Loading...
HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 11/16/2010 *PLEASE NOTE: Since the Glendale City Council does not take formal action at the Workshops,Workshop minutes are not approved by the City Council. "I'll ih GLENp MINUTES OF THE GLENDALE CITY COUNCIL WORKSHOP SESSION Council Chambers—Workshop Room 5850 West Glendale Avenue November 16, 2010 1:30 p.m. PRESENT: Vice Mayor Steven E. Frate and Councilmembers Joyce V. Clark, David M. Goulet, Yvonne J. Knaack, H. Phillip Lieberman, and Manuel D. Martinez, ABSENT: Mayor Elaine M. Scruggs ALSO PRESENT: Horatio Skeete, Interim Assistant City Manager; Craig Tindall, City Attorney; and Pamela Hanna, City Clerk WORKSHOP SESSION 1. FY 2010-11 FIRST QUARTER GENERAL FUND STATUS REPORT ON REVENUES AND EXPENDITURES CITY STAFF PRESENTING THIS ITEM: Erik Strunk, Interim Deputy City Manager and Don Bolton, Interim Management& Budget Director This is a request for City Council to review the FY 2010-11 first quarter report on General Fund (GF) revenues and expenditures. The first quarter report covers July, August, and September of FY 2010-11, which historically is the slowest quarter for revenue collections. The FY 2010-11 GF first quarter report is consistent with the Council's goal of ensuring the city's financial stability by conducting timely reviews of expenditures and revenues. In response to Council requests, staff committed to providing quarterly reports on the GF beginning with FY 2003-04. GF Summary • GF expenditures are essentially even with the first quarter budget. Due to the timing of retirements, attrition and layoffs associated with the planned FTE reduction exercise, salary expenditures were higher than normal which reduced the level of expenditure savings we 1 typically see in the first quarter. As the year progresses, the planned variance during the first quarter will correct itself over the next three quarters. • GF revenues are $2.8 million or (7.9%) below budget. This difference is attributable to the normal first quarter lag we experience in sales tax revenue and the timing of when our planned revenue enhancements become effective. This is an improvement, last year at this time GF revenues were $3.6 million or(9.1%) below budget. GF Expenditures • The FY 2010-11 budget expenditures and actuals for the GF operating and pay-as-you-go (PAYGO) capital expenditures are shown in the following table. GF YTD Expenditure Comparison Budget to Actuals, FY 2010-11 (In 000's) FY 2010-11 FY 2010-11 Amount .....................................................: YTD Budget YTD Actuals Under/(Over) Budget Salaries/Benefits $27,077 $27,651 ($574) Non-Personnel $9,033 $8,311 $722 Debt Service (leases) $1,409 $1,409 - PAYGO Capital $475 $475 - TOTAL $37,994 $37,846 $148 • Overall, the first quarter actual expenditures are $148,000 less than the amount budgeted. • The salaries/benefits "YTD Budget" figure reflects the FTE reductions that were a part of the balancing plan for FY 2010-11. The negative variance was expected due to the timing of attrition, retirements and layoffs that occurred during the first quarter. As the year progresses, the planned variance during the first quarter will correct itself over the next three quarters. General Fund Revenues • The following table reflects a comparison of the GF revenue budget and GF actual collections for FY 2010-11. GF YTD Revenue Comparison Budget to Actuals, FY 2010-11 (In 000's) FY 2010-11 FY 2010-11 Percent YTD Budget YTD Actuals Over (Under) Budget City Sales Tax $12,625 $11,638 (7.8%) 2 State Income Tax $5,913 $5,898 - State Sales Tax $4,424 $4,247 (4%) State MV In-Lieu $2,125 $2,127 - HURF $3,375 $3,273 (3%) Primary Prop Tax $305 $305 All Other $7,429 $5,863 (21.1%) TOTAL $36,196 $33,351 (7.9%) • The All Other category includes such items as court fees, permit fees, business licenses, recreation revenue, interest revenue and the revenue enhancements included in the FY 2011 balanced budget. The revenue sources that comprise this category come in unevenly over the course of a fiscal year and are $1.6 million under budget. • The revenue enhancements were expected to come in under budget during the first half of the fiscal year because the majority of them become effective in the late stages of the second quarter and into the third quarter. For example, premium parking fees take effect during the first city event in November and the new liquor license fees are expected to be received in January. • The amount shown for the property tax budget was adjusted to more accurately reflect the collection cycle of property taxes. • HURF revenues are commonly called the gas tax even though there are several other transportation-related fees that comprise this revenue source. This revenue source is based primarily on the volume of fuel sold rather than the price of fuel. HURF receipts are $102,000 under budget. • State-shared revenue collections are $12.3 million. This amount is $190,000 under budget. • GF revenue receipts through the first quarter of FY 2010-11 are $2.8 million under budget. The sales tax lag in revenue is consistent with the first quarter reports of years past. Second and third quarter collections are usually our highest collection periods. Designated Sales Tax Receipts • At the end of the first quarter, the transportation sales tax budget to actuals comparison shows that this fund collected $327,000 less than the amount budgeted. 3 YTD Comparison Budget to Actuals, FY 2010-11 (In 000's) FY 2010-11 FY 2010-11 Percent YTD Budget YTD Actuals Over (Under) Budget Transportation $4,663 $4,336 (70/0) Sales Tax • The following table shows a comparison of budget to actuals for FY 2010-11 for the two components of the public safety sales tax. YTD Comparison Budget to Actuals, FY 2010-11 (In 000's) FY 2010-11 FY 2010-11 Percent YTD Budget YTD Actuals Over (Under) Budget Police Sales Tax $ 2,994 $2,801 (6%) Fire Sales Tax $1,484 $1,395 (6%) • For FY 2010-11, the police component of the public safety sales tax was $193,000 less than the budget and fire was $89,000 less than the budget. • Similar to the GF, the expenditures of these funds are being paced to match revenue levels. This is a status report on the GF covering the first quarter of FY 2010-11. No Council guidance is requested on this report. Horatio Skeete, Interim Assistant City Manager,presented the item. He explained that the first quarter report covers July, August, and September of FY 2010-11, which historically is the slowest quarter for revenue collections. He stated even though the numbers reflect a reduction in revenue, this was anticipated. He indicated they will be in much better condition in the second quarter. He introduced Mr. Erik Strunk, Interim Deputy City Manager, to continue the presentation. Mr. Strunk stated that as they continue to face challenges due to the slow economic growth, it is important to note Glendale was working to position itself to stay on top as the recovery continues. This quarterly report is done to assure both Council and city residents that staff will continue to track revenues and expenses to insure and maintain a balanced city budget. Staff will accomplish this by moving through the current budget year by proactively seeking opportunities 4 to reduce cost. He stated although a more robust economy is not projected until 2013/2014, the good news is the economy is improving. He reviewed how Glendale had been impacted by some of the national down trends. He remarked on the flat housing market, forecloses, low consumer spending and unemployment. The unemployment rate still remains relatively high compared to what Glendale has experienced in the past. The national unemployment rate is 9.6 percent and in Arizona the rate is 9.6 percent. He added the good news was Glendale's unemployment rate was 8.7 percent, almost a full percentage below what the state was experiencing. Additionally, the city has done a lot to try and maintain its position to come out of the recession and create job opportunities for residents and those who move to Glendale. Moreover, the Economic Department last year helped facilitate the creation of 1,776 new jobs in the city. He stated over the last years, 22 different businesses relocated in Glendale. Additionally, the city has assisted in the additional creation of 660 jobs in the first quarter. He stated it was important to note the economy was still recovering and staff will continue to monitor the city's revenues and expenditures. He introduced Mr. Don Bolton, Interim Management and Budget Director. Mr. Bolton provided a slide presentation summary of the FY 2010-11 first quarter report General Fund revenues and expenditures. He reiterated that traditionally, the summer months have been the slowest months for Glendale and this trend had also continued this year. In addition, the majority of the revenue enhancements included in fiscal year 2011 will be collected in the last half of the fiscal year. He noted the first quarter revenue numbers were actually an improvement from the first quarter revenue numbers experienced last year when comparing actuals to budget. He assured everyone that staff had a systematic process in place to continue monitoring revenues and expenditures and make timely adjustments as needed. Additionally, staff will continue to monitor any developments from the state Legislature pertaining to state shared revenues. Council priorities will guide staff in preparing recommendations for considerations as part of the normal spring budget process. Councilmember Lieberman commented on the ongoing recession and the predictions from the experts as to when the recession will end. He stated the housing market was still not doing well. He discussed the last recession and how in his view, it took almost 15 years to bounce back. He explained this economic difficulty will not simply take a few years to bounce back, but many years for the city to have a balanced budget with a surplus. Councilmember Clark asked if state shared revenues were $12.3 million for the year or for only the first quarter as stated on page three. Mr. Bolton replied it was only for the first quarter. He explained that for the entire year, state shared revenues were approximately $49.9 million, which included state income tax, state sales tax and motor vehicle revenue. Councilmember Clark commented that discussions from the state Legislators were that they were exploring taking a third of all of state shared revenues. She remarked state shared revenues make up 40 percent of the city's budget. Mr. Bolton noted it was closer to 34 percent for this fiscal year. Councilmember Clark asked if staff had a contingency plan to deal with the loss of state shared revenue should it happen. Mr. Bolton remarked that at this time, they did not want to speculate on what may or may not happen on the state's end. He explained staff will know more as they go through the second quarter and assess the situation. Councilmember Clark remarked that staff needed to reassure everyone they were developing a contingency plan should there be this draconian loss to the budget, even if they were not likely to share it at this time. Mr. Skeete explained that staff has instituted a plan to react to changes in budget scenarios which has served 5 them well in the last two years. He stated part of the plan was not to indulge in speculation, but deal with the practical scenarios at hand. He noted they will continue to monitor the budget, revenues, expenditures and activities at the state and local level. He stated they will make the necessary adjustments when they receive clear indications of the level of changes in the revenue side of the budget. Councilmember Clark remarked it was her firm belief that state shared revenues will most definitely take a hit this year. She added the state Legislature has made it very clear that state shared revenues is an avenue they will definitely go after. Councilmember Clark asked for an example of a timely adjustment staff might make to the budget. Mr. Bolton explained one example would be an extensive review before filling a vacant position. He added that as positions become vacant due to retirement and attrition, they can theoretically keep those positions vacant to make sure expenditures match revenues. Councilmember Clark remarked, the city had eliminated many positions last year. She asked how many vacant positions were currently being carried. Mr. Skeete stated staff did not have that number at the moment, however, will get it to City Council in the next couple of days after they check with the Human Resources Department. Councilmember Clark commented on the revenue comparison on page two regarding budget to actuals for FY 2010. She noted the comparison showed they were down 7.9 percent total. However, the "All Other" category was down 21.1 percent. She asked if the items listed in the bullet point on page 3 included a complete list of the "All Other" category. Mr. Bolton replied it was not the complete list, but only the majority of the bigger items that make up that category. Councilmember Clark asked for an example of a smaller item that was not included. Mr. Bolton noted several city business licenses and development fees were not included. Councilmember Clark asked if all those fees averaged out to the 21.1 percent. Mr. Bolton stated the primary driver of the 21.1 percent was the revenue enhancements that have been budgeted. Those revenue enhancements will not arrive until the second half of the year. Councilmember Clark asked staff to list some of the revenue enhancements for the general public. Mr. Strunk explained that as part of setting the budget for this year, several revenue enhancements were identified. He noted that revenue enhancements include Electronic Billboards, Premium Parking, Wireless Tower Contracts, Pawn Shop and Fire Inspection fees. He noted most of these fees will go into effect in January as another form of revenue to help balance the budget. Councilmember Clark indicated they should see the 21.1 percent number go down in January. Mr. Strunk replied it most likely will be in the third or fourth quarter portion. Councilmember Clark remarked that this situation was the new norm and she will continue to say it. She stated that this situation was not an aberration and things will not be turning around anytime soon or at least not in the next five years. Councilmember Martinez stated he was glad staff had a process in place in which to deal with the state shared revenue issue. He indicated that the general fund revenue variance of $2.8 million was less than it was last year at this time. He stated he recalled the city usually having big (expenditure) savings in past years and this year we have $148,000. He asked why the expenditure savings was lower than the previous fiscal year Mr. Bolton explained that the Paygo category had $710,000 of first quarter savings last year due to the timing of the sales tax and license system project coming on line in the last half of that year. This year, there were no Paygo savings as expenditures matched revenues. Additionally, due to the timing of retirements, attrition and layoffs associated with the planned FTE reduction exercise, this year's first quarter 6 salary expenditures were higher than normal, which reduced the level of expenditure savings typically seen in the first quarter. As the year progresses, the planned salary variance during the first quarter will correct itself over the next three quarters. Vice Mayor Frate remarked that the new revenue enhancements were not being done to raise money but to be able to pay for those services. Mr. Strunk agreed and explained that the potential revenue enhancements were assessed to see if they were covering the cost to administer the various licenses and fees to programs. Vice Mayor Frate wanted to make clear that they were raising fees in order to recoup the money it cost to administer the programs. Councilmember Knaack commented she was glad the city had been diligent in looking for fees they might have missed in the past to help balance the budget. She stated it says a lot about how hard staff has worked to find whatever revenue they can in legitimate ways. She noted the city had missed out on some revenue in the past. She thanked city staff, police and fire for the amazing job they have done in expense management. Councilmember Lieberman commented that at the budget meeting in March, there were a total of 180 positions vacant. He added that staff hoped to have 90 positions through attrition in this budget year. Mr. Skeete stated that the plan presented during the last budget was implemented over the summer and into the first quarter. He indicated the plan had been fully implemented and is reflected in this presentation. Councilmember Lieberman asked if they will be close to the 90 positions by when this budget year ends in June of 2011. Mr. Skeete replied yes. As there was no further business,Vice Mayor Frate adjourned the meeting. ADJOURNMENT The meeting was adjourned at 2:00 p.m. 7