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HomeMy WebLinkAbout09-08-2010 Council Minutes CITY COUNCIL WORK SESSION September 8, 2010 APPROVED 1 CITY OF LINO LAKES 2 MINUTES 3 4 DATE : September 8,2010 5 TIME STARTED : 5:30 p.m. 6 TIME ENDED : 9:30 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; Director of Administration Dan 13 Tesch; Community Development Director Mike Grochala; Director of Public Safety Kent 14 Strege, Public Services Director Rick DeGardner; Director of Finance Al Rolek 15 16 2011 Proposed Budget—City Administrator Karlson explained that during the two 17 weeks that he has been on staff, he has made it a priority to meet with the directors and 18 has go through the budget for the coming year. He is confident that the directors are 19 presenting a budget tonight that will meet current service level needs for the city and its 20 residents. He envisions a budget process that involves a team effort including both 21 council and staff, and that brings forward a budget that meets service needs. A reduction 22 in the proposed budget will mean that some services will have to be curtailed. He would 23 have liked to have begun the budget process with a system of prioritization by the council 24 but timing did not allow for that. Staff is trying to present a budget that meets service 25 needs recognizing that the citizens are also facing a down economy and financial strains. 26 This is a preliminary budget and what is certified next Monday evening is as high as the 27 levy can go;there is more time to cut back after looking at priorities and other revenue 28 etc. 29 30 Finance Director Rolek spoke to the proposed budget before the council this evening. He 31 reported that staff has included the recommendations provided by the council in July— 32 capital enhancement for streets and equipment, and do away with employee furloughs. 33 Added to that the city is required to pay additional PERA costs, health insurance costs 34 don't remain static, and there is an obligation of a cost of living raise for the some police 35 personnel. The bottom line is that the city is a service provider and that means much of 36 the costs are personnel related. He noted that storm water maintenance is included in the 37 budget but staff recognizes that the council is considering a storm water utility that would 38 reduce the levy by approximately$311,000. He noted that various expenditures have 39 been reduced by $48,000. The preliminary levy proposed is below the state's levy limit 40 by about $426,000, indicative of the city holding the line over the past few years. Within 41 the levy also is about $240,000 of state mandated tax relief(Market Value Homestead 42 Credit)that the city would normally receive back from the state but due to state cutbacks, 43 probably will not receive back in 2011. Given all of the factors presented,the council is 44 looking at a proposed budget that will increase by approximately 4% and a tax levy that 45 increases by approximately 6% (impacted somewhat by the civic center and YMCA 1 CITY COUNCIL WORK SESSION September 8, 2010 APPROVED 46 obligations). The budget presented is quite lean and he advises that adjustments should 47 address what services will be impacted. 48 49 A council member received clarification that the capital equipment replacement costs 50 indicated in the expenditure increases is actually additional funding to those efforts. 51 When asked, staff also explained some unemployment and benefit pay out expenses are 52 related to positions dropped from the budget this year. A question was also posed 53 regarding the possibility of additional debt refinancing at lower interest rates but the 54 Finance Director explained that the timing as well as significant savings must be possible. 55 The bridge at 35E and CSAH 14 will not have an impact on the budget directly as city's 56 portion will be covered by special assessments and further the city's obligation is to 57 Anoka County. Another member questioned why elimination of employee furloughs is 58 projected to save $125,000 when the original savings were supposed to be closer to 59 $100,000, and Mr. Rolek explained that some of the elements (PERA benefits for 60 example)brought the savings higher. Upon request, Mr. Rolek also explained that the 61 cost of living salary increase for the police department is related to the agreement to hold 62 off on that until the last month of 2010. 63 64 The mayor suggested the council look at the big picture first and then examine details. 65 He recalls the previous year's budget discussion and reductions related to the loss of city 66 activity and related work force. He sees that activity has not returned and the economy 67 has not recovered,valuations are almost ten percent down and since reductions were 68 minimized the previous year, there is still work to be done in that area. The budget that is 69 being presented to the council now proposes an increase and he doesn't feel that is 70 appropriate. An organizational review would have helped this situation but that hasn't 71 happened yet. He asked that the council consider their overall goal first and whether that 72 includes raising taxes. 73 74 Regarding furloughs, a council member suggested that the time off represents 75 approximately 1.5 FTE position and questioned, since the city functioned without that 76 during 2010, couldn't that amount be cut permanently? The finance officer responded 77 that it's difficult to compare a reduction over the whole of the workforce in comparison to 78 reducing specific positions with specific duties. 79 80 The council concurred that they are not interested in raising taxes and that the biggest part 81 of the picture becomes personnel. They will attempt to talk about priorities and service 82 impacts and make decisions based on that information. When asked about open 83 positions, Mr. Rolek explained that within the Police Department there are three open 84 positions and one additional position that will be vacant for a military deployment period. 85 The senior services position is also expected to be vacated by retirement at the end of the 86 year; staff has discussed filtering some of that work into the city's recreation services area 87 and not staffing the senior center but still having it open for visitors. 88 2 CITY COUNCIL WORK SESSION September 8, 2010 APPROVED 89 There was discussion of the status of the city's fund reserve; Mr. Rolek suggested that the 90 reserve is at about 57%. He also anticipates some savings under projections for this 91 year's budget. 92 93 The council requested that staff be open to discussing realistically capital and other 94 expenditures at this time; if certain things don't need to be replaced in the coming year, 95 the best effort should be made to decide that now. Mr. Rolek distributed the proposed 96 capital improvement budget as included in the draft(not adopted)Five Year Plan and 97 then explained that the proposed budget for capital replacement is up from $150,000 to 98 $200,000. The council discussed an increase to the Centennial Fire District budget and 99 the city's requirement to contribute to that budget at a higher level than the other two 100 cities in the district; the fire district equipment has a replacement schedule also. The 101 mayor noted his strong feeling about fully funding the street maintenance budget but 102 added that perhaps he sees some flexibility in the equipment replacement area as long it 103 doesn't disrupt the savings that come with properly investing in equipment. Mr. Rolek 104 noted that financing costs are low now so that remains an option for equipment other than 105 including it in the operating budget. The council recalled plans to purchase a street 106 sweeper and questioned the possibility of contracting for sweeping services. Public 107 Services Director DeGardner explained the logistics of sweeping operations and 108 presented information supporting the financial sense of keeping that service in-house 109 even if it is with just one sweeper. 110 111 Discussion returned to how the council will set the tax capacity rate, a decision that must 112 be made for the upcoming council meeting. Administrator Karlson recommended that 113 the council not use the tax capacity rate as a gauge because it isn't a good indicator in 114 times of deceasing values; looking at actual numbers is recommended. In looking at 115 numbers, one council member suggested that the council consider cuts of$900,000 to 116 represent the $400,000 that wasn't cut last year and the $500,000 increase proposed by 117 staff for 2011. That was recognized as an aggressive number by some council members. 118 Mr. Rolek also pointed out again that the figure established for the preliminary budget 119 will be the maximum so the council can reduce after that. 120 121 The council discussed the possibility of debt financing having heard that interest rates are 122 in the area of one percent. Mr. Rolek noted that the budget includes about$400,000 in 123 expenditures in that area with about $100,000 of that amount proposed to be debt 124 financed. There is the ability to finance an additional $200,000. 125 126 A council member noted that he is continuing to do research on health care, getting some 127 comparison information from other cities. 128 129 The council then discussed how they would set the figure to be approved for the 130 maximum budget and one council member presented reductions in the area of$500,000 131 (health care, capital replacement, attrition, 2010 budget saving all included) and 132 suggested that would make the budget flat with last year;that could be a starting point 133 and one that the council could approve as preliminary. Another council expressed some 3 CITY COUNCIL WORK SESSION September 8, 2010 APPROVED 134 concern about presuming savings in health care since that area can be quite hard to pin 135 down. The mayor requested that the council consider a tax capacity of 40.9 representing 136 a tax levy of$8,510,000. Mr. Rolek explained that those figures would mean that the city 137 would have to cut $672,000 from the existing budget. A council member suggested that 138 the 40.9 figure wouldn't necessarily be prudent since reductions haven't been specifically 139 identified and the preliminary levy can always be lowered but not increased. The city 140 administrator concurred that it would make more sense to allow staff the time to present a 141 service level review so the council can make reduction decisions with that information 142 clear. 143 144 Several council members concurred that the worst case scenario is that the city will "hold 145 the line" on taxes and while they certainly intend to reach for as much reduction as 146 possible,they feel it is prudent in setting that as the preliminary levy. The mayor 147 indicated that he is not comfortable with"holding the line"with the current economy and 148 valuation situation; he would like a reduction and he proposed a 41.5 tax capacity rate 149 ($8,630,000). There were several suggestions from council members to either hold the 150 line or to reach a compromise between holding the line and the mayor's suggestion. The 151 council concurred that the preliminary levy forwarded to the council meeting will be 152 $8,660,000. 153 154 A department director suggested that it would be helpful for management staff to hear 155 about the council's service priorities for the city as they(the directors) consider what 156 options for reductions they will bring back. A council member responded that while the 157 council will have to rely somewhat on the institutional knowledge of the directors, it is 158 also important for staff to understand the council's priorities. Council members will 159 direct their individual comments on priorities to the administrator who can then share 160 information with the directors; there will be another budget work session to discuss 161 reductions. 162 163 Mr. Rolek noted that additional actions to be considered on Monday evening will be 164 setting the public hearing on the budget for December 13 and nullifying the levy for 165 2005A bonds for the Legacy project(as it will be handled through an interfund loan once 166 again). 167 168 Police Department Personnel -Administrator Karlson noted that Police Chief Strege 169 has a request standing to fill two vacant police officer positions(by moving up two 170 community service officers). The council concurred that public safety is a high priority in 171 the budget but it's difficult for the council to work on the picture in pieces; they would 172 like to consider all the 2011 budget decisions with all information on the table. Police 173 Chief Strege added that the department is working out the personnel situation to make 174 sure that the patrol functions are fully covered but there is some risk that the CSO's who 175 are POST eligible could chose to interview elsewhere and that would be a great loss to 176 the city and department. The council also received information on special assignment 177 officers. 178 4 CITY COUNCIL WORK SESSION September 8,2010 APPROVED 179 The council requested that an overall discussion of the department occur at a future work 180 session, including but not limited to overtime, personnel, outside assignments, grant 181 funding, and possibly provision of services to other communities. 182 183 Organizational Review—The council deferred discussion on the matter to the next 184 regular work session. 185 186 Energy Improvements at City Facilities—Public Services Director DeGardner 187 reminded the council of the energy savings projects that were discussed for several city 188 facility buildings and more information was provided on the budget impact (to the 189 Municipal Buildings Fund). 190 191 The mayor recalled that the council didn't have as strong an interest in the back-up 192 generator project for city hall. Mr. DeGardner reiterated that he wants the council to be 193 aware of the potential for a complete shut down of city hall with a power outage (except 194 for the police department). The council confirmed that the city has insurance to cover 195 outage events. There was discussion about including the generator project in 2011 plans 196 but no direction was given to include it. 197 198 The meeting was adjourned at 9:30 p.m. 199 200 These minutes were considered, corrected and approved at the regular Council meeting 201 held on October 25, 2010. �- 202 203 204 205 206 Juliarke Bartell, City Cler Jeff Reine , Mayor 207 5