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HomeMy WebLinkAbout10-10-11 Finance Com of WholeDUBLIN CITY COUNCIL FINANCE COMMITTEE OF THE WHOLE Monday, October 10, 2011 — 6:00 p.m. Council Chambers Minutes Present were: Mr. Gerber (Chair); Ms. Chinnici - Zuercher, Mrs. Boring, Mayor Lecklider and Vice Mayor Salay. Mr. Reiner arrived at 6:25 p.m. Mr. Keenan was absent (excused). Staff present: Ms. Grigsby, Mr. Thurman, Ms. Mumma, Ms. Ott. Mr. Thurman introduced Ms. Angel Mumma, recently hired Deputy City Manager /Director of Finance & Administration. Mr. Thurman presented a Third Quarter Financial Update, noting the positive trend in City revenues this year has continued. Income Tax Revenues Through September 2011, income tax revenues were up 4.06% over the same period last year. During the quarter, July revenues were up 12.44 %, and August and September were essentially flat. The majority of the City's tax increase is a result of the withholding tax revenues. This is a positive reflection of Dublin's economy. Employers are either giving raises or increasing employment. This is an increase of $2.1 million over last year's third quarter year -to -date collection, and it is an increase of $4.4 million over what was anticipated in the budget. Ms. Chinnici - Zuercher asked whether it is possible to know how many of these are new jobs versus retained jobs. Mr. Thurman responded that it is difficult to evaluate until the end of the year. When W- 2s are submitted, it is then possible to determine this if the number of W -2s has increased. It is possible to look at new companies that have come online and compare their withholding accounts to determine the source of the revenue. Ms. Gibson regularly evaluates whether the increase is generated by the City's "top ten" employers or by one large company. Fortunately, this increase is spread out over all Dublin's businesses, and the increase actually is larger further down in the business list, which indicates that the medium -sized companies are driving this increase, not the top ten companies. Ms. Chinnici - Zuercher added that this would be an interesting profile to receive in next year's first quarter report. Ms. Grigsby responded that the City's annual report indicates the amount of income tax revenue collected from new companies. General Fund Balance Mr. Thurman stated that the General Fund balance remains strong. At the end of 2010, the balance was $39.9 million, which represented 75.9% of the General Fund Finance Committee of the Whole October 10, 2011 Page 2 expenditures. Throughout 2011, the General Fund balance has continued to increase, and stands at approximately $44.8 million at the end of September. Based on 2010 General Fund expenditures, that represents a balance of 85.3 %. The City has maintained a very healthy General Fund balance. Rating agencies consider the General Fund balance as an indication of the City's economic vitality. Property Tax Revenues Franklin County conducted their real estate sexennial reappraisals this year. There was some concern regarding changes in property valuations. Although the City does not receive a significant amount in property tax revenue, a decrease in the valuation of some TIF district properties would have an impact. However, the first and second half 2011 distribution decrease was very minimal, essentially remaining steady. The slight decrease was due to the conversion of the McKitrick PUD from a straight TIF to a non - school TIF. Removing that from the equation, the service payments from the TIF districts actually increased 13.67 %. Therefore, staff anticipates very little change in TIF district service payments. Hotel /Motel Tax Revenues Mr. Thurman reported that hotel -motel tax revenues continued to show a significant increase, after the 2009 decline. Year -to -date, hotel -motel tax revenue is up 11.04 %. Mr. Gerber noted that some restaurant owners have shared that they are experiencing an increase in activity throughout the work week, which would seem to indicate an increase in business travelers. Summary Mr. Thurman stated that, based on the foregoing, the City's revenues appear very healthy. The 2012 Operating Budget workshops are scheduled during November. Staff has provided a copy of the parameters for budget preparation to Council. Mindful of the nation's and the world's economic situation, budgeting projections continue to be conservative in terms of both expenditures and revenues. Ms. Chinnici - Zuercher asked for confirmation that the hotel -motel revenue report indicates an increase of 11 % year -to -date, which equates to $124,000 additional dollars generated. Mr. Thurman confirmed that is correct. 2012 Operating Budget Mr. Gerber stated that he concurs with continuing a conservative approach with budgeting, in view of the nation's economic situation. Staff's memo indicates the budget requests should reflect no more than a two percent increase for 2012. Does that include wages? Are department cost increases anticipated for provision of the same services, or would this include expansion of programs? Finance Committee of the Whole October 10, 2011 Page 3 Mr. Thurman responded that internal budget meetings with the various City departments/ divisions have just been completed, and the divisions' requests are being reviewed. The two percent increase will account for some increases, such as fuel; some decreases, such as that due to the CNG vehicles: new initiatives that would benefit the City, some of which are economic; and new parks coming online, which will necessitate an increase in utilities, maintenance and staffing. Mr. Gerber noted that he believes a forward- moving, yet lean approach to the Operating Budget process is prudent. Ms. Chinnici - Zuercher asked how prioritization of the revenues over the next two or three years is done so that staffing of those focus areas is increased, if necessary. Ms. Grigsby responded that this year, a two percent increase was the overall guideline for all general operations. It is typical to have some areas requiring additional funds for studies that will not be needed again in next year's budget. There will also be some areas with actual decreases compared to last year's budget and some areas with increases greater than two percent. After the internal budget meetings, Finance administration reviews the budget and prioritizes the requests. During the past 18 months, Human Resources has conducted staffing audits, particularly when there is a vacancy. Some areas have more staff than is now needed, and re- allocation of some staff members to other areas of vacancy is conducted. Ms. Chinnici - Zuercher asked if there is a relationship between Council's identified goals and the budgeting process. Ms. Grigsby responded that Council's goals are considered in the budgeting process. For example, with the Bridge Street Corridor goal, follow -up studies and additional consultant work are budgeted. For the new Training and Development goal, overall staff development has been included in the Human Resources budget. Proposed Fee Increases for 2012 Ms. Chinnici - Zuercher asked why an increase is needed in fees for the areas of Community Development, Land Use /Long Range Planning and Building Standards, when the level of development is much lower than it has been. How can that be justified? Mr. Thurman responded that in determining the cost of services, staff considers the cost per unit of service. There has been a decrease in development activity and, as a result, more of those fees are pushed toward tax - subsidized activities, such as the Bridge Street Corridor or Community Development Plan. They are not factored into the cost, but they look directly at what it costs to provide that unit of service. This is the cost to perform those particular functions within the Community Development area. Ms. Grigsby stated that last year, there were very few fee increases, even though the results of the study indicated that some increases were warranted. In several areas, the Finance Committee of the Whole October 10, 2011 Page 4 decision was made not to increase the fees due to the economy. As mentioned, the fee is based upon the cost of providing the unit of service. The Building Division is a good example of this. The existing staff level is a little high, based on the current activity. They do not try to allocate all of those staff costs to the individual units. They look at what it costs to provide that unit of service. Some of those staff members assist in other divisions, such asTax Services and Code Enforcement, and some of their costs are charged to those programs. The fees truly reflect the cost increases over the last two years for providing those services. The fee increases are relatively minor. Mr. Gerber asked if the purpose of the fee is to recover the total cost, or the incremental cost of review services. Ms. Grigsby responded that it is 100% of the cost of the review -- for example, 100% of the cost to issue a building permit, including the inspections. Many of the Planning fees are based on a 50% cost recovery, not 100 %. An estimate is made of the time required to process, inspect and review applications, not the actual staff hours involved, divided among the number of units. The purpose of conducting a cost study, and having incremental fee increases, is to avoid a future need for a large fee increase. Mrs. Boring stated that some of the costs are fixed costs. However, because of the economy, there are fewer applications. Because the number of units are decreasing, the per unit cost would naturally increase. Ms. Grigsby responded that the cost breakdown is based upon the amount of time spent on that service. In the past, more of the staff time was directed toward the actual cost of the permit. Mrs. Boring asked if the original fee covered all costs, including the building. Mrs. Grigsby responded that it did, but it is proportionate. Mrs. Boring stated that she remains concerned with some of the increases. It would seem that in some areas, such as a Concept Plan, the City may be penalizing some -- particularly in the commercial category -- who choose to come to Dublin and go through these steps of a review. Because the number of units have decreased, it would seem preferable not to increase the cost significantly at this time. In the future, if the units increase, it would not require such a significant "jump." Ms. Grigsby clarified that the fee is not determined by dividing the cost by the number of units. It is calculated only on the cost of providing that unit of service. Ms. Chinnici - Zuercher asked if there is an entity, such as the APA or National League of Cities, that would have a formula that is accepted in those various fields. Ms. Grigsby responded that the consultant that the City uses has presented at the ICMA Conference. Various types of costing software are used, but they are all very similar to the City's process. Mr. Reiner noted that, having served on the Finance Committee for many years, he is convinced that these incremental increases are legitimate and fairly measured. Finance Committee of the Whole October 10, 2011 Page 5 Mayor Lecklider moved to adjourn the meeting into executive session for the discussion of legal and collective bargaining matters. Mr. Gerber seconded the motion. Vote on the motion Mayor Lecklider, yes; Mr. Gerber, yes; Vice Mayor Salay, yes; Ms. Chinnici - Zuercher, yes; Mrs. Boring, yes; Mr. Reiner, yes. The meeting was adjourned to executive session at 6:30 p.m. The meeting was reconvened at 7:10 p.m., at which time the Regular Council Meeting began. Clerk of Council