2023.08.30 CCMinutes - Midyear Budget Review

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Minutes for Midyear Budget Review on September 30, 2023 Page 2 of 4 The largest portion of the proposed tax levy was for general fund operations. In the General Fund budget were employee wages that included funding for four currently vacant position. Staff was currently looking to fill the fulltime Fire Chief position and a Public Works Utility Lead Position. A Community Development Assistant and Deputy Clerk position would be filled on an as needed basis. Public Works was requesting to reclassify the mechanic’s position to a Pay Grade 6, and staff was requesting to increase the hourly rate for the Audio-Visual Technicians. With the repeal of the Governor’s salary cap, the City Administrator pay grade was proposed to increase to Pay Grade 14, Step 5. All employees were budgeted to receive a 4.5% cost of living adjustment. Health insurance premiums would increase by 7.68%, much higher than the 2.15% last year but not as high as the increase in 2019 by 21%. Wobse talked about the budget for public safety. The 2024 budget had the funding for a fulltime fire chief position, and once a fire chief was hired, officer salaries would be adjusted. The current fire chief also recommended continuing the retention program that was modified last year to increase the hourly rate by $1 instead of $.50 for each year of service from 5-10 years. Washington County requested a new deputy be added for 2024. The City would be receiving $703,253 in a one-time Public Safety Aid payment that must be used to provide public safety, which would cover the cost a new deputy for the next four years. Wobse summarized expenses and revenues saying the General Fund Budget was up $735,457 for 2024. In addition to employee and inflation costs, the increase could be attributed to added cost for ordinance revisions, emergency siren maintenance, training classes, and small equipment purchases. The budget contained funds for website updates and $200,000 for the sixth consecutive year for tax rate stabilization. Revenues were budgeted conservatively by leaving permit fees equivalent to 50 new housing starts and eliminating investment earnings as the market was still unpredictable. Wobse reminded the Council that Fiscal Disparities was a property tax program in the metro area where each community receive a distribution. Hugo receives more than it contributes. The proposed distribution to Hugo had decreased for Pay 2024 but would still pay for over 7% of the total tax levy. The assessor’s report showed the median value home increasesd by 6.6% to $408,700. At a tax rate of 36.371%, the City tax on that home would increase by $100. Wobse presented a list comparing tax rates of ten other Washington County cities. Stillwater was the highest at 49.146%, and Lake Elmo was the lowest at 24.064%. Hugo moved up on the list last year because of the flat tax rate policy, where many cities lowered their tax rate. She explained that when property values decline, those cities would have to increase their rates and Hugo’s would remain the same. She reiterated that Hugo received no 2024 LGA distribution. Also, other cities charge additional fees for stormwater, street lights, street maintenance and sales tax, etc. Hugo does not charge additional fees, and that needed to be factored in when comparing tax rates. Wobse presented information on the American Rescue Plan Act (ARPA) Funds. The City had until December 31, 2024, to spend the $1,668,411.91 received. Initially, the Council was going to spend those funds on the North Star Wetland Bank, but later decided to put it towards road maintenance expenses. The Council needed to decide where the funds for the wetland bank