HomeMy WebLinkAbout2020.09.15 CC Minutes - Midyear Budget Review
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.
Hugo City Council Meeting Minutes for 15, 2020, Midyear Budget Review
Page 2 of 3
The total general fund budget was up $340,000. Otkin explained that in addition to wage and
insurance costs, the remaining increase was attributed to higher law enforcement and street
department materials. The General Fund Budget also contains $200,000, for the third consecutive
year, to be set aside for maintaining the new tax rate that was set last year.
Otkin said he conservatively estimated non-property tax revenues, explaining that investment
earnings were zero because interest rates are near zero, and room rentals will be non-existent until
COVID runs its course. After subtracting those non-tax revenues, the General Fund Tax Levy
requirement was $6,075,000.
He recapped by saying staff was proposing an 8.9 million tax levy, which would not increase the
urban tax rate. He talked about how fiscal disparities increased 11 percent to $852,000. Almost
10 percent of the City’s tax levy is paid for through this program. The median value home
increased by 4.13 percent, and by keeping the tax rate the same, the tax would increase by $49.14
on a median valued home. Otkin asked for the Council to come to a consensus on the levied tax
amount for approval on the September 21, 2020, Council meeting, which can be decreased
following the Truth in Taxation hearing in December, but cannot be increased.
Weidt talked about the surplus and having a lot of moving pieces with COVID, the economy, and
election, and he wanted to continue on the path Otkin had proposed.
Miron agreed and asked if the City will have an opportunity to adjust the CARES budget in the
event the federal government demands the money be returned. Otkin explained that staff will
need to document how our expenditures are COVID related and if we need to return the money
we will have already set aside the funds. Miron agreed with Weidt that there were a lot of
moving parts and having a cushion was a good thing.
Weidt asked about the City Planner position and if there was an intention to fill the position as
soon as possible. Community Development Director Rachel Juba explained it has been left as a
placeholder. The Building and Planning Departments continued to stay busy and they did use
Landform a few times to get through some of the planning projects this year. Staff will be
looking at the work load at the end of the year. Staff has hired interns in the past to reduce
workloads. Bear added that the Planning staff was as busy as can be, and it was not a very
sustainable pace, but he did not want to fill the position now and have economic conditions turn
downward. It was Weidt’s opinion that the City should not be too conservative about getting help
if needed.
Petryk asked about elections and increased election costs. City Clerk Michele Lindau replied that
the state was providing masks and hand sanitizers, and the other large expense was shields, which
would be funded through the CARES budget.
Weidt asked about the business grant program and how it worked if they also applied for grants
through the County. Juba provided information on the Washington County grant program saying
15 Hugo businesses had applied. There were over 300 applications that would total $5 million
dollars. The deadline for the second round of applications was September24, 2020. She stated she
would reach out to the County, but it was her thought that the City’s qualifications were close to
Hugo City Council Meeting Minutes for 15, 2020, Midyear Budget Review
Page 3 of 3
the County’s. Haas asked about extending the City’s October 1 deadline. Bear noted businesses
could apply for both but they could not use money on the same expenses twice.
Adjournment
Haas made motion, Weidt seconded, to adjourn at 4:44 p.m.
Respectfully Submitted,
Michele Lindau
City Clerk