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HomeMy WebLinkAboutFinance April 23 20021 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. WHATCOM COUNTY COUNCIL Finance and Administrative Services Committee April 23, 2002 The meeting was called to order at 12:05 p.m. by Committee Chair Sam Crawford in the Council Chambers, 311 Grand Avenue, Bellingham, Washington. Present: Absent: Dan McShane None Sharon Roy Also Present: Laurie Caskey- Schreiber COMMITTEE DISCUSSION AND RECOMMENDATION TO COUNCIL 1. ORDINANCE AMENDING THE 2002 BUDGET, REQUEST #4 (AB2002- 175) Dewey Desler, Deputy Administrator, stated there are three items. The first is to appropriate funds to the Treasurer to pay off a bond debt. The second is to appropriate funds to the Sheriff from the High Intensity Drug Trafficking Area (HIDTA) grant. The third is to appropriate funds to the Sheriff from funds received by the Port of Bellingham for airport security. There is no net gain or loss to the general fund. McShane moved to recommend approval to the full Council. Motion carried unanimously. COUNCIL "CONSENT AGENDA" ITEM 1. REQUEST AUTHORIZATION FOR THE EXECUTIVE TO AWARD BID NUMBER 02 -38 FOR THE WESTERN AREA CLASS G ASPHALT PRELEVEL PROJECT TO THE LOWEST RESPONSIVE BIDDER, WILDER CONSTRUCTION, FOR THE TOTAL AMOUNT OF $458,310 (AB2002- 185) McShane moved to recommend approval to the full Council. Motion carried unanimously. 2. REQUEST AUTHORIZATION FOR THE EXECUTIVE TO AWARD BID NUMBER 02 -41 FOR THE ANNUAL SUPPLY OF ASPHALTIC MIXES FOR Finance and Administrative Services Committee, 4/23/2002, Page 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. COUNTY ROAD PROJECTS TO THE APPROPRIATE LOW BIDDER, BASED ON JOB LOCATION AND DISTANCE FROM PLANT, AND PRODUCT AVAILABILITY, FOR A TOTAL EXPENDITURE OF APPROXIMATELY $375,000 (AB2002 -186) Roy moved to recommend approval to the full Council. Motion carried unanimously. 3. REQUEST AUTHORIZATION FOR THE EXECUTIVE TO AWARD BID NUMBER 02 -42 FOR THREE REPLACEMENT DUMP TRUCKS TO THE LOWEST RESPONSIVE BIDDER, KENWORTH NORTHWEST, IN THE AMOUNT OF $325,480.35 (AB2002 -187) McShane moved to recommend approval to the full Council. Motion carried unanimously. 4. REQUEST AUTHORIZATION FOR THE EXECUTIVE TO ENTER INTO A LEASE AGREEMENT FOR A REPLACEMENT MAIL MACHINE FROM PITNEY BOWES, USING THE WASHINGTON STATE CONTRACT, FOR AN ANNUAL COST OF $9,621.60 AND A TOTAL SIXTY -MONTH COST OF $48,108 (AB2002 -188) Crawford asked for which department this applies. Dewey Desler, Deputy Administrator, stated it is for the Administrative Services Department, Information Services Division. This is a proposal to acquire a machine used intensively to handle all the outgoing mail for the County. It's a recurring lease charge the County pays every year. The County just completed a five -year contract in which it paid almost $46,000 for the previous five -year period. They are proposing to pay approximately $400 per month more. It's a comparable machine. A tremendous volume of material runs through the machine. McShane moved to recommend approval to the full Council. Motion carried unanimously. COMMITTEE DISCUSSION 1. DISCUSSION REGARDING COUNTY EXECUTIVE PETE KREMEN'S ACTION PLAN FOR MAINTAINING A BALANCED BUDGET (AB2002- 169) Dewey Desler, Deputy Administrator, stated he would talk about revenue sources for the County. Whatcom County has a complex revenue stream. There Finance and Administrative Services Committee, 4/23/2002, Page 2 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. 1 are about 563 different revenue sources that come into the general fund. Dozens 2 of other sources support other operations in the County. Of those revenue sources, 3 the largest is the property tax. In 2001, the County received over $17 million. The 4 amount of Sales and Use tax revenue received is $6.7 million. In 2001, the third 5 source of revenue was from interest income in the amount of $3.2 million. They 6 will receive $2.8 million in 2002. It's a reduction. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Regarding the property tax, the State limited general fund support to $1.80 per $1,000 assessed valuation. There is $11.5 billion in assessed valuation in the county. In 2001, the levy was $1.49. It has been reduced from the previous year. As assessed valuation of county property goes up, the County can lower the levy rate. Up until last November when initiative 747 (I -747) was passed, the County legislative authority could vote by resolution or ordinance to raise that levy rate by up to 106 percent. I -747 reduced that raise to 101 percent beginning this year. Any increases above and beyond the one percent would have to be approved by the voters. The County, because it has left the levy rate the same year after year, has a bank levy capacity. The Council could acquire the additional levy capacity for future years' use, but requires a supermajority vote and declaration of a substantial need. Keith Willnauer, County Assessor, stated referendum 47 established the limitations and requirement for resolutions on this issue on the part of the County Council. There are two levels of resolution that the County Council can use. One level is to increase the base level above what was levied in the previous year. That would allow them the ability to acquire banked capacity as opposed to being limited to what was levied the previous year. That would allow them to increase the levy by the internal price deflator (IPD), which is a calculation of an increase to inflation. In order to go above IPD, the Council would have had to pass a second resolution, the special need resolution, allowing them to go from the IPD up to six percent. The IPD has been running at one to two percent. The legislature had given the County the ability to go above IPD up to six percent with a special need declaration. I -722 reduced all of that back down to one percent, which is the new maximum instead of six. They never know from year to year what the IPD will be. If the IPD were less than one percent, then they would have to have one resolution to get to IPD, and another resolution to get to one percent. The first resolution requires a simple majority. The second resolution is the one that requires a supermajority of the Council. Crawford stated there is a certain target amount of money the County is shooting for. They are going to divide it up between all the assessed valuations, which is what determines his tax. He asked if that is a correct analysis. Willnauer stated the levy is limited by a number of mechanisms. They are limited from year to year by a number of mechanisms, which controls how much more they can ask for as an increase in the budget and amount of property tax collection. Finance and Administrative Services Committee, 4/23/2002, Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. Crawford stated the County's budget did not increase any more. In fact, with the reassessments, it went down as a portion of their per thousand dollar rate. Willnauer stated the calculation is levy divided by tax base equals rate. If the levy were to stay the same, the tax base rose, and the rate falls. That is what has been occurring. Crawford asked if they are assessing taxes for the IPD. Willnauer stated the IPD is simply a construct to be used in the levy limitation formula. The federal government every year designs it by September. It is referred to in the statute. The County has been taking a zero percent increase for seven years, and has been banking that capacity in the interim. A term used is called the highest lawful levy amount (HLLA). The law would have allowed the County to go to some amount, but the Council chose to budget it's own percentage. He tracks HLLA against where the County is at any point. The County can return to HLLA and recover banked capacity. That number today is about $2.1 million. It's about a 28 percent increase. Desler stated that if the current levy capacity is about $17.7 million, they could collect about $19.9 million. The rate would go from $1.49 to $1.68 per $1,000 of assessment. Willnauer stated they would still be under the $1.80 levy rate limitation. The levy limit could be achieved by passing a single resolution with a simple majority of the County Council to return to HLLA plus the IPD from what they levied the previous year. Without a resolution, they are stuck with what they levied last year. If they pass a resolution, the Council would insert "HLLA" in place of "previous year's levy," and then go from there plus IPD. The resolution requires them to state that increase in terms of an amount of money and a percentage over what was levied the previous year. The resolution would expose that as a 28 percent, $2.1 million increase. Desler stated the 28 percent figure seems high. The correct percent is 17.7 percent. Under the formula it would go to 19.9 percent, and be a little under $2.2 million. Willnauer stated that for the resolution to be valued, it needs to state the percentage increase in dollars over what was levied this year. Roy asked if they have the option of not going to the maximum. Willnauer stated they do have that option. They have been passing a resolution every year. This is how they have maintained a banked capacity. They have met the requirement of passing the resolution. The current resolution states a zero percent increase with no dollars over what was levied the previous year. All it does is set a new ceiling. The County still has the opportunity to actually levy anywhere in between. It establishes a new ceiling when they meet the resolution requirement. Finance and Administrative Services Committee, 4/23/2002, Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. Desler stated the general fund is approximately 11 percent of the total property taxes collected in the county. The road fund is about eight percent of the total. It is only applied to those who live in unincorporated areas. It has a separate requirement. The County has not been passing a resolution to create a higher banked capacity in the road fund. Willnauer stated the road fund has been operating close to its rate limitation of 225. It's at 214 right now. It would not have an ability to operate in the same dynamic fashion as the current expense levy. There is some small amount of bank capacity in the road fund as well. McShane asked the reason for the difference in bank capacity. Willnauer stated the County chose not to pass resolutions for the road fund, so they didn't establish the bank capacity. There have not been increases in the road fund in the last seven or eight years. Desler stated the road fund gets additional revenue. It has its current levy, plus it has value that comes from new construction. It is not under the same degree of stress that the general fund has been under. Anytime they are talking about an increase, in this case it's about 11 or 12 percent on the general fund portion to increase the bank capacity. McShane stated there is a $28 per year increase on the $100,000 value of property. Crawford asked if the administration is proposing a property tax increase. Desler stated it is not yet. There are other taxes the County is involved in. The County can ask the voters to approve an excess levy. As long as the County asks for a levy of less than $1.80, it can ask the voters to lift the lid for more than one percent, by a simple majority of the population. The voters can limit the amount of time the levy is made. The maximum length of the levy is nine years. The purpose of the levy could be limited. Crawford asked if the emergency medical services (EMS) levy is not paid into by everyone in the county. Desler stated there are three or four districts that have implemented an EMS levy, with a vote of the people. They use that to support basic life support operations in three or four fire districts. It's possible that the County Council could authorize, with voter approval, an EMS levy. The law allows the County to go up to $.50 per $1,000 assessed valuation, which would generate about $6 million per year. That would be collected countywide. The Council could elect it to be a six -year, ten -year, or permanent levy. If it were permanent, it would be subject to a referendum at any time. Crawford stated the Election reserve and the Mental Health /Developmental Disabilities /Veterans Relief reserves are paid by everyone in the county. The emergency medical service (EMS) levy is not. Desler stated that is correct. Finance and Administrative Services Committee, 4/23/2002, Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. Crawford asked what the general excess levy is. Desler stated that if the County decides to, it could take something before a vote of the people, such as paying off bonds or supporting operations. The county hasn't ever taken a request to the public in the last 30 years for a bond issue or a levy increase. McShane stated it's similar to a school bond levy. Crawford asked about the difference in an increase between a general excess levy and a specialized levy. Desler stated the bank capacity issue applies to the general fund property tax category. Excess levies allow the voters to approve lifting the levy for general purposes. Roy asked if the County is still bound by the same percentage limitations for the excess levy. Desler stated it is not. They can go beyond the one percent because of the bank capacity that is particular to Whatcom County. They can ask the public for an excess levy, up to $1.80 per $1,000 of assessed value. Willnauer stated they are limited by the rate. This mechanism would be called a lid lift, because it lifts the one percent lid to wherever they want to go, as long as they don't exceed a rate of $1.80. Crawford asked if that includes specialized levies. Willnauer stated it doesn't. Crawford asked if the $1.80 cap applies to the general fund property tax, but not to the excess and specialized levies for general government purposes. Willnauer stated that is correct. There are two ways to lift a lid. A lid could be lifted for a certain period of time and for a certain purpose to get a certain amount of money. The Bellingham Greenways Levy is an example of that. It is a lid lift levy to collect 20 million over seven years for a specific purpose. The second way to do a lid lift is a permanent lid lift. It is the mechanism used by many fire districts. It simply specifies a point to where the rate would be lifted. From that point on, they would be subject to the one percent limitation and the other limits. It's a way to get to a new level. Desler stated that a third area is the bank capacity. Willnauer stated that accessing the bank capacity would not require a vote of the people, but it would require a public hearing with the property tax resolution on the agenda. A simple excess levy is for a specific purpose. They are bond issues, and require a two - thirds vote of at least 40 percent of the people who voted in the previous election. (Clerk's Note: End of tape one, side A.) Finance and Administrative Services Committee, 4/23/2002, Page 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. Willnauer stated the EMS levy is outside of this mechanism. They could form a countywide simple EMS district that can levy on its own. Whatcom County levied a countywide excess levy for park and recreation issues. It was 15 or so years ago. It was a one -year program. Desler stated the purpose was to get maintenance money for park facilities. Willnauer stated there is already an entity there, the Northwest Park and Recreation District, that has chosen not to function. They also have the Point Roberts Park and Recreation District and the Lynden Park and Recreation District that are levying taxes. Desler spoke on the Sales and Use Tax. The County imposed a sales tax of one -half of one percent. In the city, if a person purchases something, the City government gets 85 percent of that one -half percent. The County gets 15 percent of the one -half percent. If a purchase is made in the unincorporated area, the County gets 100 percent of the one -half percent. When there is an annexation or incorporation, the County looses the tax generating capacity. The 7.9 percent sales tax also includes funds to the transportation authority, criminal justice, the State, and other places. The County instituted a .1 percent criminal justice sales tax. Of the money generated in the county, which is $2.1 million, the first 10 percent goes to the County. The rest of the 90 percent is split between the County and cities, based on population. The County total is about $1.1 million. Crawford asked if another increase that would go before the voters for the purpose of a jail would have to have a similar split, or if it would all go to the County. Desler stated it would all go to the County. Desler spoke on the Rural Counties Public Facilities tax. The County has not taken advantage of this option. It's a rebate that comes to the County. From the State's portion of the sales tax, .8 percent comes back to the County. It is no tax increase to the consumer, only credited against the 6.5 percent that goes to the State. It can be used for things like bridges, roads, domestic and industrial water supplies, sanitary sewer facilities, earth stabilization, stormwater sewers, railroads, electricity, natural gas, buildings, structures, telecommunications, transportation, or commercial infrastructure and port facilities. The administration is looking at using this to address key building issues in the County. It has to be part of the Comprehensive Plan and Capital Facilities Plan. Another tax is called the Real Estate Excise Tax (BEET). The County instituted a .25 percent sales tax on the sale of real estate. The purchaser pays that tax. The funds can only be used for capital projects identified in a county's capital facilities plan. Whatcom County has used REET to make a portion of the bond payments on the courthouse construction. REET generates a little over $1 million per year. Whatcom County uses about $800,000 to make the bond Finance and Administrative Services Committee, 4/23/2002, Page 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. payment each year. It has been spending general fund money for the rest. Over time, property values have gone up, and the rate is generating a little more revenue. The administration may use more REET monies to support the bond payment. They have a balance of over $1 million in the REET fund. The County could also implement a second .25 percent sales tax on sale of property. It is for the use of eligible capital projects. Crawford asked if it could be used for a criminal justice facility. Desler stated it could. The County can bond itself from that income, and pay off the bond. Desler spoke about interest income. It is down in 2002 by $500,000. License and permit fees collect about $1.5 million. Twelve million comes from intergovernmental revenue, including grants and entitlements. That amount is dropping as State government is reducing its amount. Crawford stated there was some discussion about the Planning and Development Services Department receiving about 80 percent of their funding from fees, with 20 percent coming from the general fund. There was talk about closing that gap. He asked if there would be approval on that for the 2003 budget. Desler stated they are looking into it. They have to link the fee with the service. Crawford asked for a review of permit fees in other jurisdictions of a similar size. He asked to know if those jurisdictions are covering their costs. Desler stated he would find out that information. About 75 percent of the revenue from the Planning and Development Services Department comes from permit fees. Other jurisdictions are surprised that Whatcom County does that, because they were justifying that the revenue that came from building support services paid for everything, including the land use portion. It makes people nervous about sustaining a level of staffing if that permit revenue drops. He believes that they have a sustained level of service, especially with how they deal with land use. Demand for that service is growing. Intergovernmental revenue in the form of grants and entitlements totals $12 million for the general fund. Regarding charges for services, Whatcom County does that with the Parks Department, the jail, and other places. They collect $5.1 million per year. Fines and forfeitures total $1.3 million per year that is brought in from the courts. District Court is basically self- supporting. Miscellaneous revenue totals $3.7 million from a variety of sources. When the County Council designates money into Title III under the Secure Schools Funding Act, they get substantially less money in federal payments in lieu of taxes (PILT). The designation they made this year was to put $409,000 toward Title III. Next year, they will lose approximately $357,000 in their PILT money. Congress or someone in Washington D.C. just decided to reduce PILT payments. That says to the County that the County is not going to be able to take Title III funds. It might Finance and Administrative Services Committee, 4/23/2002, Page 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. even mean that they increase the designation to Title I from 80 percent to 85 percent. Revenue received from the timber harvest taxes total about $126,000. State timber sales totals about $509,000. Federal PILT totals $592,000. They transfer $1.2 million from the road fund into the general fund. That is primarily used to support road deputies and traffic enforcement. The County has other significant sources of support. They've dealt with flood fee issues, which is about $3.7 million. It is a fee added to the gross level of value of a property. Conservation Futures funds, which is a County tax levy, totals about $850,000 per year, at a rate of $.0625 per $1,000 of assessed value. It's restricted for the purpose of purchasing open space and future development rights. Crawford stated he is interested to see if they can do some revenue shifting, possibly from the flood tax fund to the general fund. It's an example of how they are well funded in one area, and close to dire straits in another area. A shift would have zero effect to the taxpayer. The Council will have to debate it. Desler stated the idea is to look at all the various sources of revenue that comes into the County, and determine how to increase one area and reduce another area, so there is no net difference to the taxpayer. Crawford stated that whether or not they get the zero net difference is less important than saying to the taxpayer that the County wants to be good stewards of the tax dollars, but is lacking in a certain area, so it wants to do some shifting. Desler stated the County Council makes the decision on how the priorities are implemented, and how policy is implemented in the community. Oftentimes, taxes and revenue streams designate where things are going to happen. The public approved the charter, wanted a home rule, and wanted more flexibility. In May, there will be two strategic planning sessions. During the first session, the departments will talk to the County Council about their efforts, services, and future ideas. The following Tuesday, the Council and Executive will set some priorities. Out of that meeting, the administration will have more direction on how to construct both the revenue and the budget for 2003. OTHER BUSINESS There was no other business. ADJOURN The meeting adjourned at 1:25 p.m. Jill Nixon, Minutes Transcription Finance and Administrative Services Committee, 4/23/2002, Page 9 1 2 3 4 5 6 7 8 9 DISCLAIMER: This document contains the Whatcom County Council or Committee minutes, as approved. However, unless an attested signature page is attached, they are not the final approved minutes. 011-0 U; Dana Brown - Davis, Council Clerk WHATCOM COUNTY COUNCIL WHATCOM COUNTY, WASHINGTON Sam Crawford, Committee Chair Finance and Administrative Services Committee, 4/23/2002, Page 10