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HomeMy WebLinkAboutTB Study Session 2011-07-08 Town of Estes Park, Larimer County, Colorado, July 8, 2011 Minutes of a Study Session meeting of the TOWN BOARD of the Town of Estes Park, Larimer County, Colorado. Meeting held at Town Hall in Room 202 & 203 in said Town of Estes Park on the 8th day of July, 2011. Board: Mayor Pinkham, Trustees Blackhurst, Elrod, Ericson, Koenig, Levine and Miller Also Attending: Town Administrator Halburnt, Deputy Town Administrator Richardson, Directors Bergsten, Chilcott, Kilsdonk, Kufeld, McFarland and Zurn, Assistant Finance Officer McDougall, PIO Rusch, Town Clerk Williamson Absent: None Mayor Pinkham called the meeting to order at 8:00 a.m. BUDGET POLICY AND FLOW CHART Finance Officer McFarland reviewed the budget flow chart for 2012 and stated the Town of Estes Park produces a one-year budget annually. The budget process starts in July with the Town Board and departments meeting during a study session to discuss priorities, revisions to the 2011 budgets in July, draft budget for 2012 due mid August, review of budgets by Administration, final proposed 2012 budget due by mid September, budget study session meetings held on Fridays in October, 2012 budget hearings at Town Board meetings in November, supplemental 2011 budget in December and rollovers of applicable expenditures to 2012 budget. 2011 YEAR TO DATE REVIEW Assistant Finance Officer McDougall reviewed the year-to-date financials stating the revenues are at 24% of budget and expenditures are 36%. The funding for the Local Marketing District and the Fire District has been moved from transfers to the Community Service grants account. The net income for Light and Power is up $583,644 with 98% of the revenue from electric sales. Expenditures have increased with the work being completed for the Fish Creek circuit upgrades. The net income for Water is down $250,129 with 95% of the revenue from water sales. Expenditures have decreased in 2011 with the completion of the upgrades to the Marys Lake Water Treatment facility. Finance Officer McFarland stated sales tax has increased each month except January in 2011, with the year 6.3% ahead of 2010. The indicators used, hotel occupancy, traffic counts and park visitation, indicate May would be a flat month for sales tax. ECONOMIC OUTLOOK/2012 BUDGET COMMENTS Finance Office McFarland provided an overview of the current economic climate. The unemployment rate jumped to 9% in April demonstrating a slowing of the rebound with payrolls growing at the slowest pace in 8 months. Households continue to pay down credit card debt, auto and student loans (non-revolving credit) increasing, retail sales continue to play large part of U.S. economy, and existing home sales fell with 31% of May transaction included foreclosed properties. Estes Park continues to fare well amongst other mountain communities. The local real estate market continues to be soft for vacant land and condominiums; however, single-family home sales are recovering. 2012 BUDGET/POLICY GUIDANCE Finance Officer McFarland stated the 2012 budget would include a 1 to 2% increase for sales tax revenues. The Finance department continues to consolidate funds when possible and currently maintains 12 funds including the General Fund, Special Revenue Town Board Study Session – July 8, 2011 – Page 2 (Community Reinvestment, Conservation Trust, Open Space, and Community Service), Internal (fleet, information technology, vehicle replacement), Fiduciary (police pension and theater), and Enterprise (light & power, water). The long term trends demonstrate expenditures continue to outpace revenues. Without new revenue sources, the Town would need to cut services in the future and reprioritize goals. Capital Asset Management Plan Public Process PIO Rusch suggested the Town could conduct an online survey to receive input on the ranking of projects and their importance to the community. She stated the public would need to become familiar with the projects and recommended a public meeting that could be filmed and rebroadcasted to the community and available on the web. Board discussion followed and is summarized: a survey would become an opinion poll for issues that are complex; a public session would be beneficial to educate the public on the projects; it is the Board and staff’s responsibility to determine the appropriate projects; involving the public at this point would be premature because the plan does not contain objectives or goals; a citizen survey of Town services has been sent out and an additional survey at this point in time may be confusing; and in order to be transparent the CAMP information should be made available to the public for review. The Board agreed 1) the CAMP should be made available on the website with a list of items and the description for the general public’s review; and 2) a ranking of projects by the Board would be completed by year and not by projects only. Community Reinvestment Fund, Fund Balances & General Fund – CRF Relationship Finance Officer McFarland reviewed the fund balances projected for 2011 for each of the fund types: General Fund – $3.6 million or 32%, Special Revenue funds – $147,055 or 5%, Internal Services funds - $1.9 million, Fiduciary - $415,296 and Enterprise - $5.5 million. The General fund would see a decrease in fund balance below the established 30% fund balance starting in 2012 if current expenditures and funding commitments continue moving forward and no new revenue sources become available. The fund balance would be 10% by 2015. At the same time the Community Reinvestment fund (CRF) balance would grow to $6 million with $800,000 transferred from the General fund each year. To maintain a 30% fund balance in the General fund, the transfers to the CRF would have to be reduced from $800,000 to $250,000 in 2012 and decrease to $200,000 by 2015, thereby reducing the transfers to the CRF by $2.3 million over the next four years. Discussion followed on the need to do an analysis of the Internal Revenue fund balances, more specifically the Vehicle Replacement fund to determine an accurate fund balance. Staff would review and provide a recommendation to the Town Board during the budget study session meetings including the potential of decreasing transfers from the General fund if it is determined the Vehicle Replacement fund is fully funded. The Board requested the Theater fund budget reflect realistic expenditures. The Board discussed the current fund balance of 30% and questioned how it was established. Staff stated communities that are sales tax driven tend to have higher fund balances because of the potential volatility of the economy. Trustee Ericson suggested the Board consider a reduction in the General fund balance to 25% to use the funds for projects such as street improvements. Staff would review past fund balance history and provide a recommendation on fund balance targets and transfers for review during the budget process. Community Service Grants The Town has provided grant funding to local organizations serving the citizens of the Town through grants approved during the budget process. The amount of funding has been reduced the past few years as the budget has been cut. Other communities have concluded that non-profits should be financed through private funds and not the local government. Staff questioned if the Board would maintain the current funding levels for Town Board Study Session – July 8, 2011 – Page 3 2012. Board discussion was heard including the need to require the entities to provided additional information on how they are funded; the need to determine if entities require local funding to maintain services; establishing quarterly payments rather than lump sum payments at the first of each year; and setting a cap on annual funding such as 5% not to exceed $300,000. The Board expressed a need to continue to invest in the community through grants. Staff would review the letter and application sent to entities each year to outline changes including quarterly payment, the need for additional information related to funding sources, and a qualifying statement that approved funding would be dependent on sales tax collection. Staff would provide recommendations during the budget process on the percentage, cap and quarterly payment process. Trustee Elrod requested the Town review the funding for the Scottish Irish festival, a privately organized event. Administrator Halburnt stated Town funding has been reduced from $100,000 to $50,000, and the Town provides a number of in-kind services for the sales tax generating event. Financial Commitments to other Taxing Districts. The Town current funds the Fire District with 7% of sales tax and the LMD received $89,000 in 2011. Discussion followed amongst the Board on funding: the MOU with the Fire District would have to be updated to reflect any change in funding; the Town has an obligation to the District and the voters to maintain the current commitment to the district; questioned the financial stability of the districts; and a new MOU should be developed to address the need for the Fire District to become financially independent and any increase in mill levy should decrease the Town’s financial support proportionally. The LMD has requested the Town help pay for improvements to the CVB to provide the district with more space on the second floor and their own phone and computer systems. Employee Compensation and Benefits Employee raises have not been included in the budget for the past two years. Staff has proposed a 3% increase, which equates to $300,000 with $180,000 from the General fund. Trustees Blackhurst, Miller, Koenig and Levine agreed the Town needs to reinvest in the employees; however, they requested more information on the proper increase to bring employee salaries in line with the cost of living. Trustee Elrod commented the employees have jobs with full benefits. An insurance committee consisting of a representative from each department has been formed to review the current health insurance, self insurance versus full insurance and options to keep premium increases down for 2012 while maintaining quality health insurance. A survey was developed to receive input from the employees on health care premiums. The committee would present Administration with a proposed option for consideration during the budget process. Utility Fund Transfers Deputy Town Administrator Richardson stated since 1945 the utility departments have transferred funds to the General fund and have reported the transfer as rent, franchise fees, salaries, land rental, payment in lieu of taxes (PILOT), and to fund other transfers established by the Board at the time. No official documentation was found for the practice of transferring Enterprise funds to the General fund; however, the auditors have reported the transfer since 1945. An informal survey of 28 other municipally owned utilities in Colorado found 79% transfer funds with an average of 7.5%, 41% charge additional fees, 17% have written policies, and the funds transferred are used to fund general services of the municipalities. These practices are consistent with the Town of Estes Park’s business model. A written policy outlining how transfers are determined and what the purpose of the transfer would formalizes the process. The Board agreed a written policy should be developed to outline the percentage and the use of the transfer. The Board stated 8.5% would be appropriate for 2012. Town Board Study Session – July 8, 2011 – Page 4 Potential Revenue Sources Town Administrator Halburnt stated property tax revenue is such a small portion of the annual revenues that it would not be worth investigating an increase. With the recent sales tax legislative that removed the cap, a sales tax increase of .5% could be approved by the voters and earmarked for streets and roadways. Discussion followed on setting a time limit on an increase, concerns with earmarking the funds and questioned if sales tax funds could be used to fund an enterprise fund. Staff has discussed a potential Stormwater and Streets Utility with the Board in the past to generate revenue to address concerns, and has suggested a flat fee could be added to utility bills. The Board discussed and reached consensus that staff -explore an increase to sales tax to fund an enterprise fund for streets to be submitted to a vote in 2012 and provide education to the public during the upcoming year. A sales tax increase would allow improvements to be funded by both the visitors and the citizens that use the road system. Budget Document The Board suggested the following changes: include the 2011 budget numbers next to the proposed 2012 budget numbers; the Board should review larger items such as $20,000 to $30,000 items and include an all other line item; and the budget review process should be completed at a higher level. Staff would review options and provide the Board with examples. Budget meetings The meetings would be reduced to three meeting on Fridays in October because of the reduction in the number of funds. There being no further business, Mayor Pinkham adjourned the meeting at 12:00 p.m. Jackie Williamson, Town Clerk