LONG-RANGE FINANCIAL PLANNING COMMITTEE

JANUARY 3, 2006

1.      Chairman Eric Magill called the meeting to order at 4:33 p.m. with Committee Members Mayor Gary Meredith, Councilman Bill Wichmann, Town Manager Kathy Roth, Marc Grimes, Roy Thomas, and Cliff Mitchell in attendance.  Town Administrative Official Charles McMullen and Police Chief Kenneth McLaughlin were also present. 

2.      The Pledge of Allegiance was recited.

3.      There were no changes to the agenda.  Gary Meredith made a motion to approve the agenda as presented.  Bill Wichmann seconded the motion, and it was unanimously approved. 

4.      A new page 2 of the minutes of the December 13, 2005, meeting that showed the donation from Sussex County to the Ocean View Police Department as $25,000 rather than $20,000 was given to Committee members.   Bill Wichmann made a motion to approve the minutes with the corrected

page 2.  Gary Meredith seconded the motion, and it was unanimously approved.

5.      The Town Manager said that she would put the spread sheets of the various handouts on a screen and try to make changes as they suggested.  She began to explain the Budget Summary with Various Options.   Cliff Mitchell asked if the figures could be changed to eliminate the additional zeros; e.g., 38,000 would be shown as 38.  He thinks the figures are easier to read in that format.  The Town Manager attempted to make this change, but determined that this could not be done easily during the meeting. She went on to explain that she increased the transfer tax revenue by 10% and showed a one-time 10% property tax increase in 2008.  The issue of the 50% increase in overtime was discussed.  The Town Manager explained that the Town spent $62,000 in overtime for the police department, but only $47,000 was budgeted.  She explained that actual figures were used for overtime, and no grant money was included in those figures.  She said that the Administrative Department is requesting a full-time accounting clerk and a part-time code enforcement officer.  The issue of health insurance was raised, and she said that she had increased this line item by 25%.  Roy Thomas and Cliff Mitchell discussed the question of including capital items in the operating budget; the Town Manager said that some items are accrual and some are non-accrual.  The issue of the cost of the new police facility was raised; Chairman Magill said that the Town will obtain a loan for it and doesn’t want its cost to throw off the other figures.  The best way to include the figures for the capital and debt service expenses was discussed but not resolved.  Questions were raised about exactly what the $120,000 figure for a new police officer included and if the Town needs to purchase a new vehicle so that each officer has a vehicle.  Eric Magill suggested that the Town should set aside 10% of the fund balance for special projects and said that this fund would allow the Town to spend money for special project within the Town, but would not obligate the Town to long-term expenses.  Cliff Mitchell agreed that this fund would be an excellent way to use the Town surplus without committing the Town to on-going expenditures.  He suggested that some of the reserves be earmarked for special funds.  Bill Wichmann asked if the Town uses up all of the transfer tax that it is legally permitted to use; Eric Magill explained that the Town is now using it to offset the operating deficits in the DPW and PS departments and said that he is concerned that the Town will not be able to sustain the ever increasing operating deficit if it loses the real estate transfer tax.  Bill Wichmann said that he doesn’t think the Town will lose this tax and noted that Seaford has always used its real estate transfer tax for capital expenses and uses the general fund for operating expenses.  Chairman Magill agreed that this is the ideal use of the transfer tax and said that the property tax increase proposed for 2008 will add significant revenues, but will not end the operating deficit.  He repeated that a special projects fund would permit the Town to do good things for the Town without adding to its debt.  Roy Thomas said that he thinks that they must deal with other issues before this one.  The Town Manager asked if the Committee should go through this budget and have a line-by-line review of the items.  After a short discussion, Cliff Mitchell suggested that they should look at the “big picture” and said that the Town Council must address its expectations and decide what is really meant by “present level of service.”  Several comments about the budget were then made, and the need to set aside money for the Town’s infrastructure.  Discussion continued about such matters as the fact that 100% of the police budget is covered by the real estate transfer tax; additional money ($384,000) comes out of the reserve fund; reserves are Council-designated rather than legally designated; the possibility of establishing restricted reserves, and the fact that there is no lock box on funds.  Cliff Mitchell asked about the Town’s obligations because it gets transfer tax money.  Gary Meredith explained that the State encourages growth near the towns, and the transfer tax helps towns with the expenses associated with that growth.  Roy Thomas said that he thinks that this is not a revenue problem, but a spending problem.  He expressed surprise that no one was disturbed by the fact that the costs of health insurance will be 175% higher than actual salaries in future years.  He noted that the Public Safety Department increased spending by 50% from FY 07 to FY 08 and said that the Town can’t raise enough money to pay such costs.  He said that a possible answer is to subcontract all services, but he does not favor this solution.   After more discussion, the Town Manager again suggested that they go line by line and review each item.  Roy Thomas thought that they must deal with certain items first and asked what would constitute a fair increase in expenditures; e.g., 5, 10, or 20%.  He said that they could go line-by-line, but must agree on what is reasonable.  Bill Wichmann agreed with Roy Thomas and raised the issue of the health insurance costs.  Roy Thomas then asked what the Town Council expects from the various departments.  He said that it now seems that the Chief’s ideas for the PS department are the Council’s ideas and thinks the Council should decide what it wants from the police department.  Chief McLaughlin said that he has presented his proposals and needs direction from the Council.  Chairman Magill said that he thinks the Council wishes to have 24/7 police coverage and expects that an officer will always be available for the Town’s property owners.  Both Cliff Mitchell and Roy Thomas agreed that the Town Council must define the Town’s mission, especially as it relates to its expectations for service from the various departments in the Town.  They think that this must be done in a timely manner and a discussion of the Town’s mission should be put on the agenda for the next work session.  The mission statement in the Comprehensive Land Use Plan and the police department’s mission statement were mentioned.  Chief McLaughlin raised the issue of creating a detective’s position and said that this position was needed because of the increased number of complex crimes that needed the skills of a detective.  He also mentioned that the Town’s level of growth is unknown at this time.  Marc Grimes asked if the Chief would prefer to have more officers with lower pay or fewer officers with higher pay.  He said that the Town would have to increase salaries by 10% if neighboring towns such as Fenwick Island increased their police salaries by 10%.  Chief McLaughlin said that he definitely sees a need for a detective position next year, but other than that, he would prefer to pay his officers more money to keep them and have fewer officers if necessary.  He said that his greatest concern is the effect of this area’s growth, both in and out of Town, on the Town and said that this could affect the level of service the police department can offer the Town.  Discussion about the possibility of training officers and losing them to other police departments took place, and Chief McLaughlin said that the officers must know that it is advantageous for them to remain in Ocean View.  Discussion followed about a suggestion that each department head should meet with the Council to discuss its budget needs so that they can receive the proper direction from the Council.  Roy Thomas then said that the Council must discuss what it wants to spend and how it plans to raise revenue and must clarify its goals and expectations for the Town and its various departments.  He went on to say that he thinks that Council members as elected officials have an obligation to learn enough about each department to determine what they need and said that he is not sure that all of the Council members agree with Chairman Magill’s goal of bringing expenditures into line with revenue and thinks that the Council must indicate if does or does not agree with this goal.  The meeting attendees agreed that the Council must define its mission and goals and that it would be good to move the next meeting of the Committee from January 17^th to January 31^st.  After some discussion about the best way for the Council to define its mission and goals; determine an acceptable percentage for expenditure increase, and meet with each department head, the Committee members decided to recommend that the Council should consider its goals as its only topic at the January 17^th work session.  Meeting attendees continued to discuss such issues as the desirability of keeping the small-town atmosphere of the town, ensuring that all residents continue to feel safe in Ocean View, and need for Council to know the direction it wants the Town to take.   The Town’s department heads emphasized that they must know exactly what the Council wants and how much the Council wants to increase the budget each year to ensure that the Council’s goals are met.   Gary Meredith said that it would be good for the Council to hold a special meeting on January 17^th at 4:30 p.m. to discuss its mission and goals and meet with each department head at the January 17^th work session to find out their needs and hold the next Long-Range Financial Planning Committee meeting on January 31^st at 4:30 p.m.  Charles McMullen was told that all department heads can attend the Special Council Meeting on January 17^th.  Roy Thomas made a motion to cancel the January 17^th Long-Range Financial Planning Committee meeting and recommend to the Town Council that they hold a special Council meeting on January 17^th to determine the Town’s mission and goals and meet with each department head at the January 17^th work session to find out the needs of their department.  Kathy Roth seconded the motion, and it was unanimously approved. 

Roy Thomas made a motion to adjourn the meeting.  Kathy Roth seconded the motion, and it was approved unanimously.  The meeting adjourned at 6:18 p.m.

                                                Respectfully submitted,

                                                                 Eric Magill

                                                                 Chairman

                                                 Long-Range Financial Planning Committee

Transcribed from notes:  January 12, 2006