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Minutes - 09/11/2012 MINUTES FROM THE HUNTSVILLE CITY COUNCIL MEETING HELD ON THE 11TH DAY OF SEPTEMBER 2012,IN THE CITY HALL, LOCATED AT 1212 AVENUE M IN THE CITY OF HUNTSVILLE, COUNTY OF WALKER, TEXAS AT 6:00 PM. The Council met in a regular session with the following: COUNCILMEMBERS PRESENT: Mac Woodward, James Fitch, Lydia Montgomery, Don H. Johnson, Keith D. Olson, Joe Emmett, Tish Humphrey,Ronald Allen,Clyde Loll COUNCILMEMBERS ABSENT: None OFFICERS PRESENT:Chuck Pinto,Interim City Manager Lee Woodward City Secretary SPECIAL SESSION [6:OOPM] 1. CALL TO ORDER—.Mayor Woodward called the meeting to order at 6.03 p.m. 2. INVOCATION AND PLEDGES — Mayor Woodward read a portion of President Obama's proclamation for 9/11, encouraging volunteerism and service to others, and led a moment of silence in remembrance of the events of September 11,2001. 3. PUBLIC COMMENT There were no public comments. 4. STATUTORY AGENDA a. Presentation, discussion, and possible action on Ordinance 2012-38, adopting the Fiscal Year 2012-2013 Annual Budget(record vote). [Winston Duke, Director of Finance] Mayor Woodward moved for approval of Ordinance 2012-38 adopting the Fiscal Year 2012-2013 Annual Budget and was seconded by Councilmember Olson The Mayor thanked all of the staff for their dedication and hard work and the City Council for their efforts and concern, acknowledging the challenges. He noted this budget will raise.more total property tax than last year's budget by$451,621.00 and that it alone would not pass the tax rate. The Mayor responded to Councilmember Allen, confirming the overall amount of the budget ($59,335,330.00 plus changes on exhibit Al, equaling $58,189,840.00) and parts of the Ordinance being passed. Councilmember Allen took exception to not receiving the summed material prior to the weekend. Councilmember Humphrey confirmed the material Councilmember Allen was discussing was a result of the material the Council had received the prior Thursday. Councilmember Fitch said he was also confused, and the Interim City Manager explained that the workshop changes were included. Councilmember Fitch said he thought the Council was now approving something that was not presented at the public hearings or workshops. Councilmember Loll reminded the Council that the work had been done with estimates. The Mayor suggested including the sheet with reformatted numbers could be included with the material with the Ordinance. Councilmember Fitch expressed his belief that the numbers were off much more than might be expected with estimates. Winston Duke, Finance Director, said the difference was $855,000. The Mayor asked about the change in Transfers Out and Mr. Duke said it was the FEB trust numbers and administrative reimbursements in, totaling $205,000. Mr. Duke said the budget in question was the budget was from July and included the workshop changes. Councilmember Fitch received confirmation that the reformatted sheet also included the workshop changes. Mr. Pinto said the Council was considering a budget that was still using reserves but did not take the reserves below 25%. The Mayor called a 10-minute recess at 6:43 Dm The Council reconvened at 7.12 Dm The Mayor withdrew his motion and Councilmember Olson withdrew his second The Mayor announced the meeting would be continued the next day(Wednesday, September 12 2012)at 5:30 Dm The Mayor adjourned the meeting at 7.14 Dm MINUTES FROM THE HUNTSVILLE CITY COUNCIL MEETING HELD ON THE 12TH DAY OF SEPTEMBER 2012,IN THE CITY HALL, LOCATED AT 1212 AVENUE M IN THE CITY OF HUNTSVILLE, COUNTY OF WALKER, TEXAS AT 6:00 PM. The Council met in a regular session with the following: COUNCILMEMBERS PRESENT: Mac Woodward, James Fitch, Lydia Montgomery, Don H. Johnson, Keith D. Olson, Joe Emmett, Tish Humphrey,Ronald Allen,Clyde Loll COUNCILMEMBERS ABSENT: None OFFICERS_PRESENT:Chuck Pinto Interim City Manager Leonard Schneider City Attorney Lee Woodward City Secretary SPECIAL SESSION [5:30PM] CALL TO ORDER—Mayor Woodward called the meeting to order at 5:31 p.m. Mayor Woodward said he had attempted to present budget information correctly and concisely and apologized to the Council and the community for the wrong numbers being used and confirmed the Council had received the updated material. Leonard Schneider, City Attorney,spoke from the TML 2012 deadlines for large taxing units and said he understood that the Council had met the requisite number of public hearings that action had to be taken tonight, being the 14th day following. He said the process could be restarted if no action was taken this evening, with notice in The Huntsville Item, public hearings on September 21"and 24th,with a vote no later than September 27th, due to constraints of the City Charter. He added that an amendment to continue the current budget from month to month if a new budget not approved by the 27th, noting that the effective tax rate would be automatic if a new tax rate was not approved. Councilmember Olson moved for approval of Ordinance 2012-38 adopting the Fiscal Year 2012-2013 Annual Budget and was seconded by Councilmembers Johnson and Loll Councilmember Allen said he would not vote for the motion because of the confusion and because medical expenses exceeded the revenues. Mr. Schneider, in response to the Mayor, confirmed the Council could make modifications to the proposed budget. Councilmember Fitch acknowledged today's budget did not include the proposed tax increase and that he understood the budget would be amended, but asked which budget was being voted. The Mayor said the Council was voting the proposed budget with the$0.04 proposed tax increase,and that if a different tax rate was approved,the budget would then be amended. Chuck Pinto, Interim City Manager, explained the sheet received today was a summary and reflected the proposed tax increase at the bottom. He added that the General Fund Revenue number had been lowered and that the effective rate had been applied to the certified tax roll at a 97% collection rate to arrive at $11,413.238. Councilmember Fitch asked that everyone understand that there was a shortfall of almost a million dollars even with the proposed tax increase and that both options caused the City to fall below its 25% reserve target and expressed concern over the cuts that would be.necessitated in the coming year to balance the budget. The Mayor agreed, saying that even correcting the numbers had not changed the difficulty of the decision and the significance of the cuts that would be required and that this was now magnified but that he did not think so much could be cut before the end of the month. He said his commitment was to do the best to minimize the deficit by the end of the coming fiscal year. Councilmember Johnson asked Mr. Pinto what could be added to the Ordinance to note the Council's intent to reduce the insufficiency and ask the staff to begin working on it. Mr. Pinto said the staff realized the severity and recognized the changes were critical, even with the proposed tax increase. He suggested that an October 1 target was too soon and that 60-90 days to make changes would be most effective. Councilmember Johnson read a statement that recognized the Council objectives of a balanced budget and community input on the issues, noting that reserves had been used for this in past years but that lowering sales tax and minimal property tax revenues and increased costs would require increasing revenue - and/or decreasing expenses. He addressed the fact that voters had approved tax increases for City projects but that reserves had been used instead and that was no longer a possibility. Councilmember Johnson said the situation highlighted the City's need to increase"the size of the [economic] pie," closing by saying he would vote for budget as a citizen, because he felt it was in the community's best interest. He pointed out that the proposed tax increase was only a$0.03 net increase over the current tax rate. The Mayor echoed Councilmember Johnson's commitment to reducing expenses and said the City should look for ways to enhance new and existing businesses. Councilmember Montgomery clarified with Mr. Pinto that the General Fund Revenue number discrepancy had been mainly affected by calculating using the current year's effective tax rate,the best available information prior to receiving the certified roll from the Appraisal District. She added that she had had great concern about cuts and service levels even with the incorrect calculation but discussed Mr. Pinto's plans for restructuring in the coming months to reduce expenses and refine service. Mr. Pinto concurred but pointed out that there were certain things that would need to be started immediately,with an ,eye to a new overall budget level. Councilmember Montgomery mentioned the need for the step-and-grade program to'provide fair and equitable system of pay, as there were issues of over-and underpay across the staff. Mr. Pinto said restructuring and increasing responsibilities made this more necessary and that a cost-of-living adjustment was not being proposed. Councilmember Humphrey expressed appreciation of statements made by Councilmembers Johnson and Montgomery, especially the misunderstanding in the community that employees had been receiving across-the- board raises. She noted her gratitude of the Council's work and Mr. Pinto's professionalism. Councilmember Fitch said one of his major concerns and embarrassments last night was City Manager applicants who might have been watching the meeting. He said that,as great as Mr. Pinto is,even he could not do it in so short a time and that this pressure of needed reduction would be placed on the new City Manager. Councilmember Humphrey said she thought the Council had addressed the issues but didn't believe they were.. requiring a 12-month fix. Councilmember Montgomery agreed. Councilmember Fitch said he had merely given his opinion and wanted the Council to be cognizant of what was being done. Councilmember Allen asked how much implementing the step-and-grade system would cost. Mr. Pinto said it would be making job descriptions fair in comparison to the market in duties and compensation, noting a City Manager and the Personnel Department would be the first things to be addressed. He said a 3% amount of approximately$350,000 had been placed in the budget. Councilmember Allen asked what it would cost to give all employees a 3% increase and Mr. Pinto said about$170,000-190,000. Councilmember Allen said the Council had worked on the budget and then found out they were using the wrong numbers,suggesting that the Council had quit too soon because of this. He said it was his opinion that the Council would have continued to work on the budget if' they had had the correct numbers,saying the Council had cheated the citizens. Councilmember Olson addressed the work of the Council and the constant changes in the budget, adding that the Council continued to get a better view of the"real"projected numbers. He characterized the numbers as estimates and said he felt the Council had the best numbers they had seen and were still$1.4 million"in the hole." He said it made it clear in the severity of the cuts needed and that no member of Council was comfortable with the size of the deficit. Councilmember Olson recalled the Council knowing even more would need to be cut than any projected shortage at any time, and that something had to be done to"make the turn." He said he had to look to the future of the City. A record vote was taken and the motion passed 7-2 as noted — Councilmembers Emmett Olson Johnson Montgomery Loll and Humphrey for and Councilmembers Allen and Fitch against Mayor Woodward moved to ratify the ad valorem property tax revenue increase reflected in the adopted 2012 2013 budget and was seconded by Councilmember Humphrey. The Mayor noted the budget contained an increase of$451,621.00. The motion passed unanimously. b. Presentation, discussion, and possible action on Ordinance 2012-39, adopting the Fiscal Year 2012-2013 tax rates (passage of budget required to vote on this item) (record vote). [Winston Duke, Director of Finance] Mayor Woodward moved that the property tax rate be increased by the adoption of a tax rate of$0.4206,which is effectively a 10.5%increase in the tax rate and was seconded by Councilmember Olson Councilmember Fitch reiterated his concerns of the night before, that both the Council and the public had used incorrect numbers, suggesting it was possible that there might have been a different citizen response if the true picture had been seen, and that he was torn as to whether to support the increase. The Mayor said all the Council had wrestled with the proposed tax rate, but noted again the voters had passed two bond issues and that the current and proposed budgets each contained about$451,000 in principle and interest to cover those costs, and that he thought the increase could be better understood in light of this and the support of those projects. Councilmember Montgomery agreed, noting the voter approval and prior City decisions to use reserves, but also saying that now the City had to live within its means and ask the voters to pay for the things for which they had agreed upon. She also noted concern over the amount of change in service levels and that also increased her support of the tax increase. Councilmember Olson said six citizens had spoken at the first public hearing, four of whom were over 65 and would not pay increased taxes and that one of the other two was in support of the proposed tax increase. He said that if citizens were outraged or very unhappy, there would be more response, and that he understood the need, even though he didn't like paying increased taxes, either. Councilmember Olson said he had previously stated that it was irresponsible to see the trends and not do something to correct the situation. The Mayor added that no one wanted to be on the first Council in ten years to raise taxes, but that he was proud of the projects the City had completed without raising taxes. Councilmember Humphrey pointed out the fire station and library debts had been voted on and issued in 2008- 2010 but that everyone had seen increases in their home budgets since that time and that the debt service for those projects had been even higher initially. She urged aggressiveness for a year to see results. Councilmember Fitch said he did not think it was fair to tell the citizens that prior Councils had been able to pay from reserves but that they had to pay now because that could no longer be done. He said he would like to see perhaps a smaller tax increase proposed but that he did not know if there was really another option now, that it was the Council's responsibility and that he thought perhaps approval was the only alternative. Councilmember Allen said he thought that not having more citizens come to protest the tax rate expressed lack of confidence in the Council rather than approving the increase. Councilmember Johnson said he appreciated that no one wanted increased taxes but that his feedback seemed to show a greater degree of trust in the Council;that they were doing this because it was needed and part of their fiduciary responsibility as the issues had not been identified in the past few years. He reiterated that the proposal was effectively a$0.03 increase over the current rate and that it was hard for him to believe that an additional $40 a year was as great an imposition as not addressing the needs of the City budget. Councilmember Olson said Councilmember Allen viewed this as a political issue, that he [Olson] would vote against it if that were his aim, but that the Council was here to do the right thing. Councilmember Fitch moved to amend the rate to$0.4006. The motion failed for lack of a second The Mayor noted that $0.1567 of the proposed rate is for debt service and $0.2639 is for maintenance and operations,for a total of$0.4206. A record vote was taken and the motion passed 8-1 as noted—Councilmembers Emmett Fitch Olson Johnson Montgomery Loll and Humphrey for and Councilmembers Allen against 5. PUBLIC COMMENT Kendall Scudder said the Mayor was a man of great integrity and that only Councilmembers Allen and Fitch took responsibility and apologized for last night and the position in which the City found itself. 6. MEDIA INQUIRIES RELATED TO MATTERS ON THE AGENDA There were no media inquiries. 7. ITEMS OF COMMUNITY INTEREST The Mayor encouraged the public to attend the SHSU Junior Fellows Film Festival featuring Dana Andrews. The Mayor reminded all of the Main Street Friday Night Concert Series on the Courthouse lawn from 6-9pm going on \` through September 28. The Mayor announced the Gibbs-Powell House would be celebrating its 1501h Anniversary on Sunday,September 29 from 47 pm. The Mayor noted this year's Fair on the Square would be October 6,the Dreyer's orchard would have groundbreaking on October 12, and a ribbon-cutting for the Highway 19 project would be on October 2. Councilmember Humphrey announced that the Bearkats would only have three home games this year and expressed her excitement over the community support for the University this year. The Mayor thanked the Council for their work. 8. ADJOURNMENT Mayor Woodward ad'ourned the miaetin at 7:181"An. Respectfully submitted, Lee Woodward,City Secret ry r