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COMMITTEE OF THE WHOLE Packet - 10/14/2014 CITY OF MUSKEGO COMMITTEE OF THE WHOLE AGENDA October 14, 2014 6:30 PM City Hall, W182 S8200 Racine Avenue CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL STATEMENT OF PUBLIC NOTICE APPROVAL OF AGENDA APPROVAL OF MINUTES - September 23, 2014 CLOSED SESSION 1. Please take notice that following Approval of Minutes, the Committee of the Whole will convene, upon passage of the proper motion, into closed session pursuant to Wisconsin Statutes Sections 19.85 (1) (c) (f) and (g) to discuss the department structure and performance of specific employees in the Parks and Recreation Department and the Assessor's Office in light of possible budgetary options in those areas. Action may be taken in closed session. The Committee of the Whole will then reconvene into open session to continue with agenda items. NEW BUSINESS 1. Discuss merging of Special Revenue Funds - EPI Standing Committee (#207) & Future Parkland Standing Committee (#213). 2. Discuss options for updated transportation aids amount in General Fund Operating Budget 3. Review Water and Sewer Utility Budgets 4. Review budget goals and final recommendations COMMUNICATIONS AND MISCELLANEOUS BUSINESS AS AUTHORIZED BY LAW ADJOURNMENT Possible reconvening of the Committee of the Whole immediately following Common Council Meeting of the same date to continue work on agenda items NOTICE IT IS POSSIBLE THAT MEMBERS OF AND POSSIBLY A QUORUM OF MEMBERS OF OTHER GOVERNMENTAL BODIES OF THE MUNICIPALITY MAY BE IN ATTENDANCE AT THE ABOVE-STATED MEETING TO GATHER INFORMATION; NO ACTION WILL BE TAKEN BY ANY GOVERNMENTAL BODY AT THE ABOVE-STATED MEETING OTHER THAN THE GOVERNMENTAL BODY SPECIFICALLY REFERRED TO ABOVE IN THIS NOTICE. ALSO, UPON REASONABLE NOTICE, EFFORTS WILL BE MADE TO ACCOMMODATE THE NEEDS OF DISABLED INDIVIDUALS THROUGH APPROPRIATE AIDS AND SERVICES. FOR ADDITIONAL INFORMATION OR TO REQUEST THIS SERVICE, MUSKEGO CITY HALL, (262) 679-4100. Unapproved CITY OF MUSKEGO COMMITTEE OF THE WHOLE MINUTES September 23, 2014 5:40 PM City Hall, W182 S8200 Racine Avenue CALL TO ORDER ROLL CALL Mayor Chiaverotti called the meeting to order at 5:45 p.m. Present were Ald. Madden (arrived at 6:42 p.m.), Kubacki, Engelhardt, Di Pronio, Borgman, Hammel, and Wolfe. Also present: Director of Finance and Administration Mueller, Community Development Director Muenkel and Deputy Clerk Blenski. STATEMENT OF PUBLIC NOTICE The Deputy stated that the meeting was noticed in accordance with the open meeting law. APPROVAL OF AGENDA There were no issues with the agenda. APPROVAL OF MINUTES - September 18, 2014 Alderman Kubacki made a motion to approve the September 18, 2014 minutes. Alderman Borgman seconded. Motion Passed 6 in favor. NEW BUSINESS Continue Review of 2015 Proposed Operating Budget Ms. Mueller stated that with the approved water rate increase, the City’s budget will have to be adjusted to include a 3% increase for public fire protection. She will offset the expenditure with the revenue from the State Transportation Aids. Consensus: All in favor. Severance The Mayor reviewed the existing policy for Separation of Employment. Several positions will be eliminated as of January 1, 2015. The affected employees would receive severance pay if certain conditions are met. One of those is that the employee must remain employed until the termination date (12/31). The Mayor noted that this could pose a problem for the employee who may find a new position and want to leave prior to December 31. Currently, the employee who leaves prior to December 31 would not receive any severance. The Mayor requested that the Committee review and consider other options. After considerable discussion and various suggestions, Ald. Kubacki recommended using a percentage scale if the employee leaves prior to December 31. He suggested the following severance payout for an employee whose position is eliminated: Last Day of Employment – 12/31/2014 100% Payout Last Day of Employment – 11/30/2014 95% Payout Last Day of Employment – 10/31/2014 90% Payout Last Day of Employment – 9/30/2014 85% Payout Consensus: 5 in favor; Ald. Wolfe opposed. Ald. Wolfe believes the suggested payout should be more conservative; he would like to revisit the existing policy in the future. Library Ald. Di Pronio questioned some increased expenditures in the Library budget for print materials. Ald. Engelhardt stated that activity at the library has increased according to information provided at the Library Board meetings he attended. It was suggested that the Director attend a future meeting after this budget process to help the Committee better understand the operation of the library and the requested expenditures. Percentage of Employee Increase (Ald. Madden arrived at 6:42 p.m.) The budget currently reflects up to a 4% increase for managerial and specialist staff as part of the Pay for Performance Plan. This allows for step increases and progression within the merit pay program. Ald. Hammel and Borgman stated those percentages were too high. The Mayor stated the average employee will receive approximately 2.7%. The 4% is a maximum and not commonly awarded. The increase is based on merit and subject to review of the Mayor. She stated that employees who were non-represented have wage ranges with minimum and maximum amounts. The merit increase allows an employee to move through the salary range. It may take employees many years to reach the maximum even with favorable evaluations. Several Aldermen requested that the maximum percentage of increase should be reviewed annually. It was determined that the 2015 budget would not be changed at this time and the issue would be reviewed in the future. City of Muskego Proposed 2015 Budget The Committee recommended unanimously to move the budget forward. Ms. Mueller noted that the budget public hearing notice would be sent to the paper later in the week for publication on October 2. ADJOURNMENT Alderman Kubacki made a motion to adjourn at 6:59 p.m. Alderman Hammel seconded. Motion Passed 7 in favor. Minutes transcribed by Jill Blenski, Deputy Clerk W Sew P 20 Tu W182 S8200 wer Prop 15 Dis esday, O Racine Ave Waukesha (262 r U pos Bu stributed October 14 enue, Musk County, Wi 2) 679-4100 Utili sed udge d 4Th, 2014 kego, WI 53 isconsin 0 ty d et 4 3150-0749 Schedule Page Statement of income and expense 1 1-2 Schedule of capital outlay 2 3 Schedule of changes in utility working capital: 2015 Budget 3 4 Schedule of construction funds 4 5 Sewer Fund Definitions 5 6 CONTENTS Schedule 1 Page 1 2014 2015 2015 % Change 2013 Aug. 31, 2014 2014 Adopted Proposed Adopted From 2014 Actual Actual Projected Budget Budget Budget Budget Operating revenues Sewer service charges $ 6,025,332 2,997,671 6,028,500 5,966,866 6,034,000 - 1.13% Miscellaneous revenues 16,452 6,478 13,812 10,500 13,750 - 30.95% Total operating revenues 6,041,785 3,004,149 6,042,312 5,977,366 6,047,750 - 1.18% Operating expenses Operation and maintenance: Milwaukee Metropolitan Sewerage District: Capital charge 3,035,550 2,813,128 3,066,376 3,066,376 3,520,962 - 14.82% User charge 1,048,333 822,973 1,067,575 1,067,575 1,125,641 - 5.44% Town of Norway Capital charge - - - - - - 0.00% User charge 174,097 132,462 225,000 225,000 225,000 - 0.00% Supervision and labor 449,678 278,858 452,293 453,295 468,625 - 3.38% Supplies and expense 26,017 17,597 26,500 24,000 28,000 - 16.67% Maintenance: Amortization - - - - - - Odor control 18,088 5,624 20,000 22,500 22,500 - 0.00% Building and structures 17,098 3,094 14,000 14,000 14,000 - 0.00% General plant safety equipment 6,894 317 6,500 10,000 7,000 - -30.00% Sewerage collection system 77,380 87,847 120,000 125,000 125,000 - 0.00% I & I reduction 83,016 - 50,000 100,000 100,000 - 0.00% Electricity 136,996 92,182 140,000 135,000 145,000 - 7.41% Transportation expense 19,650 8,233 18,000 18,000 20,000 - 11.11% 5,092,796 4,262,317 5,206,244 5,260,746 5,801,728 - 10.28% Customers' account expenses: Accounting and collection 58,695 35,006 60,500 60,359 64,084 - 6.17% Meter expense 28,566 - 29,000 29,500 29,500 - 0.00% 87,261 35,006 89,500 89,859 93,584 - 4.15% General expenses: Office Salaries 64,313 37,657 66,000 65,859 69,584 - 5.66% Employee pensions and benefits 233,009 152,349 242,869 $254,196 251,234 - -1.16% Unemployment compensation - - 2,000 2,000 2,000 - 0.00% Office supplies and expenses 60,121 37,853 66,060 64,440 66,975 - 3.93% Outside services 87,674 27,295 61,085 84,830 74,060 - -12.70% 445,118 255,154 438,014 471,325 463,853 - -1.59% Total operation and maintenance 5,625,175 4,552,476 5,733,759 5,821,930 6,359,165 - 9.23% Depreciation 1,116,768 - 1,135,000 $1,135,000 $1,155,000 - 1.76% Total operating expenses 6,741,943 4,552,476 6,868,759 6,956,930 7,514,165 - 8.01% Net operating income (loss) (forward) (700,158) (1,548,327) (826,447) (979,564) (1,466,415) - 49.70% CITY OF MUSKEGO SEWER UTILITY STATEMENT OF INCOME AND EXPENSE 2015 BUDGET Schedule 1 Page 2 2014 2015 2015 % Change 2013 Aug. 31, 2014 2014 Adopted Proposed Adopted From 2012 Actual Actual Projected Budget Budget Budget Budget Net operating income (loss) (forwarded) $ (700,158) (1,548,327) (826,447) (979,564) (1,466,415) - 18.53% Add non-operating income Interest from investments 22,207 3,780 22,500 23,000 23,000 - 2.22% MMSD I&I Subsidy $7,509 $0 $0 $250,000 $250,000 - Interest income on RCA's and special assessments 27,955 24,155 24,155 27,560 21,600 - 14.10% Sewer Connection Fees 22,500 19,500 25,000 15,000 20,000 - -40.00% Total non-operating income 80,170 47,434 71,655 315,560 314,600 - 340.39% Income before non-operating expenses (619,988) (1,500,893) (754,792) (664,004) (1,151,815) - -12.03% Deduct non-operating expenses Interest charges on long-term debt 92,201 44,468 80,000 78,647 - - -1.69% Amortization of debt discount $45,333 $0 $45,333 $51,276 $45,333 - 13.11% I&I MMSD Program - $0 $0 $250,000 $250,000 - #DIV/0! Total non-operating expenses 137,534 44,468 125,333 379,923 295,333 - 203.13% Net income (loss) before capital contributions $ (757,521) (1,545,360) (880,125) (1,043,926) (1,447,148) - 18.61% CITY OF MUSKEGO SEWER UTILITY STATEMENT OF INCOME AND EXPENSE (Concluded) 2015 BUDGET Schedule 2 Page 3 2014 Estimated 2014 2015 2015 Total Adopted Proposed Adopted Description Funding Cost Budget Budget Budget 1.2014 Capital Projects Truck - 25% DPW Replacement (C ) - 43,750 - - Truck - 50% Water/Sewer (C ) 11,210 25,000 - - Riding Lawn Mower - 25% DPW (C ) 3,000 3,000 Portable Radio Replacement (C ) 28,790 28,790 Janesville Reconstruction (C ) 26,550 - Lift Station Upgrades (C ) 155,000 100,000 - - $ 224,550 200,540 - - 2.2015 Capital Projects Truck - 25% DPW Replacement (C ) - - 46,250 - Truck - 50% Water/Sewer (C ) 22,500 - Communication Controls Radio (C ) - - 37,500 - Lift Station Upgrades (C ) - - 60,000 - Replace Roof (DPW & Utilities) (C ) - - 87,500 - Garage Doors (DPW & Utilities) (C ) 6,000 Wash Station (DPW & Utilities) (C ) 2,500 (C ) - - - - $- - 262,250 - $ 224,550 200,540 262,250 - Note A: Anticipated to be financed with available construction funds Note B: Anticipated to be financed with borrowings Note C: Finance with working capital Note D: Finance with replacement funds Note E: Finance with reserve capacity assessment funds Note F: Reimbursement from MMSD Note G: Reimbursement from Franklin Grand Total CITY OF MUSKEGO SEWER UTILITY SCHEDULE OF CAPITAL OUTLAY Schedule 4 Page 5 Non-TIF Operation Reserve and Special Equipment Capacity Maintenance Redemption Replacement Assessment Construction Fund Fund Fund Fund Fund Total Funds provided From operations: Net income (loss) for the year $ (1,447,148) - - - - (1,447,148) Add charges to income not requiring funds: Depreciation 1,155,000 - - - - 1,155,000 Amortization: Debt discount 250,000 - - - 250,000 Manhole Rehabilitation and Mapping Projects - - - - - - MMSD Funding - - Less: Other - - - - - - Funds provided from operations (42,148) - - - - (42,148) Increases in: Collection of special assessments 10,000 - - 300,000 - 310,000 Other contributed capital collection- RCA Landfill - - - - - - Total funds provided (32,148) - - 300,000 - 267,852 Funds applied Principal payments on debt - - - - - - Capital outlay (Schedule 6 for Construction Fund) - - - - 262,250 262,250 Total funds applied - - - - 262,250 262,250 Interfund transfers - net Interest earnings (6,500) - 6,500 - - - Equipment replacement (26,350) - 26,350 - - - Sewer Connection fees (20,000) - - 20,000 - - Transfer to Construction Fund (262,250) - - - 262,250 - Transfer for debt retirement reserve - - - - - - RCA funds used to finance MMSD capital charge - - - - - - Total transfers (315,100) - 32,850 20,000 262,250 - Increase (decrease) in working capital (347,248) - 32,850 320,000 - 5,602 Working capital, beginning of year 9,567,816 - 849,376 5,699,033 - 16,116,225 Working capital, end of year $ 9,220,568 - 882,226 6,019,033 - 16,121,827 -3.63% 0.00% 3.87% 5.61% 0.00% 0.03% CITY OF MUSKEGO SEWER UTILITY SCHEDULE OF CHANGES IN UTILITY WORKING CAPITAL 2015 BUDGET Schedule 5 Page 6 FUND DESCRIPTION Operations and Maintenance Recommended minimum fund balance - 3 months of operations and maintenance costs. Special Redemption Accounts as a reserve for a percentage of annual principal and interest payments, as required by the debt covenants. Equipment Replacement Fund Used for significant mechanical equipment replacements as required by the DNR. Non-TIF - RCA Includes reserves established to account for capacity assessment levies restricted to finance related capital and/or debt service costs. Construction Accounts for borrowed funds or interfund transfers from working capital to cover the cost of capital projects. MMSD Capital Charge Funding 77.83% = Utility rates & 22.17% = Reserve Capacity Assessments (Prior to 2007, 27.83% was funded by positive tax increments from TID's #2-#7) CITY OF MUSKEGO SEWER UTILITY WORKING CAPITAL FUND DESCRIPTIONS 2015 BUDGET W W Wa P 20 Tu W182 S8200 ater Prop 15 Dis esday, O Racine Ave Waukesha (262 r U pos Bu stributed October 14 enue, Musk County, Wi 2) 679-4100 Utili sed udge d 4Th, 2014 kego, WI 53 isconsin 0 ity d et 4 3150-0749 Schedule Page Statement of income and expense 1 1 Schedule of capital outlay 2 2 Schedule of changes in utility working capital: 2015 Budget 3 3 Water Fund Definitions 4 4 CONTENTS Schedule 1 Page 1 2014 2015 2015 Change 2013 Aug 31, 2014 2014 Adopted Proposed Adopted From 2014 Actual Actual Projected Budget Budget Budget Budget Operating revenue Sales of water: Sales to general customers $1,221,010 592,131 1,261,800 1,275,500 1,305,315 - 2.34% Private fire protection $40,657 20,877 41,000 41,000 42,000 - 2.44% Public fire protection $450,613 71,732 455,000 448,000 464,000 - 3.57% Other operating revenue $57,866 26,220 63,500 67,500 65,550 - -2.89% Rental of Water property - tower lease $107,908 57,425 113,461 113,866 119,135 - 4.63% Total operating revenue 1,878,054 768,385 1,934,761 1,945,866 1,996,000 - 2.58% Operating expenses Operation and maintenance: Source of supply expense 8,194 1,654 5,295 12,776 9,887 - -22.61% Pumping expense 170,102 95,198 171,730 167,839 171,692 - 2.30% Water treatment expense 32,557 21,310 49,200 30,338 30,819 - 1.58% Transmission and distribution expense 151,514 66,245 116,738 116,283 127,568 - 9.70% Customer accounts expense 27,066 14,126 29,575 32,938 26,627 - -19.16% Administrative expense 341,010 259,245 354,900 372,376 370,571 - -0.48% Total operation and maintenance expenses 730,442 457,778 727,438 732,551 737,164 - 0.63% Depreciation $754,944 - 755,000 770,000 758,000 - -1.56% Taxes $617,188 16,815 615,614 610,614 618,337 - 1.26% Total operating expenses 2,102,574 474,594 2,098,052 2,113,165 2,113,502 - 0.02% Net operating income (loss) (224,520) 293,791 (163,291) (167,299) (117,502) - -29.77% Add non-operating income - interest $34,139 $13,268 $25,939 $20,235 $25,311 - 25.09% Income before non-operating expenses (190,381) 307,059 (137,353) (147,064) (92,191) - -37.31% Deduct non-operating expenses Interest on advances from municipality and revenue bonds $205,888 106,433 210,000 212,584 200,000 - -5.92% Amortization of debt discount and expense $24,625 - - 10,572 - - -100.00% Total non-operating expenses 230,513 106,433 210,000 223,156 200,000 - -10.38% Net income (loss) before capital contributions $ (420,893) 200,625 (347,353) (370,219) (292,191) - -21.08% CITY OF MUSKEGO WATER PUBLIC UTILITY STATEMENT OF INCOME AND EXPENSE 2015 BUDGET Schedule 2 Page 2 Estimated 2014 2014 2015 2015 Total Adopted Proposed Adopted Funding Cost Budget Budget Budget 1.2014 Capital Additions: Meters (A) 11,000 25,000 Truck - 25% DPW Replacement (A) - 43,750 - - Truck - 50% Water / Sewer (A) 11,210 25,000 Riding Lawn Mower - 25% DPW Replacement (B) 2,720 3,000 Portable Radio Replacement (A) 28,790 28,790 Industrial Park Piping from Water Tower (A) 129,000 129,000 Janesville Road Reconstruction (A) 142,551 - Belle Chasse Phase III Well Site (A) 120,000 120,000 - - $ 445,271 374,540 - - 2.2015 Capital Additions: Meters (A) 100,000 - Truck - 25% DPW Replacement (A) 46,250 - Truck - 50% Water / Sewer (A) 22,500 - Well #6 Abandonment (B) 30,000 - Radio Replacements (A) 37,500 - Building - Roof, Garage Doors & Wash Station (A) 96,000 Water Tower Cleaning & Inspections (A) 15,000 - - 347,250 - Grand Total $ 445,271 374,540 347,250 - Notes: (A) - Financed by borrowings. (B) - Financed by working capital / Depreciation Fund (C) - Anticipated to be financed by a borrowing (D) - Anticipated to be financed by a stimulus grant (E) - Anticipated to be financed by assessments CITY OF MUSKEGO WATER PUBLIC UTILITY SCHEDULE OF CAPITAL OUTLAY COSTS PROJECTED 2014 AND 2015 Schedule 3 Page 3 Operation and Debt Maintenance ConstructionDepreciation Service Fund Fund Fund Fund Total Funds provided From operations: Net income (loss) for year $ (92,191) - - (200,000) (292,191) Add charges to income not requiring funds: Depreciation - - 20,000 738,000 758,000 Amortization - - - - - Amortization on water tower - - - - - Transfer working capital to other funds - - - - - Proceeds from borrowing - - - - - Increases in collection of special assessments - - - 55,000 55,000 Total funds provided (applied) (92,191) - 20,000 593,000 520,809 Funds applied Principal payments on debt - - - 503,011 503,011 Capital outlay - 272,250 - - 272,250 Total funds applied - 272,250 - 503,011 775,261 Interfund transfers - interest earnings (3,146) 646 500 2,000 - Increase (decrease) in working capital (95,337) (271,604) 20,500 91,989 (254,452) Working capital, beginning of year 101,522 271,604 349,265 1,359,853 2,082,243 Working capital, end of year $6,184 - 369,765 1,451,842 1,827,791 -93.91% -100.00% 5.87% 6.76% -12.22% CITY OF MUSKEGO WATER PUBLIC UTILITY SCHEDULE OF CHANGES IN UTILITY WORKING CAPITAL 2015 BUDGET Schedule 4 Page 4 FUND DESCRIPTION Operations and Maintenance Recommended to fund 3 months of operations and maintenance costs. Construction Accounts for borrowed funds or interfund transfers from working capital to cover the cost of capital projects. Depreciation Is available for the acquisition of capital equipment not financed by a revenue bond issue. Debt Service Accounts as a reserve for a required percentage of the annual principal and interest payments on the outstanding debt. CITY OF MUSKEGO WATER UTILITY WORKING CAPITAL FUND DESCRIPTIONS 2015 BUDGET