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HomeMy WebLinkAbout04-24-18Minutes of the Pulaski Town Council budget meeting held at 6:00 p.m., Tuesday, April 24, 2018 in the Council Chambers of the Town Municipal Building at 42 First Street, N.W. In attendance were: Mayor: Robert N. Glenn, presiding Councilmen Present: David L. Clark; Gregory C. East; Joseph K. Goodman; Lane R. Penn; James A. Radcliffe Councilmen Absent: H.M. Kidd (excused) Administration: Shawn M. Utt, Town Manager Nichole L. Hair, Deputy Town Manager Staff David Quesenberry, Clerk of Council Rebecca Reece, Finance Director Others Present: Brooks Dawson 1. Call to Order Mayor Glenn called the meeting to order at 6:00 p.m. 2. Roll Call Roll was taken with the following members shown as present: Mr. Radcliffe, Mr. East, Mr. Clark, Mr. Goodman, Mr. Penn and Mayor Glenn. Mr. Kidd was absent (excused). A quorum of members was present to conduct business. 3. Modification of the Agenda Mayor Glenn noted that there were no modifications needed for the agenda. He then asked Mr. Utt to proceed with the public hearings. 4. Public Hearings a. Proposed Rates for Water Utility Service, FY 2018-2019 Mr. Utt reviewed the history of water rate increases referring to the Davenport Study which recommended a 4% increase in water rates each year for five years, of which this increase would have been the fifth one. However, concerns by the auditors over the Sewer Fund in last year's audit led the Town to ask Davenport to update their financial analysis. Davenport's revised analysis recommended an additional increase of 4% per year over a second five year period for water rates and an increase of 4% in sewer rates for the first two years, followed by 2% increases for the last three years of the new five year period. The Davenport study he continued, used the measure of days of cash on hand to evaluate the water and sewer fund reserves. Last year he noted, the study showed the Town's water fund had 116 days of cash on hand (75 days or above considered good). This year however, the audit showed a decrease of 16 days to approximately 100 days of cash on hand. Mr. Utt noted that the current proposed rates for water service, based on the standard average consumption of 5,000 gal/month, would result in an increase in a monthly bill for water service from $27.04 to $28.12. Use of the Town's actual average consumption of 3,400 gal./month, Page 1 of 4/April 24, 2018 resulted in a monthly increase for water service from $29.05 to $30.21 roughly a $1.00 increase per month for the average customer. The main cost he added was the volume charge which went from $3.06 to $3.18 for in -Town customers and $5.28 to $5.49 for out -of -Town customers. Mr. Utt then concluded his presentation. Mr. East asked if any headway had been made to repay the General Fund for the $1.6 million transfer to the water and sewer funds. Mr. Utt responded not yet, but the funds were now out of the red. The auditors had suggested the Town get the Water Fund into the black throughout this year after which they would review the issue with staff. Mr. Goodman said it would be nice to payback the transfer, but he was not sure if it should be pursued because it would put the water and sewer funds in debt and prevent investment in capital items from being made. Mr. Utt ventured that repayment would likely require a ten year plan. Mr. East said that he did not favor doing anything that would take away from the water and sewer funds. Mr. Goodman suggested meeting with the auditors on a way to "forgive" the debt. Mr. Utt responded that the transfer did not show up as a debt, but showed up as a positive for the utility funds because their assets increased that year (2012). However, he added it greatly diminished the General Fund reserves. Mr. East noted that there had been improvement in those reserves. There being no further comments or questions, Mayor Glenn opened the public hearing on the 4% proposed water rate increase at 6:08 p.m. There being no comments, the hearing was closed at 6:09 p.m. Although no action on the rate increase at this time was required, Mr. Utt told Council that it was his goal to have an official public hearing on the budget on May 22"d. Council could vote on the utility rates at the next legislative meeting. b. Proposed Rates for Sewer Utility Service, FY 2018-2019 Mayor Glenn then called for Mr. Utt's report on the sewer utility rates. Mr. Utt reported that Davenport had recommended a 2% increase this year, but the increase was advertised at 4% allowing Council to increase sewer rates up to that percentage. Regarding Sewer Fund reserves, Mr. Utt reported that the 2017 audit showed the reserves had increased to 36 days of cash on hand from a low of 5 days cash on hand in the 2016 audit. For the average Town customer using 3,400 gal/month, the proposed rates would result in just under a $2.00 per month increase in sewer charges. The proposed rates per thousand would increase from $7.32 to $7.61. Following these remarks, Mr. Utt completed his presentation. Mayor Glenn opened the public hearing on a proposed 4% increase in sewer rates at 6:12 p.m. There being no comments received, the hearing was closed at 6:13 p.m. 5. Budget Update Mayor Glenn then moved on to the Budget Update. Mr. Utt reported on staffs work in reviewing the budget which focused on revenue projections, savings, efficiencies and incorporation of the amended Gatewood budget. He reported that approximately $225,000 was available for the General Fund CIP. The Water Fund CIP had a $48,887 surplus since there was already $113,000 incorporated into the budget from last year, Page 2 of 4/April 24, 2018 leaving the surplus as a cushion or for savings. Likewise the Sewer Fund CIP had a surplus of $64,227, and incorporated $100,000 from last year's budget. Mr. Utt recommended that the surpluses from both utility funds be saved. Mr. Utt said the May 8th budget work session would focus on the CIP and current vacancies. He noted that currently there were 17 vacancies which involved every department except Finance. Staff had been reviewing the Compensation Study to determine the true cost of implementing the study's Phase 2 with current staffing. The study estimated that the Phase 2 cost would be $100,000, while the Town determined the true cost would be approximately $40,000, if the start date for Phase 2 were moved to July 1 St . Mr. Utt said he would like to put together a final proposed budget for Council's consideration on May Stn Referring to a PowerPoint presentation, Mr. Utt noted that there were nine openings in Public Works, mostly laborers and two operator positions. A recent applicant for a laborer's position requested $13.00/hr. while the starting pay for a laborer was only $10.50/hr. If the Salary Study was funded at 100% of market value, the starting salary would increase to $12.85/hr. Initiating 96% of market value on July 1St would place the starting salary for a laborer between $11/hr. and $12/hr. Mr. Goodman said the issue should be considered given previous discussions on raising the salary "floor" for Public Works employees. Mr. Utt said the end result of the Compensation Study was to get the Town to the salary "floor" of $12.85/hr. for laborers. If the salary adjustment were done on July 1St, for laborers only, there would be a problem in that laborers would be making as much as an equipment operator. Mr. Penn asked if the Town had a building official and a building inspector. Mr. Utt replied the Town had advertised for both. Currently, Mr. Pedigo was serving as the Building Official. An offer had been made to one applicant but it was not accepted, so the Town had contacted a second applicant. Mr. Radcliffe said that there was a need to get Public Works salaries up adding that it was embarrassing to try to get workers for such a low wage. Mr. Goodman added that if the Town was not competitive and could not recruit persons for those positions, it would need to rethink how positions are compensated including raising salaries a bit more than it desired. Mr. Utt said a full implementation of the salary study on July 1 St could cost $160,000 which he was not comfortable attempting in one fiscal year. He ventured the Town could look at doing 2% increases every six months (July 1St, January 1St, July 1St). Mr. Goodman said that if the increase were done on July 1St, the next increase would have to be July 1St of next year, in that it would not be acceptable for employees to wait 18 months for a raise. Mr. East asked how many employees were in Public Works. Mr. Utt replied there were between 40 and 45 persons and gave a short summary of current staffing. Given the number of vacancies, Mr. East felt the problem appeared to be critical and that the salary issue could not wait but should be broken out and addressed sooner rather than later. Mr. Goodman asked Mr. Utt what it would cost to get the salaries in Public Works so that there would be less turnover and allow more ability to recruit. He also suggested considering giving a bonus to employees who remained for picking up the extra workload. Mr. Utt said he felt comfortable going to 96% of market value on July 1St or May 1St since the savings from the current vacancies would cover the cost for two months. He thought it could be Page 3 of 4/April 24, 2018 considered as a "band aid" before a larger fix came with the new budget. Mr. Goodman felt that the Town needed to get new employees in place before the busy summer season began. Mr. East said when factoring in the Town's paying the greater portion of health care, the Town needed to set itself up so it was not competing with Target or other retailers. He added that he didn't know what that number would be, but it would have to be higher. Mr. Utt felt that could be discussed at the legislative meeting since staff could determine the cost for this fiscal year, then work to determine the cost for the next fiscal year. Mr. Goodman said it may be that with a proposed multi-year plan, the numbers would not be right. He suggested that the numbers could be adjusted if needed, since it appeared salaries was the real issue holding the Town back. Mr. Utt felt the Town had a good plan if it could be implemented. Mr. East commented that the Compensation Plan made recommendations on restructuring and that it was important to start that process. He felt if everything were based on the Compensation Study, then the study needed to be enacted in its entirety. While some things were a little "fluid" and needed to be rethought, he felt that both sides needed to be looked at. There being no further comments, Council moved to the next agenda item. 6. Future Meetings Mayor Glenn noted the legislative session was rescheduled for May 2, with a budget work session on May 8th and the Council work session on May 15'h 7. Adjournment There being no further business, Mayor Glenn called for a motion to adjourn. The motion was made by Mr. Goodman, seconded by Mr. Clark and approved by the unanimous voice vote of the Council at 6:34 p.m. Approved: �� C, Ro ert N. Gleiln Mayor ATTEST: David N. Quesenberry Clerk of Council 1 Page 4 of 4/April 24, 2018