~~~~~ BUDGET ADVISORY BOARD MINUTES 5:30 p.m. ~~~ I. Call to Order Chairman Rick Banker called the meeting to order at 5:30 p.m. Those present were Chairman Rick Banker, Vice Chairman Jerry Kane, Dr. P. T. Fleuchaus, Eugene Miller, Frank Pezzimenti, Finance Director Kelly McGuire, and City Manager Joyce Shanahan. II. Approval of Minutes of July 8, 2009, Meeting Mr. Eugene Miller moved, seconded by Dr. P. T. Fleuchaus, to approve the minutes of the July 8, 2009, meeting. The motion passed unanimously. III. Review of Proposed FY 2009-10 Budget Ms. Kelly McGuire, Finance Director, stated that the city would have one of the lowest tax rates in the county at 3.80 mils, which would generate a total of $10.5 million. Ms. McGuire stated that the City Commission would consider a water/sewer tax rate increase in September of about 4%. She stated that primarily the increase was for the increase in fuel and chemical costs, and the Water Treatment Plant and Wastewater Treatment Plant expansion projects. Mr. Miller asked about the transfer from the General Fund; whereby, Ms. McGuire stated that it was 6% of the gross revenue. He also asked about administrative costs attributable to the enterprise funds; whereby, Ms. McGuire stated that a small amount of engineering and utility billing/ customer service was charged to the water fund. Dr. Fleuchaus asked about the reserve; whereby, Ms. McGuire stated that each fund had its own reserve and the General Fund reserve was about $5 million or 17% of the budget. He also asked about the CIP and transportation funding; whereby, Ms. McGuire stated that a portion was paid by mils. She stated that the John Anderson Drive and Hand Avenue Collector Road projects were partially funded by mils. Pension Funds
Page 2 Mr. Rick Banker asked about the pension funds assumed rate; whereby, Ms. McGuire stated it was 8%, which was pretty standard around the state. She stated the pension plans were down 16% for the year, and the city s contribution of $500,000 was a percentage of payroll. She stated that the Firefighters Pension Plan was the largest part of the city s contribution. Ms. Joyce Shanahan, City Manager, stated that in the 1990 s the city s contribution was small because of the positive return on investments. She stated that when times were good that communities tended to do capital projects instead of keeping their contribution rate at least at a minimum amount. Mr. Banker suggested that an 8% assumed rate was poor management; whereby, Ms. Shanahan stated that a lower assumed rate had consequences and the city would have to pay a higher contribution. She stated they were prevented from converting to a defined contribution plan for the police and fire by the Division of Retirement. She stated in 1999 the insurance tax, which had been used to offset the city s contribution amount, was frozen and the police and fire plans started receiving a supplement that could only be used to enhance benefits, usually long-term benefits such as an increase in the multiplier. Ms. Shanahan stated that staff was unconvinced that the funds were adequately valued long-term by the actuary. She stated they had not been successful in getting legislation passed to reverse the state supplements back to the city. Mr. Frank Pezzimenti commented on the article e-mailed to them about a start/stop of the plans; whereby, Ms. Shanahan stated that this would have to be approved by ordinance, but they would have to go through the bargaining process with the unions first. She stated an option was to say no to any multiplier increases and to support a shared plan (defined contribution plan). She stated that staff would be negotiating new contracts for the police and general employees this year and she planned to look at ways to cap pension costs. Mr. Banker stated that trimming pension costs should be at the top of the list; whereby, Ms. Shanahan stated that the Commission had requested staff to revisit all issues. Ms. Shanahan stated that buying out and closing the plan would be very complicated and to put new hires in a defined contribution plan would take 15-20 years before any savings was realized.
Page 3 Ms. Shanahan stated that union negotiations would be difficult and it was possible that they would go to impasse. She stated that Mark Levitt of Allen, Norton and Blue, was the city s labor attorney. Consolidation of Services Mr. Banker stated that the board recommended regional consolidation of services, wherever possible. Ms. Shanahan stated that Volusia Council of Governments (VCOG) had directed the city managers to get together and look at consolidating services, such as street sweeping, building inspecting, etc. She stated that Daytona Beach, Holly Hill, Ormond Beach, and Volusia County were discussing consolidation of fire services. She stated that Volusia County had conducted an in-house study and prepared a new fire model and consolidation report, which she would provide to the board. Ms. Shanahan stated that priority dispatching was another area where they were working on a series of questions to ask the caller in order to determine the level of urgency. She stated it was hoped that the number of firefighters per station and overtime costs could be reduced by receiving more accurate information and restructuring the fire department. Mr. Miller commented that the studies contained good recommendations and logical thinking, until the implementation phase where it fell apart at the political process. He suggested we needed a study on how to achieve a factual analysis that would be acceptable by the general public. Mr. Miller expressed concern that the fire union would say the city was letting people die by extending the response time; whereby, Ms. Shanahan stated that the medical director would develop a set of questions to ask, and the firefighters were okay with the issues changing the response time. She stated she believed that business/residential were more efficient because of stricter building code regulations and fire suppression systems so they have less fire calls. IV. Discussion of Palm Tree Planting Dr. Fleuchaus stated he felt the palm trees planted on Ormond Parkway and Arlington Way were in the wrong place and there were too many of them. Mr. Pezzimenti stated his opinion that they looked terrible and were a waste of money.
Page 4 Mr. Banker stated that the block was only 0.3 miles long with palm trees planted indiscriminately on one side of the road about 20 feet apart,. He stated there were 64 palm trees planted on Ormond Parkway and 60 palm trees planted on Arlington Way. Dr. Fleuchaus asked about the funding; whereby, Ms. McGuire stated that the Community Block Grant Fund (CDBG) provided the funding. She stated that the Neighborhood Improvement Advisory Board (NIAB) along with the Grants Coordinator went to the citizens to see what they wanted to do with the funding in the CDBG area, and the citizens chose the palm tree plantings. Mr. Pezzimenti suggested the funds could have been used for parks, purchasing land, or hiring students; whereby, Ms. McGuire stated the CDBG had rules about what the money could be used for in the CDBG area. Ms. Shanahan stated that the NIAB got feedback from the citizens on how they wanted to spend the money and they chose the palm trees. Mr. Jerry Kane stated that he listens to the City Commission meeting audio broadcasts and this item had come up every meeting for a year. He suggested the board members also listen or attend the meetings and study their budgets so they can make informed decisions on the issues before the board. He noted that Commissioner Kent had meetings at his home regarding the palm trees. Mr. Banker asked about the planting design; whereby, Ms. McGuire stated they were planted to give the boulevard effect, only on one side of the street because there was not enough room on the other side of the street. Mr. Miller asked about the city s Tree City USA designation and the city s arborist; whereby, Ms. McGuire stated that one of the Neighborhood Improvement officers was an arborist. Messrs. Banker, Kane, Pezzimenti and Dr. Fleuchaus stated they felt the palm tree plantings were a mistake and the money should have been used somewhere else. V. Other Business Engineering Consultants Mr. Kane stated that Mr. Gregory Avakian had a chart at a recent City Commission meeting that showed engineering costs of $1 million per year;
Page 5 whereby, Ms. McGuire stated that there were $83 million in studies in ten years. Mr. Pezzimenti suggested utilizing some type of management software to save money; whereby, Ms. Shanahan stated she strongly disagreed because the 10% the city pays for engineering services was very low as compared to the industry standard of 25%. Ms. McGuire noted that the City Commission raised taxes two years in a row to pay for CIP projects and used engineering services. She distributed a list of projects where the city used outside consultants in the last three years. Mr. Kane suggested the chart was misleading and he asked about retainers; whereby, Ms. McGuire stated there were no engineering consultants on retainer. She stated that they considered many factors before deciding on outside consultants. Ms. Shanahan commented that utility projects were more complicated and tended to run higher. Federal Stimulus Money Mr. Miller asked about the federal stimulus money; whereby, Ms. Shanahan stated there were very few direct dollars as most of it was going through existing state projects. Future Meetings Mr. Banker stated that future 2009 meetings would be on call, and if something came up that the board needed to discuss, he would call a meeting. Contributions Dr. Fleuchaus asked if contributions had been cut by 20% as recommended by the board; whereby, Ms. McGuire stated they were cut by 7%. VI. VII. Audience Comments Adjournment The meeting was adjourned at 6:47 p.m. Respectfully submitted, Lois Towey, Recording Secretary
Page 6 Attest: Rick Banker, Chairman