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Agenda & Minutes

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Mayor & Council (View All)

City Council Study Session Agenda & Minutes

Thursday, November 10, 2016

12:00 Noon
Prescott Room, Police Station
219 S. Ivy, Medford, Oregon
  1. Joint Study Session with City Budget Committee and Medford Urban Renewal Budget Committee

12:00 Noon
Prescott Room, Police Station
219 S. Ivy, Medford, Oregon

The Medford City Council Study Session was called to order at 12:00 p.m. in the Prescott Room of Medford Police Station on the above date with the following members and staff present:
Mayor Gary Wheeler; Councilmembers Clay Bearnson, Daniel Bunn, Chris Corcoran, Dick Gordon, Tim Jackle, Kevin Stine, Michael Zarosinski
City and Medford Urban Renewal Budget Committee Members Beverly Adams, Robert Bartalini, Heather Casey, Bruce Conway, Barbara Davidson, Steven Dickson, Ed Felan, Kevin Keating, Ronald Weaver, Rick Whitlock
City Manager Brian Sjothun; Finance Director Alison Chan; Deputy City Recorder Winnie Shepard
Councilmember Eli Matthews and Budget Committee Members Ron Norris, George Schroeder and Jerry Shean were absent
Joint Study Session with City and Urban Renewal Budget Committees
Mayor Wheeler opened the meeting; attendees introduced themselves.
City Manager Brian Sjothun outlined his responsibilities as City Manager and noted he added a budget message and made the following suggestions/recommendations:
  • Budget should be easy to read and understand
  • Hold semi-annual meetings with both budget committees and Council
  • Staff should report the outcome/results from Council’s key objectives and performance measurements on a semi-annual basis
Mr. Sjothun requested Council direction on the vision for future budgets.
Revenue Projections  
Alison Chan Finance Director explained:
  • Property taxes are largest source of revenue in general fund
    • Over the last four years, assessed value grew 4.3% per year
    • New marijuana tax revenue is difficult to determine as it has not been collected
Marijuana Tax Revenue
Ms. Chan requested direction regarding whether marijuana funds should be forecasted and/or dedicated.  She noted that funds can be restricted either through revenue or expenditures. 
  • Council and Budget Committee Members suggested the following:
    • New dedicated fund for all marijuana revenue
    • Use for donations or special issues for non-profits to come up throughout the year
    • Two dedicated funds: one for the 3% tax and one for the 17% state collection
    • No decision until a vision is determined
    • Include some funding in the budget, because we know there will be incoming funds
    • Shouldn’t dedicate the funds when the amount is unknown
    • Budget a conservative estimate of $100,000
  • Use the 3% to bolster local graduation rates through financing afterschool programs or other activity
  • Use for essential safety net services
Ms. Chan explained that none of the marijuana revenue can be deposited directly into a dedicated fund; it would need to be deposited into the general fund and then transferred through Council action.
The State is already collecting the 17% tax and we have an IGA to collect the 3% tax. State will pay us the 3%, but take a 4% processing fee.  The 4% is not negotiable and there is a delay for processing the payments.
After discussion, Mr. Sjothun clarified Council’s direction is not to forecast or dedicate the new marijuana tax revenue at this time, but track it for a year then reconvene to determine any allocation.
Ms. Chan stated she will track the 3% and the 17% payments separately to report the amount of funding received for each.
Medford Urban Renewal Agency (MURA)
Ms. Chan explained MURA is scheduled to sunset in 2018 resulting in approximately $1.2 million available.  She provided a brief history noting there is a property tax special levy in which MURA receives $5 million, but half is the special levy. If MURA creates a substantial amendment, the special levy goes away immediately, providing revenue to the City.
She asked for Council direction regarding whether revenue should be budgeted in the general fund or into a dedicated account.  Ms. Chan clarified the fund is measureable, but not known because the MURA Board has not decided whether to create a substantial amendment. Council commented as follows:
  • A decision should be made on MURA’s extension before deciding on the potential revenue
  • If MURA sunsets, recognize the funding during the next biennium; if a substantial amendment is approved, recognize the funding immediately
  • If no substantial amendment; the funding should be dedicated to capital projects and not the general fund
Revenue Development
Mr. Sjothun noted a web link for the City of Eugene and requested attendees visit the site to view Eugene’s revenue ideas. He explained the City should look at all of our fees to determine our cost recoveries.
Personnel Expenditures
Ms. Chan stated the City has seven union agreements and three are still open as of July of this year.  She outlined salary increases for the seven unions and noted PERS rates increase from 11.3% to 15.0% and explained the different rates for different retirees. Ms. Chan estimated a $1 million increase in City’s PERS expense, but 64% will go to fund those already retired and pulling a benefit.
Capital Improvement Projects (CIP)
Mr. Sjothun noted the City is spending approximately $4.2 million on capital improvement projects and explained that any new project must be a part of an approved CIP or extend the life of the asset.
Ms. Chan provided a history of the fire station construction, noting the City couldn’t afford the build all three fire stations at once.
Ms. Chan spoke regarding the Central Avenue sidewalks downtown and $250,000 in unbudgeted MURA funding which could be used to repair the sidewalks now versus waiting for additional funding.
Councilmember Gordon recommended separating the CIP for each department.  Councilmembers Gordon and Corcoran clarified that Council already directed the use of street fees for the Central Avenue sidewalk repairs; Councilmember Corcoran recommended Public Works pay for repairs now and be reimbursed later.
Budget Issues
Mr. Sjothun suggested the City Manager recommended prioritization of budget issues, with the Budget Committee(s) approving all budget issues and setting the final prioritization. He asked whether Council objected; no objections were received.
Mr. Sjothun asked for direction regarding whether or not Council would like to hear all budget issues, even if there was funding available.  Budget Committee Member Beverly Adams recommended bringing forth the services needed versus the positions needed.  Councilmember Bunn clarified the Council authorizes positions and the Budget Committee authorized the level of funding.
After discussion, Mr. Sjothun clarified that Council would like hear all requests.
Social Service Grants
Mr. Sjothun asked Council whether the grants should be brought forward if there was no request for increase.  Council and Budget Committee Members responded:
  • Need to set a procedure to eliminate requests directly to Council from the public
  • Was it feasible to continue funding social services with the increase in PERS expense
    • Grants actually help save money by support existing agencies versus providing the services directly
    • This funding does not include CDBG
    • Difficult to determine funding amount until budget preparation begins and our financial situation is reviewed
    • Grants are an investment in the community; our funding is leveraged with in-kind services and volunteer hours
    • Funding grants insulates Council and creates a funding process using the General Fund Grants Subcommittee
After discussion, Mr. Sjothun clarified that Council would like the grants included in the preliminary budget.
Biennial Budget or Annual Budget
Ms. Chan provided a history of the City’s change to a biennial budget and explained it matched the state’s budget cycle. Mr. Sjothun noted he spoke with half a dozen city managers and they would like to be on a biennial budget, if they weren’t already. 
  • The City has processed seven budget amendments and the City is ľ through the biennium, but most were for moving funds or determining accounts for revenue
  • Most cities in Oregon are on an annual budget
  • The budget committee can help utilize funding
  • Difficult to predict expenses and revenue more than one year in advance
  • Medford School District has a $110 million annual budget which is similar to the City’s
  • Keep biennial budget, but use budget committee more often for “tune ups” to keep staff costs down
  • Going from biennial to annual budget is “going backward” with increased staff costs
  • Ms. Chan recommended a biennial budget, because it is more efficient
Mayor Wheeler stated the City hasn’t utilized the Budget Committee like we should; he recommended maintaining the biennial budget but include more budget committee meetings.  He didn’t see an advantage in changing and the staff costs could increase. 
Mr. Sjothun explained his experience working with an annual budget and noted the new software is designed to work with a biennial budget.
After discussion, Mr. Sjothun noted the Council’s consensus is to remain on a biennial budget with more help from the Budget Committee.
Councilmember Bunn suggested the Department Head presentations have less “fluff” and more substance; clarifying that Councilmembers already know the responsibilities of the departments.
Mr. Sjothun stated he has requested Department Heads submit their achievements and accomplishments separately in a book to be provided to Council.
Councilmember Gordon requested that everyone has a link to the last budget and the last audit.  He also asked that quarterly reports are sent to Council and the Budget Committee Members. 
The meeting adjourned at 1:48 p.m.
Winnie Shepard
Deputy City Recorder                                                 

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