Draft Minutes February 25, 2011 Budget & Finance Meeting

Draft Minutes February 25, 2011 Budget & Finance Meeting

The meeting was Called to Order by Chair David King (3:15 pm), followed by the Pledge of Allegiance, and Roll Call. Members present: Larry Silver, Steve Huse, Dave Davis, Anna Legates, Rich Hanewinckel, and Mayor Diane Hanson. Town Manager Diana Smith, Director of Finance Bill Brown, and Maintenance Head Alvin Huffman were present in their official capacities; Commissioners Marty Seitz, Jim Laird, and Rick Solloway were present.

Minutes. A motion was made to approve the minutes from the February 11, 2011 meeting. This was seconded and passed by unanimous voice vote.

Budget Review

The Chair requested starting at the bottom line; to reach a consensus as to where the committee should strive to end up in terms of Operating Expenditures and Net from Operations. The working documents for this meeting included updates to the draft budget reviewed at the February 11 meeting (the February 20th draft budget view) and recommended changes from the Town Manager. It was noted that this budget view shows several line items under Operating Expenses that were previously carried below-the-line, and does so in a way that shows the netting revenues under Operating Expenses (rather than under Operating Revenues) so as to provide an “apples-to-apples” comparison to prior year budgets, i.e., in a manner that does not increase the apparent Operating Expenses.

The Total Operating Expenses are shown at $2.4 M, including $79,500 for Bayard Ave., which is approx. where the Town’s budget has been the past few years (adjusting for Bayard Ave); with a net from Operations of $180K if we achieve all of the suggested new revenue streams. Bill gave an update for the “entertainment fee” number of $20K rather than $100K,

Questions were asked re: operating costs and maintenance for the pumps at Bayard Ave.; need to monitor the cost benefits of the Season Police; reduction of the two categories of legal/litigation fees by a total of $100K (regular legal fees being reduced through negotiation of retainer-based model with Town Attorney and use of para-legal for routine documents and research; big concern re: reduction of Litigation expenses given the unknowns of pending and future litigation coming out of the DBE MAR. There is also $264K in a Town-designated, segregated equity fund restricted for litigation expenses. Expenditure of these monies will negatively impact both the Town’s P&L and Balance Sheet).

Maintenance Department (Alvin Huffman).

·  No change in Payroll & HR

·  Add’n of $5,500 for high-school student for clean-up along Coastal Highway Thursday through Monday, and watering/beautification. The Town Manager need to figure out a supervision strategy to avoid overtime on Alvin’s part for supervision on weekends. (Maybe funded through a BID or a Job’s grant)

·  Proposed reduction of major assets (assumed was a mistaken copy of last year’s expenditure). Alvin stated this line item was for a zero-radius mower, and it was left at $12,000.

·  Trash. There was some confusion as to exactly what is included in this line item; street cans and runs to the dump only or including trash in all buildings as well. Facing an increase in rates; consensus on $19,000. Bill should take a look at bidding this service out.

·  Beautification Contribution; $1,700 allocated from the Gala for beautification (ultimately to be shown as deferred revenue in a restricted account, and use it to offset expenses for materials and labor, including the HS student).

·  Street signs. Reduce to $1,000. Alvin in process of changing out, reusing backing to allow him to change these out at a reduced cost.

·  Parking Meter. Discussion placing meters in strategic locations to generate more revenue from meters than received from permits, such as South side of Van Dyke. Alvin noted the cost of a new meter head is $300 for each new head.

·  Telephone. FY11 Projected number low due to timing of quarterly billing, contract rate $1,200.

·  Street Sweeping. Last year listed under Marketing; consensus to show under Street & Hwy. $4,000.

·  Heat & Electric. This is primarily the W. Rehoboth building. Bills last few months (winter) $500 to $600 per month keeping the heat at 60 degrees.

·  Gasoline. Includes mowers and tractors. $2,000 through the end of January. $2,900 seems reasonable in light of likely gas-price increases.

·  Need to monitor cost benefit of Season Police.

·  Bill needs to investigate ways to reduce “trash” costs.

·  Need to consider shared services and resources. Jim Laird.

·  Review use of W. Rehoboth building. Is this a cost effective resource.

·  Changes from prior budget view (Lines 207 – 213).

o  State grants for Bayard Ave. Project Design Study. Do not include in operating budget (will go into restricted equity fund), but note it is still outstanding.

o  Building Permit number should be ¼ of Building Permit Revenue shown under Operating Revenue.

o  Municipal Street Aid and Highway Special grants shown with off-setting revenues here to net out to zero.

o  When approved, these items will be grossed up.

Alderman Court

·  Pass through items shown as zeros. Non-operational, formerly shown below-the-line. Bill will set up as Accounts Payable.

·  Changes in Insurance department by department due to re-allocation by the Town Manager. Overall an increase of approx. $17K in a total budget of approx. $150K.

·  Judge Simmons has restructured operations of the Court in an effort to reduce costs, including addition of a dedicated part time clerk dedicated to the Court ($9,975 fully loaded); total Payroll & HR for the Court of $43,045.

Lifeguards

·  Contributions and equipment. These are discretionary expenditures by the department head, and have been netted out to zero (shown for transparency).

·  Night Beach Patrol. Reduced coverage to just weekends and holidays (Bill needs to check with Todd to confirm).

·  Payroll & HR. The starting number included everything Todd asked for except the 20-cent per hour increase. It was based on last year’s 108 day season, plus the Friday before Memorial Day and the 6 days following Labor Day. The same period this year is 7 days shorter. The Total Payroll & HR number was therefore reduced by 5%; and then increased by $5,000 to provide for the requested 20-cent per hour increase. Total Payroll & HR for the 108 days from the Friday before Memorial Day through the Sunday after Labor Day, $273,848.

·  The staffing request is based on an average daily staffing of 26. But rain days and weekdays at the beginning and end of the season should require lighter staffing – possibly removing a salary burden of $8,000-plus. The Town Manager should require a detailed manning table and work with Todd to more effectively manage his resources; possibly offering pay increases for his guards if he manages to come in under budget by appropriate staffing.

Code Enforcement (4:45 pm).

·  Increase of $7,280 for part time, seasonal evening/weekend code enforcement officer (Thurs – Mon), to check on late-night operations of businesses and check on business-license compliance – one year trial, not permanent addition to staffing.

Life Saving Station

·  Includes monies to paint interior. Decrease $4,600 and plan on a painting party on Beautification Day.

Seasonal Police and Monitors

·  A large number of comments about the need for such a large (26) compliment, and apparent inefficiencies of the seasonal parking monitors; Sam did say he would cut parking enforcement staff if he had to cut the Seasonal PD budget (average approx. $12,000 fully loaded). Enforcement often seems lax; budget seems high relative to apparent return on this investment. A suggestion was made to reduce the parking monitor staff by 2. This suggestion was rejected at this time—leave the staffing at the requested level and evaluate performance. Payroll and taxes adjustments of -5% (-$13,737 and $1,559, respectively) were made to reflect a reduction in days between the Friday before Memorial Day to the Sunday after Labor Day—108 days this year versus 115 days last year—as per the lifeguard budget discussions. (This was done in error since seasonal PD staffing runs 123 days from May 15 to Sept 15.)

·  A question was asked re: the need for 6 seasonal dispatchers. Don offered that the 16 part time officers often work a few hours a week at dispatch to make up their 40 hour work week. However, Sam was not present and therefore was unable to answer this directly.

·  It was noted that this department is largely staffed to put 15-16 sworn officers on the streets weekend nights when the bars are letting out.

Administrative (5:15 pm)

·  Bayard Ave. is shown reflecting 3 payments, beginning in July. Diana is looking into a loan term of 15 years.

·  The large change in Insurance from last year’s number is due to re-allocation across departments. Overall Insurance was up about $17K, largely due to Public Official’s Liability.

·  Holiday expenses. Backout the -$4,950 one-time repair to the electrical service for the Coastal Highway lights; reduce by -$750 to reflect funding by contributions.

·  Lawsuits legal (litigation). Diana recommended lowering to $50,000. Some sense among committee members that this is unrealistic, and perhaps $100,000 – where FY11 is likely to wind up – is a better number.

·  Legal Fees Regular. The Town Manager is working to put the Town Attorney on a retainer model, including the use of a para-legal for routine document preparation and attending Town Meetings, which should reduce this number significantly. Consensus was to reduce this number to $70,000.

·  Employee Bonus. Now shown in Payroll & HR by department, -$7,500.

·  Beach/Marketing Events. The Town Manager recommended taking $12,000 from this line item, and we shifted $4,000 to Street Sweeping (Streets & Highway), so reduce -$16,000.

·  Information Technology. As per Town Manager’s memo reduced to $8,000, -$5,500

·  End of Year Employee Gift. Now shown in Payroll & HR by department, -$7,500.

·  The HR portion of this budget reflects no new people, no salary increases – same staffing as last year.

Police (5:30 pm)

·  Big changes: $48K for pensions now shown under Payroll & HR.

·  A variety of netted-out entries (e.g., EDIE Grants) are an effort to bring items previously presented below-the-line, now above the line – there is no change to Net from Operations by doing this.

·  Bill noted that the expense of contributions and donations is at the Chief’s discretion, and should not be shown in the operating budget. David replied that these items are artificially netted out to offset, showing the actual expenditures in the budget. There was general consensus that this is okay for the purposes of drafting this budget, and might be accounted for in a different manner when formatting together the final budget.

·  Pensions will be going up in the middle of the year to 14.52% in July, from 13.90%

·  Approx. $60K of COPS grant-deferred Payroll & HR costs is shown netted out here; previously shown below the line; will be grossed up when formatting the final FY12 budget.

·  Special Event Fees. It appeared (incorrectly so) that there were no entries/potentially low entries for special event re-imbursements. A place holder of $5,000 was inserted here.

Operating Revenue (5:45 pm)

·  Increases in Transfer Tax ($15K) and Accommodation Tax ($20K) to reflect the current situation; there is a large number of properties currently on the market.

·  Decrease in Residential Rental Business Licenses (-$35K) to reflect last year’s numbers – lost 130 RRBLs from FY10 to FY11 (Don’t know why; may be a compliance issue).

·  Parking Fines. Increased $28K based on revenues through early Feb bringing the FY11 total to approx. $275K - $290K.

·  Delinquent Parking Fines. Increase $11K, based on expected value of 36% of outstanding fine and penalty amounts ($90K from 2010 and $200K from prior years).

·  Traffic Fines. Increase $15K to bring closer to FY11.

·  Misc. Income. In FY11 this line item included $40K for items for which the Town had no legislative authority (new franchise fees on utilities and increases in business licenses) – and it never materialized.

New Revenues

·  Penalty for non-payment of business licenses. Already approved by the Town Council; historically resulted in approx. $10,000 in revenue.

·  A total of $162K of new revenues were discussed, of which the largest was relying on the bars and restaurants to serve as the Town’s agents to collect $0.25/patron through an occupancy-based entertainment fee.

Steve raised the very real concern that we are about to look at a variety of new revenue sources in an attempt to balance the budget and that, as we saw last year, this might be unwise. Rick Solloway raised a question about the legality of some of these additions. While there was some discussion to pose some of these to the Town Commissioners as recommended amounts to add to current revenue streams (e.g., $16K in business licenses for non-conforming eateries, restaurants and bar/convention center), the final consensus was not to include unsubstantiated revenues to the draft budget, and for the final draft budget to be balanced, as a minimum expectation. This will require an additional meeting

Status at the end of the meeting:

Total Operating Expenses $2.503M

Total Operating Revenue $2.371M

Net from Operations $ -$132K

A final meeting was scheduled to get the Town Manager’s input and recommendations to achieve a budget that is balanced without any significant new revenue streams.

Adjournment. A motion was made to adjourn, seconded and passed by unanimous voice vote. The next meeting will be held Saturday March 5, 2011 at 10:00 am, provided the Town Manager is available. (6:30 pm)

Action Items

·  Review Todd’s manning schedule with him for potential cost savings.

·  Investigate operational costs for Bayard Ave. pumps (electrical consumption and service)

·  Review insurance costs; Joan Claybrook will work with Bill Brown on this and shared services

·  Review trash costs

·  Investigate shared services and resources

·  Leverage realtors and businesses to sell daily & weekly parking permits