HomeMy WebLinkAboutAugust 12, 2026 City Council Workshop Meeting MinutesC.
CITY OF FALCON HEIGHTS
City Council Workshop
City Hall
2077 West Larpenteur Avenue
MINUTES
August 12,2026
6:00 P.M.
A. CALL TO ORDER: 6:01 P.M.
Gustafson called to order
B. ROLLCALL:GUSTAFSON-X- MAY-X-
MIELKE X MOGEN ea WASSENBERG X
STAFF PRESENT: LINEHAN X LANDBERG X
POLICY ITEMS:
1,. 2027 Budget Workshop #1 (6:00 P.M.)
a. 2026 2"a Quarter Financial Report and Year-End Estimates
Landberg presented t}re2026 Second Quarter Financial Report covering the period
tfuough June 30, 2026.9he reported that overall revenues and expendifures across all
fund types are on track and broadly comparable to 2025 percentages-to-budget at the
same point in the year. She noted that revenue figures do not uniformly reach 50% at
mid-year due to the timing of property tax settlements and other cyclical receipts.
General Fund: Revenues and expenditures are on track. General fund expenditures
stood at approximately 40% of budget.
Council Member Wassenberg asked whether the city produces monthly budget
expectations broken down by timing.
Landberg confirmed thatno formal monthly revenue schedule is prepared, though she
monitors individual line items such as charges for services on an ongoing basis.
Special Revenue Funds: Performance is similar to 2025 percentages. Two notable
variances were identified: the Community/Economic Development and Community
Inclusion funds each showed expenditures near 97% and96% of budgef respectively,
athibutable solely to allocated audit fees rather than any programmatic spending.
Council Member Wassenberg inquired about the Community Inclusion fund's activities
Linehan explained that the fund has accumulated a healthy balance through annual
general fund transfers of $1"0,000, butno specific inclusion initiatives were programmed
for 2026.
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Debt Service Funds: All principal and interest payments are current. The 2023 G.O.
Improvement Bond, which was retired early in 2025 using surplus assessment revenues
from earlier road project funds, carries only audit fees as remaining expendifures.
Council Member May sought clarification on the debt service percentages presented
Landberg explained that the 455% expenditure figure shown for the 2023bondlr:.2025
reflected the early payoff.
Linehan outlined the city's bond history, noting that each bond is tied to a specific road
projec! with the exception of the 2025Tax Abatement Bond, which funded the
community park.
Capital Project Funds: These funds are difficult to compare year-over-year given the
variable timing of project expenditures. Revenue overages in several capital funds are
primarily driven by investment interest income. Linehan noted that the Fairway
Commons and UMN Les Bolstad funds were recently created and the 2021 Street Project
fund is being wound down and will be closed.
Enterprise Funds: Minor timing variances exist in both sanitary sewer and storm
drainage funds, largely due to a two-month lag in utility revenue receipts and the
Metropolitan Council's advance billing for wastewater services.
Year-End Proiections: Landberg summarized that across all fund types, revenues are
projected to finish over budget, and expenditures under budget.
Linehan highlighted two primary revenue outperformers: investment interest on
inveshnents, projected at approximately $150,000-$180,000 against a $30,000 budge!
and building permit revenue, projected at approximately $170,000 against a $60,000
budge! largely driven by the Fairway Commons development. On the expenditure side,
the NYFS social work program line will come in approximately $20,000 under budget as
the program was not launched, and the finance consultant line will be approximately
$50,000 under budge! as the city settled on outsourced payroll at approximately $26,000
rather than drawing on the full $75,000 budgeted. Linehan also noted that the contracted
planner line will exceed budget partially offsetting those savings. He flagged the
previously approved $325,000 budget amendment for the transfer to Parks Capital to
purchase 1,407 Larpenteur Avenue (the "Get Pressed" property) as the primary anomaly
in the 2026 general fund picture.
b. 2027 General Fund Preview
Linehan presented a preliminary overview of the proposed 2027 General Fund Budget
and outlined the budget process timeline. Key upcoming milestones include: a capital
and PMP discussion at the nextworkshop featuring City Engineer Hendrickson's five-
year infrastructure plan; a levy discussion workshop on approximately September 9;
preliminary levy approval at the September 23 CLty Council meeting; and the Truth in
Taxation hearing on December 9.
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a
Proposed Budget Changes - Revenues: The general fund is proposed to increase by
8.75%. The primary revenue drivers include a1,4% increase in ad valorem tax receipts
($3L1,000), arrS% increase in fiscal disparities distributiory a modest increase in licenses
and permits, and a doubling of the fines and forfeits budget from $15,000 to $30,000 in
anticipation of continued growth in State Fair parking violation revenue.
Linehan noted that the 2026btdget included a $49,000 transfer from the ParkMobile
Parking Management fund to the general fund, which is not currently reflected in the
2027 proposal. He indicated this figure could be revisited at the September workshop
once State Fair parking revenues are better knowry and that including it could reduce
the levy by approximately 1.5 to 2 percentage points.
Proposed Budget Changes - Expenditures: Total expenditures are proposed to
increase by approximately 7.96%. The principal expenditure drivers are:
Compensation: A total increase of approximately $103,000, attributable to grade and
step increases, a proposed 3% cost-of-living adjustment (consistentwith the current
metro-area range of 3-4%), additional employees enrolling in the city's health insurance
plan, and a more accurate accounting of overtime.
Linehan noted that the city has historically budgeted $0 for overtime, which has proved
inaccurate as staff tenure increases and comp-time balances grow. Staff additions for
2027 rncfude expanding the administrative intern to a full-year position, adding a $5,000
finance intem line, and restoring a Public Works seasonal part-time position.
Public Safety: An increase of $193,176, reflecting St. Anthony Village Police reaching
their contracted full complement of 30 officers n2027.
Linehan explained that once full staffing is achieved, annual increases are expected to
moderate to approximatqly 5% or less, consistent with Lauderdale's historical experience
under the same contract.
Financial Software: An upgrade from the current desktop-based Tyler Encode system to
a cloud-based version at an estimated cost of approximately $19,000, driven in part by
the forthcoming end-of-support for the existing server infrastrucfure.
Landberg noted that the cloud-based system would allow remote access for consultants,
enable workflow-based budget processes, and facilitate a planned addition of a fixed
asset module (estimate d at$600 / year) to eliminate manual depreciation journal entries.
Conferences and Professional Developmenfi A modest budget increase to better reflect
acfual recent expenditure trends.
Levy and Tax Rate: The preliminary levy is proposed to increase from $2,882,408 to
fi3,234,420, a12.21% increase of $352,012. Debt service levy remains stable at approximately
$190,000 annually, with no major bonding anticipated in the next five years. The projected
city tax rate would rise from approximately 37"/, n2026 to approximately 41,.9L% tn2127.
Council Member May asked for clarification on the tax rate figure
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Landberg explained that the local tax rate is calculated by dividing the net local levy
amount - after subtracting the fiscal disparities distribution - by the net local tax capacity
provided by Ramsey County, over which the city has no control.
Linehan provided context by noting that Falcon Heights had one of the lowest levy
increases in Ramsey County in recent years (3.88% ir.2025), and that the current increase
reflects genuine cost pressures that had been partially deferred. For comparisory Saint
Anthony's tax rate is approximately 65% and Saint Paul's exceeds 50%.
Council Discussion - Lery Reduction Strategies: Linehan presented several levers
available to reduce the preliminary levy, including:budgeting a ParkMobile transfer as a
recurring revenue item; increasing the interest on investrnents estimate from $50,000 toward
the $100,000-$150,000 range that has been consistently achieved; adjusting the Parks Capital
transfer; or making modest use of the city's fund balance. He noted the city's fund balance
policy requires a minimum of 45% of operating revenues to be held in reserve and that the
city currently holds a healthy triple-A-rated balance well above that floor.
Council Member Wassenberg advocated for working to reduce the levy increase, suggesting
the council consider what an appropriate resetve level is and use surplus beyond that
tfueshold to offset taxes rather than allowing reserves to grow indefinitely. He also
suggested consideration of "leveling" increases across years - e.g., an 8% increase this year
and a 6% increase next year - rather than a steep increase followed by a minimal one, to
smooth the impact on taxpayers.
Council Member May expressed general agreemen! noting a preference for calculated
rather than speculative risk when budgeting aggressive revenue estimates. She raised
concerns about the apparent decline in intergovemmental revenue, which Linehan clarified
was primarily a timing artifact related to LGA advances and the non-recurtence of one-time
grants rather than a structural loss. May also asked about the risk of a state LGA reduction
given the current political environmen! Landberg and Linehan acknowledged the
uncertainty but noted that2027 LGA is projected to increase slightly and that maintaining
LGA levels remains a League of Minnesota Cities legislative priority.
Mayor Gustafson emphasized the importance of fiscal transparency, stating that if the city
has legitimate expenses, it should raise the revenue to meet them rather than obscuring
costs. He recalled that prior to 2017, the city had been artificially suppressing taxes by
drawing down reserves to a dangerous level, and that correcting this required significant
levy increases that residents ultimately accepted because the rationale was clearly
communicated. There was general consensus among the Council to direct staff to explore
strategies to reduce the levy below 10% where feasible without operational impact.
Linehan committed to returning at the September 9 workshop with multiple levy scenarios
- showing trade-offs for each approach - and with updated ParkMobile revenue figures
following the State Fair.
D. ADIOURNMENT: 7:03 P.M.
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DISCLAIMER: City Council Workshops are held monthly as an opportunity for Council Members to
discuss policy topics in greater detail pior to a formal meeting where a public hearing may be held and/or
action may be taken, Members of the public that would like to make a comment or ask questions about an
item on the agendn for an upcoming workshop should send them to mail@falconheights.org prior to the
meeting. Alternatiaely, time is regularly allottedfor public comment during Regular Gty Council
Meetings (typically 2nd and 4thWednesdays) during the Community Forum.
Dated this 26ft day of Augt;ist,2026
C.Mayor
City Administrator
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