Town of Maggie Valley

Board of Aldermen Budget Workshop

May 19, 2004

MINUTES

Members Present: Mayor Jo Pinter Aldermen: Linda Taylor

Jim Higel

Phil Aldridge

Staff Present: Manager Scott Buffkin, Public Works Director Mike Mehaffey and Town Clerk Vickie Best

Budget/ Finance Committee Members Present: Jim Blythe (3:05 p.m.), Larry Dubuke, James Carver, and Bob Ruhlman

Workshop Called to Order

Mayor Pinter called the workshop to order at 2:40 p.m. on Wednesday May 19, 2004 in the Town Hall Boardroom.

Budget Workshop for Fiscal Year 2004-05

The Town has seventeen full time employees that are insured under the United Health Care Insurance program.

Council discussed different options to lower the cost of insurance.

4Go to a higher deductible such as $5,000 with the town being self insured for the $5,000.

4Cost share for family coverage.

Council felt that “all in all” the employees are healthy. Council is not aware of any major claims through the employees.

Mr. Dubuke felt cost sharing could be effective because it increases people’s awareness of the charges if part of the cost is coming out of their pocket. “You can negotiate with hospitals and often cut the original charge by as much as 20%. People don’t care about the cost if they don’t have to pay it out- of- pocket.”

Mr. Mehaffey stated that the employees are required to go through a PPO. If an employee goes to a doctor outside the PPO there is no coverage.

Mr. Ruhlman, Blythe and Dubuke felt the insurance needed to be addressed. “It is a major cost to the Town”.

Mr. Carver felt that taking the benefit from the employees would break their spirit and loyalty. “Medical coverage is keeping Harrah’s Casino good employees. Mr. Mehaffey agreed adding that some of the employees work for the town for the insurance coverage.

Council questioned Mr. Mehaffey’s son being on the town’s insurance.

Mr. Mehaffey explained that his son was on the COBRA program since finishing school. Mr. Mehaffey himself pays the premium each month.

Manager Buffkin will have quotes from different insurance companies within the next few days.

Mayor Pinter agreed that the benefits help to keep good employees. “Insurance is a great benefit to provide for the employees but we must give taxpayers the “best bang for their buck”. Manager Buffkin added that for tax purposes, it is better for him, for the town to pay for insurance rather than give salary increases.

Manager Buffkin explained public sector budgeting. The General Fund is more or less the “catch all” fund except for the Enterprise Fund (sewer) and the Festival Grounds. The reason the Festival Grounds is in a separate fund is to more accurately track the spending. The town operates under a fiscal year budget. The State of North Carolina requires a balanced budget. The un-appropriated fund balance is like a savings account. The Town is required to maintain at least 8% of the total budget in the un-appropriated fund balance. The town received a letter from the Local Government Commission (LGC) with concerns about the fund balance decreasing over the past few years. The LGC reviews all local governments’ audits. The money from the ABC Store will increase the fund balance. Property taxes are the number one source of income to the town. The tax is based on the assessed value of the property. The current year tax rate is .39 per $100 dollar value. The tax rate can only be set one time for the fiscal year. The State’s revenue sources are often based on population which limits Maggie Valley.

Alderman Taylor could not remember decreasing the fund balance in the earlier years of her tenure. Goods and services have increased in cost. The Town has two choices; increase taxes or increase the tax base. The town has completed some aggressive annexations. The town is now in a better position to increase services. Council asked that Manager Buffkin come up with a budget that would reflect a four cent decrease in tax. The tax may not be decreased by four cents but it could be a tool to find additional funds to increase services. Maggie Valley’s tax rate is the lowest in the County.

Every one cent in taxes provides approximately $19,000 in revenues.

Mr. Dubuke felt that insurance, propane, etc. could be negotiated and decreased.

Manager Buffkin reported that State Statues limit some activities because of biding laws.

Mr. Carver felt it unwise to cut the tax rate.

Council desires to increase services especially in road maintenance.

Mr. Mehaffey explained that Enterprise Fund is self supporting. The money comes from sewer user fees, impact fees, dumping fees and the interest from those fees. The reason the Enterprise Fund reimburses the General Fund is for work done for the sewer department. The Enterprise Fund has purchased much needed equipment for the town.

Public Works Department has requested a salt spreader which would come from the General Fund.

A capital project budget will be set up for the construction of a maintenance building. The capital project budget can expand beyond the fiscal year.

All remaining funds left at the end of the year roll over into the fund balance.

Mr. Ruhlman had great concerns about the fund balance and the enterprise fund paying employees. “It is like borrowing from Peter to pay Paul.” Mr. Ruhlman also questioned why the town had taken from a fund that the “watch dog” has written a letter about.

Alderman Taylor responded that you do not raise taxes in an election year and you try not to raise taxes during re-valuation years. Also the attorney fees for the annexation lawsuit were in excess of $100,000.

Mr. Ruhlman asked that council try not to go into the fund balance again.

The state rates towns on their budget to debt ratio. Maggie Valley does not carry a large debt.

The treatment plant will need to undergo another expansion. Campbell Creek Properties will have approximately 150 homes while Crockett Meadows will have approximately 90 homes. The flow is now around 70% in July and August.

Alderman Taylor reminded the Budget/Finance Committee that the treatment plant is receiving those levels of flow with Ghost Town closed. Mr. Mehaffey agreed adding that Maggie Valley needs to be prepared to meet the growing need for service.

Alderman Taylor concurred adding that the reason for the large imposing electric poles was because of the increased demand for electricity.

People often forget that sewer is a service.

Mr. Rulhman questioned how much the town attorney is paid.

Mr. Dickson is paid $100 per month. That fee may increase now that the aldermen have begun having two regularly scheduled meetings per month.

Alderman Taylor stated that the town attorney for Waynesville guides the meetings. “We have got to stop all of these comments from the floor.”

Mayor Pinter wanted input from the audience but it has now gotten to a point that it is hard to conduct business.

The discussion then went to salaries.

Alderman Higel asked if there were employees that deserved more or less than the discussed 3% cost of living raise. Mr. Ruhlman questioned the retirement and 401K benefits.

State law requires the town to contribute 5% to 401K for the police department. The retirement benefits are based on years of service. The previous board provided for an optional 3% match to the 401K program for the remaining employees.

Mr. Ruhlman questioned the holiday bonus.

The holiday bonus is paid at the end of November and is based on years of service. Taxes are taken from the bonus the same as regular pay.

Mr. Ruhlman then questioned the purchase of office supplies.

Each department is allotted a certain amount for office supplies. The town gets a break on some items purchased through state contract.

Alderman Higel felt that keeping an extra police car was not cost effective.

Alderman Taylor felt the employees had rather keep their insurance without having to pay a portion of the premium than get a few hundred dollars in a raise. “State employees do not get family coverage. Haywood County is one of the few counties that pay family coverage.”

Mr. Dubuke gave the example that if one “big” company starts cutting the rest of the companies follow suit across the nation.

Mr. Blythe agreed and offered advice on becoming self insured. Mr. Blythe had addressed Council last year with concerns about the high cost of insurance. Mr. Blythe suggested getting a carrier that would write a catastrophic policy and possibly going in with the water department to become self insured.

Alderman Taylor had concerns about the increased amount of paperwork in becoming self insured and the possible need for another position.

The paperwork could be “farmed out” but there would be a cost associated.

Because Maggie Valley is a resort town it is more difficult to compare to other municipalities with the same population. Maggie Valley is young compared to other towns. That is why the Maggie Valley Fire Department and the Maggie Valley Sanitary District were created prior to the town incorporating.

Mr. Ruhlman asked if Maggie Valley could have a Mayor’s court.

Mayor’s court was done away with in the early 1980’s. Maggie Valley gets $5 for each case that is won. The old saying of police officers getting “their quota” is inaccurate. It cost municipalities to go to court. The Town has to pay an officer to sit in court and wait for his case to come up on the docket.

Manager Buffkin touched on the tremendous cost of the last annexation lawsuit. The town could not recoup any of the attorney fees from the case. “Judges are extremely reluctant to award attorney fees.”

Mr. Mehaffey previously took council to look at roads inside the corporate limits. There had been earlier discussions about Hemlock Loop needing to be widened and upgraded. In order to widen the road, people would loose their porches. The Town has upgraded Lewis Lane from nine feet to eighteen feet. On Rocky Top Road there is no room to even pull off the road for two cars pass.

There is no room in the Woodlands to widen the road. The Town has attempted to remove snow in the Woodlands but some of the home owners will not allow the trucks on their road.

Mr. Dubuke clarified that developers can not get away with substandard roads today.

The sewer use ordinance requires anyone connecting to town sewer to meet the subdivision standards and petition for annexation.

Mr. Blythe felt that roads sixteen feet in width are sufficient.

The town cannot receive Powell Bill funds for roads less than eighteen feet in width. The funds are provided through a formula based on the length of the roads and the population. Maggie Valley receives approximately $17,000 annually.

Mr. Blythe, previously a council member in a municipality in Alaska felt that there were State and Federal funding available to help with road maintenance. Mr. Blythe also suggested using an assessment formula based on street frontage, acreage, or the benefit received by the home owner. The Town could obtain a loan for thirty years then assess the residents. “If people refuse, the town has done all it can do for road maintenance”

Mr. Dubuke agreed adding that everyone pays, if not at the time of purchase, then later as road maintenance becomes a necessity.

Manager Buffkin reported that the proposed budget did not include any funding for community center improvements.

Manager Buffkin went on to inform the budget committee that council had appointed a grant writing committee to seek and write grants.

Mayor Pinter asked that her salary be put into a line item to use for board members to attend events, schools, etc.

Again Mr. Rulhman stressed his concerns about the sewer fund helping the general fund. Mr. Rulhman felt the sewer fund should be used for sewer items only.

Alderman Taylor explained that people pay less tax by the enterprise fund helping pay employees and purchasing equipment. The Enterprise fund is paying for the percentage of the employee’s time that is spent on sewer paperwork i.e. issuing sewer commitment forms, tracking and taking money for taps and impact fees, and all correspondence associated with the sewer system.

Mr. Ruhlman felt the town should certainly not take from the fund balance if money is being allocated from the Enterprise fund. “This affects our bond rating. We have got to tighten up.”

Mr. Blythe, referring to failed sewer systems, stated that there are “time bombs going off all over the mountains. There are people facing condemnation. The town should focus on sewer line extensions.”

The town does not have the means to give away sewer.

Mr. Blythe suggested going after grants to help off-set the cost. Mr. Blythe went on to say that sewer would be an incentive to annex into town.

Alderman Taylor stated that once people have sewer they will not give easements or annex. “That has been proven.”

ALDERMAN TAYLOR MADE A MOTION TO GO INTO CLOSED SESSION FOR THE PURPOSE OF DISCUSSING PERSONNEL MATTERS.

ALDERMAN HIGEL SECONDED THE MOTION.

MOTION CARRIED.

Council went into closed session at 5:00 p.m.

ON MOTION BY ALDERMAN HIGEL, SECONDED BY ALDERMAN TAYLOR, COUNCIL CAME OUT OF CLOSED SESSION AT 5:25 P.M. AND ADJOURNED THE MEETING.

MOTION CARRIED.

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Jo Pinter, Mayor

ATTEST:

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Vickie Best CMC

Town Clerk