Taxes, fees dominate discussion

McCOOK, Nebraska -- McCook City Councilors and city staff discussed several view points pertaining to city revenue needs and citizen feedback focused on new taxation, Monday evening, before ultimately deciding to eliminate the previously proposed cell phone tax, reduce the existing land line tax and increase water and sewer rates.

The back and forth discussion featured warnings that the city could soon be facing budget constraints that prevented parks from being mowed and emergency responders from doing their jobs, yet took place during a meeting that included budget approvals for $25,000 city entrance signs and authorization for sales tax dollars to fund $115,000 in upgrades to city park bathrooms.

Mayor Dennis Berry said citizens had expressed to him that they didn't care if police cars broke down, making the comment just after he proposed reducing the existing land-line tax from 3 percent to 1.5 percent and eliminating the previously proposed cell phone tax.

Councilman Bruce McDowell responded that everyone that communicated to him their opposition to the cell phone tax, also offered somewhere else the funds could be cut from in the budget, but each had a different area they believed should see budget cuts.

Former Councilman Aaron Kircher attended the meeting and commented that there was no reason to reduce the existing land line tax and said the need for the cell phone tax was already addressed with the use of sales tax.

"Why not leave the land-line alone? It wasn't an issue until the cell phone tax was brought up," said Kircher, adding that he believed the cell phone tax would have generated more revenue than what city staff had indicated and he was uncertain a need for the additional revenue even existed.

Councilman Mike Gonzales raised the issue of the county moving dispatch services away from the city, which he believed could result in revenue losses and budget constraints.

Mayor Berry echoed Gonzales concerns and said the city would need to look at staffing.

Chief of Police Isaac Brown communicated to the Gazette Friday that when the city began dispatching for Red Willow County, one dispatch staff member was added to accommodate the additional workload. Brown said that position was currently vacant and he would wait on filling it until after the county made their decision on dispatching services, or he received other instructions.

Councilman Jerry Calvin said he supported the reduction of the land line tax and was opposed to any new cell phone tax. Calvin said he was a big supporter of the idea that "if the government doesn't have to have your dollar, they shouldn't take it." "At some point we have to stop and say, it's the taxpayers money," said Calvin, adding that if the city could find the revenue somewhere else or do without certain services it should.

"What I'm hearing from the people on the street is to cut back on services," said Calvin.

Councilors unanimously approved reducing the land line tax from 3 percent to 1.5 percent and eliminating the previously proposed cell phone tax completely.

Also during Monday's regularly scheduled meeting at council chambers the 2012-13 city budget was approved for its second of three required readings. The budget was amended to include distribution of $220,000 of the $329,000 in uncommitted sales tax funds. $80,000 will go towards improving bathrooms at Kelley Park, $35,000 towards improving bathrooms at Karrer Park, $5,000 towards trees at McCook cemeteries and $100,000 will be used to buy down city sewer loans.

Councilman Gonzales said he would like to see more of the sales tax funds used to repair city streets, with Mayor Berry responding that the budget and sales tax use would not be finalized until the third reading. Berry said councilors could look again at the list of potential projects and propose adjustments at their next meeting.

The 2012-13 Fiscal Year Employee Classification Pay Plan was also approved on its second of three required readings. The pay plan includes a 2.5 percent city-wide wage increase, which equates to a $80,357 annual increase, combined with $80,520 in merit increases and additional longevity increases.

The approved water and sewer rate increases of 3.5 percent will go into effect Oct. 1, 2012. The rate increases, anticipated to increase on average by $10 annually for sewer and $16 annually for water, were approved on their first of three required readings.

Prior to councilors approving the water and sewer rate increases Jenny Blankenship with Public Financial Management spoke via conference call to councilors and provided a review of the annual cashflow analysis for the water and sewer utility funds. The report gave a snapshot of the funds for current, past and future years.

Utility Director Jesse Dutcher said during the review that the water treatment plant was now six years old and beginning to show some signs of wear. Dutcher said it wasn't anything the city hasn't planned for, but offered it as justification for budgeting operating expenses at a 7 percent increase in the water fund and a slightly lower 6 percent increase in the sewer fund.

"Increases to electricity rates are also having a big impact, that eats up a lot of our budget," said Dutcher.

The water enterprise fund was shown to be in a better financial position than the sewer enterprise fund. The PFM review reflects a surplus of more than $200,000 in revenue in the current budget for the water fund, that Blankenship attributed to record sales this summer.

Despite the record sales and consistent growth in water sales every year since 2008 the PFM review forecasts water sales to not only decrease in the upcoming 2012-13 budget, but to be lower than the 2010-11 water sales.

The water enterprise fund was budgeted in 2012-13 to have an ending cash balance of $1,950,555 or 176 percent of operating and maintenance.

Dutcher said the proposed model for the water fund showed the 176 percent gradually decreasing over time and added that the item was used by NDEQ for loan purposes and was a great tool to show the water funds ability to repay its debts.

The PFM review of the water fund proposed a 3.5 percent annual rate increase until 2016, at which point the rate increase was proposed to increase to 4 percent annually. Those numbers were forecasted with 7 percent annual operating expense increases in the PFM review.

The sewer enterprise fund, which Dutcher explained had a consistently flat revenue stream which wasn't typically increased by usage like the water fund, was budgeted in 2012-13 to have an ending cash balance of $360,477 or 51 percent of operating and maintenance.

Dutcher said that while maintaining 30 percent of operating and maintenance was mandated, 50 percent was the industry standard and represented having six months of expenses available. Dutcher said the water department utilized very expensive equipment which had potential to develop needs for large amounts of repair work in a very short period of time.

The PFM review of the sewer fund proposes a 3.5 percent annual rate increase until 2015, at which point the rate increase is proposed to decrease to 3 percent annually.

McCook Police Sergeant Kevin Darling presented illustrations of design ideas for city entrance signs to be created at the four major entrances into the city. Darling has been working as part of a sign committee comprised of other city employees that has been tasked with providing councilors input on the project.

Councilors praised Darling's work and asked him to continue with it.

"Darling is very, very talented," said City Manager Jeff Hancock, adding that it would have cost the city a significant amount of money to contract out what Darling had volunteered to do.

The sign concepts focus on a storytelling theme of the community, with the northern entrance sign possibly highlighting the historic airfield north of McCook and the southern entrance highlighting the bricked downtown city area. The themes and overall concept have not been finalized but councilors praised the direction Darling was moving with the project.

Darling also indicated that each sign would have room for two potential sponsors, that would be intended to attract local civic organizations or businesses.

The city budgeted $25,000 in the current budget for the project, which was not spent, and proposed the same $25,000 be budgeted in the 2012-13 budget for the project. Actual cost estimates for the project are not yet available.

Prior to approving the consent agenda Councilman Mike Gonzales asked why a request from United Way to use city streets, for their 12th annual United Way Fun Run and 5K race, was brought before the city council. Gonzales asked if no streets were closed, why was it necessary and explained that other entities were approved for use of city facilities without council approval.

Public Works Director Kyle Potthoff replied that it had been done for informative purposes. Chief of Police Isaac Brown further elaborated to Gonzales that the police department provided escorts and other services to the runners and bringing the item before councilors provided additional public notice.

The run is scheduled for Sept. 29, 2012, and the United Way was authorized to use city streets for the event.

A request from a potential buyer of the school bus barn property to rezone the property from residential medium to business commercial was approved. Rick Klug, a representative of HCC Leasing, said the group intended to build storage facilities on the southern portion of the lot and three spec homes on the northern side.

Klug said they had a similar storage operation behind Quality Urgent Care and typically rented their space to other businesses, usually on a 3-5 year lease scenario.

The bus barn property does have city water but is not connected to city sewer. City Manager Jeff Hancock said there was potential for TIF funds to be used to assist with getting sewer service connected to the lot.

Klug also said that McCook Economic Development Director Rex Nelson was working on developing a portion of a corn field, north of the bus barn property, into additional residential property.

The three-reading rule was suspended pertaining to the rezone, with Klug explaining to Councilman Jerry Calvin that the McCook School District would like to close on the sale of the property as soon as possible, so they could begin developing the former armory location.

The school bus barn property is located on the northeast corner of Q Street and West Eighth Street. The school district has indicated previously it intends to move the operations there to the recently purchased National Guard Armory building adjacent to McCook High School.

Other items on the consent and regular agenda:

A 1 percent increase to the Unused Restricted Funds Authority was approved.

An amendment to a 2009 agricultural farm lease between the city and the Meyers Brothers, pertaining to property located at the airport, was approved for a three-year extension through 2015. According to the meeting agenda the Meyers Brothers have been good stewards of the airport farm ground and were agreeable to an extension under the same terms. The lease includes payments to the city that combine to equal $15,440 annually.

Rock N Horse Lounge was approved for a special liquor license for a beer garden at the Farm & Ranch Expo at Kiplinger Arena in November.

MO Dough LLC was approved for a special liquor license for receptions at the Keystone Business Center in September and October.