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Minutes 07-13-04IqTNUTES OF THE SPEC:~AL C~TY COlqlqTSSTON BUDGET f4EET~NG HELD ON TUESDAYf JULY 13f 2004 AT 3:00 P.14. TN THE L:~BRARY PROGRAI~I ROOIq Present Jerry Taylor, Mayor Mike Ferguson, Vice Mayor Bob Ensler, Commissioner Mack McCray, Commissioner Carl McKoy, Commissioner Kurt Bressner, City Manager .]ames Cherof, City Attorney Janet Prainito, City Clerk REVTEW PROPOSED BUDGET FOR F:~SCAL YEAR 2004/05 Mayor Taylor called the meeting to order at 3:05 p.m. City Manager Bressner began the operating budget review for fiscal year 2004/05 by explaining that staff would not be in a position to discuss the Capital Improvement Program (C[P) budget during this meeting. A time and date would be set for a workshop meeting to discuss the C1:P budget. Following the review, the Commission would set the proposed millage rate that is due at the County no later than August 4th. Following past practice, City Manager Bressner explained that he would provide an overview of the budget and then go through the individual departments by exception. City Manager Bressner advised that since the budget was presented on .]une 30, 2004, additional information concerning revenues was received that brightens the picture for this City. The estimates for State-shared revenue indicate that this City will receive $350,000 more than was originally projected. The .]uly 1~t property assessment data was made available and based on the increase in the taxable value in the City (without the CRA portion), the projection is $331,230 of additional funds. This is good news because this budget contains recommendations for revenue streams. They were mentioned as follows: A 4% utility tax on water that would generate approximately $326,000; Increasing the Utility Fund transfer by about $220,000; and Restoring the millage rate back to 7.6%. This would generate $345,000. Mr. Bressner explained that it was originally projected that we would need $1.8 million of the unobligated fund balance in the General Fund budget. This amounted to the money that was originally budgeted last year, but not spent. The City used only $28,000 during the course of the year. The fund balance reserve of 10% of the operating expenses has been maintained. This is a "sacred fund" that is only used in extraordinary circumstances. This number increases each year. When adding up the undesignated fund balances plus the set aside for the City, there is approximately a $13.9 million fund balance that represents approximately three months of operating expenses. This is an improvement over last year's financial picture since the City was able to increase that figure from 21/2 months to 3 months of operating expenses. The budget recommends a readjustment to the property tax rate from 7.5% to 7.6%. This recommendation is made because the debt service dropped back to .28% and the dollars are needed for some of the programs that will be discussed. f4EET~NG f4INUTES SPECIAL CZTY COI~If4ISS~ON BUDGET f4EET~NG BOYNTON BEACH, FLORIDA .JULY 13, 2004 Mr. Bressner reported that the assessed value in the community has been growing at a much faster pace in the CRA than it has in the balance of the community; however, growth has been achieved in the entire City. There is a difference between real growth and growth that is allowed under the Statute for property that is protected under the "Save Our Homes" Statute. Even though the market value of a home is increasing by 6% or 7%, if the home is homesteaded, the amount of growth is limited by the formula of the "lesser of the cost of living index or 3%". The number this past year is 1.9%. Outside of new construction, commercial and new home sales, the revenue stream for assessed value is expected to be fiat. The proposal in the budget was to include a public service tax on water. Other communities charge this tax and staff recommends a 4% tax to balance the budget. Based on the revenue streams we received, this would be desirable, but not mandatory. There are some concerns with the telecommunications tax. ]:t will probably be reduced another $200,000 next year. The Florida League of Cities is attempting to seek legislation to modify the 1999 formula. However, it is not anticipated that there will be any relief. Therefore, we are projecting a downward trend of approximately $300,000 by the end of next fiscal year. With regard to expenses, Mr. Bressner enumerated the following: A recommendation is made in this budget to retain a federal firm. This will be done in tandem with the CRA. There are a number of issues that are facing the City that will require assistance above and beyond what has been accomplished. Because the Strategic Initiatives were approved on .lune 15, 2004, there was not an opportunity to cost out the programs. A supplemental report has been provided that contains estimated dollars to that Strategic Plan in the amount of $280,000 for the 12 programs. The recognition dinner for advisory board members has been restored back into the budget. The Community Investment Program has been retained, but it has been cut back from $12,500 each to $10,000. The Pension Funds - Over the last few years, we have experienced considerable increases. There are costs associated with the pension funds that include the cost of providing the benefits, the assumed rate of return for the investments (7% or 8%) and the percentage of payroll. Anything that dips below that rate of return must be accounted for. That could be accomplished through additional employee participation or by the City's contribution. Mr. Bressner is recommending that the City hire a pension expert (financial expert and actuary) to perform an external analysis of all three pensions to determine whether the expected rate of return is an appropriate number; whether the actuarial balancing is correct and what the overall projected cost will be to the City assuming certain investment returns on the portfolio. M EE'I'~NG MlrNUTES SPEC~.a.L cz'fY COMMZSSI'ON BUDGET MEETI~NG BOYNTON BEACH, FLORIDA .1ULY 13, 2004 On the positive side, the investment portfolio for all three pension funds has improved tremendously over the last 16 months. While we are experiencing increases, the full dollar benefit will not be achieved because each of the pension funds practice "smoothing". This means that the investment earnings and the expenses are balanced out over a period of time. The Fire and Police funds practice a four-year smoothing period and the General Employees' fund practices a three-year smoothing. After listening to the Commissioners, it appears that the Neighborhood Grants & Tmprovement Program requires revamping to better reflect what the Commissioners wish to accomplish. Although no changes have been proposed, the program has been reduced from $40,000 to $25,000. Woman's Club - Funding for this project has not been included in this budget. The Woman's Club does appear to be structurally sound; however, the Commissioners will have to make a policy decision on whether or not this expenditure should be included since direction was given to staff to move forward with the clubhouse at ]:ntracoastal Park. When the City initially proposed taking over the Woman's Club on a long-term lease two years ago, Intracoastal Clubhouse was not on the project list. The Town Center report should be complete by the end of August. Decisions will be needed with respect to the old high school. A determination is needed regarding what the old high school will be used for. The City Commission has already decided that the building should be refurbished. The Town Center team is developing ideas on possible uses and partnerships. The Civic Center is at, or beyond, the end of its serviceable life. It is an active building and decisions would have to be made about where those programs would be handled if the Civic Center were removed. Staffing - Additional staffing has been added in the Police Department. Funding for four of the :~0 positions will be considered by the CRA at their regular meeting in July. These officers would be seasoned Police Officers with experience in the community. There will be six additional Police Officers and 2 additional Community Service Officers. ]~n addition, the staffing proposal recommends adding an Electrical Inspector, Building Tnspector, Plumbing/Mechanical Inspector, and an Assistant Fire Marshal. These are staff positions that are necessary to cope with the tremendous amount of building and construction activity facing the City. A number of other positions have been eliminated through attrition in order to balance these additional positions. The net change in additional positions is 9. The City is preparing to do a compensation study to ensure that the salary range for positions is competitive with the marketplace. Since money is so tight, the Human Resources Director position will not be staffed for six months. Those savings will fund the compensation study. The Fire Department held off hiring 12 additional staff this year. They will be hired next year to fill the Fire Stations. There is nowhere to put these employees until the Fire Stations are completed. Twelve firefighters were hired a year ago. 3 MEET/NG MINUTES SPECIAL CITY COMMISSION BUDGET MEET/NG BOYNTON BEACH, FLOP~DA 3ULY 13, 2004 There are extra engine companies on the street and they are currently operating out of very tight quarters. Mr. Bressner remarked that if the Homestead Exemption question gets on the ballot and passes by the voters, it would raise the exemption from $25,000 to $50,000. The projected loss of revenue to the City of Boynton Beach would be $3.2 million in reduced property tax revenues in the 2005-06 fiscal year. For that reason, the City needs to re-evaluate programs and activities in order to refine and reduce them. Last year, a complete inventory of programs and services was done. We will update that list so that priority adjustments could be made when necessary. Water & Sewer Utility Fund - There is a reduction of three positions and that budget is balanced. There will not be a need for a water/sewer increase. GQIf Course Fund - As part of the Early Retirement :Incentive Program, two individuals have been asked to fill the position being vacated by .loe Sciortino. The department director position will not be replaced. SQlid Waste Fund - A rate modification for multi-family is underway. That modification should be available in mid-August. We will monitor the Legislative efforts to divert resources. We are also exploring the expansion of the cart system in the residential areas such as Leisureville. Mass Transit Fund - This fund operates the bus system and it returns less than 20¢ on the dollar. Tt is a very popular program and one that provides alternative transportation needs for many citizens who may not have transportation options available to them. :If the referendum passes, this is a program that would require serious reconsideration to determine whether or not we would be able to continue this type of service. Fleet Maintenance Fund - This is an internal service fund with a balance of $5.5 million. Self-Tnsurance Fund - The Commission addressed the fund deficit last year and the City is enjoying a better insurance market. We are beginning to see some reductions. Tennis Center - This was taken out of the Recreation Program Fund and is back in the General Fund. There will be discussions about the Tennis Center during the next fiscal year. CTP BudQet - This will be available in approximately two weeks. Mr. Bressner concluded his overview of the budget. Commissioner McCray inquired about the departments that have overspent their 2003-04 fiscal year budgets. He also asked for the reasons why these budgets were overspent. Diane Reese, Finance Director, explained that at this point no department totally overspent its entire budget. When Commissioner McCray questioned how the Police Department was doing at this point, Ms. Reese repeated that the Police Department has not overspent its budget to date. 4 MEETZNG MZNUTES SPEC1~AL CZTY COMMiSSiON BUDGET MEETZNG BOYNTON BEACH, FLORZDA 3ULY 13, 2004 Commissioner McCray also inquired about the holiday bonus program. Iris. Reese explained that the holiday bonus money was not originally included in the budget during this current fiscal year, but it was added from fund balance when it was requested. Commissioner Ensler directed everyone to Page 5 of the budget. He said that at this point we are currently including just over $5 million for the pension funds and the rate of return is 7% to 8%. Using the current employees, he asked, if the market were to return the 7-8%, what would the City's contribution be the year after next?. Ms. Reese explained that the contribution is based on an actuarial factor and it would not be possible to provide an estimate at this point. Commissioner Ensler requested an answer based on everything remaining status quo. Ms. Reese reiterated that the calculation would change because salaries change. Retirees do not impact the fund actuarially. They are funded in the plan. The City's contribution is applied to future retirees. This year's contribution of $4.4 million is only for current employees and to make up for prior investments. Also on Page 5, Commissioner Ensler referred to the Neighborhood Grant and Tmprovement Program. When he questioned whether a future meeting would be held to discuss this program, Mr. Bressner responded affirmatively. Vice Mayor Ferguson pointed out that in looking at the tax base from 1999-00 to 2004-05, the tax base went up 50% from $2.4 billion to about $3.6 billion. However, the City's contribution to the pension went up more than 300% from $1.6 million to $5.3 million. He supports hiring the expert for $65,000 to find out what is going on. Commissioner Ensler asked what percent of operating revenue is healthy for the City. City IVlanager Bressner said that data must be gathered. (~onsensus There was a consensus of the Commission to move forward with hiring a pension expert (financial expert and actuary) to perform an external analysis of all three pensions to determine whether the expected rate of return is an appropriate number, whether the actuarial balancing is correct and what the overall projected cost will be to the City assuming certain investment returns on the portfolio Commissioner Ensler questioned how much the 24 new personnel listed under the fire assessment would impact the General Fund. Mr. Bressner responded that it would cost approximately $1.7 million including benefits. On Page 6 of the budget, Commissioner Ensler noted that additional inspectors are being added, but the revenue for permits is down. Mr. Bressner explained that although the figure is down from the estimate, it is up from what was budgeted last year. Commissioner Ensler remarked that plan check fees dropped from $1,450,000 to $1,087,000. He questioned how this figure could go down when we are anticipating a tremendous amount of development. Ms. Byrne said the Development Department is confident in the number that they budgeted and they do not believe that they grossly underestimated the amount of revenue. Mr. Greene would prefer to err on the conservative side. The figure is based on known projects that are MEE'I'~NG MINUTES SPECI'AL CITY COMMt'SSI~ON BUDGET MEE'I'LNG BOYNTON BEACH, FLORZDA 3ULY 13, 2004 coming in. Ms. Reese concurred with the Development Department's decision to be conservative because if the budget winds up short, expenses will have to be cut in mid-year. Mr. Bressner agreed with Ms. Reese. Mayor Taylor agreed with Commissioner Ensler that it is hard to believe that we will do worse in the next fiscal year than we did this year based on what everyone knows is coming into the city. Vice Mayor Ferguson felt that the City is honor-bound to enter into an agreement with the Woman's Club. The net amount would be $100,000 and he believed that the City could find that money in an item regarding the old high school that would be considered by the Commission on July 20th. ]'f the additional homestead exemption passes, the City would have to find $3.2 million. :In that case, the renovation of the old high school would have to be eliminated. Vice Mayor Ferguson is not in favor of funding more than the remediation for the old high school until it is clear what the outcome will be with some of the lawsuits that are pending. Mayor Taylor felt that it might be necessary to put off some of the items that are on the Commission's list of things to do. While the Woman's Club would be nice to have, he is concerned about the City taking on that building on a long-term lease. Furthermore, he is not ready to consider this project at this time because the same people who want the City to take over the Woman's Club and renovate the old high school are the ones that have brought the lawsuit against the City. Mayor Taylor would like for these people to understand that in order for the City to help with these projects, the City depends on development. Vice Mayor Ferguson felt that the increases in the State-shared revenue should be sufficient to allow the City to maintain the millage rate at 7.5%. Mr. Bressner explained that in order to balance the budget, it is necessary to use $1.4 million of reserves, institute a possible water service tax to generate $326,000 and restore the millage to 7.6% that would generate $345,000. Commissioner Ensler directed everyone to Page 24 and questioned why the site plan approval line item was reduced to $75,000. Mr. Greene explained that there is a great deal of development that is currently in the "pipeline" or on the drawing boards. However, once the Winchester property is completed and the six blocks in the core of downtown go, the City will run out of development options. Tn response to Commissioner Ensler, Mr. Greene confirmed that Compson has not yet paid the site plan fee for the Winchester property. Commissioner Ensler directed everyone to Page 25 and referred to the reduction in the Palm Beach County Administrative Charge from $85,000 to zero. Mr. Bressner explained that the City stopped administering the program associated with those dollars. 6 M EE'I'~NG MI'NUTES SPECI'AL C~'TY COMMTSSI~ON BUDGET MEETZNG BOYNTON BEACH, FLORIDA .1ULY 13, 2004 Commissioner Ensler referred to the regular salaries in the Fire Department and remarked that the Early Retirement Incentive Program was supposed to result in a savings. He did not see where this occurred in the Fire Department. Ms. Reese explained that during the first three years of the Early Retirement Incentive Program, the projected savings for the Fire Department was $30,000. The employees received between 5% and 8% salary increases. That offset the $30,000 savings. Commissioner McCray questioned whether it was absolutely necessary to institute a 4% water tax. Mr. Bressner explained that if the Commission chose to keep the millage rate at 7.5%, it would be necessary to do something. If the 4% water tax were implemented, the millage could remain at 7.5%. He further advised that if the Commission did not wish to increase the millage or institute the 4% water tax, it would be necessary to take $1.8 million from unobligated fund balance and increase the utility transfer from $90,000 to $120,000. Commissioner Ensler said he is always concerned about deficit financing and that has been happening for four years. He said we were fortunate to underrun the budget this year, but if that does not happen next year, we would be looking at an increase in budget and have to make up $1.5 million in a year when we are looking at a possible loss of $3.2 million in taxes and $1.7 million for Firefighters. This would not include inflation, salaries and other expenses. We have more challenges in this coming year than this City has ever faced before. Commissioner Ensler feels the Commission needs to be very conservative and reiterated that deficit financing is the wrong way to go. Commissioner Ensler directed everyone to Page 244 of the budget to review the revenues with respect to refuse collection for multi-family. He inquired if the Commission intended to support the increase in fees charged for pickup in multi-family communities. Vice Mayor Ferguson said he would not support a proposal that increases fees for multi-family units. Mayor Taylor recalled that prior discussions related to how to address these fees and the question was whether to increase everyone or increase just the people who are not using the carts for the automated trucks. Mr. Bressner explained that the increases that are indicated are due to the increase in multi- family units in the City. The $200,000 figure that is indicated reflects the increase that is needed to balance the budget. This issue will be brought before the Commission in the future for consideration and approval. Mayor Taylor confirmed that if the Commission does not approve this proposal, the City Manager would have to come back to the City Commission for a budget adjustment. On Page 269, Cemetery Fund, Commissioner Ensler noted that no additional revenue is indicated after Year 2005-2006 because the plot sales will end; however, expenditures continue to rise. Mr. Bressner explained that the Cemetery Trust Fund covers perpetual care in the amount of $4 million that is earning interest. This will provide care of the cemetery on a long- term basis. 7 MEETING MINUTES SPECIAL CITY COMMISSION BUDGET MEETING BOYNTON BEACH, FLOI~DA .]ULY 13, 2004 On Page 274, Local Option Gas Tax, Commissioner Ensler inquired why that amount has decreased when the cost of gasoline has increased. Ms. Reese explained that this is a formula that the State calculates based on population, not on gas sales. .1elf Livergood, Public Works Director, further explained that the gas tax is assigned on a cents-per-gallon basis, not on a percentage of cost. On Page 52, Neighborhood Grants Program, Commissioner Ensler requested an explanation of the difference between the Neighborhood Grants Program and the capital program. Wilfred Hawkins, Assistant City Manager, explained that the Neighborhood Assistance Program is a grants program where there is a 50/50 match between the City and the neighborhood. Tn the Capital Program, larger scale programs are accomplished with the City paying the majority of the cost. Examples of the capital program would be the project at the Crossings, the curbing in Chapel Hill and the trees along Seacrest Boulevard. These are projects that do not come before the Commission for approval; however, they are reported on in the department's monthly report. Mr. Bressner offered to provide a report to the Commission. When Commissioner Ensler said he is interested in putting together a plan for annexation, Mr. Bressner directed him to Page 20 of the Strategic Plan. He said the City Commission would have to develop an annexation policy. Staff will provide recommendations. Vice Mayor Ferguson said that with respect to C]:P, the Commission must make a decision about what to do with the Tennis Center prior to spending the $340,000 included in the budget. Mr. Bressner said the CTP team met last week and is assessing this project. A final report will be presented to the City Commission. Mr. Bressner inquired if the Commission wanted the Holiday Bonus put back into the budget. There was a consensus of the Commission in favor of including that money in the budget. On Page 7, Mass Transit Fund, Commissioner Ensler pointed out that the bus service costs the City $200,000. He questioned whether there were a way to reduce that cost impact. The City may want to look at an alternative program such as a taxicab certification program without having to bear the cost of the buses. This will be a tough program to eliminate because it is the shopper hopper program that is very popular. Mayor Taylor confirmed that the buses are leased from Palm Tran for $1 and we charge $1 for riders and 50¢ for seniors. Commissioner McCray pointed out that this program is very good advertisement for the City. Commissioner Ensler questioned the $100,000 that is included in the Golf Course budget for satellite Iocators to help golfers determine how far they are from the green. He feels this is a luxury that is not really needed. The Golf Course staff agreed to remove this item from the budget. Mr. Bressner said he would work on the report during the evening and it would be ready for the Commissioners in the late morning on July 14th. The next budget meeting will be on Wednesday, July 14th at 3:00 p.m. in the Library Program Room. 8 MEE'I~NG MI~NUTES SPEC~L C~TY COMMISSZON BUDGET MEETING BOYNTON BEACH, FLOI~DA 3ULY 13, 2004 AD3OURNMENT There being no further adjourned at 5:06 p.m. business to come before the Commission, the meeting properly A1-FEST: ~bed by City Cler~ CITY OF BOYNTON BEACH :L_~'s~ o e S:\CC\WP\MINUTES\COMM\Year 2004\071304 - First Budget Hearing.doc 9