MAY 3, 2011 MINUTESCITY OF VIRGINIA BEACH
"COMMUNITY FOR A LIFETIME"
CITY COUNCIL
MAYOR WILLIAM D. SESSOMS, JR., At-Large
VICF. MAYOR LOUIS R. JONES, Bayside -District 4
RITA SWGEI' BELLITTO, AI-Large
GI,/sNN R. DAV/S, Rore Hall -District 3
WILLIAM R. DeSTEPH, At-Large
HARRY E. D/EZEL, Kempsville -District 2
ROBERT M. DYER„ Centerville -District 1
BARBARA M. HENI,F,7, Princess Anne -District 7
JOHN E. UHRIN, Beach District 6
ROSEMARY W/LSO,V, At-Large
.LAMES L. WOOD, Lynnhaven -District 5
CITY COUNCIL APPOINTEES
CITY MANAGER -JAMES K. SPORF.
CITY ATTORNEY - MARK D. STILES
CIIYASSESSOR - JF_RALU BANAGAN
CI"IYAUDITOR- LYNDONS. REMIAS
CITY CLERK - RUTH HODGES FRASF,R, MMC
CITY COUNCIL WORKSHOP AGENDA
3 MAY 2011
I. CITY COUNCIL WORKSHOP -Conference Room -
A. RESOURCE MANAGEMENT PLAN
BUDGET RECONCILIATION WORKSHOP
FY 2011-2012 Operating Budget
FY 2011-2012 Capital Budget
Six (6) Year Capital Improvement Program (CIP)
PUBLIC HEARING
May 10, 2011
Ordinance to AMEND
C/TYHAGG BUILDING
2401 COURTHOUSE DRIVE
VIRG/NIA BEACH, VIRG/N/A 23456-8005
PHONE: (757J 385-4303
FAX (757) 385-5669
E- MA/L: ctycncl@vbgov.com
3:00 PM
the previously adopted Noise Ordinance
1
MINUTES
VIRGINIA BEACH CITY COUNCIL
Virginia Beach, Virginia
May 3, 2011
Mayor William D. Sessoms, Jr., called to order the FY 2011-2012 OPERATIONS BUDGET and
RECONCILL9TION WORKSHOP: FY 2011-2012 CAPITAL BUDGET with consideration of the Six
(6) Year Capital Improvement Program (CIP), on Tuesday, May 3, 2011, at 3:00 P.M.
Council Members Present:
Rita S. Bellitto, Glenn R. Davis, William R. "Bill " DeSteph, Harry
E. Diezel, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R.
Jones, Mayor William D. Sessoms, Jr., John E. Uhrin, Rosemary
Wilson, and James L. Wood.
Council Members Absent:
None
May 3, 2011
2
MAYOR `SCOMMENTS
Council Lady Rita Sweet Bellitto submitted her resignation as a Member At Large of the Virginia Beach
City Council (effective June 18, 2011). Said letter is hereby made a part of the record. Council Lady
Bellitto advised that her family will be moving later this Summer to Seattle, Washington, as a result of
her husband's promotion with the Boeing Company. Although this change will be beneficial to her
family, it requires that she leave the City she has grown to love over the past twenty-five years.
Mayor Sessoms requested City Attorney Mark Stiles to provide the time frame within which the City
Council needs to work for the replacement Appointee of this At Large seat.
City Attorney Stiles advised City Council has forty-five (45) days from June 18, 2011, to make an Interim
Appointment. There will be a Special Election in November which will encompass Council Lady
Bellitto's remaining term thru December 31, 2014. City Attorney Stiles will provide the detailed time
frame during the next City Council Session.
May 3, 2011
City of Virgirzia Bead-i
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RfiA SWEET BELLITTO
COUNCIL LADY • AT LAAGE
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VBgov.com
PHONE: (757) 418-0960
rsballitt®vbgov.com
May 2, 2411
The Honorable William D. Sessoms, Jr., Mayor
Members of City Council ~
2401 Courthouse Drive
Virginia Beach, VA 23456
Dear Mayor and Members of City Council:
I am writing to advise you that my family and I will be moving later. this summer
to Seattle, Washington, due to my husband's promotion with the Boeing Company.
Although this change will be beneficial to my family, it requires that I leave the city I
have grown to love over the past twenty-five years. Accordingly, I hereby resign my
position as a member of the City Council, effective June 18, 2011.
I have been proud to serve the City both as a member of this Council and as a
member of the School Board. I very much value the confidence that my fellow council
members showed in initially selecting me to serve in February 2010. I regret that I will
not be able to serve the full term that the voters elected me to last November, but I know
the City is in good hands and that it will continue to be a Community for a Lifetime.
Between now and June 18, I will continue to thoughtfully and carefully attend to
my council responsibilities. I give you this notice so that Council has some time to
consider an interim replacement. It has been an honor and a privilege to work with you.
Be assured that no matter where I live, Virginia Beach will always be home for me.
Sincerely,
Rita Sweet Bellitto
City Council Member
POST OFFICE BOX 6448, VIRGINIA BEACH, VA 23456
3
RESOURCE MANAGEMENT PLAN
BUDGET RECONCILIATION WORKSHOP
Mayor Sessoms read into the record, which is also made a part of the proceedings, a letter of
Reconciliation for the FY2011-12 Operating Budget and Capital Improvement Program, signed by the
Mayor and Vice Mayor. Recommended, effective with this FY 2011-2012 Budget, will be the elimination
of the City/School Revenue Sharing Formula. and the elimination of the Two Cent (2 cent) increase in the
Real Estate tax.
The Mayor stated.•
"In closing, we believe this letter reflects the comments and suggestions expressed by
each of you. We believe this approach will provide a firmer frnancial position for the
community going into the future. Details of the actual dollar adjustments for both the
Capital Improvement program and Operating Budget are attached. "
Catheryn Whitesell, Director -Management Services, stated: revenue for Machinery and Tools has been
eliminated ($1.7-Million). Catheryn advised relative the increase in Personal Property Tax, the estimate
could be increased by $2-Million ($5.2-Million). This is levied on business and consumer vehicles, not
property.
Councilman Diezel referenced the School Funding Formula and stated he believes this is one of the most
critical debates the City Council should have as a Policy body. After this Budget process, he is going to
recommend that the very first thing in the next planning session, be a discussion to determine if a policy
can be established. Relative trash fees, discussion should involve "can Virginia Beach support its own
trash disposal system. " It is his understanding; the Capital Improvement Program did not include any of
the major "big ticket" items associated with the Dome site or Convention Hotel, as well as other
associated items. Councilman Diezel recommended the Debt Service increase be supported so long as
earmarked speciftcally for infrastructure projects which have been reflected by City staff. This City
Council, approximately fifteen (1 S) or (20) years ago, said Debt is retired when needed and new projects
are not assumed. The intent was to incur the debt, and pay it off. If the City went back to this philosophy,
we will always be keeping our Debt Service below the "cap ". He is not very supportive of any of the tax
fees or tax increases currently suggested. He expressed concern re supporting the School Funding
Formula issue.
Catheryn advised re an inquiry from Councilman DeSteph, that basically, the City pays off approximately
$60- Million a year in Charter Debt. The Charter allows the City to reissue that debt plus $10-Million.
No debt is issued without City Council approval (as part of the process). Councilman DeSteph believes
Councilman Diezel was stating the City Council 's original intent was to continue to pay down the debt.
Catheryn advised this was allowed in the City's Charter.
May 3, 2011
4
RESOURCE MANAGEMENT PLAN
BUDGET RECONCILIATION WORKSHOP
Councilman Diezel believes the City Council has to be cognizant of the ceiling and try to stabilize and
decrease it, if possible. Catheryn advised the proposed new trash fee has been directly tied to the Waste
Management Budget unit so that staff can track that fee against related costs; however, it is part of the
General Fund and the City Council can make changes.
Council Lady Henley advised it is her understanding the big projects are not in the Capital Improvement
Program. This will be a City Council decision to include them. Council Lady Henley believes it is City
Council's policy not to do anything without identifying the source of the funding. This is the key to any
of the projects mentioned. Council Lady Henley also expressed concern re the trash fee.
The City Manager advised City staff will provide a Briefing the end of June regarding the overall system
and the options. These costs will rise between now and 2018, just as the tipping fee will increase. It will
involve a number of years to fine tune what the enterprise will be and how many services does City
Council want to cover with the fee.
Concern was expressed re the wedding fee (in the amount of $S00) for services on the Beach.
Vice Mayor Jones requested a synopsis of next year's situation re funding.
The City Manager advised the best estimate would be the Operating Deficits for the City next year would
be $23.2-Million and the Schools would be $24.4-Million. This is based on the Reconciliation
recommendations contained in the correspondence of the Mayor and vice Mayor.
May 3, 2011
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WILLIAM D. SESSOMS, JR.
Mayor
May 3, 2011
Members of City Council
City of Virgiriia-Beach
VSgov.com
MUNICIPAL CENTER
BUILDING 1
2401 COURTHOUSE DRIVE
VIRGINIA BEACH, VA 23456-9000
(757)385-4581
PAX (757) 385-5699
WSESSOMS@VBGOV.COM
Subject: Reconciliation of the FY 2011-12 Operating Budget and Capital Improvement
Program
Dear Council Members:
At our retreat in January, we laid out a tough course for our City Manager and his staff. The City
Council set as a top priority the development of a responsible Operating Budget and six-year
construction program while requesting the City begin to address backlogs in roads and
technology. We feel the spending plan the City Council received in March met that mandate.
The Proposed Operating Budget maintains core services to the community while improving
efficiencies. It recommends modest increases in several tax rates and the institution of a new
solid waste collection fee to meet these requirements in the face of declining revenues.
We believe the economy is slowly improving and the impact on families of the proposed taxes
and fees will be modest. However, even a modest burden may prove too much, so we are
recommending to you that we eliminate the two cent increase in the real estate tax rate. We
believe this is justified when there are sufficient fund surpluses which can be used to maintain
core services to replace the revenue generated by this tax rate increase. Therefore, we
recommend the two cent real estate tax rate increase be replaced by lowering local funding
transferred to the School System by $9.2 million. We feel we can accomplish this without impact
to School operations and our children's education in FY 2012 by replacing that funding with
School fund balances. We propose using the remaining $5.5 million from the School Risk
Management Fund ($14.5 million was already diverted in the Proposed Operating Budget) and
$3.8 million from the School Instructional Technology Fund (this will leave a balance of $7
million in this fund). With these transfers, the School Board's adopted FY 2011-12 Operating
Budget would remain fully funded.
In addition, we are recommending the City Council make the modifications requested by the
School Board to their CIP. This request for additional debt capacity will allow the School System
to construct the Old Donation Center/Kemps Landing Magnet School beginning in FY 2015; will
provide $2.5 million in energy performance contracts for each of the next three years; and will
restore funding to John B. Dey Elementary and to Princess Anne Middle School in FY 2016 and
FY 2017.
Members of City Council
Reconciliation of the FY 2011-12 Operating Budget and Capital Improvement Program
May 3, 2011
Page 2
Effective with this budget, we are recommending the elimination of the City/School Revenue
Sharing Formula. This construct of the late 1990's served the City Council and School Board
well during growth years, but now that resources are more constricted, we believe it has
become a barrier to communication between the two bodies. Going forward, we envision jointly
meeting with the School Board to discuss both City and School requirements and available
resources. These meeting should begin with the Five Year Forecast in November when both
bodies receive information that identifies projected trends and financial situations.
We are also recommending to you that we adopt the remaining proposed tax and fee increases
including the Solid Waste Collection Fee. As you are all aware, we face uncertain times with the
disposal of residential trash, not simply in Virginia Beach, but also in the region as the
Southeastern Public Service Authority (SPSA) begins to wind down its operations. Beginning
with FY 2016, our capped tipping fee will end and the City's tipping rates will rise to those of
surrounding communities. It is prudent that we begin to plan for this eventuality. To us, this is
similar to the Lake Gaston decision this body made back in the mid-1980's to pursue a critical
water source. It took perseverance to work through a host of naysayers and regulatory hurdles.
It also took vision and financing: vision to look ahead and plan for what could happen without
the pipeline and financing to pay for something in the future. This is where we find ourselves
today. We know SPSA will either be eliminated or will be substantially reconfigured. We also
know our cost to dispose of residential solid waste will increase significantly. Putting the Solid
Waste Fee in place allows us the financial mechanism needed to deal effectively with both of
these issues.
Several of you have proposed modification to the compensation plan for City employees
included in the proposed Operating Budget. Faced with a third year with no pay increases the
City's recruitment and retention of quality, effective staff is in jeopardy. While all have expressed
concern for our relative decline in the regional market, most have felt that it would be better to
take the available funding and provide a greater increase to all employees. Therefore, we are
recommending that we increase the proposed across-the-board increase from 1.5% to 2.5%
with this additional 1 % coming from the market survey adjustment funding. We are proposing
that we provide $1 million to allow the City Manager the discretion to address City positions that
are most significantly behind in the market. Also in the area of compensation, as requested by
Sheriff Stolle, we are recommending that we increase estimated revenue from Federal
Prisoners to allow his Office to provide a 2.5% increase to his employees.
Other items we are recommending that we include in this budget and CIP are
- Reduction in funding for the Governor's Transportation Plan as contained in the draft
Virginia Department of Transportation (VDOT) six-year improvement program, and the
elimination of three of the seven positions added to support this program;
- Funding for the construction of the Blackwater Fire and Rescue Station in FY 2014
($2,439,409);
- Funding to maintain the operations of the Oceanfront Branch of the City Treasurer's
Office and the three staff positions ($173,914);
Members of City Council
Reconciliation of the FY 2011-12 Operating Budget and Capital Improvement Program
May 3, 2011
Page 3
- Funding for community employment slots for the developmentally disabled ($25,000).
We would also suggest that we accept the Sheriff's generous offer to fund the
Therapeutic and Medication Services program in Human Services, through the use of
his fund balance ($121,596); and
- Funding to add back three positions eliminated in the FY 2011 budget for the
Commissioner of Revenue's Office ($160,597) and $35,000 to allow for renovations of
their office space to improve efficiencies.
To help fund these additions, we recommend adjusting the estimated revenue for personal
property based on improving trends. As the Finance Department reported last Tuesday,
personal property revenues are currently doing better than anticipated, and Management
Services feels we can increase the estimated revenue for next year by $2 million. This increase
was split according to the existing City/School Revenue Sharing Formula. Management
Services also projects that we can adjust revenues outside of the formula by $390,011 due to
recent revenue trends. In addition, we recommend restoring $1.5 million of the initial $2 million
estimated revenue loss from the elimination of BPOL taxes on new businesses for the first two
years. We understand from discussions with Ms. Wilson and Mr. Davis that the implementation
issues will delay this change well into the new fiscal year and the issue may result in new
businesses making a minimum payment. The ordinance for this will come to us after the
beginning of the fiscal year, so this remains an estimated impact. Again, this revenue was split
according to the existing City/School Formula. We also want to thank Ms. Wilson and Mr. Davis
for their leadership in working through these issues with the Commissioner of the Revenue and
City staff.
In closing, we believe this letter reflects the comments and suggestions expressed by each of
you. We believe this approach will provide a firmer financial position for the community going
into. the future. Details of the actual dollar adjustments for both the Capital Improvement
Program and Operating Budget are attached.
Sincerely,
~n
~. G~,
William D. Sessoms, Jr. Louis R. Jones
Mayor Vice Mayor
Enclosures (2)
James K. Spore
Catheryn R. Whitesell
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5
ADJOURNMENT
Mayor William D. Sessoms, Jr. DECLARED the City Council Meeting ADJOURNED at 4:56 P.M.
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Beverly O. Hooks, CMC
Chief Deputy City Clerk
uth Hodges Fraser, MMC
City Clerk
May 3, 2011