062209 CC WS MinCITY OF T-~°' -/,30D
CITY COUNCI .IORK SESSION
MONDAY, NE 22, 2009
MINUTES
1. CONVENE CITY COUNCIL WORK SESSION
_ _ UNTRY CLUB ROAD
CC - NCIL CHAMBERS
Acting Mayor Turgeon called the meeting to order at 6:03 P.M.
A. Roll Call
Present. Acting Mayor Turgeon; Councilmembers Bailey, Woodruff and Zerby; Administrator
Heck; Finance Director Burton; Planning Director Nielsen; Director of Public Works
Brown; and Engineer Landini
Absent: Mayor Lizee
B. Review Agenda
Director Brown requested Item 2.A, Country Road 19 Project Closeout, be added to the agenda.
Zerby moved, Woodruff seconded, approving the agenda as presented. Motion passed 4/0.
2. 2010 BUDGET
Director Burton stated per Council's direction Staff prepared the first draft of the 2010 General Fund
Operating Budget with a 0.00% tax levy increase over the adopted 2009 budget. The first draft of the
budget, which is in very rough form, and a budget overview document had been distributed to Council.
Staff believes the budget is on target to achieve the objectives specified by the Council. She explained
Council needs to adopt a not-to-exceed property tax levy by September 15, 2009. The enterprise budgets
(water, sewer, stormwater and recycling) will be prepared and discussed in the fall. A Truth-In-Taxation
budget public hearing is scheduled for December 7`'. The final adoption of the budget is planned for
December 14"'.
Burton explained the Legislature imposed local levy limits on cities with populations over 2,500 for
2010. The Pay2010 levy limit allows for up to a 3.9% inflationary increase or an Implicit Price Deflator
(IPD) increase in the base levy over the 2009 base levy, whichever is less. The League of Minnesota
Cities (LMC) has indicated the IPD was 7.62% based on 2009 first quarter data. Based on that IPD, the
City's allowable Pay 2010 base levy increase would be $31,606. The most recent IPD is 0.86% which
would allow the City to have an increase of $35,800 in its base levy. The City is waiting for final
notification of what the certified IPD will be. She noted the 2009 levy increased $101,755 (or 2.51
over 2008. She explained the levy limit law allows for "special levies" (for things such as debt service on
bonds); special levies are added to the base levy.
Burton stated preliminary information from Hennepin County on the City's estimated market values
indicates an increase in the range of 2% for Pay2010. The City has not received information regarding
the change in tax capacity or taxable value.
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Director Burton reviewed the 2010 budget revenue highlights.
➢ The budget contemplates a base tax levy and special tax levy of $4,776,292 (the same as
the 2009 levy). The special tax levy (for debt service for the public safety buildings and
the City Hall renovation bonds) is approximately $617,620. The total proposed 2010 tax
levy reflects a 0.0% increase over the Pay2009.
➢ Transfers out to Capital Improvement Funds are programmed at $980,000. This amount
is reduced from 2008 budgeted transfers by $50,000. The 2009 budget includes a transfer
of $50,000 to the Public Facilities Fund; there is no identifiable use for this in 2010. The
2010 budget reflects the 2009 transfer. The transfers to the parks, streets and sewer funds
are budgeted at the same levels as in 2009.
➢ The budget includes using about $160,000 (4.6%) of General Fund reserves, in keeping
with the General Fund Reserve Policy. This is unchanged from 2009. This use of
reserves should result in an anticipated General Fund balance of $3.3 million.
➢ Other City revenue sources which have changed in 2010 from 2009 include a $60,000
reduction (from $180,000 to $120,000) in building and permit revenue and a $22,000
reduction in interest income (from $117,000 to $95,000). Fine revenue remains
unchanged. The transfer of $40,000 from the Liquor Fund into the General Fund is
unchanged from 2009.
➢ The 2010 projected revenues would be approximately $50,000 less than in the amount
budgeted for 2009 if a levy increase amount of $31,000 were to be included.
Director Burton reviewed 2010 budget expense highlights.
➢ No staffing changes are included in this draft of the budget. Budgeted salaries reflect a
0.00% economic adjustment. The Administration Budget includes a $24,000 allocation
for anticipated merit increases. The AFSCME contract will expire on December 31,
2009; 2010 salary increases will have to be negotiated. The employees' insurance
premiums are expected to increase. It's proposed that the City's current payment of up to
$777 per month of a regular full-time employee's insurance costs be increased to $850
per month. This may change when renewals are completed in the fall.
➢ Because 2010 is an election year $41,000 has been allocated for that purpose.
➢ The budget draft uses an estimated total police expenditure amount of $1,185,887, which
is a 0.84% increase over the 2009 budgeted amount. This amount was discussed by the
Investment Committee, and it is in accordance with levy limit requirements. This amount
will be adjusted once the SLMPD 2010 Operating Budget has been approved. The
expenditure for Mound fire services is not known at this time. The proposed Excelsior
Fire District budget reflects an overall increase of 0%.
➢ Assessing services from Hennepin County were increased $1,500.
A The budget includes funding for replacement computers for two employees which were
scheduled for replacement in 2010. The 2009 copy machine purchase was deferred in
2009; its downtime and continuous repairs necessitate it be replaced in 2010. The
estimated cost for these replacements is $25,000. She and Administrator Heck have
discussed transferring $25,000 from the Technology Fund to the General Fund to
accommodate these proposed replacements, noting this is not included in this budget
draft.
➢ The Parks and Recreation budget anticipates contract costs for Community Rec
Resources (CRR) will increase to $53,000 from $20,000 in 2009 to provide both park
scheduling services (which it has done for a number of years) and park administration
services (which were contracted out to CRR in 2009).
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Burton stated Staff has made a concerted effort to prepare a draft budget as lean as possible. Even so,
there is a gap of approximately $107,000 (after using $160,000 in General Fund reserves) that must be
closed by either a reduction in expenditures or transfers, or an increase in revenue.
The following clarifications, comments and requests were made with regard to revenues.
➢ The Public Facilities Fund was originally used for public facilities and office equipment.
A number of years ago it was split into two funds - the Public Facilities Fund and the
Technology Fund. The Public Facilities Fund was intended to partially fund City Hall
improvements, improvements to the buildings on the City-owned property located at
5795 Country Club Road, and potentially provide for capital improvements to the
Southshore Center.
➢ There was consensus to reduce the revenues from building and permits to $90,000 from
the 2010 budgeted amount of $120,000 after lengthy ensuing discussion. The decision
was made based on actual permit revenues through May 2009, and on the current and
anticipated construction climate.
➢ The fees for off-sale alcoholic beverages are established by State Statute. There is some
room for maneuverability with on-sale liquor. The American Legion and the Minnetonka
Country Club have what is called a club organization license; the fees for a club
organization are a lower level.
➢ Staff will reconsider if the budget for Other-Miscellaneous revenue should be reduced.
There was question as to whether or not people were applying for required licenses for
their rental properties.
➢ Staff did not budget for any reimbursement from the State to help offset market value
homestead credits. Staff will research whether the revenues for Market Value Credit
State aid should actually be a negative amount. If it should be, it would be considered as
a reduction in revenues from general property taxes.
➢ The $30,736 shown as 2009 year-to-date for homestead credit revenues should actually
be for MSA State aid revenues for the first half of 2009.
➢ Revenue from General Government includes rental revenues from the City-owned house
as well as from things like copies of City documents. Staff will reconsider if General
Government revenues should be adjusted upward because the City-owned house is
rented.
➢ The year-to-date revenues received through May from Fines and Forfeitures is on track.
➢ When the Southshore Center was built a capital fund called the Senior Community
Center Fund, was created. Its purpose was to the track the expenses during the
construction process. There is a balance of approximately $40,000 in the Fund. Staff
recommends that fund be used to establish an enterprise fund for Southshore Center
operations. Staff does not anticipate that any General Funds would be required to support
Southshore Center operations in 2010. Center fees and rentals and the $40,000 should be
sufficient to offset operating costs. Fees for management services for the Center will be
funded out of the enterprise fund.
➢ The City has a stable property tax base; few properties have experienced a decline in
value. The City should receive preliminary Pay2010 property tax value in the near future,
and Council will be provided that information as soon as the City receives it. It was
noted that the 2009 assessments indicated a 1.5% decrease for the City.
The following clarifications, comments and requests were made with regard to expenditures.
CITE' CIE
June 2.-, ' -
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➢ It was noted that if year-to-date expenses for Traffic Control and Street Lights and for
Tree Maintenance were prorated for 2009 the actual expenses would be less than what
was actually spent in 2009. The 2010 budgeted amount is higher than the 2009 budgeted
amount.
There was consensus for Council to then review the individual department budgets. The highlights of the
discussion are as follows.
➢ Mayor and Council
There was one perspective that the funding for the 2010 appreciation function
for Staff and volunteers for an amount of $5,000 should be eliminated; and the
$2,000 amount for conferences and seminars should be reduced. There was
another perspective to leave the funding for the appreciation event at this time.
➢ Administration
There was ensuring discussion about whether or not it was appropriate to
allocate $24,000 for potential merit wage increases for Staff. The increases could
either be administered as a one-time lump sum payment or they could be added
to a person's base salary. The $24,000 is approximately 2% of the 2009 budget
for non-union employees' wages.
After ensuing discussion it was decided to compile of list of items discussed during budget work sessions
that could be used to close the approximate $137,000 budget gap. The gap must be closed by either a
reduction in expenditures or transfers, or an increase in revenue. This gap exists after the use of $160,000
in General Fund reserves and building and permit revenue of $90,000 are factored in. A levy increase has
not been factored into the budget as of yet. There was some belief that doing it this way would make it
easier to assess all potential items for consideration concurrently and then prioritize them as Council
deems appropriate.
Following are the items identified during this meeting that should be placed on a list for consideration to
eliminate the budget gap of $137,000.
➢ Increase the base tax levy by the amount allowed using the IPD.
➢ Eliminate the $5,000 for the appreciation event for Staff and volunteers in the Mayor and
Council budget.
➢ Reduce the $2,000 amount budgeted for conferences and seminars in the Mayor and
Council budget.
➢ Transfer $25,000 from the Technology Fund to the General Fund for the purchase of two
replacement computers for a cost of $2,500 each and one copier for a cost of $20,000.
➢ Eliminate or reduce the $24,000 allocated for merit wage increases for non-union
employees in the Administration budget.
➢ Reduce the size of or eliminate the printed version of the Council meeting packets
thereby decreasing the need to replace a copier.
➢ Consider a reduction in Staffing level.
➢ Consider delaying the replacement of Staff computers.
Woodruff moved, Bailey seconded, recessing the City Council work Session of June 22, 2009, at
6:58 P.M. Motion passed 4/0.
Acting Mayor Turgeon reconvened the work session at 10:12 P.M.
N T NUTES
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Discussion moved to Item 4 on the agenda.
A. County Road 19 Project Closeout
This was not discussed during this meeting due to tack of time.
3. MISSION STATEMENT AND GOALS
This item was not discussed due to lack of time.
4. ADJOURN
Bailey moved, Zerby seconded, Adjourning the City Council Work Session of June 22, 2009, at
10:12 P.M.
Administrator Heck requested Councilmembers provide him any with broad areas they wanted addressed
in the budget so Staff can do that prior to the next budget work session.
There was Council consensus to have a two-hour budget work session on July 27, 2009, prior to the
regular City Council meeting.
Motion passed 4/0 at 10:14 P.M.
RESPECTFULLY SUBMITTED,
Christine Freeman, Recorder
Christine Lizee, Mayor
ATTEST:
ilec ty A inistrator/Clerk
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