CITY OF ROCKY RIVER

OCTOBER 20, 2008

The Committee-of-the-Whole was called to order by Mr. Moran, President of Council, at 8:05 p.m.

Council Members Present: Mr. Hunt, Mr. Shepherd, Mr. Mylen, Mr. Furry,

Mrs. Arabian Whitman, Mr. Long, Mr. Moran

Administration: Mayor Bobst, Mr. Linden, Mr. Harrington

Law Director: Mr. Bemer

Press: Ms. Pritchard

The meeting was opened with the Pledge of Allegiance. President Moran welcomed four students of the government class at the high school who were in attendance.

MAYOR'S REPORT:

The Business to Business Expo was once more very successful with very positive comments from many of the more than 750 attendees. The Mayor thanked volunteers including Carol Benyo, in attendance at the meeting. The new Buy River loyalty incentive campaign described in the Mayor's Report last week was launched at the Expo.

Saturday's opening of Jake's Good Life at Beach Cliff Market Square went very well. Urban Home and Garden has moved to the center and had a soft opening on that day also.

Sunday's traditional Kiwanis Pancake Breakfast was very well attended. Dedicated Kiwanis volunteers served many hungry diners. The Mayor added that many churches and other community organizations support the good work of the Kiwanis.

Mayor Bobst alerted Council that on the NOACA website, a list of 2009 proposed projects is listed. Two large ones in Cuyahoga County are a bridge rehabilitation in Cleveland and preventive maintenance on I-90 which will include the route as it passes through Rocky River as well as Lakewood and parts of Westlake, and Cleveland. Further details are on their website.

Letters have been sent to Lake Road residents, business and property owners alerting them to ODOT"s decisions regarding phasing of the Lake Road project. The Mayor said that she was pleased that ODOT has agreed to that approach which will allow this project to move forward. The resurfacing of Lake Road will begin in the spring of 2009; in the spring of 2010 the reconstruction of the road from the clock tower east will take place. Early in the spring of 2010 will be the realignment and signalization project at Elmwood. The Mayor wished to alert all that the intersection at Elmwood will not be completed until the spring following resurfacing. This information is outlined in the letter.

The Mayor thanked Dale Pavlik, former coach and teacher at Rocky River High School, representing Markers, Inc., who donated seven tons of field drying product, valued at $2500, to Recreation Director Mike Patterson and his staff.

A letter has been received from United Way of Cleveland thanking City employees for all that they did to raise funds for United Way. The Mayor said that it shows again how City employees feel about the community and organizations that help serve residents.

At Thursday's monthly meeting of the Chamber of Commerce, Kory Koran will provide an economic development update. The meeting will begin at 11:30 at St. Demetrios Church.

Saturday will mark Spooky Saturday at Kensington School.

Because the Superintendent of the Wastewater Treatment Plant, Jeff Harrington, was present to present information on several ordinances, these ordinances were considered out of their normal order.

Ordinance No. 105-08: Mr. Harrington explained that this ordinance ratifies a project grant/loan agreement and promissory note with the Ohio Public Works Commission (OPWC) for next year's WWTP capital improvement projects. This grant/loan has been applied for and received. Its provisions call for a $1.5 million grant, $1+ million in a zero interest loan and a contribution from the WWTP Capital Fund. For the project, Metcalf & Eddy has been retained for engineering and design and Kokosing is the contractor. The amortization schedule in the exhibit to the ordinance shows an annual payment of $50,000+ for 20 years upon completion of the project. However, because costs are lower than projected, that cost will now be approximately $27,000 annually. This amount will be shared with Fairview Park, Bay Village and Westlake, the other communities which also use the plant. Savings are partly due to the fact that OPW will allow the WWTP to use the full grant before utilizing the loan rather than the usual percentage payments.

Ordinance No. 106-08: This ordinance will authorize the City to pay Rocky River's share of the loan for the above project. This ordinance is similar to those done on previous loan agreements and will be passed by all member cities to insure that all cities will pay their share of the loan repayment due on completion of the project. Currently, based on the current sewer flow and strength study, Rocky River's share is slightly more than 29%.

Ordinance No. 107-08: This ordinance will authorize a contract with ABC Piping to replace an existing HVAC system in a chemical storage building. The building was constructed 10 years ago, but the design did not accommodate the corrosive atmosphere in the building. The project has been redesigned by Metcalf & Eddy using stainless steel materials and plastic PVC air ducts. Both these materials are extremely resistant to corrosion and will, hopefully, provide a 30-year life on the new system for the building.

Discussion: Mr. Long asked if the exhibits for Ordinances 105-08 and 106-08 were identical. Mr. Harrington said they were, noting that the first contains the entire agreement and discussion modification of the existing executed agreement. The second is an ordinance that will be passed as with previous OPW projects by each of the four cities to authorize loan payment.

Mr. Moran confirmed that the amortization schedule listed the highest annual repayment amount possible, and that a smaller amount will probably be required. Mr. Harrington said it was possibly 50% of the amount shown.

Ordinances 111-08 through 116-08: Mr. Harrington indicated that these ordinances authorize the purchase of chemicals and services required for operation of the WWTP. They are passed annually.

• •This year, because fuel costs are increasing and there have been issues with raw materials used in these chemicals which have increased substantially, particularly sodium hypochlorite and sodium bisulfite. All suppliers have increased prices. Ferric chloride, however, has dropped from $308/dry ton to $302/dry ton, which is fortunate since large quantities are needed.

• •Regarding sludge hauling, Yaworsky Farms has once more been awarded the contract for removing digested sludge cake which it has done since 1984-85. Their cost increases have been very modest, particularly considering fuel costs. The other is a contract for removal of sludge to a landfill, a contract required by the EPA.
• •Removal of raw sewage sludge is also used as a back-up plan to remove this material, and will be used only in the case of an emergency if the digester does not function properly.

UNFINISHED BUSINESS:

Ordinance No. 94-08: Mr. Hunt indicated that this ordinance authorizes an easement for AT&T, and Council members are familiar with details as it has been pending for some time. Photographs of the screening installed at various buildout locations have been provided this evening. Mr. Hunt asked the Mayor and Law Director if there has been any communication from AT&T, and neither had heard from the company.

• •Mr. Shepherd suggested that instead of a perpetual easement, Council may wish to consider limiting the duration to 20 or 30 years because the future is uncertain. His other thought was that, since these easements are not in the right-of-way, Council may consider a provision in the agreement which obligates the company to follow the right-of-way legislation procedure or some other procedure so there is some oversight on the buildout.



• •Mr. Bemer said that he believes that there has been discussion with the Building Department concerning buffering of both of these potential buildouts, but he will confirm with the Building Commissioner.



• •Mrs. Arabian Whitman asked if there are other communities with more mature buffering which will give Council members a better idea of the eventual appearance. The Mayor said that in Lakewood, Fairview Park and Bay Village, there are examples. She suggested the installation on W. 210 approaching Bain Cabin and in Bay Village on Lake Road opposite Cashelmara.



• •Mr. Mylen asked if, in the screening on Linden, there is no landscaping facing the street because of the lack of space. Mrs. Arabian Whitman suggested it may be an access issue for maintenance purposes. The Mayor will review the landscape plan.

Mr. Hunt commented on the choice of buffering material which is salt-resistant. The Mayor indicated that Mr. Beirne, the Building Commissioner, spent some time in researching the topic to find the best plants for these locations. Mr. Hunt said this was a concrete step in the right direction. He will now await answers to the other issues so that the easements can move forward.

• •Mr. Bemer also noted that AT&T has agreed to install arbor vitae plants on the corner property, privately owned, of Bonnie Bank and Wooster.

Ordinance No. 99-08: Mr. Mylen commented that this ordinance, authorizing the purchase of software for the Municipal Court, has been discussed thoroughly in the past and was set for passage, delayed because only five members were present at the last Legislative Meeting. (Consent Agenda)

Ordinances No. 100-08: This ordinance will authorize billing for ambulance services. It was discussed by Director Linden some time ago and raises revenue to offset emergency costs. It is also in keeping with actions of other West Shore communities. (Consent Agenda)

Ordinance No. 101-08:  This is a companion ordinance to 100-08 above, engaging J P Recovery Services for collection of outstanding billing for medical services and all other delinquent accounts. (Consent Agenda)

Ordinance No. 104-08: Mr. Hunt explained that this ordinance will enable the City to sell ten used vehicles which are no longer needed for municipal use, and recoup some costs of replacement. (Consent Agenda)

MISCELLANEOUS BUSINESS:

Mr. Moran reported that the Rocky River Jr. Women's Club has thanked Council for its $150 donation in support of the Holiday Home Tour event. High school scholarships, the public library and the Rocky River Assistance program will all benefit. The tour will be December 7.

(Note: This was a personal donation by members of Council and no public funds were used.)

COMMITTEE REPORTS:

Parks and Recreation Committee: Mrs. Arabian Whitman reported that the Commission met last Wednesday, and indicated that participation is high in all programs. The recreation football league had 75 youngsters and now the hockey season is beginning. Learn to play has 75 participants. Friday night skates have returned and the Halloween Party will be coming up soon. The Zamboni, which is manufactured following purchase, will be delivered in the beginning of the year.

Finance Committee: Mr. Moran noted that his committee had met this evening to discuss the 2009 budget process, the calendar, income streams, debts and expenses. The process will proceed in November, and meeting dates will be scheduled. He thanked the Mayor and Directors for moving the process forward.

NEW BUSINESS:

Ordinance No. 103-08: Mr. Hunt indicated that a discussion was held earlier which included information on these additional easements for AT&T. He thanked the Administration for the photograph which pinpointed the location of the easement. This ordinance, as well as Ordinance No. 94-08 will be held pending further information.

Ordinance No. 105-08: As heard earlier from Superintendent Harrington, this ordinance ratifies the grant/loan agreement with the OPWC, not to exceed $2,570,693. Part of the agreement is a grant, another part a no-interest loan and the remainder from the WWTP Capital Fund. Mr. Moran added that this is a great way to keep up with expenditures rather than finance solely through loans. An amortization schedule, the same as in Ordinance No. 106-08, was added to the exhibit. (Consent Agenda)

Ordinance No. 106-08: Mr. Moran explained that this ordinance will authorize the payment of Rocky River's share of the OPWC's loan. The amortization schedule shows the maximum payment possible because the grant can be totally utilized first. Rocky River's portion of any expenditure will be 29%. (Consent Agenda)

Ordinance No. 107-08: Mr. Furry indicated that this ordinance will authorize improvements to the HVAC system of the chemical storage building. There were five bids ranging from $81,900 to $118,500. ABC Piping was the lowest and best bidder, having done previous work. Design changes will increase the ventilation and cut down on corrosion, and stainless steel and PVC air ducts will be used. (Consent Agenda)

Ordinance No. 108-08: Mr. Hunt indicated that this ordinance will exercise an option to renew the City's insurance at the same rate as last year, corresponding to Ordinance No. 118-07 from last year. This will provide insurance from McGowan and Company for the City with the same provisions as last year. This is the second year of three for the policy underwritten by Argonaut. (Consent Agenda)

• •Mr. Furry asked if Dawson Insurance carries this type of insurance. Mr. Linden explained that their products are based on municipal pools which was not deemed to be in the best interests of the City.
• •Mr. Mylen asked about the frequency of bidding. Mr. Linden clarified the bidding process and explained that bids were solicited last year for 2008 with an option for the two years following.

Ordinance No. 109-08: Mr. Hunt continued that this ordinance is an insurance agreement for the Municipal Court. This also is in the second year at the same rate as last year. There are no new bids for this year, but the insurance will be renewed at the same price for the same coverage. (Consent Agenda)

Ordinance No. 110-08: This insurance is for the WWTP, and is also the second year of the contract. The City is exercising an option for insurance at the same rate from the same provider. (Consent Agenda)

Mr. Furry reviewed the WWTP ordinances which authorize the purchase of chemicals and services:

Ordinance No. 111-08: Sodium hypochlorite, or bleach, has three applications: effluent disinfection, odor control May through October, and as a primary clarifier. Approximately 275,000 gallons are used annually. This is an EPA requirement to maintain the WWTP's permit. (Consent Agenda)

Ordinance No. 112-08: Sodium bisulfite is used to remove final traces of chlorine in the effluent, another EPA requirement. Prices in the past have ranged from $.65 to $.84/gallon. This year it is $1.93/gallon. The plant uses about 30,000 gallons annually. (Consent Agenda)

Ordinance No. 113-08: Ferric chloride is added to the effluent of the grit tanks and promotes the settling of sludge and removal of phosphates, another EPA requirement. In the past, costs were $206 to $308/dry ton. This year, it is $302/dry ton. Approximately 450 dry tons are used annually. (Consent Agenda)

Ordinance No. 114-08: Removal of digested sludge by Yaworsky Farms. This is the normal method of sludge removal. The City has a long history with this supplier and historically, 100% of the sludge is disposed of using this method. (Consent Agenda)

Ordinance No. 115-08: Removal of digested sludge to a landfill. The EPA requires that if a plant does not have the facilities for 120-days' storage of sludge, it must have an alternate plan. If the farm cannot remove the sludge, this contractor will remove it to a landfill. The WWTP has only six days' storage so this ordinance is required, but this service has not been used in the past. (Consent Agenda)

Ordinance No. 116-08: Removal of raw sewage sludge to a landfill. This EPA requirement will go into effect in the event of mechanical failure. As with Ordinance No. 115-08, it is an emergency measure which has not been utilized. (Consent Agenda)

Ordinance No. 117-08: Mr. Shepherd commented that this ordinance will allow the Safety-Service Director to purchase meals for those incarcerated in the City's jail at a cost of $7.50/meal or $22.50 per day plus delivery if fewer than four meals are ordered at one time. Michael's is the only bidder, and the price is the same as last year. Responding to Council questions, Mr. Linden responded that prisoners' medical, religious or vegetarian requests are respected. (Consent Agenda)

ANNOUNCEMENTS: NONE

As there was no further business by members of Council, the meeting was adjourned at 9:07 p.m.

______________________________ ______________________________

James W. Moran Misao Kurokawa

President of Council Clerk of Council

CITY OF ROCKY RIVER

OCTOBER 20, 2008

Finance Committee

The meeting of the Finance Committee was called to order by the Chairman, Mr. Moran, at 7:00 p.m. in the David J. Cook Council Chambers.

Finance Committee Members Present: Mr. Moran, Mr. Furry, Mr. Long, Mr. Mylen

Council Members Present: Mr. Hunt, Mr. Shepherd

Administration: Mayor Bobst, Mr. Linden, Mr. Thomas

Law Director: Mr. Bemer

Mr. Moran opened the meeting of the Finance Committee to address the 2009 Budget by noting that he thought it might be helpful to prepare for coming budget meetings by discussing basic expenses and income with the Director of Finance.

I. Budget Calendar and Process: Director Thomas observed that the calendar is set partly by State Code and one deadline in the Charter. The State Code addresses Alternative Tax Budget Information, which has been completed for this year as outlined in a resolution presented and passed before the recess. This document is a projection of the rest of the present year and 2009 and is due to the County Budget Commission by July 17. Mr. Thomas emphasized that monitoring of the current (2008) year's budget is an ongoing process for the Administration, with directors constantly reviewing expenses and revenues throughout the year.

The County Budget Commission, consisting of the Auditor, the Treasurer and the Prosecutor, is a statutory body which accepts the City's Alternative Tax Budget Information. Their purpose is to verify the City's need for its levies, ratifying that the City has a sewer levy, a recreation levy, and a capital improvements levy, all of which are necessary to the operation of the City. When verified, the City will prepare a resolution to accept tax rates, an annual ratification of the levies in place. He noted that the bond levy is up to one mill. If the tax base should grow and generate taxes greater than the debt service required, the rate will be reduced. Although the tax base has grown, it is not yet sufficient to reduce the rate.

In the budget process for next year, each department has drafted its budget, and Mr. Thomas has compiled them. The Mayor met with all department heads in preliminary meetings last week and will meet with them again, constantly looking at proposed projects and equipment requests. The ordinance and budget book will follow.

The budget book is compiled to help Council and give them some rationale as to how and why amounts are determined. To this end, it includes information on the Court's operation, donations, POPAS activity, revenue and revenue history from property tax and estate tax, the largest revenue streams.

Financial information is presented in several formats:

• •Mr. Thomas explained that what is in the budget is most closely related to the monthly report and contains details on the Administration's management of departments and the funds that have been appropriated.
• •The appropriations ordinance is a very summarized version. It is structured in this manner because the Ohio Revised Code requires appropriations for personnel and all other expenses. This budget is structured with wages in one column, benefits, and other such as the operating budget, non-payroll expenditures (including capital). This is a different presentation from similar financial information.
• •The Comprehensive Annual Financial Report (CAFR) is the City on a GAAP basis, prepared once a year at the end of the fiscal year.
• •The monthly report is a management report used by department heads to run their departments within the budget which has been appropriated. The City ordinance requires that it be given to Council.
• •The financial summary may be more useful, and Mr. Thomas said that is why it is generated on a monthly basis. It gives a more general perspective and a higher level of review.

Mr. Thomas also commented that information in the budget book has also been influenced by former Councils who requested information in particular formats they felt would be useful in the decision process.

• •Mr. Moran remarked that he feels that the report, as presented to Council, is easy to follow. Making it less complicated and manageable is very helpful. He proposed that the process continue as formerly, with each Council member heading a section such as recreation, or service. That member will be responsible to carefully review the information and discuss it with department heads, interviewing them at the committee meeting.



• •Mr. Thomas added that the process is accomplished earlier than it used to be. The Charter deadline is the last day of January, so it used to be done at that time. That means that money cannot be spent until it is appropriated, so a temporary appropriation would be passed.

Mr. Mylen asked if any consideration has been given to the economy in planning for next year. Fuel, for example, caused departments to require supplemental appropriations, and is just one example of unpredictable costs which may rise in uncertain economic times.

Mayor Bobst noted that this will be part of her Executive Summary when the budget is presented. She said, however, that all department heads are watching very closely in predicting the needs of 2009 and beyond, in some areas. Department heads were asked to prepare their budgets, but then also to prepare an alternate budget which is 8% less than what was submitted. This did not include wages and benefits, but did include all other operating expenses. They did a good job of looking at ways to reduce expenditures and do more with less without diminishing any programs already being provided to residents. All personnel, materials, resources, and programs were evaluated. She also noted that some budgets had no increases when they were forwarded the first time. In submitting figures, she compared 2009 revenues with 2009 expenditures. Some of the reduced budgets have been forwarded to Director Thomas; others require more work, but they will be forthcoming. She asserted that the City's view of the budget has always been a conservative view of revenue projections, but in expenditures, to include all anticipated costs.

Regarding large expenditures, revenues are constantly monitored. To illustrate that point, the Mayor related that she has met with Mr. Linden to discuss capital equipment purchases totaling $823,000. Some vehicles must be purchased for the fleet, and it makes good sense to do that at the beginning of the year to assure that they are available through the State buying program and delivery is made as soon as possible. Those purchases may account for $300,000 to $400,000. No further purchases would be made until sometime after June or July depending upon availability and revenue. Even if expenditures are in the budget, the Administration is careful to watch the revenue stream so that there is no overspending. In the second or third quarter, decisions are still made regarding some purchases.

Also to be considered are ongoing negotiations with four labor unions. This is a significant part of the budgeting process. Fund balances are also important and must be maintained because if the need to borrow occurs over the next year or so, those balances will be important to the City's bond ratings. Those ratings are the highest they have been in many years.

II. Revenue. The larger revenue stream into the City includes income tax. The relationship with CCA is, in essence, a contractual relationship with a vendor, much as that with a company that does street paving. Mr. Thomas said that he is in constant interaction with them and when they had some exceptions, Mr. Thomas described enforcement measures taken on behalf of the City.

• •Mr. Furry asked if a change to RITA has been considered. Mr. Thomas said that he has not done a cost study, but some cities have changed vendors.
• •Mr. Long asked if cities who leave a collection agency sign with another or set up their own tax offices. Mr. Thomas said that both occur, e.g. Lakewood set up its own tax office; Euclid set up its own office and Mentor left CCA and went to RITA.

Mr. Thomas continued that Rocky River has a contingency fee arrangement with CCA. The City is charged a fee when someone files and pays taxes. Much of their work is before payment by the City.

Concerning property taxes, within the budget process, the Tax Commissioner in conjunction with the County Auditor sets assessed values annually. Typically, a preliminary assessment which incorporates changes in the tax base, both commercial and residential is received about this time of year. A final evaluation upon which taxes are based is usually issued about the middle of December. This County Budget Commission provides projections of property tax that can be expected. Those amounts which will appear in the budget and management reports are from the County and is based upon the assessed values and a delinquency projection.

In discussing tax rates, Mr. Thomas stated that the City's property levies total 10.9 mills, with the latest increase in 2004 with a voted levy (1 mill). Municipalities do not receive the H.B.920 reductions that the school districts receive. Therefore, the 10.9 mills is assessed and the full amount is received. The gross tax rate is 112+ and is reduced to about 69 mills; within that amount, 10.9 comes to the City with portions going to the County, Metroparks,, Tri-C and others.

• •Mr. Furry asked if the nine-month figures showing that tax collections are down is a matter of timing. Mr. Thomas said he believes collections are down, but Homestead and rollback reimbursements will be made by the State which will improve the situation. Mr. Furry expressed concern that property tax revenues will be down next year, acknowledging that only 16% goes to the City. Still, foreclosures will have an impact.



• •The Mayor noted that at this time, it appears that the Auditor's Office will not make its triennial assessments.

Mr. Thomas indicated that as soon as assessed values are available, the County Budget Commission works upon projections for individual taxing authorities. A preliminary projection can be used for budget purposes, and a final report is approved by the State Department of Taxation.

• •Mr. Moran confirmed that of property taxes, 16%-17% goes to the City, and responding to his further question, indicated that this comprises about 30% of the City's budget.

The amount of Estate Tax collected fluctuates. Over the last several years, the City has budgeted $1 million per year and has been above that amount since 2002. By Code, these funds are restricted to capital improvements, equipment purchases and sewer rehabilitation. Funds are required to go through the General Fund, but then are then transferred to other funds for permitted uses.

• •The Mayor commented that because this income is unpredictable, it is not used for operating expenses.

III. Debt. In discussing the City's debt, Mr. Thomas commented that generally, bonds have not been issued since 2005, when the Civic Center Improvement bonds were issued.

• •In the fall of 2004, there was another bond which funded a good number of projects that took place that year including Orchard Park-Bates (partial grant), Aberdeen, Hilliard and others.
• •There was also a refinancing of a 1994 issue which was a 20-year bond issue. Because rates had fallen, and there was a callable feature on the bonds, they were paid off and a new 2004 bond was issued.
• •There are also special assessment bonds from 1998 and 2000 for erosion control projects on the lakefront.
• •The Municipal Court debt is a general obligation bond of the City, but the Court has pledged a court cost to service that debt and it is adequately funded.
• •The 2005 issue was a voted bond issue so there is a one mill tax to service that debt.

Mr. Furry requested a summary of total debt service over the next years so that Council is aware of outstanding debt in case it is asked to incur further debt. Mr. Thomas said that the OPWC includes an amortization schedule for loan repayment before each project and he will include those copies in the budget books, as well as an amortization schedule for outstanding bonds. He noted that there are City loans and also those that are serviced by the WWTP.

Mr. Moran summarized the process by noting that projected expenses will be forthcoming in budget books. Efforts will be made to reduce expenses and Council's role is to review them and monitor the process. Discussions can begin following distribution of budget books on November 10 and three readings can be accomplished before the end of the year. Meeting dates and times for the interviews of directors will be set shortly.

• •Mr. Furry asked about pending union negotiations which will have a significant impact on budget figures, wondering if they will be complete by the time the budget is passed. The Mayor said that is the Administration's hope, and negotiations are well under way with the fire union and meetings with the police union will be Wednesday. She noted that the budget can be passed and modified after the first of the year, if necessary. The final negotiated figures will not be available on November 10 when the books are presented.



• •Mayor Bobst also mentioned that next week numbers on health care should be received. This is a pivotal issue because of potential increases. The City has not had good experience this year as shown by a recent supplemental appropriation of $200,000 into the health insurance account. Preliminary figures of a 22% dental increase and a 17% increase in health care have been mentioned. Talks will continue to refine those figures during the next week.

Mr. Moran again reiterated the importance of the budget, but emphasized that services also need to be provided to residents.

Mr. Hunt recalled that in the past, directors have been asked to begin with a zero base rather than start with last year's figure and move upward. He asked if this is still the case.

• •Mayor Bobst responded that although the same line items are present, previous experience is evaluated to go forward. It does not mean that all programs remain the same, and different ways to save, from collaboration to evaluation of the worth of a program are considered. This is especially important for the Senior Center, Recreation and the Service Department. There is a constant search for efficiency which will not decrease resident services. Even with 8% cutbacks, no director has said that residents will directly feel the impact of these cuts. They are committed to resident service.

Mr. Mylen asked if accuracy is impacted when a budget is assembled three months before the end of the year, or whether it is easier to forecast spending and revenue after the first quarter into the new year.

• •Mr. Thomas responded that this is the reason that estimates are conservative, particularly in estimating revenues. The Estate Tax was considerably higher than projected; last year's income tax revenue projection was $7.9 million and the City collected $8.7 million. The Finance Director said that he likes to maintain those gaps in revenue and appropriations. Fuel, environmental issues and health insurance claims are unpredictable, but this plan allows for flexibility.

Mr. Mylen asked if the same errors in estimates were made when the budget was passed in March. Mr. Thomas said they were the same because the philosophy of developing the budget was the same.

• •The Mayor commented that the budget was submitted at the end of January, so there was very little experience on which to base figures. She acknowledged that Council has until March 31 to finalize the budget, but with a budget finalized before the end of the year, it means that capital projects can be started immediately. In terms of serving residents, it is much more efficient. A temporary budget can be passed for the first three months, but no large expenditures will be made during that period because it is unknown which projects will be funded. Being able to begin immediately has served the City well, both with capital projects as well as equipment purchases. Being able to bid earlier has advantages also with more contractor availability for the summer.

Mr. Moran noted that passing the budget before the end of the year does not mean that it cannot be adjusted during the year if conditions change. He commented that he appreciates the early start and looks forward to receiving the figures.

There was no further discussion from members of Council, and the meeting was adjourned at 7:58 p.m.

_______________________________ _______________________________

James W. Moran, Chairman Misao Kurokawa

Finance Committee Clerk of Council