LANE COUNTY BUDGET

COMMITTEE MEETING

May 12, 2009

5:15 p.m.

Harris Hall Main Floor

APPROVED 2/2/2010

 

Chair Alice Kaseberg presided with Budget Committee members present:  Scott Bartlett, Bill Dwyer, Bill Fleenor, Rob Handy, Denis Hijmans, Cindy Land, Peter Sorenson, Faye Stewart and Rose Wilde present.  County Administrator Jeff Spartz and Recording Secretary Melissa Zimmer were also present.

 

I. CALL MEETING TO ORDER

 

Chair Alice Kaseberg called the meeting to order.

 

II. COMMITTEE BUSINESS

 

May 5, 2009

 

MOTION: to approve the minutes of April 5, 2009

 

Fleenor MOVED, Land SECONDED.

 

VOTE:10-0.

 

III. AMERICAN RECOVERY & REINVESTMENT ACT

 

Mike McKenzie-Bahr, Economic Development, discussed the American Recovery and Reinvestment Act grants.  He noted at the state level for the formula block grants there is $714 million available  He noted Lane County  entities will receive $66 million, including an unemployment benefit extension.  He noted that that $1.7 million will be going to Lane County for transportation and  $12 million to Lane County for state and city projects. He indicated that the legislature will have to approve this and take it up after May 15.  He commented that they will know within a few days if the state will be about $5 billion short.  He said they might  have to give monies to the County by supplanting it with stimulus money.

 

IV. DEPARTMENT OF CHILDREN & FAMILIES

 

Alicia Hays, Children and Families, gave a PowerPoint presentation on the budget of the Department of Children and Families. (Copy in file).

 

V. LANE EVENTS CENTER/FAIR

 

Rick Reno, Fairgrounds, reported that he has been at his position for five months and has worked with two combined budgets.  He asked for everyoneís patience as they move through the transition.  He commented that based on the economic indicators, he tried to  put together a cautious but optimistic budget.  He indicated the main difference in revenue is the 20 percent decrease in transient room tax, based upon actuals that they have been looking at.

 

Reno stated that expenses are projected to increase due to the Lane Events Center becoming a County department.  He added that if the Lane Events Center and the fairgrounds become unionized, expenses will increase.  He said if they maintain operations and transient room tax doesnít rebound for the next few years, there is the probability that the revenues will be insufficient for operating expenses.  He indicated that serious discussions need to take place about the Lane Events Center including reducing services and facility operations as they relate to facilities and events and the possible cessation of certain operations.  He commented that if the revenue is insufficient and they have property infrastructure that needs to be repaired, then the stopping of the fairgrounds might need to be considered. He thought there were other avenues worth supporting.  He said there is the potential to improve the financial condition of the fairgrounds and the Event Center by having aggressive sales and marketing, improvement of the infrastructure,  and alternate uses of the facility.  He stated that this budget is the beginning of a proactive approach.  He said it addresses infrastructure improvements to the Wheeler Pavilion. 

 

VI. PUBLIC WORKS

 

Marsha Miller, Public Works, gave a PowerPoint presentation on Public Worksí budget overview.  (Copy in file).

 

VII. DISCUSSION

 

Kaseberg stated she was struck about the potential impacts the state cuts will mean.  She said the question Sorenson raised about backfilling everything  would take entire services, much of which they have to maintain for a bond rating.  She thought they needed to pass on as much money to supplemental budgets when they are known.

 

Stewart commented that in hearing about the cuts from the state, the ability to help youth will be limited.  He was concerned about the $18 million cut to Health and Human Services.  He said they need to be prepared.  He added that they canít address cuts in the budget.  He thought that they might need to be prepared to come back after they adopt the budget after the state adopts their budget.

 

Handy said they need a budget that is cautious but optimistic.  He said they need to look ahead and save the first few percent for research and development.  He added that they need to reinvest in leadership opportunities in moving forward.

 

Bartlett stated that they need to have a resourceful approach to keep each service operational.  He commented that there is a complexity to a reduction in Mental Health, Youth Services, Public Health, and the preservation of life.  He added that incarceration is vital to the protection of life and property.  He thought they needed to hold onto the services.

 

Sorenson wanted to set aside money in the budget for a public safety reserve.  He was not sure whether they are going to have base money.  He heard the Budget Committee said that they should target investments for bigger dollars.  He thought they should think about the reserves to use when they figure out the state picture.  He thought they should determine the amount of reserves that are going to be used over the next year as they learn the impact of the state cuts.  He wanted to do everything short of an across the board approach.

 

Fleenor commented that this year they are looking at reduction in timber payments.  He thought the writing was on the wall.  He said they will see significant reductions from the state.  He wanted to set aside $6 million to stabilize this yearís budget.  He said that as they go forward they need to be cautions.  He commented that they need to be mindful of the uncertainty and the citizensí plight.  He stated that as a county they have to tighten their belt more than the average citizen of Lane County.

 

Questions:

 

For Children and Families, will you be able to get the half-time FTE funded with an add package.  How much will it be used

 

Hays responded that for this budget they have a .5 FTE.  She added that she got state funding for another position around resource development.  She wasnít sure what would happen with the state. She added that if it remains a 30 percent cut, they will lose one-third of their employees.  She indicated she would need $33,465 to bring the position up to a full FTE.

 

Moody reported that there wasnít an additional need that it was in the budget.

 

Within the department, are there funds for specific purposes.  Are there any areas which give flexibility to spending.

 

Hays reported that they have flexible funds and that is how they fund the Family Resource Centers.  She added that their commission decides how to allocate funds  for CASA, Relief Nurseries and Health Start.

 

The Fair Board purchased insurance for 08/09 at $78,000.  How is it purchased from the insurance company.

 

Reno said he is meeting with the risk manager.  He indicated that it appears there might have been an assumption moving into a County department that the insurance would fall under the liability of the County.  He noted that there will have to be a special events insurance policy for the fair that will come into the budget, but it is not in the budget at the current time.

 

Kaseberg asked how much the ice rink costs.  She asked if it makes or loses money and if it would be more effective if they closed it.

 

Reno said he hoped to put together their facilities like profit centers.  He wanted to get a cost analysis versus revenue generated.  He stated that the ice center does not generate revenue to cover expenses.  He added there are physical problems with the ice center.  He wanted to address those issues to see if they should keep the facility open.

 

Kaseberg asked what services might be rescued.

 

Reno said if they have to operate the ice center seasonally, it could be a positive because while the ice is not there they could have other events.  He thought they might be able to generate revenue to put in alternative events.  He added that the other facilities need capital improvement and due to regulations and codes, they might have to shut down operations.  He noted that currently the system in place is that people who use the facilities par no charge or reduced rates.  He thought if they could utilize rate sheets as written, they could generate an opportunity for revenue.

 

Kaseberg asked what alternative uses of the existing facilities might be possible.

 

Reno responded that in order to look at the utilization of a facility, if they were to take the convention center and have three home and garden shows and car shows and banquets, (whatever the attendance is) that  once they get past the ice center and private hockey and skating, the same people are using the facility.  He said if they could put an analysis on the cost of operation per different person, the ice center would be the highest cost.

 

Kaseberg asked what events donít get charged and why.

 

Reno noted that the logging conference is the largest money generating event.  For users over an annual basis, the home and garden show  and the logging conference wanted a reduction in rents.  His understanding is that the users are currently not being charged rent as  a result of instructions received by the previous manager.

 

Kaseberg asked if there were funds that were flexible and where he sees funding.

 

Reno said in looking at expenditures, the challenge in the industry is to create economic development.  He said they have to do certain things to generate economic development.  He noted in the budget they are asking for a sales manager and he will try to see if they could hire someone on commission.  He said the key is not only expenses, but a way to increase revenue is to increase the rent.  He added that if they are not careful, they will hit the point of diminishing returns and they will see large and valued customers go away.  He thought if they could cut expenses, they could cut the bottom line.  He said they need the ability to create revenue from scratch and in order to do that, sales and marketing (even in bad times) need to look positively to the future.  He wanted to see flexibility given the largest opportunity. He also wanted  to see if there is a way to bring in different activities that will bring in net revenue.  He commented that they will either run away the business or they wonít be able to generate any more.

 

Kaseberg asked if there is an across the board cut to reserve money for programs and services if it could possibly delay the costs of replacing vehicles.

 

Tanya Heaton, Public Works, responded that it would depend on the management of each fund and how much the department would get to turn in cars or a longer life cycle.  She said they could stretch the cars for five years.  She added that it would only affect those funds that have vehicles in their classification.

 

Would it be prohibitive to figure in $450,000 as a revenue resource for Land Managementís overhead surcharge until the volume picks up.  Is it possible to trade Land Management overhead surcharge if it was traded for $450,000 replacement of fees.

 

Heaton responded that if central services generated overhead, it could be waived in a year, the Budget Committee could waive it and decide by waiving it or deferring it to another year. She added if they deferred it for another year, it would make the gap bigger.  She noted the difference is their department is paid from the road fund.  She added if they wanted the road fund to defer charges to Land Management, County Counsel would need to determine if it was a proper use of the road fund.

 

Public Works is in the road fund and the funds are dedicated, specified by the Constitution of the state of Oregon.  Where is there flexibility in spending and areas where they are restricted in where there are choices to spend it.

 

Miller responded that  road funds are the most restrictive of all fund. She noted the Constitution of Oregon, Article 9, Section 1, says all revenue shall be used exclusively for constructions, maintenance, and operation for the use of public highways, streets, roadside rest areas and other funds with some flexibility within those funds.  She added that most are revenue generated.

 

Garnick distributed a list of MuniCast scenarios.  (Copy in file).

 

Dwyer was concerned about critical services.  He commented that they canít keep cutting the anemic services.  He was concerned about the most vulnerable.  He stated that conservatism doesnít work when demands are the greatest when the revenue is the least.  He added they canít be conservative when people are losing jobs.  He said it requires resources.

 

Hijmans asked what will remain mandated and what they will be reducing otherwise, not getting the whole picture.

 

Spartz responded that the budget and Board will have to make the best estimates where they can affect the mandates and then go on.

 

Garnick noted that for benefits, they predicted a 15 percent increase, but it will be 5.5 percent and that is built in the forecast.

 

Handy wanted an updated sheet on the general fund impacts to eliminate most of the reductions that are not general fund related.

 

Sorenson thought it was important to look at the MuniCast scenarios on Thursday.  He said they arenít going to know what the state has done.  He said they should investigate a reserve for public safety and public services across the Board in a scenario that would allow them to balance the budget.

 

Dwyer was not concerned about the federal government.  He said they always step up to help to meet their obligations.  He said they need to have a certain level of money for the people.  He didnít want to save money if people are in desperate need for more resources.

 

Stewart stated that he was concerned about the Commission on Children and Families.  He said it was a terrible time to reduce services when the need is greater than ever before.  He thought Reno gave a good presentation.  He said it was the time to act.  He supported Reno in trying to make a turnaround for the future. Stewart believed the fair was important, as it builds community support.  He added that they need to have a site where the fair is supported.  He said they have to continue to find a way to make it happen.  He added that if they start to do something today, in the near future they wonít be able to afford the facility.

 

Wilde commented that certain things should be included and certain requests not included.  She thought the fairgrounds were underutilized and they could be used more.  She said they should start talking about tools. She wasnít sure about looking at the reserves to set aside to provide for greater flexibility as they are getting a financial impact from the state and other sources.  She doesnít want to defer the decision to another group unless they would be better and more effective.

 

Bartlett asked if they could make decisions as to the allocations, but make them contingent upon the state revenue forecast in October and have a defacto mini reserve and not expend the money.  He added that if the forecasts are better, then they could spend the money. He asked why the County couldnít cut back to four days per way of operation with a good mix of services.

 

Land  commented that being fiscally conservative and compassionate are not exclusive.  Those are the choices they are going to make and they have to be compassionate and realistic.  She said they have to balance the budget and they will have to choose things.  She added that they will do the best they can.  She commented that children are a priority and the Lane Events Center and Fair are an amazing resource.

 

Fleenor stated that they need to be mindful of the repercussions and unintended consequences.  He said they have to make sure they have a balanced approach and move forward so they are ready for the future.

 

You included some service add packages, but not all requests.  Why did you include a developmental disability specialist, a communicable disease nurse and community service work and reopen the 84 jail beds, but you didnít include the OSU Extension Service of the Lane Events Center.

 

Spartz said he thought they agreed with Reno they would add a sales manager.  He added that they canít raise rates on existing customers and subsidies from the transient room tax will be down this year and for the next couple of years.  He noted the only solution is for some new net revenue business to be plugged into the system, unless the Board wants to write a check out of the general fund.  He didnít think they were adequate regarding the communicable disease nurse to manage an outbreak.  He noted that for the last two years serious crime is down in Oregon but Lane County is the only county in Oregon where crime is up.  He commented that they have gotten to the point where the criminal justice system cannot cope with dangerous people.  He thought the District Attorney was understaffed.  Spartz said there needs to be certainty and there isnít in Lane County and that is why they have an increasing crime rate while every other county has had a decreasing crime rate.  With regard to the Extension Service, he recalled that last year they were told if the County gave them free rent for two years, they would engage in sufficient fund raising to get stable environment.  Spartz did that and now the Extension Service is stating they need more than just the free rent.

 

Dwyer said the reserve funds are for various departments.  He said reserves sound like a good idea, but the thought about benchmarks and what triggers to release those funds. 

 

Handy wanted to make sure they remove things that are not general fund related.  He thought for Thursday they could have an update with unintended consequences.  He wanted to show that for economic development they could cut checks for $2,000 each to help small businesses.

 

Bartlett commented that it is not a good message to send that they canít have incarceration.  He added that in a normal year, $3.2 million for jail beds is not a bad amount.  He asked what happens if they appropriate the funding and then get hit with a 40 percent cut from the state.  He said they need more prosecution.  He added that a misallocation of funding sends a bad message when they need prosecutors.

 

Sorenson stated that they donít know how many hungry people they will be dealing with who will be losing their jobs.  He thought they needed to think about a contingency fund.  He said if the situation is bad, they need to have the ability to help people.  He thought the County would be in better shape in July than now.  He said they need to be flexible.  He noted the level of expenditures are down, but they have reserve money and contingency funds to put into high priority areas as they learn what they are.

 

Land cautioned about over reserving.  She said they talk about going beyond 10 percent in department budgets and now they are discussing reserves for emergencies.

 

Fleenor thought they could control expenditures.  He said they should look at how they can save money and use it for helping people who are in need of help:  the low income, developmentally disabled and people with small children.  He said that is part of an equation that makes the County whole.  He commented that a healthy community is a safe community.  He thought they needed to ensure the entire system was working together at a lower level.

 

VIII. ADJOURN

 

Chair Kaseberg adjourned the meeting at 7:55 p.m.

 

 

Melissa Zimmer

Recording Secretary