BUDGET WORKSESSION

JULY 20, 1999

CITY COUNCIL OF THE CITY OF ABILENE, TEXAS

BASEMENT CONFERENCE ROOM

The City Council of the City of Abilene, Texas, met in budget worksession at 1:00 p.m. on July 20, 1999, in the Basement Conference Room of City Hall. Mayor Grady Barr was present and presiding with Councilmen Paul R. Vasquez and A. Don Drennan, Councilwoman Carol Martinez, Councilmen Rob Beckham and Versie L. Brown, Jr., and Councilwoman Kay Alexander. Also present were City Manager Roy McDaniel, Assistant City Manager Mike Morrison, Director of Finance David M. Wright, City Attorney Sharon Hicks, City Secretary Jo Moore, and various other members of staff.

Councilwoman Kay Alexander gave the invocation.

Mayor Barr reviewed the expected budget worksession schedule, stating the meeting would conclude today by 4:30 p.m. if possible. Councilman Vasquez stated he would need to leave the meeting at 3:30 p.m. Mayor Barr noted Council will go into executive session between 3:00 p.m. and 3:30 p.m. today.

City Manager Roy McDaniel stated staff would spend today reviewing budget information with Council. Following the review, Council decisions would be made either Wednesday or Thursday.

Budget worksessions began with City Manager Roy McDaniel's letter outlining the list of programs and projects. Mr. McDaniel reviewed and explained the following line items:

Mr. McDaniel stated there are currently 69 vacant positions (including 12 in fire, and 7 in police); with only approximately 40% funding being recommended in this budget for those 69 vacancies. Mr. McDaniel stated he strongly recommends, if year-end funds exist, putting those funds into equipment replacement, self-insurance, and facility maintenance.

David Wright, Director of Finance, reviewed the General Fund Summary of Revenues and Expenditures, and explained the sales and use tax, franchise taxes, and the miscellaneous user fees.

Mr. McDaniel noted the general guideline used in determining a fee amount is that the fee should cover the expense of the service, but because there is a loss of public use due to high fees, this guideline is not always easy to follow. The fee structure has to be analyzed periodically. Mr. McDaniel briefed the Council on the history of the ½ cent sales tax and the Economic Development Department.

Mr. Wright reviewed the General Fund Summary of Departmental Expenditures and Capital Outlay Requests.

Mr. McDaniel noted under the Capital Outlay Requests, the $315,000 for library books is low based on a per capita.

Mr. McDaniel then briefed the Council on the Equipment Replacement Fund and stated an analysis of each piece of equipment is done each year and Mr. McDaniel emphasized the need to put funds in the Equipment Replacement fund when possible.

Following review of unfunded requests, Council recessed at 2:30 p.m. for a five minute break.

Council reconvened and Mr. Wright continued with review of the Estimated Ad Valorem Taxes and Distribution; History of the Tax Rate from 1990-91 through 1999-00, Assessed and Estimated Value of Taxable Property and the CDBG Summary of Projects.

Mike Morrison, Assistant City Manager, distributed a July 22, 1999 Council agenda item which reflects a change from the proposed budget for the CityLink (Local Match for Access to Jobs) proposed project. The original recommendation for no funding has been changed to a recommendation of $20,000. Mr. Morrison explained the FTA matching grant funding for the "Access to Jobs" program intended to expand the CityLink services as part of the Welfare to Work initiative.

Councilman Beckham requested the total budget amount for the Call for Help Program. Staff stated that information will be provided to Council at tomorrow's budget worksession.

Mr. McDaniel stated the least cost possible to the property tax rate is his goal, and if CDBG funding can be obtained, he will obtain it.

Council comments concerning CDBG proposed projects included: if these items (Call for Help, etc.) are really needed consideration should be given to funding them from the General Fund and freeing up CDBG funding for other needs; providing some funding to the Day Nursery of Abilene; and when non-profits or the City go public with needs, sometimes the public will provide for these needs.

Mr. Wright reviewed the HOME Investment Partnership Program (HOME) and the Housing Fund, which are 100% Federally funded; Senior Citizens Fund summary of revenues and expenditures; Health Services Fund summary of revenues and expenditures; and the General Obligation Bond Debt Service Fund statement of revenues and expenditures.

Mr. McDaniel reviewed the Water & Sewer Operating Fund, stating the Fund is in excellent shape. Mr. McDaniel further stated that although there is no funding in this budget, the question of adding fluoridation to our water needs to be discussed. Mr. McDaniel further stated the cost is minimal, with the State Health Departments reimbursement and only $22,000 per year operating cost. Opinions on fluoridation vary from people being violently opposed, to the unconcerned.

Mayor Barr stated there is some opposition to fluoridation, and he has been contacted by one group that supports the issue. The Mayor further stated an election could be held in conjunction with the State Constitutional Amendment election in November, at a cost to the City of approximately $15,000.

Dwayne Hargesheimer, Director of Water Utilities, briefed the Council on an $800,000 to $900,000 project for the use of effluent return water on all of the golf courses. Mr. Hargesheimer stated with no pumping cost from the wastewater plant to Grimes the project would be very cost effective and we have enough permitted water to get started. No Council action was required at this time.

Councilman Vasquez left the meeting at 3:35 p.m., just prior to Executive Session.

Mayor Barr recessed the Council into executive session pursuant to Sections 551.071 and 551.074 of the Open Meetings Act, to seek the advice of the City Attorney with respect to pending and contemplated litigation and to consider the appointment and evaluation of public officers.

The Council reconvened from executive session and reported no action taken.

There being no further business, the meeting adjourned at 4:00 p.m.

Jo Moore, City Secretary

Gady Barr, Mayor

BUDGET WORKSESSION

JULY 21, 1999

CITY COUNCIL OF THE CITY OF ABILENE, TEXAS,

BASEMENT CONFERENCE ROOM

The City Council of the City of Abilene, Texas, met in budget worksession at 1:00 p.m. on July 21, 1999, in the Basement Conference Room of City Hall. Mayor Grady Barr was present and presiding with Councilmen Paul R. Vasquez and A. Don Drennan, Councilwoman Carol Martinez, Councilmen Rob Beckham and Versie L. Brown, Jr., and Councilwoman Kay Alexander. Also present were City Manager Roy McDaniel, Assistant City Manager Mike Morrison, Director of Finance David M. Wright, City Attorney Sharon Hicks, City Secretary Jo Moore, and various other members of staff.

Councilman Drennan gave the invocation.

Mayor Barr called the worksession to order and complimented staff and Council on the preparations that had been made on the budget.

City Manager Roy McDaniel briefed the Council on the expected schedule for today's worksession.

In reviewing the budget summaries for the Utility and General Special Services Division, David Wright, Director of Finance, noted the Water Department pays the franchise fee just as other utility companies do, and a recovery cost. Mr. Wright then reviewed the Cypress Plaza Fund Revenues and Expenditures, stating the plaza was originally purchased for a library, and some profits from it help pay for the branch library. Mr. Wright further stated revenue from the Depot and eventually the Railhead will go into the Cypress Plaza Fund.

Mr. Wright reviewed the Transit System Fund and the Equipment and Replacement Maintenance Funds. Mr. Wright explained the purpose and procedural operation of the Equipment Maintenance and Replacement Funds and concluded with review of the Summary by User Fund.

Following a briefing on the history of the Self Insurance Fund, Mr. McDaniel's comments concerning the fund included: employee rates may be raised in January 2000; he recommends the City put money in this fund at year end if possible; liability, workman's compensation, fire, and casualty are all covered by the self-insurance fund; West Central Texas Municipal Water District employees are a part of the city's plan; PPO is our Health Insurance, which includes prescription drugs; the City has saved $1-1/2 million through self-insurance; next year, health claims are expected to be $4 million, with self-insurance still being a savings.

Mr. Wright reviewed the DCOA Statement of Revenues and Expenditures and the number of Total Authorized Full-Time Personnel by Department.

Following the staff review of the Revised FY99 and Proposed FY 2000 Budgets, Council comments and/or discussion included the following:

Councilman Vasquez questioned the makeup of the tax rate structure. Mr. Wright explained it is being proposed that .61 cents be added to the tax rate for new expenditures and 1.7 cents be added to pay for bonds approved by voters last year. Councilman Vasquez asked what can be done to not add the .61 cent tax increase, and Mr. McDaniel then gave a summary of the items to be funded with the .61 cents.

Councilman Drennan stated as done in years past, he would ask to leave the operations tax rate level, which would reduce the proposed budget by $175,000, and have staff choose and set aside items to be reviewed for funding at year's end. Mr. McDaniel replied for the last 7-8 years there has been a year-end balance and he will manage the vacancies, which contribute to this balance, as best he can. Although he hopes to have $200,000 to $400,000 at year's end, Mr. McDaniel stated we can't be assured of that. Mr. McDaniel further stated he would recommend putting year-end funds into the Equipment Replacement, Self-Insurance, and Facility Maintenance funds.

Councilwoman Alexander stated in leaving the tax at the current rate, Council is setting a precedent that will be more difficult for staff to work with next year.

Councilman Drennan stated $175,000 cut in a $52 million budget is manageable and Council owes it to the taxpayers to hold the tax rate as low as possible, not to be lowered but not to be wasted either.

Councilman Beckham stated franchise fees haven't changed much, and asked how much flexibility we have over those dollars? Mr. McDaniel replied state law regulates franchises fees, so we have very little control over those; and no control over the sales tax. Mr. McDaniel further stated the philosophy the Council adopts, the direction they go in, and changes they make have an overall effect on our City. Council has the opportunity this year to add .61 cents with little impact to our citizens, but it will be more difficult to do so over the next few years.

Councilman Beckham stated the economy is good, and if we have to raise taxes later, it's better to say we have not raised taxes in four years versus we have only raised taxes .61 cents in four years. Mr. McDaniel replied we pay for what we need and want, but if the sales tax drops and we still want to fund the Expo, what will we do then? Mayor Barr suggested we fund the Expo now, not at year-end.

Mr. Wright explained the possible impact of the sales tax holiday weekend.

Councilman Beckham questioned the necessity of purchasing library books all at one time. Mr. McDaniel replied books are bought throughout the year based on new titles, publication dates, etc., and the Library has to know what has been funded for them to order. Mr. McDaniel stated funding outside agencies is not his operation, but if Council wants to fund them (i.e., Expo), then we will fund them.

Councilman Vasquez questioned if departments are down to basic budget needs. Mr. McDaniel replied expenditures and needs are reviewed through the revised budget process.

Councilman Vasquez suggested looking at what is being recommended to see if anything can be removed from the proposed budget. Mr. Wright explained the budget review process that is gone through in order to determine what will ultimately be proposed to Council.

Mr. McDaniel stated there is a price you pay for options and there is a risk in cutting the $175,000 proposed funded items, a risk he would like for the City to move past. Mr. McDaniel further stated if cuts are to made, he would suggest removing funding for the Expo Center, Cultural Affairs Council, Sister Cities, and street name change signs, and for Council to be aware if at year end the money is not there, then those four would not be funded.

Councilman Drennan stated he is willing to take the risk, based on his belief that the funds will be available at year-end. Mayor Barr stated he is not willing to take that risk.

Councilman Beckham stated the Expo Center and the arts are important, but a compromise is necessary. Mr. McDaniel stated the Expo Center and Arts add to the economic and sales tax base, but the equipment replacement fund is important too. Mr. McDaniel further stated it is not financially prudent to continue to build budgets on year-end balances.

Mayor Barr asked what would a year-end balance go to, if it exists. Mr. McDaniel replied we would first look at the unfunded list, then take it to the audit committee, and again suggested he would recommend putting it in the equipment replacement, self-insurance, and facility maintenance.

The Council took a short recess at 2:25 p.m.

Upon the Council reconvening, Mr. McDaniel stated possible cuts from the budget that would result in complaints, although we don't have to provide these services, are street name change signs and street maintenance material.

Councilman Drennan stated his basic philosophy is to keep the tax rate as low as possible. Mr. Drennan further stated every year we have had year-end dollars, and that this is not the year to raise taxes with bonds having just been approved.

Mr. McDaniel called attention to the unfunded list of budget items and to items not bond approved.

Councilwoman Martinez questioned Mr. McDaniel's concern in reducing the budget by $175,000 when we've reduced the budget in the past? Mr. McDaniel replied that it is not good financial management to continue to budget depending on year end dollars. Mr. McDaniel reminded the Council of their preference to fund the cultural affairs and the Expo Center, and they now have to determine how those items will be funded.

Councilwoman Alexander stated that although it may be a small amount that could be justified and deferred, eventually it would have to be paid for.

Councilman Vasquez stated he knew taxes would have to be raised due to the approval of bonds, but he wasn't expecting an additional increase.

Councilman Drennan moved to accept the budget as submitted and adjust the General Operating Fund in order to keep the operations tax rate level at 43.20 cents. Councilman Vasquez seconded the motion.

Councilman Drennan then amended the motion to leave the operations tax rate level at 43.20 cents, which would reduce the proposed budget by $175,000. Councilman Vasquez seconded the motion.

Council discussed the need to base decisions on needed dollars and the cost associated with those dollars, and requested Mr. McDaniel prepare a list of items that could be removed from the proposed budget ranging from $175,000 to $300,000.

The motion and second were withdrawn in order for the City Manager to prepare options for removal from the proposed budget ranging from $175,00 to $300,000.

There being no further business, the meeting adjourned at 2:55 p.m.

Jo Moore, City Secretary

Grady Barr, Mayor

BUDGET WORKSESSION

JULY 22, 1999

CITY COUNCIL OF THE CITY OF ABILENE, TEXAS,

BASEMENT CONFERENCE ROOM

The Council reconvened from executive session and reported no action taken.

The City Council of the City of Abilene, Texas, met in budget worksession at 11:45 a.m. on July 22, 1999, in the Basement Conference Room of City Hall. Mayor Grady Barr was present and presiding with Councilmen Paul R. Vasquez and A. Don Drennan, Councilwoman Carol Martinez, Councilmen Rob Beckham and Versie L. Brown, Jr., and Councilwoman Kay Alexander. Also present were City Manager Roy McDaniel, Assistant City Manager Mike Morrison, Director of Finance David M. Wright, City Attorney Sharon Hicks, City Secretary Jo Moore, and various other members of staff.

Mr. McDaniel briefed the Council on the process staff follows in preparing the proposed budget, then noted Council had requested staff to again review the proposed budget for any possible reductions.

Mr. McDaniel stated in looking at these options, he would recommend: Funding for the Street name change signs be reduced by $150,000, leaving $30,000 for replacement of vandalized and damaged signs; street maintenance material budget of $490,000 be reduced by $25,000, which results in a total of $175,000 in reductions. Mr. McDaniel stated the City maintains our streets, but we contract out street construction.

Councilman Vasquez questioned if street material cost is reduced, what control we will have over seal coating, etc. Mr. McDaniel replied we have some control, but if we have less funding we'll do less work, and this could result in hiring fewer temporary workers.

Councilman Beckham asked for the City's 10-year history of deficit, and if library books are purchased every year. Mr. Wright replied the 10-year history could be supplied to Council and that the increase is due to the branch library. Library books are purchased every year. Mr. Wright noted the nationwide per capita per year for library books is 2.84 and that Abilene is below the per capita average.

Mayor Barr stated the average $50,000 home would have a tax increase, above the bond sale rate, of approximately $3.00 per year if the proposed budget is approved.

Councilwoman Alexander stated she is pleased with the City Manager's proposed budget and feels it is a lean budget, but still addresses the City's needs.

Councilwoman Alexander then moved to approve the First Reading of the Ordinance Approving the Revised 1998-99 Budget and Proposed 1999-2000 Budget as submitted by the City Manager. Councilwoman Martinez seconded the motion and the motion carried.

AYES: Councilman Vasquez, Councilwoman Martinez, Councilmen Beckham and Brown, Councilwoman Alexander, and Mayor Barr.

NAYS: Councilman Drennan.

Councilwoman Martinez moved to approve the First Reading of the Ordinance Setting the 1999 Tax Levy at 56.21 cents. Councilwoman Alexander seconded the motion and the motion carried.

AYES: Councilman Vasquez, Councilwoman Martinez, Councilmen Beckham and Brown, Councilwoman Alexander, and Mayor Barr.

NAYS: Councilman Drennan.

Councilman Brown moved to approve the First Reading of the Ordinance Setting the City's 2000 TMRS Contribution Rate. Councilwoman Alexander seconded the motion and the motion carried.

AYES: Councilmen Vasquez and Drennan, Councilwoman Martinez, Councilmen Beckham and Brown, Councilwoman Alexander, and Mayor Barr.

NAYS: None.

Councilman Vasquez emphasized that in the area of CDBG funding, the Council needs to consider next year placing Senior Citizens and Call for Help into the General Budget to eliminate depending on CDBG, and stated he appreciated the good spirit between Council and staff during these budget worksessions.

Mr. Wright explained due to a change in State law, the second reading and public hearing dates could be August 12 for the tax rate Ordinance only, or August 26 or September 9 could be public hearings and second readings for the Budgets Ordinance, Tax Levy Ordinance, and TMRS Contribution Rate Ordinance. Once staff knows the exact dates, the information will be made public.

Mayor Barr, City Manager Roy McDaniel, and Finance Director David Wright stated appreciation to the Council and staff for their input in the preparation of the budget.

There being no further business, the meeting was adjourned at 12:11 p.m.

Jo Moore, City Secretary

Grady Barr, Mayor