Approved Minutes - 2009-04-20 of LAKE()sip_
CITY OF LAKE OSWEGO
CITIZENS' BUDGET COMMITTEE MINUTES
April 20, 2009
Proposed FY 2009-2010 Budget
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Chair Ron Smith called the meeting to order on April 20, 2009 at 6:30 p.m. in the Santiam
Room of the West End Building, 4101 Kruse Way, Lake Oswego, Oregon.
Members present: Jack Hoffman, Mayor Ron Smith, Chair
Donna Jordan, Council President Katherine Shallenberger, Vice Chair
Roger Hennagin Frank Bearden
Kristen Johnson Kelly Calabria
Sally Moncrieff Jeff Gudman
Mary Olson Daniel Williams
Bill Tierney
Members excused: Gary Logsdon resigned 4-20-09
Staff present: Alex McIntyre, City Manager
Darin Rouhier, Finance Director
Jordan Wheeler, Management Analyst
David Powell, City Attorney
David Donaldson, Assistant City Manager
Robyn Christie, City Recorder
Brant Williams, Economic and Capital Development Department Director
Carol Bryck, Assistant Finance Director
Kam Frederickson, Budget & Financial Analyst
Ed Wilson, Fire Chief
Chip Larouche, Chief Technology Officer
Bill Baars, Library Director
Jackie Rose, Library Youth Services Manager
Jane Carr, Library Reference/Adult Services Manager
Joel Komarek, LOIS
Jane Heisler, Public Affairs Director LOIS
Kim Gilmer, Parks & Recreation Director
Gary Evans, Assistant Parks & Recreation Director
Tom Mueller, Golf Course Manager
Jerry Knippel, Special Projects Director
Dan Duncan, Police Chief
Guy Graham, Public Works Director
Megan Phelan, Human Resources Director
Barb Parr, Legal Assistant
Fran Blake, Municipal Court Supervisor
City of Lake Oswego Citizens' Budget Committee Page 1 of 9
Minutes of April 20, 2009
I. Welcome &Agenda
Chair Smith opened the meeting. He asked Committee members who had attended the City
Council's community roundtable open forum on the budget the previous Saturday to describe
what they heard from the 15 citizens who had participated. Hoffman, Jordan, Shallenberger
and Tierney recalled a wide range of comments and questions. Christie distributed a summary
to the Committee
II. Department Presentations
City Manager, Alex McIntyre had consolidated the departmental budget presentation. He
began by showing the organizational chart. He explained the City Council appointed the three
charter officers: the City Attorney, the Municipal Judge and the City Manager. He explained
how he had reorganized City operations. The Fire and Police Chiefs, managers of new, high
profile programs and projects such as Emergency Management, Economic and Capital
Development, Sustainability and the LOIS project team now reported directly to the City
Manager's office. The Assistant City Manager is in charge of the City's other operational
departments.
McIntyre asked if the Committee members who had questions for the staff at the last meeting
were satisfied with the answers they had received. Gudman confirmed that he had talked with
Rouhier and was satisfied with the answer. Rouhier had clarified for Tierney that of the
bonded debt that is outside of the legal limit, which makes up about 14% of a citizens' property
tax bill, the City received 4% of bonded debt and it is used to pay general obligation bonds.
Olson asked the City Manager to leave time for a discussion of financial policies at some point
in the process.
City Council
Jordan Wheeler, Management Analyst, explained that the City Councilors were now
categorized as "employees" and their stipends were accounted for under Personal Services.
This was a proactive change based on the experience of other jurisdictions that were being
audited because they categorized city counselors as contractors. During the questioning
period, he explained the proposed budget did a better job of differentiating between City Council
expenditures and City Manager's office expenditures. Related adjustments to line items such
as Development and Training had been made to reflect Council expenses such as membership
in the Oregon League of Cities and the U S Conference of Mayors. The Miscellaneous Charges
budget had been increased to account for the cost of catering and televising more City Council
meetings. He clarified that the cost of the City Council clerk was charged to the City Manager's
office.
City Attorney's Office
City Attorney, David Powell explained his office served as the "general service law firm": for
the City. The office consisted of the City Attorney, Deputy City Attorney, a legal assistant,
administrative support and a part-time City prosecutor and they handled about 420 criminal
cases a year. His office advised the City Council and City boards and commissions. One half-
time staff position that was the planning liaison had been moved to the Planning department
because they had not had as many Measure 37 claims to deal with as they had expected.
During the questioning period, he clarified for Tierney that the Professional & Technical
City of Lake Oswego Citizens' Budget Committee Page 2 of 9
Minutes of April 20, 2009
Services budget contained a contingency for outside services in the event of litigation. Last
year little of it had been used. He clarified for Hennagin that most legal services were provided
in-house, but the City had contracted with specialized outside counsel for the LOIS project, and
human resources sometimes hired specialized outside counsel during labor negotiations.
Those costs were not part of the City Attorney's budget. He said the City's insurer typically
hired the attorneys when a tort claim was made against the City. He clarified for Jordan that
the City had employed its own prosecutor for many years. He confirmed for Williams that the
part- time employee got vacation and sick leave, but had not taken advantage of medical
benefits. Tierney suggested "contingency" funds should be called out in a separate line item.
Questions from the audience
Eugene Dittler wanted to know how much the City's attorneys billed per hour for services.
Hoffman explained they were paid salaries, and he estimated the cost might be about $60 to
$70 per hour. He said typical outside counsel charged $220 to $250 per hour.
City Manager's Office
Assistant City Manager David Donaldson explained the reorganization meant he no longer
served as Human Resources director because one had been hired, and he was now in charge
of eight departments. The City Manager's staffing budget was larger this year because of the
positions that had been created in or moved to the City Manager's office because they were
important to the overall organization and achieving City Council goals related to sustainability,
emergency management, public outreach and the special centennial celebration projects. He
said the last snowstorm had demonstrated the City needed an emergency plan and manager.
Jane Heisler's efforts were now focused on the LOIS project, so the vacant second Assistant
City Manager position had been reclassified to Public Communications Manager. During the
questioning period, he clarified that of two of the additional Full Time Equivalents (FTEs) in the
City Manager's office were transfers from the Human Resources and Planning Departments.
Gudman and Tierney observed the printing budget had gone up and asked if the City could use
less paper. Wheeler explained that the City was printing more inserts each year but was
distributing the newsletter electronically now. He explained for Gudman that the increase in
Miscellaneous Charges reflected the cost of organizational memberships, which had previously
been accounted for in other budget items. Gudman asked why the Professional & Technical
Services budget was up and Wheeler said he would get more details for him.
Gudman asked why the large jump in the proposed budget for Special Projects (to $360,000).
Wheeler explained $100,000 of it was the cost of the 2007-09 FAN alley pickup project, which
had not been expensed yet. $250,000 was for the Centennial Celebration next year. Gudman
questioned spending such a large amount on a "celebration of ourselves" in the current
economy. Williams asked how the amount had been arrived at. McIntyre said it was a
"placeholder" based on his experience with similar celebrations. He said it would be an
opportunity for the community to come together. It would be a yearlong celebration that
included some major events and that would require a lot of concerted effort to be successful.
He explained the cost would be reflected in the currently contemplated budget and the next
budget because it took a lot of planning and there were "up front" costs. He said the City would
engage an events coordinator and look for partners. Williams agreed the City needed
something like that, but he cautioned that people would ask why the City was spending so much
on it and the City should try to find partners. Jordan suggested incorporating it into regularly
scheduled events, such as the Festival of the Arts and July 4th fireworks.
City of Lake Oswego Citizens' Budget Committee Page 3 of 9
Minutes of April 20, 2009
Gudman questioned the need to establish separate new Special Projects line items for
intergovernmental relations and accomplishing City Council goals if they were ongoing efforts.
Wheeler explained this was to account for efforts to achieve new goals that were not yet
assigned to a department and were to be shepherded by the City Manager's office. Gudman
explained he wanted to ensure there was no "double budgeting" for City Council goals. Wheeler
confirmed there was not. Tierney said projects in the Special Projects category should be
explained in more detail so everyone would understand. The staff agreed to prepare a report
and email it to the Committee members. Gudman indicated that would satisfy his concern that
there was a "$250,000 placeholder" without any detail, and that he accepted the answer that
there was no "double counting" for efforts to achieve Council goals. He commented that a lot of
"placeholders" could add up to a lot of money. Hennagin agreed that a new City Council goal
should be assigned to the City Manager's Office and budget.
Economic and Capital Development
McIntyre said this new department would report later.
Finance Department
Darin Rouhier, Finance Director explained that the Finance Department handles daily
operations, accounting, financial reporting, utility billings, tracks the financial activities, manages
debt payments and investments, and annually supports budgeting with monitoring throughout
the year. He indicated that the 1.5 increase in FTEs was the result of transferring the costs of
one finance position back from the utility departments, which were supporting the utility billing
function, to more closely reflect utility costs after some changes; and a receiving a half time
position from the building department to assist with a more comprehensive front counter.
Finance oversees "fiscal entities- such as Assessment Project Fund; Bonded Debt Service
Fund; Risk Management for insurance and other fees; the Streetcar Fund; the new Tourism
Fund captures the new 2% increase from Hotel/Motel tax; and Non-departmental has the
General Fund operating contingency, insurance reserve contingency and others.
During the questioning period, Tierney wanted to know if contingency funds budgeted in
individual departments were $10,000 or something larger. He also wanted to know if the
operating philosophy was to leave them in departmental budgets instead of rolling them all into
one citywide contingency fund to be managed. Rouhier said his philosophy was to have
contingencies in the General Fund that had been defined by City Council policy to have a safety
net or contingencies for reserves. He said allowing flexibility within individual department
budgets was an approach that may prevent the need for Council approval on very small items
that may come up, but Council may prefer to know about any changes not programmed in to the
budget.
Jordan asked why, on the Summary of Resources, the Hotel/Motel Tax was listed separately
for 2009-10 and why the Intergovernmental component of the had gone from $100,000 to zero
after the 2005-07 Biennium. Assistant Finance Director Carol Bryck explained that the
Intergovernmental $100,000 was state revenue sharing money that had been moved to the
Streetcar Fund. She also explained that the portion of Hotel/Motel tax revenue that was not
mandated to be spent for tourism was put in the General Fund, but the 2% for Tourism was
being tracked separately to ensure it would be used as intended. Also, she explained for
Hennagin that consortium contributions to the Streetcar were expected to significantly increase
because the City had billed consortium members for unpaid back payments. She confirmed that
the City of Portland was participating.
City of Lake Oswego Citizens' Budget Committee Page 4 of 9
Minutes of April 20, 2009
Rouhier explained the difference between "Contingency" and "Unappropriated Ending Fund
Balance." Oregon budget law required a budgeted "Unappropriated Ending Fund Balance" to
stay "locked up" through the entire current cycle. But it was possible to spend contingency
funds. Any contingency not reallocated to be spent by the end of the year would be "booked" as
part of the Ending Fund Balance. He clarified for Bearden that the City Attorney's office did not
have a contingency fund, but they had budgeted an amount in Professional & Technical
Services that they could use where often needed. Tierney suggested the City Attorney's
budget should separate "Contingency" from Professional & Technical Services and that
spending of contingency funds by individual departments should be controlled by the City
Manager for large amounts so movement of the money would be more visible. Rouhier said
the budget had a contingency for labor settlements. All bargaining units were currently in
negotiations and none of them were settled yet. Past budgeting processes would have
assumed some outcome and put those amounts into departmental budgets. But the budgeting
team had put it aside in a contingency fund that could be allocated by the City Council after a
settlement. Shallenberger said a small allowance might be acceptable to budget in a run rate
manner as opposed to large contingencies. Tierney suggested setting a limit on individual
departmental contingency budgets and anything over that amount would have to be approved
by the City Manager. Jordan noted that is was necessary for City Council approval for use of
contingency over a certain amount.
Bryck clarified for Gudman that each fund could have a contingency, not each department.
Gudman wondered if each fund might be tempted to maximize the contingency amount, and it
might make more sense to have a citywide contingency fund. McIntyre advised that Oregon
law required contingency amounts on a fund-by-fund basis. He reiterated that departments did
not have contingency funds. He confirmed for Gudman that he and Rouhier were satisfied that
the total of contingency dollars reflected what was best for the City.
Rouhier confirmed for Olson that the City knew Risk Management expenditures would go up,
but they did not yet know how much CIS would charge next year. Bryck confirmed for Olson
that the Tourism Fund budget included Repair and Maintenance of the Iron Furnace.
Fire Department
Fire Chief Ed Wilson explained the City had a full service fire department that did a lot more
than respond to fires and they served an area larger than the City because they had long-
standing contracts with other areas and fire districts. Revenue came from property taxes and
contract revenue was almost 15% of their$12 million budget. All 50 sworn personnel had at
least basic EMT certification and 27 of them were paramedics. Every apparatus that went out
had at least one EMT or paramedic on it. The budget eliminated one deputy fire marshal
position in the Prevention Division. Currently there were about 2,200 inspectable buildings and
over a third of them had not been inspected for five years or longer. It would be a challenge, but
they planned to train more firefighters so they could inspect 900 — 1,100 of the inspectable
buildings. Wilson said he supported shifting the Emergency Management Coordinator to the
City Manager's office because it created better synergy with other major departments. He said
when the economy improved he might ask the City Manager to add back the Prevention deputy.
During the questioning period he confirmed for Williams that the Fire Marshal reviewed building
plans and even though new construction activity had slowed there was still lots of remodeling.
He related that he had asked the previous City manager for a third fire marshal position. He
clarified for Hennagin that part Intergovernmental income was reimbursement from the County
for providing services there. Income from other districts was listed under Sales & Services
revenue. He agreed to offer the Committee more details about that income. He and McIntyre
City of Lake Oswego Citizens' Budget Committee Page 5 of 9
Minutes of April 20, 2009
clarified for Gudman that the Repairs and Maintenance budget was up dramatically in this
budget because now each department had to account for their own fuel costs, instead of
transferring funds to Maintenance Department & Motor Pool to cover those costs.
McIntyre confirmed for Shallenberger that the fire and police budgets planned for"cashing out"
of benefits of employees they knew were about to retire, but a new leave reserve fund he
suggested for a future year would ensure the City did not get caught short when others left.
Wilson explained to Shallenberger that the department believed the South Shore fire station
was in the right location, but it was at the end of its useful life and should be rebuilt. That
decision would be up to the City Council. Williams observed the Professional & Technical
Services budget had more than doubled. Wilson explained a large part of that was the cost of
EMT recertification, which was required every two years. So the budged cost covered two
years. He said he would provide the Committee with more details about this line item. He
confirmed that the child car seat installation-checking program required fire and police overtime
because the checks were typically conducted on a Saturday and not all firefighters were
certified to do that. Jordan advised this was a valuable service because most child seats were
installed incorrectly. But she was surprised to learn it cost overtime. She thought grants were
available. Wilson recalled some grant money had been available for that about six years ago.
Wilson described some scheduling arrangements the department used to try minimize overtime
cost. He related that although alarm checks were typically done outside of typical business
hours, the Department recouped their cost for that. He said it was likely there would be more
overtime in the Prevention Division now that they down one FTE.
Olson was glad to see the department was setting aside a reserve for equipment replacement.
Rouhier explained for Olson and Hoffman that the Fire Department Contingency would not "go
away" when combined into the General fund. He planned to explain how that would work in
more detail during the financial policy discussion. Tierney wanted to know how stable the
Sales & Services income was for fire contracts. Wilson identified several factors that indicated
it would be stable for at least the next three years. He said the department planned to begin
negotiating for increased rates. Tierney asked him to provide more information to justify the
large increase in materials and services. Rouhier explained that the reserve for equipment
would remain in the Fire Department budget. Wilson explained for Hennagin that Prevention
Division reflect one FTE was moved to the Operations Division. He said he would provide more
details on the estimates and FTEs.
Human Resources
Megan Phelan, Human Resources Director, explained that some of the human resources
department responsibilities are for recruitment and selection, benefit administration, training,
safety and workers compensation. The budget was lower because the Assistant City Manager
position had been moved to the City Manager's office and Professional & Technical Services
reductions include attorney services and labor relations consultants. She said the department
employed an HR Director, an HR Analyst, an HR Specialist and a part time internship was
funded by donations from the Robert Kincaid Memorial Internship program.
During the questioning period, Donaldson clarified for Shallenberger that the average age of
City employees was 46; the average tenure for union employees was 10.5 years; and the
average tenure of management employees was 7 years. Phelan explained that Professional &
Technical Services paid for attorneys and labor relations consultants. That cost was estimated
to be higher for 2009 because the City was currently negotiating all three labor contracts.
Contracts were typically for a two-year period.
City of Lake Oswego Citizens' Budget Committee Page 6 of 9
Minutes of April 20, 2009
Gudman observed the City had sent PERS almost $4.3 million in June 2008. He wanted to
know what the City would send to PERS in June 2009 and what the City's total liability to PERS
was. He guessed that was in excess of$100 million. Phelan said she would provide that
information. She explained for Williams that the large increase in Materials and Supplies
accounted for items that had not been counted before, such as employee and volunteer
recognition; extra publications and reports; and computer services or upgrades in her
department. Tierney asked if there was a "rule of thumb" for employee benefits as a
percentage of full-time salaries, noting that departments vary. Phelan said each jurisdiction
established their own standard. She agreed to research the City percentages for the
Committee.
Information Technology
Chip Larouche, Chief Technology Officer, explained his department supported the City's
computer network and ran the copy center. He said most of the 1.2% budget reduction he
proposed related to slowing down some purchases of software and software upgrades. He
announced he no longer proposed to discontinue wireless support in City parks ($800 per year),
or eliminate outsourced computer training for employees. During the questioning period, he
explained that computers were replaced when they were about five or six years old and a "low-
demand" computer might be used for as long as eight years.
Gudman wanted to know if the department was systematically measuring the return in
productivity the City got for the investment in computers. Larouche explained that if a
department director said their computers were slowing the department down, that might indicate
a computer needed to be replaced in that department after three years, but he looked for
somewhere else to continue to use it. Gudman asked if the City was more productive because
they were using computers? Larouche said computers allowed the City to do a lot more things
and IT ensured the system worked. He clarified for Hoffman that the Professional & Technical
Services budget reflected the cost of software licenses. Williams observed that budget had
been cut in half, but the Other Materials and Supplies budget had been significantly increased.
Larouche explained he had budgeted $100,000 for servers, backup resources and power
supplies to support the network. The department heads budgeted for their own departments'
computers, so that equipment was not in his budget.
Library
Bill Baars, Library Director, reported the Library had been ranked first overall for Oregon
Libraries and had the highest per capita use in the state. It benefited from the services of 543
volunteers, donations from Friends of the Library, and two endowment funds. It would also
benefit from revenue from the new, voter approved, County Library District. The Committee
was scheduled to discuss that next week. He explained that they moved a 0.5 FTE unfilled
position from Management to a Youth Services Division.
During the questioning period, he clarified for Jordan that the cost of purchasing books was on
the Library Print Materials line for each division. He said three-quarters of the 245,000 items in
the Library were books. They also budgeted for Non-Print downloadable materials because
they saved valuable shelf space. He said even though timber revenues had gone away there
was still enough money for each city to receive $1 million capital for libraries for the next five
years.
Hennagin asked about the endowment funds that were accounted as both resources and
requirements. Baars clarified for Hennagin that the Library was not dipping into endowment
City of Lake Oswego Citizens' Budget Committee Page 7 of 9
Minutes of April 20, 2009
funds, but endowment income had declined. Rouhier pointed out that the crosswalk more
clearly portrayed what was happening with the beginning and ending balances.
Baars clarified for Johnson that the Library was "maxed out" on space. They were trying to fit
as much in as possible and had removed study carrels to make more room for computer
terminals. He clarified for Shallenberger that the Library did not track the cost of having staff
available to help for computer users but they did track the cost of offering special classes. He
said Friends of the Library operated the Booktique and paid rent of$1 per year. He said they
transferred books to the Booktique to be sold, then the Friends provide the Library with
programs and materials. He said they were trying to find a way to track the actual time staff
spent at each Division desk. He clarified for Tierney that the Library had five managers; many
employees were on-call, and most employees were part time.
Lake Oswego Interceptor Sewer Project (LOIS)
Joel Komarek, LOIS Project Director, said his team was 4.7 FTEs: two professional
engineers, two professional communications staff and .7 FTE administrative support staff. The
team had been formed last June. Most of the proposed LOIS budget was related to capital
expense of Phase II (Lake Full). The bids had been opened and the project was to be
completed June 2010. Phase I (Kelok Road) had been started and was to be completed by the
end of the fiscal year. All three phases would be either completed or under construction during
the next fiscal year.
During the questioning period, Komarek confirmed for Tierney that the capital outlay included
the cost of professional engineering design services and $26 million would be spent on the Lake
Full phase though June 2010. He anticipated Phase III (Lake Down) would begin in October
2009 and be underway by the start of the 2010 fiscal year. $200,000 would be spent on that
phase during the proposed budget cycle.
Gudman asked what the total project budget was. Komarek said after the bids were opened
the original estimate of$125 million had been changed to $110 million. That included
contingency funds for all three phases to address conditions they did not anticipate. Gudman
stressed the need to make the distinction between "budget" and "forecast." He suggested
Komarek present a "budget" of"x" dollars and say everything else was an "estimate." He said
the community would understand that, even if the City had to explain a change of scope
changed the amounts. Jane Heisler explained the Lake Full budget was more certain now that
the bids were in. The rest of the amounts were estimates until those bids were in. So the
current best estimate was $110 million. Tierney asked where the proceeds from the bond sale
were listed in the budget. Jordan noted that the $56 million proceeds was in the Public Works:
Wastewater budget (see page 142). She asked the staff to provide a crosswalk between the
LOIS project and Wastewater Fund budgets. Rouhier agreed to cross-reference that, but he
noted that LOIS was not a "fund" that stands alone.
Rouhier confirmed for Olson that the $12 million Revenue Bond Principal was to be used to
pay off the 2007 bond issue.
Municipal Court
Donaldson introduced Fran Blake, Court Supervisor. She explained that the court dealt with
traffic and municipal code violations and criminal misdemeanors. Donaldson reported that he
and Blake were tracking violations, revenue and costs on a monthly basis to determine why
court revenue was down by 14.7% from last year and had been declining for six months.
City of Lake Oswego Citizens' Budget Committee Page 8 of 9
Minutes of April 20, 2009
During the questioning period, Blake explained the state legislature set the fine schedule and
the City had to send a mandated amount of fine revenue to the state and county each month.
She confirmed that the City allowed people who could not pay a fine to make payments. The
City uses an agency to collect older past due amounts. Donaldson said part of his research
would be to find out what percentage of fines were actually collected. Hennagin observed that
in this budget the expenditures for Materials & Services was greater than the staffing cost.
Donaldson explained that was where the Court accounted for the mandated requirements it sent
the county and state ($268,000 of the total $319,000 for Materials & Services). The Committee
members suggested showing the obligations to the county and state as separate line items.
III. Public Comment
Smith closed departmental presentations for the evening and invited public input.
Carolyn Jones inquired about the Streetcar. She recalled that money had recently been
allocated to repair a trestle and when she spoke to Metro staff they had inquired about which
trestle. She also questioned how a single-track line would allow 10-minute interval trolley
service. She worried money spent on repairing the trestle now might be wasted if the entire line
and the trestles had to be rebuilt in the future.
Jordan explained that Metro may not know which trestle, as the project would be funded by Tri-
Met stimulus funds and it would pay for trestles and tunnels. Tri-Met would direct the repairs.
The Trolley would not be running again until late summer because the trestle repairs were
necessary even to support the existing Trolley. Hennagin explained that the 10-minute
frequency would be met by constructing two sections of passing tracks at Willamette Park and
farther north that would allow streetcars to pass each other. Jordan said the trestle
improvements would need to make the trestles strong enough to hold a couple original, heavier,
Trolley cars that the City of Portland would provide. The City Council was still looking into how
heavy new streetcars might be and if it can be built to support them as well.
Eugene Dittler asked if the Streetcar would be allowed to run empty. He observed the buses
were crammed with riders. Jordan anticipated they would be on a schedule.
IV. Adjournment
Chair Smith adjourned the meeting at 9:30 p.m. Next meeting is Tuesday, April 28, 2009.
Respectfully submitted,
Kam Frederickson /s/
Kam Frederickson
Budget & Financial Analyst
PENDING APPROVAL BY THE CITIZENS' BUDGET COMMITTEE: 5/11/09
City of Lake Oswego Citizens' Budget Committee Page 9 of 9
Minutes of April 20, 2009