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Minutes 11-05-12 MINUTES OF THE FINANCIAL ADVISORY COMMITTEE MEETING HELD ON MONDAY, NOVEMBER 5, 2012, @ 6:00 P.M., IN THE BOYNTON BEACH CITY LIBRARY, ROOM "A ", 208 S. SEACREST BLVD., BOYNTON BEACH, FLORIDA PRESENT: Don Scantlan, Chair Barry Atwood, Finance Director Jeffrey Grady Tim Howard, Deputy Finance Director Steven Grant Terry Lonergan John Sparrell 1. Call to Order — Don Scantlan, Committee Chair • Should any members not be able to make the meeting; contact Barry Atwood (AtwoodBbbfl.us) or (561) 742 -6311 by 3 pm Monday as the meeting may be cancelled for lack of a quorum. Donald Scantlan, Chair, called the meeting to order at 5:57 p.m. Roll was called and five members were present. There were no changes to the agenda. Ms. Lonergan moved to approve the agenda. Mr. Grant seconded the motion The motion passed unanimously. 2. Introduction of Members (Listing of Current Members attached) Self introductions were made of those present. Chair Scantlan noted there were only two original members remaining and two new members in attendance. Mr. Grant had already attended two meetings. The meeting was to kick off a new budget year 3. Discussion of Committee History and Quick Review of Recommendations — • Article XVIII Creating the Financial Advisory Committee (Copy attached) • Executive Summary Committee Recommendations for Budget Year 2012 -13 (Copy attached) The Committee had been in existence for three years Each year the Committee met with challenges, but tendered a final report to the Commission. The goal was to remain neutral and provide the Commission with another data point upon which to make decisions The Committee serves at the pleasure of the Commission and attempts to evaluate data and present unbiased, thoughtful recommendations for the budget negotiations. 1 Meeting Minutes Financial Advisory Committee Boynton Beach, FL November 5, 2012 Typically a list of items is presented and the Committee selects a couple items to investigate over the coming year. Each member independently conducts research on the item, brings their findings to the Committee and defends their findings. The Committee would then vote on the findings, with the vote presented to the Commission at the budget workshop. A full report, outlining what was studied, and the findings and recommendations of the Committee, is submitted to the Commission for their budget discussions. Meetings have not been held because there has been nothing to accomplish at this point in time and due to the lack of a quorum. The first year the Commission asked that additional research be done on specific items. The ordinance creating the Financial Advisory Committee, including the objectives of the Committee and the last Executive summary, had been distributed for review prior to the meeting. Mr. Scantlan recalled the department heads came before the Committee and explained their budget, including a 10% decrease and its impact on services. It was felt that was a burden on the department heads and the procedure was not repeated in subsequent years. He recommended the members attend the City Services Institute when it is offered to learn about all the departments and their functions. Mr. Scantlan felt it would be beneficial to have the department heads present their budget recommendations based on the projection and direction from the Interim City Manager. Mr. Atwood opined he hoped the property valuations would not decrease any further and estimate a possible gain of 1% to 3% Mr. Howard projected a flat valuation for next year. Mr Scantlan assumed if the revenue was flat, the department budgets would have to remain flat. Mr. Sparrell remarked when the economy went up his rental property taxes went up considerably. The taxes had now plummeted more than half. His rental business is more profitable now that the economy is worse. Mr. Scantlan speculated that the majority of property owners did not understand how the valuation, millage rate and property appraisal works together. He had learned that the City does not run on property taxes alone. Mr. Atwood indicated more education was needed to differentiate between rates going up and the actual taxes going up. The media focuses on the increase in the tax rate, but, if the property valuation decreases, the actual taxes paid may be less. To stabilize the revenue stream the tax millage has to go up if the valuations go down The roll back rate is the rate of taxes needed to generate the same amount of revenue as the previous year, based on property valuations. It is the result of the property tax law in the State of Florida. The residential homeowners have amendments in place to protect how much the value can go up each year. Rentals and commercial properties have not had that protection. Residential homeowners would not see a drastic drop in their taxes 2 Meeting Minutes Financial Advisory Committee Boynton Beach, FL November 5, 2012 Mr. Sparrell felt the system and calculation was somewhat extreme and should be in closer proximity to eliminate the high and lows. Mr. Scantlan asked that the recommendations and research be as data driven as possible. Emotions, feelings, opinions and attitudes should be held separate. The facts presented should support the recommendation being made. Mr. Atwood commented the City had not taxed up to the roll back rate and thereby left $16 million on the table. The media has a tendency to inflame the residents by focusing on the tax rate and not advising the property valuation decreases can lower the amount of tax actually paid. This year the rate went beyond the rollback rate. It was noted the property taxes do not come close to funding the City expenses. Mr. Atwood added the property tax revenue would not quite fund the Police Department. Mr. Scantlan pointed out there were several topic areas suggested and included the possibility of franchising some operations. The idea being the City could get more revenue for services the employees now do, that transfers money to the General Fund. Mr. Atwood cautioned more money is transferred from the Sanitation Fund than how much a franchise fee would generate. The idea that government should be run like a business is exemplified in The Links golf course that is totally self- funded which is unusual for a municipal golf course. The City does receive a small amount of revenue transferred to the General Fund. The Sanitation Fund does generate revenue and is nun like a business that transfers funds to the General Fund Mr. Sparrell observed he has very little garbage and does not need twice a week garbage pickup. Mr. Scantlan advised he had pushed for two years to go to once a week garbage pickup and it has not been undertaken. Mr. Atwood cautioned a once a week pickup schedule would not equate to a reduction in the garbage fee. Mr. Scantlan added it becomes a capacity issue of the trucks and may require the purchase of more trucks and more manpower. It is an interesting logistic problem. 4. Discussion of Meeting Dates and Frequency for the Upcoming Year Mr. Scantlan reviewed the proposed meeting dates of twice a month and proposed the November 26 meeting be cancelled and then begin the twice a month meetings after the first of the New Year. Motion Ms. Lonergan moved to cancel the November 26 meeting. Mr. Sparrell seconded the motion. The motion passed unanimously. 3 Meeting Minutes Financial Advisory Committee Boynton Beach, FL November 5, 2012 The discussions for the December 10 meeting would be the City Services Institute, the questions for the City Services Survey and the topics each member would be interested in researching for the next year. Mr. Scantlan explained the previous year's survey process. Mr. Grady requested a copy of last year's survey. He advised this was his area of expertise. 5. Expectations of City Commissioners and Department Directors The possibility of department heads presenting to the Committee was suggested since there were at least three new members. Staff is asked to bring the roles and responsibilities of their department. The question of the budget projection was discussed. Mr. Grant suggested the department heads be asked for what changes they would like to see, since they provide the services. Mr. Grady agreed it would be his approach to find out the wants and needs of the departments compared to the community's wants and needs. Mr. Atwood pointed out that at least 70% of the funding for most departments is the staff. Some departments are even higher. Reductions or increases in budget mean people. The Interim City Manager would have to determine the targets for the budget projections. Mr. Atwood did not feel having the department heads report to the Committee would be that beneficial. The information is printed in the budget documentation, as well as the current budget figures. If something specific was being asked of each department, it may be more time efficient for everyone. Mr. Grant suggested a five - minute presentation on roles and responsibilities plus ten minutes on their wants, needs and goal for the staff to make the next year better than last year. Mr. Scantlan stressed the target being set by the Interim City Manager would have to be determined. Mr. Atwood stressed the cuts over the last two years have gone very deep and more may not be possible without cutting services to the residents. All the cuts for such things as cell phones and smaller items have all been eliminated. Ms. Lonergan contended the department heads should be contacted to determine if they are willing to talk to the Committee. Mr. Scantlan declared the issue would be put on hold until the Interim City Manager determined the parameters of next year's budget. Motion Mr. Grant moved to wait until speaking with the Interim City Manager to determine the roles of the department directors and developing their budget. Mr. Scantlan did not feel a motion was necessary, rather an action item be established for Mr. Howard to speak to the Interim City Manager relating to the budget objectives for the next year and the timing. 4 Meeting Minutes Financial Advisory Committee Boynton Beach, FL November 5, 2012 Mr. Atwood noted all the union contracts are to be renegotiated in the coming year and the employees have not had raises since April, 2009. It would have a significant impact. There were several recommendations last year relating to union contracts. Mr. Grant inquired if the City Commissioners would be expected to direct anything for the Committee to consider. There was an agenda item for the next meeting regarding topics for the Financial Advisory Committee to study. The Commission had not previously given much input. There had been discussion to disband the Committee. Mr. Scantlan had pointed out the Committee consists of volunteers who do their best to fully develop and investigate the issues that were on the original list. There seems to be an excess of need and a shortage of capacity to get through all the items. It was not anticipated that the Committee would review every line item in the budget. The upcoming agenda item for the City Commission would perhaps reveal the expectations of the City Commission. Mr. Scantlan urged the members to come to the Commission meetings as often as possible. The audio of the City Commission meetings is available the next day. Any of the members of the Committee could speak to the Commission. 6. Discuss Recruitment of New Committee Members There were two openings for regular members and two openings for alternates on the Committee. Any interested parties should be encouraged to submit their applications. There must be four members present at a meeting to have a quorum. The list of preferred qualifications and characteristics were reviewed. It was noted the meetings are generally twice a month during budget preparation and then drop to once a month or not at all after the budget was adopted. There is a three -day workshop when the recommendations of the Committee are submitted and discussed. An attendance requirement to attend - the meetings is also in place. It was estimated that work on a topic could consume 3 to 10 hours a month to complete the research and make a recommendation. It basically involved making phone calls and perhaps an appointment with a department head to discuss the issue. It is not an overwhelming responsibility. Ms. Lonergan noted this year there were only 14 topics to be reviewed and recalled the first year there were 58 items for consideration. The process for finance committees in neighboring cities was reviewed for guidance revealing one dealt directly with department heads each year on any change in the budget and the other reviewed the entire budget as closely as possible. There was a collective decision on how the Committee would proceed. The role of the Committee is to be advisors to the City Commission that holds the ultimate responsibility of a decision. 5 Meeting Minutes Financial Advisory Committee Boynton Beach, FL November 5, 2012 7. Review and Discuss Committee Member Study Topics and Potential Assignments for FY 2013 -2014 — See attached list of Topics and article entitled "Reducing Your City's Expenses Without Reducing Services" - Kindly review both attachments in advance of the meeting The list of topics could be expanded by the Commission or the members and topics that had previously been reviewed could be revisited. Mr. Grant inquired if the topic of garbage pickup should be revisited. Mr. Scantlan had tackled the topic two years in a row and did not want to continue with the debate. He pointed out there was a capacity limitation for the trucks if once a week pickup is begun that may not be cost effective, if new trucks and more personnel had to be added. His past research had revealed the opinion of the residents was 50/50 on a change to once a week. Mr. Sparrell suggested once one week and twice the next week would be cutting a large expense. Ms. Lonergan thought the suggestion would create too much confusion for the residents. Mr. Scantlan did mention the recycling costs were high and the return was low. Most residents supported the program though. The carbon footprint from running the trucks may out weigh the intent of going green. Mr. Howard mentioned there was a goal to reduce the waste stream. Mr. Grady mentioned some cities use tipping point recycling for all garbage. Direction was given that three sources be used to gather information -- City staff, neighbors and Boynton residents, and independent information from the internet or other cities or other available outside sources. Three perspectives were the approach undertaken to make the recommendations. The Commission would then have another data point to be included in their decision making process. An action item for the members was to review the list of topics and select preferences and be prepared to discuss the issue with the Committee members. Any additions to be studied should be brought to the next meeting. Ms. Lonergan inquired if the Police Department was one of the topics. There was brief discussion on the outsourcing of policing for the City. Mr. Grant noted once the department was gone it could not be retrieved. The asset acquisition to restart would be too expensive. The loss of - the overhead would be a big feature, especially the insurance premiums according to Mr. Grady. Mr. Atwood added salaries were a big portion too. Mr. Scantlan claimed there was a City of Boynton Beach for a reason and if the police and fire were taken away, the City should be unincorporated and go back to the County. Mr. Howard reviewed the timeline for the City's budget. In February and March the departments are looking at their individual budget requests. A budget review committee M Meeting Minutes Financial Advisory Committee Boynton Beach, FL November 5, 2012 examines the budget requests for all the departments. Around April or May the City Manager makes adjustments and by Statute a tentative millage rate has to be adopted in July. In the month of September, by Statute, the municipalities have to adopt a final millage rate and adopt the budget by September 30 The Final millage rate cannot be higher than the tentative rate unless every taxpayer in the City is notified in writing. The Commission can go lower than the tentative rate before final adoption. There are two public hearings on the millage rate and adoption of the budget in September. The Commission does scrutinize the budget with the department heads during the July workshop that is also a public meeting. The City Manager gives the department heads some preliminary direction on the budget usually in February. Mr. Howard also cautioned many pieces of the budget are governed by the union negotiations and labor contracts. Once the contract is signed, the departments have to fund the provisions. Mr. Grant asked about the terms of the elected officials. Mr. Scantlan explained the districts and terms of the five Commission seats. The Commission could completely change in the next two years except Commissioner Holzman in District 3 has not reached his term limits. The Commission sets policy and the budget, and hires the City Manager and City Attorney. The City Manager then hires all other positions. 8. Other Business Mr. Howard would be sending all the members a copy of last year's budget calendar and a copy of the survey. Mr. Scantlan welcomed the new members and was looking forward to an exciting new year. He thanked Barry Atwood for his assistance and support and wished him well in his retirement. Lastly, a reminder of the requirements of the Sunshine Law not to speak to each other about items coming before the Committee and to not "reply to all" in any emails was stressed. All communications should go through Mr. Howard. 9. Adjournment Motion Ms. Lonergan moved to adjourn. Mr. Grant seconded the motion. The motion passed unanimously. 7 Meeting Minutes Financial Advisory Committee Boynton Beach, FL The meeting adjourned at 7:12 p.m. J ith A. Pyle, C eputy City Cier November 5, 2012