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06/03/2008 Strategic Planning MeetingCITY OF MONROE CITY COUNCIL STRATEGIC PLANNING MEETING 300 W. CROWELL STREET, MONROE, NC 28112 JiJNE 3, 2008 - 4:00 P.M. AGENDA www.monroenc.org 1. Review and IDiscussion of Proposed FY 2008-2009 Budget This Agenda is tentative and is subject to change up to and including the time of the meeting. AS A COURTESY, PLEASE TURN OFF CELL PIHONES AND PAGERS WHILE MEETING IS IN PROGRESS 06-03-08stp City Council Strategic Planning Meeting June 3, 2008 Page 82 CITY OF MONROE CITY COUNCIL STRATEGIC PLANNING MEETING JUNE 3, 2008 - 4:00 P.M. MINUTES The City Council of the City of Monroe, North Carolina, >rnet in a Strategic Planning Meeting in the City Hall Council Chambers, 300 W. Crowell Street, Monroe, North Carolina, at 4:00 p.m. on June 3, 2008 with Mayor Pro Tem P.E. Bazemore presiding. Present: Mayor Pro Tem P.E. Bazemore, Council T/Iembers John Ashcraft, Billy Jordan, Lynn Keziah, Dottie Nash, Robert J. Smith, City Manager F. Craig Meadows, City Attorney Terry Sholar, and City Clerk Bridgette H. Robinson. Absent: Mayor Bobby G. Kilgore (June 3, 2008). Visitors: Brian Borne, Bruce Bounds, Doug Britt, Mary Lou Clark, Russ Colbath, Mike Courtney, Jason deBruyn, Jim Fatland, Ron Fowler, Wayne Herron, Jim Loyd, Dorn Mitchell, Chris Plate, Debra C. Reed, Lisa Stiwinter, Lisa Strickland, Mike Toiralba, David Williams, and others. Mayor Pro Tem Bazemore called the Strategic Planning Meeting of June 3, 2008 to order at 4:00 p.m. A quorum was present. Item No. 1. Review and Discussion of Proposed FY 2008-2009 Budget. City Manager Meadows stated the strategic planning meeting would be a review and discussion of the proposed FY2008-2009 budget. A. Water and Sewer. City Manager Meadows stated staff was recommending a 4.5% water and sewer user rate increase effective July 1, 2008. Water Resources Director Russ Colbath stated the rate increase was not tied to this year's needs, but the debt of future capital projects such as the Bearskin and Stewart Creek outfalls, upgrades and expansion of the wastewater treatment plant, a reclaimed water system, and building a new water tank. He advised that according to the rate model, by 2015 the City's annual debt service would increase from $2 million to $7 million to pay for $80 million worth of capital projects. Mr. Colbath stated if Council did not want to continue to equalize rate increases over multiple years, staff would not implement a rate increase this year; however, that would mean elevated rate increases in future years. Mr. Colbath stated future revenue needs could be covered by adding more customers in order to sell more services, or by raising rates. Because of the drought of record and significant economic slowdown with financing and banking issues, Mr. Colbath advised that staff tried to conservatively predict an average annual growth rate of 1.5% over the next five years. City Council Strategic Planning Meeting June 3, 2008 Page 83 Council Member Ashcraft stated a future major factor was the wastewater treatment facility and curtailing future commercial and residential development was the only way to delay future ~1 growth. Mr. Colbath stated the City has committed to developments that will build out over time and increase the number of customers and revenues. Mr. Colbath stated the City's surplus wastewater treatment capacity is 800,000 gallons per day. B. Electric Fund. City Manager Meadows stated at this time, staff was not proposing any user rate increases for electric or natural gas. Energy Services Director Don Mitchell stated the Electric Fund was always the biggest utility fund due to the purchase of power cost. The Power Agency passed on a 3.2% wholesale rate increase, but staflF does not recommend any adjustments to the electric rates. City Manager Meadows asked if staffs anticipated any significant changes in the wholesale rate in the next two to three years. Mr. Mitchell stated the Power Agency has levelized rate increases in the 2.5 to 3% rate through 2019, and projections were for about a 30% decrease in wholesale rates after 2019. C. Natural Gas Fund. Energy Services Director Mitchell stated the Natural Gas Fund was similar to last year's budget except purchase gas prices are considerably higher this year. Since the budget was submitted, gas prices have increased about; $3 a dekatherm and the latest budget includes those price increases. Mr. Mitchell stated that as presented right now, there are no changes to any of the natural gas rates. D. Storm water Fund. City Manager Meadows stated staff recommended establishing a $4 per month stormwater utility fee•residential charge beginning :fanuary 1, 2009. E. Charlotte••Monroe Regional Airport. Economic Development and Av>ation Director Chris Plate stated the road relocation design was underway for Goldmine Road Phase II and the runway extension. There are seven prospects with an estimated worth of $187 million considering the airport based on the lengthening project, name change, and fuel policy. F. Parks and Recreation -Golf Course. Parks and Recreation Director Mike Courtney stated the Pro Shop should be complete by the end of June. G. Parks and Recreation -Greens Proiect. Parkas and Recreation Director Courtney stated the greens project was moving along very well. for the front side greens and the recontouring was ahead of schedule. Staff will be sprigging; the greens at the end of June. H. Parks and Recreation -Winchester Update. Parks and Recreation Director Courtney stated staff has been working with Union County Community Action regarding their needs in the building and would update Council at the next meeting. I. Parks and Recreation -Old Armory. Parks and Recreation Director Courtney stated the structural engineer has everything set and are waiting on estimates from the contractor. The recreation center site is progressing. City Council Strategic Planning Meeting June 3, 2008 Page 84 J. Monroe Aquatics and Fitness Center. Parks and Recreation Director Courtney stated staff had ordered a new line of fitness equipment, and the locker room will be updated with bigger lockers. K. General Fund. City Manager Meadows provided Council with various reports regarding the General Fund.. He noted the Appropriation from Fund Balance report was in response to a question about an appropriation of General Fund Fund Balance that was appropriated to balance the budget and what that appropriation would be used folr. This report showed items that were contemplated to be funded from the Fund Balance appropriation, and also showed what was appropriated over the last four fiscal years. City Manager Meadows noted the Summary of Proposed. Programs and Fiscal Impact reflected prior year commitments that have been made which impacted the General Fund and also new proposed items that impact the General Fund for FY2009 and carries those projected impacts out for the next five fiscal years. City Manager Meadows noted the General Fund Five Year Cash Flow reflected cash flow projections for the next five fiscal years based on the estimated beginning Fund Balance at July 1, 2008 based on the most current estimates. The projection also estimates revenues, expenditures and the General Fund fund balance for each of those fiscal years. City Manager Meadows stated that this was assuming a tax rate of 50 cents would be implemented for FY2008/FY2009 which was his budget recommendation and also contemplates an additional three cent increase that would be proposed for FY2011. City Manager Meadows noted that staff had prepared the same analysis using a tax rate of 47 cents for FY2009 and FY2010, which would be a revenue; neutral rate, and then stepping up to a three cent increase to 50 cents for fiscal years 2011, 2012, and 2013. Council Member Nash expressed concerns with a discrepancy in total revenue. One report indicated $30,649,020, and another showed $33,454,000. Revenue listed under expenditures showed $3,800,000 and she questioned if that was extra or a shortage. Council Member Nash stated that with a minus sign in front of the number it indicated a shortage, but the City Manager projected $33,454,000 in revenues. Council Member Nash stated $30,649,020 was total revenue and the projection was $33,454,000 at the 50 cents rate. City Manager Meadows explained that to get the "Total Revenues", you added ($30,649,020) to "Total Other Financing Sources and Uses" ($2,805,000) to get Total Revenues. Council Member Nash stated that debt service had increrased and wanted to make sure all the debt service including the firing range and facilities package was included. Council Member Nash noted the original projection was $1.8 million and now was $2.3 million. City Manager Meadows confirmed these items were included. Council Member Nash noted the Fund Balance appropriated in the Budget Message was approximately $1.9 million and had decreased to $1,100,130. She questioned what had been removed. City Manager Meadows advised nothing had been changed and did not think it was included in the Budget Message. Council Member Nash thought it was $1.9 million with the City Council Strategic Planning Meeting June 3, 2008 Page 85 totals Council had been given. City Manager Meadows stated that was an oversight in the Budget Message as he did not put the appropriated Fund Balance in there, but that number should not have changed and thought it had been $1.1 million from the beginning. Council Member Nash stated the City had paid on debt service with Fund Balance which was normal because it was operating expenses and questioned why the City was paying off debt service that had already been included in the previous year's budget. City Manager Meadows stated the only item for debt service included in the :fund balance appropriation were the installment financings. He stated that one installment financing would be paid off this year and another in two years. City Manager Meadows agreed with Council Member Nash and felt long- term debt financing should not be included, but since those installment purchases were primarily for equipment that the City could have bought out of Fund Balance, it was decided to go ahead and pay off those two installment financings. Council Member Nash stated Finance Director Fatland's; original projection on Fund Balance was going to be at least 25% and noted at 47 cents, the fund balance was 26% and was concerned about the 1% margin. City Manager Meadows stated he would let Mr. Fatland explain those two spreadsheets because in FY2009 at 50 cents, it showed fund balance would be 27%. Council Member Nash stated the City's policy was 25% for Fund Balance so it would provide a 2% margin. Mr. Fatland stated staff provided cash flows noting a revenue neutral tax rate and three cent increase. The items in the spreadsheet which have a big :impact on Fund Balance are the "Prior Year Approvals and Commitments" at $1.4 million. Mr. Fatland stated those were programs that Council previously approved and staff had not programrried them into the cash flow until now. He advised that those items now have to be paid for and will impact the Fund Balance unless a tax increase was implemented to cover that. Mr. Fatland stated the Finance Committee requested staff consider forming three separate funds: Medical, Workers' Compensation, and Property Liability. The City has two savings accounts which add about $2.6 million for workers' compensation and property liability. He stated that around 2004 or 2005, Council may have wanted to appropriate $200,000 for medical. Mr. Fatland felt it was a great idea to move forward on it establishing the funds now because when there is a good year, you can build up some reserve. Mr. Fatland stated staff was working to get the information together so Council could review it for adoption at the June 17 meeting. Mr. Fatland noted it was also suggested to form a Solid Waste Enterprise Fund. Staff proposed to charge each department a workers' compensation fee and a property liability amount. Staff will recommend that a portion of the $2.6 million be allocated to the Medical Fund based on the research done on the $200,000 per year that Council directed staff to work on. Council Member Jordan stated it had always been his wlderstanding that since the 1990's, the City had $1.0 million plus interest earned set aside for medical expenses. Mr. Fatland stated each department was charged their share of medical, but when the City has a good year that money goes in the General Fund. Mr. Fatland felt it was an excellent idea to form a separate fund for that and noted staff would work diligently to get that information to Council before the June 17 meeting. City Council Strategic Planning Meeting June 3, 2008 Page 86 Council Member Jordan noted Council's request for staff to determine when someone started making those transfers without Council's knowledge. Mr. Fatland stated staff was still (~ researching that exact year and felt it was probably 2004 because he noticed the numbers went up in 2005 in looking at the expenses. Council Member Nash stated that "Employee Contribution and Employee Medical" was $282,000 that the City assumes every year plus the $470,000. Mr. Fatland stated the $282,000 was the General Fund share of the $470,000. Council Member Nash noted she had requested Mr. Fatland to research the Electric Fund transfer that was made. It was listed in the Financial Statements ass a "transfer" and that goes against the City's policy. City Manager Meadows stated it should have been loaned and Mr. Fatland agreed. Council Member Nash asked if that money was in Fund I3alance because she did not want $1.5 million taken out. City Manager Meadows stated that was for economic development incentives and asked if that 'was actually advanced. Council Member Nash stated the Financial Statements showed it was transferred into the fund from the Electric Fund and was not shown as an advance because with an advance, there should be a promissory note. Budget Analyst Mary Lou Clark stated it did show as an advance on the ledger. Council 1Vlember Nash stated that was fine, but the Financial Statements showed it as a transfer. City Manager Meadows asked if the funds were reserved for incentive grants as opposed to being in the undesignated portion of the Fund Balance because if staff did transfer it, it would be reserved and staff would have transferred it with the reservation to hold it for grants. Council Member Nash stated she just wanted to make sure. Mr. Fatland stated he would research it and sit down with the auditors if necessary to get it corrected for next year. Council Member Smith asked if there was anything in the CIP that could be deferred besides the $600,000 for the J. Ray Shute gymnasium. City Manager Meadows stated if the J. Ray Shute facility is removed, that would affect future years because there was no debt service payment projected for this project in 2008/2009. He stated that if that was taken out, it does not have an impact on the proposed budget, but would impact future budgets. Council Member Smith asked what items have impacts on the budget next year. City Manager Meadows stated the biggest ones staff identified are the street resurfacing over and above the Powell Bill funding of $300,000, BMPs for the fire stations which are required. as a part of Phase II of $40,000 and imgating and sprigging the multi-purpose field at Parks V~Iilliams Park which was $40,500. City Manager Meadows stated those projects are not financed and if they are taken out, it would be a dollar for dollar reduction on the General Fund expenditures. Council Member Ashcraft asked if the BMPs were required for the fire stations. Engineering Director Jim Loyd advised that they were required andl staff should have already begun the process to implement something to treat the runoff in order for the fire department to be able to wash their vehicles. Chief Fowler stated with the stormwater requirements, staff would have to start capturing wash water from washing the fire apparatus. Station #5 was currently being modified so vehicles could be washed there and would also be the least expensive and easiest to do the station layout at a cost of $20,000 and would be done this year. Chief Fowler stated that $40,000 was projected for next year to construct Stations #2 and #3. Chief Fowler stated that since staff was planning to build a new permanent facility at Station #4, there was no use to build one at the temporary facility. Chief Fowler stated that Stal;ion #1 would be very difficult and City Council Strategic Planning Meeting June 3, 2008 Page 87 expensive to do so staff has decided to hold off since there have been discussions of possibly building a new fire station headquarters at some point. Council Member Smith asked for a cost estimate on Station #1. Chief Fowler advised staff did not have an estimate at this time and this site presented a challenge due to space limitations and layout along with the close proximity to Crowell Street. Council Member Jordan asked why it was necessary to have a BMP at every site and not a central location. Chief Fowler stated one of the reasons, was the expense of moving to other facilities with the fuel costs and would take a longer time. Council Member Jordan stated when the firefighters go and eat dinner, the fire trucks go with them. Chief Fowler agreed; however, the other reason was if there was just one central location, then the firefighters and trucks would have to leave to go there and would be out of their initial. response area, but that was an option staff could look at. Council Member Jordan stated it would be more convenient to do onsite, but if staff looked at the costs involved as additional equipment was added on, does it become cost effective for the City to try and have each site able to contain this runoff. Council Member Jordan stated when it came to adding extra staff, it was for the safety of the City's firefighters and making sure they go home to their families at the end of their shift. However, when adding improvements to buildings to accommodate more firefighting equipment this was something the City could afford. Chief Fowler stated any fire station built from this point forward would include the BMPs. Council Member Jordan stated he did not know why staff was considering that rather than looking at a site where all stations could be incorporated within the City. Chief Fowler stated staff could certainly take a look at that request. Staff was trying to meet federal mandates. Council Member Smith asked City Manager Meadows which items had the highest priority number in the budget. City Manager Meadows stated in putting the budget together, he always tried to take care of the City's greatest resource first, and that was existing employees, and the City tried to provide competitive pay and benefits. Council Member Nash asked what was done with the compensation and pay study recommendations. City Manager Meadows stated that instead of implementing the full package which had been talked about earlier, staff recommended adjusting all the pay grades based on the Pay and Classification Study and any employee below the minimum of the adjusted pay grade would be brought up to the minimum, but staff did not make any initial adjustments within the pay grade. Council Member Nash asked what was the original cost to the City. City Manager Meadows replied $790,000, but that staff was implementing $146,000 versus $790,000. City Manager Meadows stated that in looking at the pay and benefits for the existing employees, staff first made sure funding was maintained to fund existing employees and then looked to add additional employees if there are areas that need it. City Manager Meadows stated there were a number of employees requested in various departments and the list was pared down to seven full-time employees (four in police, two in City Council Strategic Planning Meeting June 3, 2008 Page 88 code enforcement, one full-time at the armory, and two part-time at the armory). He stated if there are left over funds, staff would look to add capital. Council Member Smith asked City Manager Meadows what would have to be cut to keep the rate at 47 cents revenue neutral. City Manger Meadows stated he would take a hard look at any expanded programs such as street resurfacing beyond what the City receives from Powell Bill. He stated that providing leaf collection every year was an expensive program and if it was curtailed would save money but not a lot because those employees perform other duties during the course of the year. City Manager Meadows stated if Council decided to keep the street resurfacing, BMPs, or the Parks Williams Park, these items could be allocated from Fund Balance for one-time capital; however, he cautioned that if Council started pulling out of Fund Balance, the unappropriated percentage is reduced as you go into subsequent years. City Manager Meadows stated that staff tried to propose a budget that should the tax rate increase three cents this year, it would carry for two fiscal years. He stated that if the City goes back to a revenue neutral rate even with some of the cuts, especially with a revaluation year, there would be a lot of pressure to adequately fund programs again next year. City Manager Meadows stated one of the things Council might consider was to be able to make some short term cuts to keep the rate revenue neutral this year, but felt they would be just transferring some of the pain to next year. Council Member Ashcraft stated naturally Council wanted to keep the rate as low as possible, but some of the major things Council was trying to take down, he did not know how that was going to be feasible like Police and Code Enforcement. Council Member Ashcraft asked what did the City get from Powell Bill funds. Engineering Director Loyd replied about $1.0 million. Council Member Ashcraft asked if the City was adding an additional $300,000 to that. Mr. Loyd stated the City spends about 60% of its Powell Bill funds on street maintenance, 7% for sidewalk improvements, 10% for debt service on some past equipment purchases, and the remainder was for new equipment. Mr. Loyd stated in May 2006, asphalt was $39 a ton. As of June 2, 2008, there was a $10 increase per ton and this was one of the reasons staff felt like they could justify $300,000. Council Member Ashcraft asked what was spent on street resurfacing. Mr. Loyd stated last year the City spent $300,000 on street resurfacing which was included in the budget and the City maintained 158 miles of streets. The industry norm is to resurface streets every 12 to 15 years and realized with the funds that were received, there was no way to accomplish that. Mr. Loyd stated this was presented to the Transportation Committee. Staff identified 15 miles of priority streets each year and try to resurface on a 12 to 15 year cycle. The remaining streets that receive less volume are looking at a 30 to 40 year cycle. Council Member Jordan stated at one time he had previously suggested the City partner with the Career Center to try and upgrade the level of expertise of the City's mechanics in the garage so the City does not have to send as much of their work out, especially the technical work, engine analysis, and special police cars and wanted to know if that had been done. He stated that in looking at the mechanics' salaries, he was not sure if the (:ity was getting the expertise out of the City Council Strategic Planning Meeting June 3, 2008 Page 89 mechanics needed in order to reduce some of the outsourcing. Council Member Jordan requested staff review this to determine if it would provide better training to City mechanics in order to bring more work in-house and save the City money. Council Member Ashcraft asked if the City offered the mechanics training now. City Manager Meadows advised training was provided; however, he was not sure of the- level of certification. Council Member Nash felt Council should review the Enterprise Fund because Allied Waste could possibly ask for additional fuel recovery. due to high gas prices. City Manager Meadows stated that was another good reason for having a separate Solid Waste Fund because the solid waste fees generated revenues slightly in excess of what Allied Waste charged the City for services, but that would return into the General Fund as well. Council Member Nash made a motion to recess the June 3, 2008 at 5:30 p.m. on Tuesday, June ~ 3, 2008, to be reconvened at 4:00 p.m. on Tuesday, June 17, 2008. Council Member Ashcraft seconded the motion, which passed unanimously with the :following votes: AYES: Council Members Ashcraft, Jordan, Keziah, Nash, Smith, and Mayor Pro Tem Bazemore NAYS: None Tuesday ,June 17, 2008 Mayor Kilgore reconvened the City Council Strategic Planning Meeting at 4:00 p.m. on ,~ Tuesday, June 17, 2008. A quorum was present. City Manager Meadows requested Finance Director Jim Fatland advise Council of the questions and concerns as a result of the previous Budget Work Session. Mr. Fatland stated it was suggested at the last meeting that staff look at forming separate funds for Workers Compensation, Property Liability, Medical Fund, and also establish an Enterprise Fund for Solid Waste. Finance Director Fatland stated staff originally was going to try and do this next year and was pleased when Council asked if it could be done this year. Staff worked overtime to get it done. He reported that the budget recommendations included forming these four new funds. One of the things Council Member Smith suggested was that if we did this, the City might be able to generate some monies from the Enterprise Funds where in the past we have been subsidizing it with the General Fund. He reported that about $200,000 was generated from the Enterprise Funds and would help on bringing that cost down. Mr. Fatland stated all departments are charged their share of their employees' medical costs in the Medical Fund; however, at the end of the year if the fund came up short, the General Fund was used to make up the difference. Staff recommended the Medical Fund be a separate fund and any savings would remain in that fund. (~ Mr. Fatland stated in the past, there was a designated fund balance in General Fund for Workers Compensation and Property Liability totaling $2.6 million. Staff allocated that to the two funds City Council Strategic Planning Meeting June 3, 2008 Page 90 and made a transfer from the Workers' Compensation Fund of $500,000. Council also suggested that staff take a look at the $2.6 million and move a portion into the Medical Fund to offset the $470,000 hit the City is going to have. Mr. Fatland stated the way it was done in the past was Workers' Compensation claims were paid each year and were charged to the department that had the claim. At the end of the year in June, Finance would take money out of the Workers' Compensation balance and then transfer to the departments that needed the money. Mr. Fatland stated that if there was a claim in the Enterprise Funds, the General Fund reserve covered that. Staff was not going to charge all the departments their cost of Workers' Compensation and there are various rate factors that the League of Municipalities has suggested. Mr. Fatland stated that they would not collect the full premiums that would be paid to an outside insurance company. The City paid claims around $300,000 so they are going to collect about $300,000 from all the departments to roll into the Workers' Compensation Fund to cover estimated claims to be paid and carry that fund balance over to the following year. Finance Director Fatland stated this would also be done with the property and casualty insurance, as well as collecting money from all departments. Staff reviewed the appraised values of all the facilities and charged all the funds their fair share of the property and casualty insurance. Three separate funds for the Insurance Funds and the Total Fund Balance will be designated in the CAFR. Mr. Fatland stated this was an idea that came from the last meeting and staff had worked diligently getting those funds in place to be part of the budget recommendation. Mr. Fatland stated staff formed a new Enterprise Fund for the solid waste to be able to account for all the expenses and income and carry any leftover money to the following year. r __ Council Member Nash expressed concern with one of the reports noting medical insurance costs of $282,000. Mr. Fatland stated that was the General Fund's share of the $470,000. Council Member Nash asked if all of that would be moved into the Insurance Fund and free up $282,000. Mr. Fatland advised it would. Council Member Nash advised Council she had requested Mr. Fatland to look and see if there was a way Council could set aside some money for the Winchester community and then put it in a fund on its own and add to it each year for the area that they want redeveloped. Council ~~ Member Nash advised she also asked Mr. Fatland if there was $282,000, could $100,000 of that money be set aside. Mr. Fatland advised it could and would not affect the General Fund undesignated fund balance and was Council's decision on how to appropriate that savings. Finance Director Fatland stated the $282,000 was the General Fund's share of the $470,000 appropriation coming out of the designated Fund Balance. City Manager Meadows stated the money Council discussed at yesterday's meeting was a net "wash" of about $190,000. Mr. Fatland stated $198,000 was the savings by charging the Enterprise Funds. Council Member Smith stated he was more interested in reducing the tax rate than allocating money to Winchester. City Council Strategic Planning Meeting June 3, 2008 Page 91 Council Member Nash questioned if money was transferred or advanced from the Electric Fund. She had an email and requested Ms. Clark check into it and was advised that the money was sent to Economic Incentive #250. Council Member Nash-stated that in the City's financial statement, when there was reserved money or a loan, was staff not supposed to set aside that money in the City's reserve. Mr. Fatland asked if she .meant for the loan we are going to have with the Electric Fund. Council Member Nash stated that was correct. Mr. Fatland stated the only reserve required was if there was a revenue bond issue; but not for an internal one. Council Member Nash questioned if it was not required and confirmed there was a promissory note that was done, but Council never signed off. Council Member Nash stated she had asked that already,-but on page #16 of the 2007 CAFR-it showed reserve for encumbrances, state statutes, streets, Powell Bill, and asked if that was not supposed to be set aside in the undesignated, but in the reserve for the Fund Balance was that money not supposed to be set aside that the City had borrowed. Mr. Fatland advised there was a promissory note to pay it back over "x" number of years. Council Member Nash stated there was not a promissory note. Mr. Fatland stated it was before Council for consideration and vote. Council Member Nash stated in the past it was not a promissory note because it was never brought to Council and asked for an explanation as to how that worked. Mr. Fatland advised his understanding was when there was a promissory note it was paid back and the City would budget for that debt. He stated that Ms. Clark would take the City's debt and pro rate each particular year so it was taken care of so you do not have a reserve to cover your future debt and the current revenue covers -your annual debt. Council Member Nash stated Council sets aside that money. Mr. Fatland stated that was correct. City Attorney Sholar stated it would not be the full amount. Mr. Fatland stated it was just the amount needed for that ~, particular year. City Manager Meadows asked if it was not set aside as a payable in the General Fund and a receivable in the Electric. Fund and therefore does not affect Fund Balance. Council Member Nash stated she was referring to the reserve not the City's savings account undesignated and asked if it was not supposed to be noted in the City's financial statement. City Manager Meadows advised the funds would not show as a reserve, but would show as a payable in the General Fund and a receivable in the Electric Fund. Council Member Nash stated •the City recently made a debt service payment and there-was no promissory note. Mr. Fatland stated that was correct and staff was trying to come back and correct some things and move forward. ,r~°~ City Manager Meadows stated at this point of the budget. discussion, there were differences of t priorities and there was some discussion about looking at allocating additional monies for Winchester and trying to reduce the tax rate. He stated that staff was looking for direction from Council on their priorities and how to achieve them. Council Member Jordan apologized for being- late andl questioned if Council had already discussed the tax rate comparison for the different cities and if they would be doing so. Mayor Kilgore stated Council had not discussed that yet, but it could be discussed if Council Member Jordan wanted to. Mayor Kilgore was not sure what 1VIr. Meadows had in. mind, but felt it was for Council's information: City Manager Meadows stated that was correct. Several Council members- asked for some comparable tax rates in similar size communities for this year and what they were looking at for next year. City Council Strategic Planning Meeting June 3, 2008 Page 92 Council Member Jordan stated the information does not indicate whether or not these other cities were going through revaluation. City Manager Meadows stated that was listed in the first (`~ column. Council Member Jordan stated it also does not take into account how much additional money the cities are raising even if the cities are revenue neutral rate. Council Member Jordan stated because that factor was missing in the information, it was not a true comparison of how the City was doing. Council Member Smith questioned the $191,000 and if Council was able to reduce the proposed tax rate from 50 to 49.5 cents, would that allow staff to present a budget next year without a tax f rate increase. City Manager Meadows stated the commitment that staff has made in working through this budget was to try and present a budget this year so that when the tax rate was established and voted on, it will hold for Fiscal Year 2008/09 and for 2009/10. Council Member Smith stated that would only give about $50,000. City Manager Meadows stated if the tax rate went to 49.5 cents then that would reduce revenues a net of $282,000 versus the $190,000. Mr. Fatland stated the key thing was the savings the City would realize from the creation of the internal service funds would be ongoing operating savings every year after that and could help on the tax rate cut. Finance Director Fatland stated the $282,000 was a one shot transfer from the Fund Balance which would not be year after year and the answer was the $191,000 savings. City Manager Meadows stated the $191,000 was in current operations. Mr. Fatland stated that current operations which would help with next year's savings as well which would help on the tax cut. City Manager Meadows stated that if Council approved a budget with a 49.5 cent tax rate, staff felt confident that could hold for two years; however, it could mean some tighter cuts in the second fiscal year. Staff was concerned that if Council approved a revenue neutral rate, then there was no way short of beginning to lay off staff that they could hold that rate for two years. Council Member Smith stated he would like to stay at 47 cents, but felt it could not be done if the City was going to hire four new police officers and two new code enforcement employees. He was comfortable with 49.5 cents after City Manager Meadows advised he did not anticipate raising the tax rate next year or at least hoped not to. Council Member Smith stated if Mr. Fatland could review the Enterprise Funds and make sure monies are being allocated like they should, then the City might be able to realize some savings. Mr. Fatland advised that for the budget next year, staff would be preparing a cost allocation plan update that has not been done in six or seven years and would be an opportunity to capture some costs in Enterprise Funds. Council Member Ashcraft commended Mr. Fatland and his staff for providing Council with a lot of information. City Manager Meadows thanked Mary Lou Clark and Lisa Strickland for their hard work and working quite a bit of overtime hours getting all this information together. Staff had talked about setting these things up going into the next fiscal year, but Ms. Clark and Ms. Strickland got it done with this budget. City Council Strategic Planning Meeting June 3, 2008 Page 93 Mayor Pro Tem Bazemore made a motion to add $52,000 for Union County Smart Start which was left blank. Council Member Ashcraft seconded the motion. Council Member Smith asked if Council had ever received the requested information from Union County Smart Start. Council Member Nash advised that no information was received other than the letter. Mayor Pro Tem Bazemore stated his point was Council had not asked for anything of the other 14 or 15 outside agencies except for what they were going to use the City money for and questioned why this agency was going to be handled separately and why was Council trying to discriminate against this one. Council Member Jordan stated it was not being discriminated against and that the other people provided the information. Mayor Kilgore questioned if all the other agencies were asked for the same information. Council Member Nash stated that was correct and the other agencies provided a breakdown. Mayor Pro Tem Bazemore asked if all the other agencies provided you with all the funds they receive from other sources. Council Member Nash stated that was correct and the other agencies advised how much they received from the County and everyone else. Mayor Pro Tem Bazemore asked Mayor Kilgore to see a copy of that information because he would have some justification, but stated a copy should be made available to Council. Council Member Nash advised she would ask this question one more time. Was Council going to do anything to set aside for the Winchester community. Council Member Ashcraft asked if Council had promised the Winchester community the City was going to do something. He stated the City had spent or planned to spend over $3.5 million dollars in the Winchester community in the last ten years. Assistant City Manager Wayne Herron stated the promise that was made and what was noted in the report was at that particular time when the plan was adopted, there was no promise of General Fund obligations, but that staff would try to seek grant funding. Council Member Ashcraft asked if the City had been doing that. Assistant. City Manager Herron stated that staff had been trying to do that by seeking funding for housir>g, community centers, etc. He stated that unfortunately under the current conservative administration, the grant programs were just not available; however, staff has looked and will continue to look. Assistant City Manager Herron stated there was no specific promise made of any General Fund designation to be set aside and it was at Council's discretion every year of how they choose to do that. Council Member Ashcraft pointed out to Council Member Nash that when the Winchester group was at the Council meeting two weeks ago, they were pointing out that they were of the opinion that the City was neglecting them and he was sort of caught off guard by that. He asked City staff to summarize that information. Council Member Ashcraft advised in the last ten years, the City has committed $3.5 million dollars to .Winchester iin improvements, buildings, additions, swimming pools, and redesign. He stated that Council had not neglected that neighborhood. Council Member Nash stated that when we had the Steering Committee, we met and talked about when the City went in and bought houses that they tore down which was before her time. Council Member Nash stated at least it was a good faith effort that the City was committed to their community and let's set this money aside and at least start adding to it and it may be ten years before there was enough money to do anything. Council Member Ashcraft stated like seed City Council Strategic Planning Meeting June 3, 2008 Page 94 money. Council Member Nash stated that was correct anti to go ahead and put the money aside so you could actually start looking at having an estimate of the cost to build a teen center which was one of the things the community is after because the Bazemore Center is so small. They want to get kids off the street. Council Member Smith asked what they were going to do with the basketball gymnasium because they do not need a teen center. They want to play basketball and did not want a teen center. Council Member Jordan stated that contrary to popular belief, black folk do more than play basketball. Council Member Smith stated that was not what the residents that live there indicated they wanted. Council Member Jordan stated again that contrary to popular belief Council Member Smith, black folks want to do more than play basketball. Council Member Smith stated he was just giving his opinion and noted Council Member Jordan had an opinion as well. Council Member Jordan stated that Council Member Smith gave his opinion and he gave his, but you are going to stop putting the Winchester community down and noted it was the second time he had done it this week and it would stop. Council Member Smith stated we have put and did not think they are invisible if the City has invested $3.445 million dollars in Winchester. The City has put a lot more money in Winchester than Savannah Way. Council Member Ashcraft stated the City had spent more money in Winchester than anywhere else in the City. Council Member Smith was not aware of any other community center or teen center in the northeast part of town. Council Member :Jordan stated that sometimes when there are problems in a specific community, /~ that when you have a situation where you have gone on in and taken houses and businesses, it (` ` takes a little bit more to try to address those concerns, and he has already made his statements on this. Council Member Jordan stated the record is clear where he stands. The Council has to take a vote and the community has to take a look at that vote and decide whether or not it was something they are comfortable with. Mayor Pro Tem Bazemore stated Council had been talking for years about doing something in southeast Monroe and felt if Council was going to set aside some money annually, it should not be limited to Winchester and should be to both areas, because there was not anything in southeast Monroe and never had been anything - no gym, no swimming pool, etc. Council Member Jordan asked what area he was referring to in southeast Monroe. Mayor Pro Tem Bazemore replied over near the Shute Center and the public housing area. Council Member Jordan asked if it was over near Elizabeth Baptist Church. Mayor Pro Tem Bazemore stated that was correct. There being no further business, the City .Council Strategic Planning Meeting of June 3, 2008 adjourned at 4:35 p.m. ~~, Attest: Bril~ette H. Robinsori, City 06-03-08stp Minutes transcribed by: Sherry K. Hicks rs~~- Q. d~;l \~~~ City Council Strategic Planning Meeting June 3, 2008 Page 95 G. re, Mayor