City Council Workshop

09:00 on June 18, 2011

Utilities Collection Conference Room, 210 Ave. C

Headlines:

2011-12 will be a very lean budget year.
The General Fund will run a $3M+ deficit for 2010-2011.
Health care costs will sky-rocket. Kenny Wells says the city can't afford "cadillac health care" any more.
Fleet replacement and fuel costs are going to be very high.

This is the 2011-2012 budget review. Because I had a conflict for the June 6 budget hearing, this is the first view I will have of the budget. I've looked at the 2010-2011 budget book and it is impressively presented.

First there's a special city council meeting to approve the schedule for repacing Mr Wilkerson.

Rivera and Workman are absent.


Agenda Item	Description	Discussion	My Notes
SP-1.	Consider resolution to fill District 4 Council vacancy.	Mayor: we need to fill this position, if for no other reason, in order to make it easier to achieve a quorum. We also need the expertise and contribution of 7 councilmen. Cole: also, it's a district seat and district 4 should be represented. Acting Manager: Accepting applications thru THursday, June 23 in City Secretary's office. Tuesday 28 will be interviews of the applicants. Proposing to start at 1300 and go, if necessary, to 1600. The selection of the candidate will be on the agenda that night. The schedule was approved on the motion of Mr Cole, seconded by Cosper.
Meeting was adjourned.

Now the special city council workshop: Two items: review the 2010-11 budget and preview the 2011-12 budget.

SP1: Review 2010-2011 budget

Proposed 2011-12 budget will be delivered to the council in July.

For 2010-11 All specific funds are in good shape. In the general fund, expenses exceeded income, as was budgeted.

Concerns:

EMS Billing and Collections -- moved to Fire Department this year
Cost Recovery Program -- not generating expected revenue
Non-emergency Transport Program -- not implemented
Police Overtime -- when were down 39 position, there was lots of OT. Manning the north precinct has also put pressure on OT. High profile crimes like the child abductions also contributed.

Recommended 2010-11 budget amendments,

reducing the general fund by $655,838.:
- Remove all budged costs and expenses from FD Special Revenue Fund.
- Transfer EMS Billin costs from FD back into the general fund (224,931). (Management of it remains in the FD.)
Increase PD overtime by $430,907

This brings the general fund annual deficit to $3.3M, or about 5% of expenses. Mrs. Gonzales noted that Killeen usually budgets a deficit for the general fund, then finds ways to make it up. It's not clear how or if it can be made up this year. In fact, Morrison said it will not be made up this year.

Wells brought up a good point about the EMS billing: the FD will have less motivation to be efficient if the costs are not in its budget. Morrison said that they have some ideas to fix that.

Cost recovery got quite a bit of discussion. The mayor encouraged more effort.

SP2: Information on 2011-12 budget: process and progress.j

Budget proposal will be delivered July 27.

Current city property tax rate is 74 cents pwer hundred dollars assessed property value. A 1 cent change has a $490,000 impact on city revenue.

Priorities

Community development and revitalization
Preserving and leveraging partnership with Fort Hood
Safety and Security
Financial Stability (we have an AA rating)
Improved transportation (this was adopted as a priority last year)
Preserve positive city image
Foster a sense of community and improve quality of life
Targeted economic development ("essential for any community"). "Joint basing" will be important.
Quality Education. Emphasis on TAMU-CT.
Sound infrastructure
Recruiting and maintaining good workers. Not just city employees.
Local and regional leadership.

Goals and Priorities:

Maintain current property tax rate
Maintain current programs and services
Maintain adequate and fair pay for city employees
Identify and plan needs 3-5 years ahead.

Considerations and Challenges:

Budget philosophy. Should we plan a deficit budget?
KAAC (FBC) comes on line. The place will have to be staffed, right?
Health Insurance increases. Mrs Maynor said they are doing what they can, but maintaining current benefits will mean 22-36% premium increase.
Increasing fuel costs
Fleet replacement and maintenance. (It's not clear why this is a challenge.)
Sustaining pay plans
Demands on Service/Staffing. Population growth is creating more demands for service than revenue to pay for it.
3-5 year budget review. For example, the COPS grant runs out in fy 13-14 so we have to find budget for those 10 officers. New water treatment plant will be needed by 2015-16.L

(These considerations are a mixed bag, and were not very well presented. It's not clear how several of them affect the 2011-12 budget.)

What do we have to do?

Eliminate or reduce non-essential spending
Review and evaluate all major operating funds
Review city government organization. Reposition staff as necessary.
Outsourcing/Privatization
Review Discount Programs -- early payment discount, not senior freeze or disabled vet discounts.
Review Pay Plans
Review Fee Schedules -- they do it every year anyway
Increase collection efforts. Again, this is discussed every year.
Review fund balance policy. Not to follow our own policy is a red flag for the bond-rating agencies.

Facility Moves:

Volunteer Services will move to the community center
Code Enforcement will move to Head Start building (2nd & D).
Community Development Block Grants to FBC
Records storage or print shop to 2nd & D.

(I don't see the information needed to make investment decisions wrt facilities.)

Key dates:

July 5 Mail out effective rate
July 26 Deliver budget to council
August 2 Budget Presentation
Sept 13 Adopt budget.

Cosper: We can't spend money we don't have.

Cole: no tax increase; balanced budget; if you're going to propose a deficit, show us what you would have to cut to achieve balance; what are we doing on paperless office? How much will the moves save the city?

Wells: City can no longer afford a Cadillac health plan. "If it's non-essential, let's eliminate it." We have to review our pay plan.

Clark: Fee is just another word for tax. Outsourcing: be careful not to be locked into something that will actually be more costly in the long term.