The Ann Arbor city council is beginning a budget planning process that should culminate in a council vote to adopt a fiscal year 2014 budget at its second meeting in May, which falls this year on May 20, 2013.

City administrator Steve Powers and chief financial officer Tom Crawford sketched out three kinds of topics they could explore with the full council at work sessions through the spring: (1) funding for items in the capital improvements plan (CIP); (2) budget impact analysis, broken down by service unit; and (3) additional resources required to support the city council’s five priority areas, which were  identified in a planning session late last year.

The top three priority areas are: (1) city budget and fiscal discipline; (2) public safety; and (3) infrastructure. Two additional areas were drawn from a raft of other possible issues as those to which the council wanted to devote time and energy over the next two years: (4) economic development; and (5) affordable housing.

Possible city council work session dates are the second and fourth Mondays of the month. Regular meetings fall on the first and third Mondays.

The city council will be adopting a final budget for fiscal year 2014 by its second meeting in May. FY 2014 starts on July 1, 2013. Although the council approves an annual budget for the next fiscal year, the city uses a two-year planning cycle. This year starts a new two-year cycle, the first complete one for city administrator Steve Powers, who started the job about a year and a half ago, in September of 2011.

During some back-and-forth with the budget committee about the staff’s ability to provide all the information to the council that the committee had been describing – within the timeframe of the budget season – Powers joked: “Tom and I aren’t rookies!” Powers was previously Marquette County administrator for 16 years. Crawford has served as Ann Arbor’s CFO for more than eight years.

The council’s five-member budget committee consists of: Sabra Briere (Ward 1), Jane Lumm (Ward 2), Christopher Taylor (Ward 3), Marcia Higgins (Ward 4) and Mike Anglin (Ward 5).

An interesting wrinkle that emerged during the budget committee’s discussion was the role to be played by the city council in shaping the capital improvements plan (CIP). In response to some interest expressed by committee members to amend the CIP, Powers encouraged them to think in terms of allocating funds (or not) for elements of the plan. That’s because the content of the CIP is the statutory responsibility of the planning commission, not of the city council. The city council’s role is to determine which projects should be funded, Powers explained. But it’s for the city planning commission to finalize the content of the CIP itself.

This report includes more on the Michigan Planning Enabling Act (Act 33 of 2008) and the city council’s recent history of amending the CIP.

Capital Improvements Plan: 2014-2019

The city’s planning commission has already voted, on Dec. 18, 2012, to approve the CIP for 2104-15. [.pdf of CIP for FY 2014-2019] The CIP is developed and updated each year, looking ahead at a six-year period, to help with financial planning for major projects – permanent infrastructure like buildings, utilities, transportation and parks. It’s intended to reflect the city’s priorities and needs, and serves as a guide to discern what projects are on the horizon.

This year, 377 projects are listed in 13 different asset categories. In the report, new projects are indicated with gray shading. They include renovating and/or remodeling five fire stations, 415 W. Washington site re-use, a park at 721 N. Main, urban park/plaza improvements, several street construction projects, a bike share program, and the design, study and construction of a new rail station.

Capital Improvements Plan: Amending the Plan?

Three years ago, on Feb. 16, 2010, the city council voted to amend the CIP after receiving it from the planning commission. On that occasion, the project that the council removed from the plan was one labeled the “Runway Safety Extension” for the city’s municipal airport.

The possible runway extension has been controversial for a few decades, but re-emerged again as a point of friction more recently in the context of an environmental assessment connected with the runway extension. [The runway extension is included again in this year's CIP.] The city council has voted periodically to fund the project, which taps non-local sources in addition to the smaller amounts needed from the city. The most recent vote by the council on that study came on Aug. 20, 2012.

Again on Feb. 7, 2011 city council amended the CIP to exclude the runway extension. Roger Fraser, who was city administrator at the time, hinted during the council’s meeting that the council was not actually expected to alter the plan itself [emphasis added]:

City administrator Roger Fraser noted that the planning commission is required to propose the CIP, but that not every item in the plan needs to have funding identified. Development of the plan, he said, complies with state law, and technically, the city council should simply be voting to receive the plan – implying that it was not really expected that the council would alter the plan.

Last year, on May 21, 2012, the council received the FY 2013-18 CIP attached to its agenda as a communication, and did not vote on it except to receive it along with several other communications. By that time, Powers had been serving as city administrator for about 9 months. The memo attached to the item on the agenda recited the past practice of amending the CIP, but noted that the city council did not need to act on the CIP [emphasis added]:

Similar to the City’s two-year budget process in which this year’s budget review by City Council consists of adjustments to the second year of the two-year budget presented to Council in the spring of 2011, the CIP approved by the Planning Commission consists of adjustments to the second year of the FY12-17 CIP approved by the Planning Commission on January 4, 2011. On February 7, 2011 City Council approved the FY12-17 CIP as the basis for the City’s capital budget, with the exception of the Airport Runway Safety Extension Project which was removed from the FY12 Capital Budget. As the adjustments to the CIP and to the capital budget under review by the Council were performed jointly, and with approval of the adjusted capital budget to be performed by Council following its review of the adjustments, no action regarding the CIP is required by City Council.

When Powers sketched out the overall concept for budget planning at the Jan. 22 meeting of the city council’s budget committee, Jane Lumm (Ward 2) expressed an interest in amending the CIP. She noted that when she’d served on the council in the mid-1990s, she recalled undertaking amendments to the CIP. And Sabra Briere (Ward 1) recalled the more recent amendments of the CIP with respect to the airport runway.

Powers responded by pointing out that the CIP was not the purview of the governing body – in this case, the city council – but rather of the planning commission. What the council was responsible for, Powers explained, was allocating funds (or not) for the projects in the CIP. Powers alluded to the relatively recent change in the statute that lays out the responsibilities of the city planning commission. He confirmed later for The Chronicle that he was referring to the Michigan Planning Enabling Act 33 of 2008, which reads in relevant part:

125.3865 Capital improvements program of public structures and improvements; preparation; basis.
Sec. 65. (1) To further the desirable future development of the local unit of government under the master plan, a planning commission, after adoption of a master plan, shall annually prepare a capital improvements program of public structures and improvements, unless the planning commission is exempted from this requirement by charter or otherwise. If the planning commission is exempted, the legislative body either shall prepare and adopt a capital improvements program, separate from or as a part of the annual budget, or shall delegate the preparation of the capital improvements program to the chief elected official or a nonelected administrative official, subject to final approval by the legislative body. The capital improvements program shall show those public structures and improvements, in the general order of their priority, that in the commission’s judgment will be needed or desirable and can be undertaken within the ensuing 6-year period. The capital improvements program shall be based upon the requirements of the local unit of government for all types of public structures and improvements. Consequently, each agency or department of the local unit of government with authority for public structures or improvements shall upon request furnish the planning commission with lists, plans, and estimates of time and cost of those public structures and improvements.

In the case of Ann Arbor, there’s no exemption of the planning commission from having responsibility for the CIP.

At the committee meeting, Briere observed that – from her perspective as the recently appointed city council member to the planning commission – she perceived that planning commissioners viewed the CIP as a document that could be altered by the city council, and thus commissioners viewed it in some sense as merely a recommendation by the commission. She ventured that Powers’ explanation of the respective roles of the planning commission (which is responsible for the content of the plan) and the council (which is responsible for the budgeting of specific projects in the plan) would need to be incorporated into the planning commission’s culture.

Water Mains in the CIP

At the budget committee meeting, Lumm indicated that her interest in amending the CIP stemmed from a desire to see a water main replacement project in her ward be funded for 2014 instead of 2015. And in the course of deliberations during the city council session that followed the budget committee meeting, Lumm’s Ward 2 council colleague Sally Petersen mentioned a water main replacement project she wanted the city to undertake. The two councilmembers confirmed for The Chronicle that the specific water main project they meant was on Yellowstone, which is in the eastern area of the city, bounded by the east-west portion of Green Road on the north, and Bluett Road on the south.

The CIP for FY 2014-19 includes the Yellowstone water main replacement for 2015, and indicates a cost of $650,000. The CIP includes more than 30 different water main projects citywide. Projects are ranked on a priority scale with a number of factor weights. Lumm wants to see the Yellowstone moved a year earlier – to 2014. She responded to a query from The Chronicle by indicating that the Yellowstone water main has had six breaks in a five-month period.

Based on data compiled by The Chronicle from the city’s comprehensive annual financial reports (CAFRs), total water main breaks citywide in the last four years are less frequent per year than in the previous three. In 2012 there were 72 water main breaks citywide.

City of Ann Arbor water main breaks: 2006-2012. Data from city of Ann Arbor comprehensive annual financial reports.

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Posting of the budget committee's Tuesday meeting.

At a meeting of the Ann Arbor city council’s budget committee, the city’s chief financial officer, Tom Crawford, sketched a plan to start making available a wide range of raw data from the city, starting with numbers from the finance department. Crawford said he hopes to have a pilot in place by the end of February.

Budget committee members also discussed what the contents of a monthly statement should be that will now be provided to the committee and to the council as a body – such a report is required by the city’s charter.

The other main point addressed by the budget committee was raised by city administrator Roger Fraser, who suggested to councilmembers that they owed it to the community to put the question of a city income tax before the voters. Fraser said they had a responsibility to float the question, regardless of what their personal feelings were on the issue.

The meeting was also attended by Mayor John Hieftje, who is a member of the city council, but no longer part of the 5-member budget committee – the council reorganized its committee structure at its Dec. 21, 2009 meeting. Hieftje participated in deliberations on the question of when a city income tax ballot question might feasibly go on the ballot.

Data Catalog

The city’s chief financial officer, Tom Crawford, put the posting of the city’s financial data online in the context of a broader initiative – modeled on Washington D.C.’s data catalog – to make available basic data on the city’s website. The idea is that other interested parties might use the data to create reports and analyses that the city staff might not think to create, or simply not have the time and resources to create.

Crawford reassured councilmembers that the data could not be altered and then re-posted to the city’s website by the public. Addressing the issue that someone could alter the data, then disseminate in by some other means, Crawford cited the experience of the Ann Arbor Downtown Development Authority in developing a disclaimer that is included with the provision of its realtime parking data. [That disclaimer reads: "The DDA is not responsible for third party use of this data." For some background on the realtime parking data kerfuffle leading to that disclaimer, see "Plus, Data Access Talk"]

The first kind of data that would be posted as a part of the city’s data catalog, Crawford said, would be data from his own department. As a pilot, the data would be provided as comma-separated value (CSV) files, together with documentation summarizing what was contained in the data set, a contact person within the city, a statement addressing accuracy, and a list of field names.

Also included for each group of data would be one of the standard kind of reports that can be run from the data, Crawford explained. These sample reports could range from hundreds to thousands of pages, he said. [They will not be printed out.] Examples of the kinds of data that would be available are journal entries, P-card transactions, the check register, the aging report (people who owe the city money), and the investment report.

The move towards providing the financial data as a part of the data catalog comes in advance of deployment of new financial software, which the city council authorized purchase of at its Dec. 7, 2009 meeting. The new software will cost around $900,000, with a payback through savings realized in a little under three years. One of the benefits touted for the new software is the ability to generate a variety of different reports by a broader range of users, and with less effort.

Even using the old software, however, Crawford said the idea was to post the data in a way that involved “minimal human effort.” This came in response to a concern expressed by Christopher Taylor (Ward 3) about the burden it would place on city staff.

The question of city staff burden arose at a couple of points during the meeting. City administrator Roger Fraser responded to councilmember concerns that they were placing an undue burden on staff. He said that, yes, there’d been an uptick in council requests for reports and data – but that was understandable given the current budget climate and that city staff accepted that as a part of their job.

Monthly Report

The budget committee also discussed what the contents of the monthly report should be, which will now be provided to the council. A monthly financial statement is required under the city’s charter:

SECTION 5.6. The Controller shall be the chief accounting officer of the City. The Controller shall:

(6) Submit to the Council, through the City Administrator, by the tenth working day of each month, a statement showing the balances at the close of the preceding month, in all funds and budget items, the amount of the City’s known liabilities and budget items to which the same are to be charged, and all other information necessary to show the City’s financial condition;

Tom Crawford, the city’s CFO, reported that he and his staff had looked at the charter and come up with a report that they thought met the definition as described in the city charter.

One of the elements of that report will be a report of the general fund’s revenues and expenditures. Crawford cautioned that the year-to-date percentages would not necessarily match the percentage of time that has passed to date in the fiscal year – it’s not linear. For example, now halfway through the fiscal year, most of the taxes were collected – but that’s a function of when taxes are collected, at the beginning of the year. Or halfway through the year, revenues from licensing and inspections in the building department are more than 50% of the year’s budgeted amount – but that actually translates into a projected shortfall.

Christopher Taylor (Ward 3) asked if the comparative year-to-date percentages could be included in the monthly report, just to orient councilmembers to the possible significance of the percentages. For example, 20% could either be awesome, Taylor said, or it could also mean that “the sky is falling.”

In discussing how the monthly report should be disseminated, Roger Fraser suggested that it be sent directly to all councilmembers. However, Marcia Higgins (Ward 4) weighed in in favor of first having the budget committee review it before disseminating it to other councilmembers. She reasoned that the rest of the council might not understand what they were looking at, and that budget committee members would then be in a position to help others on council.

Sabra Briere (Ward 1) said that she preferred to “err on the side of everybody-sees-it.” Crawford said that it could be posted on the website. Taylor suggested that if the report changed after review and questions by council, then it could be held until a final version was determined.

City Income Tax

City administrator Roger Fraser told the budget committee that revenue was not one of the items on the list of issues staff had been given to consider in preparation for the council’s Jan. 26 budget workshop [starting at 6 p.m. in city council chambers]. But on the question of a city income tax, Fraser said, “We owe it to the community to have that question out there.” He suggested that it be put before the voters either at the August 2010 primary election or the November 2010 general election.

Mayor John Hieftje would subsequently point out that choosing the primary versus the general election would not affect how soon the tax could be implemented.

When there seemed to be little enthusiasm in the room for the idea of floating a ballot question for voters on the implementation of a city income tax, Fraser pressed the point. He suggested that they spend a little bit of money to have a survey of voter attitudes done – similar to what the Ann Arbor Transportation Authority had undertaken recently to measure attitudes about a countywide transportation millage. He called undertaking such a survey “due diligence.”

Stephen Rapundalo (Ward 2) wondered if there was a good enough set of information out in the public for a survey to be meaningful – we might want to try to educate first and then survey voters. One specific example cited by Rapundalo was that many people are under the erroneous impression that an income tax would be implemented on top of a property tax for general operating expenses. [The city charter forces a choice between a property tax or an income tax – it's not possible to have both for general operating expenses. That said, there would still be other property taxes collected – for transportation, solid waste, and schools, for example.]

There was some sentiment expressed in the room that people essentially calculated whether their individual taxes would go up or down and decided their vote based on that.

Fraser responded that a properly designed survey would actually find out what it is that voters understand about the issue. He allowed that when the results of the survey came back, the council might well decide that there was no point in putting it on the ballot.

Quorum and Open Meetings Issues

The five-member budget committee as determined by a city council resolution at its Dec. 21, 2009 meeting consists of  Mike Anglin (Ward 5), Marcia Higgins (Ward 4), Christopher Taylor (Ward 3), Stephen Rapundalo (Ward 2) and Sabra Briere (Ward 1). Prior to that resolution, the council had combined its budget committee with its labor committee. Now, the labor committee is combined with the council administration committee.

At one of the spring 2009 Sunday night city council caucus meetings, Higgins had rejected the idea that other councilmembers should attend the budget committee’s meetings, citing the possibility that a quorum could be reached, with implications about whether any decisions made would become decisions of the council as a body as opposed to decisions of the budget committee.

The attendance on Tuesday of all five members of the budget committee, plus the mayor as an additional member of the council, constituted a quorum of councilmembers. The meeting was not social in nature and thus met the standard for definition of a meeting under Michigan Open Meetings Act.

Notice of Tuesday’s meeting of the budget committee was properly posted in the lobby of city hall; however, the notice did not include mention of the possibility that a quorum of councilmembers could be present.

The Open Meetings Act requires that minutes be recorded for the meeting – in the “action minutes” style used by the council, this would amount to a list of topics addressed as posted in the meeting notice, names of attendees, date and time of the meeting. Councilmembers present at the budget committee meeting did not vote on any resolutions.