SPECIAL COUNCIL MEETING
A Special Council Meeting was held on October 7, 2002 at 4:30 p.m. with Council President Carey presiding. Council members present were Mr. Ritter, Mr. Pitts, Mr. Truitt, Mr. McGlumphy, Mr. Speed, Mr. Salters, and Mr. Ruane. Mrs. Williams was absent.
Council staff members present were Mr. DePrima, Mrs. Mitchell, Mr. Cooper, Captain Kurtz, and Mrs. McDowell.
The invocation was given by Chaplain Dixon, followed by the Pledge of Allegiance.
AGENDA ADDITIONS/DELETIONS
Mr. McGlumphy presented a line item agenda to facilitate the discussion of Budget Visions for Fiscal Year 2003/2004 and requested that it be added to the agenda. Mr. Ritter, noting that he would like to discuss budget issues only, requested that Items #2-G1 through 2-G12, Other Issues, be deferred until a later date.
Mr. Speed moved for approval of the agenda as amended, seconded by Mr. McGlumphy.
Mr. Truitt moved to amend the motion to include that the meeting would conclude at 6:20 p.m. due to their previous engagement. The motion maker and the seconder concurred and the amendment was unanimously carried. The motion to approve the agenda, as amended, was unanimously carried.
Council President Carey explained that the Special Council Meeting was requested by Mr. Ritter to discuss Budget Visions for Fiscal Year 2003/2004 in order to provide staff with direction in preparing their budgets.
FY03 BUDGET
Unbudgeted Commitments
Responding to Mr. Ritter, Mr. DePrima, City Manager, stated that there are no unbudgeted commitments outstanding. Mrs. Mitchell, Finance Director, stated that committee action forms would be forthcoming for unbudgeted work that was performed related to the Duke contract. In total, the appropriation was within the budget; however, line item adjustments which will affect the carry-forward balance are necessary. She also noted that she would be presenting uncollectible water/sewer and special assessment bills that have been written off. Mrs. Mitchell stated that, once the audit is complete, she would bring forward any necessary adjustments.
Mrs. Mitchell stated that the Pension Fund is below where it should be due to the market level. The actuary has provided a preliminary suggestion that the increased unfunded liability created by market loss should be dealt with this fiscal year by “smoothing”. She indicated that she would provide members with additional information.
Hiring Freeze
Mr. DePrima noted that, since the City does not have the revenue imbalances that other jurisdictions are experiencing, nor are there large uncommitted budget items, he would like the opportunity to hire people to fill vacancies. He noted that he recently began carefully scrutinizing each vacant position and requests for new positions prior to authorizing hiring new employees. It was his feeling that an across the board hiring freeze would hamper their ability to manage. Council staff members present concurred.
Mr. Ritter noted that the draft budget indicated 365 employees and the final document indicates 368 employees. Mr. DePrima stated that he would look into the matter.
Mr. McGlumphy noted that, since revenues have not decreased, there would be no need for a hiring freeze.
Revenue Forecasts
Mr. DePrima stated that revenues are being received as projected and they are in line with previous years. Responding to Mr. Salters, Mr. Cooper, Tax Assessor, stated that they are working on a system to check for delinquent property taxes prior to issuing business licenses or permits. At the end of August, 92% of the property taxes billed had been collected and the amount outstanding is over $500,000. Responding to Mr. Salters, Mr. Cooper stated that once a property owner is two (2) years in arrears with their property taxes, the property is subject to Sheriff’s sale. Mrs. Mitchell noted that the statistical section of the Comprehensive Annual Financial Report contains a ten-year trend on tax collection.
Mrs. Mitchell stated that the only real concern she has regarding revenues is the investment earnings.
Mr. Ruane asked staff if they have had an opportunity to revisit Fines and Police Revenues. Mr. DePrima indicated that all revenues would be reviewed at mid-year.
Changes in CIP (Net Effect)
Mr. DePrima noted that the credit card processing software purchase has been delayed an additional year due to a new product being released by HTE.
Responding to Mr. Ruane, Mrs. Mitchell noted that projects which carry-over from one fiscal year to the next are still being reconciled.
Mr. Ritter, noting that the State may withdraw funds granted to cities to compensate for their revenue shortfall, asked if it would affect the City of Dover. Mr. DePrima stated that the Delaware Prevention Network (DPN) could be affected. Fortunately, the City is not dependent on a great deal of State funding. It was Captain Kurtz’ understanding that State funding cuts would not affect emergency services.
FY04 BUDGET
Budget Process
Mr. McGlumphy stated that he would like to see employees work within financial parameters, submit proposed cuts (if necessary) prior to May, and submit and complete projects within a successful timeline. He also suggested the possibility of forming a Financial Oversight Committee. Mr. Salters indicated his feeling that putting their trust in the City Manager and department heads would yield splendid results.
Financial Parameters
Mr. Ruane stated that he is committed to maintaining the Reserve Policies. It was his feeling that a decision should be made to either modify the policy so that the City Manager understands that contingency funds will not be used except in the case of a genuine unforeseen emergency or modify the policy so that, if there are excess funds, the City Manager can propose a budget that anticipates utilizing some amount of the contingency fund based on the fact that it is over-funded.
Mr. Speed requested the opportunity to review the Contingency Policy prior to amending it and suggested reviewing it within the next month or so. Mrs. Mitchell stated that she could have the Financial Policies ready for review at the Legislative and Finance Committee Meeting of October 28th.
Mr. Ruane referred to transfers made from the Electric Fund to the General Fund and suggested establishing ground rules or principles based on percentages. Mr. DePrima noted that transfers would be covered in the Revenue Policy.
Revenue Forecasts
Mr. DePrima reminded members that he, Mrs. Tieman, and Mrs. Mitchell were in the process of developing a Revenue Forecast Manual. The manual contains a sheet on every revenue source in the City, an explanation of the background on the revenue, when it was last updated, the forecasting methodology used, and benchmarks used to determine the appropriate level of income expected of the source. Mr. DePrima stated that he anticipates that the draft will be completed within two (2) months.
Mr. Ruane requested that Council first consider the projected revenues, then discuss necessary budget adjustments such as water/sewer and electric increases, etc. Mr. Speed stated that he would like the opportunity to define the revenue parameters prior to voting on the expenses included in the budget.
Mr. DePrima, noting that timing plays an important role in revenue forecasting, stated, for example, that an increase in Business License fees this year would impact the next fiscal year. Mr. DePrima cautioned that forecasting revenue too far in advance decreases the accuracy of the estimate.
Mr. Ritter suggested that items #2-E, Big Ticket Items, and #2-F, Fees, could be included in the Revenue Policy discussion within the next month or so.
Mr. McGlumphy moved for adjournment, seconded by Mr. Speed and unanimously carried.
Meeting Adjourned at 6:12 P.M.
TRACI A. MCDOWELL
ASSISTANT CITY CLERK
All orders, ordinances and resolutions adopted by City Council during their meeting of October 7, 2002, are hereby approved.
JAMES L. HUTCHISON
MAYOR
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