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Minutes June 30, 1992290 CITY OF DENTON CITY COUNCIL MINUTES JUNE 30, 1992 The Council convened into the Work Session at 5:15 p~m. civil Defense Room. ~' in the PRESENT: Mayor Castleb~rry; Council Members Brock, Perry, Smith and Miller. ABSENT: Mayor Pro Tem Hopkins and Council Member Chew 1. The Council received a report and held a discussion regarding the 1992-93 Major Budget Issues. Lloyd Harrell, City Manager, presented Council with a calendar outlining the various items to be presented during the budget process. The July 7 agenda would include a discussion of the major budget issues, no work session would be needed for July 14, July 21 would be a regular meeting with the work session including presentations by the hotel/motel tax recipients. The July 28 meeting would be a work session at 5:15 at which time the proposed budget would be submitted to Council followed by a reception for retiring Council Members and Board/Commission members. Consensus of the Council was to hold the reception on July 28 at the Visual Arts Center. Council Member Chew joined the meeting. Harrell continued with the August 4 meeting which would begin at 4:00 p.m. with staff budget presentations. On August llth, staff budget presentations would be completed. Mayor Pro Tem Hopkins joined the meeting. Harrell stated that the August 18th meeting would be a general budget discussion, a public hearing on a proposed tax increase and budget would be held on September 1 and Sept 8 would be the final budget discussion. The September 15 meeting would include the adoption of the budget. Consensus of the CounCil was to proceed with the proposed schedule. Harrell continued with the Major Budget Issues. This report was a preview of what the budget looked like. He stated that the philosophy of the Major Budget Issues Report was to identify those issues which were policy decisions which would make a difference in the community depending on the option the Council chose. He felt this was the most difficult budget he had put together since being in Denton. The city used a modified zero based budget process. Department directors were asked to submit budgets that limited expenditures to previous year levels. Because of inflation and other circumstances, the approach required department directors to offer program cuts to meet their budget targets. Normal budget 291 City of Denton City Council Minutes June 30, 1992 Page 2 debates then occurred ~about programs to restore and what new programs to add. This year there was no debate about packages. The program reductions offered to meet targets were taken and department directors were asked to offer additional cuts of 2%. Many of these reductions were incorporated into the budget in order to present a balanced budget to Council. The total City budget revenues for 1992-93 was proposed at $129,133,501 and proposed expenditures at $128,800,996. General fund revenues were proposed at $27,700,000 with expenditures proposed at $28,000,000. The expenditures exceeded revenues by a small amount which was made up by using fund balance. The proposed expenditures for the general fund were $28,064,160. Last year's general fund budget was $28,376,920 which was a drop in the proposed 1992-93 budget of more than $300,000. Major Issues - General Fund 1. General Fund Reserve Level - 8-10% was the adopted goal to maintain the fund balance. Last year, Council preferred to keep the amount at 10%. The budget was built on a 10% fund balance. Staff was recommending that $362,000 of the unreserved balance be used to help balance the budget and keep the balance at 10%. Current figures indicated that only $300,000 would be needed to balance the budget and there might be $62,000 available for other uses. 2. Revenues A. Property tax - valuation was down over $6 million from the Appraisal District with potential further drops after the appeal process was completed. Staff was recommending setting the tax rate at the effective tax rate level which was the rate it took to bring the same amount of property tax revenue as the previous year. Because of Council's desire to limit a tax increase, the proposed budgetwas based on the effective tax rate which would be $.6882 per $100 valuation plus an amount to be determined after the appeal process. If an additional reduction of 4%-6% occurred, an effective tax rate of $.7247 to $.7325 might be required. Setting the tax rate at the effective rate level would produce the same revenues as last year and would not cover any increases for inflation, salary adjustment, or any new demand for services. Essentially this was not a tax increase as the' same amount of revenue would be received as last year. B. Sales Tax - this year sales tax collections through May were 3.28% over prior year collections for the same period. A 4% sales tax growth rate was recommended to be used in balancing the 1992-93 budget. 292 City of Denton City Council Minutes June 30, 1992 Page 3 C. Utility Sales Tax - this item was not included in the budget but might be an ~ption for the Council to debate. In the 1970's the Legislature gave cities the option to exempt residential gas and electric customers from a 1% city sales tax. Denton took advantage of the exemption. Since that date, most cities in the Metroplex had repealed that exemption. The City could generate an additional $198,165 in General Fund revenues by repealing this exemption. Implementation would be January 1, 1993. The action would allow for a reduction in the property tax rate, or allow for funding of services that had been reduced in the proposed budget. D. Health Inspections - fees in this area had not increased since 1988. An increase of $10 per category fee was proposed with a reinspection fee of one-half the original inspection fee. Approximately $9,000 of revenue would be generated. This amount was not included in the proposed budget. Council Member Chew asked for an analysis of costs if the fees were increased more due to the discrepancy between revenue and expenditure. E. Storm Drainage Utility - it was recommended by the Storm Water Utility Committee that the utility be created, but not implement the charges. Council then could impose the fee whenever it desired. If the charges were imposed, an additional $800,000 per year would be generated. 3. Pay Plan Adjustments - Harrell stated that any adjustment to the pay plan resulted in major dollar amounts. In the 1991-92 budget, Phase I of the new classification and compensation plan was implemented. This provided funds to bring any position which was 80% below market up to that level. All other employees received a 3% salary adjustment with the commitment that Phase II implementation would be considered in the 1992-93 budget. To implement Phase. II, $938,837 would be needed. Due to the limited resources in the 1992-93 budget, staff recommended no salary increases for City staff. If the Council wanted to give employees an increase, every 1% of increase would result in $200,000 of needed dollars. 4. Benefits Adjustments A. Health Insurance - an anticipated increase of 15% in the health insurance premiums was seen and the budget was based on that amount of increase. If the premium went higher than that, design modifications would be made to the plan in order to keep the rate at no more than 15%. 293 City of Denton city Council Minutes June 30, 1992 Page 4 B. T.M.R.S. Adjqstment ~ all City employees belonged to T.M.R.S. except for th~ fire fighters who had their own pension system. The City was paying approximately 14% for the fire fighters pension fund and 10.8% for other employees. It was recommended that due to the inequity between City contributions for fire fighters and all other employees and because no salary increases were proposed, the adjustment to the T.M.R.S. contributions increase to 6% and 6.8%. This was on the lower end of the level with the surrounding communities. Half of the money had been set aside in the budget to phase in the contributions. $108,500 would be set aside for contributions and any unreserved year-end balance which exceeded the 10% level would be added to the fund. 5. Positions - no new positions were recommended and eight vacant positions were being recommended for elimination. Those positions included (1) Emergency Management Coordinator - duties for this job would be assumed for the City by the Police Chief and the Fire Chief; (2) Engineering Tech II - this was one of three positions; (3) Adult Athletics Supervisor - this position was the coordinator for adults athletic leagues, oversaw the golf driving range and oversaw the swimming pool. If eliminated the swimming pool management would be taken over by other staff, the golf driving range would have to be closed or leased and the adult leagues would have to increase their own self-management; (4) fire staffing would eliminate 4 positions. Last year the Council decided to add nine new fire fighter positions during this budget year. At the same time, Council decided that when Station 6 was opened, Station One would be closed. This would increase the manning level of the current fire trucks. Unfortunately, it was not possible to increase service levels at this point. The nine new positions would be reduced to seven with one of those being assigned to EMS Program Manager. Two of the seven positions would be held vacant and filled upon the retirement of two Battalion Chiefs which was anticipated sometime during 1992-93. Thereafter, the Battalion Chief positions would be eliminated. $166,000 would be needed to restore these positions. 6. Service Reductions a. Taxation - eliminate two extra mailings the City preformed which were not required by law. be Street Construction - eliminate tree trimming for 1992- c. Police - line item reductions which reduced film, travel, schools and seminars. It also would hold vacancies to accommodate 294 City of Denton City Council Minutes June 30, 1992 Page 5 salary savings. d. Library - various service reductions which included no travel, schools or seminars for the entire staff. The Library would lose its membership in the American Library Association and the Texas Library Association. There would be no repair funds for broken equipment and no books would be sent for repair. e. Budget/Accounting - the 1993-94 budget would be limited in the number of copies that were made for distribution. Currently 165 copies were made. This number would be cut back to 25 copies of the proposed budget and 75 copies of the approved budget. Another service reduction would be in Animal Control which would eliminate routine patrols between 5:00 p.m. and 8:00 a.m. 7. Other Agency Contributions - the current budget for other agencies was $115,600 with a request from the Human Services Committee for $129,800. The proposed budget was based on $114,444 which was a reduction of 1% from the current level. Council Member Chew asked for a description of the Court Appointed Special Advocates program. 8. Transportation - the proposed budget provided for a 1% reduction from current funding levels for SPAN ($100) and HANDIHOP ($460) transportation services. 9. County Funding for the Library - The City spent much more money serving county patrons than it was receiving compensation from the County. Options included to continue subsidizing non-City patrons and accepting the County allocation or not accept the current County proposal of $110,932 and begin assessing a user fee for out-of-City patrons. If this option were selected, it would require the elimination of three positions and the Library would need to reduce hours of operation. Staff was recommending accepting the County's proposal. 10. Split Tax. payments - it was estimated that an additional $20,000 of interest income was earned when no split payment was used. The majority of the users of the spilt payment program was not homeowners but rather commercial and apartment owners. 11. Tax Exemption for Persons Over 65 - increasing the exemption by $1,000 to $21,000 was recommended in the proposed 1992-93 budget. 12. Cable Television - the operational cost for televising the ~ 295 City of Denton City Council Minutes June 30, 1992 Page 6 City Council meetings was not included in the 1992-93 budget. Total cost to provide this service was approximately $2500 for temporary interns and equipment maintenance and $40,000 to be taken from the special fund established for this purpose for equipment. The DISD was very interested in a joint agreement with the City for these services and the Council would be receiving a report at the next meeting regarding such a proposal. 13. Swimming Pool Improvements - Council had authorized Phase I which addressed problems associated with the circulation and filtration systems and would be paid from interest funds from previous bond issues. Phase II dealt with renovating the building and grounds of the pool area. Staff recommended that Phase II begin in early 1993 using the issuance of Certificates of Obligation to fund $309,000 of structural improvements. It was also recommended that the revenue needed to pay the debt service on the Certificates come from a $.0024 increase in the ad valorem tax rate. This increase was not programmed into the 1992-93 budget at this time. 14. Police - Public Safety Officers - the Police Chief had identified approximately 5 positions in the Department which did not require a uniformed officer to perform. He was suggesting that over time these positions be transferred to public safety officers who were civilians. This would also maintain the Police Officer positions at 104. This budget year proposed shifting one vacant position to a public safety officer. 15. Fire Reserve Fund - over the past several years, a fire reserve fund had been built to phase in the fiscal impact of opening a new fire station. The 1992-93 budget used $132,000 of the reserve to offset expenditures required for opening Station #6. 16. Mowing- when Loop 288 opened, the City would be responsible for an additional 60 acres of mowing. South Park would add 6 acres of additional mowing. Staff was recommending that mowing services be cut in the.following areas: no renewal of the lease on the 13 acre school site at the corner of Teasley Lane and Longridge, eliminate mowing of 30 acres of Class C areas at North Lakes Park which was the proposed area for new athletic fields, and reduce mowing of an additional 30 acres of Class C area at North Lakes Park on the south side of the park. 16. Library Automation - the automation equipment at the Library was over 15 years old and needed to be replaced. Lengthy input time, loss of data, erroneous file comparison verifications had impacted service levels. DUe to the tight financial year, it was recommended that this program be left in the CIP and not funded out 296 City of Denton City Council Minutes June 30, 1992 Page 7 of current revenue. 17. Street Improvements - this area was not reduced in the proposed budget. This would allow the Department to expand its service levels as per the indications from the Council budget questionnaire. Utilities - Major Issues These recommendations came directly from the Public Utilities Board. The Board proposed a 4.8% reduction in electric rates, a 6% increase in water rates and a 10% increase in wastewater rates. The net amount of these rate changes was anticipated to increase an average residential customer's monthly utility bill between $3.50 and $4.00. Mayor Pro Tem Hopkins requested further discussion regarding TMPA and rate reductions. Harrell stated that a real concern was the 10% increase in wastewater rates. That increase was entirely driven due to the expansion of the treatment plant to incorporate the new Federal guidelines. If a 10% increase were done this year, a 25% increase would probably be needed next year. The Public Utilities Board had indicated that a 25% increase would not be done, that ways would be found to keep the rate increase below that percent. If the rate were held to 15% next year, it was anticipated that 7 wastewater treatment operators would have to be laid off. Harrell listed the proposed Utility positions - a® Electric - net reduction of two positions Water - recommend one new person Wastewater - no new positions Sanitation - no new positions The Public Utilities Board had recommended a $.35 per month increase for residential customers and a State landfill fee on residential and commercial customers which would be added as a separate line item on the utility bill of 3 1/2%. Recycling - The Public Utilities Board recommended keeping the current program. Some small programs would be added such as household hazardous waste public information program, paint swap program and waste reduction and recycling public education 297 City of Denton City Council Minutes June 30, 1992 Page 8 advertising program. Other options presented to Council included mandatory cu~bside recycling which would add $1.25 per month on a residential customer bill. A voluntary subscription program could be started for citizens to volunteer for the program. If a 20% participation rate was realized, the service could be offered for $3.25 per month. Item 4. was considered. 4. Miscellaneous matters from the City Manager. City Manager Harrell had no items for Council. 5. New Business The following items of New Business were suggested by Council Members for future agendas: A. Council Member Chew requested a report on the possibility of establishing a pedestrian crossway on East McKinney between Crawford and Wood Streets. B. Council Member Brock stated that she felt the bird problem was not solved and requested a further report. C. Mayor Castleberry credited the City Manager with the way the Old Steam Plant building was looking. Much work had been done to improve the site. The Council returned to the agenda order. 2. The Council convened into Executive Session to discuss legal matters, real estate, and personnel/board appointments (considered appointments to all City of Denton Boards and Commissions.) No official action was taken. With no further business, the meeting was adjourned. NIFER~ALTERS Y SECRETARY Y OF DENTON, TEXAS ACC0009B BOB CASTLEBERRY, MAY~R CITY OF DENTON, T~ ~