09-09-02 Council Meeting Minutes

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REGULAR MEETING SEPTEMBER 9, 2002 he is grateful for the hard work of the department heads, division managers and staff who have made this possible and would like to thank City Controller Rick 011ett and Tom Skarbek for their hard work in putting this budget together. The Mayor stated that the City continues to face new challenges with rapidly increasing insurance costs and pension liability squeezing resources. The full impact of reassessment and tax restructuring is still unknown. A new formula for capping the growth of the property tax levy will yield fewer dollars next year. The downturn in the economy will mean reduced revenue from local option income taxes. Most of these changes will impact the amount of funds that are available for the Capital Budget in January. Mayor Luecke stated that the budget does show a surplus of revenues over expenses and that is intended. That surplus will help fund the Capital Budget next year. Nevertheless, they expect to present another strong capital investment plan for 2003. He noted that the administration stands ready to meet the challenges by improving efficiency and finding more economical ways to provide services. The Mayor noted that he is proud of the operating budget that is being presented and at this time asked City Controller Mr. Rick 011ett to highlight some of the key factors of the budget. City Controller Rick 011ett, 14th Floor, County -City Building, South Bend, Indiana, thanked the Council for going over the budget with the administration, department heads and fiscal officers and he thanked Mr. Tom Skarbek for putting this budget together. Mr. 011ett informed the Council that the proposed 2003 budget is balanced and fiscally responsible. The administration has been realistic about current fiscal responsibilities and financial responsibility. While the City is fiscally sound and has growing revenues, it is not flush with resources to do everything and priorities will have to be made. Mr. 011ett noted that while many issues are sizeable, there are also opportunities that are sizeable as well. The TJX project and other redevelopment projects are good funding problems to have. The City has a long list of projects that will need to be addressed and it is good to look for funds to accomplish great results. Balancing South Bend's needs has never been easy. He noted that balancing the needs in 2003 will not be the most challenging the City has had to face but it will probably be more difficult than the current year for many reasons. Mr. 011ett noted that national, state and local economies are still on the mend. There are also escalating medical, pension and liability costs. Budgeting is one way to give some perspective to balancing resources, demands and priorities. As precise as the printed numbers look, they reflect the assumptions used and the programs needed to serve citizens. The numbers are reasonable estimates for next year but unexpected events must be planned for. He noted that last year there was a great increase in medical and health costs. Mr. 011ett stated that this budget includes all operating expenses as well as debt service. It does not include new capital requests. The property tax levy increase assumes the maximum allowable 5% for the Civil City. General Fund revenues including property taxes are expected to increase by $3 million or over 5.4 %. Personnel costs include base salary increases of 5.3% for all Police Officers that range from 4.7% to 5.6 %. For Firefighters that figure is 2.8% with a range of 2.15% to 4.05 %. Teamsters and Non - Bargaining employees will see a 4% increase. The Police and Fire Pensions continue to experience funding shortfalls. The state pension laws have positively impacted the overall funding but they are not going to hold for the longer term. The catch up funding the state provided in December 2001 and additional distribution from the Public Deposit Insurance Fund will cover the City to 2003. However, by 2004 and beyond, it can be expected that there will have to be a transfer of funds to the Pension Funds from the General Fund. Mr. 011ett noted that full time employees have declined 29.3 from last years budget through attrition. Additionally, Local Roads and Streets and the Street Department will have fewer funds to work with. Over the last two (2) years estimated funds for their capital expenditures decreased from $2 million to $1.3 million. Mr. 011ett further advised that the Mayor's guidelines for expenditures for the 2003 budget included 0% increase in supplies and 1.5% for other services except in unusual circumstances. The total U1"