Finance and Economic Development Committee
January 25, 2010
Mary Dean, Andy Ryder, Jason HearnStaff Present:
Greg Cuoio, Lori Flemm, Troy Woo, Carol Litten, Scott Spence, Ken Ahlf, Brad Burdick, Scott EggerNote: On January 21, 2010, the Council agreed to separate Land Use from the Finance Committee. The change is on a trial basis for one year.
2009 Regional Athletic Complex Budget – Status of Agreement with County
Lori Flemm, Parks & Recreation Director, briefed the Committee on the Regional Athletic Complex budget and the status of the Interlocal Agreement (IGA) with Thurston County. The IGA, initiated in 1998, requires the City and County to each pay 50% of acquisition, development, and M & O (maintenance and operations) for 15 years after closing the property purchase and sale.
Lori stated that as of December 31, 2009, the City and County have contributed $2.5 million towards land acquisition of 68 acres, and the development of
Phase I. The County did not contribute funds for the Phase II development. In 2009, Thurston County was unable to meet its financial obligation for M & O with current expense funds. At the end of 2009, the City had contributed $569,000 more than its equitable share.
The future funding obligation for the City is estimated at $2.4 million for recreation services and M & O through March 2014. Capital improvement projects and replacements are projected at $525,000.
Total projected contributions by jurisdictions through March 2014 are $5.3 million. Thurston County would need to contribute $1.9 million. The County is considering using excess REET taxes from 2005-2006 to pay a one-time amount to meet their financial obligations through March 2014. These funds would be transferred to the Parks and Open Space Fund to be used for acquisition and capital expenses, and then transferring an equal amount from utility tax revenues in the Parks and Open Space Fund, which can be used for M & O, to the RAC for services and M & O.
Troy Woo, Finance Director, stated the City has not received payment yet from the County for 2009, which has caused a negative operating fund of $40,000 for the City. Council approved an interfund loan for capital expenses, but not operations. Staff recommends waiting until the end of January when PFD revenues are forecasted before taking action. Budget Amendments
Troy Woo, Finance Director, presented the Committee with a review of future budget amendments for the 2010 adopted budget. In the past, the City Council has consolidated budget amendments to one action per year and allowed staff to proceed without multiple budget amendments throughout the year when resources have been identified or amendments were minor. Staff recommends continuing with this process if Council agrees. The Committee concurred.
Troy reported on significant budget amendments that have been identified since the adoption of the 2010 Budget.
- $50,000 towards the 50th Anniversary Train Depot project - funds allocated from Parks and Open Space Fund.
- $119,648 for construction of Regional Athletic Complex (RAC) storage building as a carryover project – funds need to be re-appropriated in 2010
- $21,680 for repairs to playground equipment in Wonderwood Park as a carryover project – funds need to be re-appropriated in 2010
- Construction of a 10 foot wide paved trail to connect Woodland Trail to the bridge at Woodland Park. Estimated cost is $35,000 – funds are available in the Parks and Open Space Fund.
- Lighting upgrades at the Timberland Library, as a carryover project from 2009 – funds were identified in the Capital Equipment Fund. However, the Friends of the Library are considering a contribution to the project, which could reduce the City’s cost.
- $28,500 towards completion of the Hawks Prairie statue – the Arts reserve is included in the Building Improvement Fund
- Audio visual upgrades, furniture and relocation of storage in the City Hall expansion project – the carryover amount is $211,000.
- $39,608 shortfall for the RAC Maintenance and Operations due to county non-payment in 2009 toward RAC M & O. Staff proposes an inerfund loan from Parks and Open Space Fund which will require City Council action and a future budget amendment.
- $100,000 for a special election for a Fire District annexation proposition.
Greg Cuoio, City Manager, reported that a request has been received from the Hawks Prairie Rotary to provide additional lodging tax funds for the Mushroom Festival. The LTAC Committee indicated it would consider additional funding if the Mushroom Festival was moved to a different date than the Jazz Festival - this has been done.
Councilmember Mary Dean remarked that although she advocated for the community festival, she supports the City’s participation as an active partner, not as a sponsor. She would prefer to see LTAC funds allocated to the Wayfinding project to provide additional signage to Lacey designations. Final Property Tax and Assessment Role
Troy Woo, Finance Director, reported the City has received data from the Thurston County Assessor’s Office regarding Lacey’s 2009 for 2010 assessed valuation, property tax totals, and levy rates.
The total of Lacey’s property tax levies has increased $.06/$1,000 of assessed valuation over 2008. The General Levy Rate changes are due to the addition of $137.5 million of new construction valuation to the assessment rolls, the Council exercising its revenue limit authority due to increasing expenditure levels, and overall assessed valuation within the City limits decreasing by 2.14%.
Troy reported the two General Obligation Bond levies have decreased in 2010, which are impacted by the addition of new construction, overall assessed valuation changes, and pre-determined debt repayment schedules.
The total property tax levy has increased $.1050/$1,000 of assessed valuation. The typical home valued at $225,000 in 2009, and now valued at $220,185, will pay $23.82 less property tax in 2010, or a 2.14% decrease.
Troy stated property tax growth has been limited by I-747 to 1.0 percent of the implicit price deflator, whichever is less. The impact of the 1.0 percent revenue limit severely impacts property taxes that are the City’s single largest source of revenue within the General Fund. Its largest expenditure, the cost of labor, has been growing faster than the rate of inflation. In addition, the cost of medical insurance and pension contributions has been growing faster than inflation. Without new construction, it will be difficult for the City to address its expenditure growth challenges in the near future.
Councilmember Mary Dean encouraged the city to continue its fiscally conservative policies. Troy agreed, but noted it will be a challenge unless the retail sales tax base expands to bring in additional revenue.