BUDGET COMMITTEE MEETING
May 2, 2006
Harris Hall Main Floor
Chair David Crowell presided with Budget Committee Members Scott Bartlett, Bill Dwyer, Bobby Green, Sr., Denis Hijmans, Mary Ann Holser, Tony McCown, Anna Morrison, Peter Sorenson and Faye Stewart present. County Administrator, Bill Van Vactor, County Counsel Teresa Wilson, Budget Financial Planning Manager Dave Garnick and Recording Secretary Melissa Zimmer were also present.
I. COMMITTEE BUSINESS
A. Election of Chair and Vice-Chair
MOTION: to nominate David Crowell as Chair.
Bartlett MOVED, Holser SECONDED.
MOTION: to nominate Scott Bartlett as Vice Chair.
Hijmans MOVED, Stewart SECONDED.
B. Approval of Lane County Budget Committee Minutes:
May 3, 2005, Budget Committee, 6:15 p.m.
May 5, 2005, Budget Committee, 5:15 p.m.
May 10, 2005, Budget Committee, 5:15 p.m.
May 12, 2005, Budget Committee, 5:15 p.m.
May 17, 2005, Budget Committee, 5:15 p.m.
MOTION: to approve the Budget Committee Minutes from May 3, 5, 10, 12 and 17, 2005.
Morrison MOVED, Dwyer SECONDED.
C. Distinguished Budget Presentation Award
Van Vactor announced that Lane County had received for the second year, an award that is presented by the Government Finance Officers of America for a Distinguished Budget Award.
II. BUDGET MESSAGE
Bill Van Vactor, County Administrator, gave his budget message.
John Arrons, Department of Youth Services, Patty Perlow, District Attorney’s office, and Pam Stuver, Public Health, gave reports about the jobs they do for Lane County.
III. BUDGET OVERVIEW
Dave Garnick, Budget/Financial Planning Manager
Garnick explained that the departments were directed to present their budgets as status quo, meaning they were to provide the same services for next year. He added that the general fund departments were asked to meet a general fund target that limited their use of discretionary general funds to only 4.25 percent. He said that non-general fund departments have to live with whatever revenue they have available for next year. He noted that, in general the status quo was accomplished, but several departments had to make reductions due to declining special revenue or grants that are ending.
Garnick indicated that the total budget for next year is $489.9 million, including all funds. He said they started fiscal year 2005/2006 with about $474.5 million and the budget grows through the year with supplemental budgets and grants. He noted the current 2006 budget is $485 million and the proposed budget is $489.9 million, a one percent growth from the current budget. He explained the largest funding in the overall County budget is dedicated special revenue. He noted that dedicated special revenue is 46 percent and the general fund is 20 percent of the overall budget for next year.
With regard to resources, Garnick said their previous growth had been five percent but had dropped down in the 2006/2007 budget overall for all revenues for the entire County. He said cash and fund transfers are 30 percent of the overall budget which has to do with reserves departments set aside. He said that carries forward as cash.
For expenditures, Garnick noted that prior growth had averaged almost seven percent. He said some funds are growing but some departments have had to make cuts. He added the combination of the growth minus the cut is a net effect of a one percent overall growth.
Garnick noted for overall expenses, that personnel services is up by $5.2 million, an overall growth of four percent. He noted in 06/07, the County will pick up the employee’s share of the six percent PERS contribution. He added that some bargaining units are still under negotiation. He noted that wages are almost 56 percent of the overall budget and benefits are 39 percent. He commented that employee benefits are where they are seeing the growth. He said it is going up by nine and a half percent. He added that salaries are flat. He noted that for 2006/2007, benefits are about 65.5 percent overall of permanent wages. He noted for every dollar of wage they have to budget another 65.6 percent for health benefits. He said for negotiated benefit increases, they are anticipating a $2 million increase.
Garnick indicated the general fund budget next year is $97.9 million. He noted starting July 1, there will be a new HR Department. He said there were no additional costs to create that new department because the HR manager’s salary was the same for a small department. He said they are beginning an early implementation of a new ten percent general fund reserve policy. He noted there will be an emergency reserve of five percent of operating revenue and an economic stabilization reserve of five percent. He said this was as a result of Moody’s Investor Services giving Lane County a negative outlook. He explained that the new reserve policy is a ten percent reserve and specifies how it is to be calculated, when it could be used, how soon it had to be paid back and under what conditions. He added it would have to go to the full board for adoption.
Garnick noted the budget grew by $4.2 million or 3.8 percent and they transferred $17.1 million of dedicated special revenue that the Budget Committee and the Board has no control over to a special revenue fund. He recalled it was a status quo budget and brings them in line with other comparable counties and reduces their overall reserve requirement. He said they might go out in 2007 to seek additional bond funding for the public health building. He said they will then determine whether their reserve is high enough and if they have a policy they believe would work and meet their expectations.
Garnick stated the discretionary general fund for next year is $64.2 million, about 13 percent of the overall total budget. He noted that 87 percent of the budget is earmarked for other purposes. He added for the discretionary revenues in the general fund, taxes and assessments are 45 percent with Secure Rural Schools at 25 percent. He noted the 25 percent portion was at risk if the Secure Rural Schools Act is not renewed. He added the discretionary general fund is up $4.8 million or eight percent for next year, which is good. He noted that law enforcement uses between 60 percent and 65 percent of the discretionary resources.
With regard to the financial forecast, Garnick recalled that over the past 15 years, the County has made cuts in 12 of them. He indicated they cut $1.1 million in the first five; $2.2 million in the next five and $8.1 million in the last five years, for a total of $18 million. He added that averaging that over the 15 year period comes to $1.2 million each year, or three percent. He said the forecast is saying that expenses are growing at six percent and revenue is growing at three percent. He said they are cutting three percent each year to keep a balanced budget. He said they have a structural deficit because current revenues could not sustain current services. He said in 2007 they are projected to be balanced, but for the next ten years, the revenue is never sufficient to cover the expense. He indicated they would have to cut every single year for the next ten years unless they cut more than they need and have a year or two of stability. He added that was assuming that the Secure Rural Schools Act was renewed. He commented that health costs were not growing as fast as originally projected.
Garnick discussed the reduction package. With regard to Youth Services, Garnick said they have grants ending. He noted they had to cut over $1 million and 4.4 FTE. He noted that Public Works is reducing their engineering division by $900,000 and 12.25 FTE. Health and Human Services is reducing family planning by $312,000. He indicated that the Florence Justice Court is cutting office hours and reducing their one remaining clerical staff from full time to .70. He added there is miscellaneous FTE the departments keep for a period of time. He noted if they unfunded a job for one year, they have one more year to find the funding. He said 3.45 FTE will be going away.
With regard to add packages, Garnick indicated the Sheriff’s Office has a hazard mitigation disaster preparedness add package of 3 FTE, for $259,000; Children and Families requested a position for resource development, 1 FTE for $74,900. He said they would be general fund dollars. He said that Information Services was asked for a disaster recovery plan as a notation in Lane County’s audit. He said the cost is $600,000, with Lane County’s share as $300,000. He said the total for the add packages is $733,900. He added they had community add requests. He said that LRAPA was asking to have Lane County give back the $43,00 in revenue LRAPA gives to Lane County as they want to do air quality projects. He added that is money they count as discretionary revenue and would be a reduction to the general fund. He said the watermaster was asking for another year of a limited duration office assistant. He said he was given money in the current year and wanted it continued. He said the Lane County Human Rights Advisory Committee was asking for part-time office help to help the community for $30,600.
Garnick commented that the continuing challenges will be rising benefits costs, as they are hard to predict. He indicated they keep increasing the annual cost. He added there are PERS uncertainties and lawsuits that have not been resolved that could overturn the Oregon Supreme Court decision. He said they don’t know what the renewal of the Federal Secure Rural Schools Act will be. He indicated 20 years ago when Jim Johnson was County Administrator, they were having trouble balancing their budget. He added that ten years ago Bill Van Vactor said the same thing. He indicated that they still have the same problem and they need to find a long-term solution. He said the Board of Commissioners has a plan to address the problem and thought the biggest challenge will be educating voters about the alternative revenue measure.
Garnick reported that Lane County is stable for one more year. He said if the Secure Rural Schools Act is not renewed and no alternative revenue is found, the current financial forecast will no longer be valid. He added the resulting reduction will be much larger than in the early eighties.
IV. PROPERTY TAX
Jim Gangle, Assessor, indicated that property taxes are still part of the discretionary fund. He said that half of the discretionary fund comes from property tax revenue. He stated that Lane County collected $335 million this year for 80 total taxing districts. He said in 1997 they lost 44 percent of revenue received from property taxes due to the passage of Measure 50. He noted of the $335 million, half goes to fund education, one-third goes to cities and seven cents on the dollar goes to other special districts. He said Lane County only keeps about nine cents of every dollar they collect. He explained that the nine cents they collect was about $27 million for 2005 in Lane County. He added that revenue from property taxes has been increasing from between four percent to eight percent per year.
Gangle explained the maximum assessed value from Measure 50 was to roll back and reduce value and put a cap on the value of property. He said it is allowed to grow three percent per year and 73 percent of the properties in Lane County are under that limit. He said what will add to the revenue is new construction. He indicated in the last year they picked up $660 million across the county for new construction. He noted that half of that is residential.
Gangle indicated when there is an urban renewal district, it reduces the amount of revenue Lane County receives. He said since 2001, it had been flat at about $200 million lost revenue to the County that goes to other districts.
Gangle noted that compression was almost zero for Lane County as a district. He said they did an analysis when looking at the formation of a public safety district and it would take about an increase of one dollar in rate in the urban areas to have a significant increase in the amount of compression.
Gangle explained that they are projecting $28 million in property tax revenue for Lane County for 2006.
Green asked about the backlog and if they could add staffing. He asked what could be collected over a period of two years.
Gangle responded the original numbers over a three-year period showed that they would add over $4.2 million in revenue to Lane County.
Green wanted that discussion brought up in Assessment and Taxation’s budget presentation.
V. PUBLIC HEARING ON THE FY 2006-07 PROPOSED BUDGET
Michael Mattick, Springfield, stated he is the State Watermaster. He said the county where his office is located is required to provide office space and equipment. He said that Lane County provides office space and pays for his telephone service and Internet access. He stated that every year he makes a budget request to Linn and Lane counties. He recalled that last year Linn County gave him $2,500 and Lane County gave him $2,000. He noted that Linn County had voted to give him another $2,500 this year. He indicated he is the State Watermaster in District 2 and is one of 20 in the state. He explained that his main function is to settle water use disputes when there is not enough water for everyone who wants to use it. He said he speaks with people about water rights locations, and certificates and final proof maps and well logs. He also does well inspections and water disputes. He commented that Lane County has more wells drilled annually than any other county in the state. He noted there are different water issues coming up in Lane County.
There being no one else signed up to speak, Chair Crowell closed the Public Hearing.
Morrison asked Garnick to do a financial plan that shows what would happen if the Secure Rural Schools Act is not renewed or if it is renewed at half the amount.
Morrison indicated that last year Ollie Snowden did the same thing for the road fund because of the controversy of the county-city road partnership to explain the dynamics of what this could look like. She commented without any revenue going away, they are already seeing cuts in Public Works. She thought they should get a visual perspective of what it would look like at 50 percent and zero.
Sorenson thought they should set aside more money than they would otherwise in this budget to deal with the impact. He thought they should drive up their ending balance for more flexibility.
Dwyer thought they should deal with the bargaining units to bring them into the loop, as they are the ones who would be affected by the decisions. He said if they are part of the process, they would have a greater understanding and less friction between the choices.
Green stated they have a well-prepared document and their budget is balanced and allows them to make critical decisions. He said they have done the best job they could do in Lane County to articulate the message to Congress about Secure Rural Schools. He added they have to education the voters and solve Lane County’s own problems and not depend on Washington, D.C. on this.
There being no further business, Chair Crowell adjourned the meeting at 8:10 p.m.