City Council

CITY OF FREDERICKSBURG, VIRGINIA HON. THOMAS J. TOMZAK, MAYOR HON. MARY KATHERINE GREENLAW, VICE MAYOR CITY COUNCIL HON. KERRY P. DEVINE, AT-LARGE HON. BRADFORD C. ELLIS, WARD ONE HON. GEORGE C. SOLLEY, WARD TWO HON. FREDERIC N. HOWE, III, WARD THREE Council Chambers, 715 Princess Anne Street HON. BEATRICE R. PAOLUCCI, WARD FOUR Fredericksburg, Virginia 22401 Council Work Session March 27, 2012 Fiscal Year 2013 Budget The Council of the City of Fredericksburg, Virginia held a work session on Tuesday, March 27, 2012, beginning at 5:30 p.m. in City Hall Conference Room. Council Present. Mayor Thomas J. Tomzak, Presiding. Vice-Mayor Mary Katherine Greenlaw. Councilors Kerry P. Devine, Bradford C. Ellis, Frederic N. Howe, III, Beatrice R. Paolucci and George C. Solley. Also Present. City Manager Beverly Cameron, Assistant City Manager Mark Whitley, Budget Manager Amanda Lickey, City Attorney Kathleen Dooley, Director of Planning Ray Ocel, Police Chief David Nye and Clerk of Council Tonya B. Lacey. Fiscal Year Budget 2013. City Manager Cameron noted that there were four budget topics to be covered: budget overview, fund balance, staff response to Councilor Howe requests, and results of the general reassessment. Councilor Devine declared that she was a member of a business, profession, occupation or group of three or more members affected by the transaction, namely she is an employee of the Fredericksburg Public School Board and that she is able to participate in the transaction fairly, objectively, and in the public interest. Mayor Tomzak declared that he was a member of a business, profession, occupation or group of three or more members affected by the transaction, namely he is an employee of the Fredericksburg Public Health Department and that he is able to participate in the transaction fairly, objectively, and in the public interest. Budget Overview. Budget Manager Amanda Lickey review the budget with a PowerPoint presentation. The PowerPoint covered the general fund revenues and fund balance. There was an overall budget increase of 3.85 percent or $2.9 million. Majority of the 1 increases were from local revenue growth as there are favorable patterns in personal property, meals and sales taxes. The meals taxes are projected to be $810,000 over the FY 2012 budget, which has had continued growth each month. The sales taxes are projected to be $100,000 over fiscal year 2012; 2011 was a strong year, but there has been consistently level or lower tax collection. The real property tax is projected at $271,140 over FY 2012. The only proposed change is to equalize the rate, based on the final reassessment. The personal property taxes are projected at $750,000 over the FY 2012 based on changes in assessment and population growth. The intergovernmental revenues which are revenues from the Commonwealth and the federal governments comprise of 6.5 percent of the general fund budget and staff recommends a $150,000 increase over last year. Majority of the proposed increases for intergovernmental revenues are due to increases in highway maintenance and law enforcement assistance and a slight increase in the Compensation Board revenues due to reduction in localities aid to state cuts. Ms. Lickey explained the fund balance, stating there will be a transfer to the capital fund from the general fund in the amount of $1.2 million to provide funding for projects in public facilities, public works and public education. There is a proposal to transfer $100,000 in the property maintenance fund for blight abatement and historic preservation work. Staff propose to appropriate $300,000 of savings from the health insurance plan to cover the increase of over $360,000. The final use was the general fund contingency which appropriates $550,000 to serve as contingency funding and can only be used on an as needed basis as approved by Council. In salaries and benefits, there are proposed increases of $1.37 million or 5 percent over FY 2012. This increase includes a 2.5 percent cost of living (COLA) increase at $533,000, a Virginia Retirement System (VRS) increase of $725,000 prior to proposed amendments. The City’s rate increased from 14.65 percent to 19.65 percent. Group life insurance also increases $178,000 due to the General Assembly adjustments in the last biennium. There is also Health Insurance cost of $300,000 with is subject to the renewal. The general operational budget which covers maintenance, office supplies, construction contracts or anything that the departments use on a day to day basis has an increase of $145,100, two percent over FY 2012. Majority of the line items were held flat or reduced based on prior year usage. Nondiscretionary line items such as maintenance service and 2 contracts and fuel were increase based on market conditions. Staff also set aside additional funding for workers compensation, general liability and motor vehicle insurance increases. The general fund capital outlay is recommended at $684,000 which is relatively flat compared to FY 2012 budget. There were a few major capital replacements being recommended: 9 Police Department cars, 2 Sheriff’s cars, 3 traffic control boxes, several dump trucks, and various light equipment and replacement vehicles for Public Works and Building and Development Services. There were a few large items that were not recommended for funding. The debt service will increase a little over $1 million over the FY 2012 budget. She explained that the increase does not equal the interest payment on the new court debt because there had been savings from paying down the bond over time. The joint operations increases are $233,000 over FY 2012. The major increases come from the Library an increase of $58,485, the Regional Jail an increase of $170,745 and the Regional Landfill with tipping fees increasing by $16,700. The outside agencies remain relatively flat and will be discussed at a later work session. In the transfers there was an increase of $108,000 or .4 percent increase over FY 2012. The City schools are recommended to be funded at $24.9 million which meets the Superintendents budget request. There is also a $20,000 increase over FY 2012 for the Head Start program, which is also based on the superintendent’s request. Social Services are recommended to increase by $18,455 over FY 2012. The overall budget for Social Services is decreasing because the Commonwealth is going to start electronically implementing some of the programs the clients need and they will no longer receive that funding, but the increase was due to personnel. The Comprehensive Service Act also increased by $99,125 this was because of an increase in program cost and the number of clients had risen over the years. The Regional Arts Commission also had an increase of $3,500 to help fund new initiatives including a public arts program. New positions - they were recommended by the budget committee that evaluated all the new position requests. Their recommended positions were: public information officer, police dispatcher, transit fund mechanic, and Assistant Director of Public for Works Water and Wastewater. The City continues to wait on the Virginia Retirement System for the final status on the implementation of the new system. They are proposing three different options the first was 3 implementing the system in one phase, effective July 1, 2012 and requiring all employees to pay five percent of their salary. This would require the City to give employees a five percent pay increase. The other option was phasing it in over a five year period at one percent a year. The third option is to delay implementation by one year to allow localities to plan for the change. There will also be many other retirement plans dependent on when the employee was hired. The estimated cost to implement the change in FY 2013 is about $215,000. Fund Balance. City Manager Cameron explained the flow chart for the proposed use of fund balance. The use of the fund balance totaled $2,155,045 with $1,205,045 being transferred to capital, $100,000 to property maintenance and historic preservation fund, $550,000 to general fund contingency and $300,000 for health insurance. The $1.2 million going to capital will cover public facilities capital in the amount of $380,000, public works capital in the amount of $625,000, educational capital in the amount of $200,000 and no monies to the public safety, new courts, transit, water and sewer capital. Mr. Cameron also presented a general fund uses chart that showed the funding from FY2011 through FY 2013. On this chart it shows the general fund balances for each of the years and the uses. The projected balance as of April 1, 2012 is $16,938,246. He said he was confident a surplus will be added at the close of FY 2012. He said they have also received the Cowan Boulevard reimbursement from Virginia Department of transportation in the amount of $2 million and it will be added to the general fund balance. Councilor Howe asked what funding the Savage building and the interest only payment for the court was paid out of. Mr. Cameron explained that it was paid out of the bond proceed and none of it was paid out of the general fund balance. Councilor Howe believed that $1 million was to go to the Savage building. Assistant City Manager Whitley explained the there were two separate $1 million transfer and the transfer Councilor Howe was thinking of was the transfer to general fund balance in FY 2011 and used to buy down some of the cost of the courts. Request from Councilor Howe. City Manager Cameron summarized the questions from Councilor Howe in a memo starting with the Capital Improvements Plan (CIP) outlined in a 5, 10, 15, 20 year timeframe. He stated that the City’s CIP is a five-year plan and is generally accepted as best practice by local governments and it is the time frame envisioned in the Virginia Statues. The five-year plan ties in with the five-year cycle for the comprehensive plan updates. The proposed CIP also incorporates a “Year X,” which represents improvements 4 beyond the five-year horizon, but they are not tied to a schedule. Staff defines ten-year and twenty-year capital improvements as long range planning. Undertaking additional long-range planning would require resources; either additional staff or additional consultant assistance. To improve the quality of long-range planning in the City there are a number of studies that would need to be conducted: school enrollment, master facilities plan for City and school buildings and grounds, comprehensive water and wastewater facilities plan, stormwater management plan, transportation plan, public safety level of service analysis, updated fixed assets inventory and replacement schedule and updated comprehensive plan. Conducting these studies would allow the City to better answer the questions about future infrastructure and services needed. On the debt ceiling projections, Mr. Cameron stated that the City’s “legal debt margin” is reported every year in the City’s Comprehensive Annual Financial Report (CAFR). Staff offered to provide estimates of legal debt margin as it may relate to the funding of projects in the adopted CIP. Council held a work session last year on the CIP and long-range financial forecasting. He offered to present estimates of future legal debt margin assuming issuance of general obligation bonds in 2011, 2015, and 2017. He also offered to update and discuss at a later date. In regards to the tax increase projection, Mr. Cameron explained that the projected increase in real estate tax can be presented with the CIP, but he cautioned the potential tax impacts associated with capital projects are estimates based on current knowledge of overall revenue and expenditure trends. The estimates are only one factor in a complex set of factors that determine the required real estate tax levy. He said there are many factors that affect the City’s budget outlook and he listed a few in the memorandum. The request on revenue projections, Mr. Cameron offered to develop and refine a future revenue forecast on a five-year time. He warned that the longer the planning time, the more uncertainty that is introduced in to the planning process. The City revenues are generally reliable, but do have sensitivity to both economic and legislative changes, both of which are hard to predict. The monthly operating and maintenance report, staff stated that he report is distributed quarterly to Council, but staff concluded that based on Councilor Howe’s request the report needs improving. Mr. Cameron proposed to develop a cover memorandum for the report that would highlight key developments and he also suggested pulling the report off the consent agenda and placing it on the City Manager’s regular agenda. 5  Reassessment. Assistant City Manager Whitley stated that the assessor was still making last minute changes and the assessor had found some class errors and some of the numbers will change. Generally the taxable value will go down about two percent. Residential is down about seven percent and multi-family had taken a significant jump, commercial had seen a wide variation, some have gone down in value significantly and others have held up such as medical. The decline in value is present, but not as severe as expected. He explained that there were a couple of factors that could affect the bottom number and those were appeals, which are to be held in April through the first of May if needed. Also, the Board of Equalization will make more adjustments in the fall. A discussion ensued on the real estate class and on equalization so that the general public would understands that equalization is for the City’s numbers and not to the citizens. Councilor Devine stated that she felt the budget reflects the Councils goals and she agreed there were areas to discuss, but it reflects Council’s goals and objectives and it reflects the confident staff. Councilor Ellis commented on the rental housing inspection program and he noted that more than half of the City’s residential are rentals. He stated that he would like to see two more people assisting John Walsh in the residential rental program. He would like it divided up into three zones to hold landlords responsible. He felt the program was successful in the past. He also met with Dr. David Melton on the schools budget. He focused on the schools capital improvements plan and the money they will need in 2013-14 and 2014-15 was significant. They will need $2.8 million for the 2013-14 plans. $1 million of the $2.8 million will be for Walker-Grant architectural design needs. Councilor Ellis said he would like to see $400,000 put in the school budget to help give them the $1 million to meet their needs. He suggested taking money and setting aside for future needs of the schools. On the Riverfront Park, he said he would like to see something done there but he noted that there was a lot of opportunity cost in the budget in regards to the Courts and said the $1.3 million being spent there could go a long way in other areas. Councilor Howe stated that he does not agree with the impact the courts were having on the City and he stated that he did not agree with taking $1.4 from the general fund to fund the courts. He said that because of the cost of the courts the City will not be able to fund many other needed projects. He also disagreed with hiring of a public information officer he said the bigger issue in the city was the quality of life and he felt the City need to hire someone to help 6 with property maintenance. Councilor Howe also felt spending $200,000 on a study for the Riverfront Park was premature and that the area needed to be stabilized first. Finally, he disagreed with the $1 million being spent on the Executive Plaza, he said it was a lost opportunity to buy other needs for the City. Councilor Solley said he thought the budget was a thoughtful. He explained that detailed planning must be done on the Riverfront Park before anything else could be done. He also stated that the river was stable and it does not need to be dredged before doing the park. Councilor Paolucci at first glance, felt the budget was a good budget but looking at the rankings of Council’s goals and initiatives the one item she had concerns about was the organizational review which tied in importance with Pathways. She felt strongly that this needed to be done prior to rebuilding the staff. She said she had been an advocate for information’s officer, but she felt property maintenance was higher ranking than the information officer and she feels there needs to be more focus on property maintenance. Vice-Mayor Greenlaw said the budget was a good budget to discuss and she was pleased that there is an improved economic climate that it could be discussed. In regards to the Riverfront Park, she was delighted to see the money in the budget because there needed to be a plan in order to move forward. She also desired an overall look at the organization before significant changes were made in personnel. She noted that the communications position was very important and it is hard for each individual department head to post notices for the public and to Council. She said there needed to be a communications plan whether it was created by the person hired or outsourced by some other agency. She said thinking ahead on the capital needs is sensible. She also said the cleanliness of the overall appearance of downtown is very important because this was a concern for many of the citizens. Adjournment. There being no further business to come before the Council at this time, the meeting was declared officially adjourned at 6:52 p.m. _____Tonya B. Lacey_____ Tonya B. Lacey Clerk of Council City of Fredericksburg 7