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Home My WebLink AboutMINUTES-2007-02-19-2007CITY COUNCIL ROLL CALL - PRESENT: A Quorum was present. NOT PRESENT AT ROLL CALL: PRESIDING: or, EUr kCQ I1 Alderman Moran Alderman Tisdahl Alderman Hansen Alderman Wollin Alderman Rainey Mayor Lorraine H. Morton February 19, 2007 Alderman Jean -Baptiste Alderman Wynne Alderman Bernstein Alderman Holmes A SPECIAL MEETING of the City Council was called to order by Mayor Morton Monday, February 19, 2007, at 7:10 p.m. in the Council Chamber for the purpose of considering the FY 2007-08 Proposed Budget. Citizen Comment Jeff Smith. 2724 Harrison St., requested Council not pass a sticker tax on leaves and other recyclables. It is backwards to let residents generate plastic but to tax people for raking leaves. This is a tax on trees, despite all the policy statements and how important trees are to Evanston. It taxes people for taking care of them, putting leaves on City parkways that homeowners rake for free. Now residents will have to pay for that privilege. No one can control how many leaves fall on their property, unless they cut down trees. Is that what they want -- to turn into "Mr. T" instead of "Mr. Tree." Trees take a lot of greenhouse gases out of the air and he thought that was a good thing. They also drop a lot of leaves and branches but no one with a wooded lot can possibly mulch and compost all of them. The tree tax is also a regressive tax. It won't affect those who outsource their yard work to a squad of gasoline -powered leaf blowers. This only impacts those who tend their own yard, out of economic necessity, or who choose not to contribute to noise and pollution. This fee is also anti -environmental. Finally, he predicted it would result in more leaves getting raked into the street, which costs the City money. He asked someone who is much smarter what she thought. His wife said, "Disposing of leaves is a fundamental City service that I expect our taxes to cover." He agreed. This budget has plenty of things that are not fundamental City services or that taxpayers pay for beyond fundamental. Probably 99% of Evanston voters don't read the budget, so every other year they get scared into thinking their only choice is to pay more taxes or lose something they count on like leaf disposal or a branch library. If people read the budget, they would be surprised to see all the things that residents have no idea they pay for, things funded at the same levels as the year before or higher. He sees a few chops but no real "belt tightening." Leaf collection could be funded by cutting the appropriation for traffic signs, which he thought already outnumber trees. The yard waste fee is a little thing. Sometimes being forced to buy a stamp or sticker really ticks people off. He submitted the trees are as important to Evanston as tea was to Boston. Find money elsewhere. Don't tax the trees. CONSENT AGENDA ADMINISTRATION & PUBLIC WORKS: Ordinance 5-0-07 — Yard Waste Sticker Program — Consideration of proposed Ordinance 5-0-07, which amends Section 8-5-3(E) of the City Code to establish a charge for the collection and disposal of yard waste. Ordinance 6-0-07 — Sanitation Service Charge — Consideration ofproposed Ordinance 6-0-07, which amends Section 8-5 of the City Code to eliminate the recycling fee and replace it with a monthly Sanitation Service Charge of $5.00 per household. Aldermen Moran asked that all items be taken off the consent agenda. (At this time Alderman Rainey was present.) 543 2 SPECIAL ORDER OF BUSINESS February 19, 2007 Resolution 6-R-07 — Operatine Budget — Fiscal Year 2007-08 — Consideration ofproposed Resolution 6-R-07, which approves the Operating Budget for Fiscal Year 2007-08 in the amount of $188,145,727. City Manager Julia Carroll noted Council had received budget memos 50 and 51 on Friday and that evening budget memos 49, 52 and 53 were put on the dais. She reported finding at a recent SWANCC Board meeting that the City was short on what was needed to fund SWANCC services. That budget adjustment is an increase of $11,043. The cost to televise the Plan Commission meetings ($5,000) was added at the direction ofthe Rules Committee. Revenues of $45,000 were added after going through everything one more time. Alderman Holmes had asked for scenarios using various amounts of the Northwestern University funds on the property tax, which were provided. Alderman Rainey requested that staff go through the memos. Budget memo 50 was a response to Gerald Gordon's inquiry about interest. Ms. Carroll stated the initial inquiry was to look at the interest income forecast for the General Fund and could that be increased so the property tax levy could be decreased. In looking at the last four years, the number in the audit includes something the City is required to record, unrealized gains and losses. That is due to market value fluctuation and is not cash. In budgeting, they look only at cash that comes from interest income. That average over the past four years has been about $359,500, therefore staff believes the $400,000 projection is adequate and reflects the actual cash the City will receive. Finance Director Matt Grady explained that unrealized gains/losses are calculated the day the fiscal year ends, February 28. He stated they are running consistent with the $400,000 budgeted for 2006-07 and 2007-08. Ms. Carroll explained that the cash balances would decline. There is a $2.5 million reserve for the IMRF reserve for the Early Retirement Incentive program and some other things which will result in less revenue from interest income. Alderman Rainey and Ms. Carroll discussed the Fire and Police Pension funds. Alderman Rainey asked how much interest income was generated in those funds. Mr. Grady said that number was calculated by an actuary. The amount budgeted for the Debt Service Fund is equal to the cash received. Budget memo 51 contained five scenarios with different combinations of the potential revenue to the General Fund and property tax levy using various sums from the Northwestern University fund and on some the proposed refuse fee. Scenario # 1 is to adopt the $1.28 refuse fee increase and lower the property tax levy by $300,000 in the General Fund the property tax would be 5.53% and all other changes. Scenario #2 is to leave the refuse fee on the property tax and use $350,000 (one-half) of the Northwestern funds to lower the property tax levy in the General Fund. The impact is a 5.38% property tax increase. To date the City has collected two payments of $350,000 from Northwestern. The third $350,000 payment would be made at the beginning of fiscal year 2007-08. No money from Northwestern was considered in the operating budget. Those funds were deposited into a capital account. Alderman Jean -Baptiste asked why there was such trepidation about using these funds to reduce the tax levy for this year and do what constituents have asked, keep the property tax increase to a minimum. Alderman Wynne disagreed with Alderman Jean -Baptiste because she considered the Northwestern money as one-time revenue. If they spend this money this year they will similar expenses and have to increase the property tax next year. She calculated on a $8,000 property tax bill they would save $48. They have a policy of not using one-time revenues for operating expenses. Alderman Jean - Baptiste explained that it was only to offset the tax levy. The $1 million was given in lieu of taxes. She thought it was one-time because it is a finite amount. Alderman Bernstein understood the rationale for not using one-time revenues. The argument is about what are one-time revenues. This payment in lieu of taxes is a reduction of an ongoing revenue stream to the City, a reduction from $980,000 annually to $350,000. He could understand using at least one payment and not calling it a one-time revenue, because it cut an ongoing revenue stream. He had not seen where the City captured the proposed $690,000 leaseholder's tax. They haven't been billed yet because the entire bill comes in the second tax installment. These are commercial ventures subject to a leaseholder's tax. The calculations given in budget memo 43 proposed a $690,000 revenue from this tax. The difficulty is that the City does not have a good method of collecting. Ms. Carroll said $690,000 was in the budget and is part of the EAV. The City saw no money in 2005 because Cook County was uncooperative. 3 q' q 3 February 19, 2007 Alderman Moran was concerned because the Council has operated on a firm adherence not to use one-time revenues for the operating budget. He saw the Northwestern payments as one-time revenues; called it borrowing from Peter to pay Paul. They are attempting to develop an ongoing revenue scheme that will cover expenditures so that the City has money coming in that is adequate to fimd ongoing expenses. The further they drift away from that and plug one-time revenues into the operating budget, the next year they come up short. They are offering temporary tax relief but it is illusory. They have to adhere to the line that they will use current revenue to meet current expenses. Alderman Tisdahl agreed with Alderman Moran•, noted the City has huge capital needs so this money would be used. It would be wonderful to use it to decrease property taxes this year, but that means a bloodbath next year. She was concerned about the leaseholders' money; asked if they will receive all of it and can they collect it if someone doesn't pay. Ms. Carroll said there is no clear method of collection, except this time they worked with the County and got the PIN numbers established which had not done before. They can monitor it. They won't know until they go through a year and figure 2% uncollectible for all (leaseholder) taxes. Alderman Rainey did not think they had ever used payment in lieu of taxes in that policy which is what this money is. She stated it is not a one-time revenue just on its face; it is a three -time revenue. It is not a one-time revenue if they don't collect the leasehold tax, shame on those who don't pay. All leaseholders at 1800 Sherman Avenue should pay. The reason the Chamber and Dick Peach gave such soft, fuzzy speeches is that the City'has bent over backwards to help retail and commercial establishments. She was certain they would publish a list of everyone in that building; urged Council to use this money to help people. There are people that $48 means something to. Then consider making the water bill $10 every other month. When they isolate a little item here and there it adds up. It is tax money. Northwestern is doing the responsible thing here. Alderman Jean -Baptiste said if they took the $1 million and used that for the City Manager's office that would not work, because the following year they would not have those funds. But when they getting ready to levy to make up a difference in the budget anyway and have revenue that was paid as tax or in lieu of taxes, why cannot they use it to offset the tax that people will pay. The $48 they may not pay this year would be paid next year. The levy may go up or down, depending upon revenue and expenditures. He did not think they were committing a sacrilege to use this money to provide some degree of tax relief to people. They represent people not the government. They do all kinds of things to be inflexible, as opposed to being flexible enough to provide relief to people. Because people have not come here en masse to take over the podium, eventually some will come and say they cannot afford to live here anymore. They have capital needs and sell bonds for those. Give people a break when they have funds. Alderman Bernstein pointed out that they cannot characterize leaseholders as deadbeats because this is the first time they will pay this tax. They presume integrity and honesty by all residents. He did not perceive this as one-time revenue, but as a reduction in the revenue stream; advised using a portion of the funds. In the future there will be increased revenues as the new condos come on line. Alderman Rainey commented that reassessment is imminent and was told her end of town will get 30-50% increases in assessed value. Nothing has changed recently. She asked for information on this. The second week in March they will get the reassessment notices. What are the implications for residents? Ms. Carroll stated the assessment won't affect what the City levies. The City levies on dollars. If the assessment goes up, the rate will go down. Ms. Carroll agreed to provide information on the impact of the reassessment on residents. Alderman Hansen recalled the outcry of taxpayers when 1800 Sherman Avenue went off the tax rolls. People are being priced out of the market and she saw that they were nickel and diming people with monthly charges of $1.50 for yard waste stickers and the $5.00 sanitation charge. The Northwestern good -will money would relieve the burden on taxpayers; advised using the money for tax relief. Alderman Wynne asked for budget~ memo 53 which was what it would cost to borrow $1,050,000 the total amount Northwestern has committed to the City in lieu of taxes on 1800 Sherman and the cost to borrow that amount for 20 years. She thought they could give a small amount of tax relief on their taxes, but should know what it would cost to borrow this amount for capital projects. Ms. Carroll explained the total cost of principal and interest at 4.5% interest 4 February 19, 2007 would be $614,000 in interest over 20 years. Alderman Wynne said they have the Robert Crown Center, the Civic Center and many parks that need rehabilitation. She urged that the funds be earmarked for capital improvements; argued that saving $16 this year on a tax bill would mean next year an additional $16 would be needed. Mayor Morton asked why they could not assume more property taxes coming in from the new condominiums. Alderman Wynne stated the City would not receive $1 million from the new condos. Only 1,000 new condominiums have been added with 400 of those on Chicago Avenue. Alderman Jean -Baptiste asked how much the $614,000 could cost each taxpaying unit over the 20-year period; asked when the TIFs would expire. Ms. Carroll said the last tax levy in the Downtown II TIF is 2008; the City will levy in 2009 and in 2010-11, collect about $2.1 million. The next one would come in about five years. This information was confirmed with Cook County. Alderman Bernstein moved to take $500,000 from the Northwestern University payments and add to the income column. Seconded by Alderman Jean -Baptiste. Roll call. Voting aye — Rainey, Hansen, Jean -Baptiste, Bernstein, Holmes. Voting nay— Moran, Tisdahl, Wollin, Wynne. Motion carried (5-4) Alderman Bernstein stated that nobody knows the relative increases in the reassessment ofproperty. If everybody goes up proportionally, all pay the same. If one part of the City that has customarily been assessed lower than other parts increases to a greater extent than other parts, they will pay a larger share of the tax pie. Alderman Rainey was told the reassessments would go up substantially in the 5`h and 8 b wards. Alderman Rainey asked about expenditure correction BU30. Ms. Carroll said staff found an error in the original budget that needed to be corrected. That was an error in Recreation. Staff had over budgeted by $67,900. All other changes were discussed. She noted the corporate sponsor position will be a contract position. Through adjusting some other revenues there is a net increase of $45,000 in revenues. Mayor Morton and the City Manager discussed preparation of packets in-house versus copying by Kinko's. Staff estimated the cost of this service is about $2,000 a month. Alderman Holmes wanted to look at the possibility of doing packets in-house and hiring a person to do that next year. She referred to budget memo 38 about child care at recreation centers, which raised many questions; asked that be held for next year. Alderman Rainey was confused about revenues under sales taxes and home rule taxes. Ms. Carroll explained the February 15 memorandum contained a revenue analysis where staff was asked to look at projections on major revenue accounts. Mr. Grady explained the analysis. Ms. Carroll questioned the accuracy of the revised 2007-08 revenues on the Sales Tax and Home Rule Sales Tax; suggested they were off by $700,000. Alderman Rainey said every year they talk about the Real Estate Transfer Tax and to estimate it below $4 million was a guesstimate. This year they are through January and $250,000 over the estimate. She suggested they rethink these. When they are conservative on the revenue side, they ought to be conservative with taxpayers. No change is expected in the telecommunications tax. Alderman Rainey stated the excitement about Administration Adjudication has not come to pass and it is a waste of time. She saw that staff revised the estimated revenue to $120,000 from $150,000. She has seen a half -dozen or so staff members sitting in the hearings for two or three hours; saw judges find somebody guilty but do not levy a fine time after time. The judges are paid $2-3,000 a month. If they estimate downward, they will waste money. She suggested that Administrative Adjudication be sent back to Administration & Public Works. Ms. Carroll confirmed a study would be done for next year. Alderman Rainey directed Council members to budget page 77 which lists transfers from previous years; pointed out that $437,800 less would be transferred from the Water Fund in 2007-08 than in 2006-07. 00 5 February 19, 2007 Alderman Rainey moved that $250, 000 be transferred from the Water Fund to the General Fund. Seconded by Alderman Jean -Baptiste. Ms. Carroll said that number was due to a different method of budgeting. At the first budget meeting they talked about budgeting for the total cost of employees in department budgets. Those used to be paid by the General Fund and be reimbursed. Transfers have been reduced because those costs are reflected in the different funds and they have a more accurate way to reflect personnel costs. Alderman Rainey noted there is an excess of $500,000 for unallocated reserves in the Water Fund. It is cash that water users have paid into and can be returned to the taxpayers. All expenditures have been accounted for. Alderman Wollin said there is an enormous MWRD water project and a sewer project coming through and both are expensive. The last time they talked about transferring from the Water Fund, Mr. Stoneback was clear that reserves were needed. Public Works Director David Jennings said that the MWRD project would not be a drain on the City's treasury. The question of the budget transfer was answered in budget memo 37 and by Mr. Stoneback. The City will have to borrow sooner if they transfer these funds. Staff knows from the Rate Study that in a few years they will have to borrow for capital expenditures in the water system and continued not to recommend a transfer. Alderman Wollin wouldn't support the transfer; did not want to borrow money sooner or increase water rates. Alderman Rainey asked if they were borrowing money currently for capital improvements. Mr. Jennings said they have borrowed money and currently have not borrowed for the water main replacements, which is how future bonding would be used. Was the intent to borrow for water main replacements? Yes. Roll call. Voting aye — Rainey, Hansen, Jean -Baptiste, Bernstein, Hohnes. Voting nay — Moran, Tisdahl, Wollin, Wynne. Motion carried (5-4) Alderman Rainey suggested that real numbers on the February sales taxes for three years be prepared in detail and submitted to Council. Yard Waste Sticker Program Mayor Morton noted the memo says yard waste will be placed in yard waste carts that will be sold to residents at a cost to be established by the City. She asked how much more money will they ask taxpayers to pay monthly. Each sticker costs $1.50 so nothing can be collected unless it has a sticker. Ms. Carroll explained that residents may use the yard waste cart at no cost. People without a yard waste cart would have to purchase stickers. Mr. Jennings explained that the City sells yard waste containers currently. The intent of the ordinance is that if somebody continued to use their cart, they would not have to purchase a sticker. Bags and bundles would be $1.50. The carts cost $81 and change and are owned by the resident, unlike the City refuse cans which are owned by the City. Stickers would have to be purchased ahead of time. Mr. Jennings said that 9 of the 23 S WANNC communities charge for yard waste pickup and this is one of the lowest priced sticker programs among those communities. Many SWANNC communities sell waste carts and sticker the cans. Ms. Carroll said at that point Council decided not to have any increase in the Sanitation service charge. The charge will be on the property tax. In the base budget they had $300,000 as a sanitation service fee, but placed it on the property tax at an earlier meeting. Only property owners would pay the refuse fee through their taxes, except for the $3.72 that residents currently pay. That would not change. In response to Alderman Moran, Ms. Carroll said if they were to adopt the Sanitation Service Charge, a $1.28 increase over the $3.72 recycling fee, it would be about $300,000 in revenues and currently on the property tax. If adopted it would lower the property tax by $300,000. The yard waste sticker fee is worth $200,000 in revenue. If not adopted, property taxes would increase by $200,000. In response to Mayor Morton, Mr. Jennings described the City's previous bag program. Mayor Morton asked why the bundle is four feet. It is due to handling and fitting into the bucket of the truck. According to the City Code, bundles have to be 2 feet by 4 feet. It is brush and limbs of four inch diameter. Anything larger would hurt the hydraulics of the trucks. Alderman Moran recalled when they had bags, standing in line to buy them and that people complained the City was nickel and diming them. The program was very unpopular. He recommended taking the sticker program out and going with the Sanitation Service Charge, which was more palatable. Alderman Moran moved that Ordinance 5-0-07, the Yard Waste Sticker Programbe cut and put back Ordinance 6-0-07, the Sanitation Service Charge. Seconded by Alderman Wynne. 3 It-1 6 February 19, 2007 Alderman Rainey commented that that the sanitation charge would make Evanston the only community that requires an extra charge for garbage. She argued that if the cost of garbage went up and if the City feels they have to charge for a service other than an increase why shouldn't it be on the tax bill. By charging homeowners on their water bill for the extra garbage cost, that cost is not spread across the entire community. The whole community has to value garbage collection whether collected or not. Thousands of people pay if they put it on the tax bill. But if kept on the water bill it goes to single-family homes and up to four flats that already pay for City garbage collection. She felt that was an unnecessary burden for an essential service. The burden is less on the tax bill because more people pay. She asked what $300,000 spread across the tax bill would be. She did not support the sticker because people did not use bags and recalled filthy alleys cluttered with overflowing bags. Roll call. Voting aye — Moran, Tisdahl, Jean -Baptiste, Wynne, Holmes. Voting nay — Rainey, Hansen, Wollin, Bernstein. Motion carried (54) Alderman Hansen asked about budget memo 45, allocation of the unreserved fund balance of the General fund, the $1.3 million to the Police Pension and $1.3 million to the Fire Pension funds. She wondered what those sums do to the pension funds. How would that affect the City's bond rating? Budget memo 46 talked about downgrades in the City's bond rating. A memo will be prepared. Alderman Rainey asked about budget memo 52 on miscellaneous revenues. She wanted to know the period those actual numbers were through, December or January. They were through January 31, 2007 and the prior years were for a full year. She wanted to see January numbers for 2006-07 and 2005-06. Alderman Wollin asked about the Athletic Tax. Mr. Grady explained it always comes in late and was on target. Alderman Jean -Baptiste asked why the tax went down. Mr. Grady stated that tax is based on attendance. It is 11 % of the ticket price and based on how many games there are. A three year history will be provided. Alderman Tisdahl asked when the Athletic Tax was last raised. At least 10-15 years ago, according to Management, Business & Information Systems Director Pat Casey. He noted 11 % is a high tax on a ticket and the City has to show why it is taxing at that rate. The higher the tax the harder that is to do. Alderman Rainey recalled the Athletic Tax has always ranged between $500-600,000. She asked if the ticket price has gone up; recommended they find out the ticket prices. Alderman Moran recalled seeing numbers on the incremental costs and thought the City does well on this tax. Alderman Wollin hoped the reason the cigarette tax went up was due to increased tax and not increased smoking. There being no further business to come before the Council, Mayor Morton asked for a motion to adjourn and the Council so moved at 9:30 p.m. Mary P. Morris, City Clerk A videotape recordine of this meetine has been made Dart of the permanent record and is available in the Citv Clerk's office. 11