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08-11-14 CC WS MinCITY OF SH.OREWOOD CITY COUNCIL WORK SESSION MONDAY, AUGUST 11, 2014 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. Mayor Zerby called the meeting to order at 6:02 P.M. A. Roll Call Present. Mayor Zerby; Councilmembers Hotvet, Siakel, Sundberg, and Woodruff; Administrator Jaynes; Finance Director DeJong; and Director of Public Works Brown Absent: None B. Review Agenda Hotvet moved, Woodruff seconded, approving the agenda as presented. Motion passed 510. 2. 2015 BUDGET DISCUSSIONS Administrator Joynes stated staff has refined some of the numbers in the draft 2014 General Fund Budget based on the discussion during Council's July 14, 2014, work session. During that meeting he told Council the City could accomplish, for the most part, all of the items that were discussed during the February 2014 Council and staff retreat. Jaynes reviewed the 2015 General Fund budget assumptions. The budget reflects one additional staff position that would have responsibility for forestry activities and be a water resource coordinator to help deal with future Municipal Separate Storm. Sewer System (MS4) mandates and stormwater management. The hope is that by having such a position, over time the City can reduce its reliance on contract engineering services. It assumes continued contracted engineer and administrator services. It includes a salary reserve of 2.5 percent. Labor contract negotiations will begin in September. Southshore Community Center (SSCC) operations costs and capital costs are included in the budget. The purchase of trail plowing equipment has been programed into the budget. There is no levy limit in place for 2015. He stated that in general terms revenues are estimated to increase to $5,513,878; an increase of 1.3 percent. The estimated expenditures total $5,642,863; an increase of 1.7 percent. That leaves an unfunded gap of $128,985. During Council's July 14 meeting there was discussion about using General Fund reserves to fund the gap. He explained the General Fund reserves are estimated to be $3,577,080 at the end of 2014. The General Fund Balance Policy requirement of 60 percent maximum reserve level based on that estimate is $3,385,718. That results in 5171,362 of excess reserves. Staff has recommended the use of $128,985 of those excess reserves to fund the budget gap. That leaves $40,301 in unallocated excess reserves for 2015. It leaves approximately 51.2 million above the reserve level recommended by the Office of the State Auditor (OSA). During the July 14 meeting Council and staff talked about eliminating the 3 percent transfer cap from the Policy. What has been recommended still adheres to that cap. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 11, 2414 Page 2 of 5 He reviewed the major expenditure changes for 2015. City Council salaries were increased by a total of $5,400. Administrative support at the reception desk / counter was increased by $11,200 for part -time help at the counter. The 2014 budget includes $11,200 for election judges. That will be not be needed in 2015. Therefore the two things will offset each other. The Hennepin County Assessor has notified the City that their costs are going up $4,000. Police services are projected to have a net increase of $22,571 in 2015. Fire services are proposed to increase $9,833. He noted that Council asked staff to portray the new position as frill -time in the budget even though staff had recommended a .75 full -tune equivalent (PTE). He explained that the Public Works portion of that full -time position is estimated to cost $55,000 ($40,000 for salary and $15,000 for benefits). Another portion of that salary will be charged to stormwater management. There will be a $30,000 increase in the transfer into equipment and streets for 2015 and subsequent years. That helps fund the trail plow and improvements to the SSCC capital improvement program (CIP). The aesthetic upgrades identified for the SSCC in the Cover Proposal were estimated at about $40,000. Money for that is not included in the 2015 budget. Joynes then noted all of what he has mentioned and what is included in the detail budget spreadsheets amounts to a 2 percent levy illerease. He recommended Council certify a maximum levy of 2.5 percent to Hennepin County by September 15. That would provide an additional $26,137 should something unknown come up between now and when the final budget is adopted in December. He clarified that he does not think the levy increase will be 2.5 percent but he thought it prudent to have some latitude. He noted there are two more Council meetings during which the maximum levy could be set before September 15 — August 25 and September 8. Councilmember Woodruff stated the General Fund budget summary Director DeJong handed out just before this meeting looks the same as the one included in the meeting packet. Earlier in the day he had told DeJong that the budget detail numbers and the budget summary numbers do not match. DeJong stated he had attempted to update the spread sheets but something must have gone wrong and noted that except for the 2014 year to date numbers they are correct. Woodruff then stated one of the risks he thinks there is in the proposed budget is health insurance. Some additional funds might be needed to cover an increase. Administrator Jaynes stated the City has relatively consistently budgeted for a $25 per month per person increase. Joynes noted the insurance consultants the City uses has not determined what the increase will be. Woodruff noted that for now he can support a maximum levy certification of 2.5 percent with the understanding that the highest priority use for additional funds would be health insurance. Woodruff asked staff to schedule someone to come and explain to Council this fail what impact the changes the City has to comply with as a result of the Affordable Care Act (ACA) will have. Administrator Joynes stated the ACA is quite complicated. Joynes stated that renewing the City's insurance policy for 13 months gave the City time to figure that out. Councilmember Siakel noted that she had been comfortable with certifying a 2 percent maximum levy. She stated that she thought that if something happened with health care the City has enough resources to cover it. She then stated from her vantage point there are two parts to the budget that warrant more discussion before she is ready to set the levy. One is the new staff position. Although Council had stated that additional help for Public Works important, she is not convinced it needs to be a full -time position. She had envisioned it being a seasonal position or a contract position. The second is the issue with the SSCC. She noted that she could support using some of the General fund balance to resolve that before a CITY OF SHOR3EWOOD WORK SESSION MEETING MINUTES August 11, 2014 Page 3 of 5 lot of capital investment is made in the SSCC. She noted she said the same thing about the SSCC last year and she continues to think the same. Councilmember Sundberg stated that she thought Councilmember Siakel brought up good issues. She then stated that continuing to contract for administrator and engineer services might be fine for the short term. But, she thought it prudent to start to think about succession planning sooner versus later. She noted that she would like to gain a better understanding of what the forester/ water resource coordinator would be responsible for. She stated it may be better to contract for those services. Councilmember Hotvet concurred in principal with Councilmember Siakel's and Councilmember Sundberg's comments. She stated there has been one year of the 1000 -year storm. She thought Public Works was a little shorthanded because of having to detail with the damage and issues caused by that and therefore other tasks did not get done as quickly as people would have wanted. She suggested that the proposed new position should provide more support to Public Works in that area. She noted that she is not ready to set a levy quite yet. She also noted that what has been proposed is a good start. Councilmember Woodruff stated he would like staff to provide a position description for the proposed new position before he signs off on it. He asked staff to also provide a year one work plan for that position with specific objectives, goals, tasks and dates. Mayor Lerby stated based on resident feedback he thinks the proposed position is needed. More staff time needs to be spent on trees and water resource coordination. He noted that he agrees it needs to be defined and that will be part of the process. He also noted he is comfortable leaving it in the budget. He stated he would like to hear more about a contracted position versus a staff position. Councilmember Siakel stated once the City hires someone it is committed to another employee. She then stated a broader understanding of staff in general and where the proposed position fits in would be valuable. She noted that she does think there would be value in adding a position to provide more support. She stated if the City had an arborist on staff then she viewed the City charging for that service. Siakel asked what the approximate $129,000 in reserves will be used to fund. It is for the snow plow, the new position and the SSCC? Administrator Joynes responded it is for all of that. Administrator Jaynes stated that in the history he is aware of the City has always beaten its estimates to the good. If the City under spends or takes in more revenue than projected the General Fund reserves will increase again in 2015. Administrator Joynes explained there is a job description for the new position. The prime task would be forestry services — diseased tree programs, being the contact person for trail construction and road construction as they relate to vegetation, and advisory services related to trees. The second priority task would be water resource coordination. There will be a lot of survey work that has to be done regarding wetlands; work that does not take the skills of a registered engineer. The person will also be an assistant for Director Brown. There are a lot of on the spot needs that come up requiring help from Public Works. When that happens that tends to increase the response time to residents who have contacted Public Works. Staff envisions that person taking on that public contact. He noted that staff originally proposed a .75 FTE to start with until staff can get a better handle on what: the demands are. He also noted he will provide Council with a job description for the position for its August 25 meeting. Councilmember Siakel suggested maybe contracting for that work for at least the first six months to see how it works out. She stated she wants to make sure it is the correct decision for the City. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 11, 2014 Page 4 of 5 Administrator Joynes stated the costs for contracting would be a little higher than hiring a person. Councilmember Woodruff stated the work plan for the position would identify specific work goals for that person. He clarified that the position would not be a land surveyor. The City has needs for a stormwater inspection person to help address some of the upcoming stormwater management state and federal mandates. There will be a lot of records that will have to be kept for that. Mayor Zerby stated there is back office work that needs to be done in Public Works. For example, landscaping standards, stormwater drainage and parks maintenance. Zerby then stated the 2013/2014 season was a record season with regard to snow and ice control. Yet the 2014 projected year end expense does not reflect exceeding the budget. Director DeJong stated it was a record year in terms of cold and salt prices. DeJong explained the 2015 budget is for an average year and that more has been spent on that this year to date than average. Based on discussions with Director Brown he thought the year end actual amount will be close to budget. Councilmenber Sundberg asked. when Council East discussed the City's compliment of staff. For example, the number of employees and what is getting done. She would like to know if the City is under staffed or over staffed or is it staffed appropriately. Mayor Zerby stated it has been a while. Sundberg suggested doing that before moving forward with the proposed position. Administrator Joynes noted the job descriptions were updated the beginning of 2013. Councilmember Sundberg stated she shares Councilmember Siakel's concern about bringing a staff member on when Council is a little tentative about that position. She noted she would be more comfortable bringing that person on in a consultant capacity even if it will cost a little more. That would give Council more time to assess the current staffing compliment. Mayor Zerby asked if that would be something Council would do or would it hire a consultant to help with that effort. Councilmember Sundberg stated her knee jerk reaction is to hire an outside firm that is experienced in municipal government. Zerby asked Sundberg if she wanted to include funding for that in the 2015 budget. Councilmember Woodruff stated he thought that would be a useful activity. He then stated the low end of the level of reserves specified in the General Fund Balance Policy is 55 percent. Going down to 55 percent would free up additional reserves for use. Woodruff then stated the City has a person dedicated to SSCC operations and if the City changes what it is doing with the SSCC that person may not be needed at the SSCC and maybe there is not a need for one staff person. He clarified he is not suggesting getting rid of a person. Councilmember Sundberg stated she is still in a personal quandary about what to do with the SSCC. She noted a high school group did some research on other community centers. She suggested getting someone with deeper expertise to guide Council in making a decision about the SSCC. Councilmember Siakel stated the financial cost for the SSCC always falls on Shorewood. She then stated the real issue to her is to what level the other SSCC co- owners' are willing to participate in. Those cities geed to make a decision about participation. If they do not want to participate, then Shorewood needs to pursue all of its options. It will be up to the City Attorney to make recommendations on what the options are. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 11, 2014 Page 5 of a Councilmember Sundberg questioned if it would be appropriate to assume SSCC operations are not going to break even and the City will have to subsidize operations. Administrator Joynes stated staff can bring back budget options for Council. He reiterated Council has two more regularly scheduled meetings to take action on setting the maximum tax levy for 2015. ADJOURN Woodruff moved, Siakel seconded, Adjourning the City Council Work Session of August 11, 2014, at 6:46 P.M. Motion passed 510. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Sco rby, M yor ATTEST: Jean anchyshyn, City t lerk