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HomeMy WebLinkAboutMeeting Notes 1-28-2015 1 BUDGET COMMITTEE Meeting Notes - January 28, 2015 Committee present: Eric Levine - Chairman, Herb Engman, Pat Leary (via Face-Time) Staff present: Mike Solvig, Judy Drake, Jim Weber Others present: Bill Goodman Meeting was called to order at: 12:03 p.m. AGENDA ITEMS: • Review and approve meeting notes. Committee members reviewed and approved the meeting notes from August 27, 2014 and September 24, 2014. • Set 2015 Budget Committee meeting dates. The committee reviewed and approved the proposed meeting schedule for 2015. The committee will continue to meet, for the most part, on the last Wednesday of each month. Exceptions to this schedule in 2015 will be April, where the meeting will be held on the 22nd, and September, where the meeting will be held on the 23rd. Meetings will begin at 12:00 noon, and will be held at Town Hall in the Aurora Room. • Discuss 2015 Budget Committee priorities. The committee identified the following topics as priorities for 2015: - Review Reserve Funds and Accounts, setting maximum balances where appropriate. - Review Town’s Investment Policy. - Continue review of the Town's voluntary contributions to community organizations. - Review Town’s Long-Term Debt. - 2015 Bond Issue. - Property Tax Cap / Property Tax Freeze. - Five-Year Financial Projections. - Five-Year Capital Improvement Plan and 2016 Capital Budget. - 2016 Town Budget. Mr. Solvig commented that one of the committee’s priorities in 2014 had been to review the Town’s Asset Inventory. As the year progressed, attention to other priorities prevented the Committee from focusing on this topic. Mr. Solvig stated that while the Town does not keep a “formal” asset inventory, the capital project and equipment replacement schedules from Public Works provide sufficient information for budget purposes. Mr. Engman commented that he does not want staff to spend a lot of time working on this if little is expected to be gained. Mr. Goodman stated that having a list of water tanks, showing year constructed, and a list of parks and playgrounds would be very helpful. Ms. Drake stated that the Town has several listings of properties, including parks, trails, buildings, water tanks and other structures for insurance purposes. This listing was updated last year, and includes pictures of most structures. 2 Staff will assemble the available asset schedules for the Committee’s review at a future meeting. • Preliminary Financial Report for the Year Ended December 31, 2014. The Committee reviewed the preliminary Financial Report for the Year Ended December 31, 2014. Results were generally positive, with fund equity increasing in all funds except the Light District Funds. In those funds, the decrease in fund equity had been budgeted to bring existing fund equity down to a more appropriate level. In the Forest Home Light District, expenditures to operate and maintain the entry features installed in 2010 and 2011, at the request of Forest Home residents, continue to be higher than expected. Mr. Goodman inquired about the almost $360,000 remaining in the Sand Bank Road Improvements Capital Project Fund. Jim Weber explained that the original budget figure of $750,000 anticipated having the work done by an outside contractor. The work was actually done by a combination of our own work force with mutual aid from other municipalities, resulting in large savings. Mr. Solvig explained that the remaining funds would be used for Phase 2 of the Sand Bank Road Improvements, currently scheduled for construction in 2016 at an estimated cost of $650,000. Staff is still waiting for a few final items (including December sales tax payment, December fire protection invoice, and December attorney’s invoice) before closing the books for 2014. • Results of 2014 Bond Issue. The committee reviewed the report on the 2014 Bond Issue. In December 2014, the Town issued $3,910,000 in long-term general obligation debt. - $910,000 Public Improvement Refunding (Serial) Bonds, Series 2014-A: The proceeds from these bonds will be used to refund the remaining Public Improvement (Serial) Bonds, Series 2004- B, issued in 2004 with an interest rate of 4.25%, to finance construction of the West Hill and Coy Glen water tanks. Issued at a par amount of $910,000 plus a premium of $34,606, less issuance costs of $25,052, net proceeds for the Series 2014-A bonds totaled $919,554. This amount will be held in escrow at the Bank of New York Mellon to pay the outstanding Series 2004-B bonds later this year. Issuance costs represent 2.7% of total proceeds. With an average interest rate of 2.14%, this refunding will result in aggregate budgetary savings of $95,808 over the next ten years. - $3,000,000 Public Improvement (Serial) Bonds, Series 2014-B: This new general-obligation debt was issued to finance the Town’s 2014 capital projects. These projects include the following: Sand Bank Road Improvements $ 750,000 Winners Circle Improvements 200,000 Christopher Circle Water Tank Replacement 850,000 Coddington Road Water Main Improvements 1,200,000 Issued at a par amount of $3,000,000 plus a premium of $121,418, less issuance costs of $67,316, net proceeds for the Series 2014-B bonds totaled $3,054,102. Issuance costs represent 2.2% of total proceeds. The average interest rate for this issue is 2.81% over the 15 year life of the bonds. Mr. Solvig commented that the cost of borrowing money has remained lower for a longer period of time than anyone would have predicted. The average interest rates for the 2011, 2013, and now 2014 bond issues are all below 3%. 3 • Discuss Town's Reserve Funds and Accounts. The committee reviewed and discussed the report on the Town’s various reserve funds. - Parks and Open Space Plan Reserve: This reserve account in the General Fund had a balance of $735,544 as of 12/31/14. Mr. Engman stated that he would recommend continuing the annual contributions to this account as we cannot predict when land will become available for purchase or what the cost may be. Mr. Goodman asked if these funds are also available for parks development. Mr. Solvig replied that he has never found anything that would preclude our using these funds for parks development, it would just require a resolution of the Town Board to that effect. An additional $75,000 in unreserved fund balance was designated as reserved for this purpose by the Town Board on January 12, 2015 (Resolution No. 2015-014f). The Committee is not recommending a maximum amount to this reserve at this time. It is suggested that the question of a maximum reserve amount be revisited when the balance in the reserve reaches $1,000,000. - General Benefit Reserve: The aggregate balance of this reserve as of 12/31/14 was $366,038. The balance by fund is as follows: General Townwide Fund $ 180,391 General Part-Town Fund 63,548 Highway Part-Town Fund 99,876 Water Fund 14,220 Sewer Fund 8,003 Total - Benefit Reserve: $ 366,038 The Committee recommends that the maximum of this reserve be set at $350,000. Balance in excess of the limit at year-end to be returned to the unreserved fund equity of the host funds. - Preserve Maintenance Reserve: The General Townwide Fund includes reserve funds designated for the maintenance of the Pine Tree Wildlife Preserve, donated to the Town by a local family in 2013. In conjunction with the donation of the land, the amount of $40,000 was provided for future maintenance of the preserve. As of 12/31/14 the balance of this reserve totaled $40,036. Future income for this reserve will be limited to interest earnings. As this balance is expected to decrease over time, the Committee is not recommending a maximum amount for this reserve. - Preserve Maintenance Reserve: In 2014 the Town purchased the development rights to the Indian Creek Farm with financial assistance through a State of New York grant. This grant included $10,000 to be held in reserve by the Town, designated for the stewardship of the Indian Creek Farm lands. For the year ended 12/31/14, the balance of this reserve totaled $10,002. Income for this reserve will also be limited to interest earnings. As this reserve is also expected to decrease over time, no maximum amount is recommended. - Highway Equipment Reserve: The Highway Part-Town Fund includes reserve funds established for the purchase/replacement of highway equipment and machinery. The balance as of 12/31/14 was $212,109. This reserve is funded by sale of surplus machinery and equipment, with additional income from interest earnings. $62,325 was added to this reserve in 2014 through the sale of surplus equipment. 4 After discussion, the Committee r ecommends that the maximum of this reserve be set at $250,000. Balance in excess of this limit at year-end would be returned to the unreserved fund equity of the Highway Fund. - Risk Retention Fund: This fund is used to account for expenditures for 1) direct employee health and wellness expenditures, including work-related emergency room and clinic health care visits, and 2) repairs to equipment and facilities not covered by insurance or until reimbursement from insurance is received. Income for this fund is derived from annual budgeted inter-fund transfers, plus insurance recoveries and interest income. Fund balance was $141,874 as of 12/31/14. Recommend that the maximum fund balance of the Risk Retention Fund be set at $150,000. Balance in excess of the limit at year-end to be returned to the unreserved fund equity of the contributing funds. - SJC Account in Sewer Fund: The Sewer Fund includes funds held for “SJC purposes”, which totaled $305,307 as of 12/31/14. Mr. Solvig stated that over the past four years these purposes have been defined as either 1) a reserve to pay for expenditures related to the improvement of jointly-owned sewer interceptor lines, and/or 2) a reserve to pay the Town’s share of the City of Ithaca’s bonded debt issued to pay for IAWWTF improvements. A search of Town records with the Town Clerk was unable to locate any documentation explaining the original purpose for SJC account. Mr. Weber commented that only the State Street Interceptor project remains to be completed of the five projects listed in the Town’s current agreement with the City of Ithaca. Although he did not have the estimated cost of this project, prior projects were roughly in the $300,000 cost range. Mr. Solvig informed the Committee members that outstanding IAWWTF debt at year-end totaled $13,839,324. The Town share (40.88%) of this total amounts to $5,657,516. The SJC is currently looking at additional improvements to the plant that will cost approx. $5,000,000, which will be paid for through the City issuing new long-term debt. The Town share of this new debt will be in excess of $2,000,000. With this additional debt, the Town’s liability will be around $7,750,000. Some of this debt will be paid off over a 30-year period. It would seem prudent for the Town to set up a reserve to pay part of this debt in the event of future economic hardships. Mr. Solvig proposed that such reserve would be in an amount equal to 25% of the Town’s share of outstanding IAWWTF debt at year-end, to be adjusted annually. The amount of this reserve, based on current outstanding debt, would equal $1,414,379. It was also proposed that this reserve include $300,000 to pay for future improvement of jointly -owned sewer interceptor lines. If such an amount were to be included, the total reserved for SJC purposes should be $1,714,379 as of 12/31/14. After discussion, the Committee concurred with Mr. Solvig’s recommendations . The Committee further recommended that $1,000,000 from the unreserved fund balance of the Sewer Fund be designated as reserved for SJC purposes, and transferred to the SJC account. The new balance of the SJC reserve would total approx. $1,305,307. This amount would be reviewed and increased (or decreased) annually, as appropriate, until the total reserve equaled the total recommended. 5 • Property Tax Freeze Certification Mr. Solvig reported that the required Property Tax Freeze Certification was completed and submitted to the Comptroller’s Office on January 16, prior to the January 21 deadline. Mr. Engman commented that he received an email confirmation from the Comptroller’s Office. • Future of the Property Tax Cap and Property Tax Freeze Programs. The Committee briefly reviewed a handout outlining the Governor’s proposed changes to the Tax Cap and Tax Freeze programs. As proposed, the Real Property Tax Credit would provide relief to homeowners with incomes under $250,000 whose real property taxes exceed 6% of their income. The credit would be valued at up to 50% of the amount by which property taxes exceed the 6% burden threshold. The specific amount of the credit within that 50% would be determined on a progressive income scale so that households with the highest tax burdens and lowest income levels would receive the greatest amount of relief. It is estimated an Upstate homeowner could receive up to $781 in relief. Ms. Leary asked if the $781 relief figure is for just the Town, or a combination of the taxing districts. Mr. Solvig replied that the figure is a combination of the various taxing districts, including the school district(s). Ms. Leary also asked if this will required governments to enter into efficiency agreements. Mr. Solvig replied that there is no mention of this in the proposal, but the information is very preliminary. Mr. Goodman commented that the 2016 tax freeze will require the Town to have entered into an efficiency agreement, and questioned whether that will be feasible. Mr. Engman replied that TCCOG continues to study this, but is concentrating efforts on pushing the look-back period back one more year, where we would be able to use the savings from the Health Consortium. This subject will be discussed on an on-going basis as further information becomes available. • Discuss Capital Budget Process. Mr. Solvig proposed to the Committee that this year’s budget process be changed to formally adopt the Capital Budget earlier in the process. The Committee discussed this proposed change. Mr. Goodman suggested that the Capital Budget be presented to the Town Board and discussed at the June study session, with any follow-up discussion and adoption at the July study session. This will be discussed with the Town Board at a future study session. • Other Items. - Lake View Cemetery: Mr. Engman reported that the Cemetery Board is interested in acquiring the Town’s old mowing equipment as it is being replaced. After a short discussion, it was decided that if equipment was found to be usable for cemetery maintenance, a resolution gifting the equipment to the Cemetery would be submitted to the Town Board for approval. The meeting was adjourned at 1:29 p.m. Next Meeting: Wednesday, February 25, 2015 at 12:00 pm, Town Hall - Aurora Room