5. City Manager/Council CommunicationCity of Kalispell
Post office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406) 758-7000 Fax - (406) 758-7758
REPORT TO: Honorable Mayor and City Council
FROM: Chris Kukulski, City Manager
SUBJECT: Supplemental Information on Street Maintenance Budgeting
MEETING DATE: August 18, 2003
BACKGROUND: During the August 18, 2003 City Council meeting Councilman Hafferman
took considerable time questioning the honesty, competence, and integrity of the staff and City
Council. He also questioned the motives of the City Council and me with respect to consolidating
the General Street Maintenance and Traffic Signs and Signals budgets (General Fund items) into
the Special Street Assessment Fund for FY 2003/04. Regrettably, Councilman Hafferman's facts
were incorrect. The following information is offered to, hopefully, correct the record and reinforce
the City Council's confidence that their earlier decision to make this consolidation was correct. I
am also responding to several other accusations Mr. Hafferman leveled against me during my
absence.
Fiscal year 2002/03 budgets for the three street maintenance funds (exclusive of Gas Tax)
compared to the fiscal 2003/04 combined budget for these functions are as follows.
FY 02/03 General Street Maintenance
$
107,734*
FY 02/03 Traffic Signs & Signals
$
148,880*
FY 02/03 Special Street Maintenance
$
704,897*
FY 02/03 Health Insurance Cost
$
29,781
FY 02/03 Retirement Cost
$
9,808
Total $1,001,100
FY 03/04 Special Street Maintenance $ 862,959*
*Budget summaries attached
FY 03/04 Change -$ 138,141
As this tabulation clearly shows, the FY 03/04 budget reflects a reduction in street maintenance
costs of nearly $140,000 over FY 2002/03; a significant amount that itself reflects the continuous
and intense level of effort by the staff to minimize annual maintenance costs. Further, the amount
of FY 2002/03 General Fund street maintenance costs was $256,614, not the $107,000 stated by
Councilman Hafferman. Had these costs been held level and left in the General Fund budget for
2003/04 their impact on the General Fund mil levy would have been substantial.
During the August 18 City Council meeting Mr. Hafferman's made several statements
regarding the 2004 budget and referred to other earlier statements by the City Manager.
"When we started this 03-04 budget process we stated that this new budget would not
exceed the current budget. Last meeting this council approved a General Fund budget that
exceeded the current general fund; that means MORE property tax. "
To refresh everyone's memory, the Council's specific guidance to me was clearly stated in the
budget directives:
"2004 Budget Directives, Goals & Objectives — City Manager
1. Mil levy funds will not increase above current levels with the exception of new
construction, annexation growth, and the inflation adjustment included in the
state's mil levy value formula.
2. Staffing levels will remain constant with no additional full time employees being
hired."
Both directives were followed when crafting the FY 2003/04 budget. In fact, the
need for ,funds generated by the mil levy has decreased as a result of moving street
maintenance costs away from the General Fund to the Special Street Maintenance Fund.
This action was revenue neutral.
In addition to the two primary directives listed above, the approved budget also was
formed around the seven goals and objectives that I presented to the City Council.
1) Construct the City's first fire sub -station by 2005
2) Implement Facility Plan recommendations for the 2004 fiscal year
3) Fund 50% of the annual capital equipment depreciation
4) Fund 5% of compensated absences
5) Implementation of the 2003 Growth Policy
6) Continue annexations of properties receiving one or more City services
7) Present to the voters the local option tax or city charter
Councilman Hafferman continued his accusations with the following statement.
"The proposed street assessment increase is a 46% increase over the previous
year's assessment. "This HUGE raise was not even discussed during a workshop. "
"There is no cap on special assessments, the only cap that exist is on property tax, and that
is by State law and I think that is what we are trying to escape, State Law. "
During a City Council budget workshop the majority of City Council members believed it would
be beneficial to shift costs associated with street maintenance away from the General Fund into the
Special Street Maintenance Fund. It was clear during the discussion that the Council's support for
this concept would remain firm only if the change was revenue neutral. The required revenue
neutrality was achieved and the result is a budget that is easier to understand and with revenues
and expenditures pertaining to street maintenance consolidated in a way that allows the total and
all its component parts to be more closely analyzed by the Council, management and the public.
This decision is not questionable legally and the City is not trying to "escape, State Law."
The expenditures in the approved budget were in no way affected by this change. In other words,
the exact same dollar amount would have been proposed to provide street maintenance and sign
and signal services had it been in the general fund or the street assessment fund. The 46%
increase generates the same amount of money as the mill levy would have had to generate in order
to maintain street maintenance services.
Councilman Hafferman went on to say:
"Last meeting we heard a statement from the City Manager that appeared to say that there was
not a tax increase, Yeah! Right!" "Come-on Council forget about the mil levy, forget about the
number of new mils, how much money are we extracting out of the tax pavers? In other words we
should be less in the general fund. Let me read you last weeks statement from the City Manager,
`the general fund budget is $5, 737, 890 which is less than a 1 % INCREASE, ' we have increased
the general fund, now what are we taking about here, revenue neutral, BS.
Mr. Hafferman chose not to read the full quote which clearly indicates that the total FY 2003/04
budget of approx. $3.2 million is approximately 5% LESS than the previous years amended
budget. Mr. Hafferman's selective, out of context quotes, are a direct attack on my honesty,
competence and integrity and are an unvarnished attempt to mislead and misinform the public. See
the attached spread sheet that clearly shows the impact of lowering the mil levy while increasing
the street assessment.
As I said earlier, Councilman Hafferman's factual errors are regrettable. It is equally regrettable
that I was not present during the meeting to respond to Councilman Hafferman's accusations. This
dialog could have been easily avoided had the Councilman simply asked staff ahead of the
meeting for an explanation of the rationale behind the budget changes approved by City Council.
We would have been happy to answer all his questions and would have given him any information
needed to assist his understanding of the issue.
I have asked Councilman Hafferman on several occasions to inform me when he has questions on
an issue prior to the City Council meeting in order to allow the staff and me the opportunity be
fully prepared to answer his questions during the meeting. This simple courtesy would ensure we
give the best and most complete information to Mr. Hafferman and the other Council members
when considering important policy decisions. Unfortunately, Councilman Hafferman refuses to
extend to me or the staff the same courtesy that he expects when engaged in the public's business.
The result appears to be a wasteful game of "Stump the Manager" rather than a genuine interest in
getting factual answers to the questions raised.
That said, the bitterness on display and the needlessly combative and accusatory tone of
Councilman Hafferman's arguments are inappropriate and directly conflict with two of the City's
adopted core values. Honesty — Represent yourself with credibility and integrity and Respect —
Treat every individual with dignity, fairness and compassion. I am hopeful that by handling this
in a Council workshop we can get back to the business of governing our great city. However, if
Mr. Hafferman continues to maliciously issue public challenges to the honesty, competence, and
integrity of me and the staff, I will have no alternative but to respond publicly. By allowing Mr.
Hafferman's erroneous statements to go unchallenged, the public will be misled regarding the
competency and integrity of our staff and the organization.
In this instance, as well as in Mr. Hafferman's needlessly harsh letter of July 23, 2003 regarding
our planning staff, many of the facts expressed publicly by Mr. Hafferman, have been proven
wrong. It would be nice to hear a public apology delivered with the same volume and vigor given
to his erroneous comments. This apology would allow the public to understand that mistakes were
made and would correct the unwarranted implications that City staff has misled and lied to the
Council and community.
RECOMMENDATION: 1) Councilman Hafferman respect the core values adopted by the City.
2) Councilman Hafferman share his questions with the City Manager prior to the meeting in order
to receive accurate answers to his questions.
Respectfully submitted,
Chris A. Kukulski, City Manager
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