CITY OF PEORIA, ARIZONA PUBLIC SAFETY ADMINISTRATION BUILDING, PEORIA ROOM April 7, 2006 A Budget Study Session Meeting of the City Council of the City of Peoria, Arizona was convened at the Public Safety Administration Building (PSAB), Peoria Room, 8351 W. Cinnabar Avenue, in open and public session at 1:02 p.m. Members Present: Mayor John Keegan; Councilmembers Cathy Carlat, Patricia Dennis, Joan Evans, Vicki Hunt, and Carlo Leone. Members Absent: Vice Mayor Bob Barrett Other Municipal Officials Present: Terrence Ellis, City Manager; Susan Thorpe, Deputy City Manager; John Wenderski, Deputy City Manager; Carl Swenson, Deputy City Manager; Mary Jo Kief, City Clerk; Constance Copeland, Assistant City Clerk; David Leonardo, Stephen Bontrager, Brent Mattingly, Grady Miller, Sandy Teetsel, Jeff Tyne, Steve Prokopek, Greg Eckman and Glen Van Nimwegen. Audience: Approximately 10 individuals were present. Fiscal Year 2007 Budget Workshop Terry Ellis, City Manager, gave an overview of the $216.7 million operating budget. He explained that this was a 22 percent increase over last year. Mr. Ellis stated that this budget was comparable with the budgets of other comparable cities the size of Peoria. The Budget includes requests for 96 new full time employees (FTEs) which include 37 FTEs in the area of public safety, 23 FTEs for the Fire Department, 12 FTEs for Police, 2 FTEs in the City Attorney’s Office and Municipal Court, 25 FTEs are to support facilities slated for construction in the Capital Improvement Program and 35 additional FTEs. Ten of the 35 additional FTEs are supported through user charges or outside funding sources. Mr. Ellis stated that Staff was presenting a balanced budget with sustainable revenue. There are, however, Legislative actions that may have an impact on the budget. Discussion ensued regarding state shared revenue, sales tax impact, and the local transportation tax. Mr. Ellis reported that this is the first time the Transportation Sales Tax was incorporated into the budget. Mr. Ellis expressed appreciation to Council for their willingness to make policy changes regarding the transportation tax revenue. Mr. Ellis stated that Staff also recommended a ten cent reduction to the City’s secondary property tax rate in view of the recent increases in property valuations. Jeff Tyne, Budget Director, introduced the FY2007 Budget and explained the budget process. Mr. Tyne explained that a department’s budget supplement requests must define the need, include an itemization of the costs, explain how they will affect operations, and explain what results will be measured. Brent Mattingly, Finance Director, reported on the revenue generated by the one percent sales tax from retail sales. He noted that nine months into the current FY generated more revenue than expected. The 2006 estimate is $16.2 million, an 11 percent increase. Discussion ensued regarding the impact of proposed Legislative action on sales tax revenue sharing. Mr. Mattingly provided an overview of sales tax revenue from construction contracting and the impact of primary property tax collections which are projected to amount to $2.6 million. He explained that there are statutory limits on what can be collected from the primary property tax; the City is $700,000 below the limit. Mr. Tyne reviewed General Fund funding considerations. He noted that revenue is above mid-year estimates by $6.3 million. Also included in the budget were costs for the following: * Operating Costs – CIP-FY2006 $2.4 million * Increase to Arizona State Retirement System Rates $550,000 * Medical Inflation Increase $750,000 * Risk Management Costs $350,000 * Worker’s Compensation Increases $250,000 Discussion ensued regarding a Bill before the Legislature regarding how cities manage impact fees and transaction tax revenue. Mr. Tyne explained that departments had requested $25.8 million in total supplements to the budget; the Executive Budget Review Committee recommended $14.6 million in supplements. Mr. Tyne explained changes to the agenda schedule and reviewed the format of budget reports provided to Council for these meetings. Debbie Card, Treasury Manager, reviewed Peoria’s Trend Analysis and Planning with Effective (TAPE) Measures report which provides a systematic method to monitor and evaluate the City’s financial outlook and performance. Ms. Card explained that the report provides 18 comparisons of the City’s data with six other comparable jurisdictions in Arizona. Ms. Card reported that only one indicator changed since prior years (2001-2004). The City’s Residential Development indicator changed from a favorable trend to a neutral trend as the City’s residential development out paced commercial development during the past fiscal year. Discussion ensued regarding the demand for services created by residential development. Mayor Keegan declared a short recess at 2:05 p.m. and the meeting reconvened at 2:25 p.m. Mr. Tyne outlined adjustments to the Capital Improvement Plan (CIP) which included: Sports Complex Frontage Road $101,000 Right-of-Way-Lake Pleasant Parkway $453,500 Congestion Mitigation and Air Quality Trail – Northern to Peoria $252,500 Parke West Improvement District $11.0 million In response to questions from Council, Mr. Tyne reported that $252,500 should complete the trail project based on current estimates. Discussion ensued regarding improvements to Parke West. Mr. Tyne outlined the 10-year planned uses which are estimated to cost $725.6 million with Street projects accounting for 34 percent. Funding sources were identified and Mr. Tyne identified the proposed CIP projects for FY2007 including: Branch Library, Development Services Building, Communications Upgrade/Radio System, Municipal Court Expansion, Studio Equipment, Butler Water Reclamation Facility, and major intersection improvements. Mr. Tyne reported that the proposed total property tax rate is $1.4900/$100 of assessed property values. Owners of a median valued home ($280,701) would owe $418.24 a year. Mr. Tyne reviewed the schedule of departments whose budgets would be reviewed at this meeting. COMMUNICATIONS & PUBLIC AFFAIRS Mr. Tyne reported that the base budget for the Communications and Public Affairs Department is $1.5 million with $429,623 in supplemental requests which includes 1.5 new FTE positions. The FY 2007 Communications and Public Affairs Department total budget request is $2 million which is a 17.35 percent increase from Fiscal Year 2006. Grady Miller, Direct of Communications and Public Affairs, reported that supplemental requests included: * Pioneer Memorial $100,000 * Public Art Master Plan $100,000 * Community Branding Project $90,000 * Video Production Specialist $71,183 * New Peoria Arts and Crafts Festival $55,000 * Part-time Cultural Arts Coordinator $42,760 * Vehicle for Peoria Channel 11 $29,680 Discussion ensued regarding community branding and how neighborhoods will be incorporated. Jim Brink, Marketing Manager, explained that there are three distinct areas of the City. There will be a clear identity developed with sub-identities also developed. In response to questions from Councilmember Dennis regarding the use of the Channel 11 studio by outside users, Mr. Miller responded that a fee schedule may be developed for those purposes. Discussion ensued regarding options for the $100,000 Public Art Master Plan. Mayor Keegan stated that during this budget review, Council may identify a number of proposals for consideration and can prioritize these proposals at the end of the budget review. MAYOR AND CITY COUNCIL Mr. Tyne stated that the base budget for the Office of the Mayor and Council is $829,789 with $72,663 in supplemental requests which includes one new position. The Fiscal Year 2007 for Mayor and Council total budget request is $902,452 which is a 13.51 percent increase from Fiscal Year 2006. Mr. Miller explained that the supplemental budget request for one additional FTE was identified at the Council workshop. Terry Ellis, City Manager, stated that if Council supports this request, the position could be filled this summer. CITY MANAGER Mr. Tyne reported that the base budget for the Office of the City Manager is $1.6 million with $216,228 in supplemental requests which includes 1.5 new FTE positions. The Fiscal Year 2007 City Manager budget request is $1.8 million which is a 40.77 percent increase from Fiscal Year 2006. Mr. Miller explained that the supplemental budget requests include an Assistant to the City Manager, funding for legislative tracking and adds a number of safety and emergency preparedness items such as changing a Safety Specialist to full time, funding an emergency preparedness exercise, maintaining the Emergency Operations Center and training staff. Mr. Miller added that the supplements also include sharing funding with Intergovernmental Affairs for a Neighborhood Day at the Legislature. Mr. Ellis explained the supplemental request for an Assistant to the City Manager. Presently there is no professional level staff person reporting directly to the City Manager who can write reports or represent the City Manager at meetings. Mr. Ellis stated that Grady Miller had this responsibility before assuming the position as Director of Communications and Public Affairs. Mayor Keegan commented on the continuing effort to lobby Washington on behalf of Luke Air Force Base. INFORMATION TECHNOLOGY Mr. Tyne stated that the base budget for the Information Technology Department (IT) is $6.8 million with $1 million in supplemental requests which includes four new FTE positions. The Fiscal Year 2007 Information Technology total budget request is $7.9 million which is a 16.48 percent increase from Fiscal Year 2006. Kris Lambertus, Information Technology Development Services Manager, described the numerous major projects in progress which include a legal practice management system; City Clerk document management upgrade; CIP project management software; and voice, data, infrastructure and technology projects related to new City facilities such as the Management Operations Center, Rio Vista Phase II expansion, the new northern library, and Butler Water Reclamation Plant. Ms. Lambertus advised that many projects are initiated by the department and then the IT portion is transferred to the IT budget for implementation. Sandy Teetsel, Chief Technology Officer, presented an overview of the supplemental requests including funding several positions, server warranty extensions, secure network architecture/framework, and funding the IT Reserve Fund for server replacements. Ms. Teetsel also reported on the Enterprise Network in partnership with Utilities for a Microwave Network. She reported on the number of computers on the Network and the need for server growth and continuing security issues. Discussion ensued regarding spam filters. Ms. Teetsel explained that the City recently implemented new email addresses to shut off old messages and reduce spam. In closing, Mr. Tyne reviewed the agenda for the April 10, 2006 Budget Work Session. The agenda includes presentations by the Public Works, Budget, Fire and Engineering departments. Adjournment: Being no further business to come before the Council, the meeting was duly adjourned at 4:40 p.m. ____ __________________________________ John C. Keegan, Mayor ATTEST: ______________________________________ Mary Jo Kief, City Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Budget Study Session of the City Council of Peoria, Arizona held on the 7th day of April, 2006. I further certify that the meeting was duly called and held and that a quorum was present. Dated this 20th day of June, 2006. (Seal) ______________________________________________ Mary Jo Kief, City Clerk