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HomeMy WebLinkAbout09-06-18 Special Meeting of the La Porte City Council REQUEST FOR CITY COUNCIL AGENDA ITEM Budget Agenda Date Requested: September 6, 2018 Source of Funds: Requested By: Corby D. Alexander Account Number: Department: Administration Amount Budgeted: Report: Resolution: Ordinance: Amount Requested: Exhibits: Golf Course Cart & Fee Increase Budgeted Item: Golf Course Fee Survey PW Reduction in Force Equipment Services Cost Comparison Contingency 3 Year History SUMMARY & RECOMMENDATION On Monday, August 13, 2018, the La Porte City Council began meeting to consider the fiscal year 2018-19 budget. Staff was directed to consider the viability of list of possible cuts (list attached) as well as some other follow up items. Raising the Tax Rate $.05: When setting tax rate there are, of course, a number of factors to consider. One issue raised during the budget -19 rollback for the City of La Port is $.77. Consequently, Council could increase the rate by $.05 without risking the rollback provisions in the law. If a taxing unit other than a school district adopts a tax rate that exceeds the rollback tax rate, voters in the taxing unit may petition for an election on the tax increase. A successful election limits the taxing unit's current tax rate to the rollback tax rate. It is also important to note that increasing tax rate will require certain public notices and public hearings. If Council chooses this option, we will need hold two separate public hearings and hold a special meeting to adopt the tax rate. The schedule could be as follows: Public Hearings on September 20 and September 24. State law requires that we wait nd a week after the 2 public hearing adopt the tax rate. While we typically have a tax rate adopted by the end of September; the law allows the city to adopt a tax rate as late as October 21. Furthermore, should Council approve a tax rate increase, we would setup a system to earmark any increases to those project identified and approved by Council. Projects could include but are not limited to: 1. New stand-alone fitness center 2. Revamping senior facility 3. 1500 stipend for city employees paid in November 4. Turf baseball fields 5. Drainage improvements Potential Cuts: Staff was also asked to look into the viability of several budget cuts/revenue enhancements. Automated Server Monitoring $35,000 event one or more goes down. The current year service will not negatively impact the mission of the City. Reduce Consulting Fees $5,000. In the past, we have had a number of IT related projects going on at the same time, creating the need for outside consulting services. Fortunately, we are completing or have completed many of those projects. Reducing this line item will not negatively impact operations. Eliminate the Director of Planning $137,000 Unfortunately, upon further consideration, I have found this idea to be ill conceived. Eliminating this position would hurt day to day operations. This position has daily oversite for all permitting, code enforcement, planning, and GIS functions. I believe that not having someone dedicated to this task would be a critical mistake. Additionally, we are receiving very highlyqualified applicants, several of whom could prove to be a tremendous asset to the City. Reduction in Liability Insurance Fund $30,000. As presented in the budget hearings, staff intends to move forward with this cut. There is no negative impact to the City. Legal/ Prosecutor $101,000. Staff was directed to identify the logistic associated with retaining the current City Attorney while hiring a full time in- City council shall appoint a competent attorney, duly licensed by the State of Texas, to be city attorney and head of the department of law. He shall be appointed and removed at the will and pleasure of council by a majority vote of the entire council, and shall receive compensation as may be fixed by council. The city attorney, or other attorneys selected by him with the approval of council, shall represent the city in all litigation, provided that council may retain special counsel. He shall be the legal advisor of, and attorney and counsel for, the city and all offices and departments thereof. This Charter provision brings to light a couple of questions. 1. City Attorney is a department head (i.e. head be some who is not a regular full time employee? 2. What is the desired reporting structure? Charter does not reference the position of Prosecutor. Question 1. My opinion is that Council could opt to maintain the current relationship with Askins and Askins as City Attorney and allowing them to head the department of law. However, I think that a Charter revision will be required to have City Prosecutor that reports to the City Council, which I assume is the desire. Golf Course Deficit $200,000. The aim of this directive was to reduce the General Fund subsidy of the golf course by $200,000. Through analysis, I believe that we can generate an additional $70,000 in golf revenue through increased fees (please see attached). We have to balance the need to enhance revenue with market constraints. Pricing ourselves out of business will not help. Staff believes that we can increase revenues by $70,000 and still be competitively priced. Additionally, staff will begin a very aggressive marketing campaign. While staff is very certain that marketing will help to increase the total number of rounds played, it is very difficult to quantify for budget purposes. I would recommend increasing fees and re-evaluating in 12 months. Reduce Base Salary Increases by $186,000. Reducing dollars available for employee merit increases is an option. A reduction of $186,000 would leave $300,000 available for salary increases. A reduction is not desirable for the following reasons: It would apply only to non-civil service employee. The current Meet and Confer agreement gives civil service employees a market base adjustment each year. It could negatively impact employee morale. It could lead to more turnover of valued employees. It could contribute to employees being further behind as it relates to pay in the local government market. It would be a departure from a long standing policy that has been a valuable recruitment tool. There was also the idea that each employee could be given a lump sum amount. A lump sum of $1,000 per non civil service employee would amount to $300,000. A lump sum amount of $1,500 per non civil service employee would amount to $450,000. Pharmacy Change $250,000. As discussed at the budget presentation, this change will have very minimal disruption for employees and covered retirees. There is no negative impact with this change. Stop Loss Coverage $480,000. Stop Loss is insurance coverage that we purchase to reduce the City risk associated with health insurance claims. Currently, the City stop loss coverage kicks in to pay individual claims that exceed $165,000. There is also aggregate coverage that kicks in should total claims cost exceed 125% of total projected claims. The City has never reached the aggregate for total claims. However, we do at times experience individual claims above $165,000. Since 2013, the City has paid $2,086,521 in stop loss premiums. The City has received a total of $632,194 in reimbursements from claims above $165,000. In short, had we opted to discontinue stop loss in 2013, the City would have saved $1,454,327. Staff also looked at the possibility of either raising (to $200,000) or lowering (to $120,000) the attachment point that (of $120,000) would have saved the City approximately $7,000 over the other 2 options (i.e. holding the attachment point of $165,000 or raising it to $200,000). Please see attached summary of premiums vs re-imbursement summary. As with any insurance, it is not needed until it is needed. Eliminating stop loss altogether could prove to be a very risky endeavor. We will be shopping this coverage this year. I would recommend we retain coverage at a lower attachment point of $120,000. We will pay more in premiums, but will likely see an increase in re-imbursement while reducing risk. Drainage Interconnect $250,000. The developer has agreed take on the expense of this project. $250,000 has been removed from the budget. Spencer Masonry Fence (Southside) $584,000. Removing this project from the budget will not negatively impact operations. However, staff is requesting that we remove $380,400 from the total budget. We would still construct a fence and sidewalk on the north side of the ROW and would use the remaining project budget to do so. Motor Pool Lease Fees. Extending the life of non-emergency vehicles by 1/3 the current life cycle could save $236,000 in lease fees. Keeping vehicles longer will increase repair costs. We have no way of knowing the amount of a potential increase in repair cost that would offset this savings. We also cannot predict the loss of revenue resulting from the sale of older vehicles. A prior effort to extend life cycles was not successful. We could make another attempt and re-evaluate in 2 to 3 years. Public Works Reduction of Force $974,000. Attached is summary data associated with the work that would be impacted by this reduction of force. I believe that any reduction in force could potentially have a negative impact on our provision of services. Fleet Maintenance $159,000. Staff has taken a comparative look at the cost of our fleet maintenance division. We took the cost for certain common repairs/maintenance activities and compared those to the cost of outsourcing the same service/repair at two different vendors. The cost comparatives for the City includes labor costs (plus benefits) as well as indirect overhead costs. In the comparison, the City provided the least cost of 5 out of the 8 cost comparison activities. The largest significant difference in activity cost is related to the replacement of clutch flywheel bearings seals and gasket for a 2015 John Deere tractor. Please see the attached summary of equipment services cost comparison. I would also note that the City has been very diligent in securingprices for parts that arefar below retail. In some instances, our parts pricing through cooperative purchasing agreements is 1/3 of retail. The later fact should be considered when analyzing labor cost/parts cost ratio. Contingency $350,000. The contingency line items in the budget is designated to cover those unplanned or unforeseen expenses that arise throughout the year. Please note that this budget item has increased in recent years primarily because we now limit any budget amendments to matters of grave public necessity. Attached is a listing of recent contingency related expense for this year and last. Also note that we budget separately for contingency associated with each capital project. Staff is very frugal in the use of these contingency dollars and has never expensed the entire amount. We could reduce or eliminate contingency from the operating budget. However, there will likely be things that are unplanned that will have to wait until the next budget cycle to be addressed. I would recommend a reduction of $100,000. New Position Request $102,000. There is no new position being requested of the upcoming budget. This item was miscoded on the large spreadsheet of the budget. Tax Collector $100,000. This is strictly a policy decision for Council. I believe that the current arrangement does not violate the charter. We will continue efforts to recruit a tax collector and to get current employees properly licensed to perform the duties of tax collector. Electric Franchise Fee. As presented in the budget, electric franchise fees have increase by $600,000 over the last 3 years. Unfortunately, we have not realized the anticipate revenue associated with the substation construction approximately 3 years ago. We verified that the facility has not consumed the projected amount of electricity, because the plant associated with new substation was reduced in size and capacity. Initially, the plant was to include 4 large trains/compressors. The facility was constructed with 2. Private Fiber Network $430,000. As discussed, we will eliminate funding for Phase 1 of a private fiber network from the upcoming year. This would reduce the proposed budget by $430,000. No negative impact to the City. Action Required by Council: Provide direction regarding the FY 2018-19 tax rate and budget changes. Approved for City Council Agenda Corby Alexander, City Manager Date Bay Forest Golf Course Cart & Non-Resident Weekend Green Fee Increase Analysis FY 2018-19 Current Proposed New Annual QTYRateIncreaseRateImpact CARTS 1/2 Cart for 18 Holes25,168$13$2$15$50,336 Single Cart for 18 Holes309$16$2$18$618 1/2 Cart for 9 Holes1,735$8$1$9$1,735 Single Cart for 9 Holes9$11$1$12$9 GREEN FEES Non-Resident Weekend Green Fees6,555$32$2$34$13,110 Friday, Saturday & Sunday Tournaments1,735$32$2$34$3,470 TOTAL$69,278 Increasing 1/2 carts $2, non resident weekend and weekend tournament fees $2, would make a weekend user fee of $50.23 (includes tax). That would be up from $46.07 in our current fiscal year and up from $44.07 in fiscal year 16-17. That would be a nearly 14% increase from 16-17 and a 9% increase fromcurrent fiscal year. (Note: QTY is based upon actual usage amounts from 2017 calendar year report.) Bay Forest Golf Course 2018 Rack Rate and Cart Fees Survey Non-Res Weekend Rack Rate includes 1/2 cart for 181/2 Cart for 18 Golf Course Bay Forest$45$13 Eagle Point $62 281-385-6666 Memorial $49$11 713-862-4033 Moody Gardens $81$17 409-683-4653 Southwyck $52 713-436-9999 Bayou Golf Course $39$16 409-739-9622 Timber Creek $62$13 281-993-1140 The Wilderness $67$15 979-297-4653 The Battleground $50$20 281-478-4653 Sharpstown $39$12.50 Equipment Services Cost Comparison TaskVendor 1Vendor 2La Porte Costs Texas TruckHouston Freightliner Brake Job - 1 axle >2017 Freightliner$980.99$1,336.50$747.93 Noble Truck ServiceHouston Freightliner Oil Change > 2017 Freightliner$230.00$415.78$110.42 Noble Truck ServiceHouston Freightliner Oil Change Plus Transmission Service > 2017 Freightliner$705.00$1,065.78$328.92 Monument ChevroletD&T Firestone Oil Change > 2018 Tahoe$49.95$75.00*$70.09 Monument ChevroletD&T Firestone Oil Change Plus Transmission Service >2018 Tahoe$229.90$247.00$160.84 Bobcat of HoustonHeavyquip Replace Tracks and re-seal tensioners > 2010 Bobcat$3,700.00$1,878.24$1,826.99 Landsdowne Moody Replace Clutch flywheel bearings seals and gaskets >2015 John Deere tractor$1,938.00$2,445.64 Rotochopper Replace 4 teeth , 4 holders, 1 screen$3,919.42$3,924.25 * includes 20 point inspection with PM " A" LABOR RATE PLUS BENEFITS AND INDIRECT OVERHEAD$ 33.25 Contingency Account Fiscal Year 2016-2018 2016 Adopted Contingency 250,000.00 Roof Project (15,822.00) Unit 71-84 Window Repairs (79.00) Replacement of Fire Panel (2,915.00) Front bumper repair Unit 53-25 (808.00) Repair Front Bumper Unit 59-32 (865.00) Unit 71-84 Repairs (116.00) Rental Ambulance Due Fleet (3,000.00) Ambulance Chassis Unit 59-40 (46,700.00) JUSTFOIA Software (4,050.00) Cost to Demolish Windsail Apartments (49,437.00) Pecan Park Canopy (43,400.00) Sylvan Beach Pier Repair (4,820.00) JUSTFOIA Set up fee/Training (1,800.00) City Hall Security Project (50,000.00) Parks Audit (20,000.00) TML Reimbursement 200.36 6,388.36 2017 Adopted Contingency 300,000.00 A/C Equipment Repairs (7,106.00) A/C Equipment Repairs (1,259.00) Pecan Park Security Camera Project (5,621.00) AC Unit Replacement at Special Programs (21,803.00) Bay Area Coastal Protection Alliance (10,000.00) 1218 S Broadway (5,000.00) Purchase 1218 S Broadway (107,584.00) Heating & AC Repairs (1,362.00) 140,265.00 2018 Adopted Contingency 300,000.00 Unemployment Benefits Payment (32,000.00) Happy Harbor Bollards (3,500.00) 264,500.00 REQUEST FOR CITY COUNCIL AGENDA ITEM September 6, 2018 Appropriation Agenda Date Requested Jason Weeks, Asst. City Manager Source of Funds: N/A Requested By: Administration Account Number: N/A Department: Amount Budgeted: N/A Report Resolution: Ordinance: Amount Requested: N/A Exhibit: Budgeted Item: YES NO SUMMARY & RECOMMENDATION $100 of property valuation and the rollback tax rate at $0.771 per $100 of property valuation. The effective tax rate provides a taxing unit with approximately the same amount of revenue it had the prior year on properties taxed in both years. The rollback tax rate provides the taxing unit approximately the same amount of tax revenue it spent the previous year for day-to-day operations plus an additional 8% and sufficient funds to pay its debt in the coming fiscal year. e requires a City Council to hold two public hearings if a City adopts a tax rate higher than the effective or rollback tax rate, and a separate date to adopt the tax rate. If the City of La Porte City Council wishes to adopt a tax rate exceeding the effective tax rate of $0.731 per $100 of property valuation, the st Council would need to formally announce the date of the public hearings, which the 1 Public Hearing would nd occur on Thursday, September 20, 2018 at 5:00 p.m. and the 2 Public Hearing would occur on Monday, September 24, 2018 at 6:00 p.m., while the date to adopt the property tax rate would occur on Monday, October 8, 2018 at 6:00 p.m. All public hearings and the adoption of the property tax rate would occur in the City of La Porte Council Chambers located at 604 W. Fairmont Parkway in La Porte, Texas. Action Required by Council: Discuss and consider or other action to propose a FY 2018-19 tax rate and establish public hearing dates (if applicable) as required by State law. Approved for City Council Agenda Corby D. Alexander, City Manager Date