Loading...
HomeMy WebLinkAbout06.09.14 Work Session Minutes Council Budget Work Session Minutes June 9,2014 Mayor Larson called the work session to order at 6:30 p.m. Present: Larson, Bartholomay, Bonar, Donnelly Absent: Fogarty Also Present: David McKnight, City Administrator; Robin Hanson, Finance Director; Brian Lindquist, Police Chief; Adam Kienberger, Community Development Director; 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 MOTION by Bonar, second by Donnelly to approve the agenda. APIF,MOTION CARRIED. The purpose of the work session is to discuss the 2015 budget, specifically the general fund and debt service funds budget and tax levy. The remaining funds will be discussed in the July work session. The draft 2015 budget shows revenues at$3,043,207,which is a$111,000 increase over 2014. Expenditures are projected at $11,544,695 which is an increase of$574,000. Fiscal disparities have been left the same for now at$2,253,199. This brings the general fund levy to $6,248,289, which is an increase of$463,000 over the 2014 final budget. The debt levy is $116,000 more at a total of$3,059,728. The draft net tax levy comes to $9,308,017 which is a 6.6%increase over the final 2014 budget. The tax levy increase in 2010 was 2.39%and in 2011 it was 3.42%. In 2012 and 2013 there was no increase and in 2014 there was a 1.92%increase. Finance Director Hanson reviewed the revenue line items. Animal license revenue has been reduced due to the option of a lifetime license or a two-year license. Building permit revenue will be increased from$315,000 in 2014 to $380,000 for 2015, which is less than the actual 2013 building permit revenue received which was $513,000. The city's share of LGA is $276,607 which is an increase of$31,278. MSA maintenance has been increased. Fire charges revenue has been increased based on recent experience. Police service charges have been reduced to reflect the reimbursement arrangement with the school district for one school resource officer. Investment income has been reduced from$55,000 to $20,000. Transfers in is the money transferred in from the enterprise funds to cover administrative and personnel costs, including the liquor stores. This has been increased by 3%. Regarding expenditures, all budgets reflect the anticipated human resources based on union contracts,the wage study,retirement contributions, health insurance and workers compensation increases. There is also an increase in technology costs as the city continues to expand the use of technology, support and upgrade hardware and software. The administration budget has been increased by $25,000 to cover strategic planning, a customer survey and increased technology for the purchase of Novus Agenda and iPad support. The increase in finance is due to an audit contract which will go out for bid later this year. In risk 11 Council Budget Work Session Minutes June 9,2014 Page 2 management there are increased premium costs for property and casualty insurance and there is more use of the city's deductibles which is eating away at the fund balance. The police budget includes an increase to buy Axon Flex body cameras,the software and upgrading of phones to smart phones to improve evidence collection and moving the information to cloud. Staff is recommending that money for vehicles be moved to a capital equipment fund and that it be funded on a longer term basis for immediate needs and use a portion of LGA to address deferred maintenance. There is an increase in the fire budget for pump testing for$15,000 and continued hose replacement. Painting of the ceiling at station one is estimated at$28,000 and half of that will be in the 2015 budget and half in the 2016 budget. There is also $25,000 for positive pressure ventilators and extraction pumps. Amounts previously approved in the fire CIP will be transferred out and moved into the fire capital projects fund. In engineering there is $10,000 for efforts that may be recommended by the community development director, and$10,000 for professional services in building inspections in the event the activity level is such that we need to contract out work due to increased building levels. There is an increase in municipal services of$11,000 for snow removal. A new item is permanent levy adjustment and delinquency experience. In the audit there was an actual reduction in the levy that we sent to the county. According to the county those are permanent adjustments done by a local taxing authority due to evaluation appeals or due to the ag preserve credit. The $30,000 is a permanent reduction and we will not see it. To reflect that, the 2015 budget includes $30,000. In 2016 through 2018, Finance Director Hanson recommended we build up over that three year period our delinquency experience which runs about 1.5% in a good year. Then we will have the money in the fund balance to take care of the timing differences between when we expect the tax receipts and when we actually receive them. Transfers out is comprised of the general fund (non-LGA items) and LGA items. Non-LGA items include: EDA $ 40,000 Arena $ 20,000 Fire CIP $ 70,000 This is for one brush truck and-a-chief's-vehicle. The fire department had-requested-a second chief's vehicle. The police department has a commercial inspector's vehicle that is six years old and it would make sense to transfer that to the fire department for a chief's vehicle and replace the commercial inspector's vehicle. Police Capital Equipment Fund $125,000 Sealcoating $350,000 Trail maintenance $ 30,000 Building maintenance $ 15,000 Total $650,000 12 Council Budget Work Session Minutes June 9,2014 Page 3 LGA uses include: Customer survey and strategic planning $ 25,000 Assessments related to hotel parcel $ 50,000 Fire CIP $ 30,000 Streets and equipment CIP $ 80,000 The current CIP does not address deferring equipment for the next six years. This money would provide funding so that if we need to replace a vehicle rather than repair it we would have money to do that. It would be approved by Council. Building maintenance $ 2,707 Technology $ 82,300 This would pay for a new software tool and redesign of the city's website, costs associated with updating the city's remaining computers to the same operating system and Office suite software, point of sale software for the pool,the purchase of accounts payable automation software, and online employment application software. New lights at the Rambling River Center $ 6,600 Total $276,607 The debt service levy provides funding for scheduled debt principal and interest repayment obligations. It continues to strengthen the cash flow for several debt issues as we work towards compliance with the 105%funding requirement, and provides funding for the 195th Street reconstruction project. In 2015 bonds will be sold for this project and the first payment would be in 2016. Because interest rates are against us and we have to add on a stretch of Pilot Knob,the bond sale size has been increased and the cost will be more. The debt service levy factored in $67,000 for the project, so staff recommends keeping that in here. Between what we collect in 2015 and 2016 we will be approximately$20,000 off. Fiscal disparities are expected to be the same in 2015. Regarding human resource costs and budgeted debt service needs the levy would need to increase 4.02%to fund those items. The estimated average increase to property taxes would be $35.69 to cover the 4.02% increase. This assumes the average market value is $197,416, which is an increase of 10.08%based on preliminary county numbers. The additional 2.58% included in the city's draft budget,totaling a 6.6%increase, is estimated to cost the average homeowner an additional $26.86, for a total projected increase of$62.55 on the average residential home. This budget does not include funding for a ladder truck, recommendations from the aquatic feasibility study, or any Ice for Tigers funding request. Staff met last week and did a first round of cuts before bringing this budget to Council. Councilmember Donnelly asked about the average levy increase from 2010 through 2015. This comes to an average increase of 2.8%per year. Mayor Larson asked for an explanation of the body cameras. Police Chief Lindquist stated we are always one step behind with technology. Now the courts say we have to record audio interviews and if these cameras are available we have to use them according to federal and state 13 Council Budget Work Session Minutes June 9,2014 Page 4 mandates. Everything we do is questioned and must be defended. The evidence collected is of the same nature. The body camera is taking the camera out of the car and putting it on the cop to show everywhere they go. The equipment is on sale this year and forfeiture funds will be used to purchase them. There is a monthly fee associated with each camera that allows us to use their system as a depository for all evidence collected and is placed in the cloud. The cameras would not be on continually, only when necessary. Everything collected on the camera can be used to defend the city. Councilmember Bonar stated the average property owner will see a$20,000 increase in the value of their home. He asked how they understand they are part of the inflationary increase if Council decides to increase the levy$62.65 per residence. City Administrator McKnight clarified the question is if the levy increase was zero, what would that do to taxes. Taxes will go up because we will see a 2%increase in the taxable market value. Staff will provide a dollar amount. Councilmember Donnelly noted commercial would go down. City Administrator McKnight noted growth has returned and will equal 2%of new construction. All these pieces of the residential pie will pay old and new taxes. The$62.65 assumes more homes in the community. Councilmember Bonar stated if we chose a 5% increase,what were the circumstances within the community at the last 5% increase? Staff will provide historic building permit numbers. He remained cautious when it comes to adding taxes to the community. Councilmember Donnelly recalled even with a zero increase,the commercial properties took a hit. Councilmember Bonar was trying to define what is in our control and what isn't. Negotiated agreements and other commitments approved by Council are within our control. A lot of things are not within our control that we will be responsible for. The current rate of inflation is 2%. Councilmember Bartholomay asked about the cost of the smart phone upgrade for police. Police Chief Lindquist stated the cost is $6,500. The cameras and the phones are related. There is an application for the phone that can help monitor the camera. It will also allow us to download evidence to the cloud. The audio recorders are $450 each. The last time cameras were purchased they were$140 each. A lot of officers communicate by texting. There is also new CAD software that has an application for smart phones. Councilmember Bartholomay asked about the cost for repurposing a police vehicle for fire department use. Decals are approximately$600. Other than that it is mechanical labor time. The lights and radio would remain in the vehicle. It would be approximately$2,000 total. Councilmember Bartholomay asked if the LGA expenditures for fire CIP, streets and building maintenance are one-time expenditures. Finance Director Hanson stated there is long term funding for the fire CIP which is contingent on receipt of LGA funds. Regarding equipment and streets CIP, staff's recommendation would be to do a similar amount in 2016 if LGA funding is received. This would bridge the gap until CIP funding is in place. Councilmember Bartholomay asked for the highest percent in delinquent taxes during the last four years. It is approximately 5 —7%. He also asked what the 2% inflation amounts to in dollars. It is $175,000. Councilmember Bartholomay stated beyond the 4.02%we would have to increase the levy another$170,000. Finance Director Hanson noted 2% for supplies, utilities, 14 Council Budget Work Session Minutes June 9,2014 Page 5 etc. would not be in there unless you add it to the base of the 4.02%. Councilmember Donnelly stated the 4.02%includes contracts,workers comp, etc. Councilmember Bartholomay asked if a 5%increase would cover inflation. Finance Director Hanson will provide that information. Councilmember Bonar asked about the tax impact per household for a ladder truck, aquatic facility study and funding for Ice for Tigers. Finance Director Hanson will provide the average residential levy impact for each of these items. Finance Director Hanson stated for Ice for Tigers funding there are two scenarios. A lease revenue bond would be issued by the EDA and the city would lease the facility from the EDA. It is expensive to do it that way,but it does not require a referendum. The cheapest way would be a referendum. The difference is $50,000- $60,000 per year. The lease revenue requires we set aside a full year's debt service in the issue. So instead of a$3.2 million issue, it is $3.6 million. They also want the proforma to show a 20%profit. The best way is to do a general obligation bond which requires a taxpayer vote. Mayor Larson felt Council could all agree the 4.2% is there and we cannot touch it. He felt the 6.6%increase will not work either. He would be comfortable with 5%. Councilmembers Bartholomay and Donnelly agreed with 5%. Councilmember Bonar would be comfortable with 4% -4.99%,not 5%. Council was comfortable with the LGA proposed uses. Council agreed with doing a community survey. MOTION by Bartholomay, second by Bonar to adjourn at 7:59 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 15