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HomeMy WebLinkAboutBudget Advisory Commission - 12/08/2009 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING TUESDAY, DECEMBER 8, 2009 6:00 P.M., COMMUNITY CENTER Cambria Room 167000 Valley View 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. Vice-Chair King was not able to attend the meeting, and Commissioners Agner and Schultz arrived late due to snowy road conditions (Agner at 6:11 p.m. and Schultz at 6:25 p.m.). II. MINUTES A. BAC MEETING HELD TUESDAY, OCTOBER 27th, 2009 Chair Uram asked for any additions or corrections to the minutes. There were none. Proops expressed concern that the idea the BAC discussed regarding expensing capital was left out of the final recommendations to the City Council. This idea was mentioned at several meetings and is included in the notes from the October 27"'meeting. MOTION: Chacko moved and Proops seconded to approve the minutes from the October 27"'meeting. The minutes were approved 3-0-1 with Muilenburg abstaining. III. STAFF UPDATES A. 2010 BUDGET 1. Budget Reductions Kotchevar updated the BAC on the status of the budget. It was adopted by the City Council at the meeting on December Is'. A minor adjustment was made that will increase the budget by approximately $30,000. This Budget Advisory Commission Minutes December 8, 2009 Page 2 adjustment is to give employees on step plans a step increase for next year (the cost of this is about$52,000). Proops said he was pleased to see that the CIP was not included in the September version of the budget. He asked if the budget will increase when the CIP is added. Kotchevar explained that the budget amount will not increase since the CIP is already included in the current budget. Uram stated that he would like to see the specifics of the cuts Scott Neal is considering. Kotchevar noted that Neal will present his recommended reductions on January 191h. The amount of the reductions is already in the budget,but the specific areas to be reduced have not yet been specified by Neal. Uram added that he would like to know what areas might be ripe for possible reductions when Neal identifies them. It might help the BAC to be aware of options for reducing costs. B. 2011 BUDGET Kotchevar explained that the full two-year budget was reviewed during the budget process,but the 2011 budget will likely be revised next year based on 2010 actual results and changes that may occur between now and then. Proops mentioned the two percent wage increases Scott Neal is considering for employees. Proops would like to see the 2011 Fire Relief Pension numbers since he is concerned that they could increase or decrease in the future,based on changes made recently to the program and increases in eligible staff(with the addition of the fourth fire house). Kotchevar clarified that these changes were already factored into the funding calculations, so they should not increase funding requirements going forward. Kotchevar noted that a work group will likely be formed next year with a few BAC members, Scott Neal, Sue Kotchevar, and a few others involved with the Fire Relief Pension. The most recent valuation for the Fire Relief Pension funding is from 12/31/08, so the partial market rebound has not been factored in to the funding yet. Voting will take place soon for the possible unionization of the Police Department. Muilenburg responded that decreasing the chance of unionization was a reason given for increasing expenses by increasing wages in 2011 (and for previous salary increases given also). Kotchevar noted that the police department cannot strike, so if they become unionized, an arbitrator would make decisions in possible disputes. IV. BAC PLANNING FOR 2010 A. Capital Improvement Plan Kotchevar explained that the City will be updating the five-year CIP, which is approximately $6 million currently. For the next five-year period, the City may find it does not have enough money to fund the whole plan for the first time. Budget Advisory Commission Minutes December 8, 2009 Page 3 Chacko asked about funding authorization, and Kotchevar clarified that planning is completed for five years but spending authorized for only two years. The dollar amounts for projects in the CIP budget are estimates, and projects over$50,000 need to be approved by the City Council. The five-year plan is a planning tool to look at the City's needs and see if there is adequate funding. Currently the biggest project is the pavement management program. Proops noted that he prefers to defer some of the projects in the CIP, including $400,000 per year for five years planned for the Major City Center Area/wayfinding project. B. Utility Rate Study Kotchevar added that the utility rate study will take place soon. The City will interview candidates next week. The consultants hired will meet with the BAC at some point also. Development revenue paid by developers will run out as development declines, so the consultants may recommend restructuring and using the rate structure for water and sewer instead to fund capital improvements. The question was raised as to whether or not the City should have more money in the bank to pay for random expenses ($1.5 million to replace a roof on a water plant, for example) or if the City should issue debt instead. The two firms competing for the utility rate study are Spring Stead (Financial firm) and AE2 (Engineering firm). Uram noted that utility rates in Eden Prairie are very low compared to many other cities. Kotchevar mentioned that a street maintenance fee may be a possibility. Proops stated he does not favor assessing residents for street pavements. Muilenburg did not favor special assessments since residents are already paying for services such as street maintenance; he wondered about the purpose of creating another mechanism for the funding. Proops said the street maintenance program is for maintenance and eventually replacement. Uram added that the funding is not there for the street maintenance in some cases. Muilenburg considered it more palatable to spread street maintenance costs among all residents via taxes instead of charging extra fees to residents whose streets require replacement or significant maintenance. C. Fire Relief Pension Kotchevar reiterated that a group will likely be formed next year with a few BAC members, Scott Neal, Sue Kotchevar, and a few others involved with the Fire Relief Pension to review the Fire Relief Pension. Uram asked if BAC members wanted to look at any other topics during 2010. Proops asked if the Major City Center Area project makes sense in this economy (in terms of cost and time). The $400,000 per year to fund this project relies on $2 million from the Special Service District(SSD), and Proops stated this is not the time to ask for extra money from retailers. Proops added that another issue is where the light rail station might go. Budget Advisory Commission Minutes December 8, 2009 Page 4 Chacko asked how the BAC can address the issues, Proops mentioned and other topics in a monthly two hour meeting. It was suggested that Janet Jeremiah could show the BAC what is currently planned for the Major City Center Area project, and a City Council decision may be needed as to whether or not the project should be delayed. Muilenburg noted that a subset of BAC members could meet with the Community Development department and find out why costs are scheduled as they are currently. The BAC may better understand what is driving their schedule after a meeting. Uram added that he does not think there are enough votes on the City Council right now to spend the money. Muilenburg asked if more City revenue will be generated, and if that is good for taxing in the long term. He suggested that the BAC could try meeting with the Planning Commission for a joint meeting to understand the impacts of these types of decisions. Chacko raised the issue of whether or not the BAC was as effective as it could have been during the past year. Uram responded that it was an improvement over the previous budget cycle meetings (which were twice a week for four hours each for a period of time). Muilenburg added that Kathy Nelson has asked if the BAC has looked at ways to increase revenue for the City, and he thinks that could be a good area for the BAC to spend time. Schultz would like to see this and compare with other cities and what they do. Kotchevar said the City has compared fee schedules to other cities' fees, and Chacko noted that the book used for this might be a good reference for the BAC. Uram added that comparable cities try to match their fees to one another. Chacko said that comparing city tax levies over time could be useful, as Scott Neal has done. Some cities have strong development revenues, and Eden Prairie's tax burden may be decreasing as a function of where revenues come from. Muilenburg would not want to change rates just because other cities are doing this. The utility franchise fee would change Eden Prairie taxes relative to other cities. Muilenburg mentioned that many cities offer a city-operated golf course to residents, but this may be more of a policy decision. The long-term five-year plan could include the possibility of a golf course. Uram would like to suggest taking a look at operations since the government has changed (not on a department by department basis,however). The BAC and City staff could spend some time brainstorming on new ways to do things and how services are being delivered. Uram wondered what the City of Eden Prairie does that could be completed more efficiently and effectively. Proops agreed with Uram's point, but he said the BAC cannot study these types of activities during regular meetings. They would need to observe and meet with City employees in a relaxed, non-threatening way to see what employees are doing and hear their complaints and ideas. Proops added that listening to complaints could decrease interest in unionization. Chacko said he is not sure if meeting with employees or managers is the most effective ways to do things. It seems unlikely to him that the BAC would uncover something in most departments that could be improved significantly;however, technology is an area where costs could decrease and efficiencies could be identified and gained. Chacko added that some work may be able to be Budget Advisory Commission Minutes December 8, 2009 Page 5 outsourced (possibly assessing), and money could be saved in this process; he wondered if there are cheaper ways to do assessing work. Muilenburg stated that inefficiencies could be identified in some of the administrative departments, and the BAC could recommend the City bring in consultants where needed (the BAC would not be taking on the role of consultants). Uram said it makes sense to consider the core services the City has to provide and examine the costs of those activities. Uram noted his support for the assessing department since they can increase revenue for the City through their jobs, but he agreed there could be technology available to help the department increase efficiency. Since 70% of the budget is people, the long-term sustainability of the budget is a concern. A series of meetings on a topic may be useful. Chacko asked if it makes sense for the group to take one quarter to address each issue in more depth. Uram asked if Kotchevar could send the core services presentation to all BAC members, and she replied that she would do that. Muilenburg suggested that small focus groups could be used to observe City administrative operations during the day so the BAC could come up with solid ideas. Proops said the BAC meetings do not accomplish much since the real issues rarely surface when BAC members hear presentations from or talk with managers. The BAC members would learn more by visiting with staff and seeing the nuts and bolts of the work done by employees. Muilenburg noted that Hennepin County ambulances park in the fire station parking lots, and he wondered if they could contribute to some of the maintenance costs for the facility. The response was that county vehicles are located at most fire stations to serve the local populations, and George Esbensen would say it is a benefit to the City to have the vehicles there. Proops suggested that, in January, BAC members could indicate whether they are interested in digging deeper into certain issues. Uram added that he expects some resistance from the Police and Fire departments, and he would prefer to focus on the Parks and Recreation department. Proops said efforts for BAC members to dig deeper have to originate with Scott Neal talking to his department heads and with his full support behind the efforts. Chacko suggested that some revenue could increase in the Parks and Recreation department. Agner stated that members of the BAC would probably all be willing to be involved in focus groups to study City operations in more detail. To her, the issue is whether or not such efforts would be a waste of time. If the BAC focus groups were not welcome, the efforts would not be useful. V. CHAIR AND STAFF ADMINISTRATIVE ITEMS Kotchevar noted that the next BAC meeting will be the 4"'Tuesday in January, and the BAC will work on further planning for 2010. Budget Advisory Commission Minutes December 8, 2009 Page 6 VI. ADJOURNMENT The meeting ended at approximately 7:17 p.m. Schultz moved and Muilenburg seconded the motion to adjourn.