Budget & Finance Committee Meeting

Summary

Meeting Overview

The Budget and Finance Committee met on August 25, 2009, at 1:00 p.m., with Kevin Stinnett presiding. The committee addressed five agenda items focused on municipal financial matters, including a review and discussion of revenues, a presentation on the Urban Service District Fund, discussion of landfill user fees, an update on bond and debt obligations, and a discussion of business and occupational license fees. All agenda items were informational in nature. The committee heard four public comments during the meeting and took one motion to a vote.

Attendance

Present: - Kevin Stinnett - Ed Lane - dim Gray - Linda Gorton - Chuck Ellinger - George Myers - Julian Beard - Tom Blues - Peggy Henson

Absent: - Andrea James

Late: None reported

Votes and Decisions

Motion to Direct Commissioner Taylor to Pursue Study of Fee-Based Services in Waste Management 1:17:10

The body voted on a motion to direct Commissioner Taylor to pursue a study and analysis of fee-based services in waste management. The motion was made by George Myers and seconded by Ed Lane.

The motion passed unanimously. All nine members voted in favor:

• Kevin Stinnett
• Ed Lane
• dim Gray
• Linda Gorton
• Chuck Ellinger
• George Myers
• Julian Beard
• Tom Blues
• Peggy Henson

No members voted against the motion, and there were no abstentions.

Budget and Financial Actions

The meeting addressed two significant financial allocations for environmental infrastructure projects:

Recycling Center Equipment and Upgrades

An appropriation of $3.8 million was approved for funding new recycling center equipment and upgrades. These improvements are designed to increase capacity and enhance labor efficiency at the facility.

Landfill Closure and Water Quality Compliance

A grant totaling $17.5 million in reserve funding was allocated for capital expenditures related to landfill closure and water quality compliance projects. These funds are designated for work at the Old Frankfort Pike and Haley Pike landfills.

Public Comment

Four members of the public provided comments on waste management and budget matters during the meeting.

Tom Blues 1:00:38 addressed the use of surplus funds from waste management. He expressed concern about whether reducing the user fee was sufficient compensation for the community. Blues suggested alternative investments in environmentally important projects or street cleaning and questioned the long-term financial impact of bonding for the new Materials Recovery Facility (MRF).

Chuck Ellinger 1:02:59 raised concerns about revenue projections and budget risk. He questioned the 4.2% revenue increase assumption being used to balance the budget and requested information about monitoring plans and contingency strategies if projections fall short.

Julian Beard 1:06:02 commented on capital project funding and bonding strategy. Beard suggested that half the funds for the new MRF could be drawn from existing surplus while bonding the other half. He argued this approach would preserve bonding capacity and reduce risk to the city's credit rating.

Linda Gorton 1:09:28 requested updates on two matters related to waste management operations. She asked for an update on the street sweeping study and requested a breakdown of temporary positions used in the waste management division, noting that 60 temporary staff were employed across the division.

Contested Items

Bonding Capacity and Capital Project Prioritization

Council members engaged in a heated discussion regarding the city's debt service levels and their impact on future financial flexibility. The primary concern centered on a proposed increase in debt service to 15.12% of revenue, which members worried could jeopardize the city's credit ratings and constrain bonding capacity for future projects. This debate reflected a fundamental tension between maintaining fiscal responsibility and addressing critical infrastructure needs. Council members highlighted unmet capital requirements, including a new government center and an Emergency Operations Center (EOC), underscoring the challenge of balancing immediate infrastructure demands against long-term financial health and creditworthiness.

Waste Management Fee Reduction and Surplus Use

A split vote emerged over the appropriate use of waste management fund surplus and the scope of fee reductions. The disagreement centered on whether reducing the waste management user fee adequately compensated the community for the surplus funds. Some council members advocated for reinvesting surplus funds into critical services such as street cleaning or environmental projects rather than directing the savings toward tax relief. This dispute reflected differing priorities regarding how to best serve constituents—whether through direct fee reductions or through enhanced municipal services funded by the surplus.

Review and Discussion of Revenues

Bill O'Mara presented preliminary revenue data for June and July 2009, emphasizing the importance of understanding volatility in the figures due to timing differences and seasonal trends. 1:02

Key Presentation Points

O'Mara highlighted that a 23% increase in July revenue appeared misleading when examined more closely. He explained that this figure was significantly influenced by $1.6 million in early August 2008 payments, which distorted the year-over-year comparison and required careful interpretation.

Discussion Topics

The committee engaged in substantive discussion regarding the relationship between payroll withholdings and net profits. O'Mara emphasized a critical distinction: net profits are considerably more volatile and less predictive than payroll withholding data, suggesting that payroll metrics may provide more reliable indicators for forecasting and planning purposes.

Concerns Raised

Committee members raised concerns about revenue assumptions and their reliability for planning purposes. Additionally, the group identified the need for more strategic approaches to hiring and expenditure tracking to better manage financial performance and ensure alignment with revenue realities.

Participants

The discussion involved Bill O'Mara, Ed Lane, Chuck Ellinger, Julian Beard, George Myers, and Kevin Stinnett.

Outcome

This agenda item was informational in nature, providing the committee with updated revenue data and context for understanding recent financial performance.

Presentation on Urban Service District Fund

Commissioner Taylor presented a detailed analysis of the Urban Service District Fund 37:27, covering three primary service areas: waste management, street cleaning, and street lighting.

Presentation Content

The presentation included a 10-year historical snapshot of fund performance and projections extending to 2015. Commissioner Taylor outlined assumptions supporting a proposed 10% property tax cut, with anticipated revenue growth from recycling programs and labor savings expected from new equipment investments. The analysis also addressed capital projects related to landfill closure.

Key Discussion Points

Committee members engaged with the presentation on several topics:

• Fund balance status and sustainability
• Current vacancy rates within the service district
• The need for a comprehensive study on fee-based services

Speakers

In addition to Commissioner Taylor, the discussion involved Bill O'Mara, Tom Blues, Julian Beard, Linda Gorton, and George Myers.

Outcome

The agenda item was informational in nature, with no formal action taken. The presentation provided the committee with financial analysis and operational data regarding the Urban Service District Fund's management and future planning.

Discussion on Landfill User Fee

43:30

The committee discussed the $4.50 landfill user fee during this agenda item. Key speakers included Kevin Stinnett, Julian Beard, Commissioner Taylor, and Ed Lane.

Fee and Fund Status

The discussion centered on the necessity of maintaining the landfill user fee given the current financial position. The committee noted that the landfill fund maintains a $25.5 million fund balance and a $17.5 million closure reserve.

Landfill Status and Capital Projects

Commissioner Taylor explained that the landfill at Old Frankfort Pike has not yet been closed due to water quality issues. The commissioner also noted that capital projects are currently underway at the facility.

Committee Concerns

The committee raised questions about the long-term sustainability of the $4.50 user fee. Members also questioned how surplus funds are being utilized, given the substantial fund balance already in place.

Outcome

This agenda item was informational in nature, with no formal action taken.

Update on Bond/Debt

Bill O'Mara presented a comprehensive summary of general fund debt obligations and financial projections extending through 2016. 1:30:53

Current Debt Status

The presentation outlined the following key figures: - Current general fund debt: $229 million - Annual debt service: $19.98 million - Projected debt service-to-revenue ratio by 2016: 15.12% (based on current assumptions)

Key Speakers and Discussion

The agenda item involved discussion among Bill O'Mara, Ed Lane, Linda Gorton, and Julian Beard. Council members raised concerns about the high debt level, particularly in light of unmet capital needs facing the municipality.

Concerns Raised

Council members expressed specific concern about capital projects that remain unfunded, including: - A new government center - An Emergency Operations Center (EOC)

These unmet needs highlighted the tension between existing debt obligations and the desire to fund additional infrastructure projects.

Outcome

This item was presented as informational, with no formal action taken during the discussion.

Business and Occupational License Fee Discussion

Bill O'Mara presented Ordinance No. 160-2008, which established a $100 annual minimum license fee for all business activity in Fayette County. 1:45:14

Key Points Presented:

• The ordinance applies a uniform $100 minimum annual fee to all businesses operating in the county
• O'Mara clarified that this fee constitutes general fund revenue rather than a processing fee
• Education and outreach efforts have been effective in reducing public complaints about the fee

Concerns Raised:

The committee discussed public concerns regarding the fee's impact on specific business categories:

• Home-based businesses expressed concerns about the requirement
• Out-of-county businesses raised questions about the fee's applicability to their operations

Committee Discussion:

Speakers included Linda Gorton, Tom Blues, and Julian Beard, who participated in the discussion alongside O'Mara.

Outcome:

A motion was made to streamline the payment process by integrating the business license fee into the net profit return, simplifying administration and compliance for businesses.

The agenda item was treated as informational in nature, with no final binding decision recorded in this summary.