Work Session Minutes of the Town of Cary , North Carolina
Subject: Proposed Operating Budget
Location: 120 Wilkinson Avenue , 2nd Floor Conference Room
Date:  May 31, 2005

Present: Mayor Ernie McAlister, Council Members Marla Dorrel, Mike Joyce, Jennifer Robinson, Julie Robison and Nels Roseland

Absent: Mayor Pro Tem Jack Smith

Mayor McAlister called the work session to order at 4:32 p.m.

Town Manager Bill Coleman recapped the decisions made in the capital budget work session. Council was provided with a copy of a May 31st memo regarding the fiscal year 2006 multipoint budget input session (attached to and incorporated in these minutes as Exhibit A).

Budget Director Scott Fogleman referred council to the Summary of Adjustments to Requested FY 2006 Capital Improvements Budget Resulting from May 19, 2005 Capital Worksession #2 (attached to and incorporated in these minutes as Exhibit B). He stated that the first table at the top shows a grand total for general and utility capital projects of $60,994,601; through work session adjustments staff was able to reduce that amount by $9,894,850 with the adjusted amount of $51,099,751. This is a reduced debt in streets of $6.5 million and in parks of about $3 million.

Mr. Fogleman stated that midway in the bottom box shows the Bartley Park money coming out according to work session adjustments because council chose to reprogram existing funding to cover the project. A mid-year staff report will be prepared for the Operations Committee meeting in July to reprogram this existing funding. Because no new funding was needed for that project it was removed from the total projects requesting new appropriations in the FY06 budget. Mr. Fogleman said that when prepared the original capital improvement budget showed $2 million in open space and related park site acquisitions; since that time the May 3rd referendum for open space passed, exchanging sources of debt funding from the 2003 park bond money to the 2005 open space bond money. If council chooses to leave $2 million in that capital project, $1 million would be cash and $1 million would be from the 2005 open space bond authority.

Mrs. Robison stated that the shift if more for flexibility rather than savings. Mr. Fogleman confirmed.

Mr. Roseland asked about using utility funds. Mr. Coleman stated that $1 million is being transferred from revenues from the utility fund as the source of cash. Mr. Coleman stated that staff wanted to ensure that council was aware of this as it was an item in the discussions regarding the open space question on the referendum this past year. Mrs. Robison stated that the program is not being changed in terms of funds flow this year. Mr. Coleman confirmed.

Mr. Roseland stated that when the obligation bonds are due debt service will be from the General Fund. Mr. Coleman confirmed, stating that it will probably be at least a year’s lag.

Ms. Dorrel asked if we are doubling the amount for open space. Mr. Coleman stated that in 2005 $1 million cash from the utility fund was budgeted for open space; in the previous year it was $1.7 million; and before that it was $2.5 million. He said that this year staff left the $1 million transfer to open space in the proposed budget because it was previously a council policy decision in the budget. Given the results of the May 3, 2005 referendum that gave additional authority for open space, staff looked for a minimum level of continued expenditures to advance the open space program and added $1 million from that referendum. In related discussions about the $10 million open space referendum, council did not have discussions about whether to maintain utility fund cash transfer. The difference in the utility rates this year is a proposed 9.1 percent utility rate increase which would be 6.5 or 6.7 percent without the transfer.

Mayor McAlister stated that some council members understood that if the open space bond referendum was successful it would become a funding mechanism for open space going forward, not the $1 million transfer out of the Utility Fund. He said that a premium is put into reconsidering the $1 million transfer out of the Utility Fund to moderate the increase in the year that utility rates are budgeted to go up 9 percent and that he doesn’t know how to do that and still double the amount for open space. He was a concern when talking about funds for open space in capital improvement budget.

Mr. Roseland disagreed. He said that if council budgets $10 million for open space next year, debt service one year later on a 20 year term would be $1 million in debt service as needed. Hypothetically, if we budget that amount, expend it, acquire the land, and sell bonds the following year to recover that full $10 million in year one expenditures, then we would have $1 million in debt service for the next 20 years. He said that if the $1 million budgeted for next year is reduced by one-tenth, then the following year we would need $100,000 in debt service. Mr. Roseland stated that in looking proportionally at taxpayer pockets he can see reducing the Utility Fund by $100,000 but not creating a total wash on open space funding.

Mr. Joyce stated that the Town has $3.5 million set aside for open space. He asked if the Town has site acquisition in FY06 for the $3.5 million and questioned why money is being put in and not spent. Mr. Roseland stated that acres developed versus acres being preserved six to one. Mr. Roseland stated that over $400 million has been inventoried in open space and that $14 million has been budgeted over the last four years. He said that on looking at the rate of development versus preservation it is still out of balance when looking at the raw numbers.

Mayor McAlister expressed concerned with the double dipping aspect. He stated that $10 million in open space funding was approved in the May referendum with the understanding that it could add a penny to the tax rate when fully implemented. He asked if the $1 million per year from the utility fund is being thought of to service that debt because both cannot be done. He is concerned about doubling the amount and while continuing to subsidize from the utility fund.

Mr. Roseland clarified stating that $1 million was budgeted for passive open space last year, whereas the current recommendation from the budget is $1 million each for active and passive open space.

Parks, Recreation and Cultural Resources Director Mary Henderson stated that staff tried to purchase parkland adjacent to open space priorities to make larger parks and part of the parks would be open space.

Mr. Joyce suggested taking money from Bartley Park and giving it to the parks department for open space. He said the question is how to buy parkland and open space.

Mrs. Robinson asked if Mr. Joyce was suggesting spending money to acquire land for open space instead of on developing parks. Mr. Joyce confirmed and stated that it would postpone debt.

Ms. Dorrel stated that through development plans we are also preserving open space with a different kind of mechanism. She suggested keeping the $2 million in the budget to have this discussion and determine how to fund it. It was her understanding from council discussions that the plan that the Utility Fund contribution would go away when bond funding began. Ms. Dorrel is interested to see what the utility rates look like with the $1 million removed. Mr. Coleman stated it would be about $6.5 million or $6.7 million instead of $9.1 million. Ms. Dorrel stated that she is reluctant to raise utility rates and keep utility money for open space funding with the bond approval.

Mayor McAlister stated that it is a question of priorities due to the amount of current debt. He said that the Town has seven years to use the money with the referendum. Council needs to balance out what is necessary.

Mrs. Robison stated that reducing the amount for open space as a dedicated revenue stream from the Utility Fund does not buy that much in terms of offsetting increases in the Utility Fund rates. She said that it is a small impact over time when you consider the existence of the rise in utility rates regardless of open space allocation. Mr. Coleman concurred. Mrs. Robison stated that to make a policy decision to discontinue the dedicated revenue stream gained from the Utility Fund for open space for short term gain is short sighted. She wants to maintain the dedicated revenue stream to ensure long term vision and consider utilizing more bond referendum funding when we can more comfortably afford associated debt services.

Mr. Joyce said if we leave the $1 million from the Utility Fund in place it would in effect raise fees 2.4 percent. All other council members disagreed, stating it’s been in place since 2002.

Mrs. Robinson asked if council wanted to spend money to develop parks or acquiring land during tight budget times. She stated that it is good to acquire the land now and develop later due to escalating land costs. She asked what would be lost if money is taken from Bartley Park phase 1 and what would be gained that money is used to acquire land. Mrs. Henderson responded that phase 1 includes a large playground, picnic areas, restrooms, trails, dog park, and road improvement. She stated that the Town owns the land and the park has been designed. Ms. Dorrel added that construction has already been delayed for a year.

Mr. Joyce asked about Middle Creek amenities. Mrs. Henderson stated there are four softball fields from phase 1.

Mr. Roseland stated that it is worth exploring the double dipping comments. He said that average Town of Cary household spends about $2.60 per month to support the open space program and asked about the cost effect per house hold if the Town were to double dip. He stated that people would pay nothing for open space for a 12 month period if the Utility Fund amount goes away; the amount would kick in the following year with debt services which seems to be 26 cents per month. Mr. Roseland said he is hesitant to go from $2.60 a month now to 0 to 26 cents a month in future years. He asked staff to quantify options and provide projections for next year to pay the $1 million in bond service.

Ms. Dorrel stated that the average bill including open space would be $5.11 for 7,000 gallon per month to maintain Utility Fund revenue stream. Taking out open space would reduce that by $1.33 per month (or would be $3.78 per month for the increase) for a 7000 gallon a month user. Mrs. Robison said she doesn’t think the savings are worth giving up a dedicated revenue stream. Mayor McAlister agreed, but stated that not doubling in a year that would cause a compounded debt. Mayor McAlister suggested keeping the Utility Fund and not using the bond money this coming year.

Mr. Joyce wants to take the Bartley Park money and buy open space; otherwise, more staff will be needed to operate the park. He does not want to continue adding operating expenses.

Mayor McAlister stated that hears an agreement from council to stick with the status quo for now and in the future when the Town is not as challenged with debt to start drawing on the bond money. He said to fund $1 million per year for open space using the Utility Fund, which is going from $2 million to $1 million.

Mrs. Robinson wants to explore park development versus park acquisition. Mr. Roseland is in the minority.

ACTION: Use the Utility Fund this year instead of bond money.

Mayor McAlister stated that Bartley Park was put back into the budget by postponing other things and those are types of choices that council needs to make.

Mrs. Robison said that there needs to be a separate detailed discussion if talking about reprioritizing using the Bartley Park money and that a policy shift should be done in the proper framing.

Ms. Dorrel stated that all of the answers do not lie in Bartley Park and asked about the implications down line for the parks, recreation and cultural resources master plan.

Mrs. Robinson wants to keep the $1 million dedicated from the utility fund and consider finding money from existing park development money for parkland and open space acquisition. This does not mean that she is in favor of $1 million instead of $2 million, but she doesn’t want to use the bond money. Mr. Roseland stated this could keep the Town at the $2 million level. Mr. Joyce wants to use Bartley Park for the $2 million.

Mr. Roseland stated that the goal is to find $2 million for this year. Mayor McAlister stated that can be done if they are able to find $1 million in existing park funds to divert to open space. He said they are not prepared to answer that today. He stated that they will definitely not use open space bond money in coming year and instead will move forward with using $1 million from the Utility Fund for open space.

Mr. Coleman moved into the operating budget, general fund and utility fund budget. He referenced a summary of the information in materials. (A copy of the draft budget is attached to and incorporated as an exhibit to the May 31, 2005 council meeting minutes.)

Mr. Coleman stated that budget projections for this year include about a 6.2% increase in general fund revenues the solid waste collection fee is changed. He stated that there is still a small revenue growth regarding tax base and sales tax is coming back some. Those are the revenue restrictions in the general fund budget. He said that given the escalating expenses and limited revenue growth staff tried to approach the budget to maintain service levels, limit new debt but still allow flexibility to pursue implementation of some of the thoroughfare and parks master plans, identify opportunities to create service efficiency for the future to control future costs, look at how the Town charges for services and improve those methods, and try to create a foundation of business principles to move the budget into future. He said that staff tried to limit growth in personnel and decrease operating expenses (staff has been given direction to decrease operating expense by at least 3% and travel and training by 10%). In addition, any time a position is vacant a review is done of that position to see if it is necessary. Staff has tried to limit capital growth as matter of an expense source in the budget.

Mr. Coleman stated that the recommended overall General Fund operating budget increase is about 11.6 percent; however, debt service and capital projects make up about 7 percent of that increase. He said that there is only about a 4.6 percent increase in actual operating expenses if certain increases in debt service and capital expenses are eliminated. Staff has been going through the list of capital purchases in the operating budget looking to significantly reduce that amount and will have that list by next work session. Mr. Coleman stated that the Primary drivers for the General Fund budget are increase in debt service, which is a cost we can’t do anything with, and personnel costs (listed review of all new positions recommended for funding). He stated that only 18 positions out of about 36 requested are recommended for funding; of those 18, all but 2 of the full time positions are related to new facilities or new programs. He stated that the two new positions not related to facilities or programs are in the clerks and public information offices and are workload driven.

Mayor McAlister stated that there are 9.7 employees per 1000 citizens, which is as low as it’s been in past 10 years and assumes adding those new positions. Mr. Coleman concurred.

Mr. Joyce asked about landscaping greenways and about the percentage of work force contracted out. Public Works Director Mike Bajorek stated that all general turf maintenance is contracted. He said that in FY06, there is $507,000 in general landscape maintenance. Mr. Joyce asked what landscaping is taken care of by the Town. Mr. Bajorek stated there are about 400 developed acres with 8 teams of 3 people for a total of 24 people responsible for doing beds, trimming trees, safety issues, in addition to repairing fences, playground safety, etc.

Mr. Joyce asked if any required landscapers are due to the new parks and greenway network. Mr. Bajorek stated that the vast majority of the work is done by contracted services. However, if there is an erosion problem, damage, or a problem that will take less than a week and is cost effective for staff to do then it is done in house; otherwise it is contracted out. Mr. Bajorek stated there is one addition person in the request for landscapers this year to help with landscaping around the town hall complex. He said that three of the workers are being driven by Middle Creek and, if that project is postponed, those positions will not be needed. There is almost 17 acres per person of landscaping.

Mr. Roseland stated there are two to three requested positions in USA Baseball going to the operations committee and that he saw a staff report stating it would be 16-18 months before it is constructed. Mr. Bajorek stated staff is not hired until there is a need. Mr. Roseland suggested reprogramming the existing positions instead of asking for new ones. Mr. Bajorek stated that could be done or the three positions can be dropped off the chart and brought back in a future year. Mr. Coleman stated that the main reason not to do that is because if positions are added to work in a specific facility and that facility is not built then those positions are not hired. Mr. Coleman said this is done in order to avoid the perception that positions are hired twice; if additional personnel is needed for other facilities it is dealt with separately in order to alleviate any confusion with personnel issues in the capital projects. Mr. Fogleman added the FY06 funding for those three USA Baseball-related positions is taken out and is only shown on staffing documents.

Mr. Joyce asked about overtime. Mr. Bajorek stated the Town is already paying overtime.

Mr. Joyce stated that automated trash collection will result in internal staff looking for jobs and asked if there would be an opportunity for one of those staffers to fill the job. Mr. Coleman stated yes.

Ms. Dorrel asked about public information office position and stated that one option is to say service standard at this time is sufficient. Mr. Coleman asked Public Information Officer Susan Moran to provide information on goals staff is attempting to me with regarding the media, public information using channel 11 public TV, the website, the amount of material to update, and goals for turnaround keeping information up to date and providing new information. (A copy of the General Public Information Work Program Analysis is attached to and incorporated as Exhibit C.)

Ms. Moran stated that Cary is unique because a lot of the public information is done at council direction. She stated that the Town Clerk and Public Information Office positions are not directly related to programs, but that every time council approves a program the expectation that citizens will be made aware falls directly to the public information office. Ms. Moran stated that these expenses generally are not included in the operating budget or in the initiative that council directs. Since 1998 there has been a 160 percent increase in the number of news releases. She stated that there isn’t enough time to put out all of the information in a timely way and that we’ve outsourced as much as possible. Help is needed in order to continue the current level of service for providing public information. She said that there are currently 3.625 staff, 1.625 is totally directed to Cary TV, and 1 works directly with the web and Bud. Ms. Moran handles everything else. Ms. Moran stated that to be efficient they have utilized the services of Assistant to the Town Manager Lana Hygh. She stated that the public information office has had less access to administrative support because they are doing higher level duties. Four positions were requested from the administrative department the town clerk and public information configuration will free up capacity for an administrative support person.

Mr. Joyce asked what the public information office has done with oasis. Ms. Moran said something was done on BUD TV, comprehensive communication plan including articles, and news releases. Another employee would help to provide more information about Oasis.

Ms. Dorrel stated it is a values issue and she is comfortable with the request for the two administrative positions. She said that each time council asks for another public input session, outreach effort, etc., which are highly prized by citizens, it puts more pressure on staff.

All council members indicated that they are okay with the two requested administrative positions.

Mr. Coleman stated that one of biggest issues in the proposed budget is the change in the solid waste collection method and fee. He stated that the primary reason for making the recommended change is to look at solid waste collection, disposal, and recycling differently. He said that staff is proposing an enterprise fund to account for the expenses and revenues separately and tie the two together. He believes that this is a cleaner way to establish the service and fee, and account for it in the future. Mr. Coleman said that one of the biggest problems in the future will be maintaining backyard service. The Town has lots of problems and issues that occur every year with recruiting and retaining employees, and it will become more difficult with exposure to danger and workers compensation claim. He said that it is clear from experiences in North Carolina and across the country that going to an automated solid waste and collection system is needed in order to maintain the consistency of service and control future cost.

Mr. Coleman stated that a similar proposal was made 13 years ago and staff has worked thru that system since then. He said that given the state of the industry, the issues related to workers compensation and controlling cost in future, staff feels it is time to make that change.

Mr. Bajorek provided copies of the modification of solid waste service staff report presented at the council/staff retreat on February 18, 2005 along with a summary of those modifications. (Copies of the staff report and summary are attached to and incorporated as Exhibit D).

Ms. Dorrel stated that budget committee will discuss the solid waste collection issue and some questions may be deferred to the committee to be brought back to the whole council. Mr. Coleman stated it needs to be reviewed by the entire town council and any detailed questions or proposals for changes can go to the committee.

Mr. Bajorek stated the Town has a unique opportunity over the next several years because trucks must be replaced in near future. He said it is time to consider a shift to a more cost effective type of collection. The recommended program will change yard waste pickup from Monday to the day of the garbage collection and for most citizens their collection day will not change. He stated that staff will work four 10-hour days, which is industry standard, even though staff currently staff works five 8-hour days. Collection will start at 7 a.m. with separate yard waste crews following the automated trucks picking up yard waste. With automated collection there is one person driving the truck picking up the can and that truck will be followed by a yard waste rear loader.

Mrs. Robinson stated that people will complain about not having yard waste picked up on Monday, after spending all weekend doing the work.

Mr. Roseland is opposed to asking people to do more work and doubling their bill. He said council needs more time to set objective and asked when the conversion would take place. Mr. Bajorek stated it would take place after carts are delivered.

Mrs. Robinson stated that this decision is predicated because staff needs to replace trucks. Mr. Bajorek concurred. Mrs. Robinson agrees with Mr. Roseland about the funding issue. She asked staff to provide information on the cost to citizens, as is, with a fee instead of property tax.

Mrs. Robinson is concerned with yard waste not being collected on Monday. Mr. Bajorek stated that staff looked into and the cost was over $350,000 additional to do yard waste on Mondays.

Mayor McAlister stated that $18.80 is full cost recovery if they continued with back yard collection. He asked if that included support from the General Fund. Mr. Bajorek stated that it assumed $550,000 from the General Fund to subsidize and that that the convenience center is also supported.

Mayor McAlister stated that council can’t just look at one part of this without looking at everything. He said if the Town moved to an enterprise fund with backyard collection the cost would be $18.80 as opposed to the current $7.67 now with the General Fund subsidy. He stated that the business community is paying this in their tax rate and subsidizing everyone with no benefit to them. He said it is unfair to double costs and cut back on the service; costs are being put on the users and not taxes.

Mr. Roseland is okay with the fee increase if property tax decreases by same amount. He doesn’t want the subsidy eliminated only to use it for other needs in the budget. He could support the objective of going to the automated service, but needs more time to get public input and feedback. He said it is also important to explore privatized services, put out a request for proposal and get bids and wants to see a proposal on the table before a decision is made.

Mayor McAlister asked Mr. Roseland if he was suggesting a separate enterprise fund for police and fire. Mr. Roseland stated that if the objective is to eliminate subsidies, eliminate all of them and make them user fee based.

Mrs. Robison echoed Mr. Roseland’s concern about the policy goal stating that council needs more discussion. She said if the driver is an equity issue in favor of the businesses not receiving solid waste collection services and subsidizing residential out of property taxes, then this is a policy goal statement. She does not like the fact that it puts the burden for the share equally on all residents and is not prorated based on volume or value of the house. She said that a benefit being is being lost and the burden shifted.

Mrs. Robison asked if an enterprise fund would operate like the Utility Fund so that funds would never be transferred and would basically charge to run the enterprise what it costs. She asked if the same thing can be achieved through an accounting system. Mr. Coleman stated yes. Mrs. Robison asked why a goal of matching revenues to expenditures be achieved through a policy goal stating that a certain percentage will come from the General Fund in order for the fee to be less regressive. Mr. Coleman stated that it can be done through accounting, but he does not know the impact it will have to the extent the fee is regressive. He said that revenues and expenditures can be counted to give a reasonable picture. Mr. Coleman said that the proposal for the enterprise fund was simply a way to set it apart from the budget and make it clearer and easily comparable from year to year in the long term. Mrs. Robison stated that it is a good goal for full cost recovery. Mr. Coleman stated that long term accounting is not as clear as enterprise fund but that it can be done.

Mayor McAlister asked about the current proposal in the budget. Mr. Fogleman stated that staff prepared statements using the same General Fund approach and that all costs and revenues are included in the General Fund for comparison purposes. He said if pulled out and made part of an enterprise fund, then the General Fund would decrease by the amount being put into the solid waste enterprise fund. It would mean moving dollars and revenues over and at $15.50 it would not be 100 percent cost recovery; there would still need to be a general fund subsidy for the convenience center and other things.

Mayor McAlister stated that the $18.80 referenced in the staff report is to keep backyard pickup. Ms. Dorrel stated that the full cost recovery is 86 percent. She sees this as a course correction stating that council made a significant policy shift in 2001 for the FY02 budget and they are now re-examining that policy. Ms. Dorrel said that one question is whether that shift should be taken all at once for the 86/14 split or if it should be done in phases. She sees it as a way to return to a more equitable situation and remembers some of the discussion at the time of change. The other piece is that this does generate additional revenue. She said that if they don’t want to see this as a revenue producer, then they must find expense cuts on the other side. Ms. Dorrel stated that the budget committee has been discussing this issue and hopes to look into it in the future.

Mr. Joyce stated that moving to a user base situation is a full cost recovery by a contractor plus profit to the user. He said that by not privatizing the Town saves 86 percent.

Mr. Roseland wants honest discussion about other needs instead of redirecting the money. He $3 million is being injected into the garbage program freeing up a subsidy that is moving to other parts of the budget to help with the public information officer and other needs outlined in the budget. He said it is not full cost recovery because it is currently being paid for with property taxes.

Mr. Joyce asked what happens if the system is kept as is and the Town just buys new equipment. He stated that a tax deduction would be good but as the Town grows and adds more back yard service it increases staffing needs for solid waste collection. He asked if any certain subdivision can be phased in to be controlled by automated front yard service and then add everyone else in slowly over the next 10 years.

Ms. Dorrel stated that there is the shift from the property tax to a full cost recovery system and a change in the method and they are not inseparable. She said that the shift in method to curbside is proposed at a three year phased method, but the rate is not phased and some people will not see a change in method until the third year.

Mr. Coleman stated that staff is trying to make council aware of costs, revenues, and opportunities now and for the future. He said that the issue of how we pick up trash is separate from how we pay for it. Staff believes that in the long term the Town will be in the best position for providing consistent, dependable and cost effective service if delivery service is changed. He said that how it is paid for includes a lot of policy issues whether or not it is subsidized. Staff has pointed out the history and payment of solid waste collection and disposal. The information provided is precise, clear, and presents an honest evaluation of choices and options. Staff has looked at volume based collection issues and curbside collection presents future opportunities for more precise charges. Breaking solid waste collection down into measurable units is difficult; administratively it is much more costly and time consuming. Going to curbside collection provides future opportunity to greater break down unit costs. This change gets us closer to past council direction. Mr. Coleman stated that it is pretty clear from the state of the industry that if the Town stays with backyard service it will be difficult, if not impossible, to get any one private contractor to bid on this. He said that those are some of the issues reviewed by staff. How we pay for it is to clearly identify the cost and policy and value decisions with one method over another and it is a council decision on what to do with the policy.

Mr. Roseland stated that he didn’t intend to imply anything dishonest going on. He said there are a lot of financial and program questions and discussion needs to occur. Mrs. Robinson stated that council discussed the issue at length at the previous retreat.

Mrs. Robison asked staff to provide council with two different options that would fulfill or support the staff recommendation. She also asked if a budget decision could be made without deciding the method. Mr. Coleman stated that the fee would have to be increased, a tax increase would be needed, and expenses would have to be reduced by some amount of money.

Mrs. Robinson stated one option is to create the enterprise fund, start charging $15.50, and then subsidize the balance of $3.30 from the General Fund until the decision is made. She said that would decrease the tax increase; otherwise, if kept in the general fund with backyard pickup a small tax increase will be needed if expenditures are not decreased anywhere else in the general fund. Mr. Fogleman stated that the most direct way to do this would be with a solid waste fee increase to $15.50; if at some point a further decision is made to leave in back yard collection the rate could be raised at that time. He said in order to continue with the current service level backyard service is more expensive than curbside.

Mr. Joyce stated that he agrees with Ms. Dorrel that we are correcting what was done in the past.

Mr. Roseland stated that truck replacement is a one time cost and the Town could look at garbage fees or the fund balance. He said that the t\Truck replacement cost is $690,000. He asked to be provided with a scenario to keep the rate as is for a year, look at the fund balance to buy the trucks, and move towards the objective of automated curbside service. He said that subsidizing garbage collection will prevent a certain amount of property tax increases. He would like to see a one time hit to the general fund to replace trucks and keeping fees as is.

Mr. Fogleman stated that part of the way the fee was developed was to look at cost recovery realizing capital costs implications, knowing that some years trucks won’t need to be replaced. He said that an enterprise fund approach allows you to see the specific amount of fund balance which might be generated in one year when no equipment is replaced.

Mr. Fogleman stated that transitioning service in three years is more behind the scenes in terms of fleet truck replacements. He said that everyone town-wide would see the service change to curbside all at once.

Mr. Joyce asked about having two different fees. Mr. Coleman stated it can be done, but staff has not made that proposal. He feels that council wants to look at a volume based system and that from an administrative standpoint staff wants to avoid changing the system every year due to costs and confusing to the population. He said they want to start with the automated system and then bring recommendations to council in the future about volume based service. He said staff could look at the 90 and 65 split initially if council is interested.

Mr. Roseland asked about having two to three tiers on garbage based on a one-time study, i.e., 1500 square feet charged one amount, etc. He would be open to a fee structure that is more equitable than one size fits all.

Mr. Joyce wants to offer people choices on what they want. Mrs. Robinson agreed. Mrs. Robison concurred and stated we don’t need to do a study. Mrs. Robinson stated that smaller homes sometimes generate more trash than people in larger homes.

Mayor McAlister asked if automated trucks can load either size bin. Mr. Bajork responded yes. Mr. Coleman stated that staff has done some research on this. Mr. Bajorek talked about some of the issues related to the 65 versus 90 and stated that with volume based will look at again. He said we are fortunate in North Carolina that the disposal rate is around $29-$30 per ton, which is low compared to other areas around the country. He said that the cost of collection is getting the truck in front of person’s house to pick it up and we are looking at a difference in 32 gallons of trash at $3 per ton, which is not a lot. He said we don’t have the capacity to add more to recycling with trucks. As we replace the current fleet of vehicles and move towards a 2-stream collection, more materials could be added that would give citizens an option to recycle more by lowering the level of waste.

Mrs. Robison stated that it is more economical to collect the same amount of volume from everyone because landfill costs are low compared to other parts of country using volume based systems. Mr. Bajorek stated results of a study show that Cary citizens currently already divert 35 percent of waste stream.

Mr. Joyce stated said that instead of setting two fees based on volume the fee could get smaller. Mr. Bajorek stated it is easier to give a 96 gallon cart up front. Going to a curbside service provides costs savings in terms of reduced labor and flexibility by collecting in a semi-automated manner, with two people on one truck instead of three or four. He said that residents creating more than one 96 gallon can of garbage can ask for an additional cart; likewise, residents using less could get a smaller cart.

Mayor McAlister stated that the issue would be taken up at the upcoming budget committee meeting. He said that there is a diversity of opinions and asked that the committee work through the issues and provide council with more clarity to help them make decisions for the budget prior to the June 6th work session.

Ms. Dorrel stated that a decision tree is needed to outline questions, because there are a number of policy questions.

Mayor McAlister hopes the group will make recommendations on timing based decisions—what must be decided now in order to move the budget forward and what can be postponed to a later date. He left it in the budget committee’s hands and expects to hear from them at the next budget work session.

Mrs. Robison wants to clarify that what she hopes to get back is information on what needs to be decided now to move the budget forward but not necessarily tie that to the method or policy issues needing to be discussed. Ms. Dorrel said there is the policy issue of the method and the subsidy and their balance. She stated that may be a key budget decision but approach and method would not.

Mrs. Robison thinks citizens will want to be part of the discussion. She said council should consider some type of short term ad hoc committee involving citizen stakeholders in the discussions. She stated that once the policy is determined the methods will be adopted without a huge amount of resistance from public.

Mr. Coleman stated that the budget subcommittee is looking at the following to report back to council on June 6: issues related to span of control in staffing with regard to ratio of supervisors to other employees; identification of cash and existing park projects related to the open space issues; quantifying issues related to revenue generation related to business licenses; identification of cost issues related to fire operations; identifying staffing options and any options to change the staffing; comparison between station operating costs between us and Raleigh or another municipality; a business model for inspections and permits where we can look at fee recovery; recommendations for parks and recreation fee increases; looking at issues related to delaying some of the fleet replacements identified for this year; changing level of service for street sweeping frequency, mowing and maintenance of medians, maintenance of greenways, and other landscaping activities; changing frequency of sweeping for parking garages; and changing level of service with regard to contracted janitorial services for all town facilities. Those are all expense related issues to be brought back to council. He stated that the committee also reviewed other issues wrapped up in expense and cost reductions: privatization and contracting efforts; efforts at reviewing and reducing staffing during the course of the year prior to budget; and staffing at community centers. In addition, the committee also looked at the pay plan and 401k issues and will bring all of that information back to the full council.

Ms. Dorrel hopes the committee can provide information to the full council in a concise format to answer questions instead of generate more.

Mr. Joyce asked about the proposed $29 million in new debt and the options. Mr. Fogleman stated that based on the timing of all of the documents and related schedules, the information in the recommended budget represents the capital requests submitted at the April capital work session. He said that the changes from that capital work session will be factored into the capital changes and open space discussion is reflected in Exhibit A.

Mr. Joyce stated that they never discussed non-profit organizations and he sees more added to the list. Mr. Fogleman stated that cultural arts may have added one or two more. Mrs. Henderson stated $89,000 is requested for cultural arts groups versus the $96,000 requested last year.

Work session adjourned at 6:37 p.m.