MINUTES OF A BUDGET WORK SESSION HELD BY THE MAYOR AND COUNCIL OF

  THE TOWN OF CHAPEL HILL, TUESDAY, MAY 12, 1992 AT 7:30 P.M.

 

Mayor Broun called the work session to order.  Council Members in attendance were Julie Andresen, Joyce Brown, Joe Capowski, Mark Chilton, Joe Herzenberg, Alan Rimer (arrived at 7:47 p.m.), Arthur Werner (arrived at 8 p.m.).  Council Member Roosevelt Wilkerson, Jr. was absent excused.  Also in attendance were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Personnel Director Pat Crotts, Transportation Director Bob Godding, Library Director Kathy Thompson, Public Works Director Bruce Heflin and Town Attorney Ralph Karpinos.

 

Mr. Horton briefly reviewed the proposed topics of discussion for the evening.

 

401 (k) Compensation

 

Ms. Crotts said that 401 (k) referred to the Internal Revenue Service's designation for a tax-saving retirement program.  She noted that the Town had initiated the 401 (k) benefit in 1987 for all Town employees in lieu of a market adjustment.  Ms. Crotts said employees had grown to appreciate the 401 (k) program benefit for retirement planning and the ability to borrow from their own accounts.  She stated that fifty-six percent of employees either had loans from their 401 (k) accounts or made voluntary contributions.  Ms. Crotts said the total current annual cost of the 401 (k) benefit was $551,000, of which $378,000 was for non law-enforcement personnel.  She noted that no merit or market increases were recommended in the proposed budget.  Ms. Crotts also noted that the Town's and University's benefit packages for employees were quite similar.

 

Council Member Capowski requested a comparison of the Town's and State's retirements plans relative to retiree benefits for employees in similar positions.  Ms. Crotts said although the two plans were quite different in some respects, benefits received would be similar, with State employees probably receiving a few dollars a month more in retirement payments.

 

Council Member Andresen inquired what percentage of employees currently had 401 (k) loans.  Ms. Crotts said thirty-seven percent.  Council Member Andresen inquired about the purposes of the loans.  Ms. Crotts said the loans could be for any purpose.  Council Member Andresen said the 401 (k) program was a nice benefit for Town employees.  She noted that five of nine local government units currently contributed five percent of employee salaries to a 401 (k) program.  Council Member Andresen inquired whether other communities were considering reducing their percentage contributions to 401 (k).  Mr. Horton said he was not aware of any such plans.

 

Council Member Brown inquired about the percentage of local governments state-wide contributing to 401 (k) plans.  Ms. Crotts said approximately twenty-five percent of local government units contributed to 401 (k) programs beyond the required 5% contributions for law enforcement personnel.  Council Member Andresen said the 401 (k) benefit was a nice one for Town employees.  She noted no change should be made in the program in light of no proposed pay or merit increases.  Council Member Andresen expressed hope that it would be possible to maintain the 401 (k) program in the future. Mayor Broun noted that the 401 (k) had been instituted in lieu of a market adjustment in 1987.  Mayor Broun said he was not disposed to lower the level of employee compensation.  Council Member Herzenberg said it was admirable to treat all employees the same with programs such as the 401 (k) program.

 

Training and Development Costs

 

Mr. Horton noted that Ms. Crotts had conducted a survey of Town departments concerning training and development costs.  Ms. Crotts stated that an amount equal to  approximately one percent of total employee salaries was budgeted for business meetings and training, with approximately $84,000 for training and $6,500 for local travel reimbursement and related items.  She said that approximately three hundred of the Town's five hundred employees would directly benefit from some type of training program.  Ms. Crotts said in-house training such as safety was provided by the Police, Fire, Transportation and Personnel Departments.

 

Council Member Andresen inquired about the amount set aside for out-of-town travel.  Ms. Crotts said that sixty to seventy percent of training occurred in-state.  Council Member Andresen inquired how the proposed training budget compared to last year's training budget.  Ms. Crotts said the proposed General Fund training for 1992-93 was $72,000, compared to $89,000 in the current year.  Mr. Horton noted that reductions had been made in accounts which would have the least immediate impact on service provision, training being one such account.  He stated that the proposed reduction in training was approximately twenty percent, with efforts being made to preserve training in police and fire operations.  Council Member Andresen said it was appropriate to examine all areas for possible reductions. She also noted the importance of not compromising on-the-job training programs.  Mayor Broun noted that the area was fortunate to have a number of excellent training facilities such as the Institute of Government and the Coates Center in close proximity.

 

Noting that no market or merit increases were recommended, Council Member Rimer noted that reducing training budgets in addition would be inadvisable.  He stated that most training would yield benefits to the Town in the future.  Council Member Chilton thanked the Manager for making reductions in areas which would have the least impact on services.  He noted that it was not possible to do this every year.  Council Member Chilton said he hoped that the proposed reduction did not imply a lack of commitment to training.  Mr. Horton said the Town was committed to retaining and maintaining a well-trained work force.  Council Member Brown noted that it was important to distinguish between business meetings and training.  Mr. Horton noted that these costs were segregated.

 

Trolley Service

 

Transportation Director Bob Godding stated that two trolleys had been acquired in September, 1989.  He briefly reviewed trolley operations, noting that tours of the historic district were being offered on a seasonal basis, funded by hotel/motel revenues.  Mr. Godding reported that trolley ridership had declined from an average of twenty-nine passengers per hour in the first year of operations to twenty passengers per hour at present.  He noted that the amount paid by the Downtown Commission for trolley service did not cover the full cost of operations.  Mr. Godding stated that the ten cent fare for riding the trolley was supplemented by federal and local operating assistance from the Town and University.  He noted that although historic district tours were permissible, chartering of trolleys was not.

 

Council Member Herzenberg asked whether most funds for trolley service were generated by a special district tax.  Mr. Godding said yes.  Council Member Herzenberg said he thought that the Town's trolleys could be used to greater advantage, increasing special use beyond the current programming of sixty hours per year.  Mr. Godding said this was possible, but would involve additional operating costs.  Mr. Horton noted that there had been a strong expression of interest from the university visitor's center for tours of the area on the trolley.  Council Member Herzenberg inquired whether it was correct that the trolleys could be used for charter service only if there was no other local source of similar vehicles for this purpose.  Mr. Godding stated that it would be necessary for the Town to publish a notice of their intent to enter into the charter business.  He added that private operators would have the opportunity to challenge this type of proposal.  Mr. Godding noted that some local operators would be interested in starting a charter service.

 

Council Member Capowski inquired whether $7,800 of downtown district tax proceeds were earmarked for trolley operations.  Mr.  Horton said it was not possible to determine specific funding support by sources.  Council Member Capowski asked whether the Downtown Commission was the largest contributor to the trolley's operating expenses.  Mr. Horton said yes, noting that the grant from the Town to the Commission was quite large.  Council Member Capowski inquired about the scope of the grant.  Mr. Baker said approximately $24,000.

 

Council Member Capowski asked whether the Downtown Commission felt it was getting it's money's worth.  Mr. Horton stated that at an administrative hearing on the downtown service district, there had been expressions of concern about the drop in trolley ridership but there was also strong support for continuation of the service.  Council Member Brown said she concurred with Mr. Horton's observations.  She added that one speaker at the hearing had wondered whether the trolleys were being used correctly.  Council Member Werner asked whether the Town was spending between $37,000 and $38,000 per year for trolley operations.  Mr. Godding said this was difficult to quantify.  He stated that gross costs for the trolley service was equal to the average hourly cost times the number of hours of operation.  Council Member Chilton asked whether operating expenses for trolley service were spendable on other transit service in the event that trolley service were discontinued.  Mr. Horton stated that the funds could be used to provide other types of transit service.  Mr. Godding added that if the trolley service were discontinued, corresponding operating assistance would also be curtailed.  Council Member Werner inquired about the cost of the trolley service.  Mr. Godding said he did not have an exact figure, but costs could be calculated on a line-item basis.  Council Member Werner asked whether approximately $30,000 would be available for use elsewhere if the Town chose to discontinue trolley service.  Mr. Godding said yes, noting that there would be a corresponding reduction in operating assistance.

 

Council Member Werner said the Council ought to examine the question of whether or not to continue providing trolley service. Council Member Andresen said this was a fair question.  She added that the Town might be able to sell the trolleys for a good price.  Council Member Andresen also expressed her support of the Downtown Commission's efforts.  She inquired whether it would be a good idea to raise the trolley fare from ten cents to twenty-five cents.  Mr. Godding said a fare of thirty cents might be preferable.  Council Member Andresen inquired about the anticipated impact of a fare increase on ridership.   Mr. Godding said the increase would likely have a minimal impact.  Mayor Broun said it was worth thinking about a fare increase, with the additional revenue earmarked for promoting the use of trolleys.  Mr. Horton noted the importance of segregating costs for trolley operations between the Town, Carrboro and the University.  He inquired whether it was possible to segregate costs for promotion efforts.  Mr. Godding said the crucial question was whether the Town or Downtown Commission was better situated to handle marketing of the trolley service.  Mayor Broun said he hoped that better marketing would result in greater ridership in the long-run.

 

Council Member Capowski inquired whether any trolley services made a profit.  Mr. Godding said he was not aware of any such circumstance, although some systems had higher ridership than others.  Council Member Capowski said the Council should consider whether spending $35,000 for trolley service was the most beneficial means to help the downtown area.  Mr. Horton said this was a very reasonable question.  Council Member Werner, noting a large decrease in ridership, said he questioned whether operation of the trolley was a good investment.  He stated that there were other more effective means of promoting downtown area.  Council Member Brown asked whether the Downtown Service District tax had been adopted for a specific purpose.  Mr. Horton said a number of purposes had been specified.  He added that the Council could change the allocation of dollars from the district tax in accordance with these purposes.  Council Member Brown asked whether the tax yielded about $40,000 per year.  Mr. Horton said yes.  Council Member Brown asked whether a reduction in hours of trolley service corresponded to a reduction in federal assistance.  Mr. Godding said this was possible.  Council Member Brown inquired about the cause of decreased trolley ridership.  Mr. Horton cited a general decline in business activity in the community in the past year.  Mr. Godding concurred that the general economy appeared to have the greatest impact.

 

Council Member Rimer suggested the possibility of a compromise, with the Town challenging the Downtown Commission and Chamber of Commerce to initiate efforts to increase trolley ridership and initiate economic programs to enhance the downtown area.   Council Member Andresen suggested that the Council ask the Downtown Commission to re-evaluate trolley service.  She noted that the original purpose of the service had been to tie the two towns together.  Council Member Andresen said there was a great deal of potential for future uses of the trolleys.

 

Council Member Herzenberg said he enjoyed the experience of riding the trolley at least once per week.  He noted that the fare had been set at ten cents to discourage movement of cars in the downtown area.  Council Member Herzenberg said he did not oppose raising the fare to twenty-five cents.  Council Member Herzenberg said he supported continuing trolley service for at least one more year.  He noted that the money might conceivably be used for something else.

 

Council Member Chilton expressed concern about the extent to which benefits of trolley service were reaped by some downtown businesses such as movie theaters.  Council Member Werner inquired whether the university and hospital provided separate funding support for the trolley.  Mr. Horton said yes.  Council Member Werner suggested that the Town contact the school district about the possible use of trolleys for school activities and journeys.  Mr. Godding said a program of this type had been initiated.  Mayor Broun said it appeared to be the sense of the Council to maintain the trolley system in the coming year, working with the Downtown Commission to explore promotional programs.  Mayor Broun said the Council also appeared to agree in principle to raising trolley fares from ten cents to twenty-five cents.

 

Mr. Godding reported that the Town's share of federal operating assistance for transit operations had been increased from $1,200,000 to $1,291,500, as a result of a recent agreement with the City of Durham.  Mr. Godding noted that the Transportation Advisory Committee had endorsed the concept of the Town and City of Durham working together to allocate federal transit assistance.  Mr. Godding also reported that the Triangle Transit Authority was planning an expansion of transit service throughout the Research Triangle.  He noted that the Town had been asked to consider two routes in conjunction with this effort, including additional Blue Line service and the possible addition of service to the Research Triangle Park.  Mr. Godding said the Authority planned to cover operating costs for the proposed new routes.

 

Council Member Werner inquired whether the likelihood of contracting out of service was likely.  Mr. Godding said this would be determined by the Triangle Transit Authority Board of Directors.  He noted that the Authority had expressed interest in purchasing about twenty buses for its own operations.  Mr. Godding said contractual service might only be needed for one to three years if the Authority acquired its own buses.  Mr. Horton said he was impressed with the work of the Authority to date.  He noted that planning had been initiated for a fixed-guideway system.  Noting the vast expanse of the Research Triangle Park, Council Member Andresen said he hoped that the Triangle Transit Authority would work with large employers in the Park to determine transit routes.

 

Mr. Godding provided an update on funding for the U.S. 15-501 park and ride lot, noting that funding was available for the lot itself, but not a roadway accessing the lot.  He added that indefinite postponement of the project might result in losing a grant of $700,000 for the lot.  Mr. Godding said it would cost an estimated $15,000 to design the road to the lot and approximately $220,000 to construct the roadway.  Council Member Brown requested further clarification of the access road situation.  Mr. Horton said the realignment of Dogwood Acres Drive was not anticipated as part of the access road construction.  Council Member Andresen inquired about the amount of leeway before the funds would no longer be available.  Mr. Godding said this was difficult to pinpoint.  He added that federal funds for projects of this type were generally available for up to three years.

 

Council Member Andresen inquired about possible shared use of the park and ride lot by the Town and Hospital.  Mr. Godding said it would be possible to confer with hospital officials on this matter.  Mr. Horton noted that if the lot were constructed, it would also be necessary to provide funds for service from the lot.  He stated that the provision of such service would necessitate reducing bus service in other areas of the Town.  Mr. Horton inquired about the estimated local cost for the acquisition of sixteen new buses.  Mr. Godding said approximately $400,000.

 

Council Member Werner inquired about the implications of building an access road on the proposed Southern Community Park.  Mr. Godding said it was only necessary to build about the first four hundred feet of roadway to provide access to the proposed park and ride lot.  Mr. Horton noted that the driveway would also serve as a future parking lot for the proposed park facility.   Council Member Chilton inquired whether a listing breaking down the residences of hospital employees by zip code was available.  Council Member Werner noted that the Council had requested and received this information several years ago.

 

Council Member Brown inquired about the possibility of using $32 million currently allocated by DOT to widening U.S. 15-501 South to fund bus replacements.  Mr. Horton said this might be possible, depending upon the degree of flexibility offered by the State of North Carolina Department of Transportation.  Mr. Godding noted that the Town had extended a twelve year replacement schedule for buses to 14 years.  However, since operating funds were now scarcer than capital funds, we should return to the federal standard of 12 years.  He added that new Clean Air and Americans with Disabilities Act requirements were quite costly to implement.  Mr. Godding said new buses cost between $225,000 and $250,000 each.

 

Council Member Herzenberg inquired about the average number of miles on an average twelve year-old bus.  Mr. Godding said between 500,000 and 750,000 miles.  Mr. Horton noted that although there would likely be a future challenges in transit funding, recent discussions with state representatives and senators had gone well. Mayor Broun thanked Mr. Godding and Mr. Horton for their efforts.

 

Library Support and Maintenance of Effort

 

Library Director Kathy Thompson noted that Orange County currently provided approximately fifteen percent of the Town's operating budget for the library.  She noted that funding support for library services by Orange County had increased or stayed the same each year since 1985.  Ms. Thompson briefly reviewed maintenance of effort provisions outlined in the North Carolina Administrative Code, noting that libraries receiving funding support from the State could not expend less than previous years.  She noted that libraries in other states could apply for exceptions.  Ms. Thompson stated that the proposed library budget was $17,400 less than the current year budget.  She noted that loss of state aid would occur for a minimum of two years, with a total loss of $157,000 and some state library services.  Ms. Thompson said she recommended the pursuit of a more lenient interpretation by the state.  She noted that the Town was involved in an extensive capital investment program with the proposed new library facility.  Ms. Thompson said the Town was not the only library in the state in the situation of reduced funding for services.  She suggested that an alternative approach was to transfer $17,400 from the Library Gift Fund to the operating budget line item of materials acquisition.

 

Council Member Werner inquired whether maintenance of effort guidelines were an appropriate issue for the General Assembly's short session.  Mr. Horton said the staff would appreciate the opportunity to provide a copy of applicable correspondence to local General Assembly members.  Council Member Werner said the maintenance of effort rule appeared silly on its face.  Mr. Horton said the staff would make an effort to demonstrate that locally-generated funds had increased while state funds had decreased.  Council Member Herzenberg inquired about the genesis of State Library Director McGinn's letter to the Town.  Ms. Thompson said the Town had requested a clarification of the State's interpretation of maintenance of effort for funding of local library programs.  Council Member Herzenberg inquired whether the interpretation differed from those in the past.  He also noted that Sunday library service had been temporarily halted in 1980-81.  Mr. Horton noted that this year was the first time that an actual reduction in the library budget was recommended.  Mayor Broun said he encouraged the staff to pursue a change in ruling from the local State Legislative delegation.

 

Council Member Herzenberg inquired about the extent of bookmobile service in Chapel Hill by the Hyconechee library system.  Ms. Thompson said she could provide a copy of the County's bookmobile schedule.  Council  Member Herzenberg said there was a great inequity in County funding of library services.  He stated that the County provided fifteen percent of funding for library services while thirty-one percent of patrons were non-Chapel Hill residents.  Noting that Town residents were also County residents, he said Town residents were entitled to a considerably larger share of County services.

 

Council Member Capowski inquired whether a transfer from the Library Gift Fund would be recommended in the event that a change in maintenance of effort rules was not possible.  Ms. Thompson said this was correct.  Council Member Capowski inquired about the nature of the Library Gift Fund and the impact of a transfer from the fund.  Ms. Thompson said the principal of the fund was restricted in some instances.  She noted that a transfer was made from the Library Gift Fund to the General Fund annually, to purchase books and to cover general operating expenses.  Ms. Thompson noted the importance of collection development for the new library facility.  Mr. Horton noted that the actual transfer might need to be approximately $22,000.

 

Council Member Herzenberg suggested that the Library Board of Trustees guidance be sought on the matter of maintenance of effort.  He said the Board of Trustees had generally been opposed to replacing municipal funds with gift funds.  Ms. Thompson said using gift funds for collection development was consistent with their purpose.  Council Member Herzenberg inquired why more gift funds were not used for collection development.  Mr. Horton said it would be undesirable to lose the State's contribution for library services.  He expressed hope that the decision on maintenance of effort could be changed, perhaps by an administrative law judge.

 

Public Works Reorganization

 

Public Works Director Bruce Heflin noted that departmental reorganization had been initiated approximately four years ago.  He briefly reviewed the proposed changes in organization.  Mr. Heflin noted that two of the reorganization's goals were to combine related activities under the same supervisor or administrative director and to centralize administrative responsibilities.

 

Council Member Rimer inquired whether additional responsibilities were anticipated for positions such as the Grounds Program Supervisor in Field Operations Administration.  Mr. Heflin stated that the organizational chart was arranged on a programmatic basis, with maintenance, cemeteries and entranceways and right-of-ways included in the field operations division.  Council Member Rimer inquired about the line of command.  Mr. Heflin said as a practical matter, field crews would report to division superintendents.

 

Council Member Herzenberg suggested that the title of Landscape Superintendent be expanded to reflect the position's responsibilities as the Town's Urban Forestry Officer.  Mr. Horton said this could be accommodated.  Council Member Brown requested additional information on cost reductions resulting from the proposed reorganization.  Mr. Horton noted that the anticipated savings for field operations were based on maintaining the proposed reorganization in the division.  Council Member Brown requested additional information on the Public Works administrative budget and matters of equity.  Mr. Heflin said the solid waste Administration position received two-thirds funding from the Landfill Fund and one-third from the General Fund.  He noted that some overhead charges were included.  Mr. Baker noted that there were overhead charges for each of the Town's enterprise funds.

 

Council Member Capowski requested additional information on the proposed reduction of one refuse collection crew in the 1992-93 budget.  Mr. Horton noted that the reorganization being discussed this evening was only for the field operations division.  Council Member Capowski inquired whether it was correct that the proposed savings of $3,241 did not include the sanitation division.  Mr. Heflin said this was correct.  Council Member Capowski inquired about projected costs for personnel in the Public Works Department.  Mr. Horton said some reductions and additions were proposed.  He stated that the proposed budget totalled $3,029,000, compared to $3,154,000 in the current year, with an absolute reduction in personnel services.

 

Council Member Andresen requested additional information on the two proposed groundskeeper positions needed for maintenance along Fordham Boulevard.  Mr. Heflin said it was anticipated that the positions would not be required until the end of this year so they had been designated as contract workers in 1991-92.   Council Member Andresen inquired whether the staff had explored the possibility of contracting out maintenance for Fordham Boulevard landscape maintenance.  Mr. Heflin said only one firm had informally discussed this possibility.  He noted that the cost of contracting was not advantageous to the Town at present.  Council Member Capowski inquired whether a reduction of approximately $125,000 was proposed in the Public Works Department's payroll.  Mr. Heflin said yes.  Council Member Andresen inquired about the proposed overall amounts for personnel costs.  Mr. Horton said total personnel service costs for all funds were $13.570 million in 1991-92, compared to an estimated $13.665 million in 1992-93.

 

The work session concluded at 9:39 p.m.