• Discussion: Strategic Planning

• Discussion: Fiscal Year 2003 Budget Shortfall/Layoffs

• Discussion: Strategic Planning

• Discussion: Fiscal Year 2003 Budget Shortfall/Layoffs

• Discussion: TIF Litigation

• Reports/Inquiries from Elected Officials

• Scheduling of Next Meeting Date and Time

Chairperson Kriz called the Johnson County Elected Officials Meeting to order in the Johnson County Administration Building at 1:30 p.m.

Elected officials present were: County Attorney J. Patrick White; County Auditor Tom Slockett; County Recorder Kim Painter; County Supervisors Pat Harney, Mike Lehman, Terrence Neuzil, Sally Stutsman, and Carol Thompson; and County Treasurer Tom Kriz. Staff present were: Board of Supervisors Budget Coordinator Jeff Horne, and Auditor’s Office Recording Secretary Casie Parkins.

Stutsman said she added this to the elected officials’ agenda to update them about the Board’s recent Strategic Planning session with Tim Shields. She said the Board will meet with Shields again soon, after which they will meet with the elected officials to continue the Strategic Planning process. Stutsman and Lehman reported that the Supervisors had discussed the role of county government with Shields, and also covered a number of other issues involving the County’s mission in times of tough budgetary issues. Thompson added that the Board is going to try and identify areas that the County is required by statute to fund, and what other functions are extras. She said the question is whether or not they can afford all of the extras. Thompson said the Board agreed that there will be no sacred cows. County Treasurer Tom Kriz noted that the County’s elected officials had met with Shields last year, and asked if this should be discussed on a future agenda. Stutsman hoped this would occur before April or May. Stutsman said that the Board of Supervisors sets its own Strategic Planning, but she thought that Strategic Planning for the County overall should include input from the elected officials. Kriz said, that once they meet with Shields, the Board can contact him and he can get information out to the elected officials. County Auditor Tom Slockett asked if the Board is planning to list everything that the County is not required by law to do? He commented that this is a pretty subjective decision. Thompson said the Board understands that they do not have to cut all the way back to basic services, but they want to review the rest to set priorities.

Slockett gave zoning as an example of something not required by statute; will this be on the list? County Attorney J. Patrick White said that the Board only has to meet 4 times a year; will this be on the list? Stutsman added that they only need 3 Supervisors. Thompson said that the Board will need help from the elected officials with the process, and admitted she wouldn’t have thought of some of these issues. Slockett said building inspections, a personnel department, and a Board of Health, are also not required; White added GIS and Slockett added new software. Stutsman said the County doesn’t have to have a technology fund, or buy more buildings. Stutsman said the issue came up because of Human Services funding, always an easy target for cuts. She said the question is what is their role with Human Services funding? What are they required to pay for and what things aren’t required, but the community expects them to be involved in. Slockett didn’t think that the community of Johnson County would stand for the County only doing what is required by law. Slockett said they don’t have to take minutes, except for very cursory minutes. He joked that the Board might like that. Stutsman said that’s the sort of thing to which those who are complaining about big government are referring. Slockett said secret government isn’t one of the things wanted and Stutsman agreed. Thompson asked what basic minutes would do, and White said they would record the proceedings, as the formal minutes are prepared now. White said the informal minutes are a compromise on a long-standing debate between the Board and the Auditor’s Office; the current format is a solution to an inability to reach a middle ground. Slockett said it has been a long-standing problem that exists between minute-takers and governments. White agreed. Slockett said that since they have moved to the current format, there has not been a single complaint, except that the minutes are too long. White said that those people who have to rely on looking at a record love the current minutes. Slockett said they are a wonderful resource, and make for a peaceful situation between the Board and Auditor. He cited examples of disputes regarding the minutes under the prior Auditor. He reported that similar complaints by City Council Members to the Iowa City Clerk disappeared when that department went to the transcript format. He asked how comfortable they will feel with the new system they will have to go to for taking minutes, if they don’t have what they have now. White added that the County does not have to have an Ambulance Department; Stutsman said they also are not required to have a SEATS Department, or fund the libraries. She said the Board’s role in Conservation is also in doubt. Slockett said they don’t have to have the maximum REAP funding. Slockett said they also do not require a Budget Coordinator or their Executive Secretary. Kriz said it will give the Board some areas to look at that sometimes get taken for granted or forgotten and to look at how important those are to the community.

Neuzil said the other option is to cut everybody equally, an across-the-board cut. Slockett asked if this were the method, why didn’t they just eliminate the Board of Supervisors and get a computer? Slockett said in his view, making choices was the Board’s job. Neuzil responded that this was what the Board was trying to do by identifying what is mandated and what is not. Stutsman added that they need to find out what the community thinks is important. She continued that it might be easy to get rid of Planning and Zoning, but what would the community say about that? Slockett said it would be a concern if there wasn’t an ambulance to take people to the hospital. Lehman said the analysis of services will be used both to rationalize the Board’s difficult decisions and to help explain those decisions to the public. Stutsman said it is wonderful to have many County offices open for extended hours, but maybe they will no longer be able to afford this convenience. Stutsman said this would not be at the top of her list of choices, since the community really likes the extended hours, but said that the community has to recognize that these kinds of services do cost money. Slockett wondered if any money would be saved by cutting back hours? Would the offices be closed for a day, and if so, would there be staff layoffs? Lehman said the State was talking about instituting a furlough policy that asked staff to take a half-day off for each pay period.

The group agreed that the elected officials and Board of Supervisors would meet with Tim Shields after the Board’s next Strategic Planning session with him. The group tentatively set a 9:00 a.m. meeting on April 16th (1st choice) and April 17th (2nd choice) as potential dates for the joint Strategic Planning session. The probable location would be the large downstairs conference room in the Administration Building. The Supervisors said they would communicate with Shields to see if one of these dates worked better for him. Stutsman said when the Board received the documents generated from the last Strategic Planning session, they would pass those on to the elected officials.

Neuzil asked Budget Coordinator Jeff Horne to briefly summarize the reasons for the County’s budget shortfalls for the elected officials. Horne said the main reasons for the budget problems include: a lower rollback for residential taxable property valuations, valuation’s slow growth (only 2.6%, compared to 6.8% last year), sharp decreases in revenues (mainly due to lower interest income), and a number of built-in expenses. Horne said the County hit its levy limit this year, which prevents the County from taxing any more for the General Basic Fund. Neuzil asked about the State impacts; Horne said these are significant, with Secondary Roads taking a big hit, but there were also cuts in MH/DD.

White asked Horne about the road use tax formula, and asked what happens when the County gets less out of this account? Horne said he didn’t know, but said it is a complex formula. Stutsman thought it was a direct result of the recession, that people aren’t driving as much. Slockett said there was a very temporary cutback in driving, but he understood it had gone right back up again. Slockett said another item that is included in the Road Use Tax is the excise tax on new and used cars, the sales tax, which went down for a brief period of time. Slockett asked if the current year’s Road Use Tax went down, or next years? Horne replied that both had decreased, saying the current re-estimated Secondary Roads budget was down $200,000. White asked if that is independent of the across-the-board cut? Horne said that this issue is not related to the 4% cut, because it is in a different fund; Horne said the Secondary Roads cut is bigger than 4%, amounting to over a million dollars. Harney asked if any Road Use funds were diverted for other purposes. Stutsman noted that they guard the Road Use funds pretty carefully. Stutsman asked Kriz if the number of car titles has decreased; he said his office can verify that car sales have never been better. Thompson asked if that is just for Johnson County, or is this trend statewide; Kriz answered that it was a statewide trend, at least with the larger counties such as Story, Polk, and Black Hawk. Slockett said that the 0% interest rates have stimulated car sales. Horne speculated whether the State is keeping more of the funds for their use. Stutsman said the formula is set by Code. White said he did not understand what has happened relative to Road Use Tax, and why that is down. Horne said that County Engineer Mike Gardner had re-estimated revenues for this year, which are down a sizeable amount.

Kriz reported that interest income has decreased over $700,000 from the previous year, and said he is expecting another rate cut, to 0.51% for major depositors. They had previously been paying about 3%. Stutsman asked if lower interest rates would bode well for the County if they decide to do the bonding? Horne and Kriz said it should. Horne asked about the Reservoir Roads CD; Kriz said it was in a 7.5% CD, which expires in November; currently, it is hard to find even 2% or 2.5% interest. Horne discussed with the Board that the interest from this fund might now dip below what the Secondary Roads Department actually spends and they may draw down accumulated interest. Kriz said the drop in interest will be large because it is a $2 million CD. Kriz said there is a lot of liquid money on the sidelines that has come out of the stock market, which continues to depress interest rates. He said people are parking that money in short-term investments, waiting for a more positive investment climate. Thompson noted that the County never buys anything that isn’t insured, limiting its choices; Kriz affirmed this. Kriz noted some of the recent financial troubles of large corporations as reasons for the strict guidelines. Kriz said the current interest rates are at levels not seen since the 1920s and 1930s.

Thompson asked if any of the elected officials were planning to lay off employees this year? Kriz said in the Treasurer’s Office, there are a couple of positions open that he will not fill; if this were not the case, he said, he would have had to look at laying somebody off. Kriz said this brings up the issue of seniority, potentially moving people into positions for which they don’t have the aptitude or they don’t want, but would take the job to stay employed. Thompson said the Admin union contract is especially challenging, because it has positions such as "Clerk," which occur in more than one office. Kriz agreed with this, saying there are Clerk I and Clerk II positions, titles which are also found in other offices such as Public Health Department, Recorder, and County Attorney.

Slockett said he has temporary workers, and he has no choice but to lay them off, because there are not protected by any collective bargaining contract. Slockett said these employees are valuable to his office, so the cuts are a serious thing. Slockett requested that the Board communicate with other elected officials on tough budgetary problems before making decisions, as they have in the past 25 years. Slockett said he notices that the Board is now making these decisions independently, because his office used to be involved on a daily basis. This year, Slockett said, he hasn’t known what the Board is doing, and has been waiting for a meeting where the Board will communicate with the elected officials. Slockett said he would like to work together to spread out the budget cuts over as many months as possible. He said it is not clear what is budgeted for each office because the revenue/expense adjustment cuts expense dollars from each department and adds revenue dollars to each department because of historic trends of under-spending expenses and over-receipt of revenues. For the Board to know whether a department is doing better than they budgeted, they need to know the revenue/expense adjustment to that budget. Slockett said allowing them to get involved, they could give the Board more accurate data by department and they could let departments work on coming in over the revenue number or under on expenses, which could be counted against next year’s cuts. Slockett said by doing this now, during the current budget year, the Board could spread the period over which the cuts are enacted over 2 budget years, instead of concentrating all the cuts in the next budget year, FY 03. If personnel leave this year, Slockett said they could delay hiring the position this year, allowing funds to hire the position next year. This would not make a difference in the bottom line of the budget. Currently, Slockett said, departments will have to assume that there will be no turnover July 1st and immediately lay people off on July 1st, because there is the possibility of running out of funds during the course of the year. On the other hand, he said, if someone quits during the year, and their hiring can be delayed, departments might be able to avoid laying people off at the beginning of the year. Slockett said he’s very interested in what assumptions the Board is making. He noted that the Board is not using the revenue/expense projections in the way they’ve been working very well in the past years, and asked what Capital Projects and Capital Expenditures are being funded in preference to laying people off? He said he’s heard the Board bought a car for Information Services, and objected to the purchase of a new car when there are layoffs in his office. Slockett said they may need a new car, but if the Supervisors talked to other people in the County, they might get another perspective. He said some people could be spared from losing their jobs. He said in his 25 years of being Auditor, he’s never had less information, and this situation is probably as serious as any problems they have had in the past. Slockett said there used to be full communication between the Board of Supervisors and department heads and elected officials. He asked if the Board is intending for these people to find out about the budget issues at the budget hearing, or will there be communication and input before then?

Lehman answered that he thought Horne has been doing a pretty good job of putting information out to department heads and elected officials. Lehman stated that they have had a number of budget work sessions, including one tomorrow morning, and Slockett could come and address the Board, on any topic he wished. Slockett said he doesn’t have the information, and asked if it can be made available? Harney said he is disappointed in Slockett; if he felt he wasn’t getting the information he wanted, he should have come to the Supervisors. Slockett said he did this in a work session, where he brought up the proposal about bonding. Slockett said when the Auditor’s Office used to do the budget, they had made copies of every budget, and fully communicated with the Board. Harney thought that the budget had been turned over to Horne, who was to communicate with the Auditor’s Office as needed. Stutsman said this issue comes up every year, that the elected officials do not know what’s going on with the budget until it’s almost done. She said in the past the Auditor has known what is going on because of their involvement in the budget. White said he’s had better communication, but never what he wants. Stutsman said it is always an issue, and said she wants to improve the communication and is open to ways to improve the process. Slockett said he wanted the information made available and if the Board asks for evaluation, the Auditor’s Office will take a look at the budget and see what they think. Stutsman asked why it would be fair for the Auditor’s Office and the elected officials to see the budget, but not the other department heads? Slockett said he is speaking only as one office, but assumes that the Board will invite everyone for their input.

Thompson asked if it is The Auditor’s Department budget that he hasn’t seen or the whole budget. Slockett answered the whole budget, because that is impacting his budget this year, because of the requested $30,000 budget cut. Stutsman said she feels like communication has to be with everyone, and Slockett said this would be fine; he’s not asking for special treatment. Stutsman said everyone would want to ask the Board not to cut items in their own budget, so they might as well have budget planning by group. Harney said the Board had decided that the best way to make cuts was to ask for a 4% cut across-the-board, allowing each elected official to make their own decision. He said the Supervisors didn’t want to dictate how or where the cuts should be made. Slockett said that it is his guess that the elected officials in the room do not like or approve of across-the-board cuts. He said having to make a 4% cut without having any input on other alternatives was the problem he was talking about. Thompson said the time was limited once the Board had the information that the budget was going to be short. For next year, she said, they are looking at some non-required services the County provides, and will have some plans in place for things to cut in July and August to help the budget for next year. This year, Thompson said, they didn’t know cuts would be needed until late in the process, so they felt it was better to leave it to the department heads.

Slockett said he responded immediately with his 4% cut, but then later found out that not everyone had been required to make the cut. Lehman pointed out that those who had not had to make the cut had come before the Board and pleaded their case. Slockett said he didn’t think anyone even knew that was an option. White asked who didn’t have to make a 4% cut, and Slockett replied that the Recorder had not been cut. Thompson clarified that the Recorder increased revenues instead. White said those are not the Recorder’s revenues; they are the County’s revenues. Slockett agreed, and said a big chunk of those revenues are for work done by the Auditor’s Office. County Recorder Kim Painter said only about $20,000 of the Recorder’s revenues were for the Auditor’s Office work. Slockett said that was 2/3 of the cut. Painter said her revenues were going to increase somewhere over $200,000. Slockett said it is a matter of State law that Painter collects the revenues, and said that the fact that it should accrue to the Recorder and no other department is totally ludicrous. He asked if the Treasurer should get credit for all the property taxes collected. White agreed, saying it is a philosophical issue. Neuzil said if Slockett wants the Board to micro-manage their departments, he should prepare to also be micro-managed. Neuzil said this issue can go both ways. Harney defended the Recorder, saying that department has fewer areas to cut, especially with their increased workload. He said cuts there would have to be staff, which would really cut services. White asked how the Recorder has fewer areas to cut than his office? Thompson said that Painter increased her revenue by the amount of the 4% cut. White said this is not what Harney had said; he had said the Recorder had fewer areas to cut than other departments. Thompson said one of the areas the Supervisors had considered was that if Painter cut her expenses, she wouldn’t be able to collect the revenue. Kriz said at the same time, other elected officials are laying off staff. Slockett said the budget for his office is 94% staff, and asked what percentage of the Recorder’s budget is personnel. Painter said personnel in her office was around 89%-90% of her budget. Slockett said that his budget, then, has a higher percentage of personnel than Painter’s budget. Kriz and White said that almost everyone’s budget has personnel percentages around this level. Neuzil warned that next year would also be a tough budget year. Slockett said he is not criticizing Painter at all; Painter replied that she’s not taking it personally. Slockett said this is what happens when all elected officials are not kept involved in the process. White said the other elected officials are actually admiring her efforts in avoiding the 4% cut. Painter said that in her time in the County, she has known elected officials to speak immediately and strongly on issues that were important to them. Though she has sometimes not done this in the past, she said, she did speak up this time, and went to the Board and told them. Painter said her operating costs are lower than they were in 1993, so a 4% cut meant either shorter hours or staff layoffs.

White said that he too did not feel like he has been kept informed, stating that he did not know what the Board of Supervisors did with the Compensation Board’s recommendation. Thompson said this is a good example, because the Supervisors have changed their minds about the issue a number of times, making tentative decisions that were changed before the numbers were finally settled upon. White said Horne had qualified the information given in that regard as not being final yet. Horne said he doesn’t like to tell anyone anything until the numbers are finalized, because he has been burned a couple times doing that. White thought the Supervisors should share as much as they can. Thompson said nothing is final until the Board votes on it. White said he understands this, and had been lobbying for some changes. Slockett thought that the 4% cut had been just that, not a request to get as close to 4% as was possible, or a request to get as close to 4% as possible without laying anyone off. Slockett noted that Painter doesn’t have any part-time employees, and said he could argue that the workload of his office is great, and he has tried to soften the cost impact of this workload by hiring part-time temporary workers, who will have to go. He repeated his hope that they could work together over this budget year and the next one, to avoid employee layoffs. Thompson said that the Supervisors are hoping to use the savings for this year to cover this year’s shortfall, so spreading it over months in this year isn’t really an option. Also, Thompson said, the Supervisors chose 4% rather than 1% or 2% because of the revenue/expense adjustment. Slockett said he didn’t know whether or not he would agree with this number, and had a question how they determined it. He noted that the revenue/expense adjustment was his creation, and he might have had some valid input on how it is used.

White said he also didn’t know what the Board has decided about collective bargaining; adding that he had a staff position that is potentially impacted in terms of what type of work that Attorney will be doing. He wondered if there is money budgeted to hire outside negotiators. White said at his budget presentation, he thought the Supervisors had said that they would let White know when they were ready to talk about this issue. Stutsman said they did budget money for outside collective bargaining. Slockett referred to Thompson’s earlier comment that the 4% savings was to be used for this year’s shortfall, and wondered what savings and what shortfall was being referred to? He said that if the Supervisors would work with them, they might be able to create additional savings. He said it is always preferable to save money in one year with the option to spend the next year. That would give them a whole year rather than a few months to let that work out. Slockett said he would like to have input on these sorts of issues.

Slockett also responded to Harney’s comment about coming to Board meetings, saying he would not waste his time or that of the Supervisors by attending meetings when he is neither invited nor wanted. Slockett said he knew that the Board’s meetings are public, but said attending uninvited does not make up for poor communication from the Board. Harney said if Slockett has some budget alternatives, he would like to see them; Stutsman agreed. Slockett said the question is alternatives to what? He said he hasn’t seen the budget. Stutsman said they discussed sending informational emails to department heads and elected officials after each budget work session. When the Board meets, department heads and elected officials could then attend or send a representative. Slockett said he would support emails, information on the web or an Outlook file containing the budget spreadsheet. Slockett said he would like permission to provide input, and said right now he doesn’t feel like it’s wanted. Stutsman reaffirmed Thompson’s earlier point that the Supervisors are always concerned with the time constraints, as well. She wondered about moving the process earlier, allowing for more deliberate decision-making and reactions from department heads and elected officials. Slockett said when extraordinary situations occur, such as the recent budget cut, communication is very important. He said that he does not know, for example, what input the Board received about Capital Projects and Capital Expenditures, items that can be delayed for a year or 2 during a tough economic situation. He said he doesn’t know what the Board decided on these issues, but advocated for temporarily delaying these areas. Thompson said they did that. Slockett asked if the Board is buying Information Services a new car, and Stutsman said yes.

Lehman noted that the minute-takers from the Auditor’s Office sit in all of the Board’s meetings, and said Slockett could get an update from them after each meeting. He asked if it is OK to do this, and said he makes a policy not to do this. Stutsman was surprised at this, and said she thought Slockett would be asking for updates. Slockett said the Board took the budget function away from his office and hired their own person to do it. He said there are people in his office perfectly capable of doing the budget. Slockett said he got the message, and would not force his way into the budget process, but said he does not like what has happened. He wanted to give the Board an opportunity to do something about the situation, if the Board wants input from his office.

White said he didn’t understand how the Supervisors could make a decision about hiring an outside negotiator without having a conversation with his office about the pros and cons. Thompson replied that the Supervisors thought the big pro is that this is the year when the Board needs to get some kind of accommodation on health insurance. White said he understood that there are pros and cons. He reported, though, that the person who did the bulk of that work was personally and professionally insulted when the Board decided to hire an outside person to negotiate the Sheriff’s contract, with very little consultation with the County Attorney’s Office. White said it is the Board’s decision, and that’s fine, but it is new spending in a time when some employees are being laid off. White said one point is that a fair laundry list of why this has happened includes Board spending decisions over the last 2 or 3 years. He said a variety of people have cautioned against some of these decisions, but the Board has spent the money anyway. Neuzil said it could be argued that the spending of the elected officials’ departments has also contributed.

White clarified that he is very grateful that the Board allowed him the flexibility to manage his 4% cut, rather than trying to do it for him. Slockett agreed. He said he agreed with Slockett on an earlier issue that was discussed, saying he is not a fan of across-the-board cuts. White said if he were empowered to do so, he could make $500,000 worth of cuts that would not lay off staff, impact his department, leave the absence of security or another Assistant. He said that is not his judgement to make and admitted that it is hard to do. Thompson thought that everyone has their list of where everybody else could cut, and White agreed. Thompson said the Supervisors have tried to focus on each department cutting where it can. She said they can’t make a budget by polling. Neuzil said it comes back to priorities, which leads back to the discussion from the beginning of this meeting about identifying mandated and non-mandated services. Neuzil thought the cuts next year could be 15% to 20%. White asked if the other Supervisors share this worry; is the situation this bleak? Lehman said they threw out the idea in strategic planning that they might give everyone a 10% cut and then go through decision packages. He said they didn’t know what the budget situation will be, and noted that the State could impose more cuts this fiscal year. White said they are going to. Lehman asked what will happen then? White said he was in a meeting with the Governor about 2 weeks ago, and said the Governor is about as depressed a State public official as he’s seen in some time. The picture is very bleak, White said. Slockett said this makes it all the more important to get as much information as possible, in order to make good decisions. Slockett said it has never happened before that these Board decisions have come down by fiat, with no chance for discussion. Lehman and Thompson asked if there has ever been a budget year like this? Kriz thought that Slockett has seen a year like this. Thompson said there have been times when the budget has been capped, going into the budget year, but she didn’t know if there have been times when the County realizes that they have a 6% drop in their assessed valuation growth, in January. Neuzil asked if they have ever been at the limit on taxation? Slockett said during the farm crisis, there were large meetings with much debating and many speeches. Thompson wondered if they have ever had a time when the County reached its taxing limit, and Slockett said maybe not. White didn’t think so either. White asked what the overall tax increase was going to be, and Neuzil said for Iowa City residential the increase was 8.0%, and for rural residents 7.1%. Slockett asked about the tax askings increase, and Horne said they increased $2.3 million, because of the revenues falling off and built-in expenditures. Neuzil said the City is talking about a 13.8% increase in tax askings. White wondered if the reported figure for the City is a real increase in tax askings, as opposed to an increase in the tax rate based on the rollback? Horne said it is based on the Assessor’s revaluation, as well. The group agreed that this is very complicated. White said the bottom line is that the taxpayers are paying quite a bit more, but are getting less, which is a tough sell to the public. Horne said a lot of the increased expenditures resulted from built-in increases in health insurance. Slockett added that they are also getting a lot less State funding and interest. Thompson said that they are also having to budget $400,000 new dollars for the Jail next year.

Kriz said the Treasurer’s Office has cut its budget every year, so the 4% budget cut was particularly painful. He said this sent the message never to cut a budget, but to leave the fat in there, because when things get tough, the cuts will come. Several of the Supervisors agreed. Kriz said he was asked to cut $40,000 from a budget with non-personnel costs of only $79,000. He said by diligently and proactively reducing staff and cutting his budget over the past few years, his office was really penalized with the 4% cut. Kriz said all of these issues will become even more important next year if Neuzil’s prediction about next year’s budget comes true; in this case, Kriz said, staff layoffs become inevitable.

Thompson said the Board could also look at reducing discretionary funding even further, such as cutting the remaining Senior Center funding, reducing funding to libraries or eliminating SEATS. Thompson and Stutsman agreed that they are not talking about small cuts, but there will be big cuts. Kriz said in a private business, the first things that are cut are the things that you give away, the expenses that are not necessary. He said this is similar to what the County has done, eliminating donations to programs. Lehman noted that where the Board has a contract, they have to live up to that agreement. Thompson added that the Supervisors could inform people currently under contract that a change will be coming when the current contract expires. Lehman said he is concerned about mid-year cuts that may be needed, due to shortfalls in revenues either from the County’s own sources or from the State. He wondered if they can cut block grant funding mid-year. Stutsman noted that block grants are not contractual funding. Kriz brought up the point that the County is cutting its own employees, providing what they feel are vital functions; yet the County is still funding some State positions, which is hard for him to understand. Harney said the Board discussed these issues, and had made the best decisions that they could at the time with the across-the-board cut. Slockett said in the past there have been discussions about the balances in the Mental Health funds. He said he was asked to project the balances, and he showed that the department was determining balances incorrectly. Slockett said that is the last time he was asked for that type of information. Slockett thought that the County’s balances are going to be a lot higher than those being published and told to the public. He said he’s curious why Neuzil is projecting a 15% cut next year. Neuzil replied that a combination of factors were included in his projection: decreased State funding, the County reaching its levy limit, rising insurance costs, and in his opinion- which he said may not be that of the other Supervisors- the extreme limitations to growth in valuations in the rural parts of the county as a result of the County’s Land Use Plan. Slockett said it is still possible to shift things from the General Fund to the Debt Service Levy, which takes them away from the limit. Neuzil said they avoided that this year, and Thompson agreed, saying they didn’t want to do that without making similar cuts on the other side. Thompson said they didn’t want it to be increased taxation, unless it would be for something like voting equipment, if they decided to bond. Slockett said the financial software and the voting equipment would be over a many-year period; Thompson agreed, saying it would be a real bond. Harney said in the Board’s strategic planning, they are trying to focus on the role of County government, and what the public expects from it. Stutsman didn’t want it to be an opportunity to throw out everything the County does. Harney agreed. Stutsman advocated for a very deliberate process, where the Supervisors weigh these decisions and seek input from the public.

White said that one suggestion made by the elected officials last fall was to do a 2nd round of department meetings after the initial budget presentation. White suggested, after the Board had a sense for the County’s revenues and where the budget stood, departments could come in again. This would force everyone to talk to each other. White said he understood how often the Board meets, and what a pain this might be, but said the idea might be a potential vehicle to improve communication during the budget process. White also reminded the group that if an Admin. Bargaining Unit department has to lay off a person covered by the collective bargaining contract, the County needs to devise some sort of procedure to identify the position and identify the least-senior position. White said an individual department head can’t just lay off a Clerk I, for example. The departments will have to get together to identify the least senior Clerk I. In his example, if the Treasurer lays off a Clerk I, the least senior person in that position would be the part-time receptionist in his office. One department’s budgetary decision might have an effect on another office. White said he has kept Sullivan informed of this process, and said that so far no one within the Admin. Unit has said they anticipate having to lay someone off who’s covered by the collective bargaining unit. Slockett looked for clarification, asking if he laid someone off in his office, the person in his office could bump the person in another office with the least seniority. White agreed. Slockett said he could eliminate the position, but the person might go to another office. White said his plea is that before anyone eliminates a position, the department heads and elected officials should meet and do the best they can to plan ahead. Harney asked what would happen if the employee’s new position required a skill that they did not have, such as shorthand? White responded that all the Clerk I positions had the same requirements, as did all the Clerk II positions. White said there had been a conscious decision made not to treat employees differently depending on who their boss was, but try to define jobs in a way that was meaningful across departments. White thought it has worked; Thompson said that everything has its good points and bad points. White agreed, and said the issue was debatable. Painter and Slockett agreed that problems can arise on this issue. Stutsman said things that worked well before, may not work so well in a crisis situation. Thompson said they should check the union contract, because these issues were spelled out in detail in the contract. Neuzil thought they had to eliminate all of the part-time, non-bargaining unit people before they eliminate any union positions. White disagreed, saying they could lay off bargaining unit people before they lay off non-contract positions.

Stutsman said the Board had discussed instituting a hiring freeze, requiring departments not to rehire positions when employees leave. White urged the Board not to do that. White said it is OK to talk about individual positions when they open up, but said that one of Neuzil’s quotes in the Daily Iowan had people in his office very nervous and scared. The quote, White said, was that "There will be layoffs in the County Attorney’s Office." Neuzil expressed surprise at this. Slockett said he had a Daily Iowan reporter ask to interview the part-time employees from his office that were being laid off. White said the State hiring freezes have created more havoc than they’re worth. He reiterated that a better policy was to talk about a position when it comes up. White said it can be a big problem when a critical position opens up, and needs to be refilled immediately, but they need to jump through hoops. Slockett said there could be more than one position become open. Stutsman said these issues are tradeoffs; should there be a hiring freeze or layoffs? Neuzil asked about the idea of attrition and early retirement; should the County be thinking about that? Painter said one of the reasons for doing this, traditionally, has been continuing to pay for a retired employee’s insurance, and insurance costs for the County had been sharply raising. Kriz agree that the need to look closely at the cost of that. White said the University is using early retirement as an incentive because they don’t plan on replacing a lot of those staff members. White said the use of the word "fluff" in this discussion makes him nervous, because he doesn’t think there is any fluff in Johnson County’s government. He thought people are working very hard, for very modest pay. Slockett said they are struggling to catch up with where they ought to be. Stutsman agreed, and said that is why the 4% cut has felt so devastating. Neuzil said that 85%-90% of everyone’s budget is employees, so staff is quickly impacted when budget cuts occur. White noted that Mental Health and Roads are exceptions to this rule. Slockett said one of the reasons for the high percentage of departmental budgets going to personnel is that the Board took all of the other expenditures out of departmental budgets and put them in separate budgets. That is one of the reasons he’d like to know what decisions have been made.

Thompson left at 2:45 p.m.

Slockett distributed a handout and said he is going to go over the information without going into great detail. He said that all of the information given uses the example, if the Coralville combined TIF was in effect in the current budget year, what it would cost all of the jurisdictions. He said they are conservative numbers that understate what would actually happen because of the increasing valuations and the increasing amount of the TIF increments. He said the first page shows what is lost for each TIF district in the County from each local taxing authority to the TIF. He said that in the current Fiscal Year in TIF’s, $7.2 million are diverted from local taxing entities to the TIF’s. He said the County’s budget lost $1.5 million to TIF’s. On the next page Slockett noted the breakdown is by city. He said $5.5 million is diverted from Coralville taxpayers into TIF’s. He said Iowa City is at only $148,000. He said that North Liberty is about $1 million. Lehman said Tiffin is higher than Iowa City. Slockett said Tiffin’s TIF increment is a higher valuation than the base. White asked what it is. Lehman said it’s their housing. Stutsman said that North Liberty takes their TIF’s out as soon as they are paid off. Slockett agreed, saying their approach is a lot different than Coralville’s. Slockett said the next page is by school district. He said Coralville officials stressed the fact that the State reimburses a large share of the diverted funds, which are about half the amount. The last page he indicated summarizes TIF diversions for each TIF project.

The next handout, he said, shows information on the new TIF in Coralville created by connection along Interstate 80. The next page has statistics showing, if the new TIF were in effect in the current year, what the diversion costs are per parcel of property as opposed to if there was no TIF. If all of the TIF diversions were eliminated from local governments for the current year, this would be the amount taxes could be lowered per property or the amount of services that could be purchased per property. There would be $4,344,535 diverted for this one TIF in the current year, all within Coralville, averaging $703 per parcel in Coralville. He said that because Coralville is part of the Iowa City School District and part of the County, that diversion affects such other local governments. He said the third line shows the per parcel diversion impacting Coralville taxpayers, a $304 diversion. He said this means Coralville taxpayers’ taxes could be cut $304 and they would still receive the same services or they could receive $304 in additional services. Slockett said it is a common misconception that the City of Coralville is receiving a large amount of income from the TIF for their budget. He said that is completely backwards. He said they pay 6 times the cost per parcel as anywhere else in the County. He said that because the Coralville budget is disproportionately involved, the City of Coralville loses $1,565,441 million from their operating budget. White asked why the Coralville taxpayers aren’t upset. Slockett said he doesn’t think they know what’s going on. He said he thinks this is why the Coralville City Council reacts negatively to this information. He thinks they have sold it as a way to get everyone else’s tax dollars and it is to Coralville’s benefit. He said the people of Coralville don’t realize they are paying the worst price. Stutsman asked if this is ever going to pay. She wondered about what jobs are being created and what tax base is being created. Slockett said he believes TIF’s are a good idea in that they are a clever way of paying for the bonding and the cost of new development, while allowing current property taxpayers to not have their taxes raised to pay for it; as long as it’s paid off in a relatively short period of time. Slockett cited the example of the Coral Ridge Mall, which could have been paid off in 6 or 7 years. Now it’s being reported that it will take several more years, because they have increased the bonded indebtedness by about two-thirds. White asked if that was to fund the Northwest quadrant. Slockett responded in the affirmative. Slockett said, that when new development occurs, it’s not long before the cost to support that development starts hitting the local governments. You do have additional housing and jobs, and with that more space needed in classrooms, additional fire protection and law enforcement, and impacts on the Ambulance Department and SEATS. Slockett said a relatively short period of time makes sense, but anything longer than that should have stiff regulations regarding what is allowed and isn’t, with other governments brought into the decision-making process. Slockett continued to review the figures. The Coralville taxpayer has a cost of $304 per tax bill annually. The City of Iowa City budget is not affected by the Coralville TIFs because the TIFs aren’t in Iowa City in the way they are in Johnson County or the Iowa City School District. The effect on an Iowa City taxpayer, by virtue of the fact that they are in the Iowa City School District and the County, is a cost of $48 per year per tax parcel. The amount for the Clear Creek School District or Iowa City School District, but not in Coralville or Iowa City, is $51 each. In other school districts in Johnson County the cost is $23, the example being a person in the Lone Tree area. The bottom of the handout shows the amount per jurisdiction is $4,344,531, including a $724,000 cost to the State of Iowa through the State Aid formula of payments back to the schools. Slockett said this is accurate information for the current fiscal year, but it does make the assumptions he stated. Slockett said it is difficult to project costs into the future, so they just use real numbers from the current year, comparing the costs whether the TIF is in effect versus if there was no TIF.

Slockett noted there is litigation to determine whether it is legal for Coralville to declare the right-of-way of Interstate 80 as an economic development TIF, where there are no tax dollars collected and where absolutely no development can occur. He said the legal question is one that should be decided. Slockett said that bond attorneys, as well as taxpayers, would like to have more definite guidelines. The lawsuit also asks whether these 2 TIFs can be combined in that way; whether it is allowed. One of the questions he recounted that Margaret Reihman brought up talks about Code Section 403.19(B). It seems to indicate that the intent of the Legislature is that when a TIF is extended into another TIF and they are combined, that TIF combined with the original TIF goes up to the current assessed value rather than keeping the original base. Slockett wished to talk about this because White was present. Slockett said that if these 2 TIFs were contiguous and if the Coral Ridge TIF were expanded to include the Highway 6 TIF, that the Highway 6 TIF base would then increase to it’s current value. Slockett said Coralville appears to be saying that since they weren’t contiguous and since they were joined by the creation of the Interstate 80 TIF, that law no longer applies. He said the argument could also be made that since they were joined together simultaneously by the I-80 right-of-way, each was joined to the other one, whereby each would have to have the base go up the current assessed value. He stated that is a logical argument. That is one thing Slockett said he is considering doing and he wants to talk to White about getting a County Attorney’s opinion. That opinion would address whether the Auditor can develop policy about how to handle the base valuations, because the Code of Iowa isn’t clear, or whether White thinks the Code does offer guidance. Slockett added the question whether it is appropriate that the Code section not apply because the TIFs were joined together in this unique way. He said the bottom line is that there is a suit trying to clarify these issues. Slockett said there is a conventional wisdom that this is an attack on Coralville and TIFs. He sees this more as an attempt to clarify these issues. Property owners, who will be seriously affected by losing their properties, are asking if it is legal or not to do this. He doesn’t think the answer to that is known. Slockett said he would like to see the County join in the litigation to make that determination.

He pointed out on the front page of the handout the example of the Coral Ridge TIF alone. Under property taxes diverted to TIFs by city and project, the Coral Ridge Mall, in the County column it indicates that the County is losing from the Coral Ridge Mall alone $687,465. The Highway 6 TIF, which has now been combined with the Coral Ridge Mall TIF, brings that amount up to over $800,000, close to $900,000. He said Johnson County is severely affected by combining the TIFs and its taxpayers are affected, so he feels they have an obligation to find out whether or not they have to do this. One of the things that made this really clear and plain to Slockett was that in the midst of the controversy about Coralville combining the TIFs there was a small article about the Clear Creek School District having a $1,000,000 bond issue requiring a 60% vote. The City of Coralville is diverting millions of dollars, initially issuing 30,000,000 million dollars in bonds, and no one is voting on it. They are extending a TIF that would have been paid off in 6 or 7 years to 20 years, as is allowed under law, but without any vote or permission from the other local governments affected. Slockett said he thinks the property owners are providing a real service to the public at a great cost. He thinks they are interested parties in fact to the suit, and he would like to see the County formally recognize that by joining in and providing any kind of assistance they can. He asked what the Board and other people, particularly the County Attorney, would think about it.

Lehman asked if the CAT funding that Coralville is negotiating for falls through, whether there would be any point in them proceeding with the TIF. Slockett didn’t know, saying it is entirely possible they could reformulate the plan. Lehman recounted several conversations with Coralville officials in which they mentioned that the County is going to have to put in matching dollars and Coralville could do something to reciprocate. The easy answer, Lehman said, is that the County has no money to put into this. He wasn’t sure whether this would be a complete roadblock. Stutsman said Coralville’s argument is that the County’s contribution is the TIF diversion. Lehman said he has heard requests for real dollars. Slockett said he would like to focus on what they have control over, which is what they do. Lehman asked if the Clear Creek School Board has taken any action. Slockett said they did object at the meeting where an opportunity was given to formally object. He added that a similar agenda item addressing whether to be part of the suit is on the Iowa City School Board agenda, noting there is a lot of interest by the Iowa City School Board. He said what the County does may affect what the school districts do and Stutsman added that the school districts’ actions may affect what they do. Slockett said this impacts the County a lot more than the school districts, because the School Board is reimbursed for half their costs. He added that the School Board has the unique situation, that the TIF doesn’t affect their ability to fund education, because the per pupil cost is set by the State Aid formula. It affects their school district taxpayers negatively but doesn’t affect per pupil spending. Slockett said it affects the County directly. Stutsman said Coralville probably would give the school districts a deal on their Physical Plant and Equipment Levy funding. Slockett replied that the PPEL is only a small part of it. He added that the PPEL is an exception to the rule; it is a true loss to the school district. Stutsman said it would make a difference if everyone would go in on the lawsuit rather than any individual local government entity. Slockett said he would like to see the County take a leadership position on that.

Stutsman asked White for his thoughts. Lehman joked about White needing more funding before taking this on and White jokingly added that he would need a new position. White stated that he had been torn all along. He said the question of the gerrymandered map for the new TIF is a good one, but very good bonding attorneys have looked at this and approved it. He said there is always the argument that they are interested in promoting the use of TIFs and aren’t likely to step up and say hold it. He said this is reminiscent of the Hills annexation in terms of gerrymandering. White said he is a reluctant participant in litigation for a combination of reasons. He thinks it is a gray area. White said, if they violated the open meetings statue and he was convinced they did, he would be right there to sue them or challenge them. He said this one is grayer. White said he is personally a veteran of Iowa City versus Coralville litigation and knows how adversely that can impact intergovernmental cooperation. He reported that quite literally when Iowa City and Coralville were in litigation over annexation, which was the in the late 50’s/early 60’s, it was 20 years before those 2 bodies would enter the same room, when Dick Myers and Mike Kattchee finally were able to break the ice. White said he is also a long-term advocate of intergovernmental cooperation, but that doesn’t necessarily mean you don’t sue. Relating to earlier budget discussions, he said there are pros and cons to this, citing the enormous impact on the County budget. If it were a matter of debating it in public policy terms, White said he would be right there. He noted he was a critic of the original Coral Ridge Mall TIF process and the subsidy being given, adding he still is. On one hand, it is an issue he would love to be engaged in, even in court; but on the other hand he was uncertain it was worth the damage that would be done to the relationship. He said an alternative, not knowing how productive it would be, would be to try to negotiate with Coralville some compensation, trying to get them to agree as a matter of policy to free up some money for the County budget. He had been waiting until the budget was over to see how badly it turned out to be, before going back to talk to Coralville City Manager Kelly Hayworth. White said he read the petition. They have put before the court the issues Slockett has identified. White said he is right that it is expensive litigation for private citizens to do.

Slockett said one of the things he’s thinking about is the precedence of 7.2 million dollars being diverted in the current year. He said other cities are going to be watching this. He said connections along roads could occur all over. Slockett also believed that the intent of the Legislature was that TIFs be created in order to create value, to create future taxations, and to create additional worth. He added that the purpose of TIFs was not to create public, tax-free development. White said there are places in Iowa that have TIF’d the whole town and the Legislature is aware of that. He said you can read into legislative inaction that they are OK with it. The liberal interpretation of the TIF statute is OK with the Legislature because it has happened in other locations. Slockett said that is a little different from extending one TIF into another. He wasn’t sure of the history of how TIFs covering whole towns were created, whether they extended existing TIFs. White said they do know that they create the consultation meeting requiring the TIFing entity talk with other public entities and weighing that. Slockett asked if the County’s not objecting cuts down their argument. White said there is an argument that they failed to exercise their administrative remedy. It’s a legal concept that you can’t sue if you failed to exercise an administrative remedy. He said they would have to argue that is not an administrative remedy, but just an opportunity to speak. At least in theory the Coralville Council would consider the County’s objections. Slockett noted that the timing of when they notified the County didn’t allow time for the Board to designate an official representative.

Lehman said one bone Coralville would throw the County would be to release part of Coral Ridge Mall. He said the County would get some money, but the City of Coralville probably needs some money for their operating budget. Lehman said something subtle, like not funding cash dollars might be just as intrusive, that might speak as loudly. Neuzil said the CAT grant is just one $4,000,000 piece of the puzzle for the Iowa gallery that they might not have to have. He said they might just find a way to make the Mall TIF last longer to pay for it. Slockett said the Iowa gallery doesn’t play a very big role in what they are doing; that they could move ahead without it. He said the gallery isn’t going to attract people like the convention center. Neuzil said they are just trying to gain State support. Slockett said he’d rather see that money go to the Englert Theater, which has huge public support, as opposed to something like this that he doesn’t think the public supports.

Stutsman left at 3:20 p.m.

Harney asked, if he was a Coralville resident, why wouldn’t he want that $304 not added as taxes but going back to the base of my community? Slockett said Coralville residents are really hurt by this, and if they knew what was going on, he doubts they would stand for it. White wasn’t sure. One of the things at work here, he said, is this is a version of Coralville pride. He added that they are enormously proud of the Coral Ridge Mall. White said Mayor Fausett’s comment that creation of the Mall was a home run is an understatement. Slockett totally agreed with that. White said Coralville officials feel they are no longer little brother to Iowa City and they are going to keep going. They want to bootstrap it into something that is equally or even more impressive as a signature for where the City of Coralville is, who they are, and what they want to become. Slockett said his sense is that the people agree with the first part of what White said, that they are very proud of the Coral Ridge Mall, but he doesn’t think they want their taxes for the next 15 years to go for a tax-exempt hotel. White said they just re-elected the whole Council. Slockett said the people didn’t know they were going to do this. He reiterated that he didn’t think the people of Coralville would want to have their tax dollars go for a convention center and a tax-exempt hotel, adding that he isn’t sure it will be tax exempt. Lehman agreed that worked into the Coralville pride.

Harney asked, if the area of Interstate 80 connecting the 2 TIFs is such a question, why wouldn’t the Attorney General get involved? White said it isn’t really a State issue. White said, if they are audited and the Auditor finds an irregularity, then that might be different. He said the TIF law is pretty ill-defined. White said he could make an argument that it is OK. Coralville previously spent a lot of money on the Highway 965-Interstate 80 interchange in the right-of-way and the argument could be made that there would be more work in the right-of-way. He said the hotel is likely to be on the tax rolls, which will affect the cash flow and balance sheet. He said the hotel would likely be sold or leased to a private company to manage. Initially, Slockett said, they would create a tax-exempt entity. White said the fact that it is a tax-exempt entity doesn’t automatically control whether it pays taxes. He cited a number of non-profit entities that pay property taxes, based on the Assessor’s judgement. Slockett asked what the utilitarian reason for making the hotel tax-exempt is. White replied to get it off the ground and maintain control, unless or until they decide to enter into a long-term lease or sell it. White said they wouldn’t have the same control through the construction phase if the land was sold to a private entity. He said convention centers around the country typically are publicly-owned and tax-exempt; the hotels around them mostly are privately owned and pay taxes. Slockett asked, if it is taxed, will they be able to keep the receipts. White said it depends on how they set it up; if it is leased they keep the lease revenues but it would still pay real estate taxes, when it comes out of the TIF. Slockett said they can make more money per room if they don’t have to pay the taxes. White said there is a long line of cases analyzing whether an entity’s facility is taxable or not. His office has litigated a lot of those.

Kriz suggested moving on to reports from the elected officials. No reports were given.

The next meeting date was tentatively set for 9:00 a.m. Tuesday, April 16th, with an alternate date given, Wednesday the 17th.

Adjourned at 3:35 p.m.

Attest: Tom Slockett, Auditor

By: Casie Parkins, Recording Secretary