2022.08.31 CC Minutes - Midyear Budget Review

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Hugo City Council Meeting Minutes for August 31, 2022, Midyear Budget Review Page 2 of 3 Wobse reviewed the General Fund Budget that included personnel. There were 27 regular full- time employees included in the budget, one vacant position in the Community Development Department, a new deputy clerk position, and funding to allow for the restructuring of the Public Works Department for lead worker positions and a superintendent. A salary survey showed the City of Hugo’s pay was comparable to other metro cities. The proposed budget contained a 4.5% cost of living adjustment. The budget also contained funds to increase the Fire Department retention program to an hourly rate increase of $1 instead of $.50 for firefighters working between 5-10 years. Health insurance only increased by 2.15%, and HealthPartners was not increasing the deductible. In summary, the 2023 General Fund Budget was up $1,116,240. In addition to personnel costs, there were increased operating expenses anticipated for Lions Volunteer Park; website redesign, room rental and planning software; and $200,000 for flat tax rate stabilization. Wobse reviewed how revenues were conservatively estimated. Non-tax levy revenues equaled $729,369. The general fund tax levy requirement after subtracting the non-tax revenues was $7,934,054. In summary, when adding all levies, the total proposed levy came to $10,984,174. Wobse provided fiscal disparities distribution information explaining how the City received more back in volume than contributed. Almost 8.5% of the total tax levy was paid for by this program. At the proposed urban tax rate of 36.274% in 2023, the median valued home would see an increase of $156. This rate would be midrange of other cities in Washington County. A new requirement of the state was to include an insert in the proposed tax notices that would show various levies and budget details. Wobse asked for a discussion on a fulltime fire chief saying the budget did not contain funding, but if the Council chose to add it, it would reduce the equipment levy to cover salary and benefit costs. She asked for direction on this and on the public works restructuring. Council had questions on the insert that would accompany the proposed tax notices. Wobse explained the categories would likely model what is submitted to the state auditor. Bear stated the mailing will likely influence what the residents think, and it will be interesting to see the feedback. It was noted it would put emphasis on levies and not values, and other units of government would be reflected as well, not including the state. There was discussion on the levy increase of $1.3 million over last year. Wobse talked about the increase in the equipment levy and inflation affecting the general fund. There was a question on how Lions Park affected the levy. Wobse explained the park budget increased to $884,000 from $710,000 partially due to added operating expenses for Lions Volunteer Park and additional seasonal worker. It was noted that the park costs may be offset by rental revenues. There were questions on the City’s reserves and its impact on the borrowing rate. Bear explained having a high balance helps the bond rating. There were other techniques available to achieve the AAA rating, but it was not on the City’s list to borrow money. It was agreed it was a good idea to have the reserves since it was unknown whether the fiscal disparities program may go away. The Council had questions on the impacts of restructuring Public Works. Wobse replied there would be an impact to the streets fund, parks fund, and the sewer and water fund. It was noted funds were set aside in the previous year’s budget and not used. The organizational chart had been modified, and Council indicated they were comfortable moving forward with restructuring.