May 13, 2004
Commissioners' Conference Room
Chair David Crowell presided with Budget Committee members Scott Bartlett, Bobby Green, Sr., Don Hampton, Mary Ann Holser. Kathy Keable, Anna Morrison and Peter Sorenson present. Francisca Johnson and Bill Dwyer were excused. County Administrator Bill Van Vactor, County Counsel Teresa Wilson and Recording Secretary Melissa Zimmer were also present.
1. Approval of Minutes of April 29, 2004
MOTION: to approve the Minutes of April 29, 2004.
Hampton MOVED, Keable SECONDED.
VOTE: 7-0 (Bartlett out of room).
2. Children & Families
Alicia Hays, Children and Families, reported they used the Strategic Plan, (page 453 Section D. 3,) regarding allocation of resources. She added that section discusses priorities guided by severity and immediacy of the threat of life and health and safety and the effectiveness of long-term and future deterrents to threats of services. She said that Children and Families is an early intervention service that would be a higher priority than later intervention.
Hays said their budget is biannual from the Oregon Commission on Children and Families as well as federal grants. She said they chose youth as their priority, using flexible funding to fund the family resource centers and community safety nets. She noted they applied for and received a federal grant for positive youth development. She added they also fund state funding for crisis relief nurseries in Eugene and Cottage Grove with a total budget of $1,025,777. She said it reflected a cut of $190,625 to those programs because of the failure of Measure 30. She also stated they fund the Healthy Start Program, run by Health and Human Services. She noted the biennial budget for Healthy Start was $1,477,586, reflecting a cut of $94,314 because of failure of Measure 30. She commented they spend their energy in doing community mobilization and community connections to bring services to children and families in more effective ways.
With regard to comparisons with other counties, Hays said Lane County was in the middle with Washington County having the largest budget and Marion County having the smallest. She added that Lane County is the only county not to receive general fund money. She commented that they also pay the lowest indirect.
3. Workforce Partnership
Chuck Forster, Workforce Partnership, reported they are a private non-profit organization. Their arrangement with the county is by an agreement through which Lane County provides administrative and personnel services. He noted their Board of Directors is a 38-member board comprised of business representatives, local elected officials, school districts, labor organizations, economic development and state agencies.
Forster explained the Workforce Network brings under one umbrella a vast array of resources to create a one-stop system for workforce development for employers and job seekers. He added the partners include the Oregon Employment Department, Department of Human Services, Lane Community College and the Office of Vocation and Rehabilitation Services.
Forster discussed jobs welfare to work. He said the primary goal is caseload reduction in job placement. He noted the State of Oregon, Department of Human Service sets targets for the coming year. He added for the coming year they set a caseload maximum in Lane County of 1,900. He said their charge is to make sure the caseload doesn’t go above 1,900. He said they also have to place 1,400 individuals in jobs for the next 12 months.
Forster indicated their revenue from 03/04 was $8,174,680. For 04/05 there is a 12% reduction to $7,645,350. He said they had a large grant from the Department of Labor to provide services for laid off workers. That two-year grant ended. With regard to impact to services, he said there would be about 350 fewer laid off Lane County workers who will have access to training, support and other services through their services this year.
4. Fair Board
Warren Wong, Fairgrounds, said the Fair Board is a five-member board appointed by the Board of Commissioners. He noted the fairgrounds provide the venue for trade shows and conventions including the 4H and County Fair. He said the fairgrounds adds to the local economy and generates room nights. He noted that in the FY 05 budget proposal, there is no change in services. He said external forces including health benefits, PERS, and the cost of utilities, drives them. He said the number of FTE’s doesn’t change from the current year of 21 FTE. He indicated the amount of excess transient room tax dedicated to capital and other uses is $775,000.
Wong explained the major issue facing the Fair Board is reinvestment in the capital infrastructure. He noted the facilities and equipment are getting older. He said what they get from transient room tax they put into replacing equipment. He noted another issue is competing venues. He said there are new facilities coming up in other cities in Oregon, but there is the issue of retaining clients as well attracting new clients. He indicated a major issue is financial stability. He noted that their staff and Board went to the Board of Commissioners on March 31 and made a presentation and recommendation on financial stability. He said the Board referred that discussion to the Budget Committee. He forwarded a memo to the Board in April about trying to generate sufficient revenue to cover the cost of doing business. He explained the events generally would cover their direct costs.
Wong said financial stability has been an ongoing goal of the Fair Board. He indicated the problems started in the late 90’s as the costs of PERS and health insurance escalated. He said they have increased rates and admission fees, but there is a limit because of people’s ability to pay. He added the competition could also be a problem because of other meeting facilities in the community.
With regard to expenses, Wong noted they made efforts to control expenses including reducing the number of authorized permanent FTE’s by a third, not granting cost of living adjustments, energy conservation projects and other efforts. He said there is a structural problem with Fair Board finances that mirrors what is taking place throughout the whole County organization. He said the cost of health insurance and PERS is growing faster than revenue. He noted that last year the loss was about $1,000 but as they project outward, the deficit gets larger.
Wong indicated that the Fair Board’s recommendation is that the excess transient room tax committed to the fairgrounds be continued. He said in the original recommendation, the Board had used the words “in perpetuity.” He thought a five-year commitment was what the Board agreed to in 2002 when the first authorization of the excess transient room tax was given. He said the reason for having a multi-year commitment was some clients want to rent the convention hall for up to five years in advance. He said they have to give some assurance that it will be in operation. He noted that currently by Lane Manual, the excess transient room tax is limited to capital expenditures, unless specifically authorized by the Board of Commissioners. He said it could be used for roof repairs or equipment purchases that have an useful life greater than five years and more than $5,000 in costs. They are suggesting that that restriction be partially lifted so the comparative advantage could be allocated to the operating budget to cover the deficit, but to allow a cash reserve to be established on the operating side. He said currently they don’t have a cash reserve and they have a line of credit. He said they are $30,000 into the line of credit. He said they would have to draw on that to make payroll. He stated the Fair Board takes this request seriously.
Wong said in reviewing the options, the only viable option is to privatize the fairgrounds if the operating funds are not available. He said there were companies that could take over operation of the fairgrounds. He said the Board recognizes that transient room tax is critical in keeping the fairgrounds open and operating as a public entity. He said the Fair Board understands the trade-off with capital and they were not asking for more transient room tax, or any general fund money. He said they are aware of the limitations on the transient room tax and the Fair Board will commit to transferring over to the operating budget the smallest amount they can reasonably justify in order to cover operations and create some financial stability. He commented that the difficulty of having the fair is that they need a core level of permanent staff.
With regard to a multi-year commitment, Van Vactor thought Wong made a good business case, but recalled there was a tourism summit, and the Board appointed a tourism infrastructure task force. He thought they should wait for the recommendation. He said there is still a major financial uncertainty with the renewal of Secure Rural Schools. He was supportive of this year’s Fair’s proposed 04/05 budget.
Bartlett asked if there was a 20-year plan for the fairgrounds, including the conventions.
Wong responded that the Lane County Convention Center was misnamed. He said it is really a trade show facility. He said they only have four meeting rooms whereas the Portland Convention Center or the Hilton have bigger spaces for meetings. He commented that Lane County needs a Class A conference center to keep the various conferences that come to the area, but there is a tier of the conference market they can’t tap into because they don’t have a facility that can bring people in.
Holser commented that the fairgrounds are a public entity for people to share. She supported maintaining the fairgrounds and finding a way to support it with general funds.
Tom Hunton, Fair Board, commented that the Fair Board did not want to come to the Board of Commissioners asking for an operating subsidy from TRT. He said they are committed that if operating freedom is given with TRT they will keep to the minimum that moves from capital into operations. He recognized that if they can’t do that in the future, then they would need to make a decision about the future of the fairgrounds.
Van Vactor stated the language in the Strategic Plan discusses that when Lane County is in reduction mode that they should look at re-directing revenues. He noted an option was transient room tax. He asked what the consequence would be if they re-directed the remaining capital portion of the TRT.
Wong responded that if the Budget Committee accepts the Fair Board’s proposal of $775,000 budgeted for transient room tax, they would move $200,000 to the operating budget to cover the projected deficit and to develop a cash reserve. He said from the remaining $575,000, there is an amount of debt service outstanding on EWEB energy loans to the bank for the ice smoothing machine and the planetarium loan for $200,000 which leaves about $300,000 for capital. He said if that money were taken away for another purpose, they would end up with no replacement of equipment and continued deterioration of the building. He added the difficulty is they are experiencing failures because equipment is more than 25 years or older. He was concerned about the HVAC going out.
Green asked what challenges the Fair Board would face if they could maximize the space by getting a tenant with ongoing revenue.
Wong explained the issue is if another entity were to put a facility on the fairgrounds, they would lose parking spaces that would drive cars into the neighborhood. He added for some events like the fair or the logging conference, losing the parking would impact the areas that would be needed to have the events.
Bartlett asked what the replacement value would be for the fairgrounds.
Wong estimated the value is between $50 million and $70 million. He commented that within the next 20 years, they would have to make a major capital reinvestment in the facilities at the fairgrounds if they are going to keep it at the fairgrounds. He noted the expo buildings are around 70 years old and most are not ADA compliant.
5. Discussion on Deliberations
Crowell passed out and discussed the process sheet for Tuesday’s deliberation (Copy in file).
Sorenson asked what the difference was between a one year and two year budget.
Garnick responded that in a budget for one year there would be a five percent prudent person reserve. He said if they were cutting to get two years of stability, they would cut a large amount, they would have a larger reserve that would be used in the second year to help balance the budget. He said the reserve is $6.2 million, including the $3.7 million and $2.5 of additional cuts that were over and above what was needed for one year.
Green thought they should ask a threshold question comparing a one-year budget versus a two-year budget.
Garnick explained if they only make cuts for one year, they would spend the next year figuring out how to prioritize the cuts. He said if they have the larger cut now, they would spend the time on financial problems and structural deficits.
Morrison commented that next year they would be in another legislative session. She said they need to maximize future dollars to provide services. She thought sticking with the two-year budget was common sense.
Crowell commented that it was stressful to do one-year worth of cuts and then have to come back next year. He thought the one-year of financial stability would be good to focus on solutions instead of spending the next year wondering where they were going to find the cuts.
Sorenson was concerned about spending money and laying people off. He thought they should have a two-year budget.
Green thought the nine percent cut would get them to the two-year reduction approach. He added it was a one-year annual budget by law but with two years of reductions. He thought the threshold question should be if the committee wanted to take a one-year reduction package then the next year they would have $4.5 million in reductions to deal with or if they do the two-year budget, they would take the hits now and use the year to develop strategies.
Hampton wanted to do a one year budget where the cuts are less, and take more time modifying the Strategic Plan so when they get into the next budget, they already know what they are going to do.
Garnick noted that 70% of the discretionary fund is in law enforcement. He added that the District Attorney has additional incentive money that he could put into Family Law. He noted those technical adjustments need to be reviewed. He indicated that when they do a motion to approve the budget, they have to include or exclude those items. He added they have to add an electrical program onto Public Works. He said if they don’t approve the budget on Tuesday that everything rolls to Thursday.
Crowell requested that spreadsheets be made for the next meeting to track inventory and needs.
Adjourned at 8:10 p.m.