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

THE TOWN OF CHAPEL HILL, MONDAY, MAY 3, 1993 AT 5:45 P.M.

Mayor Broun called the session to order at 5:53 p.m. Council Members in attendance were Julie Andresen, Joyce Brown, Mark Chilton, Joe Herzenberg, Barbara Powell, Alan Rimer (arrived at 5:56 p.m.), and Arthur Werner (arrived at 6:43 p.m.). Council Member Capowski was absent excused. Also in attendance were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Library Director Kathleen Thompson, Planning Coordinator Chris Berndt, Public Works Director Bruce Heflin, Fire Chief Dan Jones, Personnel Director Pat Crotts, Parks and Recreation Director Mike Loveman and Recreation Superintendent Lisa Baaske.

Personnel Matters

Mr. Horton provided an overview of personnel compensation and benefit issues, noting that as requested by Council, staff had calculated both declining percentage and flat rate salary increases. He also noted that benefits for Town and State employees were roughly comparable. Mr. Horton said that staff had also compiled a list of new, recommended and converted positions. He also noted that the estimated cost for separating the Town's Police and Fire Departments would be $93,000 additional in each of two fiscal years, 1994-1995 and 1995-1996. Mr. Horton stated that additional funding of $28,000 for staff overtime for community events such as street fairs and halloween celebrations was also being requested.

Noting that Council Member Capowski was unable to attend this evening's meeting, Council Member Andresen said Council Member Capowski favored a flat $800 across-the-board salary increase per employee or a descending salary increase scale from 4.75% to 2%, including up to 1% merit pay. Council Member Herzenberg inquired about Council Member Capowski's reasons for preferring this approach. Council Member Andresen said these approaches emphasized equity. She added that Council Member Capowski suggested that the 401-(k) benefit could possibly be reduced by one percent annually for the next three years. Council Member Brown inquired about the estimated cost of an $800 per employee annual increase. Council Member Rimer said approximately $475,000. He added that relatively few employers provided across-the-board flat dollar increases for all employees. Citing unusual current economic circumstances, Council Member Andresen said she disagreed with this assessment. Mayor Broun said the Town had a relatively small amount of money for revising employee compensation. Mayor Broun added that he preferred declining percentage increases over lump sum increases.

Noting that most State employees had received a $522 annual increase last year, Mayor Broun said these employees would likely receive an increase of about 3%, including a 2% market adjustment and 1% for merit, this year. Mr. Horton said he recommended a declining salary increase scale, ranging from 4.75% for lower-paid employees to 3% for the Town's highest paid employees. Council Member Andresen said another option was to use percentages ranging between 2% and 4.75%. She added that it was worthwhile to evaluate anticipated salary increases proposed by other employers.

Council Member Brown said she supported lower percentage merit increases for higher-paid employees. She noted that tax bills for many people would increase considerably, between 80% and 100% in some cases, due to property tax revaluation.

Council Member Rimer said he preferred to focus on upper and lower percentage range increases rather than lump sum salary increases. Council Member Powell said Town employees were also taxpayers. She expressed support for staggering pay increase percentages. Council Member Powell said she favored maintaining the 401-(k) benefit in lieu of 1% additional pay for merit. She inquired about the benefits of merit pay. Mr. Horton said the principal benefit was to distinguish between better performers and those not meeting standards. Council Member Andresen said she favored maintaining a merit pay component. Council Member Chilton inquired whether it was possible that one employee might pass another in terms of compensation due to the declining percentage option. Mr. Horton said this point was well-taken and a sensitive one.

Mr. Horton said difficult financial times would likely continue in the foreseeable future. He noted that the Town's employment market was the Research Triangle area rather than just the University. Noting the importance of competition and basic fairness in the market place, Mayor Broun said it was necessary to continue to make salary and benefit comparisons to the University. He stated that a reduction in the 401-(k) benefit amounted to a reduction in compensation for employees. Mayor Broun inquired whether the Town's total benefit package was approximately 2% above State benefits. Mr. Horton said this was correct. Council Member Andresen said it was possible that the Town's benefits package was stronger than necessary. She noted that over one hundred local governments throughout the State currently provided a 401-(k) benefit for non law enforcement personnel. Council Member Andresen said Town employment was more secure than many other employers. Ms. Crotts noted that the employee's 401-(k) benefit had been included in salary comparisons with other local employers. She said that many local employers provided salary increases last year.

Council Member Powell said many persons she had spoken with had indicated that felt that continuation of the 401-(k) benefit was of greater importance than a possible 1% merit increase. Mayor Broun inquired about the staff's feeling on this matter. Mr. Horton said most employees would interpret a reduction in the 401-(k) benefit as a reduction in salary. He added that another possible scenario was to have salary increases ranging from 3.75% to 2% while maintaining the existing 401-(k) 5% benefit. Mr. Horton said he did not like either option of reducing the 1% merit or 401-(k) benefit. Council Member Rimer said he thought the 401-(k) program was an important long-term benefit for Town employees. Council Member Brown inquired how the Town's turnover rate compared to those of Orange and Wake Counties and the City of Raleigh. Mr. Horton said staff could provide a follow-up report to compare turnover rates. Council Member Chilton said he would be interested in comparing turnover rates.

Council Member Chilton thanked Bill Oppold for his recent letters to the Council. He inquired about health care benefits for part-time employees. Ms. Crotts said part-time employees had to pay one-half of their health insurance costs. Council Member Powell inquired whether part-time employees received benefits comparable to full-time employees. Ms. Crotts said yes, noting that part-time employees received benefits at one-half the rate of regular employees. Council Member Powell inquired whether this was the practice of other organizations. Ms. Crotts said approaches differed by organization.

Mayor Broun noted that any cut in benefits amounted to a reduction in salary. He added that the Town's benefits package was slightly better than the State's package. Mayor Broun said it might make sense to keep better benefits and lower proposed salary increases. Council Member Werner said in light of spiralling health care costs, it was advisable to focus on benefits rather than salary increases. Ms. Crotts noted that a comparison of Town benefits with other employers two years ago found that some employers were ahead, some behind and others comparable. Council Member Andresen inquired why staff recommended changing some contract positions to part-time positions. Mr. Horton said this was being recommended out of a sense of fair treatment for all employees. Council Member Andresen asked whether all part-time and full-time positions would be needed for the foreseeable future. Mr. Horton said yes. Council Member Brown inquired why some tables indicated 540 Town employees while others indicated 538 employees. Mr. Horton noted that two positions had been deleted in the Transportation Fund.

Council Member Andresen inquired about training problems associated with separating the Police and Fire departments. Mr. Horton said it was preferable to complete separation of the two departments for training, administrative and other purposes.

Council Member Andresen said Council Member Capowski had suggested that the Town charge the University full costs for handling athletic and Smith Center events. She noted that major events coinciding with emergency incidents could overtax available public safety resources. Mr. Horton said he was working with Police Chief Pendergraph on these concerns. He added that the University paid fully for Town transit and public safety services related to concert events. Mr. Horton stated that the University had agreed to contribute five replacement trees valued at over $1,500 and a $500 cash contribution to offset costs related to the UNC NCAA Celebration on April 5th. Mr. Horton said staff needed the Council's guidance on how to include special events funding in the proposed budget.

Operational Issues

Public Works Director Bruce Heflin briefly reviewed costs for Town recycling programs. Council Member Andresen inquired about the cost per ton for landfilling. Mr. Heflin said the cost was $21.50 per ton. Council Member Andresen said she was struck by the high cost of recycling for multi-family complexes. Mr. Heflin said recycling at apartment complexes was a labor-intensive activity. Mr. Horton added that a greater percentage of loads at multi-family sites were contaminated, with materials being improperly sorted. Council Member Werner said he did not understand why recycling costs were twice as high for multi-family sites than single family residences. Mr. Heflin said there tended to be less contamination and greater recycling participation in single-family areas than multi-family residences. Council Member Brown inquired whether recycling rates for multi-family residences were lower than single family residences. Mr. Heflin said this was generally correct.

Council Member Andresen inquired about possible changes in the Town's recycling programs. Mr. Horton suggested that any proposed changes in recycling be coordinated through Council Member Rimer, the Town's Landfill Owner's Group liaison. Council Member Andresen inquired whether the bid for recycling services was truly competitive. Mr. Heflin said yes. Council Member Andresen said Council Member Capowski had indicated that it was not possible to give carte blanche to high-cost programs. Mr. Heflin noted that the cost for local residential refuse collection and disposal was approximately $90 per ton. Council Member Brown inquired about comparative recycling costs per ton. Mr. Heflin said that private recycling concerns had not been willing to share information in the past. Noting that the average cost for single-family residential recycling, including rural curbside, was $86.08 per ton, Council Member Brown said any additional information on recycling program costs would be useful. Mr. Heflin said costs per ton were lowest and levels of recycling participation were highest at drop-off sites. He added that future recycling programs might have higher marginal costs per ton due to new state regulations.

Noting that the cardboard program was one of the least expensive recycling programs, Council Member Brown inquired why greater cardboard recycling program expenses were anticipated. Mr. Heflin said only a limited amount of cardboard could be collected and recycled due to limited staff resources. Council Member Brown inquired about the possibility of establishing a cardboard recycling program which was as cost-effective as University Mall's program. Mr. Heflin said staff had considered options for additional collection incentives and full-cost recovery recycling programs. Noting that the proposed new landfill would cost approximately $5.5 million over six years, Council Member Brown stated that no one had addressed total cost concerns. She requested information on what needed to be done in accordance with new landfill and recycling laws. Mr. Horton said the Landfill Owner's Group had hired an attorney to investigate forms of organization to issue debt and purchase land for a new landfill site. Council Member Brown expressed concern that the system was not effective in looking at long-range costs.

Council Member Chilton inquired what proportion of multi-family units did not have recycling programs. Mr. Heflin said by the end of next year, all multi-family complexes desiring recycling services would have programs. Council Member Chilton asked whether backdoor and curbside recycling pick-up costs per ton were comparable. Mr. Heflin said staff could gather and provide this information to the Council. Noting that substantially less was spent for multi-family than single family residential refuse collection, Council Member Chilton said this should be taken into account when comparing recycling program costs. Council Member Rimer noted that annual recycling program costs exceeded landfilling costs. Council Member Rimer said he disagreed with Council Member Brown's earlier comment that funds had not been set aside for a landfill site. He stated that funds set aside had been limited by the conscious decision of local governing bodies to limit property tax rate increases. Council Member Rimer said greater recycling and landfill costs would be encountered in future years.

Council Member Andresen inquired whether any recycled items were stockpiled. Mr. Heflin said no, noting that stockpiling was only very rarely needed and then it was only temporary. Council Member Werner emphasized the importance of moving ahead on acquisition of a landfill as soon as possible. He also inquired about mixed paper recycling rates from local office buildings. Mr. Heflin said staff could attempt to provide information in this regard. Council Member Werner inquired about the status of household hazardous waste programs. Mr. Heflin said a building for a paint exchange program had recently been acquired. He added that staff had applied for a permit to receive hazardous materials in the building, including pesticides. Mr. Heflin stated that the proposal would be presented to the Landfill Owners Group.

Noting that the state had recently initiated stream monitoring programs around the Town, Council Member Werner said the streams were not as clean as expected. Council Member Werner added that the total cost of recycling programs was approximately $400,000 to $500,000. Council Member Brown said she would be interested in seeing estimated landfill replacement costs. She also emphasized the possibility of initiating a local unit-based refuse collection pricing program. Mr. Horton said he understood Council Member Brown's point about waste tipping and related consumption-oriented philosophies. Council Member Brown said she had a number of additional questions that she would put in writing. She requested that answers to the questions be supplied to the Council and citizens.

Sanitation Services

Council Member Andresen said Council Member Capowski felt that refuse collection was the Town's most visible service. Noting the estimated annual savings of $37 per household and that approximately 1 in 8 residents left their carts at the curb, Council Member Capowski expressed his support for once weekly rearyard collection. Council Member Brown said the Town's solid waste collection costs were quite high compared to other communities. Mr. Horton concurred, adding that the Town provided a fairly high level of refuse collection service. Council Member Brown stated that unit-based pricing systems would provide greater flexibility by providing a waste-reduction incentive. She inquired why the Town did not have pick-up and fee schedules for bulky items such as appliances. Council Member Andresen said this might result in increased dumping. Mr. Heflin said staff would need to do some research in this regard. He stated that scheduled collection for bulky items would likely add expenses. Mr. Heflin stated that most bulky items were collected within 48 hours. Council Member Brown said if calls were scheduled, staff could provide a cost analysis of the program.

Council Member Werner suggested that the Council's views on sanitation collection methods were quite disparate. He added that there was no consensus on whether or not an enterprise landfill fund should be pursued. Council Member Brown said the agenda item on sanitation services did not contain specific cost information. Council Member Werner stated that compiling this information would require considerable staff time. Mayor Broun inquired about the amount of staff time needed to gather information. Mr. Horton said it would take quite a bit of time to cost out all elements of the solid waste collection system.

Council Member Chilton said the matter of unit-based pricing for refuse collection could not be resolved quickly. He stated that three percent of City of Seattle, Washington residents elected to pay for extra rearyard refuse collection rather than unit-based collection. Council Member Rimer said it was likely that unit-based pricing would get mixed-up with the difficult staff task of disaggregating costs. He emphasized the importance of the Council having a rational question and decision-making process for solid waste management issues. Mr. Horton noted that there was a limited amount of time prior to July 1st for staff to gather additional information and that he would follow Council guidance regarding how to focus that time. Mayor Broun suggested that the staff examine whether refuse collection should be an enterprise fund or Town service. Council Member Powell said she favored continuation of twice-weekly rearyard collection and the Town's current recycling program. She added that some rollcarts rolled into the street when they were not taken in by residents.

Cost of Fire Protection Services

Council Member Andresen inquired about the number of fire calls and equipment usage on the University campus as a percentage of total Town calls and fire apparatus. Mr. Horton said about 28% of calls were from the university. He said it was more difficult to attribute percentages of equipment usage. Council Member Andresen noted that Council Member Capowski had inquired how the Town could increase the State's contribution for provision of fire protection service to the University. Mr. Horton said members of the local delegation would have to bargain with other state representatives and senators to increase University fire protection funding. Council Member Andresen noted the need for the Council to make a stronger case for additional funding in future years. Council Member Werner inquired whether the Town was legally required to provide fire protection to the University. Mr. Horton said yes. Council Member Brown asked whether the Town would have needed its new piece of aerial apparatus if protection were not provided to the University campus and buildings. Mr. Horton said Fire Chief Jones had indicated that a somewhat shorter ladder could have been purchased. Council Member Andresen inquired about the cost of the new truck. Chief Jones said approximately $500,000.

Transportation

Mr. Horton said staff efforts to receive additional federal and state transportation operating funds continued. Council Member Chilton inquired about transit service from downtown to the Smith Center for concerts. Transportation Director Bob Godding noted that the minimum level of service to Smith Center events was service from downtown, University Mall and Carrboro Plaza. He noted that up to $2,000 per event could be lost on small events. Council Member Rimer inquired about the status of the Rosemary Street parking facility project. Mr. Horton said the Town would file a claim for liquidated damages and it was likely that the contractor would file a counterclaim. Council Member Andresen inquired why transit revenues for basketball games were almost double those for football games. Mr. Godding said it was possible to make multiple bus trips for basketball games while this was not as likely for football games.

Council Member Brown inquired why parking revenue estimates for lot #3 were higher than the consultant's feasibility study. Mr. Horton said this was primarily because lot #3 had been converted from leased to metered spaces. Council Member Andresen said Council Member Capowski did not oppose raising the standard bus fare to 75 cents. She also noted that Council Member Capowski did not favoring reducing bus service. Council Member Chilton inquired about the estimated additional revenue from the 75 cent fare. Mr. Horton said approximately $26,500 would come to the Town and considerably more to the University. Council Member Andresen asked if the majority of revenues were from passes. Mr. Godding said yes. Council Member Chilton noted that although ridership levels were more influenced by routing than by fares, and that a fifteen cent increase would not net significant money for the Town. Mayor Broun said he favored maintaining current bus fares.

Library Services

Mr. Horton said he highly recommended that Council Members take a tour of the new library site. Council Member Andresen said Council Member Capowski and herself favored raising fines and fees. She inquired why the maximum fine was $6.50 and the true replacement cost of books. Library Director Kathleen Thompson said the replacement cost was the cost of the book plus a processing charge of $8.50 per book, although only $4.00 was charged to patrons. Council Member Herzenberg noted that books were returned when the maximum fine was collected. Council Member Chilton said he agreed with the proposal to raise library fines.

Noting that the Manager had proposed a number of possible reductions in library services, Mayor Broun inquired whether it was possible to defer some items for a year or two. Ms. Thompson reviewed the options noting that it was likely that there would be longer service lines if staffing levels were similar to current levels in the new library facility. Noting that it was rare to have a bookmobile in a small urban area, Ms. Thompson noted that the Library Board of Trustees had previously expressed its strong support for maintaining the bookmobile. She added that the bookmobile served 22 day care centers and 13 other locations in the community.

Mr. Horton said the proposed cuts were divided into two tiers, one group of services to handle the anticipated thirty percent increase in patrons and a second tier concerning possible expansion of library services. Council Member Andresen said $95,000 was a lot of money to expand reference and circulation desk services. She suggested the Council might be better served by being more conservative with proposed staffing of the two desks. Ms. Thompson said staff could periodically evaluate the desirable staffing levels of the circulation and reference desks. Noting that there were presently a number of passive, angry non-library users due to parking and building size problems, Council Member Herzenberg said some of these non-patrons might be angry if the new facility were not adequately staffed. Ms. Thompson said it was difficult to estimate actual demand for telephone lines and other library services.

Council Member Rimer said a total of seven full-time equivalent positions were being requested, with four permanent and three contract positions. Council Member Rimer said he found it incomprehensible that some increase in staff could not be funded. Mr. Horton said the new facility's staffing requirements could be periodically reviewed. Noting that the community had been waiting a long time for a new library facility, Council Member Werner said staffing at the facility could be increased or decreased as needed. Council Member Andresen said it was rare to cut back on staffing levels. Council Member Werner said patrons would be very unhappy if the new facility did not have at least the same level of service as the current library. Council Member Werner also said he favored maintaining bookmobile service.

Outdoor and Nature Program Options

Mr. Horton said a number of options had been outlined for Council consideration. He added that Parks and Recreation Director Mike Loveman and Recreation Superintendent Lisa Baaske were in attendance to answer questions. Council Member Andresen inquired about the Town's indoor rock climbing program. Mr. Loveman said this program could continue under the direction of the Community Center facility manager. He added that the annual indoor rock wall climbing competition could continue using contract staff. Council Member Andresen asked whether the competition made money. Mr. Loveman said yes. Council Member Andresen said she favored continuation of the program.

Council Member Werner said he favored option "b". He added that option "c" could be implemented if demand warranted. Council Member Chilton said option "b" involved some one-time costs. Noting the importance of programs for young children, Council Member Andresen said she favored option "a" or "b". Noting that the next budget year would be fiscally challenging, Council Member Brown emphasized the importance of cutting back on programs. Mayor Broun said he favored option "b". Mayor Broun said he did not know whether the Town could afford option "a". Council Member Chilton suggested that the Council give consideration to the interpretive trail program. Mr. Horton said he would include options concerning the programs in the recommended budget.

Parks and Open Space Bonds

Mr. Horton said the recommended minimum issuance of bonds for parks and open space would be $400,000. Council Member Werner inquired about the amount of funding recommended in the current budget. Mr. Horton said zero.

Board and Commission staffing

Council Member Werner said he was struck by the contributions of ad hoc committees and task forces. He added that committee operating costs were minimal. Mayor Broun expressed his concurrence. He added that the Council needed to recognize demands being made of staff. Council Member Andresen inquired whether the same level of staff support was necessary for all committees. She also inquired about limitations on staff time. Mr. Horton said staff tried to be reasonable in meeting committee requests. He added that the Public Works Department had a small administrative staff to handle a lot of information requests. Mr. Horton also noted that the citizen leaders of the Citizen's Energy Task Force had been the impetus for energy-saving projects. Council Member Herzenberg said committee such as the Noise and Tree Protection Committees received valuable staff time and assistance. Council Member Chilton noted that some boards and commissions did not have sufficient applicants to fill vacancies.

Mayor Broun suggested that the Council review the list of possible budget reductions to meet the objective of a no tax increase budget. The session concluded at 9:02 p.m.