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HomeMy WebLinkAboutBudget Advisory Commission - 08/25/2009 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING TUESDAY,AUGUST 25, 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 6:00 p.m. All Commissioners were present except Schultz, who did not arrive until 6:10 p.m. II. MINUTES A. BAC MEETING HELD WEDNESDAY,AUGUST 12, 2009 Chair Uram asked for any additions or corrections to the minutes. Kotchevar noted two changes from Esbensen. On page 2 (2nd paragraph), Esbensen wanted to clarify that the majority of on-call firefighters do not receive both PERA and the EPFFRA pension. Some firefighters may be a volunteer for a number of years and then become full-time and be eligible for both. Another change Esbensen passed along through Kotchevar is that firefighters are expected to respond to 40% of calls outside their normal working hours (not 70%). No additional changes were recommended by Commissioners. MOTION: Chacko moved and King seconded to approve the minutes from the July 28 meeting. The minutes were approved with a vote of 6-0 prior to Schultz's arrival. III. BAC DISCUSSION ON FUTURE MEETINGS AND TOPICS Kotchevar suggested the BAC could spend some time at future meetings preparing for the November 171h meeting with City Council. Also, at this meeting, BAC members could debrief on the recent City Council workshop and decide how to spend time at future meetings. Chacko noted that different BAC members may have heard different things from Council members at the City Council workshop. Chacko noted Mayor Young preferred the no enhancements approach, and he seemed uncertain about the Eden Prairie Budget Advisory Commission August 25, 2009 Page 2 possibility of franchise fees. The Council preferred more transparency than the franchise fees appeared to have, and the Council stated they had discussed franchise fees previously. Chacko interpreted the majority of Council members did not seem to support the idea of expanding the base for franchise fees. Case disagreed with some other Council members that revenue increases were off the table. Case and Nelson thought the faster response times may make the Duty Crews worth considering. Aho and Nelson suggested the BAC could assist by looking into specific areas for expense saving, such as technology, communications, payment, and IT systems. Duckstad expressed concern the BSF would be too low with the current budget plan at the end of 2011. He is in agreement with the idea of a budget with no enhancements. Duckstad wondered why the projects that plan to use the Economic Development Fund (MCA, for example)have been taken out of the competition for resources that other CIP projects compete for. King does not think this is the time to raise revenue. Uram said the BSF seems to be overutilized in the proposed budget, and he would prefer to see some expenses reduced. Uram noted the franchise fee can be as transparent as the City wants it to be. Council member Nelson requested the BAC look into areas where the City could benefit from increasing expenses, and Schultz responded that the BAC did look into possible enhancements during the last budget cycle. Chacko suggested that Council members seem to have the impression that the BAC's document just contains its members' ideas; however, the BAC worked with the philosophy and product of Neal's original budget draft and overall agreed with the approach he took in creating the budget. An exception to this is that Neal did not take a position on the franchise fee issue. King stated he continues to support the recommendations the BAC has made to the Council thus far, and he raised the question of what else the BAC would like to recommend. Proops raised a few questions regarding the quarterly financial report. Kotchevar clarified that cost recovery for the Community Center should be calculated as Revenue/Expenses. It was noted the start-up fees and administrative fees are not being charged as part of the expenses. Since the Community Center money was raised through a referendum and the remodeling project is complete, the money is not tracked in the budget. In response to Proops' question about the fund balance, Kotchevar said the fund balance is mostly accumulated interest that the City has to give back to the Federal government on bonds (a liability on the books), including bond proceeds for parks and trail referendums. The majority of the money in the Economic Development Fund is from land sales (Lone Oaks Center and Singletree Lane areas). Proops agrees with the suggestion that the City move Economic Development Funds to the BSF. Kotchevar summarized the BAC wants to hear more about franchise fees. She noted the City will have a utility rate study done, and the BAC could be involved with this study during the first quarter of 2010. The City staff continues to review best practices for finance. Staff members are looking into evaluating how they charge for depreciation and what added value an outside vendor or consultant could bring to their review process. Proops noted if money in the CIP is available, it seems it would obscure departmental Eden Prairie Budget Advisory Commission August 25, 2009 Page 3 budgets to charge back for depreciation. King suggested that Kotchevar could bring the goals of the utility rate study to the BAC. Neal added there is a philosophical question of how much money the City should charge the current tax base for amenities that will be available to future taxpayers down the road. Chacko stated water usage was up most years even with an increase in rates, so it seemed the rate structure was not impacting usage as expected. Muilenburg noted droughts and weather in recent years may have a greater impact than the rate structure. Neal responded to a question regarding LOGIS by stating the City is moving away from the LOGIS consortium. Muilenburg stated many companies are currently saving money by waiting until equipment dies completely before replacing it(for computers, etc.). Agner asked if the City markets the Community Center and the Art Center to other cities. She wondered if reciprocity could be offered to Hopkins and other neighboring communities (Other cities residents could use the Eden Prairie Community Center and Art Center at a discounted rate and Eden Prairie residents could receive discounts at their Centers). Agner further suggested that City liquor could be marketed to a broader group. She thought these new ways to look at some of the resources in Eden Prairie could help with budget challenges. Neal noted a group of West Metro City Managers is looking into the possibility of consolidating services (such as building inspections, assessing, and 911 dispatch systems) among cities to save money. Neal offered to prepare a description of the activities Eden Prairie engages in to save money and contract out its resources. For example, the City's IT department serves as consultants for the City of Eagan's web site. Chacko asked if some of the work currently done internally could be outsources (such as assessing). Chacko noted some data driven activities could possibly be outsourced. Agner suggested adding extra creativity into budgets, and she favored the idea of increasing expenses in some areas if the City can assure a return. Agner added the Senior Center could increase revenues from increasing participation from seniors in surrounding cities. IV. QUARTERLY REPORT Kotchevar described the highlights of the quarterly financial report. For 2009, revenue less expenses as of June 30"' was negative; in 2008, that number was positive. The decline in tax revenue and development revenue accounts for much of this significant change. Proops asked about the liquor establishments, and Kotchevar clarified that the licenses and permits are paid for by the liquor-selling establishments. Delinquencies in property tax payments refer to the difference between the tax levy and the amount collected thus far in the year. Kotchevar stated 100% is usually collected during the year of a possible 102% (since the City uses a 2% tax abatement figure). Muilenburg asked if and when an ROI is anticipated for the $1/2 million plus expenses for the 20/40/15 initiative. Neal said the ROI is included in the financing tool for Eden Prairie Budget Advisory Commission August 25, 2009 Page 4 20/40/15 initiatives since the ROI must be less than or equal to 15 years on average in each phase. King noted at mid-year, the budget is 47% spent, so a good goal would be to spend no more than 94% of the budget by year end. Kotchevar stated the City is on average about 2-3% underspent by year end historically. She added that summer is the busiest time for the City to pay bills. Uram asked how the City will likely end up in terms of collections by year end. The revenue is at 47.4% currently. King suggested the City attempt to hold the expense side with a goal to bring in revenue where possible. V. CHAIR AND STAFF ADMINISTRATIVE ITEMS Kotchevar stated the BAC's next meeting is September 22nd. She could check on the availability of staff to discuss LOGIS, communications, and new initiatives in which the BAC members have shown interest. Uram noted he would prefer not to hear the LOGIS study rehashed. Kotchevar said the Ceridian contract was approved last week for Phase 1, and the City plans to look at different general ledger programs for next year. King would like to hear about the Technology budget in total. Neal said the sum of the costs should be less than for LOGIS in the long-term, and a significant reason for the City to move away from LOGIS is for more functionality. LOGIS is a Least Common Denominator system, and its capabilities fit the smaller cities' needs better than Eden Prairie's needs. King asked if there are other cities that could join with Eden Prairie and create a system with higher functionality. Neal mentioned that Kathy Nelson asked him to raise a question to the BAC about the possibility of holding BAC meetings in the Council Chambers and recording it. Proops has trouble seeing how the group would achieve the interaction they currently have, but he noted the acoustics would be better. Schultz said that due to the nature of the topics, the City and the BAC may not want them advertised. Neal noted the tapes may not be played on television unless someone requests that. Muilenburg has no objection to recording, but the meetings would become more formal. Dynamic conversation is often needed between the BAC and staff members, and it may be more difficult to achieve this if the meeting is recorded. It was noted the BAC has importance and needs to be more transparent at some point. Chacko noted the BAC can get on the Council agenda to share whatever it wants to share,but he expressed concern that the group's discussions will be inhibited if they are videotaped. King agreed it may force the BAC to increase its game, and the record could help residents understand the background for recommendations. Agner said the BAC seems to be just starting to develop a group dynamic, and she would like to establish this more before recording meetings. VI. ADJOURNMENT The meeting ended at approximately 7:07 p.m. Muilenburg moved and King seconded the motion to adjourn.