AUGUST 30, 2016 Special Council Meeting 2017 Budget Workshop

Transcription

1 AUGUST 30, 2016 Special Council Meeting 2017 Budget Workshop The Common Council met in special session on August 30, 2016 at 4:00 p.m. in the Council Chambers to discuss the 2017 budgets. Present: Scherer, Machek, Galloway, and Stabosz Absent: Cutler, Fettinger and Mrozinske Department Heads Present: Police Chief Klimczak, Fire Chief Snyder, Beth Shrader, Director of Community Development and Planning, Mark Schreiber, Director of Parks & Recreation, Mike Fraze, Director of Street Department, Nick Minich, Director of Engineering and Becca McCuaig, City Attorney Mayor Milo stated she wanted to have a chance to talk with the Council about where we are at with the 2017 budget process. She reported there are a number of things that the City is still trying to get more information on, but she wanted get the process rolling of having the full Council involvement in the process. TIMELINE Mayor Milo stated following is the timeline for adopting the 2017 budgets: July 11 th & 14th - Finance Committee met with Department Heads August 4 th - Finance Committee met August 9 th - Met with FOP and Fire Union Representatives August 30 th - Budget Workshop with full Council September 13 th - Budget submission through Gateway October 3 rd - Introduction and Public Hearing for 2017 Budgets October 19 th Budget Adoption REVIEW/OVERVIEW 2016 Budget Recap Mayor Milo stated there is a slide in their packet that gives an overview of what the City did for 2016 including the growth factor, circuit breaker losses, 27 pay periods instead of 26, Salary Ordinance adjustments and the filing of the anticipated tax shortfall filing. Councilman Stabosz inquired if the City actually lost 26% of the operating budget to the circuit breakers. Teresa Ludlow, Clerk-Treasurer, stated yes it has been a loss since the inception of the circuit breakers. In order to absorb some of those losses, some expenditures were moved from one fund to another, such as the health insurance, which a portion was moved to CEDIT. The rest of the losses were absorbed in cutting budgets, higher deductibles for health insurance, etc.

2 2017 Budget Overview The Mayor advised the growth factor for 2017 is 3.8% which is an increase of 1.2% higher than This results in an increase of approximately $356,000. She reported the circuit breakers are estimated to be about $2.5 million for 2017 which is roughly 26% of the operating budget. SALARIES Federal Department of Labor Mandate (FLSA) The Mayor reported the Federal Department of Labor (FLSA) has issued a mandate that all exempt employees, have to be paid a minimum of $47,476. An exempt employee is someone who is exempt from overtime pay. The Mayor reported this is an administrative action by the Federal government and is causing great problems across the country. She advised this is being challenged by Congress who have issues with the regulation in and of itself and members who say this was enacted without Congress s ability to weigh in on this decision. The Mayor stated there is a severe negative impact that is being felt across many sectors of the economy including local government, non-profit, educational institutions, small businesses, etc. Mayor Milo stated she will be the first to say this is the worst way to have to try and make a decision about how the City is writing salary amounts for our employees. The Mayor reported this mandate effects about 8 positions within the City. In looking at those positions we had to determine if it was feasible to pay overtime for any hours worked over 40 or to raise the salary to $47,476 for those positions. She reported seven out of the eight positions it was more feasible and cost savings to the City to move the positions to $47,476 and the one position the potential of overtime hours is very minimal and will be monitored. Discussion was held regarding the FLSA mandate and how it affects the City. Councilwoman Scherer asked what happens if Congress is successful in having the mandate repealed. Mayor Milo stated she does not believe it will happen prior to the December 1 st implementation date, if at all. She stated if it does, then those positions that were increased will be reviewed in ensuing years when raises are given. Teresa reported the ruling states the Federal government is to review this every three years, so in three years that dollar number could go down or up. Mayor Milo advised in their packet there is a color coded spreadsheet that was done for all the salary positions within the City. She reported when looking at the eight positions that were affected by the FLSA mandate, it created a trickling down effect as you want to make sure the positions who supervise (department heads) are compensated more than those who work for them. In order to take all that into consideration, we took a look at all the salary positions and put them in four different categories based on position and responsibilities. She noted those positions that were affected by the FLSA mandate are indicated at the far right of the spreadsheet in orange. The Mayor stated overall the Finance Committee is recommending a 3% increase for salary positions with the exception of public safety who will be getting 4%. There are several positions that were adjusted based on job duties and responsibilities or the FLSA mandate that will be receiving a higher increase and those are noted in yellow with an explanation to the far right of why. Mayor Milo informed the Council the State of Indiana INPRS (retirement) has informed municipalities there is a sufficient balance in the State Pension Fund to fund the retirement plan for public safety

3 personnel. She stated this resulted in a decrease in the amount of monies the City is required to send to the State for police and fire retirement with regard to the employer portion. She advised the police and fire unions asked that those savings be passed on to their members in the form of an increase in their pay for The Mayor stated although she understands their desire, she is reluctant in giving all of the savings as a salary increase, if in the future, the rate is increased, which is set by the State based on the needs within the retirement fund. She stated that is why police and fire will be receiving a 4% increase for 2017 instead of 3%. Pay Schedule Mayor Milo stated in a typical year, pay periods are based on a bi-weekly basis, or 26 pays. In 2016 the way the calendar falls there are 27 pay periods. She stated this happens every eleven years. In order to make sure employees brought home the same amount every two weeks, salary positions were increased by one pay period resulting in approximately a 4% increase. Hourly employee rates did not change from 2015 to The Mayor reported employees are saying they did not get a raise in 2016 even though their W-2 s will be higher. She stated she understands that because they actually worked those extra hours. So when trying to figure out pay raises going from a 27 pay period back to 26 pays it is a nightmare, because you can t just add 3% to hourly employees as their 2017 annual salary would be less than what they made in 2016, because they actually worked 2160 hours in 2016 and a normal year they work 2080 hours. Teresa explained the first pay in January is actually for hours worked the previous year. She advised the City has never adjusted the pay for employees from one year to another in terms of when hours were worked and paid. If the pay date falls on January 3 rd of a given year, the hours worked are calculated at the rate of the current year not the previous year. The Mayor stated when trying to figure raises for 2017 discussion was held on how do we fix this situation. She reported the most feasible way is to change the pay periods from 26 pays per year to 24 pays or twice a month. For salary positions this would entail taking the salary amount on the Ordinance and dividing it by 24 pays. Hourly positions would be paid for hours worked within a certain pay period. The Mayor advised there has been some push back from a few employees who do not want to switch to 24 pays. She reported a list of the proposed pay periods and pay dates were given to departments to distribute to their employees so that employees were aware that this is something the City is considering. She stated unfortunately there is information that is out there to employees that is not accurate and was not explained correctly. She reported it has even gone as far as there are petitions that employees have signed requesting the City remain at 26 pays. The Mayor reported by State Statute, this decision is up to the Clerk-Treasurer. Teresa advised this is a very hard decision and the intent is to hold a conversation with the Council to get their feedback. She stated if this is the direction that the City wants to move forward on, this would be the year to do it as employees get paid December 30 th, so it would be a little over two weeks if we changed to the 15 th and the last day of the month. Councilman Galloway asked the Clerk-Treasurer if the Council s opinion is four to three to not change to 24 pays, would she still change it. Teresa stated probably not. She stated if she is asking for the Council s input and guidance for the City and there s justification for it, she wants to take the employees concerns into consideration as well. She stated in the end, what is the best route is for the City. The Mayor stated she doesn t think a decision needs to be made tonight. Teresa stated she believes the sooner the better so that employees are aware of what is going to happen. The Mayor stated she believes the majority of the employees don t have an opinion one way or the other. For those that do,

4 she has asked other than it is a change, what is the problem. She reported she hasn t gotten a lot of response to that question. Employees are still getting paid the same amount and are getting paid pretty close to the same cycle. Bill Lott, LaPorte Firefighter and Fire Union President, stated as the union president he has to do what his membership wants and they are saying if the majority of the employees don t want to change, is the benefit that great to change it anyway. If the Clerk-Treasurer s Office is going to run smoother, if it is going to be that much of a difference then make the change. But this seems to only be an issue every ten or eleven years and he realizes that it creates a headache for two consecutive years. Mr. Lott stated he doesn t mean to throw Teresa under the bus, but in conversations he has had with her, she has indicated that it would be a pretty big deal to switch to 24 pays. Teresa stated it will cause extra work in her office as we will need to contact all the providers where employees have deductions withheld from their checks to notify them that we will be switching from 26 pays to 24 pays. She stated once that is done and those changes are made in the computer that issue will be taken care of. Further discussion was held regarding this issue. Councilman Stabosz recommended that for peace of mind, he thinks the value added for employees receiving a check every two weeks is probably worth leaving it as it currently is. Councilman Galloway stated he has received a lot of calls and thinks it should be left as is also. Councilwoman Machek reported no one has contacted her one way or another, but based on her personal experience, as she has been paid both ways, she feels getting paid on the 15 th and 30 th is easier to budget and more consistent. Councilwoman Scherer advised she only talked to one person and they said that it didn t matter to them one way or the other. She reported when she asked that individual why he thought employees were against the 24 pays, the only reason he could come up with is that being paid 26 times a year, twice during the year you receive a third paycheck and maybe they thought of that as a freebie. Councilwoman Scherer stated she thinks the 24 pays makes more sense. Becca McCuaig, City Attorney, stated it may be beneficial to talk to employees who are in favor of changing to 24 pays or who don t care one way or the other. You are only hearing from those that don t want to make the change. Councilman Stabosz asked for input from the Department Heads that were present and their take with this issue. Mark Schreiber stated it is difficult to say what the employees are feeling as we are just having these conversations with them now. He stated once they have the accurate information they might be able to make a better determination. Mr. Schreiber stated up until the petition was distributed, his employees hadn t said a word to him about this issue. He advised based on the conversations today, he will be meeting with his employees on Friday to discuss the situation. The Clerk-Treasurer asked where is this petition. Mr. Schreiber stated he does not know, but a petition that is signed without all the information is only worth exactly that. He stated once he sits down with his employees on Friday and explain to them what is happening, why it is happening and answer their questions, he would have a better sense of where they are at with regard to changing to 24 pays.

5 Chief Snyder stated he can only speak for himself, but what he has heard through the Fire Department pretty much echoes what Bill Lott said earlier. He stated when he has asked the reasons they are opposed to changing to 24 pays, they really don t have an answer. Chief Snyder stated he became aware of the petition yesterday at the Department Head meeting. He stated he understands it is on the union bulletin board at the station which is allowed as long as it is not disruptive to the department. Councilwoman Scherer asked if this is addressed in the Fire Union s contract. Chief Snyder stated it is, however, if there is a State Statute that conflicts with language in a contract, State Statute would override the contract. He also stated the contract is signed with the Board of Public Works and Safety for which the Clerk-Treasurer is not a member, she only attests their signatures. Mike Fraze reported only a few of his employees actually talked to him and their reason for leaving it at 26 pays is because they like getting that third pay twice a year. He stated he has talked to his employees and will talk with them again. Teresa stated whatever the decision is, it is an extremely difficult one for this administration to make. However, she would hope that through the years we have gained the employees respect enough to know that we have stood up for them many times to help them get the things that they need. Teresa stated her hope is that we work as a team no matter what the decision is and not let it fester and become ugly. The Mayor stated she agrees with that sentiment. She stated she believes this is something that can go both ways and she sees both sides to the situation and she hopes that it isn t something that becomes divisive amongst folks. Mayor Milo stated this topic came up at the last Council meeting and as she was not there she would like to address it now. She reported this concept was discussed with the Finance Committee and both unions. A schedule was created to show when the pay periods would end and checks issued. This was sent to departments so employees were made aware of what the City was considering. She stated as far as not communicating with the employees, it was communicated to Department Heads with the intent of starting to have conversations with the employees about what was being proposed. The Mayor stated at no time was this ever meant to be secretive or a hidden agenda by the administration. Mayor Milo stated it is unfortunate that the schedule was left out at a Fire Station and one shift that didn t get any explanation ran with it. She stated what became an issue probably didn t need to be an issue had folks been here to have the conversations that needed to be done. The Mayor stated we are trying to get the information out and communicate with all the varying entities in a way that unfortunately had some hick-ups previously that certainly weren t intended and certainly provided a false impression of how things were handled. Teresa advised this something that is not on the Salary Ordinance so there isn t a timeframe as to when a decision needs to be made, however, the sooner the better. Mayor Milo asked if there were any issues, questions or concerns with the amounts for Councilman Stabosz noted that the overall increases are greater than the Consumer Price Index increases, so it is a little bit of a catch up for employees after much suffering over the past decade. The Mayor reported as far as this administration goes, the employees have received an increase every year. She reported the City has tried to incrementally get up to the standards that are comparable to cities of our size and try to get closer to industry standards.

6 ASSESSED VALUATION TREND Mayor Milo reported there are concerns with regard to the City s assessed valuation over the past several years and the fact that it has significantly decreased since She advised we are still in the process of trying to figure out why this has happened and have hired Umbaugh & Associates to look into it further. Discussion was held regarding this issue and how it affects the City s bonding capacity. The Mayor reported the City has one bond that will be paid off in January and typically when one bond falls off you start a new bond. Because the assessed valuation has decreased so much, the City does not have any bonding capacity for capital projects. She reported the City has looked into other avenues to fund major capital projects particularly a new irrigation system for Beechwood Golf Course and a new fire truck. She reported one way is to have the Redevelopment Commission serve as the vehicle to issue bonds and from what we understand doing it this way would not impact the Redevelopment Commission. The Mayor advised this has not been brought before the Redevelopment Commission as of yet, but will be presented to them at their next meeting. Discussion was held regarding bond issues and lease financing. The Clerk-Treasurer explained the City cannot do a lease financing for an irrigation system or fire truck as they would not be tied to a building. She stated the Fire Station Building Corporation the City utilized when the new fire station was built and fire trucks purchased was for a specific purpose. She reported the Fire Station Building Corporation actually sold the bonds and the City pays lease payments annually to pay for the bonds. The Mayor stated there are many needs within the City and we only have a little less than $2 million if we can do a bond through the Redevelopment Commission. Chief Snyder explained the capital needs for the Fire Department with regard to fire trucks and building improvements. Discussion was held regarding these improvements and the needs for the department. The estimate for a new irrigation system for Beechwood was approximately $1.6 million dollars. Mark Schreiber advised that amount can be scaled back, however, the hydraulic system needs to be converted to electric as the current system is very antiquated. Teresa advised she will be putting the $153, for the sale of the land by Fire Station #3 in the Fire Department s budget for 2017 to help pay for a new fire truck, so the Council will not need to set up a special fund for those proceeds. PAVING Mayor Milo stated the last slide before them outlines the proposed funding and plan for street paving for 2016 and 2017 based on funding available. In 2016 the City is anticipating on spending approximately $2.1 million on paving with the matching Local Road and Bridge Grant and in 2017 a total of approximately $2.4 million with funds from the Local Road and Bridge Grant, wheel tax revenue and Group 2 STP Funds.

7 The Mayor informed the Council the Clerk-Treasurer will need to submit the Notice to Taxpayers within the next couple of weeks so if the Council has any questions, concerns or changes, she will need to know them as quickly as possible because once the budget is published it cannot be increased. Attest: Teresa L. Ludlow, Clerk-Treasurer Approved: September 19, 2016 Approved: Blair E. Milo, Mayor