MINUTES OF THE METRO COUNCIL BUDGET & FINANCE COMMITTEE

Wednesday, February 2, 2000

Council Chamber

Members Present:  Susan McLain (Chair), Bill Atherton (Vice Chair), Rod Monroe

Members Absent:    

Also Present:    David Bragdon, Ed Washington

Chair McLain called the meeting to order at 1:35 P.M.

1.  Consideration of the Minutes of the April 14, 1999 Budget Work Session and November 18, 1999 Budget Task Force Subcommittee Meeting

2.  Discussion of Committee Goals and Work Plan

•  Short-term Issues Related to the FY 00-01 Budget

•  Long-term Agency Capital Needs

•  Examination of Alternative Funding Methods

Chair McLain opened by inviting Metro's partners and departments to submit a list of infrastructure and funding items and ideas as well as how they should be handled both short and long-term. She understood that Executive Officer Mike Burton would include his ideas on this subject when he presented his proposed budget at the February 10 Council meeting. She asked committee members do the same. The Council analysts and committee clerk were requested to keep a full record of all ideas brought forward as a prompt for possible future action by the Council.

Councilor Atherton asked if the Executive Officer had already presented his issues and options.

Chair McLain responded that Mr. Burton would present at the February 10 Council meeting, but many issues have come up in the past that may be revisited during the committee's deliberations. Many of the Agency's departments had no capital budget plan. While there was an overall Agency plan, there was no actual funding in place for many departments' capital needs budget. Some definite capital needs must be addressed prior to 2004-2005.

She said that the Council has previously discussed the need to determine if there were functions that could be scaled back or perhaps handled elsewhere. The committee should look at the overall functions of Metro: what it covered; what functions were charter-mandated, what had been handed to Metro to do or were connected to property and facilities.

Councilor Atherton affirmed Chair McLain's statement as an excellent beginning focus for funding strategy and fiscal policy for the agency. Capital funding often used debt instruments or Systems Development Charges (SDCs) as the buy-in for the capital assets of the agency. Typically, however, annual revenue was used to create a fund for capital expenditures by taking a portion out here and there. His preference was to have a clear demarcation, that a fiscal policy be established to use Metro's annual revenues from each enterprise to take care of maintenance and operations. Maintenance and operations also included reserve and replacement accounts and adequate funding for them.

He would like to segregate capital needs and pursue a conscious strategy of using debt instruments. He also would investigate the practicality of shaping a region-wide system of new development charges so that the price of bare land was not propped up for speculative purposes. He suggested that this system would lend credibility and acceptance to citizens for the work of Metro. They would pass the necessary debt instruments when they realized that their investment would pay a dividend and not incur more debt.

Councilor Washington asked Councilor Atherton if he could be more specific as to details about how his proposal would work. Councilor Atherton responded that one example was the MERC facilities with a current asset value of between $.5-1 billion. A SDC might be levied on new development in the region that would benefit from this facility and public investment. This SDC would be used to pay down the outstanding debt on these facilities with the user fees collected at the enterprise operations going to fully fund maintenance & operations plus reserve accounts.

His second example was Greenspaces. He said that this would be more difficult; as often there was no way to gather annual revenues to support maintenance and operations of greenspaces. Perhaps, however, there might be a special circumstance where a region-wide SDC could be used to pay back the region's investment value in these facilities. That, plus a one-time use of solid waste money to create an endowment fund would be a reasonable approach to taking care of the maintenance and operation of this capital asset. He noted that an SDC was normally not allowed for maintenance and operations; however this SDC would go into what Councilor Bragdon called a “legacy fund” and thus would be a capital asset. He believed it would be allowable since the proceeds, rather than the capital, would be used for maintenance and operations, but would consult with legal counsel on the matter.

Councilor Monroe said he looked forward to next week’s budget proposals from the Executive Officer. While the budget process was always important, this year it was especially so. There was a particular need to review the potential for streamlining Metro's work, while meeting the contractual responsibilities Metro was mandated to perform by the voters. The real needs for planning and prudent management of the open spaces that Metro has acquired should also be scrutinized. That review included looking at the Council's own house for potential savings.

In addition, he said, the Agency should recommit to the recycling goals that have stagnated slightly in recent years and renew its commitment to reaching the goal of a 50% rate of recyclable materials. Once the review process was done then prudent reserves and revenue sources to support them must be identified; sources that were not only politically expedient, but also appropriate to support the real needs of this agency.

Presiding Officer Bragdon stated that he believed that the notion that growth should pay more of its own way was valid. The nexus was clearest in the area of land use planning, including natural resource protection. He understood that an SDC must connect to a burden on services provided occasioned by the development itself, but noted that had always been a contentious idea in the courts. He looked forward to finding ways to make this connection to a provided public service. The planning for the state mandated 20-year land supply complicated the process since an SDC was typically paid when a developer applied for a building permit at some later date.

He said it was important to try to capture some of that cost, since the planning action itself helped to create property value. He was intrigued by Councilor Atherton's premise, but felt that the need and legal basis for it was not so much in the area of a convention center or a zoo, but needed to be broader. He felt the cost of planning for the future should be borne in part by new development.

Further he looked forward to discussion of MERC and streamlining the Metro-MERC relationship, as well as creating reserve funds for departments without them. He looked forward to working with the other Councilors on these issues.

Chair McLain said that historically the Council began the budget process by looking at all three budget goals, but ended up focusing on the current year's work without addressing long-term capital needs and alternative funding. To try to prevent that from happening this year, she offered to work with staff on a paper outlining the committee's goal in all three areas and bring it to the next meeting for discussion, refinement and buy-in. She asked if the committee was 1. Willing to examine possible funding methods; 2. Willing to look at taking funding to the voters; 3. Willing to look at streamlining the agency and look for efficiencies; and 4. Interested in compiling a list of items for future funding when viable. She felt that the committee should make a start at answering these questions and asked the other Councilors to respond.

Councilor Atherton agreed with the concept of looking at what issues might be taken to the voters and the concept of serial levies. He also agreed with Presiding Officer Bragdon's previous comment that it was difficult to determine what the impact was in a regional context to facilities such as MERC and the Zoo. However, there were two components to the SDC; the impact that Presiding Officer Bragdon addressed with which he agreed was inappropriate on the regional level, and the reimbursement component. Reimbursement was based on investment and asset value that has built up. It could include all costs that go into that capital investment including interest that goes up and up. That process provided incentive to develop rather than to hold property for speculative purposes. He was intrigued by the concept of using an SDC to create an endowment fund for planning. He asked what the Councilors thought of the notion that land planning might be supported by using a per-acre fee region-wide; in essence a flat fee for services.

Councilor Washington said that all three issues before the committee were important to him. In respect to an examination of alternative funding, the bottom line was that these needs were a necessity for the region, not an "alternative". He felt it was time they were treated as the necessity they were and approach them head-on. The term "alternative" diminished the true importance of these issues to the region's citizens. Asking for money was hard to do at a governmental or a personal level, but the time had come when Metro must take its case to its citizens. Chair McLain responded that she meant the term "alternative" as necessary or basic and that she and staff would make an effort to capture this more clearly in the position paper she had promised.

3.  Committee Discussion of the FY 00-01 Budget Process

•  Meeting Schedule (Including Potential Supplemental Meeting Dates)

-  Number and Timing of Public Hearings

•  Scheduling by Department, Fund or Budget Issue

•  Role and Work Products from:

-  Executive Budget Staff

-  Council Analysts

•  Development/Presentation of Budget Recommendations/Amendments by:

-  Councilors

-  Council Analysts

-  Departments

-  General Public

Chair McLain directed the committee's attention to a copy of FY 1999-00 Work Session and Council Schedule. She asked that a fifth column be added to indicate each department's funding source, i.e. excise tax, federal grants, etc. Also when a department or Councilor offered an possible streamlining she asked staff to estimate the amount of savings that would be realized by the action and where the savings would be derived i.e. contingency, reserve, etc. A copy of FY 1999-00 Work Session and Council Schedule is included in the public record. The committee suggested no further additions. She asked all Councilors to review the committee meeting dates and notify her if they had a conflict. She then asked Presiding Officer Bragdon if he wished to address the budget at any of the evening Council meetings that had been set.

Presiding Officer Bragdon responded that he had requested at least 2 evening meetings this Spring for the purpose of gathering public input on Goal 5, the budget and H-TAC. Chair McLain requested staff put out public notice as soon as the public hearing dates were added to the Budget meeting schedule. Councilor Monroe noted that the budget must be submitted to Tax Supervising & Conservation Commission (TSCC) in late April.

Chair McLain said that she and John Houser, Council Analyst, would review potential public hearing dates and bring them to the next committee meeting. Last year TSCC commented that they would like to see more opportunity for public involvement in the Metro budget process. She said it was her goal to work with the Presiding Officer and staff to make sure that there were such occasions in March or April and June. These hearings would be part of the Council meetings that have already been scheduled. She asked if Finance staff would like to come forward to participate in department scheduling discussions.

Tony Mounts, Financial Planning Manager, suggested that it might be worthwhile to consider reviewing the budget by grouping funds or departments into larger groups. For example, REM, the Zoo and MERC could make up one group. Second, departments in the general fund such as Executive and Council along with the related departments that receive excise tax such as Planning and Regional Parks could make up another set. The Metro services group could make a third set; i.e. Auditor, General Counsel, Administrative and Information Services departments. Chair McLain agreed that his scenario would be interesting as it dovetailed with her request to identify each group's funding source. She promised to work with both Council and Financial Planning staff to put together a first pass at the schedule.

Councilor Monroe said that if the Council was to consider any revenue items for the beginning of this budget year they would need approval by April 1 in order to take effect July 1. Chair McLain responded that she would talk to Mr. Houser about this. Sometimes the Council has had a Budget Notebook and sometimes staff has done executive summaries that were given to Council a set number of days prior to discussion. She asked the Councilors for input on what they felt was needed and when it was needed. She asked Mr. Houser to remind the Committee of the process done last year.

Mr. Houser responded that last year the analysts' practice was to prepare an analysis once a department or group had presented their budget before Council. The issues that had been raised were then taken to that department's staff for response. The report prepared outlined that budget, the issues and responses. In times past, although not last year, the committee chair for the affected department sat in on this process. He asked the committee what level of involvement they wanted to have as the analysis was being done. Chair McLain said that as Budget Chair she plans to sit in on all meetings. She encouraged all Councilors to sit in on any or all of the Budget meetings if they so desire. For staff meetings she thought it would be appropriate to keep it to her and staff, but offered the Councilors individual briefings by staff prior to Budget meetings.

Presiding Officer Bragdon suggested that each committee’s work plan should somehow be overlaid on its corresponding department's budget. As an example in Growth Management the Council has agreed that the number one priority on the work plan was Goal 5, so the staff and budget should reflect this status and the Council's buy-in. He felt that this would be a useful tool to identify the Council's agreement to certain priorities.

Chair McLain agreed and said she had assumed that the work plans were part of the staff's resources. However, there were differences in the work plans in different departments; REM and Transportation are more comparable than others. There was also the allocation plan and the legal proposals that Presiding Officer Bragdon had mentioned that would effect all departments. She hoped the Presiding Officer and all Councilors would feel welcome if they wished to participate.

Mr. Houser asked the committee for direction as to who should analyze the Council Office's budget; in the past the analysts have done the analysis, but there was some discomfort in looking over their own department's budget. Chair McLain responded that the committee was looking for streamlining and cost savings everywhere and no budget was immune. Councilor Monroe understood Mr. Houser's concern, and suggested that this was an appropriate duty of the Chief of Staff, Jeff Stone, to review and present the Council budget. Presiding Officer Bragdon, Chair McLain and Councilor Washington agreed.

Councilor Atherton asked for some clarification of Mr. Mounts suggestion as to how to examine the different departments. Mr. Mounts responded that essentially the enterprise functions, Zoo and MERC, have their own self-contained funding mechanisms; the service functions, Planning and Greenspaces, have linked funding sources; while the support services were the corporate services to the whole Agency.

Councilor Atherton said that in light of Councilor Monroe's reminder of the need for April 1 review to meet the deadline, perhaps the activities that could require new funding sources should be discussed first as the enterprise operations were pretty straightforward. Chair McLain agreed with his comments, but said the tricky part was to know what the need was. Service and Support systems could change considerably depending on the need assessment. Parallel processing was needed. As to making amendments to the Budget ordinance, she felt that each amendment should be presented in writing and asked Mr. Houser to develop an amendment form that would be easy and consistent. It should include the source of money - the specific program or line item, etc. that would be impacted. Further, both staff and Councilors should have adequate time to review all amendments prior to vote.

Councilor Monroe agreed that amendments should be in Councilors hands at least a day or two in advance. He also felt it was critical to have a firm policy to the amendment process. In the past some amendments were made before full council that had not been to the budget committee. If an amendment failed in committee it could still be presented to the full Council, but he felt that the process should not allow by-passing of the Committee.

Chair McLain said that parliamentary procedure allowed any item to come to vote before the Council, but it was only courtesy to give staff time to come up with the budget impact of the amendment. As all Councilors present were in agreement with this effort she promised that she and Presiding Officer Bragdon would prepare a memo to Council on the procedures for amending the budget ordinance.

3.  Councilor Communications

Councilor Atherton answered to a previous question from Councilor Monroe in regard to the deadline for placing items on the May ballot; it was March 14.

There being no further business before the committee, Chair McLain adjourned the meeting at 2:35 P.M.

Respectfully submitted,

Pat Weathers

Council Assistant

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ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF FEBRUARY 2, 2000

The following have been included as part of the official public record: