An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, March 26, 2002 commencing at 7:00 a.m.

Present: Council Members – Hitchcock, Howard, Land, Nakanishi (arrived at 7:05 a.m.), and Mayor Pennino

Absent: Council Members – None

Also Present: City Manager Flynn, City Attorney Hays, and City Clerk Blackston

City Clerk Blackston reviewed the weekly calendar (filed).

City Manager Flynn announced that Carlos Tobar, Transportation Manager, has accepted a position with the SMART San Joaquin Regional Transit District and will be leaving employment with the City of Lodi within a few weeks. Mr. Flynn also announced that Joel Harris, Purchasing Officer, has attained his Lifetime Certified Purchasing Manager certificate. He reported that beginning April 7, 2002 the Library will be open on Sundays.

C-1 "Budget – Estimated Revenues"

Council Member Land requested a copy of the Assembly and Senate Bills.

Ms. McAthie reviewed the 2001-03 Financial Plan and Summary report as follows:

Tax Revenues
In the original 2000-01 budget, $20.6 million was estimated in total tax revenue. The actual amount as of June 30, 2001 was $22.1 million. Staff recommends increasing the current year budget by 4.3% (amounting to an additional $900,000) and an overall increase of 4.6% for 2002-03. Ms. McAthie noted that a recent Kiplinger report indicated that 2001 was a record year for home sales and refinancing. An additional $215,000 in property tax was received in 2001. In the current revenue report as of February, the City was at 59%, as compared to 55% of the revenue at the same time last year. Ten-year trends on property tax have increased by 2% each year, the five-year trend is 5%, and the last two years is 9%. Staff recommends increasing the property tax by 6% in the current year and 7% in the second year. An additional $278,000 was received in sales and use tax as of June 2001. It is anticipated that the City will receive an additional $400,000 in sales tax, amounting to a 4.8% increase, with a 6% increase next year. The ten-year trend on sales tax is 6%, the five-year trend is 7%, and the last two years has been 11%. The public safety sales tax is projected to increase 3.4%. In the Transient Occupancy Tax (TOT) the ten- and five-year trend shows an increase of 8% and the two-year trend is 13%.

Council Member Howard referred to a letter prepared by City Attorney Hays on the subject of the TOT and noted that Council may need to consider whether to keep it at 9%.

City Attorney Hays advised that Council consider the matter in a closed session meeting.

Ms. McAthie stated that the waste removal franchise is currently at 60%, as compared to 50% the same time last year. Staff recommends flat lining it to the same amount received as of June 30, 2001. Twelve percent will be taken on the in-lieu franchises. The real property transfer tax will be flat lined.

Licenses and Permits
$1.4 million was estimated in 2000-01, with an additional $170,000 received. Staff recommends flat lining it for the current year, which would increase the original estimate for the current year by $110,000. In the second year, staff recommends an increase of 3.75%, amounting to $59,000. There would be a small increase in the business license tax, with the bulk of the remaining increase from various types of permits. The trend in building permits over the last ten years shows an increase of 8.2%, with a five-year trend of 9.4%, and two-year trend of 14.35%. The value of the permits over the last ten years has increased 23.69%, a 33% increase over five years, and a 20% increase over the last two years. Staff recommends increasing the building permits by 7%, with the rest flat lined to the June 30, 2001 figure.

Fines and Forfeitures
Staff estimated $900,000 for 2000-01; however, $200,000 less was received. Ms. McAthie attributed this to using a different method of calculating late charges on utility bills and being more aggressive in collections. She recommended flat lining fines and forfeitures.

Investment/Property Revenues
$6 million was estimated in 2000-01 and $6.4 million was received. Staff recommends increasing the amount to $5 million. She noted that the original estimate for the current year was $4 million, and it is recommended that it be flat lined for the second year.

In reply to Council Member Nakanishi, Ms. McAthie and Mr. Flynn indicated that the amount of investment/property revenue received throughout the year depends on the cash levels available for investment, which ranges from $18 to $30 million.

Revenue from Others
Measure K reimbursements was estimated at $3 million in 2000-01. The revenue received in this area are reimbursements for work done over multiple years. This year staff will book the estimated revenues when electronic billings for reimbursements are done.

Mayor Pennino remarked that staff has done an excellent job of obtaining grants, noting that it represents 12% to 15% of the City’s income.

Referencing Line 71, Ms. McAthie explained that the $700,000 represents the City being super funded for Miscellaneous Employees. Although the City had approximately $300,000 it was able to use, it was not considered super funded this year.

In regard to the PERS super fund issue, Mayor Pennino asked that a comparison be done between the current status and two years ago when the issue was originally discussed.

Service Fees and Charges
Public safety came in at $16,000 more than was estimated in the prior year. In answer to Council inquiries, Ms. McAthie reported that it was due to underestimating the amount of towing that would be done. She explained that this is related to vehicle abatement. The City does not tow for extended parking violations. Staff recommends that the $120,000 figure be flat lined for the next two years.

Council Member Nakanishi asked what account the $8,000 Grape Festival grounds security was deposited in. Ms. McAthie replied that she would research this and respond back.

Electric Operating Revenue
Ms. McAthie reported that discussions are now underway regarding accounting and projections for Electric operating revenue. This issue is scheduled for the April 2, 2002 Shirtsleeve Session.

In reply to Council Member Nakanishi, Electric Utility Director Vallow explained that revenues are driven by expenses and indicated that it would be difficult to obtain total amounts until all expenses have been projected.

Sewer and Water Operating Revenues
Ms. McAthie reported that numbers for sewer and water operating revenues are currently being discussed with Public Works. In answer to Mayor Pro Tempore Hitchcock, she explained that "all others" pertain to residential and commercial accounts.

Transit Fees
Staff recommends that transit fees be flat lined.

In reply to Mayor Pennino, Ms. McAthie stated that she would report back on the Farebox recovery amount.

Park and Recreation Fees
Revenue for park and recreation fees decreased by $100,000 from the 2000-01 estimate. Staff recommends flat lining the revenue to be in line with actuals. A $30,000 decrease is projected in 2001-02.

Community Center Fees
Ms. McAthie stated that staff is working with the Community Center Director to estimate the box office figures. She explained that the box office was placed into a trust account; however, it should be under revenue and expenditure. "Other fees" are classes that the Community Center offers.

Community Development Fees
An additional $90,000 was received in Community Development fees over what was estimated for 2000-01. Staff recommends flat lining the fees for the current year, and in the following year to be more in line with the actuals for 2001.

Public Works Engineering Fees
Staff does not recommend any changes to the original estimates under this category. Ms. McAthie attributed the increase in 2000-01 to Development Impact Fees and noted that the fees come in only as development is done.

Administrative Fees
Staff recommends no change from the original estimate on Administrative Fees. Ms. McAthie explained that these are utility connections and returned check charges.

Benefit and Insurance Fees
The major change under this category is indicated on line 139. Retiree medical premiums are now deducted from their PERS check, so this revenue will no longer be coming in to the City.

Other Revenue
Revenue No Other Category (NOC) was estimated at $285,000 for 2000-01 and $1.1 million was received. From this amount, $225,000 was for the DBCP, $140,000 was for the septic dump charge, $300,000 was due to an accounting change related to Workers Compensation, $273,000 was a one time grant for transit, and $143,000 was a reimbursement from Apache Plastic. Staff recommends leaving the estimate unchanged from the 2001-02 amount, other than an increase in Revenue NOC for quarterly reimbursements for the Veterans Mall. Line 155 is the Library private sector trust.

City Manager Flynn noted that revenues as well as expenses have come in higher than anticipated.

Ms. McAthie reviewed a report entitled Summary by Different Funds (filed) and stated that in the actuals, the additional 6% revenue received amounted to $5.5 million. Staff’s original estimate for 2001-02 was a little over $103 million. A 2% increase is projected for just over $105 million. The following year staff anticipates a 13% increase, subject to upcoming meetings with Public Works and Electric Utility.

Mayor Pro Tempore Hitchcock requested a copy of the summary report.

Ms. McAthie reviewed upcoming target dates related to the budget process.

None.

No action was taken by the City Council. The meeting was adjourned at 7:52 a.m.

ATTEST:

Susan J. Blackston
City Clerk