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HomeMy WebLinkAbout2019.09.05 CC Minutes - Midyear Budget Review Mayor Weidt called the meeting to order at 7:00 p.m. PRESENT: Haas, Klein, Miron, Petryk, Weidt ABSENT: None STAFF PRESENT: City Administrator Bryan Bear, Finance Director Ron Otkin, Finance Coordinator Anna Wobse, Parks Planner Shayla Syverson, City Clerk Michele Lindau Finance Director Ron Otkin began by talking about a recent news article regarding the City of Plymouth that used budget surpluses to cover the cost of a new maintenance facility. He explained this was done by conservatively budgeting revenues and contingency budgeting for expenditures. He stated that Hugo has been using this method for decades, which assures either a balanced budget or a surplus that can be used for capital items. It was his recommendation to continue using this technique. He is estimating a budget surplus of $173,556 and is recommending this be transferred to the building maintenance fund. He proposed using part of these building maintenance funds in 2020 for repairs to the parking lot, sidewalks, and exterior of the building at the fire station. Ron explained that building permit fees are a primary source of revenue. This will be a topic at the next legislative session due to a report from the Housing Affordability Institute claiming cities are overcharging permit fees, driving up the cost of new homes, and that not all cities are filing the required reports. Ron stated that Hugo has complied with reporting requirements since they began in 2002, and that cumulatively over 17 years the revenue from building permits haven’t completely covered the cost of providing inspection services. Ron noted that Washington County estimates the City’s market value and tax capacity will increase by 10%. To keep a flat tax rate, the proposed levy cannot exceed $7,757,651. Ron presented a proposed 2020 tax levy equaling that amount. He reviewed the City’s bonded debt stating the City will be making the final payments on all but one bond issue next February leaving a gross bonded debt of $445,000. The debt service levy will drop to $63,235 in 2020. Ron reviewed the street Capital Improvement Project stating the roadways had been reviewed and the new street CIP showed Goodview Avenue needed to be done next year. He anticipated the City will be able to finance all projects under the estimated schedule. He reviewed the five year financing plans for the equipment purchasing fund and storm water fund. He explained the park levy for 2020 will remain at $92,000 unless it is increased by Council. These funds are used primarily for neighborhood parks. The fire relief levy will be banked into a separate special revenue fund and that no municipal contribution is required in 2020. Ron talked about the expansion to Public Works saying the space needs study is very preliminary. Ron stated the proposed levy includes $274,626 to begin a revenue stream for a possible bond issue to finance expansion and improvements to the facilities. Minutes HUGO CITY COUNCIL MEETING MIDYEAR BUDGET WORKSHOP HUGO CITY HALL TUESDAY, SEPTEMBER 5, 2019 – 7 P.M. Hugo City Council Meeting Minutes for September 7, 2019, Midyear Budget Review Page 2 of 3 Ron reviewed the general budget and personnel costs, and recommended redirecting funds from the planner position to a building department position for a person to shadow Building Official Chuck Preisler, who will be retiring in November, 2020. No changes will be made to the high deductible health plan but insurance premiums will be increasing by 10.5%. The general budget also includes additional funds for law enforcement and street department materials. For the second consecutive year $200,000 has been set aside for flat tax rate stabilization. Ron reviewed non-tax levy revenues, which included eliminating gaming fees. Ron proposed a total tax levy of $7,757,651, which would not increase the flat tax rate of 36.33%. Ten percent ($767,665) of the total tax levy is being paid for through fiscal disparities. To keep the same tax rate, the tax on a median value home will increase by $72.68, which is still lower than most surrounding communities. Parks Planner Shayla Denaway presented to Council the Parks Commission community park funding priorities. Lions Park has the highest priority with improvements estimated to cost $7,700,000. Five phases were identified in the feasibility study, and there was discussion that roadway and stormwater could be done with development or other funds. Plans for Irish Avenue Park included interim improvements totaling $250,000 to enhance current use. There was no master plan for that park, and there was a need to initiate discussions with neighbors. A master plan for Clearwater Creek Preserve was approved last year, and the Parks Commission would like to proceed with Phase A (trails, boardwalk, signage, and seating) and Phase D (bridge and boardwalk/trail to Fenway Boulevard). The total cost would be $1,850,000. Other phases would best be done when 140th Street is extended. Ron discussed with Council the possibility of increasing the proposed tax levy to include a revenue stream for park improvement bonds of approximately $7.2 million. The revenue stream needed to fund this bond issue would be $556,133. Ron stated he was looking for a maximum tax levy to certify to the County. The levy can be lowered in December after the Truth in Taxation hearing, but it cannot be increased. Council also discussed the timing of improvements to Lions Park. City Administrator Bryan Bear talked about the last time a road project in that area was talked about, the residents on 145th Street were not in favor of it, so that street could be eliminated. The other street and stormwater improvements related to the park could possibly be paid for through development or other funds. The CIP did not include those streets but they could be added. The adjacent land has not developed partly due to the street and infrastructure costs. A cost-share could help move the project forward. It would be a timing issue. Council Member Petryk talked about the White Bear School District Levy to be brought to the voters in November, and if that passes, residents would also see an increase in school district taxes. She also questioned if all amenities planned for the park were necessary and if the City needed to bond that much for the park. Shayla replied that the plan is a few years old and needed to be revisited. Mayor Weidt asked for consensus to add $556,133 to the 2020 preliminary tax levy to begin the revenue stream for a $7.2 million bond issue for community parks. Council Members Haas, Klein, and Miron stated that it made sense. Council discussed how improving Lions Park could spur development, and if residents opposed the increase at the truth-in-taxation hearing, the Hugo City Council Meeting Minutes for September 7, 2019, Midyear Budget Review Page 3 of 3 Council could reduce the levy. It was mentioned there will be a separate workshop scheduled to discuss improvements to the public works facility. Otkin will prepare the preliminary tax levy to be brought to the Council at their September 16, 2019, meeting for certification to the County. Haas made motion, Weidt seconded, to adjourn at 8:29 p.m. Respectfully Submitted, Michele Lindau City Clerk