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HomeMy WebLinkAboutBudget Advisory Commission - 06/28/2007 APPROVED MINUTES EDEN PRAIRIE BUDGET ADVISORY COMMISSION MEETING THURSDAY,JUNE 28, 2007 5:00 PM, CITY CENTER Heritage Room 8080 Mitchell Road BAC MEMBERS: Vice-Chair Don Uram, Mark Kantor, Richard King, Jon Muilenburg, Richard Proops, Gwen Schultz. CITY STAFF: City Manager Scott Neal, Finance Manager Sue Kotchevar, Finance Supervisor Tammy Wilson, Assistant to City Manager Michael Barone, Public Works Director Gene Dietz, City Manager Intern Luke Fischer, City Engineer Al Gray, Public Works Superintendent Cliff Cracauer, Utility Operations Manager Rich Wahlen and BAC Recorder Tanya Schmieg I. ROLL CALL/CALL THE MEETING TO ORDER King called the meeting to order at 5:00 p.m. Chair Kardell was absent. Vice Chair Uram joined after 10 minutes and chaired the meeting. II. BUDGET PRESENTATION AND DISCUSSION A. OFFICE OF THE CITY MANAGER Scott Neal and Mike Barone gave a power point presentation on the Office of the City Manager, Legislative, Legal Council, and Contingency Budgets. Neal said the Quality of Life Survey was done in late 2006 and early 2007 and there is a desire to do another survey in 2008 for the 2010-2011 budget process. Neal said this is the first time they have done a community survey as a budget planning tool. He noted the City last did a community survey about twelve years ago. Neal said they would use the recent survey as baseline and have surveys done every two years at the start of the budget process. King asked for a summary of `actionable' items from the survey results. Neal said he could bring back a summary to the Commission; and stated the City received very good feedback from the consultants. Muilenburg asked if the numbers from Human Resources are flexible. Neal responded they are not and these are based on projections for compensations costs, number of people, fringe benefits, etc. Barone noted that finance blocks them so they can't be changed during the budget process. King asked about the $1,200 fee for internet access, wireless and broadband. Muilenburg asked if these are redundant costs for technology with what was presented by the IT division on Tuesday. Neal responded "No", they are similar in scale,but the same items are not repeated in another budget. Schultz asked if using an outside consultant for the City Manager's Performance Review works well, compared to using an internal process. Neal said that City BUDGET ADVISORY COMMISSION MINUTES June 28, 2007 Page 2 Council directed that action ever since he has been the City Manager, and the process has worked very well. Kantor asked if the travel budget is consistent from other years. Barone responded yes. Muilenburg asked what the City's role was in the attending the "A Better Chance (ABC) Foundation" annual gala. Neal said it is for a table in support what ABC does, and noted that the City typically has Police Officers or other Police employees attend the gala, since they interact with them on an ongoing basis. Proops commented on the dues and subscriptions and asked if some of the bigger dollar amount ones are reviewed as to whether or not the City should continue its participation, or are they just continued automatically. Neal said, as an example, they recently dropped the Southwest Corridor Coalition for the 2008 budget, and that there are beneficial reasons to continue belonging to all of these organizations. Proops said it looks like a good place to possibly save money. King asked if the City has ever thought about having a sponsorship for the annual Commission banquet. Neal said that is something they could explore. King also asked if the City qualified for 503C charitable contributions, and Neal said the City does qualify for tax deductible donations. King said people or organizations could give charitable contributions to possibly underwrite the banquet. Schultz asked if the legal budgets are a fixed fee contracts or hourly. Neal responded the prosecution services portion is a fixed fee contract and the civil services portion is charged on an hourly basis. Muilenburg asked how often that goes out for bid. Neal said they did an RFP last year a three year contract was awarded. Neal gave a short overview of the last RFP process to the Commission. Neal said they did an analysis comparing the costs of contracted legal services provision versus possibly using an in-house attorney and decided to stay with the contracted services. Schultz asked for a summary of the analysis, and Neal said he would provide the report to the Commission. Proops said the wage line is up 0.8% and asked if that is automatic or can they do something about that. Neal said that Human Resources has calculated the market adjustments for 2008 and 2009, looking at salary and benefit costs. Those items are then put in to the budget reports and are locked. Kotchevar said there will be a presentation on the pay program from Human Resources at a BAC session in July. King pointed out that Human Resources is providing data to the spreadsheet on negotiated rates and set merit raises, which is more mechanical than declarative. Kotchevar noted there is a lot of detail behind those numbers. Neal explained the City Council can make adjustments if needed. Proops asked if the employees are aware of what is in the budget for increases to salaries and benefits. Neal responded that wage information now seen in the budget is currently a guide. King asked if there is some flexibility for pay adjustments based on employee performance. Neal said there is. Neal noted that there are some BUDGET ADVISORY COMMISSION MINUTES June 28, 2007 Page 3 jobs where the City is able to look at both public sector and private sector wage information for comparisons,but that there are laws and guidelines that govern public sector compensation that Human Resources has to consider in developing the City's final pay program. B. PUBLIC WORKS Dietz gave a power point presentation with four divisions. Uram asked what are Fleet Services hours of operation. Cracauer responded that they operate from 6:00 a.m. to 6:30 p.m. He noted the staffing is split and they are also available 24 hours a day for police, fire and weather emergencies. Uram asked if they service any fire trucks. Cracauer said yes they do all preventative and basic maintenance of the fire trucks and other vehicles in the City. King asked if the budget line item for full time wages is where they would see the elimination of the one FTE salary. Kotchevar said it is not shown there, but rather on the new items list. King commented on the fleet refresh rate and asked what the impact of 15 years or longer is and what would the savings be. Dietz provided some history and additional slides. Cracauer explained the replacement criteria schedules. He said currently they are at 100,000 miles for squad cars and 9 years for pickups, for example. He talked about the auction and how much money they recover. Muilenburg made a comment that if you replace the transmission and engine you may get another three years out of the truck. Proops asked about the Suburbans. Cracauer said the fire department has Durango's now and they are on the same replacement as the police. He noted Durango's cost$20,000 and they are typically set for 7 years. Proops asked who makes the decisions on the big road improvements. Dietz said a transportation plan was done in 1998 and a consultant prepared the traffic forecasts. The plan generated a list of improvement projects based on the road conditions and demands for traffic and then prioritized based on available funds. There is a formula the state uses for distribution of gas tax revenue (about $1.6 Million for Eden Prairie) and the rest is done by special assessment and new developments. He noted that very little new construction comes out of general fund dollars. Uram asked if there was a copy of the fleet maintenance plan and annual expenditure for the fleet. Kotchevar said she will provide a copy. Schultz asked how the decisions are made as to purchase an SUV instead of a lower cost car. Cracauer said those requests are made primarily by the Fire Department. He explained that a lot of time they are going off road and a car won't suffice. Dietz pointed out that all the full-time fire staff are also EMT's and have the Durango's full of equipment. He stated that function usually drives the equipment selection. BUDGET ADVISORY COMMISSION MINUTES June 28, 2007 Page 4 Proops commented on every time he goes by the police department lot there are so many vehicles there and asked what the reasoning was and how the number of vehicles is determined. Dietz responded there are a lot of factors such as shift change. Neal noted that there are more cops out in the evening, which results in more cars appearing in the parking lot during the daytime. Neal said he will give Chief Reynolds a heads up and be prepared to elaborate on the answer. Muilenburg asked if vehicle utilization rates are prepared so you know how many you need. Dietz said we are going to an internal service fund and the theory is that each department will see what the cost is to have the fleet they need. He stated this will become a focus and people will have to budget and be accountable for their own actions. Neal said they are also doing the same thing with IT. Dietz said they do rent equipment during the summertime. Cracauer said they also have cooperative equipment sharing agreements with other cities. Schultz asked if all the vehicles are new when bought. Cracauer responded yes and that aquisitions are part of the state purchasing agreement. The State contracts for hundreds of vehicles per year at very competitive prices. Muilenburg questioned the small tools. Cracauer said that includes blades for snow trucks which cost about $10,000 per year. It also includes some hand tools. Cracauer said they could look up what was purchased specifically for each one of the years. Muilenburg asked for a report. Neal said they will run a report. King asked what the user charges are. Kotchevar said it is property and workers compensation insurance. King noted that is for internal customers. Uram commented on the pavement condition index of 80 and asked what the cost savings for future expenditures would be if it went down to a pavement index of 70. Dietz said they spend approximately 2 million on overlay and seal coating. He noted they have about 225 miles of streets in the City and that it is comparable to spending $200 per year on maintaining a $20,000 vehicle. He stated it is the most cost effective way to manage the system. Schultz asked if there will be issues with the salting corroding vehicles. Dietz said that the County roadways are already using straight salt and the incremental amount that the City would add to the system would be negligible by comparison. Muilenburg commented on the study of straight salt and the return on investment by saving money in the long run. Dietz said they didn't have money in the budget this year and they will be asking for it next year. Dietz talked about the street lighting and noted they rent most of the lights from Xcel Energy. Uram asked about implementing a street lighting utility fee. Neal said they are not proposing it in this budget cycle. Proops asked who pays for the parking lights in the Southwest Transit garage. Neal said Southwest Transit does. The commission took a 10 minute break at 7:00 p.m. BUDGET ADVISORY COMMISSION MINUTES June 28, 2007 Page 5 Dietz noted in the wintertime they pump about 6 million gallons of water and in the summertime they pump about 22-23 million gallons. It was noted over 900 lawn irrigation violations have been issued in the past two weeks. Muilenburg asked if the violation surcharges are high enough to cause people to think about it. Dietz said most people notice the $25 fine and don't repeat and others rack up the fines. Muilenburg asked if it is the same for single family and commercial. Dietz said yes, but there are not too many problems with commercial properties. Dietz explained the rates for multiple violations. Muilenburg commented on the peak requirements and maybe scaling those back. King asked how the water pricing compares to other areas. Dietz said they look low at $1.55. Next year will be $1.65 and this is the low side in the metro area. However, capital replacement costs are not included in the rate structure—those costs are paid from Water Access Fees, Trunk Assessments and the $12.50 charge on the water bill He said the rates are meant to be stable and they are not there to make money on that operation. Dietz said that wells cost about$500,000 a piece. King asked if the cost of the new wells get covered. Kotchevar said after the debt is paid off in a couple of years they are projecting that the capital enterprise fund will grow. King asked if the water could be used to subsidize other activities in the City. Neal said once the water system pays off the water related debt it would be possible, but they have chosen not to do that. They try to keep those revenues associated with where they came from. Kotchevar noted that it is considered an issue of equity. Muilenburg questioned the new wells with 15-19% more people and 36% more wells if they are lower capacity wells or replacing wells. Dietz responded yes to all and that each well will pump about 2 million gallons. He noted they would like to have 2 wells that could be out of service and still meet peak demands. He talked about possibly having some drift wells where the water is at about 200 feet deep rather than the existing 400 foot deep wells. Proops asked why the sewer bills are quarterly and aren't done with the water bills. Dietz said they are studying that. He noted by doing it quarterly it eliminates postage and staffing time. They do have a monthly billing system in place but haven't found a valuable reason to implement it. King pointed out that in order to have a total "break-even", including depreciation, the fees would need to go up. Kotchevar noted they are also recommending an increase in 2009. She stated that this is the operating and the capital is separate. King said it seems like you would want it break-even by plan. King asked if the fines are always collectible. Dietz said yes, since they can special access against the property. Schultz asked if the .10 cent increase is already set. Dietz said it is in the proposed fee resolution, but it is something that will require action by the City Council. Proops asked about not recovering depreciation. Dietz said they are not recovering depreciation. Kotchevar added that a lot of the assets of the system were donated BUDGET ADVISORY COMMISSION MINUTES June 28, 2007 Page 6 and are still showing the depreciation. It is based on the costs of the assets, but the assets were contributed. Dietz noted that the wells, storage tanks and plant were paid for by the City. Kantor asked about the cost in terms of violations. Whalen said they have spent overtime dollars or adjusted shift schedules. Kantor asked if they would consider building more wells and allow customers to pay for watering more. Dietz stated they are under regulations by the DNR that limits the amount of water that can be pumped. The regulatory agencies have some limitations on this resource. Kantor pointed out that it is not just about dollars. Dietz talked about the storm drainage budget. King asked if the rate could go up for 2008. Kotchevar said she thinks it should. Muilenburg asked if that was prorated for varying kinds of properties. Dietz responded for industrial and commercial it is. Schultz asked what is the reasoning for not raising rates. Dietz thought the projected cost is high and talked about the total expenditures in previous years. He noted they are keeping the cash balance at or above a million dollars. Schultz asked if there is an excess and a rise in rates if that extra money could be used in another area or does it stay with storm drainage. Kotchevar said they could, but she wouldn't recommend it because eventually those funds will be needed. Schultz asked about on how the 2007 budget is actually turning out. Kotchevar stated they do quarterly reports and there will be additional time to review if they are not spending what was budgeted or if they are spending more. Neal said they are now doing a two year budget. Kotchevar said they could run year end reports but half the year would still be unknown. Wilson noted with the water and sewer they redid the 2007 budget based on 2006 budget. Muilenburg asked what the motivation is for the budget line items to come in under budget. Neal said they encourage them to be good stewards of their money. Muilenburg commented on how to make them more efficient. Neal said they do it through meetings and reviews and they are held accountable. During the review process they go through and talk about work plans and budgets. Muilenburg talked about there being an incentive. Proops said it is the desire to do a better job and communicate better. King pointed out he thinks that the guideline is the City Council's philosophy. Muilenburg talked about the private sector and how there is a reward for not using the entire budget. Neal said that most rewards are prohibited by statute. King talked about the quality of life survey and challenging all the budget division holders to find a way to be more efficient. Proops noted that another incentive is it is a good place to work with security. Uram commented that there is a highly professional staff here and there is always comments about service. Muilenburg said there is a high tax burden on the residents and wants to be efficient on the line items. Neal said he is struggling with the answer and it is done differently than a private sector. Kantor said direction needs to come from the City Council. Neal noted there is a connection between spending and taxation and they will provide that information. Uram asked where Eden Prairies is in taxes. Neal said they are BUDGET ADVISORY COMMISSION MINUTES June 28, 2007 Page 7 right in the middle. He said they have a set of charts and graphs that show the data from 2006. C. FINANCE Kotchevar gave a power point presentation on Finance. King said he thinks the billing monthly is a good idea and asked why it wouldn't be switched when it goes online. King said while billings are done with paper, the City should not go to monthly billings. The change should be when the billings can be done electronically. Kotchevar agreed with these items. Kantor talked about the shock value and showing people. Proops asked if it can show a direct debit. Kotchevar said yes they can directly debit a checking or savings account for the utility bill. She noted there are mailings sent out a couple times a year with the bill. There are about 5% of the customers that use it. Proops suggested doing a publication to educate people on what it would save the City. Muilenburg asked out retirees staying on health insurance. Kotchevar said they pay for implicit liability at 100%. Kotchevar said that audit costs include audit and financial. The City has an investment advisor and she is recommending that they pay the fee out of the interest income. Kantor asked about the financial basis points. Kotchevar said they pay 10 basis points. Schultz asked if outsourcing staff would be beneficial. Kotchevar said they will review this in the future. D. REVENUE PROJECTIONS Schultz asked on what the community center revenue projection is based. Kotchevar said they have done some detailed projections with the current members and expected members. She said it would be increase in memberships that drive the revenue. Proops said the increase would be at the end of 2008. Kotchevar noted the community center will open in stages. Kantor asked about the intergovernmental fund. Kotchevar said that is put into the general fund. Uram asked about the school district lease. Neal said it runs forever and the CH Robinson lease runs until 2011 or 2012. He noted that the school district lease went to 0 in 2006. Schultz asked about the charges for traffic violations. Kotchevar responded that those are set by state statue and collected by Hennepin County. Kantor asked about the parking permits. Neal said there are permits for parking at the community center and high school and they are increased whenever the school increases the rates. BUDGET ADVISORY COMMISSION MINUTES June 28, 2007 Page 8 Proops asked how the Southwest Transit hub was financed. Kotchevar said they pay for it and they received a lot of federal funds. Neal explained that they are a separate organization and board. Proops noted that it doesn't impact City expenses at all. IV. DISCUSSION AND FEEDBACK Uram asked if they are looking for recommendation to the City Council on all the budgets or the general fund budget. Neal said they want to show them all the budgets. He noted the general fund is what affects taxation. He said they will be providing responses back on the questions and suggestions discussed. V. ADJOURNMENT MOTION: Schultz moved, seconded by Kantor, to adjourn the meeting. Motion carried 7-0. The meeting was adjourned at 8:52 p.m.