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VIRGINIA BEACH CITY COUNCIL
Virginia Beach, Virginia
May 7, 20/3
Mayor William D. Sessoms,Jr., called to order the CITY COUNCIL'S WORKSHOP in the City Council
Conference Room, Tuesday, May 7, 2013, at 4:00 P.M.
Council Members Present:
Glenn R. Davis, William R. "Bill" DeSteph, Robert M Dyer, Barbara
Al Henley, Vice Mayor Louis R.Jones, John D. Moss, Amelia N. Ross-
Hammond, Mayor William D. Sessoms, Jr., John E. Uhrin, Rosemary
Wilson and James L. Wood
Council Members Absent:
None
May 7, 2013
RECONCILIATION
4:00 P.M.
Mayor Sessoms expressed his appreciation to those in attendance. As in past years, Mayor Sessoms and
Vice Mayor Jones submitted their joint letter re: "Reconciliation of the FY2013-14 Operating and
Capital Budgets", which is hereby made a part of the record. Mayor Sessoms expressed his appreciation
to the Department Directors and Management Services for all of their hard work in presenting the
proposed Budget this year.
Councilman Moss advised he feels this is a great Budget and is in full support.
Councilman Dyer acknowledged the "Team Effort" that went into the Budget by focusing on the
employees while maintaining the City's high standards
Council Lady Henley does not approve of raising the Solid Waste Fee to $21.00. She would feel better
about the increase had the City made that information available to Citizens during the Public Hearings;
however, offsetting the increase with the lower real estate tar may help.
Councilman Moss advised as the Solid Waste Fee has increased, the City has retained the 'freed-up
revenue"and then spent that revenue. The goal is to get the Solid Waste Fee to a self-sustaining fund so
those that use it are the ones payingfor it.
Council Lady Henley expressed concern as it was not shared with the citizens.
Mayor Sessoms advised the City Council would hold a Public Hearing next Tuesday, May 19, 2013,prior
to the City Council's Formal action to adopt the Budget.
Councilman Wood understands where Council Lady Henley is coming from and would like to see the
Solid Waste Fee become a full "Enterprise Fund".
Councilman DeSteph advised this Budget is the first one he has supported since he has been on City
Council. Councilman DeSteph hopes the Mayor and Vice Mayor continue listening to Citizens.
May 7, 2013
Council Lady Ross-Hammond is pleased to see the restoration of the Elderly and Disabled Tax Relief
Councilman Davis is happy the employee compensation was addressed and to see the Budget process
become as transparent as he has ever seen. By having the Solid Waste Fee not be embedded in the Real
Estate Tax Rate has allowed the City to begin moving forward in making this a true "Enterprise Fund".
Council Lady Henley is pleased the City and Schools are able to increase employee compensation;
however, compression continues to be an issue. Unfortunately, the City is not making a lot of progress.
She requested an on-going report so the topic does not get lost.
Mayor Sessoms thanked the City Council, City Manager and the entire City Staff for their continued
dedication and hard work. Mayor Sessoms expressed how impressed and pleased he is at the excellent
accomplishments the City has made during some very difficult economic times.
May 7, 2013
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May 7, 2013 „lESSSO, °��'M
Subject: Reconciliation of the FY 2013-14 Operating Budget and Six Year Capital
Improvement Program
Dear City Council Members;
Since the initial presentation of the Proposed Operating Budget and Six Year CIP at the end of
March, there have been two opportunities to hear suggestions from the public; several of you
have held town hall meetings to discuss the proposed budget and CIP; and we have held five
budget workshops with the various departments to gain additional information. In addition, staff
has responded to almost 200 City Council questions. We are now at that time to integrate the
various ideas we have heard from the community into our Budget for fiscal year 2014. As in the
past, we are preparing a "straw man"recommendation to get us started in our discussions today.
We believe the two issues that were most frequently raised at the public hearings were concerns
over the proposed boat tax increase and the need to increase employee compensation. First, the
need for the boat tax, recently city staff was informed that the Army Corps of Engineers would
have funding to meet their commitment to dredging navigational channels from the Hurricane
Sandy Relief Program. This will allow us to eliminate the proposed boat tax increase for FY
2014 and reduce the dredging program in the CIP• however, we will need to work towards a
permanent funding solution for navigational dredging in the future. Staff has assured us that the
remaining funding within the Coastal Program will allow us meet current commitments without
significantly impacting navigational channel dredging during the upcoming year.
Second, to increase employee compensation, we are recommending that City employees receive
an additional 1.66°% pay increase beginning on October l51 beyond the required 1.34% increase
(State mandated VRS increase for full-time employees)proposed in the budget for July I5'.
School employees would receive a similar increase by September I . This will bring the total
pay increase for City and School employees to 3% next year and will allow the School Board to
accept the State's funding for a 2% pay increase for SOQ positions.
May 7, 2013
Page 2
To accomplish these changes to the budget, we recommend:
1) Reduce the sequestration reserve by $1,976,000 million based on efforts of the various
federal agencies and the Congress to mitigate the impact of sequestration. This would
leave $724,000 in the reserve;
2) Reduce the funding available to address vertical compression by $350,000. Refined
numbers from Human Resources indicate that providing up to a maximum of$5,000
vertical compression adjustment to the 170 supervisory employees who currently make
less than those they supervise will reduce the cost to $650,000 rather than the$I million
included in the proposed budget;
3) Reduce funding for debt service by $1,290,339 for the City and by $1,493,106 for
Schools due to the favorable interest rates related to the recent bond sale and refinancing;
4) Increase State revenue by $622,125 for Constitutional Offices and other state supported
functions based on additional pay raise funding included in the State Budget;
5) Increase State finding to Schools by $3,843,201 for the State's proposed 2%pay raise
along with increasing our required match under the City/School Revenue Sharing
Formula by $988,533 because of the additional State funding; and
6) Move an additional $1,116,978 in Sandbridge TIF surplus funding from the School's CIP
to their Operating Budget bring the total in the School Operating Budget to $3,116,978.
7) Reduce City funding for health care by$800,000 to reflect recent estimates of health care
reform costs.
In addition to addressing the boat tax and employee pay, we would recommend increasing the
solid waste fee to fully cover the cost of delivering residential solid waste services. As the Public
Works Department briefed us, this will require a fee of$21.36 per month. The Proposed
Operating Budget has a fee of$13.00 per month- we would therefore, add an $8.36 increase to
the monthly solid waste fee. This additional revenue will go to the solid waste special revenue
fund. To partially offset this increase, we would suggest a two-cent reduction in the real estate
tax rate from 95 cents to 93 cents per$100 valuation. Implementing this plan would allow us to
restore the Tax Relief for the Elderly Program along with other items being requested. As a part
of this, we also recommend the reduction in real estate taxes not impact the School System
through the Revenue Sharing Formula.
We also support the following adjustments to the Proposed Operating Budget and CIP to include:
1) adding a project to renovate the Owls Creek Marsh Pavilion, which will require$1.16 million
for design in the first year with the Aquarium Foundation providing $746,560 of this amount; 2)
converting two part-time nurses in Human Services to a full-time nurse to address turnover at the
Recovery Center; 3) restoring the Media and Communications position and related costs in the
City Manager's Office; 4) lowering the hotel tax in the Sandbridge SSD by 1% and offsetting
that revenue loss to the sand replenishment project by increased use of the Sandbridge TIF; and
5) eliminating the proposed $100 increase in the surf camp fee.
May 7, 2013
Page 3
We hope this suggested recommendation helps the City Council reach consensus on finalizing
the FY 2014 Operating Budget and CIP. Attached is a table that explains these recommendations
in more detail. We want to take this opportunity to not just to thank the City Council for their
time and commitment to working through the various issues in the Operating Budget and CIP;
but also to thank all the staff who worked to make the briefings meaningful and to quickly
respond to City Council questions.
Sincerely,
William D. essoms, Jr., Mayor o its R. Jone Vice-Mayor
WDS/LRJ/crw
Cc: Members of the School Board
James G. Merrill, Superintendent
James K. Spore, City Manager
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ADJOURNMENT
Mayor William D. Sessoms,Jr., DECLARED the City Council Workshop ADJOURNED at 4:27 P.M.
Am ey-Barnes, CMC
Chief Deputy City Clerk
th Hodges Fraser,MMC
City Clerk
City of Virginia Beach
Virginia
May 7, 2013