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HomeMy WebLinkAboutResolutions - 2006.08.31 - 28087MISCELLANEOUS RESOLUTION. #06167 August 31, 2006 BY: GENERAL GOVERNMENT COMMITTEE, WILLIAM PATTERSON, CHAIRPERSON IN RE: INFORMATION TECHNOLOGY — REQUEST TO EXTEND THE EMERGENCY TELEPHONE OPERATIONS SURCHARGE FOR CALENDAR YEAR 2007 TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Chairperson, Ladies and Gentlemen: WHEREAS Miscellaneous Resolution #99279 authorized the various telephone companies throughout the County to levy up to four (4%) percent surcharge for emergency telephone operations (with the actual levy being $.57 per wireline, as defined; while the authorized amount could have been up to $.80 per line, as defined) with recognition that the surcharge would expire on December 31, 2006 (the same time as the enabling surcharge legislation); and WHEREAS the enabling legislation has extended wireline and wireless surcharges for the 2007 calendar year pending a more permanent solution under consideration; and WHEREAS the wireless surcharge has been extended for the 2007 calendar year and will be collected state-wide, distributed under an existing State formula (anticipated $1.0 million annually to help fund the operations of the Radio Communications Fund) and will be addressed as part of the permanent solution relating to the surcharge legislation; and WHEREAS the County has had a $.57 per month wireline operating surcharge recommended by the County Executive and approved by the Board of Commissioners while fees collected were used to construct the new radio communications system, not covering operating costs; and WHEREAS the wireline surcharge would cease on December 31, 2006 absent the approval by the Board of Commissioners regardless of the extension of the underlying state legislation; and WHEREAS comprehensive financial statements have been provided quarterly to the Board of Commissioners, project cash flow projections submitted on a semi-annual basis and the development of the County Executive's Fiscal Year 2007 and 2008 Budget Recommendation represents the operations known at such time for the operations of the new radio system; and WHEREAS some options or a combination of options of revenue sources suggested to cover the operational funding of the Radio Communications Fund, going forward, as the wireless/wireline operating surcharge, user fees, and General Fund (as outlined in the attached exhibit); and WHEREAS an estimated requisite amount necessary to secure sufficient funding to cover the Radio Communications Fund operations through December 31, 2007 would be $1,423,000 from the wireline operating surcharge; and WHEREAS the suggested wireline surcharge will include provisions for the loss of the number of lines due to Voice over IP; and WHEREAS the suggested wireline surcharge will also provide $700,000 for a migration solution for the presently decentralized and rapidly aging 911 Call-Taking Equipment at the local public safety answering points to an IP-Based solution by enabling a centralized solution over the County's OAKNet; and WHEREAS the extension of the surcharge at a requisite amount is estimated at $.28 per telephone line which includes $.19 per telephone line to cover operations and anticipated loss of lines plus another $.09 per telephone line (one-time charge) for the IP-based call taking equipment; and WHEREAS the technical wireline surcharge was reduced by $.05 per wireline, as defined by the telephone company (which has exclusive rights to raise or lower the technical surcharges). NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners authorizes the extension of the surcharge per telephone line for the period of January 1, 2007 through December 31, 2007 to cover the operations and necessary provisions of the Radio Communications Fund in the amount of $.28 per wireline, as defined. Chairperson, on behalf of the General Government Committee, I move the adoption of the foregoing resolution. GENERAL GOVERNMENT COMMITTEE GENERAL GOVERNMENT COMMITTEE VOTE: Motion carried on a roll call vote with Crawford absent. OAKLAND; L. BROOKS PATTERSON, OAKLAND COUNTY EXECUTIVE COUNTY MICHIGAN Robert J. Daddow Assistant Deputy County Executive TO: FROM: SUBJECT: DATE: Radio Oversight Committee General Government Committee Finance Committee Gerald Poisson Laurie VanPelt Joe Sullivan Pat Coates Bob Daddow Telephone Operating Surcharge August 4, 2006 Over the past year, there have been many promises made by the State to resolve the telephone operating surcharge situation for both wireless and wireline fees. The surcharges were set to expire on December 31, 2006. The enabling legislation has been extended for a single year (calendar 2007) pending a more permanent solution. The solution is being developed in Lansing based on several committees that have been established and no consensus has been reached for submission of an enabling bill that would cover the period beyond December 31, 2007. BACKGROUND The issue is quite difficult for many local dispatch operations throughout the state. Many of these dispatch operations depend upon the wireless and wireline operating surcharges for their daily operations. While the wireless surcharge will continue unabated through state-wide collections and distributions, the wireline surcharges continue be dependent upon local actions — either through a Board of Commissioners action (for those fees 4% or less than the monthly telephone charges, as defined or through a voted surcharge from over 4% up to 20% of the monthly telephone charges, as defined. Clearly, those local dispatch operations that rely on voted surcharges could lose their revenue stream. The County has had a $.57 per month wireline operating surcharge ($.80 per month would be the 4% maximum that could be authorized without a vote) on its telephone bills recommended by the County Executive and approved by the Board of Commissioners for several years now. The fees collected have been used to construct the new radio DEPARTMENT OF INFORAATION TECHNOLOGY BUILDING 49W • 1200 N TELEGRAPH RD DEPT 421 • PONTIAC MI 48341-0421 • (248) 858-1650 • FAX (248) 858-5130 communications system. None of the fees have covered operations. The original enabling legislation (now extended) and the approving Board resolution ends December 31, 2006. Absent an affirmative vote by the Board of Commissioners to extend the wireline surcharge for a year, the surcharge ends on December 31, 2006, regardless of the extension of the underlying state legislation. Over the past several years, this issue has been a routine discussion at the Radio Oversight Committee and in the quarterly financial statements and semi-annual cash flow projections for the radio communications project. Presently, there has been groups meeting for well over a year on a permanent solution to this matter, but have yet to reach consensus. Commissioner Hugh Crawford (MAC representative) and Ms. Patricia Coates have led the charge on this matter on behalf of the County. There are outstanding commitments that the permanent legislation will be passed no later than the end of the calendar quarter — however, the same held true with commitments for the fall of 2005 as well. OPTIONS As has been related in the above memorandum shared with the Board of Commissioners committees for the past several years now, there are several options (or a combination of options) in operational funding of the Radio Communication Fund going forward, as follows: • Wireless / wireline operating surcharge. This proposal would provide for a combination of the wireless (collected and distributed by the State and result in roughly S1.0 million annually to the Fund) and the wireline operating surcharge to cover the operations of the Radio Communication Fund, after certain revenues. • User fees. User fees would contemplate charging the local governmental units for their public safety use of the radio communication system. The non-public safety, non-governmental units (such as ambulance companies and hospitals) would be charged for their access to the radio communications system. Much of these non-governmental agencies have had their equipment acquired through homeland security grants, but these grants only cover capital and not operating costs. User fees could get a bit complicated because the equipment includes not only the portable / mobile units, but also the consoles at the roughly 28 public safety answering points (PSAF's). The complicating nature of the fees charged to the PSAPs for console use and maintenance would result in costs borne by the PSAP that would, in turn, have to be passed along to the member public safety agencies being dispatched. Many PSAPs likely already have existing agreements with fixed amounts to be billed for the PSAP services. • General Fund. The General Fund would have to cover the operating shortfall of the Radio Communications Fund. Over the past several years, the County's 2 operating budgets have been very tight arising from a general economic downturn and are not immune. General operating reductions for departments (particularly as grants are no longer extended) are now the norm. It would be very difficult to cover the operations arising from the County's General Fund at this time. The recommended budget submitted to the Board of Commissioners for appropriation for the October 1, 2006 through September 30, 2007 fiscal year has reflected a $4A million arbitrary amount designated as 'E-911 surcharge.' Since there was still hopes that the State legislature would pass legislation this year (originally it was projected at a two-year extension), this line item represented a needed to balance amount. The actual amounts being generated for purposes of the below and attached discussions for wireline and wireless operating surcharges is $5.0 million and $1.0 million, respectively. Because of the voice over IP technology affecting the number of telephone lines upon which the fee is assessed, the amount of revenues generated by the wireline fees at the present rate level if expected to decline through December 31, 2007, and beyond. OPERATING SURCHARGE Exhibit A represents schedules entitled Summary of Projected Operations — Radio Communications Fund (Summary) and explanatory footnotes to that Summary have been included for reference and provide much more detail than this letter of transmittal. The Summary would suggest that the requisite amounts necessary to secure sufficient funding from a revenue source would be $1,423,000 in one of the three prior sources (surcharge, user fee and / or General Fund, or a combination thereof). Based on the $.57 per telephone line (as defined) generating roughly $5.0 million in surcharge revenues today, the requisite amount necessary to be included for this service alone would be roughly $.16 (5.57 x $1,423,000 / $5,000,000). However, this would assume that the number of lines would remain static between now and December 31, 2007. They will not. As such, a provision of approximately $.03 per line for the loss of the number of lines would have to be assessed to make up for the lost lines. Between these two items, the required one-year analysis would be $.19 per telephone line (as defined). Had the surcharge been for a longer period of time the per telephone fee would have been increased to address the 'one-time' revenues relating to the sale of the old Motorola equipment — expected to generate as much as $500,000 in revenues when sold. Given its age, the problems the County is having in keeping this system operational and general inability to secure parts, the used parts should have some after-market value. Until such time as the County actually attempts to market the used parts, there is no easy way to value the existing system upon sale. Should the actual revenue generated from the sale of used equipment provide an amount less than projected, the Fund equity will have to absorb the unfavorable difference. 3 CALL-TAKING EQUIPMENT Over the past 7-plus years, most of the PSAPs in the County have enjoyed the use of the Positron call-taking equipment funded by the County's General Fund — roughly $3.0 million at the time. Since then, the Positron maintenance has been funded at one-half by the County and one-half by the PSAP. The equipment is aging rapidly and is becoming obsolete with changes to an IP-based system being the present state-of-the-art system. Recently, Motorola announced that the equipment present in two PSAPs would not be supported beyond December 31, 2006. This equipment is also obsolete. At the time that the County was acquiring equipment for other PSAPs, Southfield and Troy had recently acquired the Motorola equipment. Both units (as well as two others) were partially reimbursed their costs for acquisition through the County's General Fund. Both communities are looking to replace their equipment with an IP-based solution for call- taking. Both are looking to resolve this matter before the end of the current calendar year. The IP-based solution addresses many types of equipment that exist in the world today. The radical changes in cellular telephones (pictures, text messages, etc.) cannot be handled by the Positron equipment, or the equipment currently in place at either Troy or Southfield. The County's OAKNet fiber network provides the necessary backbone to support a centralized IP-based solution that could not be considered in other governmental entities (if any others even have a fiber optic network). When the call- taking equipment requires replacement, the County would have to move towards an IP- based solution. Accordingly, it would seem that the solution in support of a strategic direction for the call-taking equipment would be to include a provision for an amount necessary to provide for the centralized equipment (roughly $500,000) and networking costs (roughly $200,000) to enable the IP-based solution by the PSAPs. This proposal would require the local PSAPs and the Sheriffs Office to fund the local equipment (using County standards) that would tie to the centralized equipment to enable the call-taking equipment. Given the above, the estimated cost, expressed in a per telephone line cost would be $.09 ($.57 x $700,000! $5,000,000), including $.01 for the loss of revenue arising from voice over IP telephone line losses. The operating surcharge to enable the IP-based solution would be a one-time charge. Presently, the County General Fund covers one-half of the costs of the Positron equipment (roughly $170,000 annually — Troy and Southfield receive no maintenance reimbursement as they use equipment different than the Positron equipment generally in use by PSAPs). Should the County be able to convince the locals to secure the IP-based equipment, it is probable that the annual cost to the General Fund could decline. The amount of the decline, however, cannot presently be determined pending a competitive 4 bid received from the various vendors who supply IP-based solutions. Likewise, the PSAPs' costs for maintenance would also decline by an undetermined amount as well. OTHER MATTERS Recently, the Board Chairman received the 'annual accounting' for the telephone technical surcharge from AT&T (formerly from SBC). The technical surcharge covers the operating costs of the telephone companies' equipment and related data for E9-1-1 services. There is no control over the setting of the surcharge amounts by the State or County officials. The changes in the rates charged and related calculations rest solely with the telephone company. Effective, July 1, 2006, the technical surcharge was reduced by $.05 per wireline telephone line per month. RECOMMENDATION Given the above, the proposal to cover the operations of the Radio Communications Fund for the calendar 2007 year would involve a $.19 per telephone line operating surcharge, plus another $.09 per telephone line operating surcharge (a one-time charge) for the IP- based call-taking equipment. 5 EXHIBIT A SUMMARY OF PROJECTED OPERATIONS — RADIO COMMUNICATIONS FUND August 4, 2006 SUMMARY OF PROJECTED OPERATIONS - RADIO COMMUNICATIONS FUND OAKLAND COUNTY, MICHIGAN August 4, 2006 (In Thousands) Fiscal Year Less 1st Net Fiscal Year Less 9 Net Description 2007 Quarter Adjust. FY2007 2008 Months Adjust. FY2008 Revenues: Antenna site mgt. $ 600 $ (150) $ (75) $ 375 $ 600 $ (450) (25) 125 Leased equipment 678 (170) (350) 158 678 (510) (125) 43 Wireless surcharge 1,000 (250) - 750 1,000 (750) - 250 Outside agencies 266 (67)- 199 266 (200) - 66 Parts / labor 65 (16) - 49 65 (49) - 16 Gain - equip. sale 500 - - 500 - - - - Investment income - - 40 40 - - 15 15 3,109 (653) (385) 2,071 2,609 (1,959) (135) 515 Expenses: Personnel 864 (216) 125 773 877 (658) 65 284 Tower charges 200 (50)- 150 200 (150) - 50 Maintenance 196 (49) 90 237 196 (147) 50 99 Communications 150 (38)- 112 150 (113) - 37 Electrical 125 (31)- 94 125 (94) - 31 Profess. services 125 (31)- 94 125 (94) - 31 Parts / access. 125 (31)- 94 125 (94) - 31 Depreciation 4,000 (1,000) (3,000) - 4,000 (3,000) (1,000) - Insurance - 125 125 - - 45 45 Internal services 501 (125) 127 503 501 (375) 40 166 Contingency - 600 600 - - 200 200 All other 260 (65) 195 252 (189) - 63 6,546 (1,636) (1,933) 2,977 6,551 (4,914) (600) 1,037 $ (3,437) $ 983 $ 1,548 $ (906) $ (3,942) $ 2,955 $ 465 $ (522) Net Cash - Begin (January 1, 2007) 955 49 $ 49 $ (473) Restoration of working cash balances (950) Estimated amount required in surcharge fees for calendar 2007 $ (1,423) FOOTNOTES TO THE SUMMARY OF PROJECTED OPERATIONS — RADIO COMMUNICATIONS FUND OAKLAND COUNTY, MICHIGAN August 4, 2006 These footnotes provide supplemental information concerning the scheduled entitled Summary of Projected Operations — Radio Communications Fund (Summary) for Oakland County, Michigan dated July 31, 2006. This Summary has been prepared to estimate the requisite wireline operating surcharge that would be necessary to for calendar year 2007. Much of the schedule converts the County's Radio Communication Fund recommended budgets for the fiscal years ending October 31, 2007 and 2008 to a calendar year. The two columns entitled "Fiscal Year 2007" and "Fiscal Year 2008" represent the amounts extracted from the recommended 2007 and 2008 operating budgets submitted to the Board of Commissioners by the County Executive on or about June 30, 2006. The column excludes the amounts applicable to the wireline surcharge of roughly $5.0 million in both 2007 and 2008 (based on the current rate of $.57 per telephone line, as defined in the State statutes) as this amount is being calculated in the Summary itself. The wireless operating surcharge, which is approximately $1.0 million annually and largely unaffected by voice over IP issues, has been included as it has been continued through December 31, 2007 unchanged from the current rates by the State. The columns involving deductions for the quarter (2007) and 9 months (2008) essentially reduce the recurring operations for the quarter beginning October 1, 2006 (already included in the 'net cash — begin' as of December 31, 2006 and for the period January 1, 2008 through September 30, 2008 (after the current extension expires). Only recurring costs have been excluded. Comments concerning the adjustment columns for both 2007 and 2008 follow: • The reductions of $75,000 and $25,000 for 2007 and 2008 arise because of the notice of that a wireless carrier will be abandoning its lease of the Independence tower site very shortly (arising largely because of a merger between two telecommunications companies). The annual lost revenues are $50,000. In addition, the County is still attempting to secure a $50,000 contract for annual rentals from a vendor, but a local governmental unit is withholding approval. The leased equipment reduction largely arises as the local governmental units will not be charged user fees with the extension of the operating surcharge. As such, only non-governmental, non-public safety, and / or for-profit entities (such as hospitals and ambulance companies) will be billed for the user services. 1 • Because some cash will remain in this Fund, there will be investment income generated for both fiscal years. In addition, the interest rates for investments have been climbing quite quickly over the past four months with the federal government increasing the fed fund rate. • The personnel increases represent overtime arising from issues that likely will occur and the related immediate response required for this mission critical effort. • The maintenance costs have increased arising from the County's need to enter into an agreement with Cisco for the 24 x 7 maintenance of the networking equipment for the radio communications system. This was not originally contemplated. • The elimination of depreciation suggests that the County will not be funding depreciation relating to the radio communications system. In doing so, the capital needs will have to be funded through debt issuances or out of operations in the future. • The County had not included only the existing level of insurance for the radio communications equipment in the operating budgets. Risk Management is presently evaluating the exact amount necessary - the amounts herein represent a provision for the increased insurance needs. • The internal service cost increases arise from a recently-calculated indirect cost rate increase for the Fund. • The contingency arises simply because there are still some unknowns relating to this radio communications system. The towers have been constructed (the last tower is finally being installed in late July 2006) and consoles installed. These two areas represent two areas where the budget could have expanded. The last areas, which remain open, are the number of portable / mobile radios and V-TACs (units necessary to fill radio coverage holes) are still open. 2 ,01••n MEW APPROVE THE NG RESOLUTION Ruth Johnsa, County Clerk Resolution #06167 August 31, 2006 Moved by Patterson supported by Crawford the resolution be adopted. AYES: Crawford, Douglas, Gershenson, Hatchett, Jamian, KowaII, Long, Melton, Middleton, Molnar, Moss, Nash, Palmer, Patterson, Potter, Rogers, Scott, Suarez, Wilson, Woodward, Zack, Bullard, Coleman, Coulter. (24) NAYS: None. (0) A sufficient majority having voted in favor, the resolution was adopted. STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Ruth Johnson, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on August 31, 2006, with the original record thereof now remaining in my office. In Testimony Whereof, lhave hereunto set my hand and affixed the seal of the County of Oakland at Pontiac, Michigan this 31st day of August, 2006.