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HomeMy WebLinkAboutMinutes - 2/24/1999 - Finance and Personnel Committee (4) FINANCE COMMITTEE MEETING February 24, 1999 Members Present: Chairperson Alderman Murgatroyd and Chairman Alderman Baird Absent: Alderman McClatchey Others Present: Mayor Cuda, City Administrator Lobaito, City Clerk Althoff Finance Chairmen Alderman Murgatroyd opened the Finance Committee Meeting at 7:15 p.m. stating the purpose of this evening's committee meeting was to preliminarily review fiscal year-end revenue projections. In addition forecasted revenues for the next three fiscal years would be analyzed. GENERALFUND City Administrator Lobaito reported the forecasted General Fund revenues were increased at a conservative 2% per year figure. He noted approximately 55% of the General Fund revenues are based on sales tax receipts. The projected increase from fiscal year 98/99 to fiscal year 99/00 reflects the loss of COPS Grant revenues totalling $135,000. Some discussion followed regarding the projected 98/99 sales tax figure of 54,100,000 and the budgeted figure of 54,400,000. It was the consensus of the committee to project year-end sales tax dollars at 54,400,000 as originally budgeted. City Administrator Lobaito also reported Sales Tax figures for east of the river properties had been received from the II(inois Department of Revenue. The 1998 calendar figure was 5332,000. Although the 1998-99 budget reflects a sales tax revenue figure of 5350,000 for these properties, the East of the River Bond (Bond 1997A) payment for the 1998/99 fiscal year is 5323,000. Therefore, sales tax revenues collected from these properties satisfies the bond principal and interest payment for sanitary sewer infrastructure extensions east of the river. Some discussion occurred regarding the cable franchise revenues of $58,595. City Administrator Lobaito reminded the committee, approval of the proposed cable franchise renewal agreement will, in all likelihood, increase this revenue to approximately 582,000. He cited the new definition of "gross revenues" as the cause. In addition if council increases the current franchise fee from 3% af the Finance Committee Meeting Minutes February 24, 1999 Page Two gross revenues to the 5% maximum, cable franchise revenues could potentially increase to $136,000 per fiscal year. Finance Chairman Alderman Murgatroyd stated his interest in pursuing the franchise fee increase. Further discussion followed regarding Traffic Fine Revenues. Mayor Cuda suggested staff investigate the feasibility of instituting a policy requiring immediate full restitution from non-prevailing parties involved in traffic prosecutions. Currently non-prevailing parties may elect an elongated payment plan. City Administrator Lobaito also noted a reduction in line item #315, Interest Earned citing a reduction in the fund balance. Some discussion occurred regarding the initiation of a fund balance policy. City Administrator Lobaito noted most municipalities maintain fund balances equal to 25% of their annual expenses or a 3-month reserve. He suggested a figure of $1,900,000 as an approximate 3-month reserve balance. Motion by Baird, seconded by Murgatroyd to recommend to full council the adoption of a Financial Policy requiring a General Fund reserve balance, each fiscal year, equalling 25% of all annual operating expenditures. Voting Aye: Baird, Murgatroyd Voting Nay: None Absent: McClatchey Motion carried. ANNEXATION FUND City Administrator Lobaito noted a 1998/99 year-end projection figure of approximately 5320,000 for the Annexation Fund. Annexation Fund rnonies are typically utilized for singular projects which are nonrecurrent in nature. He suggested the committee consider utilizing these monies for the 1999-2000 streets program. Some discussion occurred regarding the Land Purchase line item expenditure of 5100,000. The committee requested staff provide clarification regarding the project designation associated with this expenditure. Finance Committee Meeting Minutes February 24, 1999 Page Three PARK DONATION FUND City Administrator Lobaito noted the projected decrease for line item 12.315 Interest Earned was caused by recent council action to allocate 50% of all developer donation monies collected, beginning in May of 1998, to a Recreational Center Fund. In addition, projected park donation revenues were reduced based on the average, per year issuance, of 1 18 single family home building permits. Fiscal year 1999-2000 projected revenues also include Brookside Park Grant monies totalling S 140,000. CAPITAL DEVELOPMENT FUND City Administrator Lobaito noted 50% of the anticipated cost for property acquisition to accommodate the Central Wastewater Treatment Plant expansion was included in the 1998-99 Capital Development Fund Budget. The estimated 50% figure was 5600,000. He noted the East of the River sanitary sewer extension project was completed below budget. In addition the significant increase in single family and multi-family home construction during this fiscal year has contributed to an increase in water and sewer capital development fee balances. It is staff's recommendation monies for the construction of elevated water storage tanks be expensed from this Fund. Current cost estimates for a 750,000-gallon elevated tank are between 5750,000 and 51,000,000. City Administrator Lobaito also suggested the committee consider a complete and thorough examination of the city's current capital development fee and park donation formulas. City engineers, Baxter and Woodman, have suggested the capital development numbers are too low.� MOTOR FUEL TAX FUND City Administrator reported the Motor Fuel Tax Fund will have a balance of approximately 5800,000 by fiscal year end for the 1999 Streets Program. Council will receive the IMS Street Analysis Report in their Friday, February 26th agenda packet. A Public Works Committee Meeting to review the report is tentatively scheduled for Thursday, March 1 1 th. Chairman Alderman Murgatroyd suggested some General Fund monies be allocated toward the proposed 1999 Streets program. A lengthy discussion followed. City Administrator Lobaito also suggested Motor Fuel Tax dollars collected for the first few months of the 1999-2000 fiscal year in the months of May and June be Finance Committee Meeting Minutes February 24, 1999 Page Four allocated toward the 1999 Streets program. He noted the City of McHenry typically receives approximately 535,000/month from state Motor Fuel Tax alfocations. The committee also discussed utilization of Annexation Fund monies. In response to Alderman Baird's inquiry regarding the expense for Engineering Studies of 5574,000, City Administrator Lobaito explained these costs were attributable to the Green Street project. The project is 80% funded by Federal monies from the Council of Mayors. Revenues for this fund reflect the federal grant monies totalling 5459,000. Some discussion followed regarding the Shamrock Lane and Route 31 intersection improvement project. City Administrator Lobaito affirmed the project will include the installation of a traffic signal as well as lane improvements from Bull Valley Road south to Shamrock Lane. City Administrator Lobaito also stated he included a $60,000 revenue figure for Mr. Lang's contribution toward this project as per his 1995 annexation agreement. Finance Chairman Alderman Murgatroyd stated as estimated projections reflect a 5200,000 under budget figure within the Administrative Department, these monies might also be earmarked for the 1999 Streets Program. Further discussion occurred regarding the 1998-99 525,000 Sidewalk Program. Alderman Baird requested consideration be given to the installation of sidewalks on Green Street south of the Municipal Building. Mayor Cuda requested consideration be given to the installation of sidewalks along Freund Field. It was the consensus of the committee to recommend to full council the adoption of a policy regarding Sidewalk Programs. All sidewalks expensed from the sidewalk program should be new installations and should connect existing sidewalks. Afl sidewalk repair should be expensed from the general fund's operating accounts and be completed by city crews. Annexation Fund monies can be allocated toward the Sidewalk Program, but never for sidewalk repair. Motion by Baird, seconded by Murgatroyd to recommend to full counci( the following policy regarding the Sidewalk Program -all sidewalk installations conducted under the Sidewalk Program must be for new sidewalks connecting existing sidewalk sections. Voting Aye: Baird, Murgatroyd Voting Nay: None Absent: McClatchey Motion carried. Finance Committee Meeting Minutes February 24, 1999 Page Five Some discussion followed regarding the City's current policy regarding Capitalization. City Administrator Lobaito noted the City currently capitalizes all asset purchases over 5500. It is staff's recommendation to increase the base amount to $700. Motion by Baird, seconded by Murgatroyd to recommend to full council the following policy regarding Capitalization Limitations: -all asset purchases over 5700 shalf be capitalized effective May 1, 1999. Voting Aye: Baird, Murgatroyd Voting Nay: None Absent: McClatchey Motion carried. WATER/SEWER FUND In response to Chairman Alderman Murgatroyd's inquiry City Administrator Lobaito explained although the combined water/sewer rate increase is stated at 10%, individually the funds are increased as follows: 1999 2000 Percentage Water 1 .55 1 .85 18% Sewer 1 .75 1 .80 3% There is a significant increase in water rates as opposed to sewer rates. City Administrator Lobaito noted his projections reflect a conservative 8% overall increase. Revised projections will be provided the committee as each month's totals are calculated. Chairman Alderman Murgatroyd also reminded the committee after May 1 , 2000 the water/sewer rates will be increased on February 1 st of each succeeding year based upon the Chicago Area Consumer Price Index Annuat Average and be subject to annual review by the Council. It was also the consensus of the committee to review the IMS analysis and recommendations prior to allocated a specific dollar amount for the 1999 Streets program. The meeting was adjourned at 8:40 p.m. Steven Murgatroyd, Finance Chairperson