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HomeMy WebLinkAboutBudget Advisory Commission - 02/24/2009 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING TUESDAY, FEBRUARY 24, 2009 7:00 PM, CITY CENTER 8080 Mitchell Road, Eden Prairie, MN Heritage Room COMMISSION MEMBERS: Don Uram(Chair), Richard King (Vice Chair), Annette Agner, Eapen Chacko, Jon Muilenburg, Richard Proops, Gwen Schultz CITY STAFF: Sue Kotchevar(Finance Manager), Tammy Wilson (Finance Supervisor), Scott Neal (City Manager), Rob Reynolds (Police Chief), Jim DeMann (Police Captain), Angie Perschnick (Recording Secretary) I. ROLL CALL/CALL THE MEETING TO ORDER Chair Uram called the meeting to order at 7:01 PM. All Commissioners were present. Schultz asked about adding the City Council direction information as a separate agenda item. Neal said any information he has regarding City Council direction would be included in the Financial History and Projections section of the meeting. Chacko moved and King seconded the agenda as written. II. MINUTES A. BAC MEETING HELD TUESDAY,JANUARY 27, 2009 Muilenburg moved and Chacko seconded to approve the minutes from the January 27 meeting. The vote was 6-0-1 with Uram abstaining since he was unable to attend the January 27 meeting. III. QUALITY OF LIFE SURVEY RESULTS The 2008 Quality of Life Survey results were presented to the City Council at their recent planning meeting. Results from the survey are used to evaluate City performance on a number of factors relative to the cities Eden Prairie typically compares itself to (Edina, Minnetonka and others). Scott Neal presented the summary of results to the BAC, and he stated the data seems fairly reliable and provides a full-scale view of the opinions of City residents. A representative sample was chosen from all nineteen voting precincts in Eden Prairie to participate in the survey. St. Louis Park is the only city ranked higher in the overall quality of life rating in the survey. There was close to a 50% increase in the percentage of people who ranked "taxes" as something they liked least in the City compared to 2006. In 2008, more people opposed tax increases to maintain City services than they did in 2006. Also, when asked where Eden Prairie Budget Advisory Commission February 24, 2009 Page 2 they would spend an additional 1% of the budget if given the hypothetical option, more people said "none" in 2008 than in 2006. This reflects an increase in the priority among residents to avoid raising taxes. Many in the survey were not even willing to consider spending additional money in a hypothetical question. Muilenburg asked about the Mixed/Transit question slide in Neal's presentation. Neal clarified that the slide was actually referring to a long question regarding the Town Center initiative in the City, not to transit services in the City. Another question in the survey shows that the number of residents receiving cable TV has dropped since 2006. Muilenburg asked about whether the percent of residents receiving cable TV included those receiving satellite too. Neal stated it did not. The question is related to a question regarding how many people receive and watch Channel 16 for City meetings and news. Residents receiving cable are able to access Channel 16, while those with satellite or no cable do not. King noted that 9000 hits were received on the Flying Cloud Airport part of the City website last time the Airport Commission reviewed this data. He noted that people are more likely to want to receive news on websites or through email than in years past. Proops asked if the term quality of life was defined in the survey. Neal said it was not; instead it was self-defined by survey respondents. IV. FINANCIAL HISTORY AND PROJECTIONS Scott Neal presented the financial history and projections information to the BAC that he presented at the City Council planning session. The general fund is vulnerable in several areas. It funds many items and activities for the City, and the buffer has decreased over time. The buffer is the difference between revenues and expenses in the general fund, and it is nearly gone. Chacko asked about the sources of revenue. Neal replied that 70% of the City's revenue is from property taxes, and 70% of the City's expenses are personnel costs. Approximately $2.5 million out of$38 million revenue is expected to be received from development in the City. Muilenburg asked what happened in 2003 when the general fund revenue declined. Neal explained that this was right after Governor Pawlenty took office and cut aid to City governments through decreasing market value homestead credits. The budget revenues took a drop at that time. Muilenburg asked if a change in philosophy took place that was linked to an increase in expenses in the City starting around 2003. Neal explained that this was not what happened. Instead,personnel costs continued to increase over time and revenue did not increase at the same rate. The general fund revenue from property taxes (as a percent of the total revenue)has stayed fairly constant over time. Debt service is projected to increase in 2010 and 2011 and then starts to drop in 2013. Debt service is tax supported,but a separate levy is used. Kotchevar explained that the City has a pay as you go philosophy for smaller projects, and they issue debt for bigger projects. Some of the larger projects that debt was used to finance include the 20-40-15 initiative and the police/fire software project. Neal explained that the total tax levy Eden Prairie Budget Advisory Commission February 24, 2009 Page 3 includes general fund, debt service, and a few other areas. Chacko asked if the state controls MVHC. Neal explained that it does,but sometimes the state does not reimburse city governments, so then the City levy must be used to pay for it. Neal walked through four scenarios that were presented to the City Council for general fund revenues and expenses over the next several years. The Budget Stabilization Fund (BSF) consisted of approximately $5.9 million at the end of 2007 per Kotchevar. A few scenarios included no salary increases for employees or no increases for a couple of years and then 2% increases after that time. Neal emphasized that these are just hypothetical scenarios for the City Council to consider the possible impacts on the BSF from keeping the tax levy the same vs. increasing it, cutting or maintaining personnel salary-related costs, or making other decisions over a period of several years. Chacko asked how the tax levy is derived. Neal explained that it is the amount the City decides to spend spread over the City's taxable base (the rate is derived from that number). In 2010, levy limits are in place, so the scenario that suggests a significant increase to tax revenues (a 7.96% increase in the tax levy) is not a viable option. The City Council requested that Neal keep refining these numbers as more budget revenue information is known, and he can give them updated data in May. Developmental revenue is the biggest unknown for the general fund budget in 2009. Neal acknowledged that it might be helpful for the BAC to know if the City Council would like to see more money spent in some areas and less in others,but with numbers up in the air, that direction was not provided by the City Council. King asked about the numbers for 2009 thus far. Neal explained that there are two peaks in revenue for the City. If the City does not have much revenue from development by April, they will know more about what the revenue numbers are likely to be for the year. Neal stated that$1.5 million was used as a development revenue constant in all of the general fund models because it is a good baseline building revenue for cities that are fully developed. Money still comes in for building permits for home improvements, but less revenue is received for cities that are fully or nearly fully developed. King noted that, even though $2.4 million in revenue is listed in the 2009 budget currently, the City has probably given up on that number now since Neal incorporated $1.5 million into each of the general fund scenarios presented to the Council. King asked if the City is hoping for a miracle before dealing with reality. Neal said he is talking with department directors about decreasing the expenses planned in their budgets for the year at this time, so they are anticipating cutbacks will be needed. Uram asked what the City Council's position is on taxes. Neal said they are not going to welcome more than modest increases if any at all. Eden Prairie's values dropped from 10% to 9.5% gross valuation for taxation purposes (commercial and home values), and it is expected to drop another 5% soon. Uram asked if the school budgets could increase even if the City does not increase its part of the levy. Neal confirmed that the tax levy is impacted by the school as well as the City's budgets. Muilenburg asked if the numbers in the general fund scenarios reflected total compensation. Kotchevar stated that the numbers represent wages and related benefits (PERA, FICA),but not health insurance. Uram asked how the staff reductions would take place. Neal responded that there may be Eden Prairie Budget Advisory Commission February 24, 2009 Page 4 some retirements, deciding not to fill open positions, and he is not sure if layoffs will be needed or not at this point in the process. The numbers for possible staff reductions they are working with in the examples are hypothetical. This set of choices will come back to the City Council again. Schultz asked if the BAC can receive information on the direction they would like the BAC to take in their recommendations from the City Council. Neal said this is not currently planned,but there are some open slots in the City Council's schedule that could be used for this purpose. Schultz noted that it is tough for the BAC to get started without City Council direction. King said the BAC looked at departmental budgets a lot two years ago, and the City Council input and direction could help department heads make decisions too. King agreed that it would be helpful to have City Council goals for the BAC's process. Neal stated that he is incorporating his values and philosophy into his budget recommendation process and relying on those in place of City Council direction currently. Neal said he is looking into hiring freezes, voluntary reductions in hours worked, and other options for reducing the budget at this time. King said he sees that Neal is focusing on the reality of the budget situation in looking at possible reductions. Neal said that once he has a budget ready, the BAC can look at it. King suggested the BAC could provide another set of eyes to help Neal evaluate his proposed budget. Uram said they will be six months into a two year budget before it is ready to be presented. The building permit information is not available until late in May, and that is a long way off for the BAC use the information to make recommendations. Muilenburg suggested that breakout sessions could take place with different departments and BAC members. King asked if the BAC could switch the meeting date for the next meeting and if Neal can present a tentative budget at that time. Uram agreed it would be helpful if Neal could give an idea of where general numbers may turn out. King noted that the suggestion to cut one FTE who provided language translation services was a huge hot topic last time around. Neal said that he would be ready with the general categories that are likely to see reductions for the 2009 budget by mid-March. Muilenburg asked if the BAC could see the proposed budget a few days in advance so the group can review it before the meeting. Proops said the BAC would have trouble making recommendations without seeing the line item budget. Neal stated that he needs to address the current situation first by completing the 2009 budget reduction recommendations, and then he can get working quickly on the 2010 and 2011 budgets. Uram said that it seems appropriate to address general categories first and then review line items later on in the process. V. POLICE DEPARTMENT Chief Reynolds and Captain DeMann provided a detailed overview of the primary responsibilities and work done in the Police Department. There are 44 employees in Patrol Operations, 18 in Investigative Operations, and 31 in Support Operations. The police force participates in proactive work to help decrease the number of burglaries by watching for open garage doors as part of patrol duties. A liaison officer is assigned to each school. The CounterAct program is led by officers in Eden Prairie (similar to the DARE program), and the program educates youth about drug use and violence. The officers work to develop relationships with students. In addition to their primary Eden Prairie Budget Advisory Commission February 24, 2009 Page 5 assignments, secondary assignments are typically given to officers. Sometimes these secondary assignments include a reversal of their priorities, or they may be based on special skill sets the officers have. Their staffing strategy is to handle the call volume on most days, and they try to balance their primary jobs with proactive work and their secondary jobs also. Because needs vary with weather and chance, at times there are not enough employees working to cover every call that will come up. The traffic unit can handle patrol calls if needed as back up, but their primary job is to help with traffic. The City's police force uses smarter ways to deploy people by assigning multiple tasks to each officer. Uram asked about the Critical Incident Stress Management Team. Their job includes helping people heal and cope with traumatic events. The SWAT team is the emergency response unit. They are trained to work together as a team, and they can be assembled quickly from different cities. The Crime Scene Tech Unit can solve many crimes with extra technology and training investment given to specific employees. Reserve officers are volunteers who bring the mobile command post van to officers as needed. The Police Department participates in many charitable events, including the Special Olympics Torch Run, Special Olympics Polar Plunge, Safety Camp, Open House, Minnesota Night to Unite, and My Book Day. The police staff budget consists primarily of personnel costs. In January and February of this year, there was a 19.6% increase in calls for service. The cold weather was probably mostly responsible for the increase. Reynolds summarized that he wants the BAC to understand how officers are deployed with multiple duties, and the City receives a lot of value for the Crime Scene Tech Unit also. King said that, based on the Quality of Life survey, the Police Department has done well in terms of public perception. They also do well with duty assignments, and King was very impressed when working with the airport police staff. King rode along with an officer for a day recently too, and he would recommend that experience to everyone. He was impressed with how the officer approached problems and with the mall officers he met too. Uram noted he also had a great experience riding with an officer a few years back, and he saw the great skills of the officers on the force. The goal of public safety is good as well. Muilenburg asked if the increase in call volume has been studied by call type. Reynolds responded that they have data available by category, method, and time of day. They try to stop problems, and the Crime Analyst works on this. Muilenburg asked what category of call is growing faster than others. Reynolds said all are growing fairly consistently. Usually when one type grows faster, there is a reason behind the growth. A single suspect could increase numbers in one category if he victimizes many people the same way. Agner asked if Reynolds has any predictions with the worsening economy and a possible link to increases in certain crimes. Reynolds responded that assaults are more likely when economic times are difficult because people experience more frustration (some of this takes place in homes). The Police Department is the answering point to get help. Some increase in crime has happened in large urban areas and especially on the coasts. It Eden Prairie Budget Advisory Commission February 24, 2009 Page 6 may or may not come here before times get better. Nuisance crimes may increase (stealing cell phones and other valuables from vehicles). Stealing from stores is likely to increase with prolonged economic turmoil. VI. CHAIR AND STAFF ADMINISTRATIVE ITEMS Kotchevar had no administrative items to present. She said she would schedule a special meeting in March to review Neal's 2009 modified budget recommendations. At the next regularly scheduled meeting (March 24), Gene Dietz will present information on the Public Works Department. VII. ADJOURNMENT The meeting ended at approximately 9:22 PM. Muilenburg moved and Chacko seconded the motion to adjourn.