HomeMy WebLinkAbout08-22-2011 Council Minutes (3) CITY COUNCIL BUDGET WORK SESSION August 22,2011
APPROVED
1 CITY OF LINO LAKES
2 MINUTES
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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
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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
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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.
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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.
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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
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CITY COUNCIL BUDGET WORK SESSION August 22,2011
APPROVED
46 information is available. Other items on the list—organizational assessment,janitorial
47 services, civil and criminal legal fee reductions—have been discussed previously and
48 either haven't changed or are already in place. The gap noted is $51,811.
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50 Health Insurance—The council discussed further the pending health insurance increase.
51 The 14 to 18 percent increase anticipated seems high considering what some other cities
52 are seeing. Administrator Karlson noted that he is investigating the ranges of increases
53 and feels that the proposed budget is conservative; he has also looked into getting
54 additional bids. A council member suggested that efforts need to continue in all areas to
55 keep the health insurance costs as low as possible. Mr. Karlson added that although the
56 council has already directed an increase in the employee contribution for family coverage
57 and lowered the amount offered for waiver of coverage those changes are not reflected in
58 savings for the gap because it is very possible that some employees who took the waiver
59 may change to taking a family plan.
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61 Fund Reserve - Finance Director Rolek explained that the end of the year surplus funds
62 become part of the city's general fund balance. That general fund balance is currently at
63 about a 57% level but it has been reducing over the past few years. The capacity to build
64 that reserve is only budget surplus and that isn't sustainable. One council member
65 equated the reserve to a"rainy day fund" and suggested that the council may want to
66 consider if the current situation is in some ways that rainy day. Staff was directed to
67 bring forward a fund reserve policy for further council discussion.
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69 Other Questions - The council asked, what are the "big rocks" out there (in terms of the
70 increase in the budget)? Mr. Rolek suggested the health insurance increases, a two
71 percent cost of living increase for staff, increase to capital equipment replacement budget,
72 street maintenance budget increase (all as noted in the memo introducing the budget
73 book). The savings end of the budget are those things noted on the gap sheet.
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75 A council member noted his desire to see the budget levy lowered.
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77 The mayor suggested that the meeting provided a good high level discussion of the
78 budget. For the next meeting, he suggests members do individual research and come
79 prepared to drill down the numbers. The council will meeting again at a special work
80 session on August 31, 2011 at 5:30 p.m.
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82 The meeting was adjourned at 8:50 p.m.
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84 These minutes were considered, corrected and approved at the -= ! . ouncil meeting held on
85 September 12, 2011.
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89 Jul'. e Bartell, Ci Cle Jeff " i ' Mayor
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