The average citizen cannot listen to the radio or tune into the local TV news show without being hit in the face with the reality of the national economy. The current state of the economy impacts on every business sector and all levels of government. We, here in the Town of Clayton, have seen some substantial changes in the economy that have caused us to step back and reconsider how we are doing business, but to borrow a catch phrase, "We are not participating in this recession."

The Fiscal Year 2010 Town of Clayton Budget certainly reflects the changes in the national, state, and local economies in that it connects with a resource stream that is less vigorous than was the case just a couple of years ago. It takes a very austere approach to revenue forecasting, but at the same time it still reflects the progressive nature of the Council and the community. Both the General Fund and the Water Fund include small contractions as compared to prior year budgeted expenditures and the Electric Fund includes only a small amount of growth based on the increasing wholesale cost of energy that the Town has absorbed over the past year. The General Fund reduction is the second year in a row that budgeted expenditures have decreased in actual dollars.

Staffing levels and benefits have been impacted in this Budget by the recent slowdown in growth. The proposal includes some changes in those areas. The Town of Clayton realized over ten years of steady growth and so a staffing infrastructure has been built to accommodate that rapid rate of growth. The slowdown means that adjustments will have to be made, particularly in areas directly associated with growth, and those adjustments will be addressed herein below. Similarly the Town has dedicated itself to recruit and retain the highest quality of employees in a very competitive area. Past successes mean that we are well positioned to take a pause from the policies that have fostered a pro employee environment without significant risk of losses.

The staff of the Town of Clayton has worked diligently to produce a fiscal year budget proposal that is responsive to the times and responsible to the citizens and Council. It works within available resources without increases in fees, rates, or spending down of available fund balances. It includes sacrifices on the part of employees for the sake of the financial integrity of the Town, and it connects with the goals adopted by the Town Council. While no budget is perfect, it is safe to say that in the past decade no budget or other policy proposal has received the extent of forethought and review that has gone into the 2010 Budget proposal. While voluminous, it also provides a much greater level of detail and a clearer connection between resources and expenditures, programs and priorities, and the community and the Town.

The Town of Clayton has a track record of providing high quality, attractive benefits to all employees. The hard reality is that the current state of the economy does not support continuation of certain practices that have placed us, at other times, in an enviable position as compared to other employers. The FY 2010 Budget does not include funding for employee Cost of Living Adjustments (COLA) or the merit based evaluation program. We chose to focus use of our limited resources on maintaining our benefits package because it has been our experience that once a benefit package begins to be dismantled, it is seldom restored when financial conditions improve. We are very pleased to continue funding our supplemental retirement benefits at current levels and we have not modified our group health insurance program to shift cost to the employees. It has become an all too common practice to increase co-pays, deductibles, and maximum out-of-pocket expenses as a means to reduce health insurance premiums, but we have held tough and realized major success from our employee wellness initiatives. We will also continue to supplement the cost of dependent coverage or additional insurance products by maintaining the cafeteria plan allowance for all employees.

As mentioned above, the Town of Clayton Employee Wellness Program is paying dividends and will actually see a funding increase during this fiscal year. As an example of how the program is paying off, group health premiums initially included a 9.6% increase. That increase applied to both employee and dependent coverage and resulted from the Town being rated as part of a "pool" of similar sized employers. When we learned of the rating method we objected and challenged our provider to look at our individual history and the benefits of our wellness program. After extensive additional negotiations the provider agreed to weigh our own history more heavily in the analysis and the rerating resulted in a reduction in the amount of increase to 4.2% or approximately $51,000 in savings this year alone. The wellness program will continue and will include incentives for participation.

Finally, another popular program, the employee longevity compensation award, will continue to be funded consistent with the existing policy and practices. Although it is very regrettable that no COLA or merit awards will be given this fiscal year, we understand from other agencies that this trend is widespread and that we are doing well to maintain our other benefits and compensation programs.

In addition to freezing compensation (aside from adjustments related to successful completion of the new employee introductory period), the Town will hold certain positions vacant for the year, some vacant for a period of time, and some existing staff will experience a reduction in scheduled hours as a result of the slowdown in the economy and the directly related reductions in revenues associated therewith. The budget instructions provided to all staff included a general statement that no new employees may be requested for 2010 and this budget does not include any new positions for the first time in a decade of growth.

Aside from no new staff additions several currently vacant positions have not been budgeted during this year. These positions are Planner and Water Reclamation Plant Operator. Two existing Police Officer Positions and an Electric Instrumentation Control Specialist position will be held vacant for one quarter. One Meter Technician position will be vacant through retirement after the end of July and will not be funded thereafter. This staff reduction is made possible through the implementation during FY 2009 of the Automated Meter Reading program. Several staff members in multiple departments collaborated to make that program a success and we will all enjoy the savings.

Finally, and most unfortunately, the reduction in new construction and the very substantial reductions in building permit revenues necessitate changes in the Building Inspections Department. The entire staff of six including the Supervisor, four Inspectors, and an Administrative Support Specialist (Permits Technician) will be budgeted at eighty percent of normal hours or thirty-two hours per week. This change in status will not impact on their eligibility to participate in our benefits program including group health and retirement, but it will represent an equivalent reduction in compensation. Management will closely monitor building permit activity and the related revenues on a monthly basis to determine whether staffing hours can be expanded, but unless activity increases we cannot retain all existing staff on a forty hour per week basis. Inspections activities are at about one-quarter of their peak during the economic expansion and about forty percent of normal. Although staffing levels were examined in every operational area we do not propose additional reductions in staff allocation or schedule at this time.

We will, during the course of the year, consider staff additions that are one hundred percent grant funded, particularly if the grant proceeds cover multiple years. We expect to come forward with such proposals during the year as opportunities are identified.

The economic slowdown has had some additional impacts on the budget. The Town utilizes a standard rotation for acquisition and replacement of all rolling stock. The rotation has been deferred for one year.

We regret that the budget includes very substantially reduced allocation for employee training. The Town staff has been very active in furthering their qualifications and readiness and in serving in leadership roles in their respective professional associations. Although this particular budget is

somewhat inconsistent with our past practices in these areas, the successes of the past allow us to take a bit of a hiatus from the customary vigorous advanced training practices and still maintain a high level of quality, professional performance.

One reduction, actually a deferral, that we have reluctantly included in the budget is the implementation of the after school program in the new community center. Because the budget was so tight and we were dedicated to maintaining our existing services at current levels we have chosen to defer establishment of the after school program at the community center until fall of 2010. All other programs provided for at the new facility have been included in this proposal.

Nearly every capital project has been deferred, with some very noteworthy exceptions. Funding as necessary for the design of a new Law Enforcement Center ($400,000) has been included in the Law Enforcement, Administration Budget. This project had been shelved; however, an opportunity for low interest, long term loan funding through the USDA was identified and is currently being pursued. This project is past due in relation to both needs and capital planning, but has been delayed due to a lack of adequate resources. The USDA source makes the project feasible and attractive at this time.

In May of 2008 Town of Clayton citizens voted overwhelmingly in favor of two bond initiatives: three million dollars for street improvements and four million dollars for investment in recreation facilities. The 2010 budget includes funding for implementation of those programs including debt service for the pending bond sale and $200,000 in operating revenues for design and permitting of the East Clayton Community Park project.

Finally, no budget message would be complete without mention of the long pending Downtown Lot Project. A financed allocation of $350,000 has been included with the related debt service ($36,000) for completion of this project. Should the Council seek to tweak the design this funding level would still be adequate to the purpose of improving the lot with desired amenities, public facilities, aesthetic enhancements, and art elements. Although the larger economy is contracting, the Downtown economy has never been more vigorous and the time is right for the Town to take advantage of this vitality and shore-up those businesses, employers, and landlords that have invested in this essential hub of our community.

The Council will immediately notice that the budget document takes on a very different format this year as compared to prior years. Implementation of the new, comprehensive municipal software system that was funded beginning in FY 2008 facilitates a far superior end product. The document is longer, but do not interpret that to indicate it is more complicated. The document includes substantially more detail for those who are interested and the structure of the budget includes some additional Divisions, or functional operations, that have been split out from other departmental activities as a means to better track program cost. Due to implementation of the new system historic data is not included; however, very substantially more data regarding the current year budget is included in the form of comments and transactions throughout the document. As the system is implemented on a multiyear basis historic data will be available in ways that are far superior to the past budget format.

While we apologize for the length of the budget document, we are proud to present to you a proposal that in the best of times should meet your expectations, but given current events should leave you extremely pleased. This budget seeks to meet or exceed all stated Council expectations for the future, to provide services that are equivalent or superior to prior years, and it does so through the innovation, initiative and sacrifice of the staff who constructed it. The Town of Clayton is well served by an experienced and professional group of workers, supervisors, and Department Heads who took to heart the task of providing a frugal but responsive budget within available resources.

Finally, and most of all, we the Town Staff express our appreciation for the many years of support and leadership provided by this and past Town Councils. These times challenge us all, but Together Everyone Achieves More.