HomeMy WebLinkAboutMinutes - Finance and Bond Committee - 10/20/2008 i
Town of Oro Valley
Finance and Bond Committee
Regular Meeting
Hopi Conference Room
11000 N. La Canada Drive
Oro Valley, Arizona
Monday, October 20, 2008
6:00 p.m.
CALL TO ORDER
The meeting called to order at 6:01 P.M.
ROLL CALL
All present
PRESENT: Chuck Kill - Chairman
Peter Lamm, - Vice-Chair
Bob Harris, Member
Dan Toth, Member
Jared Parks, Member
Council Member Bill Garner
CALL TO AUDIENCE
Mr. Doug McKee a member of the Planning and Zoning Commission
spoke to Finance and Bond Committee regarding a proposal that was
presented at the last Planning and Zoning Committee Meeting. A General Plan
Amendment was approved allowing developer (Vistoso Partners) to build 474
more houses than he is currently allowed to build in Neighborhood 5. This kills a
potential revenue source in the form of a golf course. A multi million dollar golf
course in the future will not be able to develop if this amendment is passed and
the land is rezoned. Mr. McKee stated the Golf Course would be a better
revenue source than the 474 houses which will increase the net operating cost to
the town and will further deplete the water supply. Mr. McKee asked the
Committee to educate themselves on this amendment and to talk with the
Planning and Zoning Committee regarding this amendment.
1. APPROVAL OF MINUTES FROM THE AUGUST 25, 2008 MEETING
Approval of minutes.
MOTION: Member Toth called for the approval of the minutes and Member
Harris seconded the motion.
MOTION carried, 5-0.
10/20/2008 Finance and Bond Committee 2
2. WELCOME COUNCIL MEMBER LIAISON GARNER AND
INTRODUCTIONS
Chairman Kill welcomed Councilman Bill Garner as the Town Council Liaison to
the Finance and Bond Committee.
Councilman Garner stated he looked forward to working with the Finance and
Bond Committee and providing feedback between the Council and the
Committee.
3. TOWN OF ORO VALLEY FY 2008/09 FIRST QUARTER FINANCIAL
STATUS REVIEW
Stacey Lemos, Finance Director discussed the First Quarter Financial Status.
The Mayor and Council asked for this report to be presented at the October 1st
meeting.
The staff looked at the 1st quarter revenues and expenditures. The report
focused on the main funds of General Fund, Bed Tax Fund, Highway Fund and
Transit Fund. The budgeted amounts were then divided by 4 to compare 1st
quarter actuals to the budgeted amounts in order to compare revenues. They
then compared projected year end totals in order to show any anticipated deficits
or surpluses in the budget.
Finance Director Lemos then went through the report fund by fund to report
activities that are ahead and/or below projected budgets. The General Fund is
currently 9.8% or$750,000 below budgeted amounts, due to several contributing
factors including Residential Building Permits, lower than anticipated retail sales
tax revenues and state sales taxes.
Ms. Lemos reviewed several cost savings measures being taken by the Town as
presented in the packet materials.
Chairman Kill asked if the Bed Tax Fund was being put aside for the Naranja
Town Site if the proposal passes. Finance Director Lemos responded that a
portion of the Bed Taxes is being set aside for future operations and
maintenance of the park if the bond passes. If the bond issue is delayed these
monies can then be used for other purposes should the Town Council deem
necessary. Member Harris asked if the Council has control over when the bonds
are issued for the Municipal Operations Center. Finance Director Lemos stated
yes, that the Town Council is required to pass a resolution to issue those bonds.
4. DISCUSSION AND POSSIBLE RECOMMENDATION TO EVALUATE THE
IMPLEMENTATION OF PERFORMANCE MEASURES IN TOWN BUDGET
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Finance Director Lemos told the committee this was included in the Agenda at
the request of the Committee members.
Member Harris stated the Town currently has a project budget that provides what
funds are needed for the current year. The Performance Indicators are all
historical and contain no projections for the coming year. A performance based
budget would link the two with key indicators. Member Harris would like to
suggest for the future 2009-2010 that we start out with a few but meaningful
measurements. Member Harris would propose that the departments project for
the performance indicators for the coming year and then for the following year,
try to build the entire budget around performance indicators.
Finance Director Lemos enclosed information on this type budget in the F & B
Committee packets. The Town is currently linking the Draft Strategic Plan and
budget in order to measure outcome and performance.
Ms. Lemos stated the budget process will kick off in November. The Town would
be able to start the performance based budget process in 09-10 and then a more
fully developed performance based budget in the 2010-11 budget. This would be
a more pervasive budget involving all depts.
Chairman Kill asked how much additional training would be needed for
Deptartment Heads to adopt this type of budget. Ms. Lemos stated that the
Town could invite other cities that have gone to this type budget and have them
come in and do peer training.
Chairman Kill stated the importance to bring this up to each Department Head to
start thinking along these lines. Chairman Kill also asked if we have a department
liaison or a budget manager. Ms. Lemos answered that we do not have a
department liaison or budget managers, but Wendy Gilden, Art Cuaron and Ms.
Lemos answer budgeting questions. The Strategic Plan contains guidelines and
offers suggestions for performance based measurements.
MOTION: A motion was made by Member Harris and seconded by Member Toth
make a recommendation to the Town Council to develop a Performance Based
Budget for the next fiscal year.
MOTION carried, 5-0.
5. DISCUSSION REGARDING RESTRICTIONS ON TOWN SPENDING
Member Lamm presented the committee with a preliminary discussion regarding
restrictions on Town spending. This is for discussion purposes only and is not
ready to result in a motion and not ready for policy changes.
10/20/2008 Finance and Bond Committee 4
Item No. 5. on the Agenda discusses the ability of the Town to establish its own
local expenditure limitation with voter approval.
Ms. Lemos stated the only restrictions on a home rule option would be if a no
vote prevailed; then the Town would be subject to the State imposed expenditure
limitations.
Ms. Lemos reviewed a handout regarding State imposed expenditure
limitations derived from the League of Cities and Towns and also explained the
Home Rule Option.
Vice-Chair Lamm discussed the 3 variables that govern funds available for
spending; population, inflation, and productivity or changes in standard of wealth.
The formula used by the state carefully records 2 out of 3. This type of constraint
properly constructed is better than not having one. Published income data for
Oro Valley is not available but there is information for Tucson Metro Area.
Obtaining personal income per capita will let you compute a personal income for
Oro Valley times the population. These figures from Tucson Metro can serve as a
proxy for information for Oro Valley. What could be used is a limitation somewhat
like the State one for Tucson Metro Area, as long as the percent is chosen
correctly you can capture the 3 variables that are used to govern spending.
As an example in 2007 the per capita personal income in Tucson Metro was
$32,500. You can take that $32,500 and multiply it by 42,500 Oro Valley
residents and what you come up with is around 1.3 billion dollars proxy personal
income. If you take the general fund expenditures for the fiscal 2009 budget you
come up with about a 2.4% ratio of general fund expenditures to total personal
income. What would be a good idea would be to have the home rule option
limitations modified so that they somewhat resemble this 2.4%, with a limitation
comfortably higher than whatever we are running right now. This would put a
hard cap on continual governmental growth. This will have to go back to the
voters in 2 010.
Chairman Kill asked how difficult would this be to implement. Ms. Lemos told the
committee that this would probably require asking the voters for a permanent
base adjustment. This does not take into account the services offered by the
Town. To communicate this type of methodology to the voters, it needs to be
easy to understand in order to receive a favorable vote. This would need to be
looked into to see what the Statute allows the Town to do.
Chairman Kill asked that this be researched before going forward. Ms. Lemos
stated 77 of the 90 incorporated towns in Arizona have some type of alternative
expenditure limitations. The majority of the towns have home rule and the next
higher number of towns have done a permanent base adjustment. The home rule
is a system that is flawed due to the amount of growth over the last few years
and the demand on program growth.
10/20/2008 Finance and Bond Committee 5
The election for this vote will be in May, 2010. Research will need to be done on
this in order to bring it before the Town Council prior to the election.
Vice-Chair Lamm stated a lot of citizens are concerted that government growth is
driven by revenues available for spending.
6. DISCUSSION REGARDING CONSTRAINTS ON UTILIZATION OF
CONTINGENCY FUNDS
Member Lamm - Requested this be placed on Agenda. How much can the Town
spend and what external restraints can be placed on spending. We have a
substantial contingency fund/reserve. Many entities have failed in constraints on
spending during difficult financial times. This may be able to be included in the
Home Rule. Use of the reserves would allow the Town Council to dip into these
funds by using the usage rate of 117th of 1%. The Town Council voted to set the
usage rate of 117th by a majority vote and a suggested 115th by a 5-2 super
majority and 1/3rd by a vote of 6-1 and then 100% unanimously or by emergency
declaration by the Governor.
Ms. Lemos provided in the packet the Town Council's current Budgetary Policies
regarding dipping into the reserve fund. These are considered one time funds to
only be used for one time expenses. Vice Chair Lamm stated this would be a
more sophisticated way of managing these funds. If we have a prolonged
economic downturn this could work to the Town's advantage.
Ms. Lemos replied that this fund is also used for our bond ratings, thus use of this
fund can drive our bond ratings. This would need to be a Council decision if they
want to place parameters on our budget.
Chairman Kill commented this could cause taxes and fees to go up if there is a
reluctance to dip into the contingency reserve.
Member Harris told the Committee he sees no problem with the spending of the
Council regarding the contingency funds.
Member Parks asked if the purpose of the reserve is to tide us over during an
economic downturn. Ms. Lemos replied it is there to provide for certain needs of
the city and its residents for emergency situations and unplanned downturns in
the economy.
7. SCHEDULE NOVEMBER, 2008 FINANCE AND BOND COMMITTEE
MEETING
Meeting Date - Member Harris cannot make Nov. 24th meeting.
Two topics will be presented.
10/20/2008 Finance and Bond Committee 6
MOTION: A motion was made by Member Parks and seconded by Member
Harris schedule the November Finance and Bond Committee meeting on
November 24, 2008.
8. COMMITTEE MEMBER/COUNCIL MEMBER LIAISON REPORTS
No report
9. FUTURE AGENDA ITEMS
Chairman Kill called for future agenda items.
The Financial Report through the month of October can be brought back to
Committee next month at the November meeting as an additional Agenda
Item E.
Member Harris asked Councilman Garner if it would be worthwhile if proposals
related to funding this year and any cutbacks should come through this
committee first before it goes to the Council for recommendation. Councilman
Garner stated this has not been part of this Committee's duties in the past, but he
will relay this interest to the Council.
10. ADJOURNMENT
MOTION: A motion was made by- Vice-Chair Lamm and seconded by Member
Harris to adjourn meeting. Meeting adjourned at 7:45 p.m.
Prepared by:
Alice Taylor
Senior Office Specialist