City Council

JULY 6, 2016 The City Council of the City of Idaho Falls met in Special Council Meeting (Council Budget Session), Wednesday, July 6, 2016, at the City Council Chambers in the City Annex Building located at 680 Park Avenue in Idaho Falls, Idaho at 10:00 a.m. There were present: Mayor Rebecca L. Noah Casper Councilmember David M. Smith Councilmember Thomas Hally Councilmember Michelle Ziel-Dingman Councilmember John B. Radford Councilmember Barbara Ehardt Councilmember Ed Marohn Also present: Pam Alexander, Municipal Services Director Mark Hagedorn, Controller Kenny McOmber, Treasurer AJ Argyle, American Insurance Service Representative Derick Sorensen, Accounting Intern Kathy Hampton, City Clerk Mayor Casper called the meeting to order at 10:05 with the following: Opening Remarks: Mayor Casper reviewed the calendar dates for the five (5) scheduled work/budget sessions for the FY2016/2017 budget. She reviewed the steps taken to this point including collaboration with the Finance Team, consisting of the Director Alexander, Mr. Hagedorn, and Mr. McOmber; tentative valuation of property as determined by Bonneville County; Budget Watch, which occurred in May, 2016, as an educational forum for the community; and discussion involving the Department Directors with Mayor Casper and subsequently with the Finance Team. Budget packets, including information on health and wage increases, and capital projects were then distributed to each Councilmember for their review. Notable changes to the current budget include Inter-fund transfers, utilizing a formula based on needed/measured expenses, and the elimination of Non-Departmental Fund, which previously had been used for miscellaneous expenses. Funds in these accounts have been transferred to the appropriate line item or have been eliminated. Mayor Casper stated previous elected officials chose not to always accept any new growth money and no tax increase. During that time growth was slow due to the recession, although the infrastructure remained the same. She indicated infrastructure is continually growing and the budget being presented includes growth/annexation money. Councilmember Marohn reviewed the following dates per State Statues: July 28, 2016, budget tentatively approved by Council with authorization given to notice for publication August 11, 2016, public hearing for the proposed budget August 22, 2016, budget to be adopted by Appropriation Ordinance by the Councilmembers Councilmember Marohn reminded the Councilmembers that the Enterprise Fund is self-funded, and it is best practice to maintain 25% of reserves in the General Fund balance. Councilmember Hally recommended the Councilmembers review the budget manual provided by Association of Idaho Cities (AIC). Overview of Proposed Fiscal Year 2016/2017 Budget: 1  JULY 6, 2016 Director Alexander introduced the Finance Team and expressed her appreciation for their assistance. The Finance Team presented the following information with general discussion throughout: Overview of Proposed Fiscal Year 2016/2017 Budget: Funding Sources 2015/16 Approved 2016/17 Department Increase or Budget Requested Budget Decrease Charges for Services $83,760,658 $87,686,074 $3,925,416 Property and Franchise Taxes $30,187,106 $30,385,720 $ 198,614 State Shared Revenues $ 7,851,000 $ 8,008,000 $ 157,000 Inter-Governmental $ 7,194,182 $ 8,213,472 $1,019,290 Payment In-Lieu of Taxes $ 4,628,460 $ 4,595,033 ($ 33,427) Grants $ 6,005,049 $ 6,830,429 $ 825,380 Miscellaneous $ 8,431,401 $ 5,194,417 $3,236,984 Fund Balance $43,599,594 $51,680,462 $8,080,868 Total $191,657,450 $202,593,607 $10,936,157 Expenditures 2015/16 Approved 2016/17 Department Increase or Budget Requested Budget Decrease Wages and Benefits $62,575,060 $64,276,575 $1,701,515 Operational Expenses $78,614,812 $76,901,813 $(1,712,999) Capital Outlay $53,256,881 $49,439,254 $(3,817,627) Depreciation $ 2,972,450 $2,942,400 $(30,050) Debt Service $ 1,100,000 $1,100,000 $ -- Inter-Fund Transfers $(10,362,303) $(10,585,225) $ (222,922) Adjustments $ -- $5,544,768 $5,544,768 Subtotal $188,156,900 $189,619,585 $1,462,685 Budget Requests $3,500,550 $12,974,022 $ 9,473,472 Total $191,657,450 $202,593,607 $10,936,157 Total Budget vs. Actual for the previous four (4) years was reviewed, with recommendation to over-budget for unanticipated expenses. Comparison of expenses and forecast comparison was reviewed, indicating the comparison(s) remain fairly consistent from year to year. Director Alexander reviewed the non-departmental budget as follows:  2015/16 adjusted budget - $1,721,208  Last year’s expenses - $1,549,619  Variety of budget items included: o City power bills - $720,000 (have been allocated to individual departments) o Bonneville County Courts - $400,000 (have been allocated into Legal Department) o Community Support funding - $337,588 (have been allocated into Council budget and Community Development Services Department budget) General Fund Priorities Recommended for Consideration as follows: One-Time Cost Ongoing Cost (Estimated) (Estimated) Add one Human Resources Analyst position $1,500 $91,952 Add two patrol officers $0 $132,589 Add one Weed & Environmental Control Maintenance Operator and one- ton extended cab truck $39,000 $48,862 Add one zoo keeper $0 $48,117 Police station consultant $150,000 $0 2  JULY 6, 2016 Police data storage $56,000 $0 City building infrastructure funding $100,000 $100,000 Street maintenance funding $3,000,000 $3,000,000 Street capital improvement funds for 17th and Hitt $1,200,000 $0 Dumpster for code enforcement $15,000 $0 Temporary employees for code enforcement seasonal activities $10,000 $10,000 Total $4,571,500 $3,431,520 Director Alexander briefly reviewed the recently-edited Priority Based Budgeting (PBB) Community-Oriented Results for Good Governance as follows: Access to Culture, Recreation, Leisure, Education and Life-Long Learning Opportunities Attractive, Clean, Livable and Family-Oriented Community Strong, Stable, and Healthy Economic Growth and Vibrancy Environmental Sustainability and Resource Preservation Managed, Well-Planned Growth and Development Reliable Public Infrastructure and Effective Transportation and Mobility Safe and Secure Community Director Alexander indicated the results have been utilized as a planning direction from each Department Director for any budget requests. She stated the FY2016/2017 budget is being staged for use of PBB with complete transition occurring in FY2017/2018. Tax Revenues Collected and Budgeted by Source, Government Funds were reviewed as follows: Collection Year Property Tax Property Tax Franchise Taxes Other Taxes Total Taxes Penalties 2016 $28,766,486 $250,000 $695,000 $3,500 $29,714,986 2015 $27,840,847 $258,397 $685,558 $4,914 $28,789,716 2014 $26,865,219 $246,052 $861,440 $3,678 $27,976,389 Mr. Hagedorn stated the City won’t actually see any money that is levied for several years. Property Tax (Assessed Value and Actual Value of Property Tax) was reviewed as follows: Collection Year Net Assessed Value Total Direct Tax Levy (%) Property Taxes Certified to County 2016 $3,008,461,828 0.009561859 $28,766,486 2015 $2,977,260,980 0.009262093 $27,575,663 2015 $2,965,273,734 0.009026746 $26,766,775 This amount is determined by Bonneville County and remains variable until the final reporting date. New Annexations and Growth (Taxable Value) History Year New Annexations New Construction Levy Rate Total 2017 (Estimated) $480,291 $44,681,410 0.009561859 $431,829 2016 $417,645 $38,853,400 0.009262093 $363,732 2015 $326,045 $44,669,159 0.009026746 $406,160 2014 $452,400 $39,815,568 0.009009666 $362,801 3  JULY 6, 2016 It was noted this year’s levy rate will apply to next year's construction rate and any foregone money, money that is held from not taking the levy increase, has new regulations, one of which will now require a public hearing. Benefits and Wages: The Benefits Compensation Evaluation Panel consisted of Mayor Casper, Director Alexander, Mr. Hagedorn, Mr. McOmber, Michael Kirkham - Assistant City Attorney, and Mr. Argyle. Mr. Argyle reviewed comparable city data health insurance stating the City of Idaho Falls current contributes 92% toward the Preferred Provider Organization (PPO) plan, and $1,750 toward the Health Savings Account (HSA) for benefitted employees. He has negotiated a 6% increase for the benefit renewal process for FY2016/17. This is a one-way retention agreement with Blue Cross of Idaho. He reviewed premiums paid in, claims paid out, and stated the loss ratio, at 68%, is the best it has been in approximately 10-12 years for the demographics. HSA has seen an increase to overall liability to the employer, and approximately 97-98 City employees participate on the HSA plan. HSA participants are consumer driven, which allocates their own money into the cost of service. Mr. Argyle reviewed comparison costs and stated the City is approximately 10% below the national average, although emergency room visit co-pay is higher. He reviewed a new Teledoc option indicating approximately 92% of minor medical issues can be resolved through this video option. The monthly cost for those participants on the PPO plan would be $2.65 per employee/per month, there would be no cost to those participants on the HSA plan. Mr. Argyle reviewed a Data Analytics option stating all claims submitted would be monitored as a precursor to any health issues. He stated all Health Insurance Portability and Accountability Act (HIPPA) regulations would be protected for the Data Analytics options. There would be no cost to the City as the cost for the Data Analytics option would be absorbed through American Insurance. Mr. Argyle reviewed Health Insurance options, stating there is no change in coverage. Options are as follows with general discussion throughout: City Contribution Assumptions (based on estimates) Policy Option 1 $9,796,258 City absorbs 10%, HSA 25%, PPO 65% of the Shared burden increase; HSA contribution decreases by $100; 10% of PPO employees move to HSA Option 2 $10,265,299 City absorbs entire 6% increase; assumes no changes Employee to plan selection Recruitment/Retention Option 3 $9,831,087 PPO absorbs entire 6% increase; assumes 25% of PPO Long-term consumer driven employees move to HSA Option 4 $9,726,439 PPO absorbs entire 6% increase; HSA contribution Short-term consumer driven decreases by $200; assumes 10% PPO employees move to HSA Option 5 $9,606,113 Remove HSA plan and PPO absorbs entire 6% Immediate financial savings increase Option 6 $9,673,986 PPO absorbs 67%; HSA 33%; HSA contribution is Balanced adjusted to average difference between PPO and HSA: assumes no changes to plan selection Average Cost Analysis to Employees Employee PPO (monthly *) Employee HSA (monthly *) Policy Option 1 $78.70-$260.75 $7.17-$74.56 Shared burden Option 2 $41.00-$154.00 $0-$52.52 Employee Recruitment/Retention Option 3 $94.71-$303.16 $0-$52.52 Long-term consumer driven Option 4 $86.61-$280.18 $0-$52.52 Short-term consumer driven Option 5 $73.20-$252.91 $ -- Immediate financial savings 4  JULY 6, 2016 Option 6 $76.40-$258.47 $18.64-$109.81 Balanced *Ranges estimated based on plan selection Mayor Casper stated the City picnic and benefits fair will be held on August 23, 2016, and she is hopeful to present a benefits option, with the consensus of the Councilmembers, at that time. She stated the Councilmembers will need to make the best decision for the employees as well as remain budget-minded. Mr. Argyle indicated he will coordinate any further discussion with individual departments after the August 23, 2016, benefits fair. Director Alexander introduced Mr. Sorensen, stating he is assisting the Finance Team in budget preparation. The proposed inflation increase for all benefitted employees is 1.75%, with an estimated cost of $683,681. The proposed employee wage adjustment/purchasing power of 1.75% is based on reports of Idaho Falls, regional, and national sources. This would affect the General Fund in the amount of $385,000, with the remaining balance occurring in the Enterprise Fund. Mr. Hagedorn stated this amount has been calculated into the overall City budget but has not been calculated into department budgets. Department budget wages/benefits increases include the step and grade increases as well as longevity. The Public Employee Retirement Systems of Idaho (PERSI) was reviewed stating there was notification in early June of possible contribution rate and Net Pension Liability (NPL) increases as market conditions and investments are lagging behind the expected 7% rate of return. A group meeting with the PERSI Executive Director is scheduled for July 13, 2016, in Idaho Falls, but any decision will not occur until after the budget has been formally approved. Director Alexander briefly reviewed the current employee benefits; Blue Cross PPO Medical, HSA Medical option, no employee contribution for dental insurance, Longevity Pay, Employee Education Program, 10 State-designated holidays and one special holiday, vacation time, sick time, and PERSI. Municipal Services Department Presentation: Director Alexander presented the following information with general discussion throughout: Funding Sources 2015/16 Budget 2016/17 Proposed Increase or Decrease Budget Charges for Services $ -- $ -- $ -- Property and Franchise Taxes $ -- $ -- $ -- State Shared Revenues $ -- $ -- $ -- Inter-Governmental $ -- $ -- $ -- Payment In-Lieu of Taxes $ -- $ -- $ -- Grants $ -- $ -- $ -- Miscellaneous $ 127,350 $ 131,203 $ 3,853 Total $ 127,350 $ 131,203 $ 3,853 Director Alexander stated Municipal Services Department is mainly a support department, therefore not generating revenue beyond miscellaneous items, such as licensing. Expenditures 2015/16 Budget 2016/17 Proposed Increase or Decrease Budget Wages and Benefits $6,044,691 $5,657,298 $ (387,393) Operational Expenses $6,422,154 $4,813,752 $ (1,608,402) Capital Outlay $ 384,202 $ 786,064 $ 401,862 Municipal Equipment Replacement $ 39,850 $ 37,500 $ (2,350) Fund (MERF) Contribution Debt Service $ -- $ -- $ -- Inter-Fund Transfers $(7,468,529) $(7,143,521) $ 325,008 Total $ 5,422,368 $ 4,151,093 $ (1,271,275) 5  JULY 6, 2016 Director Alexander stated overall proposed expenditures have decreased, mainly due to re-allocation of Non- Departmental funds. Budget Priorities: Priority One-Time Cost Ongoing Cost 1. Accountant I $72,000 $73,000 2. Building Infrastructure Account $100,000 $100,000 3. Cemetery data solution (shared project with Parks and $ 50,000- $65,000 (Estimate) $ -- Recreation) – Resolution 2016-18 Department Community-Oriented results as follows: Accountant I – Strong, Stable, and Healthy Economic Growth and Vibrancy Building Infrastructure Account – Reliable Public Infrastructure and Effective Transportation and Mobility Cemetery Data Solution – Managed, Well-Planned Growth and Development Director Alexander briefly reviewed forecast sums of Interfund Transfers, Operating Expense, Salaries and Benefits, Capital Outlay, and MERF Depreciation. Mayor Casper reviewed the proposed schedule for the July 7, 2016, Council Budget Session. There being no further business, it was moved by Councilmember Marohn, seconded by Councilmember Hally, to adjourn the meeting at 3:40 p.m. which motion passed following a unanimous vote. s/ Kathy Hampton s/ Rebecca L. Noah Casper CITY CLERK MAYOR 6