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HomeMy WebLinkAbout08.26.09 Work Session Minutes Council Workshop Minutes August 26, 2009 Mayor Larson called the workshop to order at 5 :00 p.m. Members Present: Larson, Fogarty, May, Wilson (arrived 5:04 p.m.), Donnelly (arrived 6:23 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; Cynthia Muller, Executive Assistant Audience: Dave Pritzlaff, Shannon Walsh MOTION by Fogarty, second by May to approve the agenda. APIF, MOTION CARRIED. The purpose of the workshop was to discuss the 2010 budget. City Administrator Herlofsky stated the 2010 budget is an attempt to continue with the current service level. It includes: - A street light utility. The cost of the street lights will be part of the utility fund and they have been removed from the general fund. - Regarding personnel, management has not met with the bargaining units yet, but the current budget does not include any salary schedule changes for AFSCME. The Police Department is already settled for 2010. Management will be meeting with AFSCME in late September. If during 2010, employees are eligible for a step increase, they will be receiving that on their anniversary date. There is no reduction in staff. There is one increase in staff for a School Resource Officer that was added in 2009. (Councilmember Wilson arrived). Staff took the 2009 budget and moved it over to 2010. All department heads were asked to look at all non-personnel costs and keep them the same for 2010, 2011, 2012; this includes supplies, etc. We have started with Council by sending mailings electronically rather than delivering paper copies. The next meeting on the budget will be the September 8, 2009, Council meeting. Council will be asked to set the levy amount for 2010. After that, the levy amount can be lowered, but it cannot be raised. Finance Director Roland distributed some replacement pages to the budget. After the preliminary budget was distributed, the county provided the fiscal disparities distribution number. The new pages reflect those changes. Because the City participates in the fiscal disparities pool because of our level of commercial/industrial development, the City receives money from the pool. We pay in a value to the pool, but we receive money back. The pages to Council Workshop Minutes August 26, 2009 Page 2 be replaced include pages 13, 15,36,39 and 40. She also distributed an example of five properties showing values for 2010 and what the proposed tax levy would do to the taxes. Property values are declining in 2010 and the resulting request for the tax levy makes a $30- $40/year change to the property tax. This would replace page ii in the front of the budget. The first page of the property tax levy, proposed 2010 compared to certified 2009 which is before the $350,000 adjustment, the actual amount going to the general fund would be less than $20,000 more in 2010. City Administrator Herlofsky noted the levy does include the $350,000 in market value homestead credit we lost in 2009. We do not want to dip into the fund balance as a means of satisfying the budget. Finance Director Roland explained you have to levy the MVHC back in order for the State to take it away. This is according to statute. If it is not levied, the State will take another $350,000 off what the City levies. This makes it look like the City is raising the levy by 5%, which in reality it is being raised by 2%. Mayor Larson recalled a letter was received from the State that they would take $308,000 next year and $411,000 the year after. Finance Director Roland clarified the State will take $308,000 in 2009. The revised amount in the budget for property taxes MVHC, 2009 revised, is the difference between the $350,000 already taken from the general fund and the $308,000. In 2010 it will be there and available when the State takes away the other $350,000. The $411,000 was based on an assumption of what the City will levy. What the State pays in MVHC is based on what the City actually levies. City Administrator Herlofsky stated the budget includes sufficient money for staffing of the Police Department at the level Council wished to have it staffed. Councilmember May thought we were to have an additional SRO. Finance Director Roland stated that is for 2009. Weare adding an SRO for 2009 for four months. There is a patrol position that will move to an SRO for four months and the patrol position will be open during that time. At the beginning of 20 1 0, we will have the SRO position from 2009 and we will backfill the empty patrol position. So a third SRO position was added for 2009 with the understanding the patrol officer position would not be filled in 2009. City Administrator Herlofsky noted this was approved by a prior Council. Finance Director Roland noted we are not adding an officer in 2010, we are backfilling. City Administrator Herlofsky noted there are 12 patrol officers and 2 SRO officers. The plan for 2009 was to have 11 patrol officers and 3 SRO's until January 1,2010. After January 1, we will have 12 patrol officers and 3 SRO's. Councilmember May noted then we are adding a position. The school district pays for 10 months of the SRO position. This was an indication from prior Council, but it still needs to be approved by this Council for 2010. Councilmember Fogarty met with staff prior to the meeting regarding her questions. One issue was under legislative where one of the biggest expenses was the amount of paper we generate. Council has not discussed eliminating the paper Council receives, deliver information electronically, and have laptops issued to Councilmembers. Staff felt that would pay for itself within a year or two. There are certain larger documents, Council would still have to receive, but it would eliminate an officer having to deliver packets and the paper we generate. Mayor Larson was in favor of this. Councilmember Wilson stated there is no way he would support Councilmembers receiving laptops. Councilmember Fogarty was looking to save money. Regarding the Fire Department, Councilmember Fogarty asked how many firefighters we need to train in 2010. Fire Chief Pietsch stated there are six openings now and there could be another 6-8 openings. Staff is in the process now of filling those openings. Councilmember Fogarty Council Workshop Minutes August 26, 2009 Page 3 noted there is a big increase in training, but training for them is a necessity. The amount of training goes from $8,000 to $21,000. Finance Director Roland noted with the new individuals we have to replace the turnout gear. This was originally funded by a grant, but when it wears out we have to replace it. City Administrator Herlofsky noted the fire pension aid is $61,058. Councilmember Fogarty stated we will have to discuss the street light utility. A large portion of the City is tax-exempt. Those properties would be paying for some of the things they have access to. Finance Director Roland stated the street light utility amounts to $2/month/utility account. There are 6,000 utility accounts. The levy being presented is under the levy limit. Mayor Larson asked ifthe unallotment (the $350,000) is subject to levy limits. It is outside of levy limits. Finance Director Roland noted we could levy the $350,000 we will lose for 2009, but we could also levy back the $174,000 from 2008, but we have not gone that far as we wanted to limit the amount of the levy. Councilmember Wilson asked for an explanation on the market value homestead credit. Finance Director Roland explained MVHC is a State grant where the State pays the City for a portion of the taxes that are levied in the City. Instead of the money coming from the County, it comes from the State. If the State decides not to pay their portion, the County will not pay us for it when they collect it, so the State keeps their money. Councilmember May recalled that money was not supposed to be budgeted. Knowing that it mayor may not come to fruition, to build that into the budget as money we plan on spending, it is there but it is not money we will actually spend so we are doubling it so we do have the money. City Administrator Herlofsky stated the law still exists that we do it this way, but the State has reneged on their portion. Councilmember May recalled there was a document saying we should not include that number in the budget. Councilmember Wilson stated the reason to add it in is to cover it when it is taken away. Councilmember May stated the other answer is to reduce the spending rather than bump everything up. City Administrator Herlofsky replied is it staffs duty to inform Council if they want to maintain services, this is a way to do that. The option is up to Council. Councilmember Wilson read that the stated salaries for 2010 minus LELS are flat. The LELS portion is $142,700. Finance Director Roland stated 2010 includes LELS and a number of people during 2009 received step increases because they are part of the contract. That is also included. The step increases that were not necessarily fully there for 2009 are fully there for 2010. The budget includes partially the LELS increase and partially the result of everyone who had steps. The LELS consideration is $81,363. Councilmember Wilson asked what the tax rate would be if the $350,000 was not in the budget. He was open to looking at the $155,000 for the street utility. He asked within the general fund expenditures, where would that expense have come from. Staff replied it would be part of the tax levy and part of the general fund under Municipal Services, street lights and signals. If the $350,000 were not in the budget, the tax rate would be 48.5%. Councilmember Wilson asked what the average resident would have paid with the street lights left in the budget. Staff will review this and provide to Council. In order to support this, Councilmember Wilson wanted to know what the resident impact would have been before the street light utility. He did not feel 100% comfortable with taking advantage of the market reality by having increased spending. City Administrator Herlofsky noted in 2009 we balanced the budget by having employee furloughs, taking money from the fire contribution, and reducing part-time staff. These were one time events. Right now, we do not have a furlough in the 2010 budget. We do have a contribution to the fire relief and putting some part-time positions back in. Council Workshop Minutes August 26, 2009 Page 4 Councilmember Wilson felt comparing our neighboring communities we are not competitive as a package including the City, school, and county. Finance Director Roland felt those cities will see a significant jump in tax rates because of the same issues with MVHC on a much higher level. City Administrator Herlofsky noted in looking at 2006 - 2010 there is $1 OO/year or $8/month difference in taxes during this time. Councilmember Wilson was looking at people who have lost their jobs, where $40/year is 10 gallons of milk. Finance Director Roland stated we cut where we could, did not ask for additional programs, and did not add back items cut in 2009. There are some professional services, such as legal services, we have no control over. Much of the budget is static because of the services we provide. Councilmember Wilson asked if there was a way to prevent the financial situation that happened this year. Fire Chief Pietsch said it was just the perfect storm as far as the activity with the fire pension. The market went down even though they did a goodjob of managing the funds. At one point they were 130% funded. There is no increase to the fund for 2010. City Administrator Herlofsky noted at December 31, the market was at its low point. With the economy starting to come back, they will see an increase. Finance Director Roland added the fire relief is allowed to invest in funds the City cannot. Councilmember May thought this would be more of a summary meeting and that department heads would make presentations on their budgets. She did not support the street light utility and felt it was an addition that would not go away. It was confusing that there are no salary increases, but the steps will be in place. City Administrator Herlofsky stated the Police Department will have a salary schedule adjustment as well as steps. For AFSCME employees staff is proposing there be no salary schedule adjustment but there will be steps. From a comparable worth issue, if you freeze it that means people will not get credit for the year of service on their schedule. Councilmember May would be in favor of a freeze. City Administrator Herlofsky stated other local units of government are doing it the way we are suggesting. Finance Director Roland stated the step increases only affect four people who are not at their mid-point which is the point at which steps stop. Councilmember May stated that was the perception last year, and then the increases were larger. City Administrator Herlofsky stated the difference in the dollar amount between 2009 and 2010 also has to be factored in when looking at the total payroll. There is a $100,000 reduction in the payroll in 2009 due to the furlough during the summer. Finance Director Roland stated we will run into problems statutorily if we do not do the step process because of comparable worth. Human Resources Director Wendlandt stated it depends on if it affects more women than men. If more men than women are at their mid-point and we freeze everyone, it could throw us out of compliance with pay equity laws. City Administrator Herlofsky stated there should not have been any miscommunication regarding 2009 or the original plan in 2008. We had employment agreements which are the basis for the payment of employees. For 2009 it is based on the AFSCME contract and the LELS contract. Councilmember May was in favor of looking at staff reductions. It goes in line with reducing services. The community is in a holding pattern and we need to be prudent. She does not like the worksheet that shows the taxes only need to go up $5. It is not getting down to the nitty gritty of spending. She was more in favor of looking at hard core ways to reduce spending and cut the budget. She asked if we have looked at the cleaning contract for City Hall as that number was rather large. Finance Director Roland asked how City Hall would be cleaned if we do not have a cleaning contract. Councilmember May replied she did not say not to have a cleaning contract, but not have it cleaned as often or have staff do some Council Workshop Minutes August 26, 2009 Page 5 of it. Finance Director Roland stated you are also talking about staffing reductions so you would have less staff to do the things you are asking the cleaning company not to do. We have looked at other companies and tried the RFP process. There are no other companies that proposed lower than what we have. Administrative Services Director Shadick stated we have not done the RFP process yet and have not received estimated bids. City Administrator Herlofsky stated we have brought in a proposed levy and are asking Council for an indication of whether it is appropriate. If Council is uncomfortable with a certain levy amount, and if the objective is to maintain services, staff would like to have some indication of the level of services Council would like to have performed. Councilmember Wilson felt it was too late in the process to prioritize what services are important to residents. City Administrator Herlofsky stated we are looking at a budget of $9.3 million and the Police Department is $3.8 million so 40% of the budget is public safety. The budget shows what percentage of expenditures are in each area. Councilmember Wilson suggested prioritizing people that do jobs here. Staff is expensive and valuable. City Administrator Herlofsky noted 80% of the budget is people. Councilmember May noted the Chief mentioned if he cannot get the officer position filled, he would not add a School Resource Officer. She was not convinced we need to add an officer at this time. Police Chief Lindquist stated the request is made by the school to have three School Resource Officers. To fill that position, he has to move someone from a dedicated spot on the road. In doing that it decreases the manpower needs for the rest of the City. He cannot eliminate one from the road and continue to provide officer safety, coverage for training, etc. There are some cities that are adding officers and some are not filling retirement spots, but they may have 50 -75 officers on the road. We have 12 officers on the road. Reducing one position is a greater impact than it would be for Apple Valley or Lakeville. City Administrator Herlofsky stated you need five people to have one person available 24 hours 7 days a week. With 12 officers the highest strength would be 2 officers. Finance Director Roland noted a reduction in one Police Officer also has the affect of increasing the amount of overtime. It may reduce a staff person, but you have additional overtime at time and a half. Councilmember May noted the budget shows the same amount of overtime and asked who makes up the bulk of the overtime. Staff replied the Police Department and some Municipal Services for issues such as a water main break and also snow plowing. City Administrator Herlofsky stated overtime for the Police patrol is $82,000. Councilmember May asked ifit would make sense to add a police officer to eliminate overtime. Police Chief Lindquist replied no, there would still be court time, training, etc. Councilmember May asked about the numbers on individual budgets not equaling the numbers on the summary page. Staff noted those numbers should just equal the numbers from the general fund, not the special revenue or debt service funds. Councilmember May asked about the investment income noting the 2009 revised is $289,000 and for 2010 it is $285,000 and asked if that was realistic based on the investment world. Finance Director Roland expects the City to fulfill the budget interest. Councilmember May would prefer a more conservative approach. Staff noted the problem is if we do not use that, then we need more tax levy to balance the budget or there needs to be other cuts. Finance Director Roland's budget strategy for revenues is to evaluate as much history as possible over the last ten years. The amount of total interest Council Workshop Minutes August 26, 2009 Page 6 citywide, is a number consistent with revenue estimates from prior years. Councilmember May felt the 2010 outlook for interest income is not that good. She noticed the electric is a significant drop. Finance Director Roland stated that drop is street lights that go to the street light utility. Councilmember Wilson stated that is why he did not want to support a new expenditure with the previous allocation still in the budget. Staff has learned that the electric rate class will decline in 2010 and beyond. Councilmember Wilson noted there is $43,800 of new revenue coming in from the SRO. Staff noted that is for 10 months of three SRO positions including salaries and benefits. Councilmember Wilson stated we are spending $60,000 because of the person remaining on staff and that would explain the difference between the expenditure and the revenue coming in. Staff stated that is the net effect. The revenue amount is the amount ofthree SRO's plus benefits, divided by 12, times 10 months equals the $235,000. The three officers' salaries and benefits are included in the 1052 division statement. The $30,000 reflects the net of the revenue and expenditure, but the officer replacement, because there is no revenue with that, is the increase to salaries and benefits. (Councilmember Donnelly arrived). Mayor Larson asked what the SRO's do for the other two months they are not used at the school. Police Chief Lindquist stated they come back to the Police Department and are assigned to investigations or to cover other shifts, etc. Councilmember Wilson asked if the employee benefits line item includes health and dental insurance premiums. Human Resources Director Wendlandt replied yes and other than LELS contracts that are settled, staff does not anticipate providing more dollars for employee benefits. For health insurance there is a 15.68% increase and dental is approximately a 2.5% increase. Councilmember Wilson asked if there will be a change in the plan design or will employee costs increase. Staff replied they have to negotiate that. Councilmember Wilson felt the 2.3% in the line item of employee benefits is a low percentage. He asked if Council could see comments coming back in a couple months to increase the amount in that line item. Staff did not think so. Councilmember Wilson was concerned there may be a budget adjustment mid-year. Finance Director Roland stated the budget currently includes the 2009 level of contribution with the exception of LELS and the Sergeants where we are required by contract to split the difference of the increase. Mayor Larson noted when they were looking at reducing the 2009 budget, employees had provided a list of options to reduce costs and asked if staff has reviewed the list. Human Resources Director Wendlandt replied they looked at tuition reimbursement and schools and conferences and a number of other items. Mayor Larson stated the street light utility makes sense as far as what residents pay now and would support it. He asked what it costs for snow plowing and recalled the budget was $100,000 over for salt last year. He asked if it would save any if we plowed at 3 inches rather than 2 inches. Municipal Services Director Reiten stated you still have to make a call. Some residents will like it and some won't. If you don't plow, you have packed snow, it becomes bumpy and you have to clean it with the grater which damages the seal coating. Flagstaff A venue has added a lot of problems and we will be adding 19Sth Street Council Workshop Minutes August 26, 2009 Page 7 this year. Finance Director Roland noted regarding the list of employee ideas, they have reduced or eliminated the college tuition reimbursement, we have frozen supplies at the 2009 level, we have discussed the concept of e-mailing Council and commission packets rather than printing them, we have left the printing and mailing costs at the same level as 2009, we are keeping the publications at the same level as 2009, we already participate in the programs for electricity savings. Employees suggested eliminating the mileage reimbursement for staff having access to a City vehicle or allow all employees to use City vehicles, we encourage staff to use City vehicles whenever they can and they do; they suggested eliminating Nextel phones and eliminate reimbursement of personal cell phone use for work related issues, the people reimbursed for cell phone use do not have a City cell phone and they find it necessary to have one. Nextel phones in a year's time saved the City the salary and benefits of one person. Employees suggested incentives for early retirement, but that is more cost prohibitive because of the additional severance we are required to payout under City policy. Also on the list was to reduce postage costs and suggested using more e-mail. That is something we continually do. We are unable to eliminate certified mailings for weed notices as we are required to pay for those by statute. Employees also looked at different ways to do furloughs. We do not have furloughs in the 2010 budget. Councilmember Donnelly asked about the street light utility. Staff will research this to determine if residents are paying for street lights more through taxes or through a street light utility and determine the least expensive method. Councilmember May stated why do it if it is not bringing more money to the table, so why bother. Staff explained it brings more resources. Councilmember Fogarty stated a street light utility allows tax exempt properties to contribute. Councilmember May stated you are collecting from the street light utility and still collecting money from the levy so you are collecting from two pots instead of one. Now it can be allocated to different areas. That is why she is not in favor of it. It is a fee, an added tax. Staff noted it amounts to $24/year/account. Councilmember Wilson explained he is for it because instead of paying $24/year, the residents under the levy may have paid $30/year. The Council will need to set the levy, not the budget, at the September 8, 2009, Council meeting. The budget is approved between November 24 - December 28. There will not be a truth-in- taxation hearing this year as the laws have changed. Staff will announce a date when the budget will be discussed after November 24, at a Council meeting where public comment will be taken. Once public comment is taken, the budget can be voted on and approved that same night. Councilmember Fogarty would like to see the budget presented at the December 7, 2009, Council meeting and take comments from the public. Councilmember Donnelly felt the debt service seems high at 21.4% of the levy. Finance Director Roland explained that is because we are a growing community and building things. We are in the process of looking at refinancing the debt that was issued to build the Central Maintenance Facility and Police Station. We could save in excess of $150,000 over the term of the debt service and would reduce the payments. Councilmember Donnelly noted there is a transfer in of $52,005 and asked where that came from. Finance Director Roland explained it is from the County. It is the bonds for 195th Street and the County is making our debt service payment. After five years, the developer will take over through special assessments on the Fairhill property and they will pay the debt services. Council Workshop Minutes August 26, 2009 Page 8 Councilmember Wilson would like to neutralize the $350,000 as much as possible, and suggested reducing the work week to 36 hours throughout the entire year. He asked about the financial impact and if it is allowed. As an offset, consideration could be increasing the employee benefit contribution. He also asked if a work week reduction is considered a furlough ifit is permanent. Human Resources Director Wendlandt noted we could go to 36 hours, but that would reduce the hours of operation. Staff noted it may result in some overtime. Mayor Larson asked Council if they were comfortable with no change in services and no personnel changes, no staff reductions. Are we comfortable saying our services should not go down? City Administrator Herlofsky stated we have approximately 100 full-time employees. If we cut 10% that is the same as eliminating 10 people to do the work. Councilmember Wilson asked what do we define as services. He wants his water to go on, wants his streets plowed, garbage picked up, parks mowed and trails groomed. He would not mind holding a Town Hall meeting to find out what services people want. Councilmember Fogarty stated there was a survey done several years go and residents would rather see a reduction in services than an increase in taxes. Even with a 36-hour week she did not notice any disruption in garbage service. Municipal Services Director Reiten stated scheduling was more difficult to cover shifts. At times we had to pull someone from the Streets division to cover. Councilmember Fogarty stated maybe we need to consider it for the summer. Municipal Services Director Reiten stated staff has been waiting for the 40-hour week to get things done such as pumping the catch basins for NPDS requirements, repair 40 manholes that have sunk, there is a huge map of tree trimming that has not been touched, and to catch up on televising and sewer vacuuming that was not done last year. We had to prioritize what is most important. Councilmember Fogarty noted it is critical for Council to know these things. City Administrator Herlofsky noted we have streets, parks and sanitation workers that have worked out their schedules to get things done. City Engineer Schorzman stated no one has seen these things yet. We have several drainage issues we have not been able to get to and those things will continue to pile up as we continue to just do priorities. Municipal Services Director Reiten stated we were on a schedule to replace vehicles at a certain point and now over the past couple years that has gone away. It is hard to see we were on a maintenance program and now those costs will go up as there is no capital outlay. All employees working here are so dedicated and it is not their mentality to not go the extra mile to get work done. City Administrator Herlofsky stated he has to make sure employees leave on time because they are trying to get things done. Eventually we have to tell Council this is all we can do and some things will have to wait. This is one of the few places where at 4:30 you do not see a rush to the door because they are wrapping things up. A 36-hour week is not a 36-hour week for managers; they are still working more than that. Some say that is why they get paid what they do, but they do that plus a little extra. They get that same thing from the people who work for them. There is a great group of guys at the Maintenance Facility; they do that little extra. Councilmember Fogarty stated it is important Council knows things are not getting done. She was completely unaware of this. The problem is someone will finally call Council and it will be our fault because we cut back your resources and were not aware of the consequences. That may not change the outcome, but we will know the scope of what we are doing. That has been missing from the conversation. Council Workshop Minutes August 26, 2009 Page 9 Finance Director Roland noted one of the things that does not get done on time is billing. The utility bills may show up on the 2nd or 3rd of the month rather than the 15t ofthe month. Last week we sent out 1,000 certification letters. The receptionists and clerical help from Engineering spent two days stuffing envelopes to get them out in the mail and Finance had to generate the letters. That put billing on the back burner. Once the letters were received, the voice mail was full Monday morning. Employees are working only 36 hours a week. City Administrator Herlofsky stated IT is 2 people, and one of those is Human Resources. We have a receptionist learning payroll as a backup. Weare trying to make sure there is backup without adding people. Councilmember Wilson stated he cares very much about the City employees and the welfare of the City. When he calls with questions he gets great answers. The reality is revenues have decreased because we are not building homes. We have Vermillion River Crossings waiting for businesses. Residents have said reduce my services; I have lost my job. He has to balance the fact people in the community are going from two incomes to one and $30-$40 a year is gallons of milk or boxes of cereal. r lis decisions do not reflect that he does not appreciate everything everyone does. He looks at the average resident and their 401K values have decreased and they have lost their jobs. Issues are causing a lot of re-prioritization. He does not see that in this budget. He is open to the street light utility because a similar amount is shifted to a more constant revenue source. Councilmember Donnelly asked about the $350,000 levy. Finance Director Roland explained that is the Market Value Homestead Credit which we have to levy even though we will not receive it. Residents will not see it as a credit on their tax statement. Dave Pritzlaff commented the City did not receive $175,000 in 2008, and $350,000 in 2009 and 2010. In 2004-2008 he felt it was not explained to Council that we need to put up $350,000 and then get it back. At the end of 2008 we were told the State would not give us the $175,000, now we put $350,000 in the 2009 and 2010 budgets. He asked about the $25,000 requested from CEEF as the article in the newspaper says the bills will be paid. The levy has to be approved by September 15, and Mr. Pritzlaff recalled last year Council called a special meeting. It does not have to be approved on September 8. He suggested an option for the budget is to have a furlough for the whole year rather than four months, or the City shuts down for one day a month. Regarding the street light utility, he thought a public hearing was required. By putting that in the budget now, no matter what happens with public comment the decision has already been made. If it is not approved at a public hearing, are the lights turned off? If it is not approved, the money is already in the budget for the lights to be left on. Finance Director Roland stated the money is not there, it is out of the general fund and is not there twice. Councilmember Wilson asked that when staff obtains the information on the amount residents pay through taxes or through a street light utility that it also be given to Mr. Pritzlaff. Finance Director Roland will also determine if a public hearing is required. Mr. Pritzlaff noted of the five properties shown on the worksheet with the 5% increase, the second property is just under $100 more per year. Whether it is the City or the school district, it all adds up. Just for this property it would be $100 more per year to the City, not taking into account tax hikes from the district or the county. He felt it needs to be trimmed. Council Workshop Minutes August 26, 2009 Page 10 Councilmember Donnelly noted after we set the preliminary levy, we can lower it, but not raise it. Finance Director Roland explained if Council approves a levy that has the street light utility as a separate item and then decided to put the street lights back in the general fund, we would have to find $155,000 elsewhere in the general fund budget to cut. She agreed that the actual deadline that the levy has to go to the County is September 15. For efficiency we put it on the first Council meeting in September. Councilmember May stated we had this meeting and throw out our thoughts, but what changes. There are no opportunities to introduce any changes. She understood the budget does not have to be approved until December, but she is used to starting at a lower number and work from there. She was logistically trying to figure out how Council can make some changes if they decide to do so and she did not see how this process does that. She thought Council would have some opportunity during the strategic planning workshops. Now they are running out of time. Nothing will change before September 8. Police Chief Lindquist explained the Police Department budget stating 80% of his budget is personnel. The budget presented was bare bones. Staff has already gone through the process of cutting and is presenting to Council the leanest version they can. He would rather hear from Council to cut 10% somewhere rather than have a directive towards a specific act. That would be impossible to control. We have not left anything that can be easily removed from the budget without some ramifications to the City throughout the year. Councilmember May stated that is from the perspective of the department heads. Council represents the taxpayers. Staff may think it is bare bones, but the taxpayer may not see it that way. City Administrator Herlofsky stated because of the State, we have to adopt the levy in September. From September we can meet as many times as Council wants until December to go through whatever detail Council wants. We can reduce the levy. The public is invited to comment in November. If Councilmembers want to meet privately, we can do that also. We have done our part. This is the kick-off for Council. Councilmember May stated revenues are down. How do we deal with that reality and hand a bigger bill to the taxpayers? City Administrator Herlofsky noted last year we cut $350,000. Now we did short and long term items and cut $350,000. Mayor Larson asked Council where they would like to see the levy. Finance Director Roland stated we do not have another meeting scheduled before September 8, and staff is proposing to put this forward. rf Council decides on September 8, they want a different number, the resolution will have to be changed at that time. Councilmember May asked why start higher when the ultimate goal is to reduce it? Mayor Larson asked Council if they want a 5% or 2% increase. Councilmember May wanted a 2% increase. Mayor Larson suggested taking this to the meeting on September 8, and reduce it along the way. What else can the State take? rfwe reduce it too much, we are in trouble. Councilmember Fogarty was comfortable with the budget. She was not willing to touch public safety. Councilmember Donnelly asked about the 5%. Finance Director Roland replied the 5% is the total levy increase, but we will not get $350,000 of that, so the actual increase is 2%. The unallotment is included in the 5% increase. In 2009, there was a certified levy in the general fund of $5.8 million. Staff is proposing for 2010 the same number. The difference comes in the Fire levy, which is an increase of$125,000, and the $350,000 that we will not get is the special levy. The general fund number stays approximately the same, the debt service number stays the same, the Fire levy goes up $125,000, and we get Council Workshop Minutes August 26, 2009 Page I I $100,000 more from fiscal disparities. City Administrator Herlofsky explained the Council's main objective last year was to maintain the fund balance. We are still following up on that. If we try to maintain services, we will have to use the fund balance. If Council wants to reduce services, then we can maintain the fund balance. Councilmember Donnelly was comfortable with the preliminary levy. Councilmember Wilson will support it now, but not in December. He noted every year we get a number and talk about a number. We have never talked about priorities. $100,000 or $350,000 does nothing for him. He needs to know what is in the number. $350,000 for the special levy is too high. From a staff development of the budget you do a phenomenal job. Council has to be a little defensive, because we do not have the benefit of knowing how staff put this budget together. It is not just a numbers discussion, it is a policy discussion and Council does not have the benefit of that with four months left. (Councilmember Fogarty left at 7:47 p.m.). City Administrator Herlofsky suggested we need a special meeting with Council to go through priorities with this as a backdrop. We can go through the budget in detail, there is still time. Mayor Larson would like to do that. Finance Director Roland asked if Council wants to look at the priorities for each department or line by line? Councilmember Wilson stated a higher level of priority. When services are going to be cut, he wants to know what that means. Finance Director Roland stated the swimming pool is a service and has a cost every year. That has been a Council priority to make that work. That is $75,000 that came from the liquor store. That money now does not go to the park improvement fund for future park improvements. Councilmember Wilson suggested we spend more in the Economic Development category and then we would have to reduce somewhere else. That is his priority. City Administrator Herlofsky suggested starting high and find out what the common level is. The budget does list expenditure levels. Mayor Larson suggested putting the levy through as is, and then have some meetings to go through priorities so Council can understand it. Councilmember May was not comfortable with approving this levy limit, but we need to move forward. City Administrator Herlofsky suggested setting aside the second Monday of each month as a budget workshop. Council agreed. MOTION by Wilson, second by May to adjourn at 7:57 p.m. APIF, MOTION CARRIED. Respectfully submitted, //. .-/~? )?/7J~ C.~;.-.........(... 'GGc....,. dJT Cynthia Muller Executive Assistant