City of Centralia City Council Met Nov. 9.
Here is the agenda provided by the council:
The City Council for Centralia, Illinois met on Monday November 9, 2020, for a Work Session to discuss the 2021 Operating Budget, Water and Sewer Budget, and Revenue. Mayor Williams called the Work Session to order at 5:00 p.m.
Present: Mayor Williams, Councilman Sauer, & Councilman Marshall (Mayor Williams was present at City Hall and all others attended remotely)
Absent: Councilman Jones & Councilman Smith
(Councilman Smith joined the meeting at 5:04 p.m. and Councilman Jones joined the meeting at 5:15 p.m.)
Staff Members Participating Physically at City Hall: Lowell Crow, City Manager and Kim Enke, City Clerk
Staff Members Participating Electronically: Gayla Harting, Community Development Director Katie Plutz, Assistant City Manager and Economic Development Director; Michelle Liggett, Finance Director; Jeff Schwartz, Public Works Director; Chief Dodson, Police Department; and Chief Lynch, Fire Department
City Manager Crow provided an overview of the water and sewer budget with it being provided in a Power Point. He stated that the budget is almost complete with final expected numbers still being entered as well as department heads making some final changes to the budget. He stated that the notification is being sent with the budget available for inspection on the 12th of November and copies will be delivered to the Council the next day.
City Manager Crow reviewed the sewer budget starting with the sewer expenses including the administration and operation of the plant. He stated that there are changes and updates to be made due to negotiations with the union and changes to the workers compensation and liability insurance costs that have decreased. He stated that the capital outlay expenses are part of the capital plan that includes cleaning and painting of digesters. The sewer revenue was also discussed by the City Manager. He stated that the revenue is a portion of what is received from water and sewer bills. He reviewed the cash analysis that reflected a slight increase. Councilman Sauer asked if the revenue increase is due to the annual percentage increases. City Manager Crow stated that it is the reason and he was correct, noting that it is increased by CPI.
City Manager Crow discussed the water fund budget and explained that the funds in the water fund can’t betransferred into the general or other funds. He noted there was a slight increase of approximately $3,000 in the reserve and funds continue to be set aside for the replacement of the water plant. He stated that Jeff Schwartz and himself have started discussions about the future water plant designs. He stated that it typically takes 4 years from design to opening and estimated $50,000 for the first year and $200,000 for the following years for engineering services. He stated that there is already a plot of land set aside for it. He reviewed the water expenses that includes a portion of salaries and operation of the water department staff and Clerk, salaries of the Finance Director, Treasurer, City Manager, and Assistant City Manager. He stated that the Rt. 161 water line is part of the water budget and capital plan. He stated that the repainting of the last water tower is also included. He stated that the budget includes approximately $7,000 more in revenue than expenditures.
Next City Manager Crow reviewed the general budget that is balanced. He stated that the liability and workers compensation came in under budget. He stated that following the bid process, there was a reduction of over $300,000. He stated that the renewal includes a $70,000 discount due to COVID and the rest of the savings in liability. He stated that the IML has made a change in revenue estimates with a bigger decrease in unemployment and the state is down from what they originally anticipated. He stated that 30% of the communities have moved to a calendar year so they are now doing both calendar and municipal fiscal year estimates. He noted some of the cuts to the general fund which included a reduction of demolitions by $50,000, a reduction of tree removal by $30,000, and delaying the purchase of the new pumper and repair of City Hall roof. He stated that there is also a reduction to the number of summer part time labor by 2 and the elimination of the new building inspector position from the budget. He also noted that the first fire truck lease payment will be covered from CURES money. He stated that these changes fix the budget. He stated that in future years there may need to be additional reduction or reorganization in personnel. He stated that they will need to look at manning City Hall and how to handle Public Works staff. He stated that one recommendation is to combine street and water/sewer repair into a single entity. Hestated that there are also discussions with EJ Water and Woodard & Curran that he stated he didn’t want to discussat this time since contract negotiations are ongoing. City Manager Crow stated that the funding sources also needed to be considered. He noted that the sales tax could also be put on the ballot again as an option primarily for police and fire equipment. He stated that phased replacement plans were necessary. He also stated another option is to raise property taxes. He noted that a 4.95% increase would result in approximately $135,000 in revenue. He stated that a 2.5% increase would cover the cost of the original truck lease. He stated that the levy needs to be passed by the last council meeting in December. He stated that the increase in revenue needs to be made. He explained that even if there would be changes to the fire or police departments, the city is still responsible for all of the pensions. He stated that there are really only a few things that can be done for reductions in costs. He stated that the city has not raised taxes for the last 10 years, but salaries have been continuing to increase for the staff and unions which has created some of the issues.
Discussion began with Councilman Sauer discussing the water plant improvement fund asking what will happen to it in 2021, referring to the $7,000 in revenue. City Manager Crow stated that it was the amount for now but there is a buffer in the amount due to not knowing how the negotiations are going to go. Councilman Smith asked for clarification about the staff taking a 2% cut in salaries. City Manager Crow stated that the cut was made in 2020. Councilman Smith asked who the cut applied to and City Manager Crow stated that all nonunion staff were the ones that took pay cuts. He noted that the 2% pay cut happened after the 1st of July and the unions negotiated a 1% raise for the year and next year. It was clarified by Councilman Smith that all administrative staff took the 2% cut including the City Manager that was on contract. Mayor Williams stated that he was also aware that the City Manager did not take any moving expenses. Councilman Sauer asked why City Manager Crow didn’t take anymoving expenses and City Manager Crow stated that he felt it was important to keep the budget balanced and he was able to afford it. Councilman Smith stated that he appreciated him doing that. Councilman Smith reviewed the cuts to the budget including demolitions and trees and he stated that he sees an issue with the sales tax passing. He asked what the final vote was with discussion following that it was almost a 2 to 1 vote. Councilman Smith inquired if the property tax would be a ballot question and City Manager Crow explained that it would be a Council decision. Councilman Smith also asked if the IT position would also be cut. City Manager Crow stated that the IT/GIS position is worked into TIFs, general, water, and sewer funds. He stated that one of his recommendations is to dual hat the Finance Director and Treasurer since the Treasurer position is changing to part-time. He stated that this is a consideration for the Council. He stated that she is also the Human Resources Director and spends 30% of her time on IT. Councilman Sauer stated that water and sewer is the least interesting parts of the budget but the Council is going to have to discuss and be motivated to make either cuts or property taxes. He stated that sales tax was voted down and he feels that sales tax is a better tax than property tax. He stated that he anticipated that the next meetings to have further discussion. City Manager Crow stated that he met with each department head twice and also went back over the cuts and met with those affected by the cuts. He stated that the final estimated amount for the current year is still being worked on. He noted that both the Finance Director and Treasurer were out of the office so it did cause some delay. Councilman Jones asked for clarification concerning where the IT position would be paid from and if it could be held off. City Manager Crow stated that 10% of the salary can be paid from TIF funds and also from the water and sewer funds. He noted that with the city being in 4 counties, the Economic Development Director uses the information from the 4 counties to gather data. He stated that the IT position would also be responsible for the GIS work that the city uses for establishing plots, limits, and borders to see if they are within TIF districts, Opportunity Zones, and gives the overall view. City Manager Crow stated that it is a position that can be held off on but noted it will only save about $20,000 from the general budget. Councilman Marshall asked how long the city could hold off on the two pumper trucks and any police cars and how much that would save. City Manager Crow stated that two of the fire trucks were already purchased, so the city will need to fund the lease payment for those. He stated that next year can be covered by the CURES money but going forward it will need to be paid. He stated that one pumper is 17 years old and the plan is once the city got the new pumper that pumper would go into reserve. He stated that the current pumper is 27 years old and parts are difficult to get. He stated that it would take approximately 10 months from once they are ordered to when it would be delivered, so it really pushing it out two years. He discussed the purchase of two new police cars with the DUI and Impound funds next year. He noted that within 3 years, the cars get between 100,000 to 120,000 miles and need replaced. He stated that the other thing that has happened is that the manufacturers have went to SUV vehicles which is causing some increases in costs. Councilman Sauer stated that compared to the overall police budget, the police cars are a good way to spend money due to the number of miles on the vehicles suggesting that the police are out on patrol in the community and he would hate to cut police cars. Councilman Sauer asked if any of these discussions would be in closed session or open meeting. City Manager Crow stated that it would be in the open meetings unless discussion involved specific individuals, but he noted certain union contracts can be discussed in closed session. He stated that other communities have violated this and the PAC has become involved. Councilman Marshall asked City Manager Crow what contributed to the current deficit. City Manager Crow stated that over the last 10 years the biggest increase has been an approximate $1.2 Million increase to the pensions without an increase to the revenue. He also stated that the continued increase in personnel costs has also affected other communities as well. He explained that being a non-home rule community, Centralia is limited on the taxes that can be raised and fees on licenses and permits such as gaming. Councilman Jones asked for clarification concerning the reorganization of the Police Department and the addition of Deputy Chief. City Manager Crow stated that it was proposed to add a Deputy Chief but remove a Lt. and Sgt. from the department. Councilman Marshall asked when this budget must be voted on. City Manager Crow stated that everything needs to be done by the last meeting in December, but it is scheduled to pass at the first meeting in December to be recorded with the county as required. Councilman Sauer summarized and reviewed that due to the CURES funds the city has the funds for the lease for 2021 but in 2022 those funds will not be available so the city will be looking for additional revenue. He also questioned that if the pensions have increased about $300,000 per year during each of the last two years, would it be expected to continue to increase again. City Manager Crow stated that he does expect it to increase due to an aging fire department with retirements budgeted into the police and fire department for the year. He also stated that it drives the pensions up which have increased $360,000 last year and $200,000 this year. Councilman Sauer noted that there was an actuarial change two years ago that made this increase. He asked if this was ongoing and not just a one time change and City Manager confirmed that it will be continual. He explained that the state changed the actuarial standard from 8% to 6.24% return. He stated that communities above 35,000 could not use the state actuarial so the state adopted the 6.24% which is the expected rate of return. He noted that this caused an increase when they made that change in preparation for the consolidation of the pensions. He stated that they are 11⁄2 years behind and the pension boards have not been appointed, so the communities have not been told their cost once the consolidation is complete. He stated that IML has informed him that the communities will continue to pay toward the 90% pension amount and the benefit will be that the communities are investing together and there will not be a charge for actuarial, management, or investment fees which can be over $100,000. Councilman Jones confirmed that these fees would go away with the consolidation and City Manager Crow confirmed that they would and there is more money to invest as a group. He stated that the state has a limit on what can be invested based on the amount of money available. He provided the example of if there is less than $10M or more than $10M there is a split that sets the percentage in bonds and the percentage in stocks per pension fund which can punish the smaller communities. He explained the pension increases for IMRF is increased based on CPI increases but the Police and Fire pensions per state statutes get either CPI or 3.5%, whichever is higher. Councilman Smith asked what the pumper lease payment amount was and City Manager Crow stated that it would be an annual payment of $118,000 for 15 years. City Manager Crow stated that the budget will be ready for viewing after the 12th and noted that it would be shared with the Council as well as a rough draft. He stated that there will be a work session once again prior to the next regular meeting for more review and any other questions.
With no further business to discuss, the Work Session was adjourned at 5:48 p.m.
https://cityofcentralia.org/vertical/sites/%7BFC680FE7-BE5C-4903-A103-67AF5EF51655%7D/uploads/11-_November_9_2020_Work_Session_-_budget.pdf
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