Ways, Means & Budget Committee November 6, 2003 1:00 p.m. Present: Guests: Staff: Chairman Russ Johnson, Carl Anson, Floyd Boynton, Mike Kunzwiler, John Proud, Carolyn Rush, Kim Seager Legislators Morris Sorbello, Barry Leeman, Art Ospelt, Art Gearsbeck, and Greg Osetek; Legislators-Elect Philip Vashaw and Carl Rusaw; Jane Murphy, Cherylann Nagley Steve Lyman, Bruce Clark, Carol Box, Steve Loadwick, Bob Lighthall, Mark See, Kurt Ospelt, Mark Lichtenstein, Brian Frazier, Phil Church, John Kruk, Maureen Sullivan, Dave Hastings Chairman Johnson called the meeting to order at 1:10 p.m. 1. Review Minutes of October 2, 2003 The minutes of October 2, 2003 were approved by Leg. Boynton, seconded by Leg. Rush and carried unanimously. 2. New Business a. Budget Modifications i. County Administrator Steve Loadwick, Budget Analyst, explained that this budget modification is to establish accounts for distribution of FEMA and SEMO revenue of $65,747 to 126 fire departments for mutual aid provided during the ice storm. Leg. Kunzwiler moved to approve the resolution, seconded by Leg. Anson. Leg. Seager asked if all 126 fire departments were from within the county and how the reimbursement amounts were figured. Mr. Loadwick stated that most the fire companies were from outside Oswego County. Each fire department had a project worksheet to record their resources, and these were compiled by the Fire Coordinator s Office, which kept track of statistics and sent them to FEMA. The motion to approve was carried unanimously.
Ways, Means & Budget Committee -2- November 6, 2003 ii. Sheriff s Department Bob Lighthall, Undersheriff, stated that this budget modification is to accept and transfer federal funding received under the State Criminal Alien Assistance Program. The full amount is $8,665.00 and of that, $1,906.30 will be transferred to Other Fees and Services to pay Justice Benefits, Inc. the percentage owed to them for services in attaining the funding, and the remaining $6,758.70 will be transferred to Food Supplies & Expense. Motion to approve was made by Leg. Rush, seconded by Leg. Boynton and carried unanimously. iii. Planning & Community Development Brian Frazier, Director of Planning and Community Development, requested approval to accept federal funds and establish the necessary accounts, to receive $400,000 in federal funding to conduct brownfield assessments within the Oswego River Canal Corridor. Of that amount, $38,000 will be used for department administrative costs. Motion to approve was made by Leg. Seager, seconded by Leg. Proud. Leg. Seager stated that she encourages Mr. Frazier and other departments to include administrative costs in grant applications whenever possible. The motion to approve was carried unanimously. iv. Treasurer s Office John Kruk, County Treasurer, stated that this resolution is to correct Resolution No. 127 for Energy Recovery Capital Project No. 192 for compliance with Federal Air Regulations. The Capital Reserve Fund should have been from Equipment Reserve rather than Road Construction Reserve. Motion to approve by Leg. Kunzwiler, seconded by Leg. Boynton. Leg. Anson asked if the informational memo reflects any additional equipment from what Resolution No. 127 approved. Mr. Kruk said no, that the same equipment and dollar amount is involved and this simply corrects the accounts. The motion to approve was carried unanimously. b. RESOLUTION AUTHORIZING THE OSWEGO COUNTY DEPARTMENT OF PLANNING AND COMMUNITY DEVELOPMENT TO APPLY FOR A U.S. EPA BROWNFIELD JOB TRAINING GRANT. Mr. Frazier stated that this resolution authorizes the Department of Planning and Community Development to apply for training funding. In conjunction with the brownfields assessment grant and a pending brownfields remediation grant, the department is on a targeted list to apply for training funds to prepare citizens of the county for specialized brownfield remediation work. There is no required local match. Motion to approve by Leg. Proud, seconded by Leg. Rush and carried unanimously. c. RESOLUTION ESTABLISHING THE COUNTY EQUALIZATION RATE FOR SEVERAL TOWNS AND CITIES. Chairman Johnson stated that this is an annual resolution. Motion to approve by Leg. Boynton, seconded by Leg. Anson and carried unanimously.
Ways, Means & Budget Committee -3- November 6, 2003 d. RESOLUTION ESTABLISHING DATE FOR RE-LEVY OF 2003/2004 UNPAID SCHOOL TAXES. Motion to approve by Leg. Kunzwiler, seconded by Leg. Anson. Leg. Seager asked does the county have to make the school districts whole. Bruce Clark, County Attorney, said yes. Leg. Seager asked if we know the cost to the county for doing this. Mark See, Chief Accountant, stated that the cost is up this year but we re-levy on county tax bills and eventually get it back. Mr. Clark stated that the county collects interest and fees. The motion to approve was carried unanimously. e. RESOLUTION ESTABLISHING DATE FOR RE-LEVY OF 2003 UNPAID VILLAGE TAXES. Motion to approve by Leg. Anson, seconded by Leg. Proud and carried unanimously. f. RESOLUTION AUTHORIZING THE FINANCING OF CERTAIN COSTS OF THE 2002 LOCAL GOVERNMENT EARLY RETIREMENT INCENTIVE PROGRAM HERETOFORE ADOPTED, FOR THE COUNTY OF OSWGEO, NEW YORK, AT AN AGGREGATE MAXIMUM ESTIMATED COST OF $985,000.00, AND AUTHORIZING THE ISSUANCE OF $985,000.00 BONDS OF SAID COUNTY TO PAY THE COST THEREOF. Steve Lyman, County Administrator, stated that the legislature approved county participation in 2002 in the early retirement incentive program. The bill came, due in December 2003, for $960,000. There is not sufficient balance in the appropriation line for retirement system costs. Normally one option would be to move funds from contingency to the appropriation account, but the amount exceeds the balance in contingency. Two options exist: 1) Pay a portion of the bill: state legislation has given counties the ability to amortize the bill with the state at 8%. Compared to the open market, this is cost-prohibitive. 2) Issue a bond anticipation note at 1.5% and pay the full amount in December. This is the recommended option. Leg. Kunzwiler stated that the legislature was told last year that this would be self-funded, and asked if Mr. Lyman could explain the discrepancy between that and the current situation. Mr. Lyman stated that he has reviewed all minutes and can find no record of a discussion about financial analysis, projected billing, or accounting to explain how this was planned to be selffunding. Leg. Anson stated that the bond note looks like the cheapest way if we have to pay this. However, we are in the 23 rd month of our legislative term and are indebting the new legislative body for five years. He would rather let them decide. Leg. Seager stated that we are the legislative body that will pass a 2004 budget that would still have to deal with the retirement bill. She said she assumes there is some recommendation in the 2004 budget proposal to pay for next year s retirement bill. Mr. Lyman stated that there are some ways to pay for that bill: the tobacco securitization fund is one, and another is bonding. This involves adjusting our debt service figures. Since we have already committed tobacco securitization funds for debt service, we would have to make an adjustment. Paying off the bill is not in this proposed budget. Leg. Kunzwiler said he agrees with Leg. Anson; as long as there are options to look at next year. Mr. Lyman stated that the optimal approach is to generate savings, put funds into contingency, don t draw them out, and pay the bill when due. Leg. Seager asked how much is in contingency now, and stated that 1.5% is good, but not borrowing is better. Mr. Lyman said there are a number of other obligations yet to hit the floor, such as overruns in Medicaid, that we can t bond. Leg. Seager asked if we can just not pay the bill. Mr. Lyman said that the county chose to participate in the program. It would not behoove us to withhold payment. The state has other ways to take
Ways, Means & Budget Committee -4- November 6, 2003 back money if we don t pay it, such as withholding state aid. Chairman Johnson said that we can t pull the rug out from retired employees. Leg. Proud asked if this problem has been exacerbated by what happened in the Comptroller s office, and said that he has received complaints from town and village officials about the retirement costs. Chairman Johnson stated that this is based on the retirement program the state offered and we bought into; unpredictable factors include how many people will retire and what their final average salaries will be. An estimated range is all that can be planned. Leg. Seager stated that this body adopted the policy at a time when we were told there would be no cost. Leg. Kunzwiler stated that we were told by the previous administrator that this would fund itself and not cost us anything. Mr. Lyman stated that the comptroller s office has been here, reviewed our records, and found our practices costeffective. We have to budget the cost and put it into appropriations. Leg. Anson stated that we can t do anything about what we decided in the past, but we were told that the early retirement incentive would self-pay over two years, because new employees would cost less than retiring employees, and some vacancies would not be filled. Leg. Brown stated that if we can borrow at 1.5%, we are doing good. The bank told her that they can only pay her 1% interest on investment. Leg. Ospelt stated that what Leg. Anson said is right, that we were told unfilled vacancies and lower pay for new employees would self-pay for the program. Leg. Chairman Sorbello stated that the payback is coming in but it can t equal the initial costs of retirement. The motion to approve the resolution was carried unanimously. g. Key Bank Credit Card Presentation Cherylann Nagley of Key Bank Albany, Key Merchant Services, and Nova Information Systems, presented the committee with information about the county having credit card payment capabilities. There are two types of credit card payment systems. One is where departments see payers face to face, the other is where payments are received by mail or phone. Each is a little different, per Visa/MasterCard regulations. Visa/MasterCard follows credit card agents closely to see that their guidelines are followed. Ms. Nagley gave legislators a rate proposal and reviewed portions of the material. There is a one-time only application fee for the county that would apply when the first county office became an agent. The county would be charged a percentage of dollar amounts charged, based on volume, and a transaction percentage. The process would be as follows: credit card payments are processed through the system and within 2-3 days, the payment is credited into the county s account. At the end of the month, fees are invoiced. There is a minimum discount (i.e., monthly fee) of $25 per participating department. The county can also opt into American Express and Discover, which have their own fee structure. Ms. Nagley s company is an authorized agent for them. For telephone and mail credit card charges, the departments would type in the card numbers on a credit card machine. The cardholder s zip code must be typed in, for rate plus address verification. In case of credit card disputes, there is a chargeback to the county every time there is a dispute, which each must be investigated by Key Merchant Services. There are no annual fees or service fees beyond the above. The cost of the credit card machines is a one-time fee of $700 per machine, with a discount on purchases of more than four machines. The machines last for 20 to 30 years. The county would not be allowed to charge a surcharge for credit card payments, but could charge a convenience fee, if they charged it for all forms of payment, including cash or check. This would provide a way to recoup fees. Ms. Nagley has given John Kruk a contact name for the City of Rochester, which is using Key Merchant s credit card payment system, for a reference.
Ways, Means & Budget Committee -5- November 6, 2003 h. RESOLUTION FIXING TIME AND PLACE FOR PUBLIC HEARING ON THE PROPOSED ADOPTION OF THE TENTATIVE COUNTY BUDGET FOR THE YEAR 2004. Motion to approve the resolution with date and time open was made by Leg. Proud, seconded by Leg. Rush, and carried unanimously. Discussion ensued regarding a date and time. Motion to approve the resolution setting the date and time for Thursday, Dec. 11, 2003, at 6:30 p.m., made by Leg. Seager, seconded by Leg. Rush, and carried unanimously. i. Budget presentation by County Administrator Steve Lyman, County Administrator, stated that his 2004 budget proposal to the county legislature was placed in legislators mailboxes with an introductory report. A detailed discussion of the report included review of factors affecting the 2004 budget: retirement system contributions, Medicaid, labor contracts, decreased general fund balance, increased assigned counsel fees, declining revenues from PILOT payments, etc. Immediate and/or ongoing measures to reduce costs include recent workforce reductions, equipment purchasing freeze, more effective use of resources including staff assignments, energy conservation, travel restrictions, standardizing technology, etc. The proposed budget, without changes, would represent a 43% increase in county property tax rate. Mr. Lyman stated that his narrative includes options that, if fully implemented, would reduce that to a 29% increase in the tax rate. One option is to increase sales tax. The majority of counties have asked the state legislature for authority to increase sales tax. Several steps are required: 1. The county legislature passes a resolution to introduce the request into the state legislature; 2. A bill number is sent to each house; 3. The county legislature passes a home rule resolution that references the bill numbers; 4. The state legislature passes a bill, and the Governor signs it; 5. The county legislature enacts a local law to impose the tax increase. If the process moves smoothly, then NYS Dept. of Tax & Finance needs 2 to 3 months to implement it. If the county legislature chooses to reduce the tax levy via an increase in sales tax, at most there would be a half-year of increased sales tax revenue in 2004, or an estimated $2.5 million (based on an increase from 3% to 4% in county sales tax). Another option is to borrow for a portion of the retirement system bill due next year in December. Just as with this year s early retirement incentive program, there are a couple of ways to pay the bill next year other than full payment: financing with the Comptroller, or bonding on our own. The Comptroller himself says that the second option is better. It is not a choice between good and bad, it is a choice between what medicine we administer. Technically it is better not borrowing to pay recurring expenses. However, with our low debt burden, favorable interest rates, and the ability to use tobacco securitization funds for debt service, smoothing this over 5 years rather than hitting property tax payers in 2004 may be preferable. Mr. Lyman stated that the extensive budget review by his staff has been to deliver to the legislature a full picture of the county budget with which to go forward into reviewing each department and aspect of the budget. His goal is to make recommendations that affect the bottom line but still deliver services, and to strike a balance between what the people of the county need and what they can afford. There will be differences of opinion on where to strike the balance. There will be phone calls, letters, and good attendance at meetings. Mr. Lyman asked that we agree to disagree reasonably, with courtesy for each other and the folks who visit us.
Ways, Means & Budget Committee -6- November 6, 2003 Life will go on, the situation will improve, and there are things that we can point to that give us optimism. We will continue to deliver high quality services that residents need and deserve. As the legislature decides on any changes in the budget, if they decide to increase funding in a particular area, they should consider how this will affect priorities in other areas. Discussion ensued about the importance of maintaining a general fund balance. Mr. Lyman stated that a good balance enables the county to pay for unanticipated costs without going straight to the taxpayer. It is hard for businesses to make a business plan when the tax rate keeps increasing and decreasing. Stability is needed for taxpayers, service deliverers, and county employees. Leg. Seager thanked Mr. Lyman for the improved, more user-friendly layout of the budget and asked how much has been cut from department requests to this proposal. Mr. Lyman replied, over $2 million. Another dynamic is that revenue projections were taken down to more realistic levels based on history. Leg. Anson noted that a large change is reflected in the Central Services budget for telephone expense. Mr. Lyman stated that while Central Services will still pay for and monitor telephone bills in the same way, the bills will be reflected in department budgets to allow department heads to better monitor this expense. Leg. Boynton asked what the status was on tobacco securitization. Mr. Kruk stated that Hiscock & Barclay and First Albany Bank are working on it. We have formed a corporation, which held its first meeting earlier today. The next meeting will be Nov. 17. Leg. Proud stated that on page one of the budget, Legislative Reimbursement has an increase of approximately $14,000. He made a motion that the increase be dropped and revert to the previous salary for legislators. Chairman Johnson stated that other jurisdictional committees will review the budget before Ways & Means, but that this measure sends a good message. Leg. Kunzwiler seconded the motion and it was carried unanimously. Leg. Kunzwiler stated that if we implement all the possible options, we also have to look at coming up with a 5 to 10 year business plan to take what we do in government and make it more cost efficient. Mr. Lyman stated that Mark Lichtenstein, Deputy Superintendent of Solid Waste, brought a proposal to Public Works Committee this month to re-do the whole way we do recycling. Structural reforms take time to walk through. You do budget every day. It is tough to take an already good system and find ways to improve it, as Mr. Lichtenstein did. Leg. Seager stated that she agrees with Leg. Kunzwiler completely, and that the meeting with towns and cities to discuss how governments do business and ways to effectively interface the services of different levels was very productive. Leg. Kunzwiler cited other areas that can be looked at such as county cars. Chairman Johnson asked Mr. Lyman what other measures could bring the tax levy increase down further. Mr. Lyman stated that in August, he reviewed staff responsibilities and recommended the layoff of employees. The process included looking at functions and assignments that were less critical to county government and recommended reductions that would not reduce programs and services. In 2003, 100 full time and 85 part time positions have been eliminated. If you look at personnel costs, they are all tied to delivery of services. When you allocate no dollars for equipment, and tighten every area you can, then for further cuts you are really talking about services. These are fundamental policy decisions.
Ways, Means & Budget Committee -7- November 6, 2003 If it were easy to do, we d have already done it. There have been serious workforce reduction efforts for the past couple of years. For further workforce reductions, the question becomes, what services do legislators want to eliminate or reduce. Chairman Johnson stated that we as legislators need to start looking at the budget. We have approximately a month and a half, for jurisdictional committees and this committee to review and make changes. There are mandated services over which we have no control, but we can control how we effectuate them to some extent. Discussion ensued over the impacts of workforce reductions that have already occurred. Leg. Chairman Sorbello stated that this administrator came on eight months ago and along with his staff had done a great job with a difficult task so far. Leg. Ospelt stated that in defense of department heads about the revenue projections being higher than actual in the past, they were asked to do it that way. Mr. Lyman stated that on page 7 of his narrative, there is a summary of the 2003 to 2004 revenue projection changes to make the numbers more realistic. He stated that the legislature is charged with the burden of adopting a 2004 budget. ADJOURNMENT - There being no further business the meeting adjourned at 3:08 p.m. under motion by Leg. Seager, seconded by Leg. Rush and carried unanimously. Chairman Johnson stated that the next meeting would be on Monday, November 24, 2003, at 9:00 a.m. APPROVED BY: Russ Johnson, Chairman