The meeting was called to order by Mayor Cheryl A. Young at 7:30 p.m.

Mayor Young led the flag salute.

MEMBERS PRESENT:

Marian Calnon (departed 7:59 p.m.)

Jan Forsyth

Larry Kanzler

Karen Ladd

Sally Ann Marson

John Yazzolino

Cheryl A. Young

MEMBERS ABSENT:

Bill Guy

Gary Hudson

Bob Schmor

ALSO PRESENT:

Leahnette Rivers, City Administrator/Recorder

A quorum was present and due notice had been published.

Mayor Young opened the nominations for the position of Chair.

MOVED (MARSON), SECONDED (YAZZOLINO) AND CARRIED UNANIMOUSLY TO NOMINATE LARRY KANZLER AS CHAIR.

There being no further nominations for the position of Chair, Mayor Young closed the nominations. Mayor Young called for a vote. All voted in favor of Larry Kanzler serving as Chair, and Mayor Young declared him duly elected.

Mayor Young turned the meeting over to Chair Kanzler.

Chair Kanzler thanked staff for an excellent job in preparing the budget document.

Chair Kanzler opened the nominations for the position of Vice-Chair.

MOVED (YOUNG), SECONDED (KANZLER) AND CARRIED UNANIMOUSLY TO NOMINATE SALLY ANN MARSON AS VICE-CHAIR.

There being no further nominations for the position of Vice-Chair, Chair Kanzler closed the nominations. Chair Kanzler called for a vote. All voted in favor of Sally Ann Marson serving as Vice-Chair, and Chair Kanzler declared her duly elected.

Chair Kanzler opened the nominations for the position of Secretary.

MOVED (FORSYTH), SECONDED (YOUNG) AND CARRIED UNANIMOUSLY TO NOMINATE KAREN LADD AS SECRETARY.

There being no further nominations for the position of Secretary, Chair Kanzler closed the nominations. Chair Kanzler called for a vote. All voted in favor of Karen Ladd serving as Secretary and Chair Kanzler declared her duly elected.

AGENDA ITEM 3 DISTRIBUTION OF PROPOSED BUDGET FOR FISCAL YEAR 2002/03:

The proposed budget for fiscal year 2002/03 was made available to the public and distributed to the members of the Budget Committee and staff on April 23, 2002.

Leahnette Rivers reviewed the highlights of the Budget Message with the Committee. She said the budget is conditioned upon a water rate increase of 25%, which the Council will consider in September 2002. Leahnette described the 1% loan the City will receive under the Safe Drinking Water Loan Program to finance the City's water reservoir and well project. She said in order for the City to qualify for the 1% interest rate, and in order for the City to make the principal and interest payments on the loan, increases in the City water rates will be necessary.

Leahnette explained that the budget includes appropriations for a monthly utility billing process. She said due to recent and projected increases in water and sewer service charges, the Council has determined that it may be necessary to move to a monthly billing process. She said a monthly billing process will increase costs related to staff time, office supplies and postage, but it will also provide some benefits to both the customers and the City. She said the benefits include improved communication through the monthly newsletter and more frequent customer contact, earlier leak detection due to more frequent meter readings, improved cash flow due to more timely payments, and improved collections due to more timely billings. She said it may also be easier for some customers to budget for their water and sewer billing on a monthly basis.

Leahnette discussed the City's utility billing process and policies at length with members of the Budget Committee.

Leahnette said this past year was difficult for the City from a financial standpoint. She said the events of September 11th, coupled with the downturn in the economy, the high unemployment rate, the low interest rates, and the slow in building activity had a negative effect on the City's projected General Fund beginning fund balance. She said she projects a $40,000 General Fund beginning fund balance, which is about half of the ideal three-months operating expense she would like to see. She said we will not meet some revenue projections in the current year, even though those revenue projections were very conservative.

Leahnette said the time spent by employees that are shared between departments was evaluated during the past year. She said public works employees were spending more time on water related activities and less time on street related activities than previously estimated. She said there were some staffing changes in the administrative office this past year, and duties were shifted between employees. Also, water meter readings and utility billings will be monthly in the coming year instead of bimonthly. As a result, the distribution of staff time was adjusted in the proposed budget to reflect the time employees are expected to spend on each department's activities.

Chair Kanzler asked Leahnette to discuss debt service.

Leahnette explained that the Sewer Debt Service Fund is used to account for property tax revenues collected to make principal and interest payments on the outstanding sewer bonds.

Leahnette said we also make payments on a loan we obtained to prepare the reservoir siting study and water rate study. She said these payments are made from water sales revenue, and they are accounted for in the Water Fund.

Chair Kanzler asked if the City accumulates cash from property taxes in excess of the amount needed to make our loan payments.

Leahnette said the City only levies the amount of tax that will be needed in order to make the principal and interest payments during the coming year, and to provide for an unappropriated ending fund balance that will adequately cover the payment due in the following year before property taxes are received.

Leahnette said the loan payments for the reservoir and well improvements will be made from water sales revenue, not property taxes.

Sally Ann Marson said the capital outlay budget seems very skimpy. She questioned whether or not the City will be able to purchase a pickup for $3,000.

Leahnette said the City has already found the pickup, and will be participating in a sealed bid process in an attempt to purchase the pickup from the Columbia River PUD.

Leahnette explained that contingency funds have been appropriated in the General, Street, Water, Sewer, and Water Capital Project Funds.

Chair Kanzler asked Leahnette to discuss the Equipment Reserve Fund. Leahnette explained that in 1999-00 the City Council established an Equipment Reserve Fund with $7,000. They wanted to continue to place $7,000 each year into the fund to pay for new police cars. She said in 2000-01, the City purchased a new police car. She said the City used money from the General Fund, along with a small contribution of $2,840 from the Police Vehicle Reserve Fund, to pay for the new car.

Leahnette said in 2001-02 the City was not financially able to add funds to the reserve fund, and she said there is only $1,348 available this year to add to the fund. She said she recommended the City Council close the fund and account for the reserved funds within the General Fund because it is expensive and time consuming to maintain a separate fund to reserve such a small amount of cash. She said the Council agreed that the fund could be closed, and the funds transferred to the General Fund and accounted for there. Leahnette reviewed the new Equipment Reserve line item with the Budget Committee, which has a proposed appropriation of $6,290.

Sally Ann Marson asked how and when reserve funds can be spent.

Leahnette explained that reserved fund can be spent when they are appropriated for an approved use, or they can be released from a reserve by the City Council in an upcoming budget unless they involve legally restricted revenues. She noted that there are restrictions, for example, on the use of system development fee revenues.

Mayor Young asked where the City might obtain funds to pay legal fees for an unanticipated lawsuit.

Leahnette said there are appropriations for legal services in each major fund, and additional appropriations could be transferred from contingency if necessary.

Leahnette discussed the City's long-range planning project, which involves updating the City's Comprehensive Plan and Urban Growth Boundary and developing a Unified Development Code, at length with the Budget Committee. She noted that the project is funded by a grant from the Department of Land Conservation and Development, and that is has an anticipated completion date of June 30, 2003.

Public Hearings opened.

No comments were heard from the public.

Public Hearings closed.

The Budget Committee had no further questions about the proposed budget.

Chair Kanzler recommended the Committee approve the budget.

MOVED (LADD), SECONDED (YAZZOLINO) AND CARRIED UNANIMOUSLY TO APPROVE THE BUDGET FOR 2002-03 AS PROPOSED.

MOVED (LADD), SECONDED (YOUNG) AND CARRIED UNANIMOUSLY TO APPROVE THE LEVY OF A PERMANENT TAX RATE OF $1.1346 AND A SEWER DEBT SERVICE TAX LEVY OF $108,000.

There being no further business to come before the Committee, MOVED (HUDSON), SECONDED (SCHMOR) AND CARRIED UNANIMOUSLY THAT THE MEETING ADJOURN AT 8:45 P.M.

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