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City Council - 08/01/1995 - Workshop APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL TUESDAY, AUGUST 1, 1995 6:15 p.m. CITY CENTER COUNCEUSTAFF WORKSHOP Room: Heritage IV, 8080 Mitchell Road COUNCH2V EMBERS: Mayor Jean Harris, Councilmembers Ron Case, Nancy Tyra-Lukens, and Ross Thorfinnson, Jr. CITY COUNCIL STAFF: City Manager Carl Jullie, Assistant City Manager Chris Enger, Assistant to the City Manager Craig Dawson, Director of Human Resources and Community Services Natalie Swaggert, Director of Parks, Recreation and Facilities Bob Lambert, Police Chief Jim Clark, Director of Public Works Gene Dietz, Director of Assessing and MIS Steve Sinell, Director of Finance John Frane, Director of Inspections Kevin Schmieg, Fire Chief Spencer Conrad, Maxine Brueck, Financial . Operations Manager, and Planner Don Uram. I. CALL TO ORDER The meeting began at 6:40 p.m. The Council and staff had dinner in the Garden Room beginning at 5:30 p.m. II. WORKSHOP City Manager Carl Jullie stated that staff had developed strategies and prepared scenarios as directed by the Council at the last workshop. He distributed worksheets which showed areas of service provided by the City and indicated the level of expenditures for them. Assistant City Manger Chris Enger reviewed the charts which illustrated possible scenarios which would bring revenues into line with spending. .He described the budget model tools staff had utilized to create a workable budget model. He described possible operational spending cuts and noted that these could have a dramatic impact on how fast the expense and revenue lines on the graph would come together. He noted that large development fee receipts would drop in future years because the growth of the City will taper off. City Council Minutes Page 2 August 1, 1995 Enger reviewed the three budget scenarios presented which could be implemented over a ten-year period. He noted that an initial operational spending freeze was proposed, with a gradual spending reduction after that--dramatic decreases for a growing community to consider. Property tax rates were varied throughout the three scenarios. In the first scenario staff suggested that ongoing revenue sources be analyzed which may provide additional revenues instead of relying so heavily on property taxes. He noted that the water utility may be a source of additional revenues. Staff believed the scenarios could give the Council enough tools to develop a working model budget plan that could be implemented. Enger noted the street lighting utility's possible reductions in the city's special assessment debt contributions and the water utility profits were all possible sources of revenue that should be considered by the Council. Mayor Harris inquired if any of these three revenue sources were reflected in the projections shown by staff, and Enger responded negatively. Tyra-Lukens commented that a 5% tax increase sounded large, and inquired what it would translate into in dollar amounts. Director of Assessing and MIS Steve Sinell responded that the properties which were close to the median value within the City would have a property tax increase of 5%. He described the tiered tax system and explained that the greater the market value of the house was the less the impact of the tax increase would be. He noted that staff had tried to take into account possible contingencies, but it was difficult to predict what any Legislature might do. There was no provision for any cushion in the event the tax laws were changed or a recession occurred. He believed that the City should have some cushion built into the budget model to enable it to survive a financial crisis which could be brought on by external factors. Enger stated that contingencies need to be planned for to prevent financial deficits arising which would require the use of other funds to balance the budget. Enger stated that staff recommended scenarios #1 and #3 as viable plans. Tyra-Lukens commented that Scenario #3 had a larger tax increase initially and she believed that the taxes should be collected sooner rather than later. Mayor Harris commented she also preferred Scenario #3 as she felt the sooner the tax revenues were collected the sooner the City would be able to look at a more balanced budget and could possible consider other courses of action. The Council did not know what the Legislature would do in this session, or future sessions, and she believed it was important to put the funds in the City's hands as soon as possible. Case agreed with Mayor Harris because Scenario #3 projected revenues which were more in line with what the actual costs were projected to be. City Council Minutes Page 3 August 1, 1995 Mayor Harris commented that it was important to talk about taxes in terms of dollars rather than in percentages, because percentages always seem higher than the actual amount when translated into actual tax dollars. Sinell noted that Scenario #3 reflects the spending pattern of the City, and when the year 2000 arrives, the development growth of the City will have reached a plateau. Case discussed the level of service issues and expressed concern that residents should be informed of any proposed changes. Enger briefly discussed the level of service worksheets provided by each department in the City and listed subsidy requirements, if any. Director of Public Works Gene Dietz commented that there will be some items for which it will be difficult not to expand services in the future, with such safety issues as trail maintenance and playground maintenance. He was concerned about freezing levels of service, and believed some type of fund needed to be established to provide for flexibility to address these issues. Mayor Harris stated that criteria will need to be developed to establish flexibility and allow such things to be considered on a case-by-case basis. Thorfinnson commented he believed some factors were not being taken into account and needed to be included in the development of the budget model. Enger commented that staff believed that utilizing Scenarios #1 and #3, the discrepancy between expenditures and revenues would be closed when additional revenue sources which staff had identified were implemented. Discussion ensued regarding the use of one-time revenues. Mayor Harris directed staff to develop Scenario #3, and include additional revenue sources in more detail and illustrate the impact of this proposed model. She believed that $400,000 of planned one-time revenues could be pulled out to show what could be done if the Legislature freezes property taxes, or there is a shortfall in State funds, or aid to cities is cut again. M. ADJOURNMENT The meeting concluded at 7:21 p.m.