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07-14-2010 VC B WS-MMINUTES OF THE BUDGET WORKSHOP SESSION VILLAGE COUNCIL OF NORTH PALM BEACH, FLORIDA • JiTLY 14, 2010 Present: William L. Manuel, Mayor Darryl C. Aubrey, Sc.D., Vice Mayor David B. Norris, President Pro Tem T.R. Hernacki, P.E., Councilman Robert A. Gebbia, Councilman Jimmy Knight, Village Manager Melissa Teal, CMC, Village Clerk ROLL CALL Mayor Manuel called the meeting to order at 7:00 p.m. All members of Council were present. All members of staff were present, except the Village Attorney. Finance Director Samia Janjua, Information Technology Director Michael Applegate, Community Development Director Chuck Huff, and Public Works Director Wiley Livingston were present. The purpose of the meeting was to review the General Fund Budget for FY 2011. Mr. Knight distributed copies of the FY 2011 General Fund Budget -Overview presentation, General Fund Budget line item detail, and the Investment Performance Review Quarter Ended June 30, 2010 prepared by PFM Asset Management LLC. CURRENT FINANCIAL CONDITIONS Mr. Knight detailed the General Fund 3rd Quarter financial report. Mr. Knight advised that 91.52% of revenues for FY 2010 had been collected as of 6/30/2010. Mr. Knight compared the total amount of ad valorem revenue collected to the budgeted amount of ad valorem revenue for the 2008, 2009, and 2010 fiscal years. Mr. Knight explained municipalities are permitted to budget 95% of the ad valorem revenue due. Mr. Knight noted that due to reductions in assessments by the Value Adjustment Board, it is likely the Village will not meet its 95% target this year. Mr. Knight has requested a list of the affected properties from the Palm Beach County Property Appraiser. Mr. Knight reviewed Village Manager contingency funds and Council contingency funds and reported $109,864 in total contingency funds available for FY 2010. Mr. Knight advised that the Unreserved, Undesignated Fund balance for FY 2009 - 2010 is estimated at $10,058,216, which represents 55% ofthe Annual Budget. MILEAGE Mr. Knight provided a comparison of the current millage rate in North Palm Beach with that of neighboring communities. It was noted that North Palm Beach does not have additional service fees as do many other municipalities, and Mr. Knight was requested to provide data on the fees other municipalities charge in addition to their ad valorem tax levy. Mr. Knight addressed the devaluation of property values, which has resulted in a reduction of $144,806,970 or 8.7% in taxable value, and a loss of $851,738 in ad valorem revenue for FY 2011. • Mr. Knight noted the assessed value of property in the Village is almost back to 20051evels. Mr. Knight reviewed millage rate options for FY 2011, and advised that the budget was based on the rolled back rate of 7.4802 mils. By consensus, Council set the tentative millage rate at 7.4802 mils. Council noted 7.4802 is the maximum rate and the final millage rate may be less. Minutes of Village Council Budget Workshop Session held July 14, 2010 Page 2 of 4 REVENUES • Mr. Knight estimated ad valorem revenue at $10,967,043 and combined revenues of $7,255,504 from all other revenue sources for estimated revenue of $18,222,547 total. Possible alternate revenue sources were reviewed. Discussion ensued on a garbage collection fee. Mr. Knight reviewed the breakdown of sanitation operating costs prepared by Public Works Director Wiley Livingston using the formula provided by the Solid Waste Authority. Mr. Knight detailed the monthly costs for single family and multi-family homes. Mr. Knight reported net annual operating costs of $1,147,840 for Village sanitation collection. Discussion took place concerning capital expenditures, such as new vehicles, and amortizing the cost over the lifespan of the equipment. Mr. Knight provided a comparison of the sanitation service fee, provider, and method of collection in surrounding cities. Mr. Knight reviewed the challenges in using Seacoast Utility Authority to collect a monthly sanitation fee. Mr. Knight recommended that the total amount be added to the annual property tax bill issued through the Palm Beach County Tax Collector, should Council choose to assess a garbage collection fee in future. Mr. Knight explained that the Tax Collector must be notified a year in advance, so this method of collection could not be implemented until FY 2012. It was suggested that the budgeted cost to provide garbage service be publicized to Village residents. Discussion took place concerning the number of Village properties that pay little or no property tax, due to exemptions and the assessed value of property. Notification to the Tax Collector and Property Appraiser will be considered after adoption of the FY 2011 budget. PERSONNEL AND COMPENSATION Mr. Knight noted that personnel costs comprise approximately 71 % of the overall budget. A 4% increase in health insurance is anticipated. Mr. Knight detailed employee-paid costs for health insurance and advised that a change in health insurance providers would be effective 10/1/2010. Mr. Knight summarized the total full-time and part-time positions in 2010 and 2011. Mr. Knight noted the elimination of one full-time position and addition of one part-time position for FY 2011. Mr. Knight reviewed compensation for general and bargaining unit employees and reported no market adjustment or COLA increase is planned. Mr. Knight explained the Federation of Public Employees collective bargaining agreement provides for a merit increase and the collective bargaining agreements for police and fire employees provide for step increases. Regarding pensions, Mr. Knight noted the General Employees Pension Plan is 72% funded and the Police and Fire Pension Plan is 80% funded. Mr. Knight reported the required Village contribution for the Police and Fire Pension Plan is up 2.24% from FY 2010, while the required contribution to the General Employees Pension Plan is down 3.72% from last year. Mr. Knight recommended a 20% contribution (15.78% required, plus 4.22% catch-up provision) to the General Employees Pension Plan. Mr. Knight suggested making additional contributions annually to the General Employees Pension Plan until it is 80% funded. Discussion ensued on elimination of the catch- up provision. Mr. Knight stated it would realize a savings of $60,000 in the budget. Discussion took place concerning the required pension contribution determined by the plan actuary. The percentage of employee contributions to each pension plan was discussed. • EXPENSES Mr. Knight highlighted certain operating costs, such as contractual services, utilities, materials and supplies, property/general liability insurance, gas, repairs and maintenance, which total $4,051,676. Mr. Knight detailed expenditures by department and function. Personnel, operating, contingency, capital, and debt service expenses for FY 2011 tota118,222,547. Minutes of Village Council Budget Workshop Session held July 14, 2010 Page 3 of 4 CAPITAL EXPENDITURES • Mr. Knight provided a list of capital expenditures, which total $469,200 for FY 2011. Discussion took place concerning the Capital Projects Fund ("K" accounts) and designated reserves. Council requested more detail on "K" accounts and asked to be updated more frequently on the status of these funds. DEBT SERVICE Mr. Knight reported that debt and other non-departmental service related costs account for $1,169,312 or 6.42% of the budget, including a loan payment of $330,000 and an additional principal payment of $218,691. Mr. Knight advised that after the last FY 20101oan payment is made in August, the principal amount outstanding is approximately $1,568,000. Mr. Knight reviewed debt service payments from 1998 - 2011. Mr. Knight discussed Council Contingency, which is 1 % of the annual budget or $182,226, and Village Manager Contingency, which is .25% of the annual budget or $45,557. Discussion ensued on adjusting the percentage, based on history. Mr. Knight noted the Village auditors have advised that contingency is for non-budgeted, unanticipated projects or expenses. Regarding the use of contingency funds, Council discussed including funding for the Small Business Grant Program in the budget in future years. AVAILABLE RESERVE BALANCE Mr. Knight reported the Unreserved, Undesignated Fund Balance as of 9/30/2009 is $10,058,216, which represents 55% of the budget or 6.62 months of operating costs. Mr. Knight discussed various suggestions for the percentage of the budget that should be held in reserve and recommended a reserve level of 35% of the annual budget. Mr. Knight reviewed opportunities for use of reserve funds. Mr. Knight detailed the estimated cost to pay offthe last general fund loan, add sidewalks in the Southwest Neighborhood, install new street signs throughout the Village, and establish a Memorial Park next to the Village Library.. Mr. Knight reviewed millage options and the budgetary and tax impact of paying off the remaining loan. Mr. Knight asked Council to consider appropriating reserve funds in FY 2010 to payoff the loan prior to adoption of the FY 2011 Budget, which would reduce the total budget by $389,913 and taxes by $556,604, and allow for a millage rate of 7.1013. Council discussed the current interest rate on the loan versus the interest rate earned by Village investments. Discussion ensued on sidewalks, street signs, and Memorial Park. It was suggested that residents of the Southwest Neighborhood be surveyed regarding the installation of sidewalks. Discussion took place concerning paying off the loan now and considering other projects after the end of the current fiscal year. A suggestion was made to consider a passive park in the Southwest Neighborhood. It was suggested that Council be provided with a collective list of the projects proposed by individual councilmen in order to prioritize improvements. Council consensus was to pay the outstanding loan in total and fund the sidewalk project in FY 2010. Council requested the Village Manager bring back a • conceptual drawing and cost estimate for Memorial Park. A suggestion was made to fund Memorial Park from Council contingency. Council will discuss the street sign project again at its 8/412010 Budget Workshop in conjunction with other suggested projects. Minutes of Village Council Budget Workshop Session held July 14, 2010 Page 4 of 4 BUDGET PUBLIC HEARINGS • Mr. Knight advised that pursuant to Florida Statutes, the first public hearing on the budget must be held between the 3rd and 18th of September, after 5:00 p.m. Additionally, the Village must ' hold its budget public hearings on a different date than that of the School District or Palm Beach County (9/7/10 and 9/14/10, respectively.) Council Regular Sessions are held on the 2nd and 4th Thursday of the month. This year, the Rosh Hashanah holiday falls on September 9th, the usual meeting date. Council discussed its September meeting schedule and by consensus, determined to alter its meeting schedule for September 2010, with the first public hearing on the proposed budget and millage rate to be held on Thursday, September 16th, and the second, final hearing to be held on Thursday, September 30, 2010. CONSENSUS ITEMS • set tentative millage rate at 7.4802 • pay offoutstanding General Fund loan in FY 2010 • fund sidewalks in the Southwest Neighborhood in FY 2010 • hold first budget public hearing on 9/16/2010 and second, final hearing on 9/30/2010 NEXT BUDGET WORKSHOP DATE Council determined that no further discussion on the Country Club budget was needed; therefore, the Budget Workshop previously scheduled for 7/28/2010 was cancelled. The next Budget Workshop will be held on 8/4/2010 to review the Public Safety and Public Works Departments. ADJOURNMENT With no further business to come before the Council, the meeting adjourned at 9:55 p.m. ~G~j ~ ~'~~~ C/i~~~ Melissa Teal, CMC, Village Clerk