COUNCIL WORKSHOP

A Council Workshop was held on March 3, 2008 at 7:30 p.m. with Council President Williams presiding. Council members present were Mr. Leary, Mrs. Russell, Mr. McGlumphy, Mr. Slavin, Mr. McGiffin, Mr. Hogan, Mr. Salters, and Mr. Ruane.

Council staff members present were Mrs. Mitchell, Mrs. Townshend, Mr. DePrima, Mrs. McDowell, and Mayor Carey.

AGENDA ADDITIONS/DELETIONS

Mr. Slavin moved for approval of the agenda, seconded by Mr. Hogan and unanimously carried.

PRESENTATION OF MID-YEAR REVIEW OF THE FISCAL YEAR 2008 BUDGET

Mr. DePrima, City Manager, presented members with the mid-year review of the Fiscal Year 2008 City of Dover Budget. He explained that the purpose of the report is to give City Council a mid-year picture of the City’s operating expenses and revenues for all City budgets. He suggested that this review should be considered a proactive exercise so that Council can take necessary actions to adjust budgetary behavior if necessary. Mr. DePrima reported that “managing to the budget” continues to be a priority and that the City Manager and the Finance Director continue to monitor budgets closely.

Mr. DePrima advised members that the report projects that the General Fund Budget Balance will decrease by $816,828 to $2,722,193, which exceeds the eight percent (8%) fund balance requirement by $31,716. The combined Water/Wastewater Fund Budget is projected to remain relatively the same with revenues decreasing by $8,084. He stated that the expenses declined $226,067 in the operating budget and $161,733 in the capital budget. The Electric Fund operating budget has increased miscellaneous revenues in the amount of $377,130, which is reflective of the projected increases in penalties, fund interest, general service billing, reconnect fees, return check fees, and electric new service fees. The Electric Improvement and Extension Fund’s balance increased by $3,559,242, which is due primarily to the savings in the 69Kv Feeders 3 and 4 Project ($3,354,795). Mr. DePrima noted that some of these savings will be needed for the St. Jones Substation Project in FY 2008 and FY 2009.

Mrs. Tieman, Senior City Administrator, reviewed the most notable revisions. Following this review, she explained that staff will develop budget ordinance amendments to be presented to City Council for their consideration of a First Reading during their Regular Meeting of March 24, 2008.

Referring to the transfer to the CDBG Fund for salary costs (item #11 on page 4), Mr. Ruane questioned if the grant monies received from the federal government are sufficient. Mrs. Mitchell, Finance Director/Treasurer, explained that the grant monies received are for administrative expenses which, in addition to salary, includes training and conferences, subscriptions and dues, program expenses, etc. She also explained that the grant itself has been reduced which reduces the amount provided for administrative expense since this amount is based on 20% of the grant money awarded.

It was Mr. Ruane’s opinion that the federal program should have an allowance sufficient to pay for its administration and suggested that the City’s congressional representatives be made aware of this matter. Responding, Mr. DePrima stated that the City has not contacted anyone regarding this issue and explained that the CDBG is a formula based program and that the regulation provides for 20% for administrative costs, which includes salary. In an effort to address this issue and as permitted, he stated that the City is billing the director’s time to projects. He explained that in the past, all of the director’s salary was charged to administration costs; however, if a percentage of the director’s time is spent on the housing rehabilitation program, that portion of the salary can be billed to that program. Mr. DePrima advised members that the City is seeking alternative means to recoup the expenses for the salary. It was his opinion that this would not be an issue to discuss with the congressional representatives since it is a nationwide formula-based program.

City Clerk’s Office Note: The Budget Ordinance Amendments (Exhibit #1) will be presented to City Council for a First Reading on March 24, 2008.

PRESENTATION OF REVENUE PROJECTIONS FOR FY2008 REVISED AND FY2009 PROJECTED

Mr. DePrima, City Manager, presented members with the revised revenue for FY2008 and projected revenues for FY2009. It was noted that the projected revenues for FY2009 do not include the proposed fee increases.

Mrs. Tieman, Senior City Administrator, advised members that the General Fund revenues for next year are projected to increase by $129,939, which represents a .39% (less than ½%) increase. She explained that if there is no increase in revenues, it may be necessary to consider a tax increase due to additional expenses.

Responding to Mr. McGlumphy, Mrs. Tieman assured members that she would review previous Comprehensive Annual Financial Reports to determine if there is a trend in the amount budgeted for beginning balances. She explained that the reserves are budgeted in accordance with City Policy and that Council has the ability to reduce or increase the reserve amounts.

Referring to the minimal increase in revenues for the General Fund, Mr. Slavin suspected that as an alternative for increasing revenues, Council will be “scrubbing” the expenses budgeted. He cautioned the budget team to anticipate this action occurring during the budget review and requested that when the budget presentation is provided, staff include historical data for each department that is reflective of their projected budget and actual budgets during the past few years. If the historical data indicates that there is an inflating of budgets at the outset, Mr. Slavin suggested that Council make necessary adjustment during their review.

Mr. Slavin advised members that an additional option would be for Council to review the balances in the reserve funds and if there is an over-funding, due to the economy, this may be a time for members to consider reversing the flow of these funds.

In response to Mr. Ruane, Mr. DePrima stated that the proposed fee increases and new fees are scheduled to be reviewed by the Legislative, Finance, and Administration Committee during their meeting on March 10, 2008. He explained that any action resulting from this review would be an amendment to the revenue projections that have been provided at this time.

Mr. Slavin suggested that if there are any fee increases recommended by the Legislative, Finance, and Administration Committee, they would be presented to Council for consideration at the same time as the Budget Ordinance Amendments (Mid-Year Review) during their Regular Meeting on March 24, 2008.

Referring to the Electric Fund, Mr. DePrima advised members that the increase in gas and oil prices has also been occurring in the natural gas and power prices. During the last two (2) weeks, he, along with the Finance Director/Treasurer and Public Utilities Director (Energy Management Team), has had to authorize two (2) defensive buys for power contracts for next year. He explained that there is a very unusual energy market and cautioned members that it may be necessary to change the energy projections.

Responding to Mr. Ruane, Mr. DePrima stated that the funds necessary to meet the obligation on the 1146 Regulation to have the “scrubber” installed by 2008 has been included in the budget.

Mr. Leary moved for adjournment, seconded by Mr. McGlumphy and unanimously carried.

Meeting Adjourned at 8:28 P.M.

                                                                                    TRACI A. McDOWELL

                                                                                    CITY CLERK

All orders, ordinances, and resolutions adopted by City Council during their Workshop Meeting of March 3, 2008, are hereby approved.

                                                                                    CARLETON E. CAREY, SR.

                                                                                    MAYOR

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S:ClerksOfficeAgendas&MinutesCouncil-Minutes20058-22-2005 Council.wpd

Exhibits

Exhibit #1 - Proposed Budget Ordinance Amendments (Mid-Year Review)