Mayor and Council Budget Workshop – April 24, 2017

MAYOR AND COUNCIL

BUDGET WORKSHOP

APRIL 24, 2017

Mayor Cerino opened the budget workshop at 7:00 p.m. In attendance were Councilmembers Liz Gross, Linda C. Kuiper, Samuel T. Shoge and Mauritz Stetson, along with W. S. Ingersoll (Town Manager), Jennifer Mulligan (Town Clerk), Amanda Miller (Accounting/Treasury Specialist) and guests.

Mr. Ingersoll went over the revenues for the preliminary FY 2018 budget. He stated that he had spoken with the County assessment office earlier to get an idea of real property additions from last year’s taxes and they said they were unaware of the Town’s 2016 annexation of eighty (80) acres.  He said that he sent them the 2016 Resolution and had it recorded at their request.  This should make certain that it would be added to the tax rolls for FY 2018. Their comment about last year’s reassessment of all residential property in Chestertown was that there was little change.  Commercial assessments were taking place this year.   Mr. Ingersoll said he added $200,000.00 to the real property revenue estimates taking into account last year’s new construction, the annexation, and improving real estate values.  He said that real estate was trending up and sales were more commonplace.

Mr. Ingersoll stated that there were 87 apartment units planned for the annexed area expected this year so building fees were included in the budget for that development, which amounted to $43,500.00. This will also add $348,000.00 in water, $348,000.00 in sewer and $69,600.00 in sprinkler fees for the Utilities Department budget.

Mr. Ingersoll stated that to reach the figure he had for the permits he took into account the Dixon apartments, 3 lots owned by Mr. Ramunno on South Water Street, the College Boathouse, a couple new homes at Chester River Landing and other miscellaneous permit fees for signs, sheds, additions, etc. for a total of $90,000.00.

Mr. Ingersoll stated that the preliminary budget was just about dead even with revenues and expenses and did not include capital projects. He said that a tax differential with Kent County would help tremendously with revenues.  He said he appreciated receiving 100% of the hotel tax, but if Airbnb’s were included in the room rental tax figures it would make a huge impact.  Ms. Gross stated that she thought change was happening in the County because Airbnb’s have been removed from their website.

Mr. Ingersoll stated that the influence of COG (Council of Governments) was helpful in getting the entire hotel tax back to the Town. He suggested that the COG Mayors go to a meeting of the County Commissioners ask them to consider a tax differential because the town taxpayers in each of the towns were paying twice for services such as police protection, road departments, zoning, etc.

Ms. Gross stated that $50,000.00 was listed in miscellaneous revenue and asked why it was at $158,700 this year.  Ms. Miller stated that the Broad Reach funds were listed in that account and would be spent this fiscal year.

Mr. Ingersoll stated that the Visitors Center rent was divided by two tenants since 2004, each paying $600.00 per month including utilities. He said that costs have gone up and there were many more people using the facility.  He said that he would like to raise the rents to $750.00 (good for a 5-year period).  Maintenance costs alone on the building have gone up 14,000% since 2004.  Ms. Kuiper asked how many groups were meeting in the conference rooms.  Mr. Ingersoll stated that many groups meet in the Visitors Center and Town Hall because there was no charge.  Mr. Shoge stated that the inflation calculator showed that the rent should be $835.41.  Ms. Kuiper asked about cleaning costs.  Mr. Ingersoll stated that cleaning costs were up 58% since 2004.  Ms. Gross asked if the Town was losing money on the operation of the rental space in the Visitors Center or were they covering their expenses.  Mr. Ingersoll stated that the expenses were $68,594.00 and they were receiving $15,000.00 per year on rents.

Mayor Cerino asked if paving was included anywhere in the budget. Mr. Ingersoll stated that the money received from the sale of the former police building would to be used for paving.  The plans were to pave Queen Street, lower High Street, Calvert and Dixon Drive.  Mr. Ingersoll stated that the Town needed to start a campaign for paving.  Ms. Kuiper stated that some money the County receives from Highway User Funds should be given to the Towns in a tax differential for road repairs.

Mr. Shoge asked how the Town could raise funds for road maintenance. Mr. Ingersoll stated that taxes could be raised or the Town could borrow money.   Mr. Ingersoll stated that unappropriated surplus could be used as the Town had $1.2 million but he did not like to get much below that amount.

Ms. Kuiper asked if the vacant lots were going to be sold this year. Mr. Ingersoll stated that they were listed and there was interest with a buyer/builder who wanted to build a model on Lynchburg Street.  He said he thought that would cause the other vacant lots to sell.

Mr. Ingersoll stated that the proposed budget included 3% raises across the board. He said that each dollar was stretched and better times were on the horizon.  Ms. Gross stated that COLA was only .3% this year.  Ms. Miller stated that last year the raise was 3% by mid-point.  Ms. Kuiper asked where healthcare costs fell this upcoming year.  Ms. Miller stated that costs were up 4%, noting that last year the cost was down.  Ms. Kuiper asked if the employee would absorb the 4% increase to healthcare.  Ms. Miller stated that employees would continue to pay 25% of their dependent coverage.   Ms. Miller stated that the premium last year cost the Town $355,618.28. Ms. Miller stated that deductible costs seemed to be between 65% and 70% for the year.

Ms. Miller stated that that the 4% figure for health insurance being used for this meeting was based on renewal of the existing plan. She said that they were looking into self-funding through LGIT and the current broker also offers a self-funding option which they were discussing in a meeting tomorrow.

Ms. Kuiper asked if employees were offered a spending account for the deductible. Ms. Miller stated that the money for the deductible was separate and provided on a card to the employees through the healthcare provider.  An employee can also opt separately to be in a flex spending account at their own expense.

Ms. Kuiper stated that the employees received good benefits and it was a lot to ask for a raise as well. She said that she would like to see actual figures on how much was put into the deductibles for this coming year and last year along with the costs of the premiums.

Mr. Shoge asked if raises could be given to the employee from the deductible pool rather than paying 100% of the deductible.

Mayor Cerino asked the total costs of a 3% raise. Ms. Miller stated that salary alone was $57,000.00, not taking into account the pension costs.  Ms. Gross asked for scenarios at 2%, 2.5% and 3%.

Ms. Gross stated that she understood that people expected to progress on a salary scale. Ms. Miller stated that she did not consider a 3% raise as a cost of living; she considered it a reward for the hard work put in through the year.  Mr. Stetson stated that the problem is there are people who work hard and there are people who don’t and they are getting the same 3% raise.  Ms. Miller suggested approving a specific amount for raises and allowing Mr. Ingersoll to decide how it was split among employees.

Mr. Stetson stated that he believed in a system of “steps”. Mr. Ingersoll stated that Chief Baker has been researching steps/grades for salaries.  Mr. Stetson stated that it cost much more to train officers than other employees.  Mr. Ingersoll stated that the Town had a compensation study for all employees that included steps.

Ms. Kuiper stated that a pet peeve of hers was the money going to recreation and other requests for funding when people have money for their organizations. She said that the Town was not a charity and that nonprofits should be cut out of the budget along with the money to Parks and Recreation for summer camps.  Organizations can set up free of charge in the Farmers Market and ask for donations for their organization.  Mr. Stetson stated that he felt the same way about the fireworks.  Ms. Kuiper stated that the Marina needed all monetary attention this year that would normally go to non-profits.

Ms. Shoge stated that the money for the DCA and some other non-profits was at a minimum compared to other parts of the budget.

Ms. Kuiper stated that she thought the recycling cost of $60,000.00 was too high. She said she would like to see a financial statement from Infinity Recycling.  Ms. Kuiper stated that the recycling budget should be cut in half with pick-ups only twice a month.  Ms. Gross stated that if services were cut for recycling, more garbage will make its way to the trash.  Mr. Stetson suggested collecting household garbage once a week in the hopes that more people will recycle.   Mr. Shoge agreed that he would prioritize recycling over trash pick-up.

Ms. Kuiper asked how much was charged per household for recycling. Mr. Ingersoll stated that he would get the numbers.

Mr. Shoge asked about the possibility of reducing trash service to once a week and how they could get projections on savings or potential impacts on the Town. Mr. Ingersoll stated that the project would have to be bid out and would likely involve upfront costs.  He said that told him that haulers should be researched, including the costs associated with the landfill.

Mr. Ingersoll asked how much trash cost per household. Ms. Miller stated that it came out to be $101.00 per house per year.

Mr. Ingersoll stated that he did not agree on cutting small funding to non-profits such as Curb Appeal as they did so much to help the Town look good.

Mr. Ingersoll asked what initiatives the Council would like to see put in the budget.

Mayor Cerino stated that his main initiative was the Marina and said that grant money was lined up. Mr. Ingersoll said that if the Council did not feel they were doing any capital projects this year, there were over $1,000,000 in capital  projects listed under the Marina budget.

Mayor Cerino stated that he would like to see the last leg of the Rail-Trail complete. Mr. Ingersoll stated that was included in the budget with a Bike Ways grant.

Mayor Cerino stated that he would like to see the park at Washington Park complete. Mr. Ingersoll stated that a Community Parks and Playgrounds grant will be submitted and some small  improvements were happening this year.

Ms. Kuiper stated that she would like to see the stockade fence carried along Cannon Street up and around the Town yard.

Mr. Stetson stated that he would like to see $1,000.00 for Bailey Park because they needed new degraded granite. He said that the Friends of the Dog Park raised $7,000.00 for one pavilion already and letters were mailed out today for donations for a second pavilion.

Mr. Shoge stated that he would like to see paving in the business park, Washington Park park area to be finished, and for the economic development budget to be increased. Ms. Miller stated that there was a $6,000.00 line item for the Marketing Committee.  Mr. Shoge asked if it be changed to $12,000.00.

Ms. Gross stated that she would like paving on Queen Street and the lower part of High Street.

Ms. Gross asked if the Town needed to do anything with the fiber implementation taking place in Town. Mr. Shoge stated that once easements were received to dig fiber, FTS can install antennas on the fiber to boost the Wi-Fi and cellular reception.  He said in an initial conversation with FTS there should not be upfront costs but there may be maintenance costs.  Mr. Ingersoll asked how the installation of fiber would improve Wi-Fi or cell reception.  Mr. Shoge stated that antennas will be added to process both cellular and Wi-Fi.

Mr. Ingersoll asked about raising fees at the artisans and farmers markets. Ms. Kuiper stated that she did not see why fees could not be doubled.  Artisans pay $5.00 per week to participate in the market.

Mr. Ingersoll stated that Chief Baker was present had capital items as well as salary requests that he would like to discuss. Chief Baker stated that he was sensitive to the financial concerns and said that he met with each Councilmember in regards to a grade/step process for the officers and said that he did not think it was ready for implementation at this point.  He said that he did want to remind the Council that the reason he was looking at changes to salaries was because the department was having difficulty competing with other departments for recruitment and retention.  He said that any salary increases would help the department stay more competitive.

Chief Baker stated that an officer could go to Dover with beginning pay at $52,000.00 and $48,000.00 in Queen Anne’s County. Chestertown hires officers at $40,000.00.

Chief Baker stated that he was also working on a policy for take home cars. He said that one thing that he may be able to do is keep a car rather than sending it back to allow for one additional car in use at no cost other than maintenance.

Mr. Ingersoll stated that each cent the tax rate is increased equals $55,000.00. Taxes haven’t been raised in at least 12 years.  He said that at some point taxes were going to have to increase unless there was substantial economic growth.  Mayor Cerino stated that the annexation should be a tremendous help.  Mr. Shoge stated that raising the taxes by a cent was more palatable than raising it $.15 cents at some time in the future if there was economic downturn.  Mr. Ingersoll stated that whenever taxes had been raised they were raised more than one cent.   He said that if it came to raising taxes from the current $.37, they should consider the increase to something like $.40.

Ms. Miller asked what the Council wanted to see regarding insurance. Ms. Kuiper stated that she would like to see all breakdowns on insurance and asked if it was possible to partner with the County for self-funding to make a larger pool.  Ms. Miller stated that she did not know if that was possible.  Mayor Cerino asked for breakdowns on the cost of raises at 1%, 2%, 2.5% and 3%.

The Council decided to change the next workshop meeting to Tuesday, May 9th at 6:00 p.m.

Mayor Cerino closed the workshop meeting at 8:20 p.m.

Submitted by:                                                 Approved by:

Jennifer Mulligan                                            Chris Cerino

Town Clerk                                                     Mayor

 

 

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