Mayor and Council Budget Workshop – May 8, 2018

MAYOR AND COUNCIL

BUDGET WORKSHOP

MAY 8, 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.

Mr. Ingersoll stated that he sent an email earlier in the day to the Council from Ms. Shelley Heller, Kent County Administrator, telling him that Chestertown was probably not getting a tax differential this year, as things for the County look bleak, but that Chestertown was “on the County Commissioner’s radar”. Mr. Foster stated that questions about the tax differential should be raised at every forum for candidates for Kent County Commissioner.  Mayor Cerino stated that he did not think most people understood what a tax differential was.

Mr. Ingersoll stated that the FTS fiber costs are reportedly closer to $7 million rather than $4.5 million and the County Commissioners may actually raise taxes. He said that the County was in a good position to take debt because they have paid off all their debt with the income tax windfalls they have received over the past 6 years rather than giving anything back to the municipalities.  Mr. Ingersoll stated that the Town does have a line of credit for anything that the Council feels is necessary, although he does not want to have to use it for general government.

Mr. Ingersoll stated that when the tax differential was last open for discussion by the County, their idea was for $.02 back to the taxpayers, which would give the Council justification for a tax increase of $.02 (which would amount to approximately $110,000.00). He distributed figures showing what $.03 and $.05 increase would render the Town.

Mr. Ingersoll stated that he recommended raising building permit fees, which could be done administratively. Bulk pick-up fees should be raised as they were not covering expenses as is.  The Airbnb funds should yield about $12,000.00 to $30,000.00 based on the honesty of the Airbnb owners.  All hotel taxes (as well as B&Bs) are collected by the County and turned over to the Town.  Fees could also be assessed for use of Town owned buildings by other non-profit agencies.

Mr. Ingersoll stated that police and street services should charge fees when they are requested for an event such as a race or use of the parks where the Town is not directly involved. Chief Baker stated that when he worked for DNR, they charged for the police officer and use of the vehicle when police were requested at events.  Mr. Tolliver asked about funerals as undertakers and churches pass along charges to families for services.  Chief Baker stated that they are asked to escort cars and stop traffic for funerals.

Mr. Ingersoll stated that he got late notice that the fiber project running along Cross Street has been mandated by the State Highway Administration to be done at night. He said that he received the information today and has advised the police that if the noise ordinance is being violated he wanted the job shut down.  He said that he was not pleased that the Town was not included in conversations where decisions are made with both the fiber company and the State Highway Administration.

Mr. Foster asked about the increase in Highway User Funds. Ms. Miller stated that there was a slight increase up to approximately $182,000.00 but she did not want to change any numbers until she received official notice from MML.

Ms. Kuiper asked about Music in the Park. Ms. Mulligan stated that Ms. Jewel has not responded to her request regarding Music in the Park.

Mr. Ingersoll stated that items that might be considered to cut out of the budget would. He said they might be sacred cows to the Council but needed to be discussed:

  • Not replacing a retiring employee from the Street Department, whose net salary with all expense was about $59,000.00.
  • Cut curbside recycling at $65,000.00 per year.
  • Drop donations, aside from the Recreation Commission which amounted to $13,000.00.
  • Dropping the fireworks yields $7,000.00.
  • Public Relations donations amounted to $8,500.00: Samaritan Group, Earth Day, Greening Initiative, Directional Signage, Curb Appeal and Bayside Hoyas. He said that some of the groups have not asked for money this year, although some were very good causes.
  • Main Street received $13,000.00 last year and the program was $65,000.00 to the Town having Ms. MacIntosh as an employee ($37,500.00 was covered by a grant).
  • A police officer may resign and/or deployed saving $75,000.00. Chief said that the police was fully staffed at 14 currently.

Mr. Ingersoll stated that the Street Department worked hard and if they did not replace the retiring employee they could not afford to lose anyone else. He said the Street Department does everything that is asked of them.  Ms. Miller stated that the full amount for the retiree would not be $59,000.00 because of his retirement date and post-retirement benefits.  There were other raises that had to be accounted for over the year since the last meeting, for employees receiving their CDLs or promotions, which were not factored into the original figures.

Mr. Ingersoll stated that street repaving was necessary and every year it gets kicked out of the budget. There were few properties left to sell, except one lot the Third Ward and Rev. Tolliver was working with him to build a home on it.  He said that would yield $15,000.00 to $25,000.00 and could happen this year if they could find an interested family.

Mayor Cerino asked about going to one day a week trash pickup. Mr. Ingersoll stated that he was meeting with the trash company the next day but did not think it would yield much money.  He thought that staying with the company the Town has is a value compared to other firms.

Ms. Kuiper stated that Infinity charges per household for recycling whether you put out recycling or not. Ms. Miller stated that the figure is also growing because every bill has an additional 6 to 8 residents added.  Ms. Miller stated that at one point she went through the list and removed some houses but the number is right back up to where it was before.  Mr. Stetson suggested having Infinity Recycling to go to twice a month pickup.  Ms. Kuiper stated that Green Opportunities was out of business entirely now.

Mr. Stetson stated that he would like to donate the $1,000.00 allotted for the Dog Park back to the Town from the “Friends of the Chestertown Dog Park”.

Mr. Stetson stated that he thought the Environmental Committee funds should be cut altogether. He said that he did not think that there was not enough action; rather they merely had discussions.  Ms. Miller stated that the Environmental Committee’s budget was $2,500.00 but she thought that Margo Bailey had some invoices that she is paying out of pocket so she is reimbursed for her expenses.  She said that the committee has their monthly movie and advertised in the Tidewater Trader.  The committee bought gift certificates for presenters.

Ms. Kuiper asked if Chestertown had to be a Tree City. Mr. Ingersoll stated that the Town did not have to be a Tree City but the work the Town did have to do on maintenance paid for it, noting that Mr. Sampson’s tree on Calvert Street was going to cost $1,200.00 to remove.

Mayor Cerino stated that if taxes were raised by $.03, the budget would be balanced. Ms. Miller stated that would just break the Town even.

Mr. Stetson stated that there were employees that worked hard and were not getting any raises this year. He would rather cut donations and give the money to the employees rather than donate to outside entities.  Mr. Stetson stated that he thought that the Council would also have to raise taxes, but it had to be made clear that if the tax differential was received, the taxpayers would not be hurt.  Mayor Cerino stated that he did not have confidence that the County Commissioners will do anything for the Town, so they had to raise taxes, cut expenses, or a combination of both.

Mr. Stetson stated that police overtime is budgeted at $40,000.00 and last year they only spent $24,000.00 while not fully staffed. Ms. Miller stated that the police overtime was budgeted at $50,000.00 for 2018 and they were projecting that this year was going to be $60,000.00.  As of March 31st overtime for police was at $35,000.00.  Mr. Stetson stated that was too much overtime and the Sergeant had to work harder to curb it.

Rev. Tolliver asked what the conditions were that got the Mayor and Council to this deficit. Mayor Cerino stated that the Marina was a drain, costing the Town $150,000.00 per year.  Ms. Miller stated that the Marina already owes the Town $402,000.00.  Mr. Ingersoll stated that the Town is paying the principle on the loan.  Mr. Stetson stated that “not one cent of taxpayer’s money” would be spent on the Marina according to former Mayor Bailey.  Mr. Ingersoll stated that the Marina is a separate, discretionary fund and had paid the interest on its debt every year.  In its dilapidated state it could not pay the principle, which is $88,000.00 annually.

Mr. Ingersoll stated that what could not be ignored was that the assessable base has not changed much in 10 years. He said that taxes have not been raised and the Town has been trying to live within its means, but the tax base has not recovered from the “great recession”.  Mr. Ingersoll stated that adopting the Enterprise Zone was a nice idea, but if they didn’t have it there would be a windfall of assessable base.

Mr. Ingersoll stated that the Marina was the Town’s plan to boost Chestertown’s local economy. He said that they envisioned rebuilding it with Waterway Improvement Funds at 100% funding.  However, the recession caused people to stop buying boats and paying the boat tax, so there is now a 50% match required making things difficult.  Mr. Ingersoll stated that Mayor Cerino has done an excellent job of extending his hand to everyone who could possibly help and raised over a million dollars just by asking.  He said that the Town was now on the verge of finishing the project and it looked better physically than it has for a long time.

Mr. Ingersoll stated that the Town was going to either raise taxes or find another source of revenue. Other than that, draconian cuts need to be made and he did not think that should happen.  Mr. Stetson stated that he did not want to cut staff.  Mr. Ingersoll stated that he could not lose anyone in the office.  Mayor Cerino agreed, stating that he did not want to cut staff, but something had to be cut.

Mr. Ingersoll stated that the post-retirement benefit of a stipend to each retiree might be reworked, cutting the figures down for future retirees as it cannot be sustained. Ms. Miller stated that as written in the personnel manual, the maximum that could be received was $5,000.00 per year, based upon the annual fee at the time of retirement.  Ms. Miller stated that the amounts are adjusted using an algorithm, noting that right now most retirees are between $3,000.00 and $3,500.00.  Ms. Kuiper asked if this was an expense on the budget at $5,000 for each person.  Ms. Miller stated that the only place the Council could see the actual figure was on the audit, noting there were six (6) retirees who receive the benefit.

Mr. Ingersoll stated that the Kent County Visitors Center is in name only. Mayor Cerino stated that it was a good service.  Mr. Ingersoll stated that the room rental tax is used to run the Center.  The Airbnb revenue will be added to at $10,000.00.

The Council reviewed Mr. Ingersoll’s suggestions and agreed on the following:

  • Add $10,000 into the room rental tax for Airbnbs.
  • Add $15,000 into revenue for the sale of one lot on Lynchburg Street.
  • Curbside Recycling – keep in the budget; discuss with Infinity going to biweekly.
  • Donations:
    • Bayside Hoyas – $1,000.00: Remove
    • Chester-Gras – $1,500.00: $1,000 donation to remain
    • Christmas Celebration (Music) – $1,000.00: Remove
    • Christmas Lights – $1,500.00: $1,000.00 donation to remain
    • Civil War Trails – $200.00: $200.00 donation to remain (mandatory maintenance fee)
    • Curb Appeal – $2,500.00: $2,000.00 to remain with additional funds as approved by the Mayor and Council
    • Directional Signage – $2,500.00:   Remove
    • Earth Day – $1,000.00: $1,000.00 donation to remain
    • Environmental Committee – $2,500.00: $500.00 donation to remain
    • Horizons – $4,000.00: Remove
    • Kent County Post-Prom – $100.00: $100.00 donation to remain
    • Library – $5,000.00: Remove
    • Main Street – $13,500.00: $5,000.00 donation to remain
    • Mid-Shore Community Foundation – $1,400.00: Remove
    • National Music Festival – $2,000.00: $1,000.00 donation to remain
    • Samaritan Group – $1,500.00: $1,000.00 donation to remain
    • Stories of the Chesapeake – $1,000.00: $1,000.00 donation to remain

Mayor Cerino stated that all donations from this point forward should be capped at $1,000.00 and should in some way come bring visitors to Town.

Mr. Ingersoll stated that the rest of the budget would have to be cut department by department. He said that the department heads should look closely at their budget one more time, perhaps looking to make a 5% reduction.  He said that he saw a real problem in not giving raises to worthy employees.  Mayor Cerino agreed.

Mr. Stetson stated one of the things he admired about Mr. Sipes was that he always does research before making a purchase and he was not sure that the same could be said for other departments. Mr. Ingersoll stated that the Town has been very generous with its donations over the years, including sending money in the direction to the County offered services (such as Kent County Parks & Recreation).

Ms. Miller stated that with all the cuts made by the Council at this meeting and additional revenue of about $10,000.00, they were still at a deficit of $116,000.00. Mr. Stetson stated that raising the taxes by $.03 would render $167,165.00.  Mayor Cerino stated that there were also potential revenues that have not been added back into the budget.

Mr. Ingersoll stated that he did not want to raise taxes often, so the Council had to do it in the correct way this year. He said that the increase was not punishing to the public and he thought a $.05 increase was manageable.  They would not have to raise taxes again the following year if there was no change to the tax base.  He said that the Council could also drop taxes when things improve.

Mr. Foster stated that he could agree to the $.05 increase if some of the money went to paving roads. He said that the Town can continue to patch potholes but that was not the most cost-effective way of getting the work done.

Mr. Stetson stated that $.03 seemed much cheaper than $.05 to him. He said that it appeared they were doing the best they could for the money and it would give the Town a little cushion, noting that next year would have to be better.  Mr. Foster stated that there was no guarantee that things would be better next year.  Mr. Ingersoll stated that there was a lag on the State tri-annual assessments but he did not know how far it was lagging.  Mr. Stetson stated that the houses in College Heights were finally selling.  Mr. Foster stated that although houses were selling it did not mean that a person was getting full price.

Mayor Cerino stated that he would like the department heads to look at the budget one more time before making any decisions on raising taxes.

Ms. Miller asked Chief Baker if he could withstand another 5% cut as they have already cut their budget tight. Chief Baker stated that if he had to make cuts he would but they have been cut for the last 2 years.  He said that he would sit down with Mr. Ingersoll and discuss his budget.  Chief Baker stated that the majority of his budget is salary and pension so there was not much left to cut.

Ms. Miller stated that the Council also had to realize the expenses that come along with cuts. She said that raising the tax by barely $.03 in order to get by for one year and making many cuts that really should not be made can cause unwanted consequences.

Chief Baker stated that there was a system in place where the department purchased a new car each year, rotating the oldest car out and minimizing on maintenance while having some value left on the car traded in. Chief Baker stated that because of cuts they have not gotten a new car for 2 years and they have had to make cuts to maintenance in addition.  Chief Baker stated that that maintenance costs are going to go up because he is on year three without a new car.

Mr. Stetson stated that more miles were put on the cars by officers going to and from home in the cars and that increases maintenance costs. Chief Baker disagreed.  He said that he has a study showing that costs are negligible, if not a savings, if a car is actually driven at a higher rate of speed on occasion instead of  driven constantly on town streets with stop signs, lights, and low speed limits.  It is also an incentive to officers to have a take home car, so if they are working 3 days in a row and live within 25 miles of Town they are permitted a car, a compromise agreed to several years ago.  Mr. Stetson stated that he thought there should be an incentive to have Town officers live in Town.

Ms. Kuiper asked if the Town charged for the use of the police dogs if they had to go to help in another municipality or county. Chief Baker stated that the agencies reciprocate services when needed at no charge.

Mayor Cerino asked about the officer that may be leaving the force. Chief Baker stated that if he was going have to cut an officer, he would cut himself as he was the highest paid officer.  Chief Baker stated that the officer discussed was in the National Guard and is subjected to be called at any time with short notice.  In this instance, he had notice that he was going to be called but another person took the deployment so he was not intending to leave at this time.  Ms. Miller stated that this officer has been looking for other employment for some time as well.

Mr. Ingersoll stated that the new police department was bought at a bargain, but the $40,000.00 annual debts service was one of those things that increased Town expenditures significantly. Mr. Ingersoll stated that the Town did have room for more debt if the Council had to go in that direction.

Mayor Cerino stated that the Kent County Commissioners claim that they police Chestertown also and asked how to explain to them that on paper they do, but Chestertown really patrols without help from the Sheriff’s Office. Chief Baker stated that it was factual that the vast majority is patrolled by the Chestertown Police Department.  He said that the Sheriff’s Office and State Police have authority in Chestertown, so a deputy can come into Chestertown, but Chestertown officers perform 98% of the services. He said that there were no quotas but if they were trying to keep busy, the majority of activity occurs in Chestertown.  Chief Baker stated that the Chestertown Police Department answers more calls for service than the County does overall each year.

Mayor Cerino stated that if the Town of Chestertown had 10 officers, could they ask the County to patrol more often to make up for fewer officers. Chief Baker stated that he thought there could be somewhat of a combined force.  He said that he met with a gentleman in Western Maryland who told him the State Police patrolled his town with 10 officers and they pay the State Police $1.2 million to patrol.  Mr. Stetson stated that they used to call them “resident troopers” and the State Police put exorbitant fees to the towns for those services.

Mayor Cerino stated that he was wondering if the case could be made that the same county property tax rate was being paid by Chestertown residents as the people who live in Worton and Fairlee. The Chestertown resident is basically covering service for those areas and not Chestertown.  Chief Baker stated that he thought the small incorporated Towns request so many hours of patrol and they pay the Sheriff’s Office for those services.  Ms. Miller stated that both Millington and Galena pay the Sheriff’s Office a fee for police service.

Chief Baker stated that the Chestertown Police Department was intimately familiar with the people of Chestertown and that made a huge difference to the people. Mayor Cerino asked if there was a formula for how many officers are required in a department.  Chief Baker stated that there is a way to factor number of residents to number of officers and that was where Chestertown stood in the number of employees.  He said the department was in no way overstaffed.

Mr. Ingersoll asked again where the Council stood on tax increases. Mayor Cerino stated that he was at $.02, noting that he wanted to show the taxpayers that they tried to balance the budget without raising taxes, but they were raising them as low as they can.  Mr. Ingersoll stated that every residents should know that the Town has not received a tax differential in years and either the Town should be receiving it or the citizens should be getting it back.

Mayor Cerino stated that he has spoken with the Commissioners every way he knows how but what the Commissioners get is that they have a great deal by not giving the Town a tax differential and prefer to take money and subsidize services for themselves. Ms. Kuiper stated that they also gave themselves raises.  Ms. Miller stated that their workforce was also receiving 3% raises.

Mayor Cerino stated that there were only 3 counties that did not give a tax differential. He said it used to be that the Town received a differential but he did not see it coming back.

Ms. Kuiper asked if there was reason to believe there would be a shortfall next year. Mayor Cerino stated that he hoped the Marina would begin bringing more revenue in and would pay for itself.  Mayor Cerino stated that the Town was allowed to sell the Marina after 10 years.  Ms. Miller stated that the Town was entering year 7 years of ownership.

Ms. Kuiper asked if someone was going to be paid to run the Marina or if they were looking for someone to run the Marina and pay the Town of Chestertown. Mayor Cerino stated that question would be resolved sometime in the coming year.

Mr. Ingersoll asked the Council’s feelings on the post-retirement benefits and put a cap on them. Ms. Miller stated that she and Ms. Lawson thought it should be a stipend based on age and years of service.  She said that the early retirement age is 62, so the employee would only be eligible for it at that age and the amount would depend on the years of service with the low end being $500.00 and the high end at $3,500.00.

Ms. Mulligan stated that the next workshop meeting was scheduled for Tuesday, May 15, 2018 at 6:00 p.m. Mr. Ingersoll stated that if issues were resolved before then he would cancel the meeting.

There being no further business, the budget workshop closed at 8:00 p.m.

Submitted by:                                                 Approved by:

Jennifer Mulligan                                            Chris Cerino

Town Clerk                                                     Mayor

 

 

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