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10/15/2015 - Minutes City of Port Orchard Council Finance Committee A meeting of the Council Finance Committee was held at City Hall on October 15, 2015 at 5:30 p.m. PRESENT: Chairman John Clauson, members Rob Putaansuu and Jerry Childs, Mayor Tim Matthes, Council member Bek Ashby, and Treasurer Allan Martin. Citizen Nick Whittleton. Mayor Matthes and Mr. Whittleton left the meeting at 6:25. Chairman Clauson called the meeting to order at 5:50 p.m. 2016 Preliminary Budget Mr. Martin began with an overview on how the Preliminary Budget Analysis Report is presented, laying out revenue and expense, beginning and ending year cash. A Preliminary Revenue for 2016 Budget document was made available which displays estimated revenue for only fiscal year 2016. Mr. Putaansuu inquired about surpluses from 2015. Current expense general fund balance cash (Fund Balance) is estimated at $1,453,629. Staff recommends transferring a portion of this amount to the Capital Construction account to be used for cash flow purposes. Currently Capital Construction Fund Balance is $25,000 but with the construction of the DeKalb Pier Project on a reimbursable bases more cash is needed to tide the city over until the state reimburses. The recommendation is for $250,000 to move to Capital Construction to be used until reimbursed. The Capital Construction Fund would end 2016 with $275,000 with the added benefit of that amount available in 2017. The transfer would result in a reduced beginning cash balance for current expense general fund. Council member Ashby inquired about beginning cash balance and how 2015 budget items that were not expended were captured. Mr. Martin responded that the beginning cash excluded those items. Mr. Clauson clarified that beginning cash is derived from revenue over the year exceeding expectation and expenditures lower than expectation. Chairman Clauson asked how much unbudgeted fund balance was available for 2016. Mr. Martin cautions that the city is still in labor negotiations, and although salary and benefit increases of 1.6% are budgeted, labor discussions are ongoing. Mr. Martin talked two small assigned accounts on the books. $33,610 City Hall Reserve is budgeted for a city hall building/structure review. $7,500 Street Vacation account recommended for grant match to purchase the Rockwell property. Both accounts would be zeroed out and closed. The committee agreed to using the funds and closing the accounts. The committee recognized that Tremont Widening project was not budgeted for 2016 with the current focus on the Bethel Corridor. Member Putaansuu offered the suggestion that Real Estate Excise Tax (REET) could be used for Bethel Corridor grind outs. Noting that use of REET for maintenance is allowed by statute for 2016, but not for future budget years and that a moment in time exists to maximize the use of REET for Bethel. The preliminary budget contains Bethel improvement sections A, and B of the engineer’s estimate taken from the Public Works Supplement request. Section A and B total $296,000 with the source of funds from REET $183,000 and $133,000 from property tax revenue. An additional $424,000 is needed to complete D, and E. The Committee discussed using $424,000 additional REET to complete the entire engineer’s estimate for Bethel sections D, and E in 2016. Treasurer Martin elaborated on how the use of REET would allow a $306,000 assigned fund balance of street fund to become Street Fund Balance for future street needs. This would build a healthier fund balance for future street projects, in future budgets. Mr. Putaansuu supported the use of REET in the 2016 Budget to complete the engineers’ sectional grind out plan. A discussion ensued among members on whether or not grind outs were the preferred improvement to pursue. The conclusion was to continue the policy discussion on scope of improvements. Mr. Putaansuu requests that the budget include the use of REET for Bethel. The committee agreed to move the budget forward to include additional $424,000 REET proceeds for Bethel improvements. The Committee reviewed the need for the Pavement Management System (PMS) and asked whether or not it is included or remains a supplemental item. It remains in supplemental. Mr. Clauson summed up that the committee was in agreement to include the PMS in the budget. The Committee reviewed budgeted vehicle requests by fund. 2 Patrol Vehicles Criminal Justice 1 Patrol Vehicle Equipment Reserve 1 Go-4 Parking Vehicle General Fund reimbursement Code Enforcement Vehicle General Fund Water/Sewer Truck Water/Sewer Utility Street Truck Street Fund The committee directed the equipment reserve be reimbursed for the purchase of the 1 patrol car. All vehicles are to be paid for using 2016 revenue. Potential budget adjustments providing additional revenue were discuss ed with the committee. Which includes the following: Property Tax .01 levy increase $14,044 new construction $42,259; Refunds $9,365; Sales tax additional increase $80,000; reduction of cost of medical benefits $60,205. Total $205,873. Finance will continue to monitor 2016 additional revenue potential and will report to the committee and council. Supplemental budgets include additional employees. The committee was supportive in including the part- time temporary planning employee through April 2016. Council member Ashby requested funding for city attorney services specifically for council members to contact the attorney. The discussion revolved around $3,500 with a quarterly review by members. Mr. Putaansuu would be supportive should the council adopt a policy that sets a parameter on the use of the funding. The budget reflects the Mayor salary allocated between Current Expense, Water/Sewer Utility, Street, and Storm Drainage Utility. Council positions are budgeted as a current expense. Total jail 2016 $601,862, an increase of $137,977 over the 2015 budget. The committee learned the 2015 jail budget is over budget and will require a budget amendment prior to year end. However, ending and beginning cash balance has been adjusted for this additional expense. Mr. Clauson requested the minutes be provided so that he is able to report to council at the upcoming Work Study Session. The meeting ended at 7:30 pm.