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HomeMy WebLinkAbout06.08.09 Work Session Minutes Council Workshop Minutes June 8, 2009 Mayor Larson called the meeting to order at 6:33 p.m. MOTION by Wilson, second by Donnelly to approve the agenda. APIF, MOTION CARRIED. Present: Larson, Donnelly, Wilson, May (arrived 6:50 p.m.), Fogarty (arrived 6:58 p.m.) Also Present: Peter Herlofsky, City Administrator; Robin Roland, Finance Director~ Brian Lindquist, Police Chief; Randy Distad, Parks and Recreation Director; Kevin Schorzman, City Engineer~ Todd Reiten, Municipal Services Director; Lisa Shadick, Administrative Services Director; Brenda Wendlandt, Human Resources Director~ Troy Corrigan, Fire Department~ Cynthia Muller, Executive Assistant 2010 Bud!!et Discussion Council adjusted the 2009 budget early in the year and also in 2008. Staff provided the worksheet given to Council previously showing options that were reviewed. Council was also given a memo showing final changes to the budget for 2009. The purpose ofthe workshop was for staff and Council to agree on objectives so staff can proceed with the budget and bring it back to Council in a way that is consistent with what Council wants. Council pre-approved budget items include: Sr. Center Loan Amount $20,000 Sf. Center Operational Costs $50,000 Additional Police Officer $65,000 School Resources Officer $30,000 Total $165,000 The additional officer is not adding another officer. One of the patrol officers was moved to the high school. The school resource officer would work 12 months, but 9 months would be reimbursed from the school. There would be three officers at the high school. State mandated items include: Total $30,000 $25,000 $25,000 $80,000 PERA Contribution Elections 20 I 0 Elections Equipment 2011 Market Value Homestead Credit $(350,000) Total 2010 Budget Issues $595,000 Council Workshop Minutes June 8, 2009 Page 2 The City levied for $9.3 million, but did not receive the $350,000 MVHC. rfthe City wants that amount, we have to levy for it. Total Levy 2009 Amount Received $9,313,415 $8,963,415 $ 350,000 Difference Staffwould like to add the $595,000 to the $9 million for the levy for 2010,2011,2012. Staffs objectives for these three years are: - No increase in levy beyond the pre-approved items and mandates. (Hold the levy to the $9.6 million). - Maintain service levels. - Maintain staffing levels. Ifwe can get a levy for $9.6 million for 2010,2011,2012 we can mange the cost and personnel. This decision is needed before personnel discussions can take place. The auditors stated at the last Council Meeting how well staff managed their budgets and how close we were to the estimates. The department heads understand their budgets, that there is limited use, and only use what they have to. Councilmember Wilson asked about the Elections equipment for 2011. Administrative Services Director Shadick explained that the County plans on updating the equipment. The number is a guess as there is usually cost sharing and the possibility of grants. Department heads have reviewed their budgets and staff feels non-personnel items can be managed very carefully over the next three years without increases. Staff is trying to not have increases in labor costs over those three years. This item would need further discussion in a closed session. Regarding revenue enhancements, staff brought back the two items mentioned earlier in the year. This includes instituting the streetlight utility for 2010,2011,2012. This would help balance out additional revenue and help with managing costs. This would amount to approximately $200,000. Council noted residents here have not wanted this. City Administrator Herlofsky stated it is another fee, but it would help with managing costs. Once things are back to normal, having this would make an excellent source for capital improvement funds and help with equipment. The second item is franchise fees. Council has been concerned with costs for seal coating. Franchise fees could be used to cover these costs. Everyone would pay including profit and non-profit. The franchise fee relates to the use of our right-of-way. It gives us more flexibility with our projects as residents would not be as concerned with projects ifthere were no out-of-pocket costs. Franchise fees would amount to $300,000. This money could also be used to offset costs in the general fund. This money would be used as revenue for seal coating and assessments would be eliminated. A feasibility report would still be done. Costs for preparing the assessment roll, mailings, and holding public hearings would be eliminated. This would take effect for 2010. Farmington is one of very few cities that still assess for seal coating. Council Workshop Minutes June 8, 2009 Page 3 Councilmember Wilson asked about Farmington's share of the joint powers agreement for seal coating. Staff noted the cost is approximately $300,000. Councilmember Wilson clarified this would be a tax on businesses, residents, and non-profits. Mayor Larson noted levy dollars can be deducted from taxes and franchise dollars cannot. (Councilmember May arrived). The budget strategy is: 2009 adopted tax levy $9,313,415 Less: MVHC unallotment (350,000) Total $8,963,415 Add: Senior Ctr Debt 20,000 Senior Ctr Operations 50,000 School Resource Officer 30,000 Police Officer (backfill) 65,000 PERA rate increase 30,000 Elections (2010) 25,000 Total $9,183,415 Add: MVHC recovery 350,000 Minimum proposed 2010 levy $9,533,415 General fund expenditures for non-personnel items should remain flat at $2.8 - $2.9 million. The streetlight utility would help with this. Regarding how this will affect City taxes, based on estimates for tax capacity, the 2009 and 20 I 0 taxes should be very close. Staff feels they can run the City for the next three years with a $9.5 - $9.6 million tax levy which should not raise property taxes over those three years. The tax rate will go up because the home values will go down, but the actual taxes levied should remain flat. We should plan on the $350,000 from the state not being available. A law was passed that does allow cities to levy back for unalloted funds with no levy limit impact. The recommendation shows levying this amount back in. (Councilmember Fogarty arrived). Councilmember Donnelly asked if the $50,000 for the senior center is above what is budgeted. Finance Director Roland replied yes, it is additional ongoing operational costs because of the size of the building, utilities, supplies, etc. that are needed to operate the new building. Councilmember Donnelly then asked if the $65,000 was an additional officer. City Administrator Herlofsky explained in order to assign another officer to the school, we have to take an officer off patrol. The net result would be one more officer in the police department, but there would be three in the school and not an addition to the number of patrol officers. Finance Director Roland explained there are two separate items. For 2009 we have a school resource Council Workshop Minutes June 8, 2009 Page 4 officer who starts in September and works to December. The City gets paid by the school for this amount of time. The position is not backfilled during this time so we are short one person during this time. Beginning 20 I 0 there is a full time school resource officer and the $30,000 is the portion the school district does not pay (summer months). The backfill officer position would be filled the first of January. Mayor Larson asked if housing values have hit bottom. Councilmember May replied no. Finance Director Roland stated the county numbers show a 7% - 15% drop in valuation on top of a flat 2009. Mayor Larson asked if money was included for the $70,000 deduction in the fire department fund. Finance Director Roland stated as the $350,000 MVHC is added back, the items cut out would be added back and that would be included. The exact dollar amount would need further discussion. Mayor Larson noted the budget for salt went over. Finance Director Roland stated we had $80,000 budgeted for it for 2009, but unless we have a major blizzard, we should be fine. Mayor Larson clarified there were no other areas that exceeded budget that we need to discuss. Finance Director Roland stated the police department went over due to the Republican National Convention and overtime, all others were under except for salt. Staffis recommending a $9.5 million budget for the next three years, the streetlight utility, and use franchise fees to cover seal coating. Staff would like a consensus from Council on this. Councilmember Fogarty stated we need permanent fixes. We have a lot of non-profits and charging them helps ease the burden on the residents and businesses. She is comfortable with the numbers, but Council needs to set some direction. Councilmember Wilson stated it was hard to give any thoughts on these numbers until we have the personnel discussion. That is the big expense side. It is easy to say housing prices are falling so lets put on a new tax because the residents will not notice. At some point the economy will turn around and governments are not too eager to remove a fee once it is on the tax rolls. Councilmember May asked if there was a way to not replace the police officer position and reduce the force by one. City Administrator Herlofsky noted that is a Council decision, but staff is not recommending it. Councilmember Fogarty stated Council has not set any goals or priorities and she would not entertain any kind of staff reduction until Council knows what they want. City Administrator Herlofsky stated there were three objectives given; no increase in the levy beyond pre-approved items and mandates, maintain service levels, and maintain staff levels. If Council wants to change those, then staff needs to know. Councilmembers stated they did not know what they wanted. Police Chief Lindquist stated if we do not replace the patrol officer, then the school will only have two officers. He cannot be short on patrol. With Farmington's population of 22,000, we have 1.09 officers per 1,000 residents. This is the fifth lowest in the county. Councilmember May felt our population is not growing. Finance Director Roland noted we are still issuing C.Oo's, and the population number is increased once that is issued. Councilmember May stated nothing talks about any cuts. To her there is still a rate increase. It is only because the values are going down that the taxes will not go up. Finance Director Roland agreed, however the City lived for many years on the growth and valuation to take advantage of the growth to levy what we needed to run the City. The question becomes, how much money do we need to run the City. That is what we have put forward. We are not talking about expenditure cuts, because we have already done expenditure cuts in 2009. That is what we are using as the base; the revised 2009 budget. The debt levy of $2.1 - 2.2 million is stable for the Council Workshop Minutes June 8, 2009 Page 5 next three years. That is on buildings and road projects and counts on Vermillion River Crossings to produce actual taxable properties so we have assessments to pay the bonds. If the assessments do not come in, we will have to talk about levying taxes to cover the cost of the bonds. City Administrator Herlofsky stated we are not proposing any cuts in service and are trying to maintain the same staffing level. If Council wants to change that, that is why we are bringing it up. The spreadsheet from earlier in the year shows we did cut some things from the budget. There will be requests for some of those items to go back in. We have a reduced staff in Parks and Recreation. We have not met with the union and have been encouraging them to meet regarding 80% of our operations, which is staffing. Our objective is to meet with the union to find a way to maintain the same number of people based on the limitations and direction from Council. Contract negotiations would be for 2010,2011,2012. At $9.5 million or $9.6 million we may have to come back to Council and say it cannot be done. We are trying to find a number to use as a target and get some consensus from Council. Finance Director Roland stated the capital outlay number is at the same level as 2009 and is for two squad cars. Every other piece of equipment would be put off until after 2012. Councilmember Wilson asked what year we should watch for Fairhill. Finance Director Roland stated 2011 was the first year we anticipated seeing it come forward and they are still on track. If development does not occur, the property owner is liable for the assessments for the road which is $5 million. Councilmember May stated the feeling of the public is the home value went down, so the taxes should go down. She wanted to make sure we are looking at everything from the cleaning contract to the number of officers we have. She wanted some good discussion on cutting as much as we can. Mayor Larson felt we can start with the $9.5 million. He did not like to see the values go down and the taxes stay the same. He asked if there is any equipment that must be replaced in the Fire Department. Mr. Corrigan explained the standards are updated every three years, but we deal with the current equipment until it is replaced. There has been equipment in the budget that keeps getting pushed back. Just because standards change, we do not need to buy new equipment now. City Administrator Herlofsky stated he would still like to see a full time Fire Chief in the next two-three years if there is some turnaround in the economy. Councilmember Wilson asked if there are other areas for grant opportunities. City Administrator Herlofsky stated we are doing an adequate job now, but that is something where we could take more time. Finance Director Roland noted grants are great, but in three years if we need to replace the item, the money is not there. Mayor Larson asked about the pumper trucks and if they need to be replaced. Mr. Corrigan noted there are two trucks and that is one of the items that has been in the capital outlay budget for a number of years. One is a 1993 and the other is a 200 I. We need to look at how we purchase the vehicles and how they are made. City Administrator Herlofsky stated if Council wants to set aside money each year for capital outlay for the Fire Department, we can look at that. Councilmember Donnelly noted regarding the additional officer, there will be another 500 kids at the new high school, not another 500 kids being added to the district. Police Chief Lindquist Council Workshop Minutes June 8, 2009 Page 6 stated Dr. Meeks requested a third school resource officer and not backfill a patrol officer. We did that for four months. The school wants a third officer to address programs that are not being addressed. If we do not fill the position for an additional officer, we cannot provide a third officer for the school. Councilmember Donnelly stated the money still comes from the same taxpayers, whether it goes to the school or the City. Finance Director Roland noted the City has a much smaller tax base than the school. Councilmember Donnelly asked regarding the franchise fee, what does $100,000 of taxes cost on a house. City Engineer Schorzman stated it is a $16 increase using the seal coat dollars divided by the number of households. Councilmember May noted we talked about the operations of the new senior center and that they would be able to cover the increased costs. Parks and Recreation Director Distad stated it was discussed to look at fees, but it was not determined if costs would be covered. City Administrator Herlofsky stated there was an arrangement that they would do their best to try to cover the $20,000 they were required to. If after the first year they raise their fees and cover the costs, then this would be reduced. Councilmember May stated if the number is there and you increase the tax rate, the money is there. It does not provide as much incentive if the money is not there. City Administrator Herlofsky stated if we do not put it there and we have the expense, the cost is there. Councilmember May replied then it is back to the discussion about cuts, if we are only looking at making sure the extra money is there in case instead of taking a more proactive approach and saying the money is not there. Finance Director Roland clarified so you do not want them to levy for the money, you want them to run into a deficit because you won't close the senior center after we have built a new one. They are going into a bigger building with significant cost increases, but you want to budget at the same level it is in a smaller building. What if they cannot meet that? Councilmember May stated that is forcing their hand because she wants to see them do their best. There was discussion we would look at raising fees and has there been any discussion about selling the building. City Administrator Herlofsky stated we are still working on that. The pool costs us $75,000 to operate over and above expenses. Do we cut that or cut a police officer? The other concern is between the ice arena and the pool; those are not new facilities. If something breaks down with either one ofthem, we will be ill prepared to cover those costs. What may look like a generous budget, is not put together to be generous. It is trying to take care of our concerns. The previous Council's main objective was to increase the fund balance. We increased it in 2006 and 2007 by adopting a budget that was reasonable, and the money that was left increased the fund balance. If Council has something they want to take out, that is their choice. Councilmember May stated the $50,000 is the same number we talked about when going over there. City Administrator Herlofsky stated it would be more wrong to not put the number in. Councilmember May asked if there were any plans to raise the fees and generate more income to offset the $50,000. City Administrator Herlofsky stated the people in charge of doing the plans to raise the $50,000 are not under his influence so until he sees the number he has a hard time not putting that number in for Council to consider. Mayor Larson felt that discussion needs to take place at the goal setting. Councilmember Fogarty stated we have to have a plan and give staff a direction. Councilmember Wilson stated strong supporters of the senior center thought the $50,000 was a drop in the bucket. He is thrilled with the senior center, but this is why he was concerned with the financing. It is wise to have it has a place holder to show this is the amount we have to account for. Councilmember Donnelly stated a goal could be it becomes self-sufficient in three years or shuts down. Another Council Workshop Minutes June 8, 2009 Page 7 could be is it our goal to cut taxes or stay at the same level or maintain services. That is what we need to determine. Mayor Larson stated the $9.5 million is where we have to be for now until we can decide as a group. He asked how Councilmembers feel about the franchise fees and streetlight utility. Councilmember Wilson was open to some of them, but we need to discuss the policy and goals behind them. Ideally he would levy for neither one. The fact that the seal coating is unbalanced he would be open to a way to make it more predictable, but right now he would not support either one. Councilmember Fogarty noted there have been very few complaints regarding seal coating. Mayor Larson asked about the streetlight utility and taking the $200,000 out of the general fund and paying for it with the fees. Councilmember Fogarty stated it is a permanent fix. She would like to have a sunset on it after two or three years where it goes to a specific fund such as EDA, Park and Rec, etc. Councilmember May said it is a flat no. She did voice concerns over the inequity of the assessments and would maybe look at that. She was not in support of adding a fee. City Engineer Schorzman stated this is one way to distribute the seal coat costs evenly. There have been more complaints this year internally. He looked at it as whether it is an assessment once every seven years or is it a flat fee every month, you are not increasing the taxes, you are changing the way the money comes in. The cost to the City of just going through the assessment process on the seal coat is substantially higher as a proportion of the cost of the project than it is on a reconstruct or a higher dollar project, because it costs the same amount of money to do the seal coat assessment as it does on the other projects. It would reduce the costs and not have the residents pay any more than they do every seven years. It would reduce the mailings, staff time, public hearings, etc. City Administrator Herlofsky stated if Council were willing to raise the taxes $6/year to pay for the seal coating, that is something we could work with. Finance Director Roland stated Council could raise the levy to cover the cost of seal coating every year, or institute a franchise fee, or assess it. If it were on the tax statement it could be deducted from the federal and state income tax. As an assessment you cannot. Councilmember Fogarty would like this laid out financially. Stratee:ic Plannine: Council discussed when to have a strategic planning session. Council did not want to spend time doing the SWOT analysis and wanted to get down to specific budget items. It was decided to hold the session on Monday, July 13, from 6:30 - 10:00 p.m. and Wednesday, July 15, from 2:00 - 6:00 p.m. Staffwill research locations and cost. MOTION by Wilson, second by Fogarty to adjourn at 8:21 p.m. APIF, MOTION CARRIED. Respectfully submitted, /i // ./.4" c;." ~ ?-r/~ ~a Muller Executive Assistant