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Minutes - 11/25/2002 - Committee of the WholeMINUTES OF THE NOVEMBER 25, 2002 COMMITTEE OF THE WHOLE MEETING OF THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF OAK BROOK APPROVED AS WRITTEN BY VILLAGE BOARD ON DECEMBER 10, 2002. 1. MEETING CALL — PLEDGE OF ALLEGIANCE: The Committee of the Whole Meeting of the Village Board of Trustees was called to order by President Bushy in the Samuel E. Dean Board Room of the Village Commons at 7:04 p.m. 2. ROLL CALL Village Clerk Linda Gonnella called the roll with the following persons PRESENT: President Karen M. Bushy, Trustees Stelios Aktipis, George T. Caleel, John W. Craig, Susan Korin, Elaine Miologos and Alfred P. Savino. ABSENT: None. IN ATTENDANCE: Michael A. Crotty, Acting Village Manager; Dale L. Durfey, Jr., Village Engineer; Debra J. Jarvis, Fire Chief; Bruce F. Kapff, Director of Information Services & Purchasing; Robert L. Kallien, Jr., Director of Community Development; Darrell J. Langlois, Finance Director; Ruth A. Martin, Library Director; Michael J. Meranda, Public Works Director; Allen W. Pisarek, Police Chief, Bonnie Sartore, Bath & Tennis Club Manager; Trey VanDyke, Golf Club Manager; William Haas, Deputy Police Chief and Police Lt. Susan Srch. 3. ADJOURN TO CLOSED MEETING: To consider the appointment, employment, compensation, discipline, performance, or dismissal of specific employees of the public body. Motion by Trustee Caleel, seconded by Trustee Craig, adjourn to closed meeting to consider the appointment, employment, compensation, discipline, performance, or dismissal of specific employees of the public body. ROLL CALL VOTE: Ayes: 6 — Trustees Aktipis, Caleel, Craig, Korin, Miologos and Savino. Nays: 0 — None. Absent: 0 — None. Motion carried. Motion by Trustee Aktipis, seconded by Trustee Caleel, to adjourn the Closed Meeting at 7:30 p.m. to the Committee -of- the -Whole Meeting. VOICE VOTE: Motion carried. 4. 2003 BUDGET WORKSHOP President Bushy commended Finance Director Langlois and staff for their efforts in developing the 2003 Budget. COMMITTEE -OF- THE -WHOLE Minutes Page 1 of 9 November 25, 2002 A Acting Village Manager Crotty explained the 2003 Municipal Budget to the Board of Trustees. The 2003 Budget continues the methodology, called "results budgeting ", that has been used in Oak Brook since 1995. The methodology combines traditional program budgeting and line item control with a management by objectives system. Coupled with the Five -Year Financial Plan, this approach provides the Village with a management system that goes beyond traditional budgeting to become a directional mechanism for accomplishment of the results desired by the Village Board and the community. Ordinance 1999 -FI -S -957, the Village Board's policy ordinance on Finance Taxation and Budget, provides both long and short-range guidance to the budget process through the fundamental policies embodied therein. The policy ordinance, as well as other policy decisions of the Village Board, directs the Board to: • Operate the Village without a general real estate tax. • Accumulate cash reserves in advance of major capital projects (utilizing long term debt very judicially and only in order to meet financial goals and policies of the Board). • Maintain a cash balance of at least six months operating expenditures in the General Corporate Fund. • Annually test the incremental growth in General Corporate Fund operating expenditures against the incremental growth in revenues, striving to hold expenditure growth within the limits of new revenues. • Operate enterprise activities on a self - supporting basis. • Annually review the need for and uses of the utility tax on natural gas and electric service. The budget does not rely on a general property tax. Major capital projects are funded with no new debt, drawing down reserves that were accumulated for those purposes. Enterprise funds are budgeted to operate in accordance with the governing policy. However, the 2003 Budget results in a cash reserve of approximately 5.77 months of operating expense, just short of the six month reserve policy. Experience has shown that actual expenditures are regularly less than budgeted expenditures. If this proves to be the case in 2003, it is likely that the six -month reserve will be met come December 31, 2003. The total budget for operating and capital expenditures (excluding non - operating and interfund activities) is $30,583,725, a decrease of $1,873,550, or 5.8 percent from the comparable figure in the 2003 budget. The decrease is primarily attributable to substantial completion of various capital projects. Total unrestricted cash balances (i.e., excluding pension funds) are budgeted to decrease approximately $3,520,550 from the estimated January 1, 2003 balances. COMMITTEE -OF- THE -WHOLE Minutes Page 2 of 9 November 25, 2002 Z� The decrease in cash balances is due primarily to continuing outlays for the Municipal Complex Project, capital projects in the Water Utility and scheduled replacements of vehicles. REVENUE: Summarized revenues include: • Revenue from the one percent share of the Retailers Occupation Tax (a.k.a. General Sales Tax) of $9,875,000 is based on a 2002 estimate of $9,650,000. The budget amount is based on a one percent growth assumption and also takes into account new retail development. • State Income Tax revenues of $626,500 is seven percent above the 2002 estimate and seven percent below the 2002 budget of $671,795. The shortfall in 2002 is attributable to the downturn in the economy. The 2003 budget for this revenue is based on projections provided by the Illinois Municipal League. This revenue is distributed to the Village by the State of Illinois from its Local Government Distributive Fund (LGDF) according to a per capita formula. One tenth of State income tax receipts are deposited by the State into the LGDF. • Total revenue in the General Corporate Fund from the Telecommunications Tax and a two percent portion of the five percent taxes on natural gas and electric service amounts to $3,515,000. Beginning in 2003, the State of Illinois will assume collection responsibility of the Telecommunications Tax, and this will result in an additional two month delay in receipt. In order to partially offset the impact of this delay, the two percent portion of the utility tax includes the one percent normally earmarked for the Equipment Replacement Fund. • Total fees from licenses and permits of $494,450 are approximately twenty -four percent above the 2002 budget amount of $398,550. Total fees for charges for services of $553,000 are an increase of forty percent over the 2002 budget amount of $394,500. These increases are due primarily to significant adjustments to various fees over the last year. • Motor Fuel Tax revenues of $251,500 are approximately two and a half percent above the 2002 budget of $245,400. This revenue is derived from the taxes levied by the State of Illinois on gasoline and other fuels. Approximately fifty -four percent of the amount deposited to the Local Government Distributive Fund is distributed to municipalities on a per capita formula. • Revenue to the Infrastructure Fund from utility taxes of $1,102,000 are approximately five and a third percent over the 2002 estimate. The 2002 estimate of $1,047,000 is approximately sixteen percent below the 2002 budget, which is due primarily to substantially lower natural gas prices and a warmer winter season. The total tax rates in effect for 2003 will be five percent and the portion deposited to the Infrastructure Fund remains at three percent. COMMITTEE -OF- THE -WHOLE Minutes 16 Page 3 of 9 November 25, 2002 • There is no revenue to the Equipment Replacement Fund from utility taxes in 2003. This Fund's one percent share of the five percent levy is re- directed to the General Corporate Fund. • Revenue from sale of water of $3,850,000 is an increase of four percent over the 2002 budget. The current retail rate of $2.60 per 1,000 gallons remains in effect for 2003 and is still among the lowest of DuPage Water Commission customers. Beginning January 1, 2003, the monthly service charge is projected to increase from $5 to $7 in order to begin to recover costs associated with the implementation of the automated meter reading system. • Revenue to the Sports Core Fund from the sale of real estate in the Westchester Park area is estimated to be $1,800,000. Most of these funds are earmarked for repayment of an interfund loan from the General Corporate Fund for capital improvements at the Sports Core. OPERATING EXPENDITURES The total 2003 operating budget is $25,167.545. This is an increase of 1.48 percent over the comparable figure from the 2002 budget. The 2003 operating budget does not include any of the new staff positions that were included in the 2002 budget, due to continuing revenue issues. A new full -time Public Works employee is funded through the Water Fund, and is necessary in order to comply with the Village's mandated participation in J.U.L.I.E. The total change in full -time equivalent (FTE) staff positions reflected in the 2003 budget is a decrease of 3.5. The 2003 budget for full -time salaries is based on: an average top -of -grade increase of 3.5 percent that is based on the change in the applicable consumer price index (CPI) for the twelve months ended September 30, a change in the employment cost index (ECI) and the pay practices of the municipalities established through collective bargaining as the Village's "labor comparables ". Trustee Aktipis commended Manager Crotty for the work the staff has done. He noted the greatest source of revenue has come from sales tax. But there has been a decline in sales tax for the last three years while personnel costs increase. He commented that the Finance Department tries to balance these two areas and thanked staff for the difficulty in producing this working document. Trustee Caleel remarked that the Village is shy in the six month operating budget and he asked that this be corrected. Finance Director Langlois explained the increase of outside legal counsel was not expected and with other normal positive benefits such as the land sale of Westchester Park then it should be met. Trustee Korin asked that the quarterly reviews continue next year with the budget. She asked if the Safety Pathway Projects are funded. Director Langlois stated they are funded by grants except for approximately $10,000.00. COMMITTEE -OF- THE -WHOLE Minutes Page 4 of 9 November 25, 2002 Trustee Korin asked that the comparisons should have been done between the actual costs of 2002 rather than a budgeted figure. Trustee Miologos noted that this year's budget is based on last year's budget not actual figures. Finance Director Langlois explained why that occurs with the budget process. Trustee Caleel remarked that department heads cooperate in reducing their budgets but they also make sure they don't cut it too much. He stated that in previous years staff has always come in under budget. The Board also will be meeting four times a year on a quarterly basis so they may review these figures then. President Bushy commented that the new stores in Oak Brook are doing well and it could make a difference in our sales tax revenue. Also, in January a new legislature will take office in Springfield and there may be dramatic changes in legislation such as pensions. She has been invited to go to Washington in January to meet the new Secretary of Homeland Security and will participate with a delegation to lobby for direct reimbursement of expenses incurred with municipalities regarding this project. Operating Expenditures: Department 1 — Legislative and General Management: The most apparent features of the 2003 budget for these functions are the reduction in outlays for equipping the new Communications Center and those related to technology, projected increases in employee benefits (i.e. health insurance), costs related to outside legal services, costs of negotiating a new labor agreement and outlays in the hotel /motel tax program. Trustee Miologos asked if the Contingency Fund of $100,000 would be used. Finance Director Langlois explained that it may be used for outside counsel expenses next year. Trustee Miologos asked if the reduced subsidy was included for community events. Trustee Caleel asked if the Hotel, Convention and Visitors Committee would subsidize the July 4th event and again requested to survey residents in the Village newsletter if they participate in any of our events. Manager Crotty explained that the subsidizing of community events is an objective. Regarding the Hotel, Convention and Visitors Committee, they have not met yet but will try to address this at their next meeting. The survey has not been included in the Village Newsletter as the Administrative Assistant is completing a project requested by Trustee Caleel. Trustee Craig noted that a resident's letter received by the Board has suggested methods to help subsidize the costs of the July 4th event. Trustee Craig asked if some of the corporations in Oak Brook could be contacted for sponsorship of such an event. President Bushy agreed that sponsorship is a good idea. Trustee Aktipis suggested reserve parking space close to the event and charge a fee for it. COMMITTEE -OF- THE -WHOLE Minutes Page 5 of 9 November 25, 2002 I Trustee Craig remarked that with the new four lanes Oak Brook Road and road improvements on the Sports Core property that this may improve traffic flow. Bath & Tennis Club Manager Sartore suggested that the Police Department work with the parking coordinator of the July 4th event to discuss some alternative parking concepts and then bring this to the Board for their consideration. Department 2 — Financial Services: The increased outlays are reflected in both pension funds due to projected retirement benefits. Department 3 — Public Works: The addition of a Building Maintenance Foreman position included in 2002 has been eliminated. A Public Works employee position is included in Program 351 (Water Operations) in light of the Village's mandated participation in J.U.L.I.E. The 2003 Budget includes $110,000 in Program 365 (Forestry) for the implementation of a Village -wide beautification plan. This amount includes $50,000 originally budgeted but unspent in 2002. The budget also includes funds to implement the system -wide automated meter reading program. The budget for the Equipment Replacement Fund is $1,076,870 reflective of several major equipment items scheduled in 2002 but deferred to 2003. Each purchase will be evaluated individually before proceeding with any purchase. The normal transfer from the Garage Fund to the General Corporate Fund has been increased by $200,000 in order to return surplus funds generated over the past several years. Department 4 — Engineering: Trustee Caleel inquired if another person is being hired. Manager Crotty explained that employees are going through the range and that is why there is an increase in the salaries. He further asked what are the structural improvements. The Manager indicated the old Library repairs and the Public Works roof are being addressed. Department 5 — Library: The Library budget is decreased due to outlays occurring in 2002 for new Library equipment. Staffing is budgeted to remain at its 2002 levels. Department 6 — Police: The 2003 budget does not include the three new patrol positions that were budgeted but unfilled in 2002. COMMITTEE -OF- THE -WHOLE Minutes Page 6 of 9 November 25, 2002 0 Program 621 (Police Field Services) includes $162,500 for the purchase and implementation of the IVAC mobile data terminal /video system for thirteen patrol vehicles. This system will replace existing stand -alone MDT and in -car video equipment, originally scheduled for replacement over the next couple of years. Department 7 — Fire: Three additional contract firefighter /paramedics included in the 2002 Budget are not re- budgeted in 2003. Pension costs are projected to increase due to several years of unfavorable market conditions. Trustee Miologos asked for clarification of objectives. Fire Chief Jarvis stated it was to have employees cross - trained in more than one specialized area. Trustee Savino asked if the Village charges for fire inspections. Chief Jarvis stated staff is reviewing this presently. Department 8 — Sports Core: The 2003 Budget continues to project more favorable operating results due to the operation of the expanded and renovated Bath & Tennis Clubhouse. The purpose of the project was to modernize and expand the facility to enhance the opportunities for success in the food and beverage operation. Program 844 (Golf Surcharge) includes $110,000 for substantial improvements to the bridge area at Hole 9 and to the practice facility. Trustee Korin noted the objective to expand the catering sales. Manager Sartore explained that this is their objective and not a Village Board objective. Noting the small amount of revenue, staff will not expend a lot of time with this but finds it is beneficial to work with the marketing people regarding this service. Department 9 — Community Development: The 2003 budget for the Community Development Department contains no substantial changes from 2002. Capital Projects: The 2003 budget for capital projects is $5,516,180, a decrease of $2,240,280 or twenty - nine percent from the comparable figure in the 2002 budget. Municipal Buildings: COMMITTEE -OF- THE -WHOLE Minutes Page 7 of 9 November 25, 2002 A 2003 will see the completion of the Municipal Complex Project involving a 32,700 square foot addition to the Village Hall. The addition houses a new fire station and office space for several Village departments. The projects also include substantial renovation of the Police Department. $1,410,000 is scheduled to be expended in 2003 and the total project budget has been increase to $9,900,000. Program 421 (Municipal Building Improvements) includes $125,000 for the repair and maintenance of the old Library building. This Program also includes $228,000 for the replacement of the roof at the Public Works building deferred from 2002. The Sports Core Capital Improvement Account (Program 841) includes $1,607,100 for repayment of bridge loans from the General Corporate Fund for expansion of the Golf Club clubhouse, replacement of the Bath & Tennis Club swimming pool deck and a small portion of the Bath & Tennis Clubhouse expansion. Street Improvements: The budget includes $769,500 for paving, microsurfacing, crack sealing, pavement rejuvenation and pavement marking. This is significantly less than annual outlays over the last decade. Water System Improvements: The Village will continue to care for its water system in 2003 with $704,140 budgeted for water main replacements and system improvements (Program 451). Safety Pathway System: The 2003 budget includes a total of $669,000 for various projects critical to the unification and completion of the Village's unique Safety Pathway System. Highlights include progress on the 3lst Street/Route 83 and York Road/Harger Road connections. These major projects are recipients of significant grant funding. Once the Budget is adopted, budgeted revenues and expenditures are allocated to each month based on anticipated timing. Monthly variance analysis compares actual results to budget and the Village Manager, Finance Director and Department Heads review the status of the budget on a regular basis. This enables management to identify and respond to trends and events in a timely manner. President Bushy announced that the 2003 Budget will be on the December I 01 agenda of the regular Village Board meeting. The preparation of the annual budget is an enormous undertaking, participated by virtually the entire Village staff. COMMITTEE -OF- THE -WHOLE Minutes Page 8 of 9 November 25, 2002 A The process receives its overall direction from the President and Board of Trustees through its Mission and Vision statements, financial policy ordinance and determination of annual Village Board objectives. Village departments develop goals and objectives for each program and the initial financial budget based on that guidance. Special recognition is due to Darrell Langlois, Finance Director, who coordinates the budget process. Thank you also to Alice Filinovich, Pat Finaldi, Denise Williamson, Joyce Resh, Margaret Rimbo and Sandy Schmidt for their assistance in producing this document. 5. ADJOURNMENT: Motion by Trustee Craig, seconded by Trustee Aktipis, to adjourn the Committee -of- the -Whole Meeting at 9:13 p.m. VOICE VOTE: Motion carried. ATTEST: Linda K. Gonnella, CMC Village Clerk cow COMMITTEE -OF- THE -WHOLE Minutes I Page 9 of 9 November 25, 2002