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HomeMy WebLinkAbout07172012BUD AgendaCITIZENS BUDGET REVIEW ADVISORY BOARD AGENDA 6:00 P.M. TUESDAY - JULY 17, 2012 CITY HALL 1225 MAIN STREET SEBASTIAN, FLORIDA 1. Call to Order 2. Pledge of Allegiance 3. Roll Call 4. Approval of Minutes: A. Meeting of June 26, 2012 5. Budget Overview and Update by the City Manager 6. Board Review and Comments on Draft Proposed Budget - FY 2012/2013 7. Other Discussion/Questions by Committee Members 8. Adjourn Agenda Attachments: Minutes for Meeting of June 26, 2012 PUBL/C /NPUT FOLLOWS THE SAME PROCEDURES FOR PUBL/C /NPUT AS THE CITY COUNCIL, WH/CH /S /N ACCORDANCE W/TH RESOLUTION R-09-45. ANY PERSON WHO DECIDES TO APPEAL ANY DEC/SION MADE W/TH RESPECT TO ANY MATTER CONS/DERED AT THIS MEET/NG WILL NEED A RECORD OF THE PROCEEDINGS AND MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDINGS /S MADE, WHICH RECORD /NCLUDES THE TESTIMONY AND EVIDENSE UPON WHICH THE APPEAL IS TO BE HEARS. (F. S.286.0105) IN COMPLIANCE WITH THE AMER/CAN W/TH D/SABILITIES ACT (ADA), ANYONE WHO NEEDS A SPECIAL ACCOMODATION FOR THIS MEETING SHOULD CONTACT THE CITY'S ADA COORDINATOR AT 589-5330 AT LEAST 48 HOURS /N ADVANCE OF TH/S MEETING. �� ��I���y � HOME OF PELICAN ISLAND CITIZENS BUDGET REVIEW ADVISORY BOARD MINUTES TUESDAY, JUNE 26, 2012 - 6:00 P.M. City Council Chamber, 1225 Main Street, Sebastian Mr. Ed Herlihy called the meeting to order at 6:00 p.m. 2. The Pledge of Allegiance was recited. 3. ROLL CALL: Present: Dionna Farmer Ed Herlihy Tim Slaven n � Not Present: Gary O'Hara (Excused) William Flaherty Harry Marshall Christine Vicars Staff Present: AI Minner, City Manager Debbie Krueger, Administrative Services Director Ken Killgore, Finance Director Donna Cyr, Recording Secretary Also Present: Vice Mayor pon Wright Chief of Police Michelle Morris Approval of Minutes: June 12, 2012 Regular meeting MOTION by Mr. Marshall and SECOND by Mr. Flaherty to approve the June 12, 2012 minutes as written, motion passed on a unanimous voice vote. 5. Budget Overview and Update bv the Citv Manaqer: Mr. Minner gave his PowerPoint presentation of the proposed budget (see attached). He went over the budget calendar to make sure everyone feels comfortable with the process and dates. Mr. Minner did an overview of the City's expenses, revenues and went into more detail with what he sees as the budget weaknesses. Some of the weaknesses identified are the decreased property value (47% in the last six years), the drop in Utility tax and Franchise taxes, the decline in the LOGT (which means there is no money budgeted for either street paving or for the Go Line bus). Also, revenue is being depleted in the Stormwater Fund. He said there is equipment that needs replaced and money needed for the Stormwater Park operations. Mr. Minner went over the General Fund's three step test to determine if we are in a sound financial spot. 1.) Does the organization have enough funding to sustain capital purchases, without using reserve funding? The answer is no, he said. The City has used reserve funds to purchase capital for the last few years. Budget Advisory Meeting June 26, 2012 Page Two 2.) Does the organization have enough funding to sustain operational costs, without using reserve funding? Mr. Minner answered no, because the City's reserve fund has decreased on average by $130,000 per year since FY 07, although the organization revenues/expenses have been reduced by 18.8%. 3.) Does the organization have 25% of its annual expenses in reserve? He answered yes, as of FY 11 the City has 44.7% spending/reserve ratio but under the identified FY13 Plan, the current millage can not sustain the City operations beyond FY14. After going over these questions Mr. Minner's recommended action to the board is to set the millage rate to 3.7166 and increase the Stormwater Fees an extra $1.00 a month (from $4.00 to $5.00). Mr. Minner did do some checking of other communities in the area and the average rate is $4.98 a month on their Stormwater fees. He would suggest the board recommend to Council to set the DR420 to 3.7166. Also Mr. Minner let the board know there were still some unknowns that could affect the budget. The City will be going out for bids on Employee Health Care; General Liability & Workers Compensation Insurance; Janitorial Services bid and Ditch / Swale Maintenance contract bid. At this time Mr. Minner opened up the floor to questions and discussion from the board. 6. Board Review and Comments on Draft Proposed Budget — FY 2012/2013: Ms. Farmer questioned the $100,000 change of the updated forecast from the last meeting numbers to this one. Mr. Minner explained that revenues from franchise fees and utility taxes had been further adjusted because of concerns that we may have still been overly optimistic. Ms. Farmer also had questions on Capital equipment purchases because Mr. Minner said they could be increasing. He explained the Renewal & Replacement fund and said that all the repairs or replacements had been put off and now must be addressed. He gave examples of renovating the restrooms at BSSC; the need for resurfacing the tennis courts, replacing MIS equipment, a park mower and a truck bed need replaced, etc. Ms. Farmer asked for clarification on the line graph comparing the reserve funds with the millage rate. Mr. Minner explained the graph again and said if we don't change the millage rate we will be in trouble. Mr. Flaherty said he understood the recommended millage rate increase and Stormwater increase. He also asked for a summary of what will happen if we don't increase the millage rate — what are the consequences. Mr. Minner said that nothing would happen right away but eventually there were be decay in services; decay in roads; decay in the reserve funds; and the possibility of a decline in personnel attitudes. Mr. Minner also stated that finally when we did raise the millage rate it would be significant. Mr. Marshall asked if any more thought was put into borrowing money at such a low interest rate. He said that with $121,000 for Capital expenditures, we could borrow half a million dollars at the low interest rate and cover our projected expenditures for the next five years. Mr. Marshall wants to know where we could get the biggest bang for the buck with raising the millage rate. He mentioned that gas was coming down in price which is good for the economy. He asked if we increase the millage rate now what will Budget Advisory Meeting June 26, 2012 Page Three happen in the future when times get better. Mr. Minner answered Mr. Marshall by explaining that there are three issues that he wanted to hit on. One is bonding out for street improvements, gas prices and how they are affecting this and third looking into the future. Mr. Minner said that he and Mr. Killgore did consider borrowing money but have concerns, since there are no projected revenues available that can cover the repayment. There was discussion regarding raising the millage rate to use that money for street resurfacing and committing that revenue to making the loan payments. There was discussion on when we will hit bottom in the market. Mr. Marshall asked about Mr. Minner's long term projection and Mr. Minner thinks that the projection looks bad for a while and Mr. Marshall thinks things are going to get better soon. They decided to agree to disagree. Mr. Flaherty stepped out at 7:24pm and returned at 7:28pm. Ms. Vicars asked for verification on the franchise fees total. In the draft budget it is budgeted for $1.22 million but in the slide presentation tonight it shows the fee at $1.14 million. Mr. Minner said the changes were made last week. A revised copy will be posted on line. The new numbers for the Electric Franchise fees are $1.070 instead of $1.150 and the Electric Utility Service Tax is $1.260 instead of $1.280. Mr. Minner said he duplicated the numbers from last year and that is where the difference of $100,000 came from. Ms. Vicars also asked why the City Council cell phones expenses jumped and it was explained that there were two Council members with City cell phones and now there are three. Regarding Ms. Vicars' question about longevity on page 17 of the draft Budget, Ms. Krueger stated that because of the different time of the year, one starting in September, the longevity would only affects the budget slightly. Ms. Vicars asked about the health reimbursement accounts since it was new this year. She stated that last year the projected amount was $125,000 but this year we are only budgeting $70,000. Mr. Minner explained that there is a portion that is unused and that money will roll over into the new year. Ms. Vicars identified the Chief being at the meeting and thanked staff for all the hard work and sacrifice put into balancing the budget. Mr. Minner said he will get everyone a good copy of the updated tax options sheet. Mr. Slaven asked if the proposed budget was based on the 3.3041 millage rate and Mr. Minner said actually it was based on the rate of 3.3041 applied to our previously estimated taxable values, which was based on being 6% less than last year. As certified taxable values were even more of a reduction, additional adjustments will be required. Mr. Minner said there is no money in this draft budget set aside for street resurfacing in the General Fund at this time. Mr. Slaven questioned the Police budget where it showed budgeting two new officers but their budget is down from last year? Mr. Minner answered that we are down those officers and we've had those vacancies almost all year. We need the officers but the City wanted to wait until the collective bargaining agreement changes had been implemented. The hiring process has already started. Mr. Herlihy said revenue is down and property assessment is down and utility fees have gone down. Mr. Herlihy referenced a chart that Mr. Minner gave to Council members showing that the public safety costs are not being covered by taxes collected. Mr. Herlihy said he feels if we stay at the tax rate where we are now we will fall drastically in Budget Advisory Meeting June 26, 2012 Page Four the hole. Capital expenditures are needed because equipment is getting old. He said raising the millage rate is a tough thing to do but we don't have a choice. Vice Mayor pon Wright spoke saying that he had done some research and that the unemployment rate in Indian River County is well over 10%; that property values are down in some cases as much as 50%. Mr. Wright said he feels that there was a growing disparity in salary rates between the Public and Private sector. He also said that the cash in the reserve fund keeps continuing to drop. Despite an effort to achieve a balance between income and expenditures we have spent over $1,250,000 in our reserve fund since 2007. We can't sustain doing that for much longer. Mr. Wright said that now is the time to start looking at how the City spends its money and how personnel issues are addressed because we did a two year contract with our unions and they don't come up this year but next. He recommended that the board look carefully at the next 12 months but consider how the year after that is going to get fixed. That is the real threat to our financial stability. Mr. Wright did thank the committee for all its hard work. At the suggestion from the board Mr. Minner continued with his PowerPoint presentation. Mr. Minner discussed the Special Revenues such as the Local Option Gas Tax (LOGT), the Discretionary Sales Tax (DST) and the Recreation Impact fees. He also went over the Debt Service schedule and the Enterprise Funds. Mr. Minner explained DST funds are being set aside for quarter round improvements, the Airport Drive East project, allocating funds to complete the Working Waterfront, upgrade and glazing the windows at the Old School House, upgrading the rails on the Barber Street bridge, bridge inspections, a Police truck and Code Enforcement vehicles. Recreation Impact Fees will fund the BSSC multi-use field lights, playground equipment at the Creative Playground, Schumann Park playground equipment, and Community Center playground equipment. Mr. Minner went over the CRA fund and the Debt Service schedule. Mr. Minner stated that the revenue trend was improving at the Golf Course because of the steady play and fee increase. He did let the board know that there were some Capital Improvements needed such as repairs and replacement on some cart paths and the Club House needs painting and new signage. There will be more discussion at the CIP meetings regarding repairs to irrigation, tee box replacement, and greens replacement. He will get a better feel for those costs. Mr. Minner wanted to explain that the Airport has shifted its personnel to the General Fund, with its employees also helping out in Public Works. Mr. Minner explained that the Building Department had no projected loss for FY 2012. Mr. Minner's recommendation to the board is to ask Council to set the millage rate for the DR420 report to 3.7166. That way Council has some discussion room. Ms. Farmer asked for explanation regarding the Golf Course's salaries, bonuses, overtime and departmental supplies. She felt that they were a little out of line. Mr. Minner said he would look at the numbers again. Mr. Flaherty asked about the DST money being $2,645,000 in revenues then on page 83 the money is designated to certain projects, what drives this selection of projects? Mr. Minner said that goals and directives by Council direct the projects. He said debt gets paid first, drainage improvements and the %4 round projects are also important. Budget Advisory Meeting June 26, 2012 Page Five Mr. Marshall questioned if it would be a good idea to sell or lease out the Golf Course. Mr. Minner said that no study has been done to determine the benefits. Mr. Minner did say that the sale would probably not be an option because of the lease arrangement with the Airport. He will do some checking to see if a lease would work. Mr. Herlihy brought up the point that the Golf Course is an Enterprise fund and it has no effect on the General Fund, that it is self supporting. Mr. Minner agreed. Mr. Minner did say he felt the maintenance costs are fixed and reasonable, that the overhead was reasonable, and our rates are reasonable. Before he did anything he would want to have the lease reviewed by the FAA and do a market study on the fair value of the lease. Ms. Vicars asked about the Airport building and the percent of occupancy? Mr. Minner said the wings are leased out. He said he doesn't see a revenue generator out there. The rent from these businesses washes out the utility expenses and it's not a liability on the General Fund as when it was first built and was supposed to house the Engineering and Public Works Dept. Ms. Vicars said it was just an observation but it seemed like the Golf Course does pay for itself. Mr. Slaven asked what the proposed millage rates for area Cities were. Mr. Minner said we had done those comparisons in the past but we didn't have them right there. Ms. Krueger said she would get the board that information. Mr. Minner said that he thought the average millage rate around the state is at 5.00 mills. MOTION by Mr. Herlihy and SECOND by Ms. Farmer to recommend to City Council to set the millage rate to a maximum on the DR420 form at 3.7166 Result of the voice vote: AYES: 5 NAYS: 1 — Mr. Marshall Passed 5-1 7. Other Discussion/Questions by Committee Members: Mr. Herlihy reminded everyone the next budget meeting is Tues., July 17th at 6pm. 8. Being no further business, Mr. Herlihy adjourned the meeting at 8:29 p.m. Citizen Budget Advisory Board Chairperson Signature Date