Approved Minutes - 2009-05-13 OF LAKE°sip,
1, CITY OF LAKE OSWEGO
CITIZENS' BUDGET COMMITTEE MINUTES
May 13, 2009
�- Proposed FY 2009-2010 Budget
�oREGON/
Chair Ron Smith called the meeting to order on May 13, 2009 at 6:43 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: None
Staff present: Alex McIntyre, City Manager
Darin Rouhier, Finance Director
Jordan Wheeler, Management Analyst
David Powell, City Attorney
David Donaldson, Assistant City Manager
Robert Galante, LORA Director
Kim Gilmer, Parks & Recreation Director
Brant Williams, Economic & Capital Development Director
Denise Frisbee, Planning & Building Department Director
Dan Duncan, Police Chief
Guy Graham, Public Works Director
Jerry Knippel, Special Projects Director
Bill Baars, Library Director
Ed Wilson, Fire Chief
Chip Larouche, Chief Technology Officer
Carol Bryck, Assistant Finance Director
Kam Frederickson, Budget & Financial Analyst
Linda Dickhous, Administrative Support
I. Welcome & Agenda
Chair Ron Smith called the role and highlighted the major agenda items.
II. Approval of Meeting Minutes
The vote on the Minutes of May 4, 2009 was postponed to allow more time for Committee
members to read the draft.
III. State Revenue Sharing Public Hearing
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Minutes of May 13, 2009
Rouhier reported the City's share of state revenue sharing was to be $300,000 based on a per
capita allocation method. He pointed out a state revenue sharing trend line had been included in
the budget material. These were discretionary funds that could be used for any purpose. In
recent years Lake Oswego considered it General Fund revenue.
Public Input
John Surrett, 1685 Edgecliff Terr., observed the trend indicated the City's population was almost
flat. Rouhier confirmed the City had not grown much. Smith closed the public hearing.
Hoffman moved to approve the proposed budget's use of the City's share of state revenue as
undesignated General Fund resources. Johnson seconded the motion and it passed by
unanimous vote.
Smith temporarily adjourned the City's Citizen's budget Committee meeting at 6:49 to begin the
LORA Budget Committee meeting with the same members. Smith announced the Committee
was now acting in the capacity of the Lake Oswego Redevelopment Agency Citizens Budget
Committee.
Smith reconvened the City of Lake Oswego Citizen's Budget Committee meeting at 7:38 p.m.
He suggested the members consider how to close the "gap." Rouhier observed that the
Committee had reduced it to $807,000 so far, after reducing funding for the Centennial
celebration by $79,000.
Public Input
Dan Vizzini, 13830 Verte Ct., LONAC representative, distributed copies of the official LONAC
recommendations. He said in the future the budgeting process should factor in funds to
accomplish action measures called for in the Comprehensive Plan, neighborhood plans, and
other adopted City plans. Quality of Life Indicators should be used to guide investment
decisions. During the questioning period, he clarified that the recommendations were not
prioritized, and they addressed the handful of issues LONAC members felt were important.
Gudman asked where they anticipated the money would come from. Vizzini explained that
LONAC did not expect the City to accomplish them all at once, and it might take years to fund
them, but they did want adopted plans capital projects to be added to the CIP project list.
Jerry Wheeler, 35910 Blazer Trail, CEO of the Lake Oswego Chamber of Commerce, said the
Chamber was working with the city to promote local business. They planned to hire a
consultant to do the market research. He thought the streetcar and Foothills development
would help downtown and that would motivate Lake Grove too. He recommended that the City
make light industrial land available for former Foothills business and new businesses to move
to. He said now was a time to plan for the future, not step backward. He urged the Committee
to keep the economic development line item intact. It was an investment in the future. During
the questioning period, he confirmed the Chamber and the City would form a private/public
partnership to hire the consultant. He said the City should use City resources to bring more
customers to the City; attract the types of businesses that would give the City "critical mass;"
and motivate all areas of the City to work together.
John Surrett, 1685 Edgecliff Terrace, suggested the City delay filling the economic development
position for a year until the public/private partnership consultant recommended what was
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Minutes of May 13, 2009
needed. He also suggested postponing forming the water project team for a year until the City
saw how the tiered water rates worked.
Matt Finnegan, 128 Condolea Drive, asked the Committee to follow LONAC recommendations
related to neighborhood plan implementation. Smith closed the public hearing.
Deliberations/Votes
Hoffman moved to approve the City Manager's 2009-10 budget as adjusted by the staff on
May 11, 2009 and as amended by the CBC to move $21,000 to the Parks & Recreation
Department from the City Managers office Centennial Celebration budget; to reduce the
Centennial Celebration budget in the City Manager's office by an additional $79,000; and to
place $900,000 of City support to the Library in the Ending Fund Balance as a reserve for a
future library facility. Johnson seconded the motion.
During the ensuing discussion, Smith read aloud his May 12th email to the Committee. He
wrote that it had been wrong and irresponsible for the Committee to vote the previous evening
to reserve $900,000 for Library capital improvement when that action held back $600,000 to
$800,000 from much needed areas. He urged them to reconsider the vote.
Jordan argued that the City had more than enough money in reserves. They were not just for a
rainy day. Some could be used to do things that would make the city better off in the long run.
They could implement LONAC recommendations and fund sustainability projects and the Arts
Council. She noted that two major paving projects the City would have done on its own anyway
were to be funded by stimulus funds. Johnson suggested the Committee wait to see how the
new one-year budget worked and then consider how to improve it next year. She stressed that
it implemented City Council goals. She saw the need for a streets maintenance master plan in
a future budget. She suggested the City Council might need to take more time goal setting next
year. She said it was not fair to divert funds away from the Library this year. Moncrieff agreed
with Jordan and Johnson. She stressed that City Council goals reflected what they heard
citizens wanted them to do during an extensive public engagement process. She recalled that
McIntyre had explained to them that every goal had a cost. She supported the budget as it
stood. Bearden said he supported the budget.
Gudman said he did not support it. He recalled that the City Council had not understood the
cost because when they set the goals they had anticipated they would discuss the cost at the
budget meetings. Calabria agreed with Gudman. She would not approve the current budget
because she did not feel that was a responsible thing to do in current economic times. She
wanted to give a tax break to citizens to offset the cost of increased utility bills. She said the
City lost credibility when they bought the WEB and increasing spending would not help. The
City should not increase spending and they should reduce the tax rate. That would be important
if the City needed to pass a bond measure for facilities in the future. Shallenberger said the
City could have a budget that did not dip into reserves. That would be a good message to send
to citizens. She believed it could be reduced by a certain percentage across the board.
Department heads would know what they could cut. She questioned why the economic
development position should be "on the table" when there might be savings to be found in other
departments. D. Williams agreed that the City Council goals were all worthwhile, but he
questioned the timing. He recalled that Councilors justified funding them by saying that citizens
they had talked to asked for them, but he observed that some citizens on the CBC did not think
the time was right. Tierney said he did not support the current budget because it was
"business as usual." He said City Council goals were adopted after he had served on the
Council for only a few days. He suggested there might be other ways to achieve some of the
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goals without adding FTEs. Olson explained that she and Tierney were not advocating
removing the economic development position from the budget, but waiting to fill it until the City
and the Chamber created an economic development plan. She agreed with Smith that the
contribution to the reserve for Library capital funding should be reduced to $300,000 to 600,000.
She recalled others argued they did not want to reduce the level of service to citizens, but they
were also willing to accept a lower score on the pavement condition index, which lowered the
standards for streets. She agreed that the goal setting process might need to be started earlier
next time in order to give the City Council time to consider the cost. She said she could not
support the motion, but she thought the new approach and the work the budgeting team had
done improved the budgeting process.
Hennagin explained that because he had not been present to hear half of the presentations he
might abstain. He said in many ways a City budget had to be "business as usual" budget in
order to continue providing basic services. He said the new economic development position
was important in the current economy.
Hoffman related that he had discussed other Committee members' concerns with McIntyre and
department heads and been satisfied with their answers. There were legitimate reasons for the
transfers and why FTEs and salaries and benefits were higher. He said the City Council
supervised the City Manager and they had told him they wanted the economic development
position.
Olson confirmed that McIntyre had addressed most of her concerns to her satisfaction and she
did not want to micromanage his job. But she recalled that when the City Council set goals they
had not known there would be a 30% rate increase in sewer service or that the City would be
paying for financing the WEB for a few more years. She said it might be wiser to reallocate
some of the money that would go to the Library to lower the tax rate, or pave more streets, or
put away in case they were still paying for the WEB in 2012 and the interest rate went up.
Johnson said it was not responsible to decrease the tax rate. She recalled Measure 5 had kept
the city from raising tax rates even though property values had increased by more than 50%;
the City received less state and federal funding; and the cost of asphalt had gone up. The
responsible thing to do would be to build reserves.
Smith conducted the vote on the budget and it did not pass. The results were 5 in favor, 7
opposed, and 1 abstained.
The Committee then agreed to take a break in order to allow each member time to formulate
his/her own suggestions about how to close the budget "gap." Jordan held there was no gap.
The budget planned use of reserves that had been built up over time and over the minimum
requirement to be used for strategic investments. She said a city's bottom line was not related
to profit, but to level of service.
Smith did not think it was prudent to tap into reserves and savings while there were so many
economic unknowns. He suggested closing the gap by using $600,000 of the $900,000 the
Committee had voted to reserve for the Library; using $120,000 of the proposed Centennial
Celebration funding; and either taking the remaining $99,000 from reserves or letting McIntyre
decide how to save that much. McIntyre advised the gap could be quickly closed by not
investing reserve funds into capital projects. That would mean that Parks and other CIP
projects would not get done in this budget year. However, Olson observed the gap was almost
the equivalent of the $900,000 the Committee had voted use to start a Library capital
improvement reserve fund. She said the Committee had essentially given that much in General
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Fund dollars to Library reserves even though the Library operating budget had been increased.
She agreed with Smith that it was prudent to reduce the contribution to Library reserves.
Moncrieff recalled hearing form citizens who wanted the Library expanded, Open Spaces
maintained, good schools, and potholes to be filled, but there had not been a loud message
from them to reduce property taxes and cut spending. She said this was the time to plan ahead,
not cut back.
Smith said qualify of life in the City would not be diminished if the city used County funding to
replace General Fund dollars and ensure longevity of the Library and put $300,000 into a fund
to build a new Library in the future. He questioned spending one-quarter million dollars for a
Centennial Celebration while cutting a Fire Marshal position that the City needed to inspect
buildings.
When Gudman asked, McIntyre and Hoffman said bonding agents had told them they would
be satisfied if the City maintained its current policies regarding minimum reserves through the
change in management.
After a short break, Smith asked each member to suggest how he/she would close the
remaining $807,000 gap. Hoffman wanted to use 100% reserves. Johnson proposed to take
$250,000 out of the $300,000 WEB Percent for Art fund and leave $50,000.
Jordan observed the City was required to have General Fund reserves of$14.6 million but they
had $19 million. She said the City was well run and had a very good bond rating and she did
not hear citizens calling for reduced property taxes. Olson did not want to send the message
that the City used reserves to balance the budget in current economic times.
Olson indicated she could agree to reduce the Library capital reserve by $300,000 to $600,000.
Shallenberger suggested that if 62% of City voters voted for the library district the Committee
should put two/thirds of the $900,000 in the Library capital reserve and use the remaining
one/third to close the gap. Others suggested 40°/o to 50%.
Tierney suggested reducing Special Pay by $90,000 to keep it more in line with last year. D.
Williams suggested eliminating the communications position to save $100,000 and reducing
the Centennial Celebration fund by another$125,000. That left $25,000 for the celebration.
Moncrieff wanted to add $115,000 funding for a Fire Marshall. Olson suggested removing
$4,000 from the City Council department.
Tierney clarified that he was suggesting saving $50,000 by not hiring the economic
development manager until late in the year, after an economic development program had been
fashioned. He also thought Parks & Recreation Management Services could be cut by $70,000.
He saw no reason for expanding programs and increasing part time workers if that did not
generate additional revenue. He said Public Works Engineering budget showed large increases
in Personal Services at the same time it showed low increases in FTEs that could possibly be
cut.
Shallenberger suggested that rather than micromanaging the staff and going over the budget
line by line the Committee could direct McIntyre to achieve a $250,000 across the budget
(General Fund) reduction and not use reserves. Tierney confirmed the across the board
reduction could replace the cuts he had just suggested. Gudman suggested adding $200,000
to the road maintenance fund. He also suggested recommending that the total number of non-
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utility FTEs had to say the same and McIntyre could decide where to cut 5.3 FTEs. He
estimated that would save approximately $500,000.
Rouhier discovered a problem that to only leave $50,000 in the Percent for Art Fund meant it
would go negative by the end of the year. It needed the beginning balance, plus $90,000 to
balance the $105,000 they would spend. Smith observed the WEB Percent for Art fund would
be reduced $200,000.
Smith called for a vote on using $500,000 to start the Library capital reserve fund so the City
had $400,000 more General Funds to use. The action failed when only six members voted in
favor of it, but seven votes were necessary to pass.
Smith called for a vote on reducing Special Pay by $90,000. The action was approved when
nine members voted for it.
Smith called for a vote to not fund the $100,000 Communications position. The action failed
when only four members voted for it.
Smith called for a vote to fund the second Fire Marshall's position. The action failed when only
six members voted for it.
Smith called for a vote to cut the Centennial Celebration fund by another$125,000. The action
failed when only three members voted for it.
Smith called for the vote on the $250,000 across the board cut in the General Fund budget.
The action passed when nine members voted for it.
Smith called for a vote to add $200,000 to the road maintenance budget. The action failed
when only two members voted for it.
Smith called for a vote to take 5.3 FTEs out of the budget. The action failed when only two
members voted for it.
Johnson objected to the $250,000 across the board cut. She stressed the new one-year
budget had already been cut a lot and it should be given a chance to work. It could be tightened
next year, if necessary. Smith observed that after the across the board cut vote the gap was
down to $417,000. He asked if the Committee could find $417,000 in savings? Jordan
questioned why the Committee would reduce Special Pay and the WEB Percent for Art fund
when the city might have to spend them. Hennagin observed it would be easier to revisit
Library funding than remove CIP projects. Tierney still supported a 1% across the board cut.
Moncrieff said it did not make sense to cut the Engineering budget, but add money to pave
roads; or reduce the Parks programs budget but keep funding CIP projects to improve
playground equipment. She worried the members were trying to cut things no one would notice
so they would not have to touch "hot potato" issues like the Library, CIP projects or the swim
park. Johnson questioned why they would require an across the board cut, but then add money
for some projects. Tierney disagreed that the cuts would materially affect the Parks
maintenance budget because a good manager could find one or two percent savings if he/she
tried. Moncrieff said she supported Johnson's suggestion to allow the budget to work for a year
and trust the department heads.
Johnson moved to take the $200,000 out for the Percent for Art and $90,000 out of Special
Pay. She calculated that $807,000 minus $290,000 was $517,000. She clarified her motion
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was to pass the budget using $517,000 from General Fund reserves. Hoffman seconded the
motion. The motion failed by a 6:7 vote.
Gudman suggested keeping the 2009-10 Library budget the same as 2008-09 using the County
tax funds to free up $600,000 in City property tax revenue to be used elsewhere in the General
Fund. Smith called for a vote on earmarking $600,000 for a Library building fund and using
$300,000 to help close the $517,000 gap. The action was approved with nine voting in favor.
Smith called for a vote on reducing the City Council budget by $4,000. The action was
approved after ten members voted in favor.
Johnson moved to make all the changes approved by votes and pass the budget as it was
using $217,000 from reserves. Moncrieff seconded the motion and it failed with only five
members voting for it.
Smith observed the across the board cut of$250,000 that had previously passed closed the
gap. Shallenberger observed that left the decision of whether to hire a communications person
and how much to cut from the Centennial Celebration up to the staff and she thought that was
appropriate.
V. Approval of the City 2009-2010 Proposed Budget
Rouhier summarized the changes: $200,000 was removed from the WEB Percent for Art fund
transfer; reduce Library Contingency by $300,000 to set aside $600,000 for a building reserve;
reduce Special Pay by $90,000; there was to be a $250,000 across the board reduction in the
General Fund; and the City Council budget was cut by $4,000.
Tierney moved to approve the budget as amended. Olson seconded the motion and it
passed 8 in favor, 4 opposed, and 1 abstained as follows:
Yes No Abstain
Ron Smith Jack Hoffman Roger Hennagin
Mary Olson Donna Jordan
Bill Tierney Kristen Johnson
Katherine Shallenberger Sally Moncrieff
Frank Bearden
Kelly Calabria
Jeff Gudman
Daniel Williams
VI. Adjournment -- Chair Smith adjourned the meeting at 10:10 p.m.
Respectfully submitted,
Kam Frederickson /s/
Kam Frederickson
Budget & Financial Analyst
PENDING APPROVAL BY THE CITIZENS'BUDGET COMMITTEE: April 19, 2010
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Minutes of May 13, 2009