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Minutes 1993-06-17 ,J .. 131 MINUTES BUDGE'r STUDY SESSION OF 'I'HE CITY COUNCn~ THURSDAY, JUNE 17, 1993 Crry COUNCIL CIIAMBERS, 215 EAS'f BRANCH S'l'REET ARROYO GRANDE, CALIFORNIA The city Council of the city of Arroyo Grande met for a 1993- 1994 Municipal Budget Study Session at 5:00 P.M" with Mayor , Matthew Peter Gallagher, III, presiding. I 1.>---.E!.d\!.LSALllTE Hayor Gallagher led the Pledge of Allegiance to our Flag. l..-lillLL CALL Present were Mayor Gallagher and Council Members Drew Brandy, Bernard Burke, Gene Hoots and James Souza. Staff members present i were city Manager Chris Christiansen, city Clerk Nancy Davis and Finance Director David Bacon. , ~-REYlEH-QF CAPITAL PROJECT FUND POLICY Mr. Christiansen referred to his June 17, 1993, memorandum to the Council concerning the 1993-94 Budget Shortfall, and Provision. lie recommended that the proceeds from the sale of the Brush Poppers property be set aside for a Capital Improvement Program. lie recommended budgeting $300,000 for the possible taking by the State of the City's property taxes. Mayor Gallagher reviewed the memorandum and said the original General Fund budget deficit was $602,500, the Council net expenditure reduotions Were $75,050, and, with the possible State take of property taxes, the total budget deficit is $627,450. He said the Proposed Revenue provision includes a utility Users Tax at 5 percent bringing in $750,000, and the increase of the Transient occupancy Tax Rate to 10 percent bringing in $75,000, for a total revenue of $825,000. He said that brings the city to a Zero-based budget, with the sale of the "Brush Poppers" property being used for a capital improvement program. council Members and Staff discussed the date the taxes could be implemented, and Mr. Christiansen said there may be a 45-day public notice period before the ordinanoe implementing the taxes could be enacted. Ue said certain low inoome persons will be exempted from the utility USerS Taxes. Council Member Burke said he liked this proposed budget much better. lie said that since the cutback in the funds by the State is the reason we are facing the bUdget deficit, all of our citizens must be called upon to make up the deficit. lie said he did not think the City should increase reserve accounts or sinking fund accounts. lie said he was in favor of selling the city's land outside of the City and using the money for equipment replacement or as the need arises. He said he thought the city would see an increase in sales tax revenues, building and other sources as the economic conditions improve. lie said he felt the state take from the City would be less than ~300,000. Ue said he arrived at a budget shorttall of approximately $8,000, which could be made up from the expectations he mentioned previously. The meeting was opened to the public. BARBARA ROBINSON of 1262 Manhattan thanked the Council for its support of the city employees. MARIE CATTOIR of 195 Orchid Lane said she had empat~y for the City's unemployed and those living on fixed incomes. She said a lot of people are living just above the hardship level. She.sald the Council could forgo its salary. She said the salarles of the other employees should be limited also. She said raising the taxes of sonic Cable TV will raise some waves. DICK FRANKS of 679 Fairoaks Ave. advised the Council to set 132- CI'rY COUNCIL BUDGET S'I'UDY SESSION JUNE 17, 1993 the utility Users Tax at six percent. He said zero based budgeting works until large emergencies occur. He said a capital expenditure fund should be set up with the surplus monies. JAMES YACONO of 153 Tally Ho Road warned against an extra one percent utility Users Tax to set up a reserve fund. He said it would be an invitation to spend that extra money. He asked if there were any plans for returning the taxes collected to the citizens if the state returns the money it has taken from the City. lie urged the Council to conduct an annual review of the tax increase. Council Member Brandy spoke in favor of a six or seven percent - , utility Users Tax. lie said to retain the harmony and happiness , I Arroyo Grande has always had, it is necessary to look beyond the , zero budget. He said the road situation in Arroyo-Grande needs to be considered, as does the need for various kinds of equipment. He said surplus monies should be earmarked for specific projects. He said Arroyo Grande should be self-sufficient. He said he would be in favor of reducing the tax if the City's economic situation improves. lie said the City should be planning for the future. Council Member Souza said the budget proposed by Staff is satisfactory, but he agreed with Council Member Brandy that the utility Users Tax should be slightly higher in order to reconstruct Grand Avenue and Elm streets. He said the monies should be set aside and not used for anything else. He said maybe one-half to one percent could be added to the suggested five percent. Council Member Moots said he believed that the State will soon be better off economically, and that would be the time to set up improvement funds. He said he had seen the city use monies set aside for special projects being used for other purposes because it was necessary at the time. He said he would support setting up improvement funds in the 1994-1995 budget year if possible. lie said he would support putting the monies from the sale of the Brush Poppers land in a capital improvement fund. lie supported the staff recommendation of a five percent Utility Users Tax and a ten percent Transient Occupancy Tax. Council Member Souza suggested that there be annual review of the utility Users Tax. lie asked that the review be put in the ordinance. Mr. Christiansen said the city does an annual review of the budget, and the Gann Amendment puts a ceiling on city revenues. Council Member Burke said he would like to see the utility Users Tax be five percent because in Arroyo Grande 38 percent of the homeowners are 65 or older, and 19 percent of renters are 65 or older. lie said building reserves is not right when so many citizens are on fixed incomes. lie said it is not the right economic time. Mayor Gallagher said the budget does include a reserve fund of $250,000 far city emergencies. lie said he agreed with Council Member Burke that this is not the time to set up reserve funds.' lie said the five percent Utility Users Tax is as much as the City can ask for. He said if special funds were set up there should be safeguards to say that money is "committed." council Member Brandy said he looks at reserves like social Security that pays off in the future. lie said he would not li.ll:e to have to raise the Utility Users Tax again next year. Mayor Gallagher said the City has put in place some economies that hopefully will pay off. lie listed the concept of shared services of the police departments and the potential economic development of the commercial property near the Festival Theaters. --~--_._~_.- , . - ~ 133 . CITY COUNCIL BUDGET STUDY SESSION JUNE 17, 1993 Council Member Souza said the Council could revisit the idea of capital improvement funds if the city finds out the state will not be taking the planned for $300,000 in prop~rty taxes. Council Members directed Staff to place the 1993-1994 Proposed Municipal Budget on the Council Agenda for June 22, .1.993. Mr. Christiansen said the budget would include council Net Expenditure Reductions of $75,050, a utility Users Tax of five percent, a Transient Occupancy Tax Rate increase to ten percent and sale of the "Brush Poppers" property (profits to be set aside for Capital Improvement Program). I 4. ADJOURN..,EN'J.' I It was moved' by Moots/Souza, and the motion passed unanimously to adjourn at P.M. 1 I i ATTEST: ~a. ~ NANCY A DAVIS, CITY CLERK i