Loading...
HomeMy WebLinkAbout2003-05-19 - City Commission Budget Workshop Meeting MinutesCITY OF TAMARAC REVENUE WORKSHOP MEETING CITY COMMISSION OF TAMARAC, FLORIDA MONDAY, MAY 19, 2003 CALL TO ORDER: Mayor Schreiber called the Revenue Workshop Meeting of the City Commission to order on Monday, May 19, 2003, at 9:30 a.m. in Room 105 of Tamarac City Hall, 7525 NW 88t" Avenue, Tamarac, Florida. PRESENT: Mayor Joe Schreiber, Vice Mayor Karen L. Roberts, Commissioner Edward C. Portner, Commissioner Beth Flansbaum-Talabisco, and Commissioner Marc L. Sultanof. ALSO PRESENT: City Manager Jeffrey L. Miller, City Attorney Mitchell S. Kraft, Assistant City Manager Michael C. Cernech, and City Clerk Marion Swenson. 1. PRESENTATION RE: UTILITY RATE STUDY: Utilities Director Ray Gagnon introduced Finance Director Dona Newman, C. Zachary Fuller, P.E., of Tetra Tech - Williams, Hatfield & Stoner, and Tara L. Hollis, M.B.A., C.P.A. of Hartman & Associates. Mr. Fuller gave a presentation and then turned the presentation over to Ms. Hollis. Ms. Hollis reviewed the water and wastewater revenue sufficiency study that was prepared for the City of Tamarac and explained how the suggested 11.25% rate increase was formulated. Commissioner Portner asked if the City could cut back on services in order not to increase costs, and Utilities Director Gagnon said there is very little discretionary cost in the budget; he would have to analyze the situation before providing an answer. City Manager Miller said we would have to stop or slow down repairs to the system; funds would not be available in the CIP. Commissioner Sultanof asked the age of the system, and Utilities Director Gagnon said it is 40 years. The useful life of utility infrastructure is 30 years, and we have been making replacements for the last four years. Commissioner Sultanof said water damage is the biggest destructive force and cutting back is the minimum thing to do. Utilities Director Gagnon replied if we do not replace the underground pipes, there is the danger of damage to homes. Mayor Schreiber said it is unheard of for a city to go 10 years without raising water rates, and this increase is warranted, and added that the Utilities Department is the best department in the City for making money and we must move forward. Vice Mayor Roberts asked how many miles of pipe were replaced in the last four years, and Utilities Director Gagnon said about 24-25 miles per year. Commissioner Portner asked if the previous administration put a halt to yearly increases and Mayor Schreiber said the last increase was in 1994, at which time Hartman and Associates made recommendations and made yearly reviews. There has been no recommendation for an increase until now. Commissioner Sultanof said no one could have foreseen the market and inflationary rate. Ms. Hollis added the consultants' recommendation is to go with the 11.25% increase now and then increase 2% yearly. Commissioner Sultanof spoke about consumers tracking consumption and educating the public on 0 conservation. Vice Mayor Roberts spoke about older residents on fixed incomes, and May 19, 2003 City Commission Revenue Workshop 1 Revised 05-23-03 said an 11.25% increase is a large and disheartening increase. Older consumers do not use the minimum gallons. Utilities Director Gagnon said the purpose is to keep Tamarac financially sound and maintain and update the infrastructure. Barring any mandates or unforeseen capital outlays, we will be kept financially sound if we follow the policy as set forth. Vice Mayor Roberts asked how much 11.25% would bring in and how many residential customers there are in the City. Ms. Hollis replied about $1.7 million; Utilities Director Gagnon said there are 18,500 meters, but many are for multi- family. Ms. Hollis added that a typical user, at 6,000 gallons a month will see an increase of about $4.00 per month. Mayor Schreiber questioned eliminating the minimum and just charging by usage, to which Utilities Director Gagnon replied the system is set up so that service availability is charged if the customer is at home or not and consumption charge is based on how much water is used. The minimum billed is for 1,000 gallons, and if the service availability were eliminated it would result in a 40% loss of revenue for the City. Vice Mayor Roberts asked if instituting a utility tax would alleviate raising the water rate, and Finance Director Newman said the utility tax revenue would go into the general fund, not to utilities. Commissioner Partner asked what would happen if we fell below the required amount and Ms. Hollis responded that we would have to make adjustments for the bond holders from other funds. Mayor Schreiber asked for an expression of interest to approve the recommended rate increase of 11.25% and the CPI for next year. Commissioners Partner, Flansbaum- Talabisco and Sultanof, and Mayor Schreiber were in agreement. Vice Mayor Roberts was against the rate increase. 2. PRESENTATION RE: FIRE ASSESSMENT STUDY: Finance Director Dona Newman introduced Camille Tharpe of Government Services Group and Tamarac Fire Chief Jim Budzinski. Ms. Tharpe gave a presentation and explained that many surrounding cities are in the process of increasing their rates. Vice Mayor Roberts questioned the use of the title Fire Rescue, as this was an issue with the North Lauderdale Case, and Ms. Tharpe explained it is still called a Fire Rescue Special Assessment because a piece of the Fire Department is allowed to be funded by the special assessment. Chief Budzinski added that rescue encompasses more than emergency rescue. Ms. Tharpe explained the North Lauderdale Case and said Tamarac is in good standing and detailed how Fire and EMS services were separated. Vice Mayor Roberts questioned the increases set forth in the status quo budget and enhanced budget, and Ms. Tharpe explained the net expenditures in the enhanced budget included the 13 people that would be hired, and the impact is on the general fund. Vice Mayor Roberts questioned how much would be gained going from $60.00 to $113.00, to which Ms. Tharpe responded the increase would bring in about $2 million. Tamarac was not funding 100% of what it could with the $60.00. Commissioner Portner asked if there was any other way to raise revenue besides increasing the EMS fund, and Finance Director Newman said we could use any revenue stream; we can pay through the general fund, but will then use up money in the general fund. We can increase the ad valorem tax or institute a utility tax which would bring in $2 million in revenue. The Fire Assessment fee can only be used for fire services; other funds could be used for any item. Commissioner Portner asked how much would be needed to May 19, 2003 City Commission Revenue Workshop 2 Revised 05-23-03 offset an ad valorem or utility tax, and Finance Director Newman said we are looking at $2 million, which would be 1 mil in ad valorem tax. The utility tax has not been calculated recently. Commissioner Partner asked if a combination of an increase for the EMS from $60.00 to $80.00 and a utility tax of 5%-6% would offset the need for total increase of the EMS fee. Commissioner Portner said only two cities in Broward County do not have a utility tax, and Tamarac is one. Commissioner Portner explained his desire for a utility tax, as many people in Tamarac pay no tax and a utility tax is one that everyone would have to pay. Mayor Schreiber said everyone pays the Fire Rescue Fee and it may not be wise to raise the millage at the same time as the water rate. Vice Mayor Roberts said at one time many people in Tamarac paid no ad valorem tax, but with the increase in property value they are starting to pay. Mayor Schreiber spoke in favor of increasing the Fire Rescue fee from $60.00 to $113.00 and said many cities charge more and this is less drastic than an increase in the ad valorem tax. Vice Mayor Roberts agreed everybody pays the water rate increase and the Fire rescue Assessment. Finance Director Newman said implementing the $113.00 is predicated on the preliminary budget before looking at the Fire budget, and asked the Commission to set an amount or recover 100%. Commissioner Sultanof spoke about flexibility and suggested setting a lesser amount. Ms. Tharpe reminded the Commission that what is not funded through the assessment will have to be funded through the general fund. Chief Budzinski said what was presented to the Commission is staff's best estimate of what the fee is going to be. The budget is not finalized for next year yet, so we do not know to the dollar what the fee will be, however, the components are there. Mayor Schreiber suggested instead of expressing interest in $113.00 the Commission should consider $85.00. City Manager Miller said based on the presentations from budget and Fire, the preliminary numbers are in and if the $113.00 is approved it allows us to be able to build into the budget the hiring of 13 people. In April the Commission authorized us to accept a grant preliminary award of $200,000 for a new rescue unit. $80.00 on the Fire Rescue Fee does not allow us to be able to do that; if we accept the grant we also have to put on the necessary Firefighter/EMS staff to operate the unit on 24 hour shifts. Mayor Schreiber questioned why we could not function with what we have now and transfer firefighters from the overcrowded station to the new station without the addition of 13 more firefighters. Mayor Schreiber questioned the cost for the additional staff, and City Manager Miller said about $1.5 million for the first year. City Manager Miller explained that during the fire presentation the Commission was told that they are now taking on 11,000 calls per year, so this must be done by next year or we will be placing a strain on the physical ability of our teams to respond to calls and staff may get worn out if we must go yet another year without hiring staff. Vice Mayor Roberts asked for clarification if we are replacing or adding another vehicle, and Chief Budzinski said it will be an addition. Vice Mayor Roberts said money was appropriated in the midyear budget to replace four ambulances; taking the nine months to a year it will be necessary to get 13 people on board and replacement vehicles, for the first year the $80.00-$85.00 increase from $60.00 should suffice. City Manager Miller responded that if we do not get the full amount on the fire fee we will have to make additional cuts in the budget. Mayor Schreiber suggested staff look at the figures and come back to the Commission 0 with a report. Commissioner Flansbaum-Talabisco said it is her belief that the staff has May 19, 2003 City Commission Revenue Workshop 3 Revised 05-23-03 given its best recommendation to the Commission and anything else they would come up with would be second best. The subject of Fire Rescue/EMS is a very important issue and anybody in Tamarac who has been a recipient of these services understands how important this is. If we want to continue giving the best service possible it seems the staff's recommendation is best. Mayor Schreiber directed the City Manager and Finance Director to report to the Commission regarding what has been suggested today and see where we stand so recommendations can be made. Vice Mayor Roberts said the options are to pick a number from the current level to 100%, and asked that figures from $80-$85 to $95-$100 be included so the Commission could see the difference. Ms. Tharpe said she would prepare a report in $10.00 increments from $60.00 - $113.00 so the Commission could compare the figures. Commissioner Partner said he would like the Finance Director to be given direction to figure out revenues that might be derived from a utility tax at 4%, 5% and 6%. City Manager Miller said this would be done. Mayor Schreiber recessed the workshop meeting at 11:30 a.m. and reconvened the meeting at 11:40 a.m. with all present as before. 3. DISCUSSION RE: GENERAL FUND: Finance Director Dona Newman said the remaining two items impact the money available in the general fund balance. Any shortfall from the Fire Assessment Fee will fall to the general fund or fund balance. The general fund is in good shape now, and we have the maximum fund balance we can have in the fund balance; a large amount of money which was derived from the telecom tax. If we do not collect 100% of the fire costs, in '06 we will need to increase our revenues. Commissioner Sultanof asked if the deflation cycle had been taken into consideration, and Finance Director Newman said deflation has not been built into coming years. In the general fund, the largest cost is labor — 70% in each department is allocated for labor. Vice Mayor Roberts asked if the new housing coming up and economic development is factored in and Finance Director Newman said ad valorem revenue is factored in and it is expected property values will rise; the trend has been looked at. Vice Mayor Roberts asked about incentives given to commercial properties and City Manager Miller said they were provided fee reductions which did not include ad valorem tax. The budget department projects commercial and residential properties coming on line. Mayor Schreiber said we can go to 2006 before having to turn the other way, and Finance Director Newman said we may not be able to go to 2006 if we do not get 100% from the Fire Rescue Fee. Our options will be to increase revenue or decrease service levels. No matter what we decide to do it is important to maintain financial stability and we need to carefully plan and adhere to the financial plan; stick to the budget and adopt a fund policy. 4. DISCUSSION RE: FUND BALANCE POLICY: Finance Director Dona Newman said at the November 12 workshop fund balance and the importance of having a fund balance policy was discussed. The consensus was for staff to bring back a fund balance policy, which she has brought for the Commission's consideration. Finance Director Newman explained what rating agencies look for with regard to fund balance May 19, 2003 City Commission Revenue Workshop 4 Revised 05-23-03 management, and explained suggested recommendations for fund balance for general fund. Finance Director Newman went over the definitions used in the draft fund balance policy and explained the suggested fund balance ranges. Finance Director Newman discussed options to correct falling outside the range. Vice Mayor Roberts confirmed there is nothing in the surplus that speaks to increased benefits to, or programs for residents, and Finance Director Newman said it is designated for tax fees or rate stabilizations. If we added programs based on a surplus then in the next budget year we would have to increase rates and fees. Finance Director Newman discussed what to do in the event of shortfalls. City Manager Miller said one thing that was not discussed is that we always want to have money set aside in reserves for a catastrophe. Mayor Schreiber said the Charter says we must have 10% set aside, and City Manager Miller confirmed the Charter says a maximum of 10% of the total proposed expenditures of the general fund budget, but we rarely keep that amount. Finance Director Newman said some places do not look to set a range for fund balances and do not require a balance in other funds so more than 10% is put in the general fund in case of a shortfall. This policy shows fund balance in other funds because of restrictions in the Charter. There being no further business to come before the City Commission, Mayor Schreiber adjourned the workshop meeting at 12:10 p.m. Marion Swenson, CMC City Clerk May 19, 2003 City Commission Revenue Workshop 5 Revised 05-23-03