HomeMy WebLinkAboutFinance January 27 20091 WHATCOM COUNTY COUNCIL
2 Finance and Administrative Services Committee
3
4 January 27, 2009
5
6 Committee Member L. Ward Nelson called the meeting to order at 11:12 a.m. in the
7 Council Chambers, 311 Grand Avenue, Bellingham, Washington.
8
9 Present: Absent:
10 Sam Crawford None
11 Bob Kelly
12
13 Also Present:
14 Carl Weimer
15 Barbara Brenner
16 Seth Fleetwood
17
18
19 SPECIAL ORDER OF BUSINESS
20
21 1. ELECTION OF COMMITTEE CHAIR (AB2009 -021)
22
23 Nelson nominated Crawford by acclamation.
24
25 Motion carried unanimously,
26
27
28 COMMITTEE DISCUSSION
29
30 1. UPDATE FROM THE BELLINGHAM- WHATCOM ECONOMIC DEVELOPMENT
31 COUNCIL (AB2009 -029)
32
33 Nancy Jordan, Economic Development Council (EDC), submitted a handout and
34 binder (on file). She read from her presentation (on file).
35
36 Kelly asked the role the EDC would play as the stimulus package develops. Jordan
37 stated the EDC was asked to define projects that are shovel -ready within six months and
38 would create jobs. The EDC had about six hours to respond to that question. The EDC will
39 be ready to bring those funds and projects into the community.
40
41 Nelson asked about regional strategies. Jordan stated the Comprehensive Economic
42 Development Strategy done in 2002 and 2003 is an example of a regional strategy. The
43 EDC updated that document. A regional strategy works with each entity and jurisdiction.
44 The region is Whatcom County. The question is how Whatcom County fits within the region.
45 They call it the Whatcom region.
46
47 Nelson stated they should call it what it is. It's a Whatcom County strategy. He'd
48 like to hear solutions to how to sustain agriculture. A critical issue is getting access to
49 processing. He asked if the EDC will do anything to help councilmembers make regulatory
50 decisions. He asked if the EDC's Comprehensive Plan amendments would address specific
51 issues or broad issues. He would like to know more about specific problems existing
52 businesses in the community are having, in terms of how the County can help them. Jordan
53 stated she can present a more specific topic to the Council, and they can meet on a regular
Finance and Administrative Services Committee, 1/27/2009, Page 1
1 basis. Regarding agriculture, she is a board member of the Northwest Agricultural Business
2 Center. Food processing is a big issue with that agency. They must pay close attention to
3 that issue. Make sure there are opportunities for young farmers who want to maintain the
4 industry. Regarding the Comprehensive Plan, she would want to hear specific questions and
5 get to specific answers and solutions. One big issue with businesses is financing and having
6 an available line of credit.
7
8 Brenner asked if the EDC sends proposals for regulation changes to the County
9 administration. Jordan stated she hasn't done anything that specific. They've mostly been
10 working with the Planning Director on the Comprehensive Plan and consultants.
11
12 Brenner stated she would like to hear from the EDC when the Council is dealing with
13 Comprehensive Plan amendments regarding agriculture. She would like to hear specifics.
14 Jordan stated she can do that. The Council is also welcome to contact her when there is an
15 issue in which they would like to hear from the EDC.
16
17 Brenner asked if the EDC lobbies on State bills. Jordan stated they will. They want
18 to make sure they bring forward a broad -based message.
19
20 Brenner stated Ms. Jordan can contact the Council for that broad -based perspective.
21
22 2. DISCUSSION REGARDING COUNTY FUND INTEREST INCOME DISTRIBUTION
23 (AB2009 -094)
24
25 Steve Oliver, Treasurer, submitted a handout (on file). This is an emerging issue.
26 On a daily basis, the County Treasurer invests 100 percent of the funds available for
27 investment. They look at their balances every morning, revenue, and expenditures. The
28 districts for which he also acts as Treasurer advise him on how they would want their funds
29 invested. He works with the Finance Division to manage cash flow of County funds. He
30 uses an investment pool strategy to benefit all of the participants in the investment pools.
31 They are one of eight county investment pools in the State of Washington.
32
33 Historically, the County Council adopts an ordinance to direct the County Treasurer
34 regarding which County funds the County can invest for its own benefit. Under the current
35 ordinance and policies, the County drug fund, ferry fund, solid waste fund, trial court
36 improvement fund, and veteran's relief fund currently benefit from their investments. Some
37 time this year, the County flood control zone district will also begin investing their funds for
38 their own benefit.
39
40 He referenced the handout, highlighted section of Revised Code of Washington
41 (RCW) 36.29.020. The statute says that, absent direction from the County legislative
42 authority, he shall invest those funds for the benefit of the County current expense, which is
43 the County general fund. This statute is explicit. It says he shall do that, not may do that.
44
45 In 2008, the average daily balance of funds invested for the benefit of the County
46 general fund totaled about $118 million. That residual cash is made up of the fund balance
47 of the general fund, road fund, and other County restricted funds. It includes funds for
48 checks and warrants that have been issued, but not yet cashed. It includes revenues
49 collected, but not distributed. It changes from day -to -day. This has been the direction of
50 how to handle the investment of County funds for many years.
51
52 Beginning in 2008, the State Auditor issued State Auditor Interpretation No. 22,
53 included in his handout. It provides new guidance on which County funds can have their
Finance and Administrative Services Committee, 1/27/2009, Page 2
1 interest diverted to the County general fund. The State Auditor reported to him that the
2 basis of their interpretation is from a legal analysis performed by the Attorney General's
3 Office, at their request. The analysis appears to focus on the statutory use of certain words
4 and language in the statutes as determining language about whether funds must be
5 invested for a funds own benefit.
6
7 The new guidance from the State Auditor's Office conflicts with the County's current
8 policy. There also appears to be some conflict between the State Auditor's interpretation
9 and the legislative intent to help the County offset the cost of operating the Treasurer's
10 Office, Assessor's Office, Finance Division, and other core County services for which the
11 County does not charge the taxing districts. That is part of the historic legislative intent
12 about why this particular statute is written the way it is, which is to direct the County
13 Treasurer to invest these funds for benefit of the County general fund.
14
15 His handout also includes an audit finding issued to Island County in 2008. It
16 squarely attacks this issue. Island County's response to this audit would largely be the
17 same argument that Whatcom County would make if challenged by the State Auditors on
18 this issue. This is the first time they've seen this State Auditor's interpretation applied in a
19 State Audit situation.
20
21 He met with other county auditors and State Auditor Brian Sonntag last Thursday to
22 talk about this issue. The county auditors emphasized that they support the local decision -
23 making authority by the county councils and commissioners, when making those investment
24 decisions locally. They asked the State Auditor to reconsider their view. There may be
25 some very technical arguments that could be made to support the State Auditor
26 interpretation. At the same time, the county treasurers don't feel like the State Auditor is
27 looking at the global picture, in terms of the County's need to fund central, core County
28 services.
29
30 His handout also includes a spreadsheet that shows approximately the Whatcom
31 County revenues impacted by this new State Auditor's interpretation. He read through the
32 spreadsheet.
33
34 Crawford stated the funds in the spreadsheet are the funds that, based on the State
35 Auditor's explanation, would not be allowed to contribute the interest to the general fund.
36 The funds not on the list are funds that the State Auditor did not identify as having to retain
37 its own interest earnings or are funds that are already receiving their own interest earnings.
38 If Whatcom County complies with the State Auditor, there would be about $1,136,000
39 reduced from the general fund in 2008 and put into those other funds. Oliver stated that's
40 correct. The State Auditor's recommendation to Island County was that the general fund
41 should reimburse all these other funds retroactively to make them whole. He's been told
42 that Island County declined to follow that recommendation.
43
44 Brenner asked whether the legislative intent or an Auditor's interpretation takes
45 precedent. She asked if this will have to go to court.
46
47 Crawford asked what happens if they ignore the Auditor's recommendation. Oliver
48 stated he is conflicted because he must follow the County law. It starts with the County
49 ordinance that directs the investment of those funds. He doesn't know if it will have to go
50 to court. The County Council, administration, and legal counsel will have to evaluate the
51 recommendation. They can create those interest fund accounts without much cost, but
52 someone will have to take responsibility for managing those funds and accounts throughout
53 the year. That is something they will need to evaluate as they move forward.
Finance and Administrative Services Committee, 1/27/2009, Page 3
1
2 Nelson asked if there is language in the RCW that deals with funds that are
3 designated for interest earnings. The State Auditor looked at specific Island County funds
4 and the statutory requirements of those funds. They came across language that didn't
5 address what interest is used for. He has to assume that those funds are restricted to the
6 statute only. Therefore, these funds outlined in the handout can't even apply for interest
7 earnings. He asked why they are putting money in the bank account for interest. He asked
8 what allows them to invest revenues. For instance, tourism related dollars are allowed to
9 be used solely for the purpose of tourism, promotion, acquisition, or tourism related
10 facilities. It doesn't say anything about allowing the collection of interest. He asked the
11 authority that allows all funds to collect interest. Oliver stated there are statutes that give
12 the County Treasurer the authority to invest funds in his possession.
13
14 Crawford stated that is State law. It is RCW 36.29.020.
15
16 Nelson stated that statute only says that interest may be deposited.
17
18 (Clerk's Note: End of tape one, side A)
19
20 Nelson continued to ask what specifically gives the Treasurer the authority to take
21 money from a fund and invest it. That may be the State Auditor's question. Oliver stated
22 he doesn't think the State Auditor is suggesting that they don't invest public funds.
23
24 Nelson stated their choice is to either collect interest in the general fund, or not
25 collect any interest. Oliver stated there is a clear conflict between the statute and the State
26 Auditor's interpretation. The State Auditor agreed there was a conflict.
27
28 Weimer asked if the Auditor indicated that he may reconsider. He asked the penalty
29 if Whatcom County doesn't comply with reimbursing the funds. Oliver stated Mr. Sonntag
30 stopped short of committing to fully reconsidering his position at this point. He will follow
31 up with Mr. Sonntag's staff to see if that could occur. He doesn't know what could happen if
32 Island County, or Whatcom County, doesn't comply.
33
34 Kelly asked if Whatcom County is officially out of compliance with this opinion and
35 has been notified by the State Auditor. Oliver stated Whatcom County hasn't received its
36 2008 audit, which is when this interpretation went into effect.
37
38 Kelly stated anyone can see Whatcom County's investment history, and determine
39 whether the County is out of compliance. He asked if that's happened. Oliver stated this
40 issue has never been raised in any previous audit or management letter that he's aware of.
41
42 Kelly stated this committee must understand exactly what is happening. If the
43 committee knows the County is out of compliance, it needs to take action to rectify the
44 situation. It should ask for a legal opinion about the County's options. Oliver stated he
45 agrees with getting a legal opinion. He will continue to look at the funds and impacts of
46 various alternatives. No current legislative fix is in the works. The Island County finding
47 was the first finding that applied that State Auditor's interpretation.
48
49 Nelson asked if Whatcom County is the only county that puts interest funds in the
50 general fund, or if it's common. Oliver stated a number of counties do this, or some version
51 of this investment.
52
Finance and Administrative Services Committee, 1/27/2009, Page 4
1 Nelson stated go beyond getting a legal decision. Get a stay on the decision and
2 adjudication. Oliver stated the County Treasurer Association has been working on this
3 decision for years to try and stop it.
4
5 Nelson asked what Treasurer Oliver needs from this committee. He would
6 recommend that the County stop collecting interest on these funds. It's an administrative
7 cost to the County, to manage and deal with those funds. If they aren't going to be able to
8 use those interest funds administratively, then comply with the law and don't invest them at
9 all. Oliver stated he will continue legal discussions and vet possible outcomes and
10 scenarios.
11
12 Dewey Desler, Deputy Administrator, stated the administration recommends that the
13 County continue to follow the existing policy. The County administration has a legal opinion
14 on the issue dated August 6, 2008, from the Prosecuting Attorney's Office, which says
15 Whatcom County is in compliance with State law, given the practice they've been following.
16 The Prosecutor felt his position is more defensible than that of the Attorney General who
17 advised the State Auditor's Office. The administration wants to continue to analyze the
18 situation, which was complicated by the Island County audit. The Whatcom County
19 administration asked for an interpretation from the managing director of the regional State
20 Auditor's Office, who said Whatcom County is in full compliance. If this becomes an issue,
21 the State Auditor's Office will call all the regional managers to Olympia and go through the
22 issue to make sure they understand how to apply the issue. That has not yet happened.
23 State Auditor Sonntag said the issue is confusing, and they need to reanalyze the issue.
24 Whatcom County is in a legally defensible position, and should continue to follow the
25 practice until the issue becomes clearer.
26
27 The County needs maximum flexibility to manage its affairs in local government. It
28 would be inconsistent with local voters if an auditor in Olympia defines what Whatcom
29 County should do locally. The County Charter requires more locally defined policies for how
30 the County manages its affairs.
31
32 Oliver stated he doesn't see any possible scenario in which they stop investing public
33 funds. He doesn't see any benefit from that.
34
35 Brenner stated Whatcom County isn't out of compliance with anyone, because it
36 hasn't received any kind of finding. Oliver stated that's correct.
37
38 Kelly moved to recommend to the full Council that the Council request from the
39 County Prosecutor an updated current legal opinion regarding the State Auditor's position
40 on distribution of interest income monies from various County fund investments.
41
42 Nelson submitted a letter to the record from Senior Civil Prosecutor Dan Gibson on
43 August 6, 2008 addressing the issue of a legal opinion from County legal counsel (on file).
44 Oliver stated the Island County audit finding was issued after Whatcom County's legal
45 opinion.
46
47 Weimer stated also get a discussion from the administration about the impacts to the
48 County of getting into compliance.
49
50 Nelson stated they don't have an Auditor finding right now. Now, Whatcom County
51 is in compliance.
52
53 Motion carried unanimously.
Finance and Administrative Services Committee, 1/27/2009, Page 5
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2
3 COMMITTEE DISCUSSION AND RECOMMENDATION TO COUNCIL
4
5 1. ORDINANCE AMENDING THE 2009 WHATCOM COUNTY BUDGET, FIRST
6 REQUEST, IN THE AMOUNT OF $279, 224 (AB2009 -062)
7
8 Nelson moved to recommend adoption to the full Council.
9
10 Dewey Desler, Deputy Administrator, gave a staff report and read the list of items
11 included in the request. There is no impact to the general fund.
12
13 Brenner asked if the request for $30,000 is related to Consent Agenda item six.
14
15 Kirk Christensen, Public Works Department, stated it is.
16
17 Motion carried unanimously.
18
19
20 COUNCIL "CONSENT AGENDA" ITEMS
21
22 1. RESOLUTION APPROVING THE TREASURER'S ANNUAL LIST OF PROPERTY
23 TAX REFUNDS CONSISTENT WITH RCW 84.69.020 (AB2009 -078)
24
25 Kelly moved to recommend approval to the full Council.
26
27 Motion carried unanimously.
28
29 2. REQUEST APPROVAL FOR THE COUNTY EXECUTIVE TO ENTER INTO A
30 CONTRACT BETWEEN WHATCOM COUNTY AND SUSTAINABLE CONNECTIONS
31 FOR PROVISION OF GREEN BUILDING AND RESOURCE CONSERVATION
32 OUTREACH SERVICES IN THE AMOUNT OF $20,000 (AB2009 -079)
33
34 Nelson moved to recommend approval to the full Council.
35
36 Crawford asked if the Building Industry Association (BIA) does the Green Building
37 Conference.
38
39 Dewey Desler, Deputy Administrator, stated this function is different from the BIA
40 function. This item is in the budget.
41
42 Motion carried unanimously.
43
44 3. REQUEST APPROVAL FOR THE COUNTY EXECUTIVE TO ENTER INTO A
45 CONTRACT FOR 2009 TO PROVIDE FOR REPRESENTATION OF ALL INDIGENT
46 PARTIES IN JUVENILE DEPENDENCY ACTIONS FOR CLIENTS FORMERLY
47 REFERRED TO THE PUBLIC DEFENDER, TO CONFLICT COUNSEL AND ALL
48 NEW CASES DURING THE CONTRACT YEAR IN THE AMOUNT OF $415,000
49 (AB2009 -080)
50
51 Crawford moved to recommend approval to the full Council.
52
53 Kelly asked if there are budget implications and cost overruns.
Finance and Administrative Services Committee, 1/27/2009, Page 6
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2 N.F. Jackson, Superior Court, stated there are not. They are under budget.
3
4 Motion carried unanimously.
5
6 4. REQUEST APPROVAL FOR THE COUNTY EXECUTIVE TO ENTER INTO A
7 CONTRACT BETWEEN WHATCOM COUNTY AND BENNETT ENGINEERING, LLC
8 TO PROVIDE LANDFILL MONITORING SERVICES AT BOTH THE CEDARVILLE
9 AND Y ROAD LANDFILLS, TO INCLUDE QUARTERLY AND ANNUAL
10 REPORTING REQUIREMENTS IN THE AMOUNT OF $76,360 (AB2009 -081)
11
12 Nelson moved to recommend approval to the full Council. He asked if this item is
13 still ongoing and when monitoring will end.
14
15 Jon Hutchings, Public Works Department, stated there is a 20 -year monitoring
16 timeframe after landfill closure. The Cedarville landfill is approaching the end if its
17 monitoring life. The Y Road landfill has several more years to go. The Department of
18 Ecology (DOE) is not clear about what it takes to move away from that 20 years of
19 monitoring requirement. This contract includes a component that gets to that question,
20 which is a proposal for the Department of Ecology to review what the County must do
21 outside that 20 -year lifetime.
22
23 Motion carried unanimously.
24
25 Nelson stated he would like a report on those DOE findings at the end of this
26 contract.
27
28 S. REQUEST APPROVAL FOR THE COUNTY EXECUTIVE TO ENTER INTO AN
29 INTERLOCAL AGREEMENT BETWEEN WHATCOM COUNTY AND THE CITY OF
30 BELLINGHAM FOR THE CHUCKANUT VILLAGE MARSH RESTORATION
31 PROJECT — PHASE 2 IN THE AMOUNT OF $20,000 (AB2009 -082)
32
33 Kelly moved to recommend approval to the full Council.
34
35 Motion carried unanimously.
36
37 6. REQUEST APPROVAL FOR THE COUNTY EXECUTIVE TO ENTER INTO A
38 CONTRACT BETWEEN WHATCOM COUNTY AND TETRA TECH, INC. TO
39 AUTOMATE BIRCH BAY WATERSHED AND AQUATIC RESOURCES
40 MANAGEMENT (BBWARM) DISTRICT FEE ROLL GENERATION AND TO
41 DEVELOP ADMINISTRATIVE SUPPORT SOFTWARE IN THE AMOUNT OF
42 $29,689 (AB2009 -083) (COUNCIL ACTING AS THE WHATCOM COUNTY
43 FLOOD CONTROL ZONE DISTRICT BOARD OF SUPERVISORS)
44
45 Crawford moved to recommend approval to the Flood Control Zone District Board
46 of Supervisors.
47
48 Brenner asked if this automated billing is without the incentives she requested.
49
50 Kraig Olason, Public Works Department, stated this has nothing to do with the
51 resolution. It just gets the tax roles out.
52
Finance and Administrative Services Committee, 1/27/2009, Page 7
1 Brenner stated that her proposed incentives need to be built into the automated
2 billing system.
3
4 Nelson asked who is paying for this process. Olason stated this will be reimbursed
5 by the Birch Bay Watershed and Aquatic Resource Management (BBWARM) District when
6 their funds come through.
7
8 Jon Hutchings, Public Works Department, stated the BBWARM has no budget yet
9 because it hasn't collected any money yet. The BBWARM advisory committee is in the
10 process of developing a budget that will eventually come before the County Council for
11 approval. At that point, money will be available to reimburse the resources, if that's what
12 the Council wants. This work has to be done in advance of that, and they need a pot of
13 money to accommodate that need. The pot of money is the Countywide Flood Control Zone
14 District administration cost center.
15
16 Nelson amended his motion and moved to recommend approval to the Flood
17 Control Zone District Board of Supervisors with an amendment to the memorandum of
18 understanding that this money will eventually be reimbursed by BBWARM.
19
20 Motion carried unanimously.
21
22 7. REQUEST APPROVAL FOR THE COUNTY EXECUTIVE TO ENTER INTO A
23 CONTRACT BETWEEN WHATCOM COUNTY AND GENEVA CONSULTING TO
24 CONTINUE THE PHASE IV IMPLEMENTATION WORK OF THE WRIA 1
25 WATERSHED MANAGEMENT PROGRAM IN THE AMOUNT OF $26,400
26 (AB2009 -084)
27
28 Kelly moved to recommend approval to the full Council.
29
30 Nelson stated he will support the contract. The name of the contractor has changed
31 from the name listed in the contract.
32
33 (Clerk's Note: End of tape one, side B.)
34
35 Motion carried unanimously.
36
37 8. REQUEST APPROVAL FOR THE COUNTY EXECUTIVE TO ENTER INTO AN
38 AMENDMENT TO THE GRANT AGREEMENT BETWEEN WHATCOM COUNTY AND
39 WASHINGTON STATE DEPARTMENT OF ECOLOGY TO EXTEND THE
40 EXPIRATION DATE AND ADD FUNDING FOR THE PHASE IV
41 IMPLEMENTATION WORK OF THE WRIA 1 WATERSHED MANAGEMENT
42 PROGRAM IN THE AMOUNT OF $37,800 (AB2009 -085)
43
44 Crawford moved to recommend approval to the full Council.
45
46 Motion carried unanimously,
47
48 9. REQUEST APPROVAL FOR THE COUNTY EXECUTIVE TO ENTER INTO A
49 CONTRACT BETWEEN WHATCOM COUNTY AND STEWART +KING
50 ARCHITECTS, INC. FOR THE WHATCOM COUNTY CIVIC CENTER ANNEX 3RD
51 FLOOR RENOVATIONS IN THE AMOUNT OF $105,001 (AB2009 -086)
52
53 Nelson moved to recommend approval to the full Council.
Finance and Administrative Services Committee, 1/27/2009, Page 8
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Kelly asked if this is per what was discussed in the Capital Facilities Plan.
Dewey Desler, Deputy Administrator, stated it is. It was described in the budget
process. He described the background of this issue.
Kelly asked if the Council approved this expenditure through the Capital Facilities
Plan. Desler stated it was.
Brenner asked if the County planned to keep the Civic Center Building in the long
term. Desler stated he believed it would.
Motion carried unanimously.
10. RESOLUTION TO SET HEARING AND NOTICE OF HEARING OF THE SALE OF
SURPLUS COUNTY PROPERTY BY PUBLIC AUCTION (AB2009 -087)
Nelson moved to recommend approval to the full Council.
Motion carried unanimously,
OTHER BUSINESS
There was no other business.
ADJOURN
The meeting adjourned at 12:50 p.m.
Jill Nixon, Minutes Transcription
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WHATCOM COUNTY COUNCIL
WHATCOM COUNTY, WASHINGTON
Sam awford, Commlwtee Chair
Finance and Administrative Services Committee, 1/27/2009, Page 9