08-31-1983 - Workshop
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CITY OF EDGEWATER
FY83-84 BUDGET WORKSHOP
August 31,1983
CALL TO ORDER
Mayor Ledbetter called the workshop to order in the Community
Center.
ROLL CALL
Mayor David Ledbetter
Councilman Melbourne Wargo
Councilwoman Gigi Bennington
Councilman Neil Asting
Councilman Jack Spencer
City Attorney Jose Alvarez
City Clerk Connie Kinsey
Police Chief Earl Baugh
Present
Present
Present
Present
Present
Excused
Present
Excused
Also Present:
Karen Rickelman
Terry Wadsworth
Councilman Spencer suggested looking over the Water and Wastewater
Revenues and discuss the rates and Mr. Wadsworth's recommendations.
He began discussing the inflow infiltration situation with Mr.
Wadsworth.
Councilman Asting asked which areas are Mr. Wadsworth .most concerned
with as far as infiltration?
Mr. Wadsworth explained #4, which serves the northwest portion of
town and #7, which is the Flagler Avenue area. The engineers figured
the infiltration to be 40% or more. The major cause is the leakage
in the clay pipes at the joints. He explained what is done to .keep
the pipes cleaned out as well as possible.
Councilman Spencer stated this is one of the reasons there is a
need for more revenue, adding his concern is that the City does
not have a good long range plan for both the Sewer and Water systems.
There are a lot of options regarding plant expansions. He received
information on the cost of preparing a study in the order of $35,000.
He feels the City should have such a plan, he suggested this as a
project the Council could get done.
Mr. Wadsworth informed the Council this could be funded out of the
development fund. This does not have to be considered regarding
the rates. There are several payment options for a project like
this.
There was discussion among the Council regarding a new plant site.
and when would be the time to consider constructing another plant.
These are things a study would determine. There was also discussion
about the capacity of the plant we have now and whether it is running
at full capacity.
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Mayor Ledbetter stated the time element for expansion has not
lived up to the expectation of the feasibility report.
Councilman Asting stated before we fund a study like that we
should try to increase the flow of sewerage into our present
plant.
The low pressure sewer system subject carne up. Councilman Asting
pointed out this is experimental.
Councilman Spencer commented this system is going to obtain for
the City, first-class costs for the City crews and the home owners.
Also, since that affluent will be going into our present sewer
treatment plant, we will start obtaining knowledge as to it's
effect on the plant's operation.
Councilman Asting again commented he does not believe we need
to fund such a study now.
Councilman Spencer disagreed, stressing the Council should
consider this, however from what Mr. Wadsworth just informed
the Council, this does not need to corne from Fund 40.
Councilman Asting's view was not to spend money on a plan now,
that perhaps the next City Council, will not use. Councilman
Spencer's view was not to leave this job up to the next Council.
Councilwoman Bennington stated she agrees with Mr. Asting that
we should be using our present facility to it's full capacity,
however she agrees with Mr. Spencer that we should be planning
for the future.
Mayor Ledbetter reminded the Council these studies have been done
in the past and never implemented and it is his opinion this is a
waste of the tax payers money.
Councilman Asting stated he is not against a plan for the future,
he is well aware that this is needed, he just doesn't feel it needs
to be budgeted for in this fiscal year's budget.
Mr. Wadsworth interjected that there is more of an immediate
problem with the water plant than with the sewer. There needs
to be an expansion in the water sooner than in the sewer.
Mayor Ledbetter pointed out that we had a study made by the
consulting engineers prior to building the water plant, and
after only a couple of years another expansion is needed.
There was discussion that no one anticipated the amount of growth
Edgewater has experienced in the last few years.
Mr. Wadsworth answered the engineers have told him that when the
plant was built, they were told by the Council at that time there
was so much money to spend and that more or less controlled the
size of the plant they recommended. He added perhaps there could
be a different firm used for such a study. His opinion is that
a twenty-year plan is not worth the expense, he prefers a shorter
range plan, a five-year plan would be more realistic.
Councilwoman Bennington suggested waiting until we see some of the
results from the low pressure sewer system before a decision is
made about this plan...
Councilman Spencer explained further that if we decide to go with
a plan we should have the money available to act upon the results,
such as purchasing land, or whatever.
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Mayor Ledbetter reminded everyone that a referendum was defeated
regarding water , sewer and paving in the Florida Shores area. Now
we are talking about spending the tax money on a study for the
same thing.
Councilwoman Bennington expressed her appreciation for the people
not wanting the water or sewer, however the day is going to come
when the City will be forced by state regulations, etc. to supply
these services. We have to be prepared for this.
Councilman Wargo pointed out the E.P.A. should have reports re-
garding satuation points in the Florida Shores area. Also, there
should be funds available for these type of studies so that the
City does not have to pay it entirely. He suggested this be looked
into before we budget for it.
There was Council discussion of the need for the City to have a
planner and/or a City engineer, who would be responsible for grant
information and preparation of applications.
Councilwoman Bennington expressed her opinion to be in favor of
the second option on rate increases. The users charge; which
will affect the people using the most water, rather than the
elder people who are on fixed incomes and don't use a lot of water.
This type of increase may encourage conservation.
This option suggests keeping the base rate the same, and going up
15~ on the additional usage. Based on the population figure this
would generate $29,000 more revenue.
Mayor Ledbetter explained how the water bills are computed for a
trailer park, using his own water bill as an example.
Mr. Wadsworth explained his computations only considered single
family residences.
The question was brought out that all users should have to pay the
extra charge for the additional usage not just the residential. A
discussion continued regarding the multiple dwellings and it was
the consensus of the Council that the raise should affect everyone.
At Councilwoman Bennington's request, Mr. Wadsworth explained the
third option for a rate increase to the Council. This option is
basically concerned with a charge for the sewer connection, whether
the City hooks up the connection or not. Mr. Wadsworth explained
there was a confusion at the time the ordinance was prepared and
due to the wording, if the City does not do the connection the
charge is only $45.00. On the other hand if the City does the
connection the charge is $150. This option's intent is to eliminate
the $45.00 altogether and no matter who does the connection, the
charge will be $150.00. The suggestion was made to amend the
ordinance.
Councilman Spencer reviewed option one with the Council. He feels
this also should be a consideration. Mr. Wadsworth suggested the
Council may want to discuss this with the auditors, since they are
the ones favoring the rate increase on the base rate.
Mrs. Rickelman explained their reasoning on this is it is a guaranteed
figure and you can get a better projection of your revenue. If the
increase is on the extra usage you won't really know what revenue
you will get. people will be encouraged to cut back on their usage
and perhaps you won't be receiving too much more revenue.
Councilman Spencer stated that all three options could be used,
however he has not decided himself which one or ones he favors.
Although the base rate increase is a little less of a percentage
the idea of increasing the overage does tend to encourage conser-
vation and this is a good point.
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It was pointed out again, if the conservation takes place,
the revenue will not increase, and this is a consideration.
Also, an increase in the base rate and an increase on the
overage might be considered.
Mr. Wadsworth was asked what the revenue would be used for.
He explained the infiltration would be a large part of the
use, fire hydrants and a portion could be used for the lift
stations.
There was more discussion about using all of the options,
perhaps changing the amount of each increase, so as not to
disadvantage people so much. (10~ raise in the base rate,
10~ raise in the overage and doing away with the $45.00 fee
on the sewer connections,~ll connections will be $150.00)
Councilman Spencer asked for more explanation on the Fund 40
unappropriated obtained earnings.
Mrs. Rickelman explained that Fund 42 is not set up to receive
your connection fees, which is what it is supposed to take care
of. Mr. Wadsworth appropriated $65,000 of unappropriated retained
earnings to put in Fund 42 to fund those expenditures for capital
improvements. A reserve is sitting in Fund 40; in order to use it,
it has to be appropriated and transfer it to Fund 42 for the expenses.
Auditing procedures regarding this was discussed with Mr. Wadsworth
and Mrs. Rickelman. Perhaps Mr. Kish will go over this further when
he is present.
Councilman Spencer wanted pointed out that the City of Edgewater has
utility taxes as a major source of revenue for water and wastewater.
Other cities have these funds going into their general funds. He
understands this was decided by a referendum some time back. This
is one reason why our ad valorem rate is high; if this was in our
general fund our ad valorem taxes could be lower than they are.
Mrs. Kinsey informed the Council she did ask the City Attorney for
a legal opinion on what is involved to remove the utility taxes
from Ordinance 400.
Mayor Ledbetter questioned the right of this Council to betray the
people who voted to get the water and sewer system in. Ordinance 400
is a contract between the people and the bond holder. This is a pledged
revenue of the way we got the system in Edgewater.
Councilwoman Bennington stated she does not feel anyone intends to
change Ordinance 400, Councilman Spencer is just trying to make every-
one aware that one off sets the other.
Mrs. Rickelman stated that Mr. Kish's interpretation of Ordinance 400
is that the money has to go through Fund 40, but it doesn't have to
stay there, it can be transferred from 40 to 10.
Mrs. Kinsey said this is why she has asked for a legal opinion.
Mayor Ledbetter stated that after you have met your commitments
and you have to use some of the money, there is a provision for
this, however it has to be replaced.
Mrs. Rickelman added the money has to be replaced within one year.
She shared with the Council her conversation with New Smyrna Beach's
Finance Director regarding their operations. They make a transfer
from the utility fund back to the general fund every year and the
amount fluctuates.
At this time there was discussion regarding the mechanic's salary
being divided among the various departments. Mayor Ledbetter stated
when the mechanic was originally hired his salary was to be charged
to Street, Police, Water and Wastewater.
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It was determined this procedure was changed by the prior City
Manager. Mrs. Rickelman stated this might be something to re-
consider and make a change during our next budget preparation.
A five minute recess was taken.
Mr. Alex Kish, from the firm of Brent Millikan is now present.
He passed out an outline to the Council and began discussing
the depreciation process. The suggestion is that the budget
be prepared on GAAP basis (Generally Accepted Accounting Principles)
which includes depreciation and excluding various other items and
make adjustments so that you can convert it back to your funds flow.
He went over the outlines answering various questions from each
Council person, explaining that adjustments have to be made to get
back to the GAAP basis of accounting. It is indicated that the
accounting used in financial reporting should be the same basis
of accounting you use for budgeting.
Mrs. Rickelman explained that Mr. Kish has suggested that the
statements be redone so that they will look each month like they
do at the end of the year.
Mr. Kish explained there should still be certain other reporting
forms prepared which you need to use. Put your profit determination
budget together, then modify it back to a fund flow basis. Take the
revenues on a GAAP basis, add the contributions to this, which will
give you your total funds in. Take the expenses ona GAAP basis,
add back the principle payments on debt, capital outlay and exclude
depreciation, which will give you your total funds out.
Councilman Spencer questioned the figure for depreciation being
added in as an expense amount.
Mr. Kish stated the depreciation expense is equivalent of the
capital outlay plus the principle on an average on going basis.
This is handled the same way as a private enterprise would handle
it. General fund is not the same, it is almost the exact opposite.
He suggested budgeting on a profit measurement basis and adjust it
back to a fund flow basis for determining money to pay the bills.
He explained they like to see a municipality try to cut it even,
having just enough money to be able to handle the capital outlay
and earn a little to keep on going. Always being ready where the
demand does not become greater than the supply.
Mr. Kish went over the formula to use in determining the fund flow
amount with Mrs. Rickelman.
Although it is a very political issue, rate adjustments should be
considered on a yearly basis.
Mrs. Rickelman explained what the Council decided earlier regarding
the revenue and expenses in Water and Sewer with the note about the
retained earnings of a certain amount are being used to balance the
budget.
Mr. Kish stated this is the exact way it should
remember retained earnings and fund balance are
Fund balance indicates how much cash and liquid
but retained earnings is not always cash money.
is the net equity in your utility plant.
be done. You should
two different things.
assets are available,
Retained earnings
Mr. Kish did some calculating to determine the budgeted income to
be $2,538.00. He went over his formula with the Council, adding
that this is looking like an exactly balanced budget.
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At this time Mr. Kish examined the rate structure with the
Council. He spoke with them about the utility tax money
remaining in the enterprise fund until the debt service payments
are met, then there can be a transfer made to the general fund.
Presently it doesn't read that a transfer could be made.
There was discussion about how this has been handled in the past
by transfers to the general fund.
Mr. Kish answered a few questions about depreciation and how this
is determined over the years.
Councilman Spencer question Federal Revenue funds.
Mrs. Kinsey explained a Federal Revenue budget does not have to
be prepared prior to October 1.
Mr. Kish stated there is a time table involved, but you do not
have to have it done yet. The total in Federal Revenue is there,
it doesn't matter from what year it was left. He volunteered to
get some information on Federal Revenue budgeting and funding for
the Council and Mrs. Kinsey and Mrs. Rickelman. All the require-
ments are spelled out in this document, and these are the things
the auditors will be looking for at the end of the year.
Mrs. Kinsey explained to Mr. Kish that the City has not been
notified as to how much Federal Revenue funds we can expect
to receive for the year 1983-84.
Mr. Kish explained what the forms will look like, and if they are
not available at City Hall, perhaps a phone call to Washington
will be the next step to take.
At this time there was a recess until 2:00 P.M.
NOTE: Tape 4A recorded for about five minutes before the recess.
Then there was nothing picked up until the fifteen minute mark:
Mrs. Rickelman was explaining that $22,440 is reserved for equip-
ment, bringing the total to $215,560 of revenues actually available
to spend. She told the Council after adjusting the salary figures
the new figures are; Salaries and wages: $96,920, FICA tax: $6,840;
Retirement Contributions: $9,870; Life & Health Insurance: $9,500;
Workers Compensation: $7,500. These figures are based on what the
people are earning right now. She clarified that her figures are
the same as the Council's since she missed the last meeting when
this department was discussed. New total corning to $230,205.00.
A 50~ increase in the garbage rates will bring in $22,524 additional
revenue over the year. This will leave the revenues $7,879 above
the expenses.
The Council reviewed each line item for one that could be decreased.
Per Councilman Asting's suggestion $1,000 was cut from the Vehicle
Repairs line item category. There was quite a bit of discussion
regarding Repairs & Maintenance; it was explained that the majority
of the money in that category goes for the maintenance contract on
the computer, which is divided among all the furids. The figure in
Repairs & Maintenance was changed to $1,650. There was discussion
of the possibility of purchasing"a new truck at the end of this
year with the reserve fund money. The Machinery & Equipment category
was cut to -0-. Other Current Charges was changed to $150. Printing
and Binding was changed to $600.
Councilwoman Bennington brought out the point that the raises are
not going to be very popular. It seems like everything is being
increased. It was pointed out to her that the last time there was
an increase was two years ago.
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There was discussion among the Council members about the City's
expenses regarding the garbage and trash business itself. It
was agreed that there are not many more areas where cuts can be
made. All of this will have to be explained to the public.
After more conversation, it was agreed that a news release should
be prepared by the City Clerk to make sure explanations are made
to the public regarding all of the upcoming increase proposals.
Each Council member gave Mrs. Kinsey some wording for the release.
Councilman Spencer questioned the procedures that will be followed
at the budget public hearings. will all of the Council members
answer questions or is there going to be a spokesman for the group?
Councilwoman Bennington reminded the Council that we were going to
have the department heads attend the public hearings. Copies of
the proposed budgets are posted for public review. Mrs. Rickelman
told the Council in the past there were copies made available of a
cover sheet type explaining all the departments budgets and showing
a total budget. It was also suggested that a copy be made available
in City Hall to be signed out. Councilman Spencer suggested that a
recap, or summary sheet be attached to the agenda for the public to
review themselves during the meeting. He also recommended that
Mrs. Kinsey be the spokesperson for the Council. The questions
should be answered by her, unless they are particularly directed
toward an individual Council member.
It was commented that there have not been many people attending
these workshop sessions. This is where the discussion has taken
place.
Mrs. Kinsey informed the Council of a call she received from the
Auditor General regarding the usage of unappropriated fund balances.
His answer was that this is an individual Council decision as long
as there is no charter restriction spelled out. This opinion is
coming in writing. A copy of our charter section was sent to him.
Councilman Spencer asked if there is going to be an account set
up for the paving program assessments?
Mrs. Rickelman stated that there will be an assessment receivable
on the balance sheet side. As soon as the software is tested out
the bills will be ready. Then a public hearing can be held on the
assessments.
At this time the Council returned to the general fund departments:
Public Works: Mrs. Rickelman adjusted the salary figures to include
the changes determined while discussing the Refuse budget, explaining
to Councilman Asting why this is being done. New total comes to
$409,242.
Legal Counsel: Total now being $44,850. It was discussed that the
City has four law suits pending at the present time. There should
be more money allocated for these. The Council went back to the
attorney's original budget requests and added money for Communication
Services.
There was discussion again about taking $60,000 from the Public
Works to be spent in Federal Revenue. This will now leave the
Machinery & Equipment category at $12,000.
Councilwoman Bennington reminded the Council, this does not include
any increase for the salaries. Mrs. Rickelman explained the imple-
mentation of the pay plan plus 4% has been taken into consideration.
There was a break in the recording at this time (I believe there
was a short period without electricity) .
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In summary, Councilman Asting stated this is a final draft of
the proposed budget; the next item is to get the press release
out before the public hearing.
The Council talked about the loss of Mr. Tucker, which the City
recently experienced. Councilman Asting stated a City Planner
would be most beneficial to the City. Mrs. Kinsey agreed with
this, however there is a need for an engineer also.
The meeting was adjourned.
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