HomeMy WebLinkAbout~Master - Special Meeting of the Ames City Council 01/30/2004MINUTES OF THE SPECIAL MEETING
OF THE AMES CITY COUNCIL
AMES, IOWA JANUARY 30, 2004
The Ames City Council met in special session at 2:13 p.m. on January 30, 2004, in the Council
Chambers of City Hall, 515 Clark Avenue, pursuant to law with Mayor Tedesco presiding and the
following Council members present: Goodhue, Goodman, Mahayni, and Vegge. Council Members
Cross and Wirth were absent.
FY 2004/05 BUDGET OVERVIEW: City Manager Steve Schainker, Finance Director Duane
Pitcher, and Budget Officer Carol Collings were present to review the documents contained in
the budget packet distributed to City Council.
Steve Schainker advised that the City of Ames lost $645,000 in 2003/04 from the state of Iowa
as part of its “reinvention” budget cuts after the budgets were finished, and these reductions will
continue in the future. Further reductions, totaling approximately $136,000, in state funding in
2004/05 will be $92,000 in Bank Franchise Tax receipts; $13,700 in Moneys & Credits receipts;
$24,000 in Homestead Credits receipts; and $6,500 in Military Credits receipts. Mr. Schainker
advised that the state-mandated residential property valuation rollback will again reduce the
percentage of property subject to taxation from 51.3874% in 2003/04 to 48.4558% in 2004/05.
This situation reduces taxable valuation by over $49,000,000, virtually wiping out all of the
increase in the value of new construction. Also, due to apartment buildings being converted to
condominiums, approximately $67,000,000 of commercial property previously taxed at 100%
of value will be taxed at 48%. Expenditures will increase for the state-mandated fire/police
retirement system by an additional $223,756 in 2004/05, and health care costs will cause an
additional $225,800 to be expended from the General Fund alone.
Reporting some good news, Mr. Schainker said that current projections indicate that the City
will receive $418,731 more than budgeted in 2003/04 in Local Option Sales Tax receipts, with
60% of this total ($251,238) available for further property tax relief and 40% ($167,493)
available for additional community betterment projects. He advised that these unexpected funds
will allow for the elimination of the $230,000 transfer from the Local Option Tax Fund to the
General Fund, as was done in 2003/04, and could provide a funding source for other projects.
Mr. Schainker stated that, for FY 2004/05, there will be no rate increases for electric, storm
sewer, sanitary sewer, or water utilities. Resource Recovery Utility will actually have a per
capita rate decrease from $11.75 to $10.50. Pertaining to the Electric Utility, Mr. Schainker said
that the City has reached a point where we must now prepare for our next major expansion to
meet our customers’ projected electricity demands. The City is engaged in an integrated resource
study to determine the most cost-effective alternative for meeting this demand, and once a
strategy is identified later this fiscal year, a financing plan will be prepared. Since our current
rate structure was not designed to accommodate this additional capacity expansion, the City
Council will have to consider a rate increase when we move ahead with this project.
Mr. Schainker brought the Council’s attention to the list of projects funded by Local Option
Sales Tax, which is generated from sales in the City of Ames. He pointed out that $3,366,655
of Local Option Sales Tax is used for property tax relief. Without these funds, the property tax
rate would be $1.93 more than requested.
Pertaining to economic development, Mr. Schainker advised that the balances in the City’s
Revolving Loan Fund and the Community Investment Fund are projected to grow to $826,580
by the end of 2004/05, and repayment to these funds is generating $94,000 per year. Because of
that, the annual $100,000 contribution from the Electric Utility to our economic development
incentive programs is being discontinued in 2004/05.
Duane Pitcher reviewed a series of Special Reports for the 2004/05 Budget. He said that despite
the substantial uncontrollable financial developments, the 2004/05 Budget reflects only a 3.28%
increase in the overall property tax rate – from $9.67 to $9.99 per $1,000 of taxable value.
Mr. Pitcher reported on the property tax levy breakdown, valuation percentage increases, Local
Option Taxes, taxable value, current and proposed debt service, and total levy by property type.
Mr. Pitcher also gave an analysis of change in tax dollar payments by property type, percentage
of taxable valuation by property type, and the effects of rollbacks. He showed that the rollback
adjustment means a reduction of approximately $13 per $1,000 taxable valuation for residential
property. A chart was also shown indicating the tax calculations assuming the $67,000,000
condominium conversions did not occur.
The changes in revenues and expenses for the General Levy were explained in detail by Mr.
Pitcher. Due to Department belt-tightening, the requests for contractual, commodities, and
capital items are actually less than the 2003/04 levels. Mr. Schainker acknowledged the
contributions made by the City’s departments to help make this possible. The City was able to
meet the goal of assimilating the financial setbacks into the budget with minimal impact on
service levels; however, Mr. Schainker noted that the City will not be able to continue to absorb
these types of reductions in the future without impacting services. He said that eventually the
Council will have to consider eliminating some services if we hope to keep property tax
increases to a minimum.
Mr. Pitcher described the cost of City services (which includes debt service and levies); Road
Use Tax revenue, which shows an increase for 2004/05; and the tax levy history.
Budget Officer Carol Collings summarized the revenue and expenses for the General Fund.
Revenues did not exceed expenses during FY 2003/04; there was a deficit of $154,864, however,
Ms. Collings reminded the Council that $230,000 was not transferred for property tax relief from
the Local Option Tax Fund to the General Fund in 2003/04. Economic development is no longer
funded by the General Fund; it now comes out of the Hotel/Motel Tax Fund. Also, there is no
Public Works General Fund.
Ms. Collings reviewed the Local Option Tax revenues. This fund has a balance of $1,227,477.
The Hotel Motel Tax Fund shows an ending balance of approximately $369,000. She then
reported on special revenues, which included: Housing Assistance, which has an available
balance of $238,505; a new fund, Community Development Block Grant, has been added due
to Ames achieving Metropolitan status; the Park Development fund; and the Economic
Development fund.
Carol Collings discussed the Water, Sewer, and Electric Operations Utility Funds. For the Water
Utility, major capital improvements have been financed from current revenues and the Water
Fund balance. She pointed out that the Sewer Utility (aka Water Pollution Control) retired their
debt service in 2003/04. Discussion ensued over the Parking Operations and Improvement
enterprise fund, where the General Fund Transfer increased approximately $47,000 (to
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$138,915). Ms. Collings advised that next year, the City will be finished replacing the parking
meters; they will all be digital.
The Storm Sewer Enterprise Fund was reviewed, bringing the Council’s attention to the amount
funded by G. O. Bonds. Lastly, Ms. Collings briefly reviewed the Ames/ISU Ice Arena Capital
Reserve Fund.
Public Works Director Paul Wiegand reviewed the Resource Recovery Operations and
Improvements Fund and gave financial projections. He pointed out that a few years ago, this
Fund was showing a deficit. At that time, the City Council approved an increase in the per
capita fee and the tipping fee. Subsequent to that increase, more material was processed and less
material was sent to the Boone County Landfill, which resulted in increased revenues. Mr.
Wiegand advised that staff is recommending that the per capita fee be lowered to $10.50 for FY
2004/05. The tipping fee will remain at $52.75/ton.
Mr. Schainker advised that the ASSET and COTA funding recommendations are contained in
the Council’s budget packet for their review. He brought the Council’s attention to the proposed
fee increases, specifically detailing those that are not shown in the proposed budget.
Requests for funding letters that have been received from various organizations were then
reviewed by Mr. Schainker. These requests will need to be addressed by Council during the
Budget Wrap-up on February 10.
Mr. Pitcher pointed out that the City of Ames has received the Excellence in Budget Reporting
Award from the Government Finance Officers Association for the last 18 years. During their
last review of our budget, they recommended the inclusion of financial policies. A document
has been drafted and will be presented to the City Council on February 24 for their approval.
COMMENTS: Moved by Vegge, seconded by Goodman, to refer to staff the letter from Ball
Plastics Corporation dated January 28, 2004.
Vote on Motion: 4-0. Motion declared carried unanimously.
ADJOURNMENT: The meeting adjourned at 3:57 p.m.
_______________________________ _____________________________________
Diane Voss, City Clerk Ted Tedesco, Mayor
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