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HomeMy Public PortalAbout2015_tcwsmin0323 Council Work Session March 23, 2015 Council Chambers, 25 West Market Street, 7:30 p.m. Mayor Kristen C. Umstattd presiding. Council Members Present: Kelly Burk, David Butler, Thomas Dunn, II, Suzanne D. Fox, Katie Sheldon Hammler, Marty Martinez and Mayor Umstattd. Council Members Absent: Council Member Dunn arrived at 8:01 p.m. Staff Present: Town Manager Kaj Dentler, Town Attorney Barbara Notar, Deputy Town Manager Keith Markel, Director of Parks and Recreation Richard Williams, Interim Information Technology Manager John Callahan, Library Manager Alexandra Gressitt, Director of Economic Development Marantha Edwards, Airport Manager Scott Coffman, Research and Communications Manager Betsy Fields, Captain Carl Maupin, Captain Vanessa Grigsby, Chief Joseph Price, Interim Human Resources Manager Annie Carlson, Director of Public Works Tom Mason, Assistant Town Manager Scott Parker, Human Resources Analyst Mark Hauer, Director of Planning and Zoning Susan Berry Hill, Director of Plan Review Bill Ackman, Deputy Director of Capital Projects Tom Brandon, Director of Capital Projects Renee Lafollette, Senior Management Analyst Jason Cournoyer, Senior Management Analyst Lisa Haley, Director of Finance and Administrative Services Clark Case, and Clerk of Council Lee Ann Green. AGENDA ITEMS 1. Work Session Items for Discussion a. Budget Work Session 1. Self Insurance Fund/Employee Health Care Benefits Greg Snow, Wells Fargo Insurance, gave a presentation on the Town's employee health care benefits. Key Points: • Self-insurance fund was set up last year. • Claims experience over the past 12 months is good, so it is a good time to self-fund. • Historical health care costs have been between 6-7% increases. • Recommendation last year was to build to the maximum liability using Anthem's maximum liability rates. • Changes in the out-of-pocket mandate as part of the Affordable Care Act will require medical and pharmacy out-of-pocket limits. • Anthem recommended increasing the out-of-pocket maximums by $1000 to accommodate the fact that the drug and medical out-of- pockets were combined. • Change in pharmacy tiers to add a fourth tier for specialty drugs. • Anthem's re-insurance fees are competitive. • Autism spectrum disorders will be treated as any other medical/surgical benefits. 1 ' Page Council Work Session March 23, 2015 • Dental is bundled with medical and had a favorable renewal of approximately 5.5% with no proposed changes. • Vision is carried through EyeMed and is also bundled with a guaranteed rate through June 2019 with no proposed changes. • Budgeting for the maximum liability builds some reserve. • Continuing to build the reserve is critically important for future years if there are higher than expected claims during a plan year. • Reserves can be used for health care initiatives. • Purpose of reserve is to cover large, unexpected claims or increases in rates. • Employee and town split the rate increase in the same percentage as they split the rate. Council Comments/Questions: • Why are the mail order prescription copays higher? Consultant answer: Because they are larger. • Do you foresee the town ever reverting back to 100%Anthem coverage? Consultant answer: It would depend on changes in the marketplace; however, funding dynamics would not change. A new carrier would need to enter the marketplace that accepts the additional risk. • What will happen if certain portions of the Affordable Care Act(ACA) are repealed? Consultant answer: It would depend on what changes are made. Some may have very little effect, others might have a major effect. Currently, there is nothing proposed that would dramatically affect the plan. • What page of the budget is the health care reserve shown? Staff answer: Reserves are not budgeted. They are what is held in the fund at the end of the year. • How does Council track whether enough money is in the reserve if it is not recorded in the budget? Staff answer: Staff reports it at the end of the year when the renewal is reported. It is in the self-insurance fund which is tracked separately from the General Fund, similar to OPEB. • What is the cost for Council to be covered by health care? Staff answer: Amount is based on the actual election of coverage by Council members who chose coverage. • Have you done an analysis of what would happen if we increase the deductible? Consultant answer: We had increases in the out-of-pocket, so we did not look at that as an option. The plan is competitive in Northern Virginia and utilizes copays rather than deductibles. • Have we looked at the major claims—are they accidents or chronic illness? 2IPage Council Work Session March 23, 2015 Staff answer: Claims are tracked. The largest one was an admission for "ill defined" reason. • Is staff comfortable with this plan? Staff answer: Yes. • Is the plan and its premiums competitive with other plans in the area? Consultant answer: Yes. 2. Completion of Council Review and Questions. Council Comments/Questions: • Given the new revenue source for emergency medical services transport reimbursement program, will that impact Fire/Rescue budgets and ultimate justification for what they are requesting from the Town? Would appreciate an answer from both the Fire company and the Rescue squad. • With regards to enhancements, would like detail on these items. • Based on feedback from citizens that may not be able to hear Council deliberations around the work session table, would recommend returning work sessions to the dais rather than spend money on improving the work session table microphones. • Answers that have been provided to questions about the skate park include: o Land value of the current location of the skate park- $3 million o 45% more to build skate park in a new location There is value to have active recreation choices for youth in one location, such as Ida Lee Park; however, current location offers active recreation choice for a different sector of town. • Do estimates for potential capital projects include all possible costs? Staff answer: Yes. 3. Long Term/Budget Sustainability Plan Clark Case gave a brief presentation regarding the long term budget sustainability. Key Points: • Budget sustainability program was cited as a key reason for AAA rating from bond agencies. • Chart shows that adoption of the equalized rate this year will result in increased pressure on the tax rate in further out years. • Recommended 18.3 cent rate keeps the amount of increase over years lower. Council Comments/Questions: • Is staff being overly pessimistic about home values and revenues in the near future? 3IPage Council Work Session March 23, 2015 Staff answer: Revenue increases are predicted at 2% for all sources. • What kinds of things might happen to change the numbers? Staff answer: Property values could soar or collapse, which would increase/decrease revenues, but they have been stable since 2007. • How did the town get into a precarious situation with the debt service? Staff answer: Debt was restructured in 2011 in order to keep the tax rate equalized. • What is the percentage of tax bill that is related to debt? Staff answer: The percentage is 14.9% of general fund expenditures. Fiscal policy allows 15%. • TMDLs should be paid for by the county. • Residential tax rate goes to pay debt service between FY 2017 and 2023. • Keeping the tax rate artificially low has put the town in a position to be struggling with high debt service payments in future years. • What happens if a project comes up that has to be done—do these numbers take into account the need for additional debt? Staff answer: At this, we do not have the ability to go to market again and stay within our fiscal policy. There is a possibility that the town could find other ways to pay for a project—pay for it from current revenue, raise taxes, or take the funding from other projects. • We have a separate obligation for TMDLs under state law, so the county cannot fund the town's TMDL projects. • Bond rating agencies do not like to see the tax rate raised because they figure at some point the public will fight back and cause political instability, which the bond rating agencies do not like to see. • Higher tax rate does not equate to a better bond rating. • Budget is tight because too much money was spent on unnecessary capital projects in the past. • Projects that cost a lot of money were ones that citizens needed to manage flood control. • The town's budget is not in bad shape—when the model was originally developed five years ago, the tax rate increases were estimated to be much higher. Now, the needed increases are more modest. • Budget on a year by year basis doesn't look bad, but we keep pushing things into the future. • This budget makes it impossible to consider new projects. • Cutting the General Fund budget adversely affects future years because it reduces the debt ceiling for future years, and reduces the equalized tax rate in future years. • Average tax bills are lower than they were three years ago. Continual cutting of the average tax bill and not letting it increase with the rate of inflation has left the town with no capacity for additional projects. 41Page Council Work Session March 23, 2015 • Look at services that the county should be providing, which would allow some wiggle room in the budget. Must seek outside funding for things that have been designated as priorities. • So focused on the tax rate that Council cannot look into the future. • Concerned that future maintenance of the new roads and other projects is not included into the cost. • If Council decisions are made on the basis of politics, real progress will not be made. • Current system limits Council's ability to share information with staff. • Would like to consider re-thinking the Tuscarora Creek Flood Mitigation Project as $2.9 million is significantly over what was originally budgeted. • Would like to add a crosswalk at Battlefield Parkway and the bypass. • Would like to add an interactive fountain at Mervin Jackson Park to facilitate in bringing people downtown. • Would like to readvertise a higher tax rate to give us extra money for this fiscal year and change the baseline for next fiscal year. 2. Additions to Future Council Meetings Council Member Fox stated she has questions about enforcement of the sound ordinance. She questioned how a decibel based sound ordinance would be enforced and what costs would be associated with it. Another demonstration on decibel levels was requested. Council Member Hammier asked that an invocation policy be documented and discussed as a council. There was consensus to add this item to a future work session. Council Member Butler requested a discussion over fire and rescue funding. There was consensus to add this item to a work session in June/July. Council agreed to forward questions regarding Fire and Rescue to the Deputy Town Manager who would communicate them to Fire and Rescue officials. He also requested information on TMDL project costs and who will be paying for mitigation. He stated his intention that the zoning ordinance amendment for office and industrial uses be sent to a work session after the public hearing. 3. Adjournment On a motion by Council Member Martinez, seconded by Council Member Butler, the meeting was mourned at 9:44 p.m. /' L Clerk of C i`u it 2015 tcwsmin03 5IPage