09-14-11 Council Workshop Minutes

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MINUTES CITY COUNCIL SEPTEMBER 14, 2011 The Finance Director reported that given all the factors in play, City staff is recommending a 0% gross levy increase which results in a .26% net levy decrease. There are alternative levy scenarios included in the Budget document that range from a gross levy decrease of .87% (total reliance on LGA) to a gross levy increase of 10% (no reliance on LGA). The Director reported that even with a 0% gross levy increase there will be a 3.6% increase in tax rates due to a drop in value of the City's overall tax base. The Director then reviewed the General Fund Revenue summary, noting that revenues are projected to be down by 2.94% ($93,034). This revenue projection is based on a 0% Gross Levy increase. She noted the projected decrease of 40.9% ($230,221) in State intergovernmental revenues, which reflects the decrease in Local Government Aid (LGA). Licenses & Permit revenues are projected to be down by 6.68% ($15,628) due to a restructuring of the rental housing licensing fees. Charges For Service are expected to increase by 20.37% ($17,875) most of which is derived from additional administrative charges to TIF Districts. The Director then reviewed the General Fund Expenditure summary, noting an estimated increase in expenditures of 1.8% ($52,262). The Director noted that Election expenses in play for 2012 in the amount of $9,327. Personnel costs are projected to increase by $21,386 with preliminary scale increase projected at 2% as well as limited market adjustments, step increases, and resulting increases in FICA and PERA costs. The Director noted that health insurance premiums have been quoted to increase 11.5% for 2012. Based on review of the League of MN Cities benefits survey, the Director proposed a 5% increase in the City contribution for family coverage and a 2% increase in opt -out payments. The Director noted that insurance costs are budgeted at a 14.71% increase for higher coverage levels due to 1 -IIA project expenditures included in the rating base. The Director noted that given these are pass - through costs, staff will have some discussion with the LMCIT staff relative to eliminating these costs from the City's premium base. The Director further noted that the cost of telephone services is expected to decrease with the switch to the IP telephony system. Police contract costs are increasing by 2.05% with no change in service levels anticipated. The Fire Department operating costs are down by $31,229, given a significant decrease in vehicle repairs budgeted ($26,361). Animal Control costs are budgeted to increase by $9,731 given the Sheriff's Department will be taking over this service. This first year will see start-up costs that are not anticipated for future years. Blesener asked if 2012 personnel costs include a possible part -time position to replace the employee who recently resigned. The Director reported that she has programmed in two part-time positions which will provide the City greater flexibility in terms of skill set. Given the part- 2