Fort Walton Beach Council agenda — 06-10-08 regular agenda — reading text

forfeited 9- 30 -09. Use of these hours must not result in overtime in the department. It was noted the fire union would be excluded because of contractual obligations. Staff recommendation is to endorse providing 40 hours of vacation in lieu of a percentage step /merit adjustment (fire union excluded) for FY 2008 -09. Mr. Minich moved to suspend all merit/step increases except contractual employees. Mr. Reeves seconded motion. Discussion ensued with an exchange of views with those in favor and those against providing 40 hours of vacation in lieu of a step /merit adjustment. The Mayor called for the vote on the motion to suspend all merit/step increases except contractual employees and it carried by a vote of 4 to 3 with Reeves, Hartwell, Minich, and the Mayor in favor and Holmes, Garvie, and Pullen opposed (Miller absent). Strategic Plan Goal: Healthcare Benefits Policy Decision: Should the City contribution rates be modified for medical insurance? The presentation included information that the City pays 75% of employee and 75% of dependent medical coverage; of the City's 230 medical insurance participants, 42% elect employee coverage and 58% elect dependent coverage; the current City portion is $ 3, 334 annually for employee coverage and $ 5, 779 annually for dependent coverage; and a recent survey of local jurisdictions revealed that almost all of the respondents (78 %) pay 100% of the employee portion of the medical insurance premium. The remaining 12% of the respondents either pay 90% or 93% of the employee portion. The respondents to this survey, on average, pay 52% of the premium for dependent costs. Staff recommendation is to modify City contribution to 50% dependent over 3 years and modify City contribution for new hires 10 -1 - 08 to 75 % 5 / 0 %. Discussion ensued on the compensation rates with clarification given that there are no freezes on vacant positions, that there are positions that will not be filled, and there is about one turn over every week of existing positions. Mr. Hartwell moved to amend the City' s Personnel Rules and Regulations to reflect that the City will contribute 75% of the premium for employee medical insurance coverage and 50% of the premium for the dependent portion of family medical insurance for all new hires effective October 1, 2008. Mr. Holmes seconded motion. During brief discussion there was reluctance to change health benefits for existing employees. The Mayor called for the vote on the motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent).  Special Council 5 -20 -08 143 BUDGET POLICY ISSUES cont. Strategic Plan Goal: Defined Contribution Plan Policy Decision: Should the City offer a defined contribution plan to new General Employees in lieu of a defined benefit plan? The presentation included information that the Defined Benefit Plan pension benefit is calculated based on years of service, the multiplier, and final average compensation; the Defined Contribution Plan pension benefit is a result of investment performance rather than a calculated dollar amount; the General r employees contribute 5% of wages, the City is budgeted to contribute 14% of general employees wages in FY 2007 -08; the City expense to the existing plan could be reduced by increasing employee contributions or decreasing the benefit multiplier; and the Police and Fire Pension Plans receive State contributions and cannot have different benefits for new hires. Staff recommendation is to authorize staff to explore the possibility of a General Employees Defined Contribution Plan. During some discussion it was noted there would be the need for an actuary to do a study to help with calculations and will take several months to complete so it may be a mid -year adjustment for the 2008 -09 budget year. Staff will provide an estimate on the cost of a study for Council approval. Kabe Woods, 240 Brooks Street, voiced support of a Defined Contribution Plan and mentioned one of the benefits to the employees is the ability to move their retirement plan as they move through jobs. Mr. Garvie moved to authorize staff to explore the possibility of a General Employees Defined Contribution Plan and how much it would cost to move forward. Mr. Minich seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor. (Miller absent). RECESS The meeting .recessed at 7: 27 p.m. RECONVENE The meeting--reconvened at 7: 40 p.m. BUDGET POLICY ISSUES cont. Other Issue: Separation Incentives Policy Decision: Should the City offer incentives to encourage employees to voluntarily separate? The presentation included information that in light of property tax reform and declining revenues, it is necessary to reduce personnel costs which account for 53% of total expenses and 74% of General Fund expenses; payroll savings would be derived from a reduction of the salary and associated payroll taxes for a new hire versus the existing employee, reclassification of the position once vacated, or elimination of the position altogether; the early retirement incentive would vary from $ 15K - $ 30K depending on years of service; and the voluntary separation incentive would be 1 week pay for the first year of service and 2 weeks pay for each year thereafter, up to 16 weeks max. Staff recommendation is to authorize an Early Retirement Incentive Program, and authorize a Voluntary Separation Incentive Program. The City Manager mentioned that the City would have complete discretion on who is allowed to go and when they leave and added that they have not targeted any specific employee. She said if this is approved tonight staff will begin the process, and will not bring it back to Council. Mr. Minich moved to authorize an Early Retirement Incentive Program and to authorize a Voluntary Separation Incentive Program. Mr. Garvie seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent).  Special Council 5 -20 -08 144 BUDGET POLICY ISSUES cont. Other issue: Utility Tax Cap Policy Decision: Should the monthly caps and exemptions for the utility tax be removed? The presentation included information that per Chapter 4.05 of the City's Code of Ordinances, a utility tax is levied at a rate of 10% against electric, gas, and water purchases; the tax is currently limited to 20 /month for residential consumers and $ 50 /month for non -residential consumers; the tax is not levied on the first 50 kilowatt hours per month of residential use; the Attorney General has issued several opinions stating that caps and limitations on the dollar amount taxed under Florida Statute 166.231 " Public Service Tax" are improper; and staff estimates additional revenue of $379K if the public service tax (utility tax) cap were removed. Staff recommendation is to remove the residential and commercial utility tax caps and residential usage exemption. The City Manager noted this would impact the large users in the business community. She also noted it would require an ordinance and staff would prepare the budget based on Council guidance. There was some discussion on the affect to low income families and businesses, and the Attorney General opinions that the caps and limitations are improper. Mr. Minich moved to remove the residential and commercial utility tax caps and residential usage exemption. Mr. Hartwell seconded motion. The City Attorney mentioned she was not the attorney in 2000. She said her opinion was not requested for information on this item and as they go forward she will put out an opinion that brings them current with what has occurred. She said she thought she knew where the opinion came from and thought it may have changed. The City Manager said before any ordinance is prepared it will be brought forward to the City Attorney for review. The Mayor called for the vote on the motion to remove the residential and commercial utility tax caps and residential usage exemption and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent). Other Issue: Interfund Transfers Policy Decision: Should the current allocation of shared expenses be continued? The presentation included information that the purpose of the Cost Allocation Plan is to provide reasonable and proportionate reimbursement to the General Fund for services provided to other funds; Interfund transfers to the General Fund are based on the 2003 Cost Allocation Plan adjusted for inflation plus other shared expenses not considered in the Cost Allocation Plan; the Golf Fund does not reimburse 400K per the Cost Allocation Plan in order to permit the fund to retain all revenues for operations and to rebuild net assets; and as feasible, a portion of the enterprise funds' surplus is transferred to the General Fund as a resource for General Fund expenditures. This practice is permissible by GASB. Staff recommendation is to continue current method of allocating shared expenses via interfund transfers. Mr. Minich moved to remove from discussion the Golf Fund reimbursement portion from any policy decision made tonight. Mr. Holmes seconded motion. The City Manager mentioned it was not the intent to discuss the golf course tonight and to continue the current method of allocating expenses, including the exemption for the golf course and then it will be 10tH addressed at a workshop meeting on June  Special Council 5 -20 -08 145 BUDGET POLICY ISSUES cont. Other Issue: Interfund Transfers cont. The City Manager also mentioned there is a programmed increase on June 15t for the Golf Course which she will hold in abeyance until Council makes a decision. The Mayor called for the vote on the motion to remove from discussion the Golf Fund reimbursement portion from any policy decision made tonight and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent). l; Mr. Minich moved to continue the method of allocating shared expenses via interfund transfers. Mr. Garvie seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent). Outside Agency Funding Policy Decision: Should the City continue the current level of funding to outside agencies? The presentation included information that the following agencies receive City funding: Panhandle Animal Welfare Society, Chamber of Commerce, and Economic Development Council; Council has in years past questioned the benefit citizens and businesses receive from the Chamber and EDC; Council has in years past expressed an interest in decreasing funding to outside agencies; outside agencies are traditionally afforded the