CCTA WATCHDOG REPORT FOR NEW BERN BOARD OF ALDERMEN

CCTA WATCHDOG REPORT FOR NEW BERN BOARD OF ALDERMEN

SPECIAL BUDGET WORK SESSION OF 23 MAY 2013

This public budget work session is the final of the two budget work sessions to be held this week. Last opportunity for public participation is the regular BOA meeting of June 11, 2013 at 7pm. A public hearing regarding the budget will be held at this meeting. Then the Board's is slated to vote on approving it. Tonight's session began at 6pm by Mayor Pro Tem Bengel, with all aldermen present as well as City Manager Epperson, City Clerk Veronica Mattocks, and a substitute for City Attorney Davis. Also in attendance were the appropriate department heads and cognizant staff to discuss their particular office funding requirements and present explanation or justification. Mayor Bettis was absent by previous excuse conveyed to Mr. Epperson on May 10th. He has now missed a few (3) of the several (number as yet TBD) meetings he stated he would be absent from.

Mayor Pro Tem Bengel explained since the Tuesday night agenda had not been fully adjudicated, those items would be discussed and that meeting brought to a legal close via motions for adjourning. The Board would then open for tonight's meeting to discuss the budget items on this May 23rd agenda. I am primarily reporting discussion outside the parameters of the printed budget highlights. For those highlights as well as line item details, one may read from the city website at http://www.newbern-nc.org/Fin/2013-14RecommendedBudget.php. So, the Board began where it left off with...

e) Human Resources

i) Human Resources

* HR Director, Sonya Hayes explained to the Board her department needed to reinstate, as soon as possible, a position for $48K as well as the reasons behind that need, that being the administrative duties associated with benefits claims which will now include the new Affordable Health Care Act regulations.

* The Board chose this time to voice their concerns that this budget as it now stands is not plausible without at least a 2 to 3-cent tax increase - even without including the potential capital projects (City Hall elevator, new fire stations & their operational costs, merging the City and Police Dept IT functions). Alderman Outlaw broached the subject first, saying, "The main theme I am trying to get across that all seven elected officials should resonate is the truth that with this budget we are only putting off the tax increase one year if we do all these things. These are the type of things that should be funded based on projected good times in the future, good times that I do not see or predict for another 3-5 years from all indications".

* Reporter's Note: As Hal James mentioned in his May 23rd CCTA Watchdog Report of the County Commissioners budget workshops, the city budget has most of the similar line items that could be cut to help reign in the proposed $4.1 million increase in spending for this year: namely non-contractual Special Appropriations $100,696 (Fireman's Museum, Swiss Bear, Duffyfield Residents' Council, Craven Arts Council); Dues & Subscriptions $65,695 (does not include $14K of software subscription costs for utilities depts.): Community Development $10K; and matching dollars for grants $192,216. There's also a never-been-done-before proposed $60,000.00 loan program that is funded within the Electric Dept (our enterprise funds, again), for persons to use to make their homes more energy efficient. The city is partnering with CCA (Coastal Community Action) as it has the experience and expertise from adjudicating similar programs on its own. All the details have not been hammered out or released to the public as to the terms or qualifications to partake of this loan program. In austere years, many government entities and private industry alike cut their training & travel budgets. As training and travel were not discussed, I am not aware if those items have been pared down to the absolute essentials.

ii) Employees' Benefit Insurance Fund [OTHER FUNDS]

* Finance Director Fiaschetti stated that the city will need to address increasing unemployment compensation. The state will be passing down an unemployment compensation debt of $2.5 billion with the federal government due to the recession.

* Alderman Bucher asked if the city had looked into any changes in deductions. He said most companies have had to water down coverage - has the city looked into that? Mr. Epperson replied that the city has made significant changes as recent as last year - they are not proposing making any new benefit changes. They have aligned open season with the changing of the fiscal year which will give city staff and Board an opportunity to look at the entire picture when doing the budget from now on. Further, he reminded the Board that they did institute a wellness program which lowers health insurance costs. Alderman Bucher asked if dependents were covered. Ms. Hayes said "yes". Alderman Bucher asked as to the cost and Ms. Hayes responded $254.10 per months for a family of 4. Mr. Epperson stated that they have removed spouses who have coverage elsewhere.

* Mr. Epperson stated that the increases in this budget are due to capital catch-up such as vehicles and large industrial equipment, which causes a spike in budget. In contrast the on-going operational costs are flat. Alderman Bucher asked if we have this every year. He continued saying, it would be valuable to know the operations costs separate from the capital costs. Mr. Epperson stated that the capital costs for the replacement equipment have been delayed as long as it could. Alderman Outlaw asked for confirmation that there will be a plan for instituting the police cars on a systematic replacement plan and Mr. Epperson replied that was true - that he and Chief Summers are designing a plan. Alderman Outlaw also asked if city staff have also been trying to come up with additional wellness type programs for employees as a method for lower health insurance costs. Mr. Epperson said "yes", and they have been reviewing and discussing what else they can do to lower costs. He elaborated saying that the wellness programs require up-front costs; but with them come long-term paybacks over 3 - 5 years. One idea was to institute preventative screenings. (Note: there is a $4,974,009.00 difference between City of New Bern contributions and Employee contributions under the Employee Benefit Insurance heading in the FY2013/14 budget).

f) Parks and Recreation (6:31pm).
i) Parks and Recreation
ii) Recreation Grant [OTHER FUNDS - Grants]
g) Police
i) Police
ii) Emergency Telephone System Fund [OTHER FUNDS - E911]
iii) Police Special Revenue Fund [OTHER FUNDS]
iv) Police Grants [OTHER FUNDS - Grants]
h) Public Works
i) Public Works
ii) Public-Private Partnerships Fund [OTHER FUNDS]
i) Stormwater

3. Adjourn, then procedure to convene tonight's meeting.

May 23, 2013

1. (7:25pm) Discussions with City Manager and Management Team on Recommended FY 2013-14 Budget, in the following order:

a) Water [WATER FUND]

b) Sewer [SEWER FUND]
* Down $400,000.00 due to lower consumption by customers.
* Majority of Water & Sewer Funds budget is capital expenditures for equipment replacement due to end of life.

c) Electric [ELECTRIC FUND] (7:54pm)

i) Department of Public Utilities and Finance Department Sections
* Electric Dept Dir Jon Rynne stated that "revenues are down by $200,000.00 due to weather patterns as well as the economy which slows down consumption". Alderman Outlaw asked if the Electric Dept had obtained a security consultation in light of the upward trend of copper thefts. Mr. Rynne said "yes", and the City had employed the advised new security measures to include alarms, lighting and cameras.
*Under Electric Dept Distribution O&M, Mr. Rynne noted the $110,000.00 to spend for GIS mapping for underground and connectivity. This allows the department to more quickly respond and more accurately pinpoint where repairs need to be performed.
* $60,000.00 Under the Power Production Division for a new loan program for persons to use to make their homes more energy efficient.
* Under the divisions of Utility Billing, Customer Service and Utility Billing, supervised by Mr. Steve Anderson, there has been a combined $4,200.00 decrease in spending.

ii) Rate Stabilization Fund [OTHER FUNDS]
* The rate stabilization fund is the transfer from the electric enterprise fund to this rate stabilization fund. The city is anticipating an overall electric rate increase to the City of 3%. The $1,451,930.00 that has been transferred to this new fund from the Electric Fund will be used to absorb any rate increase coming down.

d) Capital Reserve funds (OTHER FUNDS)

i) Sewer

ii) Water

Recap of the 2 days of Budget Work Sessions (8:50pm)

City Manager Epperson began by stating that staff needed Board direction tonight on the funding amount for ACT a (Allies for Cherry Point's Tomorrow) and what to do about the Fire volunteers. The Board decided to add $10K to the $4,123.00 (So ACT will receive $14,123) and to consolidate the Volunteer Firefighters budget with the Fire Dept budget. For the regular BOA meeting on May 28th, Mr. Epperson stated he would be presenting the ordinance to update the city fees schedule. The Board would need to vote on adopting it prior to the June 11th meeting for approval of the FY2013/14 Budget. Those fee changes can be found at this link: http://www.newbernnc.org/C_Hall/documents/OrdAmendingScheduleofFees.pd.

Mr. Epperson clarified that as yet, none of the capital projects discussed at the May 21st session are in the budget. Were the Board to approve any or all each would be financed. The new Fire Dept station would be a different animal as the budget would need to take on the station's operating costs. The city would need to generate significantly more revenue. However, he did not think that would result in a tax increase next year because the first year in implementing the project would only require architect/design costs. The actual project with its larger costs would follow the year after that. The city will move forward with the capital projects unless the Board says not to. In doing so, we will only incur those minor costs like the architect fees. At that point and before moving along any further, we'll bring you a budget. Mayor Pro Tem Bengel suggested first taking care of this FY2013/14 budget, then having a July work session to discuss the capital projects.

2. Opportunity for public to make comments on above sections. (9:03pm)

* Mayoral candidate Edwin Vargas spoke to the Board about the $4.1 million budget increase from last year to this year. Mr. Vargas had plugged in the city's figures for the entirety of this administration and constructed a spreadsheet. Drawing upon the data, he noted that the budget increased an average of $1,442,000.00 for each year of this administration. Therefore, he suggested the Board should make decisions to prioritize expenditures for the big ticket items like vehicles, equipment and employee benefits. He also thanked Alderman Bucher for serving on the ACT committee as well as lauded the Board for financially supporting the ACT, especially in light of the hardship that sequestration was putting on the citizens and therefore, the city economy.

* City Manager Epperson offered that post-employee benefits funding needed some work and said that other towns are modifying those benefits. He will put discussion of this subject on the July work session agenda.

* Last opportunity for public comment on the FY 2013/14 budget is June 11, 2013 at 7pm. That is also the date scheduled for the BOA to vote on adopting this budget.

3. Adjourn at 9:09 pm

Rhonda Taylor
CCTA Watchdog Reporter New Bern Board of Aldermen
Ward 6, New Bern, NC