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HomeMy WebLinkAbout(2) BUDGET - TRASH & GARBAGE PICKUP~ y.. IW INTEROFFICE MEMORANDUM TO: Mayor & Council ~~ FROM: Steve Fitzgibbons;lCity Manager DATE: February 5, 2009 , RE: Budget -Trash & Garbage Pickup During prior year retreats and budget discussions, information was' provided to the Council showing future revenue projections particularly in-lieu of tax industrial district payments. Due to a number of factors, the major factors being the. Premcor (now Valero) HOUP Project and the BASF/FINA Cracker Project coming off ten-year abatement agreements for-the fiscal year beginning October 1, 2009, Staff. and City, Council knew that for the next. fiscal year beginning October 1, 2009, the City would be receiving a substantial increase in revenue. Staff and CounciF were ..also aware. that foe the fiscal year beginning October 1, 2008 funds would be extremely tight.. In the Spring, City staff began negotiating with Valero to try to reach an agreement where the City could' receive some. funding a year earlier to provide. the City with revenues to help meet City needs. These- needs included' the City's knowledge that the Texas Municipal-Retirement System, based on an actuary report, would require the City to pay more than a $1,000,000 increase. in retirement payments to TMRS. Other known increases included an additional $1,000,000 in healttr insurance costs and' a. $1,500,000 increase in debt. service. Fuel costs, chemical costs and. other material costs were greatly increasing.. Prior to the adoption of the budget, the. City was unable to negotiate a new contract with Valero. During budget. discussions, it was noted a number of times that the budget did not include funds for capital improvements or equipment other than. police cars and a match for a fire grant. In a May 6, 2008 memo to me from Finance. Director Rebecca Underhill, that was provided to the. Council, Mrs. Underhill. states: • Stagnant Revenue - While the City is booming. with activity,,the industrial revenue, 40% of the General Fund revenue, is fixed for fiscal year 2009. The only variable for 2009 is the TOTAL contract. We. will receive the final payment under their current contract during the 2008 year, in September. We are in negotiations with them at this time for a new> contract, with payments beginning in fiscal year 2009.. The City will finally see significant growth in this revenue. in fiscal year 2010, as we expect to have new contracts with BASF, Valero, Chevron, Flint Hills Resources, and others.. Mrs. Underhill. further states: "I have identified over $4 million in unfunded cost increases, excluding salary increases. In order to maintain current service levels, and with 40% of our general fund revenue-flat, we will have to look for significant revenue enhancements. While. we expect. property tax revenue to increase, it .will not be sufficient to meet these needs. Without additional'. revenues, we wilt be forced- to substantially reduce services". Staff, and I believe;Council clearly understood that the budget did not provide funding for much needed capital improvements,. equipment needs- or employee needs: The budget; as adopted, by Council, was what a majority of the Council felt was the best expenditure plan for the funds available. In late December, prior to annexation actions by the' Council, the City reached. an agreement with Valero for afive-year period covering October 1, 2009 through September 30, 2014. As part of the agreement, the- Councif received. a portion of the agreed payments immediately: Shortly thereafter; agreements were reached with other industrial companies some. of which also included advance payments. Due to the new advanced. payments to the-Gity.in early January, the City was able to do a budget amendment on January 13`" that; among-other things, funded $500,000 for two residential garbage trucks, $175,000 for a trastr truck, $229,000 for a commercial container truck, $276,000 for three. additional police officers and three police cars, $170,000 to fund an additional four person drainage crew and $20,000 for graffiti cleaning equipment. In addition, $240;000 was budgeted. to fund the 'One Block At A Time" cleanup program for the remainder of the year: ` The Mayor, Councif and staff were well aware of the need'for this additional equipment. and staff to address- pressing City needs well _ before January 13th. What was known on January 13`", that was not. known in September when the. budget was adopted, was how this' much needed equipment, personnel and cleanup program was to be funded. ' Also, regarding the $500,OOO.for the purchase of two garbage trucks; they have been ordered. We do not expect delivery for another four or five months. We are experiencing recurring late collections as a result of equipment failures. We were- able to locate and rent two 2007 garbage trucks that we plan to use until our new trucks arrive. We: believe this will' allow us to substantially reduce late pickup occurrences.