HomeMy WebLinkAbout08-21-2012 regular meeting
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City Council of Peachtree City
Budget Workshop Minutes
August 21,2012
6:30 p.m.
The Mayor and City Council of Peachtree City met in workshop session on Tuesday, August 21,
2012, at City Hall. Mayor Don Haddix called the meeting to order at 6:40 p.m. Others attending:
George Dienhart. Vanessa Fleisch, Eric Imker, and Kim Learnard.
The purpose of the workshop was to discuss the proposed budget for FY 2012-2013.
City Manager Jim Pennington said staff had presented its proposal at the August 2 meeting and
had received feedback at the August 9 special called meeting on the millage rate. Staff had
gone back and discussed several. things with each Council Member and among themselves,
and they were ready to present another proposal to Council.
Financial Services Director Paul Salvatore reviewed the five-year projection presented to Council
on August 2, noting the use of cash reserves in 2013 of $843,000 had been left out. The roll-up
millage rate had been included, as well as two future 0.2 mill increases that could be managed
out. It showed there could potentially be a balanced budget with no use of cash reserves in
2017.
Imker noted the projection showed 26% in the cash reserves in 2017, saying the overage based
on the 22% was $688,000, and adding he would refer to that number later in the meeting.
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Salvatore said staff had reduced the use of cash reserves in FY 2013 to just under $500,000,
cutting $343,000 from the previous budget model. The roll-up for this year was still in model. It
also kept the budget in balance in 2017 with 26% cash reserves.
Proposed reductions in the FY 2013 budget totaled $339,836, and included the Mayor's pay,
$7,000: Police holiday pay, $50,000: Police overtime, $50,000: one new court bailiff (not two);
$8,930: Fire holiday pay, $55,000: Social Security, Medicare, etc., for Fire and Police deductions,
$17,433: library books increase cut, $18,500: Police records management software (delay one
year), $63,174; Fire Department born building repairs (delay/evaluate), $55,500; eliminate one
Police cruiser, $10,972: and downsize vehicles (two Expeditions), $3,327. The reductions cut the
use of cash reserves to $494,826 and eliminated the projected millage increase in FY 2016.
Salvatore pointed out that. with the recent changes in the leave policy, the Police and Fire
overtime and holiday pay was not cut; staff had been more conservative in estimating the cost
than in the previous model. There should be enough left in the two accounts to cover the costs.
He also noted that the increase in the Library budget for books was cut. which essentially kept it
at the same funding level as FY 2012. Staff proposed delaying the repairs to the burn building
until an evaluation and engineering study were completed. The delay of the Police software
($285,000 total) saved one year's debt service payment ($63,174). He added the
recommended cuts reduced the funds taken from cash reserves from $834,000 to $494,000,
eliminating one of the future millage rate increases and keeping the budget in balance in 2017.
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Imker asked Pennington if he believed the new budget proposal was sustainable. Pennington
said yes. Imker asked if the 2% cost of living adjustment (COLA) was included. Salvatore said it
was. Imker asked if the additional six part-time Public Works employees were included along
with the $35,000 for the Fire Department's surface water rescue boat. Salvatore said he
believed it was in the Public Improvement Program (PIP) funds. Imker asked if any contingencies
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August 21,2012
Page 2
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were reduced. Salvatore said no. Imker clarified that the Police software purchase had been
put off until FY 2014, and the cost was still estimated at a total of $285,000. Salvatore said yes.
lmker asked whether the budget included eight Police vehicles and one motorcycle. Salvatore
said yes, pointing out that the total number of vehicles was eight, including the motorcycle.
Learnard asked when the next facilities bond would be considered. Salvatore said it depended
on why it was needed. Imker said the current bond still had $750,000 that was undedicated.
Pennington said there might be other things that needed to be done along with the potential
items for another Facilities Authority bond. Staff was looking at what kind of package could be
put together, as well as maintaining the City's bond rating, which was why the sustainability of
the budget was so important.
Imker referred to FY 2017, noting there had been $688,000 over the 20% cash reserve in the
previous model, which was huge. Imker said it was possible to eliminate the some of the
additional 0.2 mill increases that were projected. Salvatore said eliminating another of the 0.2
mill increases meant the use of another $350,000 from the cash reserves. Anything could
happen in the next three to four years. The model showed the budget in balance in five years,
with the understanding staff would continue to try to manage out the proposed 0.2 mill
increases. lmker said they would come to a consensus on FY 2013, but he was looking five years
out. He agreed the model should be in balance for any future bond evaluations and credit
ratings.
lmker asked why another bond was being considered so soon. Salvatore said a stormwater
bond would be needed. Imker said the City wanted to show the bond writers it had its act
- together and had it together for quite a while. No other city in the state had a rating higher
than AAA. A good job had been done over the last two and one-half years pulling the City out
of a debt crisis. Salvatore said the city had been fortunate that, even though the tax digest had
declined, the property values had held better than cities in the surrounding area.
Fleisch asked if the bond writers looked five years out. Salvatore said they did to see if the City
had a multi-year financial plan and if the budget was sustainable.
Imker referred to the proposed 0.372 mill roll-up, adding the impact of not doing the rOil-up was
$600,000 on the FY 2013 budget and each consecutive year, or $3 million over five years.
Salvatore said it was difficult to understand that the City was raising the millage rate, but it was
not called a tax increase.
Imker said he needed to understand the 2% pay in lieu of salary issue. There was an option to
hold the line at 0%, all the way up to 2%, noting every 0.5% equaled $66,000.
Dienhart said they should look at 1.5%, adding the private sector was getting nothing. Citizens
were not comfortable with government should treating themselves better than the private
sector was being treated. He would support no payment or raise, which was the status in the
real world. It should be left as a one-time payment in lieu of raise, which was still a bonus the
private sector was not getting.
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Salvatore said there had been some movement in that regard. Fayetteville was reorganizing
and using the savings for a pay study. Salvatore said he had lost two people this year for other
jobs. The City had not done a formal pay classification study in approximately 12 years. Some
rates might need to be adjusted for people working outside their pay grade.
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August 21, 2012
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- Oienhart said he found it hard to grant a payment two years in a row. Pennington said when an
analysis was done, examining what the City was competing with, nothing in the private sector
was comparable to police except security guards. There was nothing for Public Works or the Fire
Oepartment that was comparable. There needed to be a clear understanding these jobs were
not the same jobs found in a factory or an insurance office. The City was probably one of the
better run cities, working with half the staff as other cities. Most cities the same size had around
400 employees. The City's employees worked hard and did dual jobs. They needed to continue
to be motivated to provide the best services to the City.
Oienhart said he was proud of the employees, but it was Council's job to take on the case of the
taxpayer, who was not getting a raise and was getting hit with a millage roll-up this year. There
was a payment to the employees in 2011.
Learnard said they had looked at how lean the City ran compared to the other Class B cities in
the state, noting only Roswell had as few employees per capita because it employed many
part-time workers. The City ran very lean, but there was a tipping point. Taxpayers needed to
understand there came a time when it was not being cost effective anymore, just cheap. The
City had a higher employee turnover rate than other Class B cities, and there was a cost for
rehiring and retraining. The employees deserved a raise, but the City did not have the money.
The 2%, even as a one-time deal, was appropriate.
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Fleisch supported the 2% COLA proposal. Every year, Council had gone through the budgets
and sustained itself. As someone in a profession that had been struggling due to the economy,
she said she wanted employees to have the 2%. The City had fewer employees and paid less
than any other Class B city. The City had more infrastructure because it had a second road
system other cities did not have. Every year Council put the employees through angst on
whether or there would be a COLA or raise. She had suffered due the economy, and the roll-up
would add $20 to her tax bill. It was worth it. The loss of people in City Hall in the last year had
cost the City institutional knowledge.
Oienhart noted the proposed budget included six part-time employees, and there had been a
COLA in 2009 and pay in lieu of salary in 2011.
Haddix pointed out that pay had been frozen in 2009. The employees had been very
understanding, but Council had not expected it to last more than two or three years maximum.
He had also talked to many citizens and was also, as mayor, responsible for keeping an eye on
things in the City. He had heard it both ways, and he was concerned for the taxpayers and the
employees. Council could not throw one under the bus for the sake of the other. This City was
the leanest in the state for accomplishing more with less, and that had to be considered.
Fleisch said there had been a reduction-in-force (RIF), and they had changed the Human
Resources structure as far as the number of hours and other factors. The policies had also been
archaic. In addition to low pay and expecting more out of employees, she felt 2% was fair.
Oienhart reiterated the City was hiring people. Staff could not be doubled in a year, but six
were being added. Fleisch said three were already on board and being paid as projects came
up. The City added 30 employees between 2009 and today. Haddix said more than 30
employees had been cut since 2009.
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Oienhart said the employees were replaced by contractors, so the job was still getting done.
Salvatore said the full job was not getting done. Haddix said 40-hour a week workers were
replaced with contractors that came in a few times a month. Salvatore said the number of
cycles was reduced. Oienhart reiterated the work was still getting done. Pennington said it was
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August 21,2012
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- not. In the winter, the employees cut during the 2009 reduction-in-force were the ones painting
and doing the maintenance work needed in the City's facilities. There was no one to do those
tasks anymore.
Dienhart said that was what was being done with the Facilities Authority bond. Fleisch said that
the bond money was not being used for maintenance. In November, Council got the wake-up
call on how poorly facilities had been maintained, and they had worked to turn it around.
Everything had been deferred for several years. Haddix said Council cut maintenance out of
the budget in 2008 and 2009 to save the expense.
Imker said the discussion of employees and a potential raise was very important, as staffing
comprised two-thirds of the budget. He heard the City did a better job with less. Eventually, the
other cities would look at Peachtre.e City and want to do things this way. The City did not need
to emulate others. He referred to the fair market values situation, noting the City ate the 3.41 %
decline in the tax digest two years ago and did not raise taxes. Last year, the decline was 1.6%,
and again, the City found a way to compensate for it. No change was predicted this year, but
there was actually a 5.13% decline, which was equivalent to $635,000 in property tax revenue.
Next year, the projection was 0%, but no one could know what would happen. If there had
been no decline this year, Imker said he would have supported a raise for employees. He saw
three options, 1 % pay in lieu of salary; 2% pay in lieu of salary, or a 2% COLA, which was much
different from a pay in lieu of salary. The 2% pay in lieu of salary would cost approximately
$280,000. The 2% COLA would cost that amount each year moving forward. Whatever the
number, he wanted to do it as pay in lieu of salary and have Council make a decision at the
next meeting, or look at any other options that might come up.
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Fleisch asked what the models were based on. Salvatore said 2% was 2%. The 2% COLA was
factored into the five-year projection. Salvatore said the budget projections for the next five
years were austere, with a 1.5% increase in expenses instead of the usual 5% to 6%. The
economy was shrinking, and they were trying not to get into the "shrink" mode. He had seen
cities deteriorate when services were taken away. Staff was trying to maintain service levels as
best as possible, as stipulated in the written budget policy. Staff had reacted to the economic
crisis by cutting personnel, changing the cycle of grass-cutting, and putting off maintenance.
The question was whether the City should look at retaining services in the current economy or
cutting services to get to a sustainable budget.
Dienhart said the City could not break the back of the taxpayer to maintain that 1.5% increase
in future budgets.
Learnard asked if the 2% pay increase was included in the future years of the five-year
projection. Salvatore said the 2% COLA carried forward with a rate of 1.5% growth. Pay in lieu of
salary would be a one-time expense.
Imker said the City was still in negotiations on the Local Option Sales Tax [LOST) distribution. He
knew a hit of $300,000 was factored in the budget, but it could be more. The LOST was
increasing every year, but the City's share might be less, adding Salvatore's estimates were fair.
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Haddix said he did not know if the increase in LOST was due to the amount of goods sold or the
cost increase of those goods. Human Resources & Risk Management Director Ellece Brown said
the Consumer Price Index (CPI) in the Atlanta metro area showed a 6.7% increase over the last
three years. Haddix said that was what accounted for the increase in sales tax.
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August 21,2012
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,- Haddix continued there was also a mandatory stormwater utility fee the taxpayers had to pay
that might need to double. The stormwater utility fees were not part of the City's budget, but
they had an impact on the individual property owners. The cost of everything was going up,
and it had an effect on people.
Fleisch asked Salvatore what the average homeowner paid in taxes. Salvatore said a property
valued at $243,000 paid $656.68 in taxes, adding the average property value last year was
$260,000. Theoretically, the homeowner should pay the same bill this year.
Mary Giles asked if the cuts by staff at this meeting were included in the five-year projections.
Salvatore said, by cutting the items out of the budget, the use of cash reserves to balance the
budget was reduced from $834,000 to just under $494,000. Giles said she was concerned about
the postponement/delay of some items. She asked Council to keep in mind the upward trend in
crime statistics regarding the delay in the Police Department's records management software.
She read from crime statistics from the Monthly Reports submitted to Council. She said
everything the City did budget-wise should be secondary to public safety. It was unfair to have
Police and Emergency Services bear the brunt of the cuts.
Imker said the Monthly Reports were one-month snapshots, and Giles might see a different
snapshot if she had looked at another month. More analysis was needed, but lmker said Giles'
point was well taken. Haddix said there was a pattern over time of the crime statistics going up,
then dipping down, and then going up again. Police officers had been added, but it was never
enough.
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Giles said this was a different economy and asked Police Chief H.C. "Skip" Clark if he had seen
any difference in statistics. Dienhart asked if there was a national trend of increasing crime.
Clark said there was an increase from 2008 in several areas and then a decrease in 2009. In
2010 and 2011, there was a decrease, but the trend for 2012 was an increase. He added that
the numbers in the Monthly Report were very raw. If the volume continued to increase, there
would be an increase in the crime statistics over last year. Giles said she was also concerned
about the effect of unemployment on the crime rate, and long-term unemployment created
desperate people who turned to crime. Clark said that might be true, but there were no
statistics.
Salvatore pointed out that the number of personnel in the Police or Fire Departments was not
being cut. The only real cut or delay was in the records management software, which did
create some delay in efficiency. Software needed to be evaluated Citywide. Human
Resources used Excel spreadsheets rather than Human Resources software, and employees still
used paper time sheets. Staff needed to look at utilizing technology. They were not looking to
cut service delivery as far as manpower on the street.
lmker noted the additional part-time court bailiff would put another officer on the street. Clark
said a reserve officer served as bailiff now, and he was not paid. There was also a staff officer in
court. The reserve officer was looking for full-time employment and might be leaving. The
evidence custodian would also move another sworn officer back out on the street.
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Phil Prebor told Council he did not mind paying more in taxes if he felt safer driving on the cart
paths at night. He realized he would have nicer things when he moved to the City, and he was
willing to pay for it. He got the same feeling from others he knew.
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August 21,2012
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,,- Fleisch agreed with Prebor. The City had maintained its home values. If the tipping point was
hit, the City would be like other places that had lost values. It was a beautiful place, and they
needed to work toward maintaining it.
Salvatore reminded Council the millage rate hearing was Monday, August 27, at 8:00 a.m. He
hoped would it would go in sync with the model. He saw no reason Council could not vote on
the budget resolution on September 6. The budget was good and conservative. There were
future challenges, but he was confident staff could eliminate the projected 0.2 mill increase by
next year.
There being no further business to discuss, the meeting adjo
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