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HomeMy WebLinkAboutCC 2010-08-06 Minutes MINUTES OF THE BUDGET WORK SESSION OF THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, HELD AT THE AMERICAN AIRLINES TRAINING AND CONFERENCE CENTER, ROOM M106, 4501 HIGHWAY 360 SOUTH, FORT WORTH, TEXAS, — AUGUST 6, 2010 Present: City Council: Oscar Trevino Mayor Ken Sapp Council Member / Mayor Pro Tem John Lewis Council Member Tom Lombard Council Member Tim Barth Council Member David Whitson Council Member Scott Turnage Council Member Tim Welch Council Member Staff: Mark Hindman City Manager Karen Bostic Assistant City Manager Jared Miller Assistant City Manager Mike Curtis Managing Director Vickie Loftice Managing Director Jimmy Perdue Director of Public Safety Elizabeth Reining Assistant to City Manager Patricia Hutson City Secretary Larry Koonce Director of Finance Mark Mills Director of Budget Mary Peters Public Information Officer Patrick Hillis Director of Human Resources Craig Hulse Director of Economic Development Andy Jones Fire Chief Jennipher Castellanos Budget Analyst Shirley Hoover Financial Analyst CALL TO ORDER Mayor Trevino called the Council Budget Work Session to order August 6, 2010 at 8:34 a.m. with all council members present. Mayor Trevino briefly commented on the budget. Mayor Trevino expressed his support of the budget and commented that the budget's one downside was its potential negative impact to employee core benefits. The Council also expressed their support of the budget and recognized its impact to employee benefits. Budget Work Session Minutes August 6, 2010 Page 2 Throughout the work session staff presented a PowerPoint presentation that provided an overview of the Revised 2009/2010 and Proposed 2010/2011 Operating and Capital Project Budgets, initiatives to be continued from previous years, trends and major financial and economic issues affecting the budget, and modifications to existing services. The City Manager began the presentation by giving an overview of the budget discussing highlights of the budget, financial and economic assumptions and the guiding philosophy used to formulate the budget. Mr. Hindman reported that while the recession continues, the local economy is showing some signs of recovery in some areas. Some positive economic indicators are single family sales starting to pick up slightly, foreclosures are decreasing, retail sales appear to be stabilizing and the consumer price index is remaining steady. Property tax revenues are lagging behind. Property values leveled out last year and this year will see a decline resulting in a reduction of $835,000 in property tax revenues. The preliminary budget is based on keeping the City's property tax rate at 57¢ per hundred dollars of assessed value. The preliminary budget is smaller than the previous two fiscal year budgets and is based upon receiving less revenue than received in 2007/2008. Property taxes are down 4 %, sales tax is down 2% and most other revenues are also down. The preliminary budget was prepared with sensitivity to the citizens' economic conditions. In balancing the budget the focus was on decisions that could be sustained overtime. Mr. Hindman advised that very little of the budget is not a core service and the core services have been prioritized. Mr. Hindman discussed the importance of being prepared to come out of the economic recovery. The proposed budget plans for the continuation of current Capital Improvement Programs including the projects approved by the voters in the 1994 and 2003 bond elections. Mr. Hindman discussed that in preparing for recovery it is important for the City to 1) maintain its assets, both physical and employee; 2) continue to prevent decline through Neighborhood Initiative Programs, maintain code compliance efforts, add funds for demolition, continue the Street Maintenance Program and Grant Funded Programs; 3) maintain its market edge through transportation enhancements, continued enhancement of Public Safety progams, NRH2O's new attraction, the new Recreation Center and the BIG Program; and 4) continue to produce local economic growth. The major budget challenge for 2010/2011 was the decline in revenues. Cost increases were seen in health care, wholesale water /sewer charges, and the maintenance of the TMRS Plan. The largest portion of expenses in the budget is personnel. The preliminary budget does not include compensation adjustments for employees, merit increases or market adjustments and the Stability Pay plan and TMRS Supplemental Death Benefit suspended in the 2009/2010 budget remain suspended for FY 2010/2011. The preliminary budget includes some staff reductions. One middle school resource officer (SRO) position will not be filled. An Assistant City Manager position was eliminated last fall and two vacant park maintenance worker positions will be frozen. Program changes in Citicable operations will reduce staffing in this division. Citicable will continue to operate in core functions but several extra services performed by Citicable will be eliminated. The positions eliminated in Citicable will be funded through March 2011 to allow the individuals holding the positions the opportunity to transition to other job opportunities. The preliminary budget utilizes some reserve Budget Work Session Minutes August 6, 2010 Page 3 balances and reduces contributions to some reserves. Should revenue exceed projections or expenses come in below budget, restoration of reserve contributions will be a top priority. Ms. Elizabeth Reining, Assistant to the City Manager, highlighted some of the past year's accomplishments supporting the Council's Goals and Objectives. - NIP expanded to include larger projects - TIF #1 expanded to larger area - City received NCTCOG sustainable development grant for TODs - Loop 820 Expansion has started - North Tarrant Parkway under construction - Boulevard 26 trail construction starts next week - CCD passed with 88% of vote - CAFS pumper completed - Police Department began Crime Victim Liaison Program - S &P raised NRH's credit rating from `AA' to `AA +' - Defeased $1.3 million of outstanding bonds - Iron Horse was voted Best Public Golf Course - City received $585,000 EECBG grant - Keep NRH Beautiful honored with $270,000 as a winner of Governor's Community Achievement Awards for outstanding community improvement - New Recreation Center will meet LEED Silver standards - Stormy Plaza opened and "Weather" debuted - Two signal boxes were added to Signal Art Project - Prestige Ameritech relocated to North Richland Hills - BIG was redesigned to encourage larger projects - Mayor Trevino received NCTCOG's William J. Pitstick Regional Excellence Award Mr. Craig Hulse, Director of Economic Development presented the economic outlook discussing national and local trends. Mr. Hulse highlighted national trends in the areas of unemployment, consumer confidence, retail sales and annual federal spending deficit. Locally, the city's unemployment rate is roughly 7.5 %, 20% less than the current national rate and 10% less than Texas and DFW. Foreclosures in the City are 50 percent less when compared to 2008 and 25% less when compared to 2009. In taxable sales, the City is up almost 1 percent or approximately $4.5 million, while most Northeast Tarrant County cities saw an overall reduction of 9.1 percent or $700 million. Northeast Tarrant County as a whole is down over $75 million. Council was advised that from an appraised property value standpoint, local assessment practices take time to catch up with market changes and tax bills and collections typically reflect values from the prior 18 months. Therefore the effects of the recession on property tax values are beginning to appear. Residential property value will decrease in 2010 as a result of dramatic increase of residential foreclosures, minor decrease in average value of homes sold and the continued slowdown in new single family residential construction. Budget Work Session Minutes August 6, 2010 Page 4 While commercial property experienced a decrease in 2009, it will experience a more significant reduction in 2010 as a result of increase in commercial property foreclosures in conjunction with decrease in sales price per square foot, continued slowdown of retail space absorption due to the shrinking small business segment compounded with increase of online shopping and continued slowdown in new commercial construction. Mr. Patrick Hillis, Director of Human Resources, presented the proposed compensation and benefits program for the 2010/2011 budget. Council was advised health insurance costs have increased 34 percent over the last 18 months. The factors that contributed to the increase in costs were discussed. Mr. Hillis discussed recommended plan design changes to the health insurance program which will allow the City to maintain the cost sharing target of 80/20 percent approved by Council several years ago. Council discussed how the proposed changes compared to other health programs. Mayor Pro Tem Sapp encouraged the continued promotion of the Wellness Programs and expansion of the program to the dependent level. Staff responded to questions from Council on the City's workers comp claims, how they compare to other cities and policies on risk management. Mr. Hillis discussed the continuation of the 8 year phase -in option for TMRS. The City was notified by TMRS in May that following this year's actuarial analysis it was determined that the City's ultimate contribution rate will increase from 20% to 20.67 %. This will result in the fiscal year 2010/2011 contribution rate increasing from 15.90% to 17.26 %. The Supplemental Death Benefit was suspended in fiscal year 2009/2010 to lower the City's contribution rate and its continued suspension is recommended for 2010 to offset the increased contribution rates. Mr. Hillis discussed with Council the employee compensation programs. Pay range adjustments were made to the Public Safety and General Services Pay Plans in July 2009. For fiscal year 2010/2011 pay range adjustments have not been included in the budget. With the continuing decline in revenue, the Merit Pay Program has also been suspended. Council discussed the Stability Program and the program's cost to the various funds. Mr. Mark Mills, Budget Director, provided an overview of the Revised 2009/2010 General Fund Budget and the Proposed 2010/2011 General Fund Budget. Mr. Mills discussed the adopted versus revised revenues and expenditures and appropriations of fund balance. The revised budget for the General Fund is $38,932,584, an increase of $200,141 over the adopted budget. Council was provided with an overview of the net taxable value history. In fiscal year 2010/2011 revenues are projected at $37,353,672, a decrease from fiscal year 2009/10 adopted revenues by $915,471. Net taxable property value decreased for 2010 and there is a projected decrease in taxes, fines and forfeitures, franchise fees, charges for service and miscellaneous. For fiscal year 2010/2011 expenditures are forecast to be $37,086,962, a 4% reduction compared to fiscal year 2009/2010 adopted budget. For the 18 consecutive year, the tax rate is proposed to be set at 57¢ per $100 valuation. Mr. Mills discussed the proposed tax rate and advised because the rate was below the effective tax rate of $0.603323 and the roll back rate of $0.586456 the City is not required to hold the two public hearings required by law on the tax rate. However, staff is proposing that one public hearing be held to Budget Work Session Minutes August 6, 2010 Page 5 promote openness and transparency. Mayor Trevino questioned if the fund balances could fund the stability program. Mr. Mills advised that there was a sufficient balance to cover the addition of the Stability Benefit Program. The council members were supportive of funding the program. There was concern expressed that because of the program's eligibility requirements not every employee of the city would benefit from the program. The benefit is provided to full -time employees who have completed a minimum of three years of continuous service and those employees with Tess than three years of service would not benefit from the program. With the suspension of several employee compensation programs, Council was supportive of providing a benefit for all employees. After discussion, the Council concurred with providing funding for the Stability Program and to include a one time Stability Benefit of $250 for employees who have not reached three years of service. Mr. Hindman advised that the funding could be added to the budget without utilizing the fund balances. Mr. Larry Koonce, Director of Finance, reviewed the Summary of Property Tax Revenue and Distribution and the General Debt Service Fund. Mayor Trevino asked for Council consensus on the General Fund Budget, the debt service and setting the tax rate at 57¢ per $100 valuation. All members of the Council concurred with the budget as presented and with the inclusion of the funding for the Stability Program and the one time payment of $250.00 for those full time employees not yet eligible for the program. Staff began a review of the Special Revenue Funds beginning with the Crime Control and Prevention District with Mayor Trevino announcing at 10:50 a.m. that he was recessing the Council Budget Work Session and calling the Crime Control and Prevention District Budget Work Session to order. After the District's Board of Directors discussed the proposed budget, Mayor Trevino adjourned the Crime District Work Session at 10:57 a.m. and called the Council's Budget Work Session back to order at 10:57 a.m. Staff reviewed and discussed with Council the remaining budgets for the Special Revenue Funds consisting of the Park and Recreation Facility Development Fund, Promotional Fund, Donations Fund, Special Investigation Fund, Drainage Utility Fund, Gas Development Fund, and Traffic Safety Fund. Mr. Mills gave an overview of Park and Recreation Facility Development Fund highlighting the revised 2009/2010 Park Fund Revenues and Expenditures and the preliminary 2010/2011 Park Fund Revenues and Expenditures. Mr. Mills presented overviews of the preliminary budgets for the Promotional Fund, Donations Fund, Special Investigations Fund, Drainage Fund, Gas Development Fund, and Traffic Safety Fund. Mayor Trevino asked for a consensus from Council on all of the Special Revenue Funds. Council concurred with the Special Revenue Funds as presented. Budget Work Session Minutes August 6, 2010 Page 6 The preliminary budgets for the Enterprise Funds (Utility Fund, Aquatic Park Fund and Golf Fund) were presented to Council. Mr. Mills discussed with Council the revised 2009/2010 Utility Fund Revenues and Expenses and the preliminary 2010/2011 Revenues and Expenses. Mr. Mills presented the Aquatic Park Fund highlighting the attendance history of the park and discussing the Revised 2009/2010 Aquatic Park Revenues and Expenses and the Preliminary 2010/2011 Revenues and Expenses. Council was advised that staff did not anticipate having funds available for park expansion reserves but should there be an excess of revenues over expenditures, the excess will be placed in reserves. Mr. Mills presented the budget for the Golf Course Fund discussing the history of rounds of golf played, the 2009/2010 Revised Golf Course Revenues and Expenditures and Preliminary 2010/2011 Revenues and Expenditures. Council concurred with the Enterprise Funds as presented. Mayor Trevino recessed the work session at 12:00 p.m. and called the work session back to order at 12:47 p.m. Mr. Koonce provided to Council the Automobile Reimbursement Policy Verification Annual Report. The report validated that for the period of July 2009 through June 2010 all reimbursement forms submitted had been verified and all reimbursements were within the policy guidelines. Mr. Mills presented the Internal Service Funds consisting of the Facility /Construction Management Fund, Fleet Services Fund, Information Services Fund and Insurance Fund. An overview was given of the Revised 2009/2010 Facility Construction Management Fund and the Preliminary 2010/2011 Facility Construction Management Fund, the Preliminary 2010/2011 Fleet Services Fund, Information Services Fund, and Self Insurance Fund. Council concurred with the Internal Service Funds as presented. Mayor Trevino asked for Council consensus on all Operating Funds as presented. Council concurred with the budgets for all Operating Funds. Council was provided with a prioritized list of items to consider adding back into the budget. Council discussed the prioritization and funding of some of the items. The consensus of Council was to put funding toward Sick Leave Incentive and Neighborhood Improvement Program; any additional funds will be split between Debt Service Fund Balance and Home Town Legal. Council began a review and discussion of the Capital Projects Budget. For Fiscal Year 2010/2011 the proposed Capital Improvements Project Budget totals $33,296,411. Mr. Budget Work Session Minutes August 6, 2010 Page 7 Curtis presented the 2010/2011 Public Works Capital Improvements Program. Mr. Curtis highlighted the completed projects for fiscal year 2009/2010. The budget consists of twenty -one continuing street projects, six new street projects, nine continuing drainage projects, two new drainage projects, eight continuing utility projects, and four new utility projects. An overview of the projects was presented. After discussion and questions from the Council, Council concurred with the Public Works Capital Improvements Program. Ms. Vickie Loftice presented the Park and Recreation Capital Projects Budget reviewing the history and accomplishments of the one -half cent sales tax since inception. Since 1992 the sales tax revenue collected totals $68,017,380 and capital project expenditures to date totals $42,345,356. In fiscal year 2010/2011 revenues are projected at $4,621,151 and expenditures are projected at $4,508.852. Ms. Loftice briefly highlighted changes to the continuing projects and discussed the new projects. Staff called Council's attention to future projects that are priorities of the 2007 Parks Master Plan needing to be prioritized for future funding. Ms. Loftice presented the proposed 2010/2011 NRH2O Waterpark Budget. Ms. Loftice reviewed the operating history of the park and the proposed revenues and expenditures for 2010/2011. The proposed budget includes two continuing projects and one new project for general facility improvements. The Council concurred with the Park and Recreation Capital Projects Budget and the Aquatic Park Budget. Council began a review and discussion of the Municipal Facility Capital Improvements Program for 2010/2011. The program consists of eight continuing projects and six permanent and new projects. Mr. Perdue discussed with Council the Animal Adoption & Rescue Center project. In the 2003 bond election $1.3 million was approved by the voters for a new shelter. The shelter was estimated to cost $3 million with the balance of the funds to come from private fundraising and donations. In 2009, Council directed Staff to explore a joint facility with the City of Keller. Keller has advised they are not interested in participating in a joint facility. Council was advised of the current construction costs and cost estimates for a 12,000 square foot facility with supporting personnel. Staff requested direction from Council on their desire to continue with the project and if so, whether they desired to do fundraising for the estimated $1.2 million or to find alternate city funding source for the balance. After a brief discussion, the consensus of Council was to continue with the project and find an alternate funding source for the balance needed. Staff will bring back some options for Council to consider. Mr. Miller highlighted the remaining Municipal Facility Capital Projects. Staff then presented and discussed the Major Capital Equipment Projects and Economic Development Projects. The Council concurred with the 2010/2011 Capital Projects Budget as presented. Mr. Mills reviewed the budget calendar and dates for the upcoming public hearings. Budget Work Session Minutes August 6, 2010 Page 8 There being no further business, Mayor Trevino adjourned the work session on August 6, 2010 at 3:30 p.m. A(I(, Oscar Trevino — Mayor ATTEST: )/a2 G� C& ` POTAritkon, City Secretary n a r r— • h :. .. ..-;:i . �h 1444 duinumato