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Items Discussed
Per Consensus
1. Discussion of 1998 Budget. Staff Report No. 97-WS (Presented by:
Bruce Kessel, Finance Director)
•
0
September 26, 1997
111 To: Honorable Mayor y and City Council
From: Chuck Whiting, City Administrator
Re: September 29, 1997 City Council Work Session
Staff and I have put together budget option considerations for the Council's discussion on Monday
evening. Based on direction from the last budget meeting, staff focused on options that could negate
the loss of revenues from the elimination of the franchise fee, and a possible reduction in the 6% levy
increase. To eliminate both would mean a reduction of approximately $325,000. The apparent
conclusion is that to achieve such a full reduction in these revenues City service levels will have to
be impacted. Some portion of that total may be achieved without effected service levels, such as 0%
personnel pay adjustments, but those actions may not be conclusive by Council action alone or have
adjoining impacts on the revenue side of the budget. In all, discussion of the actions that could or
may be taken is necessary for appropriate policy directives and understanding. Addressing the budget
options as presented should provide an adequate starting point.
As a practical aside, I would ask the Council to consider the following time frame in moving through
this phase of the budget process. First, I think it is necessary for the Council to go through the entire
documentation provided Monday evening, and attempt to determine where staff should focus its
limited time to addressing expense reductions, revenue increases, other cash flow related options and
outside non-budget matters that will eventually effect the City's ability to fund its operations in the
• future. If this cannot be concluded Monday evening, another session Tuesday evening would be
suggested. Second, assuming this work can be concluded with clear enough policy directives,
another budget session should be set up for October 20. The goal of that meeting would be to review
staff work done in the next three weeks to address the Council directives of this Monday evening,
coordinate with the effected stakeholders from those directives, and assess the status of the budget
relative to the need for franchise fee revenue and property tax revenue. This is important in order to
coordinate with Northern States Power if all or some of the franchise fee is to be reinstated in 1998.
NSP has asked me to inform them prior to the end of October. So third, if the franchise fee is to be
reinstated, Council action at the October 27 meeting would be asked for. I think this progression of
meetings, discussions and attention will meet the needs of the Council and staff in putting together
the 1998 budget.
Recognizing that the options included in this packet will raise attention of employees possibly
effected, I have discussed the nature of the Council meeting and the need to have the discussion take
place even where possible cuts or attention to particular work may be uncomfortable. The same may
be said of groups outside of City Hall either in the community or beyond and the Council may want
to give some consideration as to how and when to address possible cuts with their services if
necessary. It may be prudent to devote some time at the October 6 regular work session to do this
if effected parties show interest in the Council's discussion.
Have a good weekend and see you 6 p.m. on Monday evening.
•
MANAGEMENT MEETING MINUTES
Tuesday, September 23, 1997, 10:00 AM J N E Q H M AT l N I
• ONLYL Call to Order
Meeting was called to order at 10:00 a.m. Present: Whiting, Kessel, Saarion,
Hammerschmidt, Ericson, Ulrich, Ramacher, Sanchez. Absent: Bennett and Zikmund
IL September 9 minutes were approved.
ILL Department Reports- Saarion informed city staff that Jeff Wienke is in intensive care at
Unity Hospital in Fridley suffering from a head injury that happened while playing tennis. The
Golf Course and Public Works personnel have assisted for Jeff. Ericson reported that he has
amended a search warrant at the Lodmil property, 2349 Laport Drive. Saarion added that some
residents are not cooperating with the removal of diseased trees. Ramacher reported that a
reliable resident sighted a cougar on a trail by Greenfield and Quincy. Ramacher stated that
graffiti remains to be painted over throughout the city. The police have two suspects. Whiting
reported that Diane Clyne, receptionist, has resigned her position with the city. Addressing for a
replacement will begin with pending budget discussions.
IV. Unfinished Business-Ramacher and Sanchez reported that callers dialing 717-4000 are
able to be directly transferred to the Police Department, ext. 4070. Sanchez stated this is the only
department at this time that the front desk can transfer to, otherwise more hardware would need
. to be purchased. The front desk now will transfer to individual extensions within departments.
Saarion has two residents that are willing to volunteer painting over the graffiti. Ericson stated
that he would draft an ordinance requiring properties to remove graffiti within a 24 hour period. •
Ramacher will be contacting Bob Long to amend a few ordinances for loud car stereos and
cigarette licenses. Kessel reported that we will have 20 Internet E-mail addresses available that
North Suburban Cable Commission will host on their server. Department heads are to give list of
employees needing E-mail addresses. Whiting stated that the MIS committee will come up with a
policy on Internet usage for personal computers. Hammerschmidt discussed the options of
leasing versus purchasing. Kessel will determine when making major purchases if leasing or
purchasing would be better. Ulrich stated the need for the ArcView Software. This will allow
Public Works to access GIS/Joint Powers for sewer/water work. Sanchez was granted permission
to hire contractor/engineer for assessment of basement foundation walls where water is leaking in
and problem is worsening. Whiting asked department heads to come up with additional budget
cut options and meet Thursday, September 25 at 2:30 in preparation for September 29 Council
Budget Work Session.
V. Adjournment-There being no further business, the meeting was adjourned at 12:15 a.m.
Next meeting is Wednesday, October 1.
Respectfully submitted,
Tracy Sanchez, Recording Secretary
•
Employee Events Committee Meeting Minutes INF 0 H M AT 10 N
Wednesday, September 17, 1997-2:00 p.m.
fjobsent: Pat Michna, Chuck Whiting
. .\. 0NLYS
Approval of Minutes: Wednesday, August 27, 1997, Employee Events Committee Meeting
Business:
United Way- The committee decided that we would not organize a group to handle the United Way
campaign this year. Kitty will enclose the information with the employees paychecks at the next pay period.
She will contact Don Koles to drop off information regarding the United Way. It was decided it was not
necessary to have Mr. Koles come to talk to the employees this year. He has been here the last few years and
it was felt that the employees understand how United Way works and what their contributions are going for.
The committee will look at the proceeds and if donations are decreased we will decide what type of incentives
we may try next year.
Barb questioned if this committee will be handling the service awards recognizing employees years of service.
Tim Ramacher will check with Chuck Whiting if that will be part of this committee and when those awards
should be presented.
Holiday Party-Kitty reported there is $1400.00 available for the Holiday party. Kitty presented to the
committee an idea from John Hammerschmidt. John suggested a trip to the Grand Casino in I3mkley.
Discussion was held on the best night of the week and the general consensus was Saturday night with Friday
as an alternate choice. The cost for a bus for approximate 70 people would be $750.00. This would include
illve hours at the Casino and we could reserve a room for our group for the buffet. Another package would
ost$630.00 which would include the buffet(but not private room) and $9.00 in coins for gambling. We
would need at least 30 people to go for these prices. Tim Ramacher suggested we could use$800.00 of the
holiday fund for the Holiday party and the rest for next summers party. Digger suggested we could ask
businesses for donations for gifts and maybe hold a raffle for additional prizes and put that money towards the
summer party. Other suggestions were to play games, with gag gifts, on the bus trip to the Casino and pass
out the regular gifts on the way home to prevent taking the gifts off of the bus at the Casino and possibly
loosing something. Spouses and significant others would be included in the party. The dates decided on were
Saturday, December 6 or 13. The committee will ask people in their departments how they feel about this
type of party and the group will meet again October 1 to finalize details. If it is okay with the bus company
we would try to arrange a stop in Forest Lake for those people who live north of here.
Tim R. will speak to Chuck W. regarding the employee recognition dinner.
The committee would like employee suggestions for the summer party. Digger mentioned a picnic at a local
park with a lake.
The next meeting will be held Wednesday, October 1, 1997 at 2:00 p.m.
The meeting was adjourned at 2:45 p.m.
Submitted by:
iane Clyne
n:/data/users/dianec/share/minutes/events.9-17
Item No.
Staff Report No.
Meeting Date: September 29, 1997
• Type of Business: WK
WK: Work Session;PH:Public Hearing;
CA: Consent Agenda;CB:Council Business
City of Mounds View Staff Report
To: - Honorable Mayor and members of the City Council
From: Bruce A. Kessel, Finance Director
Item Title/Subject: 1998 Budget options
Date of Report: September 26, 1997
During the past several months, the Council has expressed its desire to consider alternatives for
eliminating the City's franchise fee on electric and natural gas sales in Mounds View. Over the
past five years, the City has came to rely on this revenue source to support ongoing operating
activities, therefore the eliminate of this revenue source presents some serious problems. The
following is a listing of some of the options available to the Council:
• Increase other revenues. The ability to increase other revenues are somewhat restricted.
Attached is a listing by department of some of the revenues and fees received for the
department. Some of the revenues are fixed by outside forces such as the State of
Minnesota for police aid and street aid. For other charges, we can only charge our costs
for administering such services. While we should pursue recovering our total costs for
providing services whenever possible, the total increase in revenues would be estimated
in the $15,000 to $30,000 range.
• Spend down reserves. The City has an adequate level of reserves at the present time. If
we spend down reserves without making other changes, we will be faced with a serious
situation in several years. If operating outlays are not reduced, outlays will continue to
rise, reserves would continue to fall, and within several years, the City would be faced
with a drastic cut in services, large increases in property taxes (this option may not be
available), or finding alternative revenue sources such as the franchise fee. Interest
earning available will decrease or be eliminated; the 1998 budget has $65,000 in such
earnings, which compound the problem.
• Increase property taxes. For the next several years, the City is faced with levy limits
established by the state which restrict our ability to raise property taxes above the
preestablished amount. For 1998, our allowed increase is approximately 6%. The City
may have an option to increase the levy above this level by passing a voter approved
referendum. The ability to obtain such approval is questionable.
• Sell City owned real estate. This should result in small decreases in operating outlays
and should result in an overall lower property tax burden for all property tax owners. The
sale of any real estate, however, could reduce our ability to perform some services such
as recreation programs, could lower property tax values within the community if it was
deemed that we did not have sufficient green space or recreational opportunities, etc.
• Sell City owned property. The City could sell some of its vehicles and equipment and
• then either rent the needed items, enter joint powers agreements with other jurisdictions
to perform the needed services, or contract with outside parties for such services. The
City of Mounds View Staff Report
September 26, 1997
Page 2
sale of anyequipment would result in a one-time ment q p cash inflow to the City. The long term
impact of such action would need to be evaluated in great detail to determine its impact
on the level of service and the cost of such service.
• Decertify existing tax increment districts or return portion of increment received. If
all or a portion of the existing tax increment districts are decertified, the tax capacity rate
for the city would be reduced slightly, however, the amount the City is able to levy would
not increase (the City is required to set a dollar levy from which a tax capacity rate is
established). Also, since approximately 82% of the taxes collected on property in
Mounds View is paid to other jurisdictions, the impact on the tax capacity rates would be
minimal. The City would not have these funds available for future development or
redevelopment projects and if future districts would be established, they would be
governed by new statutes which are more restrictive than those that govern our existing
districts. Another option is to return some of the increment collected to the County which
then distributes such funds back to the City, County and School District. Any amounts
returned do not affect tax levies therefore increase funds available for general fund uses,
however, the City only receives approximately 20% of any amount returned. We reserve,
however, the district and the increment for future years.
• Eliminate programs and services. Staff has prepared a listing of various services that
could be considered for reduction or elimination. Most of the items on the list need
additional discussion to adequately explain the long term impact on the city if such
reductions are adopted. Some items are postponements for the replacement of items and .
would still need to be replaced within the next several years; until the item was replaced,
the City may spend as much or more on maintaining the item as it would have cost to
replace it. Some items will impact other areas or services or may result in an increase in
complaints against the City. Some items could affect property tax values, the ability to
attract new businesses, quality employees, etc.
• Expand the City's tax base. Attempt to expand the City's tax base through aggressive
economic development projects. While this will not increase the amount the City is able
to levy, it will lower the tax rates which will lower the amount of property taxes
individual properties pay.
• Keep the franchise fee in some form. Consider keeping the franchise fee at the existing
rate, at a lower rate, or establish a phase out of the franchise fee over a period of time.
This would allow more time to plan for changes in operations, and to allow for more
input from the community relating to the level of services they desire and the preferred
methods to fund such services.
• Combination of several of the above. Most of the above suggestions are not mutually
exclusive and it may be prudent to consider several of the above items to effectively deal
with the long term needs of the community.
•
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Tax capacity rates
sear
Payable City Other Total
1990 16.030% 88.663% 104.693%
1991 14.355% 97.957% 112.312%
1992 21.147% 105.045% 126.192%
1993 21.057% 116.885% 137.942%
1994 25.828% 115.574% 141.402%
1995 26.029% 115.542% 141.571%
1996 24.686% 112.263% 136.949%
1997 25.062% 111.276% 136.338%
0
•
Budget options
September 29, 1997 Worksession
11 Department Amount Description410
Personnel - do not grant any cost of living increase; present budget
has a 2.75% increase at a cost of$52,000. Police and Public Works
employees are covered by a collective bargaining agreement. Issue
could go to arbitration which would likely result in an increase in the
General items 52,000 2.75%range or$30,000.
Training- change policy to allow management employees to attend
5,000 national conference every other year verses every year.
Personnel - reduce all management positions (Administrator,
100,000 coordinators, and department heads)to 4/5ths time.
City Council 3,000 Operating supplies -reduce amount spent on appreciation activities.
Other professional services -reduce amount spent for strategic
2,500 planning and other consulting services.
Eliminate participation in RCCLLG, North Metro Mayors,NMM
3,910 Crossing Coalition, and East Metro.
Advisory Comm. 4,000 Festivities Commission - eliminate contribution to City festival.
Eliminate position saving personnel costs, cellular phone,
City Admin 107,651 conferences, & mileage.
Personnel - reduce personnel to less than full time. May require
Finance 10,000 contracting for some services presently performing internally.
Capital equipment- stay on old computer system; potential for system
11,400 failure. •
Copy& misc. office supplies -reduce amount of copying and
Central services 2,000 purchasing of other misc. supplies.
5,000 Legal -reduce use of attorney.
2,500 Other professional - eliminate City internet home page.
4,000 Postage and printing- reduce frequency and size of city newsletter.
500 Printing- reduce city directory and new resident guides.
(Personnel - eliminate housing inspector for savings of$44,220 which
would reduce revenues from housing inspections by$8,700 for a net
'savings of$35,520; risk of having a deterioration in housing stock
Comm Dvlpmt 35,520 within the City.
'Consultants, special projects - reduce amount spent for consultants for.
24,000 'comprehensive plan and zoning and ordinance updates.
Capital equipment- delay replacement of building, housing/code
15,000 ,enforcement tracking software.
Police 150,000 'Personnel - elimate three officer positions.
11,750 'Other professional - elimate Liaison Officer.
14,200 ,Personnel - eliminate community service officer.
22,000 Capital - eliminate one squad car.
COPS events - reduce crime prevention activities and emergency
4,000 management drill. 4110
Personnel - cut summer playground leaders subsidy and instead
;Recreation 21,405 'charge full participation fees.
Operating supplies - eliminate first aid supplies and staff shirts &
860 hats.
School coordinator- reduce subsidy to Irondale Basketball Assoc.
4,850 program.
280 Training- cut state conference and bicycle conference.
200 Mileage- eliminate mileage.
s 6,000 Personnel - Reduce seasonal park workers from 3 to 1.5
Equipment supplies - eliminate replacement of pitching machine and
3,000 hockey& soccer goals.
Operating supplies - eliminate first aid supplies and landscaping
2,210 materials.
Uniforms & clothing- eliminate apparel for seasonal workers and cut
1,210 chemical weed spraying.
Other professional services - eliminate Random Park parking lot seal
coating, Silver View Pond treatment and Krone mowing services for
3,900 ditches and dangerous debris areas.
500 Advertisin - eliminate park facilities maps.
3,650 Portable - trooms -reduce services in parks to 3 months.
300 Training- cut MTI turf management school for park workers.
6,000 Grants - eliminate lifeguards at Lakeside Park beach.
29,751 Capital equipment- delay replacement of park truck.
Athletic fields 5,735 Personnel- eliminate seasonal workers; see below.
4,750 Materials & supplies - eliminate; see below.
!Athletic field maintenance - eliminate program; remaining items in
budget are fixed costs that would remain. Another option would be to
charge Little Lakes Little League and Irondale Baseball League fees
at a sufficient level to recover our total cost associated with providing
the service.
Forestry 2,850 Landscaping supplies - eliminate.
Building& ground supplies - eliminate flowers and weed control at
850 City Hall complex.
80 Operating supplies - eliminate.
8,000 !Professional services - eliminate boulevard tree trimming program.
'Grants - eliminate matching grant program for diseased boulevard
2,500 trees.
Bldg. & Grounds! 1,000 !Natural gas - reduce.
Pavement Mgmt ! 4,000 Personnel - eliminate seasonal position.
1,000 Operating supplies - reduce winter patch mix.
1,000 ;Other professional services - reduce engineering.
15,000 Capital equipment-delay replacement of dump truck.
50,000 !Capital construction-reduce pavement maintenance program.
Snow&Ice Cntl 3,083 Personnel overtime - reduce overtime outlays.
5,500 !Operating supplies - reduce outlays for road salt.
775 !Other professional service - eliminate weather service.
15,000 !Capital equipment- delay replacement of dump truck.
Si n Mntc ! 8,000 !Capital equipment- delay replacement of dump truck.
ellaneous j 2,000 !Fitness program - reduce reimbursement and/or eligibility.
'Northwest Youth & Family Services - eliminate contribution to
14,749 !program.
Community Center/Bel Rae - contract for management of facility;
?? estimated cost is not available at this time.
EDA-Majority of items will not have a direct impact on the City's General Fund.
EDA 15,400 Personnel -reduce EDA Director's time to 3/4 time. j •
61,600 Personnel alternative - eliminate EDA Director position.
1,500 Operating supplies - cut community banner program.
270 Books &periodicals - reduce periodicals to minimum level.
Professional services - eliminate use of consultants for special
117,000 projects.
2,000 Advertising- eliminate.
2,500 Printing- eliminate most printing.
2,575 Memberships - eliminate membership in most groups.
2,425 Training- Limit training to chamber and local activities.
Mileage - eliminate reimbursement for personal automobile and rely
150 on City vehicle.
•
4110
• City of Mounds View Staff Report
III
To: Chuck Whiting, City Clerk-Administrator
From: Bruce A. Kessel, Finance Director
Item Title/Subject: Franchise Fee information
Date of Report: September 26, 1997
Over the past several years, there has been discussion relating to the franchise fee the City
currently imposes on electricity and natural gas sold in Mounds View, and its impact on
residential and commercial customers. The franchise fee generates approximately $235,000 per
year and is set to expire on December 31st of this year; if property taxes were increased to make
up this amount, they would need to increase by 15.1% ($235,000 divided by$1,552,704 General
Fund 1997 property tax levy). Earlier this year, the State enacted levy limits which prohibit our
ability to increase property taxes more than approximately 5.9% or$90,000. If the franchise fee
is not renewed, the City will have to use a combination of increasing revenues,reducing outlays
and/or reducing reserves to address the loss of this revenue source. Another option that has been
discussed is to reinstate the franchise fee under a program that would gradually reduce the fee
over several years to allow time to modify operations (fees charged, services provided, methods
used to provide services, etc.).
Comments have been made in the past relating to the impact of the franchise fee on various
• clasof property. I have been in contact with NSP to obtain additional information relating to
ses some of these issues. (Note: NSP is able to provide information based upon their rate classes,
which do not always correspond to our property classifications,therefore, additional analysis was
required.)
Single Family Residences
NSP's closest rate category is residential which includes apartments, etc. Based upon
1995 data, the average franchise fee for residential customers was $16.88 on electricity
and $15.99 on natural gas usage for a total annual franchise fee of$32.87. As noted
above, these averages include apartments, therefore additional analysis was warranted. I
contacted our Community Development Department to obtain addresses on a number of
"average" single family housing units in Mounds View. These addresses were then
provided to NSP which provided summary data to use (Note: due to data privacy issues,
the information was provided in a format that did not allow us to correlate the data to the
associated properties). Based upon this information, it appears that the average single
family house pays a franchise fee of approximately$23.08 on electricity and$18.60 on
natural gas, for a total of$41.68 per year.
For 1997, the average single family house in Mounds View had a estimated market value
of$89,400 which resulted in$267.66 in property taxes payable to the City. If the City
did not have the franchise fee and wished to raise the same amount from property taxes, it
III would have needed to raise property taxes 15.6% ($41.68 divided by $267.66) for single
family residences.
City of Mounds View Staff Report
September 26, 1997
Page 2
Large Business users •
In the past, it was suggested that the franchise fee adversely impacted large energy users.
Based upon an analysis of the three largest energy users in Mounds View, this did not
appear to be the situation. For the three largest users, if property taxes were raised to
offset the loss of the franchise fee, the increase in property taxes would be greater than
what they presently pay in the franchise fee. Overall, shifting the franchise fee to
property taxes'would increase their overall cost by 1%.
Other users
Churches, schools, municipal properties, etc. Currently, these properties do not pay
any property taxes, however, they do pay the franchise fee. The school district pays
approximately $2,300 per year in franchise fees. The City approximately$5,000 per year •
of which$1,500 is from the general fund with the balance from utility and other funds.
Apartment dwellers. They do not pay property taxes directly, however, in theory, the
rent that they pay is adjusted for property taxes. They may also be eligible for renters
property tax refund. Average annual franchise fee payment is approximately$6.40.
Other issues
Deductibility of payment.
Businesses. Both property taxes and utility bills with franchise fees are
deductible business expenses.
Individuals. If an individual uses the standard deductions,there is no tax
advantage to either the property tax or franchise fee. For individuals who itemize
their deductions,the franchise fee is not an eligible deduction whereas property
taxes are; the tax implication is approximately $15.00 ($41.68 franchise fee times
28% federal tax and 8% state tax).
Fairness. There is no direct correlation between estimated market value of property and
energy usage. Individuals and businesses have different needs and preferences which can
impact energy usages. Therefore,there could be two very similar properties (similar
construction, age, size, etc.) with similar occupants that have very different energy
usages. Both properties could make arguments as to which was a fairer tax, property tax
or franchise fees. Within property tax classes or utility classes, there will be winners and
losers with the franchise fee, but overall, the amount of revenue generated by each class
will be approximately the same amount with either the franchise fee or increased property
taxes.
•