MINUTES OF THE METRO COUNCIL

BUDGET AND FINANCE COMMITTEE REGULAR MEETING

Wednesday, November 13, 2002

Metro Council Chamber

Members Present:  Rex Burkholder (Chair), Susan McLain, and Bill Atherton

Members Absent:  David Bragdon and Rod Monroe

Chair Burkholder called the meeting to order at 1:45 p.m.

The committee heard agenda item # 2 first.

2.  Report from the Chief Financial Officer

Jennifer Sims, Administrative Services Director, reported that the closing on the open spaces refunding was completed on November 12, 2002. The refunding resulted in a $6.1 million savings through the year 2015 to the taxpayers of the region, which will be reflected in lower property taxes. She then gave a brief overview of the budget process. The budget manual was issued in September and department requests are due on November 18. At that point, the financial planning and council analysts will meet with the departments to review their submittals and identify anything needing further attention. Those meetings will be followed by meetings with department directors and then with the Council President and Acting Chief Operating Officer (COO) to prepare a proposed budget for the Council by March 6.

Councilor Atherton asked about the status of Metro’s classification study. Ms. Sims responded that they have initiated a non-represented employee compensation study, and the results might or might not be completed in time to be included in the FY 2003-04 budget. In addition, they have been working on developing a total compensation strategy. Those results would be brought forward in early 2003 for Council consideration. The intent is to look at the package of ways that Metro compensates employees, such as benefits, salary and other kinds of rewards.

6.  First Quarter Financial Report

Agenda item #6 was heard second. Casey Short, Financial Planning Division Manager, reviewed the First Quarter, FY 2002-03 Quarterly Report, a copy of which is included in the meeting minutes. He said that an executive summary had been included in the CFO’s transmittal letter. Overall, revenues are at 19% of budget, which is the same percentage as the first quarter last year. Expenditures are at 19% of budget, down from 23% in last year’s budget due to changes in the debt service schedule. Mr. Short gave a brief overview of each of the operating and capital funds and made the following points about specific funds:

Regional Parks Fund: Parks revenues are slightly higher than budgeted.

Solid Waste Revenue Fund: There continues to be a shift of tonnage and revenue from Metro facilities to non-Metro facilities.

MERC Operating Fund: Revenues are up significantly from the first quarter of last year, mostly at the Oregon Convention Center. However, revenues are still below projections for the current year.

Zoo Operating Fund: Enterprise revenue is slightly higher than last year but lower than what was projected in the budget. Attendance is up but revenues from concessions and retail shops are down.

Support Services, Risk Management and Building Management Funds: All are within appropriation. The Information Technology Department expenditures are high for the first quarter due to costs (licensing fees, etc.) that are paid in full in the first quarter.

Mr. Short said that there were no over-expenditures in the capital funds. He referenced a note in the transmittal letter that addressed some of the anomalies in these funds.

MERC Pooled Capital Fund: Expenditures are significantly lower than expected, primarily due to a lack of time to accomplish the projects at the Portland Center for the Performing Arts (PCPA).

Mr. Short said that the amount of excise tax received was lower than projected. Although an additional $137,000 was projected above budget for solid waste excise tax revenues, that amount goes into the General Fund Rate Stabilization Reserve Account and is not available for discretionary spending until the following fiscal year. He added that the general fund had a beginning fund balance of about $250,000 above budget, which offset the decrease.

Chair Burkholder asked if the Oregon Convention Center’s revised annual forecast included funds from the Visitor Development Initiative (VDI) to assist during construction. Bryant Enge, Director of Administration at MERC, said that $5.7 million out of $8.4 million had already been received from VDI, with the remainder due between now and FY 2005-06.

In response to a question from Councilor Atherton, Mr. Short said that the county collects a small fee for administering the program that collects hotel lodging taxes and he would inform Councilor Atherton of the exact amount.

5.  Resolution 02-3240, For the Purpose of Adopting the Capital Improvement Plan for Fiscal Years 2003-04 Through 2007-08.

Mike Burton, Executive Officer, introduced Metro’s seventh annual Capital Improvement Plan (CIP), a copy of which is included in the meeting record. He explained that the CIP was implemented in 1996 to provide a sound basis for forecasting and planning capital needs and mentioned some of the diverse projects that had been accomplished through the process. He said that he had recently signed an executive order that established mandatory uniform guidelines for managing capital projects and would soon release a detailed project management manual and select a contractor to train project managers in best management practices.

Mr. Burton went on to summarize the CIP. He reported that the total number of projects in the 2003-04 through 2007-08 CIP dropped from 103 to 83 and the dollar amount decreased by $34.6 million. There were nine projects over $1 million, none of them new. Twenty-five projects were new and nine were scheduled to begin in FY 2003-04. He said that Regional Environmental Management would account for 39% of total CIP expenditures, followed by the Zoo at 29% and Regional Parks and Greenspaces at 19%. For the first time since the implementation of the CIP, the Zoo had no new major projects, with the largest single ongoing project being the completion of the Great Northwest Project. He added that the completion of the Oregon Convention Center would have a large impact on the CIP.

He went on to say that with the implementation of the capital asset management policies, a clearer picture of the agency’s total funding needs was becoming apparent. Several departments do not have adequate funding to meet basic renewal and replacement needs nor proposed new projects. Long-term unmet funding issues must be resolved and long-range funding issues must continue to be an important part of Metro’s financial planning agenda over the next few years. He encouraged the Council to use the plan as a means to evaluate how well Metro had met its mandates and what course was needed to provide a foundation for the agency to continue its mission.

John Houser, Council Analyst, thanked Karen Feher, CIP Coordinator, for her work on the preparation of the CIP. He said that this was the first year in which the council analysts and financial planning analysts worked as a team to analyze each department’s submittal. They then met with department representatives to identify issues related to their submittals. He flagged the possibility that some departments might not have adequate revenue streams to finance requested renewal and replacement and capital improvement projects or to establish renewal and replacement reserves as recommended by capital asset management policies. He said the Council would need to recognize the need to pay for these projects on a one-time basis as they occurred or begin to rebuild the renewal and replacement reserve through some kind of annual contribution process.

Mike Burton and David Biedermann, Information Technology (IT) Director, reviewed the list of unfunded projects in the IT area, listed in the Proposed CIP Report included in the meeting record. Most of the IT unfunded projects were at the Zoo or dealt with PeopleSoft connections and were meant to help Metro get a better handle on the accounting systems and the fund management systems at the Zoo. Mr. Burton also flagged the larger unfunded projects in other Metro departments.

Councilor Atherton agreed to carry the resolution to the full Council.

6.  Ordinance No. 02-971, For the Purpose of Amending the FY 2002-03 Budget and Appropriations Schedule Recognizing $411,051 in Grant Funds from Various State, Federal and Private Sources; and Increasing the Regional Parks Fund Operating Expenses by $411,051

Jim Morgan, Natural Resources Program Supervisor with Regional Parks and Greenspaces, explained that this ordinance recognized grant funds totaling $411,051 from a variety of sources to remove invasive plant species and plant native vegetation at Gotter Bottom on the Tualatin River. He said that the ordinance would allow the restoration of 110 acres of flood plain wetland to the condition of the land prior to European settlement.

Councilor Burkholder asked if any funds were available to preserve the area by keeping out non-native species after the initial work was accomplished. Mr. Morgan responded that once native vegetation was established during the first five years of the project, future maintenance costs would be minimal.

Councilor McLain agreed to carry the resolution to the full Council.

7.  Ordinance No. 02-982, For the Purpose of Amending the FY 2002-03 Budget and Appropriations Schedule to Recognize $104,570 in Grant Funds and Government Contributions from Various State and Local Sources; Transfer $25,430 from Contingency to Operating Expenses; Increase the Regional Parks Fund Operating Expenses by $130,000; Amend the FY 2002-03 Capital Improvement Plan; and Declaring an Emergency

Dan Kromer, Parks and Visitor Services Manager, explained that an unanticipated problem occurred when water levels dropped at the Gleason Boat Ramp during the summer of 2002, necessitating emergency dredging. Funds were obtained from the Oregon State Marine Board, the Port of Portland, and the Multnomah County Sheriff’s Office River Patrol to help pay for the dredging. He said that Metro’s share of the expense would come from the Parks Department contingency fund.

Chair Burkholder agreed to carry the ordinance to the full Council.

1.  Consideration of the Minutes of the October 9, 2002 Budget and Finance Committee Meeting

8.  Councilor Communications

There were no councilor communications.

There being no further business before the committee, Chair Burkholder adjourned the meeting at 2:55 p.m.

Prepared by,

Claudia Wilton

Council Assistant

ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF NOVEMBER 13, 2002