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AGENDA #3a BUDGET WORKING PAPER TO: W. Calvin Horton, Town Manager FROM: Bruce Heflin, Public Works Director SUBJECT: Possible Cuts in the Public Works Department FY 2000-01 Budget DATE: May 17, 2000 RESUBMITTED: JUNE 5, 2000 The following table presents data comparing changes by category of expenditure between the July 1, 1999 Fiscal 1999-2000 Budget and the Fiscal 2000-01 Recommended Budget for the Public Works Department. 1999-00 2000-01 Original Recommended $ %-age Category Budget Budget Change Change Operations 3,439,436 3,694,879 255,443 + 7.4% (1) Capital 103,000 66,100 (36,900) -35.8% (2) Total 3,542,436 3,760,979 218,543 + 6.2% Notes (1) About 40% of the increase in “Operations” relates to additional charges for fleet replacement. While next year’s budget includes an additional $102,398 in general fund contributions to the fleet replacement fund, most of the increase relates to items acquired in the current fiscal year. Of the total request next year for fleet replacement charges of $461,984, 88% (or $407,772) is for payments to the fleet replacement fund for items acquired in the current fiscal year. Only one debt payment for such items was required in the current year; two will be required next year for these items. The remaining 60% of operational increases next year primarily relates to the following: · Increase in unit cost of fuel from $.65 to $1.00 ($36,400) · Creation of account for sale of fuel to outside agencies for a profit ($40,000; budget includes offsetting revenue) · Additional landfill use charges related to increase in tipping fee and increased quantities of MSW ($62,000) · Addition of an account to cover department’s costs for replacement of personal computers every three years ($14,265) (2) The decrease in “Capital Outlay” relates to fewer items being acquired in the following program areas: street maintenance, right-of-way/drainage maintenance, fleet maintenance, building maintenance and refuse collection. This capital outlay covers those items excluded from the fleet replacement fund (e.g., those items not in the original schedule for replacements and/or non-vehicular, equipment items not counted as fleet components). We note that, if the Council were to approve curbside residential service, the Public Works Department budget could be reduced $34,000, which represents the cost for preparing to start services to Southern Village on July 1, 2001. OPTIONS FOR A ZERO INCREASE
IN OPERATING AND CAPITAL OUTLAY The original 1999-2000 budget for Operations and Capital Outlay totals $3,542,436, of which $359,586 covers the fleet replacement contributions to the fleet replacement fund. The net result is a total of $3,182,850. The base request next year for the two categories totaled $3,760,979, of which $407,772 are related to current year obligations to the fleet replacement fund. The net amount of $3,353,207 relative to the $3,182,850 noted above would result in a cut of $170,357. Option 1 Eliminate commercial garbage collection ($950,000). This possible reduction is discussed in a separate report. Option 2 Cumulative Item Amount Total 1. Reduce fuel accounts $12,000 -Would be achieved through reduction in unit cost of diesel fuel from $1.00 to $.85 for those operations within the department using diesel fuel; we presently pay $.81 per gallon for diesel fuel and have used a combined average for both gasoline and diesel fuel of $1.00 per gallon in next year’s base budget request. This is a question of risk and probabilities. 2. Reduce M & R – Grounds in Landscape Division 5,000 17,000 -Would cut the number of new trees for planting Town-wide next year from about 200 to 120; could jeopardize Town’s “Tree City Award” by the National Arbor Society earned in the current year. 3. Reduce contract labor in Landscape Division 1,000 18,000 -Would cut about 2% (90 hours) from base request for contract labor used to support regular grounds maintenance crews during peak growing season, resulting in decreased service level, especially in terms of mowing times 4. Cut Maintenance & Repair – Vehicles 2,500 20,500 -Request for next year already is down 2.8% compared to current year and this further reduction could mean that some preventive maintenance work would have to be deferred, along with possible reductions in non-critical work, such as repair of minor cosmetic accident damage 5. Eliminate paint sprayer in Internal Services 2,100 22,600 -This airless paint sprayer was to be used by in-house labor force in building maintenance for larger paint jobs; such jobs will be more costly if private contract work must be used 6. Reduce amount for building improvements 1,000 23,600 -This account is used for miscellaneous building maintenance services to various Town departments. A reduction would mean that fewer projects could be covered. Examples of such projects have included addition of electrical service to support new computers, copiers, etc.; addition of office partitions; and modification/expansion of HVAC systems. Such work could require that user departments find funds within their budgets. 7. Reduce advertising account in Streets section 3,800 27,400 -Budget request next year included these funds to prepare and distribute a new snow brochure, to provide information to the public regarding snow removal services. The cut would mean a deferral of this distribution until another year. 8. Eliminate scooter in Solid Waste Services 3,300 30,700 -Elimination of scheduled replacement of the division’s oldest scooter truck used to service certain residential routes; this could result in more equipment down time, cutting into service schedules on residential collection routes serviced by scooters. 9. Reduce building supplies 1,000 31,700 -This account already was reduced 3.9% in the base request for next year; the further cut would reduce our capacity to replace worn or broken tools and increase the need for mechanics to share and borrow tools. 10. Reduce M & R Buildings account 2,000 33,700 -This reduction could be absorbed through limiting cosmetic maintenance and repair work on facilities and by limiting the maintenance that we do in buildings that are scheduled for major capital improvements funded from the Capital Improvements Program in the future. 11. Reduce support accounts in Management & Support Services 4,000 37,700 -These reductions would impact use of contract labor during peak work demand periods, such as year end fiscal closing, budget preparation, etc ($1,000); curtail acquisition of office supplies used by all departmental operations ($1,000); eliminate attendance by Director at national APWA conference ($1,500); and reduce amount of computer and clerical staff training ($500). 12. Reduce traffic supplies 2,500 40,200 -Would result in a reduction of 5% in traffic section’s street name sign upgrade and replacement program Town-wide. 13. Reduce contract labor account in Traffic section 1,000 41,200 -Would mean a 25% reduction in contract labor available to supplement signs and markings traffic crew during peak work periods. Work examples include cleaning and straightening signs and assisting with repainting faded pavement markings. 14. Eliminate Construction crew 60,000 101,200 -Would result in fewer sidewalks and Streetscape improvements being built in-house; benefits gained from addition of new crew authorized in FY 1998-99 would be lost. 15. Eliminate two snowplows in Field Operations 16,000 117,200
-Streets section currently has 9 snow plows used to clear streets during snow/ice storms; 5 of these units are 30+ years old and the budget request includes funds for scheduled replacement of 3 of these old units; reduction of 2 of these replacements could mean less efficient snow removal because of down time. 16. Eliminate rear loading garbage truck 8,900 126,100 -Elimination of scheduled replacement of the oldest rear loader in the fleet could result in greater equipment down time; to the extent this would occur, remaining trucks would have to be used to assure first line route services for residential collection of MSW and this could have an adverse impact on other divisional services, primarily brush collection. 17. Eliminate side loading garbage service 53,000 179,100 -We presently serve about 175 commercial customers who use dumpsters emptied by side loading garbage trucks. If this service were eliminated, then the first year savings would be as noted and would relate to a reduction of one position and two side loading garbage trucks. The majority of the present customers could be collected using front-loading trucks, with many of the remainder customers serviceable by residential routes. We could work with some small number of customers that could not be serviced in either manner to find solutions for their particular situations. OPTIONS FOR A 2% REDUCTION TO OPERATING AND CAPITAL OUTLAY As noted above, the original 1999-2000 budget for Operations and Capital Outlay totals $3,542,436, of which $359,586 covers the fleet replacement contributions to the fleet replacement fund. The net result is a total of $3,182,850. A 2% reduction to this amount would result in a total of $3,119, 193 for the two combined categories next year. Our comparable budget request of $3,760,979 includes $407,772 for fleet replacement charges obligated in the current year, leaving a net total of $3,353,207. Given the 2% target budget reduction, this would mean a cut of $234,014 (cf., $3,353,207 - $3,119,193), or 7% of the base request for the combined categories. 2% cut would be $234,014 Suggested prioritized cuts to equal this amount, along with possible consequences, are noted below. We note that budget reductions totaling about $21,600 were had already been made within the Solid Waste Services Division (presently Sanitation Division) in order to accommodate the increases necessary for landfill use charges related to higher quantities of MSW projected for next year. Option I Cumulative Item Amount Total 1. Reduce fuel accounts $12,000 -Would be achieved through reduction in unit cost of diesel fuel from $1.00 to $.85 for those operations within the department using diesel fuel; we presently pay $.81 per gallon for diesel fuel and have used a combined average for both gasoline and diesel fuel of $1.00 per gallon in next year’s base budget request. This is a question of risk and probabilities. 2. Reduce M & R – Grounds in Landscape Division 5,000 17,000 -Would cut the number of new trees for planting Town-wide next year from about 200 to 120; could jeopardize Town’s “Tree City Award” by the National Arbor Society earned in the current year. 3. Reduce contract labor in Landscape Division 1,000 18,000 -Would cut about 2% (90 hours) from base request for contract labor used to support regular grounds maintenance crews during peak growing season, resulting in decreased service level, especially in terms of mowing times 4. Cut Maintenance & Repair – Vehicles 2,500 20,500 -Request for next year already is down 2.8% compared to current year and this further reduction could mean that some preventive maintenance work would have to be deferred, along with possible reductions in non-critical work, such as repair of minor cosmetic accident damage 5. Eliminate paint sprayer in Internal Services 2,100 22,600 -This airless paint sprayer was to be used by in-house labor force in building maintenance for larger paint jobs; such jobs will be more costly if private contract work must be used 6. Reduce amount for building improvements 1,000 23,600 -This account is used for miscellaneous building maintenance services to various Town departments. A reduction would mean that fewer projects could be covered. Examples of such projects have included addition of electrical service to support new computers, copiers, etc.; addition of office partitions; and modification/expansion of HVAC systems. Such work could require that user departments find funds within their budgets. 7. Reduce advertising account in Streets section 3,800 27,400 -Budget request next year included these funds to prepare and distribute a new snow brochure, to provide information to the public regarding snow removal services. The cut would mean a deferral of this distribution until another year. 8. Eliminate scooter in Solid Waste Services 3,300 30,700 -Elimination of scheduled replacement of the division’s oldest scooter truck used to service certain residential routes; this could result in more equipment down time, cutting into service schedules on residential collection routes serviced by scooters. 9. Reduce building supplies 1,000 31,700 -This account already was reduced 3.9% in the base request for next year; the further cut would reduce our capacity to replace worn or broken tools and increase the need for mechanics to share and borrow tools. 10. Reduce M & R Buildings account 2,000 33,700 -This reduction could be absorbed through limiting cosmetic maintenance and repair work on facilities and by limiting the maintenance that we do in buildings that are scheduled for major capital improvements funded from the Capital Improvements Program in the future. 11. Reduce support accounts in Management & Support Services 4,000 37,700 -These reductions would impact use of contract labor during peak work demand periods, such as year end fiscal closing, budget preparation, etc ($1,000); curtail acquisition of office supplies used by all departmental operations ($1,000); eliminate attendance by Director at national APWA conference ($1,500); and reduce amount of computer and clerical staff training ($500). 12. Reduce traffic supplies 2,500 40,200 -Would result in a reduction of 5% in traffic section’s street name sign upgrade and replacement program Town-wide. 13. Reduce contract labor account in Traffic section 1,000 41,200 -Would mean a 25% reduction in contract labor available to supplement signs and markings traffic crew during peak work periods. Work examples include cleaning and straightening signs and assisting with repainting faded pavement markings.
14. Eliminate Construction crew 60,000 101,200 -Would result in fewer sidewalks and Streetscape improvements being built in-house; benefits gained from addition of new crew authorized in FY 1998-99 would be lost. 15. Eliminate two snowplows in Field Operations 16,000 117,200
-Streets section currently has 9 snow plows used to clear streets during snow/ice storms; 5 of these units are 30+ years old and the budget request includes funds for scheduled replacement of 3 of these old units; reduction of 2 of these replacements could mean less efficient snow removal because of down time. 16. Eliminate rear loading garbage truck 8,900 126,100 -Elimination of scheduled replacement of the oldest rear loader in the fleet could result in greater equipment down time; to the extent this would occur, remaining trucks would have to be used to assure first line route services for residential collection of MSW and this could have an adverse impact on other divisional services, primarily brush collection. 17. Eliminate side loading garbage service 53,000 179,100 -We presently serve about 175 commercial customers who use dumpsters emptied by side loading garbage trucks. If this service were eliminated, then the first year savings would be as noted and would relate to a reduction of one position and two side loading garbage trucks. The majority of the present customers could be collected using front-loading trucks, with many of the remainder customers serviceable by residential routes. We could work with some small number of customers that could not be serviced in either manner to find solutions for their particular situations. 18. Reduce street resurfacing 15,000 194,100 -Budget request included about $14,000 to offset the 5% inflation factor in cost of street resurfacing and maintain the current year service level; loss of this amount would mean a direct reduction in level of street resurfacing service cycle relative to current year. Note: the remaining $40,000 required to reach the reduction goal of $234,014 relate to the fact that next year’s base budget for Operations includes this total in the Internal Services Division’s Fleet section to account for the sale of fuel to outside agencies, such as UNC Hospital, UNC recycling, South Orange Rescue Service and the Orange County Solid Waste Department. There is offsetting budget revenue for this, which includes a 10% overhead margin relative to the Town’s direct cost. Other Options for Reductions Due to the size of the reduction required in Public Works, we have provided the above information as the Departmental recommendation as to how to reduce our requested operating and capital budgets. If the Council desired other options for reductions, we suggest that the following list of additional marginal cuts could be considered. Option 2 -- Options for Marginal Reductions In addition to the cuts prioritized above, additional budget reductions that could be made include the following: #1. Cut additional contract labor in Landscape Division $ 1,500 -Would further reduce the division’s ability to meet workload demands for mowing rights-of-way and grounds maintenance work at public facilities and areas for which division is responsible. The impacts would be especially critical during peak growing periods. #2. Eliminate air compressor in Internal Services 3,500 5,000 -Would result in continued dependence on present shop air compressor that is over 20 years old; present unit, which is used in fleet maintenance work, currently works, but major failure likely would result in service inefficiencies #3. Reduce fleet supplies 1,000 6,000 -This account already has been reduced 9.5%; the additional cut would reduce our capability to replace worn or broken tools and require mechanics to share or borrow tools. #4. Cut additional building supplies 1,500 7,500
-This would increase the need for building maintenance personnel to share and borrow tools, because we would be less able to replace worn or broken items; service efficiency would be curtailed. #5. Reduce additional funds for building improvements 2,000 9,500 -Would result in less capacity to assume in-house building maintenance improvements; other departments either would have to defer such improvements or find funds within their respective departmental budgets for such work. #6. Eliminate pickup truck in Sanitation 1,800 11,300 -This is a scheduled replacement under the Fleet Replacement Fund for the division’s oldest pickup truck, which could result in more down time and decreased service efficiency #7. Cut an additional amount in street resurfacing 10,000 21,300 -With the cut under Option 1 above that eliminates the amount to cover the impact of inflation on asphalt materials, this further reduction would mean fewer streets would be resurfaced next year. Our base budget without the combined totals in the two options would result in a reduced service cycle for street resurfacing overall. #8. Further reduce contract labor for traffic work 1,100 22,400 -Fewer contract labor hours would be available to supplement signs and markings work, especially in cleaning and straightening signs and assisting with repainting faded pavement markings.
#9. Cut an additional amount in traffic supplies 2,500 24,900 -This further reduction would mean that the service level, both in terms of quantity and timing, would be decreased in street name sign upgrade and replacement program. Options for Service Reductions Rather than make marginal reductions to operating budgets, the Council could consider reducing or eliminating some services. Among these, we suggest the following:
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