OFFICE OF THE CITY COUNCIL
CHERYL L. BROWN 117 WEST DUVAL STREET, SUITE
425
DIRECTOR 4TH FLOOR, CITY
HALL
OFFICE (904) 630-1452 JACKSONVILLE, FLORIDA 32202
FAX (904) 630-2906
E-MAIL: CLBROWN@coj.net
Finance Committee Budget Hearing #2 Minutes
August 9, 2013
9:00 a.m.
Location: City Council Chamber, 1st floor,
City Hall – St. James Building; 117 West Duval Street,
Suite 425
In attendance: Council Members Greg Anderson (Chair), Stephen
Joost, Richard Clark, John Crescimbeni, Matt Schellenberg, Robin Lumb, Clay
Yarborough and Reggie Brown
Excused: Johnny
Gaffney
Also:
Council Members Bill Gulliford (President - arr. 12:55) and Lori Boyer
Also: Kirk
Sherman, Kim Taylor, Philip Peterson, 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 called on Council Auditor Kirk Sherman to address local option
sales tax revenue. Mr. Sherman reported
that, with the addition of another month of collection data, his office is
fairly confident that the Budget Office’s revenue projects are correct. He therefore recommended that the committee
revisit its decision at yesterday’s meeting to decrease the local option sales
tax revenue by $642,304.
Motion: in
the August 8 Budget Hearing #1 Handout, on p. 29, reverse the decision to adopt
CAO recommendation #5 to reduce projected local option sales tax revenue by
$642,304 – approved unanimously.
Budget Officer Glenn Hansen
explained the process by which the Mayor’s proposed budget incorporated the
13.88% reduction which was discussed at length at yesterday’s budget
hearing. He stated that the 13.88%
figure was derived from a calculation of the dollar amount ($64 million) needed
to balance the Mayor’s June 3rd tentative budget, assuming that the
pension reform proposal was not adopted by City Council. He stressed that the budget has been a
continually moving target throughout the preparation process, with new
information being incorporated constantly that causes the numbers to change,
even after the presentation of the formal budget proposal in July, as evidenced
by the reconsideration of yesterday’s decision on the amount of sales tax
revenue to be budgeted.
All references from this point refer to the Council
Auditor’s handout for Budget Hearing #2 – August 9, 2013
Office of General Counsel
Motion: on
p. 5, approve the Council Auditor’s recommendation regarding correction of an
erroneous billing of $171,229 to the Workers Compensation activity in
Self-Insurance – approved unanimously.
In response to a question
from Council Member Lumb about what resources the Office of General Counsel needs to operate effectively
and to hire and keep talented employees, General Counsel Cindy Laquidara stated
that salary increases of perhaps 10% would be very helpful. The private sector can offer more money and
less drama than the City at the moment, so talented and experienced attorneys
and paralegals are naturally looking at their options. Ms. Laquidara said that she would be happy to
meet with the Council’s Executive Committee outside of the budget hearing
process to discuss appropriate salary levels.
Office of Ethics,
Compliance and Oversight
Motion: on
p. 9, approve the Council Auditor’s recommendation that part-time hours be
reduced by 1,300 hours – approved
unanimously.
ECO Officer Carla Miller said
that the office needs a full-time employee to be really effective. She is the only employee and is
part-time. When she was hired into the
position the City had an Inspector General’s office with a $1 million budget
and 14 employees to do investigations and follow up on complaints and
allegations. Now there is no one
full-time on the City payroll to handle this important function.
Health Department
The committee discussed
several issues from last year’s budget hearing with new Health Department
Director Dr. Kelli Wells, including the provision of security guard service in
City-owned vs. State-owned buildings and the process by which the Health
Department applies for grants for which they would be seeking City matching
funds. Council Member Boyer noted that
the City Council typically hears from the Health Department once a year at
their budget hearing and wondered if anyone in the administration has any
regular contact with or exercises oversight over the department, or if it
operates largely “out of sight, out of mind.”
Council Member Brown stated that Jacksonville has grossly underfunded its
health department for years when compared with the investments made by other
counties, and asked Dr. Wells for some comparative budget information from
other comparable counties. Dr. Wells
stated that in difficult budget times, at both the state and local level, it
will be increasingly important to determine what is an acceptable level of
basic public health services and who will pay for that level to be provided.
General Employees’ Pension
Trust
City Treasurer Joey Greive
said that the pension office is substantially reducing its mail-out of receipts
to pension recipients by restricting the mailings to twice a year, plus any
time a change is made in a benefit. He
reported that the pension fund is currently funded at 62.38% of actuarial
liability.
Motion: on
p. 19, approve Council Auditor’s recommendation #1 to update the budget
ordinance to reflect the inclusion of the disability plan contribution (0.3%)
in the employer contribution, for a total contribution rate of 28.21% - approved unanimously.
Motion: on
p. 19, approve Council Auditor’s recommendation #2 to increase the dues,
subscriptions and memberships line item by $5,000 to subscribe to the Social
Security Death Master File Service - approved
unanimously.
Motion: on
p. 19, approve Council Auditor’s recommendation #3 to reduce the postage and
miscellaneous services and charges accounts by a combined total of $49,200 – unanimously approved.
Correctional Officers’
Pension Fund
Motion: on p.23, approve
Council Auditor’s recommendation to reduce Sheriff’s fines and estreatures
revenue by $140,000 and increase the employer contribution by the City by the
same amount - unanimously approved
The committee discussed the
City’s money management and investment policies and fees with Mr. Greive who
stated that the City pays a fee of 60 basis points on its portfolio. The City has been shifting from a flat fee
basis to a reduced base fee and a percentage of performance, which better
aligns the money manager’s interests with those of the City. He also noted that
the City has moved some of its investments into low cost index funds rather
than more expensive actively managed funds where that made sense. As of 2012 the average rate of return on
investments for the previous 10 years had been 6.9% annually. He stated that Jacksonville has moved from
the middle of the pack to the top 1% of municipal pension funds in terms of
return on investments. Terry Wood,
chairman of the General Employees’ Pension Plan board of trustees made brief
remarks, and Council Member Crescimbeni invited him and the board to come to
the Finance Committee in the future and make suggestions for needed changes to
the pension plan and the governing ordinance, as they have the most expertise
in what’s needed.
Police and Fire Pension
Fund
Motion: on
p. 27, approve Council Auditor’s recommendation #1 to reduce IT internal
service charges by $15,559, both in the PFPF’s budget and in Schedules AB and
AC of the budget ordinance – approved
unanimously.
Motion: on
p. 27, approve Council Auditor’s recommendation #2 to reduce rental income from
the Haverty’s Building (Jake Godbold City Hall Annex) from $1.33 million to
$111,067 to reflect the City’s upcoming purchase of the building – approved unanimously.
Motion: on
p. 27, approve Council Auditor’s recommendation #3 to move supplemental
information from the bottom of Schedules AB and AC up into the body of the
schedules – approved unanimously.
Kirk Sherman expressed
concern that the pension contributions associated with the staff of the Police
and Fire Pension Fund administrators are not consistent with amounts shown in
recent actuarial reports on the plan. To
date, additional information requested of the board has not been received.
Motion (Schellenberg):
table final approval of the Police and Fire Pension Fund budget until the
auditor’s concerns have been resolved – approved
unanimously.
Council Member Schellenberg
requested information on how much of the $172.5 million in growth of the PFPF’s
assets is made up of employer and employee contributions and how much reflects
investment returns. In response to a
question from Council Member Crescimbeni about whether the City Council could
withhold any contributions to the Senior Voluntary Retirement Plan, General
Counsel Cindy Laquidara replied that it could according to her legal opinion
about the status of that plan, but the matter is currently in litigation.
Motion (Crescimbeni):
that the City make no employer contribution to the Senior Voluntary Retirement
Plan, and that the funding proposed for that purpose in the PFPF budget ($158,
811) be placed ‘below the line” for future consideration – approved 4-3 (Clark, Lumb and Anderson opposed).
The committee noted that the
proposed budget includes pay raises for all employees of the fund ranging from
1% to 4%. Council Member Crescimbeni
noted that it appeared that the $650,000 removed by the Council from the PFPF’s
administrative budget during last year’s budget hearing process has been
restored to the budget this year.
Motion
(Crescimbeni): that the Police and Fire Pension Fund Administration’s operating
expense budget be reduced by $650,000 – approved
5-2 (Clark and Schellenberg opposed).
Motion
(Joost): on p. 26, reduce the PFPF Administration salary line by $20,111,
representing the value of the proposed salary increases – approved unanimously.
In response to a question
from Council Member Yarborough, Cindy Laquidara stated that the Council can
appropriate a lump sum to the salary line, but cannot set individual staff
salaries or prohibit salary increases.
Compensation of the PFPF’s employees is the purview of the pension board
of trustees.
Employee Services
Department
Ellen Blair of the Employee
Services Department answered questions about how the elimination of funding for
any non-mandatory employee background checks/screening and drug and alcohol
testing would affect hiring practices and potential employer liability.
Motion
(Schellenberg): on p. 32, restore the department’s requested budget
restorations #9 and 8 to restore funding for employee drug tests and background
checks, with the funding for background checks/ screenings being restored to
the Employee Services budget from the Special Council Contingency Fund and the
funding for employee physicals and alcohol and drug tests being allocated to
the Risk Management Division – approved
unanimously.
Downtown Northbank Tax
Increment District
Mr. Sherman noted that the
Finance Department is looking at the option of purchasing the MPS downtown
parking garages (courthouse and Sports Complex) at a cost of $52 million; the
price would escalate to $60 million if not purchased by December 31, 2013. His office believes the proposed allocation
for the operating subsidy for the MPS garages is underbudgeted and recommended
an increase of $1,033,547. Paul Crawford
of the Office of Economic Development said that MPS is projecting a larger
subsidy need as well.
Motion
(Schellenberg): on p. 35, increase the City subsidy amount for the Urban
Core/Courthouse parking garage by $467,775 – approved unanimously.
Council Member Boyer asked
several questions about the existence of current fixed obligations for the use
of tax increment funds. Mr. Sherman said that his staff and the Office of
Economic Development believe that there are no hard and fast obligations attached
to the funds, but there are historical precedents about how they have been used
to this point. Ms. Boyer believes the
City Council needs to make clear to the Downtown Investment Authority what is
expected of them in terms of utilizing the TIF funds.
Downtown Vision Inc.
Motion: on
p. 41, approve the Council Auditor’s recommendation to revise Budget Schedules
AD and AE to correct a $46 error in the personnel services expenses for DVI – approved unanimously.
Terry Lorrince, Executive
Director of DVI, expressed the belief that momentum for downtown is steadily
building, and DVI is excited about the prospects for more progress when the
Downtown Investment Authority’s new director is hired and the downtown
redevelopment plan is formulated.
In response to a question,
Paul Crawford stated that up to 10% of the revenues of the two downtown TIFs
(if available) may be utilized by the DIA for operational expenses. The
Southbank TIF produces a positive revenue stream, while the Northbank TIF runs
at a deficit given the uses to which it is being put. In response to another question Mr. Sherman
indicated that none of the $11 million in bond refinance savings allocated by
the City Council earlier this year ($9 million for downtown development
projects, $2 million for citywide economic development) has been allocated or
spent yet. Mr. Crawford stated that the DIA must seek appropriation from City
Council at this point before the funds can be utilized. After a downtown redevelopment plan has been
approved by Council, the DIA may be authorized to utilize the money on its own
authority to fulfill the plan.
Motion
(Clark): appropriate the $11 million in bond refinance savings (Ordinance 2013-89-E)
into a designated special council contingency account in the General Capital
Projects Fund 322.
DIA board member Mike Saylor
requested the committee to leave the $11 million in its current account(s),
where it already cannot be used without City Council appropriation. He indicated that the presence of the $9 million
earmarked for downtown development is already generating a positive buzz and is
stimulating interest in downtown.
Motion
(Schellenberg): to call the question – approved.
The Clark motion was approved 4-3 (Anderson, Crescimbeni and
Joost opposed).
Council Member Holt stated
that he had asked for a legal opinion from the OGC regarding order of
precedence for use of TIF funds if there are multiple projects. He has a road project to which he hopes to
direct JIA CRA funding, but needs to know if debt service takes precedence over
construction as a use of the TIF funds.
Health Department
(continued)
Motion: on
p. 11, split the cost of building security for City-owned buildings occupied by
the Health Department on a 50/50 basis with the state, saving the City $11,000
– approved.
Meeting Adjourned: 1:26 p.m.
Minutes: Jeff Clements, Council Research
8.13.13 Posted 6:00 p.m.
Tapes: Finance Budget Hearing #2– LSD
8.9.13
Materials: Auditor’s Budget
Hearing #2 handout
8.9.13