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HomeMy WebLinkAboutCC Minutes 2011-08-08 Special 08/08/11 3642 STATE OF TEXAS )( , CITY OF FRIENDSWOOD )( ' COUNTIES OF GALVESTON/HARRIS )( AUGUST 08, 2011 )( MINUTES OF A SPECIAL MEETING OF THE FRIENDSWOOD CITY COUNCIL THAT WAS HELD ON MONDAY, AUGUST 08, 2011, AT 6:30 PM AT FRIENDSWOOD CITY HALL COUNCIL CHAMBERS, 910 S. FRIENDSWOOD DRIVE, FRIENDSWOOD, TEXAS, WITH THE FOLLOWING PRESENT CONSTITUTING A QUORUM: MAYOR DAVID SMITH MAYOR PRO-TEM JIM HILL COUNCILMEMBER MICHAEL BARKER COUNCILMEMBER BILLY ENOCHS COUNCILMEMBER PAT MCGINNIS COUNCILMEMBER DEIRDRE BROWN CITY MANAGER ROGER ROECKER CITY SECRETARY MELINDA WELSH Councilmember Scott was absent from the meeting. SPECIAL SESSION Mayor Smith called the meeting to order and asked if anyone wou�d Iike to speak regarding the proposed Fiscal Year 2011-2012 General Operating Budget. No one spoke. , Mayor Smith opened the discussion between Council and Staff regarding the proposed Fiscai Year 2011- 2012 Generai Operating Budget for the City of Friendswood by yielding the floor to City Manager Roger Roecker who gave a summary of the key budget points. He stated that City Staff developed a proposed budget that maintains current services and is based on the projected effective tax rate, and no new full- time or part-time positions are included. The proposed budget contains no pay increases for City employees, no funding for street improvements, and there is $84,000 unallocated funds avaiiabie. Roger Roecker yielded the floor to Administrative Services Director Cindy Edge who stated the General Fund budget is �21,401,023 of which 84 percent is revenue tax based with 58 percent of that being property tax, 19 percent is sales tax, and 7 percent is franchise tax, and stated other revenue includes interest earnings, administrative fees, insurance reimbursements, donations and miscellaneous receipts. Cindy Edge stated regarding the property tax, the projection is built on certified vaiues from Galveston County and estimated values from Harris County and historicaliy Harris County makes up 20 percent of the City's total property value, estimated new properties added to the tax roli are included, which is $12,435,087. She stated the sales tax is �3,994,949 which includes mixed drink taxes of �29,929. The projection is based on actual collections for Fiscal Year 2010 and estimated collections for Fiscal Year 2011, and ten years of historical revenue trends are reviewed annually. The franchise fees are �1,511,334 and the Fiscal Year 2012 ptojection is based on the Fiscal Year 2011 year-end forecast plus a 1.5% growth rate. It includes utility, solid waste collection and municipal right-of-way franchise fees, and stated five years of historical revenue trends are reviewed annuaily. Licenses and permits are $593,519 and consist of building related permits, commerciai licenses permits, and miscellaneous permits. The Fiscal Year 2012 building permit revenue projection is based on estimated new home starts times the average permit fee. The Fiscal Year 2012 commercial and miscellaneous, permit revenue projection is based on Fiscal Year 2011 year-end forecast, and four years of historical revenue trends are reviewed annually. Councilmember Brown asked where the Public-Education Chan�el (PEG) fees are allocated and Cindy Edge stated the PEG fees come in the books as revenue but they are not inciuded because at the end of the year a reserve will be set up for them. Counciimember Brown asked if the PEG fees allowed up to one percent for capital improvements and up to five percent for franchise fees and what the City charges and Assistant to the City Manager Nick Haby stated it is a state issued franchise so the five percent goes to generai franchise fees and the extra one percent is the special revenue fund. I i � I 08/08/11 3643 Cindy Edge stated they are notin a separate fund but are accounted for separately. She further stated that intergovernmental revenue changes from year to year, there is$220,430 in the proposed budget, the Fiscal Year 2012 projection is based on state grants and inter-local agreements currently approved or in � effect, Victims of Crime Act (VOCA) grant which is partial funding for Police Department Crime Victim Liaison position, Law Enforcement Officers Supplemental Education (LEOSE) grant, Friendswood I Independent School District and Clear Creek Independent School District inter-local agreement which is for school zones patrols and crossing guards, and four years of historical revenue trends reviewed annually. The charges for services amount of $216,333 is primarily made up of recreation fees. The Fiscal Year 2012 projections are based on Fiscai Year 2011 year-end forecast, and includes culture and recreation fee revenue, planning and subdivision fees such as platting, rezoning, compiiance certification fees, five years of historicai revenue trends reviewed annually. Fines and forfeitures of $952,020 are made up of Municipal Court fines and $440,000 of library fines. The Fiscal Year 2012 projection is based on Fiscal Year 2011 year-end forecast, and five years of historicai revenue trends reviewed annually. interest Earnings are$111,212 and are based on Fiscal Year 2011 year-end forecast. interest rates have dropped significantly in Iast few years, Public Funds Investment Act objectives are safety, Iiquidity, and yield. Cindy Edge stated miscellaneous revenue of $237,950 is for things that are not accounted for elsewhere such as solid waste administration fee, insurance reimbursements, and donations. The Fiscal Year 2012 projections are based on Fiscal Year 2011 year end forecast, and five years of historical revenue trends reviewed annually. The inter-fund transfers are$1,128,189 and $35,000 of that is coming from the Parkland Dedication Fund and Staff is proposing to use it to resurface Stevenson Park , basketball and tennis courts, and the balance comes from the Water and Sewer Fund. The Fiscal Year ' 2012 projection is based on a percentage of General Fund operating costs associated with Water and Sewer Fund operations. City Manager Roger Roecker gave a sampling of what an ad valorem tax of $98 per month, which is equal to a monthly ceil phone or television bill. What a home with a taxable value of$200,000 pays for in City services through the General Fund and capital improvements include Police protection, community parks and recreation, fire and emergency medical services, street and sidewaik repairs, animal control, i storm water drainage, code enforcement, senior citizen program, building inspection, buildings and grounds maintenance, Iibrary, street lighting, engineering, capital projects, and long range planning. ! Councilmember Brown asked if twenty percent is the maximum amount for a homestead exemption and the City Manager stated twenty percent is the maximum amount a city can give. Councilmember Brown clarified that she meant if there was a cap on the value of the home and the City Manager stated no. He stated the budget Iynchpin is that funds not spent each year go to the General Fund reserves. Staff practices efficiency in day to day expenditures and operations and there is no "use it or lose it" phiiosophy. Administrative Services Director Cindy Edge stated there is �6.9 in the General Fund, and $5.2 miliion is a 90 day reserve, other designations are the $1 million Mud Gully project and $206,000 which includes the library, economic deveiopment grant and PEG Channel fees based on the unaudited Fiscal Year 2011 expenditures, the projection is$475, 000 in the undesignated fund balance. City Manager Roger Roecker stated research shows the amount of Staff per 1,000 Friendswood residents as compared to adjoining cities. Friendswood's ratio is 5.80l1,000 or 214 FuII-Time Equivalents(FTE) for 36,915 in population, Pearland's ratio is 6.31/1,000 or 618 Full-Time Equivalents for 97,914 in population, League City's ratio is 6.951/1,000 or 528.5 FuII-Time Equivalents for 76,000 in population, and Alvin's ratio is 8.54/1,000 or 183 Full-Time Equivalents for 21,413 in population. There � are 198 full-time City of Friendswood employees, average age is 42.76 years, average tenure with the City is 8.96 years, median annual take home pay is$33,159, and the average bi-weekly take home pay is $1,275. Administrative Services Director Cindy Edge stated although there is no merit increase in the proposed � budget there will be the impact of a full year of inerit. Councilmember Brown stated she has asked for a i list of everyone's merit increases and the City Manager explained that Council approves the budget each ' year and part of the budget is merit, if it is approved. I � OS/08/11 3644 Staff reports to Council each year as to what the merit range would be and this year there were two ranges that were different with a higher percentage for non-senior management Staff and a Iower ' percentage for senior management Staff. As part of management of the City the merits are based on performance through an evaluation for each employee and developed matrix and see how that equates, ' and questioned whether Council is allowing Staff to manage the payroll appropriately and whether that is where Council wants to get to. Councilmember Brown stated in order to review the budget there are salary increases and that is where the question arose because salary increases are larger in some departments than others and it is difficuit to analyze why that is happening without having a spreadsheet showing the merit increases, and stated it is surprising to her that it is difficult to assemble that information because each department has the salary for each individual. Mayor Smith stated that a lot of questions got asked all at once so he needs to break it apart, and asked for clarification of Councilmember Brown's comment that there were not supposed to be salary increases but there actually were salary increases and Councilmember Brown stated that there were no salary increases last year or this year but looking at the budget the salary line item increases each year and so it can only be based on merit pay and Council ' was told that it was ending on some and not going forward, but there are different percentages of I increases in different departments. City Manager Roger Roecker stated that there were salary increases that were budgeted in this year's budget. Mayor Smith stated the current budget does not include any salary increases and Councilmember Brown stated the slide does show salary increases. Mayor Smith stated at the beginning of the budget process Iast year there were no merit increases. That decision was challenged by him and other Counciimembers so merit increases were inciuded into the adopted budget. Councilmember Brown stated there is a distinction between a salary increase and a merit increase and there were no base salary increases but there was a merit increase. Mayor Smith stated this goes to a general discussion with the way the pay plan is done with the City and it is the most concerned issue he has this year as it was last year, and as much as he appreciates the gesture Staff has made of leaving the merit increases on the cutting room floor he does not believe it is a good idea. It is incumbent for Council to look at the plan for more than one calendar year. He stated that there is no guarantee that an employee will get a raise because of cost of living increases, only based upon the merit system process which is to do a good job and be evaluated by their supervisor and up the chain of command, so there could be City employees who have not received pay increases for years and City employees who have gotten pay increases every year, and suggests Iooking at the number of employees Friendswood has as compared to other Cities, compare the work that the smaller number of people do and consider what it means to them to say that the service they provide should stay on the cutting room floor considering that it is $150,000 for a �20 million budget, and stated it is not fair nor is it right so it must be funded every year, is very comfortable with looking at the money that is being spent without having to look at every person's increase because it is the City Manager's job and Council should not be involved at that Ievel, it is a philosophical decision on where the money should be spent. Councilmember McGinnis asked if the merit system functions as Mayor Smith described it in that some employees got no merit increase or did it end up functioning as a cost of Iiving adjustment (COLA) in that everyone got something and the City Manager stated that if an employee's perFormance was not at least average or satisfactory at the time of evaluation they got no merit increase, and apologized for using the terms "salary increase", "merit increase", and "pay increase" synonymously to cause confusion. Councilmember McGinnis asked if a merit increase becomes a part of the baseline salary and Roger Roecker stated yes, it might be small depending on the employee's anniversary date. Councilmember Hill asked if anyone knows the total cost of the merit raise for this fiscal year and � Administrative Services Director Cindy Edge stated $162,000 in General Fund increases. j Councilmember Enochs asked the last time a COLA was done and City Manager Roger Roecker stated there have been years when there was a COLA and a merit increase but never simply a COLA and now it has been combined into only a merit. He stated the City had fallen behind in the pay plan management and in 2008 the City undertook an effort to get caught up with other cities and the private sector. There was not an across-the-board adjustment but a job by job adjustment. Now a review of the market is done � each year and the pay plan is adjusted accordingly. I �I i 08/08/11 3645 Councilmember Barker asked if there was either a COLA or a merit increase in this budget and the City Manager answered no. � Councilmember Brown asked for the Human Resources policies that dictate merit pay versus salary I increase because she wants to make sure she is compliant. She heard that the department head would I have to pull an unbudgeted merit increase from another part of their budget which shows there is excess in the budget from which to pull, should not pull money from other parts of the budget to fund a saiary increase but rather approve salary increases in the budget if salary increases are going to occur. She stated she is surprised that there is not a detailed breakdown of employees' saiaries and Administrative Services Director Cindy Edge stated they have the amount budgeted available but they do not have how it played out available. Councilmember Brown asked if the amount that was budgeted and the amount that was given match and Cindy Edge stated not necessariiy because there is a range of increase. Councilmember Brown stated she believes that merit pay shouid be available in this budget and there is room in the budget to find it in the Council's and the City Manager's budget, and is disappointed that someone did not communicate to her before today that the salary information was difficult to get. Mayor Smith stated her comment of evidence of excess funds in the budget that would allow for unbudgeted salary increases draws a conclusion that they did not save the money by working smarter and better, and cautioned that there could be unintended consequences in how someone could view the arguments they make. He stated that he was sure she did not mean it but it sounded a bit caustic to say that Staff is padding their budget to make sure there is enough money for salary increases. Councilmember Brown stated she apologized if anyone found the comments caustic but she can tell by looking at each budget from each year that there are overbudgeted amounts in the same categories year after year and they are not used, and believes Staff can budget better. City Manager Roger Roecker apologized and stated when Staff makes up the funds they are working off an estimate for merit and they can find the funds if Council approves. Mayor Smith stated there is no need to apologize. � I Administrative Services Director Cindy Edge explained that Texas Municipai Retirement System (TMRS) j lowered the annual COLA from 70 percent to 30 percent because Staff knew that the State legislature was going to Iook at funding for TMRS and the City made the move to substantially Iower Iast year's rate, and Staff is suggesting an increase to 50 percent. A police officer was scheduled to be hired for this year ' so there wili be some change in the cost. Mayor Smith asked if there were any questions and Councilmember McGinnis stated some pensions across the United States are in deep trouble, has received information that TMRS is undertunded by about 20 biliion, and asked if this is the best retirement option for employees and if it is a healthy fund. City Manager Roger Roecker stated TMRS recognized about three years ago that there was a funding issue and did a restructuring and an analysis of the rates and the City is at a fixed rate and 70 percent to I 80 percent funded and will be fully funded soon. TMRS is very conservative and did not get hit as other retirement systems did. Councilmember Barker stated he is confused with the language about TMRS and COLA. Mayor Smith clarified that TMRS is for retired employees so the COLA for them does not apply to currently working employees. The City Manager further clarified that if a retiree receives $1,000 a month and there is no COLA, that amount is all he will receive for the rest of his life; however, if there is a COLA, the retiree � receives an annual percentage of increase of 30 percent, 50 percent, or 70 percent as the City chooses. I This does not affect current employees untii they retire, is an expensive buy back so it is better to choose I the COLA and keep it. Counciimember Barker stated it brings to mind the responsibilities to the current empioyees as well as retired employees, and is that$57,000 better spent on merit for current employees. Counciimember Enochs asked how the TMRS funding amount was decided, was it a unilateral decision or from ail Staff input and the City Manager stated it was decided in the StafPs budget team meeting, was not unanimous but majority ruled and Staff speaks with one voice after the meetings. II I li 08/08/11 3646 Councilmember HiII asked if the City continues to pay the current rate into the retirement system when an employee retires and City Manager Roger Roecker stated there are no more contributions either from the ' employee or the City after the employee retires. Councilmember Hill stated he does not want the City to make commitments to the employees that the City cannot live up to. Police Chief Bob Wieners stated the employees have been fairly treated by every one of the Council's, the sitting Council in 2008 wrestled with a pay plan a few years ago and the merit increase maintains the pay plan. The benchmarks were set and there have been no basic adjustments to the pay plan. He stated merit is such an important part of the way a City does business that four people were just promoted in the Poiice Department by which they took a written examination and their evaluations over a three year period which resulted in a composite score so this evaluation system is valuable for promotions. Councilmember Brown stated the fact that there has been no adjustment to the pay plan since 2008 might be to the employees benefit considering the economy. She asked if there was a Staff contribution with the pension and the City Manager replied that there is a Staff and City contribution as an empioyee but once retired all contributions to the plan cease. Councilmember Brown asked if the Staff's contribution to the pian is voluntary or is there a minimum and the City Manager stated the mandatory contribution is seven percent. Councilmember Barker asked Chief Wieners if there was a merit increase with the promotions and Chief Wieners answered that they got the City policy of five percent in a promotion; however there is a savings because Captain Jimmy Holland was paid $99,000 and his replacement will be paid $85,000. ' Councilmember Hill stated when he was elected in 2006, Friendswood was training people to go to Pearland and there was a lot of turnover, and there is better employee retention since the pay plan was done. Councilmember Enochs asked if the employee pays seven percent, what does the City contribute and Administrative Services Director Cindy Edge answered 15.57 percent. Mayor Smith stated the cost for funding is for the employees now and for employees when they retire and that is why they have to calculate the number of days they have been with the City. Administrative Services Director Cindy Edge stated the amounts are based on actuary where they anticipate an employee's life and career span to determine what funding will be needed to meet the goals. Mayor Smith stated he is anxious to get into the meat and potatoes of giving direction and providing changes to Staff. � Administrative Services Director Cindy Edge returned to the PowerPoint presentation of an overview and ' where Staff is looking to Council for guidance such as where to appropriate the $84,729 left in unappropriated funds, the discussion on street maintenance as to whether it should be funded from the Generai Fund balance or in General Obligation bonds. She stated the tax rate alternatives are one half cent = $117,957, one cent = $235,915, and two cents = $471,831. She stated there are alternative revenue streams that are available such as the telecommunication sales tax which is an approximate $100,000 per year increase, updating the building permit fees which is an approximate $53,000 per year � increase, and Emergency Medical Services user fees which is an undetermined amount at this time. She addressed questions previously asked at other budget meetings such as the impact of one half cent, one cent and two cents on effective tax rate, projected expenditures will exceed projected revenues in 2014, the impact of the Fiscal Year 2011 merit impact, Economic Development Division proposed budget growth. Councilmember Barker stated he thinks Council should consider a one cent increase, there are things I that can be cut from Councii's budget such as the consultant, the consultant in the City Secretary's ; budget, and the consultant from the City Manager's budget. ! I O8/08/11 3647 Mayor Smith asked what he would do with the money and Councilmember Barker stated that the City i should give merit increases and street maintenance money. Councilmember Enochs stated he is in line with Councilmember Barker's disappointment that there is no � merit increase and no street repairs, is not sure he is in line with how to get there but has no ideas of his own at this time. Councilmember HiII stated he may ask for a charter amendment to spend a minimum of one percent of the budget on streets, does not know of any other way to make sure the streets are going to be maintained in the future, and does support merit raises for employees. Councilmember McGinnis stated he submitted questions about some line items to the City Manager this morning for clarification and some big picture things are vehicle ailowance, cell phone allowance, overtime pay and contract services. He asked when cell phone reimbursement started and did the City give Staff home phone allowances before cell phones, and stated his employer has a deal with AT&T that any employee who chooses to get AT&T's service gets a twenty to twenty-five percent discount and suggested that this would be a benefit for all City employees. He then asked if employees can use City vehicles rather than be paid a vehicle allowance. Overtime pay should be challenged within the departments, and contract services may also be a way to save. Cindy Edge stated Staff is prepared to address those items. Councilmember Brown state she is in agreement with the other Councilmembers' comments, asked what is the $15,000 in CounciPs budget under Iine item for professional services, sees $75,000 in Council's ; budget that can be cut, consultant fee of$12,000 in the City Secretary's office can be cut, streets can be funded through bonds because the last major bond issue was 2003, questioned the vehicle and cell phone allowances, agrees that most companies are not funding the entire cell phone. Administrative I Services Director Cindy Edge stated the City does not pay one hundred percent of celi phone for a�yone I but has a tiered plan based on usage, whether or not a person is subject to call out and whether or not they have to have a data plan. Councilmember Brown stated the overtime is mainly in the Poiice Department and that is a necessary evil. The homestead exemption is something to consider further to reduce or eliminate because it is not fair that homes with more value get a better benefit, and is not in favor of a one cent tax increase or the increase already seen. Administrative Services Director Cindy Edge stated there is a disclosure statement because the revenues have gone up based on the fact that the new properties are on the roll and so the increase has to be disclosed. Counciimember Brown asked for clarity of a portion of the budget book. Councilmember Barker stated the City has held the line not to raise taxes for many years, is not easy to say there needs to be a one cent increase but does not see another way because the City needs a little extra revenue. Mayor Smith stated there is never a good time for a tax increase. His issue is not in a twelve month window but for 2014 and beyond because the loss of revenue wili not be made up easily until it is too late. The City will be behind because the City will reach buildout and there will be no more development, only redevelopment. The City should be allocating a little money every year to maintain infrastructure, needs to happen and will not be popular, and the flip side must be looked at. Citizens have come to Council and asked for the community not to be changed stating they will pay more in taxes to live here in order to keep from changing the complexion of the community, one cannot have it both ways because the cost of providing City services will continue to increase so emphasis needs to be placed on diversification and alternative sources of revenue or taxes will have to be increased. He stated his answer is balance, is in favor of Iooking at a small but important shift towards bringing in additionai revenue to pay for keeping up the quality of service provided and in this case it is funding employees and streets, is not sure about changing the City Manager's budgef and it is a double edged sword to talk about the City Secretary's , I 08/08/11 3648 budget because Council's consensus was to allow the decision to continue with the contract be left up to the City Secretary, and the big chunk of the professional services Iine item for Council is consuiting services, other discussions have happened before about funding this line item. If Council is not interested in giving good direction to the consultant about where to find other monies then do away with, but if Council wants to focus on finding other sources of revenue for the City to pay for some of the needs then a consultant is still needed. Councilmember McGinnis stated he is not inclined toward a tax increase because the economy has been down for a while. Citizens have lost their jobs and the real estate market is depressed and stated it is prudent to also share some of the burden and have Staff discuss and do trade off studies. Councilmember Enochs stated the City has had its cake and ate it too. Friendswood has the lowest number of police officers and other City employees per capita when benchmarked with the surrounding cities, also one of the lowest tax rates, is mindful that citizens do not have a lot of confidence in the � federal government right now so Council needs to give citizens securiry in their City so he is leaning toward using a scalpel on the budget and see where to squeak out every $1,000 here and there, a tax increase is the last thing on the table. Counciimember HiII stated he does not like tax increases either but a modest increase of one cent is not going to make the difference as to whether or not someone can make their house payment but it might make the difference as to whether or not a police officer can be hired. He wondered if the homestead exemption could have a cap, and was intrigued by the fact that without the homestead exemption the tax rate would be fifty cents. Friendswood is ten cents below any city in the area and has a better managed city. If Council wants to cut the budget then let Staff do it, the median income for the City is $37,000 and that does not include benefits. Councilmember Brown stated one of the points out of the City Manager's budget was facilitator/consultant Joe Gonzalez and the$37,000 in the City Manager's budget, the consulting fee is high and does not find value in that and regarding the $12,000 for the consultant in the City Secretary's budget, she stated Mayor Smith may have the understanding that Council was leaving it to the City Secretary to cancel the contract but each Councilmember may have had a different opinion and hers was that the City Secretary had represented to Council that she was not seeking as much advice from the consuitant. With respect to the homestead exemption, she stated she would like to see different methodology used, effectively it is still a tax increase but it is being done in a different distribution. She stated she looked at taxes of the local cities when she moved here and chose Friendswood for the taxes and that will be compeiling to those interested in moving here. She sees $75,000 to $80,000 that can be cut in the City Manager's budget, and stated Friendswood continues to compare itseif to Pearland and League City, values and averages, and Friendswood is not Iike any of the other cities because they have an active voiunteer population and an active school district that is only in Friendswood. Councilmember Barker stated he is against doing away with the homestead exemption but would not be against cutting it in half to a ten percent exemption rather than a twenty percent, asked if the exemption is � a City policy or is an ordinance and the City Manager answered that the process to reduce will need to be investigated. Mayor Smith stated doing away with or cutting the homestead exemption in half would be a significant tax increase that would be specific to residents, asked if the discussion is about cutting the tax rate along with doing away with the exemption and Councilmember Brown stated yes. Mayor Smith asked what the net valuation would be and Council needs to have Staff make some of those cuts, and there is a short period I of time to get to the bottom line. I 08/08/11 3649 Mayor Smith stated the payment for cell phones and vehicle allowance are good questions and several years ago Council went through the budget line by Iine and found that Staff was pretty good at squeezing every Iast nickel out, significant savings will not be found in looking at those Iine items because if it were there Staff would have done it, taking away the cell phone allowance and giving a pay raise makes no sense because it would put the burden back on Staff, stated Council is not gelled yet where increase or no increase is concerned. Councilmember Barker stated a 60.13 cent tax rate is not going to be a killer. Mayor Smith asked what would be wrong with taking the street repairs out of the equation and funding it from the money that was saved in the General Fund next year and Councilmember Barker stated it needs to be in the budget somehow. Mayor Smith stated it could be take� out of the reserve fund. Councilmember Barker stated the City is chewing its leg off every time money is pulled from the reserve fund and there is not much of a , reserve fund left anymore. There were a lot of reserve funds when he was first elected to Council and � there is not much left now. The City needs to get back to pay as it goes. Mayor Smith stated this goes back to Councilmember Barker's original statement and believes the City needs to do a tax increase and gave examples of what the City services might look like in four years if there is no increase in funding. Councilmember Barker stated he has always spoken against a tax increase but circumstances have changed. Counciimember Enochs stated all are in agreement that the merit increase needs to be done, the City needs $500,000 in street repair and $167,000 for a merit increase, there is enough money in the ninety day fund and the reserve to pay for it, and the City is close to where it needs to be to meet those two goals. Councilmember Hill stated in 1997 and 1998 the tax rate was over sixty cents and the reason the tax rate went down was because appraisalswere going up, apparently Council believes that it is a one way street i and taxes can only go down, does not want to get in the same situation as the federal govemment, a � bond issue is great but the citizens must vote for it and the streets need to be fixed now. The City will get I $500,000 and will be put into the reserve soon because of the fire truck and Administrative Services Director Cindy Edge stated that amount was taken into consideration and is not included in the budget. Councilmember Hill stated he is good with the effective rate which is an increase of $20 a year to residents. Councilmember McGinnis stated he is still of the same inclination he was before, Staff should cut, asked about the telecommunications tax and Assistant to the City Manager Nick Haby stated the tax is consumption based and Councilmember McGinnis stated it should be considered. City Manager Roger Roecker stated Friendswood is one of the few cities that do not have this tax. I Councilmember Brown stated she does not agree with the tax increase because it sends a message to the public and is inclined to cut the homestead exemption. The City has to consider that it has huge liabilities such as the pending lawsuit so does not want to use the reserve funds for anything right now. Streets can be paid for with bond money, wili not pass a bond if taxes are raised, and just because there was money in the past does not mean there is money now. She stated she does not think it is wise to � use the General Fund for street repairs unless there is a charter amendment that requires it. There needs to be strategic and public policy when considering revenue sources, marketing needs to be considered especially when there are new homes that need to be sold in a bad real estate market. Friendswood has built more McMansions than smalier homes since 1997. Mayor Smith stated he knows that the City Manager will meet with Staff tomorrow and is glad he will not be there because he knows there is not great clarity yet, respects and appreciates the work that has been done, and stated Council needs to decide when to next meet and City Manager Roger Roecker stated Staff planned to have a budget discussion later in the next Council meeting. 08/08/11 3650 Mayor Smith stated decisions have to be made and Administrative Services Director Cindy Edge stated ' the Public Hearing has to be on September 12, 2011, as per the charter requirement, and if Council chooses more of an increase than the effective tax rate there would be more work of a schedule and to back into it. Council can adopt the proposed budget at the first meeting in October. Mayor Smith suggested taking the next week for Council to digest the information and for Staff to work through what they will bring back to Councii and meet Monday, August 15, 2011, and if there is no clarity they will meet again. Councilmember Brown asked how long it will take Staff to put together the discussed calculations such as the homestead exemption and Administrative Services Director Cindy Edge stated Staff has done some work it but they still have to Iook at the commercial impact. Counciimember Enochs stated Staff should look at the law to make sure what is allowed. Mayor Smith outlined a plan of action. Councilmember Hill asked the difference between a one cent increase from the current and effective rate and City Manager Roger Rocker stated $59.51 will generate over$100,000 in revenue. Councilmember HiII asked if Councilmember Barker was proposing one cent over the effective rate or the effective rate and Councilmember Barker stated he was proposing one cent over the effective rate. The meeting was adjourned at 839 PM. Mayor D vid J.H. Smith ' Attest: � I Melinda Welsh, TRMC City Secretary I I