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HomeMy WebLinkAbout2009-07-14 Government Operations Committee Minutes Government Operations Committee July 14, 2009 Minutes Councilor Attendance: Wheeler, D’Errico, Blanchette, Hawes, Nealley Staff Attendance: Barrett, Farrar, McNeil Others: Water District Trustees & Staff Members, Eric Russell, BDN, Barbara Sosman, Bob Sanders, Paul Trommer, Joe Savoy, Bill Beardsley, Trevor Bragdon, Nick Bearce 1. Quarterly Update with the Bangor Water District  Introduction of Trustees and Staff (Bangor Water District Chair Wellman)  Billing System Update (K. Moriarty)  Essex Street Concrete Tank Update (K. Moriarty)  LT2 Variance (K. Moriarty)  Bangor-Brewer interconnect (K. Moriarty)  The Value of BWD’s Water (K. Moriarty)  Invitation to Tour Water Supply/Treatment Facilities (Chair Wellman)  Committee Comments/Questions (Chair Wellman) Moriarty began with an update of the District’s Billing System stating that the Water District and the City of Bangor share a billing software system which is now under contract with Northern Data Systems. In August, the staff from the Water District and the City will be training on the new system hoping to be online in September or October. The new system will take credit card payments and other banking options and will increase the efficiency of the billing cycle. Moriarty discussed the Essex Street Concrete Tank and stated that currently there are two: A 4 million gallon tank that was built in 1958 and a 2 million gallon that was built in 1933. Last year the standpipes were inspected and it was found that the cost of painting and repairing was estimated to be about $1.1 million dollars. Looking for an alternative, staff researched building one tank. The plan is to utilize one concrete tank that is 3.4 million gallons which will not need to be painted. This will cost about $1.4 million and the funding for this project is covered by the America Recovery and Reinvestment Act or the Stimulus Package. It is a 30 year loan and 30% of the total cost is grant money and does not have to be repaid. The remaining balance is at a 0% interest loan. The standpipe has a mixing system to ensure the highest quality of water. The current standpipe has a pump system that relies on electricity to mix this water. The Water District has applied for a grant through Efficiency of Maine and $49,500 would be covered. With this new system, there will be a savings of about $9,000 a year on electricity. The Contractor for this project is out of New York, but the sub-contractor is local and the concrete and lumber used will also be local. The project will be complete by early spring. Moriarty discussed the Long Term 2 Treatment Regulation which is for unfiltered water supplies, such as the Bangor Water District, to install treatment, which will inactivate a micro organism called cryptosporidium. The Water District would be installing ultra violet treatment at the estimated cost of $12 million capital cost and $100,000 for operating and maintenance costs. Bangor, Portland and Portland, Oregon are seeking a variance from the EPA. The variance will only apply to large and medium size systems and must be an unfiltered water supply. There are only about 60 in the U.S. and it has to be a very protected source of water to qualify for a variance. The Bangor Water District owns and protects 98% of the watershed. Responding to Blanchette, Moriarty stated that Portland gets their water supply from Lake Sebago. Moriarty continued on to the Bangor-Brewer Emergency interconnects. Brewer will be able to supply Bangor with 3 million gallons a day, and in return, Bangor will be able to provide Brewer with 1 million gallons per day with this interconnect. This project is funded by the Brewer Water Department through the Stimulus funding they received for this project. The contractor is Barney Silver of Orono and the hope is to have this completed this fall. A training process will begin later this fall to test it. Moriarty discussed the true value of water. She brought up the rate increase that went st into effect on July 1. The minimum rate is now $29.91 per quarter or 33 cents per day. The daily uses for water include drinking, showering, toilets, cleaning, brushing teeth, ice, washing hands, laundry, drinking water for pets, washing dishes. When you compare this cost per day with the bottled water, which costs about $1.32 per bottle, there is a huge difference. Wheeler thanked the Board of Trustees for their time. 2. BAT Community Connector Shuttle Service Agreements  City of Bangor and University of Maine  City of Bangor and Town of Orono McNeil stated that the BAT Community Connector will be operating a shuttle service for the University of Maine Campus and downtown Orono beginning this fall. It will follow a calendar year of the school with approximately 30 weeks. All costs associated with this service will be covered by the State of Maine Department of Transportation, the University and the Town of Orono. The Agreements have been approved by the UMaine and the Town of Orono. Responding to D’Errico, McNeil stated that this does impact employment. The BAT will be adding staff to the existing personnel roster to staff about 100 hours of service a week. Nealley complimented everyone involved and feels that this is a good advance in providing transportation. McNeil stated that 2 more buses will be delivered tomorrow and driver training will begin. A motion was made and seconded to recommend approval of the Agreements. 3. Draft Resolves for Committee Review and Comment Regarding Two Fall Referendum Questions  An Act to Provide Tax Relief (also known as TABOR II)  Proposed Revision to Motor Vehicle Excise Tax Rates At the last Committee meeting, two Referendum questions were discussed that will appear on the fall statewide ballot. Following a review of each, the Committee asked the City Manager to prepare DRAFT Resolves opposing each question for further consideration and comment. Additionally, a request was made to provide the proposed language for each question. Barrett stated that the language has not been finalized due to the Secretary of State releasing the draft. The following is the wording from the Secretary of State: Tax Relief/TABOR II Question: “Do you want to change Maine law to require voter approval for state and local tax and spending increases over certain limits?” Excise Tax Question: “Do you want to cut the rate of excise tax on newer vehicles that owners pay towns by about half and exempt some energy-efficient vehicles from the sales tax?” Barrett mentioned that this referendum wording is out for public comment through July th 27. He referred to page 27 of the agenda packet with the draft resolve dealing with TABOR II. In 2005 the State passed LD1, which provides some spending limits at the state level and some tax levy limitations at the local level. That law has, in many cases, been effective in that the state is under their LD1 limit as is the City of Bangor. For the current year, the City is about $1.5 Million below the allowable limit. Tabor II would change that system imposing growth limits on state spending in broader categories. The current limit only applies to the state general fund and TABOR II and would extend that to other state funds to include the highway fund and would establish the FY 2010 as the basis going forward. There have been some concerns expressed at the state level that establishes an FY in which state spending has been dramatically reduced because of the state of the economy. Barrett stated that going forward the state limit would be based on what some might argue as an artificially lowered level of state spending. It would change the current system as cumulative. For example, the City of Bangor is $1.5M under the LD1 limit, next year when computing the City’s limit; the $1.5 million dollars will carry forward. Under TABOR, the City would start over each year. In other words, next year the City’s LD1 would be calculated on this year’s tax levy, where as next year is this year’s tax levy plus the $1.5 million that the City is under, providing some flexibility. When this was discussed in 2005, the concern was this might put cities into a “use it or lose it” approach and encourage spending because of the fear that it would not be available in future years. TABOR II also requires voter approval for virtually all tax increases and expenditure increases above the growth limit. This would require an election on those kinds of issues, either locally or on a statewide base. The state has estimated that a statewide election, along with the information that the proposal would require be mailed to all registered voters, would cost the state about $800,000. Locally, it would not require as much money and the City would try, whenever possible, to group elections together trying to avoid special elections, but there would certainly be some additional costs. There is a requirement that municipalities and counties adopt a uniform budget format developed by the State Planning Office. Barrett is unclear if this would be a problem and would need to look at what the State Planning Office would propose and how that might affect things like the City’s computer systems, for example. Barrett suggested considering the extent in which Tabor II tends to move state and local government in Maine towards a process of budgeting by referendum. He pointed out that there are examples of this around the country, such as California, that seems to tie the state into a straight jacket to where they are basically rated as junk bonds and they are issuing IOU’s that the banks are not even recognizing. TABOR would also supersede the City Charter. The City’s Charter does not recognize referendums or initiative rights when it comes to City budgetary matters and does not recognize that the elected officials are the individuals who have been assigned that responsibility. The Resolve concludes with a list of reasons that the Council might consider if they wish to take a position against that proposal. Nealley stated that he was not completely comfortable with the City doing anything more than issuing facts about these referendums. In response to Blanchette, Barrett reminded the committee that if he does not get direction from the Councilors, he would not comment on an issue or he would refer them to individual Councilors to speak, He would answer questions, but he would be circumspect in what he does. He pointed out that, even though Council takes a specific position, caution is needed in any kind of electoral setting that staff does not become advocates. Blanchette is concerned about the referendum vote and feels that voter burn out is happening more and more. She believes that the 3 – 5% of voter turnout in Bangor is not a fair representation of the City of Bangor. She points out that Councilors are elected for the purpose to make decisions and represent the people of Bangor to the best of their ability. Responding to Wheeler, Barrett said that about 1 month ago there was a poll that indicated support for both of these questions with more support for the Auto Excise Reduction. He noted that this poll was conducted early on in the process before there has been a lot of discussion or debate. He feels that this might be a fairly uninformed opinion at this time. Barrett went over the Auto Excise Tax that will reduce the excise tax from between 40 and 70% on vehicles 6 years old and newer. Approximately 67% of the vehicles in Bangor are 6 years old or older and would see no change. About 1/3 of the City’s auto excise tax is paid by business for fleets and other kinds of business vehicles. The City would see about a 40% reduction in auto excise tax revenues on an annual basis, which are a cut of about $1.8 million of an approximate total of $4.6 million each year. Generally speaking, there is a close correlation between what the City spends on highways, winter and summer maintenance, reconstruction paving, street lighting, etc. and the amount received in auto excise tax plus road assistance funding from the State. If this is approved, it could go into effect as early as January, 2010 which is half way through the fiscal year. That would raise some immediate budget problems for the City and it is possible that the City would have to be looking at eliminating 20 to 30 positions in the City’s general fund. When positions are eliminated, there are usually tail costs associated with that in terms of accrued benefits, unemployment insurance, which compounds the problem over the final 6 months of the year. This would be particularly difficult for the City given that in this budget process the City eliminated $1.3 million from Barrett’s original proposed budget allowing the City to continue with the same tax rate as last year. During that process, some vacant positions were eliminated and the City would have to lay off individuals. To replace the auto excise tax with property tax would require an increase of .75 cents, which is not being suggested. Barrett also pointed out that this burden falls totally on the City side of the budget. There is no way, in the middle of the year, to go back and change the amount of property taxes that go to the School Department, for example. He referred to page 30 where it summarizes the reasons that Council might want to oppose this. It states that reducing excise tax does nothing more than increase the City’s reliance on property taxes. If the State gets into budget problems or is restricted in spending or taxing, Barrett feels that one result will be further reductions in aid to Municipalities in education. The City saw a disproportionate impact on this last State budget where the City took, not only cuts that were required due to falling State revenues, but an additional 10% cut and the City would see more of that in the future. Again, Barrett pointed out that this excise tax would create hardships and force the City into making some decisions about what services would no longer be provided and that will entail going into Police, Public Works, and Fire. Bill Beardsley spoke in favor of the underlying concepts of TABOR II stating that long term TABOR II will significantly increase the revenue of the State of Maine government and the City of Bangor. He doesn’t doubt the short term impact will be difficult, but feels that Maine and Bangor is tremendously undercapitalized and as a result of that, the standard of living is low. He says the nature of the problem is the tax uncertainty. He agrees that TABOR II is not perfect. He spoke about human resources within the City of Bangor and stated that they spend a huge amount of money on K-12 education. The result is that 40% of those students leave the state and do not come back. He said that a big reason they leave is not because of a better education, but a better career. There are no jobs when they come back and there is not the higher standard of living. Until there is some kind of stability to local investors or major corporations, he believes that this area will continue to be undercapitalized. Trevor Bragdon spoke in opposition to the Resolves and explained that he managed the campaign to collect the signatures as well as continued to work on both initiative campaigns. Over the fall of 2007 through 2008, over 3,000 Bangor residents and voters signed both of these petitions. Not all of the people that signed the petition supported them but thought that these initiatives should go out to the voters so that there could be debates on them. He stated that in these economic times, everyone is looking at ways to cut spending and reduce overall expenses. Many residents have lost their jobs, seen their retirement accounts dwindle, and property value go down. The U.S. Department of Labor says that Unemployment in Penobscot County has gone up from 5.1% in May of 2008 to 8.6% currently. He feels that if Council supports this, the message will be sent that the City is unwilling to consider proposals that set reasonable limits on spending growth and requirement tax payer’s input. If these were to pass, he feels that Bangor residents would view their Councilors as being out of touch. Nick Bearce stated that he dislikes it when statements are made saying that if the excise taxes are cut then Bangor will have bad roads. He says that if examples are going to be used like that, then use fair ones such as eliminating Assessment, Code Enforcement and the Assistant City Manager. There would be a much different reaction from the public. Barrett responded by saying that he was only using the roads as a comparison simply to show that paying excise tax related to roads because the income is close to what is spent. He also pointed out that the City would have to cut between 20 to 30 positions. The cuts would tend to be in capital spending and personnel. Paul Trommer stated that he doesn’t feel that it is the function of the City Council to state as a whole whether or not they endorse TABOR II. He feels that TABOR is responsible for the people in Augusta not listening but says that if spending is under control in the statewide level, all will benefit. Joe Savoy encouraged this committee to vote against this resolve. He supports TABOR because he feels something has to change. Responding to Mr. Bearsley’s statement about the children leaving town, Savoy says that it seems to him that the workers and students move out and the welfare folks move in. He believes that because we have such a great welfare system that there needs to be some sort of stipulation that says an individual needs to live in Bangor for a certain number of years before qualifying for help. Barbara Sosman referred to the discussion in the previous meeting regarding whether or not to make this a resolution as opposed to providing information to the public as education. She, as a member of the public, feels that once a resolution comes from the City Council, it sounds like advocacy. She thinks the Councilors are running that risk, even though it has been said that it is not the intent. Bob Sanders spoke about the lack of knowledge in the public about tax issues. He disagrees and thinks that people are very informed and passionate about these issues. He wants to advise the Council and people in the government in Maine to ask why these issues keep coming to the fore front and why are they gaining traction. He believes that it is because taxes are too high in Maine. Nealley clarified for himself as a Councilor and for his colleagues that the TABOR is asking government not to grow faster than the rate of inflation. If it does, then it has to be approved by the voters. Nealley feels that government has outgrown the private sector. He pointed out that the City of Bangor gave out about $785,000 in pay raises citywide in this budget. The State had asked for a 5% across the board pay cuts. He stated that if we do not want government to grow faster than the private sector it is going to be essential to participate in reengineering in every level of government. When the private sector is having pay cuts and job cuts to extreme levels and the City is authorizing pay raises and the only job cuts are unfilled positions, Nealley is not sure that the City is doing the best they can in terms of good finance stewardship. He stated that he felt that the Council Members did a great job and the City Manager delivering exactly what was asked for. The Council asked for $19.05 mill rate and that is what he produced, but he does not believe that it makes sense for the Councilors to pretend to have a feeling of representation to the citizens of Bangor by advocating against TABOR or the Excise Tax. Wheeler stated that whatever the Committee decides tonight is only to give the full Council a sense of the Committee’s position. This is not a final action. Barrett said that there are two questions; one is whether or not the Committee wants these to even go to the Council and the other is whether or not the Committee wants to take a position on them. It is possible to just pass them on, or it can be passed on with a recommendation for or against. Hawes made a motion for the proposed TABOR Resolve to move forward to full Council with no recommendation for passage and D’Errico seconded. Nealley and Blanchette voted no. The vote was 3 -2 A motion was made for the proposed Excise Tax Resolve to move forward to full Council with no recommendation for passage. The vote as 3-2. Meeting was adjourned at 6:40 p.m.