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HomeMy WebLinkAboutMIN 07.27.2009 CC-Wo u s '®® of - City • orgetown, Texas Monday, lit• The City Council of the City of Georgetown, Texas, met in Regular Session on the above date with Mayor George Garver presiding. Keith Brainard, Dale Ross, Gabe Sansing, Bill '' Pat Berryman Sattler, Patty Eason, Ben Oliver Paul E. Brandenburg, City Manager; Patricia E. Carls, City Attorney; Jessica Hamilton, City Secretary; Elizabeth Cook, Director of Community Development; Jim Briggs, Assistant City Manager for Utility Operations; Micki Rundell, Chief Financial Officer; Laurie Brewer, Assistant Director of Finance; Randy Morrow, Community Services Director; Kevin Russell, Director of Human Resources and Civil Service; Brent Schacherl, Interim Chief of Police Minutes I • - • ;• ' - • • •, • • 1 , 1 1 J, A Workshop discussion and possible action on follow-up items pertaining to the 2009110 City Manager's Proposed Budget, including direction on finalizing the proposed tax rate and balancing the budget-- Micki Rundell, Chief Financial Officer and Paul E. Brandenburg, City Manager Brandenburg said this item is a follow up to the last Workshop and he reviewed the direction given to staff from the last meeting. He spoke about the potential of lowering the tax rate and added staff would like direction on where to go with that rate. He said the budget is a status quo budget and noted he did not want it to impact current service levels to the citizens. Rundell said the City has received the certified valuation of $4,173,874,127. She said this number includes 60% of property that is currently under review. She said new property is low and added the total valuation decrease is less than 1.57%. Rundell showed Council a graph demonstrating the assessed valuation in the City. She said this is the first year the City has seen a true valuation decrease. She showed Council an assessed valuation breakdown broken up into non -frozen, frozen, mult-family, commerical, and personal property. She said the frozen property has become a larger portion of the total single family properties. She said the 2008 assessed valuation included more than $842 million of frozen property and noted, this year, the frozen property has increased to $1.1 billion. She showed Council a graph of the percentage valuation that has been frozen. She said, as of this year, 27.7% of the total valuation is now frozen. She noted the average home value decreased 2.1 % from $192,841 to $188,789 this year. Brandenburg reviewed the various 2009 tax rate options. He explained options A through D including the city manager proposed rate (A), using the fund balance to lower the rate (B), using fund balance to get down to the current tax rate (C) and keeping the tax rate at the current level (D). He said Option A (the City Manager's proposed rate) is $0.37959 with continues current service levels and is 9.5% less than the effective rate. He said, for the average homeowner it would be $29 more per year. He said Option B, which is to fund the balance with one time money, continues current service levels as well the continuation of the budget's contingency plan. He noted this would use excess funds to buy down debt in order to keep the tax rate lower. He said, with option B, the rate would be $0.36959 with a dollar impact on each homeowner of $18.88. He reviewed Option C, which would use fund balance money as well as additional budget cuts. He spoke about some of those budget cuts. He said the total would be $0.3637 and noted it reduces current service levels and uses General Fund excess City Council Meeting Minutes/July 27, 2009 Page 1 of 4 Pages funds for one time debt service reduction. He said this rate would provide the same tax bill to the homeowner as in the prior year. He said Option D is to keep the current tax rate as it is at $0.35622. He noted this would reduce current service levels and includes continuation of budget contingency plan. He said the City would need to cut operating expenses by $365,000. He said it would use general fund excess funds to fund one time debt service reduction. He said homeowners would pay $14.42 on average less than last year due to valuation decreases. He said, with options B, C, and D, there would be some concern with the City's bond rating. He summarized the tax impact to the average homeowner of each of the options. He reviewed the next steps of this process including finalizing the proposed tax rate, making necessary cuts to balance the General Fund, publishing the "effective tax rate" calculation, finalizing budget summary, holding the pubic hearings of the tax rate, and approving the budget Ordinances. He briefly reviewed the four options just presented to the Council. Mayor asked and Brandenburg confirmed the request is for Council to give direction to staff on how to proceed with the preferred tax rate. Oliver asked and Brandenburg said options B, C and D could be going against the Council financial policy. Rundelll said part of the policy addresses operating funds and not debt service funds. She said the policy is that the City must fund its operating expenses on a one to one basis. Oliver asked and Rundell said, if the City goes with Options B -D, it would be artificially lowering the tax rate. Rundell said, if there had been no increase in debt, the City would still have a tax rate increase because of the decrease in valuations. Sattler asked and Rundell said, if the City sold Albertsons and recovered the cost of the building as well as the cost of the bonds, the City could fund debt service but could not recall the bonds. Brainard commended Brandenburg and staff for the current prepared budget and added he can tell staff did a lot of work. He said it is worth it to acknowledge how difficult it is to work under the current property tax structure. He said a lot of people feel their property tax valuation has lost relationship with reality. He said one of the top priorities for this Council is to have no increase property tax burden, but it is clear that this is a difficult thing to do. Brainard asked about the dollars associated with increased funding for employee health insurance and the merit pay element for City employees. Rundell said the dollar amount is about $199,265 on an annual basis and added, if it is implemented in April, the City would save $100,000. Brainard asked and Rundell said the difference in dollar amount between the City Manager's proposed rate and the current tax rate is $874,999. Brainard asked and Brandenburg said the current budget assumes $400,000 for social services funding and added, this year, the City funded $360,000. Rundell said the City allocated less of the money that was in the budget this year for social services. Brainard asked and Brandenburg confirmed the budget includes $1.5 million for the Williams Drive Gateway right of way project. Mayor asked and Rundell said the appraisal district will only certify 60% of the valuations on the tax base and the staff always uses that total to come up with the tax rate. Mayor asked and Rundell said there is a potential for additional revenue to the City but the City can not certify at that total. She spoke again about frozen property and the effect on the City's tax rate. She said this is going to be the first year the City will go below the effective rate. She said, if the City receives 95% of property under review, it would mean a little over $250,000 of additional revenue. Ross said the City is looking at expense reduction and he wants to make sure the City is also looking at revenue projections. Brandenburg said the City has pushed sales tax projections as far as it can. He noted the City can take a look at its fees, but he does not want staff to rely on revenue. Ross said not all valuations have been determined yet and asked what a realistic number would be if all valuations were included. Ross asked about the revenue the City would gain with 100% of the property tax appeals. Rundell noted the appraiser will only certify at 60%, which is what impacts the effective rate. Rundell said if the City estimates the property tax revenue at 90%, the City's deficit falls to $613,000. Sattler asked and Rundell confirmed this would be with the $0.35622 rate. Ross asked and Rundell said the bond rating agencies would not review an accepted budget or sign their name to anything the Council approved. Rundell said the bond rating agencies' concerns for next year are that valuations will go down, frozen property will go up and how the City is addressing this issue. She noted the City will have to come up with a different strategy to handle the frozen property in future years. Ross asked and Brandenburg spoke about the City's resurfacing and how going with the first option would reduce that service levels to citizens. Brandenburg said the City would go back to the previous, less-expensive, and less desirable method for doing this project. Brandenburg said that would be a policy decision from the Council. Miller described this particular type of resurfacing. Mayor asked and Brandenburg described the complaints received after using this process. Eason asked and Brandenburg confirmed the City would contract out for those services . There were many questions. Sattler asked about the option of having a required day off per year for additional budget savings. Brandenburg said this would not apply to civil service. Sattler asked and Rundell said there are $535,339 of excess funds in the current general fund. Rundell listed additional one time costs with a total of a little over $1.6 million. Ross asked and Rundell said, if the City delays the McCoy right of way, it would free up $850,000 from this budget as well as $650,000 from a previous budget. Ross said and Rundell confirmed the total would be about $1.5 City Council Meeting Minutes/July 27, 2009 Page 2 of 4 Pages million. Brainard asked and Rundell said, if the City assumed it would get 90% of its value and elect to move the $500,000 of the current excess funds over to next year, the City could use money allocated for other projects to buy down the tax rate until valuations pick up. Sattler asked and Rundell reviewed the one time funds available and set aside for other projects. She said most of these excess one time funds go back to 2007. Oliver asked and Rundell the City ended the year 2007-2008 with over $2 million of leftover funds that were never allocated. She said the City still has the reserves and staff is requesting to spend $1.6 million for one time projects. She noted, therefore, there is $500,000 left in the budget to go toward lowering the tax rate. Ross spoke about Option D as it relates to Maple Street and the Williams Drive right of way. Ross asked and Rundell confirmed the City could use one time money for those funds to buy down the general fund debt. Ross asked and Rundell said, if the City postpones these project, it would get the tax rate to the Option D level. Ross said he thinks the McCoy project could be delayed one year and noted delaying that project as well as Williams Drive would give the City enough money to stay at the current tax rate. Eason asked and Rundell confirmed this would not lower or cut any budget items or current services to citizens. Rundell said, right now, the City does not have a budget contingency. Ross thanked Brandenburg and Rundell and said they have done very fine work as it related to the budget. Sansing said everyone is making really good points. He noted some citizens would be willing to pay an increase on their tax rate in order for their services to stay the same and as long as their money is not spent foolishly. Sansing said he think it is good the City is looking at the one time money option, but he asked at what point in time does the City throw its hands up in the air and become a skeleton. He said he is curious as to what the City gets by having the lowest tax rate in the area. Sansing said he questions if it is wise for Council to do what it can to get the tax rate down to bare bones. He said, the Council made a mistake one year of not going to a proposed rate and the City has been paying for it ever since. He said he is afraid next year would be an even bigger issue. He said the Council can bring the tax rate down right now, but the City needs to think about the effects on the future. Oliver said he appreciates what Sansing is saying and he came into the meeting with the same opinion. He said he does, however, feel more comfortable speaking about postponing the McCoy project and the Maple Street project. Oliver said and Rundell noted, the City is below the effective rate, so there are no publication requirements for the tax rate. Rundell added the public hearing will only be necessary for the budget. Eason said she is concerned about going to a tax rate that is less than the current rate and noted is more satisfied with option B. She said the Council has spent too much time trying to make up for previous sins. She said she thinks people would be pleased even if there was a small lowering of the rate. She noted she thinks it is a bad idea to do anything less than Option B. She does not see it as a benefit to the City in the long run to postpone the pain coming in the future. Sattler asked and Brandenburg said the McCoy project probably wouldn't start for a few years, but they would like for some funding to be lined up in the next year or two. Sansing asked and Rundell said the City does not need all of the funding from the McCoy project to bring the tax rate down to 0.35622. Eason said the problem with doing this is that it is one time money and she is worried about where that would put the City next year. Motion by Sansing, second by Eason to move forward with Option B as the target for the City's tax rate. Oliver asked and Rundell said staff could use one time money from McCoy or another project to pay down debt to put the City at the rate in Option B. Sattler asked and Eason said she only wants to go to Option B because the City will not have, as many losses as with the other options. Ross said this would be the worst time to have a tax rate increase when there are hardworking families out there that are struggling. He said there are multiple taxing jurisdictions in the area and he does not see the problem with keeping the effective tax rate where it is now. He said the City could easily get to option D with the available leftover funds. He said he does not understand why anyone would ever consider Option B or A if the City does away with the McCoy project and the Maple project is already in the bank. Sansing said the Council needs to look to the future. He asked why the City of Georgetown should be the only one to cut its tax rate. He said he would support no change for this year, but he would not consider going any lower than that. Ross said going with Option D is not cutting things to the bone and the only pain is that employees will not receive any pay adjustments. Brainard said per capita property taxes have risen more than 70% since 1998. He reviewed the money allocations within the budget and noted this budget includes salary adjustments for all City employees that are qualified. He said public employees around the Country are suffering major losses and Georgetown is not doing that at all. He said the City has come up with a formula to keep the tax rate the same on a population who has many members who have lost their job. Brainard said the idea that the City would not be able to sustain the current rate is a mystery to him and he added he will oppose vehemently any effort to increase the rate at this particular time. Sansing asked and Brainard said he would propose going with Option D which would have the City using the Maple Street and McCoy money to buy the rate down, There were many questions. Mayor said and Rundell agreed Option C would take the average home, which has experienced a loss in valuation, and raise the rate to a point where people would actually be paying the same rate that they paid this year. Sansing withdrew his motion. City Council Meeting Minutes/July 27, 2009 Page 3 of 4 Pages Motion by Brainard, second by Sattler to approve Option D. Sansing said the City has a chance to take the rate below the effective rate and he added he thinks it is a mistake to lower the tax rate below what it is right now. Oliver said he will oppose this and said Option C would do what the Council would like and Option D would cause certain homeowners to pay more taxes. Vote on the motion: Tied 3-3 (Oliver, Eason, Sansing opposed) Mayor broke the tie and opposed the motion. Motion Denied. Motion by Eason, second by Oliver to approve Option C. Tied 3-3 (Brainard, Ross, Sattler opposed) Mayor broke the tie and voted in favor of the motion. Approved 4-3 (Brainard, Ross, Sattler opposed) Recessed to Executive Session under Sections 551.071 and 551.084 -- 5:40 pm Returned to Open Session and adjourned -- 6:12pm Adjournment- -!' The meeting was adjourned at 06:00 PM. h. Mayor Georg6 Garver City Council Meeting Minutes/July 27, 2009 Page 4 of 4 Pages