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HomeMy WebLinkAboutMinutes - 10/02/2017 - Finance and Personnel CommitteeFINANCE AND PERSONNEL COMMITTEE MEETING REPORT Monday, October 2, 2017 Municipal Center Classroom, 5*30 PM In Attendance at Roll Call: Chairperson Alderman Curry, Alderman Schaefer and Alderman Mihevc. Also in Attendance: Director of Finance Carolyn Lynch, Human Resources Manager Ann Campanella, and Director of Economic Development Douglas Martin. 1. Call to Order: The meeting was called to order at 5:30 pm. 2. Public Comment: None. 3. Review, Discussion, and Consideration of Revised Revolving Loan Program Criteria and Application; Review of an Ordinance amending the Municipal Code to establish the Finance and Personnel Committee as the Revolving Lan Fund Committee; and direction to place this item on the next available City Council meeting agenda. Chairperson Curry reported a copy of the changes to the criteria for the Revolving Loan process were included in the meeting packet and as discussed at the last meeting, the biggest change to the application was simply removing the point value and references to working capital. Director Martin said this would give the application a degree of objectivity. Chairperson Curry asked for comments about the information. Alderman Schaefer announced he was ready to move forward with the revisions as presented. However as he expressed at the last meeting, he feels the Eligty Requirements #1 and #2 will be a bone of contention and said it will be interesting to see if these criteria are met adding it will probably be visible in the next application received. Chairperson Curry said he appreciated Alderman Schaefer's comments and stated we will see how it goes. Chairperson Curry reported to the committee that he had a conversation with Mayor Jett about the fact that the Revolving Loan Committee was not established by ordinance. At some point in the past, the Mayor was part of that committee to recommend to the full City Council if applications should move forward. Chairperson Curry reported Mayor Jett told him he would prefer not to be a voting member of the Revolving Loan Committee. As the proposed ordinance stands, Revolving Loans would go through the Finance and Personnel Committee and then proceed with a recommendation to the full City Council. Alderman Schaefer asked if the Mayor agrees this matter requires adoption of an ordinance and Director Martin said the proposed ordinance clarifies the process. Chairperson Curry called for a motion to forward the revised application and proposed Ordinance to the full City Council for consideration. Alderman Mihevc voted in favor of Finance and Personnel Committee Page 2 October 2. 2017 presenting the revised application and proposed Ordinance to the full City Council as presented; seconded by Alderman Schaefer. Chairperson Curry asked the Clerk to call the roll: Voting Aye: Mihevc1 Schaefer, Curry 4. Property Tax Lew Discussion and Recommendation. Finance Director Lynch stated she was seeking a recommendation from the committee regarding the Tax Levy that will go forward to the Council on November 4. For five years, the levy remained flat and last year the levy was reduced by 3%. As we also know, we have items that will drive up expenses such as Police Pension and two bargaining units that we know will increase in cost. Director Lynch reminded the committee we have a 10% decrease in Income Tax for the foreseeable future as well as a 2% decrease in Home Rule Sales Tax. All of these items added together should be taken into consideration when determining what we want to with Property Taxes. For the committee's information, Director Lynch included information in the packet on PTELL calculations, as they would have been completed if the increases had been adopted from 2010 through 2016. This was done to show that the city has forgone $550,246 in revenues by keeping a flat or reduced levy. The property tax rates for 2016 for all taxing bodies within the city was also attached. Chairperson Alderman Curry asked if we know for a fact the State of Illinois is reducing the Home Rule Tax and calling it an administrative fee. Director Lynch answered yes; it is a fact, only on Home Rule. Chairperson Curry asked based on our revenue for this year; it will be reduced by $312,000. Director Lynch said yes, for the current fiscal year. Chairperson Curry asked if this were based upon current revenue, for example if income within the city increased we would not see that much of a reduction in State Income Tax. Director Lynch said the state takes 10% off the monthly receipts. The $312,000 reduction is based off budget because that is all we have at this time. Chairperson Curry stated other than the state decrease; we know we have a higher expense for police pension fund. Director Lynch stated the police pension actuarial report calls for an increase in funding for next year of $145,000. We also know bargaining unit contracts will increase. Alderman Schaefer asked if it was correct that this does not take into account any new CIP projects. Director Lynch answered that was correct; we know the city has a road program and the Lakeland Park drainage project coming up that we will have to fund. Chairperson Curry said that all of that would shake- out during the budget process. Director Lynch said the most difficult part of determining the levy is that it occurs so early in the fiscal year. At this time, the city has only two months of Sales Tax data for this fiscal year and only two months of Income Tax data. In addition, the state usually pays the city two to three months behind making it more difficult to know where we will stand and, we are not even in the budget season. Chairperson Curry said we do have the quarterly budget report, which states the city is in good shape so far this year. Director Lynch responded saying in the budget report you are only seeing when the city receives the cash, some of that is really last year's money, Finance and Personnel Committee Page 3 October 2, 2017 which all is adjusted at the end of the year. Alderman Schaefer asked for the deadline to adopt the levy. Finance Director said it must be submitted by the last Tuesday in December. The city will set the date for the Public Hearing at the meeting on November 6, and the Public Hearing will be held on December 4. Tonight we are merely seeking a recommendation to forward to the Council. Alderman Mihevc noted this is a difficult process however if the city does not levy something, it will be boxed -in. With the knowledge of pending increases, he does not see how the city could possibly keep the levy flat. Director Lynch said if the city were subject to PTELL, it would be 2.1%. Alderman Schaefer asked if that was the inflation rate and Director Lynch answered yes. Alderman Schaefer asked if there had been any discussion other than what was presented tonight, if we were to recommend a flat levy; adding he would prefer to keep the levy flat however we should think about capturing that 2% and see where the discussion goes with the Council. Chairperson Curry stated last year in Committee, he had raised the proposal to reduce the levy and several scenarios were presented to the Council for consideration. The Council adopted a 3% reduction in the levy. Alderman Schaefer noted staff presented the recommendation to the Council as flat and a 3 % reduction was approved. Chairperson Curry said in his opinion if it was not for the state reduction, he would recommend another reduction. However, at this point he would recommend a flat levy versus last year and then budget to meet it. In his opinion, the process is backwards; the city has to make a decision before we have all the budget numbers. Chairperson Curry asked the committee to keep in mind that Property Taxes are only approximately 20% of the city's revenue and from a percentage point it has only a slight effect on the overall budget. In his opinion, people are fed -up with property taxes and although the city is less than 7% of the overall tax bill, McHenry should set the example to the other taxing districts. In summary, Chairperson Curry is of the opinion the levy should remain flat. Chairperson Curry further stated for the sake of discussion only, the city received approximately $2-million through the .5% Home Rule Tax is. If this tax were increased to .75%, the city would gain roughly $ I -million. However, people pay attention to Property Taxes and if the city increased it by 2%, it would receive less than $100,000. If it were revenue that we are seeking, he would rather see an increase in Sales Tax. Discussion ensued on the merits of Property Tax versus Sales Tax and the process of establishing the Tax Levy. Alderman Schaefer suggested presenting calculations up to PTELL, which is at 2.1 %. a 0% levy to the Council and to present Chairperson Curry recommended the levy remain flat. He noted the pressures on staff regarding finances and stated that the city has a $2-million reserve fund. He realizes that there are financial commitments however on a daily basis this number could be at $9- Finance and Personnel Committee Page 4 October 2, 2017 million. The commitments come at the end of the year however in his view, if push came to shove and we needed revenue, we have ways of approaching this. Chairperson Curry added he is not convinced that we need to raise the levy at this point. Chairperson Curry called for a motion to forward a recommendation to the full City Council for consideration. Alderman Schaefer voted in favor to recommend to the full City Council no change to the Property Tax Levy for the next fiscal year; seconded by Alderman Mihevc, Chairperson Curry called for discussion. Alderman Mihevc said he would prefer approval of an increase to PTELL however, he does agree to forward a recommendation to the full City Council. Chairperson Curry asked the Clerk to call the roll: Voting Aye: Schaefer, Curry Voting Nay: Mihevc Chairperson Curry asked staff to provide the Council with the PTELL. Although he is in favor of a flat levy, the Council should have all the facts. Director Lynch said when the total PTELL is determined she will provide calculations for 2.1 % (inflation rate) as well as on -half of this rate or 1.05%. In summary, Chairperson Curry announced the recommendation to the Council is a flat levy however, staff will provide additional information for the Council's consideration. 5. Staff Reports. HR Manager Campanella distributed information to the Committee regarding the proposed Compensation Study. The study obtains surveys from 10 comparable communities. Non -contract employees will complete job questionnaires. Following review of the questionnaires, interviews will be held between the consultant and employees involved in the study to confirm the information. Chairperson Curry asked that based on this process, the city will vet the job descriptions to determine if they are accurate and Manager Campanella answered yes. Chairperson Curry said he was under the impression that the city would then take the job descriptions to various communities and ask them for salary information. How will we know we are getting salary information on a comparable job if we do not already have the information? Manager Campanella said she has been updating job descriptions for the past two years so we are comparing apples to apples. This would be the case if the city's job descriptions were in disarray, but they are not. To contract someone to create job descriptions would have been expensive. For example, she created a general job description for an Administrative Assistant. If the city were to hire an Administrative Assistant tomorrow, we would look for these items in that position. The comparable communities are selected using equalized assessed values, per capita income, population, number of employees, general fund expenditures, state sales tax, and Finance and Personnel Committee Page 5 October 2, 2017 general fund property taxes. All information was obtained from the State Comptrollers office. The study looks for communities that are in McHenry's range. Each community receives a point value based on how similar they are to McHenry. The Committee received a list of the top 10 communities selected by the consultant. A discussion ensued on the reasons why some McHenry County communities were or were not selected as a comparable community. Alderman Schaefer expressed concern that only one community selected is located totally in McHenry County. Manager Campanella reported the numbers presented were obtained from the State of Illinois Comptroller's Office. This survey is not solely based on geography; it is based on quantifiable data. Discussion ensued on Alderman Schaefer's concerns about the communities selected as comparable to McHenry. Manager Campanella said she would ask the consultant if Home Rule was considered when selecting comparable communities. Alderman Curry asked if the city will receive salary comparisons and the answer was yes, it would be provided to the Council. Manager Campanella reported by the next meeting, she should have more information to bring to the Committee regarding the study and will forward a spreadsheet to the Committee. 6. Any Other Business. Chairperson Curry announced that the budget process will soon begin and all staff will be involved. He thinks it would be a good idea if each standing committees review with the respective department director the budget for their respective areas prior to consideration by this committee. 7. Motion to Adiourn: Alderman Schaefer made a motion, second by Alderman Mihevc, to adjourn the meeting at 6:55 pm. All ayes, motion carried. Reviewed and approved this � day of /�� ,��- 2017.