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FINANCE COMMITTEE 2013/03/18 Minutes The City of Lake Forest FINANCE COMMITTEE Proceedings of the March 18, 2013 Budget Meeting 5:00 p. m. – City Hall Council Chambers I. Call to Order and Roll Call Acting Mayor Schoenheider called the meeting to order at 5:00 p.m. Present: Acting Mayor Schoenheider, Aldermen Novit, Waldeck, Moore, Reisenberg, Palmer and Adelman. Absent: Chairman Pandaleon and Alderman Tack. Quorum present. There were approximately 21 present in the audience, of which twenty were city staff. Staff present: Robert Kiely, Jr., City Manager; Elizabeth Holleb, Finance Director; Diane Hall, Assistant Finance Director; Michael Thomas, Director of Public Works; Cathy Czerniak, Director of Community Development; DeSha Kalmar, Human Resources Director; Mary Van Arsdale, Director of Parks and Recreation; Jeff Howell, Fire Chief and Jim Held, Police Chief II. Consideration of Minutes from the Finance Committee Meeting Held on February 19, 2013. Alderman Novit made a motion to approve the minutes from the Finance Committee meeting held on February 19, 2013. The motion was seconded by Alderman Moore. The motion carried unanimously by voice vote. III. Overview of FY2014 Budget Opening Comments by City Manager – Mr. Robert Kiely, City Manager stated that the overall City budget is increasing by 9%. Included in the increase are grant funded projects. He stated that when removing the grant projects, the overall budget would increase by less than 1%. He stated that the City is in a very good position at this time. He stated that City staff will be bringing forward in the coming months the results of studies and how the results will affect the residents. FY13 Monthly Flash Report – Ms. Elizabeth Holleb, Finance Director reviewed the February Flash Report with the committee. She stated the General fund and Parks and Recreation fund are ahead of the three year average due to the early ERI payoff. She stated the City has received $235,000 from Mettawa for the sales tax revenue from the Oasis. She stated the City will be providing a list of current businesses at the Oasis to Mettawa and the IDOR quarterly to confirm all businesses are recorded correctly. Review of FY14 vs. FY13 Forecast – Revenue and Expenses – Ms. Holleb reviewed several power point slides with the committee. She noted the General fund revenues make up 50% of the City budget and the large increase of revenues in FY14 in the Capital Improvements fund are grants. Alderman Tack entered the meeting at 5:10 Ms. Holleb noted the Golf fund revenue for FY13 includes a $100,000 transfer from the Parks and Recreation fund. She reviewed fund accounting with the committee. She stated the Water fund revenues are projected lower in FY14 as compared to FY13 estimates in relation to the dry summer in 2012 as well as the water rate increase for FY14. She reviewed the expenses of the major funds. She noted the General and Parks and Recreation funds are over budget in FY13 due to the early ERI payment. The Capital Improvements fund is higher in FY14 due to the grant projects. Five –Year Fund Balance Forecast (General Fund) – Ms. Holleb reviewed the Five Year Payroll Forecast with the committee. She noted the FY13 estimates are $1,000,000 under budget due to open positions and restructuring. She noted the IMRF rate will be adjusted before the final budget is presented for approval. She reviewed the Five Year Fund Balance report with the committee. She stated revenues are over budget; therefore the early ERI payment does not Finance Committee Budget Meeting Minutes – March 18, 2013 have a large impact on the fund balance. She explained the 6.8% increase in FY14 is primarily due to the payroll forecast under by $1,000,000 in FY13. IV. Operating Revenues and Expenditures – General Fund Revenues: Primary Assumptions – Ms. Holleb reviewed several slides with the committee detailing the assumptions used to develop the estimated revenues and expenditures for FY13 and to calculate fiscal years 2014 through 2018. She stated the FY13 sales tax revenue does not include the Mettawa payment. She explained conservative revenue estimates have been used for FY14. Potential Legislation - LGDF – Ms. Holleb stated the Governor is proposing reducing local income tax distributed to municipalities. She stated if the proposed legislation is passed the estimated loss in revenue from the General fund is $220,000. Expenditures: BMW Event – Mr. Kiely stated the goal is for the event to be a cost neutral arrangement. He explained the largest cost of the event will be Police coverage. The City has provided an initial budget to the event organizers. He stated the City has included some funding in the FY14 budget for some projects. A report will be provided to the City Council. Central Dispatching – Mr. Kiely stated the City has received the first draft of the Central Dispatching study. He stated the report will be presented to the City Council at the April 15th meeting. He stated the City requested to have all costs reviewed, not just personnel. V. Capital Expenditures FY2014 Capital Improvement Program (CIP) Modifications from November 2012 Draft – Mr. Kiely stated that changes had been made to the Capital Improvement Plan since the November 2012 meeting. He reviewed the proposed changes with the committee. Ms. Holleb reviewed the Five Year Fund Balance report for the Capital Improvements fund. She stated the revenue projection percentage used for Real Estate Transfer Tax is 10%. She stated the Capital Improvements fund can maintain $3.5 million in projects per year. .5% Sales Tax Transfer – Ms. Holleb reviewed the Five Year Fund Balance report for the .5% sales tax fund. She stated the fund is utilized to pay the bond principal and interest payments. She stated staff is proposing a transfer from the .5% Sales Tax fund of excess fund balance to match FY14 grant and study expenditures in the Capital Improvements fund. She reviewed the list of proposed projects the funding would support. Ms. Holleb reviewed the Five Year Fund Balance report for the Motor Fuel Tax fund (MFT). She stated every three years the annual street overlay program is funded from the MFT fund. She stated that it is estimated in FY2018 the fund will have a negative balance. Ms. Holleb reviewed the Five Year Fund Balance report for the Park and Public Land fund. She stated the City attorney has recommended that these funds be kept segregated. Emerald Ash Borer – Mr. Kiely reviewed a simplified plan of the proposed timeline for FY14. He stated a Resident Guide will be developed in May 2013 to provide information enabling residents to make informed decisions regarding the treatment of EAB infected trees. He stated a resident workshop will be held on June 1st at Gorton Community Center. The City will be partnering with the Village of Lake Bluff, Open Lands and Lake Forest College for the workshop. He stated the City will coordinate with the Park and Public Lands and Parks and Recreation Board as to what will happen to City properties. Mr. Kiely reviewed slides showing how right of ways can be affected. He reviewed the FY14 CIP placeholder for EAB treatment. Finance Committee Budget Meeting Minutes – March 18, 2013 He reviewed two cost comparisons depicting different treatment scenarios. The allocation of treatment, removal and replacement can be reallocated. He stated the final data will be gathered in the summer of 2013. This will allow a better understanding of options needed. The committee discussed the different treatments options and doubling the place holder from $200,000 in FY14 to $400,000. The committee stated the topic of EAB will need to be discussed at multiple meetings and the residents will need to be kept informed. Other – The committee discussed the decrease in requested funding of paving City streets. The decrease was in part due to increasing the patching budget line item. City staff is recommending completing an IMS study of City streets every 3 years vs. the current 5 years. This topic will be brought to the City Council on April 15th. VI. Other Funds Golf Fund Five Year Fund Balance Forecast – Ms. Holleb reviewed the Five Year Fund Balance report with the committee. She reviewed the projected transfer from the Recreation fund to cover the annual required debt coverage. She stated in January 2014 the City has added a projected cost for seasonal employees insurance. Advisory Committee Update – Alderman Adelman stated the committee has completed the current year and will meet again in May. He stated numbers are down for the annual lottery, but this will open up opportunities for open golf times. Parks and Recreation Fund Five-Year Fund Balance Forecast – Ms. Holleb stated this is the first time that a Five-Year forecast has been presented to the committee. She stated the transfer to the Golf Fund has been included in the projections as well as the early ERI payoff. She stated the required insurance effective January 2014 has been included in the projections. She stated the replacement for the current software utilized by the Recreation department for program scheduling is included in the capital budget. Water Fund Five-Year Fund Balance Forecast – Ms. Holleb reviewed the Five Year Fund Balance report with the committee. She stated the water rate increase has been included in the water revenue projections. She stated water and sewer capital projects are funded by the Water fund and are transferred to the Water Capital fund. She stated there is a large reserve requirement for the Water fund. She stated in FY14 staff will bring forward to the committee reserve requirements for all funds to be discussed. VII. Studies & Future Considerations Sanitation Study – Mr. Kiely stated this will be the topic at the June Community Forum. He stated this study will generate different options for the committee to consider. Fire Service Consolidation – Mr. Kiely stated the first meeting will be held in April with Lake Forest, Lake Bluff, Highland Park and Highwood. Emergency Telephone Fund - Mr. Kiely stated revenues are not covering costs. He reviewed an E-911 Surcharge survey. He stated in order to modify the current rates the City may need a referendum for approval. He stated the City attorney is verifying this requirement. Finance Committee Budget Meeting Minutes – March 18, 2013 Pedestrian Underpass – Mr. Kiely stated a meeting is scheduled for early April to discuss the engineering of the project. The committee discussed the underpass located at Ravinia. ADA Transition Plan – Mr. Kiely stated staff is reviewing the report provided to the City and is in the process of formulating a long term plan and the tax levy recommendations for the Special Recreation fund. VIII. Opportunity for the Public to Address the Finance Committee: None IX. Adjourn into Executive Session Alderman Novit moved, seconded by Alderman Reisenberg to go into executive session to discuss personnel. X. Adjournment There being no further business, Alderman Adelman moved, seconded by Alderman Novit to adjourn the meeting at 7:28 p.m. The motion carried unanimously by voice vote. Respectfully Submitted, Diane Hall Assistant Finance Director