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2010.08.03_TC_Minutes_Workshop TOWN OF HIGHLAND BEACH MINUTES OF TOWN COMMISSION MEETING BUDGET WORKSHOP MEETING Tuesdav, August 03, 2010 4.30 PM Mayor Jim Newill, CPA called the Workshop Meeting to order in the Commission Chambers at 4:30 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 REQUESTS Arlin Voress -4403 Intracoastal Dr Want to congratulate the Town Manager for the good job that was done on the budget. Feel with a $10 million budget, the contingency of $200,000.00 is very low. Since we have five or six million in reserves, we need to transfer funds to bring the Reserve for Contingency line item up to $400,000.00. Also feel additional funds should be given to the library. Whenever you go to the library, you see residents utilizing the programs that it offers. Mari is always willing to work with the residents, and feel additional funds should be designated for books and an upgrade in the computer system. Commissioner Pa liaro - Do you have any numbers that you want to share? Mr. Voress - $20,000.00 for books and the ability to upgrade all the computers in the library to Windows 7, so probably about $50,000.00 for the upgrade. Town Commission Budget Workshop Minutes August 03, 2010 Page 2 of 8 John Caldwell - 2635 S. Ocean Blvd. The library budget is excessive for the number of people we have in Highland Beach. Elizabeth Susskind - 2629 S. Ocean Blvd. Have been a resident since 1985, and find this budget irresponsible. Resent that we only have 5 minutes to talk about the budget. There aze a lot of homes in foreclosure, need to start cutting salaries. Would like an explanation of why we are not cutting 10% off the budget. Mavor Newill -Your questions should be addressed by the Town Manager as he presents the budget. 3. DISCUSSION OF PROPOSED 2010-2011 BUDGET: Town Manager Superman -This is the first of two budget workshops which we will be holding during the month of August for the new budget yeaz which will begin on October 1, 2010. The second workshop meeting will be two weeks from today on Tuesday, August 17~' at 1:30 pm in these Commission Chambers. This presentation is about 20 minutes long. If you would allow me to make the presentation from beginning to end, I would appreciate it; and I will answer any and all of your questions at the end of the presentation. Of course, if I say something completely outrageous or wrong and you feel a need to stop me, please do so. If we can work through the entire presentation with you writing your questions down on a piece of paper, I would greatly appreciate it. I will not leave the room until all of your questions are either answered, or we make a commitment to do further research in anticipation of the second budget workshop meeting in two weeks. Let me start with a brief history of our Town's tax rate: From 1994 until 2006 the Town Commission kept the tax rate at a steady 4.0 mills. Beginning with budget yeaz 2007-2008 the Town Commission took efforts to lower the millage rate to 3.95 mills, and then the Commission lowered it again in 2008-2009 to 3.85 mills. The operating millage rate was lowered once again last yeaz to 3.3542 mills. But please notice that the voter approved portion of the debt service went up in this current fiscal year when our citizens voted to add the second $8 million dollazs of the Reverse Osmosis Water Treatment Plant and the SR AlA water transmission main project to the tax rolls. For 2010-2011, I am recommending that the Commission, once again, lower the operating tax millage rate this time to 3.3042 mills. Interestingly, what you will find with this recommendation is that the operating millage rate will be reduced from the current yeaz; however, the debt service rate is increased from the prior yeaz because of the falling assessed values of property in the Town. Yet, even though the operating millage rate is reducing and the voter approved debt service is increasing, my recommendation for a total tax rate is still proposed to be less next year that it has been for this yeaz. Let's take a quick look at what has been happening to our assessed values in Highland Beach over the last 4 years. We have gone from an assessed value of over $2.2 billion in fiscal year 2007-2008, down to a preliminary assessed value of $1.8 billion for the next fiscal year. Who knows exactly where we might be one year from now. Looking a little deeper into the Town Commission Budget Workshop Minutes August 03.2010 Pa e 3 of 8 reductions in the Town's assessed values over the last four years, we see reductions of $46 ~~ million of assessed value in '07-'08, $97 million of assessed value in '08-'09, $206 million of assessed value last year, and $118 million of assessed value projected for next fiscal year. Over the course of these four yeazs, we have lost neazly'/2 billion dollazs of assessed value in Highland Beach. Once again, for fiscal year 2010-2011, I am recommending an overall tax rate of 4.2443 mills, which is made up of an operating millage rate of 3.3042 mills and a voter approved debt service rate of 0.9401 mills. With this overall millage rate, we will be able to balance the budget. This will allow us to have a General Fund Reserve for Contingency of $200,000.00. It is the Reserve for Contingency which appropriates an amount of money without it being tied to any particular project or expense. It is our reserve fund which we might draw on during the budget year for anything that we might have forgotten, may come up, or not even thought about at the beginning of the budget year. Let me cover a number of other overall issues during the upcoming budget year. The budget allows for acost-of-living adjustment of 2.2% for all employee wages effective October 1, 2010. This 2.2% cost-of-living adjustment is based upon the Consumer Price Index, Bureau of Labor Statistics, and Southeast Regional Office's April index published report. Historically, we have built our budget with the cost-of-living adjustment from the April report each year. Employees will continue to be eligible for merit increases during fiscal yeaz 2010-2011. The budget has been built with an allowance of a 5% merit increase on the employee's anniversary date of employment. For the next fiscal year, I am recommending an experiment as it relates to the deployment of employee performance evaluations. I am recommending that the employee performance evaluation program be placed on hold for the next fiscal year and that one yeaz from now we evaluate the results of this experiment. This experiment has been further explained within my budget message. For fiscal yeaz 2010-2011, there are a number of changes in personnel that aze included in this proposed budget. Two positions are being added, and four positions are being deleted. The two positions being added include: the Finance Director and the Accounting/Payroll Officer. The four positions being deleted include: the Deputy Finance Director, one patrol officer, the administrative assistant position in the police department, and one Public Works maintenance position (effective on November 15) due to a retirement. With these proposed changes, the Town's overall sta.ffmg will look like this: 37 full-time employees; 12 part-time employees; and 1 contract building official. We will be adding contractual janitorial services, and reducing contract fmancial services. Let's jump over for a minute to an update on the Town's Utility Funds. Historically, the Town's Water Fund has needed a cash infusion from the General Fund to meet its operating expenses. With this proposed budget, our plan is to have no cash infusion from the General Fund to the Water Fund during the budget year. In fact, based upon our projections at this point, we believe that the Water Fund can actually have a Water Fund Reserve for Contingency of $13,500.00. Now, that does not mean that we are completely out of the woods just yet. This budget projection also depends on water sales during the year. If water Town Commission Budget Workshop Minutes August 03, 2010 Page 4 of 8 sales do not keep up, or if they should go down, then I believe that some sort of water rate adjustment may be necessary part way through the budget year. The appropriate time to look at that may be at the mid-year budget adjustment program which we typically undertake in April of each year. This budget does allow for some fairly aggressive capital improvements during the yeaz. Those capital. unprovements include: Town Clerk's Department - $3,000.00 replacement of office furniture; Public Works Department - $8,400.00 purchase of a new John Deere Gator for beach clean-up and meter reading, $8,000.00 purchase of a replacement of the fuel management system, $15,000.00 - refurbishing an older backhoe and $8,000.00 installation of humcane shutters at Town Hall ; Police Department - $200,000.00 refinishing of the old Cultural Board area, $58,000 for installation of license place recognition cameras and $29,800 for the installation of 6 new "Tough book" laptop computers for use in the patrol cars; General Government - $100,000,00 refurbishment of the Commission Chambers; Building Department - $7,500.00 purchase of the upgrade version of our Building Department permitting software; Library - $2,512.00 purchase of rack storage for mirrored servers and $65,000.00 annual purchase of books and publication. As Mayor Voress stated earlier, the request from the Library was for $85,000.00 for books and publications, and I reduced it to $65,000.00 Now, as all of the members of the Town Commission know, the budget is somewhat of a living, breathing document. Therefore, there have been some changes to the proposed budget since it was first published eazly last month. We have found some additional revenue, including: $13,800.00 in administrative reimbursements and $12,916.20 from FDOT street lighting subsidy. We have also identified at least one decrease in expenditures so faz and it is $2,000.00 eliminated for computers in the Town Clerk's budget for the Mayor and Commissioners. There have also been some increases in expenditures since the initial draft budget was published, including: Our employee health insurance renewal has finally come in and we have realized additional expenses of $36, 427.80 to the General Fund and $17,376.92 to the Utility Fund. We also made an error when we left out $21,888.00 in payroll costs for the part-time Accounting Clerk in the Finance Department, $1,500.00 in gasoline expense in the Utilities Department, and $13,800 in administrative reimbursement from the Utilities Department to the General Fund. All totaled, the net effect of the plusses and minuses at this point in the process result in the General Fund needing an additional $37,607.00 appropriated from the unrestricted Reserve account to balance the General Fund budget [$997,139 + $37,607 = $1,034,746]. In summary: 1) The budget is balanced. 2) There is a reduction in the operating tax rate. 3) There is a slight reduction in the number of employees. 4) The budget contains some significant capital improvement expenditures during the next year. 5) The Water Fund may need to look at a rate adjustment at the mid-point of the budget year. This is my presentation and I would be happy to answer any questions that you might have. Town Commission Budget Workshop Minutes August 03, 2010 Page 5 of 8 4. COMIVIISSION QUESTIONS & DISCUSSIONS: Mayor Newill - In your five yeazs with Highland Beach, how much does the Town generally use from the Contingency Account? Man eag r Su eg rman -Between $200,000.00 and 300,000.00 is generally used every yeaz. Mayor Newill - So in other words, the contingency account is too low. Manager Superman -Yes, by about $100,000.00. Mavor Newill -Only other comment I have is to voice my position that I am strongly against putting the evaluation process on hold for a year. Good corporate governance dictates there is an evaluation of its employees. If evaluators are only giving excellent evaluations, the person evaluating them needs to address it. Commissioner Trinlev - Is there any other Departments besides the Library that had its budget reduced? Mana eg r Su erman -There were a number of departments that did not have their requests filled. The Library was not singled out. Vice Mavor Zwick -The impulse to remove the evaluation process, did it come from employees or management? Manager Superman - No it came from me. Out of all the performance evaluations of Town employees, all but five got perfect scores. Three of those employees were rated by me. I came to the realization that all Supervisors gave 5% increases, and it was making my direct employees miserable. This is only an experiment. Mayor Newill - Mr. Manager -did you get an excellent rating from every Commissioner? Commissioner P lad iaro - I remember last year when we were going through the evaluation of the Town Manager and it was brought to our attention that he saved us a million dollazs. We each have different performance expectations. I think something can be said for this experiment. Town Manager Su eg rman - A speaker mentioned 12.5% raises, and I would like to clarify that. The COLA of 2.2%, if you approve it, would be effective 10/1/2010 and would go to all employees. The merit raises aze not given on October 1St, but the anniversary date of each employee. If you started in January that is when you would receive it, if you started in August that is when you receive it. The date varies according to your anniversary date. So it is hard to say exactly how much each employee will be receiving. Mayor Newill - No one would be receiving a 12.5% increase? Mana eg r Su eg_rman -That's correct. No one would be receiving 12.5%. Commissioner Sorrelli -Would like to see us cut out the improvements to the Commission Chambers and give the money to the Library. You can see by the attendance that our residents enjoy the Library facilities and their programs very much. f Town Commission Budget Workshop Minutes August 03, 2010 Page 6 of 8 Town Man er Su eg rman -There are a lot of resources that could be used. The unrestricted reserves could be tapped further if the Commission desires to increase the line item for books. Commissioner Trinley -The cost of books and periodicals have become very expensive. The Library's request for books is realistic. We should give the library the funds that they asked for. Mayor Newill -Prefer we go further into our reserves rather than eliminate the refurbishment of the Commission Chambers. If the Commission wants to increase the Library's budget, we can take it from reserves. Town M er Su erman -Does the Commission want me to add $20,000.00 to the Library's budget? Do you also want me to increase the Reserve for Contingency account? Mavor Newill - In reality, if we move some from the reserves to increase the contingency, it does not mean that number is going to be spent. I have no problem with the low number. If we use up the $200,000.00, we can call a special meeting and transfer additional funds. All we have to do is show restraint with our spending. Town Manager S erman -The "Reserve for Contingency" line item is the only item that the Town Manager cannot touch. Any expenditure out of this line item comes directly from the Commission. Mavor Newill -Does the Commission feel we should move money from the unrestricted reserves over to the Reserve for Contingency? Vice Mayor Zwick -The restraint of $200,000.00 would hold the Commission back from spending the money. We ourselves know that the money is there if something comes up that needs to be funded. Let's keep it at a lower figure. Mayor Newill -With the additional expenses that have come up since the budget was proposed, plus the fact that the Commission wants some additional funds for the Library, we are going to have to bring funds from the reserves to make the $200,000.00 Commissioner Trinlev -Looking at the Proposed 10/1/10 Organizational Chart, under the Finance Department it still refers to Cale Curtis as Deputy Finance Director. Town Manager Su eg rman -That is correct. If Mr. Curtis wants to compete for the proposed Finance Directors position, he can apply. We do not promote without posting and advertising for the positions. We do not just appoint favorites. Comm. Trinley -Then how come Deirdre McCarty is listed as the Accounting/Payroll Officer? M er Su eg_rman -None of these positions have been posted. They will be posted after October 1St. Comm. Trinley -Tell me about Bertram DeSir, Maintenance in the Library. Town Manager Sugerman -Jean Gilbert will be retiring in November. Bertram will no longer be working for the Public Works Department, instead will be transferred over to the Library. He will be a full time Library employee doing all of the maintenance at the Library. He will still be doing some Public Works Department functions: beach cleaning three times a week during season and twice a 1~ Town Commission Budget Workshop Minutes August 03.2010 Page ? of 8 week off season, plus emptying the trash on the walkway three times a week. 92% of his "-~'~ time will be dedicated to maintenance at the Library. Comm. Trinley -Isn't Deidre McCarty's position apart-time position? Town Mana eg r Sugerman -There are two errors in the organizational chart. One is Deidre McCarty, she is presently in a part-time position and the other is in the Police Department where Bob Davie is still listed as an employee. Mayor Newill -Thanked Town Manager Sugerman and Deputy Finance Director Curtis for their work on the proposed budget. 5. PUBLIC COMMENTS AND REQUESTS RELATED TO ITEMS DISCUSSED AT MEETING Arlin Voress - 4403 Intracoastal Drive If the water budget runs over, will the expenses be paid out of contingency? Town Mana er Su eg rman -The money could come from contingency which only has $13,570.00 budgeted, or the Commission can adopt a rate adjustment. Mr. Voress - I do not know if we are due to give our residents a rate adjustment or not. Last yeaz we passed a capital budget to buy additional equipment so we would not have to raise operating expenses. Is that correct? Town Manager Sugerman -Actually there were no capital improvements in last year's budget. Mr. Voress - What I am concerned about is that it takes big money to make water. We have a certain price that we charge our residents. We use a lot of electricity. If the number that is in the budget for electricity to run the plant is just an assumption, have you considered that FPL might raise the rates? Does the Public Works Director feel comfortable with the amount in the budget? Believe you will be looking at an overage of costs versus income if there aze any additional electric costs that will have to come out of contingency. Town Mana e~ r Su e~ - If there are additional costs, they could come out of contingency. It has to come from some place. We have looked very closely at the anticipated power bill from FPL. Jack has been working very hard on this and has found a number of efficiencies and we have gone on a discount rate schedule. Our power bills at the plant have gone down this past year. We budgeted enough in next year's budget in our power line account over what we actually believe we need. Jack has done a good job in working with FPL. John Caldwell - 2635 S. Ocean Blvd. With the income coming down and expenses going up, is $200.000.00 in reserves going to cover expenses next year? Why did the legal fees go down when there is an anticipation of a lawsuit with the County over Milani Park? Town Manager Sugerman - We intentionally keep money to defend lawsuits out of the budget. Mr. Caldwell - Is the increase in fuel going to be enough? If the Democrats come through with their cap and trade, we would need additional funds for fuel. In the private sector, we do not give COLA raises if we do not have the money coming in. Elizabeth Susskind - 2639 S. Ocean Blvd. Compared to last year's budget, the Town Manager will be getting a salary increase of 12.5% and the Town Clerk 9.8%. With the 10% unemployment rate, I think the budget should be looked at more carefully. Does the $500,000.00 in the Library budget include the debt Town Commission Budget Workshop Minutes August 03.2010 Page 8 of 8 service? Town Manager Superman -Mrs. Susskind, if you will call my office, I will set aside time to walk you through the budget. 6. ADJOURNMENT There being no further business to come before the Commission, Mayor Newill adjourned the Budget Workshop Meeting at 5:44 PM. upon a MOTION by Commissioner Pa liazo; seconded by Vice Mayor Zwick. APPROVE: ATTEST- verly M rown, C Date Jim Newi PA, Mayor