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2010, 07-13 Special Retreat MinutesMINUTES SPECIAL RETREAT MEETING SPOKANE VALLEY CITY COUNCIL CenterPlace Second Floor, Room 213 2426 N Discovery Place, Spokane Valley, Washington July 13, 2010 9:00 a.m. Attendance: Councilmembers Staff Tom Towey, Mayor Mike Jackson, Acting City Manager Gary Schimmels, Deputy Mayor Ken Thompson, Finance Director Rose Dempsey, Councilmember Cary Driskeli, Deputy City Attorney Bill Gothmann, Councilmember Greg McCormick, Planning Manager Dean Grafos, CounciImernber Mike Stone, Parks and Recreation Director Brenda Grassel, Councilmember Neil Kersten, Public Works Director Bob McCasIin, Councilmember Kathy McClung, Community Development Dir. John Whitehead, Human Resources Manager Mary Kate McGee, Building Official Others Present: Rick VanLeuven, Police Chief Nina Culver, Spokesman Review Morgan Koudelka, Sr. Administrative Analyst Mike Huffinan, Valley News Herald Michelle Rasmussen, Administrative Assistant Citizens: Bill Bates, Chuck Hafner, Jack Pring, Carolbelle Branch, Public Information Officer Diana Wilhite, and Arnie Woodward Deanna Griffith, Administrative Assistant Chris Bainbridge, City Clerk Mayor Towey opened the meeting at approximately 9:00 a.m. and explained that the budget is a work in progress and there is no expectation of a final draft at this point as staff and council will be working on this for the next several months; lie said many times as people consider budgets, the first thing they think of is cutting the budget, but he said that is not always necessary; sometimes the services need to be examined and services added to lessen the impact on citizens; he said this meeting it not about cutting but is about evaluating how and what we are doing and corning up with a plan, the end result of which will be service to citizens, and what financial healthy picture are we going to portray for the next six years; and said those two things should be foremost in priority and we will come out benefitting the city and the citizens. He also cautioned that this meeting is not a debate but is an exchange of information and discussion; and he thanked staff for the tremendous amount of work in Ieading council to this point. 1. Business Plan Overview — Mike Jackson The following notes from the Business Plan Overview were written on the whiteboard for ease in reference throughout the meeting: Financial Management -- The City proposes to: 1. Maintain basic service levels with reduced resources 2, Minimize personnel costs /overhead by continuing to contract for many services 3. Continue the 6 -year business plan process 4. Leverage city funds with grant opportunities 5. Minimize city debt with a pay -as- you -go philosophy Financial Objectives: The City's financial objectives through 2014 are: 1. Maintain a general fined ending balance of 15% (minimuni) through 2014 2. Maintain the service level stabilization find at current level of $5.4 million through 2014 Council Retreat minutes: July 13, 2010 Page 1 of 10 Approved by Council: August 10, 2010 Commitment — by committing to these objectives, the city will ensure financial sustainability through 2014 (on an ongoing basis) 1. Reducing 2010 general fund expenditures by 3% 2. Cut fixture (beginning in 2011) general fund expenditures by at least 3% Challenges: Beyond the general fund, the City has 3 primary financial concerns; 1. Funding street capital projects 2. Funding the street preservation plan to maintain city roads 3. Funding parks capital projects City Manager Jackson explained that today is an opportunity for a relaxed - discussion environment; that we should feel free to address each other on a first -name basis and to bring up questions throughout the day, and he reminded everyone that these documents are draft documents, to be used as a good starting point and a good point of reference. He further explained that the information on the board and those financial statements are included in the business plan; that information includes overreaching goals and he said specifics can be changed but we should keep in mind that broader level. Mr. Jackson said this is the fourth business plan this city has done; that this plan looks different from past plans as there is not very much in added services due to the current economic times; he said that the financial objectives are basic, but cover a lot of territory, and he asked council to remember that keeping the 15% minimum ending balance will ensure we are never in the position of facing severe hardships with nothing to fall back on; and said council can discuss those if changes are desired. What staff hopes to gain from this meeting, he explained, is a refining of those objectives on the board; that staff wants to give council the opportunity to review the department budgets line by line and get an understanding of where our revenues go; that there are further refinements we can do to lay out exactly where those dollars go; and staff wants to present a clear, transparent picture of the budget so council as well as the public understands how Ave spend the budget; and that today is also an opportunity for Council to provide input to the City Manager and staff; and said as we move forward to put the final budget together, that we want to align staff as closely as possible with council; he also explained that per state statutes, the city manager prepares the budget and delivers it to council; and once presented to council, council can make changes if they desire, and said the hope is that in the end, staff and council will be very closely aligned. In response to question from Councilmember Gothinamr, Mr. Jackson said that the City Manager and Finance Director can make changes between line items such as for travel or office supplies, as there is some flexibility within that budget, and said that he and Finance Director Thompson receive direction from council; that even with the 3% cut proposal, there won't be a lot of room with shifting; he said the Finance Committee asked staff to present budget reduction scenarios at 3, 6, and 9 %. He said staff proposes examining the budget at the start with a 3% reduction. Mr. Jackson also mentioned that we recently came to a tentative agreement for a new law enforcement contract which will cost more, but said we can achieve budget recommendations without cutting or reducing services in public safety unless council wishes to do that, which he said could be pail of today's discussion. Mr, Jackson said we could see changes in the financial forecast, especially now since we know the law enforcement contract, and that we can make changes within those items to respond to needs throughout the year. Regarding the Business Plan, Mr. Jackson said at some point we may decide to merge the business plan and the budget; that we run with a small staff and therefore try to minimize time and effort on everything we do; that one area is preparation of the budget and that it would take considerable staff effort to combine those. Mr. Jackson then went over the major points of the Business Plan, including the Executive Summary on page 5 and 6; page 8 where it shows revenues have declined since a high of 2007 and said we are looking at a $3.5 million reduction since 2007, which he explained is the economic drive we are responding to; page 9 shows the forecast and regarding the 2014 estimates, he explained that the "net" is the minimum general fund carryover staff is recommending; he said council could increase or reduce the Council Retreat minutes: July 13, 2010 Page 2 of 10 Approved by Council: August 10, 2010 percentage of carryover each year for any particular year, but explained that 15% is considered a good healthy general fund carryover; he explained that for 2014, we are maintaining about 21% against expenditures and about 26% against revenues, and said this is a very sound optimistic financial picture, one which most cities would envy and hope that they too were in a position to only have to make mild changes to meet the forecast. Regarding page 15, Mr. Jackson explained that two years ago we started collecting statistics on workload to compare with other communities to see how we're doing, and even to compare with ourselves to see trends; lie said this gives a good basis; that it is difficult to compare with other operations as there are many variables, but nonetheless is a gauge which is better than no comparison. Page 19 lie explained, is the first page of each division and shows the organizational flow chart showing staff positions, and lie noted that staff will later insert the missing position of Deputy City Clerk; and said however, that today's focus will be on the dollars. Pages 22 and 23 include Council goals, and Mr. Jackson said we make sure we have resources and dedicate time to complete those goals; goal three is the Laserfiche project, and when our new website goes on line, the Laserfiche repository will be available to the general public. Mr. Jackson brought attention to the side whiteboard where the goals were listed, and said those goals call always be revised. Mr. Jackson said page 30 shows the reductions and description of the impact of those reductions to each department; and said as we work through those, we will use both the business plan and the budget worksheet which shows the line items and dollars. The discussion moved to the budget worksheets, and finance Director Thompson went over the figures showing the proposed 3% reductions and the accounting sheets showing where the money came from; and he noted these numbers will change as we move ahead, and said if council wants to make changes, staff will take a look at those as well. Mr. Thompson said the general government fund includes such things as rent and state audits, and they are placed in the general fund as it is easier to keep track of instead of placing that in each department budget. Regarding the contingency fund, Mr. Thompson said if we were to have a major issue such as a flood, fire storm, or similar catastrophe, this is the fund that would take care of those expenses; and he said we have never used any of that money as we always found other resources, and gave as all example that we relied on our winter weather reserve fund to handle the past severe winters. The state audit, Mr. Thompson explained, runs at an annual cost of $60,000 to $70,000, plus $25,000 for accounting outside help from a CPA firm we've used over the past few years. Mr. Jackson mentioned that two positions were added to the 2010 budget, one of which was to assist with the audit, and although they are needed positions, we did not fill those this year due to the economy. There was some brief discussion then about the carryover in the general fund and mention by Mr. Thompson that the carryover balance can be seen on the bottom of the sheets. Mr. Jackson said previously, the carryover was booked as an expenditure so we would have the finds available if needed, but it made the budget appear much larger than it actually was, adding that we typically have not spent the carryover; which led to brief discussion on what the state law allows regarding investing funds, such as placing funds in time certificates or the state investment pool, neither of which amounts to large interest rates, but also neither of which would lose any funds. Mr. Thompson then explained some of the larger expenses such as city ball rent of $465,000 and IT (information technology) Support of $160,000; lie explained that "professional services" are the funding we do for the "outside agencies" and said we are just getting started on that process for this year, and explained that we have two categories we fund: one for economic development entities, and the other for social services entities, which all total about $170,000 annually; he said the purpose of distributing those grants is those agencies provide services that we don't have employee resources to cover. Mr. Thompson also mentioned we are required by law to contribute to the Spokane County Air Pollution Authority, which is approximately $117,000. Mr. Thompson briefly explained about BEET (real estate excise tax) funds which are limited in their use; that Risk Management includes our liability insurance, and fire and other similar types of insurance, which last year was $280,000 and said that fund was actually a little short last year so he increased it this year; he said the premium formula is based on the number of employee hours worked plus claims and other criteria, and our liability premium this year is $319,000. Council Retreat minutes: July 13, 2010 Page 3 of 10 Approved by Council: August 10, 2010 Mr. Thompson said we share throughout the state in the income of liquor sales to provide a percentage of those funds to help those with alcohol addiction problems, adding that the county has a program addressing that. Concerning the Economic Development, Mr. Thompson said we pay for a page, or possibly a half -page in the Chamber of Commerce publication, adding that most of the funds going to the economic development professional services go to GSI (Greater Spokane, Inc.,) and ITA (International Trade Alliance). Finance Director Thompson said if there is a 3% reduction, it would likely come first from the contingency line which we haven't touched in seven years as it is only there for disasters, and reminded council that staff will be making minor adjustments to correct some minor errors. Mayor Towey noted that law enforcement and the jail appear to have the biggest increase and asked if the contract is reflective of the 3% redaction or if it needs adjustment. Mr. Jackson said that is an ongoing discussion; he said we can afford the new contract within the budget, but it takes the contingency dangerously low for that contract; he said we could agree to fund that way and if we have a settle and adjust or unexpected cost, we could come back to council; lie said typically we have kept $1 million in public safety line item to cover all those public safety issues, but this year we tapped into some of that for Geiger's settle and adjust, adding that jail costs are going to increase, but we don't know exactly to what extent, and it might be an increase per prisoner, but if there are fewer prisoners, if might not result in a net increase, and he said we will continue to look at that now that we know we have the law enforcement contract for next year. Mr. Thompson added that the $1 million contingency in public safety is separate from the general fiend contingency. Councilmember Grassel noted that comparing the 2009 budget totals with the proposed 2011 totals, the 2011 is still significantly higher than 2009 totals. Mr. Jackson said things to watch for are not necessarily every line item, but adjustments within the departments; lie said the reductions are based on future increases and that we are not saying we are reducing what was spent in 2009, but are realizing we have inflationary increases, and that typically budgets go up about 7% each year, and that is what we are reducing; we are reducing the 2011 proposed budget or those future increases that would have occurred; and said the objective is to control spending and ensure financial sustainability over time. Mr. Jackson then went over the Executive and Legislative section of the Business plan; lie explained that they started with the 6% reduction instead of 3% because of the difference in salaries, that the previous city manager earned a certain income and council set a new level for the acting city manager, and that difference equals 6% and said it therefore wouldn't make sense to leave a portion to achieve the 3 %, so it went to the 6 %; lie said that a 7% reduction would remove the two currently vacant legal intern positions from the legal department, and 9% would remove the vacant city manager intern position, that staff could look at removing some of those positions now, and said that particular position has not been filled for several years; adding that staff is trying to show what the impacts would be at 3, 6, and 9 %. Council and staff went over the remaining figures in the Executive and Legislative sections including salaries and positions, with Mr. Jackson noting that there is also an unfilled position of an administrative assistant for the City Manager, which position has never been filled but always remained in the budget, as when the city began we were working from scratch on what might be needed over time. Deputy Mayor Schimmels brought up the council's travel budget and said trimming that budget by not having all councilmembers attend all conferences would be an option; and Mr. Thompson mentioned that some of those figures also include mileage for council to go to various meetings throughout the county. Deputy City Attorney Driskell went over the legal department's budget explaining that most of the cost is salaries and benefits, that there are two attorneys, an administrative assistant, and currently two legal interns, and he explained that some interns qualify for state work study which gives us a 65% reimbursement of what we pay the interns, but not all interns fall under that category; and lie went over the remaining sections of the legal department's budget. Discussion shifted to the overall budget and whether the budget adds 7 %. Mr, Jackson said that the previous trend was to add 7 %, but this budget only adds 4 %; and that these are not budgets, but are projections; adding that staff reduced the 2011 proposed budget by 3 %; he said inflation and increasing costs are very real and we have to accommodate Council Retreat minutes: July 13, 2010 Page 4 of 10 Approved by Council; August 10, 2010 for those; that we know there will be inflation, but we will reduce expenditures by 3 %. Councihnember Grafos said if the figures increase for the 2011 budget, even a 9% reduction is still $30,000 over what was spent in 2009; and he suggested that if there is a 1.4% inflation rate, to take the 2009 actual number and add that inflation rate that would be more realistic based on revenues. Mr. Jackson said Ave are not trying to look back at what was spent in 2009, but rather are looking ahead to see what it would take to balance our forecast to ensure we have a healthy general fund; that it gets back to the objectives; we don't have to reduce spending from levels in 2009; but rather this is a different perspective on what we trying to do; we are trying to ensure a healthy carryover in the general fund in 2014 so we are looking ahead at what that would take, and said looking back at what was previously spent is a different objective. Mr. Jackson said we could set a dollar amount for reserves, or set a percentage of carryover desired, or any other method, but we are trying to set up a broad goal the city can adhere to over time; some say have 15% reserves, but it could be higher if that is council's objective; and he added that we don't know what new services and programs Council may want to offer to the public; as the economy improves eventually there will be services this council will identify that we'd like to offer; so we are looking ahead, and this method gives more forward thinking to ongoing expenditures then looking back; and lie mentioned the situation with law enforcement services; that those costs have gone up; he said we can meet our financial objectives laid out, or we build into the plan what it would mean to change service levels; so we are looking at a net 4% increase on the forecast. Mr. Jackson explained that the forecast is a snapshot in time in order to prepare the 2011 budget; and then we do the whole thing again next year based on the economy; and said after all, the reason we exist is to provide service to the citizens and make sure it is affordable. Discussion included mention of the need to later determine council's desire concerning broadcasting of council meetings; that we have tightened expenditures; that sales tax for first quarter returns were the least decrease in the last couple of years; the need to make sure we don't overspend and of trying to close the gap between the actual and the estimated figures; an option would be to reduce the amount of carryover we have to spend in 2011; mention from Councihnember Grafos that the last thing we want to do is cut public safety; that if there are vacant positions that have never been filled, perhaps that should be stricken from the budget while keeping the positions on the salary classifications chart; so not funding or filling the positions, but not eliminating those positions either. Mayor Towey mentioned that every time we add a new project or something new to city services that isn't in the budget, and he said council has done that since January, but if it is not in the budget, it takes away from the carryover for the next year; and if that continues, as time goes on, council will have to make a determination. Mr. Thompson said in prior years, the actual always turned out much better than the estimate, but we are really "squeezing down now" and he feels this is pretty close, but still lie said there is not a lot of room to maneuver, adding that we update the forecast a couple times a year, and if we see a problem developing, we can make those adjustments and updates as well. Operations and Administration budgets were discussed next with Mr, Jackson going through the appropriate pages in the business plan and the budget worksheets; and he said that the Deputy City Manager is now in the executive and legislative support and under operations and administration, and staff will make that necessary correction. Mr. Jackson said that page 42 shows the reduction, salaries and wages, office supplies purchases, software Iicenses and maintenance, and he mentioned we are putting the finishing touches on a new website which will cost closer to $14,000 annually to maintain; he said the plan is to conduct citizen surveys in odd years, that they used the National Citizen Survey in the past but could look at other vendors, but that company surveys several cities across the country and gives comparables; he said the survey deals with daily services and they have budgeted the same arnount each year. The meeting recessed at 10:50 a.rn. and reconvened at 11:04 a.m. CounciI Retreat minutes: July 13, 2010 Page S of 10 Approved by Council: August 10, 2010 Next for discussion, Human Resources Manager John Whitehead explained his budget beginning on page 42 in the business plan; he mentioned publications necessary to keep up with changes in employment law and briefly talked about what might be a disqualifying element from a potential employee's criminal and/or background check, adding that even minor offenses brought out in a background check would be discussed with the city manager; he mentioned that training for all employees comes out of the Human Resources budget; that he was asked last year to split the budget to show trailing separate from travel, and he added that there is not a great deal of all -staff training; lie explained that advertising is mostly recruitment, and there has not been a lot of need for that type of advertising in the last few years and it was determined that some positions will remain unfilled; he mentioned they do not subscribe to the periodicals anymore so that was removed from the budget. The erroneously placed $10,000 was noted and staff said they will correct that error. Finance and Information Technology were next addressed by Finance Director Thompson who gave an overview of his figures on pages 43 and 44; and mentioned page 45 shows two positions they had planned to add in January 2010, but with a new incoming council, he decided not to add those positions so his finance department is "limping along" with the staff they have now, but not adding those positions has an impact on the ability to pre -plan for the audit and on all the checking required with the audit, such as gathering receipts, etc. Mr. Thompson mentioned we have hired the YMCA to run our swimming pools, and those cash registers are wired to our computers; but the Y's staff are young and occasionally the cash register comes unplugged requiring our IT personnel to venture out to the pool to address problems; adding that this situation has improved drastically over the last few years. Regarding the figures for IT per number of workstations as "70 IT for every workstation," that will be corrected. In response to questions about the audit, Mr. Thompson explained that there are three different agencies here to report sales, and if those figures are not properly reported, the funds are diverted, so those figures need to be monitored, as we can make some corrections to past errors, but we cannot collect further back than six months. Mr. Jackson said we need to thoroughly examine those two unfilled positions as those salaries could be funded by finding errors associated with checking sales tax; lie said we have never canvassed the city to see what businesses are operating and conforming to the sales tax; he also mentioned that the accounting tech position was to assist public works in tracking capital projects; he said our database manager spent a year developing a real time accounting system for capital projects and he is working closely with public works, but said it is difficult to pinpoint how much money we had; and said he feels this is an area where we need to be careful as we may be "cutting it a little thin." Councilmcrnber Grassel mentioned that there is a big jump in salaries between 2009 and 2011, and Mr. Thompson said that includes those two unfilled positions; that the 2011 budget with 3% reduction eliminates $31,000 worth of one of those vacant positions; and if we go to 9 %, it eliminates both positions. The idea was again mentioned of keeping the positions, but taking those salaries out of the budget. Mr. Thompson said the $200,000 uncollectible account is the gambling revenue we can't collect. Mr. Jackson said we will look at omitting those unfilled positions and make those reductions with the idea as the economy improves, he may need that additional manpower to meet our goals. There was council concurrence to remove the positions from the budget, but not from the salary classification grid, keeping in mind we could always reallocate in the future. Under the proposed training, the error of 3 x 1,000 was noted and Mr. Thompson said that is not 3 times 1,000 employees, and they will make that correction. Mr. Jackson mentioned that the legislative budget is not in the business plan; that the reductions are based on the 3% as a starting point. Copier maintenance was discussed as was debt set and Mr. Thompson explained that when the city began, we didn't have any money and the bank loaned us $500,000; Spokane County advanced its $1 million, and Liberty Lake loaned us $50,000 and that those debts have been paid; that for the first few years we leased copy machines but have since moved to purchase and whether leasing or purchasing, a maintenance cost is still required; he said we do not have an equipment replacement fund for copiers but perhaps that is something to consider; that each year copy costs have dropped a little but the volume goes up a little as well. Councilmember Grasscl asked about the benefit of Council Retreat minutes: July 13, 2010 Page G of 10 Approved by Council: August 10, 20I0 having a lobbyist, and Mr. Jackson said we have done well in the past with legislative appropriations; that one of the benefits of having a lobbyist is they are there all the time and they put in plugs for projects, and he reminded everyone of our acquired $500,000 for Greenacres and $800,000 in direct funds to build Discovery Playground, so there has been a huge return on our investment if we attribute that finding to the lobbyist. Councihnember McCaslin said he never supported paying for lobbyists; that we have representatives and senators and that to his knowledge, they have never been contacted except informally; he said how much influence depends on how much of a relationship there is with ruling party; and said how much credit one can give to lobbyists or representatives, he can't tell. The meeting recessed for lunch at noon, and reconvened at 12:38. Councilmember McCaslin did not return to the meeting after the lunch break. Community Development Director McClung began her explanation of her department by discussing the background information on page 61 of the business plan, which explains how her budget was changed by adding five positions in order to improve permit times and customer service, and then reduced in 2009 due to reduction of consultants and the elimination of an "on- call" inspector position; she also explained that one administrative assistant was reduced to half-time and that this cut has not worked well for the department as they have experienced delays in keeping their section of the website updated, and delays in paying bills and in finalizing planning commission minutes; she mentioned that an assistant engineer left the city and that position was not replaced, which resulted in a savings to the street fund; there was a vacancy of the building inspector plan reviewer, and they upgraded an existing inspector plan reviewer to that position and will not replace the lower position; she mentioned the interlocal entered into with the City of Airway Heights resulted so far in collecting $12,000 for June; and said the City of Millwood has asked if we would be willing to help with their building inspection services; and while no formal arrangement has been made between the cities, Millwood hired one of our code compliance officers to work on weekends. Director McClung mentioned they have four divisions within their department: Administrative, Development Engineering, Planning and Building; that under the 3% reduction scenario, they are asking to reinstate the half -time administrative assistant position that was cut; she said their department generates a lot of paper and they have fallen behind, and there would Iikely be a small reduction in overtime if that position could be reinstated to full time. She also mentioned there was a lot of cross training dining the past year so that when one area was busy, others would help. Discussion again focused on not budgeting the unfilled positions, which would result in a substantially smaller amount of actual budgeted dollars. Mr. Jackson said lie and Mr. Thompson will look at the positions we are retaining and make sure we have the correct salaries listed in order to keep track of what positions we are no longer funding or filling. Parks and Recreation Director Stone brought council attention to page 65 of the business plan and explained that his department includes nine employees and between 15 and 25 seasonal temps who work in six divisions, including Parks Administration, Parks Maintenance, Recreation, Aquatics, CenterPlace, and the Senior Center; he mentioned that the Senske Contract carne in almost $100,000 less than the previous year; that the recreation division recovers 105% of its overall costs; and for events such as the summer movies, sponsorships could be pursued as people have approached him and let him know they want to be associated with that. Mr. Jackson said if the decision were made to move toward sponsorships, we would bring that before Council for consideration, and said that the Parks and Recreation Department, as well as the other departments, are doing more and more to meet needs in these economic times. Concerning possible reductions, Mr. Stone explained the outcome of possible 3, 6, and 9% reductions; and added that he is not sure how successful CenterPlace will be in the next few years for competing for hotel /motel funding; that council can make a direct appropriation from those fiends and staff would recommend pursuing that, and he said currently they have enough dollars in the budget to do some basic things; he said the point is whether it is worth having CentcrPlacc go through the process as the committee made it clear that CenterPlace should compete as the other entities do, rather than have fiends Council Retreat minutes: July 13, 2010 Page 7 of 10 Approved by Council: August 10, 2010 appropriated by council; that they generate "heads in beds" but lie is sure his figures would not compare with those in the hotel /motel industry. Mr. Jackson said the original intent to allocate those fiends is they do put heads in beds, and the original objective wasn't just to sell CenterPlace, but to promote the City of Spokane Valley, and lie mentioned the City's emblem on the Center's front door; cities can do that and can make direct appropriations of those funds and that is different from other tourism activity; he said this facility and the playground are big attractions for the City of Spokane Valley, and said lie is not sure of the scenario of competing and said he feels there was merit to the way it was done in directly appropriating a portion of those funds for that use. CenterPlace was discussed including the building replacement fund, which currently has $317,000; and Mr. Stone said it makes the expenditures look strange but we are paying ourselves back; he said we could reduce that without a serious impact to programs, or keep it; and should further reductions be warranted, lie said we might consider closing a pool or reducing the season, or not opening restrooms until later and closing them earlier; he said recreation is almost all revenuc- driven; and the aquatics requires a huge subsidy as we cannot recoup costs on the aquatics program. Mr. Jackson said that those items listed by Mr. Stone are speculations, adding that we have no plans to close the facility. It was also mentioned that we do not have a contract with others to maintain our part of the Centennial Trail so Ave are doing that, and lie mentioned that the restroom is not located on city property; he said there is work to be done on an agreement before investing city funds to get a water supply for that restroomn which is state property, and said there are very strict state requirements concerning well water. Director Stone stated that our current lease with the college has expired, but they would like to rent a room or two for a year with the ability to add rooms at the hourly rate; he said they are working on negotiations to put together a neiv lease and said the College indicated they would love to have a presence here; he also mentioned that Central Valley School District would like to rent a room or two for their staff training, and said we are working oil a lease with them as well. Our original lease price is $16.00 per square foot, which Mr. Jackson said is pretty low rental. Mayor Towey called for a recess 1 :50 p.m. and reconvened the meeting at 2 :05 p.m. Pages 73 through 77 were discussed by Public Works Director Kersten; lie mentioned the three different levels of construction and maintenance of streets, stormwater systems, and operations and maintenance of traffic signs and signals along with transportation planning. Director Kersten said our stormwater ERU (equivalent residential unit) is among the lowest in the state, and Mr. Kersten described the reductions as shown on page 81, and said some staff switched to the lower cost health plan which represents a savings; and said they are working on an all public -works wide safety plant as their department has more safety issues as many staff work in the field, and said they have hired a consultant to help, the plan has been started and is being updated. As shown on page 82, Mr. Kersten said the re- pavement is greatly underfunded; fie said Spokane City spends over two times what we spend and said we could easily spend another three to four million on streets if we had it; that we get funds from the gas tax and the phone tax and said we try to hold our budget to that level; and said we try to keep a fund balance of over $1 million so if we have a major snow or bridge problems, we have some available fonds; he explained that we spent about $400,000 on crack sealing this year, which is more than normal as we were getting behind; and contracting that with a local private company is going well. Mr. Kersten brought attention to page 83 and the separate fund of stormwater, with a reserve of approximately $1.5 million; lie mentioned we received a grant to help implement the NPDES (National Pollution Discharge Elimination System), and the large requirement of implementing NPDES Phase II is upcorning. Mr. Kersten explained the notebook budget worksheets concerning the street fund, which fund Handles bridge inspections, which he said is about the last contract Public Works has with the County and he explained that bridge inspectors must inspect at least one bridge annually in order to keep their certification. Tile street maintenance, contract, Mr. Kersten explained, is the contract with Poe which Council Retreat minutes: July 13, 2010 Page 8 of 10 Approved by Council: August 10, 2010 company does the bulk of the summer work, adding that Senske Handles our emergency calls. Spokane County, he added, does handle the paint striping on the street, signs and signals, and said the County has discussed eliminating that, so we may have to take that over later. Mr. Kersten mentioned that the $44,600 SRTC (Spokane Regional Transportation Council) membership also comes from the street fiend. Concerning the public works shop, Mr. Kersten said he sent out notices to all realtors in our city but didn't get many responses, but of the few we received, staff is working to get those together and said lie will bring those to council at an upcoming meeting. Mr. Kersten said all projects Have been bid and some came in under budget so we will be able to do those projects as planned; and said concerning all funds within their department, that typically we don't spend all the amounts funded, and said if we don't need it, we don't spend it as can be seen in prior years. In response to Couneilrnernber Grassel's questions about the road fund and stormwater fund, Mr. Jackson explained those are separate funds and are not included in the street fiend; that state law mandates we cannot switch appropriations from one fund to another; that today's focus was on the general fund and time will not permit having a discussion on the REET fiends today. Finance Director Thompson said there are other funds, some which we can't do much about like lodging funds which will come to council later in the year concerning allocation to entities. City Manager Jackson brought council attention to Addendum A of the Business Plan, and explained that this is the first time we have included the Police Department in our Business Plan as it is a contracted service; he said he has worked with Chief VanLeuven concerning these figures, and asked all to keep in mind that the contract has specific means by which we can make reductions; said he has heard general comments that we don't have to reduce public safety, and he asked Chief VanLeuven to discuss the services provided by the Police Department. Chief VanLeuven explained that his department is continually looking for ways to work smarter and more efficiently, and said the successes speak for themselves as does the survey, which had a 94% positive rating of his department; he said he likes to compare our Police Department with other Police Departments, and in comparing us with cities of similar populations such as Kent and Federal Way, we have a significantly lower cost per capital for law enforcement services. Chief VanLeuven said he feels public safety needs to be top in the priority list, and he quoted their mission of "providing a highly- trained, dedicated team of professionals, working in partnership with our community, through utilizing their unique talents and skills in conjunction with new technology and research based criminal justice training." Chief VanLeuven said calls to the police department continue to increase each year, and he went over some of the functions of the various divisions of his department, as listed on pages 86 through 90; then explained about their training as noted on subsequent pages. There was brief discussion concerning developing a customer friendly environment; the possibility of a sign on the flagpole; an intercom system the public can use if no one is in the building; SCOPE stations; facebook; involvernent with the Spokane Valley Mall; and the internet and connecting links, General discussion then ensued regarding the "settle and adjust" for our contracts with the county and of keeping approximately $1 million available to handle those adjustments; that Animal Control has worked to sustain their budget figures; that the Council's budget goals can be discussed at the July 27 council meeting, and once finalized, those goals will be pant of the business plan. Mr. Jackson said staff will examine those unfilled positions as noted previously. He asked if council had any comments or suggestions concerning maintaining a minimum 15% carryover and of not touching the service level stabilization fund, and there were no objections or suggestions from council. Councilmember Grassel said that she noted each year between now and 2014 it appears we are deducting from the carryover fund; she said she doesn't feel it is counciI's position to go through each budget line item, but rather it is Council's responsibility to make sure we are Iiving within our means of a budget; and said if we are using carryover dollars to reach goals, she feels we are pushing off a problem that in 2014 will surface as a large problem; and said she would rather see that money used for funding streets or for a benefit to citizens, adding that personnel costs are a huge issue and the budget can be reduced if we take out unfilled positions. Regarding the $3 million negative figure on page 9 of the business plan under 2011, Mr. Council Retreat minutes: July 13, 2010 Page 9 of 10 Approved by Council: August 10, 2010 Thompson explained that in January, February and March or April of every year, we won't bring in enough money to pay all the bills, so that $3 million is our cushion until the property tax check gets in about May; and by doing it this way, it keeps him from having to go to the bank for a loan to handle the carryover until May, which loan action would require a council bond involvement and costs; so he explained that this is just a cash flow procedure to make sure we have a way to pay bills. Mr. Jackson said he would not envision carrying this plan to 2014; that if the economy doesn't improve next year, we will look even harder; but that the carryover is to see us through the lean years; lie said you can't manage a budget for the next ten to twelve years on carryover; and if the economy continues on that trend, we'd come back and re- assess the current financial situation; he said with a 20 -25% carryover and a $5.4 million stabilization fund, Nye are in very good shape; and said even with moving ahead with the planned recommended levels in 2014, we would still have over 20% in reserves; he explained that we use a forecast to set the budget, that this is not a spending plan; Ire noted there was previously showing a deficit for 2014, but said it is a matter of perspective; that the cuts we talked about today amount to approximately $2 million in reductions, he said they are very real reductions, and that staff will come back in 2011 as we put the 2012 budget together. Mr. Jackson said we have the luxury of planning ahead; that it is too soon to spend those reserves, and depending on what happens in the future, we may need those to sustain basic operations; but at some point he would recommend council set objectives, like keeping 15% carryover, and when we meet those objectives, if we have additional cash after this economic crisis, we could use those for capital projects or another use. Mr. Jackson said we are fortunate to currently have a healthy general fund. Mayor Towey thanked staff for today's information and said staff did a terrific job; and he thanked everyone for coming, and said Council has a better appreciation of where we stand and where we're going, and that this should make the finalization process better. There being no further business, the meeting was adjourned at 3:50 p.m. ATTEST Tiiomas E. Towey, Mayor Christine Bainbridge, City Clerk Council Retreat minutes: July 13, 2010 Page 10 of 10 Approved by Council: August 10, 2010