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FY 2012

We managed to restore Monday night hours at the Library, we've got some energy saving projects on tap that will save you a lot of money in future years, and the bleeding wasn't as severe as last year. I'm really proud of everyone for getting on board with making changes in how we look at the long-term, as far as energy savings goes. We're looking at building weatherization, streetlight and interior light reduction and efficiencies, and just plain old trying to figure out how to save whatever we can on energy. I wish I could tell you that I have figured out a way to create a health care program in the City that ANYONE can enroll in, and that is affordable. That's my dream, that the City of Rockland should self-insure and open it up to everyone. That's a very big project. I wish I could tell you that we don't oil anymore, or that health insurance premiums aren't skyrocketing. I wish I could tell you that we could figure out a creative way to find more funding for education for our children. I guess we've got to just keep plugging away at all this stuff the best we can, right? Together we can. We will. It's a long haul though, isn't it? That's what I have discovered in my three years as a councilor. I've gotten a lot done, but it's been a long haul, and there is so much more to do. So much more. But it's worth it. We're gonna get there.

Here is the budget presentation letter from City Manager Rosemary Kulow, dated April 20, 2011.

This letter will be read at the budget presentation at city council Wednesday night, April 20, at 6:30 pm.

If you want to download the letter as a word document, please click Here.

Introduction

This year the City of Rockland is faced with yet another challenging budget process. As we begin to rise out of the Great Recession, certain factors are not yet in our favor. For instance, depreciation of taxable personal property assets has increased with the aging of equipment; therefore, we are not assuming a significant increase in personal property tax revenue for FY12.

Likewise, significant new real property development had not occurred in the city before April 1st this year. If it had, the additional value would have provided more cushion when computing the tax rate. The city will most likely realize sizeable benefits from new development that will occur after April 1st this year, but that does not provide additional value for the FY12 fiscal year. Obviously, new development in Rockland is already limited due to the scarcity of developable land.

Because of these limiting factors in property valuation, we are assuming a very modest growth factor of ½ percent in the city’s total property valuation at this time. This small amount of growth does very little to enable city operations to absorb the huge impacts from virtually uncontrollable factors that are part of the cost of doing business, such as sky-rocketing fuel costs. We certainly hope the actual valuation numbers at the time of tax rate computation are higher than we are now assuming, but we can’t be certain at this point. The property valuation figure we are using for this budget presentation is $768,614,050.

City Council determined early in the year that city staff should develop a budget at no more than a cost of living increase in the municipal tax rate. The difficult part of this is determining which COLA to use. Should we use the CPI that does not include the cost of fuel or food, which is about 1.5% for the previous year; or should we use a CPI at the other end of the spectrum for organizations that are producers of goods and services, which is about 8%? Most certainly, the City of Rockland is a producer of goods and services, with heavy reliance on fuel and other factors involved with the cost of doing business. However, we believe that an 8% increase in the municipal tax rate would be unacceptable to the citizens of Rockland. Therefore, we used a mid-range target of no more than 3.5 percent increase in the municipal tax rate for the FY12 budget.

Revenue

About half of the city’s non-property-tax revenue categories are projected to increase in FY12; and the other half are expected to be less than this year’s budgeted amounts. We expect that revenues will increase in the following categories: (1) Community Development program income from housing programs that will offset contractor’s fees for administering the programs and some Tax Increment District (TID) funding for the director’s salary; (2) Finance motor vehicle re-registration income and notice fees, although investment income sees a reduction of $24,000; (3) General Fund Other Revenue from industrial park water company fees, higher cable TV franchise fee income, more income from leases, $63,696 more in State Revenue Sharing than in FY11, and more administration income from the Water Pollution Control and Solid Waste departments’ accounts; (4) Fish Pier fee revenue (once again the cost of the Fish Pier is completely covered by non-tax user fees); (5) Police Department grant revenue; and (6) Public Works income from MDOT’s URIP allocation, FEMA reimbursements, and fees for service.

On the other hand, revenue is expected to be less in the following accounts: (1) Assessment due to a large $67,020 reduction in reimbursements from the state’s BETE personal property program; (2) City Clerk revenue reflects the actual trend; (3) Code Enforcement more accurately reflects current conditions; (4) Fire Department omits revenues that can’t be counted on; (5) General income from photocopies is down; (6) Harbor & Waterfront reflects current and anticipated activity; (7) Legal reflects current activity level; (8) Library shows a reduction in room rental income; and (9) Recreation shows reductions in room rental and after-school program income.

Overall, total General Fund non-property-tax revenue is projected to decrease from FY11 to FY12 by about $160,000.

Projected revenue for the enterprise accounts of EMS, Water Pollution Control, and now Solid Waste, are all expected to completely fund the expenditures of those departments.

Appropriations

Total appropriations in this budget are projected to increase from the FY11 budget by only 2.4%. Some of the major reasons for the increase follow.

Fuel costs for building heat and operating vehicles are shown at a whopping 35% increase across the board. The anticipated increase amounts to about $24,000, which affects numerous departments. We only hope that our estimates are not too low for the actual conditions that will face us next year. Total city fuel costs are estimated at more than $182,300 for FY12.

Knox County Regional Dispatch costs are expected to increase 4.9% by $8,264. Obviously, this is a cost over which the city has no control.

Health insurance costs are again projected at a 10% increase. When union contracts are again ready for renegotiation, we may need to offer suggestions on alternative approaches to health insurance benefits for city employees.

One significant increase in the budget is a $36,000 appropriation to cover the cost of the Vantage Care medical savings account retirement program. Although eventually the city has to reimburse employees for accumulated sick and vacation leave, we normally calculate it for actual pay-out in the year in which retirement occurs. Now, with the Vantage Care program allowing employees to deposit the value of certain amounts of their accumulated leave into medical savings accounts annually, an appropriation to fund annual Vantage Care deposits needs to be funded every year.

The Community Development Department budget appears higher in FY12, but $12,000 of the increase is completely offset by program income that supports the administration of CDBG housing programs. There is also an increase in benefit cost for a new director, as most of the previous director’s benefits were provided by another source.

The proposed FY12 budget assumes that new non-union employees hired in the next fiscal year will be provided employee-only health insurance coverage at 85% paid by the city, and that the cost of additional insurance coverage for families is the responsibility of the new employees.

The EMS department is adding two new employees in the next fiscal year to cover additional calls and help reduce the number of hours each emergency medical professional is required to work. Thanks in part to increased bill collections by EMS’s new account manager and higher fees that will be charged to neighboring municipalities, this department’s appropriations will be covered by revenue collections without requiring a subsidy from general fund taxes.

Employees’ Wages

Union contract negotiations settled on a 3% increase in employee wages in years two and three of the contracts, since all employees agreed to no pay increases in the first year of the contract. Therefore, wages increase by 3% for union employees in the FY12 budget. Once again, however, non-union employees are sacrificing for the good of the whole and anticipating only a 1.5% increase in their FY12 salaries. None of these wage increases match the real rise in the cost of living, however; and it will be difficult to keep quality people in government jobs if their compensation is repeatedly reduced.

Department Budgets

Included in this section are highlights from other departmental budgets that have not already been mentioned elsewhere in this message.

• Funding for Engineering is decreased by $5,000 to $20,000.
• In the Executive Department, the new Executive Assistant will no longer act as the Welfare Director, as that work will be assigned to a part-time employee who focuses solely on General Assistance and other welfare duties. The new Welfare Director position will not receive health insurance or retirement benefits other than Social Security. The Executive Assistant will work for the City Manager 75% of the time and dedicate 25% of her/his time to City Attorney duties. Funding for the City Manager to attend the ICMA annual conference has been returned to this budget, as has funding for a cell phone stipend. Both of these items are contractual.
• In the General account, $3,900 was removed that would have paid for minute-takers for boards, committees, and commissions; employee recognition, and city-wide training.
• The total Health appropriation is reduced by $10,500, with only an appropriation remaining for RDNA.
• The Legal budget shows an increase in the salary line item due to the time the Executive Assistant will spend working for the City Attorney. To help offset that cost, the City Attorney has removed $5,000 of funding for outside counsel.
• Coast Guard City funding has been eliminated from the Legislative budget.
• Part-time payroll is reduced in the Library budget because the budget continues to assume that the library will not be open Monday evenings, and furthermore eliminates Sunday library hours.
• Funding for Lights and Hydrants is 2.1% less than last year due to trends.
• In the Public Works Department, one light equipment operator’s position has been eliminated. Uniform expense is down by $4,550; the cost of sand is up $11,500 due to actual usage; paving is reduced by $58,000 because we will propose a $2,000,000 paving bond for a capital improvement project.
• The Recreation budget is reduced by $3,000, as we are anticipating a reduction in evening and weekend hours at the recreation center.
• The Water Pollution Control budget (both appropriations and revenue) is up 7.1%, largely to reflect the robust collection of sewer fees. More details will be provided during the department’s presentation.
• After a year’s experience with a new self-funded account for Solid Waste disposal, next year’s budget shows a very modest .1% increase. The budget for FY12 is realistic now that a little history is behind us.

RSU 13

The regional school union is projecting a 5.14% increase in the tax rate to Rockland citizens. Due to the distribution formula in the State’s school funding program, Rockland taxpayers are hit harder than neighboring communities who participate in the Regional School Union. This translates to a $356,921 increase in the school portion of Rockland’s tax rate. The Finance Director used the school’s proposed figures in the mill rate calculation.

Summary:

If the school budget is adopted with its nearly 5.14% tax increase, and if the City adopts a proposed budget with a mil rate of $8.466/$1,000 valuation which results in a 3.2% tax rate increase on the City’s side of the equation, and if the valuation at the time of mill rate calculation is $768,614,050, the total property tax rate will increase 3.64% from $18.20 to $18.863 per $1,000 of valuation. Of the $18.863 tax rate, $8.466 is the City’s share (< 45%), $9.50 is the school union’s share (> 50%), and $.90 is the county’s share (4.77%). The Knox County budget actually went down this year! Thank you, Knox County! If the budget is adopted as presented, an average property with a valuation of $165,000 would see an increase of $109.40 from its new $3,112.40 tax bill.

Tax calculation: Valuation X Mill Rate = Tax. ($165,000 x .018863 = $3,112.395)

In summary, please allow me to reiterate robustly that the City must continue to invest in Rockland’s future, maintain its assets and infrastructure, support essential public services, and recognize the value of the City’s most valuable resource – its employees. The City must continue to pursue and invest in economic development initiatives and leverage local funds to obtain even greater amounts of state and federal funds that will enable the City to meet its goals. The City must partner with citizens, businesses, and educational systems to ensure that we continue to revitalize and strengthen our region through the wise utilization of the rich natural resources with which we are blessed. I encourage all of us to band together to maintain the high quality of living we all enjoy in Rockland.

I am honored to work with talented and dedicated City employees who consistently deliver high quality public services to the citizens of Rockland. I especially thank them for the sacrifices they show during the budget process and throughout the year, as well as how they cooperate with each other. Now, the proposed budget is turned over to the City’s elected policy-makers, trusting that they will make the best policy choices for the citizens of Rockland.

Respectfully submitted, April 20, 2011, Rosemary E. Kulow, City Manager

Letter written in April by City Manager Rosemary Kulow, to our State Representative and Senator.

I want to share with you a letter that our city manager, Rosemary Kulow, wrote to our state representative, Ed Mazurek, and our state senator, Chris Rector. The letter sets the stage for what we municipal officials are about to have to contend with. We can't continue to try to balance the state budget on the backs of municipalities. We can't balance the budget on the backs of teachers and public workers. We have to be more courageous than this. So- Read Rosi's letter for yourself to see what we are about to be up against.

Good Afternoon,

Today I am writing to impart that the City of Rockland is vehemently opposed to the proposal in the Governor’s budget to limit Revenue Sharing funding to municipalities to $94 million for the next biennium, as it represents a large cut in revenue sharing compared to what would be provided under current law. $94 million is more than $42 million short of what would be provided for property tax relief under current law, and would therefore, place an even higher tax burden on property owners in Maine municipalities.

We also strongly oppose the Governor’s intention to discontinue the municipal revenue sharing program as an actual sharing program and replace it as a year-to-year appropriation. This tenuous position would make it extremely difficult for municipalities to plan its revenue base from year to year and cause greater distress on the financial condition of all Maine municipalities.

We hope that you will support our position and urge you to vote against this devastating change in long-standing policy. Municipalities are already the most efficiently operated governmental units in the state, and to further slash their resources would be extremely hurtful to Maine people and the state’s economy.

We appreciate your time, service, and consideration of Rockland’s position on this issue and trust that you will support the position of the people of Maine.

• Sincerely,
• Rosemary E. Kulow, City Manager
• City of Rockland
• 270 Pleasant St.
• Rockland, Maine 04841
• (207) 594-0300
• rkulow@ci.rockland.me.us

Budget Adoption FY 2011, June 23, 2010.

Given the fact that tax bills just went out, I want to make sure you know what we were confronted with, and what my thoughts were in trying to deal with it.

Because of lack of state revenues and subsequent lack of revenue to share, increases in health insurance, retirement, Aqua Maine charges to the city, a large increase in school taxes, and the like, we were looking at a hole in the budget of around a million dollars. We've spent two months working to stem the bleeding, and while I felt that we could have done a few things a little bit differently, I also know that this is going to be a long-term process. For example, I have been working with Energy Efficiency Committee to identify areas of cost savings for the city, and ways to implement more efficient energy systems. Believe me, there are real savings to be had. For example, check out the downtown decorative streetlights study that we just finished, here.

Maine didn't cause this recession, but, like every other state, we're having to deal with the fallout. This is the first budget that really took into account a severe lack of revenue as a result of the financial crisis on Wallstreet, the real estate bubble popping, and continued cost increases in employee benefits and utility costs.

I did my best to ask the hard questions, and it was a tough process. I still wasn't entirely satisfied with some aspects of what we had, particularly since the average property tax payer is going to be greeted with anywhere from a $150-200 increase in their tax bill, plus a $65 dollar sticker fee at Solid Waste. In the end, the main issue of the budget ended up being the Solid Waste fee system.

I had supported the concept of trying to find a way to charge for the actual amount of trash that a person throws away, or even some kind of an average amount. Clearly, the size of your house and your tax bill doesn't have much to do with how much garbage you throw away. I was willing to look at a fee based system, as long as an optional pay per bag system remained in place for our super recyclers, since pay per bag and weighing trash across the scales is the most accurate way to charge for actual trash disposal. However, as the discussion concerning the average fee system unfolded, and the costs of $105 dollars a ton tipping fee and a $65 dollar sticker were discussed, I felt that the fee was too high and would put too much pressure on businesses, and landlords attempting to dig out from the recession, let alone families. I felt that it made more sense to support a middle ground approach.

The justification for charging the $105 tipping fee and the $65 sticker fee was that in another seven or eight years, we are going to have to cap and maintain the landfill. The cost for doing this is going to be around three million dollars. The city needs to become more proactive about setting aside the money to accomplish this task, and to care for gas extraction and groundwater monitoring once the landfill is closed. Reserves have not been effectively saved to date, which is a situation that displeases many, including me. But, we have to live in the present: the only question being, how much reserve can we set aside and have the system be fair to people who are struggling? Would it be better to set less aside at first, while we are still in a recession? I felt that this would be a more sensible approach, especially since many aspects of the system had yet to be worked out, and I felt that community goodwill would be integral to the success of the project. However, my colleagues did not agree, except for Councilor Malloy.

I believe that there is still room for council to recognize that we should consider adjusting the fees downward while we get the process rolling, in order to provide some relief to an overall grim hike of taxes and fees in general, and there is still time to discuss and hear from the public before those fees are set, and I encourage you to comment, and add to the discussion.

This was a tough budget. I would have liked to have done more to clearly assess programs and the need for equipment, and to prioritize projects. However, I won't stop working toward efficiency and effective management of our resources. Please do not hesitate to call, come to council, or email with your thoughts and questions on these topics.