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HomeMy WebLinkAbout06.26.06 Work Session Minutes COUNCIL BUDGET WORKSHOP MINUTES June 26, 2006 Mayor Soderberg called the meeting to order at 5 :30 p.m. Present: Soderberg, Fogarty (arrived 5:43 p.m.), McKnight, Pritzlaff, Wilson Also Present: Peter Herlofsky, City Administrator; Robin Roland, Finance Director; Cynthia Muller, Executive Assistant MOTION by Pritzlaff, second by McKnight to approve the agenda. APIF, MOTION CARRIED. The goals for the 2007 budget were discussed. City Administrator Herlofsky asked for an overview from Council as to what they want for the 2007 budget. Right now levy limits are off. We need to look at the levy from a political standpoint, but for long-range planning, this is not the year to be frugal. Recognizing that school district taxes will go up and other environments we need to make sure we get what we want. If levy limits go on in another year or two and the base is not sufficient, the City will be struggling for a long time. With the additional staff that have started this year what is the impact? There are some issues just with what is set aside for this year. We have hired people after the beginning of the year, but next year it will be for 12 months, we have salary adjustments, PERA has been going up, etc. Increases due to a full year of a position, we would need to add $98,319. There are three out ofthe four contracts that have been settled at a 2.75% rate, but with merit it is 3%. All the salaries are $121,500. Regular PERA increases are going from .06 to .0625 for the employer share and Police PERA is going up from .105 to .1170 which amounts to $25,600. As part of the contracts, the City is going from $690/month contribution for health insurance to $720/month which comes to $30,000 - $35,000. The total is $275,000 if we do nothing. The DCC budget would have to be added to this. New debt service items include: Ash Street Hill Dee Fire Station Certificates of Indebtedness (used to buy equipment) Hill Dee and Ash Street will be paid through assessments. The increase in debt service is $661,000. As far as Council's objectives, economic development is still an ongoing issue. City Administrator Herlofsky has a request in to ICMA for peer assistance. The tax capacity rate for 2006 is 43.348%. Due to a drop in the tax increment districts we will see an increase in the tax capacity value of over $1 million above the 13% it actually grew. The 10% levy increase would result in a 39.4% tax rate, which is a drop of 4% in taxes. A 1 % increase to the levy would equal $67,000. To bring the rate up to 43%, there would have to be a Budget Workshop Minutes June 26, 2006 Page 2 20% levy increase to keep the tax rate exactly the same. The school district taxes will go up next year. Mayor Soderberg stated we can increase the levy greater than the 10% increase planned in the performa and still keep the tax capacity rate static or going down. We will need to do more than 10% just because of staff increases. Council goals include: 1. Reduction in building permit numbers. 2. Put money in the fund balance. The goal is 35%-40%. This might be a 3-year plan. 3. Accept expenses of staff, contracts, PERA, and insurance 4. City Hall 5. Willing to have tax rate go up to 39%, but not above 43%. 6. Look at amount spent on consultants 7. Debt service as a percent of the levy. Currently 25% ofthe levy would go to debt service. We need to determine if this is an appropriate number. We might need to redefine the debt policy that we will not have any more debt as a percent than allowed. The 25% goal should not be a percent ofthe levy, but a percentage ofthe available debt. Councilmember Wilson does not want to pay consultants for something that will be done years later. He suggested not doing as many master park plans per year. He would like to see more community parks and less neighborhood parks. (Councilmernber Pritzlaftleft at 6:19 p.rn.) 8. Parks (funding) 9. Commercial/Retail Development Councilmember Wilson asked what we need to do to the budget to make economic development a priority. City Administrator Herlofsky suggested meeting with Empire Township to ask them: 1. Do they want to incorporate? 2. Merge with Farmington? 3. Or Farmington will have to start annexing. The area for Farmington needs to expand. The townships use City services and everyone wants the same thing. The school district includes the townships. 10. Invest more in communication. 11. Rambling River Days should be identified in the budget. Councilmember Fogarty felt the City needs to be 100% behind it. City Administrator Herlofsky noted it is more than money. We need to allow staff people to spend more time on it. Next year the Spruce Street and McVicker lots will not be available. Mayor Soderberg noted the fairgrounds is a great resource and we should partner with them more. Councilmember McKnight noted the number of businesses that were closed during Rambling River Days. Mayor Soderberg stated there should be a City celebration. Councilmember Fogarty felt master planning for parks could be done inhouse. She felt we need neighborhood parks. Budget Workshop Minutes June 26, 2006 Page 3 Councilmember Wilson would like to see the cost ofthese additions relative to the 39% tax rate. MOTION by Fogarty, second by McKnight to adjourn at 6:49 p.m. APIF, MOTION CARRIED. Respectfully submitted, ~/Y7~ Cynthia Muller Executive Assistant