Rebecca Fleury, City Manager, expressed appreciation to residents and staff in attendance. Ms. Fleury shared many educational opportunities were provided to present information to employees, stating she would share the questions received during the presentations. Ms. Fleury reviewed the evening's agenda, noting they would provide information on the FY 18-19 budget first, then move into the FY 19-20 budget.
FY 18-19 GF Estimates and Estimated Use of Fund Balance
Linda Morrison, Finance Director, presented information on the FY 18-19 general fund estimates, noting a use of fund balance of $417,082 for the year ending 6/30/19. Ms. Morrison noted this amount was less than the amended budget use of fund balance of $551,907, which included revenue reductions of $2,303,879 and expenditure reductions of $1,894,535. Other notable items included the elimination of payments for jail beds as of March 2019 and a transfer of $100,000 from the Self Insurance Fund to streets for sidewalk repairs. Ms. Morrison noted there may still be a year-end budget adjustment in June. Ms. Morrison also noted the City may receive a Local Stabilization payment in May. FY 18-19 Mid-Year GF Budget Reduction Review
Ms. Fleury reviewed various sections of the budget document, noting Tab 3 included 2019 estimated general fund revenues, Tab 4 presented expanded details of 2019 estimated revenues, Tab 5 provided 2019 estimated expenditures, with Tab 6 detailing 2019 estimated expenditures by department. Ms. Fleury also shared estimated 2019 results for revenue line items and department expenditures affected by the mid-year reductions in Tab 7, and projections of the General Fund, Fund Balance as of 6/30/19 and 6/30/20 in Tab 8. FY 19-20 Budget Discussion and Assumptions (All Funds)
Ms. Fleury informed the Commission the proposed budget included a .185 mill increase for the Police and Fire Pension annual contribution, 2% raises and steps across the organization for non-represented employees, noting placeholders for the budget across the organization are included for collectively bargained employees. Ms. Fleury noted Fire's IAFF is the only contract in place effective 7/1/19. Ms. Fleury stated the budget includes City pension contributions for non police and fire with no reductions for any increases in employee contributions. Ms. Fleury noted non-represented employee contributions will increase by 1% effective 7/1/19, while represented employee contributions will be negotiated. Ms. Fleury noted the general fund contribution to Transit has been reduced from the prior year by $300,000. Ms. Fleury also noted jail bed payments are not budgeted in the FY 19-20 expenditures.
Ms. Fleury informed the Commission that income tax and property tax revenue is expected to be higher than initially estimated. Ms. Fleury also discussed a legislative fix for tax increment financing districts regarding person property tax elimination, stating she expected a significant positive impact on the DDA beginning in FY 19-20, allowing the DDA to take back responsibility for debt service.
FY 19-20 GF Budget Recommendation
- Property Tax Millage & History
Commissioners were provided a millage comparison with information on the actual 2018-2019 and proposed 2019-2020 millage levies for the operating fund, capital projects/capital project debt, street/drainage improvements and Police & Fire retirement fund. The proposed increase was 0.185 mills for the Police & Fire retirement. Examples were also shown to demonstrate the annual tax impact to households based upon the property's taxable value. Finally, a chart was presented of the history of millage rates for the last ten fiscal year, per $1,000 of taxable value for all funds.
Ms. Fleury noted they did not float the P&F millage the prior year, stating it was absorbed by the general fund.
Comm. Simmons stated that although he acknowledged the obligation, his preference was not to float the P & F millage, but to have it absorbed by the general fund again. Comm. Simmons expressed concern there was no cap, that it was voted in for perpetuity, stating he did not believe it was sustainable. Comm. Simmons hoped the legacy cost discussions would address his concerns.
Ms. Fleury noted the P & F millage question would need to go back to the voters to approve a cap. Ms. Fleury asked if the other Commissioners had any comment regarding the millage.
Comm. Baldwin, expressing appreciation for Comm. Simmons' concerns, noted the P & F millage was approved by the voters many years ago, with no cap and in perpetuity. Comm. Baldwin, recognizing the large amount of budget reductions staff worked through earlier in the year, stated it was important to acknowledge the P & F expense, noting there was also a legacy cost plan, expressed support for floating the P & F millage.
- GF Major Revenue Sources
Ms. Morrison discussed the General Fund revenues, specifically $16,940,309 proposed income tax revenue, $13,634,617 proposed real estate tax revenue, budgeted $460,000 budgeted Local Community Stabilization Authority funds, and proposed $6,207,259 State Revenue Sharing. Ms. Morrison also presented a history of past Income Tax Revenue. - GF Revenues, Expenditures and Projected Fund Balance
The presentation included summaries of General Fund revenues and expenditures by department. Ms. Morrison noted the last item on the expenditure presentation, $3,413,883, included funds to the P & F retiree health care, debt service on the 2013 and 2016 bonds, Honeywell debt service and a $638,000 contribution to Transit.
Ms. Fleury presented information on the General Fund, Fund Balance projection of $5.7 million, equal to 11.7%, which is within the City's Fund Balance Policy of 8%.
Comm. Baldwin noted the Municipal League pushes for a higher fund balance, stating 8% is very conservative, but not what is recommended.
Ms. Fleury stated it has been recommended by the Government Finance Office Association that municipalities begin thinking of fund balance differently, not as a percentage of revenue, but instead a number of months operating funds, which should be 12-18% of revenue. Ms. Fleury noted $8.2 Million would be needed for 2 months of operating funds.
Other Funds
Commissioners were presented a chart of other funds, including Special Revenue Funds, Enterprise Funds and Internal Service Funds.
Ms. Morrison noted Transit demonstrates a $191,000 deficit at the end of FY 2020. Ms. Fleury cautioned that being self insured included the risk that one catastrophic claim or litigation could change the Self Insurance Fund balance.
Police Department Presentation
Jim Blocker, Police Chief, discussed the impact of mid-year budget reductions on his department, noting they reduced 2 officers for every shift, reduced overtime, continuing to monitor overtime. Chief Blocker also noted training was reduced, implementing "on duty" training for high risk areas and avoiding back filling positions. Chief Blocker also noted federal SLOT funding was used to cover some overtime expenses. Chief Blocker presented information on the proposed FY 2020 budget, including the continued reduction of 2 officers per shift, continued reductions in overtime and priority focused training. Chief Blocker confirmed they would continue to use federal reimbursement funds to support ongoing investigations. Chief Blocker expressed appreciation to his staff for their work and support as they experience budget reductions.
Responding to Mayor Behnke, Chief Blocker stated he did not anticipate a problem with the township contract, stating they are working together to ensure the township is also successful.
Comm. Simmons stated he was concerned with reductions in the Gang Suppression and Highway Intervention units. Chief Blocker noted all that the department does begins with the patrol position, stating the GSU officer will be working the road. Chief Blocker stated the reductions affect long term investigations, expressing confidence his staff will continue to serve the community, stating they are creative and dedicated. Fire Department Presentation
Brian Sturdivant, Fire Chief, presented information on the Fire Department Budget Comparisons, by percentages, noting a 78% reduction in BU 3360 Operations, with an increase of 41% in BU 3380. Chief Sturdivant noted FY 19 reductions included elimination of overtime and forfeiture of holiday pay in the OSP unit, while IAFF forfeited one day of holiday pay, reduced minimum staffing from 19 to 18, including salary savings through vacant positions. Chief Sturdivant noted general fund revenue increases expected in FY 20 resulted in budget reductions of $200,000 instead of $450,000. Chief Sturdivant stated the additional $250,000 would be tied to extending MOAs with OSP and IAFF into FY 20. Finally, Chief Sturdivant stated that in lieu of extending the two MOAs into FY 20, Fire will allow the MOAs to expire on the agreed upon date of June 30, 2019.
Comm. Simmons questioned if minimum staffing would remain at 18, or if it was being reinstated to 20.
Chief Sturdivant confirmed that due to additional general fund revenues, minimum staffing would be restored to 20, and the MOAs would expire on 6/30/19, stating contract language would be considered.
Transit Presentation
Ted Dearing, Assistant City Manager, presented information relative to the 2018 actual, 2019 adopted, 2019 amended and 2020 proposed budgets. Mr. Dearing stated Transit has received an additional $461,000 state and federal revenue, as the state determined Transit was underfunded in a prior year, stating he was optimistic funding would continue. Mr. Dearing noted they do not anticipate any red flags in the budget analysis, recognizing a lot can happen in 2 months. Mr. Dearing noted FY 20 included a general fund reduction of $300,000 subsidy, offset by some increased federal revenues.
Mallory Avis, Transportation Director, noted the federal revenues are based on population and demographic information from census data, stating they do not know the exact amounts until the federal register is released. Mr. Dearing stated staff would attempt to reduce their deficit in future years, while preserving services. Mr. Dearing also noted county-wide conversations regarding mobility continue, stating a lot of what BCT does in the future may depend on those recommendations, while also giving the new Transit Director time to consider the recommendations of the Transit Master Plan.
Ms. Avis stated she would like to attack the deficit from a revenue stand point, not expenses. Ms. Avis stated she would like to quickly implement several revenue generating opportunities, including advertising on the buses, in the buses and on the bus shelters. Ms. Avis predicted advertising may provide $30,000 to $50,000 per year.
Comm. Baldwin, noting this would be a minor amount of the overall transit budget, stated the advertising would help to draw attention to local transit services.
Ms. Avis also discussed potential increased ridership and ease of access by coordinating with Google Transit and GIS, making it easier to navigate around the City. Another recommendation by Ms. Avis included general fare increases of $.25, ADA para-transit fare increases by $1.00, and the implementation of a transfer fare charge of $.50. Ms. Avis estimated this would increase fare revenue by $105,000 in FY19 and $140,000 in FY 20. Responding to a question regarding transfer fees, Ms. Avis noted most transit systems have a 15 minute window allowing free transfers, noting BCT would need a tracking system, noting a reduced transfer fee was an industry standard.
Comm. Flores noted Battle Creek was unique as most transfers are because the buses go to the downtown terminal first, requiring a need for a transfer anywhere else in the City.
Ms. Avis stated an analysis of current transfer practices indicates passengers would experience an increase of about $30 per month, based upon 5 days per week, with a general pass, not a reduced fare pass. Ms. Avis noted the Transit Master Plan did consider the loss of riders due to fare increases. Comm. Simmons noted it was not sustainable to not include cost increases to riders, noting drivers experience cost increases annually, with license registration, insurance, maintenance and fuel increases.
Ms. Avis noted fares have not been increased since 2003. Ms. Avis estimated the fare box revenue would increase from $363,000 to $401,000 in one year. Regarding increased on-board amenities, Ms. Avis noted they would include wifi service.
Comm. Baldwin noted a special notification process would be required to raise bus fares as BCT receives federal and state funding.
Beyond FY 20, Ms. Avis discussed other considerations, including replacing current tele-transit vehicles with smaller, more efficient vehicles, reducing vehicle maintenance and operational costs, while providing the same level of service. Other opportunities included technological efficiencies to improve service, increase efficiency and decrease expenses. Ms. Avis also discussed alternative transportation mobilities, such as bike sharing, ride sharing, car sharing, microtransit and other public transportation providers. Ms. Avis discussed additional improvements that would need to be put in place with new bus stops, including curb cuts and ADA ramps, stating the costs are expected to be more than $600,000, stating BCT would work with the Streets Department to coordinate the work with other street projects. As to Lyft and Uber, Ms. Avis stated she would consider this an opportunity to over lap services, instead of considering them competition.
Future Budget Thoughts
Ms. Fleury assured the Commission that staff would continue to use Priority Based Budgeting when considering services, noting there is a new citizen facing module that provides a lot of information. As to legacy costs, including other post employment benefits (OPEB), Ms. Fleury noted they are a substantial expenditure, stating a workshop will be planned for the future. Ms. Fleury stated staff continued discussions with the Governor and State Treasury on personal property tax elimination funding. As to Capital needs, Ms. Fleury noted .5 mills were for capital expenditures, stating city hall and fire station maintenance and repairs were still needed, stating they will continue to pursue grant funds and philanthropic opportunities. Ms. Fleury informed the Commission staff continued to work with Munetrix to forecast future budgets. Ms. Fleury also shared thoughts on revising/ updating the fund balance policy, including best practices. Discussion & Next Steps
Ms. Fleury agreed a public hearing will be set for May 21, 2019, with a consideration to adopt the proposed budget on June 4, 2019.
Comm. Simmons, acknowledging staff does a fabulous job of stretching funds to ensure services, encouraged everyone to take a big step, to be creative and innovative and consider a completely different business model to better provide services.
Ms. Fleury agreed, stating the Commission is starting to include innovative thinking in the City Manager goals. Ms. Fleury noted there have been conversations around collaborative services with AMSA, local Fire Chief and Police Chief associations. |