not deemed critical know that they are still valued. ADJOURNMENT The meeting was adjourned at 6:00 p.m. 17