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08-11-2008 - Budget Workshop CITY COUNCIL OF EDGEWATER BUDGET WORKSHOP AUGUST 11, 2008 6:00 P.M. COMMUNITY CENTER MINUTES 1. CALL TO ORDER Mayor Thomas called the Budget Workshop to order at 6:00 p.m. in the Community Center. ROLL CALL Mayor Michael Thomas Councilwoman Debra Rogers Councilwoman Gigi Bennington Councilwoman Harriet Rhodes Councilman Ted Cooper Acting City Manager Tracey Barlow City Clerk Bonnie Wenzel City Attorney Carolyn Ansay Present Present Present Present Present Present Present Excused INVOCATION, PLEDGE OF ALLEGIANCE There was a silent invocation and pledge of allegiance. A. GENERAL FUND Acting City Manager Barlow presented an overview of how the meeting would be handled. He then described the City of Edgewater 2008 Accomplishments by going over the attached Powerpoint Presentation. Finance Director John McKinney informed Council the format he wanted to follow was they were going to go through the highlights of the budget book, from the back to the front. He told them to ask any questions they had while they were going through the presentation. He informed Council the worksheets they were seeing came from the HTE system. He felt this was the perfect document to work from for the budget workshop planning because of the detailed information. As they moved into the hearing stages they would put in a nicer format. Finance Director McKinney highlighted personnel. In 2007-2008 they had budgeted 200 positions. They currently had 16 of those positions unfilled. He then spoke of the amount budgeted for FY 2007-2008 for salaries and benefits and what they propose would be budgeted for FY 2008-2009. He informed Council the past 12 month CPI average for the Southern Region was 4.6%. He then commented on the four Pension programs in the City and the contribution rates. He further commented 1 Council Workshop August 11, 2008 on benefits and receiving the preliminary health insurance with Florida Health Care for next year and it being reduced from 3.9% 3%. He spoke of seeing a 12% increase with MetLife for dental. have gotten four quotes for Life Insurance but they expected a decrease in premiums. to They Mr. McKinney informed Council they were able to maintain the 15% Cash Reserve by holding the 16 positions, which saved them over $800,000 for a 12 month period. He then commented on the increase in fuel prices. Mr. McKinney then commented on creating a Fleet Department due to no longer utilizing the City of New Smyrna to do the maintenance on the City vehicles. He spoke of seeing a decrease in their overall expenses by creating the Fleet Department. Mr. McKinney also spoke of separating MIS from the Finance Department and they have now been created as their own department under the City Manager. Mr. McKinney commented on creating a loss fund, a fully insured fund and a worker's comp fund to more accurately track in one place all of their insurance needs. Mr. McKinney the pointed out they had moved Animal Services from fund 449 to fund 105 as well as created fund 205 to account for the 2005 voted debt for the Animal Shelter. Mr. McKinney then commented on the funds that include the non- departmental charges that do not belong to a specific department or division but belong to the overall department. He further spoke about Department Division 1900 or 1910 and those expenses now going to 555. Mr. McKinney then commented on Tab 9 in the budget manual. He referred to Page 92 of the budget manual and the next 5-year CIP that was presented to him for inclusion in the budget manual. They are required annually to do a 5-year CIP program in conjunction with the Comp Plan. He commented on the CDBG road paving project and the grants the City currently has for ECHO and with FRDAP to fund part of the projects for Hawks Park and Kennedy Park. He also commented on Police impact fees and wanting to purchase the land adjacent to the Police Department for additional parking. He then referred to the money for the Animal Shelter being remaining money from the current year rolling into next year that was already designated bond proceeds towards the Animal Shelter. He also spoke of road resurfacing that was needed. He spoke of prior year appropriations that were left over in Fund 331 from when they sold the ParkTowne property last year. He then commented on the improvements that were done within ParkTowne including Rowan Way and Base Leg Drive and having over $700,000 remaining at the end of this year from those improvements. He was 2 Council Workshop August 11, 2008 presenting a balanced fund with grant proceeds and a few impact fee transfers but no impact to the General Fund. Mr. McKinney then referred to Tab 5 - the Capital Project funds. Exactly what they saw on Page 92 was on Pages 73-75. Councilman Cooper questioned Mr. McKinney saying they were going to have a $750,000 surplus in the highway fund for FY07/08. He wondered if there was anything in there where they might be able to get a couple of the really bad roads resurfaced. Mr. McKinney informed him as of two weeks ago, there was $848,000 remaining in fund 331. Acting City Manager Barlow informed him most recently they have prioritized the streets that needed to be repaved and attached estimated costs with that. That was part of what was in the upcoming budget to take the funds from last year and allocate them into next year and have them budgeted so they could appropriately disperse those into these projects. There was a discussion regarding a budget amendment needing to be done in order to start the repaving this year and it already being almost the middle of August and the fact that they were six weeks out from a new budget. Mr. McKinney felt they could probably start the process to get bids for an October start date. Acting City Manager Barlow pointed out they had an estimated cost of $489,000 to repave twelve streets on the priority list. Mr. McKinney continued his presentation by going over Number 8 - Capital Outlay. He described Capital Outlay as being anything over $2,500 with a useful life of less than ten years, which Council approved in the purchasing policy. CIP is anything over $25,000 with a useful of life greater than 10 years. They have requests for the current 08/09 year of $488,507. He highlighted, based on receiving funding, there was $398,000 that would qualify for issuance of a capital lease. All of that would be based on a five year program. The other $106,000 would be paid out in cash at the time of purchase. He then listed the request for replacement vehicles and equipment from the Fire Department, Police Department, Building Department and Leisure Services. He then commented on the program enhancements with regard to Fleet, Fire and MIS infrastructure. Councilwoman Bennington asked Mr. McKinney if had checked on the rescue truck. Mr. McKinney informed her it was an error he would point out when they got to the General Fund. Councilwoman Rhodes asked if Fleet would be repairing all of the City's vehicles, including the fire trucks. Acting City Manager Barlow elaborated on there being a lot of work that could be done in- house. He spoke of receiving a reasonable quote from Daytona Beach that has EVT certified mechanics and they would be able to do the 3 Council Workshop August 11, 2008 certified work on certain aspects of the fire apparatus that Fleet could not. Councilman Cooper asked if it was true that Club 92 is now offering full-loan services in the way of mechanics as far as putting the lights, sirens, radios and computers in police cars as well as maintaining Fire vehicles. Acting City Manager Barlow asked him if he was talking about PRIDE. Councilman Cooper mentioned the prison service having a program that they would do this free of charge. Acting City Manager Barlow commented on the City utilizing PRIDE in the past for many different projects and it not being free. He also mentioned PRIDE not being a certified shop. He also commented on concerns regarding tax paid inmates competing with local businesses. Councilman Cooper questioned if all the capital expenditures were approved and purchased what the time structure was before they got into another sizeable expenditure. Acting City Manager Barlow stated one of his goals going into next year was to have a complete capital replacement program mapped out. He also commented on setting money aside every year towards a capital replacement program. For the CIP program, which they are required to have by the Comp Plan, by December 1st they have to have an entire program put together and submitted to DCA and staff was currently working on that. Councilman Cooper further expressed concern with where the City sits presently. They are going to finance $388,000 over a five year period and make payments. He questioned at what percentage this brings them up to speed. Acting City Manager Barlow estimated greater than 50%. There was further discussion regarding staff putting together a good comprehensive capital replacement program and there being debt service that would come off the books in the next couple of years that would help. Councilwoman Rhodes felt City Hall needed to be included in the capital replacement table, long range. They have to plan for it. Acting City Manager Barlow informed her they would talk about that shortly. Mr. McKinney then referred to Tab 7 - Internal Service Funds. He commented on Page 77 with regard to MIS which was 100% transfer from the General Fund. He then referred to Page 78 and 79 and commented on the telephone expenses being centralized into one area and Capital Machinery and Equipment. There was a brief discussion regarding the spam the City receives and MIS blocking 8,000 a day. Councilwoman Rogers asked if the long distance phone calls were being tracked and what the process was for long distance phone calls. Mr. McKinney commented on not being able to divvy it up to that level of detail to charge it to individual departments. Acting City manager Barlow commented on having SUNCOM and getting a significant reduction 4 Council Workshop August II, 2008 by dialing 8 before making a long distance phone call instead of 9. He further commented on the lines being shared and not being dedicated to each department. Councilwoman Rogers questioned if they looked at the last two fiscal year ends to see if the long distance cost as a whole had gone up. Mr. McKinney spoke of having some months where the long distance was only $30, which he felt was insignificant. Councilwoman Rogers expressed concern with this all coming under MIS and not being separate under the individual departments in City Hall. Mr. McKinney listed the items that were being paid out of one department that are now under each individual department such as postage, office supplies, telephone, Internet, and FPL. He further spoke of over budgeting within a lot of the line items. Councilwoman Rhodes mentioned having unlimited long distance calls on her phone for a certain amount and asked if that was something the City could get. Acting City Manager Barlow commented on not being able to due to being a business. MIS Director Tim Sopko stated right now they are paying about 1.9 cents per minute for long distance and are receiving the local service for $19.50 per line per month. Councilwoman Rogers further expressed concern with everything being lumped together. She felt in the future they needed to be so specific as to where the funds were being spent and to see if there was any abuse of that. There was further discussion regarding these things being broken down by department in the past and now everything being lumped together. Councilwoman Rogers felt there should be some accountability somewhere along the way. Mr. McKinney presented an example of telephone calls being made and not having the capability of charging each phone call to each department. Councilwoman Rhodes commented on making sure long distance phone calls being made are not personal. Acting City Manager Barlow felt that came down to Supervisors managing their people. They don't have the resources to have that type of control. He spoke of years ago long distance phone calls being logged. He spoke of the calls being screened but as far as reconciling and attaching a person to each call they don't have the resources. Councilwoman Rogers stated they were going to start this new method of accounting for next fiscal year. Mr. McKinney informed her October 1st. Councilwoman Rogers suggested this time next year he could tell the Council the aggregate total since they have it in once place compared to the previous years so they could see if there is a change. She felt they should see something because if there is a huge difference from year to year they need to go back and monitor this more closely. She suggested he put something in place to monitor it. 5 Council Workshop August 11, 2008 Councilman Cooper stated in the entire budget package this is the only one area that they lumped together because of the simulation to MIS. All the other areas they have broken it down to give a much better account which was what Councilwoman Rogers was asking for. Mr. McKinney informed him he did telephone, Internet and Florida Power & Light. Acting City Manager Barlow pointed out they broke apart postage, advertising and office supplies. Councilman Cooper expressed concern with cell phones because that is uncontrollable. Acting City Manager Barlow informed him they control that as well. Mayor Thomas called a ten-minute recess at this time. The meeting recessed at 7:00 p.m. and reconvened at 7:10 p.m. Finance Director McKinney continued his presentation by discussing 502 - Fleet which started on Page 80. He spoke of there being two components to Fleet; vehicle maintenance and fuel, which he further elaborated on. What they budgeted October 1st of 2007 until today had doubled. From what prices were July 1st he felt they were going to be rather stable. He further spoke about budgeting the pump price and the City paying roughly $.25 less per gallon after they get the tax reimbursed so they had a cushion. From March to June they spent in three months what they had paid the six months prior to that. There was further discussion regarding what was budgeted in last year's budget for fuel and fuel costs encompassed in the Enterprise Fund reimbursing the General Fund. Mr. McKinney then commented on 503, the Loss Fund, on Page 83 which was a placeholder to charge all the various insurances to the appropriate place. Mr. McKinney then referred to 504 on Page 85 which was for their benefits portion of health, medical, dental and life insurance. Mr. McKinney commented on the 16 positions that were currently open. They have said that salaries and benefits can't be touched. It's budgeted as a whole. It is a use it or lose it. Because salaries and benefits are budgeted if a position is open in 08/09 they are going to still charge for that health insurance to the department so when it comes time for renewals, they might, because it was already budgeted have that to offset premium increases for new renewals. Councilwoman Rogers had a problem with having a higher millage because they are anticipating these 16 open positions as if they are filled and they are not. She doesn't like estimating and using the money and having a higher millage than what they need especially with what was going on with the economy and then charging the citizens higher on the millage when there are 16 unfilled positions. Councilwoman Rhodes pointed out this was not the salaries and just the benefits. Councilwoman Rogers asked if they had an estimate as to what the value 6 Council Workshop August 11, 2008 of this would be. Acting City Manager Barlow explained it was being charged to each department which pays into this line code for those insurances. Let's say the revenues comes in but not as much expenditure goes out because they are 16 positions shy that difference is saved in that account and would be considered as rollover next year or could be considered if the insurance goes up they have already built in that savings account to help soften that. He reminded Council next year's economy was predicted to be tougher yet. They are going to continue to cost contain all of their operational costs so they can help with that carryover the following year as well which would help maintain the millage rate which was certainly a goal. He was trying to get them in the habit of doing more longevity planning. Councilman Cooper agreed with Councilwoman Rogers and also expressed concern with charging the taxpayers for something they aren't getting. He felt it would be nice to have that dollar figure and what it represents. He felt they should take a hard look at it before they make a decision on how much it affects the ad valorem. Councilwoman Rhodes commented on how she figured her estimate to be around $140,000. Acting City Manager Barlow cautioned Council and stated hypothetically they say they aren't going to fill these 16 positions for six months and they drop the millage to accommodate that, they will have all of the employee burdens on the payroll for next year so they would have to increase the millage next year to accommodate. Councilman Cooper asked Acting City Manager Barlow if he had a long range plan of when he was going to start filling the 16 positions. He mentioned the population only increasing by 50 people from one year to the next year. Acting City Manager Barlow informed him part of it was getting through this budget season and from there doing some reorganization. He didn't have a definite date. Population has stabilized or decreased but they still have to maintain the level of service for the residents here. He spoke of the level of service being maintained and in some cases increasing. There was a discussion regarding whether or not the 16 positions would be filled and the current budget supporting those 16 positions. Councilman Cooper wanted the directors to justify and say when the positions needed to be filled and let Council approve them. Acting City Manager Barlow commented on working with the departments. He commented on having a ton of residential subdivisions at various stages of the permitting process. Edgewater Lakes is still building. He is working very hard to bring in additional commercial and business. Having those positions budgeted and allocated so when things start to change they are able to ramp government up to respond to those changes verses reacting after the fact. He spoke of creating a savings account they can't get to without coming back to Council. Councilwoman Bennington liked the idea of planning for the positions. They exist, they have existed and they have had them filled in the past. She spoke of the employees stepping up and doing more than 7 Council Workshop August 11, 2008 their share. To wipe the possibility of them getting a relief, she didn't think that was fair to them. Councilwoman Rhodes agreed. Mayor Thomas commented on what had been asked of the employees with regard to getting paid for their sick leave, they have cut their benefits and they haven't gotten a good raise. He asked if some type of relief was in the budget for the City employees. Acting City Manager Barlow informed him they had a 3% salary increase in the budget. It appeared countywide everyone was looking at 2%. The employees have given a lot and now they are doing without 16 positions. He hoped they were planning on something for the employees. Councilwoman Rogers asked how many positions they had open last year at this time. Acting City Manager Barlow informed her in the 07/08 budget they had 200 positions budgeted and this year they had 205 proposed and they had 16 positions unfilled. These are the same 16 they discussed last year. Councilwoman Bennington doesn't want to come back in the middle of the year and have to tap into their Reserve Fund. Councilman Cooper mentioned having a Florida State Statute that says they aren't allowed to take taxpayer money for services unrendered. Councilwoman Rogers stated they have a reserve and they didn't have these 16 positions filled last year. She questioned why they haven't filled them. Acting City Manager Barlow informed her it was merely financial. Councilwoman Rogers stated they had it budgeted so how could they not afford it. There was a discussion regarding employees that had contracts leaving and the cost of the buyouts for those contracts. Councilwoman Rhodes felt the City Manager, Police Chief, Fire Chief and Environmental Services Director positions needed to be filled. Acting City Manager Barlow informed her they were budgeted. Acting City Manager Barlow identified the 16 positions that were currently unfilled. Councilwoman Bennington felt the easiest way to pay for these and budget for these was to consider the open positions so when they fill them permanently through attrition everything moves up and they have the money sitting there. Acting City Manager Barlow suggested they readdress this topic in September. Councilwoman Rhodes was asking that a City Manager, Fire chief, Police Chief and Environmental Services Director be accommodated for. City Manager Barlow informed her they were. In the 08/09 budget they had 205 positions allocated, which included the 16 unfilled positions. 8 Council Workshop August 11, 2008 Mr. McKinney then commented on Tab 4 with regard to Debt Service starting on Page 67. Mr. McKinney then referred to Tab 3 with regard to Special Revenue starting on Page 36. He commented on Animal Control already being paid as part of the Police Department budget and it being moved from Police to their own department showing a transfer from the General Fund. Based on moving to the new Animal Shelter on Mango Tree Drive at the end of the year, they have reduced the total budget in this line item by $20,000. Acting City Manager Barlow commented on the dedicated volunteers that are utilized that help keep the cost at the Animal Shelter down. There was a brief discussion regarding the staffing at the Animal Shelter. Mr. McKinney then commented on the other Special Revenue Funds starting on Page 40. He further commented on grant funds, law enforcement proceeds with regard to forfeiture money, transportation impact fees, and police impact fees. There was a brief discussion regarding the purchase of the house next to the Police Department. Mr. McKinney then commented on fire impact fees. There was a discussion regarding only being able to use road impact fees to add new roads. Mr. McKinney then commented on recreation impact fees. There was a brief discussion regarding the grant for the amphitheater roof at Hawks Park. Mayor Thomas called a ten-minute recess at this time. The meeting recessed at 8:08 p.m. and reconvened at 8:20 p.m. Mr. McKinney continued his presentation by identifying the highlights included in Tab 2, the General Fund, starting on Page 12 with regard to State Revenue and Cost Allocation Revenue. He spoke of Council approving the setting of the TRIM rate at 5.9 mills. The budget being presented was set at 5.9 mills. They do have a balanced budget in the General Fund. He then opened up the floor to Council to answer any questions they may have. Councilwoman Bennington stated in their revenue they hadn't used any of the unappropriated funds to balance the budget and this was all based on the ad valorem and their other sources of revenue. Mr. McKinney informed her that was correct. Councilwoman Bennington asked 9 Council Workshop August 11, 2008 how much they still had in their unappropriated funds per their Charter requirement. Councilwoman Rhodes pointed out they had 16% last year. Mr. McKinney informed her the $1.9 million was still in the bank and had not been touched. Councilwoman Bennington asked if there was anything in the budget to increase that amount at the end of the year. Mr. McKinney referred to Page 32 and described based on this budget he was projecting to increase that by $142,000. Councilwoman Rhodes asked what 15% of the FY08 budget would be. Acting City Manager Barlow then commented on a City Hall replacement and that as of this date they had yet to locate a piece of real estate let alone purchase the real estate let alone start a building fund towards that. He commented on development out west and outgrowing City Hall. He informed Council if they wanted they could take some of the additional money, the $142,000 to be put into the Reserve Fund and start a City Hall Replacement Fund. Mr. McKinney informed her if he took out the $398,000 debt proceeds for the capital lease their 15% reserve would be $1,957,432 which currently today they exceeded that. Councilwoman Rhodes felt that could become the start of a City Hall fund and suggested they set a policy that everything over and above the 15% each year be added to the City Hall fund. City Manager Barlow suggested possibly setting a policy to budget $100,000 every year. There was further discussion regarding establishing a line item and making sure the money is put into this line item and used for City Hall. Councilwoman Rogers presented the idea of purchasing GEA Auto Sales at the corner of U.S. #1 and Park Avenue for a Police Department and expanding City Hall at its current location. Acting City Manager Barlow commented on waiting to see what came out of their Visioning Process. He agreed to look at this. Councilwoman Rhodes commented on this being property they are getting tax revenue on and putting a building that doesn't collect any taxes on this property. Councilwoman Rogers commented on the Park Avenue Corridor becoming a CRA District. Councilwoman Rhodes mentioned the City approaching the property owners behind City Hall up Park Avenue in the past and they weren't interested in selling their property. It was the consensus of Council to create a line item and put $100,000 every year into a City Hall building fund. Mr. McKinney informed Council it would be included in the budget he would bring to them for the first public hearing. Councilman Cooper commented on the department heads coming up with new ideas to generate additional revenue. He presented some examples of 10 Council Workshop August 11, 2008 where he spoke of capacity felt they could generate revenue. looking at different things to see to generate more revenue. Acting City Manager Barlow where they have the Councilwoman Bennington mentioned generating more revenue with Code Enforcement fines. Acting City Manager Barlow explained they were extremely aggressive with their fines and although they don't get a lot of them paid up front, there are a lot of liens being satisfied. He also commented on having a fine based system for Code Enforcement where citations are written with dollar amounts verses coming before the Code Enforcement Board to be assessed the fine. Mayor Thomas stated under the Federal Manatee Mitigation Program they were allocated so many wet slips in the river. He asked how many wet slips were left. Acting City Manager Barlow estimated there were 319, maybe 400 wet slips. Councilwoman Rhodes thought they should all be left. Acting City Manager Barlow commented on the City promising 300 boat slips to Edgewater Harbor for the next two years before they could get those back and there only being a handful left. He spoke of having no plan on the book on how they allocate what they have left or what they charge. He spoke of this recently being discovered, the boat slips being a precious commodity and this being one of his goals. Councilman Cooper commented on the budget not addressing the rate survey and it looking like they may have to raise some of their rates. He asked if they would have this information available prior to the budget being approved. Mr. McKinney informed Council he received an e-mail this afternoon from the Rate Consultant saying he was to the point he could make the recommendation for Water and Sewer but had a few more questions regarding Refuse and Stormwater and he wanted to finalize it this week. He informed Council the Rate Consultant would be making a presentation Monday night on his findings after which they would finalize the budget. He spoke of Council only missing Tab 6 in the budget book. There was a brief discussion regarding the revenue received in the Enterprise Funds. There was then a brief discussion regarding the detail included in the budget they had been presented and the time it saved because of Council not having to ask as many questions due to having the information in front of them already. CITIZEN COMMENTS There were no Citizen Comments at this time. ADJOURNMENT 11 Council Workshop August 11, 2008 There being no further business to discuss, Councilwoman Rogers moved to adjourn. 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