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HomeMy WebLinkAboutMIN 07.13.2009 CC-Wmme of • of t of the City of Georgetown, Texas Monday,9/` The City Council of the City of Georgetown, Texas, met in Regular Session on the above date with Mayor George Garver presiding. Council Present: CouncilAbsent: Keith Brainard, Gabe Sansing, Dale Ross, Ben it All Council Present. Oliver, Pat Berryman, Bill Sattler, Patty Eason ',Staff resent: l Paul E. Brandenburg, City Manager; Jessica Hamilton, City Secretary; Patricia E. Carls, City Attorney; j , ,11 Jim Briggs, Assistant City Manager for Utility Operations, Micki Rundell, Chief Financial Officer; Randy Morrow, Director of Community Services; Eric Lashely, Library Services Director; Kevin Russell, Director 11 of Human Resources and Civil Services; Elizabeth Cook, Acting Director of Community Development; ;i Chris Bryce, GIS Technician; Kimberly Garrett; Director of Parks and Recreation; Laurie Brewer; l Assistant Director of Finance; A Workshop presentation regarding possible changes to the City's garbage rates to recover costs necessary in funding the 2009/10 budget -- Micki Rundell, Chief Financial Officer and Jim Briggs, Assistant City Manager for Utility Operations With a Powerpoint Presentation, Rundell gave an overview of the proposed rate adjustment to the City's sanitation services. She said the rates the City is currently charging does not cover all of the costs. She said the sources of revenue for sanitation are simple and said the primary revenue are actual services related to garbage collection. She added there are also some development fee revenues as well as miscellaneous charges. She showed Council a pie chart of the number of customers by tier as well as revenue collections by tier. She said tier one customers make up the largest percentage of the total. She listed and described the various sources of expenses including the operations contract with TDS, a franchise fee at 5% of revenue, administrative allocations, operating expenses, and personnel expenses. She said the historical net revenue has always been at a loss except for 2007. She noted, if this was a stand alone funds, the City would be $78,000 in debt. She said the City has a subsidy of taxpayer money to fund that amount. She said another issue is related to the operations contract and she said 60% of the cost is attributed to labor. She said the contract allows a cost increase of a maximum 3.2% for the labor portion per year. She said if national CPI numbers are less 3.2% then the contract price for the labor adjustment is equal to the CPI. She said staff is proposing a rate adjustment. She noted the current rate is $14.05 and staff is proposing $14.55 in tier one. She noted, in tier two, the increase is going from $16.55 to $17.20. She noted tier three is going from $17:50 to $18.15. She said the new rates are expected to generate $163,000 in additional revenue annually. She noted under the current growth projections, this rate increase should provide stability to rate payers and recover the cost of service for several years. She spoke about the various uses for the new revenue. Sansing asked and Rundell said there is no option for getting larger or smaller receptacles for residents. Sansing said older residents and single member households do not use the trash service as much and he is wondering if there is a way to have the option to use different sized cans. Briggs said staff is looking into doing something similar to that and noted the newer contract has a reduced volume limit at a container and five bags. City Council Meeting Minutes/July 13, 2009 Page 1 of 4 Pages He said, when you start to use different size containers, a person pays for whatever you can fit into the container. He spoke about a "pay as you throw" option. He said part of the single stream study will be to evaluate this option and possibly move the City in that direction. Sansing said, if the City is looking at an $80,000 shortfall, he is wondering if the Council might consider phasing the rate increase over a couple of years. Rundell said there are ways to do that. Oliver said the fixed costs on the trash pickup route and schedule would not change according to the size of the trash receptable a resident is using. Briggs said there are other entities that make its residents keep all of their trash in the container they are provided and this causes the labor costs to decrease. He added there are ways to deal with cost issues. He spoke about various ways the City has cut down on costs for sanitation services. Sattler asked and Briggs said the labor portion of the cost is capped at 3.2% and, this year, it will be lower than that. Sattler asked about MUDs and Rundell said the City has required MUDs to be tier three customers. She said, once developments occur in those locations, money will start coming in to the City and tier one customers will start to begin some returns. Ross asked about increased allocated costs in utility billing, administrative oversight, insurance and bad debt. Rundell said these costs have increased because they are numbers the City looked at several years ago. She added bad debt also continues to increase. Ross asked and Briggs said the contract with TDS would be up for renewal in over two years. Briggs said the City has had a lot of discussion with the contractor and has come through with a resolution to the question of what services the City and contractor agreed upon. He said there are some modifications the City has made to the previous contract to try to track the actual expenses. Brainard asked and Rundell said the City uses a service to collect bad debt. Brainard asked and Rundell said the last time the rates rose was three years ago when the new contract was implemented. Brainard asked and Rundell said, if the City does not increase the rates, it will be $163,000 short in the general fund. Brainard asked and Briggs said staff could provide a cost breakdown between garbage and recycling. Eason asked and Rundell said the Georgetown Utility System Advisory Board voted to move forward with the proposed rate increase with a 6 to 1 vote. Rundell noted tier two customers do not have to stay with the City of Georgetown. Berryman said she would like to see the City incentivize its citizens into using the recycling and sanitation services. There was much discussion. B Workshop overview, discussion, and possible action regarding the 2009/10 City Manager's Proposed Budget -- Micki Rundell, Chief Financial Officer and Paul E Brandenburg, City Manager With a Powerpoint Presentation, Brandenburg gave an overview of the 2009/10 City Manager's Budget. He said, out of the eight years he has been with the City, this has been the most difficult and challenging budget to date. He listed various factors as to why the budget is tight this year. He said staff is trying to keep a status quo budget. He said nearby cities have been laying off staff and cutting a lot of other costs but he noted the Georgetown budget will not affect its services to the citizens. He said the City and its Operating Revenues are policy compliant and he spoke about the decrease in revenue thoughout the City. He said the overall budget is $184.2 Million which is a $30 million decrease from last year. He said the proposed tax rate of $0.37959 is above the prior year's $0.36522, but is still one of the lowest in the region. He said the preliminary assessed valuation is $4 billion. He showed Council a graph of the City's budget revenues, expenses and general fund revenue sources. He spoke about the Annual Operating Plan and Council priorities and said they are determined by the Council and it provided guidance in the development in the budget. He reviewed the 2009/10 priorities as identified by the City Council including Northwest Blvd. bridge, no increase in property tax burden, utility billing/AMI replacement, the purchase of land for Fire Station 5, sidewalk installations, Computer Aided Dispatch (CAD) System replacement, expand the recycling program, prepare the Economic Development Plan Element for the 2030 plan, traffic management program (acquire additional traffic signals), bring employment of public safety and non-public safety employees to 95% of Round Rock, Williams Drive Gateway implementation, add position of internal auditor, and the implementation of a transit system. He quickly reviewed the action taken so far by Counciil and staff on these items and he summarized the budget highlights by division. Brandenburg said the economic slowdown has allowed staff to step back and reevaluate the City's processes. He spoke about the many department goals. Brandenburg went over the financial overview and spoke about 2009/10 policy compliance and contingency reserves. He reviewed the 2009/10 Operating Plan variance over the prior year equaling to over 14%. He said the goal is to do more with less. He reviewed again the sanitation rate changes and spoke about the Capital Improvement Program with its highlights and funding options. He reviewed the CIPS for Water Services, Electric, Transportation Services, Stormwater, and other general projects. He listed the various general capital projects including design of fire station 5, the williams drive widening, DB Wood/Williams Drive Intersection, McCoy right of way aqcuisition and public safety software. Rundell said the City was very conscious about minimizing the issuance of self supporting debt. She listed the projected debt to be issued for facility, electric, water, and stormwater improvements. She showed City Council a graph of the tax -supported General Government debt service. She said, on the City's current debt, it declines City Council Meeting Minutes/July 13, 2009 Page 2 of 4 Pages over time. She showed Council the recommendations for the property tax rate to fund the general fund. She said, right now, the 2009 taxable value is at $4 billion. She said the 2008 valuation was over $4.2 billion. She noted there was a 4.7% overall decrease in appraised valuation. She said, right now, there is currently $950 million of assessed valuation under protest. She gave Council a graph of appraised valuations and the City assessed valuation per capita and noted the recent substantial decrease. She said, as a result, the assessed valuation per capita has also declined. She defined the effective tax rate and said it is the rate necessary to derive the same amount of revenue as previous year based upon the current year assessed valuations. She said the estimated effective rate has risen to $0.42191 because of the amount of frozen property in the City. She said there was a 30% increase in the amount of frozen property this year. She noted the proposed 2009 tax rate is $0.37959. She spoke about the proposed rate and noted it is 10% less than the effective rate. She said O&M which funds General Fund is $0.21033 and the I&S which funds debt service is $0.16926. She spoke about the impacts of the 2008 Bond issues to this year's budget. She reviewed the property tax collections by capita. Rundell spoke about the history of the Texas Municipal Retirement System (TMRS) and its relationship with the City. She said the City's contribution has increased by over 30% from 11.3% to 15.52% of the City's payroll this year. She summarized the current plan and said the City matches 2 to 1 for the employee's contribution of 7%. She said the unfunded liability continues to grow. She spoke of the recommended proposal to address concerns. She said the proposal continues 100% of the updated service credit but it reduces the Cost of Living Adjustment (COLA) for retirees from 70% to 30%. She said the City will make a one time payment of $400, 000 to reduce liability and the contribution rate. She said, as a benefit to retirees, the City has added a supplemental death benefit to their plan. She said, with this proposal, there is no impact on existing employees retiring in the next 3-5 years. She said this new proposal reduced the contribution rate from 15.54% to 12.94% or below for 2010. She said it does reduce the unfunded liability from $18.2 million to $13.1 million which means the City will be 72% funded. She said the results of this plan will be that the unfunded liability will continue to decrease. She said the contribution rate may increase slightly over time, however it will be sustainable in the future. She said there will be no impact to existing employees and there is potential to lower unfunded liability using excess funds in future years. Oliver asked and Rundell said this plan will not affect current employees but it will impact retirees because of the reduction of the COLA. Rundell said the difference between the 14% and 12% is about $260,000 which staff would like to put toward implementing a new employee merit program. Brainard asked and Rundell confirmed the budget proposed includes $261,000 for the pay for performance program. Mayor asked and Rundell said the main points to take out of the budget is this that there is no decrease in services to the public, there will be no COLA for current employees, the tax rate is higher that last year but it less than the effective rate, and the impact of frozen properties on the budget. Sansing said he is disappointed that the City will not be able to do more with the pools and keep them open longer hours on more days. Ross said he thinks staff did a good job and feels the City is actually giving citizens a property tax discount. Rundell showed Council a graph of the 2009 frozen valuation. Sattler asked and Rundell said the tax burden should be the same or less than it was last year. Sattler says most people think if their house goes down in value, their property tax should decrease as well. He said people are looking at what it costs them to live in Georgetown and said some people are hesistant to buy property here because it is more expensive than surrounding communities. Eason said the City needs to look at what kind of services the other communities are providing because Georgetown will not decrease its services to the citizens. Brainard asked and Rundell said there is a 2% increase in sales tax growth. There were many questions. Berryman said she appreciates the situation but, for the tax payer, the money is all coming out of one pocket book which has increasingly become diminished. She said she likes what Brainard is saying about looking at how the City could creatively address this issue and think about the possibility of lowering the tax rate even further. Mayor asked and Brandenburg reviewed the budget adoption process and all the upcoming steps, meeting dates, and hearing dates. Rundell said, if the City lowers the tax rate, it can never get it back and it may continue into next year. Rundell said the City is already going far under the effective rate. She said most of this goes back to the fact that the frozen property tax is capped. Oliver said he is very uncomfortable talking about violating a policy which has been in place for years. He said, if they look at lowering the rate, he would suggest they look at it very cautiously and study the impact on the City's bond rating. Ross said he thinks $0.379 is too high but he added he does not want to see City services suffer and he also does not want to see any City employee lay offs. Sansing said he thinks staff did a good job putting the rate where it is now. He noted his home is looking at their own emergency funds. He said he hates to use unfunded money from previous budgets to reduce the tax rate for a year and he is afraid to do that because tax rates will never be brought back to where it should be in the future. Brainard commended Brandenburg, Rundell and staff for their hard work. Berryman said it would be good to at least look at what the budget would look like if the tax rate is lowered. Sattler said the City needs to be careful, but it still needs to look at this as an option. Eason said, as long as the Council is not making any permanent changes right now, she would be okay with this suggestion. Mayor said there will be considerable difficulties if the City City Council Meeting Minutes/July 13, 2009 Page 3 of 4 Pages funds its operating expenses with one time money. Motion by Berryman, second by Brainard that, in light of the difficult times we all find ourselves in, staff should explore all other options on how to provide citizens with additional tax relief, as well as look at the ramifications of using one time expenses to help keep the tax rate down. Rundell said this is not a problem but added the frozen tax issue will not go away. Vote on the motion: Approved 74 Ross asked that staff also continue to look and research the grant revenue being received. Meeting recessed to Executive Session under Sections 551.071, 551.074, and 551.087 -- 5:45 p.m. Returned to Open Session and adjourned -- 6:46 p.m. The meeting was adjourned at 06:46 PM. City Council Meeting Minutes/July 13, 2009 Page 4 of 4 Pages