City of Centralia City Council met Dec. 4.
Here is the minutes provided by the council:
The City Council for Centralia, Illinois met on Wednesday December 4, 2019, for a Work Session to discuss the 2020 Operating Budget. Mayor Williams called the Work Session to order at 5:32 p.m.
Present: Mayor Williams, Councilman Jones, Councilman Smith, and Councilman Sauer Absent: Councilman Marshall (arrived at 5:58 p.m.)
Staff Present: City Manager, Dan Ramey; Assistant City Manager, Kala Lambert; Treasurer, Bill Agee; Fire Chief, John Lynch; Police Chief, Greg Dodson; City Clerk, Kim Enke
City Manager Ramey provided a PowerPoint that provided the highlights of the proposed budget and charts that depicted the total debt and various funds balances.
He reviewed the highlights of the budget that included Boards, Finance, Community Development, Sanitation, Street, Public Property, Fire, Police, Telecommunications, Airport, Lake Restoration, TIF Funds, CDBG, Sewer and Water. While reviewing the Boards and Commissions funding he noted that the Youth Center decreased from $50,000 to $48,000 and the Library District funding increased from $34,523 to $45,441. He reported that demolitions will continue in 2020 with $100,000 budgeted. He noted that 2020 will be a busy year for construction road projects which will include Hickory Street, Frazier St. East Broadway, Randolph/Oak Park, Meadow Lane, Locust St., Raccoon Lake roads, and 4-5 miles of oil and chip. He noted that the Meadow Lane project will be funded by the real estate tax increments paid by Castle Ridge/Meadow Woods. He noted that the Locust St. Project will be funded by a grant as well. The project will cost $393,500 but due to the grant obtained, the cost to the City will be $125,500. He also noted that the engineering for the Gragg St. Project that will begin in 2021 will take place in 2020. He reviewed the Fire and Police Departments budgets. He noted that the Fire Department budget increased in 2020 to $2,600,098 with 15 full time fire fighters and 3 part time. He also noted that the Police Department budget will increase from $3,848,381 to $4,047,611 continuing with 24 full time officers. Both budgets include computer and equipment replacements. The Police budget also includes the purchase of vehicles, tasers, body armor, and body camera license fee expenses. Councilman Sauer inquired what the license fee included and City Manager Ramey explained that the license fee is paid to Axon for the body camera video storage. City Manager Ramey reviewed the Airport budget noting that 90-95% of the funding comes from grants that are received for the airport projects. The 2020 projects will include land and easement acquisition to ensure clear flight paths and the replacement of the approximately 30 year old hangar door. The TIF budget expenses were reviewed that included the road projects and tourism advertising expenses. City Manager Ramey discussed the grant for Intermountain Electronics through DCEO. He stated that he is still concerned about the sewer truck needing to be replaced so it is budgeted for purchase in the Sewer fund. He reported that a CDBG grant will also pay for the Pinnacle/ConAgra water tower improvements. City Manager Ramey thanked the staff for helping put together the budget and stated that the City has to live within its means. He noted that things have come up in past years and fortunately there has been a surplus to cover the additional unexpected expenses.
Next City Manager Ramey reviewed the various charts included in the PowerPoint. He reported that the total debt has decreased from the amount of approximately $10M in 2010 to an estimated $2.7M debt in 2020. He noted that $350,000 of the debt is for the Meadow Woods development and will be paid back from new funds produced by the development. Also he reported that each year the City is receiving twice as much revenue compared to the debt of the Walmart bond. He noted that there is approximately $900,000 remaining on that balance adding that these two are paying for themselves and are excellent investments. He reported that the City paid off a major EPA loan in 2019 but still has a loan for $650,000 with Peoples Bank and $575,000 EPA water bond. There was discussion concerning the other surrounding communities and their increases in debt which is much higher than Centralia’s. City Manager Ramey referred to the next slide in the PowerPoint explaining that the levy in 2010 was approximately $2.8M and each year the rate has reduced or stayed the same with the 2019 levy proposed to be $2.6M. He explained that the difference between the actual levy and the assumed levy if 4.99% would have been imposed each year. He stated that compounded, an estimated $7.8M in additional funds from taxpayers would have been received between 2010 and 2019. He stated that he believes that imposing additional real estate and sales taxes stops growth of the city. City Manager Ramey next reviewed the sewer fund ending balance that has leveled out after the large decrease that was seen in 2010. He noted that the budget does include an expenditure for a new sewer truck if it is needed in the amount of $125,000. He stressed that although it is budgeted, it doesn’t mean that it can be purchased unless it is necessary. He noted that the balance reflects the expenditure and it would be higher if that expense wasn’t included. Next the water fund ending balance was reviewed. He noted the increase in the balance and the stability of the fund with improvements continuing to be made. Also the water plant replacement fund balance was reviewed noting that it continues to increase from a balance of approximately $800,000 in 2011 to almost $4M. He added that these are funds that are set aside for a new water plant. He stated that customers are charged 50¢ per 1,000 gallons and noted that as the contracts are reviewed, the 50¢ fee is able to be charged to them as well. He stated that when the time is right and a large grant is available, the accounts funds will be critical in order to not avoid a large rate increase or for it to be necessary to issue bonds. He stated that he continues to talk to the State about a large grant for the water plant. City Manager Ramey then reviewed the general fund. He stated that he is not happy with the general fund. He stated that one of the issues that effected the balance was the bridge closure on W.161. He estimated that the closure cost the city $250,000 in sales tax revenue. He stated that it did effect the businesses but it had to be done for the necessary repairs and fortunately it was completed as quickly as it could have been. He stated that the fire and police pensions have increased $700,000 over the last two years due to receiving different actuary numbers. He stated that the City’s rate increased from 43% in 2015 to the current amount of 71% for every dollar of payroll. He stated that last year right before budget time there was a 25% increase and another 25% increase this year. He compared the rate of IMRF, which is approximately 14%, to the police and fire rate noting that the fire and police employees pay in a higher rate themselves. He stated that the State is trying to finalize the changes to the pension system but he anticipates it being operated and the merger of funds being similar to IMRF where the funds are pooled. He stated that he expects there to still be individual pension boards. Councilman Sauer questioned the year of the funding deadline. City Manager Ramey stated that the City of Centralia is in better condition than many other communities since the City is already in the 50-60% funding range and the deadline is in 2035. He stated that the actuaries change the percentage based on many variables, so the estimations can change dramatically. The City Manager then reviewed the general bank account total that reflected a 2020 proposed balance of $1,098,281. He stated that the general bank account includes the general fund and additional other funds.
City Manager Ramey reviewed the budget documents. He stated that the general budget document includes the 2019 budgeted amounts, the requested amounts that the staff requested, and the approved amount that is proposed to be approved by the Council for the 2020 fiscal year. He reviewed each expenditure line item of the general fund comparing the 2019 budget amounts to the 2020 amounts that reflected a total amount of $11,727,697. He noted that the requested amounts were at total of approximately $12,093,000 which was $300,000 more than recommended to the Council to be approved. He reviewed the proposed revenues. He stated that the property tax revenue is estimated to remain the same as last year. He explained that the sales tax revenue is estimated to be $2.6M in 2020. He stated that he believes the sales tax decrease this year is due to the bridge closure and thinks that the amount lost due to the closure is near $250,000. He stated that the City receives 1% in sales tax and the increase from $2M in sales tax revenue in 2010 to the $2.6M in 2020 means that there has been an increase in taxable retail sales in the amount of $60M. He stated if the residents are taxed more for property taxes, purchases will be less and the sales tax numbers will decrease due to residents only having a certain amount of money to spend. He stated that many other communities have over 10% sales tax rates and most of them are seeing a decrease in sales tax revenue while Centralia’s revenue is increasing. He reviewed each of the revenue line items which includes multiple license and permit fees, various fees and charges, in addition to other miscellaneous revenues for a total of $11,744,805. He reviewed each of the 20 funds in more depth noting a decrease in the Mayor/Council budget to $23,998. He explained that the administration budget includes the City Manager’s salary and the half of the Assistant City Manager’s salary. He stated that the administration budget also includes separation pay in the amount of $22,000 to be paid in 2020. It also includes $10,000 for the purchase of a vehicle if the Council chooses to purchase one for the next City Manager that could be paid off in 3 years for a total of expenditures in the amount of $272,045. He stated that the Boards/Commissions budget basically stayed the same as last year with only a couple small cuts. He reviewed the finance budget which was reduced from approximately $135,000 to $134,000. He stated that Records budget stayed at approximately $90,000. He noted that all of the department’s salaries includes a 2% increase in wages for 2020. Next, he reviewed the Community Development budget. Councilman Sauer questioned why the salary in 2019 was increased to $135,000 from $92,000 in 2018. City Manager Ramey stated that a percentage of the Code Enforcement Officer’s salary now comes from that budget instead of the animal shelter. He noted that $100,000 is budgeted to continue demolitions. He stated that there is $100,000 less in the Street Department budget than last year for a total of $1,238,505. He reviewed the Sanitation, Shop and Public Property budget totals. Next City Manager Ramey reviewed the Police Department budget compared to previous years. He stated that last year it was increased by $400,000 and this year it was raised an additional $200,000. He noted that the pension costs come into play, comparing the 2019 budget of $923,741 to the 2020 amount of $1,180,560. He discussed the problems involving the change in legislation and the actuary calculations that appear to have been unrealistic returns on investments. He stated that IMRF has been tiered to change the retirement age and now the fire and police pensions are also tiered. He compared the amount of salaries and longevity in the Police Department to the pension amount. Councilman Marshall discussed the large amount of pension increases since 2018 and how the increasing costs threatens public safety. He noted how it makes it difficult to hire additional officers with those types of increases. He also stated that he also noticed the increase in the amount of workman’s compensation. City Manager Ramey stated that the overall rate for workman’s compensation compared to other cities is twice as high as the average rate and stated that this is an issue. He stated that Chief Dodson requested $4.1M for the Police Department and the approved amount was $4M. Next the Fire Department budget was reviewed by the City Manager recalling that at one time the department had 18 officers and now has 15 full-time officers and 3 part-time officers. He stated that many have told him that the department is being run better than it has been in 22 years commending Chief Lynch. He stated the budget is a total of $2.6M. Councilman Sauer questioned what the 2019 overtime expenses are expected to be noting that he couldn’t tell from the budget document what the total would be. City Manager Ramey stated that he will provide the year to date number to him noting it was higher than the budgeted amount of $50,000. Councilman Sauer asked if it was closer to $150,000 and City Manager Ramey stated that it was not. He stated that some situations when employees are off work for workman’s comp some numbers will increase while others will go down. He noted that the 2020 budget was cut from the requested $2.7M to $2.6M and explained that the 2019 budget was $2.5M. He explained that $75,000 of the expenses that were cut was for payments for a new pumper, but it was cut from the budget in addition to another $60,000 that was cut. The overtime amount was discussed further and the City Manager later provided an estimate of approximately $85,762. Next City Manager Ramey reviewed the totals of the Animal Shelter, ESDA, and Telecommunications comparing the 2019 expenditures to the 2020 expenditures. He compared the expenditures to the revenue noting that it is a balanced budget. He stated that he is thankful that it did balance even when the pension increases started last year unexpectantly. He added that it is constantly a balancing act and the budget is a working budget. He again noted that although there are expenditures approved in the budget, the purchases may not be made without further consideration. He stated that considering the expenditures and revenues proposed, the ending cash balance is estimated at $201,332. Councilman Sauer apologized that he would have to leave the meeting but wanted to address a question he had concerning the Economic Development budget. He asked for clarification regarding an increase from $71,000 to $93,000 in salaries asking if it was due to the salary of the new Economic Development Director, Rose Aldag-McVey, and half of the Assistant City Manager’s salary, Kala Lambert. City Manager Ramey stated that he was correct. Councilman Sauer left the meeting at 6:52 p.m. Councilman Marshall apologized for being late to the meeting as well. City Manager Ramey continued to compare the total expenditures noting that $8.5M of the $11.7M total expenditures were for personnel expenses. City Manager Ramey discussed the expenditures and revenues in the other funds including the Airport which includes grant funding. He compared the Economic Development budget noting that it increased by $8,000. The Recreation budget was discussed comparing the expenditure amount to the previous years. Councilman Marshall stated that there was a large decrease in the Recreation expenditures and he questioned why the expenses went from $445,000 in 2011 to now only $233,868. City Manager Ramey explained that the expenses were decreased when the recreation operation began being contracted out by the Rec. Center which eliminated salaries and benefit expenses. He noted that the transfers from the other fund stopped as well. He stated that the costs have decreased but it still struggles. Mayor Williams asked if it was in the red. City Manager Ramey stated that this budget has $263,000 in revenue with expenditures of approximately $270,000 so it is close to breaking even in 2020. Councilman Marshall asked why the concessions revenue stopped after 2013. City Manager Ramey explained that as part of the contract with the Recreation Center, they took over the expenses of the concessions and began providing their own staff and began getting the revenue from the concession sales instead of the City. The food expenditures were compared to the concessions revenues during those previous years. City Manager Ramey discussed the Fairview Park pool stating that it is used much less than in the past years. He stated that the fees have been reduced to $1.50/day and the expenses for the year is $47,750 noting that it doesn’t pay for itself. He stated that he has considered a splash pad at the park instead of having a pool in the future which would not require lifeguards. Councilman Smith questioned if the zeros in the swimming pool budget line items for permanent and temporary employees were actually zeros or an omission in 2013. City Manager Ramey stated that they were Recreation employees and not City employees so the zeros in those line items are correct. He noted that there were temporary employees at that time that were included in the recreation line item for permanent and temporary employees so the pool employees may have been included in that line item which still keeps the total expenditures the same. He stated that towards the end of 2013 is when the City began subcontracting out to the Rec Center and began paying them approximately $14,000 per month. He stated that it does save a lot of money to subcontract. Next City Manager Ramey reviewed the Motor Fuel Tax budget. He noted that all of the bonds were able to be paid off for the Cedar and Sycamore St. project which was taking 2/3 of the MFT funds. He explained that at the end of the year the City will have a surplus of $400,000. The Elmwood Cemetery fund was reviewed noting the balance of last year and the 2020 budget of approximately $24,000. He reviewed the Park Donations budget and Veterans Affairs budget. He stated that they will be buying approximately 100 flags but will be fundraising for them. He stated that they will continue to host the 4th of July parade in 2020. He reviewed the TIF budgets that include the expenditures for various street budgets.
He reviewed the Tourism fund that is restricted to only tourism expenses and is similar to the prior year budget. City Manager Ramey discussed the Jolliff Bridge Business District fund noting that there was approximately $3000 left as an ending cash balance for the new road between Walmart and the hotel. He noted that the DCEO project fund includes $1M in grant funds from the former Revolving Loan fund. He stated that $630,000 is for the road project on 4th & Randolph and $371,000 for the painting of the water tower near Conagra. The CDBG account was added and included in the budget as a separate fund for the $450,000 grant for Intermountain Electronics. City Manager Ramey reviewed the Sewer budget stating that the sewer funds budget needs to be kept separate from the other expenses. He noted the revenue in the amount of $1,985,500 and the expenditures in the amount of $1,867,878 with a remaining balance of $188,452. He stated that increases in the sewer rates have been suggested in the past, but until the City knows what the mandates and EPA requirements will be, he is hopeful that the City will get a variance until 2035 for the treatment of phosphorus. He stated that a sewer replacement fund could also be set up similar to the water replacement fund in order to have funds set aside for the replacement of the sewer plant. Lastly, City Manager Ramey discussed the Water fund budget. He noted that there was revenue of approximately $4M. He commended the plant for their operation and making great water. He stated that in a new plant some of the same things should be implemented in a new system that wouldn’t change the smell or taste of the water. In summary he stated that it is a tight budget in all funds and especially the General Fund. He stated that he is hopeful that the pension increases stabilize because he is not sure what the City would have to do if they don’t. He noted that if people are taxed to death, people are going to stop doing business and living here. He stated that the City has come a long way, the taxes have not been raised, the sales tax revenue is increasing, the debt is decreasing, the roads are being improved, and new businesses are coming in. He stated that once the Rt. 51 bypass goes through Centralia, the sales tax will increase and, there will be more homes and businesses. He noted that the City is stable and providing jobs with fair pay and great insurance. He stated that the employees and departments work well together. He noted that he would like input from the Council and staff and anyone else but the budget and levy needs to be passed after any final tweaks at the upcoming meeting on Monday December 9th. He asked the Clerk to explain why it was earlier this year and she explained that the state statute sets the date for the recording of the levy which is prior to the end of December. She also noted that the 2019 budget was approved on December 10th last year. Councilman Jones stated that he didn’t have any questions at this time but he would contact the City Manager if he did. City Manager Ramey encouraged the Council to take the packets home to review them further.
Mayor Williams asked for any comments or questions from those in attendance. Matthew Patrick stated that he is requesting the Council provide $1500 for activities at Laura Leake Park such as frisbee, kickball, dodgeball, volleyball, flag football, and more. He stated that his expenses will be for trophies, guest speakers, Gatorade, water and advertising. He stated that these events will be for one week in the Spring and two weeks during the Summer. Vernell Burris addressed the Mayor and City Council stating that the other employees are expected to get 2% increases. He noted that the Mayor and City Council have not received a raise for 20 years and they should as well. He encouraged the City Council to get the investment portfolio from the Treasurer concerning the pensions. He stated that they will find that the Police Department invests approximately $10M and the Fire Department invests approximately $7M and it would take a long time to exhaust the funds. He stated that Centralia is very strong and there are a lot of cities that wish they were in the same situation. He also discussed the Fairview Park pool and lifeguards noting that they have to have lifeguards at the pool for safety and liability. He also discussed the water plant and the ongoing discussions about the improvements over the years. He noted that the City does continue to get waivers but one day the City will need the money to make the improvements. He also noted that the sewer plant is always unfunded. He noted that he knew the deadline was in December to pass the budget but thought there was more time. He stated that he hopes that the Council will provide funds to Matthew Patrick for activities at Laura Leake Park. City Manager Ramey stated that the water and sewer fund operate separately with the funds being kept separate as well. He stated that there are no waivers or restrictions at either plant. City Manager Ramey recalled that there was a $28M estimate for a sewer plant years ago but he estimated that the cost would be $15M. He stated that the City has a great working relationship with the EPA and the City is not on a restricted list. He stated that he wanted to come to an agreement with them about what they will accept and also get grant money for the project when it happens. He noted that it is best to be able to put it off as long as possible.
City Manager Ramey added that he would like the Council to bring up anything to him that they are wanting to discuss, add, or remove prior to the meeting this coming Monday.
With no further business to discuss, Councilman Smith made a motion to adjourn the meeting and Councilman Jones seconded, the Work Session was adjourned at 7:42 p.m.
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