As the El Dorado City Council Finance Committee prepared the 2017 budget, they asked department heads to cut their budget proposals to the “bare bone.”
Department heads heard a similar request Wednesday as the finance committee delved more deeply into 2018 budget talks.
While reviewing a financial report, committee members learned that while city revenues are running ahead of those for 2016, they are not keeping pace with 2015 income.
With a $1 million revenue loss in the general fund for 2016, the finance committee has convened each month this year to closely track sales tax revenue, using 2015 numbers for comparison.
“We’re still not on par with 2015 …, so we still have to look at the budget and try to keep it in line with what we were doing last year,” said Alderwoman Dianne Hammond, who heads up the finance committee.
Most city departments, with the exception of administration, had submitted their 2018 budget proposals by Wednesday, and before the meeting ended, one department was asked to find more ways to cut its budget for next year.
Alderman Vance Williamson noted that the budget request from the El Dorado Fire Department reflected an increase of nearly 10 percent, compared to 3 to 4 percent for other city departments.
“The lion’s share of the increase is for personnel services, and a lot of it comes from an increase in pension expenses,” Fire Chief Chad Mosby explained.
Williamson noted that $750,000 is the average minimum payment for the fire department’s participation into its pension plan, which is offered through Arkansas Local Police and Fire Retirement System, or LOPFI.
For years, the city has been working to pay off millions of dollars in debt for a local pension plan that remained after the city was required to move to the LOPFI retirement system in the early 1980s.
“Pension is an expense we have to pay every month, but with a $165,000 increase. I know we’ve got to get it paid down, but unfortunately, the revenues aren’t there,” Williamson said.
Mosby and Assistant Chief/Fire Marshal Jason Evans said that the minimum payment rate, the debt will be paid in 26 years.
Mosby also reminded committee members that the city will not be eligible this year for turnback funds that are applied directly to the debt.
Errors made by the former city payroll/personnel clerk cost the city a minimum of $150,000 in potential turnback funds.
“If we don’t get to the minimum (payment), we’re going to lose even more,” Mosby said.
The minimum payments were not met for the fire department’s health insurance premiums this year.
The health insurance for uniformed personnel is also offered through LOPFI.
“All cities in the state get that insurance premium turnback for police and fire. If there is anything left in that fund at the end of the year, it is rolled back to all cities who paid at least 80 percent of their required share to LOPFI,” Mosby said previously.
“Who’s going to be keeping an eye on the ball this time?” Alderman Willie McGhee asked, referring to the premium payments.
Mosby said he will make sure the payments are being made regularly.
City Treasurer Bonnie Wyles told city officials that health insurance premiums for civilian city employees are also increasing in 2018.
“It’s going up quite a bit … It’s through the (Arkansas Municipal League), and they paid out quite a bit more than they took in,” Wyles said.
She later said the premiums will go up by $102 per person, per month.
Williamson also pointed to a proposed $111,300 increase in the fire department’s salaries and wages line items.
Mosby said he restored former numbers for overtime pay and that three firefighters are eligible for retirement.
Two of them are seeking other employment, and while the third has enrolled in the Deferred Retirement Option Plan through LOPFI, “he could retire at any point,” the fire chief said.
“He can stay seven more years on that system, but he can leave tomorrow if he decides to,” Mosby told city officials. “My experience has been that when they see their account balance increase and they see a number they like, they’re leaving.”
He also reminded the committee that a similar situation developed last year.
“The accrued sick leave and vacation will be there if we need it. Last year we cut it out, and we had a couple of them leave, and we had to put it back in,” Mosby said.
Mayor Frank Hash referred to Mosby’s comments about the three firefighters who could potentially leave the department next year.
Hash mentioned pay raises the city approved two years ago for all city employees.
The pay structure was also revised for uniformed personnel in order to bring the pay in line with police and fire departments in cities that are comparable to El Dorado and to help attract and retain quality employees.
“We forked over the money for retention, but it seems like we still can’t stop the bleeding,” Hash said.
Mosby said the fire department’s pay scale cannot compete with higher paying jobs in private industries.
“What were we competing with before?” Hash asked.
“Other fire departments,” Williamson responded.
Mosby and Police Chief Billy White said that since the pay increases went into effect, neither of their departments has lost uniformed personnel to other police and fire departments,
“Our retention rates are up, and we’re at full staff and have been for some time,” White said.
The mayor also said that he was hoping that the state legislature would consider a millage increase for additional revenue to help pay the debt on the old, unfounded liability pension plan.
“This LOPFI thing is hitting every city across the state. It’s not just one-sies and two-sies,” Hash said.
Alderman Billy Blann agreed, adding, We can’t keep kicking this can down the road.”
The finance committee will meet again Monday, and they asked Hash to submit the administration department’s 2018 budget proposal.
White and Mosby said they would amend their budgets to reflect the increase in health insurance costs for civilian employees.
City department heads were also asked to bring their proposed capital improvement budgets to the meeting on Monday.
Tia Lyons may be contacted at 870-862-6611 or [email protected].