PICKERINGTON CITY COUNCIL
CITY HALL, 100 LOCKVILLE ROAD
TUESDAY, NOVEMBER 13, 2007
COUNCIL BUDGET
WORK SESSION
6:30 P.M.
1. CALL TO ORDER: Mr. Smith opened the Council Budget Work
Session at 6:30 P.M., with the following council members present: Mrs. Riggs, Mr. Fix, Mr. Smith, Mr.
Hackworth, Mrs. Hammond, Mr. Sabatino, and Mr. Wisniewski. No members were absent. Others present were: Tricia Sanders, Brian Sauer, Judy Gilleland,
Lynda Yartin, Linda Fersch, Chris Schornack, Ed Drobina, Chief Taylor, Steve
Carr, Paul Lane, Lance Schultz, Tim Hansley, Molly Schwartz, Bob Cramer, Mary
Knueven, and others.
2. SCHEDULED
MATTERS:
A. Review and discussion regarding proposed
2008 budget. Mr. Smith stated he would
ask Ms Gilleland to give a brief summary of the material to be reviewed this
evening.
Ms
Gilleland stated when the Utility Fees Review Commission looked at our utility
funds they looked at a five year forecast.
She stated she felt it was appropriate to do that with our budget as
well, as we have not done that in the past.
Ms Gilleland continued that when you look at the revenues and
expenditures over time, it is a more interesting picture. She stated our consultant, Bob Cramer, has
provided a five-year forecast and she felt it was important to share that
information with Council. Ms Gilleland
stated all of Council had received Mr. Cramer’s memo dated November 13, 2007
(Attachment 1), and she would let him go through that information at this time.
Mr.
Cramer stated given what is known about the 2008 budget he was asked to prepare
a forecast of what the consequences of that budget would look like over the
next five years. He stated he had
gathered together information regarding the City’s general obligation debt,
outstanding TIF obligations, and the SIB loan for the Diley Road
improvement. He stated his memo provides
a summary of the general obligation and debt service from 2008-2013. Mr. Cramer stated the problem with impact
fees is that they are collected only once.
Mr. Sabatino stated he felt the purpose of impact fees was to deal with
the additional need for services that additional growth brings. He stated, consequently, his thought would be
that if you do not have the growth, then impact fees should not be an
issue. Mr. Cramer stated one of the
consequences of growth is the investment you have had to make in
infrastructure, and right now the form of those financings are short term notes
and the debt service, however, can be serviced from impact fees. So, he felt there was a relationship between
impact fees and the cost the City has incurred to support the growth. Ms Gilleland stated she could review the
formula used for estimating the impact fees for 2008 later on in the meeting.
Mr.
Cramer stated an assumption he made was to take all of the general obligation
notes and convert them into bonds at 5.5 percent. He stated the note market has been very good
to this community over the past few years.
Mr. Cramer stated his report brings attention to the fact that decisions
made today have consequences for the years that follow. He stated as Council looked at the budget,
rather than as a one-year spending plan that is balanced under State law, you
can look at it as a series of public policy decisions about the level of service,
the resources needed to support that, and what are the consequences of those
over time. He stated he would be happy
to answer any questions. Mr. Fix
inquired what the alternatives were other than raising taxes, and Mr. Cramer
stated one alternative is cutting expenses.
Mr. Cramer further stated 80 percent of the expenses incurred by
government are in personnel.
Mr.
Sabatino stated it was his impression that when the utility rates were
increased that would provide some General Fund relief. Mr. Hackworth stated that the utility rates
did not support the general fund. Mrs.
Fersch stated what the City wanted to do was to take the utility notes that are
General Obligation notes and burn them to revenue issues. She stated utilities must be self-supporting
to go to a revenue bond issue, but that would then be taken off our debt for
general obligation. Ms Gilleland stated
we were relying on our capacity fees for operation, and we do not want to rely
on impact fees for operation because they are a one shot deal and is
unpredictable. Ms Gilleland stated in
five years our utilities should be self-sufficient. Mr. Cramer stated the adjustments to the
utility rates were phased in over time.
Mr. Cramer stated it is clear you can do some things in the budget this
year, but the City has between now and about September of 2009 to have a plan
in place to avoid the red ink that is projected for 2009. He stated the longer you wait, the more
difficult the decisions. Mr. Hackworth
stated one of the ingredients of keeping our bond rating high was our cash
balance, and if we let that slip then our bond rating will drop and our
interest rates will increase. Mr. Cramer
stated with a plan in place, and steps to implement it in process, you could
avoid that downgrade consequence. Ms
Gilleland stated she and Mrs. Fersch’s projections are on the conservative
side, however, the bottom line is the reality will hit sooner or later so we
need to start developing a plan and talk about that. Mr. Wisniewski stated there appeared to be a
large difference in the interest projected for 2008 and 2009 and inquired if
someone would check those figures. Mr.
Cramer stated he would check on that and get back with Council.
Mrs.
Fersch stated she had distributed a listing of all the TIF’s (Attachment 2)
that shows all of the revenue that has been brought in through this year, the
year the TIF commenced, the collection years, and the amount brought in. She stated the Marcus TIF has been closed. Mr. Fix ascertained the balance of what is
owed on each TIF is reflected on the 2008 Debt Schedule Summary she had
distributed (Attachment 3). She stated
she had also distributed a sheet showing Major Sources of Revenue for 1987
through 2007 (Attachment 4). Mr.
Sabatino inquired the total amount of principal that was retired in 2007, and
Mrs. Fersch stated she would have to get that figure. Mr. Sabatino stated he would like to see what
type of principal retirement pace we were on by comparing 2005, 2006, and
2007. Mr. Sabatino stated he would like
Mrs. Fersch to create a document that would show what is required and what is
optional as far as principal reduction for the past three years. Ms Gilleland stated that would be no problem. Mr. Sabatino stated his concern was that if
we allow our cash reserve to dip to low, it would increase our interest costs
and would be counter productive. Mr.
Hackworth inquired if Mr. Cramer had been asked to map out a strategy on how to
solve this problem, and Ms Gilleland stated she recommended that at the first
of the year a committee be formed that is comprised of some council members and
some private citizens to study all of the options. She stated it would be similar to the Utility
Fees Review Commission, but would not be part of a regular Council committee,
but sort of an ad hoc committee to look at all of the options and present
recommendations.
Ms
Gilleland stated the Impact Fee Report (Attachment 5) had also been distributed
for everyone to review. Mrs. Fersch
stated the report shows some funds came in that we did not anticipate, and
there are also funds we thought would come in that did not. Mr. Fix clarified we had projected 175 homes
this year and we actually had 125. Mr.
Fix further clarified we only had five commercial developments in 2007. Mr. Wisniewski clarified we did have the
Volunteer Energy development, however, their impact fees were waived. Mr. Sabatino stated he did not feel the City
has done everything we can to bring commercial development in, and part of that
is because our process is to long. He
stated he thought this was an issue that we should be looking at.
Mrs.
Fersch reviewed the Major Sources of Revenue report she had provided and stated
that we are collecting under four percent on the Police Levy. She stated we would not know the exact figure
until after the first of the year when the Auditor’s office completes the
evaluations. She stated the Local
Government Funds distribution reflects the estimate she was provided by the
County Budget Commission.
Ms
Gilleland stated Mr. Hansley could answer any questions anyone might have
regarding the development process. Mr.
Sabatino stated he would just like to comment that the sooner we get commercial
development completed, the sooner we can begin to collect the income tax. He stated if it takes six months longer to
complete the process in Pickerington than it does in any other community in
central Ohio, we are leaving that six month’s worth of income tax uncollected. Mr. Hansley stated when we slowed down
development, it affected commercial development as well as residential. He stated further the economy has affected
not just residential development, but commercial as well. Mr. Hansley stated we have several projects
that are ready to go, and we should see a lot of activity in the next
year. Mr. Sabatino stated other
communities achieve a quality development in about half the time that we take,
and he would like to see us look at those communities and see if we can
streamline our process. Mr. Hackworth
stated the update of the Commercial Design Guidelines would help speed up that
process. Mr. Smith stated further a few
years ago we did not have the impact fees, Residential Design Standards, etc.,
and those were designed to control the quality of the development, not slow it
down. Ms Gilleland stated while staff
can speed up the process, a lot of the delay is caused by Council’s legislative
process. Mr. Wisniewski stated he felt
there were very few things that were slowed up by the legislative process. Mr. Sabatino stated he felt it would be
beneficial to see how other communities do it and compare it to our
process.
The Budget Work Session recessed at 7:50 P.M.
and reconvened in open session at 8:05 P.M.
Mr.
Smith stated Mrs. Fersch would review the General Fund Department
Revenues. Mrs. Fersch reviewed the
projected revenues for each department and stated she would answer any
questions anyone might have. She stated for
2007 she had estimated the receipts until the end of the year. Ms Gilleland stated these were all revenues,
and did not include expenditures. Mr.
Sabatino stated he would like to see the revenue in one column and the
expenditures in another so he would know what he was looking at. Ms Gilleland stated that is shown when you get
into the department budgets. Mr. Fix
stated it appeared there is not anything they can do regarding the revenues,
and it would be the expenditures that can be controlled. Mr. Sabatino stated he would like to see a
Hotel/Motel tax summary and Mrs. Fersch stated she would have that before the
next work session. Mr. Fix stated again,
he would like to look at the expenditures since there is really no control on
the revenues received.
Ms
Gilleland stated the expenditures would be reviewed at the next work session
that is scheduled for Thursday, November 15th, at 6:30 P.M. Mr. Smith stated on Thursday, there would be
a recess in the work session at 7:30 P.M. for a brief Finance Committee
meeting. He stated the work session
would then reconvene to complete the review if necessary.
3. ADJOURNMENT. There being nothing further, the Council
Budget Work Session closed at 9:00 P.M., November 13, 2007.
RESPECTFULLY SUBMITTED:
______________________________
Lynda D. Yartin, Municipal Clerk
ATTEST:
____________________________________
Keith Smith, Council President Pro Tempore