HomeMy Public PortalAboutMIN-CC-2020-04-01
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April 1, 2020
MOAB CITY COUNCIL MINUTES
SPECIAL CITY COUNCIL MEETING
April 1, 2020
Special Meeting & Attendance: The Moab City Council held a Special City Council Meeting
on April 1, 2020. Per Executive Order 2020-5 issued by Governor Gary R. Herbert on March 18,
2020, this meeting was conducted electronically. An anchor location was not provided. A
recording of the meeting is archived at www.utah.gov/pmn/index.html. A video recording is
archived at: https://www.youtube.com/watch?v=GNpKECaReCg.
Mayor Emily Niehaus called the meeting to order at 3:03 PM. Participating remotely were
Councilmembers Rani Derasary, Karen Guzman-Newton, Tawny Knuteson-Boyd, Mike Duncan
and Kalen Jones. Staff participating remotely were City Manager Joel Linares, Assistant City
Manager Carly Castle, City Attorney Laurie Simonson, Finance Director Rachel Stenta, and City
Recorder Sommar Johnson.
Presentation of Proposed Fiscal Year End 2021 Budget
Finance Director Stenta presented the proposed Fiscal Year End 2021 Budget. She explained
that our City Code requires that a proposed budget be presented to the City Council no later
than April 1 by the Budget Officer and it also requires that the budget be balanced. She was
happy to say that we have a balanced budget. She explained that in previous years the budget
was emailed out to the Council on April 1 and then budget workshops are scheduled to go
through the details of budget revenue, budget expenditures, and the department’s various
requests. She explained that the presentation will be a very high-level overview and that she
shared a Google shared drive containing the entire tentative budget with highlights for Council’s
review. She hoped that as we near the end of the proposed budget conversation today that
Council can have some discussion amongst themselves of what they would like the budget
process to look like. She explained that in previous years Council scheduled one budget
workshop per week to get through all the departmental information, but the second half of this
presentation is going to be a COVID-19 financial presentation to talk about how this budget
might change next year. She stated the information presented later might drive the conversation
as to how much time and energy Council would like to put into the front end of the budget
process knowing that it will most likely change after July 1.
She began her presentation by showing the Council the shared Google drive that contains all the
documents pertaining to this budget process. She explained that her format was the same as last
year with a two-page summary hitting the top highlights of the budget. She stated that this
budget was put together prior to COVID-19 and we had the task of cutting $1.2 million from
operations in the general fund to make sure we had a break-even budget. She said that we
successfully did and thanked the entire team for making the $1.2 million cuts to get the budget
balanced. She explained that at the point we were dealing with the $1.2 million in cuts we
thought that was the worst-case scenario but that was prior to COVID-19. She stated that the
$1.2 million in cuts actually turned out to be the best-case scenario.
Finance Director Stenta continued the presentation explaining where operational money comes
from including sales-based taxes, property tax, utility fees, and recreational user fees as well as
where the money goes including public safety, public works, parks and recreation, community
services, general government, and personnel salaries and benefits. She also explained that
infrastructure is looking very slim next year with only one major project, the Walnut Lane
project, included in next year’s budget. She explained that the parameter for the Walnut Lane
project is that it must pay for itself, so we anticipate funding it through a combination of loans,
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April 1, 2020
grants, and private donations. She stated the goal for the project is that it supports itself for
maintenance and operations in the long term so that no sales tax funding is going towards that
project. She stated the only additional capital project scheduled is the second half of the
payment to UDOT of $1 million for storm water mitigation in the Stewart Canyon area that is
part of the Highway 191 widening project currently underway. She stated the first $1 million
payment was made from this fiscal year and the second $1 million payment she believes is due
in September. She explained that the bottom line was good news prior to COVID-19 because
operations is balanced to zero and the general budgeted revenue covers expenses and is
budgeted to contribute to reserves in the amount of $175,028. She stated over the last three
years we have taken money out of reserves to fund operations. She also said that Class C is
budgeted to contribute over $230,000 to their reserves and the recreation fund had a small
amount to reserves which was a big victory for recreation. She said they worked very hard and
are budgeted to contribute $14,253 to their reserves.
Mayor Niehaus asked if the document was internal or if it would be posted on our website.
Finance Director Stenta said right now it is internal but will be posted on our website because
the tentative budget is expected to be adopted by City Council on April 14, 2020. She said for the
purpose of this meeting it was placed in a Google shared drive, but it will be available to the
public after this meeting.
Finance Director Stenta presented the tentative budget to the Council and explained that the
total change in position is zero which means revenue balances with expenditures. She further
explained that enterprise funds are not required to balance to zero because they are run as a
business. She said they are either operating at an increase to reserves or a decrease to reserves
and the amount that the fund generates carries over into their capital needs for the year.
Councilmember Jones asked what the sales tax was based on. He wondered if it was a
percentage increase to a prior year or if it was flat. Finance Director Stenta stated it was flat, a
zero percent increase over the previous year.
Covid-19 Financial Plan
Finance Director Stenta began her Covid-19 presentation. Councilmember Derasary asked if the
presentation was currently in a shared drive or if she could receive a copy after the presentation.
Finance Director Stenta said she would provide a copy after the meeting.
Finance Director Stenta said she attended a meeting through the Government Finance Officers
Association, and they put together a webinar on financial planning during a crisis. She said they
offered a lot of valuable information on how to try and plan for the unknown, which is difficult,
but she thinks we have some good tools that we can use moving forward. She also stated that the
Utah League of Cities and Towns put together a finance committee made up of financial
representatives from cities across the state of Utah to examine the impacts that COVID-19 is
having on local municipalities. She wanted to share the information that she learned and what
she put together in response to COVID-19.
She explained that we put together this year’s budget thinking $1.2 million was a lot to cut with a
lot of sacrifices and once we got to the end of it, COVID-19 took over and completely rearranged
everything that we thought we knew about the economy and our finances. She hoped this tool
would help Council as the decision makers and city administration be able to make the best
financial decisions during these uncertain economic times. She explained that we do not know
how long social distancing will be in effect or how long our tourism industry will be shut down,
which is our main source of revenue, so we need to plan for a recession. She continued her
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April 1, 2020
presentation providing an economic history for the city as well as potential ranges for revenue
shortfalls and strategies to employ based on standard accounting practices of how to deal with
recessions and financial crises.
She explained that there is a six-month lag on our sales-based tax collections, so we are
expecting our revenues for May and June to be much lower than budgeted. She said we have
spending freezes in place and other cost savings measures to try and offset for the current fiscal
year that we are in because it will be affecting the last two months of revenue. She explained that
her presentation is focused on next fiscal year because depending on how long COVID-19 lasts,
how long the safety measures last, and how long it takes our economy to recover, the recession
could affect the entire budget year. She stated that she put together a range of revenue shortfalls
from 2% to 22% and the associated loss of revenue with those percentages. She stated some
financial strategies to employ as an organization would be to reduce materials or contractor
costs, reduce capital spending, review discretionary spending, and reduce personnel costs. She
also suggested exploring new revenue sources including implementing new or revised fees,
diversifying revenue streams, and refinancing existing debt.
Finance Director Stenta presented a four-tiered plan for dealing with revenue shortfalls based
on different categories of costs and expenditures. She said that the categories of costs and
expenditures are color-coded to reflect the percentage ranges of revenue shortfalls.
Councilmember Guzman-Newton asked about the sales tax numbers from March and April
presented at the last Council meeting. Finance Director Stenta clarified that approximately $1.5
million is the total revenue at risk but that is not the predicted shortfall. She explained that the
amount presented at the previous Council meeting was the amount of revenue collected in 2018
on all sales tax combined. She stated the $850 thousand is the total sales-based tax collection for
that given month on all sales in the city, not just lodging. Councilmember Guzman-Newton
asked if it was safe to think that we are looking at close to $600 thousand a month in revenue
loss. City Manager Linares confirmed that it is half of March and probably all of April. He
explained that the $800 thousand was all sales so her guess of $600 thousand for April maybe
be a good guess. Finance Director Stenta explained that we are working on costs-saving
measures to offset the revenue that we potentially won’t be receiving this year. She stated the
plan we are looking at for next year is revenue shortfalls from July 1st forward.
Councilmember Guzman-Newton asked if March, April, and May were potentially half or a third
of our budget for the year. Finance Director Stenta explained that our total sales-based taxes are
$9.5 million for the entire year. She stated May and June that were looked at during the last
council meeting which represent March and April was right around $850 thousand. City
Manager Linares said it would be about 16%.
Councilmember Duncan asked if the fiscal year beginning in July includes sales taxes that were
made up until the point two months earlier. He asked if they were budgeted at the time in which
they are incurred or the time at which they are collected. Finance Director Stenta clarified that it
is that time at which we receive them. She explained that the sales-based tax that we realize in
July represents sales that took place in Moab in the month of May. She explained that this is a
plan to help mitigate what potentially could happen to our revenue next year. Councilmember
Duncan asked if the loss of sales tax revenue in the last half of March and potentially April
would impact the 2019 budget amount, not the 2020 budget. Finance Director Stenta stated he
was correct. She said the cost-saving measures that we currently have in place probably won’t
completely offset the revenue loss for this year and we may have to make up some of the cost
difference out of reserves at the end of this year. City Manager Linares explained that what we
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may lose in May and June we feel we have taken steps right up front to try and offset that to get
us through this fiscal year. He said those steps include the spending freeze that has been in place
for over a month as well as the hiring freeze that has been in place since January. He explained
that we are already doing things in an attempt to save money to get to June 30 and then we will
see where we are after July 1. Councilmember Duncan asked if the various cost-saving reduction
measures will still allow us to be able to balance the fiscal year ending 2019 budget. City
Manager Linares confirmed that to be the case.
Mayor Niehaus stated that hotel parking lots are empty, there is no dining in, and stores are
closing. She said that it is not a possibility of loss of revenue, it is an absolute plannable loss of
revenue for us and the businesses in Moab. She said we can absolutely plan for a loss of
significant revenue. She said it was important to hear about the expense savings that we are
doing now.
City Manager Linares explained that we speak in terms of June 30 to July 1 because legally we
are obligated to keep those two things separate and we have to close one budget to open another.
He said it is not that we are thinking of this as two separate time frames in our operations, but
we are thinking of it in two separate time frames to stay within our legal guidelines. He said
everything we are doing is to get us to June 30 to close out the budget and then keep that going
into July. He believes we will see the economic ramifications of COVID-19 in July, August and
September and explained that between the layoffs and furloughs, the salary surveys, and the
spending freeze, we have taken steps to prepare for the impacts.
Councilmember Duncan stated that he read that federal legislation that was recently passed
included $150 billion to be allocated to state and local governments. He asked if there is any
chance that some of that will filter down to us.
Finance Director Stenta stated that the portion coming to Utah is $1.5 billion but how that will
be distributed remains to be seen. City Manager Linares explained that we are already
participating in the FEMA program and we submit information to them every Friday on what
our wages and losses have been. He stated we can recoup some but not all of those costs, but we
are submitting everything that we can. He said that it can be a long time frame before we see
that money.
Finance Director Stenta presented an overview of the March tax collection amounts. She
explained that the information represents sales from January. She said we receive sales tax
distributions by the 25th of the month but it was a little late which made her nervous. She
reached out to Roger Tew with Utah League of Cities and Towns, formerly with the State Tax
Commission, to express concerns about the possibility of the state postponing the filing
requirements for sales tax and if those distributions would be delayed and he told her that there
was no intention of delaying those filings. She felt reassured after talking to Roger that sales tax
would not be delayed.
Councilmember Derasary asked for a reminder of the key meetings and dates the Council tries
to hit for the normal budgeting process. Finance Director Stenta presented a schedule of dates
for the budget process. City Manager Linares stated that we are on our normal pace for the
budget. He explained that we are required by City Code to present the tentative budget by April 1
and required by State code to adopt the tentative budget by the first meeting in May. Finance
Director Stenta explained that we have to adopt the final budget by the second meeting in June
so the proposed budget schedule can be adjusted but our target was to adopt it by the end of
May. She explained that after City Council receives a copy of the tentative budget then budget
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workshops are scheduled between the City Manager, Budget Officer, staff, and Council to work
through the details of the budget. She stated that with potential significant changes to next
year’s budget she was unsure of how much time the Council wanted to front-load going into the
budget knowing that things will change. She explained that once the tentative budget is adopted
it goes to public hearing. She said generally any changes Council would like to make based on
priorities are done prior to the tentative budget adoption so the document going to public
hearing reflects what is potentially going to be adopted. She stated that we have already cut $1.2
million and we are probably looking at more severe cuts but if Council would like to make
changes based on priorities then we would be in the position to cut from other departments to
accommodate those priorities. She explained that financially we cannot bring in more resources.
She said Council should be very well informed of what the budget represents, what has been cut
already, and what services are contemplated. She stated that the tentative budget adoption could
be pushed forward a meeting to allow more time for Council review depending on the number of
workshops and engagement level they would like. She also said that at the time the budget goes
to public hearing there is also a public hearing for the master fee schedule and the salaries
ordinance. She said the final three pieces that get approved are the salaries, master fee schedule,
and final budget. She said it is possible in May or June of this year that we may need a budget
opening to address the issues that were discussed or reflect any shortfalls and how that will
affect our balanced budget.
Councilmember Derasary questioned whether it makes sense to go with the budget as presented
knowing that we are going to fall short and not knowing where we will fall on the 4% to 22%
chart of potential losses. Finance Director Stenta suggested that they move forward with the
budget as presented and then use the information she showed in the financial plan as an
underlying budget amendment because we have balanced the budget based on the information
we have. She stated if we go in preemptively and make cuts without knowing what the revenue
shortfall will be it will be problematic for a couple of different reasons. City Manager Linares
said we realize there is a problem ahead, but we have to treat this budget process the same as
any other budget process because it is required by state law to pass a budget that is balanced. He
said every year we pass a budget there may be unforeseen things and that is the purpose of
budget amendments. He stated we know there will be shortfalls in areas, and we will address
them in budget openings the same way we have done in the past. Councilmember Derasary
wanted to confirm her understanding that the recommendation is to go with the 22 page budget
in Google Drive and as time goes on and we can tell from the numbers if it is time to implement
one of the tiered cost-savings recommendations. She said she is trying to mentally prepare for
how the process works. City Manager Linares confirmed her understanding of the process and
explained that we constantly monitor our budget and tax distributions to make sure they are in
line with each other.
Mayor Niehaus stated that we are aware that we will have a revenue shortfall and that measures
are being taken to reduce expenses and asked if we were going to proceed with approving a
budget that does not reflect the expense reductions that are in place. City Manager Linares
explained that we are required by law to approve a budget that is balanced but we do not know
all the information that Council is asking for right now in order to pass a budget that addresses
those issues. He said we are obligated to meet those legal deadlines, so we have to move forward
with the information we have now and adjust the budget as we receive additional information.
Finance Director Stenta stated that she realizes that COVID-19 has eclipsed everything but
wanted to point out that the tentative budget reflects $1.2 million in cuts that were made in
order to get operations back in the black. She explained that for the last three years we have
taken from our reserves to fund operations and if we had a healthier reserve balance for the
general fund it would be easier to adjust to decreasing revenues but we do not have the luxury to
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pull from our reserves. City Manager Linares noted that over the past three years we have
budgeted 7% increases into our budget and that was not done this year. He said there is no
proposed increase in revenue in the tentative budget.
Councilmember Derasary said she understands the logic of moving forward with this tentative
budget by May and approve it by June 1 and then as the April numbers come in she asked if we
take the time to digest the numbers and then wondered if we would revisit the budget once we
review the numbers. She wondered if there was a time period that she should expect where the
budget would be revisited. City Manager Linares explained that it will truly depend on how long
this goes on to determine our strategy on h0w to offset the loss. Finance Director Stenta added
that while it looks like we are going forward with a budget that was pre-COVID-19 knowing that
we have big hits coming, it does not wipe the slate clean to the things that are in place like the
hiring freeze and spending freeze and just because the budget is approved does not mean the
departments and employees have the approval to spend the budget amounts. She explained that
it is basically the budget framework and the extreme measures are in place because we are
bracing for a recession. City Manager Linares stated that staff has done a really good job in
cutting the $1.2 million from the budget so far and he feels that we have the ability to cut more if
necessary.
Mayor Niehaus questioned if we were going into any of the tiers right now. City Manager Linares
explained that we have already cut out overtime and implemented a spending and hiring freeze
and as we move to July 1 those things will be moved to next fiscal year as well. He said we are
taking some of these steps because we know we need to, and we know we already have a
problem.
Councilmember Duncan asked if it would make sense to close things that are not quite
“essential” city services including things like the MRAC, the MARC, and recreation programs.
He wondered if it would help to suspend those services until the budget situation improves or if
we even wanted to talk in those terms. City Manager Linares said it is not a question of whether
we want to talk in those terms but a question of what problem we are trying to solve. He
explained that if we are in tier 4 and have to save $2.1 million then he thinks the cuts will be
steeper than cutting recreation. He said he cannot give a definite answer to a problem that has
not completely manifested itself.
Councilmember Derasary thanked staff for the cuts to get the budget where it is and asked about
the process for spending after the budget was passed. She asked if there was an added level of
spending approval that is not currently in place and also asked what resources the City has been
able to offer to people that have been laid off or furloughed. City Manager Linares explained that
everything being purchased right now is going through the administration office and they are
approving every purchase where historically that has not been the procurement process. He
explained that previously if something was budgeted and approved by Council and it is below a
certain level then it could just be purchased but we have intervened in the process and said it
has to be approved by administration. He said we are allowing essential purchases to continue
for items that keep us functioning but if they are not necessary right now then we are not
purchasing them.
City Manager Linares explained that since we are government and we are different from private
industry the benefits for laid off or furloughed employees are different than for someone
working in private industry. He said we are working with HR and implementing the rules that
we have to comply with based on legislation passed. He stated that they have spent numerous
hours implementing the Families First Coronavirus Response Act that went into effect on April
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1. He said our unemployment rules and penalties are completely different than private industry
and felt it was inappropriate for him to speak to it because it is so different.
Councilmember Derasary said that at the beginning of the meeting it was requested from
Council what was needed in the way of budget workshops. She said in the past they have gone
through it in many different ways and wondered if the staff had envisioned doing them in any
particular way this time. Finance Director Stenta stated that her last day is Friday but she is
working with City Manager Linares to consult and could attend the budget workshops and
answer questions but noted that her availability is limited. City Manager Linares said it is his
intention to have Finance Director Stenta attend but they will need to work out the details.
Finance Director Stenta said the budget workshops should be whatever helps the Council feel
like they are invested and engaged in the budget because they are on the front lines with our
citizenry to answer questions. City Manager Linares said that as the legislative branch the
budget is their fiduciary duty and their single largest responsibility as a body. He recommended
that we follow the outline put together by Finance Director Stenta and go from there.
Councilmember Derasary asked about the best process to get answers to questions that the
Council may have about the budget. City Manager Linares said that staff could put together a
council question worksheet in Google to have those questions directed toward staff and allow
everyone to see the answers. He wanted to re-emphasize that the document must be staff
oriented and not discussion or deliberation.
Mayor Niehaus said she prefers a working document for questions and answers as opposed to
emails. Finance Director Stenta said she could export the tentative budget into a Google sheet
that allows Councilmembers to insert comments on specific lines. Finance Director Stenta went
back to Councilmember Derasary’s comment about staff priorities from the retreat and
explained that given the amount that had to be cut that those priorities could not be
accommodated in this year’s budget.
Councilmember Derasary said she needs a few days with the budget and a Google sheet where
she can put down some simple questions and save the beefier questions for a workshop. Finance
Director Stenta stated she would create two columns in the Google sheet showing the
department request and the administrative recommendation in order for Council to see what
changes were made.
Mayor Niehaus asked if we heard back from the County about the RAP tax. City Manager
Linares said we have not heard back, and the deadline is April 17.
Councilmember Jones said he would like to look at the budget with a comparison to last year’s
budget in order to be better prepared to continue the discussion.
Councilmember Guzman-Newton asked where we were in the process of replacing the Finance
Director position. City Manager Linares said the held interviews as well second interviews and
they are close to a decision. He said Finance Director Stenta will continue working for us and
will work with the new Finance Director.
Councilmember Knuteson-Boyd said she is comfortable with the schedule that was put out and
she has more time to study but is okay with another workshop.
Adjournment: Councilmember Knuteson-Boyd moved to adjourn the meeting.
Councilmember Guzman-Newton seconded the motion. The motion carried 5-0 aye. Mayor
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Niehaus adjourned the meeting at 4:47 PM.
APPROVED: __________________ ATTEST: __________________
Emily S. Niehaus, Mayor Sommar Johnson, City Recorder