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.