James Wilson, the City’s Financial Consultant, presented the Proposed FY 2012-2013 Budget. There are currently four options, with all four including a ten percent personnel reduction. Each option is also based on a true hiring freeze through FY 2012, with only certain safety-related positions to be filled. That would include Altus Police Department and Altus Fire Department.
The need for both personnel reductions and utility increases is driven by various situations. One is the increase in the cost of water and electricity. Another is that the City must find a way to repay the AMA $2.2 million. Wilson explained that the AMA transfers to the General Fund are budgeted annually, but they have not been done in FY 2009, through the current year. A third is that money must be raised and set aside for big projects, rather than borrowing money for them. Among the big projects is the investment in our infrastructure. “The residents will pay for infrastructure one way or another,” Wilson said. If the City borrows $1 million, the residents will have to pay $1,450,000 for that $1 million in interest. If the City saves it ahead of time, the residents only pay that $1 million.
Option 1: includes the ten percent personnel cost reduction and a 24 percent utility increase. “This is the fastest plan for reaching full financial stability, but also requires the greatest increase in utility revenues,” according to the packet provided by Wilson. But, those increases may be too fast for the residents to absorb, he noted. The financial recovery in Option 1 would take three years.
Option 2: Wilson made it clear that he thinks option 2 is the best for the City of Altus. This includes, in addition to the ten percent personnel reduction, a 15 percent utilities increase. “This option meets all key elements in financial stability”, according to Wilson’s packet. The City would have $1.3 million to address its needs. The utilities’ revenues could be rather combined to make certain none of them “goes broke”. Wilson’s figures for Option 2 show that all utilities but sanitation and electricity could be losing money and those two making money could keep funds even. With the increased utility costs, Wilson said the City could help provide the truly needy residents with a Care-type program for utility costs. The financial recovery in Option 2 would take five years.
Option 3: along with the ten percent personnel cost reduction this option holds utility costs to ten percent. This so-called ten and ten leads to very high long term costs to the taxpayers, Wilson said. “This five-year plan doesn’t address process for rebuilding fund balance, there’s no plan for repaying $2.2 million cash loan and does not address long term capital needs.” That means there’s no plan for financial recovery with Option 3.
Option 4: leads to sky high long term costs and borrowing for everything. “This option slows down the negative financial stability trend, but does not reverse direction…” There would be no financial recovery through this option. It would mean the City would be able to pay few bills and would be caught in a downward spiral. “It’s the best way to go out of business,” Wilson said.
“The AMA repaying the General Fund for the services that the General Fund provides to the AMA is not optional,” Wilson said. Wilson stated that the AMA has been short $2.6 million ($2,632,209) for years. “In some respects, we’re flat broke,” Wilson said, “if you read these documents closely. It’s very, very serious.” Wilson said the City will pay its vendors. “Now’s the time to change direction. This is a defining moment.”
The number of personnel positions that would need to be eliminated depends on how many employees take advantage of an incentive plan. (See Incentive Plan) An average number of 27 employees may save the City $1.6 million, depending on the salary of those who resign. A certain amount of moving around to different departments is expected as City employees apply for vacant positions. Matt Coppock said they already have nine to ten positions currently open. With three resignations received Tuesday, May 29, that will comprise about one-half of the reduction. Depending on the number of employees who resign, it may not be necessary to conduct a Reduction in Force (RIF) both Wilson and Mayor David Webb said.
Details on how many employee positions to be eliminated from each department will be cleaned up from the preliminary list in the packet, Wilson explained after Kenny Combs said his departmental needs are different than those listed.
The City Council, after much discussion on a City-Wide Severance Incentive Plan, voted five to one, (with Rick Henry as the dissenting vote) to approve the plan. This would offer eligible full time employees with more than one year of service, depending on categories years of service, a minimum of $3,000 and a maximum of $9,000 on a first come, first served basis. Those requests would be processed until the City reached a savings of $1.7 million in reduced personnel costs. The funding would be generated from the hiring freeze, effective now. The employees would be gone by July 1.
Chief of Operations Bob Stephenson said that DEQ could provide emergency staff services in certain departments.
Rick Henry said they’ve been talking about this for two years. He said he has a hard time thinking that by July 1 things will change. The 15 percent utilities rate increase concerns him too. In the past, money that was designated went for other purposes, Henry remarked.
Wilson said that there will be documentation accompanying the budget that could explain certain designations. He also said they will do things out in the open.
Scot Simco said that for three years MAPS money appeared on the books as revenue.
Mayor David Webb said that the money was “masked”, not intentionally, even the auditor didn’t see it.
Henry said he saw it. “I could tell.”
Wilson said something was out of balance when the department heads couldn’t purchase vehicles year after year. He called on Chief J.R. Wheeler.
Wheeler said he’d requested a vehicle for eight years, at least six years it was approved.
Perry Shelton said, “We have a budget guy with an excellent plan with a way forward.” He appreciates Wilson’s hard work and made a motion to accept the Personnel Incentive Plan. Simco seconded it. The plan was approved, but may be changed or further discussed at the June 5 meeting.
In addition to Kenny Combs, Altus Police Chief Tim Murphy spoke on his concern on the hiring freeze. Wilson explained that APD and AFD both fall under the safety critical positions policy. They could hire replacements.
Mike Patterson said he didn’t vote for the budget last year because APD took the hardest hit, losing officers.
Murphy said, “I refused to give up any uniformed officers.” He worked with HR and finance. “We are very stretched now,” Murphy said.
Rick Steen said he had concerns about losing uniformed officers from APD.
Wilson said no uniformed officers would be cut in the current proposal.
Mayor Webb thanked Wilson for his hard work on the budget.
Henry spoke on the Economic Development Corporation (EDC) and funding to tourism. He and Webb explained about the EDC and Henry said it would be better to have the EDC deciding what to do with tourism dollars. Perhaps some could help pay for City Auditorium repairs.
Remarks had been made earlier that “they” did things in earlier councils. Webb said, “Won’t it be nice to get from ‘they did it’ to ‘we fixed it’?”
The meeting adjourned at 8:54 p.m.