Fort Walton Beach Council minutes — 06-01-2010 special — reading text

159 MINUTES OF THE SPECIAL COUNCIL MEETING OF THE CITY OF FORT WALTON BEACH, FLORIDA FY 2010 -11 BUDGET POLICIES JUNE 19 2010 INTRODUCTION A special meeting of the City Council of Fort Walton Beach, Florida, was held on Tuesday, June 1, 2010 at 5: 00 p.m. in the Council Chambers at City Hall, with the following members present: Mayor Mike Anderson Councilmen: Mike Holmes; joyce gillie gossom; Dennis Reeves; Mike Minich, Bobby Nabors; Bill Patterson; and Dick Rynearson Also Present: Robert Mearns, City Manager; Helen Spencer, City Clerk; Toni Craig, City Attorney; and Department Directors. PURPOSE Discussion of Budget Policy Issues - City Council will provide policy direction to staff on the ad valorem millage rate, levels of service and expenditure preferences. CALL TO ORDER The Mayor called the meeting to order and welcomed everyone. He requested anyone who wished to address Council to approach the podium after being recognized, then state his or her name and address for the record. PLEDGE OF ALLEGIANCE The Mayor led in the Pledge of Allegiance. FY 2010 -11 BUDGET POLICY ISSUES The Mayor stated tonight City Council begins the process of preparing a balanced budget for 2010 -2011 Fiscal Year by holding the first in a series of budget workshops and special meetings. He said it is clear they are entering another challenging budget period as the City government contends with the on -going effects of the global recession. He said early estimates indicate they must overcome a gap of approximately $ 1. 7M due to declining revenues and increase in costs. He said the goal of this meeting is to clearly and publicly outline the challenges before them and then identify the strategy for overcoming the challenge. He said in the months ahead the City will prioritize what functions the citizens depend on most and then identify which programs and services they can potentially reduce or eliminate. He said as part of their commitment to keeping residents informed they can expect updates as they move forward toward a final FY 2010 -11 budget in September. He said he looked forward to working with them as they meet the challenges of the tough times and continue their collective efforts to ensure long -term prosperity for the community. The City Manager remarked staff prepared the budget policy options using a fiscally sound strategy that the City government must accept, that there has been a shift in the economy and that the funding of City government and expenditures must adjust accordingly. He remarked a permanent solution is necessary otherwise the City will be in a worse position next year and the year after that, etc. He said short-term fixes like furloughs and using reserves to fund recurring expenses will not work; those choices delay the inevitable and shift the problem to next year and the year after that. He said the City can no longer fulfill the expectations that it can continue to provide levels of service and staffing at 2010 costs with revenues at 2002 level and then be all things to all people. He said after years of an expanded tax base that enabled the City to grow its work force to obtain levels of service designed to meet every expectation, the tax base has now turned in the opposite direction and, therefore, so must the workforce and levels of service. He said the City must design its programs and levels of service with affordability and effectiveness in mind. 160cial Council meeting 6 -1 - 10 FY 2010 -11 BUDGET POLICY ISSUES cont. The Finance Director mentioned the objectives of this meeting are to assist City Council in understanding the City' s available revenue sources and allow revisions to desired service levels and funding mechanisms in order to ascertain City Council' s position on policy issues; to establish service levels and funding mechanisms in accordance with City Council' s priorities; and to ascertain City Council' s position on certain policy issues critical to development of the budget given the current fiscal constraints. She said the goal is to prepare a balanced budget that matches ongoing expenditures with ongoing revenues, while providing for maintenance of the City' s current infrastructure. She went over the current economic indicators, the current general fund revenue, the trend in the general fund ad valorem revenues since FY 2003 -04, and the breakdown in expenses general fund allocation, the increase in general fund expenses compared to FY 2003- 04 and the decrease in general fund staffing compared to FY 2003 -04. She stated the FY 2010 -11 budget goals are to maintain core service levels to the greatest extent possible, to use excess fund balance for non- recurring expenses, and to use a combination of operating reductions and/ or millage rate increase to balance the budget. She noted staff identified possible reductions based upon the current millage rate of 4. 1986 and staff requests Council vote on each proposal after it is presented. The Mayor stated they will take each topic one at a time and he will provide anyone who signed up an opportunity to speak before there is discussion and a motion. Reserves —Pay off Golf Debt Policy Decision: Should the City appropriate $ 2. 735M to pay off 1999 Golf Clubhouse Bond, structured as a loan. The presentation included information that in May 2008 Council endorsed maintaining a minimum unreserved/ undesignated fund balance of 30% of total annual expenditures; that due to changes promulgated by the Governmental Accounting Standards Board ( GASB) the City will no longer be able to maintain unreserved/ designated reserves and the $ 13M in designated reserves will become available for appropriation if desired; that there is approximately $ 3. 6M available in General Fund undesignated fund balance, above and beyond the 30% minimum due to GASB changes, the sale of property to Waste Management, and cost saving measures implemented during FY 09; that the City' s auditors have commented in the last five years' audits about the Golf Fund' s cash flow deficits and deficit unrestricted net assets; that the tax -exempt portion of the bond has a 5. 75% interest rate and a $ 2. 44M balance, the taxable portion has 8% interest rate and a 295K balance; that the City' s idle cash is currently earning 1. 23 %, the General Fund could loan the Golf Fund $ 2. 735M to pay off the balance at an interest rate of 1. 5% for 20 years that would general $ 159K annually to the General Fund and save the Golf Fund $ 87K annually. It was noted the millage rate increase required to sustain the current status would require 0. 1643 mills to fund the $ 178K transfer. The Mayor opened the floor for public input. Dan Corrigan, 116 Ferry Place, questioned the fiscal responsibility of giving $ 2. 7M to an entity that cannot pay its debts, and asked how are they are expected to pay back the interest, it is already supported out of the general fund every year. He said if a business does not make money you sell it and close it and questioned why the City is still holding it up. He Robert Hull, 245 Shannon Court, questioned if the loan was going to be another loan that is forgiven. suggested other options be considered such as contracting it out to a private contractor. He objected to spending money to save the golf course when vital services may be cut, people may be cut, and wages may be cut. As no one further wished to speak public input was closed. Mr. Nabors moved to appropriate up to $ 2. 735M from General Fund reserved to pay off the 1999 Golf Clubhouse Bond, structured as a loan from the General Fund to the Golf Fund payable at 1. 5% over 20 years. Mr. Rynearson seconded motion and it carried by a vote of 6 to 1 with Holmes, Reeves, Minich, Nabors, Patterson, and Rynearson in favor and gossom opposed.  6 -1 - 10 161 Special Council meeting Reserves —Early Retirement Incentive Policy Decision: Should the City appropriate reserves for an Early Retirement Incentive Program payout. The presentation included information that as an incentive for retiring early, employees who meet early retirement age as of August 1, 2010 and elect to participate in this program would receive an incentive payout based on years of service with the City; that the purpose is to compensate employees for the early retirement penalty making it more attractive to leave early; that the City reserves the exclusive right to either accept or not accept the application from eligible employees; that employees approved for the program would not be eligible for re -hire by the City for 5 years from the date of separation. It was noted there are 132K with an approximately 40 -50 eligible employees and that early retirement incentives are estimated at $ estimated payroll savings of $246K from position eliminations and reclassifications. The Mayor opened the floor for public input. Kabe Wood, 240 Brooks Street, stated the millage rate needs to stay the same for another year, that the priorities of government are safety and security first, basic infrastructure next, and then quality of life items are last; and to make sure there is an appropriate reserve level. He said the enterprise funds need to be self - sustaining or do away with them. Gene Large, Battalion Chief Fort Walton Beach Fire Department, mentioned he is one of the positions to be discussed to possibly be removed and he is one of the 40 -50 that could possibly be eligible for early retirement incentive. He said if offered the opportunity to retire the position could be offered to someone else at a reduced salary. As there was no one further who wished to speak public input was closed. Mr. Reeves moved to appropriate reserves for an Early Retirement Incentive Program and authorize the City Manager to execute agreements with approved employees and disburse incentive payments in accordance with the program offerings. Mr. Patterson seconded motion and it carried unanimously with Holmes, gossom, Reeves, Minich, Nabors, Patterson, and Rynearson in favor. Reserves —Employee Incentive Policy Decision: Should the City appropriate reserves for an employee incentive payout. The presentation included information that an alternative way to compensate employees and maintain morale while controlling costs is a lump -sum payment; that a lump -sum payment would acknowledge employees' service on the last pay period in November in time for the holidays, without a permanent pay increase subject to future wage adjustments and pension contributions; and that a flat dollar amount rather than a percentage has a greater impact for lower paid employees. The Mayor opened the floor for public input. Larry DiAmco, 6612 Redfield Street, Navarre, President of Fort Walton Beach Professional Firefighters speaking on behalf of 33 members stated, although subject to negotiation and final approval of the membership, they would decline the incentive. As there was no one further who wished to speak public input was closed. Mr. Rynearson moved to approve a $