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04/17/2001CITY COMMISSION SPECIAL WORKSESSION CITY OF CLEARWATER April 17, 2001 Present: Brian J. Aungst Mayor/Commissioner Ed Hart Vice-Mayor/Commissioner Whitney Gray Commissioner Hoyt P. Hamilton Commissioner William C. Jonson Commissioner Also present: William B. Horne II Interim City Manager Garry Brumback Assistant City Manager Pamela K. Akin City Attorney Cynthia E. Goudeau City Clerk Brenda Moses Board Reporter The meeting was called to order at 9:03 a.m. at City Hall to discuss the Fiscal Year 2001-2002 budget process and Commission budget priorities. Interim City Manager Bill Horne said the budget update also would bring the newest Commission members up to date. Budget Director Tina Wilson reviewed the FY 2001/02 budget process and calendar, Commission budget priorities, retained earnings, the 5-year financial forecast presented in January 2001, and fiscal conditions and financial indicators presented in February 2001. . She said at a previous Commission meeting, the Commission reviewed and ranked a list of issues and reached a consensus regarding budget priorities for the 2001/02 fiscal year. At that time, the Commission determined the top 5 budget priorities for FY 2001/02 (listed in no particular order): 1) Beach development; 2) public safety; 3) Human resource issues; 4) maintenance of City facilities; and 5) quality of life issues. She noted the Harborview Center would receive a $200,000 annual contribution from the General Fund, which would be included in future budgets. Ms. Wilson said the 5-year projection was based on the current year’s budget, assuming no new personnel or programs. She projected a deficit of $500,000 for next year. Next year, a new telecommunications tax may help offset some of that deficit. In response to a question, Ms. Wilson said she expects the deficit to increase annually. She said departments are beginning the budget process. The City is always looking to increase its resources or consider cutting programs. The City has had one millage increase in the past 10 – 11 years, while adding programs such as Code Enforcement, Public Communications, additional firefighters and police officers, and other services. It was felt citizens need to be aware that Penny for Pinellas cannot be used to pay for all the additional City services they want. Citizens need to be cognizant of the impact of the services they are requesting and whether they can be supported. It was suggested dealing with how to pay for those services that are needed and wanted by citizens at the time of their request. It was felt that redevelopment is the key to providing increased revenues and needed services. It was remarked that the percentage of money from ad valorem taxes does not pay for all City services. Ms. Wilson said the City only receives 23% of the total ad valorem tax collected. The School Board and the County also receive a portion of those taxes. It was remarked positions that were added have been justified by increased activity and have been presented by staff as a wash to the bottom line. Ms. Wilson said although that statement is true, in a General Fund activity such as with the Police or Fire departments, many of those costs are being absorbed. She said the City has downsized and departments are operating as lean as possible. She said departments generally budget a 1.5% salary savings, or operate at a 98% personnel capacity. When the salary savings exceeds 2%, departments begin to fail and do not have enough personnel to function. It was suggested staff include the average number of employees over the last 5 years in their budget projections. In response to a question, Ms. Wilson said she is unsure of new personnel requests, as the budget process is just beginning. It was requested that budget projections show revenue neutral positions and that staff provide backup details regarding how restricted versus unrestricted earnings were classified. In response to a question, Finance Director Margie Simmons explained restricted versus unrestricted funds for the Parking Fund. She said each reserve is restricted for debt service and the rest would be available. Staff performed a lengthy analysis to arrive at these numbers and had previously reviewed the process with the Commission. She said the CIP (Capital Improvement Project) is cash donated from other funds for specific projects. Bonded debt is another category. The Central Insurance Fund is for auto, property damage, liability and health insurance, and worker’s compensation. She said the money could be left in the fund to reduce future charges to departments, but felt the best use is to return that money to other funds. She said the City is considering health insurance increases and has recently boosted the family subsidy that employees must pay, while the City continues to contribute to the Premium Stabilization Fund. Ms. Wilson said all reserve balances are currently healthy. In response to a question, Ms. Wilson said the Commission had changed the retained earnings policy for reserves from 8% to 10% after a thorough analysis of other cities’ General Fund reserves. She said staff reviewed internal funds and as there are reserves in the Central Insurance Fund and other areas for emergencies, other than the General Fund, staff is comfortable with the change. She said she would not recommend lowering it any further than 8%. The current reserve is at 10.4%. Other cities’ reserves range from 5% to 20%. The City would probably be reimbursed from the State for expenditures related to a natural disaster. Ms. Simmons said the City must consider budget deficits, the size of the City, and many other factors when setting the fund reserve percentage. She said reserves are a good source of revenues that provide interest to support the General Fund. Assistant City Manager Garry Brumback said as part of the financial management process, Department Directors are staying on top of situations as they arise. Ms. Wilson said staff is analyzing the City’s needs and operations. She said employees per capita remains almost flat, therefore, it appears the City is not expanding too rapidly. Mr. Horne said although personnel has remained generally flat, it may not keep up with the demands for the future. Staff also is analyzing if the City is accomplishing what citizens want and need and if we are taking care of business. In response to a question, Fire Department Chief Rowland Herald said the department added 12 firefighters, one inspector, and a clerical person for a total net increase of 14 personnel. Ms. Wilson said 4 firefighters, a fire prevention person, and a clerical worker was added for a total of 6 persons in the Fire Department budget for the new year. One position was reclassified. Ms. Wilson said the final results of staff’s analysis resulted in the following concerns: 1) user charge coverage; 2) operating expenditures per capita; 3) Harborview operating; and 4) maintenance efforts (streets and storm sewers). Ms. Wilson said Public safety employees increased by 28 positions and Planning and Development also increased by 28 positions over a 5-year period. She said staff would research if these positions included the Community Response personnel. In May, staff will look at the City Manager’s updated 6-year CIP, Penny for Pinellas changes (if any over $500,000), and taxable values. In June, the City Manager’s budget will be released and the Commission will hold workshops to discuss setting the millage rate prior to its release in July. She said the preliminary rate is required to be in the Pinellas County Appraiser’s office by July 13, 2001. The rate will be advertised and mailed to citizens in August. The millage rate can always be lowered in September, but is costly to increase if changed later in the year. The entire process will be completed in September when required public hearings are held. Ms. Wilson said in September, the Commission also will hold a Penny for Pinellas public hearing. The meeting recessed from 10:38 to 10:54 a.m. Ms. Wilson finished her review of budget priorities. Discussion ensued regarding the top 5 priorities. It was remarked that although only 5 priorities are listed, many items fall into those categories. It was noted that the list was intended to cover General Fund areas only. It was remarked that staff is considering the big picture to eliminate the possibility of surprises. It was remarked that in the past, the Commission reacted to a budget presented by the City Manager before Commission input was obtained. The City must ensure it has the infrastructure to deliver services. In response to a question, Ms. Wilson said when the Commission identified the top 5 priorities; it ranked beach development more important for the immediate future than downtown. Annually, the Commission will review these priorities and can change or reprioritize the list. Mr. Horne said last year, when department directors tried to cut programs, others were added, and the budget process became more of a challenge. This year, staff is starting the process at a higher, policy level to focus on overall priorities that will drive the process into approaching line items. It was remarked that it was beneficial for the Commission to hear departmental budget presentations in detail and the areas that Directors felt they could cut programs. It was remarked there is a fine line between policy and administration issues, and it is not the Commission’s intent to tell the administration how to run the City. It was suggested downtown redevelopment be added to the priority list, Beach Development be changed to Economic Development, Facility Maintenance be changed to Infrastructure Maintenance, the Commission consider the level of detail they need for the budget process, and more consideration be given to volunteerism as a means to reduce costs. In response to a question, Mr. Brumback said he did not have information related to parking garage costs as it is too early in the process to do an analysis. Land Acquisition costs also will be a factor. It was remarked that with the downturn in the economy, the buying power of Penny for Pinellas funds could be affected. The meeting adjourned at 12:05 p.m.