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HomeMy WebLinkAbout2008-02-04 Finance Committee Minutes FINANCE COMMITTEE February 4, 2008 Councilors: Farrington, Palmer, D’Errico, Blanchette, Gratwick Staff: Cyr, Barrett, Dawes, Little, Moore, Hathaway Others: Roger LeBreux, Casey Leonard 1. Consent Agenda A motion was made and seconded to approve the Consent Agenda items. Palmer and Gratwick did question the bus engine emergency repair. Responding, Dawes said the bus is a 12 year old bus with 750,000 miles. It was due to be replaced last year but no federal dollars are available for bus replacement. The BAT can’t do without the unit, the motor failed and it was $27,000 for replacement. Gratwick asked about the state purchase of buses and he asked the value of the bus in terms of repair. Dawes said as far as putting money into a worn out unit, he agreed with Gratwick. Bus depreciation is approximately 10% each year. For a 10- 11 year period, the unit should be replaced. The state does purchase but it is through federal allocated dollars. Gratwick asked about spare buses. Dawes said there are two spares but they are in use in order to rotate for maintenance. Cyr said the title for the buses remain with the Maine Department of Transportation. The City does not own the buses. There is funding for operating costs and funding for maintenance. This will most likely fall under the federal maintenance category of grant funding. Providing there is sufficient money, the federal maintenance portion of the bus grant picks up 80% of the cost. The local match is 20%. Gratwick stated his dissatisfaction with the federal government. a. Emergency Repair – Bus Engine b. Quitclaim Deed – Pinkham – 287 Buck Street 2. Bids/Purchasing a. Sodium Bisulfate – WWTP – Monson Company - $12,750 Cyr said the first two items are chemicals used at the Wastewater Treatment Plant. In the past, they were on a three year contract but due to price fluctuation it was determined not to be feasible. There were two respondents for the bisulfate. Monson Company was the low bidder. A motion was made and seconded to approve staff’s recommendation. Palmer asked the purpose of the bisulfate. Moore said that state and federal government regulations mandate that wastewater be disinfected. Sodium bisulfate is needed to remove the chlorine before it reaches the river. b. Sodium Hypochlorite – WWTP – GAC Chemical Corp - $94,760 Cyr said four responses were received through the bid process. The lowest bidder, JCI requires a minimum delivery of 4,800 gallons at a time. GAC, staff’s recommendation, does have a bid price of 82 cents per gallon with a four hundredth of a cent fuel charge bring the price to 82.4 cents per gallon. This does make the cost a bit higher than the initial bidder but there is not a minimum delivery amount. Responding to Gratwick, Moore said the effluent is tested for chlorine content and the acceptable level is a maximum daily level of 0.3 parts per million; monthly would be 0.1 parts per million which equates to 10 parts per billion for the maximum average monthly level. Responding to Palmer, Moore said there is an aquarium at WWTP which has Atlantic salmon and are in the plant effluent. They will be released back into the river when the ice is out and then the staff will bring in additional salmon offspring. A motion was made and seconded to approve staff recommendation. c. Request to Waive Purchasing Regulations – Flygt Pump Ball Checks – ITT Flygt Corporation - $13,723 Moore said these act as check valves in the pump. It is about 2 ½ feet in diameter. Because they are OEM, they can’t be purchased elsewhere. The parts are made in Scandinavia. Moore said he has an opportunity to purchase two and thereby asked for the waiver. The money was not set aside but there was money leftover from the purchase of a recent pick up truck. It will make up the difference in price. A motion was made and seconded to approve staff’s recommendation. d. Request to Waive Purchasing Regulations – Bomb Squad Imaging Equipment – Logos Imaging - $22,900 Hathaway said the bomb team is in need of a new imaging system. Currently, a film based system is used which works fairly well. The film is made by Polaroid and that the film will no longer be available in 2009. The new system is a computer-based, digital system. Cyr said the request is to purchase the equipment outright and not to go through the bid process. Money for the purchase will come from Homeland Security monies. Responding to Palmer, Hathaway described how the system works and will be used. Responding to Farrington, Hathaway said the bomb squad was utilized eleven times last year and it is usually 24-25 per year. A motion was made and seconded to approve staff’s recommendation. 3. Executive Session – 36 MRSA Section 841(2) – Hardship Abatement A motion was made and seconded to move into executive session. 4. Open Session – Hardship Abatement A motion was made and seconded to approve staff’s recommendation. 5. Auditors Presentation of the FY 07 Annual Financial Report Cyr introduced Roger LeBreux and Casey Leonard of the Runyon Ouellette Kersteen auditing firm. LeBreux said his firm comes in during June for preliminary work, the Finance Director then closes out the year during the summer and then the auditing firm comes back in September. The financial statements were completed in the middle of December. The results being discussed are as of June 30, 2007. He credited Cyr and Little for putting the report together. LeBreux reviewed the handout. Responding to Gratwick, Cyr replied that money was set aside in a separate fund balance for settlement of the firefighter’s contract for presumed costs. Once the amount is known, the money becomes a liability. LeBreux provided revenue update information. In response to Gratwick, Cyr talked about the difference between designated fund balance and undesignated fund balance. Leonard reviewed general fund expenditures which were below budget in two areas: Public buildings and services as well as education expenditures. Responding to Gratwick, Leonard did not have the number of vacancies in the education department. Barrett said it could be related to replacing individuals upon retirement. If a city employee retires at a top step, they would most likely be replaced at a lower step and thus a budget savings. Cyr said the upcoming FY 09 budget process has already started. Coming close to budget estimates reflects the staff’s commitment to the budget process. Although a lengthy process, the time and effort is worth the end result. LeBreux talked about property tax collection revenue. From 2000-2007, it has been slightly higher than 97%. There has been a slight decrease in the past year but it is typical across the state of Maine. Regarding property tax rates, he said the State is providing additional state aid and the City thereby doesn’t need to raise as much tax revenue. Farrington asked if there could be a graph showing valuation information. He also asked for a graph depicting state aid over the years. Cyr said she will attempt to pull the information together. In the financial statement, she will add a table outlining the base assessment, the LD 1 allowed to demonstrate compliance with LD 1 and what the City is allowed to increase its tax rate on an annual basis. (Blanchette spoke but not into the mic). Leonard reviewed a fund balance analysis. Responding to Gratwick, Cyr said the City is at about 10.13% which is slightly over the year end range. It is in the allowable range set by Charter. She spoke about additional $550,000 dealing with the Penobscot River issue. Leonard reviewed the unrestricted net asset for the smaller Enterprise Funds. Gratwick asked about the Parking Fund. LeBreux explained that net asset is similar to the General Fund undesignated fund balance accounts. It is equity. Cyr said the total equity of the Parking Fund is actually in a deficit position of $284,000 caused by the significant investment in the infrastructure and is being depreciated over time. The deficit increased by $70,000 this year. She suggested that next year it could be done as total assets instead of breaking out unrestricted versus restricted to provide a clearly picture. Enterprise funds that are self-supporting are the Sewer Fund and Bangor International Airport. Replying to Gratwick, Barrett said the sewer rates have been held down by decreasing the cash on balance in the Sewer Fund. Most of the cash came from the sale of the percentages of the treatment plant to other communities. The secondary treatment plant will be paid off around 2012 to 2014 and rate increases will be necessary through that time. Leonard reviewed tax collections compared to other municipalities. LeBreux reviewed undesignated fund balance compared to similar communities. Bangor tries to maintain 7.5% of its budget for this fund balance and this audit shows it is slightly less than 10%. Responding to Gratwick, LeBreux said that bonding agencies suggested increased levels within the last two years. Leonard reviewed debt service as compared to similar communities. Revenue and expenditures for the General Fund were reviewed. Gratwick asked if this was typical and LeBreux indicated it depends on the community. Gratwick spoke about TIF’s. Barrett said some communities do not have TIF’s because of not having an opportunity to have them due to little development. Farrington asked about state and federal intergovernmental dollars. LeBreux said it is 90-95% state. Replying to Farrington, Barrett said much more is sent to the State from the City than the City receives from the State. Debt per capita for all debt is $3,358 per capita. From 2001-2002, the significant increase was when the pension obligation was taken out. Responding to Gratrwick, Cyr indicated it takes the staff from June to December to compile the financial statements. She waits 60 days after the year end (June 30) to make sure all is accounted for. LeBreux pointed out that this is just one piece of Cyr’s responsibilities in dealing with many City departments. He also credited Cyr for her accuracy and professionalism. LeBreux talked about internal controls report, which is a piece of the audit. It is a system in place to help prevent or detect misstatements in a timely manner. He reviewed the report in detail with the committee. Leonard spoke about activity funds at the Cohen School. Cyr said the School Department always takes aggressive steps to correct problem areas. LeBreux talked about inventory balances. Costing was inconsistent. Old aging and obsolete inventory ties up cash and wastes space. He referred to it as a shop cleanup. (Blanchette spoke but not into the mic). Leonard spoke about the Avitat cash procedures and suggested recommendations. (Blanchette spoke again but not into the mic). (D’Errico spoke but not into the mic). Gratwick asked about internal controls and segregation of duties. Cyr said the concern would be if someone on her staff was entering accounts payable and reconciling bank statements therefore leaving room for falsification. (Blanchette spoke but not into the mic). Replying to Farrington, LeBreux said accounting standards change each year and this year will be one of the largest – the approach of the audit. It will be less numbers and more internal controls. 6. Excise Tax Update Barrett said there have been continuous attempts to change state law on auto excise tax. There is now a signature petition in process to roll back the excise tax by 50%. MMA is supporting to leave the system alone. Little explained an alternate proposal. There was a group of several communities, state agencies, and MMA. Little represented Bangor. The group agreed that the excise tax should remain as is. It is not the mill rate but the value of vehicles that is causing the increase. In Maine, over 60% of vehicles are over six years old and older. At the group meeting and after conferring with Barrett, Little suggested cutting the top and the bottom rates and extended it out a couple more years and all of the people in the middle would make up the difference and make it revenue neutral. If this was enacted, the State would lose approximately $3M in revenue. In Bangor, there would be a loss of $27,000 out of $4.7M. He stressed that the group’s first proposal is to do nothing, and not make any change. The group did discuss financing excise tax with the Maine Automobile Dealers Association. (Blanchette spoke but not into the mic). Replying to Gratwick, Little said that all excise tax is driven by State law through the Legislature. Regarding the citizen initiative, Little said it also does have a incentive clause regarding hybrid vehicles. (Blanchette spoke but not into the mic). The Committee adjourned at 6:55 pm.