MAYOR AND COUNCIL BUDGET WORKSHOP
APRIL 23, 2019
Mayor Cerino called the workshop to order at 7:00 p.m. In attendance were Councilmembers David Foster, Linda C. Kuiper, Ellsworth Tolliver and Mauritz Stetson, W. S. Ingersoll (Town Manager), Amanda Miller (Director of Finance), Jennifer Mulligan (Town Clerk) and guests.
Mayor Cerino stated that he had attended the Kent County Commissioners meeting earlier in the day to discuss the Town’s request for a tax abatement or tax differential for the upcoming fiscal year. He said that last year the Town was supposed to be on the verge of getting a differential of 2₵ which was tabled because of the School Board budget. Mr. Stetson stated that Mayor Cerino gave a convincing argument to the Kent County Commissioners.
Mr. Ingersoll stated that Ms. Miller is presenting a preliminary budget with no raises or capital projects included.
Mr. Ingersoll stated that last year was unusual with huge capital grants, matching grants, and donations to finish the Marina. He said that the Marina was approximately $300,000.00 short of having those funds matched or donated.
Mr. Ingersoll stated that all departments stayed within and are under their budget for this year. Capital outlays were larger than last year and sometimes grants did not come in the same year they were budgeted. He said that next year’s budget is $154,000.00 short and he was hoping that a tax differential could at least cover the shortfall. The taxable base has risen some, but it was not near where it would be in a few years. He said that new taxable building projects would help.
Ms. Miller stated that real numbers were pulled as of March 31st and the column next to those figures were projections for the rest of the budget year. She said that if the Town spends the way that they have been spending for the next three months it gave the Council an idea of how the end of the calendar year will pan out.
Ms. Miller stated that estimates for medical benefits have not been received yet and they would be updated as soon as they came in.
Ms. Miller stated that only grants she knew about to date were Community Parks and Recreation, Police Protection and AMOSS grants accounting for $225,000.00.
Mr. Ingersoll stated that real estate income taxes were unpredictable, so the same figures were used until concrete numbers come in. Mr. Ingersoll stated that he would like to talk to someone from the State Comptroller’s Office to make sure they were following the boundaries of Chestertown as they had been less for the last 2 years.
Mr. Stetson asked if there was rent received from the County for the Visitors Center. Ms. Miller stated that $18,000.00 was received in rent total from the two (2) tenants at the Visitors Center. The Upper Shore Regional Council’s rent was paid by Kent County. The Chamber of Commerce’s paid their own rent.
Ms. Miller stated that each year the Highway User Funds included a “one-time grant” figure. The figure for next year was $230,000.00 but she did not include additional figures as she feared they may not come through. If numbers changed she would update them.
Ms. Miller stated that the Admissions and Amusements Tax was shown as higher but was money in and out as it paid back the movie theater grant extended by Kent County.
Mr. Stetson asked about tax breaks for Dixon. Mr. Ingersoll stated that the building permits for the apartments would give the Town a “shot in the arm” but Dixon has the apartment complex on hold. He said that when the apartment permits come in it will render a good amount in permit fees.
Mr. Ingersoll stated that the assessable base is up for FY2020. He said that last year there were no revenues coming in from the Marina, plus the Town has expanded services almost everywhere, especially in adding parks. Mr. Ingersoll stated that the Council should be proud of what has been accomplished through the difficult past few years.
Mr. Ingersoll stated that he will fight to retain services but many towns across the country are cutting recycling programs because they have become too expensive. He said that Kent County uses Chestertown’s figures from Infinity Recycling to meet their State mandated 15% for recycling but does not assist the Town in curbside recycling.
Ms. Miller reviewed the revenue numbers including grants. She said that she did not have funds or a proposed budget for Main Street or Ms. MacIntosh’s salary. Ms. Miller stated that $37,500 was donated to Ms. MacIntosh’s salary and she was unaware if that figure was coming in this year. Ms. MacIntosh’s salary comes close to $80,000.00 once benefits are added. Mayor Cerino stated that he thought the group that contributes a portion of her salary may come through for next year.
Mr. Ingersoll stated that the Hotel Taxes are suffering because the regular B&Bs are losing revenues to Airbnbs. People were staying at Airbnb’s and VRBOs, which did not pay hotel taxes, and taking business from regulated hotels and beds & breakfast. Mr. Ingersoll stated that the Town sent a list of 29 room rental properties to the County last year but was uncertain as to whether the County did anything to have those rentals become compliant. Hotel taxes were received on a quarterly basis. Mr. Ingersoll said that audits were not even performed on the hotel taxes collected by the County.
Ms. Miller explained that the “charges for services” lines had last year’s numbers pulled forward. She said that Red Speed figures are trending down and the proposed budget reflected that trend.
Mayor Cerino asked if a cheaper fireworks show could be scheduled for 2021 as he thought it would give a boost to the Marina and the 4th of July fell on a Saturday. Ms. Miller stated that some money should be set aside in this budget for a down payment if there was going to be a fireworks show. Mayor Cerino stated that people could donate for a show. Mr. Ingersoll stated that he already had the fireworks company on hold for July 4, 2021.
Ms. Miller stated that she did not have figures for Music in the Park because she had no idea what was going on with the program for this year. Donations were at a minimum last year. Ms. Kuiper asked about pavilion rent. Ms. Miller stated that she had not yet pulled those figures forward.
Mr. Foster asked why there was such a shift in expenses from last year to this year in the Legislative Department. Ms. Miller stated that a portion of salaries were properly allocated to the Utilities Commission. Ms. Miller stated that other expenses were listed for each department which included salaries, benefits, pension and other associated costs for the employees. Ms. Kuiper asked about meetings and travel in the legislative session. Ms. Miller stated that she keeps that figure at $6,000.00 because there is no way to know who is going to attend the Maryland Municipal League or Eastern Shore Association of Municipalities events.
Ms. Miller stated that the medical figures were not yet available and were not easy to predict. She said that Workmen’s Compensation costs went down 12.5%. There was a slight increase in pension from 9% to 9.38%, noting that overall the pension went up 4.2%. It did not appear as high because the Utilities Department is now paying some of the pension expense. Ms. Miller stated that audit fees were higher this year due to an anticipated single audit for the USDA grant. Professional fees were knocked down a bit as Ms. Leaf’s services were not needed as frequently.
Mr. Foster asked how building inspection fees were calculated. Mr. Ingersoll stated that the fees were based on what was before the Planning Commission and on the construction horizon. He said the figure changed each year.
Ms. Kuiper asked if anyone was monitoring the movie theatre. Ms. Miller stated that the admissions and amusement taxes collected were shown but were not as high as anticipated. Mr. Ingersoll said that Ms. MacIntosh told him she was going to speak to the movie theatre owners and discuss strategies to better get the word out about what is playing and when. He said that the theatre’s outreach has not been good, and there should be phone or advertisements.
Ms. Miller stated that pension costs in the police protection line added 32.22% of each officer’s salary to the budget. She said that she did not factor in the one-time credit that was normally issued ($50,000.00) because it is listed as a “one-time” credit. Mayor Cerino asked if $1.7 million was salary and benefits for the police department. Mr. Ingersoll stated that the budget was $1.386 million with salaries and associated benefits and gear.
Mr. Stetson stated that the Kent County Sheriff’s Department had 18 deputies that answered half the calls that the Chestertown Police did. Mayor Cerino stated that the County has more calls than the Town did, but the Town had more Part I offenses than the County. Mayor Cerino stated that his figures show that Kent County typically has 21,000 calls and Chestertown has 13,000. Chief Baker stated that he was not sure how Kent County defined “calls for service”.
Ms. Kuiper stated that as a board member of the Tea Party Committee she told the Committee there may come a time when festivals will pay for police presence due to budgetary issues. She had an estimate of overtime, which came to approximately $2,500.00, prepared by Officers Dolgos and Lozar. Mr. Ingersoll stated that the Street Crew should also be compensated for their work at festivals. Mr. Ingersoll stated that Ms. Mulligan drafted a document for fees for police and street during festivals which she would send out for review.
Mayor Cerino asked about the 32.22% of salary for the pension. Ms. Miller stated that figure is mandated to the Town by the State of Maryland and went up this year from 31.43%, which is not the largest increase that has been seen for LEOPS.
Mr. Ingersoll stated that Ms. Diver put post-retirements benefits in place in 2005-2006. Mr. Ingersoll stated that this was not sustainable, and he was speaking with Mr. Barroll about capping that benefit at $1,000 as an annual stipend. There were 6 employees using this benefit for the Medicare gap and he said that some of eligible employees were not responding to the Town when asked for a statement of benefits. The total projected this upcoming year for the general fund was $13,800.00 and the Utilities Department had one retiree. Mr. Stetson stated that prescription drug programs were being taken from retired State employees.
Ms. Miller reviewed donations to the Fire Department and Rescue Funds which included the AMOSS funds. She said that the Rescue Squad reflects a $15,000.00 donation and AMOSS funds.
Mayor Cerino stated that Street Department came in at $950,000.00 and $614,000.00 were salaries and other employee benefits. Mr. Ingersoll stated that trash and recycling costs are included in those figures. Recycling costs were up to $68,000.00. Mr. Ingersoll stated that the Town was lucky to have Mr. Henry collecting the trash because a less expensive service could not be found. The outfit that stepped in after the Wallace Henry’s death wanted to collect trash and recycling, but there was a 2-year contract with Mr. Henry.
Mr. Ingersoll stated that if the Town was ever in dire need to cut services, curbside recycling would have to be considered. He said recycling was becoming problematic in all towns as China was not accepting recycling anymore because there was too much co-mingling of other products. Mayor Cerino stated that it may be that the Town sets a budget and tells Mr. Schumann what they can afford.
Mr. Ingersoll stated that the Town paid $88,000.00 to the landfill (which used to be free from Kent County) plus the expense of traveling to and from the landfill.
Ms. Miller reviewed the different donations and committees that received funding. Ms. Miller asked why Earth Day received $1,000.00 and the Environmental Committee only had $500.00 in their budget. She said that Earth Day brings in money because vendors pay for spaces. Mayor Cerino stated that funding for Christmas lights should be cut as the lights were purchased last year.
Ms. Miller stated that she increased fees to Francoise Sullivan as the Marina was now using her for their website. She reviewed the Visitors Center figures.
Ms. Miller stated that she has yet to receive a budget request from Main Street.
Ms. Miller reviewed the debt service and capital outlay. Mr. Ingersoll stated that there was $150,000.00 in the current year budget for street paving.
Ms. Kuiper stated that the Cannon Street Pier rental was $2,500.00 and asked why that figure was down to $1,500.00. Ms. Miller stated that was a typo and the figure should be $2,500.00.
Mayor Cerino stated that the Town was $164,000.00 in the hole without adding in the $90,000.00 to $100,000.00 the Town pays for the Marina debt service which put the Town at approximately $250,000.00 deficit. Mayor Cerino stated that the Marina should show as debt service on the Town budget. Ms. Miller stated that the debt showed on the Marina budget, but the Marina has only been able to cover the interest on their loan; the Town pays the principle. He said that the Marina was an asset, but it has hurt the Town annually since its purchase. Mr. Stetson asked how the figures for the Marina budget were set. Ms. Miller stated that it was a guess this year as it was difficult to realize what the revenues will be now that the Marina is new and ready for business. She said that 98 Cannon Street Riverside Grille was looking to rent slips for transient boaters coming to the restaurant.
Mayor Cerino stated that from what he was looking at there needed to be $250,000.00 in cuts to break even. Mayor Cerino stated that he was concerned about getting through October of this year the way that the budget was running and said that he did not want to have to borrow money to make payroll. Mr. Ingersoll stated that they were just about where they were this time last year and the real estate tax revenues have been coming in slightly higher each year. Mr. Ingersoll stated that considering cuts or raising rates could be reviewed.
Mr. Stetson asked how many years the Town has owned the Marina. Ms. Miller stated that it was purchased in 2012. There was discussion as to finding rates for boaters coming to spend a few hours in Town without reservations. Ms. Mulligan stated that in 2017 boaters were charged $20.00 to tie up for 2 to 3 hours and after complaints from locals the fees were dropped to $10.00 for boats up to 35’ docking up to 3 hours, if they presented a voucher or receipt from a local shop or restaurant.
Mr. Ingersoll stated that the Utilities budget was solid.
Mayor Cerino stated that cuts had to be made to the Town’s budget. Mr. Ingersoll stated that a line of credit was in place to use that could be used for situations just like this. He said that the budget has been uncomfortable since the purchase of the Marina and the Town had great staff who try hard, especially the street department who perform capital improvements that might be done by other contractors. Mr. Ingersoll stated that assessments had to go up and the tax base had to expand. Mr. Ingersoll stated that if it was not for the Marina the Town would be better off in the cash on hand by $500,000.00.
Mayor Cerino asked what could be done to balance the budget. Mr. Ingersoll stated that a budget could be balanced by borrowing. He said that this was a preliminary budget and he was going to investigate income tax trends with the State Assessment Office. Fees will also be reviewed. Mr. Stetson stated that there should be a payment in lieu of taxes from Washington College and they were running at a deficit. Mayor Cerino stated that there was an aura that Washington College was wealthy because donors donate to have buildings constructed but they are at a $4-5 million-dollar deficit and enrollment was down.
Ms. Miller stated that there should be discussion of charges imposed for meeting room use by others and other services by staff for festivals and parades. Mr. Ingersoll stated that recycling could be reviewed as a possible cut. He said that it is costly to the Town and Kent County uses the Town’s figures to meet their mandate to the State. He said that the County offers igloos and people from Town who want to recycle can do that.
Mayor Cerino stated that public safety was 45% of the budget. Chief Baker stated that was typical of any police agency in a municipality. Mr. Foster asked how to explain such a similar number of employees to that of the Kent County Sheriff’s Department as there were 5,000 residents in Chestertown and 15,000 residents in Kent County. Chief Baker stated that Chestertown had more Part I crimes than Kent County by 50%. Mayor Cerino stated that crime was always higher in areas of density.
Mayor Cerino stated that last year the Town nibbled around the edges of the budget cutting smaller numbers, but he thought there needed to be some structural changes. He said that it may be time to make changes to Police Protection and Streets. Ms. Miller stated that there were people who recently left the street department but were replaced and there were 2 cadets in the police academy. Mr. Foster suggested perhaps not replacing employees when they left.
Chief Baker stated that they were right at the number of expected officers at 14 when the student population of Washington College was counted. Mayor Cerino asked if the Town could function with 12 officers.
Mayor Cerino performed an overview of Revenue vs Expenses and how much of an increase the budget has swelled from 2009 to 2019, noting that expenses have grown to $897,934.00 and revenues were only $407,449.00. Mayor Cerino stated that the Town was $250,000.00 in the hole so they had to find $250,000.00 to cut.
Ms. Miller stated that she would try to have better figures on health insurance by the next meeting.
The next budget meeting would be held on Tuesday, May 7, 2019 at 6:00 p.m.
There being no further business, the workshop session closed at 9:05 p.m.
Submitted by: Approved by:
Jennifer Mulligan Chris Cerino
Town Clerk Mayor