Board of Estimates Recap

Posted December 4th, 2012 @ 7:54 AM by

40 minutes, I should get this one done! Yikes, I just have no time for blogging any more!

Started off with a skelaton crew. Mayor Paul Soglin, Shiva Bidar-Sielaff, Satya Rhodes-Conway and Joe Clausius were there. Mike Verveer, Larry Palm and Brian Solomon were missing. Verveer was going to be late, go figure.

Palm joins them late. Verveer also joins them when they are deciding which items to discuss.

They review the agenda, pass it in total, and pull out the items they want to discuss. They pull out 9, 12, 13, 14 and 15. They pass items 1 – 8, 10 and 11.

ITEM 9 – Utility Rate Increases
Verveer asks the City Engineer Rob Phillips to estimate how much of the sewer rate increase is MMSD (Sewer District, not School District). Verveer wants to know how much control the city actually has over the rate increases. Phillips says that MMSD is 53%. Verveer asks how it compares to other years. They say it is a little higher, but they don’t seem concerned. Its $884,000 and they don’t know the percentage.

Mayor asks about if anyone else got their water bill this week. He says that they are not only getting significant increase in water usage but also MMSD charges and they have been discussing this extensively and they have been expressing their concerns to the MMSD and the related issues. He at a meeting lately where they discussed what they are doing for water treatment, phosphorus removal and a statement was made that significant amounts of the cost will not be paid by taxpayers, but it is showing up on the water bill. That is why they have taken a keen interest in appointments to the MMSD and they want someone they have confidence in and understands both payments and engineering and that their efforts to appoint Larry Nelson have not been successful.

Verveer wants to know who appoints the board.

Mayor says he loves answering that question because he can go back tot he 1960s on that question. (Laughter) He says sate statute in 1960 had the probate judge making the decisions. The judge got replaced and changed it from a good old boys network to people who cared about the environment and when they elected a county executive then it changed to that position. Until this last year, the 5 members of the board served for 60 or 70 years and they asked for new blood and that is why they want Larry Nelson to be appointed. Verveer asked if they are 5 years terms, they are. One appointment goes back to the 80s and 2 go back to the 90s. Mayor says the power to tax or levy should never go to people who are not directly elected, and that is part of the issue with the board. He says they are looking at alternative models, including Milwaukee.

Passes on voice vote.

Item 12 – Year end Appropriation Resolution
Dave Schiedicke, City Finance Director has handouts (annoying when they do this) – put them in legistar so everyone can see them! He has a “small packet”. First page is in the resolution, that is where they add appropriations for specific agencies for specific purposes, police is the first one. The total is $915,000 but the net is $830,000 because there are savings in other areas. All the appropriations excludes savings in fleet for the fuel contracts, those are tracked separately. $175,000 in fire department is for the recruit class and that will be paid for by the SAFER grant. The data and moving costs are for the fire administration building moving. Under the clerk’s office, that is the additional elections, recall and presidential. They will have a net increase of $450,000. The assessor has some costs to fill positions but there were no travel costs and they had to purchase software to access county land records because they went all electronic. Parks program costs at Goodman Pool, sick leave payouts and infrastructure issues at Olbrich are all offset by salary savings. In IT, software maintenance contracts are offset by underspending in purchase services and other categories. IN Metro, they underfunded the fringe benefits and this corrects that and it recognized the lower fuel costs. They have increases of $2.4M and then the insurance and workers comp fund and they need additional capitalization, especially cash balance in insurance fund. They put in $750,000 in charge backs to agencies, that used to be $1M. The cut has reduced the cash balance and they had a cash deficit in 2011 and they have begun to correct that by increasing it to $850,000 but this will begin to restore the $1M taken out over the last 4 years. The workers comp fund they put $1.5M in 2011 and they are seeing decreasing claims but more intensity of cost of the claims. $1.7M is the estimate of where they will be at the end of 2013, without the actuarial adjustments. The total increase is $5.1M and that is within the Expenditure Restraint Program and this helps us with the base when they calculate it for 2014. The next page it shows where they will be positive in the revenues, mostly in room tax and ambulance fees which are coming in better than estimated in the budget. He says there is $200,000 above in workers comp, insurance, clerk and police, and underspending in streets but the netting of those revenues and expenditures, they are $2M and it might get better. The last page is the contingent reserve stands. $1.2M was budgeted and they spent $115,000 and they have $1.1M they didn’t spend.

Mayor says that if you look at the size of the budget and the fact that they have $1.18M left in the contingent reserve, that is pretty good. Right?

Schmeidicke yes, uh, very good.

Mayor says it is extremely comforting. However, there are some big item shifts that as a percentage of the budget are small but there are some larger items and is that something to be concerned about – or is this acceptable.

Schmeidicke says it is small. On the expenditure side, the warmer weather and lack of snow events is big, so is the fuel costs. Those are large pieces of our non-compensation costs. The general fund balance is over 15% target and for 2013 budget they tried to accommodate the additional issues.

Mayor asks about convert to pay for police. Schmiedicke says that they are trying to budget for that in the next few years. Deb Simon adds that the mayor included that in the budget, it was one of their supplemental requests.

Palm asks about the insurance fund. He says that seemed like a policy decision, was that a mistake. Schmeidicke says that it has been a cash flow issues and they are carrying it in the general fund. He also says we are in an insurance pool with other municipalities and that is a positive asset but it is not a cash balance. From an accounting perspective and where they see claims going, it makes sense to put capital back in there.

Palm asks why they didn’t charge back the $1M. Why just lump sum it. Schmiedicke says they do the same with the Worker’s Comp. He says they look at it at the end of the year. Palm asked why they didn’t get the revised numbers, Schmiedicke says that they didn’t look at it on an agency by agency basis but they will be to try to move that number back up. They will continue to present the numbers with the 2014, you’re right there should be a charge back approach so the agencies see what the effect of their policies are.

Palm asks how they allocate this to agencies – some are probably lower and others higher. Schmeidicke some is based on positions and then the other is based on experience. There is some sharing.

Verveer asks about the assessors office, its a small amount, usually they offset that small amount in their budgets. Schmiedicke says they didn’t have offsets for some reason, he’s not sure why. Deb Simon (also finance office) says they might not have the savings. Schmiedicke says it might be when they hired. Verveer asks them to follow up.

Verveer asks about the mild winter and the $600,000 in savings, is that all ice and snow. Schmiedicke says yes, that is the primary reason.

Verveer asks why the ambulance fee and license and permits are so positive this year. Schmiedicke says they are doing a better jbo of recovering the costs from insurers and medicare on the ambulance fees. The reimbursement process is recovering more. On licenses and permits is building permits.

Verveer asks about ambulance fees, is that the new vendor. No, its in house processing, the vendor won’t start until January 1. They have just been recovering more on the claims.

Mayor jokes that they sent the streets employees that were not shoveling snow out to do collections! (bah ha)


Item 13 – they place it on file
Passes without discussion. It’s additional money for the clerk’s office that was handled in the previous motion.

Item 14 – Overture Contract
Passes without discussion. Overture Contract.

Item 15 – Budgeting Policy for Unused Balances in Debt Service
Bidar-Sielaff asks Schmiedicke if other municiaplities have this language in ordinances. He doesn’t know.

She asks the City Attorney. He answers off camera and I didn’t hear, but I think the answer was they don’t know either.

Bidar-Sielaff says that as we discussed in the budget it is a good policy to follow but she is uncomfortable putting it in ordinance language because it might have an unintended consequence that might tie the hand of future councils. (WHAT?! They just break their own laws when they want to and there are no consequences except they look bad.) As a general policy she agrees with the sentiment.

Palm asks city attorney about the policy vs ordinance and we talk about how we can’t tie the hands of future councils but we put them in laws. But we also have things like what time the council meeting should end and we don’t do that either. (They say they took that out) He asks if the council approves a budget that violates that, what are the consequences. May says that budgets are passed by resolution and resolutions cannot go against ordinances and this would require them to conform to the ordinance. If you were at that point, he would advice them not to do it. The other fact is that if a future council doesn’t like it, they can repeal it.

Clausius asks if they don’t enact this, they could just continue to do it. May says that this year they applied these funds to the debt service for the following year to free up the levy, this ordinance says that if we do that in the future we can only do it for capital expenses.

Clausius says if we don’t have experience from other municipalities what is driving this. The mayor says he is adamant about it, he says it is an abomination and that his experience in government is that if they had asked if we would ever do what we did this year, he would say it would never happen. It would be a silly question. He remembers a debate in the 70s when federal revenue sharing came along and many cities were using it for operating and we used it only for capital projects because we didn’t think they would continue to provide federal revenue sharing and it ended in the 80s under Reagan and we were one of the cities around the country that did not hit the wall because the other cities had to significantly increase taxes or cut back on operations and in a community where we would use federal revenue sharing the idea of using this money is even more offensive. The other thing is that it was kept a secret from the Board of Estimates and the Council and he has randomly polled past and present members of the council and they didn’t know. It was in plain sight and he never wants to preside over a city that is relying on borrowed funds for the operating budget. That is why we are in the crisis now, that is why we don’t have the resources for our debt service. He says this as someone as someone who rejects the right wing notions that some communities are so conservative that won’t borrow for capital budget, that is an injustice in the opposite direction because when building roads for 20 or 30 years you have to spread out that cost so it is fairly absorbed. The second part is that there are myths out there about the dangers of excessive borrowing, a practice like this feeds the myths and we should not give the Grove Norquists of the world the ammunition that this kind of practice provides them.

Verveer asks May to describe other examples of budget policies that are codified in chapter 4 or elsewhere, or are they by resolution. Are our goals by policy. Anne Zellhofer says that Verveer listed them in the question (15% goal for fund balance, contingent reserve balance) in addition to that authority of this body regarding the budget. She says that the statutes also prohibits you from using the premium on your borrowing for anything other than for debt service. So that is dedicated by statute. She says that Heather Allen in their office has found other municipalities have asked them and that none of them used it for operating other. But they did not find out if they put it in the ordinances.

Passes, I think Bidar-Sielaff was the only one to vote no.

They adjourn.

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