Mt. Vernon City Council met Jan. 31.
Here is the minutes provided by the council:
The Mt. Vernon City Council called a Workshop Meeting for Thursday, January 31, 2019 at 4:00 p.m. at City Hall, 1100
Main Street, Council Chamber Room, 2nd Floor, Mt. Vernon, IL.
Mayor John Lewis called the meeting to order.
ROLL CALL
Roll call showed present: Council Member Jeff May, Council Member Donte Moore, Council Member Jim Rippy, Council Member Mike Young, and Mayor John Lewis.
VISITORS/CITIZEN’S REQUESTS/ADDRESSES FROM THE AUDIENCE
No visitors spoke at the meeting.
SECOND QUARTER BUDGET REVIEW
City Manager Mary Ellen Bechtel explained the budget reports will show eight months of revenue and expenditures from May 1 to December 31, 2018. She stated that the reports will show how dependent the City is on sales tax and how important the sales tax is.
Finance Director Merle Hollmann distributed the budget summary chart for the General Corporate Fund, Public Utilities Water Fund, and the Public Utilities Sewer Fund.
The General Corporate Operating Cash at April 30, 2018 was $2,363,010, July 31, 2018 was $2,597,445, and December 31, 2018 was $3,843,703. The Operating Working Fund Balance at April 30, 2018 was $3,421,628 (3.0 months of operating expense), July 31, 2018 was $3,388,773 (3.0 months of operating expense) and December 31, 2018 was $4,195,411 (3.5 months of operating expense). Hollmann explained the Actual Operating Surplus Balance after eight (8) months is $773,783. He explained that the City lives and dies by sales tax revenue and fortunately revenue has increased, and expenses have declined.
The Public Utilities Water Operating Cash at April 30, 2018 was $387,458, July 31, 2018 was $88,290, and December 31, 2018 was $309,592 The Operating Working Fund Balance at April 30, 2018 was $644,541, July 31, 2018, it was $654,410, and December 31, 2018 was $914,682. Hollmann explained the Actual Operating Surplus Balance after eight (8) months is $270,141.
Merle Hollmann explained at May 1, 2018, the Water Division was separated from the Sewer Division. He stated that the sewer rates are not covering expenses, and water rates are more than carrying the expenses. After the audit is complete, the Water Division will transfer funds to the Sewer Division to make it whole. Combining the Water and Sewer Divisions, there is 1.1 month of operating expense.
The Public Utilities Sewer Operating Cash at April 30, 2018 was $.00, July 31, 2018 was $211,851, and December 31, 2018 was ($144,069). The Operating Working Fund Balance at April 30, 2018 was $.00, July 31, 2018 was ($10,283), and December 31, 2018 was ($190,640). Hollmann explained the Actual Operating Surplus Balance after eight (8) months is a deficit of ($190,640).
Council Member Jeff May asked what the Rend Lake water rate increase is. Hollmann replied that it is 2.5% over last May’s rate. City Manager Mary Ellen Bechtel stated that over the last two years, the City has not raised the operation rates.
Hollmann presented a chart showing the Working Fund Balance Projections for the next four years. The chart shows that the Months of Operating Expense decrease mainly due to the contractual union salary increases. Bechtel stressed that the chart does not take into account any capital expenses, only operational expenses. Council Member Donte Moore asked if the Council was comfortable with having three months of Operating Expense on hand. Moore stated that he would like to have four to five months of Operating Expenses. Council Member Jeff May agreed that would be a great number to achieve and this needs to build to prepare for the next economic downfall. Mayor John Lewis stated on average other communities have five to six months of Operating Expense. Lewis explained that for many pending projects, the City will need to keep several months of Operating Expense even though the City may evidently be reimbursed.
Revenue Assumptions
1. Assuming a 5.6% increase in 2018-19 budgeted sales and home rule taxes and 1.2% increase thereafter
2. Assuming Menards will generate $300,000 additional sales tax per year starting July 1, 2018
3. Assuming Harley-Davidson will generate $30,000 Home Rule Sales tax per year starting FYE 4/30/2020
4. Assuming no increase in state income tax
5. Assuming 10% reduction in state income tax will continue indefinitely
6. Assuming District 80 will reimburse City for 9 months of SRO starting 1/1/2019
7. Assuming all other revenue will remain constant
Expenditure Assumptions
1. Including 3 employees coming back October 1, 2018 : No one on layoff
2. Assuming a 2.77% increase each year in wages
3. Assuming 0% increase each year in self-funded health insurance
4. Assuming 4% increase each year in Plan F health insurance
5. Assuming 4% increase each year in property casualty and work comp insurance
6. Assuming that we will continue to fund JCDC at $100,000 each year (we funded them at $150,000 in prior years)
7. Assuming that we will continue to fund DMDC at $76,667 each year (we funded them at $115,000 in prior years)
8. Assuming 2% increase each year in all other expenses
9. Assuming no transfer for Capital Items
Merle Hollmann presented worksheets showing Multi-Year Comparisons for the 1% Sales Tax, the 1% Home Rule Sales Tax, and the State Income Tax. These are the three biggest General Corporate revenue sources. He explained that the 1% Sales Tax and the 1% Home Rule Sales Tax Charts reflect the local economy and the State Income Tax reflects the State’s economy.
Council Member Mike Young asked if the charts include the Quality of Life Tax and the new 1% Sales Tax. Bechtel replied, no. All proceeds from the imposition of the one percent (1%) increase in the Mt. Vernon Home Rule Municipal Retailers' and Service Occupation Tax are deposited into and maintained as a separate dedicated fund to be expended solely for (i) expenses incurred for Capital construction projects for the Public Utility Department, (ii) expenses incurred for Capital equipment purchases for all City Departments, (iii) expenses
incurred for Capital expenditures for road construction or road maintenance, (iv) early retirement of existing indebtedness, with priority to payment of debt with the highest interest rate, and (v) nuisance abatement expenditures, including demolition of dangerous and dilapidated structures.
Council Member Jim Rippy spoke on a possible Open Meetings Act violation. He feels that some of the emails on January 22, 2019 between the Council regarding the overpass might be a violation. City Clerk Mary Jo Pemberton (FOIA Officer) will look into this matter and report back to the Council.
Council Member Donte Moore asked if the City receives sales tax revenue information on specific businesses. City Manager Mary Ellen Bechtel replied that the City does not received individual businesses numbers due to confidentiality.
Council Member Donte Moore asked how the City’s self-funded health insurance plan is doing. Hollmann report that the fund is doing great. The City has been self-funded for eleven years and even though there were three bad years with a couple of bad years back to back, the current fund balance is about one million dollars. He stressed that the fund could be depleted easily if major claims occur. Premiums were not increased this year or last year.
City Manager Mary Ellen Bechtel presented an update on the Projected Expenditures of Capital Projects Funded with the 2012 Bond Proceeds. The amount of money available ($613,476.47) is a soft number because it does include North 44th Street which is still under construction. She recommends using any remaining bond money and TIF Funds for the relocation of the Post Office. The location of the new Post Office is confidential until the Post Office approves the location. Bechtel stated that it is in the downtown area.
Mayor John Lewis would like the public to understand that the City’s cash balance is diminishing over the next four years, plus there is a need of $25 million dollars for capital purchases and improvements.
VISITORS/CITIZEN’S REQUESTS/ADDRESSES FROM THE AUDIENCE
No visitors spoke at the meeting.
ADJOURNMENT
Council Member Jim Rippy motioned to adjourn. Seconded by Council Member Donte Moore. Yeas: May, Moore, Rippy, Young, and Lewis.
The meeting was adjourned at 4:46 p.m.
http://www.mtvernon.com/wp-content/uploads/2016/10/01-31-19-2nd-Quarter-Budget-Review.pdf
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