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HomeMy WebLinkAboutPCockrum Ltr-Ad Valorem Tax 9-22-10 1825 Broken Bend Drive • Westlake, Texas 76262 phone: fax: 206-600-6858 September 21, 2010 Westlake Town Council RE: Ad Valorem Tax and Capital Improvement Bond Dear Town Council: Unfortunately, due to prior commitments I won’t be able to attend the upcoming workshop on 9/23. As such, please consider the following input as the town council works through the budget discussion. We need to convent and defend our lack of property tax as a point of significant pride and strategic cornerstone to our financial governance. If a tax is implemented it will increase the size of our government and it will never decrease. From all that I’ve heard, I don’t believe we’ve taken enough action to curtail our cost in advance of making such an historic and realistically irreversible step as to create an ad valorem tax. Please consider the following alternate path to solvency. 1. Property Tax a. Maintain the 0% property tax rate and utilize the coming months to more thoroughly investigate and act on cost reduction options. Discussion without action will do little to solve our current condition. Cost reduction options include, but are not limited to: i. Outsourcing the EMS saves ~$500,000/yr 1. Adds $3,000,000 to general fund over 6 years, $6,000,000 in 10 years 2. Avoids $1.9M in projected cap-x (trucks, ambulance, gear, etc) – see pg 8 of 8/25 presentation. Plus it avoids future building costs 3. $500,000/yr savings ($1M cost - $400k (keller) - $100k ems revenue) southlake bid would trim the savings to $425,000/yr. 4. $0 administrative cost add … trade-off current EMS HR, admin, etc costs for outsource contract monitoring cost. 5. Yes it could increase response times, but recall that the chief couldn’t say for certain how many were critical care, he did note that cardiac is very rare and he couldn’t confirm that the additional response time would’ve made a difference. a. Increased call times i. 4.7 min (keller ems) ii. 2.8 min (southlake ems) … this will drop significantly with the completion of FM1938, and even further if/when southlake builds their proposed Dove Rd station. 6. @ $500k/yr added cost, Westlake EMS has depleted $4,000,000 from our general fund since its inception in ‘02 ii. Trim overhead cost by 10% saves ~$200,000/yr 1. Don’t hire the proposed additional staff member 2. Curtail all non-essential expenses, retreats, surveys, etc. 1825 Broken Bend Drive • Westlake, Texas 76262 phone: fax: 206-600-6858 3. Enact a one year wage freeze and/or reduction as needed to meet the balance of the 10% target reduction iii. Acting on i and ii above generates $700,000/yr in savings, adds $4,200,000 to the general fund over the coming 6 yrs, maintains solvency, and provides an FY15/16 general fund balance = $2,600,000. All without accounting for additional 1-time revenues. Regardless, we could maintain our desired 90 cash balance of $938k (pg 45 of the 9/16 presentation) and spend ~ $1.5m for cap-x improvements. b. Deloitte will generate some level of sales/use tax as they outfit their building. We should pressure them harder as good corporate citizens to shift that tax to Westlake. Is that worth $200,000 or $400,000?? c. As an alternate to acting immediately on cost reduction, we could hold the 0% tax rate and form a citizen/town panel or hire an independent consultant (Accenture, Alvarez & Marsal, etc) to evaluate options and recommend our best path with a target to complete their work in six months. Doing so could bring additional objectivity and perspective to our financial situation. 2. $6.3 Million Bond a. Postpone the vote on the bond, or b. At minimum, allow the citizens of Westlake to vote on the bond. After all, the significant majority of the fund allocation is for what I refer to as lifestyle choices as opposed to mandated needs. Sincerely, Patrick A. Cockrum