Budget & Finance Committee Meeting

Summary

Meeting Overview

The Budget and Finance Committee met on December 8, 2009, at 4:00 p.m., with Kevin Stinnett presiding. The committee addressed four agenda items during the session, which included informational presentations and discussions on financial matters and budget considerations. One motion was voted on during the meeting, and the committee heard five public comments. The agenda focused on fiscal oversight, including a review of FY 2010 financials for October 2009 presented by Rumpke, an internal audit quarterly update from Sahli, a general list of recommendations from Council Links, and a discussion on a proposed reduction to the Council Office Budget.

Attendance

The following individuals were present at the meeting on December 5, 2009:

• Kevin Stinnett
• Ed Lane
• Jim Gray
• Linda Gorton
• Chuck Ellinger
• Andrea James
• Tom Blues
• Julian Beard
• George Myers
• Peggy Henson

No members were recorded as absent or late.

Votes and Decisions

The meeting concluded with a motion to adjourn. Council Member Myers moved to adjourn the meeting, and Council Member Gordon seconded the motion 1:50:26. The motion passed by voice vote.

Budget and Financial Actions

The meeting included approval for a software purchase to support facilities and fleet management operations. The city approved an expenditure of $195,000 to PeopleSoft for implementation of real estate software. This software system is intended to enhance the management of facilities and fleet assets.

Public Comment

Council members raised several questions and concerns regarding the proposed budget measures during the meeting.

Council Member Gordon 53:45 sought clarification on the methodology behind the projected $13 million revenue shortfall. He requested a detailed breakdown of how this figure was calculated before the mayor's reduction plan is presented.

Council Member Hinson 1:09:48 questioned the audit findings on the tax gap, specifically asking for clarification on the sample size used in the analysis of uncollected interest and penalties. He asked whether the top 55 and 115 transactions examined were representative of the full population.

Council Member Myers 1:23:45 expressed concern about the timing of implementing new rent and utility charges for non-LFUCG tenants. He urged earlier notification to affected agencies to allow them adequate time to adjust their budgets accordingly.

Council Member Blues 1:40:26 suggested an alternative approach to council office budget reductions, proposing that each council member be allowed to determine their own cost center reductions based on individual usage patterns. He argued this approach would be fairer and provide greater flexibility.

Council Member Lane 1:44:51 advocated for a uniform furlough across all government employees, including council members. He argued this would set a consistent example and prevent special treatment for any particular group.

Contested Items

The December 5, 2009 meeting included two significant areas of disagreement among council members.

Council Office Budget Reduction Approach

Council members were divided on the method for implementing budget reductions to council offices. The disagreement centered on whether reductions should be centrally mandated across all offices or left to individual discretion. Some council members advocated for allowing individual offices flexibility in how they achieved required cuts, emphasizing fairness and the ability of each office to determine priorities based on their specific circumstances. Other members argued for a centrally mandated approach, citing the need for consistency and accountability across all council operations. This split vote reflected differing philosophies about budget management and oversight.

Timing of Tenant Cost-Sharing Implementation

A heated discussion emerged regarding when to implement new rent and utility cost-sharing charges for tenants. Concerns were raised that outside agencies would face insufficient time to adjust their budgets if these new charges were introduced mid-year. Council members advocating for early implementation were countered by those warning that the compressed timeline would create financial hardship for affected organizations. Proponents of delaying implementation called for early notification to outside agencies, allowing them adequate time to plan for and absorb the additional costs in their budget cycles. This disagreement reflected tension between the council's fiscal objectives and the practical constraints facing partner organizations.

Review and Discussion of FY 2010 Financials for October 2009 — Rumpke

0:01

Commissioner Rumpke presented the October 2009 financial results for fiscal year 2010. The presentation highlighted significant financial challenges, including a $4.1 million unfavorable revenue variance and a $1.7 million net deficit for the period.

Key Financial Issues

The discussion addressed several factors affecting the financial position:

• Timing differences in payroll withholding collections that impacted reported results
• Year-over-year revenue trends showing declining collections
• The impact of refunds on net financial position
• A projected shortfall of $12–13 million for the full fiscal year 2010

Areas of Focus

Commissioner Rumpke and Director O'Mara discussed the need for expense reductions to address the projected deficit. The presentation examined both the immediate October results and the longer-term implications for the fiscal year budget.

Outcome

This agenda item was presented as informational, providing the committee with an overview of current financial performance and the challenges ahead for FY 2010. The discussion established the baseline for understanding the organization's financial position and the need for corrective action through expense management.

Internal Audit Quarterly Update — Sahli

53:45

Mr. Salley presented findings from an internal audit of the Division of Revenue's tax gap processes. The audit identified several critical deficiencies requiring management attention.

Key Findings

The audit revealed the following issues:

• Data accuracy problems within tax gap processes
• Antiquated software systems
• Inconsistent application of penalties
• Outdated public information

Recommendations

Mr. Salley recommended that the Division of Revenue take the following corrective actions:

• Modernize tax software systems
• Improve internal controls

Outcome

Management agreed to take corrective action in response to the audit findings. The presentation was informational in nature, with no formal debate or dissenting positions noted.

General List of Recommendations From Council Links - Stinnett

1:13:12

Commissioner Cole provided an update on recommendations from the General Services Link, focusing on several key initiatives aimed at improving operational efficiency and cost management.

Key Recommendations Presented:

• Lease standardization efforts
• Cost allocation methodology by property
• Tenant cost-sharing arrangements

Financial Impact:

The committee discussed the potential for significant annual savings through revised tenant responsibility structures. By having tenants cover utilities and maintenance costs, the council identified potential savings of $5–6 million annually. This represents a substantial opportunity for cost reduction across the organization's portfolio.

Implementation Timeline:

The recommendations are planned for implementation in the next budget cycle, allowing time for proper planning and coordination with affected tenants.

Outcome:

This agenda item was presented as informational, with Commissioner Cole delivering the update on the General Services Link's work. The discussion reflected the committee's focus on operational efficiency and financial sustainability through improved cost allocation and shared responsibility arrangements.

Discussion on the Proposed Reduction to Council Office Budget

1:32:45

The committee discussed multiple approaches to reducing the council office budget during this agenda item. Council members examined several scenarios for achieving cost reductions, including across-the-board cuts, individual cost center decisions, and furloughs.

Key Participants

Council Member Gordon, Council Member Blues, Council Member Lane, and Council Member Myers participated in the discussion.

Topics Debated

The committee considered a target reduction of $118,300 and discussed the feasibility of using unspent aide salary funds to offset cuts. Members debated the fairness of different reduction approaches and the timing of implementation. The administration budget was identified as a potential fallback option if other reduction strategies proved insufficient.

Concerns Raised

Council members raised concerns about the equity of various reduction methods and questioned the practicality of reallocating unspent salary funds. The timing of when reductions would take effect was also a point of discussion among members.

Outcome

The discussion was informational in nature, with no formal decision reached during this agenda item.