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HomeMy WebLinkAboutApproved Minutes - May 12, 2016Finance Committee Meeting Minutes May 12, 2016 Page 1 of 4 CITY OF NEWPORT BEACH FINANCE COMMITTEE MAY 12, 2016 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 4:00 p.m. in the Crystal Cove Conference Room, Bay 2D, 100 Civic Center Drive, Newport Beach, California 92660. II. ROLL CALL PRESENT: Council Member Tony Petros (Chair), Committee Member Patti Gorczyca, Committee Member William C. O’Neill, Committee Member Larry Tucker, Committee Member John Warner, and Council Member Keith Curry ABSENT: Mayor Diane Dixon (Excused) STAFF PRESENT: City Manager Dave Kiff, Finance Director/Treasurer Dan Matusiewicz, Deputy Finance Director Steve Montano, Administrative Specialist to the Finance Director Marlene Burns, Administrative Manager Angela Crespi, IT Manager Rob Houston, Budget Manager Susan Giangrande, Budget Analyst Tam Ho, Budget Analyst Katherine Warnke-Carpenter, and Assistant City Manager Carol Jacobs MEMBERS OF THE PUBLIC: Jim Mosher and Fred Ameri III. PUBLIC COMMENTS Chair Petros opened public comments. Jim Mosher discussed the Council’s approval allocating $280,000 for a Balboa Village archway sign and the generation of sale tax. He stated the merchants did not contribute to the sign program. Chair Petros discussed the investment in Balboa Village and encouraged residents to attend the BVAC meetings. Chair Petros closed public comments. IV. CURRENT BUSINESS A. FISCAL YEAR 2016-2017 BUDGET DISCUSSION Summary: Continue review of the City Manager’s Fiscal Year 2016-2017 Proposed Budget. Recommended Action: Staff recommends that the Committee (1) direct staff to bring the Fiscal Year 2016-2017 Proposed Budget for City Council for consideration; (2) continue to review the budget at subsequent Finance Committee meetings; or (3) both of the aforementioned options. Chair Petros thanked the Finance Committee for its work on the budget. Committee Member Tucker clarified the timeline for the budget. Finance Committee Meeting Minutes May 12, 2016 Page 2 of 4 Deputy Finance Director Montano provided the variances of $250,000 compared to the prior year budget. Committee Member Tucker requested a summary of each of the variance items. Budget Manager Giangrande explained the increase in Contract Recreation Instructions. Budget Analyst Tam Ho stated the revenues were just under $1 million. Budget Manager Giangrande explained the increase in Contract Services/Park Facility and Meter Reading Services. Committee Member Warner questioned the increase in Contract Services/Park Facility. City Manager Kiff explained the price was significantly higher due to additional facilities and increase in price per unit. Budget Manager Giangrande explained the decrease in Outside Counsel/Special Litigation. Committee Member Warner expressed concern with forecasting legal expenses downward. Finance Director/Treasurer Matusiewicz directed the Committee to the forecast for internal services and other fees regarding attorney’s fees and settlements. City Manager Kiff stated the information had to be provided to the public. Budget Manager Giangrande explained the fluctuations of the expenditure category “Services Professional and Technical” due to the completion of contracts. She stated she could provide a breakdown of the contracts. She continued review of the variances including the expenditure categories of Services Professional, Software Licenses, Special Department Expense, Vehicle Replacement ISF, IT ISF Operating Charge, Rolling Equipment, Library Materials, Backbone Expense, Equipment Not Otherwise Categorized (NOC), Pac set and Mobile Radios, and OPEB Payment. In response to Committee Member Gorczyca, Finance Director/Treasurer Matusiewicz explained that contributions were being made to pay off the unfunded pension liability over a seventeen-year term as of the June 30, 2015, actuarial valuation. Budget Manager Giangrande discussed the PERS Employer Contribution for the Miscellaneous and Safety employee groups. In response to Chair Petros, City Manager Kiff stated Safety percentages could not track with portions paid by Miscellaneous and stated Safety paid 20-25 percent. Budget Manager Giangrande reviewed the PERS Employer Contribution, Employee Contributions, Salary for Safety employees, Overtime Vacation Relief, Overtime Plan, Salaries Part-Time, Salaries Miscellaneous, and Cafeteria Allowance. Budget Manager Giangrande discussed the Unfunded Liability for the Miscellaneous and Safety employee groups and also described the changes in water costs. City Manager Kiff stated ground water was less expensive. He explained that some items were one-time expenses and most were predictably sporadic. Committee Member O’Neill requested information on the projected negative fund balances presented at the CIP study session. Finance Committee Meeting Minutes May 12, 2016 Page 3 of 4 Finance Director/Treasurer Matusiewicz explained negative funds borrowed from other funds. He reviewed specific funds including the dredging fund. Chair Petros explained the Council’s commitment to repay dredging funds. Finance Director/Treasurer Matusiewicz stated it was a zero percent loan paid back from the Tidelands Fund to the General Fund over 15 years. In response to Committee Member Tucker, Finance Director/Treasurer Matusiewicz stated the total fund balance for the General Fund was $89 million at June 30, of which $15 million was an interfund receivable loan to the Tidelands Fund. Committee Member Tucker discussed expenditures in the Tidelands Management Fund. Council Member Curry stated Tidelands Programs were subsidized with General Fund money. Committee Member Gorczyca asked why the LAIF rate was not attached to the loan. Finance Director/Treasurer Matusiewicz explained the Tidelands agreement was identified as a zero interest loan by the Council. Committee Member Tucker recalled that the $47 million in contingency reserve funds is available to the City for catastrophic events. Finance Director/Treasurer Matusiewicz stated the General Fund had $77.8 million in actual cash. Committee Member O’Neill requested discussion of funding for the sewer fund. City Manager Kiff stated the goal was to continue the Capital Program in the wastewater fund. He questioned the ability to complete projects and refill the sewer fund. Chair Petros stated he was not opposed to a sewer fund rate adjustment in the Enterprise Fund. He stated sewer and wastewater should not be funded from the General Fund. Committee Member Tucker expressed concern with funding capital improvements through the General Fund. Council Member Curry stated the sewer rates needed to be adjusted to get back in balance. In response to Committee Member O’Neill, City Manager Kiff stated the Council could direct a direct transfer, not a loan, and direct a rate plan based on reserve level. Chair Petros stated Mayor Dixon hoped that the Committee would vet the pros and cons of whether or not to use $3.5 million from the General Fund for the Sewer Fund. Committee Member O’Neill discussed the proposed rate increase from 2009 that did not occur creating the need to backfill the fund. Chair Petros stated he understood the argument. He discussed his experience with Council’s failing to enact ongoing rate increases required for the services rendered. In response to Committee Warner, City Manager Kiff stated the 2009 proposed rate increase was scaled. Council Member Curry stated it was $2 and would have been unnoticeable. Committee Member Tucker stated the obligation runs with properties and now the proper rate needs to be paid. He stated the enterprise fund should remain separate. Committee Member Gorczyca questioned whether the road improvement fund operated in a deficit. Finance Director/Treasurer Matusiewicz explained that revenue from grant programs often lag, but ultimately align with expenditures. Committee Member O’Neill asked who paid for sewer spills. He stated he would research the issue. Chair Petros opened public comments.