Tacoma GP&F Minutes 5-21-08

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Government Performance and Finance

Committee Minuteshttp://www.cityoftacoma.org!councilcommittees

Tacoma Municipal Building, Room 248,747 Market Street, Tacoma, Washington 98402

May 21,2008

Chair Lonergan called the meeting to order at 4:33 p.m.

Council Committee Members Present: Lonergan, Strickland, and Mayor Baarsma.

Council Committee Members Absent: Anderson (participated via teleconference at 4:33 p.m. andarrived at 4:45 p.m.) and Fey (alternate, arrived at 6:19 p.m.)

Other Council Members Present: Ladenburg (arrived at 4:35 p.m.)

Approval of May 7, 2008 MinutesMayor Baarsma moved that the minutes of the May 7,2008 meeting be approved. Seconded

by Council Member Strickland. Voice vote was taken and carried.

Council Member Ladenburg arrived and Mayor Baarsma left here, at 4:35 p.m.

8&0 TaxAt approximately 4:36 p.m., Finance Director Bob Biles stated today's discussion is regarding the

Business & Operating (B&O) Tax and its impact on the general fund.

Mayor Baarsma returned here, at 4:36 p.m.

Mr. Biles introduced Amy Palmer, Assistant Finance Director, Budget and Research, to begin thepresentation. Ms. Palmer discussed general fund revenue sources, stating that approximately20 percent of the total revenue is from business tax. Ms. Palmer then provided a breakdown, by year,of general fund revenue sources. She also noted that the percentage from property tax has beengrowing over the last few years. Discussion followed regarding the City's B&O tax rate, the rampingdown of rates in the past, other municipalities' taxes, and tax rate increases.

Council MemberAnderson arrived here, at 4:45 p.m.

Ms. Palmer introduced Jodie Trueblood, Tax and License Division. Ms. Trueblood reviewed a list ofthe local B&O tax rates of several different municipalities and their percentages of revenue by sourceand category. Discussion ensued regarding rate increases, how Tacoma compares to othermunicipalities, non-profit status, and the taxing of hospitals. Ms. Trueblood reviewed a chart showingthe percentage of total B&O tax by classification from 1997 to 2007, stating that there have been notrue increases except in the international investment category. She then reviewed the actual businessrevenue numbers for each year by category. She discussed the growth of the general fund and B&Otax, tax thresholds, and Consumer Price Index (CPI) increases for other cities. Discussion ensuedregarding CPI increases and the need for indexing to ensure fairness. Ms. Trueblood reviewed theapportionment provision for the B&O tax that became effective January 1, 2008, stating that so far



Government Performance and Finance Committee Minutes

May 21, 2008Page2

over 300 businesses apportioned their income. Discussion followed regarding impacts on businesses,benefits to the city, and budget allocations. Ms. Trueblood then discussed modifying Tacoma

Municipal Code Section 6A.30.065 "Jobs Credit" by adding a requirement for applications within 365

days of hiring a new qualifying position. Discussion ensued regarding refunds and the intent of theoriginal ordinance.

Mayor Baarsma moved for a "do pass" recommendation to clarify language in the Code to

clarify the original intent of the Jobs Credit. Seconded by Council Member Anderson. Discussion

followed regarding how long this credit will be able to be applied for, livable wage jobs, and benefi trequirements. Voice vote was taken and carried.

Discussion followed regarding the percentage of taxes collected from citizens versus businesses, the

B&O tax structure, the state income tax rate, and the City's competitiveness. Committee Members

then discussed their requests for next steps along with their concerns, including threshold issues,

apportionment, and impacts of adjustments. Council Member Strickland inquired about the findings

from the Service Tax Task Force Committee. Chair Lonergan requested a presentation regarding the

findings from the Service Tax Task Force Committee. Discussion followed regarding thresholds, the

Angelou Economics study, and the square footage tax. Mayor Baarsma requested information on thedifferent taxes being used in other municipalities and their pros and cons.

Classification and Compensation Study

At approximately 5:42 p.m. Joy St. Germain, Human Resources Director, stated that today's

discussion is regarding performance based compensation. She reviewed a broad definition of

performance based compensation and three examples of performance based pay systems.

Ms. St. Germain reviewed six elements that should be in place to get the City to a performance based

compensation system. Discussion ensued regarding trust, fairness, and acceptance of the system.

Chair Lonergan called for a five minute recess at 5:49 p.m. Chair Lonergan reconvened the meetingat 5:58 p.m.

Ms. 8t. Germain continued to individually review the six elements that need to be in place. Discussion

ensued throughout her presentation regarding building trust, annual performance reviews, and

incentives. Ms. St. Germain reviewed characteristics of limited and broad flexibility pay programs and

examples of each. She then introduced John Hankerson, Milliman Consulting, to discuss pay for

performance. Mr. Hankerson reviewed guidelines for performance pay and principals that shoulddrive the final pay increase decision. Discussion followed regarding management training, the

different pay flexibility approaches, and changes in market. Mr. Hankerson then discussed a sample

of a general merit matrix and reviewed examples of performance pay.

Council Member Fey arrived here, at 6:19 p.m.

Discussion followed regarding represented and non-represented employees, feedback received from

the unions, the City's existing pay system, retention issues, and performance incentives.Mr. Hankerson continued discussing pay for performance and pay scale examples. Discussionensued regarding what would happen once an employee hit the top step on the pay scale, what other

municipalities are doing, Tacoma Public Util it ies' incentive day program, and the risks of a pay for

performance system. Mr. Hankerson then requested feedback from Committee Member as towhether performance should matter for pay, and if yes, then how much. The Committee Members

agreed it should matter and discussed their concerns and ideas for moving forward. Council Member

Anderson requested Mr. Hankerson come before the Council at a future Study Session to discuss thefeedback received from the Committee. Public comment was heard during this presentation from

Alice Phillips and Brock Logan.



Government Performance and Finance Committee MinutesMay 21,2008

Page 3

Contract with Tall ShipsAt approximately 7:12 pm. Tansy Hayward, Assistant City Manager, provided a copy of the draftrequest for resolution and the draft agreement with Tall Ships for in-kind goods and services and

financial support. She then introduced David Doxtater, Joe Jadwin, and Stan Selden from Tall Ships.She reviewed the contract, stating that there has been a lot of conversation with Tall Ships regardingprioritization, funding allocation, and tracking costs. Ms. Hayward stated that for its investment in

Tall Ships the City will be designated as a sponsor, a number of free events will be offered to citizens,enhanced access for disabled patrons will be provided, and the City will have a booth at the event.She also stated that coordination between all departments, including Police and Public Works, andFreedom Fair and Tall Ships has been good. Discussion followed regarding guidelines that will beoutlined in the special event permit and other events on the fourth of July. Mr. Doxtater discussed theTall Ships event, stating that between July 3 and July 7,2008, they estimate approximately 700,000

attendees. Mr. Selden discussed the ships for the event. Mr. Jadwin discussed successes of theevent. Discussion followed regarding the fourth of July, Balfour dock, and coordination betweenFreedom Fair and Tall Ships, and access to the event. Sergeant Rob Jepson, Tacoma PoliceDepartment, discussed officer costs, staffing for Tall Ships and the fourth of July, the fireworks patrol,and how cost overages will be billed.

Council Member Anderson moved for a "do pass" recommendation to bring this contractforward to the full Council. Seconded by Council Member Strickland. Voice vote was taken andcarried.

Other Items of Interest

Mayor Baarsma provided the Committee with a copy of a proposed resolution regarding consolidatedsupport services for their review. Chair Lonergan stated that this item is scheduled for theJune 4, 2008 meeting.

Topics fo r Upcoming Meetings

Chair Lonergan stated that the next meeting, on June 4, 2008, will include presentations regarding

the compensation authority of the Tacoma Public Utility Board, consolidated support services, and theextension of the cable agreement with the Click! Network.

Public Comment

None.

Adjournment

Mayor Baarsma moved to adjourn the meeting. Seconded by Council Member Anderson. Onproper motion, the meeting was adjourned at 7:45 p.m.

Apnl Larsen, Office Assistant, City Clerk's Office



Tacoma GP&F Minutes 5-21-08

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