MEMORANDUM. Background

Transcription

1 MEMORANDUM TO: Elyria City Council Finance Committee, Finance Director, Asst. Finance Director, Law Director, Safety Service Director, Council Clerk FROM: Holly Brinda, Mayor SUBJECT: Mid-Year Financial Status & Recommended Actions & Future Considerations DATE: July 29, 2017 CC: Elyria City Council Background As we have all known from the beginning of the year, the 2017 budget will be extremely tight and challenging as we collectively chose to appropriate almost all available funds. The City s reserve cash balance has been depleted over the past several years because of several factors including (1) less Local Government Funding from the State (we will get less again next year because of the diversion of funds to the opioid epidemic and townships); (2) repeal of the Estate Tax; (3) rising healthcare costs; and (4) the current and predicted losses of some industries including Riddell and 3M this year and eventually Bendix at a later date. And while the recent passage of Issue 6 is helping to address many of the long-time unmet capital needs across the city and personnel issues in the police department it is not helping the General Fund. Some plant expansions currently underway will eventually help make up for some of this job loss and tax revenue including growth from Duraline, MultiLink, Perry Fiberglass, and several others pending their own individual announcements. The City has been working with two existing industries that have communicated they will be expanding because of added government and other contracts in the near future. Another complicating factor is the recent sale of Midway Mall. While I am still hopeful that the recent $23 million highway reconfiguration and the city s highest best use study and redevelopment plan will eventually help result in a more vibrant midway area in the short-term the property value will likely decline as a result of the $4.25 million sale price of the Mall, and, we may lose businesses in the short-term as the property is redeveloped. Complicating the financial picture even further is the conciliation decision regarding the Elyria Fire Department negotiations, requiring minimum manning of 14 on each shift. And while we do not know the actual cost of this requirement, it could add between $125,000 - $150,000 in overtime between now and the end of 2017, pending results in shift scheduling with current personnel. The full agreement will be explained at Monday s Finance Committee meeting. All that being said, in the short-term I agree with the Finance Director that we must make sure we do not exceed the current budget, and, it is critical that we find ways to continue to save, and generate some additional revenue in order to maintain quality basic city services. As a longterm strategy I would suggest the Finance Committee of Council and the Administration begin to

2 look at how we can recraft Issue 6 and the upcoming renewal levy to better meet the needs of the City without adding additional costs to taxpayers. Current Financial Status The Administration has been working with Department Heads and Chiefs to carefully monitor individual department budgets to ensure that they remain on target. A joint review of the Expense Budget Performance Report from January 1, 2017 through June 30, 2017 by the Mayor, Safety Service Director, Finance Director and Assistant Finance Director demonstrates that the City is very much spending within the current budget parameters established by City Council. Of all the 30 accounts in the General Fund, 25 are at or under their anticipated expenditures as of mid-year. Five accounts are only slightly over and have been examined. In some cases there have been emergencies to respond to that have resulted in higher than anticipated maintenance and operating costs, or, there are reimbursement funds coming to the account that have not yet been deposited, or, these departments consistently spend more dollars in the first and second quarters of the year. The added costs are expected to be absorbed to a positive balance later in the year. Below please find the balance used by account in the General Fund as of June 30: Police 48% Communications 49% Fire 49% Safety Service 39% Prisoner Support 47% Cemeteries 54% Parks & Recreation 50% Summer Camps 34% Swimming Pools/Splash Pad 51% Ice Rink 48% Community Planning & Zoning 42% Community Development 42% Housing Code Enforcement 46% Mayor s Office 48% Administrative Support 48% Information technology 49% JEDD 7% Finance Administration 49% Legislative Activity (City Council) -48% Legal Administration 48% Judges 1 48% Judges 2 47% Clerk of Courts 49% Civil Service 43% Buildings & Lands 55% Engineering 48% Misc. General Government 40%

3 Central Maintenance Garage 58% Not in the General Fund but subsidized by General Fund: Street Construction (Traffic Signals) 53% Street Department 45% Proposed Cost-Saving/Revenue Producing Steps to Maintain Current Budget/Re-Build Needed Cash Reserve Over the past five years and seven months the Brinda Administration has implemented many cost-saving measures that have helped to offset the loss of General Fund revenue and maintain city services. It is estimated that a combination of these cost saving measures have saved and offset over $3 million of losses. Among the measures have include things like (1) rebidding contracts for better rates; (2) increasing employee contributions to healthcare; (3) more aggressive third party medical oversight; (4) reducing longevity; (5) eliminating many take-home staff vehicles; (6) improved technology to reduce paper and increase productivity; (7) increasing cemetery and parks fees; (8) lease agreement with the MetroParks for Cascade; (9) shared services agreements and partnerships with other cities and organizations; (10) merging the Health Department with the County; (11) energy-saving programs; (12) grants; and much more. Most recently changes in Chapter 165 covering non-union managers and other employees are expected to save additional revenue. Adjustments to pay overtime only after a 40-hour work week is projected to be $100,000 annually; the first pay period of implementation has already saved the city about $4,000. If you multiply that by 26 pay periods the annual savings equates to $104,000. All that being said, with these steps already been taken, it is getting even more challenging to come up with ways to save and produce revenue. Below please find a list of possible actions that could help the General Fund in both the short term and long terms. The suggestions total over $17 million. Short-Term Steps to Address General Fund Challenges Immediately (Total Estimated Savings/Revenue: $722, Continue careful monitoring by department and do not exceed 2017 budget appropriation. Anticipated overtime pay adjustments regarding 40 hour work week will likely yield about $40,000 of savings through the end of the year. No back fill on two open positions in the Street Department this will save approximately $100,000 in necessary transfers from General Fund to Street Fund Move the sale revenue of the Health Department building to the General Fund - $100,000. Leave nearly one dozen unfilled service positions open to allow for the transfer of General Fund employees if circumstances warrant, to prevent layoffs. Move 25 percent of the Mayor s salary split from the General Fund to Issue 6 to better reflect the economic development contribution of her work - $25,000. Move 15 percent of the Community Development and Planning Director salary split from the General Fund for the remainder of the year to Issue 6 to better represent the position s support of economic development efforts - $5,548.

4 Move 17 percent of the Community Development Specialist salary split from the General Fund to Issue 6 for the remainder of the year to better represent the position s contribution on to economic development efforts - $5, and, move another 50 percent currently in the General Fund to CDBG Administration - $17, Do not spend the remaining JEDD funds on economic development in $140,000. Lower the Building Department Budget by $20,000. Charge gasoline allowance for new police officers to Issue 6 - $ 5,500. Charge $60,000 of the Police Department Operating Expenses to Issue 6. Use the $200,000 earmarked for Fiber optics for covering the current networking, cable and tele-communications costs in the General Fund. Reduce some (supervisors) of the City-provided uniforms (Cintas) saving $3,000 annually. Possible Additional Opportunities for Now or 2018 Additional $156,000 without NOPEC Grant Eliminate spousal reimbursement as an incentive for not taking the city s health insurance estimated savings $31,000 annually only applicable to non-bargaining employees at this time. Could generate $10,333 of savings for last quarter of Eliminate health insurance for part-time elected officials estimated $125,000 savings. Could generate $41,666 in savings for last quarter of Potential, but unlikely, dispersal from remaining Powering Our Communities NOPEC grant funds - $428,160* (*The City was notified this month that there may be left-over funds available from a past NOPEC Powering Our Community Grant; we are exploring the availability and requirements for these funds.) Long-Term Steps to Address General Fund Challenges Up To An Additional $16.59 million Eliminate or reduce the amount of reciprocity that the City offers a change to the Charter Amendment could generate up to a 100% collection or approximately $13 million annually. Recraft Issue 6 and the upcoming renewal levy, combining them to better meet the needs of the City without adding additional costs to taxpayers. There is a need to steer more of this money to the General Fund. Reduce budget needs for FY 2018 to Workers Compensation costs by utilizing the recent WC rebate for budget calculations (reduction approximately $390,000). Assess for Street Lighting as allowed under ORC For example, if we take the current total of parcels in the City (i.e. 15,000) and divided it into our costs ($700,000 annually for street lighting) cost per parcel would be approximately $46.67 per year per parcel. Assess for snow plowing same as above - Street Department budget of $ 1.2M plus salt costs of $550,000 (average); Total operating costs of $1.7 million divided by number of parcels (15,000) would be a cost of $ per parcel per year for such services.

5 Discontinue providing back up for Emergency Medical Services in order to reduce costs (i.e. equipment, fuel, medical supplies) estimated savings $397, ($150 per run x 2,653 runs per average year). The $150 includes fuel, tire, repair and other upkeep on the fire trucks used for this service; OR Renegotiate the contract with LifeCare to require a shared reimbursement for EMS calls responded to by the Elyria Fire Department estimated revenue TBD. And, invest in an ambulance to provide support calls to save wear and tear on expensive fire trucks estimated savings TBD. OR Provide full-service EMS and transport services and get reimbursed by insurance (all types, Medicare, private insurance); eliminate the LifeCare contract conservative estimated revenue to help supplant the fire department budget - $600,000 - $800,000 net revenue per year.