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HomeMy WebLinkAboutMin - CC - 1977.08.03421 BURLINGAME, CALIFORN IA August 3, 1-977 CALL TO ORDER An adjourned meeting of the Burlingame City Council was held onthe above date in the City HaIl Council Chambers. The meeting wascalled to order at 8:05 P.M. by Mayor A.C. "Bud" Harrison. PLEDGE OF ALLEGIANCE TO THE FLAG: Led by Charles F. Schwalm, City Manager. ROLL CALL COUNCIL MEMBERS PRESENT: COUNCIL JIIEMBERS ABSENT: BUDGET AMSTRUP, CROSBY, HARRISON, MANGINI, MARTIN NONE Mayor Harrison turned meeting over to Councilman Amstrup, Budget Chairman. Chairman Amstrup referenced 1977-78 Proposed Budget and 1977-78 Proposed Budget Appropriation detail in reviewing followingportions of budget: PLANNTNG Chairman Amstrup noted Special Services item in the amount of $3r500to cover fees for recording secretary and hearing notj-ficationservices, and commented this is recommended because of extra timerequired for regular staff on this function. Council had noobjection, and Planning Department budget was approved. GOVERN}4ENT BUILDINGS Chairman Amstrup noted increases because of inflationin employee services, but $1r000 higher in Maintenance He recommended this budget be accepted. slight & Operations. Councilman Crosby questioned lack of capital outlay. FinanceDirector stated there was none this year, that last year's expenditureof $18,716 was for lease of mail room equipment and modification on fire alarm system. Council concurred in accepting Government Buitding budget. NON- DEPARTMENTAL Chairman Amstrup noted items of $17r000 for Chamber of Commerce; $60r000 for Convention Bureau, an increase because of increasedpercentage of contribution; and $2r000 for Sister City, a substantialraj-se. He questioned this last amount. Finance Director reported this figure was an estimate of the amount of expenditure to expect. Mayor Harrison recommendedapproval of this amount because Cuernavaca, Burlingame's SisterCity, will host the International Sister City convention in 1978. Councilman Mangini concurred. Finance Director directed Council's attention to amount of $230,000 for l{orkers Compensation and $195,000 for Liabil-ity,Property and Auto Insurance, both under City Self-InsuranceProgram. He commented amount for Workers Compensation is aboutone-haIf of what would be paid under State Compensation r so theself-insurance program is advantageous. He noted his concern,however, for reserve in Workmen's Compensation, and recommended thatthe City Council desi-gnate part of the General Fund balance to r.-v'lrrilF@t .ffirq'tal!"".T-@.,ry { I i 1 1 422 absorb catastrophic losses in the self-insurance program. He stated that reserves woufd be built up over the years, of course, but it woufd be advisable during this initial part of the program to set aside this amount. Councilman Martin noted projected reserve figures of almost $700,000 and questioned why such a large amount. Finance Director cited insurance consultant's recommendation that the City build up to a reserve that would be 2.5 times the annuaf premium City would have paid under State Compensation. With budget f j-gure of $230,000 for Workers Compensation it would take about ten years to build up a sufficient reserve. Councj-l-man Martin noted the large amount of reserves built up in both funds and questioned if there would be catastrophic Iosses in both funds in the same fiscal year. He asked j-f reserves designated out of the General Fund would be transferred back to that fund as insurance fund reserves are accumulated. Finance Director stated this would be a good policy in managing the reserve fund. He pointed out that it is only by direction of the City Council that these general fund bal-ance monies can be so designated. Cor:nci lman Martin approved the idea of insurance reserve if monies were transferred back to general fund yearly as reserves accumulate; and if there were only one reserve fund for the two pIans, repeatj-ng it is not l-ike l-y there would be major losses in both funds in one year. Finance Director agreed there could be a fund designated as "general insurance reserve. " Council-man Mangini questioned if monies could be taken out of this reserve fund if needed. Finance Director replied the only restriction on this fund would be the action of the Counci-I. Funds could be taken out at any time. City Attorney pointed out pending State legislation that would restrict future property tax revenue to a percentage increase of this year's revenue, with a maximum percentage increase to be determined effective in I9 79. Councilman Martin stated this \"ras the reason he wanted the provision that monies could be returned to the General fund. Finance Director commented the intention is to build up reserve funds year by year to an amount which would be inviolate. Counci lman Martin r4ranted designated for insurancegeneral fund as reserves policy statement drafted that money reserves could be transferred back to accumulate. Chai rman budget. Amstrup stated this woufd be submitted with the final Councilman Mangini questioned if amount of $5,000 for other contractural services in non-departmental budget was approved. Counci lman Martin urged that amount of $2,500 for Civic Arts Council ln this $5,000 item be frozen until released by Council. with this stipulation, budget for non-departmental was approved. CAPITAL IMPROVEMENT Finance Director pointed out that addition to draft capital improvement budget would include: Park Corporation Yard $53,700PoIice Communication Systems 80, 000 Handicappeil ramps and driveway cfosing 15,000 Benihana pedestrian bridge 21,000 In response to question from Councilman Crosby, he confirmed that Library Securities Systems ($14,000) would be included in this year's budget. Repl-ying to question from Councilman Mangini regarding the police station, he stated that $350,000 is not money transferred into the genera] fund from the police station fund, but rather it remains in the general fund for this project I 2 3 4 5 as do the Federal Revenue Sharing funds. Mayor Harrison questioned the possibility of Revenue Sharing funds being jeopardizeil if project is not started. Finance Director stated he and City Manager had been corresponding withthe Government agency and indications are that they realize thedifficulties involved and are incl-ined to be lenient. Finance Director informed Council the cost of sidewalk repairsin front of Fire station #3 had been revised to $7,500" Chairman Amstrup asked that Council- add this amount to his list of "Unexpected Expenditures" in his August L, 1977 budget fetter. Chairman Amstrup reported that previous budget deficit was $42,000, reduced by Transir monies retention of $35,000 to $7,000, to which must be added amo r:nt for Benihana bridge of $21,000and sidewalk repair (fire station) reduction of $2,500 for a netdeficit of $25,500. He reviewed recorunendations in his budgetIetter of August l, 1977:. Gradual initiation of zero based budgeting A11 future projects presented to Council bet\reen budgetsshould specify costs and from where project will derive funds.Establishment of S-year Capital Improvement Program A11 training and safety funds to be put in one fund undercontrol of City ManagerInvestigation of change to single fund criteria for Parks,Library, Recreation, etc. Mayor Harrison suggested discussion of zero based budgeting at a study session with a report from the Finance Dj-rector. Councilman Mangini questioned the use of the single fund criteriafor Parks, etc. in connection with zero based budgeting. FinanceDirector stated it is possible that the use of this criteria couldfacilitate the process. Councilman Martin thought that safety departments' training shouldbe an exception to control- of the City Manager since consistenttraining programs for these people are required. Chairman Amstrup stated his suggestions were for investigation and consideration in the future since they will not be implemented immediate 1y. Council had no objections. Chairman Amstrup comrnended City Manager and Finance Director fortheir excellent work in preparation of the budget. He suggestedCouncil consider reducing Recreation, Library and Park funds toan extent resultj-ng in a deficit of 980,000 in these funds. This hrould red.uce taxes by 4C. In addition to the previous budgetdeficit of $25,500, this would result in a total deficit of $105,000, which is about 1& of the total cost of government. Hestated, however, that new legislation is being considered, andasked Finance Director to explain the proposed State 1aw. Finance Director reviewed this tax reform faw which would Limitthe increase in the revenues Burlingame could co11ect. The Statewould identify fiscal year L977 as the date on which to basethis limitation. A 168 increase over 1977 property tax revenueswould be the property tax revenue limit established as effective in1979. Thus the effect of a tax reduction might be to force theCity to look to other sources of revenue, such as utility taxes,etc. He added that if the City plans in one year to spend morethan it is going to co1Iect, then in the following year the rateof increase in the property tax revenues has to take this intoconsideration. From his standpoj-nt, the amount of the tax red.uctionis such that it j-s rea11y a matter of Council discretion. Oneper cent of the expenditures or 28 of the total reserves isnot going to affect the City's financial position drastically. Hecautioned, however, that larger deficits would start to impalrcapital projects that are planned. If larger deficits are budgeted, 423 424 they woutd have to come out of insurance reserves, police station funds or other designated balances. Mayor Harrison commented that regardless of whether or not the new law passes, the City is looking this year at a constrained budget; and next year also in terms of whether to operate at a larger deficit or cut. Councilman Mangini was concerned that Council not by the phrase "deficit budgeting" and noted the C the money. Finance Director commented. that when "deficit" in loca1 budgeting, it is not necessari in U. S. Government budgeting. beitv you 1y de te rred does have use the term the same as Councilman Martin said he had a problem with cutting the tax rate 4+, sj-nce by doing this the City is merely digging into its reserves. He thought there were only two \"/ay s to cut tax rate: cut services or eliminate personnel. Otherwise, a tax cut does not accomplish anything. The only way he wouJ-d approve was if there were less money being spent. Chairman Amstrup stated there i,/e re excess funds at the end of this year in several departments. He disapproved of this and thought homeowners deserved a tax cut' especially since assessed evaluations in Burlingame have raised an average of 178. Councilman Mangini could relate to lowering the tax rate 2+ or possibly 3C, but warned it was not good judgment to reduce too much this year only to raise taxes next year. Chairman Amstrup reviewed his recommendations for future balance of revenues and expenditures: I. Reduce Spending; 2. Encourage new tax producj-ng projects; 3. Pursue getting more grants; 4. Cut servicesi 5. Look for additional tax sourcesi 6. Cut personnel 7- Combination of all these. He stated he woufd like to see a tax cut and thought it could be effected without jeopardizing the City greatly. Mayor Harrison said he dj-sapproved of too large would approve a tax cut of 24. a deficit, but Councj-l-man Martin again pointed out that j-f the City had cut the money in the budget, then it would have cut the tax rate. This year's budqet is greater than last year's; therefore, a tax cut wou1d mean going into reserves. Councilman Amstrup itemized excess funds whj-ch remained in J.976-L977 budget for departments such as Library, Recreation and Park. Counci lman Crosby questioned the contingent fund, sma1l in comparison with last year's. Finance Director informed him that fiscal 1977 had a large contingent fr:nd because of the amount needetl in labor negotiations. At this point, Chairman Amstrup invited audience comment. Mr. Joe Galligan, 1516 Hil-Iside, Burlingame, addressed Councif. He displayed Government code sections to members of Council, and stated he knew of nothing in State l-aw that would permit Burlingame to have reserves of $4,000,000. He stated the City was acting as a banker for the homeowners, and was not entitled to any tax revenue at all. He proposed that the Council eliminate property taxes entirely for a year because of the reserves which it held. He stated that gas tax funds should be used for sidewalk repair instead of other purposes, and urged that Council give consideration to selection of City Manager, in anticipation of future retirement of present cj-ty Manager. City Attorney tol-d Mr. Gilligan he saw no lega] problem with this year's City budget and did not agree with Mr. Gilligan's views. Chaj-rman Amstrup informed Mr. Gilligan the City is not collecting additional monies and puttj-ng them into reserve' Even if the tax rate were not dropped, the City would sti1l be operating at a deficit. 425 There were other Council and staff comments to the reserves would cause projects to go to bond issues, fund is an integral part of good business practice, of no reserves is fiscal nonsense. Finance Director pointed out that reserves of revenue sharing have already been designated for specific uses: Bayside Park, Broadway overpass, Sewer outfall, and an insurance reserve fund had been recommended. Mayor Harrison commented that because of Burlingame's method of paying for projects with reserve monies, they were not in the bad financial position some other Peninsula cities were. point that no a reserve and a po li cy Counci lman Mangini moved that the City reduce property tax rate by 3C, second by Mayor Harrison. Finance Director specified following rates per $100 for the foJ-lowing funds, based on total property tax of $0.89:General .06 Storm drain .032Library .19 Retirement .33 Recreation .07 Civil defense .005Park . 15 Debt service .053 City Attorney pointed out resolution must be passed to this effect. HOTEL TAX City Attorney commented he understood a couple of hotels had notpaid the increase, and pointed out that by agreement the City has increased its contribution to the Convention and Visitors Bureau as of Jufy L, 1977. He stated City Manager had recentlysent letter to hotels informing them of this tax. City Manager con fi rmgS+^stating he had \"/ritten hotels thatCity had found they/ii6t" colle cting the increase. They willcollecting it as of August l, L977. theaff be Councilman Martin questioned who had the responsibj-lity for initiatingthis tax. City Attorney said the legal burden was on the hotels. Councilman Crosby suggested collections could be confirmed byaudit, and the City could then collect for July. Chairman Amstrup stated he thought it should be the City'sresponsibility to j-nform business entities of increase in taxes. City Attorney stated he assulred City position would be not to makehotels pay from the July 1, 1977 date. Council concurred. RESOLUTION NO. 68-77 ''FTXING TAX RATE FOR THE CITY OF BURLINGAME ffiNDTNG .luNE 30, 1978" was introduced by Councilman Mangini who moved its adoption, second by Mayor Harrison, carried on unanimous roll- call- vote. RESOLUTION NO. 59_77 ''ADOPTING OPERATING BUDGET - CITY OF BURLINGAME ffiE 30, L978' was introduced by councilman Mangini who moved its adoption, second by Mayor Harrison, carried on unanimous ro11 cal-1 vote. Chairman Amstrup stated it was his unilerstanding that City hotels were not fully informed of the raise in hotel tax effectiveJuly 1, 1977, established by City ordj-nance. He consideredthat in order to be fair to the hotels the effective date of the ord j-nance should be changed. f 426 RENT Chairman Amstrup reported that the State Industrial Board rentsCity HaII Cor:ncil Chambers for $10.00 a day. He suggested this should be raised. Cor-rncif agreed to discuss at study meeting. l4eeting adjourned at 9:30 P.M. Respectf ully submitted, 7/ ii'-' Q Eve H. HillCity Clerk ADJOURNMENT