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HomeMy WebLinkAboutJuly 11, 2011 Approved MinutesCITIZENS' BUDGET COMMITTEE Meeting Date: July 11, 2011 Fenn Center MEMBERS PRESENT: Carl Hensley, Chair John Culverhouse, Vice Chair Craig Mundt Richard Pancoast Ron Knaggs Edward Lounds Stephanie Morgan Dana McSweeney Dan Kurek Jane Bachelor MEMBERS ABSENT: Randy Ezell Jay L. McBee Patricia "Pat" Ferrick Bill Hammer OTHERS PRESENT: George MacArther Ethel Rowland CALL TO ORDER Mr. Hensley called the meeting to order at 12:17 p.m. RECOMMENDATIONS Mr. Hensley asked for comments from the Committee about the overall budget that was discussed the first day of Strategic. Mr. Knaggs feels the budget proposed by Ms. Outlaw for fiscal year 12, given the Sheriff's agreement to reduce $2.2 million, is appropriate. He would have liked to have seen more of the. Board of County Commissioners' (BOCC) operational part. Ms. Outlaw did a lot of work on the Constitutionals and Municipal Service Taxing Units (MSTUs). He used Parks as an example. Mr. Lounds asked if there had been discussion on using money from the Emergency Reserve Fund. Mr. Hensley said he thinks they do not want to use it. There was discussion on the amount of the fund and options. Mr. Lounds suggested drawing a portion out as a loan, not a gift. Mr. Mundt asked about concern for the credit rating. Mr. Citizens' Budget Committee July 11, 2011 Page 2 Lounds said that is why a loan not a gift. Mr. Knaggs said there is a fund separate from the $15 million. The gamble was discussed. Mr. Knaggs clarified there is a savings account of $50 million, portions of which will be used to balance future budgets. Aside from that, there is $15 million sitting there that she cannot include. It could get her through to FY15 assuming expenses and revenues don't change. Mr. Knaggs does not agree with her shortfall numbers. He believes she will have $40 million going into FY14. He does not believe she is taking into account the revenue being generated and the shortfalls that she has already budgeted for and planned on being reflected in prior budgets. He believes she is rolling budget numbers instead of actual numbers. Mr. Hensley does not think that is a bad thing. Mr. Knaggs expanded on Mr. Lounds comment. They are asking for 7-7-7, raising the millage, Sheriff/Criminal Justice and $7 million in reductions. The plan is based on the fact that she is going to run out of savings and he does not agree. He does agree that she needs to continue to reduce costs. She is spending more than she is taking in. When she runs out and if the economy will come back before that happens are the questions. If the economy does come back, she will not run out. If it doesn't, he believes she will run out in 16, 17 or 18, if all things stay equal from what we know today. Mr. Knaggs does not know if the Board needs to raise the millage and find $7 million in cuts right now. He thinks it is too much, but does not know how much. Mr. Pancoast does not see where they will find $7 million in the Sheriff, Jail and Judicial. Mr. Knaggs agreed. Mr. Hensley suggested they return to the first question of the budget overall. They go together, but Mr. Knaggs agreed they should take it in pieces. Mr. Knaggs agrees with the current budget after the Sheriff agreed to the $2.2 million. He questions how far they need to go with the 7-7-7. Ms. Morgan agrees that the Sheriff has gone far enough. She would be totally against removing the entire School Resource Officer (SRO) program. It would have to be found somewhere else, maybe from the BOCC. Mr. Knaggs said he was told that morning that the Sheriff had sent a letter to all the Commissioners and Ms. Outlawthat he has in writing, resigned as Corrections Officer effective the first of the year. Mr. Mundt added that he is not constitutionally required to provide the Jail. The BOCC is required to provide the Jail. He is the Chief Officer for Corrections, appointed by the BOCC. It would give them the opportunity to look outside. Mr. Lounds asked about insurance savings. Mr. Hensley said there is $1 million listed in the last part of the 7-7-7 plan and that Ms. Outlaw confirmed the Board could count it now. Mr. Lounds believes it is higher because of general discussion. He believes it is over $3 million, one-time savings. Mr. Kurek said a Constitutional Officer asked him to look into how much excess money is in the insurance fund. He was told there was a lot of money in there. Mr. Hensley said there is $1 million in changes to the Health Insurance Program already in the reduction and another $1 million in the third leg of the 7-7-7 plan. Mr. Knaggs said there is $8.8 million on balance sheet. They were going to contribute another $4 million this year, but the Committee challenged them to go to pay-as-you-go now. The Commissioners agreed to do that. He thinks Mr. Kurek may be looking to see if some of that could be put back. It is an actuarial computation that determines how much is needed for the future. The difference between the actuarial number and the $8.8 million could be Citizens' Budget Committee July 11, 2011 Page 3 brought back as revenue. Mr. Kurek said they could underFund it, but it is a bad idea. Mr. Lounds asked if it was risky to do that in lieu of cutting specialty services to the taxpayers of St. Lucie County. Mr. Kurek said the reserves are mostly there for property casualty situations. The health insurance has some reserves, but the big money would be in the property casualty part. If another hurricane came through, there is a significant deductible. Last time, it pretty much ate up the fund but they were able to get most of it back in the last six to eight years. Mr. Lounds would hate to see them not maintain the buildings, which would lead to a battle with Federal Emergency Management Agency (FEMA) if claims were made. If we reduce services, such as the air conditioner group, carpenters and painters, in case of a catastrophe, we would lose with FEMA. He gave the example of Indian River Drive. Mr. Knaggs said we are not in shut-down mode and should not do anything to the detriment of the County. He added that Commissioner Mowery said we had to differentiate between wants and needs. We must provide for health, safety and welfare. The quality of life is a matter of degree. Mr. Knaggs thinks it is detrimental to the long-term viability to start cutting into the bone by not maintaining the facilities. Mr. Hensley said Ms. Outlaw is not proposing that. Mr. Knaggs agreed. Mr. Hensley clarified that if they run out of money there would be no maintenance. Transferring funds to and from the General Fund was discussed. Mr. Lounds feels the agricultural industry is a gamble every day. He thinks taking money from an insurance or reserve fund is a gamble. Going back to 2005 or 2006 when we used up our reserve funds and realized the problem, the Committee supported a percentage of the County budget be put in a reserve fund. That was more than had been used prior to the 2004 hurricanes. He did not have. a problem suggesting that they look at borrowing from the Emergency Reserve Fund to make up some of the 7-7-7. He thinks the budget should be emergency services, support for essential emergency services, non-essential services and administration. He feels the taxpayer wants to know he has what he needs to be safe. He told what he feels the restrictions should be to cutting $7 million from the judicial system. The only areas ofnon-essentials are libraries, environmental services, the County agent, which he loves, and Historical Society. He thinks there are savings in the area of library hours. Furloughs are an opportunity. What kinds of savings would be there. if the County building opened at 10:00 rather than 8:00? The essential services run 24 hours a day, seven days a week, every day of the year. Whether you agree with them or not, they are on call 24/7. The Sheriff is down to nits and grits. There are places we all can save. Mr. Lounds can afford the proposed $51 increase. He is concerned about businesses. He thinks the Committee should encourage the Board to raise the tax. He knows they are afraid and don't like it. Mr. Hensley asked about a motion agreeing with the recommendation for the budget, including the Sheriff's reduction. Mr. Knaggs made the motion and Mr. Mundt seconded. Mr. Lounds feels the Sheriff's $2.2 reduction, not the $3.2 should be part of the motion. The motion was unanimously approved. Mr. Hensley directed the conversation to the 7-7-7 plan. It doesn't have to come into play until two or three years out. Mr. Knaggs made a motion to encourage the County to look at the judicial piece, not agreeing with the amount. He wants them to look at it and get it off Citizens' Budget Committee July 11, 2011 Page 4 the table. Mr. Mundt seconded the motion. The motion was unanimously approved. Mr. Hensley asked about the millage rate. Mr. Pancoast feels they should raise the millage. If they raise the millage now, it-might prevent boosting it more later. They can give it back anytime they realize it is not needed.~~IVIr.~Lounds said if they waited until 2013 it would be much more than today. He feels what they are proposing is a band aid, but it is needed as part of the three-legged stool. Mr. Knaggs asked if they can lower a rate on any MSTU and trade it for the increase in the General Fund. Mr. Hensley would assume the Budget Director would know. Mr. Knaggs asked if they challenged it. An MSTU cannot go into deficit spending. He knows there are some with significant balances. If the pain of increasing the millage rate for the General Fund could be offset by a reduction of any of the MSTUs that have surplus funds the taxpayer would end up with no increase, but the County would benefit. Mr. Hensley said it would have to be paid back. Mr. Knaggs said it wouldn't if the MSTU did not run into deficits. Mr. Pancoast asked about making it part of the motion. Mr. Kurek said it would depend on how the ordinance was set up that established the MSTU. Mr. Knaggs asked if there was discussion on challenging it. Mr. Kurek explained how he used to ask to levy less if the MSTU did not need the money. Mr. Knaggs told about a discussion on one MSTU that was for unincorporated, he wondered about the others. Maybe they can ask later. Mr. Kurek explained the final rate is based on dollars. A motion was made to recommend the Board set the millage at Ms. Outlaw's recommendation knowing they could later lower it, but could not raise it. Mr. Culverhouse seconded the motion. Ms. Morgan is concerned that her taxes keep rising. Mr. Pancoast said the Commissioners would cut the rate when they can. Mr. Mundt explained that even with the increase last year, 78% of the properties paid less taxes. Ms. Morgan said hers have gone up every year. She is in the 22%. Mr. Hensley said the taxes on his home have decreased 55% in the last four to five years, with homestead, because the value has gone down so much. Mr. Knaggs expressed his concern for the businesses. He does not think they have answered that question and will not support the increase until they do. Mr. Lounds thinks they will have a stumbling block on raising the taxes because of the business question. They think the residential slump has leveled out. Mr. Pancoast offered to modify the motion to leave off the business properties. That can't be done. Nor, can a rebate be given. Mr. Lounds suggested leaving the motion but asking for discussion on the effects to businesses. Mr. Lounds asked Ms. McSweeney about requests for business loans. Ms. McSweeney answered that they are seeing a change in long-time businesses, but new businesses are struggling. Mr. Lounds reminded the group the tax on a homesteaded property can only go up 3% per year. Ms. McSweeney said a lot of restaurants are struggling to keep their doors open. Mr. Lounds questioned the impact on a small business. Ms. McSweeney is concerned an increase would put a small, struggling business right out. Mr. Culverhouse agreed with Mr. Lounds that it would be hard to close a gap this large without an increase. He listed some of the cuts the County had made. He is concerned that public safety will be compromised. Mr. Knaggs would agree, if he thought the gap was that big. He is concerned that with the changes the Federal and State governments are making, the County may compound it by putting in something that he is not sure they need. Citizens' Budget Committee July 11, 2011 Page 5 Mr. Knaggs is against the increase. Mr. Mundt supports the increase because he thinks we need to keep the County viable from the standpoint of residential but also commercial because they need the business that might want to come to St. Lucie County because of what we offer. We can't keep cutting back. The millage increase would only bean option to use if they need it. Maybe they can take from the MSTUs. South Florida Water Management District's rate is to go down. They might be able to lower the .5114. But he would like to see them have the tool to work with. Mr. Kurek added that they can change it in September. Mr. Mundt said the heat may be intense. He wants to hear more from Mr. Knaggs. Mr. Hensley asked them to vote on the millage recommendation first. Eight members were for and two, Mr. Knaggs and Ms. Morgan, were against. The third part of the stool is $7 million of additional cuts. Mr. Hensley said that Ms. Outlaw has said that she doesn't need all of it until 2014. If they do some now, it decreases what they will have to do. Mr. Knaggs believes if they don't need the expense, they should deal with it today, not defer it. He thinks they have that philosophy. It is obvious that they don't want to layoff anyone else, but they haven't considered furloughs. They haven't said they would freeze every position that was vacated. If you add the cuts already given, he doesn't think the entire list would be necessary. Since she has pushed them all off until 2014, they won't have to make a decision this year or next. If you are willing to buy that they might get some from Justice and you agree there should be an increase in millage, as long as they support her efforts to keep costs under control and reduce all she can, he would agree. He does not agree with all the $7.2 million. He does not think they will get there. They have already taken some of the big hitters off the table. The recommendation would be to continue to review and keep working on the reduction as necessary. Mr. Pancoast added that if there are items that are not needed, the sooner they are gone, the better, there would be more savings. Mr. Knaggs said it is a matter of do we need or want. If you keep putting it off, you will not reduce the cost. He felt they had a good discussion on generating revenues in Strategic Planning. Mr. Lounds said you spend a dime to save a dollar. He is concerned that in some instances they are going to spend a dollar to save a dime and that won't work. Mr. Mundt winced at them spending $100,000 in the gymnasium. Mr. Knaggs said if they needed a motion he would encourage the County to continue to look at ways to reduce costs to satisfy the needs or generate revenue, but not necessarily satisfying the wants. Mr. Pancoast seconded the motion. It was unanimously approved. Mr. Lounds asked about moving money from the reserve fund. Mr. Hensley said he would make a comment on that when they talked about the millage rate. They support as a recommendation to give them the option, look at transferring MSTU funds into the General Fund and keep an eye on the businesses in St. Lucie County. Mr. Pancoast and Mr. Lounds added to look at part of the reserve fund as a loan. Mr. Knaggs encouraged Mr. Hensley to volunteer to speak if they forget to ask. OTHER ISSUES Mr. Knaggs asked about the next meeting. It will be the third Friday of August. ADJOURNMENT Citizens' Budget Committee July 11, 2011 Page 6 Mr. Hensley adjourned the meeting at 1:02 p.m. * Respectfully submitted by: Brenda Marlin The next CBC regular meeting will be held on Friday, August 19, 2011, at 7:30 a.m., in Conference Room #3, at the St. Lucie County Roger Poitras Administration Annex. *Correction after October meeting