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0620201461 CONTINUED MEETING MINUTES CITY OF DUNN DUNN, NORTH CAROLINA JUNE 20, 2014 The City Council of the City of Dunn continued the City Council Meeting of Tuesday, June 10, 2014, on Friday, June 20, 2014 at 2:00 p.m. in the Dunn Municipal Building. Present at the continued meeting was Mayor Oscar N. Harris, Mayor Pro Tern Buddy Maness, Council Members Carnell Robinson, Frank McLean, Billy Tart, Chuck Turnage and Billy Barfield. Also present was City Manager Ronnie Autry, Assistant City Manager Steven Neuschafer, Chief Building Inspector Steven King, Planning Director Samantha Wullenwaber, Recreation Director Perry Hudson, Police Captain Johnny Royal, Public Utilities Director Dean Gaster, Human Resources Director Anne Thompson, Librarian Mike Williams, City Attorney P. Tilghman Pope, City Clerk Debra West and Daily Record Reporter Keilah Goff. Mayor Harris advised that due to many variables and changes to the FY2014 -15 budget, it will not be adopted today. He plans to let the budget lay open for a few days, and then reconvene next week to adopt the budget. He advised that a closed session will be necessary later in the meeting. INVOCATION Mayor Harris reconvened the meeting at 2:00 p.m. and gave the invocation. Afterwards, the Pledge of Allegiance was repeated. Fiscal Year 2014 -2015 Budget Mayor Harris yielded to Manager Autry for his remarks and findings as it relates to open issues and additional issues to finalize the budget. Manager Autry stated that because this budget has been a challenge, he reviewed the highlights of the proposed budget that was in place on June 1, 2014; and from there he will proceed with the budget modifications provided to the Council on June 18" and further modifications provided to the Council on June 20' . Manager Autry provided the following brief summary of the proposed budget: REVENUES: GENERAL • Ad Valorem Taxes: $3,470,000 projected on a collection rate of 98.6% with the tax rate remaining at .50 per $100 valuation. • The majority of the state revenues have been projected to remain as is or with a slight increase than this year's budget. A 1.45% increase in sales tax has been proposed which is less than the 3% - 4% recommended by the NCLM. • Powell Bill Fund balance was used to cover projected capital expense to railroad crossing at Pearsall Street. REVENUES: WATER • Propose water rates per 1,000 gallons be increased 5% from $3.70 to $3.89. • Propose sewer rates to be increased 5% to $9.08 base rate and from $3.46 to $3.63 per 1,000 gallons. • Water and sewer minimum 2,000 gallon bill would increase by $1.34 per month. A 5,000 gallon bill would increase by $2.42 per month. • The City of Dunn bulk purchases would increase 5% from $1.90 per 1,000 gallons to $2.00 per 1,000 gallon. EXPENDITURES: GENERAL • General Fund is 3% less than FY 13 -14 budget considering the reduction in cost for combining communications operations with the county and the additional debt that was added. • Health insurance cost increased 6.43 %. • Tipping fees were increased $15,000, since Harnett County has ended the credit at the landfill that covered this cost due to a recent audit that determined the landfill was operating in the red and therefore they could no longer offer this credit. • Downtown Revitalization debt of $181,500 annually was begun, which $55,000 of it, is covered by DDDC/Tourism. • $125,000 is appropriated to the PAL new non - profit group. Officer Rowland has been moved back to the Police Department payroll combined with the appropriation equals approximately $200,000 total appropriated to the PAL new non - profit. $32,500 expenditure for Powell Bill to upgrade signals /gates at the Pearsall Street railroad crossing. • Proposed 2.25% COLA (Revenues to be reviewed mid -year before implementation), $93,718 placed in Reserve for Contingency line item. • Capital expenditures: Police Cars - $160,000 ($22,000 USDA Grant/$138,000 USDA Loan-still awaiting final approval) (Proposed Inspection Truck at $24,600 has been removed). • All debt service has been addressed. 62 EXPENDITURES: WATER • Health insurance increased 6.43 %. • Proposed 2.25% COLA (Revenues to be reviewed mid -year before implementation). • $50,673 ($27,970 for COLA) in Contingency line item. • Capital Outlay items consist of $50,000 for an AMR startup in Grove Park & Lakeshore Subdivisions and $15,000 for Utilities Locator for the Water Department; $35,000 for Clearwell rehab and painting at the Water Plant; $115,000 to rebuild a clarifier, $10,000 for 8 -inch super -T recirculation pump, $3,500 for sludge recirculation pump building and $10,000 for RAS/WAS flow meters at the Wastewater Plant. • All debt service has been addressed. Since recessing the meeting on June 10, 2014, modifications to the budget are as follows: Manager Autry stated that budget modifications were provided to the Council on June 18, 2014 with new findings to include: • Tyler Park — Phase I Debt Service — The Lending agency advised that the new debt service payment could be made in FY2015 -16 once Phase I and Phase II renovations were combined; however the LGC ruled that this transaction could not be approved by them, the payment could not be skipped and therefore a debt payment in the amount of $119,000 for Phase I will be due in the FY2014 -15 Budget year. The LGC has advised that Phase II will be a new separate debt payment. To cover this adjustment, he removed the 2.25% COLA from the General Fund and the Inspection Department Truck to cover this unanticipated expense. • Water Fund — He sent emails to Sampson County with regard to their intent with their well operations and he has received no response thus far. At present, they are testing the wells and are currently not consuming any bulk water from the City of Dunn which is less than the 50% consumption they indicated they would be using. He is awaiting a call from the Sampson County Manager. At this time, he proposes to freeze all capital expenditures in the Water Fund until further information is known about the intent of Sampson County's consumption. • Communications Operation — Manager Autry stated that communications has been funded in the proposed budget for one -half year with the County taking over this operation January 1, 2015. The County Manager has placed six (6) new dispatchers in the County budget for a nine month period to begin hiring in October to cover the additional service for the City of Dunn. The Harnett County Manager is working on a written correspondence to this effect and will be working on a contract proposal to the City. Mayor Harris summarized the changes, adding that the next budget year will require additional monies from the City to the County to support the transfer of communications. Sales tax has stalled and is unknown for FY 15 -16. Mayor Hams asked Manager Autry how he proposes to address these open issues within the budget. Manager Autry provided another update dated June 20, 2014. He recapped the following revenue losses and expenditures that will be affected in FY2014 -15 and FY2015 -16: • Tyler Park debt payment of $119,000. • Loss of $5,000 to $10,000 in privilege license fees in FY2014 -15 and the loss of $45,000 in FY 2015 -16 due to legislation passed in Raleigh. The legislative change states that a City can only charge a privilege license fee in FY2014 -15 for only those businesses that are physically located within the city limits of a municipality. Also the legislature proposes to eliminate all privilege license fees beginning in FY2015 -16. The Governor has stated that the legislature will sit down with the cities and figure out a way to get them additional revenue. • Loss of $21,000 landfill credit by Harnett County. • Loss of revenues from Sampson County in a reduction of 50% water purchases that is budgeted for, but could be significantly less which has required him to freeze all capital expenditures until the exact amounts are determined. • Additional debt that will be added in the FY2015 -16 Budget. Discussion was held to revise the bulk water contract for Sampson County as a result of their continuous decreased consumption from Dunn and not advising Dunn of their plans to drastically reduce consumption while Dunn has been a constant supplier of water to them. Discussion was held to adjust the bulk price to Sampson County. The City is continuing to absorb the operating cost of treating water that Sampson County is not consuming. Discussion was held to reduce the water pressure to Sampson County as allowed within the parameters of the contract. Discussion was held to review the current contract for possible changes. It was discussed to adjust the fee schedule as it relates to the bulk users that do not have a gallons per day specified in their contract. Based on the above mentioned issues, he recommends that the budget revenues be adjusted by one of the following proposals: • A two (2) cent tax increase which equals approximately $150,000 • A one (1) cent tax increase ($75,000) and an increase of $1.45 per month addition on the present garbage fee which would generate approximately ($62,000). A 5% water and sewer rate increase is proposed in the budget to offset the loss of the 50% revenues from Sampson Country. If the purchases continue to decrease, then the water revenues and fund balance will be affected significantly and any major capital expenditures would have to be funded directly out of fund balance if there are not additional adjustments. rx) Manager Autry provided examples of how the proposed increases would affect a homeowner of a $100,000 home. One (1) cent tax increase + garbage rate increase of $1.45 and water /sewer rate increase would equate to a total monthly increase of $3.63. Two (2) cent tax increase + water /sewer rate increase would equate to a total monthly increase of $3.01. Mayor Pro Tem Maness suggested in lieu of a tax increase, pull the $119,000 Tyler Park debt service payment out of the general fund balance and increase the garbage rates only enough to cover the loss of the $21,000 landfill credit that the County took away and deal with the FY2015 -16 budget when it comes. COLA increases would be based upon how revenues come in mid -year - employees were given a 6.43% increase in health insurance. This would equate to a $1.00 increase to the monthly garbage rate. Mayor Harris stated that they do not need to put the City funds in jeopardy, take money from the fund balance or deprive City employees of a COLA. Discussion was held about maintaining the fund balance, employees providing a service and deserving of a COLA, better to retain long -term employees than to train new employees, absorbing health insurance increases, the unknown factors relating to sales tax revenues and Sampson County water consumption, General Assembly actions, waiting before implementing a tax increase, waiting until mid -year to see how revenues come in. Council Member Barfield stated that he agreed with Mayor Pro Tem Maness and does not favor a tax increase in this budget. Council Member Robinson stated they should pay current expenditures with current revenues and he would not want to put the next Council in a position to cut services to balance the budget. Mayor Harris recommended that the Council study the recommendations of the Manager and set an appointment with the Manager to discuss any concerning issues and he suggested that the Council reconvene at a later date to adopt the budget. Manager Autry stated that Mayor Pro Tem Maness' suggestion would equate to $1.00 per month garbage rate increase. Mr. Maness responded that he thinks this is the reasonable thing to do to offset the cost to the County. This increase would cover the $21,000 loss in landfill credits from the County. Mayor Harris stated that the landfill shortfall only addresses one issue in this budget. He added that there are many other issues including capital expenditures being frozen, the Council does not need to be put in this position and they do not need to take money from the fund balance. They need to address the problem that is before them today and if possible, reduce the tax rate in the future. Proposed Fee Schedule for FY 14 -15 The proposed fee schedule was presented to the Council with the same changes as proposed at the prior work sessions. Closed Session 3:24 p.m. — Motion by Council Member Barfield and seconded by Council Member McLean to enter Closed Session to preserve the Attorney /client privilege so the City Council can provide instruction to the City Attorney regarding a lawsuit involving Burney and Burney Construction Company. Motion unanimously approved. 3:45 p.m. — Closed Session ended. Motion by Mayor Pro Tem Maness and seconded by Council Member Barfield to approve the minutes of the Closed Session as prepared by City Attorney Pope. Motion unanimously approved. 3:46 pm - With no further business to discuss, a motion was made by Council Member Barfield and seconded by Council Member McLean to recess the meeting to Wednesday, June 25, 2014 at 6:00 p.m. Motion unanimously approved. Attest: �/ • LJW -- v Debra G. West City Clerk \ \ \Illiiullli . <CITY C)p OORPORAT'.�Z Zc'•. SFAL _ ...... • .. ,0 ''Ill 1111111 \ \ \0 c scar N. Harris Mayor