09-06-01 MEMORANDUMAugust 31, 2001
MEMORANDUM
To: Mayor and Commission
From: Jim Hanson, City Manama
Subject: Budget Meeting Sched ed for September 6th
This memo is to transmit a number of items you may wish to review prior to the budget
meeting scheduled on September 6th, to list the issues yet to be resolved concerning our
upcoming budget and to make some recommendations on how to resolve those issues.
Attached you will find several items for your review. The first is a staff report on state
requirements for the budget adoption. Our meeting on September 6th will begin with a
public hearing as required in state law. After the items related to that hearing are
complete and we have had a first reading of the budget ordinance, we can proceed to a
work session where the remaining issues of the budget can be discussed. Donna
Kalnzniak has prepared staff reports on the water capital budget and a request from the
St. Johns River Management District for $9,300. Last is a list of options for you to
consider to resolve the remaining budget issues. IrakeiNilapir
There are five major issues yet to resolve to complete the budget deliberation process.
They are listed as follows:
1. Health Care Premium Increase; We have asked the City of Jacksonville if they
would allow Atlantic Beach employees to be included in their health care
package. They in turn are working with their health care provider to get an
answer. We hope to have an answer prior to the budget meeting on
September 6th
2. Water System Capital Improvements; Per Donna Kaluzniak's staff report,
there are no changes needed in the proposed list of capital improvements for
the 01-02 fiscal year. While there are some changes in the capital list for the
ten-year planning period, they do not appear to require special action at this
time. Consequently, we can consider this issue to be closed for the time being
unless one of you wants to bring it up for additional discussion.
3. Implementation of Pay Plan and Classification Study; Per the report by
Palmer & Cay in our meeting of August 27th, there are certain implementation
costs associated with the adoption of the new pay plan and compensation
schedule that are not presently included in the draft budget. Nelson Van Liere
has calculated this to be an additional $142,876 including related benefit
costs.
4. Discretionary Projects; A list of discretionary projects was distributed with the
draft budget and another copy is attached for your information. One
recommendation made during the last two budget review meetings was to put
off any decision on funding for these discretionary items until after the City
opens bids for the Core City Project this winter. The following
recommendations could also impact funding availability from the 'A cent sales
tax.
5. Other changes; Some changes to the budget have already been discussed in
the last two meetings and a summary of those is also attached for your use.
The City Commission may want to discuss other items, or additional issues
may be brought up at the public hearing.
Recommendations; Obviously a decision from Jacksonville about health care insurance
will have a major impact on our budget discussions Thursday night. There are three
possible scenarios for us to begin our discussions at that meeting;
If we get a favorable answer from the City of Jacksonville on including
employees into their health care insurance plan.
If we get a unfavorable answer from Jacksonville by the time of the budget
meeting on 9/6.
If no answer is received from the City of Jacksonville is received by 9/6.
Recommendations for each of these scenarios follow;
1. Favorable answer from Jacksonville on health insurance;
If Jacksonville will include Atlantic Beach employees in their health
insurance plan, there should be enough in the proposed budget already to
cover the cost. Utilize the surplus in the General Fund to pay for the
implementation cost for the pay plan in the General, Storm Water and other
miscellaneous funds. This will still leave the General Fund in a surplus
position for the year with balances well in excess of the 25% contingency
requirement.
The estimated $33,000 impact of the Pay Plan implementation on the
Water and Sewer Funds is relatively small and consideration of the overall
size of their budgets and can be taken from fund balance. The impact long
term is a slight reduction in capital available for future years.
2. If an unfavorable answer is received from Jacksonville on health insurance;
In my opinion, it would be most prudent for the City to budget for the
worst case" cost for health insurance premiums by putting in an additional
283,000. This would bring the funds budgeted up to the amount of
AHL's offer of extension for another year (over double the present rates).
I would also recommend implementation of the pay plan as described
because it has a major impact on our ability to fill vacant positions (and
get the job done in each department) and because of its effect on employee
relations. These items could be funded with two major changes to the
budget.
The costs of the Selva Marina Project are discretionary. That is, they are
not "maintenance" items that were listed in the Water or Sewer Master
Plans. As such, they could appropriately be paid for from the Half Cent
Sales Tax (HCST) Fund rather than spread through the Water, Sewer,
Storm water and Sales Tax Fund as originally proposed. Paying for the
Selva Storm water work for $160,000 using the HCST Fund would in turn
allow for the elimination of the General Fund subsidy to the Storm Water
Fund of $135,000 next year. Paying for the $80,000 sewer rehabilitation
related to Selva Marina from the HCST Fund would free -up enough to
cover almost all of the costs related to both the health care and pay
plan implementation in the Water and Sewer Funds. It is
important to realize that the remaining balance in the HCST Fund that
could be used for the discretionary projects would be reduced to
approximately $310,000.
The second major shift in the budget would be to reduce the General Fund
surplus from an estimated $185,000 next year to $10,000.
3. If no answer is received from Jacksonville about health care prior to 9/6; In
this case, my recommendation would be the same as included in #2 above.
The City Commission has quite a number of options available to resolve the remaining
budget issues, which are outlined in the Finance Director's attached documents. If any of
you would like assistance from staff in developing alternate scenarios for resolving the
budget issues, we will make our schedules available to meet with you prior to Thursday
night.
If you have any questions or require any additional information, please let me know.
cc: Department Heads