I checked the City of Shoreacres website last Thursday and council has scheduled another budget workshop for Monday night, 10-7. Note that these workshops start at 6 pm, not 7 pm as is usual for council meetings. Also, they are held in the small conference room, not in the normal council chambers. The public is not allowed to speak, just listen.
Last week, Alderman Mike Wheeler was unhappy with my report. You can read his comment here, as well as my response. Although my information is limited, I decided to take him up on the challenge and propose my own budget. The starting point was so bad that even I could not get it to zero, but it is pretty close, especially if you consider the operating portion that I cut. I had to adjust the revenue down – City Administrator Stall did not correct the property tax revenue estimate on council’s revised budget. I also kept $75,000 in capital expenditures that pull from the reserve.
I realize the hot button issue is employees. Here is an org chart that I came up with:
The officer highlighted in Yellow resigned after the fiasco at the Houston Yacht Club. You can watch the report on ABC 13 here. Council decided not to replace him. Although hesitant, I went along with that cut. I hope that if revenue comes in above forecast, the council will replace that officer first. I also cut one employee from the Mr. Sutton’s department – I didn’t highlight the specific employee, I would leave that up to Mr. Sutton. I lowered the salaries of all but Mr. Sutton and the two public works employees. I also reduced the city clerk’s hours from 32 to 24 per week to avoid having to budget for insurance. I’m not sure I agree with the conclusion that our employees are covered by the new Affordable Care Act but since Mr. Stall said they were, I reduced the hours to eliminate that possibility. I also eliminated bonus pay for various certifications. There are a lot of salary estimators out there and I used one to find the average rate for our area with the exception of the Police Department. I generally left that alone since Alderman Moses has a good feel for what we need there and I think the police and our extremely low crime rate are a big asset to the city. And for those that are curious, I did reduce Mr. Stall’s salary after his current contract expires in February. At least I think that is when it expires. See what I mean about having internal information? And we need to ask why we are contributing 7{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of each employee’s salary to the Texas Municipal Retirement System and paying Social Security as well. We can’t simply drop that because of state law but we could eliminate it for new hires.
I think that all of the city’s employees are good people but sometimes we have to make hard choices in order to keep an organization afloat. I hope that they understand that.
Here is an overview of Mayor Webber’s original proposal, the council’s revised proposal, and my proposal for Alderman Wheeler:
Shoreacres Proposed Budget Overview 10-6-13
As you can see, I was able to reduce the reserve drawdown from Mayor Webber’s original proposal from $846,702 to $154,698, saving $692,004. And from council’s revised number of $481,476 to $154,698, saving $326,778.
Click on this link to view the budget details: Shoreacres Proposed Budget Details 10-6-13
If I had had more internal details, I think that I could have gotten to a balanced budget. Several accounts had footnotes on them that they had to be dedicated to certain functions – I’d like to know more about those. And the Sales Tax for Road Maintenance skewed the expenditures because it looks like it was being used as a placeholder. Again, I would have liked to have had more information about that. I would hope that Alderman Wheeler spent as much time preparing a proposed budget as I, a lowly citizen, did. I’m looking forward to seeing his recommendations tomorrow night.
The budget hole is deep but pointing fingers at past decisions isn’t going to fix it. Hard decisions have to be made if we are going to survive as a city. Public safety has to be the number one priority.We need to work hard on that contract with La Porte for fire protection as it seems out of line, especially if they refuse to respond to emergency calls. And we can switch from CLEMC to a national provider for the same or lower amount and expect lower response times and better qualified personnel.
There are things we can and must do to remain solvent. Let’s git-r-done.
Ron Hoskins says
I do agree that the city needs to look at addressing the whole CLEMC issue in more detail, but that issue is complicated. CLEMC is charging us about 26K per year, and from what I recall, LaPorte would charge us about 100K per year for emergency services. I am not sure exactly what LaPorte’s business model was that came to the 100K, but if you go through their city budget (450 pages,) it is probably not that hard to figure out. LaPorte has about 35,000 residents and an EMS budget expense of 2.6M. That is about $75 per year per resident. Our population is about 1600 and at $75 per resident, adds up to $118,000. Also, from their city budget, their EMS response time is 5.50 minutes. It does not mention whether the call came from the closest responder or not. The problem that we have with CLEMC is that, unless we get a response from their EMS located on East Meyer, the response time will be significantly higher than the 9 minutes that David Stahl presented to us a few months ago. The East Meyer location is only 4.5 miles from Shoreacres, but I do know that they stay busy. This issue needs more research.
The city has no choice but to pay social security taxes. We are not paying 7{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} (really 7.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}) of employees’ wages to the Texas Municipal Retirement System(TMRS.) TMRS operates much like a 401K plan that a private employer may offer. In order for the city to contribute 7.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of an employee’s wages to TMRS, the employee must contribute 5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} as well. The city does not contribute more than 7.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}, regardless if the employee contributes more than 5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}. The city only matches the employee’s contribution on a 1.5 to 1 basis. There is also a 5 year vesting period before the employee can keep any of the city’s contribution, much like many 401K plans. Our TMRS plan is really average for most cities participating in TMRS. On the low end, some cities match 1 for 1 at a 5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} employee contribution, while a city like Abilene, TX matches 2 for 1 at a 7{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} employee contribution (yes, 14{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} city contribution.)
The Patient Protection and Affordable Care Act(PPACA) does, or shall I say can, have an impact on us. The city is considered a small, less than 25 employees, tax-exempt employer under PPACA. The “pay or play” penalties only apply to employers with more than 50 full time employees, not Shoreacres. Employers that have less than 50 full time employees are not required to provide health insurance under PPACA. Employers with less than 25 employees that provide a healthcare plan for their employees are eligible for a tax credit from the Federal Government, if the healthcare plan provides for the minimum coverage as defined by PPACA, the employer pays at least 60{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of the cost of the plan, and the plan is made available to all of their full time employees. Small for-profit employers are entitled to a 50{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of cost tax credit, while small tax-exempt employers are entitled to a 35{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} tax credit. If you include the city clerk’s healthcare costs, the healthcare total cost for the city is budgeted at $86,508. The city would be eligible for at tax credit of $30,277.80, which is not reflected in this budget. Of course, there is the presumption that someone in the city would need to apply for the tax credit, because the government won’t give it to you unless you ask for it. It is kind of like that discount that we all enjoy from the federal government for our flood insurance!
David Jennings says
Great information Ron. Have you tried creating a proposed budget? I’d be interested in what you came up with.
DLV says
LaPorte’s cost estimate annually for services to Shoreacers as of 8/16/2013:
Jail – $20,310
Dispatch – $36,340
Animal Control – $17,794
EMS – $140,643
DLV says
We are not enjoying the CRS flood insurance discount yet!
GerryV says
David & Ron, Good info. I believe more of our citizens are becoming concerned about the financial state of the city. The information flow on this site is important in keeping citizens up to date. The employee benefits package should be revaluated if Council is unable to balance the budget. For example, the TMRS city contribution Ron mentioned that is currently 7.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} was 3{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} ten years ago.
Here’s my long winded comment on the :
This city has been living beyond its income during the past few years and has resorted to supplementing its operating budget with thousands of dollars from the city TX Pool reserve fund and, more recently, using a $220K FEMA grant reimbursement to cover 2013 general fund expenses instead of returning the grant money to the reserve fund where it originally came from. It is obvious that Council and the Mayor will have to make some tough decisions to restore fiscal responsibility to this city, otherwise this city will lose its good credit rating or, worse yet, become insolvent.
My suggestions to restore fiscal responsibility:
1. Public Works and Utilities Department. Suggested reductions:
• Stop new vehicle purchases for next two years.
• Postpone repaving of Public Works parking area. Consider layer with limestone.
• Limit pay raises to no more than 2{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} for PW maintenance employees (Public Works, Parks, Water & Sewer EEs).
• Limit PW overtime pay to no more than 5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of base pay (Proposed budget projects employee overtime at 10{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} to 14{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of base pay). Whenever feasible compensate after hours work with time off versus overtime pay. The current compliment of maintenance personnel is fully staffed. Overtime pay should be minimized.
• Fill PW with part-time employees, whenever practicable.
• Stop Recycling Program.
• Starting in April 2014 limit heavy trash pickups to twice a year (Spring & Fall).
2. Limit police vehicle purchases to no more than one per year. New vehicles should come with 100,000 mile warranties and maintenance schedules adhered to.
3. Implement a program where pay raises for Department Heads (Police Chief, Director Public Works & City Administrator) are contingent upon cost savings within their departments of repetitive expenses as compared to previous three-year average. Department heads must tighten their spending tendencies.
4. Implement a program where employees are rewarded for actions resulting in significant cost savings for the city.
5. Rezone city property near SH 146 for commercial use and offer it for sale, if legally feasible.
6. Impose salary limits on supervisory positions regardless of the individual’s experience and qualifications. Suggested maximum salary for City Administrator position is in the $76,000 range with only COLA adjustments thereafter. For Public Works Director consider $62,000 salary limit with COLA adjustments.
7. In view of the marginal condition of sections of the city water piping system and the questionable condition of our elevated water tank, combined with the new water station pumping equipment going on line in the near future, I consider the PW Director position and the supporting technicians (water & sewer system specialists) critical during the immediate foreseeable future. An increase in water line breaks and other problems will likely occur when additional water pressure is supplied by the new pumping equipment. Suggest reevaluate technician staffing levels during the latter half of Spring 2014. By then the major issues confronting the water system should be resolved.
8. The city’s income from water, sewer and garbage pickup rates is well below the City’s costs for maintaining these services. Salary caps and staffing reductions will help but will most likely not resolve the issue entirely. The city needs to seriously look at nominal increases in rates, weighing financial benefits against impact on residents.
In my opinion, this city has not rebounded from hurricane Ike at an adequate pace as compared to our neighboring cities of Seabrook, Kemah, Clear Lake Shores, San Leon and El Lago. The question is why and what can be done about it?
Please consider this suggestion. In the not too distant future, the city could sponsor a public meeting inviting citizens, realtors, and builders to discuss ways to improve Shoreacres stature as a community. Perhaps sufficient feedback will help to identify the best ways to make our community more attractive for investors and builders with the ultimate goal of encouraging new construction and improving property values.
We have some positive issues going for us; the new San Jacinto College, our street refurbishing, an updated city hall complex, an attractive waterfront, the yacht club, and the Cruise Terminal opening. Unfortunately, on the negative side, we have flood insurance rates expected to rise, Bayport container port expansion, and our reputation as the most difficult and unreasonable community in the area for contractors & builders to construct and remodel homes.
Another pending issue is the Water Tower. It will require the City to secure a bond to fund its replacement unless other arrangements can be made, such as a grant or assistance from another entity. Perhaps the city should determine if a tap into the City of LaPorte water line on Broadway would provide adequate pressure as the Shoreacres’ primary water supply (if feasible and agreeable with LaPorte). The reality is their closest water tank is 6/10ths of a mile from Shoreacres’ City Hall. Our elevated water tank is further away from City Hall. Another option, check with San Jacinto College District to determine if they are considering installing a water tank for their new college. If so, their tank will likely be funded by the Port, Pasadena or other entities. Maybe Shoreacres could coop with the school district. Also, look for other alternatives.
My hope; fiscal responsibility will be restored to our city. No doubt, it will require tough and unpopular decisions by Council and the Mayor.
Ron Hoskins says
David,
Yes, I have worked on the budget using numbers I would use. There is no way, I can find, to post them on this website. I think only you can do that a master of the website.
It is a good thing city council is continuing to have budget workshops and they should continue to do so until they get it right. This newly proposed budget that they are discussing tonight is still a tax increase with continued deficit spending. The cuts that Alderman Bunker presented at the last workshop was a good start and in the right direction. More work needs to be done and more cuts need to be made.
The budget for property tax revenue is $812,805. I remember that our estimated property values would be a little over 91M. To get to an 812K tax revenue number would be a tax rate of about .89. A true reflection of our tax revenue, assuming council doesn’t raise the tax rate, as the current budget does, would be $770,545. That is a $42,260 difference.
Add that 42K to the transfer from GF reserve on page GF-2 and that number is now $201,858. That is what the transfer in line item 4991-1(GF-2) should be. Line item 4991-2(GF-2), Contribution from Utility Fund, is amazing. 4991-2(GF-2) shows a contribution $147,778.94 from the utility fund into the general fund. That is so misleading.
Line item 4999-2(pg UF-1) shows a GF Reserve transfer of $321,877.35 into the Utility Fund. Then that fund transferred back to the GF? Wow!!!
OK, the real GF deficient spending is $201,858 + $147,779 = $349,637. The Utility Fund deficient spending is $321,877 – $147,779 = $174,098. The current proposed city budget has a deficient spending of $523, 745. Thanks to Alderman Bunker’s proposed cuts of $365, 216, the deficient isn’t $888,961.
However, our total expenditures GF and UF is still at $2,389,357. 22{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} of the expenditures are being funded by using our reserves. We need more cuts. City council has more work to do and may need additional workshops to the job.
Ron Hoskins says
Gerry,
I like many of your suggestions.
Looking at changing heavy pickup from monthly to a different schedule is a good idea.
After doing further research into solid waste pickup costs for residents in our surrounding area, I can see where a price increase would be in order. Our refuse collection revenue is projected at 83K. The cost for heavy pickup is at 25K and refuse pickup is $87,225 totaling $112,225, or a loss of $29,225. At 500 homes that would be about a $58.45 per year increase for both services. The current cost to households is $13.35 per month or $160.20 per year. Adding the $58.45 per year increase would be a total yearly cost of $218.65 or a monthly cost of $18.22. The city of LaPorte charges $18 per month for the same service, so that price increase would not be out of line.
I would not touch our water and sewer prices because they are already more than the surrounding area. The problem there is our personnel cost which needs to get cut.
As far as retirement matching with TMRS at 3{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} 10 years ago, there are only 3 municipal organizations that do matching at 3{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} today, out of hundreds of municipal organizations in that program. I don’t think we want to be at the bottom of the barrel. 1.5 to 1 matching @ 5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986} is the middle. If an employee leaves before the 5 year vesting period, we get that money (7.5{997ab4c1e65fa660c64e6dfea23d436a73c89d6254ad3ae72f887cf583448986}) back. I wouldn’t touch this one.