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HomeMy WebLinkAboutBudget Advisory Commission - 07/28/2009 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING TUESDAY,JULY 28, 2009 6:00 P.M., CITY CENTER Heritage Room 8080 Mitchell Road COMMISSION MEMBERS: Chair Don Uram, Vice-Chair Rick King; Commissioners: Annette Agner, Eapen Chacko, Jon Muilenburg, Richard Proops, Gwen Schultz CITY STAFF: Sue Kotchevar, Finance Manager; Scott Neal, City Manager; Tammy Wilson, Finance Supervisor; Angie Perschnick, Recorder I. CALL TO ORDER/ROLL CALL Chair Uram called the meeting to order at 6:05 p.m. Commissioners Schultz and Chacko were unable to attend the meeting. Agner arrived at 6:09 p.m. MOTION: Muilenburg moved and King seconded to accept the meeting agenda. The agenda was accepted with a vote of 5-0. II. MINUTES A. BAC MEETING HELD TUESDAY,JUNE 23, 2009 Chair Uram asked for any additions or corrections to the minutes. In reference to the statement"Chacko noted that City staff came up with the facts and presented the analysis that Proops had requested previously," Proops responded. He clarified that all of his questions were not answered in the presentation on the Senior Center given to the City Council by the Parks & Recreation department. Proops would like to see more details about the impact on the City budget for moving Senior Center activities to the Community Center, and he would like to see a well thought out plan including specific numbers. MOTION: Proops moved and Muilenburg seconded to approve the minutes from the June 23 meeting. The minutes were approved with a vote of 5-0. III. BAC WORKPLAN PRESENTATION TO THE CITY COUNCIL Agner presented the BAC work plan to the City Council at their last meeting. Overall, the work plan was well-received from her perspective. A few members of City Council raised questions on some aspects of the work plan. Specifically, it was suggested that the Eden Prairie Budget Advisory Commission Minutes July 28, 2009 Page 2 BAC is overstepping bounds in asking to see the numbers before a decision is made for 3rd party contracts or to purchase buildings. Proops, King, and Uram noted that Agner did a great job on the presentation from what they had seen or from feedback they had received from other individuals. King wondered what the BAC's role is if staffing and real estate and contracts are off the table. Neal responded that there may be concern among a few City Council members that the BAC does not jump ahead of the Council on issues. Agner added that the City Council members reminded the BAC they are in an advisory role and not giving directives. IV. 2010/2011 GENERAL FUND OPERATING BUDGET Neal gave a presentation to show the context behind the numbers in the budget. He noted that the budget stresses anticipated earlier in the year are happening, and the City did a mid-year adjustment on the expense side for the general fund operating budget. To reduce expenses, 10.85 FTE were eliminated, and non-personnel costs amounting to $250,000 were reduced. Over$320,000 was repurposed to determine where the City is relative to the budget. Proops asked about this process, and Neal explained that his staff asked managers where they think they will be at the end of the year relative to their budget. Through this process, the City is capturing dollars that were budgeted but are not expected to be spent this year. In addition, $500,000 was transferred from the BSF, and the overall result was a reduction in the approved 2009 budget of 2.6%. For the 2010-2011 budget, the City plans to maintain its Is'tier services (public health, public safety and maintenance of infrastructure), and they will try to maintain all the other City service levels also if possible. The fiscal goal is to maintain flat spending and taxing levels from 2009 to 2010 and 2011. Another goal for the 2010-2011 budget cycle is to improve Eden Prairie's relative position in fiscal comparisons with comparable cities. A biannual survey will take place soon that will allow Eden Prairie to make these comparisons, and they would like to be at or below the median with spending and taxing levels relative to comparable cities. The proposed budget from Neal is almost what he prefers to propose, but there have been a few changes on which he would like feedback from the BAC. $28 million is the proposed tax levy, and that is well below the anticipated levy limit for 2010 of$31.1 million. King asked about the $800,000 in savings estimated to be realized in 2010 from 2009 personnel reductions. Neal clarified that severance numbers are not included in that number, so the overall savings is likely greater. Neal noted that the total General Fund spending increase for 2010 is exaggerated by $873,261 because of an increase in spending in the Fire Division specifically. Over 75% of the increase in spending in the Fire Division is for nondiscretionary pension funding, and without this increase the overall General Fund spending would be over 1% smaller in 2010 than in 2009. A transfer from the BSF will be needed in 2009 ($1.25 million), in 2010 ($1.46 million), and in 2011 ($1.92 million) to balance the budget. Eden Prairie Budget Advisory Commission Minutes July 28, 2009 Page 3 Proops asked when the impact of the volunteer firefighter pensions will hit the budget. He was concerned that the City could face a significant liability 15-20 years down the road. Neal clarified that the firefighters' pension expenses are hitting the books now instead of only in the future, and an actuarial analysis is performed every other year to ensure adequate funding. He also explained that the reason the City expanded the volunteer firefighting force from 75 to 95 volunteers recently is due to the addition of the fourth fire station. The operating standard for fire stations is to have 20-25 firefighters per station. Generally half of the fire pension is paid for by the state's fire pension aid program and half is paid for by the City. This year, however, Eden Prairie needs to put in a lot of extra money to make up the difference. Proops suggested the City consider moving to a defined contribution plan instead of a defined benefit plan as many companies have done recently. This would allow the City to decrease its liability. Muilenburg asked how many calls volunteer firefighters have to go on, and Neal responded that the minimum threshold is about 70%. Weekly training is also required, and firefighters must attend 48 of the 52 weeks of training. After learning that the pension funds invested by the Eden Prairie Firefighter Relief Association decreased by 27% during 2008, Proops asked if the funds were invested conservatively enough. Neal replied that the EPFFRA Pension Fund has outperformed the state bogey annually and has outperformed funds of 96% of the comparable relief associations. The average decrease in residential values this past year is about 3.85%, so the tax base for the City has decreased. Neal stated the goal for the 2010 tax levy will be the same as for 2009 (no increase). The tax impact of a zero levy increase on taxpayers varies. Approximately 64% of residents would have their home value and taxes both decrease; 14% would have their home value decrease and taxes remain the same; 18% would have their home value decrease and their taxes increase; and 5% would have their home values remain the same and their taxes increase. The proposed 2011 general fund budget includes funding for 2% average wage increases for employees. Proops asked if a contingency clause could be included for wage increases (dependent on the City's financial situation at that time). Neal said it would be better not to leave the wage increase possibility too open-ended to maintain better employee morale. No firm commitment has been made to employees at this time (such as every employee receives 2%), and Neal is confident that staff can communicate what has been proposed to employees. He noted that peer cities are not necessarily freezing wages for all employees. The City would like to continue to save time and money by having a non-unionized fire and police force, for example. An additional $156,000 has been proposed for two new police officer positions in 2011. An additional $120,000 has been requested by the Fire Department for a proposed Duty Crew initiative in 2010. Neal is on the fence about both of these funding requests. The Duty Crew initiative includes enlisting two paid on-call volunteer staff in each of the fire Eden Prairie Budget Advisory Commission Minutes July 28, 2009 Page 4 station buildings around the clock. These people would go straight to the site when a fire occurs, and other firefighters would back them up. Part-time wages would be offered for firefighters who are on the Duty Crew. The City needs to decide if the potential value of having two firefighters on the scene a few minutes sooner is worth the cost of supporting a Duty Crew. The CIP is at$90,000 for 2009, 2010, and 2011. Eden Prairie is a Plan B City and cannot freeze street lighting costs,but they could include franchise fees for energy companies to offset costs. The City plans to keep its legal services contracts around the current levels for 2010 and 2011 (at or below $500,000). The City decreased its expectation for development revenue based on recent declines. In 2009, the City budgeted $2.4 million and it is now hoping for$1.4 million. In 2010, $1 million is budgeted for development revenue, and in 2011, $1.2 million is budgeted. The City is not expecting to receive intergovernmental revenues at this time. Franchise fees for cable television could go to the state,but currently these are a revenue source for the City. Fire pension aid is decreasing from the state at this time. Neal and Kotchevar will meet with Gene Dietz and staff about the Utility Rate system. Proops asked if Neal expects an answer from the City Council Tuesday evening (at the meeting on August 4"') or at the meeting on August 18"'. Proops asked about the CIP levy of approximately $90,000. This amount has been lowered in 2009 as a result of the implementation of the facilities internal service fund as the capital costs are now charged to the general fund. The CIP levy is expected to remain at this level in 2010 and 2011. King suggested it would be useful to have the Fire Chief talk about the Duty Crew, including how call response time could be improved with it and the logistics of how the Crew would operate. King wondered if the Duty Crew would move the City a step closer to having a full-time fire force. Neal clarified that the vision for the Eden Prairie Fire Department includes doing what they need to in order to avoid having a full-time fire force. There is an intangible benefit and value for a Duty Crew since it would affect the amount of demand that is placed on firefighters to respond. If a Duty Crew is formed, they would need to figure out how it affects the current pay matrix also. Muilenburg asked how many calls would be impacted, and he wondered if they just need someone there in a half hour or right away for some calls. King noted that sprinkler systems would decrease the number of fires that cause major damage significantly. Uram summarized that the BAC would like George Esbensen to speak at the next BAC meeting. The question was raised as to whether a subcommittee would be adequate to meet with him. Muilenburg responded that he would like the whole BAC to meet with Esbensen, and Proops noted that the BAC needs to meet again to get its ducks in a row before advising the Council anyway. Uram thought the BAC would spend a little time at this meeting discussing budget thoughts so far. Proops said he needs to see detailed numbers from Kotchevar to comment. Muilenburg responded that seeing all the numbers seems contrary to the current BAC work plan, which refers to the BAC providing a high level overview. Agner Eden Prairie Budget Advisory Commission Minutes July 28, 2009 Page 5 said the detail is nice to see so that the roll-ups make more sense. It was suggested that the BAC could see the detail but decide as a group what the BAC wants to discuss and the other budget numbers would then just be background information. King noted that the CIP document Neal and Kotchevar handed out has useful detail included. Muilenburg wondered if the City could support two or three more liquor stores. Neal referenced a study the City reviewed a few years ago, which concluded that adding a fourth store would not add much to the City's revenues. It was noted that the liquor store near Jerry's in southeast Eden Prairie closed. City liquor sales are increasing 6% this year overall and 14% in the newly remodeled store. Muilenburg said it would be good to keep the franchise fee in the general fund,but he would recommend not having it be hidden. Neal responded that the franchise fee on electric utilities is born by taxpayers now. It is possible that the City could spread the street lighting utility cost across not-for-profit organizations too, including schools and churches. King asked if the MAC would be affected by this possible change to utility fees, and Neal confirmed that it would be significantly affected by the possible change. Uram asked if there are questions on the numbers the BAC has seen thus far. Agner said her questions on the Fire Department's costs were covered by Neal. King commented that he had hoped the revenue to expense comparison would look better for the Community Center,but it seems that their expenses increase as revenue increases. Proops inquired about the status of PTO, and Neal responded that the City just converted to a PTO system in the past three weeks. Neal offered to present more detailed information on the PTO system at the next BAC meeting. V. CHAIR AND STAFF ADMINISTRATIVE ITEMS Kotchevar said it would be good to set preliminary dates for interim BAC meetings. Neal said Esbensen has a presentation prepared and ready to go on the Duty Crew that he could do in less than an hour at a future BAC meeting. BAC members could send Fire and other budget questions to Kotchevar before the next BAC meeting to see if other topic speakers are needed. The next BAC meeting will be held on Wednesday, August 12 at 6 p.m. Uram noted that one of his goals is to run a better meeting. At the end of the City Council meeting,people are often given a chance to comment on topics that were not on the agenda to keep a more focused discussion during the meetings. Muilenburg and King overtly endorsed Uram's authority to stop discussions in the middle as needed. Proops expressed concern since he would prefer to comment on a topic as it is being discussed. Uram clarified that, if a discussion is taking place during the meeting, the group can talk about it and members can continue to comment. After Uram determines that he has heard a variety of comments,he could cut off discussion and lead the group on to the next Eden Prairie Budget Advisory Commission Minutes July 28, 2009 Page 6 topic. Then further comments could be saved for the end of the meeting. Agner endorses and Proops is okay with Uram exercising leadership in this way. Kotchevar noted that some future changes will happen on the expenditure sheet(page 2). Due to cost allocation, some major changes between divisions will happen. King noted BAC member Schultz's recent award in a newspaper article. VI. ADJOURNMENT The meeting ended at approximately 7:45 p.m. King moved and Muilenburg seconded the motion to adjourn.