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HomeMy WebLinkAbout09.26.11 Budget Workshop Minutes Council Budget Workshop Minutes September 26, 2011 Mayor Larson called the meeting to order at 7:30 p.m. Present: Larson, Bartholomay, Fogarty, May Absent: Donnelly Also Present: David McKnight, City Administrator; Teresa Walters, Finance Director; Todd Reiten, Municipal Services Director; Kevin Schorzman, City Engineer; Randy Distad, Parks and Recreation Director; Tim Pietsch, Fire Chief; Randy Petrofske, Liquor Operations Manager; Cynthia Muller, Executive Assistant MOTION by Fogarty, second by May to approve the agenda. APIF, MOTION CARRIED. The purpose of the workshop was to discuss the enterprise funds. Liquor Operations - Projected revenues will be down in 2011 from 2010 as the 2011 revenues were overstated. Staff is taking the revenue back to 2009-2010 levels at $2.87 million. Miscellaneous revenue includes $500 per quarter received from AC Nielsen doing an analysis on sales. Inventory is a major expense and is estimated at 2009-2010 levels. Staff costs have been reduced by moving full time positions to part time and by reducing wages from $15/hour to $IO/hour. Stores are open from 10 a.m. - 10 p.m. Monday - Saturday. As a cost savings, store hours may be reviewed. Supplies will stay the same as 2011. Other services and charges will decrease because ofthe lease reduction for the Pilot Knob store. The lease for the downtown store will go up $10,000. This is the last year of the lease for the downtown store. Staff has looked at credit card fees. Councilmember May asked about negotiating with the landlord for the downtown store. Staff has spoken with the landlord and he will want more years added onto the lease to get a reduced rate. Councilmember May requested staff talk with him again about moving or getting a reduced rate. Staff noted it may cost less to build rather than paying rent. Of the $984,000 made in total revenue, $457,000 is used up in transfers and the lease. After expenses we are at $100,000 of income. Then there are transfers of $70,000 to the general fund and $30,000 to the recreation operating fund to cover the cost ofthe pool. The transfers in 2009 and 2010 helped the fund balance for the pool as very little of the fund balance was spent down the last two years. After transfers there is $120 of income. The general fund transfer covers administrative work for payroll, managing the budget, accounts payable, accounts receivable, etc. It is treated like a business. Councilmember May noted all this work gives the recreation fund $30,000. Staff stated it would be higher if we can reduce the lease. Councilmember May asked if we should transfer $70,000 and $30,000 or ifwe need to leave in a cushion in case expenses are higher. Staff noted if we don't need $30,000 we don't have to transfer that much. Staff will review the breakdown of the $70,000 transfer. It was agreed to reduce the pool 12 Council Budget Workshop September 26,2011 Page 2 transfer from $30,000 to $20,000. There are two years left on depreciation for the coolers. Other liquor stores make money because most own their buildings and very few are union. Street Lights - This was moved from the general fund to an enterprise fund. Since then, we have not been able to cover costs. This is due to the way the electricity was set up. The electric bill has gone up significantly. Councilmember May asked how a street light bill is separated from the rest of the bill. Staff will need to determine how the street light portion is allocated and whether they are metered or non-metered. Council could not recall if just electricity costs were to be covered or if maintenance was also included. Staffwill research this and also if there was a discussion regarding residential equivalent units as far as townhomes, condos, etc. Currently each meter is one REU even ifthere were 10 units in the building. It needs to be per REU, not per meter. Sewer - Revenues should be consistent with 2010. Special assessments were based on what is received this year. Investment income is going down. Expenditures include personnel costs, which is a set amount with no increases. Supplies, and other services and charges went up because the MCES fee is going up $200,000. The debt service is a bond paid out ofthis fund. The Met Council increased their fee across the board. Council asked how the gallons increased so much when we grew so little. For 2010 we pumped 450 million gallons, and 2011 was 557.83 million gallons according to the Met Council. Staffhad a number of 449 million gallons. Staff will verify this number. Staff felt the Met Council did not base the increase on the number. They split the amount over everyone. The last time we had an increase we actually had a reduction in the flow. The Met Council has also informed the City that the SAC rates are low. They will use their reserves to cover this year, but the increase may be passed along next year. Staff presented two options to cover the MCES fee increase. Option 1 would affect residential and commercial. Option 2 increases the residential rate by $.50/1,000 gallons or $8/quarter and does not affect commercial. Council selected Option 2. The amount ofthe MCES fee increase is $196,808. Councilmember Fogarty wanted it made clear in the utility bill that this increase is a pass through from the Met Council and include the Met Council's phone number. Solid Waste - Charges for services are consistent with previous years. Revenues are also consistent with prior years. Supplies, and other services and charges have been reduced from last year. Councilmember May asked about the jump in supplies from 2009 to the present. This covers vehicle supplies and fuel. Vehicle supplies in 2009 were $20,685 and in 2011 it is $35,000. This has been reduced to $28,000 in 2012. Fuel is going up to $66,000. Councilmember May asked if staff has checked with Kwik Trip for fuel options such as using a fuel card. Staff stated we use a fleet card from the State bid and do not pay federal tax. Councilmember May asked if staff has checked with the schools to see what they use. Staff has not contacted the school district as we use the State bid contract. Council asked that staff contact the school to determine what they do for fuel. Staffhas spoken with Marshall Lines and in previous years, the City declined participating with them. Now they will see what they can work out. Council also asked that an RFP be done with the local gas stations to determine any reductions with a fuel card. Councilmember Fogarty asked at what point in time does it cost just as much to dump garbage as it does to recycle. In the past two months the City has started receiving revenue for recycling. Staff is planning on purchasing a new truck this year. Solid Waste has set some money aside so we can utilize the fund balance to purchase a truck for 13 Council Budget Workshop September 26,2011 Page 3 $175,000 as a replacement. The recycling contract ends at the end of2013 and at that time staff will look at doing our own recycling. This fund has a loss after transfers of$173,866 which shows that we are able to cover operations, but not the cost of the vehicle. However, the vehicle will be covered through reserves. Weare close to breaking even and will keep the rates the same for 2012, but may look at an increase in 2013. Water - The water fund is doing fine and the Water Board is not recommending a rate increase. Storm Water- There will not be a rate increase, however, the surface water management fees for development will increase. 2012 Budget Plan - City Administrator McKnight asked Council for direction on the budget as Council has made comments that they are not done yet. He asked for a consensus from Council as to what they want. Councilmembers are in the process of one on one meetings with the City Administrator. City Administrator McKnight has prepared a detail ofthe 3% increases and will provide that to Council. Councilmember May wanted to focus on the absolute needs - streets, police, fIre and the rest is on the table. Even though all funds did not request an increase, they will next year. It was difficult receiving the initial budget with a $300,000 increase to start with. Council was not expecting to start with a 3% budget increase. Councilmember Fogarty stated by the time they end this budget session, she would like to know what the in-the-hole number will be for 2013 and COLA's and what step increases will be required. It is similar to working with a 2-year budget cycle, but approving it one year at a time. Council agreed the Police budget needs further discussion. City Administrator Update - Statfupdated Council on plans for changing polling locations. Council also discussed the status of policies and what changes have been made and would like this issue resolved. MOTION by Fogarty, second by May to adjourn at 8:58 p.m. APIF, MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 14