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HomeMy WebLinkAboutCity Council - 09/01/2009 - Workshop APPROVED MINUTES CITY COUNCIL WORKSHOP & OPEN PODIUM TUESDAY, SEPTEMBER 1, 2009 CITY CENTER 5:00—6:25 PM, HERITAGE ROOM II 6:30—7:00 PM, COUNCIL CHAMBER CITY COUNCIL: Mayor Phil Young, Council Members Brad Aho, Ron Case, Jon Duckstad, and Kathy Nelson CITY STAFF: City Manager Scott Neal, Police Chief Rob Reynolds, Fire Chief George Esbensen, Public Works Director Eugene Dietz, Community Development Director Janet Jeremiah, Parks and Recreation Director Jay Lotthammer, Communications Manager Joyce Lorenz, City Attorney Ric Rosow, and Recorder Lorene McWaters Heritage Room H I. 2010-2011 Budget Presentation City Manager Scott Neal said this Workshop is the City Council's opportunity to begin providing input on the draft 2010/2011 budget prepared by staff and presented to City Council members and the Budget Advisory Commission's (BAC) in July and August. Neal said the BAC met with the City Council in August to provide their feedback on the proposed budget. Neal reviewed reductions made to the approved 2009 budget in response to decreased development revenues. The reductions totaled about 2.6 percent of the budget. Neal said the fiscal goal for 2010 and 2011 is to maintain flat spending and taxing. The draft budget proposes maintaining or enhancing services levels in the areas of public health, public safety and infrastructure maintenance. Other service levels will be preserved using the same or less resources than 2009. The proposed 2010 and 2011 general fund budget is as follows: General Fund Proposed 2010 ' Proposed 2011 Revenue 35,956,229 36,256,566 Expense 37,412,427 38,178,323 Subtotal (1,456,198) (1,921,757) Transfer in from BSF 1,456,198 1,921,757 TOTAL 0 0 BSF Balance $3,013,837 $1,092,080 The proposed 2010 budget includes an increase of$873,261 for the Fire Department. $120,000 of the proposed increase is for discretionary new staffing (duty crew). A mandatory $1,421,386 City contribution is required to fully fund the firefighter pension fund. This is $674,386 more than the 2009 budget. Neal said there are several options available to fund the pension: • Levy for it, and add to proposed spending levels • Levy for it, and reduce proposed spending levels • Pay for it from reserves (BSF, EDF) • Force Hennepin County to levy for it(not recommended by staff) Neal reviewed the likely tax impact of a zero levy, assuming an average decrease of 3.85 in residential values. 64% of homeowners would see values decrease and taxes decrease 14% of homeowners would see values decrease and taxes remain the same 18% of homeowners would see values decrease and taxes increase 5% of homeowners would see values remain the same and taxes increase Neal also distributed handout of tax rate projections based on the proposed budget plus $688,000 for fire pension funding. On average, commercial/industrial property is projected to see a value decrease of about 2.1%. A commercial/industrial property valued at$5,000,000 would see a City tax increase of 4.49%. Apartment properties will see an average projected decrease in value of around 4.9%. An apartment property valued at$5,000,000 would see an increase in City tax of 1.51%. Neal said the City Council will be asked to set a preliminary levy at their Council meeting this evening. On November 17, the City Council and BAC will hold another joint workshop to discuss the budget. On December 15, the City Council will approve a final budget. Discussion Case asked about whether or not a street light franchise fee could be implemented this year, assuming it were to be approved by the City Council. Neal said implementation would likely not take place until the middle of next year. Case said he thinks the City Council is the appropriate body to discuss the franchise,rather than the BAC. Case also said he views the Budget Stabilization Fund (BSF) as something to be used only in "the valleys," not on an ongoing basis. Mayor Young said he cannot think of a better time than now to use the BSF. He said he agrees that the franchise discussion is ultimately one for the Council. Young said long term the City must find a way to reconcile expenses and revenues. Case said he is concerned that the proposed budget relies heavily on use of savings. Case said he is not hearing any information on where the City will be financially in two years. Nelson said she believes the funds for the Fire Pension should come out of savings; however, she is concerned that the balance of the BSF will be a quarter of what it is today. She does feel we have to use BSF this year. Nelson said we need to look at increasing efficiencies while keeping up service levels. Aho said that now is the right time to use BSF,but he wants to make sure to keep some in reserve for future needs. He said there may need to be some reductions in budgets. Case said it is unrealistic to expect to keep service levels the same and taxes the same. He said the City will "hit a wall" in 2012 and could have to cut the equivalent of 40 additional positions. He said a similar situation occurred in Eden Prairie between 1990 and 1994 when expenses were rising but revenues were not going up. He said the Council was forced to raise taxes in 1995. He said the Council cannot meet its goals solely through budget cuts and use of savings. Young said if Case thinks taxes should be increased, he should say so. Case said he is not saying taxes should be raised. He said the street light franchise is a possible source of revenue. Nelson said she believes taxes need to stay as flat as possible for 2010. Case said that there is an expectation in government jobs that"steps increases" are similar to a contract and that are guaranteed, even during a wage freeze. Aho said that looking across all markets, he disagrees that there is an expectation of step increases in this economy. Neal said the City's union contract will expire at the end of 2009. Some union employees in other cities will receive negotiated raises in 2010. He said he thinks City of Eden Prairie employees understand the need to forego raises in 2010. Nelson said she can see the logic of Case's step increase argument,but does not think the City can afford the extra money. Young said he cannot support step increases under the present circumstances. Council Chamber II. OPEN PODIUM III. ADJOURNMENT