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Minutes August 25, 1992432 CITY OF DENTON CITY COUNCIL MINUTES AUGUST 25, 1992 The Council convened into the Work Session at 5:15 p.m. in the Civil Defense Room. PRESENT: Mayor Castleberry; Mayor Pro Tem Hopkins; Council Members Brock, Chew, Smith and Miller. ABSENT: Council Member Perry 1. The Council held a discussion and gave staff direction regarding the 1992-93 fiscal year budget. Lloyd Harrell, City Manager, stated that this was the beginning step to finalize the budget. There would be a regular meeting on September 1 with budget discussion and a public hearing on the budget. On September 8, the work session would deal with remaining budget issues and discussions. The intent was that the September 8th meeting would deal with remaining budget questions with formal adoption of budget on September 15. This meeting would be a review summary~of responses from Council questions for the proposed budget and a time to solicit any additional questions/alternatives for staff to follow-up for Council. There would be a review of the major budget issues which had been presented to Council at a prior meeting. The Council could add to the major budget issues any other items they desired. The final point of discussion would be to review the major issues and determine if there were any tentative decisions associated with those items. Any decisions made at this point would be tentative. Summary Of Responses To Questions 1. Reallocation of funds from the Human Services Committee - the Human Services Committee had presented to Council their rankings and allocation of funding. One of the budget issues and recommendations was that the amount given to the Committee last year be discounted by another percent. The Committee was asked to rank the allocations based on a 1% reduction. The Council was presented with the 1991-92 budget, the recommended budget which was the initial budget submitted bYt~e Human Services Committee, the 1992-93 alternate budget which held the dollars constant and reallocated, thelamounts among the various agencies and the 1992-93 alternative budget with the 1% reduction. $114,444 was the amount included in the~budget. Mayor Castleberry stated that the two new agencies which were originally requested to be added were not included in the alternative budget. There were no new agencies with the 1% reduction budget. City Manger Harrell replied that the Human Services Committee recommendation was that if the Council cut back their recommended 433 City of Denton City Council Minutes August 25, 1992 Page 2 programs that those agencies would not be funded. Another item to consider was the request from the Parkland Hospital Poison Control Services for a $6000 allocation to continue that service. The Human Services Committee felt that it was a good program and the Council should try to fund the program but they did not include it in their allocation. 2. Economic DeveloDment Contributions - In 1992-93 the total amount in the proposed budget for economic development was $1.8 million in annual and/or one-time contributions. 3. Pay plan alternatives/Effect of more licensed professional counselors on the health plan/Explanation of Texas Municipal Retirement System fundinq mechanism and survey of metroplex cities contribution rates - it was projected that there would be a 15% increase in health insurance. Fifty six percent of the employees covered-some member of their family and would be subject to the increase in the family portion of the coverage. To compensate for the increase in family coverage, a 1-2% increase of salaries would be needed. Alternative #1 allowed for a 1%, 2% or 3% general across-the-board pay increase for all satisfactorily performing employees beginning October 1, 1992. Alternative #2 allowed for no across-the-board increases but a partial Mercer implementation with three options of an average increase of 1%, 2.6% or 3.4%. Alternative #3 allowed for an increase in the City's current contribution for TMRS from 5% to 6%. The proposed budget allowed for $108,000 which would be one-half of the cost effective January 1, 1993. Mayor Pro Tem Hopkins asked if there were a way to reduce what the City paid on TMRS to give a 1% or 2% increase in employee salaries. City Manager Harrell replied that it was possible and that it was optional for a municipality to pick up a share of the contribution. This had been done in the past in lieu of a salary increase. The problem with this year was that no salary increases were proposed. If a 2% Mercer would be implemented and the employee did his own 2%, it would equal out. Tom Klinck, Director of Human Resources, stated that the minimum contribution was 5%. Denton was one of the few cities still at 5%. He was not sure if the contributions could be split. City Manager Harrell stated, that if the Council wanted to get away from the City paying the employee share, one option might be to have the City's share be increased from 5% to 6% and then the employee would be responsible for the other 1%. Staff could supply Council with more information but it would be difficult to 434 City of Denton City Council Minutes August 25, 1992 Page 3 implement this year. Council had requested information on the effect of mental health providers on the insurance program and that information had been provided. Supplemental information had been given to Council regarding alternatives with dollar amounts for the implementation of a partial Mercer program. If that alternative were implemented October 1, 1992 including matrix and police/fire steps, $236,000 would be needed for a 1% increase. Mercer increases were available in steps. Service/Maintenance would be October 1, Office Support would be November 1, Technical/ Para-Professional would be December 1, and Professional/Management would be January 1. These steps would provide a monthly difference of $19,746. There was the option of a partial Mercer and the option to slide the dates. Implementation could be delayed a month and each month would save $19,746. Council Member Chew asked if-the implementation could begin January i and what that cost would be. Mercer must be a real commitment if it were ever going to be implemented. City Manager Harrell stated that the cost would be $177,000 if implemented January 1 and the cost of starting on October 1 would be $236,000. Council Member Brock asked how it was determined how many people would receive a "far exceeds" ranking, etc. Klinck replied that that was a variable available in the Mercer system. The variable placed 10% in the "far exceeds" category with a different percentage throughout the system. The computer calculated the salary figures in with those percentages. Mayor Pro Tem Hopkins stated that Council had seen the categories and those employees who would not receive raises until others who were on the low end of scale were brought up. Klinck replied that an employee in that category would receive a one-time lump sum and it would not be rolled into their salary. This would keep the salary of employees closer to the value of the job. City Manager Harrell continued with Alternative 2B which included an average increase of 2.6% with the same data as Alternative 1. The monthly slide would be $36,000 per month. Alternative 2C included a 3.4% increase with a monthly slide of $48,000. Pledges had been made to add steps to the command rank in the police and fire departments. The current pay schedule did not have those 435 City of Denton City Council Minutes August 25, 1992 Page 4 additional pay ranks for the command people. This would be a 2% increase per step for those individuals. Council Member Brock asked if these were required increases. City Manager Harrell asked if he could hold that answer for another section. He indicated that if a partial Mercer were done and the steps added for command ranks of police and fire, there would be a few individuals who would not receive an increase in the police and fire departments. Other supplemental items presented to Council included a recap of the TMRS proposal which was a breakdown of the 1% cost effective January 1, 1993 which would be $64,981. The City's contribution would be $87,695 if it went into effect January 1, 1993. If the TMRS proposal were implemented, then the Civil Service employees would have to be increased by 1% or $82,000. The total cost would be $237,000 to the General Fund. Mayor Pro Tem Hopkins asked if this could be done in lieu of a salary increase. City Manager Harrell replied that if the Council did not want to implement that option, approximately $110,000 would be available for use. A concern had been raised that if there were no salary increase and there was a 15% increase in insurance costs, the employee would take home less money next year than this year. Staff calculated what was the maximum amount that an employee would have to pay in additional health insurance if there was a 15% increase. Employee and family coverage would increase per month by $26.25. An option to assure that employees did not fall behind was to provide a $27 per month health insurance supplement effective January 1 for every employee. The cost to the General Fund would be $126,000. Mayor Castleberry felt that this option should really be considered as it was a fall behind situation. Mayor Pro Tem Hopkins asked if the supplement would be only for those employeeslwith family/spouse coverage as the amount was not going up that much in all categories. City Manager Harrell stated that the downside to the supplement was that the best design of the health insurance program was one in which the employee shared in the increase of health insurance so that they saw first hand what the costs were doing. council Member Miller stated that they must be careful so that they did not get in the same situation as the retirement plan. These were two separate issues of compensation and pay. He felt it was 436 City of Denton City Council Minutes August 25, 1992 Page 5 hard to deal with these issues with the message Council gave at its last meeting regarding pay increases. City Manger Harrell stated that up until last year, the City had been giving an employee health supplement of $20 per month. With the new health program, this supplement had been discontinued. Council Member Chew felt the message the Council gave at its last meeting was that they were probably not going to be able to give City employees a raise and if by chance it would be possible to give City employees a raise, there would be nothing wrong in rescinding the previous action. It did not tie the hands of the Council and that the Council needed to look at every option to give employees an increase. 4. Salary Adjustments - even though there were no salary increases in the proposed budget, there were still dollars for step increases for Civil Service employees under the adopted pay plan. There would be 7 fire fighters and 50 police officers who would be eligible, for an increase. It was debatable if this had to be done. Those dollars were included within the budget and if Council wanted to take that out, there would be $60,0000 to allocate elsewhere. Council Member Brock asked if this were a contract or a requirement under the Civil Service law. City Manager Harrell replied that it was an adopted pay plan and adjustments would have to be made in order to not give the increases. 5. Leisure Services Division Proqram Enrollment/6. Leisure Services Personnel Detail- these two sections detailed what every leisure recreation program needed for enrollment, what the actual enrollment was and what the fee was for that program. Additional information was presented regarding the positions in the recreation department from 1987 to present which had been requested but which had not been funded. Council Member Chew asked for a report on temporaries used in the Parks and Recreation departments. 7. Environmental Health Budqet Scenario for Full Recovery - a request had been made for information detailing the schedule of fees necessary to make the Environmental Health budget self- supporting. In order to do so, the existing food establishment permit fee would have to be increased by $50 which was a 90.9% increase along with the implementation of a reinspection fee which would amount to one-half the original annual inspection fee. 43'7 City of Denton City Council Minutes August 25, 1992 Page 6 8. Court Appointed Special Advocates - this was a request for more information on this agency which staff provided for Council. 9. Tax Exemptions - Council had requested a listing exemptions offered by other taxing entities which the provided. of tax staff 10. Mowinq Costs for 30 acres at North Lakes Park - this was a request for information relating to the cost for mowing the 30 acres of park land on the south side of North Lakes Park. This land was proposed to be reassigned to Class D maintenance level, no mowing. The cost was estimated to be $2,160 for mowing this area six times between May and October. Council Member Smith asked if the number of mowing times per year could be reduced which would reduce the cost. 11. Administrative Transfers from Utility Funds to General Fund Operations - these were not arbitrary amounts which were used. A consultant did an audit to determine how many hours employees spent in the General Fund area doing utility related matters such as Human Resources, Legal, etc. The amount was arrived at by an independent person determining the costs. A final report included a recap of appraisal rolls comparisons. Harrell then outlined the Major Budget Issue Items and presented Council with a detailed handout. 1. Fund Balance - if the fund balance was lowered to 10%, there would be $298,000 to help balance budget. This was included in the proposed budget. 2. Revenues A. Property tax - the budget had an effective tax rate which would provide $59,000 which was included in the budget. Each additional 1 cent would provide $183,500 which was not included in the budget. The effective tax rate was $.7180 and the current rate was $.6851. Harrell asked how much additional revenue would be realized if the rate went up to the 3% level. John McGrane, Executive Director for Finance replied that the rate would be $.7357 and the revenue would go up approximately $200,000. City Manager Harrell stated that the maximum increase was 3%. McGrane indicated that each additional penny would provide $183,000 43:8 City of Denton City Council Minutes August 25, 1992 Page 7 and would provide approximately $325,000 at the 3% level. Council Member Brock stated that property owners were not going to understand effective tax rate when they received an increase in taxes. She asked who were those with low taxes. McGrane replied that the business/commercial category had gone down considerably, residential-multifamily had gone down, residential- single family went up a little, residential single-family land went down and raw land went way down. He stated that in areas where there were a lot of home sales, the market was generally lower and the Appraisal District took the appraisal on the homes in that area. Mayor Pro Tem Hopkins was concerned that most of homeowners would not see a drop in taxes. City Manager Harrell stated that the effective tax rate gave the same amount of money as the previous year which was really less money due to inflation, etc. B. Sales Tax - sales tax for the next fiscal year would be estimated at a 4% level which would generate $216,000 which was included in the budget. For every additional 1% increase, $54,000 would be available for the budget. C. Utility Sales Tax - the recommendation was to repeal the exemption on residential utility sales of natural gas and electricity effective January 1. Denton was one of the few cities still with the exemption. This would provide $198,000 effective January 1, 1993 and was not included in the proposed budget. D. Health Inspection Fees - this would provide a $9,140 increase which was not included in the budget. E. Storm Drainage Utility - this item was tabled by Council. Pay Plan Adjustments - alternatives included: A. Full Mercer implementation at a cost of $938,837 which was not included in the budget. B. Implement Mercer at 1% at a cost of $236,951 which was not included in the budget. $19,746 would be saved for each month of implementation delay. C. Implement Mercer at 2.6% at a cost of $433,131 which was not included in the budget. $36,094 would be saved for each month 43,9 City of Denton City Council Minutes August 25, 1992 Page 8 of implementation delay. D. Implement Mercer at 3.4% at a cost of $586,531 which was not included in the budget. $48,878 would be saved for each month of implementation delay. E. 1% across the board increase at a cost of $202,036 which was not included in the budget. 4. Benefits Adjustments A. 15% health insurance increase at a cost of $100,000 which was included in the proposed budget. B. TMRS - 1/2 of 1% increase at a cost of $108,500 which was included in the proposed budget. 5. Position Reductions - the positions of Emergency Management Coordinator, Engineering Tech II, Adult Athletics Supervisor and Fire staffing reductions were recommended to be eliminate in the proposed budget. If the Council did not want to reduce these positions it would be necessary to find the money for those positions. Fire staffing was a net number which allowed the Chief to return new pieces of equipment to the budget. 6. Service Reductions - a detailed list of service reductions included eliminating extra mailing of delinquent tax notices, eliminating tree trimming program, reducing the police budget, reducing the library budget, reducing quality and quantity of budget documents and limiting the animal control response hours was provided along with the amounts needed to return the service to the budget if Council not want to eliminate a particular service. Council Member Chew questioned if overtime would exceed $5,000 as opposed to not having the Animal Control officer. City Manager Harrell replied that staff would not respond except for an emergency. McGrane replied that the full amount of the salary of the officer was not given up to allow for some overtime. Council Member Brock asked if the reduction in the Library budget included reduction in hours. city Manager Harrell replied no but that the reduction included elimination of membership in professional organizations and the purchase of materials. 440 City of Denton City Council Minutes August 25, 1992 Page 9 Mayor Pro Tem Hopkins asked for the specific dollar amounts for the two organizations which were under consideration for elimination. 7. Aqenc¥ contributions A. Reduce Human Resources another 1% which included $1,156 in the proposed budget. 8. Reduce TransDortation Funding - this reduction included a 1% drop which was included in the budget for $560. 9. County Fundinq for Library - The County determined that the City would receive $12,806 less than projected in this year's budget. Council Member Brock stated that the City needed to start planning for the future of charging out-of-city residents and eliminate county funding. City Manager Harrell replied that the City now received $100,000 from the County. It was estimated that charging for out-of-city residents would net $30,000 per year. The problem was that as long as the City took County money, it could not impose a charge. If the Council decided not take County money, $70,000 would have to be made up somewhere in the budget. Council Member Brock stated that much of the use of out-of-city patrons was for reference materials. Mayor Pro Tem Hopkins felt that the City needed to begin looking at future options as funds might be reduced considerably in future years. 10. Split tax payments - the Council would need to find $20,000 if they wanted to return to the split tax payments option. 11. Over 65 exemption - the Council's philosophy was to raise the exemption to $25,000. The proposed budget included $1,000 towards that goal. 12. Cable Television Funding - $2,500 would be needed to televise Council meetings which was not included in the proposed budget. Council Member Miller asked if that figure was over and above the amount included in the Community Services budget which indicated $2400 for interns, etc. City Manager Harrell stated that there was enough money in the 441 city of Denton city Council Minutes August 25, 1992 Page 10 budget package for equipment funding that once the new channel was wired, the City could use the screen and emergency messages. The $2500 would be the cost to pay the interns for the televising, etc. Council Member Miller pointed out that on page 347 of the proposed budget it indicated that there was $2400 for two temporary interns for Council cable broadcasting, $4000 for maintenance associated with cable. City Manager Harrell indicated that he had been referring to page 56 of the Major Budget Issues which indicated that operating costs for televising the Council meetings were not included in the 1992- 93 budget. Total cost to provide temporary interns and maintenance was $2500. He stated that he would research that information for Council Member Miller. 13. swimming Pool Improvement Phase II - the total cost of Phase II was $309,000. If Council wanted to do certificates of obligation, a quarter cent increase in the tax rate would allow the issuance of those certificates of obligation. Mayor Castleberry asked the City Manager to comment on using interest money to replace the mechanism at the pool. City Manger Harrell stated that Phase I already had that money provided and that project was in Phase I. In order to do Phase II, the Council would have to allocate a quarter of a cent for that project. 14. Public Safety Officer Staffing - this was changing a position from a uniformed officer to a non-uniformed officer and would add $8,000 which was included in the budget. 15. Fire Reserve Fund - this reserve had been built up to provide staffing and according to the plan adopted by the Council, this year would draw down $137,000 from the fund to help balance the budget in that area. 16. Mowing - '$41,000 would be needed if the Council added additional mowing crew. If the Council put back the mowing North Lakes, additional money would be needed. an Utility Funds Harrell indicated that the major issues in the utility funds 17. Library Automation - funds were not included in the budget for the outright purchase or the lease/purchase option. 44 2 City of Denton City Council Minutes August 25, 1992 Page 11 centered on rates. The electric rate, as submitted by the Public Utilities Board, was a 5% rate reduction. There was a net reduction of 5 positions in the electric area. The water rate was a proposed 6% increase, wastewater proposed a 10% increase. In this area there were three choices. The first choice centered on the original staff recommendation to the Public Utilities Board for a 15% increase this year and a 15% increase next year. Almost all of this money would go to pay off the bonds for the new expansion of the wastewater treatment plant which was mandated due to new regulations. The second choice was a 10% increase this year and no more than a 15% increase next year. Implementation of that choice would require major service reductions in the wastewater area which would have to begin within the next few months. The third choice was a 10% increase this year and a 25% increase next year. When Council debated this issue, staff would need direction for not only this year but also for next year. Mayor Pro Tem Hopkins asked about the kind of reductions and were the layoffs necessary positions. She wanted to know how this translated down to the reduction aspect. She was opposed to a 10%/20% increase and would possibly consider a 12%/17% or a similar combination to get to 30%. She felt that the Council would be sorry next year if not do more than a 10% this year. Council Member Chew agreed. He felt the rate this year should go up to at least 15% to even out the increase. City Manager Harrell indicated that staff would do a detailed analysis of the three options and what the implications would be for those options. Council Member Miller asked what was the impact of the expenditure for which there was no revenue. He understood the problem to be that the City had to make a big investment which required debt service and there was no revenue generated for that. Someone had to pay for that and it was different than investing for expansion for the future. Mayor Pro Tem Hopkins stated that in the electric area there was a 5% rate reduction but the Public Utilities Board recommendation said nothing about the extra money the City would be paying TMPA this coming year as was paid this last year and had not taken that into account. She felt the ratepayers would rather get a 4% rate reduction and not have that rate be raised in the future for TMPA. Bob Nelson, Executive Director for Utilities, stated that over the last two or three years, natural gas prices had been going down which had been a financial assistance to the City. The City had 443 city of Denton city Council Minutes August 25, 1992 Page 12 been reluctant to totally drop rates as it was not known when those gas rates would go back up again. They were now at a point that that could be done. City Manager Harrell stated that Mayor Pro Tem Hopkins had raised a very valid concern. The electric system was very healthy financially and that was not being jeopardized financially by granting this reduction. The large industrial users would see the most reduction. Council Member Smith asked if staff was predicating an increase for next year. Nelson replied that at this point, it appeared that the rated would be kept the same unless natural gas increased. Council Member Miller asked how Denton's rates compared to TU's rates. Nelson replied that Denton was lower in the residential area, in the small commercial area Denton was very competitive, in the larger commercial customers Denton was slightly higher and in the large commercial customers Denton was slightly higher. City Manager Harrell stated that in the sanitation area there was a 3.5% increase in the residential area and that all customers would be charged the state mandated charge which would be printed on the bill. Another issue was the area of recycling and the options available. Mayor Castleberry asked if Council had any additional information it needed from staff. Council Member Miller stated that there were alternatives for a 1% and a 2.6% salary increase for employees. He asked if staff could develop an alternative for a 2% salary increase and how that would fit with the Mercer plan and an across the board increase. Implementation .to be either October 1 or January 1. He was also concerned about the action the Council took at a prior meeting relative to the budgets for the hotel/motel tax recipients. Budgets had been received from the Human Services Committee for proposed funded agencies. The Council had not reviewed those budgets to determine if there were salary increases in those. He felt that if the Council was going to look at that for some agencies, it might need to look at it for all agencies. Council Member Brock asked if the City had contracts with the various organizations which received Laylor funds. Had changes ever 444 City of Denton City Council Minutes August 25, 1992 Page 13 been made in the allocations and how had that been determined. Had any changes been made since it went into effect. City Manager Harrell stated that the City had formal contracts with each agency which detailed the level of support. Those contracts had been renegotiated in 1990. There had been a change in State law which required the City Council to formally approve those budgets for organizations receiving Laylor funds. City Attorney Drayovitch stated that the contracts indicated that if the Council failed to pass those budgets, the organizations would not receive any funds until a budget had been approved. Mayor Castleberry indicated that there were two agencies which did not have an increase in their budgets. Could those two budgets be approved at the next meeting. City Attorney Drayovitch replied that those agencies were on the preliminary agenda for September 1. Mayor Castleberry stated that actually there were three agencies which did not have any salary increases - the North Texas Fair Association, the Denton County Historical Museum and the Denton County Historical Foundation. Council Member Miller asked if they had any salary increases. Mayor Castleberry indicated that there were no Salary increases. Council Member Miller stated that Council needed to be sure that the total budgets were being looked at. Mayor Castleberry stated that those three did not have salary increases. Council Member Miller replied no increases in their organizations. The employees in those organizations were not receiving salary increases. council Member~ Smith indicated that the Historical Museum had indicated that the director's salary had been increased to the level of the prior director. Council Member Miller indicated that the Council needed to be sure that the employees were not receiving salary increases as opposed to the budget f~om the Laylor funds. Was the Council looking at total funding and total salaries regardless of source of income. 445 City of Denton City Council Minutes August 25, 1992 Page 14 Council Member Chew indicated that several of the agencies had been asked where they were using the Laylor funds. Many had indicated that they were using the funds in personnel because it was easier to keep track of. Mayor Pro Tem Hopkins stated that Council must remember each agency except for the Convention and Visitors Bureau received money from other areas. Each agency could say that it was not using Laylor funds for any salary increases and use that money for rent or utilities and use other funds for salary increases. Council Member Smith stated that she would like to see the current budget along with the proposed budget in the budget presentations from the agencies next year. Council Member Brock asked what happened to money which was for certain services and was not all used. What incentive was there to save money. City Manager Harrell stated that any money not spent by the end of the fiscal year lapsed back into the General Fund balance. With no further business, the meeting was adjourned at 8:03 p.m. cx%Y) CITY OF DENTON,! TEXAS CITY OF DENTON, ACC000B2