SUMMARY MINUTES OF A WORK SESSION

OF THE CHAPEL HILL TOWN COUNCIL

WEDNESDAY, APRIL 28, 2004, AT 5:30 P.M.

 

Mayor Kevin Foy called the meeting to order at 5:30 p.m.

 

Council members present were Sally Greene, Ed Harrison, Cam Hill, Mark Kleinschmidt, Bill Strom, Dorothy Verkerk, Jim Ward and Edith Wiggins.

 

Staff members present were Town Manager Cal Horton, Deputy Town Manager Florentine Miller, Assistant Town Manager Bruce Heflin, Town Attorney Ralph Karpinos, Town Information Officer Catherine Lazorko, Planning Director Roger Waldon, Engineering Director George Small, Information Technology Director Bob Avery, Inspections Director Lance Norris, Transportation Director Mary Lou Kuschatka, Library Director Kathy Thompson, Fire Chief Dan Jones, Human Resources Director Pam Eastwood, Police Chief Gregg Jarvies, Interim Finance Director Kay Johnson, Interim Public Works Director Bill Terry, Housing Director Tina Vaughn, Parks and Recreation Director Kathryn Spatz, Senior Long Range Planning Coordinator Chris Berndt, Senior Planner Phil Hervey, Assistant Human Resources Director Anissa Graham-Davis, Assistant Transportation Director Kurt Neufang, Urban Forester Curtis Brooks, Assistant Parks and Recreation Director Bill Webster, Accountant Mary Jean Williams, and Town Clerk Joyce Smith.

 

Item 1 - General 2004-05 Budget Issues

 

Mayor Foy suggested that the Council focus its discussion on consideration of the details of the budget.  They would not go through the agenda items, one by one, he said, but may refer to them if they wish. 

 

Mr. Horton noted that he distributed a replacement page to Council members. This clarified the numbers on page two in a work report that Human Services Director Pam Eastwood had prepared, he explained.  Mr. Horton pointed out that there also was some new information summarizing changes in revenues and costs.  The Town's patience and the good work done by Randy Ballard in the Public Works Department had paid off and Federal Emergency Management Agency (FEMA) had agreed to reimburse the Town $203,000 in tipping fees, he said, adding that the funds should be reimbursed in this fiscal year. Mr. Horton pointed out that Mr. Ballard had obtained millions of federal dollars for the Town over the years in storm recovery reimbursement.

 

Mr. Horton stated that a cost to the Town had been omitted from his earlier working paper on the Stormwater Management Fund. Since it is a utility, all classes of property must be treated the same, so the Town would need to pay about $43,000 in costs to the utility, he said.  In addition, Mr. Horton noted that the School System had asked the Town to pay about $15,000 for the middle school resource officers during the summer when they are not engaged in school resource work.

 

Mr. Horton told Council members that Orange County would pick up the contract work for Animal Control, which will cost the Town about $47,000.  And the County had said there would be some additional costs, he said, estimating that those would be about $20,000.  Also, Durham had asked the Town to pay its local share for a fairly long list of planning studies that the Council had requested.  Those costs would run about $34,000, Mr. Horton said.  He stated that the net affect of the positive changes and the additional costs would be about $91,000, which could be used to reduce the tax rate, or for other purposes.

 

Mr. Horton explained that the staff had been working, as promised, to develop a reduced-cost proposal for the stormwater management utility for next year.  The bills would be going out in August, so the Town would need to do as much public education and be as responsive as possible to citizens who will be inquiring about the utility, he pointed out.  Mr. Horton reminded the Council that they would also be completing the master plan for the utility in that first year.  He recommended allowing nine months of salary for the information specialist and for the new engineer so the Town could be more responsive early on. 

 

Mr. Horton stated that the Town could manage other changes, such as eliminating the transfer to the reserve, and the balance in the General Fund could carry the Town for a while. He did not think the Town would have to dip into reserves, he said.  Mr. Horton proposed eliminating the emergency reserve and the capital reserve.  And, he said, the staff had identified a number of other changes that would make it possible to reduce the total cost to $1,760,000, with a recommended annual Equivalent Rate Unit (ERU) of $39.  Mr. Horton said that it might be possible to lower that to $38, but probably not lower than that.

 

With this level of programming, the Town could provide significant and valuable services, Mr. Horton said. He noted that services currently paid for by the General Fund would continue.  The Town would be able to produce better public information and education services, and could develop nearly all of the master plan in the first year, he said.  Mr. Horton recommended this level of programming for the Council's consideration.

 

Mr. Horton noted the Council could dedicate receipts from cell tower leases to paying the debt on greenways and open space funding.  He said that some items could be deferred from the Capital Improvements Program (CIP) and that Assistant Town Manager Bruce Heflin was prepared to review those if the Council so desired.  Mr. Horton stated that he had been asked whether he would recommend program expansions or pay increases if he had to choose one or the other.  He had recommended both, he pointed out, and would stick by that recommendation.  But, if the Town must make adjustments, then he would argue that it would be better off having well-treated employees than spending money to provide additional employees for additional services. The Town could do a better job if it retains its happy employees, Mr. Horton pointed out.

 

Mayor Foy summarized the Manager's recommendation for a 4.3-cent tax increase.  One cent raises $442,000 for the General Fund, he said, adding that the property tax only contributes $21 million to the General Fund and there are other significant sources of revenue.  From a taxpayer's point of view, four cents on a $300,000 house would be an approximate $120 tax increase, he said.  Mayor Foy stressed the importance of putting the budget in the context of a two-year cycle.  He pointed out that the Manager had said there would be at least an 8-cent tax increase next year, based on what they know about the Town Operations Center (TOC).  Mayor Foy described that as "a sobering number." 

 

Mayor Foy remarked that there was not much the Town could do about some costs, such as the personnel costs, which had been prior commitments to employee pay, as well as healthcare premiums and workers’ compensation increases.  And the Town was obligated to pay the $561,000 in CIP funds, he said.  But the $500,000 in the second category beneath that represented optional choices that the Town could make, said Mayor Foy.

 

Mayor Foy pointed out that the decision the Council had made on Monday regarding the stormwater management utility had a $1.2 million effect on the General Fund.  It reimburses the Town for money already spent and shifts some costs off the General Fund, he explained.  Mayor Foy stated that those kinds of things can help the Council think about where they can and cannot make changes and what the effects of those changes would be.  He suggested keeping in mind that they were addressing the General Fund and the Capital Improvements budget, which the General Fund was funding.  Also, Mayor Foy said, keep in mind that the tax rate includes an 8/10-cent increase for transit and that this is about 10% of the tax rate.

 

Council Member Strom asked if the Council needed to reach a conclusion tonight on the new data regarding the stormwater utility and the other items. Mayor Foy suggested waiting to decide about the stormwater utility since the Council had not seen the data before tonight.

 

Council Member Harrison determined from Mr. Horton that the Council would need to make that decision before adopting the final budget scheduled for June 14, 2004. 

 

With regard to other items, Mayor Foy pointed out that the $200,000 affects how much cash the Town would have.  So it would be appropriate to discuss that, he said.

 

Mayor pro tem Wiggins asked if the Council could at least state that Mr. Horton was headed in the right direction with regard to the stormwater fee.  Mayor Foy agreed.

 

Council Member Ward commented that the Town should follow what other universities do and charge a fee to all universities that fall within its jurisdiction.  This would allow the Town to make more progress without charging a greater fee to the general community, he said.  Mr. Horton agreed, but added that, from a financial management standpoint, he could not recommend that the Council anticipate any specific dollar level of fees from UNC.  He pointed out that UNC had, in essence, refused to pay that fee, claiming they were exempt from the law.  The Town and the University would have conversations about their different interpretations of the law, Mr. Horton said.

 

Council Member Ward suggested creating a placeholder then for what those discussions could reap for this fiscal year.  Mr. Horton agreed in the sense that the Town might add back some additional services, but not in the sense that the Town could count on the money. Council Member Ward stated that he did not want another 12 months to go by without the Town reaching a conclusion on this.  Mr. Horton replied that he understood the need to do it quickly and that the Council's recent decision to proceed had allowed the staff to begin negotiations with UNC.  But they would not proceed beyond that without specific guidance from the Council, he said.

 

Council Member Strom noted that the Town was facing a 4.3-cent increase after being reimbursed a significant amount for tipping fees.  He proposed that the public perceived this as due to the successful bond sales last year.  Council Member Strom stressed that there were only a couple of hundred thousand dollars in debt service associated with the bond sales that would occur in next year's cycle.  He stated that a good part of the increase was due to general growth, demand for services, and the fact that the Town was burdened with having to relocate a major facility due to the end of its lease at the Horace Williams tract.

 

Council Member Strom agreed with Mayor Foy that this should be looked at as a two-year cycle.  There would be an enormous challenge to control the budget next year, he said.  Council Member Strom stated that he would "push back" on many of the Manager's recommendations.  The nature of the growth in departmental and Town service demands, along with the need for the public works facility and the bond sales next year, means that the Town should fundamentally rethink some of the things that it is doing, he said.  "I think it's furniture rearrangement time on some issues," he remarked.  Council Member Strom noted that payments of the Meadowmont Gym would end next year.  So that would free $200,000-$250,000 in the CIP budget, he said, and he recommended aggressively pushing some of the capital items into next year. 

 

Council Member Strom suggested delaying the $150,000 expenditure for the vehicle replacement fund until there is a Green Fleet policy in place.  He proposed eliminating the suggested Planning position, holding off on funding the Police position, and considering 3% rather than 4% pay increases for Town employees.  Council Member Strom recommended revisiting the $186,000 for general inflation and reducing it "maybe to zero." He found it difficult to justify the $100,000 for a telephone system in Town Hall, he said, and suggested delaying or eliminating that. Council Member Strom also encouraged the Council to determine potential other uses for the Wallace Deck before spending $80,000 for capital improvements.

 

Council Member Strom commented that he had been "stunned" by the cost of generators and could not see spending $340,000 on one for Town Hall.  He expressed concern that the Town's contribution to the Visitors Center was overly generous.  Council Member Strom also wondered about the money given to the RSVP program.  But the "big one" was non-residential trash, he said, adding that he wanted to hear how the Town could maximize savings on non-residential trash pickup using existing crews.  Council Member Strom proposed that the Town had no choice but to proceed with that change in service this year.

 

Council Member Strom pointed out that he had been on the Council when they phased out the school resource officer contributions.  It did not make sense to him to phase it back in, he said, and he rejected that as a reasonable proposal. Council Member Strom also proposed that the Town try to reduce the proposed tax rate increase to about one cent.  

 

Mayor Foy ascertained from Interim Finance Director Kay Johnson that the cost of generators, in terms of new money, was $50,000 for one and $21,000 for the other.  Council Member Strom noted that $53,000 was being rolled over from last year.  Mayor Foy verified that this would be $78,000 and that the Visitors Center was $87,000. 

 

Mayor Foy pointed out that Council Member Strom had listed about $690,000 in cuts.  He asked Council Member Strom where the $300,000 figure for trash collection had come from.  Council Member Strom replied that eliminating the program would yield $500,000.  But, since he did not think it should be totally eliminated, he had estimated $300,000.  

 

Mr. Horton asked Interim Public Works Director Bill Terry to provide a more specific figure.  Mr. Terry replied that the Public Works Department had not developed an option for continuing to serve apartment complexes with commercial trash equipment while eliminating other businesses.  He predicted that the savings would be minimal because the Town would have to retain at least two of four front-loading garbage trucks and a good portion of that staff.  Mr. Terry said he would not recommend that, but he agreed to provide an estimate.

 

Council Member Strom asked if there was another approach to providing strictly residential service.  Mr. Terry replied that the commercial part could be contracted out.  But it would probably cost more to do it themselves, he remarked.  Council Member Strom asked if a distinction could be made between for-profit businesses that were running apartments and other properties, such as condos, that were not necessarily for profit.  Mr. Horton agreed to consult with the Town Attorney about that.

 

Mayor Foy clarified that Council Member Strom had suggested reductions included cutting vehicle replacement ($150,000), RSVP ($12,000), a planner position ($49,000), pay incentives ($250,000), inflation ($186,000), telephone ($100,000), Wallace Deck ($80,000), generators ($50,000), and Visitors Center (an estimated $25,000).  That rough estimate totaled $902,000, said Council Member Strom.  He pointed out that the estimate did not include eliminating commercial trash or the $90,000 or so that the Town would get back from FEMA.  And not paying for the school resource officers would add about $15,000, said Council Member Strom.  All of this would save about $1 million, he said, and "it would be $1.4 million if we nixed commercial trash." 

 

Mayor Foy noted that $1 million would be 2.3 cents on the tax rate.  He verified with Human Resources Director Pam Eastwood that reducing employees' pay increases by 1% would equal about $166,800 from the General Fund.  Mayor Foy inquired about the affect on the Transportation Fund, and Ms. Eastwood agreed to provide that.

 

Council Member Verkerk verified that the pay increase resulted from moving people through merit steps with no market adjustment.  Mr. Horton stressed that there had been no merit changes for the last two years.  The employees who had been with the Town for a couple of years were making almost the same amount as those who were newly hired, he said.

 

Council Member Harrison agreed with Mr. Horton that the Town should not count on stormwater fees to the University until it knows for sure what those fees would be, if anything.  Other universities typically work out some percentage of credit, he said. With regard to Council Member Strom's list, Council Member Harrison expressed concern about deferring costs and adding to next year's potential tax rate.

 

Council Member Strom pointed out that the Town would no longer have to pay for the Meadowmont Gym.

 

Council Member Harrison suggested that the Council continue to remind the public about the Town's sizeable expenditure for the TOC.  He expressed gratitude to Council Member Strom for proposing his list of reductions and cautioned against having residents pay for commercial trash collection.

 

Mayor pro tem Wiggins suggested keeping Council Member Strom's suggestions in mind but also asking the Manager what he would do to cut the budget by $1 million.  Council Member Strom agreed, adding that his goal was to reduce that 4.3 cents to as close to a penny as possible.

 

Mayor Foy pointed out that the Manager needed to know what the Council's policy indications were.  "He could come back with a minus 4.3 cents if we told him that's what we wanted."  Mr. Horton stated that he believed his recommendation was sound and that it reflected his best understanding of the Council's long term policies.  "But I will always assist the Council in finding its way to whatever budget levels it believes is appropriate," he said. 

 

Mayor pro tem Wiggins inquired about the $100,000 telephone system upgrade.  Mr. Horton replied that the system was obsolete and that the expense would be for upgrading it to a modern standard. Mayor pro tem Wiggins stated that knowing the Town could not find replacement parts would help her reach a decision about the telephone system.  She remarked that State employees would likely be receiving a raise of 2%-5% raise and asked if the Town was tracking that.  Mr. Horton replied that they were.  The Town's proposed rates were not at all prospective, he said, but were based on rates in other communities. If rates go up for State employees then the Town's position would be less favorable than anticipated, Mr. Horton said.

 

Mayor pro tem Wiggins stated that she would support a lower tax rate. Council Member Verkerk wondered if the Town might consider a four-year rather than three-year computer replacement cycle for general employees. Information Technology Director Bob Avery commented that the three-year cycle had worked well and had prevented extra maintenance time.  He offered to look into a four-year cycle.

 

Council Member Verkerk spoke in favor of keeping the new EZ Rider positions, noting that people sometimes sit and wait for an hour or more at the hospital.  She said that 4% was a "pretty hefty raise when Fortune 500 companies were giving 2% raises." Council Member Verkerk noted that she worked at UNC, where a tenured professor makes $49,000 and they are hiring new people at $55,000.  She knows that hurts, she said.  Council Member Verkerk also suggested being sensitive to what State employees were not getting. 

 

Council Member Harrison proposed that the State was talking about raises because the Governor was running for re-election this year.  "That's why they don’t come around very often," he said.  Mayor pro tem Wiggins replied that she had gotten raises when there was no gubernatorial election.

 

Council Member Harrison noted that Mayor Foy had mentioned $300,000 in CIP funds last week.  He asked Mayor Foy to reiterate where he had found that. Mayor Foy referred to column two on page 258 of the materials.  He noted $296,000 that the Town was reappropriating out of the current year's budget, which included renovations to the Old Post Office Building and other things.  Assistant Town Manager Bruce Heflin pointed out that the Old Post Office roof was leaking and the chimney was separating from the building.  Mayor Foy replied that he was not disputing the need for any of these expenditures, but was merely pointing out that this was money the Town could choose not to spend.  Mr. Horton noted that the staff had set the budget up in a way that shows the Council where it has discretion.

 

Council Member Hill agreed in general with the Manager's earlier statement that he would rather put money into raises than into outside expenditures.  He pointed out that none of the cuts would make Town employees happy.  But they would be less unhappy if capital expenditures or other parts of the budget were cut rather than their raises, he said. Council Member Hill requested more information about the nature of the Town's negotiations with UNC regarding stormwater payments. 

 

Mr. Horton explained that he and the Town Attorney would meet with the Vice Chancellor for Finance and Administration and her legal counsel.  They would review the law, which the Town believes to be persuasive on its side, he said. Mr. Horton stated that the Town might persuade UNC on a matter of law, or of practicality.  If they cannot agree then he will recommend that the Council file a lawsuit to settle the question, Mr. Horton said. 

 

Council Member Hill noted that a fiscal equity report in the late 1990s had identified areas that might lead to sources of revenue from UNC to the Town.  He asked if this would be an opportunity to reopen discussions about some of those areas.  Mr. Horton replied that he thought UNC had settled those discussions to their satisfaction at the conclusion of the OI-4 ordinance discussion.  The discussion could occur in other arenas, Mr. Horton pointed out, adding that the Council obviously had greater leverage than he does in that respect.  

 

Mayor pro tem Wiggins urged Mr. Horton to keep the generators in the budget.  The weather is getting more severe every winter, she said, and employees had come to work during the ice storm last year even though there was no heat in the building.  Mayor pro tem Wiggins stated that the Town should not allow employees to come to work if there is no generator and therefore no power at Town Hall.

 

Council Member Ward agreed with Council Member Strom that the Town should delay the vehicle replacement strategy and create a Green Fleet.  He did not understand the inflation figure enough to form an opinion about reducing it, he said, asking for more information regarding that.  Council Member Ward stated that, based on what he knew at the moment, he did not support cutting commercial garbage collection.  He pointed out that he, too, was a State employee, and suggested aiming for a 2% pay raise for Town employees, or 2.5% at the most. 

 

Council Member Ward agreed that the Council had appropriately shifted funding of school resource officers a year or two ago.  But it was appropriate for the Town to take on that two-month portion of their salary, he said.  Council Member Ward also agreed that it would be appropriate to identify users who require a more frequent computer replacement cycle.  But the average employee does not necessarily require that, he said.  Council Member Ward proposed asking the Manager to come back with options for 1% to 3% pay increases.   

 

Council Member Kleinschmidt expressed support for the balanced approach that Council Member Strom had taken with his list.  He liked the way that it had brought the increase down about two cents, he said.  Council Member Kleinschmidt agreed with Council Members Verkerk and Ward that 2-2.5% for employees seemed appropriate.  He expressed interest in pursuing the commercial trash issue, stressing the importance of continuing to provide the service to multi-family units.  Council Member Kleinschmidt proposed that it would be cheaper to eliminate commercial collection and to contract multi-family collection out.  It did not seem logical that doing so would cost the same or more, he said. Mr. Horton remarked that the cost would depend in part on whether the Council would pass the full cost on to the customer or whether it would continue to subsidize it as it does now. 

 

Council Member Kleinschmidt stated that he was surprised by the recommendations to replace police handguns.  He had been convinced during his recent questioning of Police Chief Jarvies that this was not needed, he said.  Mr. Horton explained that after that Council discussion he had inquired and had become concerned, and had recommended undertaking a handgun replacement policy and program.  Mr. Horton offered to provide a working paper on that.  He explained his concern that the handguns would not be reliable, and pointed out that they must, if used, work perfectly every time.  Mr. Horton expressed concern that the Town was not operating under normal standards for gun replacement.

 

Chief Jarvies explained that it was recommended that weapons be replaced in no later than 10 years.  There were some at the Department that were 16 years old, he said, and the weapons were being replaced part by part.  Trying to meet the manufacturers’ replacement cycle would require immediate replacement of 16 handguns and then replacement on the 10-year cycle, he said.  Mr. Horton expressed concern about liability exposure as well as safety.  Council Member Kleinschmidt agreed, adding that this was why he had asked the question in the first place.

 

With regard to computer replacement, Council Member Kleinschmidt said that he was inclined to appreciate the need for three-year replacement.  He expressed interest in Mr. Avery's assessment of which computers needed to be changed.  With regard to the overall budget, Council Member Kleinschmidt said he was pleased with the aggressive approach of eliminating $1 million and striving for a 2-cent increase.  He particularly liked Council Member Strom's suggestions, which brought it down to 1.2 cents in the General Fund and .8 cent in the Transportation Fund, he said.

 

Council Member Verkerk ascertained that Mr. Horton was recommending $75,000 for the Public Arts Commission.  This would be $5,000 more than they had received in the prior year, but not the $148,000 that they had requested, Mr. Horton pointed out.  Council Member Verkerk suggested telling employees that they were getting only a 2% raise but that they would not have to work past 5:00 p.m. or on weekends.  She wondered about holding off on allocating some of the $10,000 for the Old Chapel Hill Cemetery.  The Committee had not yet decided how to allocate their $150,000, Council Member Verkerk pointed out.  She noted that the neighborhood's and Committee's assessment was that the Cemetery had not looked this good in 20 years.  Mr. Horton stated that the funds were for signage at the Memorial Cemetery. He ascertained from Town Urban Forester Curtis Brooks that this source of funding included items for other cemeteries as well.  And about $9,000 of that was for new signs at Memorial Cemetery, Mr. Horton said.

 

Council Member Greene expressed general agreement with the direction and tone of the Council's conversation.  She agreed that the Green Fleet should be in place before the Town did the fleet maintenance.  She also agreed that a 4% pay increase seemed too high.  Council Member Greene commented that Town employees might be less unhappy about not getting a 4% raise if they have new computers every three years. She inquired about the age of the phone system.  How long would a new system last, she asked, and how much would a new system cost next year and two years from now.  Mr. Avery replied that the Town phone system had reached its limitations in certain areas, and there often were no replacement parts for it.  He explained that the system works on a day-to-day basis, but the cost was based on replacing it because there is no equivalent to what they have.  Mr. Avery explained that the system had been installed about fifteen years ago and updated about eight years ago with a modification to make it handle the number of lines the Town had at that time.  Council Member Kleinschmidt inquired about the secondary market for phone systems.  Mr. Avery replied that the system could be sold or reused in another Town department.

 

With regard to school resource officers, Council Member Kleinschmidt said that it was unfortunate that school employees get paid for only 10 months.  He stated his belief that the school system should pay its schoolteachers and its resource officers for the whole 12 months. Council Member Kleinschmidt stated that he did not see why the Town should necessarily pay for the school resource officers over the summer.  Mr. Horton noted that school resource officers do perform other police duties during those two months of the year.

 

Mayor pro tem Wiggins clarified that the school system had been paying for the resource officers during those two months that they work for the Town.  Council Member Kleinschmidt replied, "that might be different," and Mayor pro tem Wiggins stated, "we should pay."

 

Mayor Foy commented that of course the Town could fit them in.  But that was not the Town's choice, he said.  Mayor Foy agreed with others that the Council had already gone through this before and had placed the cost where it belonged.

 

Mayor pro tem Wiggins asked Chief Jarvies if it was true that a police officer could not be hired for ten months.  Chief Jarvies replied that he did not know any way within the system that the Town could hire a police officer for a 10-month period.  Mayor pro tem Wiggins clarified that these officers were on the Town 's payroll and that the School System reimburses the Town.  Mr. Horton noted that the Town could charge the equivalent of a year's pay to ten months of service.  They could justify that on the basis that the Town must provide for vacation and training and so forth, he said.  Mr. Horton remarked that one could argue it either way and that Superintendent of Schools Neil Pedersen had presented the other side of the argument.  He could go back and tell Mr. Pedersen that the Council wants to continue the present arrangement, Mr. Horton said. 

 

Mayor pro tem Wiggins asked how many Town positions had been vacant for the last couple of years.  Mr. Horton replied that five or fewer were vacant and that turnover had remained fairly stable.  Mayor pro tem Wiggins verified that there were no difficulties filling positions, other than special jobs such as landscape supervisor, and that none had been vacant for more than a year.

 

Mayor pro tem Wiggins asked Mr. Horton if he anticipated telling Council members that there would be difficulty implementing the Land Use Management Ordinance (LUMO) without the new positions if the Council does not approve them. Mr. Horton replied that he would have to talk with Planning Director Roger Waldon about the potential effect of eliminating the planning position. Mr. Horton said that he would not recommend eliminating that position unless the Town could figure out some reasonable way to manage the workload. 

 

Mayor pro tem Wiggins pointed out that reallocating resources is another way to keep the budget down.  Mr. Horton pointed out that the staff was challenged every year to do just that.  This year, it was most prominently done in the Transportation Department, he said, noting that one significant administrative position had been replaced with 2-1/2 maintenance positions.  He explained that he had recommended eliminating the assistant superintendent for maintenance and replacing that with other positions that do hands-on maintenance of vehicles. Mayor pro tem Wiggins pointed out that the Fire Department had made a similar change. 

 

Mayor pro tem Wiggins asked to preserve as much of the salary increase as possible.  She also proposed keeping the generators in the budget.  Those were her priorities, she said, but she also asked for a big reduction in the amount of tax increase.   

 

In response to a question from Mayor Foy, Ms. Eastwood explained that turnover rates for 2002-2004 in the four largest departments were: Fire Department (increased from 2.7% to 6.8%), Police Department (decreased from 11.2% to 10.9%), Public Works (remained around 6.3%), and Transportation (increased from 4.5% to 4.7%).  The overall turnover rate remains under 10%, she said, adding that there would be some change in that when the economy rebounds and people have other opportunities. 

 

Mayor Foy verified with Mr. Horton that he would not pursue the $128,000 grant for four foot-patrol officers in the downtown if the Council did not approve the matching amount of $32,000.  He ascertained from Chief Jarvies that those were mostly three-year grants with the first year match being 25%. Mayor Foy noted that this would be in addition to the budget.  It would leverage federal money, but the Town would acquire the full cost in the fourth year, he pointed out.

 

Mayor Foy asked Mr. Horton about his recommendation that the Town take the $60,000 appropriated in the CIP for greenways and dedicate that to amortizing the debt on the bonds.  He asked how that would work, noting that the Town was only issuing $300,000 in Greenway bonds.  Mr. Horton replied that they were only issuing that much in the first year.  But, looking at the total period of time, they could justify spending that $60,000 to pay of a portion of the debt, he proposed.

 

Mr. Horton inquired about how the $60,000 would be spent on greenways.  Council Member Strom replied that he did not know specifically.  He thought it would be for maintenance, signage, and general conditions, he said.

 

Mayor Foy determined that there was interest among Council members in taking some or all of that $60,000 to amortize the debt.

 

Council Member Ward suggested pointing out to the Greenways Commission and citizens that greenways were getting greater funding as a result of passage of the bonds. 

 

Mr. Horton said that it could be argued that the Town would be able to spend money faster on greenways than it otherwise would have.  But he could not literally argue that the Town would spend more money, he said.  The argument that the Council had presented to the public was that they would be able to do a lot of things more quickly by using bond money than they would by using small amounts each year, Mr. Horton pointed out.  Council Member Kleinschmidt added that the Town would get more greenway for the money because $300,000 goes a lot further today than it will in the future.  

 

Mayor Foy noted that there was general agreement on taking some or all of that money and applying it to amortizing the debt this year.  And if the Town has made commitments for this money, he said, maybe they should leave some or all of it in the CIP.  Mr. Horton commented that the Greenways Commission would always feel a responsibility to garner as much funding for greenways as possible.  But the Council could honestly say that they were enabling greenways to be built faster by using bond money and paying the debt service with cell tower resources, he said.  Mr. Horton noted that the Council could also consider using bond funds to replace the HVAC system at Town Hall.  That is the most inefficient system the Town has, he said.  Mr. Horton commented that the Town could then predict a steady contribution into the "energy savings bank," which was an option the Council could consider.

 

Council Member Verkerk stated that Fire Station #1 and Town Hall were exactly the types of projects the Town Council had been thinking of when they promoted the energy bond. Ms. Johnson commented that the Town did have a $50,000 or so grant match already committed out of the energy bond.

 

Mayor Foy referred to Council Member Strom's observation that the $238,000 annual payment for the Meadowmont gym would end this year.  He understood Council Member Strom's suggestion to be that some of these things be deferred, not cancelled, because that money would be available next year, Mayor Foy said.  Mr. Horton noted that the staff had programmed for 15 years, and that this had included that $238,000 for consideration by the Council.  Mayor Foy pointed out that it had been programmed but not yet committed.

 

Mayor Foy stated that the Manager had made a good argument for compensating employees.  He would prefer to see a higher pay increase and fewer new staff, he said.  Mayor Foy determined from Mr. Horton that he had enough information from the Council to come back with revised proposals and options to reduce the budget. Mr. Horton agreed to identify a series of cost reductions that would accumulate to different levels of budget reduction and perhaps option packages.  He noted that the Council had plenty of time to work out the budget.

 

Council Member Ward suggested taking advantage of the grant for four police officers even if it means taking on greater funding in future years.  Also, he said, he was totally against the Council receiving health benefit coverage equal to full time employees.  An argument could be made that Mayor Foy puts in a greater amount of time, he said, but the 50% level seemed unreasonable to him for other Council members.

 

Council Member Ward asked how the discussion tonight had changed next year's potential 8.1-cent increase, which he described as "a totally unsustainable amount for us to be contemplating."  Mr. Horton replied that the figure could be affected by changes in property tax revaluation.  That is why it is calculated on today's tax rate value, he explained.  Council Member Ward agreed with that approach, stressing that it was "the dollars out of someone's pocket" that concerned him.  Mr. Horton noted that it was also possible that there would be new growth on the tax base beyond what the Town was estimating.

 

Mr. Horton estimated that the rate of property tax base growth was going to slow down to about 1.8%, rather than the 3% or so that the Town had been experiencing.  He said that existing debt would not change in the next year and would still generate a half-cent on the tax rate.  The kinds of changes they could end up making on the CIP could result in a reduction of costs there, Mr. Horton pointed out.  He noted that the TOC debt load could be lower than the Town expects if the bid prices are good.   The new General Obligation bonds could be issued at a more favorable rate than the Town had projected, he said, or the Council could decide not to issue them.  Mr. Horton pointed out that the Transportation Center would be 99% funded in the long run by the State and federal governments.  But the Town might have to cover $7 million or more of that in the next year, he said.

 

Ms. Johnson added that the 8.1% was the effect of capital costs and debt service on that capital cost.  Referring to page 43, she noted that, with projections for other growth in personnel costs and operations, the actual total is higher than that for the combined tax rate.  Mayor Foy agreed that next year's budget would be difficult and suggested that the Council begin thinking about it as soon as they finish this year's budget. He remarked that it was unfair to the Manager to say in April or May that they cannot support a 2% tax increase when he had been "sounding every alarm he could" all year.

 

Council Member Ward noted the projected 100% increase in the tax rate over the next five years. Mr. Horton pointed out that the Council had not yet made the decisions that would produce that kind of tax burden.

 

Council Member Harrison verified that increases in the Transportation Fund were due to construction of the TOC.  With regard to health care benefits, Mayor Foy explained that he had always supported that for Council members, whom he described as unique in the structure of the Town.  This full-time categorization was purely for the benefit of an insurance company's eligibility requirements and had nothing to do with how the Council views itself, he said.  "We are anomalies, and so this is an anomaly.  And I don't see it as us making the choice. I see it as an insurance company making us categorize people," said Mayor Foy.

 

Council Member Hill agreed that this was just a category that did not reflect how much time the Council puts in or how they compare to full-time employees.  It's a way to make serving on the Council more attractive to people, he said.  Council Member Hill argued that unless the Town wants a Council composed only of people who are independently able to do the job without any compensation, it needs to make arrangements such as this.  He pointed out that he was the only single person with children on the Council.  The increase in this benefit would make it easier for others like him to run for Council, he said.  This is a way of making a Council position more inclusive and more open to people, said Council Member Hill.

 

Council Member Kleinschmidt stated that tonight's discussion had reflected why it was so important to have diverse perspectives on the Council.  Council Member Ward replied that he had heard all the rationalizations and did not agree with them.  "To me, it's a classic case of feathering your own nest at a time when it just economically makes no sense," he said.  Council Member Ward argued that increasing the tax rate and refusing positions but then asking that Council members be treated as full time employees with benefits was the wrong message to send to the community. There was significant interest in running for Council, he said, adding that this was not the way to encourage a more diverse group of candidates.

 

Council Member Hill pointed out that those who ran for Council had all come from neighborhoods that bordered Carolina North, and several were independently wealthy, he said.  Council Member Hill noted that a third of the candidates had completely funded their own campaigns.  He pointed out that no candidate had come out of Northside in years.  Council Member Hill stated that the Campaign Finance Reform Committee would be looking at ways to draw more people into candidacy.  This is one thing that would do that, he said.  Council Member Hill described obtaining health insurance benefits as getting a raise.  It did not mean that the Council was trying to put itself in line with full time employees, he said.

 

Council Member Verkerk described offering something to the Council that is not offered to part-time employees as an "unfair labor practice."

 

Council Member Kleinschmidt explained that he would not take full time benefits from the Town because he already had that from his professional life.  But, for others, "that is the absolute barrier to candidacy," he said.  Council Member Kleinschmidt stated that many people cannot leave their full time jobs to run for the Council because they would lose their health insurance benefits if they did.

 

Council Member Verkerk remarked that the health insurance issue was not what was keeping people away.  It is the long hours and the meetings that start before 5:00 p.m., she said.  Council Member Verkerk commented that the Town might get more diversity of they offered daycare during Council meetings.

 

COUNCIL MEMBER HILL MOVED, SECONDED BY COUNCIL MEMBER GREENE, TO PROVIDE COUNCIL MEMBERS WITH FULL TIME HEALTH INSURANCE BENEFITS.  THE MOTION WAS ADOPTED (6-3) WITH COUNCIL MEMBERS WARD, WIGGINS AND VERKERK VOTING NAY.

 

Mr. Horton stated that he would bring budget information back for the May 19^th budget work session.

 

Mayor Foy verified that the budget public hearing would be on May 12^th.

 

Mayor pro tem Wiggins complemented the Chief of Police and the Manager on their report about neighborhood parties.  She was glad to finally see a plan for dealing with it, she said.  Mayor pro tem Wiggins asked that the information on violations, citations, and locations be added to the Quarterly Crime Report.  That way, she said, the Council can keep track of that activity and see if there is improvement over time.

 

The meeting adjourned at 8:05 p.m.