Mayor and Council Budget Workshop – May 15, 2018

MAYOR AND COUNCIL

BUDGET WORKSHOP

MAY 15, 2018

 

Mayor Cerino opened the budget workshop at 6:00 p.m. In attendance were Councilmembers David Foster, Linda C. Kuiper, Ellsworth Tolliver and Mauritz Stetson, along with W. S. Ingersoll (Town Manager), Jennifer Mulligan (Town Clerk), Amanda Miller (Accounting/Treasury Specialist) and guests.

Ms. Kuiper asked if there was any headway on the trash going from bi-weekly to once weekly. Mr. Ingersoll stated that he met with Mr. Henry and his attorney and it was discussed and they seemed willing to work on the idea.  However, our contractor’s trash collection price is reasonably low and he said any savings would likely come from less tonnage and mileage to the Ridgely MES landfill, which was a big part of the overall costs of trash.  He said that it would have to be made clear to the residents that if they went to one night a week pick-up, they were not picking up double the amount of trash.

Mr. Ingersoll stated that everyone has been hard at work at budget cuts since the last meeting, especially Ms. Miller. Chief Baker was able to cut $9,800.00 out of his budget, primarily by removing unpurchased cameras from the budget.  Mr. Ingersoll stated that on that subject he had a call from Atlantic Security regarding cameras and he and the owner discussed a streetlight pole by the train station (where there is a meter for a former surveillance system) on which he would install 2 cameras that would see up and down the rail trail, to the Wilmer Park and up Cross Street.  Mr. Ingersoll stated that he may do it as a model project and it could be picked up by the police surveillance network.  Mr. Ingersoll stated that Atlantic Security was also going to contact Kent Plaza, Washington Square and Dollar General where the owners have been interested in surveillance cameras.

Mr. Ingersoll stated that he worked with the street department and reduced their budget by $10,000.00, mainly from curb and concrete funds.

Mr. Ingersoll stated that he added to the revenues because there was an anticipated request to buy surplus Town land at $17,400.00 (not formalized yet) and the parcel of land for sale on Lynchburg Street at $20,000.00.

Ms. Miller discussed a notes page showing the donations that were cut. She said that Music in the Park had been cut, but Ms. Jewell just advised them she had booked some acts.  Fireworks were in the budget at $7,000.00, but Mr. Ingersoll stated that he thought they should be removed for the upcoming year.  A small display has been scheduled and approved for 2018 in last year’s budget.  Ms. Miller stated that she would put Music in the Park for $5,000.00 back into the budget.  Mr. Ingersoll stated that he thought that Music in the Park was not receiving as many people due to the all of the excitement the National Music Festival draws in early June so donations are down.  He suggested a modified schedule for this year and future years.

Mr. Ingersoll asked what was added for the anticipated revenues for Airbnb’s. Ms. Miller stated that $12,000.00 was added for revenue in that category.

Mr. Ingersoll stated that the tax differential seemed to be off the table. Mr. Foster stated that this would be an issue during the candidate forums.

Mr. Ingersoll stated that with all the changes and cuts there remained a difference of $51,500.00. He asked if there were any questions about what was removed from the budget.

Ms. Miller stated that at the last meeting there was discussion of why the street person retiring did not really affect the budget numbers. She said that salaries were pulled forward for what was budgeted last year and there was $49,000.00 for a police officer (that was not initially budgeted last year) which made it a wash.  The other things that went in to the figures was a step increase for a police officer and 2 street workers in the process of getting their CDL’s which amounted to a raise of a dollar per hour.

Mr. Ingersoll stated that energy was bid out every few years and the contract was ending in October (energy above and beyond solar). The Town bought power for $.0556 for an additional 4 years.  He said that he did not see it getting lower than that on the open market and would cover everything, including street lights.  He said that Delmarva Power got a 20% to 30% bump in a street lighting tariff and the impact of that on municipalities statewide would be huge.

Ms. Miller stated that there was a chart of income tax revenues from 2009 to the present showing the difference each year. Ms. Miller stated that there should be 2 more payments received for income tax this year but did not think it would be more than $200,000.00.

Ms. Kuiper stated that it would be nice if the Town employees could go under the County plan for workmen’s compensation and medical insurance. Ms. Mulligan stated that she thought that was researched a couple years back and the Town was told that would not be allowed.  Ms. Miller stated that they researched going with the County’s provider as well and the costs were at a 30% increase over the current provider.  Ms. Miller stated that she also thought it would be a logistical nightmare.

Mr. Stetson asked what Earth Day cost the Town last year. Ms. Miller stated that they hit their budget at $1,500.00.  Mr. Stetson stated that the Town should not pay to have out-of-town people’s documents shredded, noting that was a cost of $600.00.  Mr. Stetson stated that he also did not want to be paying shipping costs for recycling of batteries either.

Mr. Ingersoll stated that the $65,000.00 cost to Infinity was troubling to him after seeing David Foster’s email of articles writing that recycling collected by haulers are not being taken by China. He said that if it turned out the recycling people were throwing away some of what they collected, he did not want to recycle with them.  He said that he did not have time to bid it out and did not know from whom to request bids.  Mr. Ingersoll stated that Creafill Fiber is recycling paper and most of what the office has is paper, which is what adds weight to the garbage in the first place.  Mr. Ingersoll stated that the Town has taken truckloads of paper directly to Creafill when they have large quantities as they know it goes right to shredding floor.

Mayor Cerino asked how much debt was assumed by the new Police Department. Mr. Ingersoll stated that they borrowed $500,000.00 because there were improvements that needed to be made and there was a $3,000.00 payment each month which will be paid off in 2030.  Payments to the Marina are about $145,000.00 per year and will be finished in 2032.  With the exception of a truck and 2 police cars there was no other significant debt.  Ms. Miller stated that after this year there will only be payments on 1 police car.  Mr. Ingersoll stated that he likes to keep debt down so they can borrow if the need arises.

Mr. Stetson asked for an explanation on the $58,500.00 in debt service under expenses on the $.03 worksheet. Ms. Miller stated that it was the total payments for the year for the police building, car leases, and interest.  Mr. Stetson asked where the marina information was located.  Ms. Miller stated that the Marina was its own budget and that she only printed what the Council asked for since the last meeting.  Ms. Kuiper asked how the donation for the marina affected the budget.  Mr. Ingersoll stated that the funds were segregated in accounting.

Mayor Cerino stated that either the taxes had to be raised to balance the budget or the Council had to come up with approximately $52,000.00 in cuts.

Mr. Stetson stated asked where the sheet was indicating a $.02 increase as he thought that would cover it. Mayor Cerino stated that $.01 would balance the budget with $55,722.00.  He said $.02 would provide a $111,400.00 in revenues.  He said that $.03 raises $167,165.00.  Mr. Stetson stated that he thought next year would be better for the Town and would agree to a $.02 increase.  He said that he would like to see the employees get a raise.  He said that employees should be able to get a cost of living raise each year and it should be budgeted.

Mr. Foster stated that he worried about roads, water and sewer. He said that the roads have not been repaired in some time and there were going to be problems in the future.  He said that he would like to raise the taxes and set aside money for a cushion for road repairs.  Mr. Stetson asked how large of a cushion he would like to see.  Mr. Foster stated that he would like to see at least $50,000.00 for preventive maintenance.

Ms. Kuiper stated that if property taxes were increased and there was a surplus the money should be designed for capital funds requiring that the Mayor and Council agree to all expenditures.

Ms. Kuiper stated that she thought there were not going to be fireworks this year. Ms. Mulligan stated that this July 4th fireworks show was approved in last year’s budget.  The fireworks being cut would be for July 4, 2019.

Mr. Stetson asked what Mr. Foster wanted to do with the funding he wanted for a cushion. Mr. Foster stated that he wanted it for road paving.  Mr. Stetson stated that the point was it would be spent as soon as it came in and not be a cushion for anything.  Mr. Foster stated that the most expensive way to maintain a road was responding to emergencies.

Mr. Ingersoll stated that it may have been better to prepare the budget using $200,000.00 as a figure in the road paving. He said the revenue would not be considered a cushion; it was a necessity.  He said that when the numbers start $300,000.00 apart without capital projects or raises the Council isn’t seeing it the right way.  Mr. Ingersoll stated that this is a culmination of 20 years of no increased taxes and not being able to work on roads since 2008.  Mr. Ingersoll stated that this was a problem the Town has been struggling with for years and why he has suggested raising taxes over the years.  Mr. Stetson asked how much was received in Highway User Funds and where that money was spent.  Ms. Miller stated that the Town will receive $183,000.00 this year including a one-time grant and the costs go to the $1.4 million that the roads department costs to run.

Mr. Ingersoll stated that the reason they needed to raise taxes by about $.05 is because they haven’t been raised in decades. This was fine when the great recession had made things tough on property owners but today things needed to be done.  Mr. Ingersoll stated that road paving was not a cushion.

Mayor Cerino stated that property tax revenues have been flat for 10 years and everything else is on a slow and steady increase. He said that each year the police department budget grows by $50,000.00 to $60,000.00.

Mayor Cerino stated that he did not want to raise taxes but if they only raised them by $.02 it did not allow for capital improvements. Mr. Stetson stated that next year the Marina will probably start making money so the Town may not have to subsidize it.

Mr. Foster stated that he did not know of any projections or increase of housing values, but said that he walked down Water Street today and the asking price for the houses for sale were far lower than he would have expected compared to several years ago.

Mayor Cerino asked when the property assessments would change. Mr. Ingersoll stated that the State Assessment Office did tri-annual assessments in one area of the Town at a time but would not give the Town their forecasts.

Mr. Stetson stated that he mentioned to several people that there would be no raises and he said that people don’t understand that as the economy was doing well. Mr. Ingersoll stated that he was more concerned with the County spending $7 million dollars and raising taxes on top of that, since that was tax money that could have been used to help with budgeting.

Mr. Stetson stated that he has been trying to cut fireworks from the budget for 10 years because it was a waste of money and said that he can’t believe that Ms. Kuiper wanted to get rid of fireworks now. Ms. Kuiper stated that she would rather see that funding go to Music in the Park and asked if a concert could be held on Memorial Day.  Mr. Ingersoll stated that there was still some money in this year’s budget for Music in the Park as the concerts begin in May 2018.

Rev. Tolliver stated that he did not want to raise taxes by $.02 this year and then have to raise them against next year. Mayor Cerino and Mr. Foster agreed.

Mr. Ingersoll stated that he would like to do a model of what a house worth $200,000.00 would have in an increase in taxes. Ms. Miller stated that she did a model and a $250.000.00 house would amount to $75.00 in additional taxes at a $.03 increase.  Ms. Kuiper asked about the Constant Yield Tax.  Mr. Ingersoll stated the Constant Yield Tax was more maintenance of effort and if you raise the income tax above the amount of money received from the year prior that would raise taxes and so would a raise in assessments.  Mr. Ingersoll stated that there has not been a Constant Yield tax hearing in many years.

Mr. Ingersoll stated that there was going to be fallout with employees who don’t see an increase in their pay. Mr. Ingersoll stated that even encouragement would be appreciated.  Ms. Kuiper stated that the employees at least had a job and get paid every 2 weeks.  Mr. Stetson stated that money is a short term incentive.  Mr. Ingersoll stated that if people weren’t being given money, they needed encouragement.  He said that the employees knew they had a job but it was also nice to be told that they were doing a good job when they were.

Mr. Ingersoll stated that taxes should have been raised before this and this was something that he tried to recommend every year. This year he meant it, saying that he never went into a budget with revenues and expenses so far apart.  Chestertown always wants to put their best foot forward and at the same time be business friendly.  He said that the Town has expanded their parks and property that requires constant maintenance from the employees.

Rev. Tolliver asked if the taxes were raised by $.05, could they be lowered if things improved. Mr. Ingersoll stated that could absolutely be done when times were better and the Town has actually reduced taxes in the past. Mayor Cerino stated that $.37 was not that much of a tax considering that property tax for Cambridge was $.92 and Easton was $.52.  Each of those municipalities also receives a $.13 tax differential from the County.  Denton had a $.75 tax, Federalsburg was $.83, Greensboro was $.75, Ridgely was $.58, and Goldsboro was $.47.  Caroline County’s tax rate was at $.98 and they gave their towns a significant tax differential.

Mayor Cerino stated that Chestertown had the highest tax rate in Kent County, noting that Betterton was at $.32, Galena was $.24, Millington was $.28 and Rock Hall was $.32. Ms. Mulligan stated that Betterton has a front foot assessment fee separate from their income tax.  Mr. Ingersoll stated that the smaller towns had no street departments or police.

Mr. Foster stated that in explaining the raise in taxes to the public it had to be explained that although the Marina was part of the cause, it was also because of the lack of a tax differential. Rev. Tolliver stated that he planned to tell people that it was in an effort to continue to provide the quality of service that the taxpayers have come to expect from Chestertown.

Mr. Stetson stated again for the record that he has been trying to cut $15,000.00 from the budget each year for fireworks and he was happy to see that it was finally cut as Ms. Kuiper would fight him tooth and nail. Ms. Kuiper stated that it was a sacrifice.

Mayor Cerino stated that the main thing to remember is that revenues have been flat for 10 years and they have accrued more expenses with personnel, debt service for important projects, and have been skimping by on maintenance of Town streets for too long. More capital was necessary.  Mayor Cerino stated that the marina was not helping things, but it was an important project that he inherited.  He said he hoped that within the next 2 years it would begin to pay for itself.  Mayor Cerino stated that each year the buck was passed on capital projects that now need to be addressed.

Ms. Miller stated that there was aging equipment all through Town, noting that there were at least four 9 year old computers being used in Town Hall and said they can’t continue to nurse things along forever.

Mayor Cerino stated that if the Council raised the taxes the full $.05, he wanted to include a cost of living raise for the employees. He said that it was not fair for some departments not to get anything and the employees could not move backwards in pay.  Mayor Cerino stated that even though he did not like it, he was thought taxes should be raised $.05.

Mr. Stetson moved for a $.02 increase in taxes. Mr. Foster stated that he would second the motion for discussion purposes but was not going to vote in favor of the motion.  The motion failed with 1 in favor, 4 opposed.

Rev. Tolliver moved for a $.05 increase in taxes, which was seconded by Mr. Foster. The motion carried with 3 in favor with Mr. Stetson and Ms. Kuiper opposed.  Ms. Kuiper stated that the vote was taken and there was no need for further discussion.   The vote will be 3 to 2 in the minutes.  Mr. Ingersoll noted that in workshops motions were not needed, only straw votes or indications of choices on issues.

Mayor Cerino asked if a cost of living raise could be factored into the budget. Mr. Ingersoll stated that a 2.5% raise, which was close to COLA this year would be approximately $35,000.00 across the board for Mayor and Council.  Ms. Miller stated that she thought COLA was a 2% this year.  Mayor Cerino stated that this would still have the Town in the black at $200,000.00.  Mayor Cerino stated that he would like to see $100,000.00 put into the street paving and leave $100,000.00 for a cushion.  Mr. Ingersoll stated that a cushion would not show in the budget and any surplus above the COLA raises will probably be in streets.

Mr. Ingersoll stated that the Utilities Budget was under control with a slight raise in water and sewer fees.

Mayor Cerino stated that he would like the Council to submit the streets that most need paving in their ward, ranking worst areas first. That was how the Town would move along with repaving.

There being no further business, the budget workshop closed at 7:15 p.m.

Submitted by:                                                 Approved by:

Jennifer Mulligan                                            Chris Cerino

Town Clerk                                                     Mayor

 

 

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