HomeMy WebLinkAbout06-20-2011 workshop
City Council of Peachtree City
Wo~ksh()p Meeting Minutes
June 20, 2011
The Mayor and Council of the City of Peachtree City met in a workshop session on Monday.
June 20. 2011. Mayor Haddix called the workshop to order at 6:30 p.m. Other Council Members
present: Vanessa Fleisch, Eric Imker, and Doug Sturbaum. Kim Learnard attended via Skype.
Staff present: City Manager Jim Pennington. Financial Services Director Paul Salvatore.
Administrative Services Director Nikki Vrana. Amphitheater Manager/CVB Executive Director
Nancy Price. Fire Chief Ed Eiswerth, Police Chief Skip Clark, Public Services Director/Stormwater
Manager Mark Caspar, Assistant Finance Director Janet Camburn. and IT Administrator Matt
Robinson.
The purpose of the workshop was to review the proposed budget for FY 2012
Pennington said Salvatore would present the budget, which they felt was designed to continue
the current service levels in the City in a fiscally responsible method.
Salvatore said FY 2012 was the fourth consecutive fiscal year of managing the budget during a
severe economic turndown. The full-time employee count had gone from 268 in FY 2008 to 238
in FY 2011. Deteriorating revenue streams had caused the need for corrective actions on the
expense side since late FY 2008.
Salvatore continued the property tax digest had declined by almost 5% since FY 2009 ($92.4
million); the 1.5% decrease expected for FY 2012 was mostly due to appeals. Local Option Sales
"....." Tax (LOST) revenues were down approximately $200.000 from FY 2008 levels and were due to be
~. renegotiated in 2012. Interest earnings were down over $330.000 from FY 2008 levels.
Deteriorating revenue streams continued to be a major factor in development of the FY 2012
budget and the five-year model. Based on the preliminary figures on the tax digest from the
County Tax Commissioner. the tax digest would decrease by 1.5% in FY 2012. or more than
$183.000. Salvatore pointed out that the proposed 0.213 millage rate increase in previous five-
year models had been removed, and the impact of that change was another $207.000. The
elimination of the "roll-up" millage was another $176.000, bringing a total impact $567.758 on
property taxes. He noted that a 0% projection had been used in preparing the proposed
budget. Salvatore added that the City and Fayette County were still doing better than most
jurisdictions.
Salvatore said a "roll-up" of 0.98 mills was not a tax increase by definition of state law; no
additional tax revenue would be collected. It did not require three public hearings on the
millage rate, or advertisements on notice of tax increase. It was only enough to offset the
revenue lost due to the declining value of existing property. It would recover approximately
$176.000 of property tax revenue lost due to the decline in the tax digest.
Salvatore noted that the estimated LOST collections in the FY 2012budget was $330,516 less
than projected in last year's model. with the cumulative impact on LOST revenue through FY
2016 projected to be $3,586.866 less than originally projected. Salvatore said a 2% increase in
LOST had been projected for FY 2011. but there had been a 1% decrease. A 4% increase had
been projected in FY 2012, but no increase had been estimated for the FY 2012 budget.
The changes Council made to the committed reserves during FY 2011 included the Kedron
Bubble. $250.000; economic development, $75,294; landscaping services, $40.175; tree service.
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June 20, 2011
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$28,000; and the Tennis Center courts, $29,290. The net impact to the expense side of this year's
budget was $172,759, not including the Kedron Bubble.
The highlights of the proposed FY 2012 budget included a major reorganization of personnel,
including the net reduction of two full-time employees; a one-time 2% employee incentive;
emphasis on maintenance and .revitalization of the City's infrastructure, with an assessment
pending; a tentative $2 million Facilities Authority bond for capital improvements; equipment
lease-purchase loans; roll-up millage rate of 0.098 mills; and a fund balance increase of
$831,385.
Pennington said the assessment of the infrastructure was needed as well as the reassessment of
the City's organization. The infrastructure was aging, and there were early aspects of
deterioration. There had been a number of construction activities involving the facilities, and
more work was needed at others. The big emphasis for the next few years needed to be on the
City infrastructure.
Salvatore said there were questions about the reorganization of the City's departments, and the
financial impact. Pennington said the City's organization was still under evaluation, and there
would be future changes in the organization, but he did not want to put a dollar figure with
those changes yet. New positions included the Community Services Director, an office
administrator in Recreation, and an accounting supervisor in Financial Services, as well as several
projected lateral moves.
Salvatore continued there had geen no employee cost of living allowance (COLA) or merit
increases for the past two fiscal years. A one-time payment to employees equal to 2% of their
annual salary was proposed af a cost of $236,000. There would be no increase in the
employees' base pay, but it still provided some incentive. It was a method used by other
jurisdictions in lieu of COLA/merit raises to keep year-over-year costs down.
Salvatore addressed infrastructure revitalization and a Facilities Authority bond, noting certain
infrastructure needs had been identified in the five-year Capital Improvement Plan. Staff would
work with a consultant to identify. additional needs and refine cost estimates. The annual debt
service on a bond was estimatedClt approximately $283,000 for 10 years.
Equipment leases included vehicle replacements, heavy equipment replacement, Rescue 8
replaceme!lt as opposed to the medic remount, technology replacements for approximately
$1.4 million in total loan proceeds. All were for critical needs that had been deferred for the
past two to three years.
Pennington said staff had conducted an exercise to determine which needs were most critical
to help in the decision-making process, and the budget addressed those needs.
Salvatore added that computer replacement had been on a three-year cycle, and the City
was currently working to get to a five-year cycle. The City would lose support on Windows XP
soon, as well as other programs, and those changes needed to be made.
Salvatore went over the budget summary, noting that the plan had been to increase the cash
reserves in FY 2011 and FY 2012, s? there.lNouldpeadcjitionalfuncjsinFY 2013 INhen paving had
to be added back into the General Fund and there would be an additional loss in LOST funds
due to the renegotiations and the increase in population in other areas of the County.
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June 20. 2011
Page 3
Salvatore continued that the LOSrViasbased strictly on a pro rat? share. so the projections for
the LOST in FY 2014 included a $500.000 impact due to the LOST renegotiations and further
decline of the sales tax. .
The expenses were also adjusted to show the pension expense as zero since the contribution for
FY 2012 was paid last year.
Salvatore referred to the Public Improvement Program (PIP) budget. saying staff still needed firm
numbers regarding what would be in the Facilities Authority bond. The southside and westside
fire stations had been removed from the PIP until it was better known if the City should forecast
for growth and what happened with the economy. He added that. if the Facilities Authority
bond came though. the projects listed in the bond would start regardless of the year it was
scheduled in the PIP.
Salvatore briefly reviewed the five-year model, noting the cash reserves should increase to
$10,501.102 barring any other economic disaster. In FY 2013. a one mill increase was projected
in the millage rate due to the unknowns surrounding the LOST renegotiations and paving costs.
and did not include any other reorganization. He continued that the proposed FY 2012 budget
accomplished the goal of maintaining what the City had, still adding to the fund balance as
was projected due to the millage rate increase last year.
There was a brief discussion on cvtting services vs. increasing taxes and what the core services
were and the residents' expectations regarding what were core services.
~ Lynda Wojcik addressed Council, saying she did not mind paying higher taxes if the net amount
WdseqUc:lI to what she paid a feVi years ago. She did not use all the services offered by the
City. but those services added value to the community and her property.
Sturbaum asked what would become the new norm for the country, noting it could be 9%
unemployment. The City had weathered the storm pretty well, but there were challenges.
Council needed to look at everything as a whole and make some tough decisions, working
together.
Pennington said economists were forecasting another dip. and that the country was not out of
the recession yet. Local government used to be able to have great linear projections. which
was much more difficult to project due to all the variables. The estimates were good, and a five-
year model was needed to help guide the City.
Imker said staff had done an excellent job of putting forth a bUdget with no tax increase. but
pointed out some items to look at.. He referred to the 0.098 mill "roll-up" in tax rate. which
Salvatore stated was technically riot a tax increase. Imker said it was, adding that if the value of
the home went down, the objective of the "roll-up" was to keep a homeowner paying the same
amount of taxes as the previous year. If the value did not go down. that homeowner would be
paying more tax next year. He wanted to look at "zeroing out" the "roll-up."
Imker continued that his concern in FY 2012 was the projected revenue had increased by $1
million ($27.838,029 in FY 2011 and $28,828.563 in FY 2012). asking Salvatore where the increase
had come from. Salvatore explai~ed $176,000 Vias from the roll-up millage rate. $400.000 in loan
proceeds for technology equipment. and $250.000 paid back to the General Fund from the
Kedron bubble loan. The remaining funds were from small increases in other areas.
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,..., Imker referred to the five-year model. noting that the projection for departmental operating
expenses in FY 2011 had been $22,687,977, jumping to $25.379,136 in FY 2012. The projections
jumped again in the out years. .
Irnker noted that the 1.25 mill increase in FY 2011 had brought in an additional $2.3 million in
revenue, adding $1.592.443 to the cash reserves. Another $831 ,385 would be added to the cash
reserves in FY 2012.
Imker continued that the one mill increase projected in FY 2013 told them the City would have a
$7 million problem. He said the increase would generate $1.8 million in revenue each year
beginning FY 2013.~ The City currently received 34.5% of every LOST dollar collected. At worst.
the City would still get 32.5% of every dollar after the renegotiations with the County.
approximately $150,000 -- $200,000 less in revenue. The City's population had changed to 32.5%
of the County. He also wanted staff to look at the increase in Public Works from $1.5 million to $2
million. He agreed the City workers needed a cost of living bonus at 1% across the board rather
than the recommended 2%. or $130.000. to be distributed evenly across the board as all were
being hit equally by the economy.
Imker referred to the Special Purpose Local Option Sales Tax (SPLOST). noting that the City was
spending $720,000. this year on streets, as well as $254.000 on paths. In FY 2012, the plan was to
spend $800,000 on streets and $409,000 on paths. He noted there was $546,000 in an unassigned
contingency fund, not dedicated to anything. He suggested using the unassigned contingency
funds for FY 2013 road and path maintenance and therefore offsetting the need General Fund
use, adding that SPLOST money could be used for those purposes. The funds would help
eliminate the proposed one mill increase in next year's ad valorem tax.
Imker also suggested changing the projected millage rates in the five-year model. using an
increase of 0.25 mills in FY 2015 and 0.21 mills in FY 2016, and eliminating the projected one mill
increase in FY 2013. When moneywas saved, it was saved rolling forward. Imker continued that
the City needed the work on the infrastructure and the updates in technology. He added he
was very optimistic about the budget.
Haddix stressed the only thing Council would be voting on would be the budget and millage
rate for FY 2012. Anything beyond that would be up to the next Council. Haddix said he did not
disagree.
Salvatore asked for direction on the proposed "rollup" millage rate of 0.098 mill. Imker said it
should be left in until there was uproar from the citizens. The actual cost would be the same for
most residents. with the exception of those who appealed and got a lower assessment. Haddix
said it truly was a tax increase because people would pay a greater percentage of their home's
value. Council needed to be very cautious in making statements. He looked at a tax as
percentage of value. and when looking at it that way. the overall percentage would go up
even if the homeowner was actually paying less money. He had not seen anything to make him
think revenues would go up. Sales tax was based on disposable income. and if people did not
have disposable income, the City would not get any LOST money.
Sturbaum said the process had just started, and he believed there were opportunities to identify
cuts to manage out the 0.098 mills.
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June 20, 2011
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Fleisch asked if the increase woul~. be left In.or tak~l1 out. SCllvClto~~ .cl<;:irified th<;:it the"roll~up"
rate of 0.098 mills should be left in proposed budget for further discussion and input. Council's
consensus was to leave it in for now.
Salvatore asked what to do with the proposed 2% COLA bonus for employees. Council's
consensus was to leave it in for now.
Salvatore said only a 2% growth rate in expenses had been figured in the out years, with the
exception of FY 2013 and the many variables for that budget. He continued that, during normal
times, the growth rate in expenses would have been 5% or 6%. Staff tried to be as conservative
as possible so things could be taken out if necessary.
Pennington added that the question was reality and the "new normal." which included not
being able to project what would happen in five years.
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Salvatore said the Stormwater Fund budget was designed to comply with the bond covenants
of 1.15 debt service coverage, with 1.39 service coverage included in the proposed budget.
Proposed changes included the elimination of street sweeping contract service as of December
31 and the purchase of street sweeper with Renewal & Extension funds. Salvatore pointed out
that staff was looking at a smaller piece of the equipment, and the purchase would save
money. Caspar said the purchase price was approximately $153,000, and the current contract
was $65,000 annually. The life expectancy of the equipment was 10 years plus. Caspar said the
budget also included a new employee for some of the stormwater permit administration, public
information, site inspections, and other programs (assistant program manager). Salvatore said
the remaining bond funds would be allocated for design and engineering of projects scheduled
for the future, with the construction to be included in a future bond.
Current hotel/motel tax collections were 5.6% ahead of projections for this time of year (more
than $43,000 by year end if the trend continued $14,000 for City's General Fund). The FY 2012
budget assumed a 2% increase... Convention & Visitors Bureau (CVB), $530,853; City General
Fund, $265.427. The CVB contract with the Peachtree City Airport Authority was for 20% of the
CBV share of the hotel/motel tax, or $106,170.
There were no major changes at the Amphitheater. Price said the part-time facilities
coordinator would be moving to Public Works. Plans were to continue with the six-concert series
and to continue to offer spotlight concerts and community events. Rental opportunities
provided diverse programming. Staff would research additional sales "packages" for the series.
Lynda Wojcik suggested using more motorcycles whEm possible, saying there could be a savings
in the cost of the vehicles and the maintenance. Clark said the cars were kept for many years
before they were surplused, making the costs about the same. The maintenance costs were
about the same, and there weresome savings in the fuel costs. Wojcik noted that it appeared
the big fire trucks, which cost the most to run, answered calls where a fire truck was not needed.
Eiswerth said that a truck responded with a medic unit on many calls due to the personnel
requirements, specifically advanCed life support or cardiac arrest calls. On other calls, only the
medic unit responded unless the engine was closer. If medic units were on other calls, an
engine would respond. Sometimes when the engines were seen in shopping center parking lots,
they were doing inspections and had to have the truck available in the event of a call.
Kurt Boehringer thanked staff and Council for the budget preparation. He was president-elect
of Peachtree City Little League and had concerns regarding what would happen with the
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City Council Workshop
June 20, 2011
Page 6
recreation programs. His organization did a great amount of work on the facilities it used. He
agreed that, while he might not use all the City's facilities, they added value to his property. The
City had very nice fields, among the best, but the bathrooms at the fields were not that great.
Caspar said part of the re-Organizotion and bringing the Recreation crews into Public Works was
to streamline maintenance of the City's facilities, fixing the backlog. The upcoming assessment
included the fields and lavatories. Caspar said they should not see less service, but more
service. Imker asked Boehringer to have his organization come up with a list of work that
needed to be done and communicate it with Caspar and him. Sturbaum, a past president of
the organization, asked Boehringer to contact him to go over the projects included in the
budget, adding he would report back to Council and staff.
There being no further discussion, Haddix adjourned the meeting at 8:56 p.m.
Nikki Vcana, Recacdlng Secreta", - a"'Ha!~ 0/