Loading...
08-16-2010 - Budget Workshop CITY COUNCIL OF EDGEWATER BUDGET WORKSHOP AUGUST 16, 2010 5:00 P.M. COUNCIL CHAMBERS MINUTES CALL TO ORDER Mayor Thomas called the Budget Workshop to order at 5:00 p.m. in the Council Chambers. ROLL CALL Mayor Michael Thomas Present Councilwoman Debra Rogers Absent Councilwoman Gigi Bennington Present Councilwoman Harriet Rhodes Present Councilman Ted Cooper Present City Manager Tracey Barlow Present City Clerk Bonnie Wenzel Present City Attorney Carolyn Ansay Present INVOCATION, PLEDGE OF ALLEGIANCE There was a silent invocation and pledge of allegiance to the Flag. MEETING PURPOSE The purpose of the meeting was to discuss the fiscal year 2010 -2011 budget. City Manager Barlow informed Council they were going to get into the budget and if they didn't finish their discussion tonight, they had a tentative date scheduled on August 30 to reconvene at a second budget workshop. Councilman Cooper stated he met with Mr. McKinney before the meeting to talk about many issues and he felt they needed two hours. They set a meeting up for Thursday. He would be looking forward to the August 30 meeting because they won't be able to get this done until he meets with him on Thursday. City Manager Barlow informed him when it got closer to 6:00 p.m. they could decide whether to meet on August 30 or for Councilman Cooper to meet with Mr. McKinney independently. Councilman Cooper felt there were five or six issues that the Council should be privy to that information too. Finance Director John McKinney informed Council they had their public hearings scheduled for September 13 and September 27 He delivered 1 Council Workshop August 16, 2010 to everybody, Council as well as the candidates, a balanced budget book on Friday at 6.36 mills. He informed Council he reduced the General Fund budget since July from $12,444,758 to $12,030,213, a decrease of $414,545, which was largely comprised of a reduction in debt service of $365,000. The other was a decrease in overall operating costs. The overall budget included the Step Plan and Stipend for the majority of the City employees. Mr. McKinney then went over the attached Powerpoint Presentation by describing the Revenue Outlook. Mr. McKinney pointed out there was a 16.3% reduction in assessed property valuation from 2010 to 2011. Mayor Thomas pointed out he had cut the budget more than that. Mr. McKinney stated they reduced their budget by $514,453 from 2010 to 2011. Mayor Thomas stated if they are going down another 16.3% from last year then he has had to reduce the budget that much more from last year. Mr. McKinney stated they also the last two years had used pretty much all of their available unreserved funds that had been saved from prior years. Even though their ad valorem went down $829,229 from last year to this year, they have maintained the level of service through the use of their unreserved funds. Mayor Thomas asked if they had dropped any of their services. Mr. McKinney informed him no. City Manager Barlow commented on the 16.3% reduction being in property taxes alone. Property taxes only make up roughly 34% or 35% of the General Fund budget. Mr. McKinney stated next year they were probably looking at another 17% decrease in their ad valorem assessed value. They have seen a combined reduction of 42% of their assessed value in the last three years. Councilman Cooper asked Mr. McKinney if had any statistical information regarding the additional 17% he was referring to. Mr. McKinney stated he reported to Council on July 12 that he attended a meeting that Morgan Gilreath spoke at where he said from January 1st to September 30 as a whole the County had already seen a property value reduction of 24 %. He was being optimistic it would be 17% for next year after having been projected at 17% the last three years in a row. The Property Appraiser's office feels pretty comfortable that it would level out in the following year with at least a 0% status quo. Mr. McKinney described the property values for this year as being just above the 2005 level but the General Fund budget is down almost $1.2 million from this time six years ago. Mr. McKinney then commented on the Budget Strategies Used for FY 2011. Councilwoman Bennington asked if maintaining the hiring freeze would be for the rest of the year so if they lose personnel they aren't going to replace them. City Manager Barlow explained every position 2 Council Workshop August 16, 2010 that is vacated would be evaluated to determine if they absolutely needed it or if there was a more efficient way to maintain the service without the position. Councilwoman Bennington was asking because of Mr. McKinney needing another person. City Manager Barlow explained when Kathy Cornelius retired, they held that position. They have restructured that position and wrote a job description for an accountant and that was included in the budget. Councilwoman Bennington asked about using some of the unreserved funds to help balance the budget. She asked how much they would have left in unreserved funds once they completed this budget and what they were allocating this year for unreserved funds. Mr. McKinney informed her they were allocating just under a million dollars, $976,000 in fiscal year 2011. They have used $320,000 in fiscal year 2010. Councilman Cooper asked City Manager Barlow to expand on the number of positions that have been frozen. City Manager Barlbw commented on the positions that were vacated this year alone in the General Fund and Enterprise Fund. He made mention of the operating budget being in the FY2005 era as well as the number of employee positions. He also made mention of the population and the business and service demands increasing. He then commented on the dedication of the City employees. Mr. McKinney then commented on the Budget Challenges with regard to Debt Reduction. There was a brief discussion regarding reducing the debt service. With $700,000 total debt issued, it will cost them around $50,000 a year. Mr. McKinney commented on saving considerably in the overall debt service by going with a balloon payment and paying it in five years instead of seven. City Manager Barlow commented on receiving clear direction from the Council a couple of years ago to work the debt down in the General Fund, which he felt was an indication they have worked that debt down. Mr. McKinney described the debt service as going from $1.5 million in FY2009 and FY2010 to just under $1.1 million in FY2011. They are looking to see a substantial decrease, down to $730,000 in FY2012. They only have four more years of debt, not including Fire Station 55, obligated by the General Fund. He further commented on always saying the level of debt held by the City is extremely low. How they are paying for it is a challenge but the overall debt is extremely low for a City of this size. Mr. McKinney then commented on the Budget Challenges with regard to Wachovia #26 and #34. He commented on having the opportunity to pay 3 Council Workshop August 16, 2010 this off early and asked for Council direction. If he paid it off tomorrow, the City would save $3,740.32 in interest. Councilman Cooper questioned paying it off with money in the General Fund and Stormwater Fund and not touching the Reserve. Mr. McKinney informed him it would touch the Reserve. He would be taking $79,933 out of the Reserve. He confirmed this was out of the Unreserved Funds, which would leave a balance of $232,436. City Manager Barlow reminded Council they were in a workshop and they could give consensus but he would be bringing it up under his report at the Regular Meeting where they could give formal approval there. Mr. McKinney informed Council the budget built was based off of them giving guidance to go ahead and pay it off. Mr. McKinney then described the Cost Allocation from Enterprise Funds, General Fund Capital, General Fund CIP and its Funding Source. There was a brief discussion regarding the YMCA air conditioning issues. Mr. McKinney then commented on the General Fund Unfunded CIP in next year's budget with regard to road resurfacing. They felt comfortable putting this off one more year as they look into the 2012 year, due to the reduction in debt service and possibly some other cost savings. Councilwoman Bennington asked Environmental Services Director Brenda Dewees if they let those four streets gb until next year what would happen to the other streets. She asked if she had them ranked according to cost or priority. Ms. Dewees informed her they were priority ranked. Councilwoman Bennington asked if they could really afford to put off any of the streets. Because of the four streets being listed at the bottom of the priority list she felt it implied they really couldn't wait another year for some of the other streets. Ms. Dewees explained if Council wanted to postpone it and not increase the millage rate any further or do the paving, they felt comfortable they could wait until next year. Councilwoman Rhodes pointed out she was talking about all of it, not just the four. City Manager Barlow informed Council none of the roads were in the budget and if they wanted to do it they would have to increase the millage. Mr. McKinney pointed out if they did the top six streets, it would be an increase in millage of .2419. Councilwoman Bennington wanted to know how much that particular cost was to each property owner. City Manager Barlow informed her every property owner's value was different. Mr. McKinney informed her assuming everyone was equal, which they aren't, it would be $12.20 for the year. 4 Council Workshop August 16, 2010 Councilwoman Rhodes asked if there was a way to make road resurfacing an Enterprise so they are billed equally for it on the water bill. City Manager Barlow commented on Daytona Beach doing something similar in the International Speedway area where they designate a district and they put an assessment on that district because it brings a value to that area so they would have to do a special assessment, which would require a voter referendum. Mr. McKinney informed the Council the additional millage to do the resurfacing would bring the millage rate to 6.6019. Councilwoman Bennington wanted people to realize the actual cost to them for them to do something like this. Mr. McKinney also pointed out at 6.36 mills they would no longer have the highest millage rate in the County. Councilwoman Rhodes expressed concern with having a whole new list of priority streets next year to be resurfaced that would be put off another year. She asked if this would be compounding a problem. City Manager Barlow informed her it was and that was the unique challenge of running a government in this recession. It's the balance of services and at the same time being able to take care of the taxpayers who are struggling too. He further spoke of doing the very minimum services they can possibly do until the economy turns. Councilwoman Rhodes would rather pay $1 a month now than $5 a month next year. Councilwoman Bennington expressed concern with putting the streets off and the Council as well as the employees having to contend with the people constantly complaining about it. City Manager Barlow commented on it being a balance. Either they pave them and make them happy there but they increase the millage and then they have the others that are unhappy if their streets didn't get paved and the millage went up. Mayor Thomas commented on everybody being in a bad situation right now. He knows the streets are bad because he has driven them but everybody is going to have to realize they are going to have to give up a little bit. Councilman Cooper commented on the program they had a few years back where they would pave three streets a year. He asked if they were to allocate this and get the ten streets done, what would they be looking at next year. He asked if they could get back on track where it is a workable budget item of only three streets. City Manager Barlow informed him these were the top ten streets and not the only streets that needed to be resurfaced. He also pointed out the streets were evaluated every year. Councilman Cooper asked if this was approved when the residents could look forward to having those streets done. City Manager Barlow commented on sharing costs if there are other projects going on in the area. They try to find the most efficient time to do it. 5 Council Workshop August 16, 2010 Councilman Cooper wanted to see this be a priority and done as quickly as they can. Mayor Thomas wanted each one of the Councilmembers to drive the streets so they could make a more cognizant decision. Councilwoman Bennington felt they needed to wait until next year. Councilwoman Rhodes agreed. Councilwoman Bennington spoke of bringing it up as an issue they needed to address. She wanted the people to be aware that part of the reason they weren't paying higher taxes was because they were cutting services. Mr. McKinney informed Council in 2012 they had to do a State Highway report. If they don't do it when the paving assessment falls off and they reduce any of their road expenditures, they do stand to lose some State revenue. It is important to maintain a certain level of road improvements, repairs, etc. because a lot of their State revenues are based on what their spending is. Mr. McKinney continued his presentation with regard to the Budget Challenges by describing Good News - Fund Reserves. He referred to Page 15, Tab 2 which shows the detail of the General Fund Unreserved $984,703 proposed to be spent in FY2011. Mr. McKinney presented a recap of the General Fund budget. There was a discussion regarding fees being established by various agencies and discrepancies in the budget with regard to revenue. Councilman Cooper stated he had many entries where they were showing the actual higher than what the new budget is. He asked Mr. McKinney to explain that. Mr. McKinney informed him he would need each line item. City Manager Barlow commented on State Revenue Sharings trending down and the revenues declining. Councilman Cooper asked about the Supplement Fuel Tax Refund showing an actual of $12,000 and they only budgeted $10,000 and they still have five weeks left. Mr. McKinney explained this is based on what the City has spent for fuel. He then commented on the City's fuel consumption being way down due to having newer fleets. Mr. McKinney continued his Powerpoint Presentation by describing the Enterprise Funds with regard to Rate Increases. On the Water /Sewer side, there is no way they can maintain operations and the renewal and replacement of their plant without an increase. There was a discussion regarding the residential consumer ratepayers seeing no change in their base rates since October 2008 which averaged 5 % . 6 Council Workshop August 16, 2010 Councilwoman Rhodes questioned the automatic increase they put in place to keep pace with the money they were losing. Mr. McKinney stated in 2009 they did propose an increase to stay with CPI but Council elected to hold the line so there was no increase in property taxes or rates. Mr. McKinney informed Council with the reduction in the SRF refinance they were able to set aside in this year's budget $250,000 in undesignated projects for emergencies. They had used every last dime of that money this year. They are at the point that they cannot continue operations without some kind of major capital improvement in their facilities. Mr. McKinney further commented on setting aside $500,000 in Refuse and $50,000 in Stormwater for the acquisition of a new Public Works facility. They have outgrown the old facility and they realize they need to start planning to acquire a new plan. He commented on the Water and Wastewater Plants needing to be expanded due to the future Restoration project, which would be paid for by impact fees. Councilwoman Rhodes asked if it was possible to raise rates to people who live outside the City. Mr. McKinney stated they already had an upcharge of 25 %. Councilwoman Rhodes asked him if they could raise it to 35 %. Mr. McKinney informed her they did a rate review of other agencies and some agencies do charge higher rates outside but they aren't doing it by the 25 %. He believed by Statute that was the most they could upcharge people outside the service area. He reminded Council their biggest outside customer was Volusia County. They use some of their wastewater capacity so if we increase their rates they are just going to raise our rates. Councilwoman Rhodes stated they use way more of our water and they pay less for it. She felt they needed to pay more for it so the people that actually live in the City don't have to pay as much. The County is always socking it to the City and she sees no problem with being reciprocal in that. City Manager Barlow commented on being in an agreement with Volusia County that established the wholesale rate. He spoke of having to notify them of a wholesale rate increase by April. Councilwoman Bennington asked if they increase their rates 5% to their citizens that it wouldn't affect the wholesale rate they sell it to Volusia County for? They can't increase that by 5% and still maintain the 25% level. City Manager Barlow informed her they do. Mr. McKinney informed her he would come back to Council with a fee resolution and that fee resolution includes what the rates are. Councilwoman Rhodes stated raise it 10% and leave it alone for us. City Manager Barlow informed her it would no longer be a wholesale rate and they would have to renegotiate a retail rate to the County. 7 Council Workshop August 16, 2010 Mr. McKinney referred Council to Page 108 of the Budget and commented on the consumption history in Edgewater radically changing in the last two years. Even at a 5% increase, it will bring in less revenue than they budgeted in the current year. He spoke of not realizing 12 months ago that the consumption would go down as much as it had. At the 5% they are only maintaining their current level of operations. There was then a discussion regarding why if the consumption goes down the cost doesn't go down. Mr. McKinney commented on their cost not increasing that much whether they treat 1,000 gallons of water or wastewater or 50,000 gallons. There was then a brief discussion regarding having less personnel if there isn't as much consumption and the plants already being at the minimum staffing levels. Councilwoman Rhodes wanted to find somewhere else to get the 5 %. Mr. McKinney referred Council to Tab 9. City Manager Barlow pointed out where they were headed with this with the reduction of 5% the only thing they could do was reduce some of the needed projects that have been put off for quite some time. Pay for it now or pay more for it later. He then commented on urging water conservation such as fixtures but this also reducing the product they are selling. Just because they reduce the amount of water they are selling it still costs about the same to treat what they do sell and have that availability. Councilwoman Bennington stated this is an Enterprise Fund so it's not like they are slapping a tax on them that they can't change. They can control the amount of water and sewer they use if they are conservative and watch it. Councilwoman Rhodes stated and they are obviously using less and are going to be spending the same amount of money for less water and she had a problem with that. Mayor Thomas asked Mr. McKinney how much longer he thought his presentation would take. Mr. McKinney informed him ten minutes. It was the consensus of Council to hold a second workshop on August 30 th . Councilman Cooper asked City Manager Barlow if they were further down the road with the negotiations they had ongoing for additional water usage with our neighbors to our south. City Manager Barlow commented on making progress with that. They were hoping to have it back before Council before the end of the calendar year. Councilman Cooper asked if the consumption would offset the increase that Councilwoman Rhodes was speaking about or if they would still be short. City Manager Barlow informed him it was a step in the right direction and they would have more customers. It wouldn't completely 8 Council Workshop August 16, 2010 offset the 5%. He cautioned Council because they didn't know where the negotiations would end that they balance this budget out based on where they hope that agreement may land. Councilwoman Rhodes asked if when they come back with this they could find out what other cities pay for water. ADJOURNMENT There being no further business to discuss, Mayor Thomas recessed the Workshop until the Regular Meeting to be held at 6:10 p.m. Minutes submitted by: Lisa Bloomer 9 Council Workshop August 16, 2010 Gtv of ATE ixrt. 1951 City of Edgewater Budget Workshop August 16, 2010 Revenue Outlook Historical Property Values & Ad Valorem Tax Yr FY05 $ FY06 $ Value Mills 664,137,932 - 6.45 812,943,450 - 6.45 FY07 $1,089,419,939 - 5.70 FY08 $1,195,974,542 - 5.20 FY09 $ 981,617,652 - 5.90 FY10 $ 822,343,254- 6.36 FY11 $ 685,099,203- 6.36 Tax $4,125,604 $5,045,677 $5,983,622 $6,053,935 $5,606,749 $4,968,598 $4,139,369 GF Budget $13,194,640 $14,136,921 $14,107,1382 $13,934,f557 $14,356,423 $12,544,666 $12,030,213 2 Revenue Outlook Revenue Outlook 2011 and Beyond • Property Tax Outlook - FY 2011 - FY 2012 -(16.3%) -(17.0%) -FY 2013 -0% 3 Budget Strategies Used For FY2011 • Eliminated positions • Maintained a hiring freeze • Proposed Step Plan &Stipend for employees • Reduced Operating Budgets • Used Prior Year Cash Savings • Reassessed and Adjusted CIP Projects — ARRA • Adjusted Reserves 4 Budget Challenges General Fund • 2005 - $9,8575233 • 2006 - $85883,985 • 2007 - $71618,910 • 2008 - $6,0703152 • 2009 - $4,6493000 • 2010 - $3,141,380 Debt Reduction Enterprise Funds • $37,0015425 • $3456255837 • $3157205482 • $28,841,268 • $253958,775 • $233796,360 Total Reduction $19,920,918 Reduction • $35348,836 • $47170,430 • $4,427,972 • $493033645 • $396703035 5 General Fund 02011 $111267420 •2012 $ 752,500 •2013 $ 495,943 Budget Challenges Debt Reduction Enterprise Funds •$115961456 •$11469,285 •$1,538,790 Reduction •$27722,876 •$2,2213785 •$230343733 Budget Challenges Debt Reduction Wachovia #26 and #34 $627,552.54 Outstanding Per Diem Charge per day $92.88 or $4,179 Interest to be earned $439.29 City Can Save $3,740.32 Money is available in General Fund & Stormwater. 7 Budget Challenges Cost Allocation from Enterprise Funds E General Water /Sewer Refuse Stormwater 2001 459,726.00 (279,981.00) (131,200.00) (48,545.00) 2002 600,000.00 (400,000.00) (150,000.00) (50,000.00) 2003 918,000.00 (712,000.00) (154,500.00) (51,500.00) 2004 755,000.00 (500,000.00) (200,000.00) (55,000.00) 2005 1,412,650.00 (1,150,000.00) (206,000.00) (56,650.00) 2006 1,408,500.00 (1,005,000.00) (294,000.00) (109,500.00) 2007 624,340.00 (624,340.00) 2008 - - - - 2009 70,736.00 (70,736.00) 2010 659,105.00 (451,855.00) (151,634.00) (55,616.00) 2011 672,267.00 (460,837.00) (154,667.00) (56,763.00) E Budget Challenges General Fund Capital -Two Police Pursuit Vehicles - $ 749457 -Code Enforcement Replacement - 17,275 •Total Capital FY2011 $ 91,732 Budget Challenges General Fund CIP -Station 55 -YMCA HVAC -Chamber Bathrooms $ 2,060,357 96,615 62,250 .30th Street Sidewalk 606,619 •Total Capital FY2011 $ 2,825,841 Fundinq Source -Debt Issuance $ 700,000 -impact fees -Grant funds -Other •rota 370,653 1,692,938 62,250 $ 2,825,841 10 Budget Challenges General Fund unfunded CIP STREETS TO BE RESURFACED COST $ Milla e Pine Tree Dr 442 to 12th $65,120.00 0.100 River-view Dr 8s Monson Rd $29,600.00 0.045 Evergreen Ave US to Riverside $17,390.00 0.0267 Mockingbird Lane $9,620.00 0.0148 Orange Ave US 1 to Riverside $18,500.00 0.0284 homas St US 1 to Riverside $17,020.00 0.0261 ildwood Dr * $79,032.00 0.1214 Lone Pine Dr * $11,544.00 0.017 Cherrywood Dr * $25,530.00, 0.0392 Ines Ede Ct * $9,768.001 0.015 11 Budget Challenges Good News - Fund Reserves As Stated by 9/30/09 CAF R 45,7261394 General Fund Reserves -Charter 15.77% $158975188 -Budget Stabilization $1,065,558 General Fund Unreserved •FY10 Budget $319,512 •FY11 Budget $984,703 12 Enterprise Funds Rate Increase -Water / Sewer 5% -Refuse 0% •Stormwater 0% 13 Enterprise Highlights Water & Sewer •$51000 - 3 yr sampling for inorganic, lead & copper •$20,000 - electrical improvement SE Storage tank •$20,000 - lighting improvements at WTP •$14,000 - DEP & DOH permit fee ($800) •$10,500 - increase in lime cost •$115,000 - removal of sand from BNRB •$27300 - compressor replacement •$37000 - ice machine replacement Refuse •$67590 - spotter training for employees Stormwater •$10,000 - herbicide spraying 14 Budget Challenges Enterprise Capital -Water / Sewer -Refuse •Sto rmwate r $128,965 page 135 $835,300 page 150 $300,000 page 157 15 Budget Challenges Enterprise CIP -Water / Sewer $1,376,153 page 143 •Stormwater $ 312,750 page 160 16