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HomeMy WebLinkAboutFinance July 22 2008WHATCOM COUNTY COUNCIL Finance and Administrative Services Committee July 22, 2008 Committee Chair L. Ward Nelson called the meeting to order at 11:00 a.m. in the Council Chambers, 311 Grand Avenue, Bellingham, Washington. Present: Absent: Sam Crawford None Bob Kelly Also Present: Carl Weimer Barbara Brenner Laurie Caskey- Schreiber Seth Fleetwood COMMITTEE DISCUSSION'AND RECOMMENDATION TO COUNCIL 1. ORDINANCE AMENDING THE 2008 WHATCOM COUNTY BUDGET, EIGHTH REQUEST, IN THE AMOUNT OF $516,268 (AB2008 -265) Nelson moved to recommend approval and to amend by removing the position for the Lake Whatcom manager. The administration is preparing a change to the ordinance. Motion to amend carried unanimously. Brenner stated she heard that the County got the Nesset Farm item as long as there is public access, and there isn't public access. Mike McFarland, Parks and Recreation Department Director, stated the partial funding for that project was provided by the Recreation Conservation Office (RCO). One condition was that public access be provided. It is one of three parcels put together,.with State Department of Natural Resources (DNR) lands in between. They are working with DNR to re- convey small sections that would connect all three of those properties. The RCO is aware of it. It will require Council action to move the reconveyance forward, which will provide public access. Technically, there is access, but there isn't developed access to Nesset Farm. They must substantially renovate those buildings before they are open to the public. The development of access will happen current with getting the site ready to receive the public. The RCO approves of this plan. They are also working on walk -in access off Saxon Road with the Land Trust and a private property owner. That will also satisfy that RCO condition. Both are conditional upon DNR approval. Motion to approve as amended carried unanimously. COUNCIL "CONSENT AGENDA" ITEM 1. REQUEST APPROVAL FOR THE EXECUTIVE TO ENTER INTO A THREE -YEAR AGREEMENT FOR CONSULTING SERVICES FOR THE SELF- INSURED MEDICAL Finance and Administrative Services Committee, 7/22/2008, Page 1 PROGRAM BETWEEN WHATCOM COUNTY AND KIBBLE AND PRENTICE (AB2008 -272) Crawford moved to recommend approval to the full Council. Motion carried unanimously. 2. REQUEST AUTHORIZATION FOR THE COUNCIL CHAIR TO SIGN THE FINAL PLAT MYLAR FOR BAKER RIDGE LONG PLAT (AB2008 -273) Crawford moved to recommend approval to the full Council. Nelson asked if the Planning Department is required to come before the Council for a final plat approval. David Stalheim, Planning and Development Services Department, stated the State requires final approval by the legislative authority within the county. He doesn't know who scheduled this item for this committee instead of the Planning Committee. Caskey- Schreiber asked if it's typical for a developer to go ahead with infrastructure before Council approval. Stalheim stated one can't sell the lots. The lots can be advertised. If sold, the deposits have to go into escrow until the final plat is signed. It's okay to put the infrastructure in. In fact, the County doesn't sign the plat until the infrastructure is in. Nelson stated that in the past, the Council Chair has signed the mylars. He doesn't know why they're doing it differently. Stalheim stated the State law is that those final decisions are made by legislative authority. Rebecca Craven, Council Policy Analyst, stated there is also a County ordinance that requires that the title report for the property be no older than 60 days when the County Chair signs the mylar. The applicant is working to get an update to the title report today. Weimer asked what happens if the Council decides to not approve this mylar. Stalheim stated the Council should talk to legal counsel. It's already been approved. The question is whether they are complying with preliminary regulations. One reason for these to come forward is to see the effect of legislative changes. Weimer asked if the Council is simply checking the box at this point, and doesn't have a choice. Stalheim stated the Council is mostly checking the box to see if they meet all the requirements of the preliminary plat approval. If they've met all those requirements, the Council checks the box. It's a good time for the Council to look at those preliminary plat approvals and the legislation that allows this to be created in the first place. Caskey- Schreiber asked about this plat. Amy Keenan, Planning and Development Services Department, described the project. Nelson stated put these items in the Planning Committee in the future. Motion carried unanimously. 3. REQUEST APPROVAL FOR THE EXECUTIVE TO ENTER INTO A CONTRACT BETWEEN WHATCOM COUNTY AND CONTECH SERVICES, INC FOR BASE Finance and Administrative Services Committee, 7/22/2008, Page 2 PLATE REPAIR AND DRIVEWAY SEALING AT THE WHATCOM COUNTY CIVIC CENTER ANNEX IN THE AMOUNT OF $66,005.84 (AB2008 -274) Nelson announced that this item was withdrawn from the agenda. 4. REQUEST APPROVAL FOR THE EXECUTIVE TO ENTER INTO AN INTERLOCAL AGREEMENT BETWEEN WHATCOM COUNTY FLOOD CONTROL ZONE DISTRICT AND THE STATE OF WASHINGTON DEPT OF ECOLOGY FOR SWIFT CREEK PROJECT IN THE AMOUNT OF $190,000 (AB2008 -275) (COUNCIL ACTING AS THE WHATCOM COUNTY FLOOD CONTROL ZONE DISTRICT BOARD OF SUPERVISORS) Kelley moved to recommend approval to the full Council. Motion carried unanimously. S. REQUEST APPROVAL FOR THE EXECUTIVE TO ENTER INTO A COOPERATIVE AGREEMENT WITH THE ARMY CORPS OF ENGINEERS FOR LEVEE REHABILITATION WORK ON THE DEMING LEVEE IN THE AMOUNT OF $808,000.00 ON AN 80/20 COST SHARE (AB2008 -276) (COUNCIL ACTING AS THE WHATCOM COUNTY FLOOD CONTROL ZONE DISTRICT BOARD OF SUPERVISORS) Paula Cooper Public Works Department, submitted information (on file). She described the location, surrounding area, and background. There were concerns with segment A related to the Comprehensive Flood Hazard Management Plan (CFHMP), which recommends continuous evulsion protection for the lower Nooksack River. Once that protection is in place, realign or remove segment A because it directs the river to the south to an area with an existing slope failure. There is evidence of potential bank stabilization there. It could cause a slope destabilization there. They don't know the extent of the glacial marine drift, so it's not clear if the problem could be big. Also, the hook in segment A constricts the active channel. The constriction may raise upstream flood levels. Caskey- Schreiber stated the area identified might be affected by this fix. She asked if the property owner has been made aware of the potential problems. Cooper stated that land is all owned by the State Department of Natural Resources (DNR). Cooper stated another issue is another constriction point that will create a different alignment. She doesn't know how long that will take. Nelson asked the options for limited dredging in this area. Cooper stated they went through a preliminary sediment budget analysis. The Council had to do a survey and wait for enough aggradation to be able to see anything. Based on the consultant's work, that would take ten to 15 years. Until the County can demonstrate significant aggradation, it's not likely to get a permit to take anything out. The Army Corps of Engineers budgeted $91,000 to repair segment A and said the County has to repair all of the levee or none of the levee. However, the Corps would be open to alternative alignments if they provide protection to the treatment facility at the school. Staff explored the alternatives. The best technical solution is alternative one. However, the property owner and the diking district don't support that option. Another alternative is number two, with a different property owner who is only interested if the County buys the property from him. He would consider selling the property, but there isn't enough time to get the project done this summer. Finance and Administrative Services Committee, 7/22/2008, Page 3 Therefore, the compromise is to keep the existing alignment and slightly lay it back. The advisory committee wasn't able to come up with a recommendation other than its original recommendation. Council approval should be contingent upon the County getting the final easement and the two flood works agreements with the Diking District and Tribe. Nelson moved to recommend approval to the full Council, with contingencies on agreements with the Nooksack Tribe, local Diking District, and final easements. Art Anderson, Deming Diking District Commissioner, stated the staff report just given is correct. This project came together with the Tribe, the County, and the Corps, which is unprecedented. Support the motion. They are going to lay the slope back. The footprint will stay the same. The district is ready to sign. The contingencies should be fulfilled soon. Weimer stated the original advisory committee recommendation was to leave out segment A, and then couldn't come up with an alternative recommendation. He asked the recommendation from the advisory committee. Cooper stated she gave the advisory committee an update and option to update its recommendation because alternatives one or two couldn't work. The advisory committee couldn't reach consensus to change the recommendation one way or another. Motion carried unanimously. 6. REQUEST APPROVAL FOR THE EXECUTIVE TO ENTER INTO OBLIGATING DOCUMENTS FOR FEMA FUNDING IN THE AMOUNT OF $700,000 FOR REMAPPING FLOODPLAINS (AB2008 -277) Crawford moved to recommend approval to the full Council. Motion carried unanimously. COMMITTEE DISCUSSION 1. DISCUSSION WITH THE ADMINISTRATION REGARDING 2009 BUDGET PREPARATION RECOMMENDATIONS AND GUIDELINES (AB2008 -227A) Dewey Desler, Deputy Administrator, submitted and read from a presentation (on file). Certain things have a big impact on the organization, but are rarely talked about, including employee medical insurance and retirement rates. Brenner asked the increase in the number of employees since 2003. She would like to compare the percentage of increase in employees with the percentage of increase in costs. Desler stated they've added about 100 employees in the last four years. Natural gas costs are directly linked to the cost of oil. In Washington State, the rates are being held flat. However, the rates will rise by 35 to 40 percent at some point. In 2009, there will be a jump in the cost of natural gas. Nelson stated the County is paying the fuel costs for animal control. He asked if the County paid for that cost with the previous provider. Desler stated it did not. The County provides the contractor with vehicles and fuel through the equipment rent and revolve (ER &R) fund. Finance and Administrative Services Committee, 7/22/2008, Page 4 Nelson asked if the City of Bellingham has the same arrangement. Desler stated he didn't think so. Brenner asked if the County is paying for the gas and work the contractor does for the cities. Desler stated he didn't think they are.. The contractor has other vehicles besides those the County provides. (Clerk's Note: End of tape one, side A.) Desler stated sales tax is the second largest source of income, and revenue is leveling out. As more services are driven inside cities, and there is less growth and development outside of cities, counties will no longer get as much of the sales tax. That doesn't mean annexation isn't a good thing. If the legislative will is to put urban services inside the cities, the cities should the responsibility for those services. Brenner stated the Growth Management Act process was to include revenue sharing, but that hasn't happened. Desler stated they have to negotiate revenue sharing with the cities. Caskey- Schreiber stated that if growth management ultimately succeeds, counties will be done away with. Desler stated Whatcom County has requirements across all political boundaries. Cities have set responsibilities, also. Cities can tax voters in four major areas, but the County has two main areas in which it can tax. He continued the presentation on new construction and property tax revenues. Caskey- Schreiber stated she's been told that British Petroleum (BP) will have at least $5 million -worth of construction activity per year over the next several years because it's receiving a lot of money to boost production. Desler stated they may be excluded from sales tax. Desler continued to read the presentation regarding Planning and Development Services (PDS) revenue and expenditures. Brenner asked if all the departments charge when people want certain things. Desler stated not all departments charge fees, other than basic copying fees. All the fees are included in the Unified Fee Schedule. They are trying to deal with the difference in the budgeted revenue and actual revenue for the past three years. They didn't anticipate that difference, which has to be paid from reserves. Nelson asked if the fees cover the cost of development services. Desler stated that over time, they've generally been able to pay for all planning services with permit revenue. He hasn't examined revenues and expenditures by division. The total revenue continues to drop. Nelson stated the Council raised fees significantly during the last budget cycle. He asked why they aren't getting the revenue anticipated. Desler stated aren't getting as much construction and development activity, which has lessened. Brenner asked if all the vacant planning staff positions have been filled. Desler stated not all positions are filled. Kelly asked the how much of the difference between expenditures and actual revenue makes up the $5 million shortfall. Desler stated it's significant. That $5 million Finance and Administrative Services Committee, 7/22/2008, Page 5 shortfall is due to issues throughout the general fund, not just issues with the Planning and Development Services Department. The shortfall has to do with the County's ability to sustain expenditures given the revenues and other requirements and mandates. Bring those revenues and expenditures back in line. Many counties create a separate fund for its Planning Department, so the revenues have to cover the expenditures, and the fund has to be self- budgeted. Given the nature of where the Council and Executive want to go, Whatcom County will have to subsidize planning services with general fund money over time. Caskey- Schreiber stated she anticipated this. They talked years ago about the pros and cons of a fee -based system for supporting planning. The Planning Department has had expenditures related to defending legal actions that has been labor- intensive and expensive. There are also Comprehensive Plan amendments that haven't been done. Some of the expenditures are necessary. In no way will construction revenue support some of those costs. It's natural that they will have to plan and budget for some of these expenses. Making this department self- supporting isn't sustainable. Brenner stated she understood that fees can only be charged for a direct benefit, and can't be charged to cover all planning services. Desler stated that's debatable. Brenner stated she would like a legal opinion from legal counsel on that question. Desler stated they are having similar problems with the Health Department's onsite septic program. They have not received the revenue anticipated, and must pay the expenditures from another source. Desler continued the presentation on the general fund expenditures. Brenner asked if any money goes from the general fund to the Public Works Department. Desler stated there is. It is used to fund a number of water projects, shown in the non - departmental budget. Desler continued the presentation on full -time equivalent (FfE) positions, and law and justice FfEs. Brenner asked how the amount of projected revenue can be lower when both the sales tax and property tax are going higher. Marianne Caldwell, Administrative Services Department, stated this is a comparison with 2008 budget and projected budget. Two years ago, they were low on their property tax projections and high on the sales tax projections. Also, interest and penalties on property taxes are also in this category, and they have fallen off substantially. When combining all the tax differences and variances, it comes out to about $170,000 less than the budgeted amount from two years ago. Brenner asked for information on the amount of taxes brought in this year compared to the amount of taxes brought in during 2007. Desler stated he has that information. Desler continued to read the presentation on the general fund revenues and revenue and expense spreadsheet from 2005 actual through 2009 projected. The fund balance will become too low for the organization. It will be less than ten percent of the overall budget. They must stop the trend of declining fund balance. Their efforts will be to bring the budget back to a sustainable level over about 30 months. It will happen as a result of increased revenue and reduced expenses over the next 24 to 30 months. Finance and Administrative Services Committee, 7/22/2008, Page 6 Brenner asked what has changed since the Executive's State of the County address when he said their finances are in good condition. Desler stated they have done more analysis. They always knew the fund balance was dropping. Recently, they realized they will have to make adjustments. The trends have become more acute based on the economy. There has been a tremendous economical change over the past year. Nelson asked if the County has a policy for where it wants to be in terms of the reserve, as opposed to the ending fund balance. Desler stated the administration recommends that they stay above $8 million with the fund balance. Nelson stated that $8 million of a $200 million budget isn't a big percentage. He asked the percentage they must have, according to policy. Desler stated the Council indicated a few weeks ago that it wanted to establish a level of ten percent. They need money to meet payroll, cover expenses and for emergencies. That ten percent policy is in the budget policy document the Council approved. Caskey- Schreiber asked how much higher the budget lapse will be due to the hiring freeze. Desler stated the lapse may be about $1.5 million more. They want the ending fund balance for 2008 to be $13 million and $11 million for 2009. If they can, they will slow the rate of loss to the fund balance over about 30 months. By the end of 2010, bring the budget back in balance with a fund balance that is about $8 million and with equal expenditures and revenues, including the lapse. Brenner stated it seems like the biggest expenditure is non - departmental. She would like a list of what is in the non - departmental budget. are. Desler continued the presentation on the 2009 Budget adjustments. Crawford asked if they plan to keep the grant- funded programs. Desler stated they (Clerk's Note: End of tape one, side 8.) Caskey- Schreiber stated that according to the handout, the 2009 projected revenue is $74.8 million. The total budget expenditures for the departments is $56.8 million. There is a $17 million difference. Then add on the non - departmental expenses. They are carrying forward $4 million. She asked why they can't compare the two pages of the handout. Desler stated not all expenses of the general fund are listed. Brad Bennett, Administrative Services Department, stated they would have to add back in $9 million of revenue, which is in the $74 million. Weimer asked if the departments are to submit two budgets. Desler stated departments are asked to submit supplementary information to the base budget, which will include additional service requests (ASRs) and scenarios for a reduced budget. Weimer asked why not all departments have the same 3.6% cost adjustment. Desler stated they are trying to contain adverse impacts to law and justice. Public safety is a high priority. The administration is asking some departments to increase revenue where they can. They are watching the juvenile justice cost changes. Fewer juveniles are coming into the system. Activity and work loads should be part of their deliberations as they consider expenditures for next year. Finance and Administrative Services Committee, 7/22/2008, Page 7 Brenner asked if there would be fewer hearings before the Hearing Examiner if construction is down. Desler stated there would be. Nelson stated they haven't experienced a significant drop in Hearing Examiner hearings. Desler stated the Executive has a goal of no formal employee layoffs. Therefore, begin a selective hiring freeze. Have a 90 -day review period for the vacant positions. That works for some departments, but not all. He submitted a handout of vacant positions and positions that are subject to approval. Brenner asked if the Executive considered essential versus non - essential personnel. Desler stated he did. Brenner asked what happens if there is a critical shortage in a necessary position, and if the County stands to lose someone very qualified. She asked how long the hiring freeze exceptions take for approval. Desler stated it varies. It depends on a lot of things. They prioritize how long it takes by how essential the position is. Nelson stated the goal of this meeting is to have guidelines from the Council for the administration on things like a hiring freeze, lowering the reserves, or other types of changes to fees and services. Crawford stated the hiring freeze has raised hackles. It sounds like they intend to take a harder look at some of these positions in a negotiable way. In terms of the context of what the administration's doing, it sounds like it's negotiable. It's obviously not a hiring freeze because they are going forward with hiring some positions. He doesn't know what the administration is trying to accomplish by this, other than to save some money. He asked if the administration has a goal or target. Desler stated the number they are trying to get at. is still in play, other than about $5 million. It all depends on revenue in 2009 and 2010. They are starting to understand where expenditures are going. They are talking about approximately 45 to 55 positions in the general fund. That can vary. It includes the adjustments for programs with contracts. The administration is trying to avoid layoffs and do these transitions to that level of $5 million and 50 positions over a period of months, so the County doesn't have to formally terminate people. Crawford stated that was the policy the County set during the budget meeting in June. He asked how many of the 76 currently- vacant positions they could not hire. Desler stated the administration wants to get to a $13 million fund balance by the end of 2008, $11 million at the end of 2009, and $9 million at the end of 2010. They are meeting daily with departments about this. Brenner asked if the Sheriff was aware on Friday when he sent his memo that the Executive approved hiring the vacancies in his departments. Desler stated he doesn't know. Caskey- Schreiber stated that if a position costs $85,000, they want to not hire about 26 positions to recoup the $1.6 million estimated to go into the lapse. She prefers that the County not pay more in forced overtime and would rather keep a healthy workforce in the Sheriff's Office and the Jail. Also the Planning Department is under a tight deadline to get all the urban growth areas (UGA) updated. Don't suffer legal consequences of not hiring in that department. Keep in mind the bigger picture and why the County needs these people. If they choose to not fill a position, allow that department a credit in its final budget. Finance and Administrative Services Committee, 7/22/2008, Page 8 Weimer stated this one - size - fits -all solution doesn't help Council priorities. A 3.6 percent budget reduction may not make sense for one department, and a 8 percent budget reduction may make sense for another department. It's possible that an across - the -board hiring freeze doesn't work, because they really want a Senior Agricultural Planner. He asked how they make sure they address the priorities. Desler stated the Executive needs to hear those staffing priorities. Nelson stated that during the budget process, keep the budget shortfall in mind. Review the budget from the perspective of public health and safety, to begin with. Curtail new services for now. Maintain what they have now for public health and safety. Another perspective is essential services mandated by law, such as the Assessor and Treasurer. The Council will have to seriously reconsider non - essential services. He referenced suggestions for reducing expenditures on Council packet page 117. Only two suggestions are highlighted, which are the hiring freeze and the review of each position. There are many other good ideas to consider. Give those ideas to the departments so they understand the many ways to achieve a lower budget other than layoffs and not filling vacant positions. Councilmembers should talk to departments about concerns before the formal budget process. See if there are alternatives such as hiring consultants or using other positions to help out. Forward any questions to the Executive. Weimer stated there are some things in the Planning Department, such as long - range planning and enforcement, that they won't recoup fees. He asked if the $1.5 million cut to the Planning Department is the same amount that the department hasn't brought in with fees. Don't penalize the department. Desler stated it's not a cut. The department can also raise revenues. Nelson stated make sure they have very good input from the Health Department. He asked how they come up with the adjustment for the discretionary figure. Desler stated the numbers are different for each department. They have an overall target. They are working with all departments, and have asked every manager and leader for ideas to address this. Nelson stated he agrees, but he doesn't want to drop programs like the Women, Infant, and Children (WIC) program, for example, that they know will be put back in. When looking at departments, be very sure to not pick target items that will draw the most public ire. He's concerned about the programs essential for the health of the community. Be careful how they evaluate that. If a department doesn't look at other areas, the Council will. Don't cut a program without a plan for the program to be supported in the private sector. Look again at contracting services and other alternatives to get services to the people through private organizations. The Comprehensive Health Plan will help the community coordinate better together. Caskey- Schreiber stated positions in Environmental Health are expected to be fee - funded when the onsite septic system program gets going. Don't undermine the program by cutting back on that staff who will implement that program. Brenner asked if the Executive can move positions around if the Council already approved the positions specific to the department. She asked if the Executive can move positions from other departments. Desler stated they stay within the FTE authority from the Council. The Council has given the Executive some discretion as to how to use those FTEs. Brenner asked if 'a position can be moved around if the Council originally approves and funds a position in a particular department. Desler stated the position will normally stay in the department. Finance and Administrative Services Committee, 7/22/2008, Page 9 1 Weimer asked if the departments have received direction about new positions. 2 3 Nelson stated he prefers to see how an ASR or new position would be funded. 4 5 Weimer stated he wants to see all ASRs for new positions and then decide if other 6 positions are a lower priority. 7 8 Nelson stated they could do that. In his experience, the Council goes after new 9 positions, which is how they got into this situation. Be cautious about what they ask for. 10 11 Weimer stated don't eliminate potential new positions that come forward. 12 13 Nelson stated a new ASR or FTE should include a new funding mechanism or a cut 14 elsewhere. That would be his policy. 15 16 Weimer asked if departments have been told to not bring forward new ASRs or FTEs. 17 Desler stated they have not. The budget policy guidelines indicate that ASRs should be self - 18 funded or there should be a change. The departments have been told that if they really 19 want a new position, it should be contained within the base budget, which means 20 adjustments elsewhere within the department. 21 22 Brenner asked if it would be possible for the administration to bring forward a new 23 position by eliminating something that's not as effective. Desler stated that would be 24 possible. 25 26 The Council concurred regarding direction on the ASRs, 27 28 29 OTHER BUSINESS OR 31 There was no other business. 32 33 34 ADJOURN 35 36 The meeting adjourned at 1:15 p.m. 37 38 39 40 Jill Nixon, Minutes Transcription 41 `��,�►►nuui���� 42 �.�`� Ct o u Al io 45 _ • � s 46 _ - • 47= • 48 a Br R- , Couecil Clerk ' •'• SN��•', 1 WHATCOM COUNTY COUNCIL WHATCOM COUNTY, WASHINGTON L. Ward Nelson, C mmitt a Chair Finance and Administrative Services Committee, 7/22/2008, Page 10