HomeMy WebLinkAbout06.24.13 Work Session Minutes Council Budget Workshop
Minutes
June 24,2013
Mayor Larson called the workshop to order at 5:30 p.m.
Present: Larson, Bartholomay, Bonar, Donnelly, Fogarty(arrived 5:50 p.m.)
Also Present: David McKnight, City Administrator;Robin Hansen, Finance Director;Kevin
Schorzman, City Engineer;Cynthia Muller, Executive Assistant
MOTION by Bartholomay, second by Donnelly to approve the agenda. APIF,MOTION
CARRIED.
The purpose of the workshop was to discuss the 2014 budget and the levy limit. The state has
imposed levy limits for 2014. The fmal levy limit number will be provided by the state before
September 1, 2013, so the League of Minnesota Cities has provided a formula for cities to
determine an estimated levy limit. City Administrator McKnight reviewed the formula and how
it applies to Farmington. Farmington will be receiving Local Government Aid(LGA) in 2014.
Because we did not receive LGA in 2013, we are unable to increase our operating tax levy for
2014. The bottom line is the proposed 2014 budget is$306,441 over the levy cap;we have to
cut that amount from the proposed 2014 budget.
LGA money is typically used for one-time purchases. Staff had developed a list of items which
were discussed at the previous workshop,to purchase with this money. Now that we cannot
increase the levy, if Council decides to use some of the LGA money towards the budget to
reduce the amount to cut, some of the items on the list would have to be delayed to another year.
Council needs to determine whether to use LGA money on one-time expenses, on operations, or
a combination. Not being able to increase the levy, affects the CIP. Council also needs to
determine whether to fund the CIP through a five-year bond. Bonding will cost us$170,000
more. If we bond for the CIP,the Akin Park Estates projects could be done in 2014 and 2016.
Councilmember Bonar agreed with bonding for the CIP. LGA should be for long term
investments. The bond proceeds should be used to reduce the $306,441 by$125,000 and left it
up to the City Administrator to fmd the difference.
Mayor Larson noted it was Council's goal to have a CIP, and bonding is the only way to do that.
Regarding LGA, he was willing to take a portion of LGA and put it towards operations, capping
it at $100,000. Over the past several years we have cut as much as we can as far as personnel.
Councilmember Bartholomay agreed with bonding for the CIP. He was not in favor of using
LGA money for operations. Our philosophy has been to use it for one-time expenses.
Councilmember Donnelly stated the proposed budget levy increase was 3%or$270,000. If we
do not use LGA money for operations,then it is a flat budget, a 0% increase. We can increase
the budget$137,000 for debt payments. We have not received LGA money for ten years. If we
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Council Workshop Minutes
June 24,2013
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put$100,000 of LGA money in operations for 2014,then in 2015 we will have a hole. City
Engineer Schorzman explained the hole in 2015 would be the difference in the amount of LGA
between 2014 and 2015. Councilmember Donnelly stated if we don't have another way to fund
the CIP other than bonding,then we should do it this year. He would prefer to use LGA money
for one-time purchases,which leaves the budget flat for 2014.
Councilmember Fogarty was in favor of bonding for the CIP and would agree to use LGA
money on a combination of one-time expenses and operations.
We started with having to reduce the proposed 2014 budget by$306,441. With bonding for the
CIP of$125,000, we now need to find$181,441 to cut. Staff will come back to Council with the
general fund budget once the fiscal disparities number is received which is in mid-August.
If any items are removed from the LGA expense items, staff would need to find another one-time
expenditure in the budget,or if an item is removed from the list and not replaced, then we have
spent LGA money on operations.
Council reached a consensus to start the bond process as soon as possible. At an upcoming
Council meeting, Council will be approving bonding for the CIP, and authorize preparation of
plans and specifications for Akin Park Estates.
MOTION by Fogarty, second by Bartholomay to adjourn at 6:25 p.m. APIF,MOTION
CARRIED.
Respectfully submitted,
Cynthia Muller
Executive Assistant
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