20080619 Westminster city FY 2009 budget update memo

20080619 Westminster city FY 2009 budget update memo

MEMORANDUM

TO: Fellow City Employees

FROM: Marge Wolf City Administrator

DATE: June 19, 2008

RE: Update on Budget

Preparing and obtaining approval for the FY 2009 budget was a real challenge because the City is struggling to maintain the current tax rate AND continuing to provide the level of services our residents expect.

The cost of providing services is constantly increasing, just as your personalbudget is increasing. Here are some examples of the increasing costs the City is facing in FY 2009:

1. Gasoline increased by 40% and more increases are expected

2. Health care premiums increased by 10%

3. Workers Compensation insurance increased by 30%

4. Electricity increased from 6.5 kwh to 11.O kwh, an increase of 38% andmore increases are expected

5. The landfill fees have increased from $61 per ton to $76 per ton andadditional increases are planned

6. The projected premium for the retirees health care benefit was increasedfrom $76,000 to $619,000 to meet the requirements of the GASB rules.

At the same time, the City revenues have been impacted by three major events.

The first is the moratorium imposed by MDE on new building.

The second is the general downturn in the economy.

And the third is the reduction in State and County funding for projects.

In fact, the City revenues have not increased from last year. We have projected a three-year operating budget for the first time. The gap between the revenues and expenditures continues to widen over the next three years so this challenging financial situation will remain with us for some time.

The highlights of the budget approved by the Mayor and Council include:

1. The 3% merit increase will become effective July 1, 2008. No cost of living will be awarded.

2. The deferred compensation program will continue with the 2% matchingcontribution.

3. The employee contribution to health care will be increased from 7% to 14% and the same match will be required for dental and vision plans.

4. The health care retirement benefit for employees will be continued for current retirees and those currently qualified for the benefit will be grandfathered. The benefit will be modified for future retirees and no employees hired after July 1, 2008 will receive the benefit. (These changes reduced the premium from $619,000 to $298,000.)

5. A $3.5M bond will be issued for a major street overlay project to repair andreplace the most damaged roads in the City.

6. Other than multi-year projects or those projects for which the City was required to budget a match in order to receive grant funds, no other capital improvement projects were approved in the General Fund.

7. We have examined our staffing and policies and procedures to provide the most effective and efficient services to our customers. Staffing requirements have changed based on that examination and these changes will become effective in the new fiscal year.

8. The tuition assistance program will not be offered this coming fiscal year.

9. Attendance at conferences and training will be limited to requirements forlicensing and continuing education credits.

In addition to these actions, we will establish several department-wide Task Forces to develop programs in the following areas:

1. Reduce the amount of gasoline consumed. This will include a review of our take home vehicle policy, the use of pool cars and our actual daily operations.

2. Reduce the energy costs in each of our facilities. An energy coordinator will be appointed in each City facility to help develop an energy policy and monitorcompliance with that policy.

3. Reduce the consumption of office supplies. This Task Force will examinecentralizing office supply purchasing and distribution, modifying utilizationpatterns and identifying waste patterns.

4. Additional members will be added to the Health Care Committee to develop along-term strategy to maintain an employee benefit package at a reasonable cost to both the City and employees.

If there are other areas where we need to conserve our resources or ways to use those resources more efficiently, please do not hesitate to make suggestions orrecommendations to your supervisor.

We will be looking for additional ways to economize and conserve to live within our budget. All ideas will be given serious consideration. Only by pulling together can we meet the challenges of this trying financial situation.

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