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HomeMy WebLinkAbout10.01.03 Work Session Minutes COUNCIL BUDGET WORKSHOP MINUTES October 1, 2003 Mayor Ristow called the meeting to order at 6:02 p.m. Present: Ristow, Fitch, Fogarty, Soderberg Absent: Cordes Also Present: Dan Siebenaler, Interim City Administrator/Police Chief; Robin Roland, Finance Director; Kevin Carroll, Community Development Director; Randy Distad, Parks and Recreation Director; Lee Mann, Public Works Director/City Engineer; Brenda Wendlandt, Human Resources Director; Ken Kuchera, Fire Chief; Rosemary Swedin, Accountant; Cynthia Muller, Executive Assistant MOTION by Soderberg, second by Fitch to approve the agenda. APIF, MOTION CARRIED. Interim City Administrator Siebenaler stated 2004 will be a very different budget year. The budget process begins with Council giving staff budget goals and direction, staffmeets and comes back with a balanced budget, it is discussed by Council and approved. Staff solicited ideas from supervisors and department heads on what the city needs to keep functioning. The ideas are then prioritized. The management team set three internal goals: 1. Nobody loses their job because of the budget. 2. Any decisions made needed to promote efficiency. 3. The budget has to be sustainable. Staff identified where the resources were and the limitations. This year, meetings were held with all city employees. The budget proposal was explained and what it would mean to them. It means employees will have to work harder, smarter and longer and with less resources than in the past. What makes this budget different from other years is the state has prohibited the city from using the resources available such as growth in valuation and new housing and business units. This year any requests had to be reasonable and real. Even with that, most of everything asked for was eliminated from the budget. This will affect the ability to do jobs quickly. There were some requests for personnel, all justifiable. Even though those needs could not be met this year, as the city grows the need for personnel will grow and this will have to be addressed in future budgets. In mid-2004 the city will be providing services to a population that is 30% bigger than when the budget was prepared for 2003. Staffwill not be asking Council for more money because there is no more money. Staff did ask for Council's support as far as requests from residents. Requests for tall grass, weeds, low branches will be handled as soon as possible. All requests will need to be prioritized as to importance. Council needs to send that message to residents who call them with these requests. The city is not broke; we are in excellent financial condition. We have resources that are waiting, we just cannot use them. The money the city will be allowed to use in 2004 and possibly 2005 has been limited. Finance Director Roland presented the 2004 preliminary levy and budget. The proposed levy is $4.651 million which is $408,736 more than the 2003 levy of $4.2 million. This is the state imposed levy limit. The state levy limit has no growth factors. Any capital outlay is excluded from the general fund budget, and the city is able to issue certificates of indebtedness to fund Council Budget Workshop Minutes October 1, 2003 Page 2 these items. The city has to have the ability to grow the levy in conjunction with the growing city and use the financial resources from those households to help pay for the services required by the residents. The general fund revenues are estimated at $6.157 million with 58% of that coming from property taxes. That is up from 52% from 2003. The estimated revenues include no government aid. LGA was eliminated by the state legislature. The city should have received $593,000. Additional funds were levied in 2003 to help offset part of this loss. In 2003, the city will neither add nor deduct from the general fund balance due to additional permit revenues. General fund revenues are only 1.5% greater than the 2003 budget. The city is working with the same amount of revenue in 2002, 2003 and 2004. There is growth in the tax base of over 46% between those three years. Regarding 2004 expenditures, there is a 6.7% increase in general fund operating expenses. This is due to normal operating expenditures. Finance Director Roland then reviewed 2003 vs 2004 revenues and expenditures. There are significant reserves in the enterprise funds to help replace equipment and offset any potential future rate increases for 2004. There is also an amount in the 2004 Transfers from the private capital projects fund. In 2003 this revenue source was not used, however in 2004 it will be used to help offset any additional development costs. If assistance is needed in the building department for additional staff there is a particular fund that has administrative and engineering revenues. $100,000 will be transferred back from that fund. This is existing money. Councilmember Fogarty asked if that was one-time money. Finance Director Roland replied it could be. The city charges developers for engineering and administrative services. That money does not go into the general fund it goes into this separate fund. It has a fund balance of $200,000 and grows every year. Mayor Ristow asked if that was done by other cities. He recalled there was controversy when the school board bought property with reserved money. He asked if this was money being held back or from development. Finance Director Roland replied this is strictly from development. Mayor Ristow stated to explain it to the taxpayers that we have an extra $300,000 but yet we are raising their levy, they would say to use the reserves rather than taking more from the taxpayers. Interim City Administrator Siebenaler stated this money is collected specifically for this purpose to cover overhead costs. This is responsible operation. Mayor Ristow asked what happens when the permits drop off. Finance Director Roland replied the city will do a minimum of 400 permits in 2004. Interim City Administrator Siebenaler stated if revenue does not come in we have to fall back on the fund balance or cut expenses. Councilmember Soderberg asked if there was a state limit on the enterprise fund balance. Finance Director Roland replied no. Enterprise funds exist as a business with enough revenue to cover the expenses including depreciation and future reserves for necessary infrastructure and capital outlay. The city has not raised rates in sewer, water, garbage, or storm water in at least 3- 4 years. The city is still able to cover all expenditures and provide for future needs in the enterprise fund balances. The water fund has $4 million in cash which includes money put away for a water treatment plant, water main and future projects. Finance Director Roland then reviewed expenditures for 2003 vs 2004. Expenditure increases are at an average of5%. The proposed 2004 fund balance will remain at $2.377 million or 38% of the annual expenditures. There will be no additions or deletions to the fund balance for 2004. The city will be using the same amount of revenue to cover additional expenses. Council Budget Workshop Minutes October 1, 2003 Page 3 Mayor Ristow asked if staff was projecting for new employees. Interim City Administrator Siebenaler stated they are proposing 1 position being funded by sewer and water for public works. One police officer at mid-year and if it cannot be sustained in 2005, the position will not be filled in 2004. Other positions are half-time temporary intern positions in planning and building inspections. Mayor Ristow noted Human Resources is up $29,000. Finance Director Roland replied that includes benefits and salary increases per contract. A staffperson was added in 2003. Some of the differences in personnel services has to do with where the hours have been allocated. Staff has watched over the last five years where people actually spend their time. Increases have to do with when people are hired and at what rate. A Natural Resources person was hired at the end of the third quarter, but money was budgeted for the whole year. Therefore, there is a savings. Mayor Ristow then asked about insurance premiums and if that was estimated. Finance Director Roland replied that is for the general fund portion of the insurance. There have been 10% increases in property and liability insurance for the last four years. Mayor Ristow then noted nothing was projected under public works for gas and electric. Finance Director Roland replied currently these services are allocated to the building maintenance division of the Parks department for the Central Maintenance Facility. Mayor Ristow stated the liquor store rent took a large jump. Finance Director Roland replied it is a $1500 increase. The renewal of the lease will be up in 2004. At that time staff will have to decide if they want to stay in that space. Councilmember Fogarty noted the pool salaries went from $15,000 to $27,000. Finance Director Roland replied that has to do with the hours of the full-time park and rec staff that are attributable to the pool. Parks and Recreation Director Distad stated they have found that employees are spending more time with pool activities than park and rec programs. Human Resources Director Wendlandt talked about staffing. A conservative approach has been taken when adding staff in previous years. A street and utility worker was added two years ago and this was the first one added in ten years. Staff looks at whether a position is really needed, can we get by for another year, and can the city keep the person employed in subsequent years. There were nine requests for full-time staff. There were three sergeant positions which would have been promotional opportunities. There was a request for a half-time person to go to % time and a ~ time clerical person to full-time. An analysis was done of a number of departments with cities ofa similar size. Farmington's staffis 14 people shy of the average. Part of that is due to only adding staff when needed and the staff is incredible. They are very hard-working and everyone does what it takes to get the job done. Two volunteer firefighter positions have been added for 2004. Staff will be asked to work harder and smarter. They will not get anymore help to pick up the slack. In the employee meetings, no one said we cannot do this, it was how can we do this. It might take longer to fill requests. Mayor Ristow stated he agreed and he has heard from residents that staff goes out of their way to provide service. Human Resources Director Wendlandt stated when she recommended that the police department get a sergeant and police officer, Police Chief Siebenaler did not think that was fair that his department get the staffing that was available. The Police Department could use six additional officers. Interim City Administrator Siebenaler stated the effort that has gone into this budget has been more intense than any other budget. The sacrifices that have been made in each department have been greater and have had more input than in the past. Councilmember Fitch stated if you cannot do it as fast, respond to the people and let them know when you can get to it. As long as they are Council Budget Workshop Minutes October 1, 2003 Page 4 kept in the loop, they should not have any problem understanding. Interim City Administrator Siebenaler stated staffing levels are very low. The Police Department will be at the lowest ratio of officers to population of any comparable city. They strive to have 1.1 officers/1 000 population. Farmington will fall to a ratio of .84/1000. That is tied at the lowest ratio of any city our size. They are doing things more efficiently. Public Works is also three people short of the average. Employees are constantly looking at how to do a job smarter and quicker. Residents get a better value for their dollar than any city in the state. Employees are aware of what is happening in surrounding cities and are willing to work harder. In surrounding cities, people have lost their jobs. 2004 will be the most difficult year ever. However, the city is not broke. Finance Director Roland stated the Governor is suggesting cities increase fees. Most of what he is suggesting, Farmington already does. The gas franchise agreement is up for renewal. As part of the agreement a clause is included which allows Council to make the decision to charge a franchise fee. This would be collected from all users. This money would be put aside for future street reconstruction or the pavement management program. This is an option to provide citizen services and reduce taxes at a later date. Mayor Ristow stated the only problem he sees is that you have to have gas and electricity. Ifthe city charges a fee to the gas company, they will charge it back to the residents. Staff stated this just preserves an option for the next ten years. Mayor Ristow stated he was approached by the School Board Chairman to set up a meeting with the new Superintendent and Interim City Administrator Siebenaler. Mayor Ristow would like to invite the new Superintendent to a Council Meeting. Council agreed. Councilmember Fitch stated in light of the budget and the levy, there are three important matters coming before the Council, the new City Hall, the Fire Station, and Parks and Recreation will have a proposal for a new facility. That could all come in 2004 with probable 200S tax implications. That debt is not subject to levy limits. He wants to look at the long range, big picture, big dollar items. The price tags could be between $11-12 million. Finance Director Roland did not disagree. She stated when they look at adding debt, they look at what the current debt limit is, what is falling off, and what they can reasonably afford to add. Councilmember Fitch stated there is not as much falling off as what these three projects will cost. MOTION by Soderberg, second by Fogarty to adjourn at 7:40 p.m. APIF, MOTION CARRIED. Respectfully submitted, ~' ~.:::- ~~/~~ ~<--C4::<a:~ ,,' ", <7 Cynthia Muller Executive Assistant