OFFICE OF THE CITY COUNCIL
CHERYL L. BROWN 117 WEST
DUVAL STREET,
DIRECTOR 4TH FLOOR, CITY
HALL
OFFICE (904) 630-1452
FAX (904) 630-2906
E-MAIL: CLBROWN@coj.net
Finance Committee Budget Hearing #1 Minutes
August 8, 2013
9:00 a.m.
Location: City Council Chamber, 1st floor,
City Hall – St.
In attendance: Council Members Greg Anderson (Chair), Stephen
Joost (arr. 9:15), Richard Clark, John Crescimbeni, Matt Schellenberg, Robin
Lumb, Johnny Gaffney (arr. 1:09), Clay Yarborough and Reggie Brown (arr. 10:17)
Also:
Council Members Bill Gulliford (President - arr. 11:30), Lori Boyer and Doyle
Carter
Also: Kirk
Sherman, Kim Taylor, Philip Peterson, Trista Straits, Brian Parks – Council Auditor’s
Office; Carol Owens – Legislative Services Division; Peggy Sidman – Office of
General Counsel; Jeff Clements – Council Research Division; Ronnie Belton and
Michele Barth – Mayor’s Office; Glenn Hansen and Angela Moyer - Budget Office
Meeting Convened: 9:04 a.m.
Chairman Anderson convened
the meeting and made introductory remarks about procedure and process for the budget hearings.
Much preparatory work has already been done by staff, and the Chair
thanked Ronnie Belton and Glenn Hansen of the administration and Kirk Sherman
and the Auditor’s Office staff for their preparations to this point. He announced that three Finance subcommittees
will also be reporting the results of their work later in the process.
CFO Ronnie Belton gave a
brief overview of the Mayor’s fundamental philosophy underlying this year’s
proposed budget. The economic recovery
is still fragile, revenue improvement is still slow, uncontrolled costs
(particularly pension contributions and health insurance premiums) are still
rising, and the Mayor believes that a sound financial foundation is needed without
raising taxes. Available revenue is
approximately $950 million for the General Fund with a looming $64 million
deficit due to the non-passage of the proposed pension reform ordinance, which
represents 13.88% of the fund’s controllable costs (salaries, non-pension
benefits, supplies, travel, and other operating costs). That budget gap has
been divided between the Mayor’s executive departments ($26.4 million in
reductions) and the budgets of the Constitutional officers ($37.6 million). Pension reform is still a crucial factor in
the City’s future financial health and the administration is still pursuing
resolution to that issue.
Budget Officer Glenn Hansen
recapped the budget submission timeline.
The administration’s budget kickoff meeting was held on March 25th
and departments were instructed to develop budgets based on the assumption of
98% of the current year’s funding, with a separate list of proposed
enhancements desired above the 98% level.
Pension contributions are a huge driver of this year’s budget, and as a
result capital investment has been cut to almost nothing for next year. Council Member Schellenberg requested a
listing of the $26.4 in executive departmental cuts already factored into the
proposed budget. In response to a
question from Council Member Crescimbeni about when the decision was made to
target a 13.88% reduction from the preliminary budget, Mr. Hansen put that date
as June 4th. Mr. Crescimbeni
indicated that he had heard from departmental representatives that some
departments presented 98% budget proposals as requested and others did not, but
all were thereafter subjected to the same 13.88% reduction.
Council Auditor Kirk Sherman
recommended that the committee not appropriate the extra 1.5 mills authorized
under the TRIM notification process ($65 million) yet – hold it in reserve in a
Special Council Contingency fund to see how the review process works out and
then determine the final millage levy at the end. The departments have produced lists of items
they would like to see restored to their budgets if possible, and some
departmental budgets still don’t seem to balance properly. Mr. Sherman reviewed the budget-related
ordinances and adoption timeline. There
has been a large decline in ad valorem tax revenue over the last 5-6 years and
state law restricts how quickly tax revenues can recover due to limitations on
millage growth rate. Council Member Schellenberg requested a report on the
amount of ad valorem collected from properties valued above and below the
median property value in Jacksonville.
One change in this year’s
process is a separate accounting on a departmental basis for utilities and
building charges, which currently are all charged to the Public Buildings
account in Public Works.
The budget eliminates 131 positions
(77 filled, 54 vacant) for savings of $6.6 million. Council Member Yarborough requested a listing
of the number of vacant positions not being eliminated.
In response to a question
about why the group health insurance cost is going down by $4.5 million despite
an 8.4% rate increase, Mr. Sherman indicated that it was because the City has
many fewer covered employees due to layoffs in recent years and some employees
opting out of City coverage when possible.
References from this point are to Budget Hearing #1
handout
Motion - on
p. 23 recommend approval of Council Auditor’s recommendation re: new internal
service fund – approved unanimously
Motion – on
p. 29 recommend approval of Council Auditor’s recommendation #8 re: decreasing
Communication Service Tax revenue – approved
unanimously
Motion – on
p. 29 recommend approval of Council Auditor’s recommendation #2 re: decreasing Code
Enforcement revolving fund revenue – approved
unanimously
Motion – on
p. 29 recommend approval of Council Auditor’s recommendation #3 re: decreasing Sheriff’s
Trust fund red light revenue transfer – approved
unanimously
Motion – on
p. 29 recommend approval of Council Auditor’s recommendation #4 re: decreasing the
JEA contributions from electric and water/sewer revenue – approved unanimously
Motion – on
p. 29 recommend approval of Council Auditor’s recommendation #7 re: decreasing franchise
fee revenue – approved unanimously
Motion – on
p. 29 recommend approval of Council Auditor’s recommendation #1 re: decreasing local
option gas tax revenue – approved
unanimously
Motion – on
p. 29 recommend approval of Council Auditor’s recommendation #6 re: decreasing utility service tax revenue – defer until JEA’s appearance.
Motion – on
p. 29 reconsider previous approval of recommendation #7 and defer until JEA’s appearance
- approved unanimously
Discussion of CAO
recommendation #5 re: local option sales tax revenue
was deferred to later in the meeting.
Council Member Schellenberg
requested information on the total amount of the City investment pool that
produces the revenue shown on p. 26 in the revenue schedule. Council Member
Crescimbeni requested information on budgeted v. actual numbers for sales tax
revenue for FY12-13 to see how close we are to the projected budget. In response
to a question from Council Member Lumb about whether the Council could pass an
ordinance to prevent the City from appropriating any funds to pay pension costs
that exceed IRS limitations, General Counsel Cindy Laquidara said that it
could. Mr. Lumb indicated that he would be requesting such legislation. Council
Member Crescimbeni requested information on the City’s membership in the
National League of Cities and National Association of Counties – how many years
and what benefits
Capital projects not lapsed
for FY13-14
Motion – on
p. 40 recommend approval of Council Auditor’s recommendation re: changing the
amount of funding for the Archiving and Surveillance Project – approved unanimously
Council Member Boyer
requested a copy of the latest debt affordability report.
Public Service Grants
The committee engaged in
considerable discussion of the public service grant scoring and ranking process
and the application of the results to the identified priority populations. The PSG Council has had trouble getting a
full complement of members and it has affected the ability to scrutinize the
applications. Seven of the thirteen seats are currently filled. Council Member
Boyer stated that the Council made a conscious decision during last year’s
budget process to distribute the available funding in greater amounts to fewer
agencies rather than spreading it thinly among more agencies.
The committee was in recess from 11:48 to
1:09.
Committee members questioned
why the allocations varied greatly by agency from year to year with some
agencies seeing large increases and others large decreases or complete
elimination. Council Member Boyer
explained that last year during the budget process she suggested considering a
3 year grant process so that agencies would have certainty and amounts wouldn’t
change so greatly year to year, but the committee was not interested in that
approach. The PSG Council also considered using an RFP process rather than a
grant application process to distribute its funding but opted against the change.
Council controls the priority population process so can change that at any
time. Council Member Schellenberg
suggested that the City Council take the process back from the PSG Council and
make the allocations itself. President
Gulliford noted that some agencies serve not only the general public but also
other agencies, so their multiplier effect should be taken into account. Council Member Brown suggested that an
infusion of new agencies into the PSG mix is a good thing – current recipients
should not get the impression that they are entitled to perpetual funding.
Motion: on
pp. 41-42 approve the PSG and CSG allocations as listed – approved 8-1 (Schellenberg opposed)
Federal public service
grants
Motion: on
p. 43 approve the Council Auditor’s recommendation regarding removal of
asterisks from several listed items - approved
unanimously
Information Technology
Division
ITD Chief Usha Mohan outlined
the division’s efforts to reduce costs and improve services to users and the
proposal for a 5-year technology improvement plan. The division has a list of
12 line item reductions that the division would like to see restored if
possible.
Motion (Clark):
on p. 48 restore ITD’s requested line item restorations #12 t0 #6 – withdrawn
Motion
(Joost): on p. 48 restore ITD’s requested line item restorations #12-6
Amendment (Crescimbeni):
assign 1 of the 4 positions proposed to be restored in #6 to Court
Administration for assignment to the Courthouse
Joost motion w/Crescimbeni amendment approved 6-2 (Clark and Lumb opposed)
Motion
(Schellenberg): on p. 48 restore ITD’s requested line item restoration #5,
allocating$1.2 million of the $1,530,080 as the funding source for ITD
development projects #1 and 2 (SAN Disk Replacement and Enterprise Document
Management Solution) shown on the IT Development Projects listing on p. 45
Amendment (Joost):
amend the Schellenberg motion to allocate the $1.2 million from line item
restoration #5 to the Special Council Contingency to fund the ITD project
restorations approved earlier
Schellenberg motion w/Joost amendment failed 2-6 (Schellenberg and Joost in favor)
The committee was in recess from 3:44 to 3:53.
Intra-Governmental
Services Department
Motion: on
p. 59 approve Council Auditor’s recommendation regarding budgeting of part-time
hours for the Call Center – approved
unanimously
Council Member Yarborough
expressed concern that the information he requested on the exact cuts made in
each departmental budget to reach the 13.88% reduction target has not yet been
received and the departments do not appear able to answer the questions about
specific reductions.
Motion
(Clark): on p. 60, move $112,370 (the difference between the 9.29% reduction
shown on the Council Auditor’s worksheet and a full 13.88% reduction) of the
Intra-Governmental Services Department’s budget “below the line” until the
department can demonstrate exactly how it intends to meet the 13.88% target – approved unanimously
Council Member Crescimbeni
requested a list of vacant positions, the value of the salary and benefits for
those positions, and the length of time the positions have been vacant for each
department that appears before the committee.
Council Member Brown indicated his opposition to a blanket
across-the-board 13.88% reduction without any consideration of the needs of the
department and the effects on the general public from the cuts.
Budget Officer Glenn Hansen
explained the method by which the 13.88% reduction was calculated for each
department. The baseline from which the
calculations were made was the June 3rd tentative budget, which
admittedly was still a work in progress at the time. A calculation was made of the size of the
budget deficit on June 3rd assuming that pension reform was not to
be achieved in time for the budget, and that dollar amount was converted into a
dollar figure and applied to both the Mayor-controlled executive departments
($26.4 million) and the constitutional officer departments ($37.6
million). Those dollar amounts were then
applied as reductions to the Mayor’s final submitted budget as of July 15th.
The 13.8% reduction from the tentative budget was achieved in the aggregate,
but not necessarily on a department-by-department basis. The committee discussed the difference
between the tentative and final submitted budgets and whether the 13.88%
reduction target should be applied in the aggregate or on an individual
departmental basis.
Copy Center
Council Member Joost asked
Maxine Person, Budget Officer for the Sheriff’s Office, to describe the JSO’s
experience with trying to control its copying costs. Ms. Person stated that the JSO has reduced
its number of copies but its costs are still rising because the overhead cost
of the Copy Center (which the JSO does not use) is being billed to all
departments. Greg Pease, Chief of
Procurement, explained that the costs of managing the copier contract have
moved from ITD to the Copy Center and the overhead charges are now being
properly charged to all City agencies which was not
the case in the past.
Motion
(Clark): put $380,880 of the Copy Center budget “below the line” – approved 5-1 (Joost opposed)
Fleet Management
Karim Kurji, Chief of Fleet
Management, described the division’s cost saving measures, including doing auto
body repairs in-house, contracting with a private vendor to run the parts
management system, and selling surplus vehicles via online auction rather twice
a year on-site auctions. Mr. Kurji also
discussed his division’s list of potential line item restorations and their
priority.
Motion: put
$972,145 of the division’s budget “below the line” - fails 2-3 (Yarborough and Joost in favor)
Council Member Joost
cautioned the committee against a fixation with seeing a 13.88% reduction in
every division’s budget and urged a more holistic approach to determining what
each division needs to properly do its job.
In his opinion cutting the Fleet Management budget will just reduce its
service level and lead to complaints from the agencies that use its services,
which in turn will lead to more attempts by user departments to pull out of the
consolidated government’s services and seek outside providers. Council Member Clark felt that the Finance
Committee should “hold each division’s feet to the fire” and achieve the 13.88%
reductions that the administration should have demanded for its proposed
budget.
Fleet Vehicle Replacement
Motion: on
p. 69approve the Council Auditor’s requested technical amendments in the
language of the waiver of the Ordinance Code provision prohibiting the purchase
of vehicles with borrowed funds – approved
3-2 (Yarborough and Clark opposed).
Council Member Clark
requested a real dollar amount for how much Fleet Management really needs to
fund necessary vehicle replacements for FY13-14.
Meeting Adjourned: 6:17 p.m.
Minutes: Jeff Clements, Council Research
8.9.13 Posted 4:00 p.m.
Tapes: Finance Budget Hearing #1–
LSD
8.8.13
Materials: Auditor’s Budget Hearing #1 handout
8.8.13