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HomeMy WebLinkAbout09.04.12 Council Minutes 7a COUNCIL MINUTES REGULAR September 4, 2012 1. CALL TO ORDER The meeting was called to order by Mayor Larson at 7:00 p.m. 2. PLEDGE OF ALLEGIANCE Mayor Larson led the audience and Council in the Pledge of Allegiance. 3. ROLL CALL Members Present: Larson, Bartholomay, Donnelly(arrived 7:03), Fogarty, May Members Absent: None Also Present: Andrea Poehler, City Attorney;David McKnight,City Administrator;Brian Lindquist, Police Chief;Randy Distad, Parks and Recreation Director;Kevin Schorzman, City Engineer;Todd Reiten, Municipal Services Director;Brenda Wendlandt, Human Resources Director;Tim Pietsch, Fire Chief; Cynthia Muller, Executive Assistant Audience: Adam Steffen, Lynne Halterman, Jeff Thelen, David Pritzlaff 4. APPROVE AGENDA MOTION by Fogarty, second by May to approve the Agenda. APIF,MOTION CARRIED. 5. ANNOUNCEMENTS a) Proclaim September Tie It Teal Month Mayor Larson proclaimed September Tie It Teal Month for ovarian cancer awareness. 6. CITIZEN COMMENTS 7. CONSENT AGENDA MOTION by Fogarty, second by May to approve the Consent Agenda as follows: a) Approved Council Minutes(8/20/12 Regular) b) Approved Rescue Squad Membership—Fire Department c) Approved School and Conference-Planning d) Approved School and Conference Heritage Preservation Commission-Planning e) Approved Bills APIF,MOTION CARRIED. 5 Council Minutes(Regular) September 4,2012 Page 2 8. PUBLIC HEARINGS a) Approve Therapeutic Massage License Hadler Family Chiropractic- Administration Mr.Adam Steffen has applied for a Therapeutic Massage License to practice at Hadler Family Chiropractic, 625 8th Street. MOTION by Fogarty, second by May to close the public hearing. APIF,MOTION CARRIED. MOTION by Fogarty, second by May to approve a Therapeutic Massage License for Adam Steffen at Hadler Family Chiropractic, 625 8th Street. MOTION CARRIED. 9. AWARD OF CONTRACT 10. PETITIONS,REQUESTS AND COMMUNICATIONS 11. UNFINISHED BUSINESS 12. NEW BUSINESS a) Adopt Resolution—Approve 2013 Preliminary Tax Levy and Budget- Administration City Administrator McKnight presented the 2013 preliminary budget. His biggest concern for the financial state of the City has been the status of the general fund budget. We have the most money in the general fund on December 31. We spend that money until we receive the first half property taxes in June. That money is spent down again until we receive the second half property taxes at the end of November. In 2011 the general fund dipped below zero for two months out of the year. We have gone below zero two to four months annually since 2008. We have already gone below zero in two months in 2012. His second concern is we ended December 2011 between$2.2 and$2.3 million in the general fund balance. We have a$10 million general fund so that means we have a 22% -23%general fund balance. The state auditor recommends a 35%-50%fund balance at the end of each year. City Administrator McKnight presented a 2013 budget of $10,060,366 which is a 0.46%increase. Staff is also proposing$8,808,865 tax levy which is a 2.84%or$242,000 increase over 2012. He presented a breakdown of the budget by department. Administration,Human Resources, Finance and Police budgets have a small increase to a significant decrease.The Fire Department has the largest increase because of new equipment and building upgrades. Engineering has personnel costs transferred to their budget from other funds. Municipal Services had a$40,000 payment for work on Flagstaff Avenue. There is also a$10,000 storm clean-up line. Parks and Recreation budget has increased trail maintenance and the transfers are down significantly because we have one time transfers that are being spent in 2012 that will not be spent in 2013. Significant factors impacting the 2013 budget include the purchase of a new fire truck in 2012 with the loan payments starting in 2013 for$120,000/year. Revenues have been adjusted to more accurately reflect expected revenues. All 6 Council Minutes(Regular) September 4,2012 Page 3 personnel costs have been included in the budget for$107,000. There are capital equipment increases related to the fire department. Two of the four union contracts are settled for a cost of$46,000 for 2013. Also included is a$15,000 building maintenance fund. These factors total$648,000. The budget also includes staff reductions of eliminating two full time positions, one in community development and a retirement in human resources;two part time positions have been eliminated, a community service officer and an administrative support position in municipal services;one full time administrative support position in the police department will change to part time beginning next year. We will go from 83 to 80 full time employees and from 10 to 9 part time employees. This is an estimated savings of$242,000. The most important information for Council to consider is the impact of this on properties. From 2006—2013,the tax capacity for commercial/industrial has increased. This is because commercial/industrial property values have fallen at a slower rate than residential properties. If we did not raise taxes for 2013,the commercial/industrial properties would pay higher taxes because they are eligible to pay a higher portion of taxes because their tax capacity has grown. Property tax statements show two different values. The market value is what the county thinks the home is worth. The taxable value takes into consideration the market value homestead credit. The taxable value is used to determine residents' percentage of the City taxes. The impact on residential properties ranges from a $95 decrease to a$21.87 increase. The average taxable value for properties in 2012 was$165,480 and for 2013 it is$151,869. The taxes for an average property would go down by$0.23. For commercial/industrial properties the increase ranges from$235 to $754. These properties have higher values and therefore,the potential to pay higher taxes. The commercial/industrial properties are taking the biggest hit with this proposed budget increase. The budget does a number of positive things. It includes all expenses,takes a conservative approach on revenue expectations,the seal coat and economic development funds established in 2012 are still in the budget, a building reserve fund has been established for 2013 to meet future needs, a storm clean up line has been added, and we have developed a two year budget cycle for a look at 2014. There are three main reasons why the budget stands as it is today. The purchase of a new fire truck which we have to start paying for in 2013, revenue adjustments, and increased human resources costs to make sure everything we have negotiated is in the budget. A public hearing for the final budget will be held on December 3, 2012. Councilmember Fogarty continued to be frustrated over market value homestead credit and the lack of control over how it affects our taxes. She will continue to advocate that the county eliminate this program. 7 Council Minutes(Regular) September 4,2012 Page 4 Councilmember May stated no matter what they call it,we are still talking about whether we increase or decrease the budget. She commended the good job staff did on the revenue side. It is the first time she felt comfortable with the revenue numbers and it seems to include everything. She still has a concern over the level of spending and the shift to the commercial side for the burden of increased taxes. The decreases will come from cutting spending. As in the past, she will not approve the budget because she believes there are additional cuts we could have made. Staff has done a good job with laying the budget out; it is easy to read, very thorough and well written. Councilmember Bartholomay agreed staff did a good job with the revenues. He agreed with purchasing a fire truck which Council agreed on. He still had questions regarding comp time versus overtime, so he was not completely satisfied with that number. He had a concern with going with straight overtime versus having comp time and overtime. Looking back, if we have not budgeted for it, it would seem we would go $107,000 in debt every year which would be a huge number by now. City Administrator McKnight stated we paid it out,but it was not included in the budget, so you start the budget out a$107,000 in the hole. Councilmember Fogarty stated this is one reason we have seen our fund balance decrease. Councilmember Bartholomay felt we would be putting a high burden on our businesses with a 2.84% increase. He made a mistake approving a preliminary budget last year he did not agree with, so he would not do that again this year. He received a report from the county showing tax capacity rates. Apple Valley has .44%, Empire .31%, Lakeville .39%, Rosemount .47%,and Farmington at.63%. We have the highest taxes in the county. He cannot support the current preliminary number. Mayor Larson asked why we go negative in the fund balance at least twice a year. City Administrator McKnight explained we have a$10 million general fund balance. The biggest revenue is property taxes. On December 31, 2010,the general fund balance number should have been between 35%and 50%, so$3.5 million and$5 million. You spend down until we receive property taxes. You have to have enough money at the end of the year to get you through everything you will pay for in the first five months of the year. We are not ending the year with enough money to stay below zero by the time we hit our low point in May and again in November. If the budget is off by$107,000,and we spend 100%of the budget and take in 100% of the revenues, which has not been happening,we will not have enough money to stay above zero. We haven't been meeting our revenues so we do not have enough money to cover expenses. We only get paid twice a year. Mayor Larson asked how we pay the bills when we go negative. City Administrator McKnight explained we use pooled cash. The general fund is just one fund. We have other funds where we borrow money and pay those funds back. Then we pay down the general fund and borrow money again in November. It will take years for this to correct itself. Mayor Larson stated the actual increase is$648,000, and we are asking for a$242,883 increase, so $405,425 were cuts. City Administrator McKnight stated they are the position cuts and one time 8 Council Minutes(Regular) September 4,2012 Page 5 expenditures that were taken out of the budget for 2013. Mayor Larson did not like the increase, but if we are going to be a healthy community we need to have a sound budget document. He thanked staff for all the work and finding the numbers we needed to include. City Administrator McKnight was asked to redo the budget document and he did and made it much easier to read. Mayor Larson asked that between now and December we still look for reductions, but stood behind the City Administrator that we have a sound budget for the first time in a long time with everything on the table and all numbers included in the budget. He did not like the increase, but will support the preliminary budget. Councilmember Donnelly stated he was much more confident with this budget than in the past. Everything is accounted for and there should be no surprises. We looked at revenues and reduced them. In the past we had unrealistic revenue projections and at the end of the year they did not happen and it comes out of the fund balance and makes things look worse. We had to purchase a new fire truck. We reduced personnel. We have a realistic budget that moves us forward. Even if we reduce the tax levy, commercial businesses would still pay more taxes than last year. City Administrator McKnight stated if you wanted to get commercial properties to a zero increase,we would have to reduce the levy by$515,000 which is a 5%decrease. Councilmember Donnelly felt it is a realistic budget, we have discussed everything. We made decisions during the course of the year to spend more money and we also made decisions to reduce positions. With revenue reductions it did not end up at zero. He felt it was a fair, accurate budget,and does move us forward. He will support the budget. Councilmember Fogarty stated it is a very solid approach to a preliminary budget. It is rare that the preliminary number becomes the final number. It cannot increase, only decrease. It is preliminary, but we need to get something out to the residents so they know what could potentially happen to their property. She will support it. MOTION by Fogarty, second by Donnelly to adopt RESOLUTION R33-12 approving the 2013 preliminary budget and tax levy as proposed. Voting for: Larson, Donnelly, Fogarty. Voting against: Bartholomay, May. MOTION CARRIED. City Administrator McKnight will bring the non-levy budgets and the general fund budget to the October workshop. 13. COUNCIL ROUNDTABLE Councilmember Donnelly: School is open and there is lots of traffic on Flagstaff. No incidents on the first day of school and everything went smooth. Councilmember Fogarty: School is back in session so there is more traffic and be attentive. She congratulated the football team on winning the game. 9 Council Minutes(Regular) September 4,2012 Page 6 Municipal Services Director Reiten: Staff met with FEMA to receive funds for storm clean-up. FEMA has estimated the City will receive$18,000. FEMA gives us 75%of the money and the state gives us 25%,or the state will split that 25%with the City. This is the first time we have received anything from FEMA. The reason is because it was a statewide event. He was pleased to have a storm clean-up fund in the budget. All the storm clean-up was done during normal work hours with no over time. City Engineer Schorzman: Municipal Services Director Reiten did a great job with obtaining the FEMA funds. Municipal Services Director Reiten noted Police Chief Lindquist also helped with this effort. Mayor Larson: He attended the 30th Anniversary Open House for the Rambling River Center and it was a great time. The program included a group of singers ranging from 62 to 94 years of age. September 8, 2012, is household hazardous waste drop-off at the Maintenance Facility. It is open to all Dakota County residents. There were two fires over the weekend and he thanked the firefighters for their hard work. He encouraged residents to shop local and promote our businesses. 14. EXECUTIVE SESSION MOTION by Fogarty, second by Bartholomay to recess at 7:50 p.m. into executive session for the City Administrator performance review. APIF,MOTION CARRIED. Closed session began at 7:58 p.m. Mayor Larson moved the meeting into open session at 9:18 p.m. 15. ADJOURN MOTION by Fogarty, second by May to adjourn at 9:18 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 10