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2009.08.06_TC_Minutes_SpecialTOWN OF HIGHLAND BEACH MINUTES OF TOWN COMMISSION MEETING SPECIAL MEETING Tuesdav, August 06, 2009 4.30 PM Mayor Jim Newill, CPA called the Workshop Meeting to order in the Commission Chambers at 1:30 PM. CALL TO ORDER: Roll Call: Members present: Mayor Jim Newill, CPA; Vice Mayor Miriam S. Zwick; Commissioner Doris M. Trinley; Commissioner John J. Sorrelli; and Commissioner John J. Pagliaro. Also present: Town Attorney Tom Sliney; Town Manager Dale S. Sugerman; Town Clerk Beverly M. Brown; Deputy Finance Director Cale Curtis; Library Director Mari Suarez; Public Works Director Jack Lee; Police Chief Craig Hartmann and Assistant to the Town Manager Zoie Burgess. Pledge of Allegiance: The Pledge of Allegiance was given, followed by a minute of silence in honor of members of the military, both living and deceased. Civility Pledge: 'The Civility Pledge was recited by the Town Clerk. 1. ADDITIONS. DELETIONS OR ACCEPTANCE OF AGENDA Agenda accepted as submitted. 2. PUBLIC COMMENTS AND REOUE5TS Arlen Voress - 4403 Intracoastal Dr I would like to congratulate Dale Sugerman and Cale Curtis for the budget that they put together. This recession has slowed things down. The financial structure in this country is beginning to turn around. People will start buying again. The housing market will return. I personally believe, we need to try to give some stability to our employees. Some of the pain in this budget can be eliminated. The budget presented, indicates that we will have about $900,000 left over from this year's budget. This will make the unrestricted reserve increase to 5 or 6 million. This Town and its people have money. We are the 34`t' wealthiest in the country. Are we going to ask our employees to keep faith? We are not going to lay you off, but will not be giving any merit raises or longevity bonuses. Plus you have to pay more for your health insurance. We want our employees to know that we care. Town Commission Budget Workshop Minutes August 06, 2009 Page 2 of 6 3. DISCUSSION OF PROPOSED 2009-2010 BUDGET: Town Mana er Su erman -Each budget year has a distinct theme. The theme for this year's proposed budget, is "this is probably going to cause a lot of pain." For 12 years running, the total ad valorem tax rate has been set at a flat 4.0 mils per $1,000.00 assessed valuation. Two years ago (FY2007-2008), the Town Commission saw fit to lower the millage rate to 3.95 mils; a rate which included the prior voter approved debt service millage rate of 0.4283 mils to cover the first $8 million dollars of capital improvement expenses associated with the construction of the Reverse Osmosis Water Plant. Last fiscal year (FY2008-2009) the Town Commission lowered the millage rate even further to 3.85 mils, including the 0.4458 mils of prior debt service. The budget that is being presented is being advanced to the Town Commission with a proposed tax rate that is even less than the prior year's tax rate. But one thing must be pointed out is that the 2009-2010 final tax rate will also include new voters approved debt service for both the water plant debt service expenses and the new SR AlA water transmission main project. With the new voter approved debt service (equal to a rate of 0.4301 mils) added to the slightly reduced general operating millage rate, the overall proposed millage rate for FY2009-2010 would be set at 4.2725 mils. Despite the decrease in ad valorem tax revenues due to the downturn in the economy and deterioration of the housing market, the General Fund will not need to make an appropriation from fund balance to cover the operating expenses for the year. Based upon the recommended budget, the General Fund will be able to begin the year with a Reserve for Contingency of $368,891.00. The Reserve for Contingency is our cushion of un-assigned funds which have been appropriated, but not allocated. The Town has traditionally provided acost-of-living adjustment (COLA) for its employees effective on October ls` each year. The basis of the cost-of-living adjustment has been the Consumer Price Index. The April 2009 CPI index for the Miami area was -0.7%. I did not propose a reduction in anyone's wages. Because the budget is so tight, I am also recommending that the Town Commission eliminate any merit increases during the coming budget year, as well as eliminating Longevity payments to employees. If approved, the savings to the Town would be $41,891.00 in the General Fund and $43,345.00 in the utility Fund. I have put in the budget an amount that would be equal to a 1% increase in base wages for all non-union employees with the first payroll to fall after the beginning of each quarter during the Fiscal Year. The cost to the Town for making these payments is equal to $18,401.00 in the General Fund and $18,460.00 in the Utility Fund for a total cost of $36,861.00 to the overall budget. The proposed budget does not request any additions to the number of personnel working for the Town; however, the Police Department has asked for a modification to the structure of its organizational chart. The Police Chief has asked that we eliminate the Patrol Officer/Detective position and put back into the organizational chart the position of Lieutenant. Part of the effort to balance the budget also involves a recommendation to modify the health insurance benefit program. Currently, the Town pays most of the cost of premiums for Town Commission Budget Workshop Minutes August 06, 2009 Pale 3 of 6 employees and their dependents, with a modest employee match for those employees who have one of the plans for dependent insurance coverage. The Town pays 100% of the premiums for all full-time employees, including health, dental, vision, life, and short-term and long-term disability insurance. Employees who have dependent insurance pay a minimal amount toward the dependent portion of the health insurance, based upon the type of dependent coverage. All employees pay 100% of the dependent premiums for all insurance other than the health insurance coverage. Page nine of the proposed budget lists six different scenarios' on how the Town can pay for the health insurance offered to the employees. It is important that the Town Commission weigh in on this issue for two reasons. The first being a cost savings and the second being an equity issue. This will be the first year that the Utility Fund does not need an injection of cash from the General Fund to cover its expenses. The Utility Fund budget, has been drafted such that there are no excess revenues over expenditures. With the infusion of cash to the Utility Fund from the voter approved ad valorem taxes, it will be possible to lower the water rates. A rate study is being conducted and the results of that rate study will be forwarded to the Town Commission. The proposed water rates would not take effect until January 2010. While the rate study will show that the water rates can be reduced, the opposite is true for the sewer rates. The City of Delray Beach has raised their sewer rate charge to the Town of Highland Beach by 17.36%. The increase in wholesale rates by the City of Delray Beach will need to be offset at the retail level with the Highland Beach customers. Capital improvements will not be funded as an operating expense in any of the budgets, because there are not enough current operating revenues available to support capital purchases. All of the capital improvements recommended in this proposed budget will be taken from the respective fund balance of the particular fund needing the capital item. 4. COMIVIISSION QUESTIONS & DISCUSSIONS: Mayor Newill -Part of the problem with the medical, is that the insurance rates have gone up but the employee's contributions have not changed. In addition, there is an inequity between the family coverage and employee's only coverage. Mana eg r Su erman -With the recommended changes to the insurance benefit, ten employees will be hit very hard. Mayor Newill - In listening to the presentation, there are four ways the Commission can make changes to the budget: 1) eliminate items; 2) raise taxes; 3) transfer monies from reserves; 4) lay off employees. I have a problem with the lieutenant's position being created in the Police Department. Do not think this is a good year to add another position and increase costs. Commissioner Sorrelli -Uncomfortable eliminating merit raises and making employees pay additional monies for their insurance. We are putting too much of a burden on staff. Mana er Su eg rman -This is the Town Manager's proposal not the Town Commission's. I started this proposal by dealing with the equity issue. The Town Commission does not have to accept the proposal. We are not punishing our employees. The Town Commission can make the pain go away by changing the proposed budget. Town Commission Budget Workshop Minutes August 06, 2009 Page 4 of 6 Commissioner Trinlev -The present health care for our employees needs to stay in the budget regardless of cost. Commissioners Sorrelli and Pa liaro also agreed. Vice Mayor Zwick -The "Reserve for Contingency Account" is actually unassigned money in a savings account. If it is necessary to transfer money out of this account into operating, that is why we have it. Agree with the rest of the Commission do not want to impact our employees. Mang er Su eg rman -Employees that are paid from the Utility Fund are paid from the water rates. The rate decrease will be less unless the Commission wants to fuse funds into Utilities. Vice Mayor Zwick -Commission needs to take the money from the General Fund to fund the additional costs of the utility employees. Mayor Newill - Am I correct that there are two votes, one for the budget and one for the tax rate? Rep1X -Yes. Can you vote differently on each one? Ren1y -Yes. To satisfy the Commission, how much of an increase would it cost to cover the cost of employees insurance. Town Mana er Su eg_rman - We would need an additional .04 mils to cover health costs. My recommendation is to decrease the millage rate by .05. Commissioner Trinlev -What is the proposed increased in building permit fees? Mana er Su erman -There is no proposal to increase building fees. I was asked to do a comparative study. If the Commission wants to increase fees, that is their decision. The Commission can only increase the fees to cover the costs of operating the building department. 5. PUBLIC COMMENTS AND REQUESTS RELATED TO ITEMS DISCUSSED AT MEETING Arlen Voress - 4403 Intracoastal Dr When I was Mayor, we were fined by the Resolution Trust Company. The Commission was concerned where we were going to get the funds to cover this fine. We took the money from the reserve for contingency. Nothing happened. That money is there in case of emergency. It is very unique for a town this size to have that much money in reserves. You should be using the money to get us out of a crisis situation. Do not get into a mode that you cannot touch that money. Mari Suarez -Library Director We all know that the economy is going through difficult times, but I do not agree that another 10% reduction in expenses needs to be undertaken. As a Department Head with the responsibility for the well-being of my staff, I think it is unconscionable that the Town should ask an employee who has a family to sacrifice $1,000.00 plus out of his or her monthly paycheck. Their only alternative is for their family to go without insurance. For those of us who are near retirement age, the loss of merit, longevity or cost of living raises will ultimately affect our Social Security and retirement benefits for all the years to come. I want to thank you for authorizing the inclusion of these benefits back into the proposed budget. Town Commission Budget Workshop Minutes August 06, 2009 Page 5 of 6 Jack Lee -Public Works Director The Public Works Department has cut operating expenses by 10% for each of the past two years. We accomplished that goal even though fuel costs, chemical costs and operating supplies have soared. The proposed budget is asking us to cut another 10% for the third year in a row. This won't be easy, but we are committed to provide the reliable services that the residents have come to expect. The proposed modifications to the health insurance program will adversely affect many of the Town employees who require dependent coverage. Employees with families would have to pay out-of-pocket $1,423.00 a month for family coverage. Some employees won't be able to afford this increase and will be forced to go without health insurance. This year's General Fund Balance carry-forward amount is $900,000.00. Would the Town Commission consider using $195,000 of this to keep our benefits? I urge the Town Commission to vote against the proposed budget as it will create unnecessary hardships for many of our loyal and dedicated employees. Thank you for giving me the opportunity to speak on behalf of the Public Works Department employees and myself. Beverly Brown -Town Clerk Last year, the Town saved $165,000 on our health insurance by changing insurance carriers. For the cost of our insurance to go down again, we would have to change providers again. If we change carriers every year, no one will want to provide health insurance for a group less than 50 people. I understand that there has to be an increase on contributions, but cannot it be done in smaller increments? Specific benefits were offered when we were all hired, please do not take them away, nor make the health insurance unaffordable for families. Thank you. Town Mana er Sugerman - Only the operating budgets were cut by 10%. The overall budget was reduced by 3%. The Department Heads are painting a picture that is not fair. Does the Commission want me to go back and put back the merit pay and longevity pay plans? Please instruct me now. Commissioner Trinlev -Let's do it. Vice Mayor Zwick - We may be a wealthy town, but we have people in crisis. Let's look at transferring a half a million from our unrestricted reserves. We are the Town of Highland Beach and represent our residents. Wish more people were here and say what they are in favor of. I am listening to the words of our past mayor and former commissioner, I will agree that this is a time of crisis and the doors of the bank should be opened. Let's fund it from our reserves this year. Commissioner Sorrelli -Fund 100%. Commissioner Pa lg iaro - I agree. Mayor Newill -Not everyone agrees. Town Commission Budget Workshop Minutes August 06, 2009 Page 6 of 6 6. AD.TOURNMENT There being no further business to come before the Commission, Mayor Newill adjourned the Budget Workshop Meeting at 6:15 PM. upon a MOTION by Commissioner Pagliaro; seconded by Vice Mayor Zwick. APPROVE: TTEST• Beverly M rown, MMC ~~. ~ ~~ Date Doris M. Trinley, Commissioner