08-22-2011 Council Minutes (3) - Laserfiche WebLink

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CITY COUNCIL BUDGET WORK SESSION August 22,2011 APPROVED 1 CITY OF LINO LAKES 2 MINUTES 3 4 DATE : August 22, 2011 5 TIME STARTED : 7:05 p.m. 6 TIME ENDED : 8:50 p.m. 7 MEMBERS PRESENT : Councilmember Gallup, O'Donnell, 8 Rafferty, Roeser and Mayor Reinert 9 MEMBERS ABSENT : None 10 11 12 Staff members present: City Administrator Jeff Karlson; Finance Director Al Rolek; 13 Public Services Director Rick DeGardner; Public Safety Director John Swenson; 14 Community Development Director Mike Grochala; Director of Administration Dan 15 Tesch; City Clerk Julie Bartell 16 17 Explanation of Revenues—In response to the council's request, Finance Director Rolek 18 reviewed the revenues section of the 2012 budget book. Basically a city's tax levy fills 19 the gap after the city collects revenue. He explained the tax rate, the tax levy and fiscal 20 disparities. He explained that the tax rate is a formula that comes from the tax levy and 21 also the rate is used to compare with other cities (council requested that information). 22 The mayor noted that the tax rate ultimately impacts the amount paid by property owners; 23 it has a real effect on payers and that needs to be acknowledged. A council member `...." 24 remarked that it may make more sense to think in terms of charging for the cost of 25 services; the Finance Director explained that the cost of services is presented in the form 26 of the city budget. A council member noted concern that he experienced a decrease in the 27 value of his home last year but yet his taxes went up; that doesn't make any sense. A 28 member noted that the cost of services didn't go down, giving the example that it costs 29 the same to plow the snow in front of a$90,000 home as it does a$100,000 home. It was 30 acknowledged that the city has no control over other levying such as by the school district 31 and county. There was discussion about fines as revenue as well as forfeiture revenue. 32 33 Homestead Exclusion Program—Finance Director Rolek distributed written 34 information from a recent Webinar sponsored by the League of Minnesota Cities (LMC). 35 He reviewed the information on the conversion of the State's Market Value Homestead 36 Credit(MVHC) Program to a new exclusion program. The program will exclude a 37 portion of the property value from taxation rather than giving a credit as in the past. The 38 result to the city is that it will lower values and thus increase the tax rate. It will have an 39 impact on the tax rate in 2012 and represents an additional $220,000 in the budget and 40 would require that amount to mitigate. 41 42 The council then discussed the updated budget gap information that was provided. The 43 ECFE lease of a portion of the city facility remains uncertain and staff is assuming a 44 $60,000 levy reduction as a worst case scenario. Administrator Karlson suggested that 45 renegotiating the lease is a possibility also; he will inform the council as soon as 1