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Home My WebLink About05202009Budget - AgendaUfY QF ~~~~~ _ ~ _ r_,t, HOME OF PELICAN ISLAND 1225 MAIN STREET • SEBASTIAN, FLORIDA 32958 TELEPHONE: (772) 589-5336 • FAX (772) 589-5574 CITY OF SEBASTIAN CITIZENS BUDGET REVIE'~V ADVISORY COMMITTEE AGENDA WEDNESDAY, MAY 20, 2009 6:00 PM CITY HALL 1225 MAIN STREET CITY COUNCIL CHAMBERS 1. Call Meeting to Order {City Manger as Ex-Officio Member) 2. Pledge of Allegiance 3. Roll Call 4. Selection of Chairperson 5. Selection of Vice-Chair 6. Approval of Minutes of July 21, 2Q08 Meeting 7. Fiscal Year 2010 Budget Introduction -City Manager S. Member Discussion 9. Adjoununent Q1Yff ~~ HOME OF PELICAN ISLAND 1225 Main Street, Sebastian, FL 32958 (772)584-5330 CITY OE SEBASTIAN CITIZENS BUDGET REVIEW ADVISORY COMMITTEE MINUTES July 21st, 2008 @ 6:00 p.m. 1225 MAIN STREET, SEBASTIAN 1. The Citizens Budget Advisory Review Committee Meeting convened at 6:00 p.m. 2. Al Minner.led the Pledge of Allegiance. 3. Roll Call: Adrina Davis Todd Klitenic Charles Cardinale Thomas Burke Brad White Dwight Trout Ed Herlihy. Staff Members resent: AI Minner, City Manager Ken Killgore, Finance Director Nancy Veidt, Jr. Accountant -Mary Rosenthal, Acct. Clerk I/ Recording Secretary 4, Announcements: a. Election of Chairman Mr: Davis and Mr. Trout made a motion for Thomas Burke to be named the Chairman. Mr. Burke nominated Mr. Herlihy a vote was taken Mr. Burke was voted in as chairman by 4 votes. b. Election of Vice Chairman A motion was made for Adrina Davis to be named the Vice Chairman, Mr. Trout seconded the motion all members where in favor. 5, AQOroval of Minutes of July ib, 2007 Meeting: Mr. Oakes our former chairman moved away, Mr. Burke made a motion to accept the July 16, 2007 minutes in Mr. Oakes stead, Adrina Davis seconded the motion all members were in favor. b. New Business: Mr. Minner thanked the finance department and ail of the department head and management staff for their cooperation in getting the budget assembled and completed, Mr, Minner gave a power point presentation on the FY 2008/2009 proposed budget overview. (attached) In this overview Mr. Minner discussed a range of topics including property taxes, tax reform, rollback, reserve levels, general fund revenue projections, special revenue debt services and the enterprise fund. After Mr. Minner's presentation he turn the meeting over to Mr. Burke. Mr. Herlihy handed out a proposal to provide funds for additional police officers; the proposal also included statistical data and a request for 10 new police officers. (Proposal is attached}- Mr. Klitenic stated that we asked. for 4 new police officers fast year and got none and we are behind in police officers from other municipalities. Mr. Herlihy stated that just looking at the statistics we need 1.0 new officers. Mr. Kltenic stated that he agrees, and that we should also add a community center that would help all citizens and double as a hurricane shelter. Mr. Minner explained that police officers have to be funded by the general fund revenue. This impact of hiring officers is approximately $62,000 per officer. If we add the police officers we will have to increase the millage rate or use cash. Mr. Trout asked about the ratio of help from the Indian River County Sheriffs department, he feels any discussion should also include this ratio of help. Mr. Minner stated that even if we were at 3.1 officers per thousand ratio the crime rate would still be the same, because it is hard economic times. The response time would improve but the crime rate would stay the same. Mr. Davis asked about the health program and did we look into getting the best program. Mr. Minner stated that they looked at all avenues and our present program is the most affordable. Mr. Burke doesn't want to dip into the cash reserves at this time because of the economy, and feels that we need to reserve this money far catastrophic times. Mr. Klitenic asked what we are doing to bring in new revenues so that we don't have to increase taxes. Mr. Minner stated that we have reduced taxes and with Sebastian being mainly residential there are only one or two areas that will bring in revenue: the ad valorem taxes, state shared revenues and the Franchise fees. Mr. Klitenic asked about the community center and when could we look at it being built. Mr. Minner stated that council has no problem with building a new community center but the staff[ng and cost of maintaining the center is not feasible at this time we don't have the money for this. Mr. Burke asked about upping the millage rate to add extra police officers. Mr, Minner stated that if you go one bit over 3.343b you need a super majority vote. Or you go over and lose your state funding. State funding is important it's another 30% of you revenue. Mr. Herlihy said that he spoke to 2 council members who reacted favorably to his proposal, but stated that funding would cause a majority vote. Mr. Minner said that he spoke with Chief Davis and our officers are aware of the difficult time we are in and are out there giving it there all. Mr, White stated that he was an advocate of adding more police officers. He noticed that the ratio of police officers in Vero is larger that in Sebastian but the crime rate is the same, showing that our officers are doing a good job. He feels the numbers don't justify the need for 10 additional new officers. Mr. Minner agreed saying that 10 new officers would not necessarily bring the crime rate down, response time would be better, some crime may be deterred and services to the public would improve but it would not change the crime rate significantly, because of the climate we are in. Mr. Cardinale asked how the council responded to the request last year for 4 new police officers, Mr. Minner said that the council was in favor but wanted to wait to see what happen with amendment #1 and knew in January we wouldn't be able to add any officers. Mr. Cardinale~wanted to know what we are doing with the police vehicles as far as them being flex-fuel cars. Mr. Minner said that the police department has been clear in their request for combustion engines because of the need for patrol and issues during a chase. Mr. Davis the magic number is 3.36 if we.go over we need a majority vote. Mr. Minner that is correct. Mr. White said couldn't we plan to add 1 police officer per quarter and ease into additional officers. Mr. Minner said we would still have to raise the millage rate or a cut somewhere else to plan for the additional casts. Mr. Burke asked if it would be advisable to submit fio council a request for additional officers by raising the millage rate to a maximum of 3.7. Mr. Minner said that this would be a reasonable request. Mr. Cardinale asked the average of housing building permits. Mr. Minner said that at this time the average is about 2 permits per month. We need 20 permits per month to break even. Mr. Gllliams of 1623 US 1, is concerned with changing the millage rate. He feels that the committee should look at the budget and try to find extra monies. He stated that there are ways to increase revenue, cameras. at traffic fights to generate revenue from speeding tickets. Use volunteers to cover more areas to deter crime. We need fio reduce our spending 10% across the board. We need to look at all ways to reduce spending, A motion was made that council adopt the proposed i=YtJ9 budget with due consideration to increase police ofFcer staffing at a level of 2 officers per year for the next 5 years and encouraging a super majority vote to take such action. The motion was passed unanimously. Mr. Herlihy made a motion to give the council a modified version of the proposal for additional police officers. Motion was seconded and passed. Mr. Klitenic made a motion for Mr. Herlihy to represent the committee at the council meeting. The motion was seconded and passed. Mr. Herlihy will represent the budget committee at the council meeting and summarized the proposal far the council Mr. Minner stated that the budget committee representative would be on the agenda to present the proposal to the council. 7.) Adjourn Mr. Berke made a motion to adjourn the meeting at 8:40 P.M. All were in favor. i~~~. Thomas Burke, Chairman Citizens Budget Review Committee Approved at the Citizens Budget Review Committee Meeting TO: Members of the Sebastia City Council FROM: AI Minner, City Manag RE: FY 2010 PRELIMIN Y UAL BUDGET REPORT DATE: Tuesday, March 3, 2 09 CC: Members of the Budget Advisory Committee White officio{ calculations and estimates from the Indian River County Property Appraiser's Office are still four months off, this report provides a foundation for planning the FY 2010 Budget and responds to Council's request far early preparations. As of this writing, I remain optimistic that the FY 2010 Budget can be adopted without increasing ad valorem taxes. However, accomplishing that goal will not come without difficult choices. This report includes revenue estimates that continue to decline, while expenses continue to . increase. Further, this report provides 10 Budget Relief Measures. To balance the budget in responsible fashion, it will require that a11, some, amended or blended portions of these measures be considered. While some of these budget measures may seem severe, they provide avenues to avoid the harsher consequence of (1) increasing taxes; (2) reductions in force; or (3} significant reserve spending. REVENUES, EXPENSES AND PROJECTED SHORTFALLS FY 09 experienced an 18% decrease in the City's ad valorem tax base (13% due to a fal[ in property values and 5% due to the additional homestead exemption). The City Manager's Office has been in contact with Indian River County officials, Indian River County Property Appraiser and the Sebastian Finance Department. Our best estimate is that property values will continue to decline in FY 2010 at a rate of 15%. Between personnel expenses that are scheduled to increase and the stated revenue shortfall there is a projected budget gap of $1,025,739. FUND REVENUE ! FY 2449 ~ FY ?494 FY 2449 se Fees _____ _._. .............i...,.....-...__ 1,305,000_.':_._._._.._..1,331,100 !,_-•-• 1,357,722 Taxes ____..__-_•--,`------2,377,OOD-I-__--- 2,424,540 ..~-_ 2,473031 s and Permit ~ 55,200 56,304 i 57.430 al Grants 41 Shared Revenue 2.b11 `Charges for Services 327,301. 333,847_ ; 340,524 347 334 -Fine and ForfeRs 58,600 i 60,792 A 62,008 53,248 Interest Earnings _ .._... _ r.. 307,200 ._ .. ,_... -.--- 307 200 -_- _---. r.. -- 307 200 I _____.. 307 200 Rents and Royaftles ; _ 95,500 ; 97 410 99 358 ~ 101,345 Sale of Fixed Assets •12 500_ 12,750 13,005 ; --_ 13,265 ____. _..~_-.- Cantnbutions~Uonetions __.____-_._,_..._._-_ -_-.-__... _. 37,900 .. _.... 36 658. . _- -_.__..L.. _.___ r 39,481 _.._..... _.__- . : 40 220 ...- . .._,....L._. .. Other Mlseellaneous _ _ 37 659 . __.....___.__38,412 ---._ - -- -- 39,180 -- - _-- _ 39,964 interfund Transfers 849,000: 849,000 849,000 849,000 ! :other Sources .. 61,400_ _ _ . -.. - _ 61,400. -_ -- ----• 81,400. , _ _ .. _ 81,400 -TOTAL tZEVENUES 99 830 747. 99,999,_37 90,878,fi3II I EXPS -All General Fund ...._..-.... .. ..__..._-- ... ...... ........ . 7165 430 _....... -.1 _.-...,1,. -. ,._.,. 7 305393 ..... ..._I. _.. _.i~ .. 71524,555 ._.. _. 7 750 291 ..._..._.1___.L__... ~, EXPS -Police Department „ ,4,685,317: _ 4,919,583 - _ 5~D67,170 _,__.5,279,165_; TOTAL EXPENSES ! 99,850,747 , 72,2?a,97G i?,591,725 ! 92,969,477 `: REVENUE EXPENSES $0 (~1 02x,739 ~ _ ($1,713.027) . ($2,162,9o7j This trend continues and deepens, with a projected decrease in revenues by 10% for FY 2011 and 5% for FY 2012. TAXES, R[F AND RESERVE SPENDING 85% of the Genera! Fund budget continues to rely on three primary sources of revenue - (1} ad valorem taxes; (2} State shared taxes; and, (3} utility taxes. Of these three sources, two (ad valorem and State shared taxes} are in steady decline. In preparing the FY 2010 Budget, three measures that can fill the entire projected deficit are not recommended. These issues are brought to your attention to offer perspective on the challenges ahead. 1. Ad Valorem Tax increase -Going into the budget process, a revenue estimate is made which decreases ad valorem revenue $637,944. This deficit is increased because without mitigation, expenses are expected to increase by $387,795. Therefore, to fill this entire $1,025,739 shortfall, the current millage rate of $3.3456 would need to be increased to $4.3284, costing the average borne owner approximately $97 in additional City ad valorem taxes (when compared to holding the rate at the same level for two years). The estimated FY 2010 Rollback rate is $3.9672 and the estimated FY 2010 Majority Vote millage rate is $4.0862. The Department of Revenue will announce the growth rate, which is used to calculate the majority vote millage rate, sometime in mid-April. For this report the growth rate was estimated at 3%, last year's rate was 4.15%. FY 70 M[LLAGE HEEDED i k_.._._.___. __.. ~..___..___.~.~~__~R Si{oRTFALL FY 14 tv1AJORITY VOTE I FY 10 ROLLBACK _ j FY 10 CURREIIT I -~ !FY 09 Assessed ---__ _,mm ~ _-..1,327,5751169 ______~_ 1,327,575,161 ;-- 1,327,575,169 _( __. 1,327,575161 I FY 19 EST Assessed ~i 1.128.438.887 i 128 ase 8A7 ! i 17A d'~i fiR7 !^ ~ 1'7G A9G CG'l i 4.640.116 4,611 387 'Ave Resfdei7iial Tax Increase { $97 i (~15] 1 (526t I lRAA1 l 2. Reduction In Force (RIFT - To reduce personnel costs in the past three years, several actions have occurred such as position freezes, position eliminations and early retirement by- outs. Over this period, total full-time employment with the City of Sebastian has decreased from 154 to 936 employees {12% reduction}. These actions have helped stabilize the budget, but a point is being reached ~vhere further RIFs :vill negatively affect service delivery. If the projected shortfall is filled by RIFs alone, 10 positions would require elimination from the General Fund. 3. General Fund Reserve Spending -The estimated balance for the General Fund Reserve Account (as of September 30, 2008} is $5,534,858. This amount is healthy. However, it has been subsidized by an approximate amount of $200,000 from the capital replacement reserve. In other words, while this is an increase from last year's $5,424,199, it is artificially high and will experience increased financial stress going forward as no other funds are available to "prop" it up. If this fund is used as a major balancing mechanism, reserve funds will be depleted quickly. The better plan for reserve spending is to use unrestricted cash to smooth out contingency shortfalls. This mitigates the larger unforeseeable problems associated with reserve spending and keeps the City more financially sound. 10 BUDGET RELIEF MEASURES FOR FISCAL YEAR 2010 The following are 10 recommendations for balancing the FY 2010 budget: 1. Temporarily Suspend the Community Redevelopment Agency (CRAI - In FY 01 the City created a CRA along the riverfront. That district generates a budget of approximately $500,000 by the City and Indian River County making an earmarked payment equal to the incremental assessed value of the CRA district. These funds can only be used to promote or develop the CRA district. If the City were to suspend this payment, those revenues used for CRA projects could be used to lessen the General Fund shortfall. While this option provides 25% of the projected relief needed to balance the General Fund, it does have some negative aspects. First, it returns to the County their $25D,000 contribution. Second, it potentially stops district capital improvement. There are ways to mitigate these shortfalls. For example, we could suggest to the County that their funds be used to bolster other county economic development funding programs. Also, other special revenues such as Qiscretionary Sales Tax or Recreation impact Fees could be used for riverfront capital improvement projects. Finally, as property assessments regain strength, the City can choose to re-start the district. This is one of the tougher budgeting choices, but it provides significant financial relief. EST SAVINGS - $275,000 2. Reduce FY 09 Daeration Expenses by 3% -Operation expense far the FY 09 General Fund are $2,692,653. While these were budgeted extremely conservatively without contingency, management staff will be asked to trim final expenses by 3%. Reductions can come from limiting travel, training, and other miscellaneous operations. Another area that may provide relief is fuel budgets were calculated at $4.OD per gallon. White same operational costs will be fixed, it is not unreasonable to assume some savings. Those savings can be carried into FY 2010. EST SAVINGS - $80,$00 3. Cost of Living Adiustment (COLA) Freeze for Department Heads and Police ChieflDenuty ChieflCaptains -Our policy is that management staff receives the same collective benefits as the CWA. The agreement calls fora 2% COLA, effective April 1, 2009. To save money this COLA will be eliminated. These employees currently earn aver $70,000 annually and there are 14 employees affected. Some supervisors fall into this Management employment category, but if they earn below $70,000 annually, their COLAs will not be frozen at this time. In addition, because the City Manager and City Clerk salaries have been frozen since April 2008, both employees met and voluntarily offered suspension of the City's family medical insurance coverage payment (effective April 1). The family medical coverage is a beneft afforded to these employees because it was negotiated in the Clerk/ManagerlCity employment agreements. EST SAVINGS-$18,800 4. Freeze Wages far Department Heads and Management in FY 2010 -While department heads will be asked to forgo the April 2% COLA, a salary freeze will also be required for FY 2010 which includes department heads and other management staff. EST SAVINGS - $88,243 5. Citv Attornev Savings -When City Council formally hired apart-time City Attorney in January 2009 they established personnel savings. In FY 09 the transition into the part-time position is estimated to be revenue neutral. However, in FY 2010, savings should be realized. EST SAVINGS - $75,000 8. Freeze Wages for CWA Union Members in FY 2010 - At the close of FY 09, the previous collective bargaining agreement with the CWA expires -encompassing all public works, maintenance and some administrative City positions. Of course, this option will need to be collectively agreed going into this summer. The alternatives are job loss and/or significant benefit reductions. EST SAVINGS - $107,428 7. Request Wage Freeze for PBA Union Members in FY 2010 -With the exception of the Chief of Police, Deputy Chief and two Captains, a!I Sebastian Police Officers are members of the Police Benevolent Association (PBA} and have collectively bargained their benefits and wages. The PBA agreement is scheduled to expire at the end of the FY 2010 (September 30, 2010). However, in light of the other City benefit reductions and pay freezes, City management may seek to request an opener to the existing PBA agreement. If the PBA agrees to these terms, it may make it beneficial for the new agreement which will be negotiated toward the end of FY 2010. This action may work #o mitigate future job loss and/or significant benefit reductions. While City Council direction has been to retain 39.5 officers, this policy direction may need to be re- visited in light of the current budget circumstances. EST SAVINGS - $143,951 8. Furlough Days In FY 2010 - In lieu of position reductions, the City should consider suspending work days or furlough days. This proposal will rotate days in which personnel are not required to come to work, but the employee will not be paid for the day they are not required. If every fu[[-time employee in the City has one day furloughed, the savings is $25,000. At this time, the recommendation is two furlough days. EST SAVINGS - $50,000 9. Reduce Retirement Contributions -The PBA manages a pension plan in which retirement contributions are dictated by (1) the actuarial report; and, (2} PBA agreement which is not expired. The City may have same management rights to reduce these payments now. However, for FY 2010 all other employees of the City receive a 9% retirement payment and that amount can be reduced to 8%. EST SAVINGS - $47,000 '!0. Wealth Insurance Benefit Modifications -While the City has worked to mitigate increasing costs of health insurance for our employees, this policy must be reviewed. Health insurance can still be provided to meet the collective bargaining agreement, but benefits under the plan could be modified. For example, the deductible could be increased which could Power premiums. Should this year's claims experience continue on the current positive trend, this action could lower overall health insurance costs. EST SAVINGS - $20,000 SUMMARY With these modifications, the FY 2010 budget shortfall is reduced to $84,910. Addressing this estimated shortfall is a more manageable task when additional circumstance and information present themselves. In addition, these steps bring out-year trends closer to balance. In summation, please feel free to provide input on these items and this office will continue to keep Council informed throughout the budget process. ADJUSTED i i itEVEIIUE FY ?009 FY 2009 FY 2040 ': FY 2011 FY 2042 ?Frenchtse Fees ~_.._..__.._._...~.;-- 1,3D5,000 _ - __ 1 305,000 .. _ 1,331,10_0 1,357,722 i _ 1,384 ~UtiltttesTaxes ~ 2,377,000 ! 2,377,000. 2,424,540_ ~ _2,473,031 ! 2,522 'UcensesandPerrrul ' ~_--------------- ----•-~- 55,200,`. ----- __,_55 ~ 200 __ _~ 56,304 I-- -- 57,430 '-- ----58 ,Federal Grards ~ 41 1529 ; 41,529.1 ---- - 42,36D '. ._ , 4307 i 44 SteteSharedRevenue_ 2,011 000 - ~ 2~011,OD0 - ~ ..__ r_ 1,910,450 . _ ____.__-~_ i,t362.__S6B9 ;_ ___.~ _ 1862 i ;Charges for Services -._ _ __. _ ,-- 327 301 i__ _ 327 3, 0? ~ _._ 33J847 , 3-_ _.___ 340y524 347 ;Fete and Forfeits i .._.__._...---.._- ...............-..._.._...-,.- 59,E00 ~_.• ---_.___.___._t ___ 59,S00 -__~. 60,792 ...._._...--....~ _ 62,pp8 3 ._... _...- r 63 IrAerest Earnings _.. ..........1.. _..._....307,200 i.._ ..-_.._307,200_i_ ._...__3D7,200.'_- __--303 7~Q0 I_ _..._307 Renls end Royalties ! 95,500 __ _____9x',500 ___ _____ _97,410 __ ___- _ 99 56 101 IS°leofFxedAssets '... -.-__.~~,5~..._. _._..._??,5~ t_ __-----12,750;-- ---__.-13 DS 13 Cortrlbu[ians~Donattwts _ 37 9DD 37,900 38,808 ' 39,431 ~ 40 i0ther tvliscellaneous 37 659 .37,659 38 412 , 39160 39 °Interfund Transfers 849 000 ; 849,OOb ' _ 849,OOD , 849,000 { B49 Other Sources _ _ 61,400 _ 81,400 i 81 400 01,400 ' 81 ;TOTAL REVEtIOES 11,83Q,747 17,830,747 11,199,237 I 10.878.698 10.506 DH APR COLA Freeze 0 ~ f18 8Dt]) 0 97~ Operattons SAVGS 0_~ t80,8DD) _ 0 - - ---- CRA Suspension .. ; (270 000)! ; Gty Attorney _ - 0 470 0001± CWAIMGT Retirement - _(#x,000);- _ - 'Suspend Workday (2j ! (a0 000) Health fnsurence ~ j~0 DDDj s TOTALEXPEIiSES 11,859,7x7 -11,731,147 11>Ba,l•i7 ; 11?84,747 71,284147 REVENUE-EXPlT15ES 50: $99,60D _(584,910);, ('~405,4~{9) (1~477,6271j