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HomeMy WebLinkAbout03-04-19 Personnel and Finance (Tax Caps/Impact) ( OUtt1a \ w u P\ PE OB' 1865 OFFICE OF THE CITY CLERK KAREEMAH FOWLER, CITY CLERK PERSONNEL &FINANCE MARCH 4, 2019 5:30 P.M. Committee Members Present: Karen White, Regina Williams-Preston, John Voorde, Jo M. Broden Committee Members Absent: None Other Council Present: Tim Scott, Jake Teshka, Sharon L. McBride, Oliver Davis Other Council Absent: None Others Present: Kareemah Fowler, Bob Palmer Presenters: Daniel Parker Agenda: Educational City of South Bend Budget Series: 2020 Property Tax Caps, Impact and Preparation- Daniel Parker, City Controller Committee Chair Karen White called to order the Personnel and Finance Committee meeting at 5:30 p.m. She introduced members of the Committee and stated, This is the second (2nd) of our Educational Series in regards to preparing for the 2019 City Budget. The first (1St) series that we had dealt with TIF and that was handled and discussed in December of 2018. This is the second (2nd) series in which we will be talking about the 2020 Fiscal Cliff Impact and Preparation. We want to say that the Council really started preparing for 2020 during 2013 and thereafter. At that time, the former Mayor, Steven Luecke had begun discussion with Council Members to begin thinking about the fiscal cliff. At the time, a number of public safety individuals were transferred from the budget and placed onto a grant that was granted under President Obama in regard to a safety program that he had initiated. We knew very clearly that those officers would need go back on the General Fund budget. We were looking at least forty(40), and that includes Police and Fire. That was the time in which the Public Safety Tax was initiated so we could continue to fund those officers. Likewise, during that time, a number of department heads took a reduction in salary to prepare for the fiscal cliff. She continued, today we will be talking about how the Administration and Council has prepared for the 2020 fiscal cliff and the impact and preparation. I think it is important for everyone to know that we have not just been discussing this upcoming event,but we have been planning and we have strategies in place for the City to respond: one (1) that we can maintain our level of services for our citizens and two (2) that we can maintain as best as possible our working strength. But most importantly, that we can be as transparent as possible in regard to our fiscal needs as well making sure that we are utilizing our citizens' taxes at the level that we should. At this time, I am going to INTEGRITY' SERVICE'ACCESSIBILITY JENNIFER M.COFFMAN BIANCA L.TlRnuo JOSEPH R.MOLNAR CHIEF DEPUTY/DIRECTOR OF OPERATIONS DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Blvd.I South Bend,Indiana 46601 I p 574.235.9221 I f 574.235.9173 I www.southbendin.gov CITY OF SOUTH BEND OFFICE OF THE CLERK turn it over to our City Controller, Mr. Daniel Parker. There is a PowerPoint presentation (which is available in the City Clerk's Office) and you will be able to get copies online tomorrow. The Administration and Council Members will have an opportunity for questions and comments. I would like to thank our citizens for being present. This is really a result of the 2019 budget hearings,where our citizens had made a number of recommendations in terms of preparing for the upcoming budget process. But also they were sharing their concerns regarding the 2019 budget hearings. I want it to be made clear that we are listening and there are a number of other strategies that we will be putting in place for our citizens. Most importantly, we'll assure that the budget process is as transparent as possible and that each time that we have a budget hearing, we make it better. At this time, I am going to turn it over to our City Controller, Mr. Daniel Parker. 2020 Property Tax Caps, Impact and Preparation- Daniel Parker, City Controller Daniel Parker, City Controller with offices located on the 12th floor of the County-City Building, stated, I want to say, thank you for being here, being present, and taking part in this entire conversation. For this entire series, I think it is helpful not for Council Members and citizens, just but also for us as the Administration to always have an eye on what the citizens want to understand better. We are always thinking about the budget and planning for next year's budget and future years' budgets and I think it's important that we communicate that as broadly as possible. I did want to point out that the title slide here is now called the"Fiscal Curb"because we do think that while there is going to be an issue, it is something we will need to keep our eyes and fingers on to be prepared for. It is not going to be a situation in which we fall off the cliff and end up in a big fiery car wreck. We are preparing for the 2020 Fiscal Curb and that is sort of the focus of the presentation today. In terms of what we will cover today, we'll be going over what the issue is, what is causing that issue, and ultimately, where I want to spend the most time, what we are doing as the City to address this issue to make sure we are prepared for any kind of revenue shortfalls that we may have going forward. I do want to say, please feel free to jump in at any time with questions or comments that you may have. He continued, This is a slide (referencing the General Fund Plus) that the Mayor used in his presentation that was addressed before Council several weeks ago. This is the scenario that the City is facing in our General Fund plus our Income Tax Funds. You'll see the 2019 Budget is balancing these funds as required and every year we work towards that balanced budget. But going forward in 2020,2021,and 2022,we do have significant deficits where expenditures are out pacing revenues in 2022 close to $10 million. By and large,the reason behind this is going to be the focus of the first (Pt) part of this presentation. Why are we in this position, where our expenditures are projected to outpace our revenues?Then we will be changing to how can we change our operations to address this as we go forward. The first (1st) part is what's causing the issue. I'd like to break it down into three (3) buckets to what is causing the problem for 2020 and beyond. The first (1st) bucket and the most significant, is revenue. At its core, the Fiscal Curb is a revenue issue. There are a number of things that contribute to that revenue issue, several of which we will go through today. The biggest of which(referring to the hand-out) is the Circuit-Breaker Property Tax Caps, the expiration of the exemption that St. Joseph County received on those tax caps. This is not the only revenue issue that we have going on in the City currently. There are some additional conversations that I want to talk about today regarding Medicaid Revenue, specifically the Medicaid Supplemental payment adjustment for EMS. Then, some gasoline tax distribution questions that were actually raised in response to the Mayor's Annual Address to the Council several weeks ago. That's the first(1St)bucket we are going to go through. The second(2"d)bucket EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld South Bend,Indiana 46601 I p 574.235.9221,f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 2 •CITY OF SOUTH BEND OFFICE OF THE CLERK is operating expenditures. As you probably saw on that graph, operating expenditures continue to go up year after year. Salary and benefit costs continue to rise particularly with respect to health insurance. One(1)of the things you may remember from the Mayor's Address,he focused on was, yes, the rise of health insurance has slowed, but it continues to rise. And as the costs and fees go up,we have more and more pressure in the General Fund to cover the cost of that health insurance. There are also other operating expenditures and routine maintenance. The cost of maintaining streets, sidewalks, curbs, etcetera continues to outpace the revenue that we receive. The demand to continuously repair and replace curbs, sidewalks, and streets is outpacing our revenue in a variety of different funds. The last bucket of financial concerns for 2020 is Capital Expenditures. These are large scale capital projects that are already underway. Particularly My SB Parks&Trails is a large capital investment that the City already has underway and a continuation of large-scale upgrades and infrastructure, particularly sewers. There are several large projects and large capital investments that the City is already a part of, that are putting pressure on both operating expenditures in an era of declining revenue. I want to dive a little deeper into each of these three (3)buckets and I'm happy to answer any questions. He went on, The first (1St) bucket is revenue. So as I said, the revenue end you see in this graph (referencing the presentation), revenue in 2020 is expected to take a slight dip but then increase slightly from 2021 to 2023. This is as I said earlier, the General Fund, we sometimes call it the General Fund Plus,which are the Local Income Tax Funds.Those are generally the core operations of the government. If you expand this to the entire government, and look at the operating revenue for all funds, you'd see a very similar picture. This chart (referring to the presentation) is a projection of all operating revenue. So,when I say operating revenue,this excludes debt proceeds. A lot of times when you see numbers it will include, in revenue, the proceeds that we get from issuing debt.This does not include that. These are charges for service,tax receipts,and the ongoing operating interest revenue and the ongoing operating revenue that the City gets every year. A couple of things to note here are the differences between this chart and the previous chart. The budget for 2019 actually represents a decrease from our actual operating revenue from 2018. That is largely due to one (1) time revenues that we received in 2018. There were several large one (1) time revenues that we received in 2018 that are not expected to continue into 2019. For example, the most significant is a $4.5 million payment by INDOT with respect to SR 933. In taking over . the maintenance of SR 933, INDOT paid us a pretty large pay out for that particular project. While we did see a reduction from actuals in 2018, for our budget for 2019 we're seeing an even future reduction for our projection for 2020. That is the focus of where we are at. There is about a $4 million reduction in the overall projection for 2019 to 2020. He continued, The next logical questions are where that comes from? And, what is driving that revenue reduction? There are a number of different factors. The most significant of those is property taxes. I don't want to get too deep into this because we could have a whole two (2) hour session on the calculation of property taxes. I do want to show a little bit about how property taxes are calculated to show what the actual issue is that we will be facing next year. This top line here shows how each individual tax payers' gross annual taxes are calculated. The net assessed value of their property is just total assessed minus any deductions or exemptions that they may have. The net assessed value of their property times the total tax rate of all the units in their property is their taxing district. That's important that we talk about all units because the City of South Bend is one (1) taxing unit. But if you are paying property taxes you are paying property taxes to the County, the library, and school district. You're paying multiple property tax rates that all go into that total tax rate deduction. If the circuit breaker tax law had not been put into place, that would EXCELLENCE I ACCOUNTABILITY INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.91731 1 10574.235.55671www.southbendin.gov 3 CITY OF SOUTH BEND I OFFICE OF THE CLERK have been the amount of taxes that we as City would have received. We have the gross annual taxes, which would have been divided up between different districts, but the circuit breaker tax credit essentially introduced this bottom portion of this property tax calculation. In addition to calculating gross annual taxes, you calculate what is called your circuit breaker maximum tax, which is your gross assessed value times your circuit breaker cap which is one percent (1%), two percent (2%), or three percent (3%) depending upon what type property it is. That's your circuit breaker maximum tax. Most counties in Indiana, unless they passed a referendum, define that as the maximum tax that the individual tax payer can pay for a particular property. However, St. Joseph County is one (1) of two (2) counties that had an additional tax laid on top of that circuit breaker maximum tax and this tax is due to property tax cap exempt rates. There were two (2) counties, St. Joseph Countyand Lake Count that had debt issues prior to the circuit breaker p Y� maximum tax credit being put into place. We were exempt for ten (10) years from the circuit breaker maximum tax. We actually got a little bit additional on top of that maximum. That additional tax of the maximum and what is going to waste. So that's the difference between what is currently going on and what we expect from last year. I have two (2) examples of how this works. So, we have on the left the net assessed homestead gross annual taxes, which is just net assess value times your tax rate. You have a maximum tax, which is just your growth assessed value times one percent(1%)in this case because it's a homestead meaning the maximum that this property ownership pays on this$100,000 home is$1,000.But because we are in St.Joseph County there is this additional one hundred and thirty-nine dollars ($139) that we receive back. That one hundred and thirty-nine dollars ($139) is what is going to be keep taking away. Instead of getting $1,139 for this property, we get a thousand up front. Now one hundred and thirty-nine dollars ($139) does not seem like a lot of money but if you move that to a commercial property worth a million dollars at a three percent (3%) tax cap, that could be move $3,876 for just that one (1) property. He went on, This particular issue can be very significant for not just us as the taxing agency but any taxing district that is going to be subject to this including school districts, the county, and the library. It's going to be very significant in terms of the impact that this is going to have. In terms of how significant, we estimate, our best estimate currently, is that this will have an impact of negative$1.93 million in revenue. That decrease, relative to the tax-exempt tax,is going to reduce revenue by $1.93 million. This chart up here shows the difference between our gross levy, which is the total bar, and our net levy, which is that blue bar. The red bar is all of the money that was in the property tax cap. The difference between the total amount that they would have paid if there was no property tax cap and what property tax was actual paid because of the property tax caps. Any questions on property taxes? Councilmember Tim Scott asked,Then with all this said,it is very important that the Assessor gets the assessments correct, right? Also, whether something is a single-family rental unit versus a single-family home? Mr. Parker answered, Absolutely. Classification is extremely important and assessment is really what drives all of our property taxes growth now. So, this model which shows us losing $1.93 million actually assumes a two percent (2%) growth in net assessed value. Even with assumed growth in net assessed value, we are projecting to lose money. If that growth doesn't occur that number could go up. Without control or say over our tax rate for most of our taxing funds, the assessed value is driving all of our property tax growth. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building i 227 W.Jefferson Bvid South Bend,Indiana 466011 p 574.235.9221 f 574.235.9173 I TTD 574.235.55671 www.southbendin.gov 4 CITY OF SOUTH BEND I OFFICE OF THE CLERK Now Councilmember Scott stated, Thank you. Mr. Parker went on, Like I said, this is probably the most significant issue that we are facing from a revenue perspective but it's not the only one(1). As I mentioned, I did want to talk briefly as this could be another two (2) hour discussion on this issue about the Medicaid Supplemental Payment Adjustment. This is a program that our Fire EMS participates in and the essentials of the program are that the State and the Federal Government recognizes that the Medicaid reimbursements that we receive from our ambulance runs aren't covering the costs to provide them. What the State and Federal Government do is they assess our actual cost of providing those services and give us a supplemental payment to cover the difference between what they reimbursed us and our actual cost. Historically, as this graph shows, this supplemental payment was north of a million dollars. One(1)year it was up around$1.8 million back in 2014, over the past three(3) years this has been around $400,000-$500,000. So, there is a pretty significant decrease in the amount that we have been receiving for the program. The causes for this are again not getting too deep into it, there are two (2) basic ways that Medicaid recipients participate in Medicaid. It's either through traditional Medicaid in which the State directly pays for their claims or through what is called Managed Care Medicaid in which the State pays a third (3rd) party insurance company. The Managed Care Medicaid, we do not receive this supplement payment that is covered by Managed Care Medicaid. We only receive this supplemental payment from patients covered by traditional Medicaid. As more and more patients move from traditional Medicaid to Managed Care Medicaid,this payment is expected to continue to decrease. That is actually a targeted intentional move by the State to move more patients to Managed Care Medicaid because it's less expensive for the State. There is an argument out there that it improves quality for the patient and other types of things. Committeemember Jo M. Broden asked, You said the difference in the cost for us to make those runs, is there any tweaking on the cost side on our side? Mr. Parker answered, We actually put together a cost report. We contract with a consultant from Blue In Company to help us do that. It's fairly formulaic and it's Medicare driven. You have to be very careful and track your cost for how much it actually costs to run the ambulance service. There's not much tweaking we can do in it, which is intentional because they don't want people to ramp up costs so that they get more reimbursement money. Committeemember Broden asked, Is that in terms of who actually serves on that call? Is that also pretty standardized to actually get to a qualified level of reimbursement? Do you see what I am asking? Mr. Parker clarified, In terms of who actually goes to the patient? I do know that the Fire Department is working very hard on changing their staffing model and the goal there is to reduce the cost,put only the people who need to be on the scene,on the scene unless a higher-level person, say, a lead paramedic is needed,then they can use J-Star. I don't know if that is specifically driven by this, but it is an effort to reduce cost in response to lowering the reimbursement. Councilmember Oliver Davis asked, Along those same lines, do you route the change in terms of the people traveling to be rushed to Saint Joseph Hospital versus Memorial Hospital which has added more time and distance to driving to Saint Joseph Hospital out in Mishawaka? Do we even take people out of State lines? Does that make sense? EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f574.235.9173 j TTD574.235.55671www.southbendin.gov 5 •CITY OF SOUTH BEND ! OFFICE OF THE CLERK Mr. Parker answered, I am not the expert on this, but as I understand it, if the patient is not in a life-threatening situation, our ambulances will take the patient to either Memorial or Saint Joseph Hospital,whichever one(1)they want to go to. A lot of times that decision is driven by insurance. But, if they are in a life-threatening situation then they are required, by law, to take the patient to the closest hospital. Committeemember Broden asked, This issue, though, is not unique to South Bend, correct? This is national? Mr. Parker answered, So, Medicaid, this is actually an Indiana-driven program. It is not unique to South Bend. It is an Indiana program that all municipalities that are participating in the program are dealing with. Committeemember Broden asked, But do most states have that Federal-State delivery? Mr. Parker answered, I am not aware of that. I don't know enough about Medicaid programs in other states to comment on whether they have a program similar to this. But, in Indiana, all municipalities that operate ambulance services are dealing with this. Mr. Parker continued, Another issue I wanted to touch on briefly is the gasoline tax distribution change. So, if you remember back in 2017, the State Legislature passed a gasoline tax increase which increased the tax by ten percent (10%). At that point, local governments, who received a portion of that gasoline tax were fairly optimistic about a large increase on gas tax proceeds that we could expect to get. We did see a pretty large jump 2018. We went from $5.16 million in 2017 to $6.55 million in 2018. However, in 2018 the State Legislature passed another law that changed and tweaked the distribution formula on how that gasoline tax is distributed to local governments. The impact of that law is that a larger portion of that gasoline tax is retained by the State and a smaller portion was ultimately distributed to local governments. This is why you see a bit of a drop down going forward in 2019 and beyond from where we would have expected that to be otherwise. You can see it's still projected to be a slight increase from where we were. It is not as though we are losing this revenue entirely. It's not to the extent to where we are expected to be when that original gas tax increase passed 2017. Committee Chair White stated, Dan I know that some of the Council Members were looking at identifying some of these dollars to support our streets, curbs, and sidewalks. I know that's probably what we will continue to be a discussion as we prepare for the 2019 budget. Mr. Parker replied, Yes, as I said, streets, sidewalks, and curbs are the expenditures there, particularly in light of the reduction of the gas tax continue to outpace the revenue. Committeemember Broden asked, How about the impact of the electric cars, alternative fuel and all that good stuff? Mr. Parker answered, The electric cars and electric fuel is a part of that same law. The Legislature did pass a law on alternative fuel cars called an excess tax. To register a hybrid in Indiana actually costs $150 more than a regular car. With the thought being that you would not be paying the gas tax as often and so you will pay more there. EXCELLENCE ACCOUNTABILITY I INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld South Bend,Indiana 46601 p 574235.9221 f 574.235.91731 I I D574.235.5567www.southbendin.gov 6 CITY OF SOUTH BEND OFFICE OF THE CLERK Committeemember Broden asked, Are there any anticipated changes being looked at in the Legislature now? Mr. Parker answered, I am not aware of anything now. Our team can certainly look into it as we are not aware of anything at the moment. In the original 2017 law, it did allow for up to a one (1) cent per gallon per year increase. So, that will presumably continue. He went on, The last revenue issue that I want to mention is local income tax. As you can see (referencing the presentation), our projections right now are that Local Income Tax revenue will increase over the next four(4) to five(5) years. The reason I wanted to highlight this is because if there is a change in economic circumstances such as a national recession or a local economic issue, this projection could change significantly and could really have an impact on our financials. Currently, we use Local Income Tax revenue to close a lot of the holes that were created in the property tax cap that we saw. So, the amount that we receive in Local Income Tax revenue, while it doesn't give us the full amount of our property taxes back it, it's fairly close to the amount of the property tax cap losses that we see. But if there is a change in economic conditions, the Local Income Tax revenue could be impacted. I throw that up there to say even with a fairly consistent growth projection of Local Income Tax revenue we still had a revenue shortfall. It's yet another condition for the change that could be exacerbated. Committeemember Broden asked, What is that growth projection? Mr. Parker answered, It's roughly two percent(2%) a year. Committeemember John Voorde asked, When it comes to distribution, how the does the State account for working somewhere else?When you live in Indiana but work in another County in the State? Mr. Parker answered, I am not sure I know the answer to that question. Now, the local employees that live in St. Joseph County and work in Michigan, there might be a different system in place. Councilmember Davis stated, I think the taxes come back here. Because mine didn't go to Berrien County when I worked in Michigan it stayed here. Committee Chair White asked, Can we just double check on that? Mr. Parker answered, We'll clarify and send out a response to all Council Members. Mr. Parker continued, I wanted to bring this back up to say, all of those different factors that we discussed, Medicaid and the gasoline tax, there is one (1) that we didn't talk about which is river boat gaming revenue ($600,000). South Bend will no longer receive that as of 2021. Councilmember Davis asked, Do you see that being a short-term situation or will that be more of a long-term situation? Mr. Parker answered, The State legislature specifically changed their distribution formula to exclude South Bend from those proceeds because of the casino. So, that I imagine it would continue permanently. That was roughly$600,000 a year. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 466011p 574.235.9221 f 574.235.9173111D574.235.5567 Iwww.southbendin.gov 7 CITY OF SOUTH BEND ! OFFICE OF THE CLERK Councilmember Jake Teshka stated, But we will be receiving at least one(1)million dollars from the casino. Councilmember Davis stated,The biggest difference is that the monies from the Pokagons go into redevelopment funds not the general funds. Mr. Parker answered, We receive two percent (2%) total and they are spilt evenly. One percent (1%) goes into each and, from a revenue perspective, we come out ahead. That is just one (1) revenue stream. Mr. Parker continued, All of those are things contribute to the decrease from 2019 to 2020 from an operating revenue projection. Those are the core issues that we are facing. This is a summary of what we talked about. It shows operating revenue by type, property taxes, local income taxes, reserves and non-operating revenue being interest earning, donations and grants. They all add up to what we just showed. Committee Chair White asked, In summary regarding property taxes, in the 2019 budget it was almost$79 million,correct?And it is projected for 2020 that it will be about$75 million? So that's where the deficit is. Will continue and maybe pick up a little bit as we look for 2022 and 2023? Where is the gain coming from? Looking at the Local Income Tax in 2019 it's about $86 million and it's projected to go back to $87 million. So, it's going to be pretty flat on the local? Mr. Parker answered, Correct. The gain is assuming a two percent (2%) growth in net value and will come from the assessed value. From the Local Income Taxes, it is down around $33 million. The $85 million or$87 million are actually charges like Waterworks and EMS. Committee Chair White stated, The issue is that we will be increasing costs to our residents, so, you are in an awkward position for our residents. Based on what we know about our number of residents that are below a certain level, this is a different conversation that we need to have. Mr. Parker stated, And again, if anyone has any follow up questions as we get into the details, please feel free to reach out. Committeemember Broden asked, On the charges for services, what are the other assumptions in there? Mr. Parker answered, It's a projection in terms of past utilization and how much this changes year after year on average. I am not aware of any assumptions or increases. Councilmember Teshka stated, So on that last line,the other operating income line,there's a pretty large drop there—it look like that continues. What kind of assumptions are made on that? Mr. Parker answered, That line, that other operating income includes the one (1)-time issue we don't expect to continue and we expect to see more of that $5 million to $6 million range. Councilmember Teshka asked, So realistically, that $5 million to $6 million dollar range is our base? EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 I f 574.235.9173 TTD574.235.5567 www.southbendin.gov 8 •CITY OF SOUTH BEND I OFFICE OF THE CLERK Mr. Parker answered, As these one (1) time revenues come along, we'll include that in there and there will be a one (1) time bump, but as a projection, we use a base line projection assumption to say those are other types of fines, fees, licenses or permits. Mr. Parker continued, I do want to move on the second (2°d) bucket, which is operating expenditures. Again, I wanted to throw this up there to show that operating expenditures, particularly in the General Fund Plus Funds, are expected to increase fairly significantly. Again, as I said earlier, this is salary and wages as well, particularly benefits and health insurance that is driving a lot of that increase. Interestingly,if you look across the entire City,you don't see as much of an increase year over year. This is all operating expenditures, so, this takes out of capital expenditures. This is all operating expenditures. This Budget 2020 is right here at $22 million dollars and over the next several years we have stayed within that budget range. There have been some efforts in the projection which has been developed as part of 2019 Budget to offset some of the increases that we see in the General Fund Plus with decreases in operating expenditures and in the other funds. The operating expenditures isn't as much of the issue as the revenue because we expect those to be fairly flat. Mr. Parker stated (Referencing the presentation available in the City Clerk's Office), This is operating expenditure by department for 2016, 2017, 2018, 2019 and projected out to 2023 and you can see something in here. One (1) thing I did want to mention is that Innovation and Technology,you'll see a pretty large increase over time. That's as we centralize more IT resources into our Innovation and Technology Department,it looks we are spending more in IT. It's because we're taking those expenditures from the other departments and centralizing them into the IT Department. One (1) more thing I wanted to highlight, from our 2019 Budget, our top total operating expenditures are fairly constant at around $220 million dollars in 2020. Councilmember Davis stated, In the past, we have looked at our budget in terms of increases and talked about instead of just giving everyone just two percent (2%) across the board, we would categorize them so certain levels get so much gross to try to make it more equitable. Do you think you could put something like that together early so that we can have that ready to go? And would this add more to the budget or can we craft something that is within the same financial constraints? Mr. Parker answered, I am more than willing to have the conversation early to see what that looks like. One (1) of the things I'll get to is, if you look at operating expenditures, over fifty percent (50%)of these expenditures are salaries and benefits. So,there are a variety of things that we could put in place and I am open to any suggestions on how we can do creative things like that to help with that issue. Councilmember Davis followed up, If you did see this, in the slide from earlier, it did show that more people are using the wellness initiative. Mr. Parker replied, The wellness initiatives have been great in making sure that our health insurance expenditures aren't increasing as quickly as they have been. The goal is to continue that and see how we can do other kinds of things to make that rate of change even less. Councilmember Davis asked, Do you see employees using the wellness plan individually or do you see their entire families getting on it? Would that make it better? EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld South Bend.Indiana46601 p 574.235.9221 f574.235.9173ITTD574.235.5567;www.southbendin.gov 9 CITY OF SOUTH BEND I OFFICE OF THE CLERK Mr. Parked answered, Yes, we see employees, spouses and children using the clinic. A lot of that is driven by the effort done by our Human Resources team to promote the clinic. Really, plan design and structure incentivizes people to seek those preventive wellness visits. If you look at the out of pocket costs to the employee, it's less if they proactively seek those wellness benefits by going to the clinic. And that was very intentional. We want you to get into the clinic and see the doctor and make sure everything is going okay, and, if you see the doctor, then you receive an incentive. He continued, This is another way to look at what I just showed you again. I don't want to get too deep into it. This just shows operating expenditures by department. It is fairly consistent year after year. From an operating expenditures perspective, this is a key part of how we are addressing this going forward as it relates to the wellness incentive. As you can see this is our 2019 Budget. The high point of about$50 million is in capital expenditures. Our capital expenditure projection falls off fairly quickly over the next four(4) years. This is somewhat reflective of our baseline capital expenditures. Things need to be updated and replaced. This is not your large scale My SB Parks &Trails initiative, these are things like replacing this section of the sewer because if we don't it's going to be a bigger issue. These are our baseline capital expenditures. As we go forward, all the additional projects and large-scale capital expenditures that we put on top of this will add to this number. The one (1) exception to that, is this line on community investment. That largely will include capital expenditures. A lot of those dollars are TIF capital expenditures for 2023. Councilmember Davis asked, So that's why those funds can decrease so much? Mr. Parker answered, It's because it's not taking into account large scale projects that are going to come before Council in the next budget cycle. These are things that the Administration will want to spend money on, particularly capital assets. Normally, we want to replace things that wear out over time. This is what I call the baseline capital expenditures and it's not like we will get much below this. Commiteemember Broden asked, Would you mind walking through the high point of $50.86 million in 2019 and that projection drop off? Mr. Parker answered, That high point is largely driven by two (2) departments which are Venues Parks &Arts and their My SB Parks&Trails Project and Public Works. Specifically, The Bendix Road construction, Western Ave Coordinator Phase Three (3), and Oliver Road. These were brought to Council before the 2019 Budget, and were what I would call over and above the baseline. These are over and above routine replacement. Committeemember Broden asked, I am bit confused, what are you saying is the baseline when you're looking at 2016 and 2017? Mr. Parker clarified,Are you asking why is the projection down in 2016, 2017, 2018. It's because we have been proactivity investing in the community. We have no just been replacing things as they break. If we continue to do that going forward, you would expect this kind of capital expenditure increase. EXCELLENCE I ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 1227 W.Jefferson BvId South Bend,Indiana 46601 p 574.235.9221 If574.235.9173 TTD574.235.5567 www.southbendin.gov 10 (:I'IY OF SOUTH BEND I OFFICE OF THE CLERK Committeemember Broden followed up, If I am understanding this correctly, we are moving from a proactive 2020 to more reactive? Correct? Mr. Parker answered, Yes you are correct. If this is the final budget, then we would not be able to make these kinds of large scale capital investments that we've made in the past. I hope that during the rest of the presentation I'll convince you that we won't have to sacrifice. Councilmember Teshka asked, All of your projections are based on the fact that these capital projects are going down and from a Utilities perspective, if we have to make a big spend on CSO Projects, correct? Mr. Parker answered, Correct, and that's the goal for the rest of the presentation. How can we enhance revenue, reduce operating expenditures, and optimize which capital projects we are choosing to invest in so that we don't have to give up on those large-scale investments which do have a return in our community?Not just a return as though it is important for our residents,which it is, but a financial return to the City in terms of property values. Councilmember Davis stated, With the CSO issues, we had a certain percentage of how we increased those monies. How do those monies reflect the projection? There was a percentage of money to look at that. I think the baseline for that is a little too low, given the fact there are already some established CSO issues. That needs to be addressed. I know that for the last four(4) or five (5) years, we haven't really done anything with the CSO issues. I know we have raised rates for that, and how do those rates and the monies that we have go into those issues that we have talked about? Mr. Parker answered, I don't know enough about the specific projection in Public Works to know what CSO Project costs are reflected in there,but I can find out and give an update. Mr. Parker continued, I want to move to what we are doing to address this issue. How are we changing our projection to make sure we can get people to invest in these large-scale projects, whether it's CSO, Economic Development, and additional parks? From a revenue perspective, I want to look at those same three (3) buckets of revenue, operating expenditures, and capital expenditures. From a revenue perspective, there's a lot of things that we can do to try to enhance the revenue that we are expected to get. For example, we want to refine our revenue projection. We continuously work to better understand the formulas and calculations that go into the taxes that we receive and get better projections on how we are expected to do going forward. This is helpful because if we are better able to estimate the money we'll have going forward, then we are better able to decide how much money we have to spend from a capital expenditure perspective, and we won't have to make difficult decisions if we can better refine the projections that we have. The second (2nd) one (1) which we circled around for some time is working with the County to make sure the assessments truly reflect the value. The net assessed value is really the key to our property tax revenue. Without real control over the rate in most cases, the assessment is really what drives increase and decrease within property tax revenue. So, we need to make sure to work with the County Assessor. Councilmember Davis asked, When you say work with the County, do you mean meetings or provide office staff to help out with their situation? EXCELLENCE ACCOUNTABILITY j INNOVATION INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 11 CITY OF SOUTH BEND ' OFFICE OF THE CLERK Mr. Parker answered, It starts with having a seat at the table with these kinds of discussions. It starts with the City of South Bend's voice being present around the conversation of assessments and property taxes. We shouldn't just be passively accepting of whatever property tax revenue we get. We should be going to meetings and discussing issues with the County. A great example over the last year and a half is that we have been working with the County on retail locations and their property tax value to ensure that South Bend has a part in the conversations with retailers in the community. City Clerk Kareemah Fowler asked,What areas would you look at when refining the projections? Mr. Parker answered, Property taxes are definitely a key in making sure we understand how our assessed valuation can translate into what our property tax value will be. We do obviously have property tax projections, but there have been years when we have gotten a lot more in property taxes or less than what we expected. Local Income Taxes are dependent on underlying economic factors. So, we need to have a better sense of the underlying economy in our City so we can better project what Local Income Tax revenue is. That is not only important from the revenue perspective,but also from the expenditure perspective so we know where to invest the money that we do have. Committeemember Voorde stated, When the State changed the assessment system,they went to a less objective system, but it is still replete with subjectivity. I think we need to work with the County to identify how they are applying the prescription. It's not easy and it's subjective. Even if your base is accurate in terms of the assessed values, from there it's still subjective. Mr. Parker followed up, So, just working with the Assessor's Office to understand how that assessment process is done will help with the first (1St) and second (2nd)points. We will work with both the Federal and State levels to see how that is done. It's a collaborative process. Councilmember Davis stated, Because there was a fear that because we know that the change is going to be made, that there was a push to almost overinflate and get all of the money from that. It was going to raise the property values so we can get more money in the government, so while we are pushing for accuracy, it can almost be seen the other way. Mr. Parker replied, The goal is not maximizing valuations. The goal is making sure that the assessment truly reflects the evaluations. Committeemember Broden asked, Doesn't the appeal process get to that? Councilmember Davis,The appeal process gets to it but the fear was people appealing too late and then the City or the County benefited from the miseducation of the voter. Mr. Parker went on, The goals are to understand the underline assessments. Committee Chair White stated, I probably recommend that we have a separate conversation and invite the Assessor in so we can really talk about it. This has been an issue that I have been hearing for the last five(5) or six(6) years. We need to have a conversation and really share our concerns. More importantly, how can we collaboratively have a discussion so we can get a better outcome that is fair across the board? EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld i South Bend,Indiana 466011p 574.235.9221 f 574.235.9173 1 1D574.235.5567 www.southbendin.gov 12 CITY OF SOUTH BEND OFFICE OF THE CLERK Mr. Parker followed up, Yes, I think exactly that. How can we collaboratively come together? In terms of other revenue, continuing to prioritize economic development issues should be from a revenue perspective and should be a priority in the budget as this is a direct revenue return to the City. Pursuing new grants and identifying sustaining funding, the key here is before we undertake new programs and ongoing obligations by the City, we are really going to push operational departments to make sure they have sustained funding before the new program is put into place. It can't be we have this new program, now we need to fund it. We need to figure out how we are going to fund it before it's put into place. Councilmember Davis stated, This goes along with economic development. We have had to look at new bonds or new situations that have come before us. I really believe that people themselves, consultants from Indianapolis, they need to make a statement that this is in our ability to pay because that's where this community has taken a hit by putting the City in financial ruin. But, to have a Double A (AA) rating, that's not being translated over to the community. Mr. Parker followed up, Specific to your question, yes, we need to do a better job of communicating our debt situation. It's important that we are able to take on debt in a sustainable manner. A manageable debt load is important. I would never want to be in a situation where we did not have debt at all because we are investing enough to impact our community. Councilmember Davis, I think that needs to be shared with the Tribune. That has to be out there because the average person does not know this information. Committeemember Regina Williams-Preston stated, Another thing we need to pay attention to is how they are going to make that sustainable. A couple years ago some departments looked at their ordinances to see how they could increase the fines and things like that.We need to make sure that we are not increasing penalties as a way to generate revenue to fund programing. This was something that was suggested to fund the RSVP Program and I think we might be looking at some legal trouble if we continue to go down that road. We should be more creative with something that doesn't tax our citizens but is actually a new way of funding things. There are some really good ideas out there. Mr. Parker followed up, Creatively pursuing grants and new funding sources is an is option to close some of these issues we've been reporting out about. Committee Chair White stated, I think as we look at this Fiscal Curb, that we as the Council in terms of our priorities for the last six (6) years, we have really focused on the quality of life for our neighborhoods and our citizens. So, as we begin to identify our priorities, I would hope that we would not lose the pace that we have gained. Now of course, much still needs to be done, but when you begin to look at those priorities and the monies that have been allocated to those particular projects,again it goes back to having to sustain those projects.Our citizens have spoken, and we have responded, but much more needs to be done to make sure we don't lose ground. As we look at the information you are giving us, we have to wave that in and make some tough decisions in regard to our priorities for the whole City but, also, for those particular districts that are more challenged than others. EXCELLENCE ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building!227 W.Jefferson Bvld South Bend,Indiana 466011p 574.235.9221 f 574.235.917311 i U 574.235.5567 www.southbendin.gov 13 CITY OF SOUTH BEND I OFFICE OF THE CLERK Mr. Parker stated, I think that is a fabulous point because I think it goes in the conversation on what we are doing from an expenditure perspective. Because what it is, is an exercise in priority. It's making sure that not necessarily decreasing expenditures across the board, it's spending the right money in the right spot. There are a couple of ideas I want to put out here that we've had. As I mentioned earlier, you can't talk about operating expenditures without talking about personnel. It's fifty percent (50%) of our operating expenditures that are related to personnel. (Referring to the presentation), he stated, And there's the breakdown of our employees. Three (3) quarters of our employees are in Police, Fire, and Public Works and the last quarter is everyone else. This $86,780 is salary and benefits across the entire City. That is the average salary and benefit cost across the entire City. Then, you can see our fulltime employee trend over time, it is trending in the right direction,it's sort of a downward trend. From an expenditure perspective,that is the right direction. But over the past several years we have been right around that 1,140 mark. One (1) of the ideas, in addition to some of the more creative things that Councilmember Davis talked about earlier, is putting in place a soft hiring freeze.What that means is not that we won't hire anyone new,but when a person leaves their position through normal attrition,we will be doing a hard look at that position to see if we should re-hire. Does it fit for the currently priorities for that administration? Does it have a responsibility that could be reallocated to others? Is it better to have that particular position done by a volunteer or some other contract employee versus a regular employee? Doing a soft hiring freeze to really evaluate those positions as they come up. If it's an important need to accomplish our priorities, yes, we will re-hire for that position, but doing that assessment will be very key moving forward. Councilmember Davis asked, Will this be now, or be placed when? Mr. Parker answered, Yes, later in 2019. Councilmember Davis asked, Is this meaning that positions that have stepped down, they will not necessarily be a part of this review? Mr. Parker answered, This is looking at it from the Controller, Mayor's Office position to ask if, the particular position that is going to be retired, it is in line with the priorities of the entire government. Councilmember Davis asked, How soon can that be put in place? Do we have to wait until 2020? Mr. Parker answered, No, it will happen in the latter part of 2019 so that we can prepare as people are leaving to bring down to right size the number of employees that we have relative to the expenditures and programs that we have. Committeemember Voorde stated, I don't think this kind of analysis is foreign to us and that is why when it's proposed to start a South Bend Plan Commission for example, you have to look at it in terms of whatever the benefits are and the type of money that we will be spending. And that's why when it was first (1st) proposed a couple of meetings ago, you don't want to say that you are against it but you want the proponents to be able to justify the costs. Mr. Parker stated, Yes, and I think that the key word is prioritization. As we look at implementing new programs, if there's not a new sustainable funding source for that program,then where is that EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld South Bend,Indiana 466011p 574.235.9221 f 574.235.9173 I I IU 574.235.5567 www.southbendin.gov 14 CITY OF SOUTH BEND I OFFICE OF THE CLERK money coming from? What other types of things are we are not going to do in order to do this instead? Councilmember Davis stated,And in that discussion Councilmember Voorde had a few weeks ago regarding programs like Area Plan, there was a movement for shared responsibilities for both the City and the County to come together. If they could come together, it would help us in both of these circumstances. Committee Chair White stated, I want to make sure we can get through the presentation and give the public an opportunity to address not only the Council, but also the Administration. Mr. Parker stated, Health insurance costs, we are doing a lot around that. I have categorized that into three (3) buckets of things we are trying to do to influence health insurance costs. One (1) is structuring plan design. That's everything from who we are working with from a vender perspective to how we incentivize our employees to act in the way we want them to. Receive those wellness screenings and preventative screenings that are known to decrease disease which helps our health insurance costs and also our productivity of employees. We will continue to invest in the Wellness Clinic. And third(3rd),using data analysis and data that we have for health insurance to identify patients that could benefit from more intensive care management, connecting those patients with other options in the community. He continued, Another area in operational expenditures that we are working on is Centralized Services. So with Central Services, all three (3) of these areas are already in place and we will continue to redefine and hone them. There is a lot of opportunity for reduction in operational costs and efficiently gain with continuing to utilize Central Services. Encouraging people to use our Central Services, maintenance, garage, and printing. There is a cost savings if a particular department needs a print job done at our workshop versus another business. Central purchasing is an area that the Administration and Finance Department is working on very heavily this year. We are continuing to refine our centralized purchasing structure and identify unnecessary purchasing and use in the City. We aim to increase the City's buying power and identify areas where different departments are using the same vendor or a similar kind of vender to do a similar kind of service. If we can, we want to combine those and structure those under the same contract to get a better deal. With Innovation and Technology, we are continuing to centralize that to identify areas for software consolidation. There are many departments in the City that are doing similar kinds of things and maybe using different software systems right now.The biggest operational expenditures that we are working on this year is the continuation of culture change. We are really making sure that all department heads, supervisors, directors down to frontline employees,understand that that we are down in the revenue stream and that we are no longer keeping up with our expenditures and that we need to do something different. One(1)of the things that I like to talk about is the two percent(2%) exercise. This is not to say that we are going to require it,but every department head should know if they had to reduce two percent(2%)out of their budget,where it would come from. Which costs are least important to your mission?Which are most important to your mission? And another, if you had two percent (2%) more in your budget, what would you do with it? It's really continuing the culture change. There are other things that would be nice to have so we need to draw the connection between those two (2) and hold department heads accountable for exercising that prioritization. EXCELLENCE ACCOUNTABILITY INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.91731 TTD 574.235.5567 www.southbendin.gov 15 CITY OF SOUTH BEND I OFFICE OF THE CLERK He continued, The last thing I want to talk about are capital expenditures. This is the third (3rd) bucket we are working to address the Fiscal Curb, and this revolves around a change in process on capital expenditures. Historically, capital budgeting has been done somewhat in silos, not dissimilar to operational budgeting. This year we are trying to attempt to do something different to prepare for 2020, in that we are already looking at capital budgeting Citywide. We are looking at departments to identify in 2020 what will be your capital needs. What projects do you think you will need in 2020? We are evaluating budget needs Citywide. We have said it a number of times, this is really a product of my deep seeded conviction that the budget process is the best way to exercise or showcase the City's strategic goals. Resource allocation follows strategic goals, we need to put in place a process that allows for that resource allocation. The last thing I want to mention regarding capital expenditures is that formal consideration of ongoing project operation costs is going to a part of the capital budget process. Committee Chair White stated, Thank you for your presentation. This was a good discussion. I know I have some additional questions. I want to ask the Council Members before we go to the public. When will we be negotiating for Police and Fire?We may want to factor that and teamsters is coming up sooner. We may want to give that thought into the budget as that will have an impact in regards to what the results may be with those unions as well. I am going to ask Council Members if you have any additional questions, reactions, and comments. I will begin with the third (3rd) district representative and go all the way down and then begin with the public. Councilmember Sharon L. McBride stated, Thank you for your presentation and I appreciate that we have been working very closely with Administration to understand how all of these things fit and how we can continue to work better together to be more transparent. I'm very thankful for Councilmember White, for having all of these budget series and having public input because there are a lot of moving parts to this. I want to repeat what you said that we are allocating our resources in all areas of South Bend in making sure we are spreading the wealth and looking at the issues with the economic disparities that we have within the City. I am excited to see that we are having these discussions and looking at the shift through a different lens. Committeemember Broden stated, I see the County budget was passed out as part the of handouts tonight. Relative to that, there are obviously some big decisions coming forward regarding renegotiating some contracting with 911. Relationship wise, some of the things we are tied to with the County in terms of interlocal. With regard to the hiring, and just overall, employees are a big part that is, with no surprise to anyone in the room. I am wondering if there are some other more beneficial ways to look at average cost per employee and salary and benefits. Is there a better more instructive way for the public to better understand that? There are some real outliers in terms of salary that the market drives because those folks could go elsewhere and then we are left without that skill set in the City. Mr. Parker responded, I am open to any suggestions on how to better present that. I do want to say that it's not the goal of the Administration to say we will be decreasing salaries and not giving raises or anything from that perspective. Because, to your point, that we are able to attract good people into the City who are productive and efficient which would actually pay dividends on the ability to operate the City. I don't want to say that we are skimming down on our employees. It is really about which positions can we allocate funds. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld South Bend,Indiana 46601 I p 574.235.9221 f 574 235 9173 I I U574.235.5567 www.southbendin.gov 16 CITY OF SOUTH BEND OFFICE OF THE CLERK Committeemember Broden followed up, I thought a different lens could also be instructive when you look at analyzing healthcare related to that. Then when you say look to right size our staffing level for the services we deliver, that's really driven by internal priorities and decisions. We really can't look elsewhere for best practices, but, we can, probably, whether or not we are being as efficient and effective with our health care metrics. Mr. Parker answered, I'll follow up on the metrics to health care. I think we are in the ballpark when it comes to this. I will get that information for you. I will say to your point, it's very difficult to see those stats in a chart because different cities offer different services, so it depends on what services the cities offer. Councilmember Broden stated, My last thing is in lieu of hiring individuals for the soft freeze. You spoke about task reallocation, but internships would be a component of that correct? If you increase those? You mention volunteers, but I thought internships are really significant because you often do get the talent without the outlay. I am also thinking consultants,more of a short-term skill benefit versus a long-term investment in the baggage that we all bring to salary and benefits. The switch off-on, is this a job that a consultant should do or could do? Or we don't need long- term benefits from, we just time specific skills to plug in? I am wondering about the question of cross-training. For your part-time numbers in a different season, I think VPA specifically on that. Overall, I am very thankful for this presentation but always from my background are the grant and sponsorship opportunities. Where is the room for grant writing? Who is mining those possible potential projects on a departmental level that could and should be shopping around for grants. I know what they do at universities. You have one (1) person that drives that process and pulls that information and prospect dollars out there,but I don't think we have that currently. Mr. Parker answered, That's a great conversation and I think you are right to a certain extent that it is largely up to individual departments to purse their own grants. We do have a grant administrator in the City, his position currently is reporting and sort of after-year compliance with the terms of the grant. Committee Chair White stated, I am going to try to move this quickly, to give the public opportunity to speak and come back to Council. Commiteemember Williams-Preston stated, I just wanted to discuss some of things that I think are very important I want your to keep on your mind. The importance of ensuring the accuracy of our property tax assessments. Creative revenue generation, I'd like to look at having a discussion of having more community members.There are lots of ideas and talents not just in our neighborhoods about what we could do to decrease cost or rescue revenue, but also our university partners. I do appreciate the focus on the difference between equal allocation versus equitable allocation of dollars. We are making decisions on investments moving forward because we finally turned our attention to neighborhoods and investing in places we haven't invested in in decades. I don't want to see a slow down in that. We need to think about public-private partnerships. All of those things really get at one (1) of our key goals around equity. Councilmember Teshka stated, Mr. Parker, it seems like from this presentation, someone could easily think you have been in this position for over ten(10) years.Thank you for the work that you have put into this. EXCELLENCE ACCOUNTABILITY I INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 l i L)574.235.5567 www.southbendin.gov 17 •CITY OF SOUTH BEND I OFFICE OF THE CLERK Councilmember Davis stated, I have enjoyed your responses today and I appreciate your follow up in the future. I look forward to discussions on ordinances regarding weather amnesty and panhandling as we put those together. I want to discuss how we can be creative when using our TIF in terms of taking some of those expenditures and how to deal with that. Committeemember Voorde stated,To an extent,this cost benefit analysis has been there in one(1) form or another for some time. It may have come down to whether or not you believe the Fire Chief. I think there is value in looking at what other cities and communities are doing, especially in the state of Indiana, whether it comes from the Mayor's Round Table,the Street Department,or Road School every Spring in West Lafayette. You find out what other people are doing. That doesn't apply to us, can we provide a better service without increasing cost or lowering it that's all great. I won't be here next year, so the budget we put together over the next dozen meetings we are going to have, nonetheless, I'm hoping to be able to nudge the Administration into more of a neighborhood focus. For better or worse, the Mayor has had a free hand in funding his vision, his priorities. It's been in large measure downtown when you look at the $30 million or so. You look at the$50 million in parks bonds. I don't want a Monday morning quarter back,but I want to start going forward. If I am here one (1) more year for a budget that I am not going to really be a part of, I hope that whether we are applying the cost benefit analysis that we have in the past or whatever it is we are doing, I think it has to look at what the long term benefit is for the neighborhoods. Councilmember White has been saying for this for years, you can't have a strong City without strong neighborhoods. Committee Chair White stated, I think we have not shared our stories from a Council perspective that we have pushed forward and will continue to do so. A lot of initiatives that are now part of the budget we have to continued to push forward and make sure, as we get into prioritizing, that we don't lose sight of the direction that I believe we need to move toward. We have invested in the downtown area and we know that you build inward and go outward,but we have to make sure that the outward is being addressed. It's going to take more City initiatives to really invest and have the developers invest their dollars.These are the kinds of conversations that the Council needs to have as we begin to look at our priorities because it's not only the Administration's priorities, but as a Council, we have priorities and we have to make sure they are being met as well. We know we have the CSO, that's coming too. We really need to, from a strategic level, have that conversation so as we move toward the budget we are ready to have a full discussion. I am going to turn it over to the public or anyone that would wish to speak. I just want to say that I appreciate everyone that is in the audience. We have advertised this, I started last month when we had our Council Members' press release. We did invite representatives from the County and the School Board, unfortunately the School Board is meeting this evening as well. We will continue to try to have other conversations with the County and School Board representatives on this whole issue because what happens at the educational and county level impacts us all. We need to open those channels of communication. I ask that you state your name and address and any comments or questions that you might have. If we can't address your questions tonight, they will be addressed and posted on the website. Committee Chair White then opened the floor to the members of the public. Sue Kesim, 4022 Kennedy Drive stated, I first (1st) want to thank Committee Chair White, as the Finance Chair for reading and taking to heart the twenty-eight(28)budget reform suggestions that I gave her. Meeting earlier is one (1) of them, so I am glad to see that we are doing this. I wanted EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld South Bend,Indiana 46601 p 574 235.92211f574.235.9173 111)574.235.55671 www.southbendin.gov 18 •CITY OF SOUTH BEND I OFFICE OF THE CLERK to reiterate a couple of them, but I am glad to see that we are doing this earlier and I appreciate you taking those suggestions seriously. One(1)of the things I found was a Ted Talk regarding the Fire Department in West Virginia, they reduced their opioid recurrences by forty percent (40%), which is really significant, and I want us to look at what they are doing to see if we could do this here. One(1)of the main things is that they just didn't show up,revive the person, and leave.They showed up with wrap around services. They made sure that a safety net was there for there them. You're welcome to watch that. I'd like to reiterate, I think I have been bringing this up the last three(3) years I've been doing this. Milwaukee did a true cost of a shooting. They figured out that it is $700,000, when someone is shot. Responders, ER, all the investigating, jails, prosecutors, everything. I really would like to know our true cost of violence in our City. Primarily because if s. we know the true cost, we can also justify the prevention and we can look at where some of those costs that are happening. And I also said, we don't have a morgue anymore, so we are tying up officers accompanying bodies to either Kalamazoo or Ft. Wayne and then we are paying them. We have travel time and then we break the chain of custody for evidence and that doesn't get prosecuted correctly. I still want to know the cost of a shooting. I still want to know if having a morgue locally is a more cost-effective solution. Being with a family that has had someone shot and killed, that delay of having the body in Kalamazoo or Ft. Wayne is very excruciating to a family that's already in crisis. So, that's another emotional toll that happens. She continued, Based on the last Public Works update, only twenty percent (20%) of sewers are done, we have eighty percent (80%) still sitting on our plate according to Eric Horvath. That's significant. We are on an eighty-five (85) year plan for the streets, only eight (8) to twenty-five (25) miles are being done every year. We have 2200 miles of streets. We can't be on an eighty- five (85) year plan. Those things need to be looked at up front, and our water. I am concerned about the heavy metal discharge. I want to know where the percentage is on the updates for the water treatment. Although we have had good water reports, it's always something that has to be kept up because it's so vitally important. Lastly, we seem to have a lot of consulting expenses, I think, I have to look this is from memory, I think it's like one(1) year there was 18 million dollars spent on consulting. Study for this, study for that. $50,000 for this, $150,000 for this study and I think that needs to be reined in. I understand that sometimes you have to have a specific consultant, but I think it's been a little too generous. You know we keep redoing studies for the South Shore, how many studies, upon studies, upon studies—before you guys approve another study, look at the ones that have been already done. Look at maybe paring the costs back. Maybe look at hiring people in our region so that we keep that money in that economy close rather than hiring someone from California. Those are a few of my thoughts and I appreciate your time. Jason Banicki, 3822 Ford Street stated, First (1St), thank you for doing this on both sides. I appreciate the Mayor's Office and the City in general for their time. I have just a few general thoughts, and maybe a few statements. When it comes to the salary and benefit break ups, maybe one(1)way is to do it in three(3)tiers, executive tier,management tier and regular employee tier. When you see $87,000 altogether, that's kind of a high number and if you can kind of see where those tiers are, you can see where those dollars are being allocated. Centralized purchasing is a good first (1') step, but have we looked at bringing all of our City departments together and partnering with the County and Mishawaka? Again, the bigger our economy of scale is,the bigger our savings will be. Let's just not look at our own self but let's look at our neighboring governments who are trying to save the same dollars.And possibly expand that with our healthcare as well. The County has seen savings with their healthcare clinic. If we partner again with Mishawaka and County,the savings should go even higher. One(1) of the things we could look at EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227W Jefferson Bvld South Bend,Indiana 466011p 574.235.9221 f 574.235.91731 TTD 574.235.5567 wwwsouthbendin.gov 19 CITY OF SOUTH BEND I OFFICE OF THE CLERK when trying to save some costs is what our Police Department has done in terms of having a very specialized detective unit. Over the last three (3) years, we have gone from having roughly 1200 burglaries down to about eight-hundred(800)to the last couple. When you talk about a thirty-three percent (33%) decrease because you have a specialized force, that's people homes that are not getting broken into. That's less people spending time in our jails. Less insurance costs for the individual. If we have seen that in one (1) particular area, can we look at doing that with other things? We have had street crime that's more on the street force. Have we looked, instead, on having a more specialized detective unit inside the City?Just one(1)that focuses on violent crimes instead of waiting until there is a homicide. Maybe we can get to the issues at hand before it gets to a homicide before it happens, so we are not losing that human capital. That expands to the Fire Department as well. Typically,the Cities that have had the best performance have at least four(4) or five (5), sometimes it's more of an initial layout that we recoup those savings on the back end. Committee Chair White asked, Do we have anymore questions? If not, we will go back to Council to ask anymore questions. Committeemember Broden stated, I just have one (1)more, and I promise, that that is it. On your chart on revenue opportunities, you have one (1) of your boxes that says, continue to prioritize investment in Economic Development initiatives. I know several have talked about that. But it seems to me that it isn't an issue of prioritizing,it's actually possibly looking at refining projections on those and then evaluating those returns on investment and also communicating those returns on investment. There's what is presented to the Redevelopment Commission as kind of the proposal, right? But then there's a lot that comes in that follows in terms of development cost that we are all in on, but it may not show up on the cost side for the petitioner. So,just blowing up your slide a little bit more, or that actual component. Another element is there is a whole other body, locally, that I see and it's more in the private sector, but it's kind of quasi, is your redevelopment authorities. They have projects and have identified priorities and sometimes I don't think they align or match with ours maybe as Council, or overall as the City. And whether or not they match, I kind of think it's an interesting discussion, but let's say they go down one(1) lane and they have an expertise or preference for funding XYZ profiles. If we want to fund BCD, in other words, we carve out our redevelopment opportunities, specific as a City, to what our priorities and our own values are. Mr. Parker replied, Yes, absolutely. I think there is a lot in there I agree with. In terms of refining projections with economic development activities, there is a lot of work being done around that right now. In terms of finding specific, or almost specific, calculators to say if we make this investment, here is what we expect to improve in when it comes in income taxes invested in to the businesses there's a ton of work going into how we make those more actuate. They are right on for suggesting that in terms of what we need to improve on. I agree completely that we as the civil city should prioritize our values but also what are others doing and how we can complement what other investments are being made so we are not throwing money into the same thing. Commiteemember Broden stated, Just as a follow-up there's a report that came out of Ball State University (BSU) about Regional City dollars. If you read that report, it's a very interesting evaluation of whether the Regional Cities dollars are being used appropriately. I guess the question I think that we have to ask is, if you were to look at the profiles of those projects, do they meet, I would suspect there are some differences our values or the values that I am elected to represent I think?With regard to that BSU report,it's being used as the talking piece to actually open up more EXCELLENCE ACCOUNTABILITY INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 466011p 574.235.9221 if574.235.9173 TTD 574.235.5567 www.southbendin.gov 20 •CITY OF SOUTH BEND I OFFICE OF THE CLERK Regional City dollars or regional cities part two (2) or whatever we are in. I think we have to be a part of that conversation. If this segment of dollars is going to be out of bounds to us and it's not coming back to us as tax payers, then we should have a seat at that table while those decisions are being made down at the State level. They are being marshalled into certain quasi-governmental decisions. I think if our values are not meshing, we need to drive some additional conversations about those dollars. Committee Chair White stated, I thank everyone, the Council, our Attorney, the City Clerk's Office, Dan Parker, the City Controller and also Benjamin Dougherty who has been very helpful in working with the Council and Dan. This is the second (2nd) of the series. The third (3rd) one(1) is going to be on debt and that will probably be in May. I try to do one (1) every two (2) months. The last one (1) in December, this one (1) is in March. April is going to be a very busy month, so for May if you can begin to think of some questions. Go back and look at the report when we had the representatives from Indianapolis and to see if you have any additional questions. All of this is being done as we prepare for the budget so that we will be in a better position regarding where our priorities are as we move forward. I thank the citizens for coming, we will continue to have the series. I am hopeful that others will join us. If there is no other information or statement this meeting is adjourned. Committee Chair White thanked all department heads for their attendance. With no further business,Committee Chair White adjourned the Personnel and Finance Committee meeting at 7:23 p.m. Respectfully Submitted Karen White, Committee Chair EXCELLENCE ACCOUNTABILITY INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p574.235.9221If574.235.9173 TTD574.235.5567;www.southbendin.gov 21