2020.09.15 CC Minutes - Midyear Budget Review

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Meeting was held remotely pursuant to MN Statute Sec. 13D.021. Meeting ID # 878 4970 2373 Mayor Weidt called the meeting to order at 4:00 p.m. PRESENT REMOTELY: Haas, Klein, Miron, Petryk, Weidt ABSENT: None STAFF PRESENT REMOTELY FROM CITY HALL: City Administrator Bryan Bear, Finance Director Ron Otkin, Community Development Director Rachel Juba PRESENT REMOTELY: Finance Coordinator Anna Wobse Finance Director Ron Otkin began by talking about the recently approved CARES budget, which was made up of soft and hard costs. Soft costs consist of public safety personnel and time spent by staff related to the pandemic. It was his opinion the U.S. Treasury would be looking for some of this money back since they keep tightening the requirements. He recommended leaving the soft costs in a separate fund until our CARES funds have been audited. If the City needs to return some of the money it would have no impact on our operating budgets. He reviewed contingency budgeting which has been used by the City over the last 30 years. Revenues are conservatively estimated while funds are set aside for expenses that may or may not occur. He explained this technique ensures the City will either have a balanced budget or a surplus, and it is looked on favorably by Standard and Poors. He estimated a general fund surplus of $285,048 this year which could be transferred to the equipment fund. This would be in addition to the $200,000 budgeted for tax rate stabilization. For pay 2021, the City’s taxable market value increased by 5.5 percent, with 1.8% coming from new construction. This equated to a 6.8 percent increase in tax capacity. To keep a flat tax rate, the proposed levy for 2021 was $8.9 million dollars and he provided information on the eight components that made up the proposed levy. He began by talking about the City’s bonded debt stating that on February 1, 2020 the City made the final payment on all but one bond issue. As of September 1st the City’s bonded debt amounted to $445,000; however, the City will soon be bonding for $8 million for capital improvements, resulting in total bonded debt of $549 per capita, lower than the state-wide average of $1,659. The City is required to levy for bond payments, and Otkin estimated a debt service levy of $493,123, which is subject to change after the CIP bonds are sold. He provided a list of non-general fund tax levies totaling $2.3 million, which contained the Lions Park Improvement Levy of $557,581. He reviewed the largest portion of the proposed tax levy, the general fund operations. The proposed budget contains funds for a City Planner position. He reviewed salary market data showing Hugo’s paygrade minimums were 5% less than the average of the 14 metro cities of the same size that reported this year, and 2% less than the average maximums. Otkin reviewed health insurance renewal premiums and that HealthPartners was unilaterally increasing our plan deductibles. Minutes HUGO CITY COUNCIL MEETING MIDYEAR BUDGET WORKSHOP REMOTE MEETING TUESDAY, SEPTEMBER 15, 2020 – 4 P.M.