It's Strange Magic Got a Strange magic Got a Strange magic It's magic It's magic It's magic Strange magic The one and only Strange magic Oh, it's the one Strange magic Got a Strange magic Strange magic The one and only Strange magic Oh, it's the one Strange magic Got a Strange magic Strange magic The one and only Strange magic Strange magic Got a Strange magic Got a Strange magic You know I got a Strange magic Yeah, I got a Strange magic Skippin' rocks, skippin' rope Laughin' at all my best friends' jokes Things I loved when I was a kid Muddy roads, muddy feet I didn't live on no blacktop street Things have changed a lot, but I never did And I don't wanna think about tomorrow I don't need anything money can buy I don't have to beg, steal, or borrow I just wanna live until I die Living right, living in this little old town I grew up in I don't have to beg, steal, or borrow I just wanna live until I die Living right, living in this little old town I grew up in I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die Living right, living in this little old town I grew up in I don't have to beg, steal, or borrow I just wanna live until I die Living right, living in this little old town I grew up in I don't have to beg, steal, or borrow I just wanna live until I die Living right, living in this little old town I grew up in I don't have to beg, steal, or borrow I just wanna live until I die Living right, living in this little old town I grew up in I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die I don't have to beg, steal, or borrow I just wanna live until I die And they are gonna go over the management comments and then any questions that we have. Thank you very much. We will take just approximately 15 minutes. We just wanna go through the audit the opinion letters, management letters, of course and some communication with the governing board. Drew's gonna do the majority of the presentation. Just wanna let you know as to what we've done. There's three types of audit reports We've got the one under just generally accepted accounting principles generally accepted accounting standards, the government auditing standards, sometimes called the yellow book and then also the single audit that we will review with you. We'll open it up for any questions once Drew runs through those and we'll be glad to answer whatever comes up and if for some reason we can't get you the answer today, we will get back to you just as soon as we can. So if Drew wants to go through those now, that'd be great. And feel free to ask us any questions that you may have. Good afternoon. Before I get started I just wanna say appreciate and thanks all the cooperation and efforts from Linda and Mary Fister and the Ahola County Department. A lot of work is put into preparing the CAFR. As Randy mentioned we performed our audit in accordance with generally accepted accounting principles, government auditing standards and the OMBA 133. Our first audit report is included in the CAFR. It's on page 13. It basically spells out, you know, we performed the audit of the financial statements the management prepared the financial statements and we provide an opinion. We've issued an unqualified or a clean audit opinion on the 2009 financial statements, which this is a good thing. I wasn't gonna get into the detail of the financial statements, but if you've not had the opportunity I'll encourage you to read the management discussion and analysis, which begins on page 15 in the CAFR. A copy of the CAFR. This report has been out since December 2009 and is just the financial statements of the government for the year ended June 30, 2009. But in this report the management prepares about a 10 page summary of the financial statement highlights for 2009 and provides some really good analysis and comparison for the year. Our second audit report is the report on internal controls over financial reporting and compliance. And it is actually included in a separate, it's not included in the CAFR, but it's included in a separate report which we call the single audit report. And again, this report has been out since February. Commissioner Rumke, is this report online so that if the public wants to look at the report that they have the ability to see what we're talking about? They are online, the CAFR and the single audit. Okay, thank you. A report over internal control over financial reporting and compliance basically says that as part of our audit we considered the internal controls of the government. And in part of that consideration if we find any control deficiencies we'll report them to you. We did not identify any control deficiencies that would be classified as a material weakness for 2009. So we did not identify any significant control deficiencies. We also did not identify any material noncompliance with laws or regulations, grants, things of that nature. That's what that report says. It does not provide an opinion on the internal controls as that's not what we were, that's not what we're supposed to do or what we're engaged to do. Our third report is also included in the single audit report. And it's the report on compliance with the federal grants. And it's also on internal controls of federal grants. Again, this report did not identify any internal control weaknesses in regards to the federal grants. It did not identify any noncompliance with any of the federal grant requirements. We've also issued, and you should have a copy of, a letter that's to the Budget and Finance Committee. This is required communication from our professional standards that we communicate to you any significant audit findings. We did not have any significant audit findings for the June 2009 audit. We didn't have any disagreements with management. It was a clean audit. That's what this letter basically summarizes. And what does council have before, and what is this? That's the last thing I'm going to get to. I have a question. When you mentioned disagreements with management, is that you disagreeing with our commissioners with how they're handling their financial issues, or is it if somebody internally has a disagreement? Can you please clarify? A disagreement with management might have to do with the accounting treatment of a certain transaction. If there was a certain transaction that management had recorded one way, and based on our research and the accounting guidance, we said, we think it should be recorded this way, you may not see eye to eye on such a transaction. So it really doesn't have anything to do with any type of internal disagreements, but more having to do with accounting and financial reporting. So if somebody has a disagreement and you don't see eye to eye on it, that would be considered a disagreement, correct? Not a. If it had to do, if the disagreement had affected the financial statements, then it might show up in this report, this letter. I'll stop. Thank you. Council Member James. Thank you, Chair. I guess I wasn't, I don't know, I missed something. I wasn't aware that this dealt with the financial statement. I don't know how I missed that. I mean, I looked at the information in our packet, and it wasn't clear to me. Am I the only one? I don't know. I'm kind of feeling like there's a, like I don't have my financial report in front of me. I didn't even review it for this meeting today. And that could just be my oversight. Maybe everybody else is ahead of me on that. I'm not even too sure what you would be looking for in an audit to even know what questions I should be asking or not asking at this point. I know that one of the questions I would have, which maybe you answer this or not, is whether or not for the ordinances and resolutions and the state statutes that we have in place, are we abiding by those when it comes to our expenses and are we honoring what the ordinances and resolutions say? Is that something that your group would audit? If there are, the government has to, there are certain things that government has to comply with that would have a direct and material impact to the financial statements, yes, we test for that compliance. And if we found that the government was not in compliance, we would have reported it to you in this report. Okay, so do you give reference to the statutes and ordinances and resolutions that you would have referred to to view compliance? Is that a listing that we could find somewhere? No, we're not, we don't identify in the report itself, we don't identify the exact, if it's statutes that we would have tested for. Okay. Chair, I just, I'm not sure where to, I'm not sure where my mind is supposed to be around this or what we're supposed to be doing or what our role is. This is simply the presentation of the audit that we get every year from our audit team. The audits are annual budgets. And this is an opportunity to go through that audit. I know there were some questions referred out of it a couple of council meetings ago about items in the audit. That's simply what this is. Ask the people who actually did the audit questions about the information we received back in actually January we got it all. Okay, so how many council members behind the horseshoe have their audit that they're looking at right now? No one. Okay. Thank you, that's all I have. And I did announce at the last budget and finance meeting that we would have this discussion as well as Thursday night that we'd be having our audit discussion. So it has been previously announced, but we can have it at the next meeting too. Anyone? Council Member Martin. Thank you, Chair. Is, you know, we have I guess an abbreviated, this is the February 4th 2010 cover letter. And what you have is exhibits as well. Is this included in what you? That is the audit, the management letter. We haven't yet got to that. Right. One of the questions I had, so the audit covers LPCG, but it does not cover LexTran or the library. Is that correct? Is that accurate? Those component units are included, the financials, those financials are included in the comprehensive annual report. But we did not audit those component units. Those are audited by other auditors. You indicated that you weren't giving an opinion about financial controls. We don't provide an opinion on the internal controls. That's correct. But you have indicated that you have found no problems with internal controls. I was just trying to understand the subtlety of the. What we actually do is we test various controls to see, you know, are the controls there that are said to be there. We test those unless we, you know, we're not giving an opinion that they're operating on the effectiveness of them. We're saying the ones that are in place there that we've been told they're operating the way they're designed to operate. We can't give you an opinion over the entire internal controls because that's not part of the engagement. But part of our planning of the audit is to go in and look at internal controls and determining the areas that we look at. We can rely on some of your controls, some of them, and we test. And those are the types of things. But we do not actually give an opinion on the entire effectiveness of the entire internal control system. But if we identify something, we bring it to your attention. Do you typically give internal control opinions and other? We do not give opinions on internal controls. Basically what we're engaged to do is give an opinion on the fairness of the financial statements as a whole. But I guess my question, in other clients or other circumstances, do you give opinions about internal controls? No, we do not do that. Okay, so that's just outside the scope of what services you provide. Right, that's outside the scope of a general financial audit. Okay. So the city would retain a different consultant for that type of opinion? I mean, it could be someone. If you wanted to have that, that's in a separate engagement that would be done to address if you wanted someone to review your internal controls in full. A lot of times those are called agreed upon procedures where you identify certain ones that you want to look at and you would give an opinion based on what you've done and the findings of that. And how common it is to get an opinion on internal controls? A lot of times you'll have what's called a SAS 70 audit for some service providers. They'll go in and review the controls there and provide a report just for that. Would you recommend that we do that frequently or periodically? I think what we're doing in terms of a general review of your internal controls, we identify the areas where we feel that the risk is high. We will test those controls. We're just not allowed to give an opinion because that's not the function of the engagement. But we are required by General Accepted Accounting Standards to test the controls in order to determine whether we can rely upon those or not. Okay. So do we need more? That's my question. My personal opinion is no, you do not need more. Thank you, Mr. Chair. I just wanted to be sure I understood what you said about previously you said that you do look at whether statutes were followed. Is that correct? It would be various statutes, various requirements of grant agreements, those type of things. And based on some questions we had a meeting or so ago, then do you also look at local ordinance or resolutions that relate to the budget and our finances, whether we're complying with those or not? Do you look at our local ordinances and resolutions? If those resolutions had a direct material impact to the financial statements, meaning if you had noncompliance with them, it would impact the financial statements, then we would have tested for compliance. Okay. And just to be clear, your audit, does it include urban service funds? It includes all of LFUCG's funds? That's correct. Okay. Thank you. I did have a question. Related to, I don't have my statements in front of me, guys, so forgive me. The prepaid items in the asset summary, the $30 million, can you all share with us what that represents? I believe that's related to the overfunding of the police and fire pension loan. So that's going to be there to fund future obligations. So is this coming through our general fund? This is the funding that is accumulated, has been accumulated? Well, if you look at your general fund, in 2009, the government issued a new bond, approximately, I believe, $70 million, $77 million related to the police and fire pension. So in the general fund for 2009, all of that bond revenue shows up as revenue in that year and everything that, in turn, all of it was expensed in that year as well. So there's no, you only see the prepaid item on the statement of net assets on the government-wide financials, which is on the full accrual basis. So really, it's already run through the general fund. That whole transaction has already run through the general fund for fiscal year 2009. That $30 million is not the bond proceeds value, is it? It came from the bond proceeds. But it's not, obviously, that's not the entire bond proceeds. Yeah, because the entire bond was $70 million and change, right? But this is where we are holding it on the, as an asset, the $30 million is being held of the bond proceeds. I thought that was in the fire and pension separate. That's not a, this is income from. Yeah, I think that's on the government-wide statements, as Drew was saying, it's where they're on the full accrual basis, whereas on the fund, it reports the income, the proceeds that comes in and the payments that are going out. On the government-wide statements, they're on the full accrual basis, which records items based on when the expense is incurred and not basically when it's paid out. On the fund financial statements, the bond proceeds were brought in and shown as proceeds, and then when they were paid out, they were shown as expenditure. But when you look at the government-wide statements, that expenditure that was paid out, it was not fully for that current year. Part of it was a prepaid item that's going to take care of the expenditures in later years. There's no actual funds that we have sitting there. We've put into the pension fund, and we have overfunded basically that amount. And that prepaid will go to offset future expense of the pension fund. Well, it's one of those areas where I sometimes think I don't understand everything I know. So the real issue, I think, if I boil it down, is how that number relates to our current funding through the bonds that we have approved for the fire and pension. Does it have any relationship to the $72 million and the $30 million that we've just approved? In terms of the actuarial impact? Yes. It's all been paid in to the fund, but it wasn't required because there's the expenditure that we had. The expense was not that much. What I'm saying, some of that prepaid, my understanding is it goes to cover the future pension costs for another year. That's why it's called prepaid. Okay. So that's why then it would have an impact. My interpretation of that is that it would have an impact on the actuarial analysis. Right. Would that have been in last year's actuarial report? I'm sorry. What was the question? Would this impact or would not impact, would the influence of that would have been that $30 million prepaid would have been included in the actuarial analysis for the same fiscal year? Yes. And it would be included in the analysis for the next year because we have some that's prepaid. So you would not have that big of a deposit. I know you don't have this in front of you, but there's a footnote in the CAFR, which this is on page 92. It provides really a summary of the actuarial report and where the $30 million originated from. Okay. And this may be related to, this is my only second question. And it's just a question related to what was the language we were using earlier for management report. The management report addresses not administrative issues, but operating control issues. So with the Sarbanes, Sarbanes applied to the management report. Sarbanes didn't apply to government and municipalities, and FASB. But the question that I had would be related to, is it across the country, we even had exposure locally to issues related to accountability, fraud detection, that sort of thing. To what extent do you guys do all, does the audit actually examine or inquire about fraud detection? I guess is a better question. Our audit is not required to find fraud. Are there any protocols that you normally engage through the audit? We do a pretty extensive inquiry with employees and management in all departments. And among other things, but that's one source that we go out and we meet with management and we inquire directly about their knowledge of fraud, where they believe fraud could exist. So that is part of the protocol. It has elevated over time, and the question really relates to the procedure or the process that you all are engaging. So there is a process is what you're saying? Yes, there is a process. Basically it's an inquiry type with various individuals within the city, employees, management. And again, we're not doing a fraud audit, but if anything comes to our attention, we're required to bring that to your attention. Thank you. And next up we have Council Member Crosby. But before you go, I want to make sure Council Members understand that what they also handed out today, we're going to keep those recommendations in committee. And it will be an ongoing process. But the main audit book that we want them to be here to answer questions on is important because in the budget process, it's the only real data we get that have been audited, scrubbed. It's the only real numbers that we can use when we're deliberating on the budget and what operating expenses should or were or could be. So that's why it's important to have that book with you during the budget process. Council Member Crosby. Walk me through. I'm going to follow up with Council Member Gray's or Vice Mayor Gray's question regarding fraud. And if I understand it correctly, you say that you do extensive questioning and there's a process that a commissioner or a director or somebody could go through to actually report that to you. At that point, you make some kind of determination, I'm assuming, as to whether or not you think there's been some sort of fraud. From that point, if it's been reported, you then just said that it's your duty to report that back to the Council or back to the administration. And then from that point, where would it go if you make some kind of recommendation? When you say recommendation, you mean if we have, through our inquiry, determined that there possibly is fraud? Or possibly not. I mean, somebody could report it and you may disagree with them. Is it still your duty to report back that this has been suggested? We will review and do as much work as we can to determine if we feel that there is fraud there. Based on what someone is telling us. And if we feel that possibly there is a possibility of that, then we would go to a level above where that fraud was pointed that it might possibly exist. Could there be conflict if somebody at a director level is insinuating that there's fraud occurring and it might be somebody who's above them? Could that create some, I'm just trying to understand the process here. When you say? A conflict where maybe, oftentimes you have people who are in positions who may assume that something is happening, but it could be about somebody they directly supervise. Who directly supervise them. You're saying if somebody reports something, your next step is to go to, for example, if it's somebody they might be insinuating fraud against who's above them, you would be going to that person? No, we wouldn't be going to the person where the fraud is considered. We would go to someone above that level to make sure that we have someone who would be able to review this with us that wouldn't have a conflict. If someone was a worker, an employee, and there was a supervisor, and the employee was saying the supervisor is committing fraud, we wouldn't go to that supervisor and ask them. One, we would do some inquiry and review some transactions to see what we thought, and then we would go above that. So let me just understand this. I'm going to give two examples. If an employee was insinuating a director was having fraudulent accounting practices, you would then go to the commissioner level, correct? Because it would be up above the director. If that's, yeah, normally we would go to the commissioner level unless there's another area within the agency where we felt we could go to. Okay, I'll come back to that. If there was a director who did it to a commissioner, I would assume that it would go to the mayor. One level above? That's normally what we would look at is if there was someone that was being, that we were considered, if there's a position that would be considered to be somewhere fraud was being perpetrated, then we would try to go above that level. Okay, and then do you make recommendations ever for it to be, if there's something that's been, you know, if there's something that's been considered to be fraudulent accounting practices, then we would try to go above that level. Okay, and then the next question brought to your attention, do you ever make recommendations above and beyond just notifying the next person above, or do you make recommendations, for example, that it go into certain committees to be examined within government since your role is not really to look at fraud, I guess? Yeah, I think our responsibility is to report it to the entity and let them investigate it. And they would make the decision as to who, what would be done, whether something needed to be reported to the police or whatever. But our record, we would be the ones who would recommend it to the commissioner, the board, whoever, and say this is what, we have these facts here, and we feel that this is something that could be going, we would like for you all to look into this. Okay, and then you're done after that point. And I'm sure there will be questions come back and say, well, you might want to look at these transactions. They might ask us to look at various transactions to see if we see anything in there. Now, then again, you have to get to the point where do you actually have to stop that engagement and start a new engagement, a fraud engagement? And would that be brought to our attention in your report if you had any, anybody report any, like you said, there's definitely a process that either commissioners or directors would have to go through. If they have questionable, if they have questions regarding accounting practices, and they report those to you, do we see what their questions might be? Do you report that anywhere in your report? I don't think it would be in this report here, because again, this is not a fraud report, but it would be something that would be brought to the attention of whoever the response, who we find. Who we felt the responsible board should be. So I guess my next question is if something of this nature is reported to you, you don't, there's no way for, you don't report it to us per se. You're reporting it to somebody within LFUCG. And so if I'm to ask, I would like to see what's been reported over the past three years that you've investigated and have made a determination on, who would I go to to get that information? If there was such communication, it would have probably been the commissioner level. And would you all have, I would assume you keep records if this has been reported to you, if we were to request that type of information? If there's been any fraud. If somebody has brought to your attention anything that they wanted you to look at through the accounting practices. Regardless of your determination, you're the point, it sounds like, of decision as to whether or not it gets reported to a commissioner or not. And I guess my question is, over the past three years, how many of these have we had and have you made determinations on? And then where have they gone to after they leave your hands? Okay. And then my next question is, besides the introduction in this book, has anybody within LFUCG written any part of this audit? The financial statements are prepared by management. So the entire document you're looking at, outside of our two-page audit report, our audit opinion letter, is the product of LFUCG. Okay, thank you. I believe my question has changed a little bit. So you're saying this was written by LFUCG management? And this was written by LFUCG management? Is it everything but the two-page? No, the financial statements, the CAFTA itself, yes, is prepared by the Department of Finance and the Department of Accounting. Now this report that you have in your hand is prepared by us. That is our management letter. Well, this is an interesting approach to audits. But thank you. Council Member Lane. Thank you, Mr. Chairman. I just wondered, since you all have audited the accounting for several years here, if you feel that the software system we have and the accounting reports we have are more than adequate and improved from what we previously had prior to that time. Just if you had a comment on that. No, it's getting better. Actually, I've addressed two recommendations in our audit management letter actually address some of the accounting system software issues, you might say. Specifically on page two, right now this CAFTA is really prepared separately outside of the PeopleSoft accounting system through Excel and Word documents. One recommendation we made was maybe putting some resources together that might be more efficient if the software itself can somehow produce the financial statements that are required under generally accepted accounting principles. I mean, that's been one of my complaints is because we have a budget in one format and we have our monthly accounting in another format and the CAFTA is another format. From your budgeting to your actual operating expenses to your audited report, there's not a continuity of the way the documents are presented. I know CAFTA, I believe they specify the way you have to report, so we're obligated to use that format for CAFTA, is that correct? That is correct. Is there a possibility that we could have all of our accounting on the same format or do you see that's more of an internal management issue, we're going to have to develop that over time? Well, I don't think you can get away from generally accepted accounting principles. I'm not sure you can get away from the budgeting process. I think every government probably deals with that issue. In here are some, they do their best to try to reconcile the different methods of accounting. There is a budget, an actual comparison in here, which is reconciled back to the government financial statements. Just for the record, I rely on the CAFTA as my primary source of financial information. And I suppose that will also be improving, because as we have two or three more years of historical data, we'll be reporting that in the CAFTA, because I think when we change formats, it may be difficult to compare previous years with current year data. Is that, would that be a fair statement to say? I think that's probably fair, although you've been under this format probably since 2003, is when the government switched over to this reporting format. I just have one more question, then I'll wrap this up maybe. The other question is, when you were sort of testing our system, just to see if you felt like it was operating efficiently and would catch irregularities or fraud or mistakes, what types of tests did you use? Could you sort of outline it very generally and don't get into too much detail on that? Well, most of our, I had to summarize some of our control testing would be on cash disbursements, cash receipts, payroll, the large dollar items. Again, we're not really looking to do that test of controls to form an opinion, but more to understand them and how they would impact our other audit test. Thank you very much. Councilmembers, we have a pretty full agenda, and we're going to keep this in the committee with the management letters for our next meeting when we get back into budget and finance after the budget. So if there's any other questions on just the CAFR without going into the management recommendations, I think C-Councilman Crosby up. If you want to continue, and then we'll keep this in committee. But we're going to have them back. Okay. Well, I'm not on budget and finance, so I know I can come, but I don't always know. As you know, it's not always possible. So anyway, back to this book. I just want to make sure I understand. The only thing that you prepared for this was page 13 and 14? The audit report. That's it? That's correct. In fact, if you're looking at page 13, the very first paragraph of this audit report says that the financial statements are the responsibility of management. You'll audit those financial statements and then provide an opinion on them. I just want to make sure I understand. Thank you. Anyone else have a question on the CAFR? All right. We'll keep it in the committee and bring those topics up. I'll turn the meeting back over to just continue. Continue on? Okay. Thank you all for coming. We appreciate it. Thank you. Next, if we could flip off the agenda a little bit and go ahead and talk about the business occupational licensing fee and then wrap up with the current financials through March and then the debt discussion. Thank you, everybody. I'll have Mr. O'Mara come up and lead us off. Everyone should have a copy of the presentation in front of them. Welcome, sir. Thank you very much, Chair. The mayor's proposed budget includes a proposal to amend the minimum license fee, and it just has a few talking points. The proposal in the proposed budget is to first change the due date. Currently, the due date for the minimum license fee is December 31st prior to the year for the minimum license fee. So taking calendar 2010 into consideration, the $100 minimum license was due December 31st of 2009. What's being proposed is that starting next year, the due date for the minimum license fee would be April 15th within the year that the license fee applies. So if you would take the example I just gave, instead of the minimum license fee being due December 31st of this year, 2010, it would be due April 15th of 2011 for the calendar year. The second part of the proposal is currently we issue a license, a piece of paper, and they are required to post that in their business location. That requirement would be dropped, that a license would not be issued and no requirement for posting at the point of the business activity. And then the third part of the proposal is for individuals or sole proprietors to issue a license. There would be a business activity test. Currently, all business entities, regardless of the legal entity type, are required to pay a minimum license fee regardless of the type of legal entity or the level of their business activity. Under the proposal, individuals or sole proprietors would go through a business activity test. If their total gross receipts from their business activity are less than $4,400 in a year, then no minimum license fee would be issued. No minimum license fee would be due. And that's basically the changes to the minimum license fee proposal. One clarification, the business activity test of $4,400 of gross receipts, not net profit, but gross receipt activity is only for individuals or sole proprietors. Other legal business entities would still be required to pay the $100 minimum license fee. And that is pretty much an update on the associated changes. All of the other questions Alright, you're good to go. You finished?  Governor James, you're up first. Good job. I mean, I understand that it's great. I think it's wonderful that you obviously have heard from our citizens because a lot of people called and said, OK, what if and this isn't appropriate? And I think it's great that we're moving forward with amending that. I just think I think that our as council, we should be looking at the legislation and working from that. So if we can get a copy of that amended ordinance as soon as possible and then work from that, I would look forward to getting that. Thank you very much. Council Member Martin. Thank you, Chair. For individuals with total gross receipts less than $4,400, would those folks have to file a return? Well, we're grappling with that. They would not be required to pay an occupational tax. I understand. Whether they would still need to file to show that they fall within the business activity test is what we're trying to determine before that final legal draft is presented to you. I mean, that's what gets under folks' skin. Because if, for example, you have a number of folks who hold a piece of property in each LLC that they have, they have to file a separate return under this rule for each LLC and then explain to the government that they don't have to file, don't have to pay the $100 because of one thing or another. If I could clarify, an LLC is not a sole proprietor individual. So this business activity test would not apply to an LLC. We're talking about Schedule C or 1099 income on an individual's personal return. That's the type of business activity test, a sole proprietor individual that we're proposing here. And you understand that one member, single member LLCs are disregarded for federal tax purposes. Are they also disregarded for our purposes of this? No, that is a nuance that is significant for any pass-through entities. Partnerships, the federal government is at the ownership level, but an occupational business license tax is on the business entity that is doing the business activity within the jurisdiction. So a partnership files a return, pays their occupational tax before distribution to owners. A legal entity like an LLC, that is the business entity that is doing business and the tax is assessed on the entity, not the individual owner. But I'm talking about single member LLCs where it's disregarded. I understand. Same thing. Same thing. It's an LLC and our tax is at the business activity level. This is a source of enormous frustration for business owners that they have a number of LLCs that they use to segregate assets for liability and asset protection purposes. But they're required to file each a separate return and pay this $100. And I don't understand why that would be different if they were incorporated or organized as a corporation or as an LLC. I think we need to maybe think about the breadth of this and whether or not this would apply because if you have an LLC that has business activity less than $4,400, why wouldn't that not apply to that as well? The proposal is looking at individuals, those people who may have an activity that has some income, but most likely is not a significant activity for their liability. For example, my wife is a harpist. She makes less than $4,400 playing harp a year. If she was organized as an LLC, she would be required to file this where there would be no substantive difference between her doing it individually and her doing it through an LLC. Because the only purpose of the LLC is for liability purposes and asset protection and things like that. But the decision on what type of legal entity in order to do your activity is the taxpayer's decision and they weigh what is advantageous for selecting that type of legal activity, business activity. And so there's federal tax planning, there's state tax planning, and there is local tax planning. They don't always match up to be the same. It's also our decision whether or not to treat small businesses fairly. Right. And as a tax administrator, I'll probably want to engage in further conversation with you because the LLC has filed with the state and said that they are a business activity. They filed and made that statement. And so the individual did not. All legal entities did and they filed with the Secretary of State, they registered and declared what type of business activity they're declaring themselves to be in. And so I'm looking at LLCs as business activity. If it's de minimis under 44. Well, we can talk about the policy later. But the point where this came up was that you have not decided or we as a city haven't decided whether or not individuals who make less than $4,400 still have to file a return. Right. That would be clarified when we work with law and come through with the drafting of the ordinance. I think that would significantly decrease the advantageous. It's a hundred bucks, but they still have to fill it out and go take the time to do that. And that's still a drag on our folks, particularly what I was looking for, our unintentional triggers, folks who may not be sophisticated business people, not be aware of this, even though they don't owe a dime to the city, they might trip over one of our rules and not make a filing that might get them in trouble. Very sensitive to that. Thank you, Chair. Mr. O'Mara, what are the revenue implications for the city if this proposal becomes law? Well, we don't have hard numbers. We have soft estimates. One of the things we track is how much net profit you paid and how much net profit you had. We don't track what your gross sales or receipts are. So I don't have that in the database to sort. But, for instance, we looked at those people that paid us between $22.50 and $50. That was 1,200 taxpayers and about $37,000. We looked at people who paid between $50 and $75, and that was another $30,000. So we have estimated that this is somewhere between $100,000 and $150,000. Thank you. Councilman Rollane. I support that the LLC should turn in a statement because those smaller businesses may end up being bigger businesses, and if we don't have an ongoing relationship with them from a tax standpoint, then we would not be able probably to collect the money without an audit of some sort. That's my perspective. Is that your perspective also? That's the discussion going on within my division, and we're talking about whether it is more convenient for the taxpayer and the tax preparer to use the standard return with an extra line or have some sort of abbreviated half page just for these people. But you had $10,000 this year. You have $2,200 next year. You have $15,000 next year. You have $2,300 the next. And so by having an informational return is all we're looking for. To designate that you qualify for this exemption was the discussion that we're having internally. All right. I like the plan. Thank you. Any other questions for Mr. O'Mara on this? Yes, ma'am. Thank you. When will we see this issue again? When will we see the ordinance come back again? Will it be before we have to pass a budget? Yes, ma'am. We're working with law now. Okay. So it will come back to the Budget and Finance Committee? I think it would come to the CAL. We're going to either bring it to a CAL or a full work session because we won't have another meeting until June. Okay. If it could be a CAL, that would be great and give us a little bit more time to deal with it. We didn't want to have the resolutions prepared unless there was other changes Councilwoman wanted to make to it. That's why we did just a proposal first. Well, you know, most municipalities actually work from an ordinance and they make the changes as necessary. So I'd like to see the draft ordinance at a CAL so it gives us time to work through it before it goes to a work session. Thank you. Thanks. Anybody else? Thank you, Bill, for giving us that proposal. Sure. Thank you very much. Do you want to take over and do the monthly financial statements from March? I believe it is, Ron. I will, sir. And I understood that our time was limited so I have the three-sentence version or we can go into more. I'll start with the summary and basically March financials. Let me start with the piece of good news. Do we have it for the overhead, Bill? Yes. Just put the good news up and leave the rest off. All right. I will go straight to the good news. If you will look, the Fayette County unemployment rate, which we got just last week, came in at March at 8%. That is down from 8.6 in February. February. I would like to say one month makes a trend, but we'll have to wait and see how that goes. I did look at the variance between the same time last year and if you go across from September through March, our current fiscal year unemployment rate has been running about 2% higher than the same month last year until you get to March 2010. In March 2010, we were at 7.9. This year, excuse me, March 2009, we were at 7.9. This year we're at 8.0, so that is only a one-tenth of a percent difference. That's significant in how we start to compare to year-over-year months to finish out the year. So we're looking for more positive variances for the fourth quarter. Yes, Ms. Dain, did you want to ask? Yeah, just a real quick question about that unemployment rate. I've been doing a lot of research on unemployment rates and what they actually mean. The percentage is there, is that the percentage based on the number of available jobs? It is what the U.S. Department of Labor and Bureau of Labor Statistics publishes. I would have to defer to their site to get the actual definition. I don't, I just don't want to be misled by that number because we do know it doesn't include folks that have dropped off of receiving unemployment benefits, and I think it has something to do with the number of jobs that are actually available. And some, but I don't, I don't know that for certain, but before, I love good news, but before we get too cheery, I just would really like to drill down on what the unemployment, and I've asked for a presentation from someone, I haven't seen it yet, it was somebody maybe from Frankfurt or something that was going to give us, I've talked to Artie and maybe Anthony, and I can't, I don't know what's happened with that, but we really need to know what that number means so that we know really true expectations of the future. And I see Commissioner Rumpke nodding in agreement, and she, she probably knows what I'm talking about because we've, she's mentioned a few times in her presentation. I guess the only, the only rebuttal I would have is, is that even though I can't tell you dissect exactly how the Labor Department computes it, I know that each month is comparable to, because it's computed the same way. That's the only, only feedback I can get. All right. The March actuals were lower than same, than budget in all categories. The year-to-date, we are, I jumped way too far, our year-to-date, we are below budget 8.4, 8.5 million, and we are still hoping that, compared to the projection of being 12.5 under budget by June 30, we're still hopeful that that is a good projection. We have pressure at the net profit and the franchise fee lines. We're hopeful that withholdings will stay steady, and we do see some favorable variances in the service and other, primarily in detention revenue and EMS. And that would be the presentation. Council Member Allenger. Thank you, Chair. We went through those pretty quickly. Yes, sir. We looked at the good stuff for a while, and then we went through the bad stuff pretty fast. I tried. I guess I want to look at where we are with our actual estimates, because we all, we, we, right, that's this one here. That's, this is our presentation. We've tried to keep consistent from, right, so that's, so could you go over again how we look at with the, with the 12.5 built-in and how we're going to write this number? Right now for withholdings, the way to read this is year-to-date we're at 112 million. We're projecting to come in at 148 for withholdings. That means that we would need to collect an additional 36 million in the last three months. If you look at what actually happened last April through June, we collected 36 million. So if we meet the same as collected last year, we will make our assumption on withholdings. And so you read that each way down. The reason I said we have pressure, excuse me. How have we done for the first nine months? So because we've got a, in order to hit this, we've got to be exactly the same for the next three months as we were the following three months. How have we done from the nine months to the prior nine months? Because we're making the assumption we're going to stay the exactly the same. I don't have a nine month number. I have the October through March and we're half a percent below the same period last year for withholdings. So would you not think that that we would stay consistent with that or do you think we're going to? Well again, I'm looking at we were two percent higher in unemployment at the same period last year. Now for the first time in March we're only a tenth of percent. Therefore I'm hoping. That still is a drop though. It's a tenth, not two percent. So I'm hopeful that we will make the fourth quarter same as last year. Still crystal ball. And a rosy one at that I think. Okay, thank you. Anyone else on the first nine months financial data? Okay, last item on our agenda. Are you ready? Yes ma'am. You're chairing. Who's chairing? It's technically easy to go over to Council Member Gordon, but we'll just keep the ball rolling. However you want. We're in the Cal portion. Well, good afternoon. Thanks for giving us the opportunity to lead you through what is proposed for capital debt in the mayor's proposed budget. You have a couple handouts in front of you. One of them is very detailed and would not project well in up on the screen, which is why we have it in front of you. And that's the actual listing of proposed capital projects that we have brought forth in the mayor's proposed budget. And Bill, that was that's a separate handout from the actual the listing of the of the projects. It's a separate handout from what I'm going to lead you through. So I'm going to lead you through these slides at a more consolidated basis, but then the individual projects are in front of you. Yes ma'am. Excuse me, I'm sorry. It says it has this heading on it and then there is a separate document that has, yes that's correct. Okay, and the separate document is? It, what is it titled Bill? I'm sorry. 2011 capital operating capital. 2011 operating capital. That has all the detailed projects. Council Member Wallace may need a copy of that. Okay, thank you. Thank you. So we're starting out and this is a global picture of the entire budget, all funds, all projects, not just general funds. So I want to make sure everybody doesn't have a heart attack when they see these numbers because they are big. In the mayor's proposed budget, there are three items from the FY10 budget that had been approved by the council that we are bringing forth that were unfunded during FY10 that we're proposing will be funded in FY11 and I'll go through that in just a moment. In addition, there is 41 million dollars, and again this is not just general fund, there's 41.5 million dollars in additional projects being brought forth and then the 31 million dollars for pension contribution for a total use of funds in the FY11 mayor's proposed budget of 74 million. Now where are we going to get that money? We're proposing that 18.35 million would come from GO bonds. We have about another 9.2 from a sewer revenue bond. The state revolving fund debt is at 6.8 million pension obligation bonds, which actually technically are GO bonds, but we separated them out because I know we had talked about keeping the pension debt separate at 31 million, and then the various transfers of fund balances and cash at 8.6, and so that would be a use of funds. So again, that's just a global overview. I'm going to take you in to the details now if there aren't any questions, Chair. Are there any questions on this page? Can you tell us what the 2010 unfunded item is? Yes, and I'm going to take you through that right now. It's on the very next slide. And again, just to summarize, you're proposing 74 million dollars worth of bonds be issued this year? No, no, no. If you look at the use, if you look at the use of funds, we would have 18.35 million in general obligation bonds, another 9 million, which we have not issued. This is all new. Everything that's on this slide would be new because it was my understanding that the committee wanted to see what more obligation would we be taking on by approving the mayor's proposed budget. So that's how I've approached this, so it would be very succinct, and you could make, you'd have decision points by which you could make good decisions around what we're proposing. So is that good? Okay. Well, let me tell you, it'll be more self-explanatory. I'm sorry. And you may be going to address this, but under your sources of funds, now sewer revenue bonds, is that sanitary sewer funds only? Yes. Yes. And then cash transfers and fund balance are, does transfers include other enterprise funds, money transferred from, for example, water quality, for example, etc.? In that number, and let me give you those two because I've got them right here in front of me, out of the 8.6 million that's up on this screen, a million four is for water quality, 2.28 million is for landfill, and I certainly, and is this schedule in there? I can get you the schedule, Council Member Gordon, just to show the 8.6 million, the various uses. I think it's pretty important. Yes, and we're, I'm happy to provide that for you, not a problem. Oh, Director O'Mara has just pointed out, thank you Bill, on that other handout on the operating capital, it says 2011 operating capital, the actual detail is there, but then I just had a quick reference schedule that I've been talking from, Council Member Gordon. So this other one has the fund sources? Yes, it does. Okay, thank you. You're welcome. With that, I think it'll get more self-explanatory. On this, I think Council Member Beard had a question on this slide. Oh, pardon me. What do we have rolling off in dollars next year? If you can let me get to the third slide, I think I'll be able to. Okay, I'm just looking for a net increase or obviously not a decrease. And we'll take you through that if I could, if I could just get to that slide, is that okay? Yes, Mayor James. Yeah, and I don't want to disrupt you as you're going through, but if you could, as you're going through, identify the projects that Council enumerated in our last CIP meeting, we rated for some projects to be, to come up again. So as you're going through, if you can identify what those projects are that are included. They weren't discussed to be included in the Mayor's proposed budget. They were to be discussed prior to the Mayor's budget coming forward. And I don't know if I have that with me, and Bill, I don't know if you have that in your folder either, but I can get an email out right after this meeting to get it back to you. I just don't physically have it with me. Okay. I apologize. Thanks. Okay, you're good to go. Okay. Oh, sorry. So this next slide, and what we have done is we have combined the capital expenditures, which again are detailed for you in that other handout, by, by division. And so as you can see, the three items, Chair, that you had asked about that were in the unfunded 2010 list, there is a portion of that for fire that has to do with repair of station number six roof and the fire training tower. There was a portion of that in FY10, and then the balance of that is being proposed in FY11. You'll see $50,000 under Public Works, that was corridors, that was in the FY10 being brought forth as part of the Mayor's proposed budget in FY11. And then a million dollars of the PDR was proposed, or excuse me, was approved by the Council in the FY10, but because they did not have the matching available, it was carried forward for the FY11, and that's how we came up with the two million dollars. The balance of those, I think, are fairly self-explanatory if you look at the individual list. So there's 1.47 million of 2010 projects that had already been approved, another 18 million and change in what's being brought forth, and then for a total of 19.5 million in total capital. Now if you look below, again we're trying to stay consistent on sources and uses, if you look at what the funding sources would be for what's being proposed, we would have the $50,000, the 1.15 million that we were putting in the contingency fund for the Real Estate Contingency Fund, if you recall the presentation on the Mayor's proposed budget, and then the balance was, and it just went out of my head, oh the the Council Office copier. Those three items would be in that cash line because we would not go out and bond for those three items. The remaining portion of the projects would be bonded for and that's that 18.35 million which foots to the the first page. Council Member James. Chair, I'm not sure if this is the time to say that or not, but when will we be able to address the unfunded 2010 projects that we discussed as a council and plugging those in because I think that conversation even came up before the million dollars for the PDR. It was a million dollars for infill and redevelopment and I don't know the others that were put on the back burner to allow the other things to move forward. Land bank, roads. Yeah, infill and redevelopment. Park trail. Translated. Yeah, so when will we be... Link process. I mean again, they're just presenting what the mayor's proposed. Then it would be during our link process and then during our Cal meetings to bring all that back up and have a Cal meeting on that. They're just for showing us what's in the budget today. They're not telling us what necessarily we can do. I understand that. I just didn't think it was a council only thing. I mean it was, I thought it was an administration and and council together. We were all in the room together on that day. So this is their recommendation, so. Yeah, okay. Thanks. Thanks. And we will get that list back out to you, Council Member James. And then Council Member Gordon. Thank you. Just a quick question to be sure I'm tracking. Okay. So as you go through this general, for example, community corrections, mayor's proposed $105,600. That relates back to the detail for that. Is that what's reflected under mattresses? Yes, that's correct. So as we go down through the general, is it is reflected in the specifics on this other sheet? That is correct. Okay, thank you. Council Member Martin. Thank you, Chair. Yeah, I echo Council Member James's concerns, because I thought that's what we were going to be doing in this meeting, was taking up those items that we had tabled at the last time we looked at capital projects. I know that we had carved off a piece of the distillery district. We had put on hold the three million dollar infuse into the repaving that had been done for several years previous. So I guess, I mean, and I've been holding off, I've brought up from time to time, but the desire to continue with the three million dollar bonding of repaving funds, because every single one of us has a very, very long list of repaving, and the list gets longer every year. And if we, just like other things that have been let go through the years, if we don't keep up with our annual repaving, we're going to get too far behind. So, Council Member Stennett, are we going to, should we just bring these up ad hoc in the council work session, or should we? At this point in the presentation, again, this is just showing us what is in the budget. We can have that discussion today if we have time. We can have it at any CAL meeting, during any LINC meeting. I'm just saying today was scheduled to show us what's in the budget, so you understand, and I understand what they proposed. That's it. We don't have to agree to it today. We don't, we can change it today, whatever you want to do, but there be plenty of conversation. This is just the beginning, very beginning. Thank you, Mr. Chair. Just so you would have a starting point to work from. Are you ready for the next slide? Okay. So, if you take the $18.353 million that was reflected on the first slide, and then we know that we would bond for the pension bonds, the total in the Mayor's proposed budget that we would go forward with from a bonding perspective would be $49.35 million. And again, that's just, we didn't put a lot of detail in there. You asked for the specifics. That's, we're happy to get it, but that's what we'd be looking at. So, here's the debt service, and Council Member Beard, we're looping back around here on your question. So, right now, let me get to that page. Forgive me. Our existing, if you look at into FY11, our existing capital debt service will be $23.845 million for next year. In addition, if we floated bonds for the $18.35 million worth of projects that were proposed, we would have an interest only payment of approximately, and again, it would depend on how much we do, but based on what we're putting out here, interest only payment on that $18 million of $376,500. That assumes we would issue in the fall. There are a lot of assumptions there that obviously could change. So, then our total capital debt service in FY11 would be $24.2 million. Now, to that, and Council Member Martin, I know we're trying to keep the pension portion separate, we have $8.6 million in existing pension debt, debt service. That does include what the Council just approved last Thursday. So, that does include the $35 million that we just bonded in that debt service. There is not, there is not additional debt service that's being projected because of the timing of when we put it in. It would actually fall into FY10. Is that correct, Bill? Or, excuse me, FY12. Forgive me. So, our total GO debt service would be $32.9 million. Again, assuming everything was done on the previous pages that we just discussed. Bill, I don't know if you have the extended schedule so that we could answer Council Member Beard as to what was rolling off in FY11. So, it would be the three. It's roughly $3 million is rolling off. If you look at capital debt service of $24.22 million and then you go to the top of the FY2012 impact and it says $21.29, the difference between those two numbers is actually what would be rolling off Council Member Beard. So, approximately $3 million would be rolling off of debt service that we currently have, which is why that's a lower number, obviously. And so, if you take a look at the FY12 and this is where it's very, very important that we think about the impact of our decisions on capital. The full impact of, if we took this Mayor's proposed budget forward, the full impact of the decision the Council would be making would be $1.365 million. So, that's a real decision point. Do we want to add $1.365 million in additional debt service to already our existing debt service? And then you can take that a step further and look at the pension, excuse me, the pension debt and that's an additional $2.585 million, which is also a decision point for Council. So, if you look at the impact of everything that's being brought forward, you're looking at about $3.9 million in additional debt service. And again, you know, we had to make some assumptions on rates, etc. But those are the kinds of decision points that I think Council needs to focus on as we decide what projects are included in our final approved budget is what is that full impact of additional debt service look like and how will that impact, not 2011, but it's actually 2012 because of how the timing of the debt service happens. We have interest only typically on our bonds for the first payment. And I think I'll stop there so that if there are any questions. Oh, by the way, Council Member Beard, what is rolling off as far as principal is one of the stormwater bonds. I think it's the 2000-D bond is what's actually scheduled to roll off and then some smaller things. Just FYI. This is a lot to absorb, so I'm happy to answer any questions. Council Member Martin, are you still up here? Okay, Council Member Lalos. I have a couple of questions. As I go through this list of bonding, it seems like many of these things are operational costs rather than something that you would use bonds to. So is there some rationale? Could you give me an example? Yeah, I mean there's quite a few here. Bonding herbies? Well, first of all, $285,000. One of the things that I think it's important for the Council to understand is we're in a position right now that we need to reserve as much cash as we possibly can. We've had lengthy conversations just a few weeks ago, actually two weeks ago, with our rating agencies and they feel very strongly that we are in great need of retaining every dollar that we can during these challenging economic times based on what Bill has presented to you from a revenue front. And so we are bringing forth many things that in a normal year where we have strong revenues from withholding in our big four, we would normally just cash flow these. But we're not in a situation that we really feel that we can cash flow these and also maintain the kind of cash reserves that we feel we need to have so that we can maintain our AA rating, if you remember back a couple meetings ago when they presented that. And I'm sorry to keep beating a dead horse to death, but this was exactly the issue that was brought up when we were talking about the 10% reduction in our urban service fund. And now we're bonding trash cans to keep our cash flow or cash reserve. So I just would like more information at some point on the rationale other than, I mean that that doesn't seem like good business sense to me. You finished, Councilor Lalos? Yes sir, I'm sorry. Thank you. Thank you, Councilor Crosby. Well I would just say that perhaps we need to look at our fees for some of these different enterprises we have because obviously we're utilizing what people are paying fees for, such as Furbies, Lennies and things like that, but we're keeping that cash flow high to keep our rating. We're doing it on the backs of our taxpayers to float, as you said, these things that we normally wouldn't in other years. And I think that some people feel like they're feed to death and I think this is a perfect example of probably an area where the fee has just accumulated, accumulated. Now they have a huge surplus and we're reserving that and not utilizing it for necessarily what people are paying the fee for. Well if you'll look, and we only are looking at general fund right now, but as we go through some of the other funds, there are actual capital projects that some of the fund balances are being used for. So well I would argue though that when you're asking us to make decisions about a pension fund, which we are required to put into, but yet we're having to make, you know, and that's, that's, you know, what did you say, three some odd million dollars, but yet we're going to bond certain things that we already pay fees to cover. I think, at least in my mind, I'm thinking why are we doing this when there's a dedicated fee to pay for these things, but we are obligated to do the other and then you're going to put us in a position to have to decide that we can't pay the additional money perhaps so that we can have Lennies. I mean that's just, I mean I'm just thinking out loud, but that's so that we show a positive cash flow. It just doesn't seem right. Thank you. And before we go on to that point, we are using the urban services fund surplus that Council Member Crosby just alluded to, to pay these bonds for projected items, correct? You're using the dedicated fee money to pay the bonds on the dedicated fee items? On the dedicated fee items, yes, that's correct. Curbies and everything, so it's coming out of that same cash pile. So we just want to clarify that. The general fund, a geo-obligation, you're going to use the revenues from the general fund. The very last page of the second handout that we gave, it says total general fund bonded operating capital and CIP, FY11, mayor's proposed budget. And if you look at the items that we're proposing out of general fund, the Herbie and Rosie's are coming out of the general fund. There are other projects that are coming out of urban services and that's what we'll be covering in a minute. So to clarify Council Member Crosby's point, we're using general fund dollars to pay on an urban service fund purchase item that's covered under a dedicated fee for solid waste? Yes. Council Member Gordon. Well this is just daylighted, something I think we need to have a long discussion about because that's exactly why our citizens pay the fee into the special fund, is to fund things like Rosie's, Lenny's, and Herbie's. And so I have a great concern about that. Our general fund shouldn't be paying for that. I mean that's my opinion and there might be other opinions, but if our citizens are paying a dedicated fee for those kinds of things, then they should be guaranteed that it's going toward those kinds of things. Well and I think what I would say to that is that we are stepping back and looking at the urban county government as a whole, as the rating agencies have looked at us as a whole, and where we have cash balances, we are trying through this next year to keep everything afloat and keep everything as stable as possible with respect to our cash balances. So if you if you pay cash for the Herbie's and Lenny's out of out of the urban service fund, we absolutely can do that. But what I will tell you is that the rating agencies look at the total liquidity of the urban county government, not just a single fund. So we absolutely could pay cash. It's not that we can't pay cash, but what I'm bringing forward is if we want to do less in bonding, I mean as far as projects go, we could do that too, but but at the end of the day you you have you have an overall liquidity that you are trying to balance. Well I understand that and I think everybody up here understands that. What our citizens have asked about and one of the reasons that we built an audit into the water quality fee ordinance is that our citizens need to be guaranteed that when they pay a fee for a specific service, that's where the money is going. And so I think first my duty as a council member is to be sure those fees and those taxes are going for those services. And if it means that we have to bond fewer things, maybe that's the choice we should be making rather than take money from a fee or a tax fund that's dedicated and not spending it there but spending general fund money there. So I'm I guess I'm expressing a little frustration right now because this is kind of highlighting an issue that I think is a bottom-line part of government taxes and fees issue and that is to be responsible to the citizens. So I think probably we'll have more discussion on this specific issue in the future. Council Member Lane. Well I think we touched on a couple of the thoughts that I had but maybe I'm a little bit ahead. I was just looking at the 2011 bond fund and there's over a million dollars worth of containers you know like Rosie, Lenny, Kirby's and all that that would be funded and I don't know is that a five year depreciable item? I think we decided it was five wasn't it? Yeah. Mine's been there ten years, it's still good. And then there's also truck for refuse collections that's like 5.8. Right, 5.8 million. Maybe seven million dollars that's not small potatoes as far as an expenditure and those all are all capital items so I don't have a problem with bonding that. Council Member Lawless. I'm sorry Council Member Beard. In looking at the same question. Are these refuse cards, Lenny's, the Rosie's, the Kirby's, pitching containers, loan a box, whatever that is, are they bundled up in a 10-year bond, a 20-year bond, or more realistically a five-year bond? Well we would go to market, typically we go with a 20-year bond, 10-year callable if you recall the last presentation, but then we have various lives of items within that bond so you have three, five, ten, twenty year properties and they basically smooth it so we're not paying for the Rosie's over 20 years we're paying for them over their life of five years. Okay that's what I was concerned about. We'd be upside down on their Rosie's, which isn't fun to be upside down on a Rosie. A little stinky. Council Member Lawless. Council Member James. Thanks Chair. Commissioner Rumpke, you weren't, I don't know if you were here when there was, I guess it was next, last budget year, were you here last budget year? There was a lot of conversation about what some called a surplus in the Urban Services Fund and it was quite a dynamic discussion because it was, it was, as I'm recalling it is I was on the Public Works link for two years and I heard from Commissioner Taylor about how when she had investigated and talked to Director Feist and others at Waste Management about why in the world is the amount so high that's in this fund and what they had been told is they had put things on hold and they they didn't make purchases, cash purchases, and it caused a big ruffle around this horseshoe because that was the argument that was used as to why we needed to really investigate what was happening at Waste Management because this amount of money was sitting there. And so hearing you now talk about allowing cash to sit in order to affect a bond rating or to make it more favorable, it all makes sense to me now. I'd not heard it before but that may have been what was happening previously as well. When they were here talking to us about AA ratings and such and one of the questions I had was about the bond, the bond system, the rating system and the agencies and I really I think they get their name bond very well. I feel like we're in bondage to the rating agencies. It's almost like having a mortgage during the economic downturn and not having, you know, it's you feel trapped and so what did a lot of people do when they were in bondage to their mortgage companies? They either left their houses sitting there to the squatters or they try to rent it out to somebody else but they did something different because they realized that system wasn't working and I said it while they were here, you know, Moody's and other rating agencies are being called to question and I have a difficult time. Here we are again, we're looking at a budget, we're looking at needs and we're still being held hostage by the bond agencies, bond rating agencies and I think we need, I'm gonna say it again and I said every month, we did need a different revenue plan. We need something different to deal with what it is that we need to do and here we are again at a time when it's gonna be a long conversation and Andrea, we don't have, that's what I'm gonna hear, Andrea, we don't have time to have that discussion. We've got a budget that we need to pass but I've been saying it all year so we need your help in figuring out some other type of revenue system rather than the bond market which in my opinion is just as reliable as the mortgage market during the economic downturn at this point. This is the only way that some people are making money at this point is by governments like us saying we got to do projects, I guess we got a bond and stacking up money that is supposed to be going for a particular purpose when that's all we've heard is why doesn't waste management use their money to pay cash for a truck when we've got it sitting in there. So I want your critique on that but really more so than that, do you understand and does the administration understand and have a plan as to a revenue? I know I'm not saying taxes and I know that's the first thing that people go to but you just get to a point where you realize we can't be bound by the same thing we were bound before when it obviously by these numbers it has been a failed system. A couple comments just and again I didn't come till late October so I wasn't with you during the last budget cycle but we did pay cash for almost eight million dollars it was seven point five maybe seven point seven million dollars in refuse collection trucks out of that fund so we had a we had a large fund balance drop and so I am assuming in response to the conversation of the council we did move forward in paying cash for some of those items because to your point we needed it the other thing that I wanted to comment before I move to revenue is that we're in unusual times right now and it's it's really a delicate balance which is why I drew council's eye to those two debt service numbers of what we're actually committing to you know there's good and bad ways to borrow and when you look at the environment that we're in right now I mean there have been some really awful things happen and you've just talked about them I mean our revenues are depressed etc but the interest rates are also depressed so one of the reasons that we obviously went forward with the pension bond was because we could borrow at a lower rate and save us millions in the future by borrowing low now I think to your point that is a delicate balance we should take advantage of the environment that we're in and our rating provides us with lower rates and if I may I told council member Senate that I would share this with you excuse me for example our our pension bond last week we got a 4.95 percent rate which is an excellent rate and because of our rating and because of what this council has done from a fiscal management standpoint we had a lower discount and it actually allowed us to pick up an additional $400,000 that we put towards the pension so when I say it's a delicate balance I think you know it's it's our responsibility as leadership to take a look at these projects and understand what we absolutely need to include and and borrow as we can afford to write the check and then the other part of that is balancing the ability to borrow at that rate which if you want to call it being held hostage there are days I certainly feel that way but but the reality is they're telling us look you can have this rating if you keep these balances and so what I've brought forward in the mayor's proposed budget is trying to balance the two and I think that that's what the council is charged with is what's that happy medium on the revenue piece just very quickly I know Jerry has a scheduled for a separate revenue projection discussion and certainly you know bill myself others have really been racking our brains how do we how do we smooth out our revenues beyond just raising taxes and and it's it's a difficult proposition because whether you call it a fee or you call it a tax it's it's something else that's layered on to a taxpayer so in trying to balance that I mean we even talked about rolling back just that occupational license fee and that's a hundred to a hundred and fifty thousand dollars so that's less that we're going to get in so how do we how do we make good decisions around that and I'm certainly open for more conversation but I wanted you to know we are talking about those things and it is it's the delicate balance that I think we're charged with today okay thank you I hope that helps it does thanks thanks chair chair councilmember Henson thank you chair commissioner I I just wanted to comment to I mean that I think if we have a dedicated fee then those fees should be used for what they were what they're there for and in with the surplus I'm I think that money's invested is that correct the surplus in that fund yes that's correct so if we weigh out the options of the cost for the bonds on these items and withdrawing the money from the surplus I don't and I just have a real problem with this coming out of the general fund I have to be honest and I hope that the links take a good hard look at that councilmember Henson if I could share with you both bond both Moody's and S&P we're very specific with director Romero and I last week and basically said if our fund balance we're really on the edge of going out of a double-a rating and so that means it's going to cost us more and we want we don't know how many individuals would actually bid on our bonds so again well I would prefer to pay cash the the challenges in the general fund right now there isn't a lot and so it's it truly is a balance I'm not in disagreement with you however I think you know we're gonna have to look at it overall which is why I started with the first slide to get a feel for what are we actually going to have to look at as an urban county not just the general fund piece are we digging ourself into a hole by taking on more capital than we can actually afford and are these absolutely necessary you know this is almost like on my personal budget charging my groceries so that I'll have cash and you know and that is so is it necessary and that's what I believe that the chair was talking about in the individual links as you all are discussing with the various directors and commissioners this is exactly what we should be talking about okay thank you you're welcome we have a couple more questions the commission can you clarify why can't we use the surplus money to pay the debt service you said which surplus money I'm sorry the urban service fund the solid waste fund you keep saying either pay cash or bonded from the general fund why can't you bond it from the solid waste I don't think you can bond in the solid waste fund well you can enter a geo bomb but pay the service from the solid waste surplus you know I'd have do you know yeah I am our new budget director is here Ryan Barrow who comes from the municipal finance sector and certainly we can absolutely look into that let me just maybe a better way to position that is the revenue bond yeah we have not looked at that in the past but to councilmember James's point I think we've got to look at everything yeah that's from a Crosby actually we had these questions we had solid waste in on Friday unfortunately we didn't have I think Commissioner Rumke was out in the afternoon and Mary was also not in so you will probably be receiving a whole bunch of questions because frankly nobody was there could answer any of our questions when it came to these issues we did ask them during our meeting so we hope you will come on Friday and maybe we'll build a follow-up on some I will not be here this Friday that's wonderful well I'm sorry it's what it is we'll just what we may have to have a separate meeting with you on another day that would be fine to work with your schedule quickly you mentioned some of the fees and things and I know we're talking about capital projects but I'm curious are there any new fees built into this budget I believe and and I know some of the other commissioners are here in the just off the top of my head in parks there was a proposed increase in the golf fee as well as the pool admission those are the two that pop in my head councilmember Crosby and would that require council action to approve this the fees are built into the budget I guess my question was the field fees were built into their proposed and we're gonna have to approve a budget I guess at what point were we going to learn that there are fee increases built into it was discussed very specifically in the General Services Council links you so I guess that's back they're gonna bring it back to the link I mean the links gonna report out to the council I guess during the mayor's proposed budget address we didn't hear anything about it increase in fees so that's why I was specifically asking thank you you're welcome we have about 13 minutes left if there's any other question on the debt I also want to get to our next meeting and discuss the format for our next meeting which is Tuesday so councilmember Martin yeah on that well thank you sir commissioner what what sources of surplus are are we finding in in various dedicated funds I don't know if I can answer that off the top of my head I apologize well the thing that I'm getting at is that the the amount of debt that we're gonna have to incur to take on the bring the police and fire pension up to solvency is enormous it is and I think we have to really seriously think about looking for half a penny penny here and there from other existing sources so that we can put together perhaps a special fund to retire that is that is going to challenge our bond rating in an enormous way and in these difficult times I think we have to end with this amount of debt I think we have to look at you know what what taxes are we currently collecting that we could dial back a little bit in order to put together a special police and fire fund nobody wants to obviously put a new tax because folks can't really do that in these these times the other part is what what how would we put together some sort of referendum for the public to do this what would be required and what would be the steps for us to put that together I'd have to defer to bill do you know what kind of referendum as far as I think that's a whole nother discussion for a whole nother time counselor if we can keep it on point on this on their presentation we have plenty other meetings to address that issue because we have two other people like to speak and we can certainly make note of that and do some research I just don't know off the top of my head but as we decide how we're gonna what we're gonna bond I think that's gonna affect us greatly because otherwise we're gonna end up with a less than double a rating thank you chair my loose change customer Gordon I just have a quick 10 second question based on councilmember Crosby's questions can you please bring us maybe within the week the next week the list of built-in fee or any kind of fee increases that are built into the budget absolutely okay could you write that down for me thank you thank you anything else in the presentation from Commissioner Roemke Thank You Commissioner thank you our next Cal meeting for the budget is scheduled for Tuesday morning at 11 a.m. there's a couple items I think that one this was labeled if you look on your schedule budget planning meeting customer James alluded to a couple budget finance meetings ago get together in some type of retreat either off-site I'm talking about budget actually planning meetings what we called it to plan councils what we want to do with the budget and what our strategy is going forward so we'll do that Tuesday you think we need to start maybe at 10 a.m. 10 a.m. instead of 11 the other thing we need to tackle was the bonding and debt again that counselor Martin and customer James talked about today so we can use the meeting for those two things because I think the planning comes real into those debt items we talked about and that I think Tim would give us a three hours it's scheduled for 11 right now but we can maybe move it to 10 is that okay do you what what link is that it's the link chaired by a council member Meyers it starts at 8 a.m. thank you you think you can be done you see not no customer grazing I just don't want to cut it short I think this being is very important especially with the debt discussion and planning on forward you're showing at 930 ending 930 well so 10 o'clock Tuesday morning so it's already scheduled for 11 we'll move to 10 if everybody's okay with that yes sir James another agenda item that you and I just talked about were questions for the budget links we've in the past had I don't know if it's five questions I can't remember how many it is but it gives you at least some it gives us some commonality throughout the link so that when we're reporting back where we know just some general questions that we're all asking so I'd like to talk about that as well and if it's okay to offer my next suggestion when I was going through the budget the budget book and I don't know for the new council members you may not know this I don't know if you do or not but during the budget process is also when any reorganization can be done so on the within your budget book there's an organizational chart there are some changes in the mayor's proposed budget organizational chart there's at least one if not more that I've that I've noticed and this kind of this determines the flow of things in our government so I'd like to ask on Tuesday if we can discuss maybe having an organizational chart committee to where we could actually discuss the org chart and make sure that everything's flowing effectively and efficiently and if there's any suggestions I know that there is a group working on a natural resource proposal for a natural resource division of government and there's been discussion of a housing division which I guess had existed years ago coming back into play to help deal with some of our housing issues and some of the recommendations out of infill and redevelopment affordable housing trust fund social services needs assessment the central sector small area plan the east and small area plan and other things but I want to give you some time to think about that and then on Tuesday maybe discuss whether you think it advisable to do a organizational chart committee to where we could talk about maybe any possible changes there thank you definitely can be accomplished in the planning but we need to plan on working on absolutely anything else for Tuesday again 10 a.m. Cal meeting we'll talk about questions of format for a link report out planning the budget planning process and then also our debt and bonds so if Commissioner if you could give us a list of what's still out there from fi o 9 o 10 that we haven't bonded yet and we can pick up with that discussion to you anything else for Tuesday that's more Gordon my question isn't about Tuesday it's about something that was asked in this meeting right time and it's quick councilmember Crosby who chairs the public works and development and environmental quality link mentioned that no one was there to answer our questions and you stated Commissioner that you can't be there at our next meeting so can you please send one someone who would know the answers to questions is there someone who depends which questions Mary Pfister it is taking a well-deserved two-week vacation and I had this on my calendar when I joined the urban county so I apologize that I can't be here but what what types of questions are you looking for so I can send the appropriate representative they had a lot to do with indirect cost and how it's assigned they had a lot to do with dedicated funds and how the monies are dispersed and the process of how those monies are received by urban county government and how they flow out to the departments and divisions I can tell you that Mary Pfister is probably the best suited as far as the flow of funds I did some extensive research on the indirect cost because I knew that you had that question that had been presented to me after your your links meeting so I do have that information that I could share in advance I don't know that someone in her area would give you what you need if you could share the information you have about indirect cost in advance that might be helpful to get started and then we're happy to follow up on anything thank you councilman Crosby and after we get through Friday if we get that information up front we probably will just have to set up a meeting I think with you individually it's a link to maybe go through some of the stuff that we did have questions on because you send it to us we probably will still have questions thank you no problem anything else come for the committee we're adjourned you you so so so so so