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Majority of council will support .87 millage

Council members worked through the budget Thursday.

September 6, 2017
Jessica Salmond - News Editor ( , Fort Myers Beach Bulletin, Fort Myers Beach Observer

After finagling and figuring, Town Manager Roger Hernstadt delivered the Town Council the beginnings of the 2017-2018 budget.

He formed his budget at 0.87 mills, a rate which would bring in approximately $2,776,842 in ad valorem revenue.

That revenue could potentially increase, but because several homestead exemptions are in effect, Hernstadt was leery of budgeting 100 percent of the ad valorem at .87.

"Currently, property taxes are being budgeted at 100 percent," he said. "We can't recommend continuing that way."

The budget Hernstadt delivered is projected to be $14,227,320.

The first budget hearing is Thursday, Sept. 7 at 6:30 Town Hall.

Cutting costs

After all operational funding was met, Hernstadt gave the council $560,000 of money to spend on projects from the general fund.

Part of that half-a-million figure comes from a multi-year oversight: the town had been paying $70,000 a year in unnecessary sales tax to the state.

"The town was accessing sales tax and remitting it to the state when it wasn't required," Hernstadt said. "They erred on the side of caution without a complete investigation as to its requirement."

Hernstadt said he didn't want to pass judgement on any current or previous administrations on how this error had incurred. He said it's been happening for a while.

"We traced it back at least four years," he said.

The generous "extra" money also comes from other areas Hernstadt has reduced the budget. Some of those are line-time cuts; he said he worked with staff to examine expenditure patterns in the last several years and determine what items could be trimmed down.

Another $120,000 in savings - or money contributing to the general fund's surplus - is coming from what Hernstadt called "surgical staffing decisions."

He's rearranged the salaries and benefits packages, and employees are going to bear more of the cost of their healthcare coverage and will no longer be guaranteed an annual raise.

Employees currently receive a 4 percent raise annually until they reach the ceiling of the pay grade in their role. Hernstadt said this system would reward satisfactory, but not excellent, work.

"I don't believe in a pay plan giving 4 percent raises every year for doing the same job," he said.

He's set aside a fund of 3 percent of payroll to dole out these goal-based bonuses.

"The goals should be challenging," he said. "If everyone hits them, we set them too softly."

He's also cutting down the town's contribution to retirement funds. Currently, the town pays out 10 percent toward a 401K, nonmatching. This number is on the lower end of the scale compared to other cities, he said, but his new plan is cuts the contribution to a 4 percent match.

Instead, Hernstadt wants to have each employee set challenging goals for the year and if they should meet those goals, they might be eligible for a one-time bonus.

His second sheer in savings was to freeze the town's contribution toward family health insurance to a certain percentage next year, and give employees with families added on their insurance a 2 percent benefit allowance this year to help them save up and offset the cost. For those without family plans, that 2 percent allowance can be used to offset the cut to the town's retirement contributions.

The cost of health insurance increases every year, and Hernstadt thinks the town needs to put its foot down in regards to family health increases.

"We've been absorbing those increases, and it's important to recognizer we can't continue to do that," he said. "The trade off is, we give them a year's notice. They can start saving and pick up that tab."

Council Member Bruce Butcher was concerned that by cutting employee raises and benefit programs, it could lose a competitive edge to other municipalities and see an outflow of skilled employees.

"At the end of the day, it's what you take home in the bag. Will we be able to retain employees?" Butcher said. "Retraining creates gaps in service. "Some people are willing to work for a little bit less because they love where they're working, but that's your big job, to make sure we have an atmosphere where people love to work."

Council Member Anita Cereceda shared similar concerns, worried that employees would not feel valued by council. She said she needed to see the real meaning of what the changes would numerate for the town's employees.

"I would want to know what the actual impact is in dollars and cents. The 2 percent back, those numbers don't mean anything to the breadwinner of the family. It would be an enormous hit for an employee if I would do that," she said. "It's a payroll deduction. I would like hard numbers on this."

Hernstadt said he would have more concrete numbers and salary comparisons to other local municipalities by the first hearing.

Where will that $560,000 go?

Hernstadt presented council with a list of "add-on" items to consider, which would be funded from the $560,000 left in the general fund.

While many of the recommendations were items and sundries the council has expressed a need for in the past, one of them was Hernstadt's brain child: hiring a full-time lobbyist.

The council often talks about reaching for state funding via grants; Hernstadt said in his experience, having a lobbyist in Tallahassee working for you can help acquire those funds.

"The state is winding down on how many grants its giving out," he said. "I've been successful using one to get a grant. I think we can increase out chances."

It was one of the more expensive add-ons at $45,000.

During his time as town manager for Marco Island, Hernstadt said he was able to pull in $2 million in grants for a water project, stormwater project, fire station and environmental project using a lobbyist.

"I wouldn't recommend it if I didn't think it would work," he said.

Another add-on item was a $7,500 fund to compensate any fee waivers the council wanted to grant. In the past, councils have been lenient in reducing or waiving fees for various events or organizations. The current council has been less likely to grant these waivers, but Hernstadt suggested keeping the fund in case the council felt inclined to reduce a fee so it could be legislatively tracked to understand the financial impact.

"A fee waiver just means someone doesn't pay," he said.

To fund fireworks or not to fund fireworks, the annual question

Budget season has brought about a discussion about funding the two annual fireworks shows for the last several years.

Hernstadt added $52,000 to the add-on list - $26,000 for each event - for the council to discuss.

Per usual, it was a lengthy debate.

"I'd like to see both funds cut in half," Boback said. "Thirteen thousand each."

Shamp said she was concerned about the "uncomfortable" interaction that revolves around fireworks, the business community and the town each year. Both events are important but Shamp said the town should commit to pay for one in totality so the fundraisers only had to raise money for one event, instead of twice a year.

"Fourth of July is in the middle of summer, in the slow time," Gore said, voicing support for the town to pay for that event. "It helps the businesses."

Cereceda asked the manager to meet with the business community, including Jacki Liszak, who has chaired the fundraising group, and work with them to see if they would be open to the idea. She said the private sector would need to be aware of exactly what they had to fund, because there are added costs of extra public safety coverage - about $10,000.

After discussion, council could agree that it wanted to fund at least one of the events - but each felt a little differently than the others. Gore and Shamp supported putting the money to Fourth of July; Boback thought the funding was too much; Cereceda wanted to leave the numbers as they were, with $26,000 for each; and Butcher was ready for the discussion to be resolved.

"Everybody does fireworks. We're not unique," Butcher said. "Why have all these negotiations and conflicts? Let's just do one and get it done."



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