Finance Advisory Committee

MINUTES FINANCE ADVISORY COMMITTEE CITY OF DEKALB May 6, 2014 The Finance Advisory Committee held a meeting on Tuesday, May 6, 2014 in the Council Chambers of the DeKalb Municipal Building, 200 South Fourth Street, DeKalb, Illinois. Chairman Peddle called the meeting to order at 6:00 p.m. A. ROLL CALL: Deputy City Clerk Wright called the roll and the following members of the Finance Advisory Committee were present: Connie Golden, Mike Peddle, Gary Peele, Tom Teresinski and Mike Verbic. Absent were David Conlin and Chris Fricker. Also present were: Anne Marie Gaura, City Manager; Rudy Espiritu, Assistant City Manager; Dean Frieders, City Attorney; Wes Hoadley, Deputy Chief; Eric Hicks, Fire Chief; T.J. Moore, Public Works Director; Jeff Birtell, I&T Technician; Diane Wright, Deputy City Clerk; and Ruth Scott, Deputy City Clerk. B. CONSIDERATION Review of Proposed FY15 Budget Mr. Peddle asked Ms. Gaura to introduce Stan Helgerson and Dave Richardson, financial consultants who have been working with the City for the last month. Ms. Gaura thanked the Finance Advisory Committee for meeting and noted there will be a joint meeting on May 17th with the City Council. She addressed the roles and duties of the Finance Advisory Committee. Mr. Peddle stated there is a desire for the Finance Advisory Committee to be involved earlier in the budget process, possibly in the Fall so that they may provide input prior to planning future budgets. Mr. Peddle stated there is an additional 10 cents on the tax bill listed for the City of DeKalb. Mr. Espiritu replied that that portion of the tax bill is for the Library expansion. One-third was funded through private donations, one-third from the State and one-third is funded through the property tax bill. He advised that the City levies on behalf of the Library and this amount goes to the Library expansion. Ms. Gaura stated that the first step in the budget recommendation is to realign the Finance Division into a formal department. Another recommendation in the budget is to create a Community Development Department. The Community Development Director will focus on economic development, planning and zoning. Public Works will then focus on capital projects. Mr. Peddle noted that there was an explicit decision made previously by Council to combine the functions of public works and community development and added that the City has been outsourcing economic development through a consultant. Finance Advisory Committee May 6, 2014 Page 2 of 3 Ms. Gaura addressed long-range planning and stated that staff will work with the NIU Center for Governmental Studies on building a ten-year strategic plan. Additionally, the City will work with other agencies on a county-wide survey and will consider Phase II of the Housing Study. Ms. Gaura advised that she is recommending a restructure of the City Manager’s office. Other recommendations include IT becoming a division of the Finance Department; redesigning the City’s website so that it is more user-friendly; the addition of a Management Analyst position in the City Manager’s office who will work on public relations, development of an employee-based wellness program, coordinating press releases, etc. Ms. Gaura next discussed the situation of the General Fund supporting nine other funds. She noted that property taxes do not fully support pension obligations, and TIF districts will expire in a few years. She added that plans are to create an internal TIF team to develop a six-year plan to develop strategies when TIF districts expire. Next, Mr. Espiritu discussed revenues and Mr. Helgerson explained the process of the five-year schedule. He recommended trending revenues on a monthly basis. Mr. Espiritu discussed the local use tax and stated he used projections from the Illinois Municipal League which indicates a 1½% price growth. He noted that there were a few months when taxes went down. He commented on the 2½% growth projected in franchise taxes and an anticipated decline in projected revenue from utility taxes in comparison to actual revenues received as a result of the extreme weather conditions experienced this past winter season. Mr. Espiritu stated there is a slight growth in building fees and noted the City is transitioning to outsourcing. Administrative Tow funds were not previously budgeted, but going forward all revenues will go into the General Fund. Mr. Espiritu pointed out that the City levies strictly for pension costs; neither FICA nor IMRF is levied. Mr. Helgerson noted that sales tax revenues over a five-year period are very consistent as well as Restaurant and Bar taxes with the exception of this year due to the severe weather. Mr. Espiritu passed out the current property tax rate and noted the City’s portion is 7% of the tax bill. Ms. Gaura stated that one of the short-term EPI recommendations is to cease making debt service payments from the General Fund and stated that some increase in property tax may be necessary. She added that the impact on the taxpayer must be considered, but also, the City must question how it pays for pension funds, etc. The levels of the payments to pension funds needs to be raised, Ms. Gaura said. In nine years the City should be 75% funded. Mr. Richardson advised that he created a policy in 1992 in Streamwood. He advised that the communities of Carpentersville, Streamwood, and Hanover Park are comparable to DeKalb. However, DeKalb’s levy is lower than these communities. He added that this creates additional challenges for the City as there are limited resources to draw from for revenues. The community’s first priority should be to levy for public safety and public pensions, he said. Mr. Peddle pointed out that TIF does not contribute to pensions. He noted that when TIF districts expire, there will be more property tax revenue. It is important to have a property tax policy along with a better policy on issuing different types of debt; DeKalb would be well served by that, he added. He stated that the City needs to fully fund pensions with property taxes. Ms. Gaura stated  Finance Advisory Committee May 6, 2014 Page 3 of 3 that this does not have implications on FY15 but it does on FY16. She added that the Council will have policy decisions to make. If Council is satisfied with services provided, they must decide how these services will be funded in the future. Mr. Peddle stated that citizens will demand that the City continue to be accountable for the revenues they raise. Property tax rates, in theory will go down once the economy recovers. He stressed that the City needs to be vigilant for every dollar raised and how it is spent. Ms. Gaura pointed out that this budget does not address all the requests or needs of the City. She added that if the City was to purchase a large vehicle, it would be necessary to finance it because there is no revenue to pay for it as there is no vehicle replacement fund. Ms. Gaura noted that included in the budget is a recommendation to outsource the Building Division. Ms. Gaura stated that the budget presentation was concluded and asked if there were any questions. Mr. Verbic agreed that the Finance Advisory Committee should meet regularly. Ms. Gaura added that the future Finance Director will do a thorough review of what reports should be shared with Council and added that staff will do a better job of tracking, sharing with Council and the community. Staff has begun advertising the position; the goal is to have someone on board by August 1st, she said. C. ADJOURNMENT: MOTION Mr. Verbic moved to adjourn the meeting; seconded by Mr. Teresinski. Motion carried on voice vote. Mr. Peddle declared the meeting adjourned at 7:25 p.m. ___________________________________ DIANE K. WRIGHT, Deputy City Clerk