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HomeMy WebLinkAbout1998-04-08 Council Minutes - Budget Work SessionC Is T -41 • 1 A 4-L. L-L BUDGET WORK SESSION APRIL 8, 1998 KENAI SENIOR CENTER 7:00 P.M. r. QVERALL )GE REVIEW - City Manager Ross and Finance Director Semmens. DONATION REQUEST PRESENTATIONS, a. Industry Counts Association - Appreciation Day Picnic b. United Way - Helen S. Donahue, Executive Director C. Kenai Community Library - Holiday Open House d. Boy Scout Troops 152 and 652 - Flags. e. KCHS Hockey Booster Club E Peninsula Winter Games g. Kenai .Peninsula Youth Court, Inc. h. Kenai Peninsula Food Bank, Inc. i. Kenai Alternative High School - Graduation donation. j. Kenai Central Highs School - Graduation donation. k. ALPAR Litter Control 1. Kenai River Festival DEPARTMENT BUDGETS a. RR memorandum regarding Dip Net Fishery. b. 11/6/97 United Fishermen of Alaska letter regarding membership. C. Resource Development Council for Alaska, Inc. letter regarding membership. d. 1/28/98 After -the -Party Holiday Party Meeting Minutes. 0 •IMNAI crrY covscII. evnOW WORK Araa. $o ins xMAI saxwR aZarrsx 7:00 P.11[. exam. ' • Williams' Bookey, Smalley, Measles, Swarner, Bannock (arriving at approximately 8:50 p.m.) PR.U3ERT: Freas, Semmens, Porter, Graves, Frates, DeForest, Walden, Kornelis, Lawyer, Morris, Holland and Elson. 8EYt8 MBX§ = David Lucas (Peninsula Clarion), L. Measles (Kenai Chamber), Jim White (KCHS Hockey), S. Little (Boys/Girls Club), Aleja DeVito and other representatives from KPB Finance Department), E. Claussen, Lorrene Forbes/Bob Peters (Library Commission), Helen Donahue (United Way), Gene Brookman/Linda Parker (Food Bank). Opeaiag Remarks: Mayor Williams explained no direct actions would be taken on budget items during this work session. He noted a presentation regarding sales tax would be made by representatives from the KPB Finance Department, Finance Director and City Manager Ross would present an overview of the budget, and then council would listen to requests for donations. BAM TAX pREBENTA � Finance Director Jeffrey Sinz of the Kenai Peninsula Borough was introduced, as well as Aleja DeVito who had been contracted by the Borough to develop the presentation. Other representatives of the Borough Finance and Assessing Department introduced were Troy Tankersley, Sales Tax Department; Erin Lockwood, Sales Tax Department; DeRay Jones, Auditor; Terri Eubanks; and Jim Lawyer, Assessor. DeVito gave a presentation regarding the sales tax system, how - monies are collected and distributed, general- code- requirements, audit processes, individual rights, and changes to the property tax code. Finance Director Semmene- passed out a packet of information which included FY 99 revenue and expenditure summary of all funds; schedule of COLA vs. CPI, budget projections for the general fund; municipal assistance and revenue sharing; and, recaps of the general fund for FY 99, including special revenue funds and enterprise funds. Total. expenditures for the year are $12.2 million, revenues $11.5 millien, and the deficit is close to $700,000, but is moderated by the credit for depreciation. At the end of the year, the city should have approximately $30 million in fund balance (which is a very healthy fund balance).. • KENAI CITY COUNCIL BUDGET WORK 3E88ION APRIL 8, 1998 PAGE 2 evenue Sources: Revenue sources are similar to last year, they expect 31% of the revenues from taxes. Other sources are water/sewer fees, interest, transfers in, and contributions from fund balance (the same as last year). &Woditures: Expenditures are similar to last year. As expected, personnel services (wages) is about half of the expenditure budget. Schedule of COLA from 1984 through 1998 vs._CPI: The CPI used is the Anchorage CPI. Last year, there was no COLA adjustment and the CPI for Anchorage increased 3% during 1996. The City lags about one year. to 1997, the most recent CPI available, Anchorage increased 1.2 %. There is about a 4.2% increase since the last COLA adjustment and the 1999 budget proposes a 2% COLA. Noted was that under any of the cumulative differences of 15, ten or five years, the COLA is a little bit behind Anchorage CPI. Budget Project - General Fund: The Fiscal 98 budget projection was revised to show a $22,000 increase in sales tax and an increase in fish tax estimate by $40,000. The interest revenues were also amended, which recognizes the transfer out of $1.5 million to the equipment replacement fund. For the Fiscal 99 budget, assessed values which drive the property tax revenues, are up slightly (based on Borough -calculations, but are not final due to adjustments being made through the year). However, the $329,138,000 projected will be close. and any adjustment would result in less than a $10,000 variance. Sales tax is projected for a 2% increase. In regard to state revenues, it was learned the Department of Community & Regional Affairs would be taking a hit and five percent will be cut from the Municipal Assistance & Revenue Sharing. This equals an approximate $27,000 decrease. Fish tax is estimated to decrease from $200,000 to $120,000 (based on information from Fish & Game that the 1998 value of catch will be 60% of the 1997 catch). . This year, $95,000 is expected from ambulance fee revenues and $100,000 next year. At this time, there are delinquent, uncollected ambulance fee revenues of $114,000, although the City's policy is not to aggressively collect these delinquent fees. However, the procedure includes reporting to a credit bureau which seems to be getting results. • KENAI CITY COUNCIL BUDGET WORK 3E83ION APR1L 89 1998 PAGE 3 interest revenues are down due to the transfer of $1.5 million to the equipment replacement fund. The revenue is based on an interest rate of 5.7% which is approximately where the two-year treasury note is today. Smalley asked if the five percent cut to Municipal Assistance and Revenue Sharing was the same potential cut expected for the Safe Communities program. Smalley added, the cut to the Safe Communities program is to be five to seven percent. Semmens stated, the programs are the same and he thought, up to this week, there was a commitment to hold those at last year's level. Smalley noted, the commitment was from Representative Phillips, Senator Miller and Governor Knowles. Williams noted, the City began receiving $1.5 million in assistance and revenue sharing, but that amount has steadily decreased over the years. This year, with the $27,000 cut, the amount the city will receive is $504,000 (both Municipal Assistance and Revenue Sh =Ming). Williams continued, last year the Legislature seemed to have made an agreement to not cut Municipal Assistance and Revenue Sharing. Now it has been learned there is no deal. As a result, a community dividend program is hoped to be developed which will fund municipalities from the losses taken in Municipal Assistance and Revenue Sharing. To guarantee funds set aside for such a program will take a constitutional amendment which will need a vote from the people. He explained, a statutory amendment can be made by the Legislature, but not necessarily held from Legislature to Legislature. Reven es to Generat Fund: They are very similar to those -last -year. Sales tax continues to be the largest source Of revenue. Z=nditures to Qrener_al Fund: The current budget shows a deficit of $646,356 because encumbrances from the year prior have been rolled over and added to, without any additional revenue source. However, year after year, the large budget deficits don't materialize partially due to governmental accounting rules and room in the budget. This year, administration is trying to estimate the lapse in the budget so that when the financial statement comes out under generally accepted accounting principles, the deficit that will be seen in the financial statement will be similar to the projected budget balance deficit. The current budget is $S9069,000. It is estimated $454,000 of that will not be spent in the current year. Projections for fiscal year 1998 is approximately $60,000. The budget for FY 99 is $799659499, $186,000- more than in the prior year's beginning budget (2.4%). If the revenues come in exactly as projected and all the appropriations KENAI CITY COUNCIL BUDGET • WORK SESSION APRIL 8, 1998 PAGE 4 are spent, there would be a deficit of $508,559 (which won't happen). It is believed, not all the budget will be spent and it will be nearer to the $110,000 lapse. Over the next five years, if revenues increase at 2% and expenditures at 3%, a continued budget deficit will be seen and at some point, it will have to be balanced out either by reducing services and expenditures or increasing revenues. A proposed one mill increase in 2002 was noted. It was also noted, general fund expenditures will level out (over the next five years) by using the equipment replacement fund. Watery Sewer Fund: It was noted the Fund is projected to show a deficit of $50,967, but actually has $71,000 in its contingency. With that, it is thought the deficit will not materialize. It's basically in good shape. No change is proposed for the rates. import Land -Sy—stem: It was noted, this Fund is also in good shape. There had been some concern because approximately $2 million was transferred out to build the Animal Shelter and contribute to the ARM Due to that, interest on investments will be lower next year. However, the Fund will end up with nearly a $6 million fund balance. Williams noted council expected a drop in the earnings because of the transfer out, buL duticipated the regeneration of funds. It was also noted a change of rents and leases is due to the Dairy Queen not being rented, and the general fund paying rent to the Airport Land System for the Animal Control Shelter. - Enterprise Funds: It was noted there is an increase in the Boating Fund of $45,000 (based on depreciation). Administration is trying to get the Enterprise Funds on the same basis as the financial statements. Without the change, the real increase to the Fund is $70000. Airport Terminal: Down a little bit, but in good shape. Cong,_regate Housing: Up a little bit, but in good shape. Boating Find: Not in good shape financially. Revenues this year are better than projected due to a lot of activity from fuel sales to one particular customer. This is not expected to happen next year, so the revenues have been moved back to a more historic average. Expenditures will be up a little bit. The Fund is projected to end FY98 with negative • KENAI CITY COUNCIL BUDGET WORK 3E$310N APRIL 8, 1998 PAGE 5 retained earnings of $47,000. From a practical standpoint, the Fund will run out of cash and the General Fund will have to subsidize it. It was suggested this fund be changed from an enterprise fund to a special revenue fund so depreciation will not be involved. An advantage to an enterprise fund is that revenues will cover the expenses including depreciation and that will not happen. Changing the type of fund can happen anytime with an ordinance. But, from a budgetary perspective, it really doesn't matter whether it is a special revenue fund or enterprise fund. As a special revenue fund, it would be on the same level as the water/ sewer fund. Williams asked if council discussed the privatizing of the boating facility. Williams passed information to the city manager and finance director to review. The information was developed by a group interested in privatizing the dock. Williams asked them to review and decide whether a third option might be to go into a public/private enterprise situation in which the operations of the dock would be privatized. Airport Ignz9nal Fund: In good shape. FY98 revenues are expected to come in $25,000 which is higher than budgeted. Next year's revenues have been budgeted less than budgeted this year, but are still in line with historical averages. The Fund is expected to generate an income of $36,000 plus another $49,000 in its depreciation credits. Congregate Housing_Fund: The Fund produces negative net income (from an accounting standpoint). But there is depreciation from the grant funded portion of the facility which is added back to the fund balance. In the end, the Fund will add $72,000 to retained earnings this year and $71,000 is projected for next year. Retained earnings are earned up to $500,000 as a reserve for maintenance of the facility. When the $5009000 is reached, the surpluses will go to the General Fund. In summary, the General Fund maximum deficit projected and the budget deficit legally is projected at $508,000 although it is projected to come in much lower than that (possibly $110,000). Williams thanked administration for the very good budget document. Ross noted, Semmens was trying to show council the projections to fine tune the budget. It is a deficit budget, but they don't believe the deficit will be as bad as projected.. Without the major decisions council made last year, the deficit could have been $400,000. Those decisions also delayed the need for a tax increase for at least two or three years based on the level of expenditures. KENAI CITY COUNCIL BUDGET . WORK SESSION APRIL 8, 1998 PAGE 6 Ross added, the major changes in the FY99 budget are in personnel, finance computer software package, asphalt recycler, development of the Erick Hansen Park, and the purchase of a tractor. Ross noted, the budget is basically a maintenance budget, but is a deficit budget. Williams commended Ross, Sernmens and the entire staff for the preparation of the document. BREAK TAKEN: 8:20 P.M. BACK TO ORDER: 8:34 P.M. DONATION RZOUESTS: Industry Appreciation Day/Suzanne Little - Little reported this year the celebration would honor the fishing and oil industries. Expenses will be incurred for entertainment and prizes for the children's activities that have been planned. She requested council's best discretion for donating to the project. Williams noted, the All -State Softball Tournament is also scheduled to be held the same weekend. Also, confirmation has been received from Senator Murkowski and they expect the Governor to also attend. United Way/Helen Donahue - Donahue thanked council for matching City employee donations up to $2,000. She noted, they would like to see the employee payroll deductions continue. Donahue reported, the United Way goal was $425,000 and they reached $444,000. Of that, the city's contribution from both employees and the council's match was $8,450 which was a small decrease from the past. Donahue, referring to her letter included in the packet, noted, they would like council to consider increasing their match. She noted, United Way serves 26 agencies in the community. Donahue also reported the co-chairs of the 98 campaign are Mayors Williams, Lancaster, Satin and Cushing. Matches from the other municipality's councils would also be requested. Kenai Community Library Open House/Emily DeForest - DeForest reported the donation to the Library Open House had inadvertently been omitted from the budget document. She requested council's donation of $500 (which was given in December, 1997). • KENAI CITY COUNCIL BUDGET WORK 3E38ION APRIL S. 1998 PAGE 7 Boy Scouts - No presentation made. It was noted, council has donated $300 in the past for the purchase of flags which the troops place along the highway on national holidays. KCHS Hockey Booster Club/Jlm White - White reported the city had been very generous in the past years in purchasing space in the hockey programs. He noted the School District budgets $5,000 each year for purchase of ice time and a stipend for the hockey coaches. He also noted, the Booster Club donated $5,400 during the last year which mostly goes to ice fees. The Club holds two major fund raisers during the year and have had wonderful support from local businesses. White noted, this year the team has two new coaches and a positive hockey program. He added, the city's donation goes to good use. Peninsula Winter Games/Laura Measles - Measles, Executive Director of the Kenai Chamber of Commerce, reported she had been requested to work with the Games group to try to enhance the gashes in the City of Kenai. In the past, most of the • activities have been held in Soldotna. However, with holding the start of the Tustamena Sled Dog Race from the city dock this year, the potential for -more activities to be held in Kenai has increased. Measles noted, it is her goal to- increase the events to be held in Kenai and focus on Kenai. Activities suggested are ice carvings, street dance, cooking contests, etc. Also, they are trying to coordinate airfare packages with airlines and local hotels. She added, there is a great potential for helping the hotels and bed/breakfasts in the community as well as increasing sales- tax collections. Measles noted, the City of Soldotna donated $2,0001ast year. She requested council consider increasing their donation to $2,500 for the 99 Peninsula Winter Games. Peninsula Youth Court/Virginia Espenshade - Espenshade referred to information included in the packet and explained most of their expenses are from personnel serv}ces. There is a court in Kenai and Horner. Some of the past donations were a used for purchase of equipment. She noted, the program trains seventh through twelfth - grade students by judges, local lawyers, and police officers. Espenshade explained, they receive a $29,000 grant from DFYS which is seed money (a two-year grant. Their budget is based on a projected cost of $76,000. They have been asking corporations and municipalities to fill the gap. Espenshade explained how the Youth Court project works, noting youth found guilty of crimes are sentenced to community service, writing essays, etc. Compliance checks are made. They have very good success. She noted the program is based on two ideas: if the child KENAI CITY COUNCIL BUDGET • WORK SESSION APRIL 8, 1598 PAGE 8 completes the youth court sentence, their case is closed and nothing is placed on their permanent record; the youth court puts the responsibility back on the offenders. Espenshade also noted benefits to the community include student attorneys receiving a law course; it's a hands-on civics lesson; it provides intervention to first-time offenders; and the community services provides volunteered labor and is a deterrent to other children. Williams asked what the Borough's level of funding has been. Espenshade answered, they have offered $1,000 stipends for teachers. Swarner asked if other municipalities have funded the program. Espenshade answered $7,500 was received from the City of Soldotna and a Horner foundation. However, no funding was received from the City of Homer. Williams asked if a different attitude is seen from youth offenders who are involved with this program versus those involved in the adult system. Espenshade answered she finds that kids in their program seem to get a reality check and sees an impact made by Youth Court. Kenai Peninwnta Food Bunk/Getty Brooko►an and Linda Parker - Parker explained, the Food Bank has been in existence since 1990. information included in the packet reviewed services provided. She noted a value of food exceeding $600,000 was distributed to people in the City of Kenai, i.e. Kenai Care Center, WRCC, etc. Parker noted, they had never received funding from the city, but due to increases on the Food Bank have encouraged them to make a concerted effort in contacting all types of businesses and government offices. Parker also noted, their Soup Kitchen Program is staffed by volunteers, community service workers, etc. Many of those working in their program have increased their aelf- confidence, gone on to apply for other jobs, learned basics in holding jobs, etc. She noted, they have seen more and more organizations sponsoring a meal a month at the Soup Kitchen for $100. Parker also reported, they are developing a summer lunch program in which they will prepare lunches and deliver them to the Boys & Girls Club and North Peninsula Recreation Program. Williams asked how they qualify a person as a potential recipient for food or soup. Parker answered, they don't judge. Anyone coming in can receive food. There is a donation cup available if someone feels they can pay even a small amount. Kenai Alternative Kigh School/Phyllis stead -- Halstead thanked council for the support they have shown in the past. She noted, they are a bare -boned, no frills high • KENAI CITY COUNCIL BUDGET WORK SESSION APRIL 8, 1998 PAGE 9 school which is housed at the Kenai Elementary. School. No dances or proms are held at their school. They have a celebration when students complete their programs and they purchase caps and gowns for the students if they can't afford them. She noted, the council has donated $100 in the past and they appreciate the donation very much. It was noticed the budget document showed a donation of $300 for the school. Williams requested additional donation be made to the Alternative School if the budgeted amount for the 97/98 budget was set at $300. KCHS After Qzaduatioa Party - No presentation made. ALPAR Litter Control/Suzanne Little - Little explained, in 1996 the ALPAR program was turned over to the Boys & Girls Club. They employ five to ten kids who clean along the highways, concentrating on Kenai and Soldotna. Last year they helped to clean up the Kenai beach during the dip net season. They have also cleaned the Huss Memorial Park and other access points to the River in both Kenai and Soldotna. R ,> Little requested the city's donation be increased to $1,000 for both the current budget year and the 98/99 budget year. Smalley asked if the City of Soldotna participates. Little answered, yes and they are requesting $1,000 from the City of Soldotna this year as well. She added, all the money donated to the program is used to pay for gas and payroll. Little also noted they received $500 from Soldotna last year and they anticipate $3,500 from the . Borough's Solid Waste Department and they also receive a $3,000 grant from ALPAR of Anchorage. Kenai River Festival/ Suzanne Little - Little explained, for the past several years, the Festival has been held in Kenai and celebrates the River and the wildlife along the River. She noted, the Festival is mostly an educational event, i.e. Fish & Game present programs, there are puppet shows regarding River issues, music is provided by local entertainers, etc. Some of the funds are used to help defray costs for the fish hat booth for purchase of the materials to make the hats. INFORMATIDN ITEMS: Williams noted the informational items included in the packet, i.e. RR memorandum regarding dip net fishery; 11/6/97 United Fishermen of Alaska letter regarding membership; Resource Development Council for Alaska, Inc. letter regarding membership; and, 1/28/98 After -the Party Holiday Party Meeting Minutes. Williams noted the minutes were interesting reading and appropriate comments made. • KENAI CITY COUNCIL BUDGET WORK SESSION APRIL 8, 1998 PAGE 10 Bookey -- Stated he believed the budget was in excellent .condition and council would have an easy budget session all the way through. However, he had some concerns of individual budgets. Swarner -- No comments. Bannock - No comments. Smalley - Agreed with Bookey, adding he believed the budget was a good document however there were some areas which will promote some good discussion. Measles - No comments. Williams thanked those who attended the work session and noted, the next budget work session was scheduled for April 22, beginning at 7:00 p.m. and to be held at the S Senior Center. Ross noted, as a matter of process, last year council took the budget memorandum that identified the big items and that was where most of the discussions were centered. He asked council to let him know by Wednesday night if that was the approach they wanted to take or did they want him to schedule the departments to come before council (if they wanted to do department by department). He added, either do that or go with the budget memo on the big items, i.e. personnel, COLA, equipment, park,- and computer program for the Finance Department, as they -were really the major changes in the budget. . Williams noted, the next budget session (April 22) is scheduled to be held at the Senior Center. Williams noted, in the past two years, council put into play discussions for each member of the council to pull out those items they had the greatest amount ' of heartache with in the budget and present those and take care of the administration's big numbers first, getting them out of the way, and then go on and complete the rest of the budget. Williams asked council if they wanted to do that or would they rather . take a look at administration's big valid budget items and then take each department individually as they often do. Bookey stated, he would like to stay with that part of the program. Williams stated, then they would go ahead with administration's big budget items and full discussion of those and then once that's finished well complete the individual budgets. • KENAI CITY COUNCIL BUDGET WORK SESSION AFRIL 8, 1998 PAGE 11 , L URN The budget work session ended at 9:31 p.m. Notes transcribed and epreaced by: Carol L. Freas, City Clerk • 0 0 APMOVW BY coUMX