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HomeMy WebLinkAbout09082008Specialcm of ~"T ~: HOME OF PELICAN ISLAND SEBASTIAN CITY COUNCIL MINUTES SPECIAL MEETING -BUDGET HEARING MONDAY, SEPTEMBER 8, 2008 - 6:00 P.M. CITY COUNCIL CHAMBERS 1225 MAIN STREET, SEBASTIAN, FLORIDA Mayor Coy called the Special Meeting to order at 6:00 p.m. 2. The Pledge of Allegiance was recited. 3. ROLL CALL City Council Members Present: Mayor Andrea Coy Vice-Mayor Sal Neglia Council Member AI Paternoster Council Member Dale Simchick Council Member Eugene Wolff Staff Present: City Manager, AI Minner City Attorney, Rich Stringer City Clerk, Sally Maio Finance Director, Ken Killgore Airport Director, Joe Griffin Police Chief, James Davis Special City Council Meeting September 8, 2008 Page Two 4. CITY MANAGER UPDATE The City Manager said there are no updates at this time, that nothing has changed from the workshop, the budget is about $11.9 M, with proposed tax millage of 3.3646, and said he would like input on the proposed CRA budget tonight and would then bring it back for formal hearing and adoption at a CRA meeting on September 17, 2008. He went on the advise that the there is an unbudgeted amount for projects to go forward, and he has heard ideas from Council and through various discussions had heards items such as undergrounding the stormwater along .the west side of Indian River Drive in an amount of approximately $250,000, the Cavcorp property improvements brought up by Vice Mayor Neglia, and a permanent band shell or other improvements on the east side of Riverview Park brought up by Council Member Paternoster. He stated the unbudgeted amount is $292,556. 5. 1ST PUBLIC HEARING AND ADOPTION OF PROPOSED MILEAGE AND TENTATIVE FY 2007/2008 BUDGET A. City Manager Announcement of Proposed Millage Rate of 3.3646 Mills Which is 9.21 % Less than Rolled-Back Rate of 3.7060 Mills The City Manager announced the proposed millage rate is 3.3646 mills which is 9.21 % less than the rolled-back rate of 3.7060 mills. B. Mayor Opens Public Hearing on Proposed Millage and Tentative Budget Mayor Coy called for public input. Richard Gillmor, 744 Kroegel Avenue, inquired about the effect of three millage rates 2.99, 3.36, and 3.17 and the City Manager advised him of the effects. He said he was in favor of going to 3.17 mills and using some reserves if it is a one-time thing. Jennifer Weiss, 1061 Louisiana Avenue, Sebastian, said nothing is being done to reduce the budget or stabilize it, contrary to Mr. Neglia's plan to raise taxes, she fights to stabilize them. Mayor Coy gaveled, gave her a first warning and said this cannot be a campaign speech and that we are hear to discuss the budget. Ms. Weiss suggested use of volunteers, xeriscape for public land, and was surprised to see a millage rate of 3.3646 mills because it is a large increase. She said she would like to look at the multitude of opportunities we have for the community, but she had not looked in depth at the budget so she can't take questions on it. Damian Gilliams, 1623 US 1, Sebastian, said he understood that Mr. Neglia wanted to raise taxes and the only who wants to hold taxes down is Mr. Paternoster, and Ms. Simchick is the only one close to 2.99, so it is not out of line to point that out. He asked to give people slack when they come to the podium because we want more people to Special City Council Meeting September 8, 2008 Page Three get involved with the community. He said we should use the contingency fund to balance, Mrs. Weiss was correct, people are hurting, said the taxpayers of this community want 2.99 mills, he can show them where all the excess fat is, recommended the citizens academy, and eco-tours in the 300 acres. Ms. Coy said for the record the previous member was asked not to campaign, and there will be no campaigning up here. Chuck Lever, Mulbeny Street, Sebastian, said he finds it interesting that we are looking for ways to ride on taxpayer's backs again, that he had suggested charging non- residents for parking to come fish for revenues, and cannot believe Council would pass on the tax to residents. Mayor Coy closed the public hearing. C. Amend Tentative Budget as Council Sees Fit, Recompute Proposed Millage If Necessary and Publicly Announce the Percent, If Any, by Which Recomputed Proposed Millage Exceeds Rolled-Back Rate (Any Recomputed Millage Can Only Be Decreased and Will Not Exceed Rolled-Back Rate) The City Manager verified that the proposed budget includes funding for 39 1/2 officers and that COLAs and collectively agreed benefits have been programmed in. She said she would like to keep the 39'/z officers as budgeted regardless of where we go with millage. She said $5.4 million in reserves is almost double than the recommended amount, with a 2.99 millage rate $470,000 would have to be taken from reserves, that she thought 3.36 was too high in these economic hard times, and that previously she was comfortable with 3.17. She said that if we are willing to give a company $285,000 for a custom building for one business, and for economic development for small business owners and homeowners without homestead she would be willing to give them $470,000 out of reserves and keep 2.99 millage for this year, noting that amount is only 20% of our contingency fund overage. She said in the interest of small businesses she was in favor of 2.99 mills at this time. Mr. Neglia asked the City Manager if we take $500,000 out of cash reserves and we keep the millage at 2.99 will cash reserves stay lower and will we be able to recover in the next couple of years. The City Manager responded in his opinion if you go to 2.99 and you use reserves to balance the budget your ability to recoup those funds would be difficult and would probably not recapture it in 2010 and it puts the City in a more precarious position. Mr. Neglia said he thinks the $500,000 might be the way to go but would reserve judgment and hear what others have to say. Mr. Wolff said the convincing reason he thought 3.36 mills was appropriate was the fact that legislation has changed, we are trying to set a bench mark that will will try to work off of for future years and we won't be able to arbitrarily raise the millage as has been available in the past. He said tonight's turnout is indicative of the sense he feels from Special City Council Meeting September 8, 2008 Page Four people in community that it does not seem to an overwhelming burden. Mr. Wolff continued stating that we don't know when the $3 million reserve recommendation from FGFOA was set, that it may have been when gas was less, and that we have seen turbulent changes in our economy in the last six months, with the threat of hurricanes, rising costs for fuel, electricity, and the City has responsibility to provide a level of service. He said we are going to have deficit spending and will go to contingency fund and we will have to reach into our pockets for the next two or three years. He said the reserve does not have the buying power it had just two years ago, cautioned while it is always easy to spend what you've got, it is hard to save and we should not think that this is a one time thing. He said as community leaders Council hears people say we want lower taxes but then they say we want more services, we have had a relatively low millage rate for the last three years. He said it is far from a rainy day, that there are harder times coming, and to make any more cuts at this time we are going to cut our nose to spite our face. Mayor Coy agreed with Mr. Wolff because he hit all the reasons she wanted to hit, that this Council has consistently brought the millage rate down and tightened our belts and lowered taxes for the last four years, have hit rock bottom and are still providing services thanks to the staff and manager who are still providing services -and if we cut anymore we will not be providing adequate services. She asked staff to figure the effect of the three millage rates on a $200,000 house. The City Manager said the three millage rates would equate to City taxes as follows: 3.3646 - $504.67 3.1782 - $476.73 2.9917 - $448.76 He then presented a residential tax increase scenario on the overhead (see attached and explained it. He then presented the residential tax increase scenario in the growth years `04 and `05 (see attached. He said the `05 millage was set before anyone currently sitting here was on Council. The City Manager said last year the legislature set our benchmark at rolled back rate plus three percent and we came in below the benchmark and came up with 2.9917 millage. He said in his opinion he had suggested last year going beyond what the State was setting because out in the future we were going to see a decrease in property values and the potential effects of amendment one limiting our ability to regulate the millage would be capped or guided by mandated legislation. He said we went below the bar so if all this occurred we could go back and provide the same services by incrementally increasing the millage rate without affecting everyone with a tax increase. He said now the purpose is to establish a millage rate you can have and hold and move forward in the climate of the unknown without stepping back and every year setting the millage rate up and down. He closed by stating, in his opinion, 3.36 is the appropriate rate which provides tax relief to most and sets the millage to a level where you can hold it steady. Special City Council Meeting September 8, 2008 Page Five Mayor Coy said we need to save the reserve for a real rainy day because we don't know what is going to happen in these hard economic times and if we don't set a sustaining millage rate this year we could be cutting our nose off for the next year. She said we are still giving the majority of people a decent tax break again, and supported staff recommendation of 3.36 mills Mr. Paternoster asked the City Manager what he meant when he stated if we go to the 3.36 millage rate we can hold that steady. The City Manager said next year in fiscal year 10, 11 or 12 you can have a consistent millage rate instead of jumping back and forth. Mr. Paternoster asked with that millage rate will we be able to hire police officers and, and the City Manager said for fiscal year 09 it will be 39.5 and for fiscal year 10 it will be for whatever the assessments will be though we will probably struggle for 2010 to increase the police force because he sees another decrease in assessments. Mr. , Paternoster said so even by bringing it to 3.36 more than likely we are going to have a difficult time regardless of the situation maybe a little bit more than the 2.99. Mr. Paternoster said we are tied to the CPI no matter which way the economy goes and the City Manager responded it is not a true CPI but is a State formula where they will manipulate what they think a fair increase is, that they recognized if you don't have increased revenue per year you are going to fall backwards because of rising costs, so the State will come up with rolled back plus or minus whatever they think the cost adjustment will be, basically a statewide average on personal income. Mr. Paternoster asked him if the rate were to stay at 2.99, in his estimation how much of an increase could Council expect to give in the next budget year. The City Manager said this is a tough question because there are many variables. He said if we go to 2.9917 approximate ad valorem revenues would be $ 4.726 M, so next year you will roll forward or your rolled back would be whatever your millage rate is going to equal that $ 3.8 M. He continued if property values decrease another 18% your rolled back rate is going to get you from $ 3.1 M to $ 3.8 M of revenues which is an 18% deficit. He said his guess would be the State won't care that you dropped down your millage rate 18% but will just base it on the formula. He said if you go to 2.99 you would have to tax at 3.5 mills next year just to get back to $3.8 M next year, where right now you are at 3.3 at $ 4.2 M, and then if the State says you can only increase it 3% then you can only get to 3.08 not 3.5 and you are $400,000 in the hole before you can even start tacking on the half million you threw at it this year. He said this is the worst case scenario. The City Manager, in response to Mr. Paternoster, ran the same scenario based on 3.36 mills, stating if you have another decrease of 3.36, of another 18%, it will be less because at that number you're going to have to generate $ 4.276 M and if they say your rolled back is going to be whatever generated your $4.276 M plus 3%, now you will be able to get yourself a millage rate that brings you $4.3 M so that will allow you to take the increases that you put toward this year, the 39.5 cops and three ditches, and in a perfect world 3.36 mills is going to get you $4.3 M. Special City Council Meeting September 8, 2008 Page Six He said if you do that you've got $3 M in the bank that you can spend safely, you are going to have decrease in flow, and you can set it and slowly use that cash to stay steady until those market rates start popping up and then you can set increase or decrease your millage rate at the amount you think runs the City. Mr. Paternoster said then we will still play the up and down. The City Manager said you will play the game no matter what but the principle behind it is to keep it as steady as possible and not get into a situation that you are chasing your tail and you can never catch up. He said a speaker said the time to raise taxes is when the assessments are good and that is incorrect, that is what got municipalities in trouble because they didn't go to rolled- back then and instead maintained their millage instead of decreasing millage rates, which is how this Council was able to reduce taxes. He said Council is in a position that is has cut back as far as it can, and if you continue to cut back more, the services you provide are going to be harder to maintain going out into future years. He said his concerns are decreasing market, the inability to have that same millage rate bring you the same amount of value and to set it somewhere where you can keep it whole and keep taxes at least more consistent where you are at least providing the same amount of services you are providing today. Mr. Paternoster said in simplified terms, the $470,000 to even things out and keep the millage rate the same is really not the issue, but is if we don't establish the foundation of raising the millage rate to 3.36 we are not going to be able to raise taxes appropriately next year unless there a supermajority vote The City Manager said he did not agree with that because he said you can't say you are going to provide the services that are in the budget right now, and then take out a $ .5 M to pay for it, so you can lower the tax rate and then expect to catch all that up next year, because we are saying at the 3.3 number is the market is crazy, next year to keep 3.3 you may need to spend a little cash. He continued that based on what we've seen the last several years, there is so much volatility and we are making geusstimates on how the CPI is going to affect us, and we just do not know, and to arbitrarily go down to 2.9 is unfair to the accomplishments Council has made in the past. He said if you go to 2.9 you can probably hold the line but there is so much uncertainty, and 3.3 is a more conservative approach. Mr. Paternoster asked how much money is being saved by the average taxpayer with the addition of amendment #1, and the City Manager said fora $200,000 house the savings would be $75. Mr. Killgore agreed it would be $75, and if we increase to 3.36 mills that zeroes out the decrease for a homesteaded house. Mr. Paternoster said we are giving and then taking it away so basically we are putting the burden on the taxpayers. The City Manager said he did not think that was the answer. Mayor Coy cited page CML 2 chart in the budget book. Special City Council Meeting September 8, 2008 Page Seven The City Manager advised them to look at CML 2 and reiterated the figures in the table. He said on a $200,000 if you take off the 25% exemption from amendment #1 you now have a taxable value of $175,000 times the millage rate last year of 2.9917 you come up with a tax bill of $524. He said that same house most likely saw a decrease in its value from 07 to 08 and now we estimate the value is instead of $200,000 it is $174,000 which is a 13.5% decrease. He said these are assumptions based on facts from the tax collector's office. Mr. Paternoster asked again how much a benefit someone would get in round figures from the additional homestead exemption. Mr. Killgore said everyone who had homestead exemption got a $25,000 deduction regardless of the value of their taxable value which equates to $74.79; and with 3.36 for anyone with a house taxed at more than $203,000 their tax would exceed the benefit they got from amendment #1. Mayor Coy said in her TRIM notice her home assessed value went down significantly. Ms. Simchick said she is a homeowner, but business taxes went up, and business owners who lease will have to pass that on. She asked what the contingency fund was when the City Manager got here, noted other municipalities are digging into their contingencies at higher levels. She said she is not looking to recoup the funds we take out but kissing it goodbye, that the supermajority vote is always an option next year, and feels dipping into 20% of $2.4 M overage is okay with her. Mr. Wolff said he didn't believe in deficit spending, noting that just a few months ago the City's investments were in trouble and if anyone has a clear crystal ball step up. He said we are only kidding ourselves if we don't think we are going to deficit spend over the next year because costs are skyrocketing, that we have a conservative plan in front of us, the economy is in trouble and we've got to set a millage rate that represents a conservative amount, and that supermajority will never happen when there are elections at the same time as the budget is set because someone will always be concerned about their seat. He said he will be the exception and his taxes would go up. Mr. Paternoster said he agreed with Mr. Wolff most of the time but in any time anyone running would not want to raise taxes, said he understood his point but we are robbing Peter to pay Paul, and he is saying let's see what happens and maybe we won't have to raise taxes. He said he didn't believe in handing someone something and then taking it back with the other hand and we have to create a stimulus package for our community. He said it is time for one year to help our citizens and give them one break. MOTION by Mr. Paternoster and SECOND by Ms. Simchick to set the millage at 2.99. Mr. Neglia said he is concerned what will happen next year if we set at 2.99, we have to cut to the bone, and that we have cut the millage every year, and the citizens know we are out to do the right thing for them. Special City Council Meeting September 8, 2008 Page Eight Result of the roll call vote was as follows: AYES: Patemoster, Simchick NAYS: Neglia, Wolff, Coy Failed 2-3 MOTION by Mr. Wolff and SECOND by Mayor Coy to set the millage rate at 3.3646. Result of the roll call vote was as follows: AYES: Neglia, Wolff, Coy NAYS: Paternoster, Simchick Carried 3-2 08.046 D. Adopt RESOLUTION NO. R-08-15 -Proposed Millage Rate for Calendar Year 2008 -Final Public Hearing and Final Adoption Scheduled for Seetember 17, 2008 (Finance Director Transmittal, R-08-15~ A RESOLUTION OF THE CITY OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, ADOPTING A PROPOSED MILEAGE RATE OF 3.3646 MILLS FOR THE CALENDAR YEAR 2008; PROVIDING FOR CONFLICTS; AND PROVIDING FOR AN EFFECTIVE DATE. The City Attorney read R-08-15 by title. MOTION by Mr. Wolff and SECOND by Mayor Coy to adopt Resolution R-08-15 proposed millage for calendar year 2008, final public hearing and adoption set for September 17, 2008. Result of the roll call vote was as follows: AYES: Simchick, Wolff, Coy, Neglia NAYS: Paternoster Carried 4-1 08.046 E. Adopt RESOLUTION NO. R-08-16 -Fiscal Year 2008/2009 Tentative Budget -Final Public Hearing and Final Adoption Scheduled for September 17, 2008 (Finance Director Transmittal, R-08-16 Schedule "A"~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA ADOPTING THE TENTATIVE BUDGET FOR THE FISCAL YEAR BEGINNING OCTOBER 1, 2008 AND ENDING SEPTEMBER 30, 2009; MAKING APPROPRIATIONS FOR THE PAYMENT OF OPERATING EXPENSES, CAPITAL EXPENSES, AND FOR THE PRINCIPAL AND INTEREST PAYMENTS ON THE BOND AND OTHER INDEBTEDNESS OF THE CITY IN THE CITY'S GENERAL FUND, SPECIAL REVENUE FUNDS, DEBT SERVICE FUND, CAPITAL IMPROVEMENT FUNDS, GOLF COURSE FUND, AIRPORT FUND, AND BUILDING DEPARTMENT FUND AS PROVIDED FOR IN SCHEDULE "A", ATTACHED HERETO, ESTABLISHING AUTHORITY OF THE CITY MANAGER TO IMPLEMENT THE BUDGET; PROVIDING FOR SEVERABILITY; PROVIDING FOR CONFLICTS; AND PROVIDING FOR AN EFFECTIVE DATE. Special City Council Meeting September 8, 2008 Page Nine MOTION by Mr. Wolff and SECOND by Mr. Neglia to adopt Resolution No. R-08-16 fiscal year 2008/2009 proposed budget, final public hearing and adoption set for September 17, 2008. Ms. Simchick asked if we just adopted item E the last time. "(Editor's note: Per Ms. Simchick following the meeting she stated she thought Council was on item E budget adoption when this roll call took place) The City Manager explained that item D was for the millage and item E was for the budget. Result of the roll call vote was as follows: AYES: Simchick, Wolff, Coy, Neglia NAYS: Paternoster Carried 4-1 6. Being no further business, Mayor Coy adjourned the Special Meeting at 7:40 p.m. Approved at the September 24th, 2008 Regular City Council Meeting. Andn:a Coy, Mayor ATTE ~~ ~-~~ Sally A. 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