«FINANCE COMMITTEE MEETING held January 14, 2013 7:30 a.m. Present: Chairman Mike Young Councilman Dwight Clark Councilman Dave Tadych Also Present: ...»
FINANCE COMMITTEE MEETING
held January 14, 2013
Present: Chairman Mike Young
Councilman Dwight Clark
Councilman Dave Tadych
Also Present: Mayor Sutherland, newly appointed Finance Director Mahoney, Police
Chief Wright, Steve Lee
Audience: Susan Fink
2013 Budget Revenue
Mr. Young called the meeting to order at 7:30 a.m.
Mr. Young explained the changes in the tax budget allocation of funds. Transfers were being made each year to the Police and Fire Pension Funds and the Emergency Paramedic Unit (EPU) Fund. Property Taxes, Homestead Exemption, and the Rollback Funds will receive less money in the General Fund due to the reallocation. Correspondingly, we will have an increase in the EPU Fund and the other two pension funds, reducing the transfers that have been required.
Mayor Sutherland asked if additional personnel will be shifted into the EPU Fund to make sure that the increased funding balances with expenses. Mr. Young stated that originally one-third of the total hours were used for the EPU. In time, however, the number of ambulance runs have steadily increased to the point where now one-half of the total hours for both Fire and Emergency Paramedic are now being used by the EPU. This had made it necessary to make monthly transfers in order to make that account whole. With this reallocation, additional taxes will be received in the account and the number of transfers required will be reduced.
Finance Director Mahoney commented that if Council is shown the revenue and expense together and compare it to last year’s, it will make sense.
Mr. Young reviewed the 2013 Revenue Forecast (Exhibit A attached) as provided by Finance Director Mahoney. The forecast includes actual figures from 2010 through 2012, and the three year average of those figures. Mrs. Mahoney stated that she received some of the 2013 Budget figures from former Finance Director Steve Presley. If there were figures that he did not provide, she did the three year average.
Property Tax Mr. Young stated that the first four rows of the General Fund: Property Tax, Homestead Exemption, 10% Rollback and 2 ½% Rollback are affected by the reallocation of the tax budget.
Minutes of a Meeting of Finance Committee January 14, 2013 A total of $655,617 has been reallocated out of the Property Tax. Subtracting that from the 2012 Budget, it works out to be significantly less than the 2013 Budget. Mrs. Mahoney distributed Worksheet No. 1. The total of all funds is $20,000 less than what the county estimated. The property valuations went down about $2 million from 2012 to 2013. Mr. Clark noted that this ties into looking at all the other funds to make sure that the numbers that are replenishing the funds are not overfunding the accounts. Otherwise, the Finance Committee will have to revisit that process again. Mayor Sutherland stated that if the reallocation is overfunding the EPU Account, they may want to add more firefighters that are being paid out of the General Fund to the EPU Fund to be paid from that fund. Mr. Young noted that the payroll for the Fire Department was redistributed by the Finance Committee to a 50/50 percentage between Fire Department General Fund and the Emergency Paramedic Unit Fund. Mr. Young stated that he does not think there will be a significant overfunding in the EPU Fund.
Municipal Income Tax
The city received just under $5 million ($4,996,000) in 2012 in municipal income tax receipts.
Projection for 2013 is $4,827,000. Mr. Clark noted that the $4,996,000 represents 96% of income tax collections. The other four percent of collections are divided equally into the Accrued Benefits Fund and the Equipment Replacement Fund.
Mr. Young stated that he does not understand why the city would budget $180,000 in anticipated revenue less than what was received in 2012. In 2012, municipal income tax revenue was projected to be at $5.2 million, and it did come in gross at that number. The amount of $5,046,000 will be established for the 2013 anticipated revenue in municipal income tax.
Mr. Young asked Finance Director Mahoney to check and confirm that the city is now collecting 3% of the residents’ fee for cable television, and we are allowed to collect up to 5%. Three percent yields $155,000 per year. If it is raised to 5% it would raise an additional $100,000 per year. Mr. Clark stated that it is a number that has done better than projected. The city has the ability to raise the fee. Mr. Clark would like to find out how much revenue is generated from every one percent increase.
Mr. Young stated the need to discuss the possible revenue increases based on some of the losses that are occurring. Significant cuts have been made in the expenses. Mr. Tadych noted that an increase of two percent in cable fees is a large increase. Mrs. Mahoney suggested that the Finance Committee might want to phase in the increase over a period of time. Mr. Young stated that he would be more comfortable raising something that is more of luxury. Mr. Clark noted that it would not penalize those that do not have cable television.
Local Government Fund
Mr. Young asked what the estimate for Local Government Fund proceeds were in 2012. Mayor Sutherland stated that 2012 was a blended year. The estimate of $375,000 for the 2013 Budget as revenue for the Local Government Fund line item is realistic.
Minutes of a Meeting of Finance Committee January 14, 2013
Mr. Clark stated that approximately $80,000 was collected in 2012 for court fines. The 2013 Budget indicates estimated revenue in the amount of $75,000. He asked if the number is affected now that North Olmsted has left the Rocky River Municipal Court and established their own Mayor’s Court. Mayor Sutherland stated that it is not affected by the changeover in North Olmsted. The fact that the City of Bay Village was down four police officers would affect revenue. The estimated revenue could probably go back to $80,000 because the department is still down two police officers.
Mr. Tadych asked if the court expenses will be higher for the cities who are still part of the Rocky River Municipal Court. The Mayor stated that the expenses should not be higher because the court has made significant reductions in personnel.
Estate Tax The estimated revenue for 2013 is $200,000. Mrs. Mahoney stated that it would not be a good idea to rely on more revenue.
Interest on Investments The estimated revenue for 2013 is $65,000. Mr. Clark stated that rates will not go lower unless there is a liquidity drain. Revenue for interest in 2012 was $82,033.70. Mr. Clark suggested estimating the revenue at $80,000. Mr. Tadych stated that estimated revenue probably can be figured by what is coming due on the list of investments on the monthly financial sheets. Mr.
Tadych suggested the figure of $70,000 to $75,000 be used for estimated revenue for 2013.
There is no estimated revenue figure listed for 2013. Mr. Young asked what the actual grants are for, such as the ADA doors at the Dwyer Memorial Center. Mayor Sutherland stated that it could be something such as the ADA doors. Mrs. Mahoney stated that she will be meeting with the department directors and will ask them about anticipated grant revenue. In the case of Hurricane Sandy, expenses were paid from last year’s funds and reimbursement would be credit to the 2013 funds. Mr. Young questioned what the city may have incurred in expenses in 2012 for the ADA doors at the Dwyer Memorial Center. Reimbursement through the grant has not been received because the work has not yet been completed. The grant funds will be 2013 revenue.
Mr. Clark asked Mrs. Mahoney to find out what the $81,204.70 in revenue in 2012 represented.
Building Permits Mr. Clark stated that estimated revenue for 2013 is $105,000. Actual receipts for building permits in 2012 were $73,428.94. Mr. Young noted that the building permits for the Bradley Minutes of a Meeting of Finance Committee January 14, 2013 Bay Nursing Home and the Bay Village Schools may affect that revenue line. Mayor Sutherland commented that the city many times waives the permit fees for the schools. If costs are incurred they are passed on to the schools, but application fees are not charged. Mr. Young stated that he does not have a problem with staying with the $105,000 figure of estimated revenue.
Transfers The amount of $143,960 was transferred in 2012. Mr. Clark stated that $3,960 is the remaining balance in the General Reserve Fund. The $90,000 number, the difference between the actual that is left in reserve is something that the Finance Committee could not reconcile.
Reimbursements The reimbursement amounts are listed from 2010 through 2012, but there is no further information as to the source at this time.
Ambulance Reimbursements The amount of $275,000 is estimated for 2013 revenue, and is acceptable to the Finance Committee.
Rental Bay Lodge The amount of $18,000 estimated for 2013 is acceptable to the Finance Committee.
Sale of Recycling The estimated revenue of $1,000 will be reduced to zero due to the fact that the city no longer maintains the recycling trucks at the service garage.
Senior Van Mr. Tadych stated that the senior van has been pulling in significantly more money than budgeted in the past. The riders are being more generous. The amount of $8,000 in estimated revenue for 2013 will be increased to $10,000.
Refuse Collection Mayor Sutherland suggested increasing the estimated revenue to $293,000. The goal has been to collect $300,000 (6250 homes at $48.00 per year).
Miscellaneous The estimated revenue of $7,000 for 2013 will be reduced to $1,500 to be more in line with the actual number for 2012.
Minutes of a Meeting of Finance Committee January 14, 2013 Emergency Paramedic Account No. 210 Mrs. Mahoney pointed out that the first four numbers of revenue items, from property tax through the 2 ½% rollback, are tied to what the county determines as estimated revenue for 2013.
Mr. Clark suggested that a small narrative be added to the information provided on reports to indicate when numbers are tied to in other categories.
Emergency Paramedic Account Transfers
Mr. Young stated transfers to this fund are usually due to overtime wages, which are paid in the last month of the year as deferred overtime. Mrs. Mahoney stated that the transfers should not be needed because of the increase in reallocation of property taxes to the fund. Mr. Young noted that methods to reduce overtime wages are an important factor going forward, although overtime occurred can be a savings as compared to new hires. Mr. Clark stated that it will be necessary to watch how the numbers we now have on the revenue side match the historical actuals so that the fund is being properly funded, and not overfunded.
Parks and Recreation Account No. 230
Mr. Tadych stated that the estimated revenue numbers don’t seem to be going higher in the winter and spring programs. They seem to be staying about the same. The costs will probably go up on those programs, especially baseball and football. Mr. Tadych stated further that he thought the city was charging more for those programs and we should have seen these numbers change.
Mr. Clark stated that Mrs. Lieske is going to have another Recreation and Parks Improvement Committee meeting with numbers that Recreation Enovitch has provided for her. These figures can perhaps be refined with that information.
Mayor Sutherland stated that you are always trying to do a balancing act with recreation programs because you want to be competitive with other communities. A lot can be driven by participation. Our population is down slightly and program participation can be affected by fluctuations in population.
Mr. Clark stated that there was discussion about basketball teams playing in leagues over the winter. It is surprising that the Community Gym numbers are down.
Transfers to Parks and Recreation Mr. Young stated that historically over $300,000 has been transferred to the Parks and Recreation Department. The city has been able to cover that $300,000 transfer based on having things like estate tax and other revenue that is totally going away. There is no longer $300,000 to transfer.
Mr. Clark stated that it has always been evasive for the Finance Committee that this is a combination of parks and recreation. The two should be isolated because recreation tends to be Minutes of a Meeting of Finance Committee January 14, 2013 self-sustaining, for the most part. The transfer may represent the cost of maintaining the parks, but the committee would like to be able to see that breakdown. That would help in making a decision on where we would be making the transfer this year because it is clear that we don’t have the $300,000 to put aside. The pool tends to be a very strong, self-sustaining operation.
The recreation numbers we certainly want to separate.
Mr. Young stated that if you look at the tax allocations for recreation, it is not Parks and Recreation. Mayor Sutherland stated it is lumped together in the accounts as Parks and Recreation.
Mayor Sutherland stated that Parks are allocated in the expense side. Mr. Clark suggested reviewing that more closely. He noted that we did not have to focus on it as much when the revenue was there, but now we have to focus on it.
Mayor Sutherland stated that the Recreation Department does only the recreation programs.
They do not do any maintenance of the parks. That work is done by the Service Department.
Dragging a ball field and mowing is done by the Service Department with overtime and a three hour minimum call out.
Mr. Clark asked why we would not, then, move Parks over to Service where it rightfully belongs and isolate recreation as its own department.
Mr. Tadych suggested adding a line that says Parks Service or Service of Parks.
Mrs. Mahoney stated that you can’t really have a baseball game without the Service Department lining the fields. So it is an expense to recreation.
Mrs. Mahoney stated that she does not know of any city that does not have to subsidize their Parks and Recreation Department. Mr. Clark stated it is not a question of whether we have a problem subsidizing; we are just not sure what accounts the money goes into. A clear trail is what is being sought.