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