Loading...
HomeMy WebLinkAbout2011.0523.TCSM.Minutesz:\council packets\2011\r6-16-11\110523m.docx Page 1 of 15 TOWN OF FOUNTAIN HILLS MINUTES OF THE SPECIAL BUDGET SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL MAY 23, 2011 * CALL TO ORDER AND ROLL CALL Mayor Schlum called the meeting to order at 5:35 p.m. in the Town Hall Council Chambers. * ROLL CALL Present for roll call were the following members of the Town Council: Mayor Schlum, Vice Mayor Contino, Councilmember Brown, Councilmember Leger, Councilmember Elkie, Councilmember Hansen and Councilmember Dickey. Town Manager Rick Davis, Town Attorney Andrew McGuire and Acting Town Clerk Shaunna Williams were also present. AGENDA ITEM #1 – CONSIDERATION OF RESOLUTION 2011-19, ADOPTING THE MAXIMUM AMOUNT FOR THE TOWN OF FOUNTAIN HILLS' FISCAL YEAR 2011/12 TENTATIVE BUDGET WITH APPROPRIATE DIRECTION TO PUBLISH SAID DOCUMENTS IN ACCORDANCE WITH STATE LAW. THE COUNCIL MAY ADDRESS ANY OR ALL ITEMS CONTAINED IN THE BUDGET DOCUMENT AND INITIATE ANY CHANGES PRIOR TO THE ADOPTION. Mayor Schlum welcomed everyone to the meeting and explained the process that would be followed. He noted that this is the first of two Special Budget Sessions that will be held (the second will be held on Wednesday, May 25th at 5:30 p.m.) and encouraged citizen attendance and input. Town Manager Rick Davis addressed the Council and thanked the members of the Executive Budget Committee and staff for all of their efforts in putting together the proposed budget. He said that based on the feedback that has been received and some of the ideas that the Council has shared staff has put together some new ideas they want to bring forward relative to closing the budget gap that currently exists, which resulted from the Census numbers. He added that staff will also discuss the fee schedule this evening and hopefully by the Wednesday meeting they will be a lot closer to bringing the budget process to a close. He stated that while staff may have some other ideas and options for the Council to consider, the proposal that came forward initially is the one that staff believes addresses the budget (the structural or revenue problem) more comprehensively and longer term. He said that what will be presented this evening will provide additional time, which hopefully will allow time for the economy to improve. Deputy Town Manager/Finance Director Julie Ghetti addressed the Council and highlighted a PowerPoint presentation on this issue (a complete copy is available in the office of the Town Clerk). Ms. Ghetti commented on FY 2011-12 budget concerns and issues; proposed General Fund operating expenditures; Streets (HURF) operating budget; proposed budget solutions, which must be aligned with the following three principles: (1) Be permanent and sustainable (there are likely to be more declines in the future due to legislative action, increased population in other communities). The Town has to adjust to the new fiscal reality; (2) Preserve organizational integrity (the ability to perpetually provide the high level of service that the citizens have come to expect); and (3) Be equitable (does not rely on one source or citizens' group; spreads the burden among various publics); revenue options that are being considered (proposed increase in sales tax on telecommunications. A 4 .0% sales tax, which would generate $750,000, is currently included in the proposed budget); historical Town staff levels and continuing declines in that area; a comparison of FY 2010-11 General Fund operating cost per 1,000 citizens; alternative options based on Council feedback and further discussion by the Executive Budget Committee which consists of paying down bonds (pay off all bonds that were sold in 2004 to build Town Hall). z:\council packets\2011\r6-16-11\110523m.docx Page 2 of 15 Annual bond payments are paid through local sales tax (0.1%). The payoff a mount is $2,932,697, the savings over the life of the bonds is $276,000 and the annual bond payment that would be eliminated is $350,000. Ms. Ghetti briefly highlighted the previous presentation provided by staff relative to the budget, the recommended steps to be taken and pros/cons/impacts of the various proposals. Ms. Ghetti stated that today's steps include: * Authorizing staff to prepare necessary paperwork to refund MPC bonds; * Authorizing a resolution to notify the public regarding the increase in telecommunications tax; * Approving the Fee Schedule; * Approving the Pay Plan (no increases); * Adopting the tentative (maximum) budget; * June 16th adopt the final operating and capital budgets; and * August 4th adopt the tax levy. Ms. Ghetti indicated her willingness to respond to any questions from the Council and added that all of the Department Directors are present as well. In response to a question from the Mayor, Ms. Ghetti advised that if they were to pay off the bonds they would be adding $2.9 million to $36.2 million for a total of $39.1 million (for the tentative maximum budget). Mayor Schlum thanked Mr. Davis and Ms. Ghetti for their comments. Executive Assistant Shaunna Williams informed the Mayor that there were six citizens who wished to speak on this agenda item. Frank Ferrara, CEO of the Chamber of Commerce, addressed the Council and discussed tourism. He said on March 23rd, the Chamber sent a very detailed proposal to the Executive Budget Committee and several of the Councilmembers and never received a response. He stated that he would like to know the status (get some indication from the Council on the proposal). He assumed that the Committee would forward it on to the entire Council for their consideration. He further commented on the restaurants and the bars (35 of them in Town) with liquor licenses and advised that he recently became aware of a tax that was incorrectly passed because it was not discussed thoroughly and there was no interpretation of what the tax was going to be. Some thought it was a one time, new business application fee for a liquor license with nothing about a renewable license and when it came out it was not only for initial applications, it was also for existing businesses (renewables) and quite high. Several businesses have indicated to him that if the fee is due and payable for this year, not next year, they won't be here next year because they will be out of business. He requested that they consider what the Council did and ask themselves if they were aware of the consequences that action would have on those businesses. He stressed that they are not out of the recession; over the last three years it has gotten worse. He asked the Council to please consider these liquor licenses in the interest of he lping those businesses because some of them will not survive if the fee is held up. Linda Bardow addressed the Council and said she heard someone say that the capital projects have to do with road bonds and she just doesn't understand why they went from $6.4 to million to $17 million. She also noticed that what wasn't in the budget for last year was miscellaneous grants for $1.5 million and questioned who those monies were going to. She added that the recession is getting worse and she objects to anything that adds money to anything right now including replacement of some of the Town's older cars (look at that when times are better). She said that she opposes raising the money for the Council because this is not something they need to do and she does not understand why the administrative costs are going up by $400,000 at the Municipal Court. She noted that the Court Enhancement Fund increased from $12,500 to $33,000. She advised that staff z:\council packets\2011\r6-16-11\110523m.docx Page 3 of 15 estimated that local sales tax revenues were going to go up and disagreed with that statement. She asked why they estimated the revenue from the building permit fee increasing and is that because of the new development they talked about previously? She referred to her Chaparral water bill and said that she and her husband do not use a lot of water and their bill was $26.47 and her water usage was $6.35 (the rest are fees and all kinds of other things). She stated the opinion that the numbers provided for what citizens a re paying for certain services are under estimated and spoke in strong opposition to raising taxes, particularly during these difficult financial times. Councilmember Elkie requested that they answer questions as they come up and the Mayor concurred. Mayor Schlum requested that staff provided an update on the status on the Chamber's tourism proposal. Ms. Ghetti advised that the proposal has been received and the Budget Committee will be reviewing it but what they needed to do first before they could go there was figure out how much money they were going to have in the budget and whether there were going to be additional cuts. It all depends on what they do as far as closing the budget gap. The Budget Committee intends to continue to meet and once they have a number and know where they are at then they can move forward with the contracts and figure out what they are going to do with them. Mayor Schlum directed staff to make copies of that proposal available to all of the Councilmembers and asked for copies of the Comprehensive Fee Schedule for all of the members as well. He said that they are going to be talking about the restaurant/bar fees and others as they move along tonight. He noted that Mr. Ferrara asked that the Council look into that and where the Town expected it would be now two years ago when they adopted that. He agreed that the economy is still tough and that is why the Town continues to reduce its spending. He asked Ms. Ghetti to respond to Ms. Bardow's comment about the increase in road bonds. Ms. Ghetti explained that there is an increase in that area and said that if the proposed initiative is successful and the voters approve the $9 million bonds for the roads, they have to budget for it and include it as an expenditure. If the proposal is not approved, they won't be making that expenditure but they have to include it in the budget in the event that it is. It is for the Saguaro Boulevard project. Ms. Ghetti also discussed grants and said that they are not giving grants -- every year staff includes in the budget a miscellaneous line item for grant revenue in the event that a grant comes in during the year that they are not aware of. The only way the Town can spend it is if they budget for it so if they didn't do that and they got a grant they would not be able to spend it; they would have to wait until the following year. In response to a request from Councilmember Dickey, Ms. Ghetti explained why the Council is adopting a maximum amount. Mayor Schlum commented that he was not aware of the fact that the Council was getting a raise and asked Ms. Ghetti to speak to that. Ms. Ghetti advised that the budget does not contain raises for anyone. The difference referred to by Ms. Bardow is probably the reallocation of staff that are dedicated to the Council. Because they have gone to a program budget, every cost associated with a program or department is now included in that budget. Mayor Schlum asked about increases in administration in the Judge's area and Ms. Ghetti stated that the one mentioned by Ms. Bardow is a separate fund that the Court uses to purchase items to enhance the Court, the Court Enhancement Fund, and that does not affect the General Fund; it is for anything purchased such as computers, etc. She added that if the budget went up it was likely a re-allocation of staffing; there are no increases at all for any Court staff. z:\council packets\2011\r6-16-11\110523m.docx Page 4 of 15 Ms. Ghetti also addressed the Vehicle Replacement Fund and noted that that is actually a transfer from the General Fund and Streets Fund (annual depreciation for vehicles) and it comes out of the General Fund and goes over to the Vehicle Replacement Fund. That consists of monies set aside for when vehicles need to be replaced. They have not replaced any vehicles at all this year although four were scheduled for replacement (they may replace one before the end of the year). Ms. Ghetti discussed sales tax revenues and said that they have seen a sustained increased in sales tax over the past five months of at least 3% and that is why staff anticipates that they will end this year with a surplus. Staff had anticipated a 3% overall increase in local sales tax for next year. She concurred that the overall revenue is still going down because of State Shared Revenues (budget was reduced by $900,000). Discussion ensued relative to the Census and the fact that the Town's "piece of the pie" has decreased; the possibility of the Town doing a mid-year Census in five years and the fact that staff does not anticipate that Fountain Hills will grow at a faster rate than Surprise, Chandler or Queen Creek and so they are likely to lose even more in this area; staff has projected six building permits this year and not much more than six next year (no commercial), a huge decrease; Plan Review fees and why is there a proposed increase in that area if building permits have decreased and Ms. Ghetti's comment that it could be from the fee schedule and other types of permits that are expected to come in; Director of Development Services Paul Mood's explanation that there are a lot of tenant home improvements and remodels that get factored in as well; last month they issued more permits than they have during the last few years, 50 to 60 general permits; staff anticipates some single family home permits coming up in the future; Ms. Bardow's comment about her water bill and Ms. Ghetti's explanation that staff took an average of what peoples’ bills are (if someone has a $50.00 water bill, they are currently paying $1.32 to Fountain Hills and that increase would go up $0.71 to $2.03) if they go up to the 4% (Town currently receives 2.6% of the bill); Ms. Bardow's actual bill and the fact that the Town's portion of Ms. Bardow's bill is $0.60; legal requirements associated with adopting a tentative maximum budget and the fact that if antici pated revenue and/or grants are not received, they cannot spend the monies so the budget may actually be a lot smaller; the fact that all municipalities are required to follow the State's budget laws; the fact that the tentative budget does not have to be adopted tonight, there is still some "wiggle room;" Councilmember Leger's suggestion that since citizens have raised questions about salary increases being included in the budget, it might be appropriate to put in a footnote or comment explaining/clarifying that this is not the case and Councilmember Hansen and the Mayor's concurrence with this recommendation; the fact that no part -time staff are going full time; there are 59 FTE's for Fiscal Year 2011-12, (61 total compared to 81 the previous year); Ms. Ghetti's intention to clarify why the numbers are different and the reason behind those changes in the actual budget; monies that are projected to be spent on road projects (next year, if the bond passes, staff is projecting $17 million for the Saguaro project and approximately $2.6 million for pavement maintenance and of that $1.5 million would be from bond funds and there are also the Shea and Saguaro projects (widening project) and that is projected to cost about $3 million with about $2.2 coming from Proposition 400 money; staff's estimate that next year approximately $3.1 million will be spent on capital projects with $1.3 million coming from Annual Pavement Management (out of the CIP Fund) and approximately $800,000 of the Town's portion of the Shea widening project (those two projects make up about two-thirds of that). The Mayor thanked staff for their clarifications and input and said that they will no w hear from the rest of the citizens who wish to speak on this item. Ken Couture, a member of the American Legion Post #58, addressed the Council and said that his organization is a small, non-profit and the purpose of their existence is through monetary donations and volunteerism, to support a variety of Veteran's groups and a number of initiatives throughout the community. He provided examples of the work that they carry out. He said that a number of members are present this evening to express their opposition to the newly implemented liquor license initiative. He stated that they pay $200 to the S tate of Arizona for a liquor license so at $500, the Town is imposing a fee on private, non -profit clubs and organizations within the community that is two and a half times more severe than the State. He discussed the z:\council packets\2011\r6-16-11\110523m.docx Page 5 of 15 current harsh economic times and advised that Post #58 and other organizations in Town that are being subjected to this can't afford to pay the fee but they also can't afford not to. He encouraged the Council to reconsider this matter. Mayor Schlum said that the Council will definitely be talking about this. Mr. John Rodakis addressed the Council, and said he does not understand why Fountain Hills would charge more than the State of Arizona. He stated that he understands that this was passed two years ago and it seems odd that the Chamber, which watches over all businesses, wasn't aware of it nor were a couple of Councilmembers. He asked why just liquor licenses are affected and not all businesses at a certain level. He noted that the cost will have to be passed on to residents of the Town and expressed the opinion that it should be lowered or other businesses should be included. He stressed the importance of coming up with a level fee. Sam Coffee, with the American Legion, addressed the Council and said they recently received a renewal for a liquor license and does not know how they could receive a renewal for something they never had. He stated that he could not find any information about the liquor license on the Town's website and if the fees were approved over a year ago he cannot understand why the information was not placed on that site. He asked if the Council's agenda adequately described the issue that they voted on because if the answer is yes, why was n’t anybody at the meeting to protest against this when the Council approved it. He added that some people told him that they received letters about this but the American Legion did not receive one or if they did, he didn't see it nor did any of their finance people. He commented on problems associated with taxing one particular type of business and stressed that AMVETS and the American Legion are primarily charitable organizations and noted that their bar does not make any money; they actually lose some money. If it wasn't for their special fund raising activities they could not operate. He said that in order to pay the tax they will have to eliminate some program and discussed the very worthwhile work that they perform. He added that a lot of Veterans will not be happy if this stays in place. Charles Lewis, American Legion Post #58, addressed the Council and said he is present this evening on behalf of his fellow officers and others, almost 700 in number. He reiterated a lot of the comments expressed by the other American Legion speakers and noted that their lounge merely provides them a platform upon which to stage fundraisers and appeal to the community to fund their very worthwhile charities. He noted that in years past the organization has participated with the Town's Parks & Recreation Department in painting trash cans and passing out flags at the Stroll & Glow. He acknowledged that revenue is down and everyone is hurting but stated that the tax on all of the non-profit organizations is a killer. He appealed to the Council to reconsider only taxing liquor establishments. Linda Kavanagh addressed the Council, referred to bar charts included in the budget presentation and noted that one says that in 2010-2011, the General Fund operating budget was $12.6 million and now it has gone down for 2011-12 to $12.1 million, however, the Town's website states that for 2011-12 the estimated revenues on the General Fund line are $13.1 and asked for clarification on that discrepancy. She added that the material also states that there are some transfers out of 337 and 354 and resources available are $12,787,409 and expenditures $12,936,830 for a difference of $149,421 as the general shortfall. She stated that she only has what has been put on line and can't find where the rest of the shortfall is because the other two columns seem to show that the Town's resources are larger than what the expenses are going to be. She thinks they are talking about $700,000 and something in shortfall and she would like to know where the rest of it is. She also pointed out another chart that talks about the General Fund operating costs per 1,000 citizens that staff compared to other towns and asked if the chart actually is comparing apples to apples. She noted that Scottsdale has its own Fire Department, Police Department, Water Department, etc., and stated that this should be an exact comparison in order to be accurate and she can't find anything that provides an explanation relative to what was actually compared. She added that as far as the charts that show the bills, she doesn't know anyone who has a $30 Cox bill (she pays $180.00) and in the summer for SRP she pays $260 and $300 with her air conditioning going and they have two z:\council packets\2011\r6-16-11\110523m.docx Page 6 of 15 cell phones, each at about $100.00. She noted that going with the 4% increase in telecommunications means a 53% increase, which during these difficult economic times is a little bit too much for most people to be able to handle. She added that any tax right now would be difficult. She informed the Council that she is also a member of the American Legion Auxiliary and her husband is a member of the American Legion Post #58 and the AMVETS and stated that she supports their protest against the liquor license tax. She advised that the State charges $175.00 for a liquor license and some of the businesses have gotten up to $1,000 and she would like to know how the Town can justify $1,000. Mayor Schlum thanked all of the speakers for their comments and said that they will be discussing the liquor license issue this evening. Councilmember Hansen said she would like to discuss how this happened. She noted that they have 19 pages of permit fees and a few years ago they started to be included in the budget documents so they were approved with the budget. It was always her understanding, and they had talked about it for years, that they were going to implement a new license fee but it was her understanding that that was a one-time license fee and not an annual renewal. She stated that that is how they got to where they are at. Mayor Schlum advised that Councilmember Hansen's memory regarding that is similar to his. Councilmember Hansen added that as she was reading the budget, on Page 43 there is a sentence that reads, "Fees and charges should be based on benefits and/or privileges granted by the Town or based on cost of a particular service." She said that this particular fee doesn't really provide a benefit and the Town doesn't provide any particular service. They have involvement when there is a new license or a license change but the Town is not involved as far as renewals. She stated the opinion that the Town lacks justification for an annual fee because the State is the issuing agency. Mayor Schlum requested that Ms. Ghetti provide background on the fee and the Town's role/responsibility as far as licensing. Ms. Ghetti advised that the Town has talked about liquor license annual fees for a long time and what other cities and towns do. She said that the theory behind the annual fee is that establishments that have liquor primarily require a higher level of public safety (enforcement and calls for service). As far as the language that says fees should be based upon the service provided it would be great if the Town did that as far as all the fees that are charged but there are a lot of things that they don't charge anybody for and fees that they subsidize heavily. She reiterated that the theory behind this is that liquor establishment require more public safety services and noted that not all liquor licensed establishments fall into that category. For a long time Fountain Hills has not had a fee at all and a majority of cities and towns in the state do have an annual fee. Mayor Schlum asked if other cities and towns have a recurring cost as well and Ms. Ghetti replied yes, a majority of the municipalities have both an application fee and an annual fee. She confirmed that the application fee is $25.00 and the annual fee is paid initially up front and then continues on on an annual basis. The Mayor asked if American Legion Post #58 would fall under a private club license category (Series 14) and Ms. Ghetti responded that it would. Mayor Schlum stated that at $500 he thinks they may be the highest across the board on this fee so that is something to consider. Councilmember Dickey asked if there was any differentiation between non-profit clubs or service clubs (between a golf club and a Veteran group per se) and Ms. Ghetti stated that the series numbers are all issued by z:\council packets\2011\r6-16-11\110523m.docx Page 7 of 15 the State Liquor Board; those are the only categories they have and all the cities and towns base their fees on that series. Discussion ensued relative to the fact that the Town charges fees for things other than liquor; Mr. Couture's appreciation to the Council for recently granting his organization a Bingo permit to help with some financial woes and his comment that as a private club they are allowed ten days per year to be open to the public and for that privilege they pay a $25.00 to the Town (an additional $250.000 that the private clubs pay to be open to the public plus the permitting fee); the fact that staff had presented some PowerPoint presentations that mentioned that they were recommending the implementation of a new liquor license fee but because it was built into and discussed as part of the budget, staff did not do a specific presentation on every fee - staff was hoping to do that this evening; the fact that the fee schedule has been in effect for several years and included in the budget ever y year; the highlighted fees in the Council's packets are the ones that staff are recommending be changed; the Mayor's recollection of the discussion on the fee and his opinion that they were remiss in not talking about it more because he was not expecting the recurring fees; the Mayor's opinion that there is an opportunity to discuss a higher initial fee (application fee) because of all the work involved and a decreased annual fee; unique factors associated with non-profits that the Council may want to consider; the fact that a comprehensive list of the fee schedule is on the Town's website and the Mayor's suggestion that staff make that more accessible on the site; Ms. Ghetti's comment that there is no charge for a Special Event Temporary License; the fact that the $25.00 per day that he referred to above is charged by the Liquor Commission and the group turns in an application to the Town for a Special Event and he was told the last time he turned in an application that the Town charges $10 for an application for a Special Event License, no matter how many days they are asking it for; the work that has to be done by staff when a liquor license application is received and the fact that the work is more labor intensive up front; the fact that staff has copies of the letters sent to the 39 holders of licenses and the letter did indicate that effective January 1, 2011 there would be a liquor license fee charged annually and it would be included in with their business license fee. Mayor Schlum noted that the discussion on this item will also take place at the Wednesday, May 25th meeting. He said that since there are no more speakers, they could do a motion or continue the dialogue and then do a motion. He pointed out that Goodyear charges $364 a year for everyb ody and some charge the same price for all and others vary the charges. He discussed the various fees listed on the schedule provided by staff. He stated that of the 39 businesses impacted he would guess that about half fall in the restaurant category and there are some hotel/motel beer and wine licenses as well. He added that they also have the Series 6 licenses issued to bars that serve hard liquor, which might demand a higher fee because there is a greater chance that more calls for service may be required at those establishments. Councilmember Elkie asked when a bar owners renews a liquor license with the State Liquor Department whether it has to be renewed each year and whether something has to be submitted to the Town if the ownership changes. Ms. Ghetti replied no. Councilmember Elkie advised that he would be in favor of a one-time application fee -- something across the board for businesses (for all liquor licenses). He added that as Councilmember Hansen stated, there would be no additional annual fee. He said that he thinks it is important that whatever they do they should make it retroactive if that is possible (at least back to last year or the year before). He stated perhaps a one -time $500 across the board application fee and then zero from then on unless the license changes hands. Ms. Ghetti noted that if they collected the proposed fee from every business it would be about $44,000. Councilmember Brown pointed out that Queen Creek charges a one -time fee of $1,500 and no annual fees and they are the only municipality that charges a one-time fee. He expressed the opinion that $500 is not adequate z:\council packets\2011\r6-16-11\110523m.docx Page 8 of 15 for businesses that open up and hopefully run for many, many years in Town. He suggested they charge a $750 one-time fee to support associated work year after year. The Mayor noted that Mesa charges the highest amount, $2,000, and also charges an annual fee of $500 to $550. He added that it appears that Series 6 license holders are charged more than club owners. In response to a question from Councilmember Dickey, Ms. Ghetti advised that this project started several years ago and the Town's fees were based on what other cities and towns were charging for their annual fees; they were not tied directly to a business or number of service calls. She added that she is not sure that any city or town does it that way. Mayor Schlum advised that some cities and towns charge based on the businesses' square footage. Vice Mayor Contino stated that he supports Councilmember Elkie's proposal for the one -time up-front fee and commented on the difficulties associated with keeping businesses running especially in a small community. He added that with the economy the way it is, a lot of the businesses are operating on a shoe string budget now. Councilmember Hansen also indicated support for the one-time fee (no renewal fees) but said that right now, starting it up, she would be in favor of $250.00. She noted that the fees get re -evaluated every year so changes could be made but at this time she believes $250.00 would be sufficient. Mayor Schlum agreed that it is a balancing act and said he is hearing that the Council wants to be equitable as far as recapturing the costs, particularly on the front end, and keeping it the same for everyone. Ms. Ghetti said that there is a $25 up front application fee for Special Event Licenses but no renewal fee. The Mayor stressed the importance of encouraging special events and not charging applicants $500 for a liquor license. In response to a request from Mayor Schlum for input, Ms. Ghetti stated that in her opinion the process is labor intensive because there are a lot of staff members involved. She added that if the Council is not going to charge an annual fee, she would suggest that they try to recover some of the costs associated with the increased calls for service, etc., and that would be closer to the $500 application fee, with an exception for the Special Event Licenses (they would pay the $25.00 or zero if that is what the Council desires). Ms. Ghetti advised that it is possible to make it retroactive for the current budget year and staff would have to issue refunds (they have collected approximately $13,000 to date). She said they would have to refund all of that money. Councilmember Dickey requested that the Council obtain more information before they move forward with one thing or another. She stated the opinion that both $13,000 and $44,000 have been mentioned and those figures are big enough that they should not just be brushed off right now. She added t hat she would rather have a better feel for this (keep bars on but take clubs off, etc.). She said she would rather find out now what the ramifications are as far as what they do. She stated that she would appreciate discussing this further on Wednesday and that more information should be provided. Mayor Schlum said that would be fine and they could always come back to this. He added that he would like to put a little bit of a line in the sand if they could in relation to this so they can give staff a better idea of where they are headed (perhaps that they are between $250 and $500 for a one-time up front application fee). He said that maybe they could look at different annual fees but he thinks he heard that for clubs or organizations no fee at all and a lesser fee on the other items. z:\council packets\2011\r6-16-11\110523m.docx Page 9 of 15 Councilmember Brown stated that he thought they were talking about just a one-time application fee and dropping all of the annual fees and asked if that was correct. Mayor Schlum replied that he is correct. Councilmember Dickey said that after hearing what Councilmember Brown said she needs further clar ification because she thinks there is a benefit to yearly, in any way shape or form and she would like to hear if there is an option that they are not thinking about right now because they are talking about this on the fly. She does not want that to be off the table and perhaps they can take out the non-profits and the clubs but she still wants to know why all of the other cities charge annual fees (is there something they are not thinking about?). Mayor Schlum replied that he thought that was good and if there are other things that they haven't talked about they need to explore them as well - the more information the better. Councilmember Hansen added that perhaps the Council could also receive some information on calls for service (alcohol related) to see what the impact really is. The Mayor said he is not sure they want to consider societal costs associated with the issuance of a liquor license and benefits as well. He added that they could go there but he is personally not interested in going there. He stated that if there is a problem he thinks it could be addressed in another way, such as working with law enforcement. Councilmember Hansen said that she would be interested in just knowing more about that because it is a theory now and she wonders if there is information to back it up. Councilmember Elkie stated what they could get is calls for service for a particular bar/location but he thinks it would be very tenuous at best to calculate DUI's because they don't know if the drivers are coming fr om a bar in Scottsdale or another city/town. He expressed the opinion that they would spend more in Court and staff hours than they would collect from the fee. Councilmember Elkie commented that the non-profits should definitely be on the very low end. He added that the State does not have a non-profit classification so they have to look at private clubs and work from there. He said that he is more than happy to look at revised data going forward and looks forward to receiving that information. He said that despite who was and wasn't aware of this, the fact is that it was in the budget last year and if the Councilmembers read all of the documents they would be aware of these fees so there was no "smoke and mirrors;" the information was out there and on the website as well. He added that improvement in locating the information in an easier place to find is needed. He noted that the Town does have a zoning ordinance to allow adult oriented businesses (a comment made by one of the speakers earlier in the meeting) in Town because they are allowed to do that by law. They have been lucky in that no one has approached the Town about opening one up but that is why they have a fee in place for that which is rather high to perhaps discourage those businesses from coming to Fountain Hills. Mayor Schlum noted that most Town fees are one-time fees and this particular one should have been looked at closer because it does have a recurring fee. Councilmember Hansen asked if the Mayor is recommending on Page 4 where it talks about the Special Event Permit for businesses, non-profits and special events - extra fees -- and said that there are some new permit fees associated with those and she would like to know if the Mayor is recommending that they do not add those fees. Mayor Schlum said yes, those are the types of ones that stood out. The Town charges $25.00 today and then for cost recovery purposes there is traffic barricade review, fire review, inspection fee, etc. that are now added for z:\council packets\2011\r6-16-11\110523m.docx Page 10 of 15 consideration for this year. He stated that those are the types of things that if they can he would like to try not to do; not because they shouldn't be recovering their costs based on necessary reviews, but because they would like to encourage special events as much as possible. He added that the permit fee was changed to a lower fee but a per day fee so he is open on that one to whatever Council might consider being the best decision on those fees. He stated that generally he would like those not to end up being more than they are today and if they can to lower those as well. Councilmember Elkie acknowledged the importance of discussing the fees but said that the bigger fish tonight is talking about the budget as far as what they are going to do and perhaps paying off the bond a nd giving staff some direction in that regard. Ms. Ghetti advised that staff will be happy to put all of the materials discussed on line for the citizens to access (materials provided to the Council). Ms. Bardow informed the Council that the first time she tried to locate the budget on line it was under "Hot Topics" and a lot of people couldn't find it so she wonders if on the Town's web page under fiscal of financial staff could just put the whole thing (right there in the same spot) because it would be much easier for people to find. Mayor Schlum stated that they will talk more about the fee schedule on Wednesday. Mr. Lewis stated that his organization has a bill that is due by June 30th ($500) and w ould request that the Council hold that in abeyance until a final decision has been made. Mayor Schlum said that they will talk about that more on Wednesday. He stressed that he does not believe there is a more Veteran friendly municipality than Fountain Hills in the world and thanked them for all they have done and all they continue to do to make this a great community. Councilmember Leger stated that the site with the information regarding the budget/fees should be in really large letters and should say "Proposed" because that is all it really is at this point. He emphasized that budgeting is a long planning process and they are still drilling down on it. Mayor Schlum advised that they will continue with the rest of the budget discussion at this time. Councilmember Leger noted that Ms. Kavanagh posed a number of questions that have not yet been answered and said that she is looking at discrepancies between numbers and he believes that can be easily explained. Ms. Ghetti stated that the first question was the difference between $12.1 million in expenditures and $13.1 million and explained that the $12.1 is basically the first introduction -- this is all the revenue that they have. She added that when they went before the Council and proposed that they increase the telecommunications and utilities tax that brought the revenue back up to $13.1 million. She noted that most schedules are prescribed by the Auditor General's Office and she believes it may be more appropriate for her to sit down with Ms. Kavanagh and go over them and where the numbers come from. She added that she is happy to do that with anyone who would like her to because the schedules are not very easy to interpret. She said as far as comparing the cities apples to apples, that is a very difficult thing to do but staff included public safety, law enforcement, but excluded anything having to do with enterprise funds or utility funds -- they tried to keep it at operating funds or general funds and take out all of the other ones that are very different. She advised that staff did the best they could. z:\council packets\2011\r6-16-11\110523m.docx Page 11 of 15 Councilmember Leger agreed that it would make more sense for Ms. Ghetti to sit down with Ms. Kavanagh and go through the schedules. He commented on the fact that the numbers have been constantly changing and the budget is still a work in progress. Additional discussion ensued relative to the fact that Councilmember Elkie is a member of the Executive Budget Committee and that Ms. Ghetti is talking about (in layman's terms) using some savings to pay down some of the debt; taking off $2.9 million and owning the Town Hall free and clear; the fact that this will save the Town approximately $276,000 over the term of the loan and will free up about $350,000 that could go into the General Fund and assist the Town in balancing its budget; the fact that another part of it is restructuring the debt on the Community Center for a savings of $193,500; Councilmember Elkie's support for paying down the Town's debt and realizing a substantial savings; the fact that it is proper and appropriate to use the interest paid on the excise tax to pay off the buildings; the sustainability factor; the fact that staff has done a great job and built up Town savings/funds and in the midst of a decline they started the Rainy Day Fund; the importance of celebrating all the savings the Town will realize; the fact that the Town can no longer collect General Government fees and the monies that they have could not finance any of the proposed identified projects and since they cannot collect the fees anymore, the amount would never increase to the point where they could be used for the projects; staff does not know how the bond rating agencies are going to react to this specific activity; discussions with the Town's financial advisors relative to a possible effect on the Town's bond rating and the fact that they are not using the money they are taking from reserves for operating -- they are using it to pay down debt -- so the advisors do not believe there will be any impact but until they receive notification from the bond agencies, nothing is set in stone; the fact that the reserve balance will be brought back up; the fact that no one wants to increase taxes especially during this economic downturn; Councilmember Elkie's question as to whether staff could come up with a way to not increase the telecommunications tax and still balance the budget and Ms. Ghetti's reply that the reason staff included the increase in the sales tax is because they have been telling the Council that whate ver they do they want to make sure that it is sustainable and staff doesn't want to have to come back to the Council again next year with this; Ms. Ghetti's comment that if the Council decides that they don't want to increase the telecommunications/utilities tax staff will do whatever it takes to balance the budget with the understanding that next year staff will be back because they will just have enough to balance this year's budget (next year there will be increases in public safety so staff will likely be back); Councilmember Elkie's suggestion that perhaps they put the increase on hold for this year and see what happens with the road bond (and then come back to the residents and explain things more clearly after that); community contracts and other items that have yet to be talked about; Councilmember Dickey's comment that it is important to have courage and their eyes open and talk about everything (nothing is off the table) and she would like to do that this year. Mayor Schlum stated that Audra Koester-Thomas has submitted a request to speak and asked her to come forward at this time. Ms. Koester-Thomas said she wanted to talk about the new proposed recommendation to fill the revenue gap and added that according to her calculations there is $1.4 million coming out of the General Fund revenues and about $500,000 borrowed from ourselves (vehicle replacement, other capital projects, etc.). She stated that she didn't hear any discussion this evening about how that would be repaid or is that a one-time call and they will not be refunding those funds. Ms. Ghetti responded that regarding the $400,000 coming out of the General Fund reserves, that is actually surplus revenues over and above what is required by the Town's fund balance policy. They would not be required to refund that and would still be within their policy. The General Fund Reserves of $1 million would be replaced with any General Fund Reserves that they have this year or next year and the year after. The $500,000, if required from the Capital Projects Fund or the vehicle replacement fund, would also be replaced with any General Fund surpluses. She noted that there is $1 million from the General Fund Reserves and explained that if they drew down the General Fund Reserves by $1 million to pay off this bond, if they have reserves at the end of this Fiscal Year, which she believes they will based on all the revenues that are coming in z:\council packets\2011\r6-16-11\110523m.docx Page 12 of 15 and their expenditures (likely to have surplus), her proposal would be that the surplus go directly to repay the General Fund Reserves balance before going to Capital Projects. She advised that they will have to make adjustments to their Financial Policies (a resolution to do that). Mayor Schlum asked about the General Government development fees and whether th at is a capital improvement dollar amount and Ms. Ghetti replied that that is an amount that would not be replenished because it has to go away (if they don't spend it they are going to have to refund it). Ms. Ghetti confirmed that the $400,000 is over and above what they have today. The Mayor referred to the $500,000 capital item and Ms. Ghetti stated that that would be used if required -- if they needed that (there wasn't enough in surplus funds left over from this Fiscal Year and again staff believes there will be). If needed they will borrow from the Capital Projects Fund and that will be the first fund to be replenished with any surplus revenues. Councilmember Brown commented that he is a little bit more optimistic than some of the statements that were made tonight. He said that he is in the construction industry and he believes that Fountain Hills is getting ready to grow again -- he is seeing it and feeling it. He commended the Executive Budget Committee for what he believes is an absolutely brilliant proposal. He added that if there is any way they can avoid coming up with a telecommunications tax to balance the budget (and he believes there is) that would be wonderful. He further stated that he would like to somehow "wring out" a 1% raise for the Town staff. He said he backs this up by looking at going from 88 employees down to 59 so every employee is doing about one and a half times or maybe even two times the work they were doing before the slowdown started. He noted that the services provided are still excellent and he hasn't heard one complaint from one person about depleting services. He said they really needed to consider doing this for Town staff. Mayor Schlum clarified that the 1% that was discussed previously was not an across the board raise; it was an innovation type of bonus. He asked whether Councilmember Brown was talking about something else. Councilmember Brown advised that he is not a big fan of innovation type bonuses because now they are waiting for one person or a group of people to say, "You’re the winner" and in one person's eye they may be the winner when in fact they may not be the originator of it. He said that it gets too complicated. He added that he is proposing, if possible, an across the board 1% increase. He noted that it would cost about $25,000 plus retirements and add ons and he doesn't know what that multiplier is, perhaps 18%. Mayor Schlum agreed that staff has done more with less and said that he is glad that Fountain Hills has been able to keep staff's salaries level and not institute furloughs like other communities. He said that he would like to do that too but is not sure they can get that done. In response to a question from the Mayor, Ms. Ghetti advised that the budget still contains a $25,000 appropriation for the Innovation Program, which would equate to about 1%. She added that they didn't intend it to be used for raises; it was intended to be for the Innovation Award Program. Councilmember Dickey stated that she would support a 1% across the board increase for Town staff. Councilmember Elkie also concurred with Councilmember Brown's suggestion. He noted that the Town has experienced massive layoffs and cuts. He said that this is a well deserved increase. Mayor Schlum stated that they will talk further about this. z:\council packets\2011\r6-16-11\110523m.docx Page 13 of 15 Vice Mayor Contino asked if the increase would include the Mayor and Council and Mayor Schlum said that he didn't believe that it would. Ms. Ghetti advised that she believes that the Council is okay with the bond proposal to pay off the debt but she is not sure as far as the telecommunications tax where they want to go with that. She added that on Wednesday she would like to bring back the resolution to adopt the maximum amount (whatever that is) and if it includes the telecommunications and utilities tax it will be $39.1 million and if it does not it will be $38.8 million so staff would like some direction on that (they need to get it published and start moving on that). She added that staff could still work out the details on the fee schedule and they can reduce the budget and still have the dialogue but they need to start the clock ticking. Mayor Schlum stated that he has heard primarily not to look at a telecommunications/utilities tax and said that they have all been reluctant to increase any taxes and they haven't, except for the bed tax, for at least three years now. He added that they might have to talk about that next year but hopefully as long as revenues continue to increase (sales tax) they may be able to get by next year as well. Vice Mayor Contino discussed expenditure options and said they have law enforcement going from $3.8 million to $3.4 or $215,500 and the Mayor said that was previously. The Mayor said that they had some good dialogue that the Vice Mayor was part of and staff is not considering that as an option right now unless they want to bring it up. Councilmember Leger asked whether staff is looking for motions from the Council. He said it sounds like they are in favor of paying down the debt in accordance with the process that has been brought before them. He added that the other question has to do with the telecommunications tax. The Mayor stated that the only thing on their agenda is the resolution so is staff just looking for dialogue or a motion on this. Town Attorney Andrew McGuire advised that either a motion of just general dialogue will suffice. He said that tonight he thinks it has worked well to just hear the discussion and Ms. Ghetti has been able to determine when there has been a Council majority on the issues. Councilmember Leger stated that he just wants to clarify where they are at. He said he is hearing that the new option that has been put on the table since the last Council meeting they are on board with (paying down the debt and restructuring). He added that they are not in favor of increasing the telecommunications tax and noted that that is a loss of $750,000 and with some wiggle room in there and a contingency fund of $313,000 he believes that is doable. He said that the Mayor mentioned that staff wanted them to come back with a maximum on Wednesday and that being the case there is one other piece to the puzzle that they need to talk about and he is not sure if they want to do that this evening. He stated that that is capital improvements because if they take money out of the budget this year for capital improvements or defer them, that is going to take down the maximum amount. He has $825,000 in capital fund reductions that they need to discuss and that will impact th e maximum. He noted that these are things that he mentioned at the last meeting that he believes are still in the Capital Funds budget. He stressed the importance of talking about capital if they want to arrive at the maximum amount. Ms. Ghetti commented that they can adopt the maximum and still go lower. Councilmember Leger replied that he understands that but he would prefer to publish the lower number rather than the higher one. Mayor Schlum asked where they were on that and what is included in the $38.8 right now and does it include the $825,000. z:\council packets\2011\r6-16-11\110523m.docx Page 14 of 15 Ms Ghetti responded that the $38.8 is just for next year and staff has not made any adjustments to the budget document or the numbers. She said that they can bring back information on Wednesday regarding that and have a discussion on the capital projects piece and the budget. She reiterated that she just hopes that on Wednesday they can adopt the maximum so they can move forward because they won't have another meeting until June 2nd. Councilmember Leger stated that to enhance that process so that staff can get a jump start on it, he is looking at what the Council has and he knows that Mr. Mood is working on it as well so there might be a gap between the two of them. He said that he is going to mention some things and take notes and maybe in that way they can save some time going forward. He said that for the capital fund for 2011 -12 he is suggesting that they defer the following capital expenses: Project #3008 - Design of Four Peaks Park - $50,000 Project #3019 and Project #3020 - Design of joint parks with the District - $150,000 Defer the Palisades infrastructure (the poles) - $400,000 Project #F4012 - Re-look at the Centennial Project ($125,000 is in the budget) - reduce to $50,000 Project #P3022 - Aerators - Defer out - $150,000 Councilmember Leger advised that the sum total is approximately $825,000 and said that these deferments will not affect their infrastructure - they are new projects, new start-ups. He added that a lot of it is for design wo rk that frankly they don't have the money to fund. Mayor Schlum asked if there was anything else staff should be more prepared for at the next meeting. Mr. Mood addressed the Council and said he wanted to respond to Councilmember Leger's comments. He noted that as far as the traffic signal at Palisades & Saguaro, they had one bad pole and took one from the Shea Climbing Lane project and that $400,000 project has been moved out to Fiscal Year 2015 and staff will continue to monitor that signal on a yearly basis and adjust it accordingly. He added that with the two parks and the joint use with the schools, those have been deferred at least one more year so that is $150,000 they moved out already. He stated that the Fountain Lake water quality improvements is still in this year's budget but staff agrees that it can either be moved out or reduced. He added that they probably would want to hire a Sanitary consultant to put together the Lake Management Program so there may be some expenditures there but obviously a lot less than $150,000. He further stated that as far as the Four Peaks Park Master Plan, the $50,000 is in this year's budget but he can talk with Mark Mayer about perhaps moving that out for a year. He added that for the Centennial Circle, staff lowered that from $125,000 to $110,000. He said that they can look at reducing it further but they don't have any design plans unless Mr. Mayer has something that has a better estimate that they can talk about. Councilmember Leger thanked Mr. Mood for his input and said that is all he wanted to clarify because he knows that Mr. Mood has been working on these things and for the Council to be able to adopt the maximum on Wednesday if the adjustments are made between now and then it would be helpful. He s aid he doesn't know how the rest of the Council feels about this but they can talk about it Wednesday. Councilmember Dickey stated that they are not going to go into the community contracts as far as Wednesday goes -- that will just be something later on down the line. Ms Ghetti advised that because they are so late in the program staff has not had a chance to have dialogue with any of the groups yet. She noted that staff has contacted most of them and said bring forth your proposal and then the Budget Committee will continue to look at those and come back with a recommendation and fi ll in the amount -- they can make adjustments. Mayor Schlum commented that right now what is in the budget is a 20% reduction and Ms. Ghetti concurred. z:\council packets\2011\r6-16-11\110523m.docx Page 15 of 15 Councilmember Leger extended his appreciation to staff and to the Executive Budget Committee for their excellent, hard work and creative solutions. Mayor Schlum said that he liked the format of the meeting; they received a lot of public input and he hopes that they receive more. He encouraged attendance at the Wednesday meeting and thanked everyone for their valuable input. AGENDA ITEM #2 - ADJOURNMENT Councilmember Brown MOVED to adjourn the meeting and Vice Mayor Contino SECONDED the motion, which CARRIED UNANIMOUSLY (7-0). The meeting adjourned at 8:18 p.m. TOWN OF FOUNTAIN HILLS By __________________________ Jay T. Schlum, Mayor ATTEST AND PREPARED BY: ________________________________ Shaunna Williams, Acting Town Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Special Budget Session held by the Town Council of Fountain Hills on the 23rd day of May 2011, in the Town Hall Council Chambers. I further certify that the meeting was duly called and that a quorum was present. DATED this 16th day of June 2011. __________________________________ Shaunna Williams, Acting Town Clerk