FINANCE & ECONOMIC DEVELOPMENT COMMITTEECOUNCIL PRESENT:
OCTOBER 25, 2010
12:00 – 1:05 PM
Chair, Andy Ryder, Mary Dean, Jason Hearn
Greg Cuoio, Troy Woo, Rick Walk, Scott Spence, Carol LittenCOUNCILMEMBER DEAN MOVED TO APPROVE THE AGENDA. COUNCILMEMBER HEARN SECONDED. MOTION CARRIED
BANKING SERVICES CONTRACT
Troy Woo, Finance Director, presented the Committee with a proposal to authorize the City Manager to sign a five-year banking services agreement.
Troy reported that in June a banking services request for proposal (RFP) was sent out to select one banking institution to provide all banking services to the City of Lacey.
Each proposal was evaluated based on six criteria:
- Legal, Lacey community involvement, and other qualifications met by the proposer.
- Completeness of proposal.
- Financial strength and capacity of the banking institution.
- Ability to meet requirements.
- Expected convenience of banking services for the City personnel involved.
- Total estimated costs to the City. Total estimated costs were 40 percent of the total evaluation, financial strength and expected convenience were 13 percent of the total evaluation, and the remaining categories were 7 percent each.
The total evaluation score for First Citizens Bank was the highest of the ten proposals received, and represents the combination of best interest earnings, lowest cost, most expected convenience for City staff, strongest financial strength, and best ability to meet the City’s banking needs.
The contract will be effective beginning on November 1, 2010.
Troy responded to Council questions:
COUNCILMEMBER DEAN MOVED TO RECOMMEND TO FULL COUNCIL THE APPROVAL OF A BANKING SERVICES CONTRACT WITH FIRST CITIZENS BANK. COUNCILMEMBER HEARN SECONDED. MOTION CARRIED.
- Councilmembers expressed concern that First Citizens Bank is not a local, community bank. Troy noted they are a solid, stable bank with a great history of providing excellent customer service.
- Although the City is not required to evaluate its banking contract on a regular basis, doing so provides a competitive edge. However, since it is time consuming, staff is recommending a five-year contract.
3RD QUARTER FINANCIAL SUMMARY
Troy Woo, Finance Director, provided a financial summary of 3rd Quarter expenditures and revenue.
Troy reported that as of September 30, 2010, total General Fund Expenditures were $24,949,081 or 70.3 percent of the amended 2010 Budget. This is a total increase of $1,383,576 compared to the September 30, 2009 total. Expenditures at September 30, 2009 were 71.9 percent of the total 2009 General Fund Budget. He noted that the cost of labor and contractual services are experiencing significant increases.
Troy stated that as of September 30, 2010, total Current Expense Fund Revenues were $24,603,944 or 69.3 percent of budget. Compared to last year, we are experiencing an increase totaling $528,819.
- Through September 30, 2010, property taxes are $462,516 or 10.3 percent higher than they were in 2009. The increase is due to a combination of the Council exercising the 1.0 percent revenue limit, the increase from new construction assessments, and the rate of collection is higher than last year.
- The top 20 retail sources provide 90.6% of all sales tax. Overall sales tax through September is down 4.4% compared to the same period last year. Construction and housing continue to decline. However, this is an improvement over double digit declines in 2009.
- To present a more accurate overview of the City’s sales tax history, Council suggested presenting sales tax information over a range of twenty years, instead of during the boom years from 2006-2008.
Troy stated that operating expenditures for the utilities are within projections. Operating revenues for the Water, Wastewater, and Stormwater Utilities are in excess of expenditures. He noted there is concern that the water revenues will not meet year-end projections. Staff will continue to closely monitor the Water Utility operations and revenue collections, because of the challenges the Water Utility Fund is facing within its capital budget.
Revenues in the Water and Wastewater Capital Funds continue to experience declines due to the slow down to construction. The funds’ primary source of ongoing revenue comes in the form of general facility charges (GFC). Water GFCs have declined 16.7 percent and Wastewater GFCs 9.2 percent compared to last September.
In conclusion, Troy stated the financial indicators have not changed a great deal since the Mid-Year Financial Report was presented. Although the City Manager has presented a balanced 2011 Budget, staff will continue to carefully track financial trends and be prepared to respond if revenue shortfalls or expenditure increases materialize.
Although the recession ended in June 2009, recovery has been slow. Predictions also anticipated that the recovery would not be without setbacks. The recovery began with initial relatively strong growth, but growth has slowed as the Federal stimulus effects are ending. BUDGET DISCUSSION
Committee members discussed the 2011 Budget process. It was noted that Council’s goal is to set the City’s long-term vision, which is implemented by the City Manager and staff. A balanced budget is prepared by the City Manager and presented to Council for review and adoption.
Troy responded to Council questions:
- In comparison to other cities that are similar in size to Lacey, the City is providing more services for less. The City’s property tax is based on its per capita which is lower than neighboring jurisdictions.
• Councilmember Hearn presented a proposal to consider eliminating the City’s Business & Occupation Tax. Committee members agreed to pursue the issue and explore options, but agreed tax elimination should not negatively impact the City’s budget.
Council will continue to discuss the 2011 Proposed Budget at upcoming Worksession and Council meetings in November and December.