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HomeMy WebLinkAbout11.22.11 Work Session Minutes City Council Budget Workshop Minutes November 22, 2011 Mayor Larson called the workshop to order at 6:30 p.m. Present: Larson, Bartholomay, Donnelly, Fogarty, May Also Present: David McKnight, City Administrator; Teresa Walters, Finance Director; Brian Lindquist, Police Chief; Randy Distad, Parks and Recreation Director; Kevin Schorzman, City Engineer; Todd Reiten, Municipal Services Director; Brenda Wendlandt, Human Resources Director; Cynthia Muller, Executive Assistant MOTION by Fogarty, second by Bartholomay to approve the agenda. APIF, MOTION CARRIED. The Council adopted a 2012 preliminary budget with a levy increase of $992,566. The increase caused an unbalanced budget with revenues exceeding expenditures by $537,258. This is a result of additional fiscal disparity revenue which should only be spent on one-time expenditures. The preliminary budget included plans to anticipate and fund future infrastructure needs, a capital replacement program that will contemplate future equipment and building maintenance needs, and plans that will ensure we are maintaining existing assets rather than replacing them. The budget also includes long-term plans to eliminate the debt and avoid paying interest charges in the future. The fiscal disparity revenue amounts to $712,285. During previous budget workshops, Council decided to use $175,000 to eliminate the EDA deficit, $120,000 to eliminate the deficit in the recreation special revenue funds, and $50,000 to eliminate the inter-fund loan in the EDA. The remaining balance left to allocate is $367,258. Stafffound $71,529 in cuts in various areas. These cuts were used to offset the School Resource Officer position and the shortfall in miscellaneous revenue. One of the biggest decisions Council needs to make is regarding the plan and which portions should be included. Council also needs to determine whether to fund the SRO position eliminated by the school district. Council will need to decide how to allocate the remaining fiscal disparities. Staff recommended this money be used on one-time items. Councilmember Fogarty stated ifwe do not include anything in the plan and not fund the SRO position, taxes will still go up, but it is a reduction in the levy. Staff explained the levy would decrease by .72% and the tax capacity rate will increase. This is due to the tax capacity in the City and the market value homestead credit. The increase in the levy is $992,566 made up ofthe $1.3 million increase in the general fund, the $412,051 reduction in the MVHC and the $48,825 increase in the Fire Relief levy. The general levy is increased by $998,512 and reduced by the total debt service levy of $5,946. The grand total of the levy increase is $992,566. The tax capacity number in 2011 was just over $15 million. In 2012 it is $13 million. 8 Council Budget Workshop November 22, 2011 Page 2 Seal Coating - Councilmember May felt there should be a discussion on the philosophy of seal coating because it is a practice we had in the past and there has been a lot of discussion whether we should continue. The majority of Council feels there is value in continuing seal coating. Councilmember May felt it should start again next year. If there is anything in the plan we should keep on the table, it should be the seal coating. She wanted Council to discuss whether it should be funded for $350,000. If so, she does not want to see a tax increase. Mayor Larson agreed with seal coating and suggested levying for half the cost and assess for half. Councilmember May recalled Council had decided against that and felt the City should levy for it. Councilmember Fogarty stated it went to 50/50 to include non-profrts. Councilmember Donnelly was not a fan of assessments and agreed with levying. It is the same pool of people. Everyone uses the roads, so everyone pays. Councilmember Bartholomay stated Council initially agreed to levy for seal coating to keep it transparent. Mayor Larson confrrmed everyone is in favor of seal coating and three want to levy for it and two want a 50/50 split. To fund the entire plan the City would have to levy $350,000. To cover the plan for this year, we would need to levy $290,000. Councilmembers agreed to fund the entire plan for $350,000. Equipment Replacement Plan - Councilmember Fogarty suggested pulling this out of the 2012 budget and start the fund with fiscal disparity money. As we work through 2013 and 2014 fmd the cuts to continue to fund this and use fiscal disparity money to build up the street rehabilitation program. The street rehabilitation program would not be funded in 2012. Councilmember Fogarty suggested taking the equipment replacement fund, fIre equipment replacement, trail maintenance, park redevelopment, computer equipment, building maintenance which amounts to $260,000 and fund them one time in 2012 with fiscal disparity money and put $100,000 towards the fire truck and bond for the remaining balance in 2012. Fiscal disparity money could go towards the road and bridge fund next year and fmd cuts in the budget to continue the funds in 2013 and 2014. Staff noted $54,000 is already in the budget for squad cars. The plan could be reduced by this amount or put it towards seal coating. By using fiscal disparity money, next year we will have to revisit these items as we do not know if we will receive fiscal disparity money. Councilmember Fogarty stated her intent would be to fmd permanent cuts in the budget in 2013. The squad cars will be left in the budget and not part of fiscal disparities allocation. Councilmember May stated it goes against staff's recommendation of using the money for something other than a one-time need. It is a dangerous path to say we'll fmd cuts in the future. Ifwe want to keep the levy as low as possible, Councilmember May felt staff should fmd the cuts today. She would like to use the fiscal disparities for the fIre truck or other immediate one-time needs and not start a fund without knowing the future funding. Councilmember Donnelly stated we have $712,000 of real money in fiscal disparities. We took almost half to pay off the deficits. Staff explained the City runs on funds. Each fund, especially special revenue funds, are their own fund and they have revenues and expenditures and have a fund balance to pay for things. When those funds go into a deficit, you are borrowing from another fund so that borrowing needs to be paid back. Every fund needs money for a purpose. Enterprise funds should be supported by their fees and not the tax levy. Ifwe didn't use fiscal disparities to cover the deficits we would have had a plan to cover them. Councilmember Fogarty stated she has had to face a lack ofplanning. Councilmember May noted these economic times are tougher than we have ever faced in our lifetime. Councilmember Fogarty stated the economy is getting worse every year. Councilmember Bartholomay stated business 9 Council Budget Workshop November 22, 2011 Page 3 owners will want to see the City make every available cut while still operating the City and having quality services before increasing taxes. Councilmember May felt we need to look at needs versus wants. Councilmember Donnelly would like to see fIScal disparities used for one time purchases such as a fIre truck. Councilmember Bartholomay felt planning is important if it is a realistic plan. He agreed with Councilmembers Donnelly and May. Mayor Larson liked the plan and residents said it was a great plan, but the wrong time. Fiscal disparities would take care of our needs for one year. He was upset about the tax calculation changing and had said no to everything in the plan. In a survey sent to residents they said to not add and maintain what we have. Ifwe can find a way to make cuts to fund the SRO, he was fme with that position and those cuts were made. He did agree with using some fiscal disparities as seed money for seal coating. Mayor Larson also agreed with keeping the $15,000 for trail maintenance and $20,000 for building maintenance. Councilmember May noted Mayor Larson has changed his mind about supporting the plan and asked Councilmember Bartholomay if he has also changed his mind to support the plan. Councilmember Bartholomay clarified he does not support the whole plan. He felt seal coating needs to be in the general fund, so that would be an increase in the levy, but he also wants to see offsetting costs amounting to $100,000 - $200,000 for 2012. Councilmember May noted ifthere are other things we need to use one-time money for, we need to get them on the table. Councilmember Bartholomay asked what amount will be needed by the Fire Department for turnout gear. Fire Chief Pietsch stated the turnout gear has a 4-5 year service life depending on the use. As we bring people on, we ftt them with new turnout gear. The number in the budget is for the recent hires a year ago. They can wear old gear on the fIre grounds, but when they get their certification they will need new gear to enter a fIre. Councilmember Bartholomay felt that should be covered with fiscal disparities. Councilmember Fogarty noted we will have to pay for whatever they need. City Administrator McKnight asked for a consensus from Council as to what they want. Councilmember May said no to the plan other than seal coating. Councilmember Fogarty stated the plan for fIre equipment is $30,000, but next year they will need $36,000. Councilmember May stated if it is a need for next year, it needs to be in the Fire Department budget. City Administrator McKnight clarified Councilmember May was saying yes, but then find cuts elsewhere. Councilmember Bartholomay agreed. Mayor Larson wanted to discuss the SRO position. He told the Police Chief if he can fmd the cuts to cover it, then we can keep the position and he found the cuts. Councilmember Fogarty had told the Police Chief she had a problem with funding it for 2012 if it could not be done in 2013 and 2014. The adjustment made is permanent. Councilmember Bartholomay fully supported the SRO position as long as we can fund it through cuts. City Administrator McKnight stated at the last workshop we discussed $75,000 in cuts, half for the SRO and have for revenue. Staff went through the whole budget to fmd $75,000 in cuts. Councilmember Donnelly was okay with the SRO position as long as it is covered. Councilmember May was not in support of adding the position in the first place. It troubles her staff can come up with this amount of cuts in the ftrst place; then why are we proposing a $300,000 increase if we can do this for a special request. This could be ongoing. It philosophically troubles her. She wants the $71,000 in savings to still happen, but used to decrease the amount of the levy. The Police 10 Council Budget Workshop November 22, 2011 Page 4 Department needs to take a good hard look at the number of patrol officers they want. With this person added, then maybe some changes need to be made within the department. Adding another officer is not the answer. The fact we are saying, well he found another way to pay for it, really bothers her. So why don't you find a way to cover another $300,000? Councilmember Donnelly stated everyone wants seal coating, but no one wants to raise taxes. So does that mean everything we add we want a net zero? Councilmember May stated the $350,000 for seal coating is an expense we would all incur whether it is assessed or added to the levy. We all have to expect to pay more to cover that, but keep the number as low as possible. We are not looking at what those cuts look like and what they mean. Does that mean we close the poo~ or cut staff and what does that do to the operations of the City? That needs to come from the City Administrator. Mayor Larson asked what adding the SRO does for the Police Department. Police Chief Lindquist stated he has not added to patrol in five years. Ifhe continues to push as he has, at some point things will stop. He cannot continue to ask his officers not to take time ofT, not schedule vacations and move shifts with less than two weeks notice. The officers have allowed him to do that. The needs to cover the community have grown. Councilmember May noted without the request from the school district for the extra SRO, we would not be in this position. Councilmember Bartholomay stated in surveys residents are okay with paying for police officers. When you layoff an officer it will hurt the morale and the department. Councilmember May thinks about the taxpayers as well, and we have to say no sometimes. Councilmember Bartholomay did not want to say no when residents are okay with police officers. We paid for these surveys and we should utilize them. Councilmember Bartholomay noted we do need to have discussions about the pool and things that will cost us more money in the future. We need to evaluate what is making money and what is not and what are our core services. If police, ftre, roads are core services, then is park and rec a core service? We need to determine our core services and establish goals around them. It will be hard to make future plans without having top goals for our departments. If there are cuts, then we know where to look. Mayor Larson stated we had those discussions a couple years ago and we reached a consensus to keep the pool, arena and senior center open. They are important to the community. We discussed this and decided to leave them in the budget. Councilmember Bartholomay stated we don't want to be like Lakeville, but they do something right with their senior center. They have a staff person, but they don't fund the senior center. They provide the building and maintenance and seniors to do the rest. Council would agree with that. Councilmember Bartholomay stated that would alleviate $120,000 in the budget. Maybe it would be cheaper to bring the seniors upstairs at City Hall with different staffmg levels. Trail Maintenance - Councilmember Bartholomay liked the idea about residents adopting trails. Mayor Larson felt we could do that during the year. Currently there is no money for trail maintenance. Councilmember Donnelly was surprised with all the trails there is no money for maintenance. We cannot let them deteriorate so we should keep that in the plan. Councilmember May felt this should be in the general levy as it is the number one thing that comes up with residents. It is our director's job to assess what is needed for the coming year and put that number in the budget. If it is something that needs to be done, then it does not belong in the plan, it should be in the budget. Whatever that number is for next year, staff needs to come up with the money and put it in the budget for next year. Councilmember Fogarty stated we are picking and choosing what survives. Are we saying we will do trail maintenance for 2012, but 11 Council Budget Workshop November 22, 2011 Page 5 we don't know what will happen in the future? Mayor Larson clarified Councilmember May wants staff to figure out how much is need for 2012 and 2013 and put that in the budget. Councilmember May was not willing to set up accounts for all these departments. Right now there are immediate needs that we have to satisfy and that is what she wants to know; the bare bones number. Staff explained trail maintenance includes patching and trail rehabilitation. Councilmember Fogarty understood about not setting up a fund, but we also do not have the time or money to do everything that needs to be done next year. She would rather ask what is absolutely needed and what would be a good starting point to maintain things. Councilmember Donnelly stated we should have a plan to include preventative maintenance and see what we need. Staffhas determined that $15,000 is needed to maintain trails. Mayor Larson felt they should put $15,000 in the budget for trail maintenance. Councilmember Bartholomay stated we should do what is needed for next year and look everywhere for grants and use adopt a trail to help out. Park Redevelopment and computer equipment - Everyone agreed with not including these now. Councilmember Bartholomay noted $48,000 is already in the budget for computer equipment. Staff noted cutting that will not affect 2012 or 2013; that amount was for the future because in 2014 there will be significant equipment replacement. Building Maintenance - Councilmember Bartholomay felt we should have something for this and it should be in the general levy. Staff stated we need a minimum of$5,000. Council reached a consensus to not include building maintenance in the plan. Next Council discussed offsetting cuts needed to cover the $406,000 included in the plan. Mayor Larson asked if Council had a number for the amount of cuts. Councilmember Donnelly noted expenses will be $700,000 greater for 2012 as there is $300,000 already added in the budget, and we have now added another $406,000. City Administrator McKnight stated we have added fITe equipment $36,000, SRO $35,000, trails $15,000, seal coating $350,000. Councilmember Bartholomay wants to see $100,000 - $150,000 in cuts with another $300,000 early in 2013. Councilmember May wants cuts for anything other than seal coating; a minimum of$300,000 up to $400,000. Councilmember Fogarty stated we are looking at $700,000 in increases. She would like to see us cut the budget by $175,000, increase the levy by $175,000 and use $350,000 in fiscal disparities to buy down the levy for 2012. Councilmember Donnelly stated when we started there was $300,000 extra in the budget. We questioned it, but it stayed. Then we went to the plan. Now people saw their tax statements and we are trying to do what we need to do. We should have fIXed the $300,000 in the beginning. Mayor Larson thought Council accepted the $300,000 as more realistic budgeting. Councilmember May stated it was presented to us and explained to us, but we never talked about increasing taxes to cover it. Councilmember Donnelly would like to see $100,000 in cuts. Mayor Larson would like to see $100,000 in cuts. Councilmember Bartholomay stated Council did not have a chance to discuss efficiencies and cuts. That makes this process very tough. Now we do not have time to explore that. Ifwe cut $300,000 staffwill have to come up with some innovative ways to do that. We need to know what that means such as cuts in services. City Administrator McKnight clarified Council is suggesting $100,000 - $175,000 with a broader scope to $300,000. This would mean a 2.49% increase to residents and 16% increase to commercial properties. 12 Council Budget Workshop November 22, 2011 Page 6 Fiscal Disparities - There is $367,258 to use from fiscal disparities. Councilmember Fogarty wanted to use it to buy down the levy for one year. Councilmember May did not want to use it for the levy, but will because we will not get cuts any other way. To ask our businesses to pay a 16% increase is unrealistic. She would like it to go towards a fIre truck. Councilmember Donnelly reluctantly agreed to put it towards reducing the levy. Councilmember Bartholomay knew the City Administrator has a plan to redo the budget process so he agreed to use it to reduce the levy so businesses do not pay a 16% tax increase. Councilmember Donnelly felt we should not have used $350,000 of fiscal disparities to buy down the deficits. We just refunded bonds and got great rates. The deficit was there anyway. That is real money that can do things for the residents. It is hard times and we are bolstering our balance sheet. He had a problem with that. Staff explained there have been some changes for next year as far as special revenue funds. Those changes may make us put those funds into the general fund anyway. Then we would take it from the fund balance in the general fund which is already low. Councilmember May felt we should repair the EDA and eliminate the EDA and EDA audit. Councilmember Donnelly had a concern with using fiscal disparity money for an EDA deficit. Staff explained how the auditors will ask for plans to payoff deficits. If you put fiscal disparities towards reducing the levy, then next year you have a problem. We would have that much money in the budget and what do we cut if we do not get fiscal disparity money next year. Council had agreed to transfer $175,000 from fiscal disparities to the EDA deficit and $50,000 to EDA operations. Councilmember May suggested using all the fiscal disparities to reduce the levy. City Administrator McKnight noted we would be starting 2013 with $500,000 in the hole which means restructuring the City. Staff stated ifwe do not receive fiscal disparity money next year we will have to cut $537,258 from the 2013 budget from the start. Staff clarified Council is asking to apply that money to ongoing items already in the levy and it is one- time money. Staffnoted we added halfan SRO this year, so next year we need to add another half to keep an officer. Councilmember May asked if Council can see what the cuts look like before we decide on the fiscal disparity number. City Administrator McKnight suggested another budget workshop following the EDA meeting on November 28, 2011. The discussion on fiscal disparities will be continued at that time. Currently the tax levy is -3.78% for residents and 8.76% for commercial. Mr. Tim Thompson, 816 7th Street, reviewed the equipment replacement plan and some of the money can be allocated differently to save money. You can take advantage of the State leasing programs, hold off another year with police cars to place more mileage on them, and never replace two squad cars in the same year. We are spending too much money at the same time. He recommended fiscal disparities not be used to pay off the arena debit. We do not belong in the arena, garbage or liquor business. We need to produce a good infrastructure. That does not include liquor, hockey, or garbage. You need to look at your bottom line. He asked why some of the items discussed are not in the yearly budget. That goes to department heads. They should have those numbers ready or they do not belong in the positions they are in. Apparently staff thinks it is okay to not have a plan. The arena does not belong to the City of Farmington. It should belong to the school district and allow them to maintain their own ice time. 13 Council Budget Workshop November 22, 2011 Page 7 Mr. Jeff Thelen, 616 Lower Heritage Way, noted Council is depending on fiscal disparity money. There is $500,000 difference between 2011 and 2012 on what the City will be receiving in fiscal disparities. He asked what made the $500,000 difference. No one knew. He asked why we are spending this money when we don't understand how we got it. We have to have someone come in to explain this. Council has to talk about how to adjust for $500,000 in fiscal disparities next year. Mr. Doug Bonar, 2506 Eastview Curve, stated he thought the fIrst hour of this meeting was attached to a capital planning meeting. All comments were about how to spend money not how we are going to balance the budget. He was pleasantly surprised the second half turned towards that task. He asked Council to consider their options and use creative energy to come up with innovative answers for the difficult questions before you. Council should keep in mind this is for the greater good, not my good is greater. Mr. Colin Garvey, Canton Court, he brought up fiscal disparities in 2009 and Council did not want to address it then. In 2010 he was told it does not affect taxes. In 2009 his fiscal disparities jumped $1200 in one year. The reason we are getting more fIscal disparities is Farmington does not have the commercial property. Everything has been taken away from the HRA and turned into City Hall. That is less property paying into commercial taxes. That puts a bigger strain on taxes. The First Street garage was supposed to have been sold to pay for the Maintenance Facility; residents were not allowed to vote on that. The old City Hall was supposed to have been sold to pay for this building; that did not happen. The City bought the Riste building and tore it down. All these properties would contribute to the tax pool. The City's policies are putting him out of business. People have lost their houses. You are not making the proper cuts. The same thing happened last year; you wait until the last minute to get the budget put in place and you do not make the necessary cuts. Bonding is not only a necessity, but ifused properly it is a tool needed by cities to function. In the past we have over bonded on projects. We have accumulated interest and don't pay down the debt. These things have to be addressed. You don't have to tax us to build up accounts; you just have to watch how you spend your money. If you need a new fIre truck, let's get out of the garbage business. Mayor Larson asked staff to look at ways to purchase equipment smarter as Mr. Thompson suggested. Fire Chief Pietsch stated the smaller trucks are on the state contract. For the larger trucks they are put out for bid. A lot of communities are no longer doing that. The Fire Department is looking into that to save money. Mayor Larson asked how we can fully understand fiscal disparities. Staffwill research bringing someone in. MOTION by Fogarty, second by Donnelly to adjourn at 9:24 p.m. APIF, MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 14