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City Council - 08/18/1998 - Workshop APPROVED MINUTES CITY COUNCIL/STAFF WORKSHOP 1999 PROPOSED BUDGET TUESDAY,AUGUST 18, 1998 5:00 PM, CITY CENTER Heritage Room H 8080 Mitchell Road CITY COUNCIL MEMBERS: Mayor Jean Harris, Sherry Butcher-Younghans, Ronald Case,Ross Thorfinnson,Jr., and Nancy Tyra-Lukens CITY COUNCIL STAFF: City Manager Chris Enger,Finance Director Don Uram,Director of Human Resources and Community Services Natalie Swaggert,Director of Public Works Eugene Dietz,Director of Parks, Recreation &Natural Resources Bob Lambert, Chief of Police Jim Clark,Director of Inspections Kevin Schmieg,Director of Assessing Steve Sinell,Facilities Manager Barb Cross, Lead Accountant Sue Kotchevar,Fire Chief Spencer Conrad, and Recording Secretary Jan Nelson ROLL CALL I. CALL MEETING TO ORDER Mayor Harris called the meeting to order at 5:05 PM. All Councilmembers were present. H. 1999 PROPOSED BUDGET A. Presentation of Budget Information and Assumptions Enger reviewed four reorganization goals: 1)Build on existing cores;2)Align service areas to best meet customer needs; 3)Maximize staff"time and talent";4) Optimize use of technology to enhance productivity and customer service. He explained the Functional Chart of services alignment with the five service areas consisting of Management Services,Public Works Services,Public Safety Services,Park and Recreation Services, and Community Development and Financial Services. He noted that the Budget Team worked with the five service area managers to prepare the budget. Enger said there are several challenges for the service areas including facility modification in order to share resources and simplify the delivery of services, CITY COUNCIUSTAFF WORKSHOP MINUTES August 18, 1998 Page 2 expanded use of cross-functional project teams, and creative use of technology and shared databases. Referring to the Workshop handout, Enger noted there will probably need to be another workshop to deal with the Enterprise Funds. The preliminary budget level will be set at the first Council meeting in September. He suggested that a workshop be held to discuss the setting of fee resolutions and that it be held in September in order to match the timing of the budget. He reviewed the four objectives for the budget: 1)Minimize tax impacts; 2)Maintain current service levels; 3)Ensure balanced budget model(look beyond the current year); and 4) Provide funding for the Capital Improvements Program(CIP). He said the 1999 Proposed Budget complies with levy limits,reflects reduction in debt service, provides minimum additional staff and includes $800,000 of capital expenditures. Tyra-Lukens asked what the current levy limit is. Enger said it is just above 6%. Uram reviewed the revenue and expenditure projections. He noted the tax impact on an average value property will be minimal. There is a budget shortfall of about $350,000 with the projections. The expenditures proposed for 1999 include payroll adjustments as a separate line item,while the 1998 figures include payroll adjustments within each of the departments. Swaggert reviewed the payroll and personnel adjustments. She said the General Fund wage base is the City Wage Base of$9 million. Contract employees are on the step system, and almost all have been set up on a five-year path. The Pay Equity/Merit employees adjustment is 3%,with 2.5% on top of that for Pay Equity. She reviewed the new positions to be added and noted that any new positions will be reviewed against the Critical New Position questions on page 12. Tyra-Lukens asked if the personnel adjustments include benefits. Swaggert said benefits are addressed in another section of the budget. Regarding the Liquor Fund,Uram said they need to fill a Liquor Operations Manager position that would be a step up from the Store Manager position. They also want to implement a system of inventory control, so they will need to add an inventory control clerk. Enger reviewed the Summary of Capital Requests. The$310,000 for Facilities is for remodeling to accommodate the service area realignment and$80,000 is for ADA improvements and some Garden Room improvements. Lambert said the Parks request includes $50,000 for playground equipment at the Preserve,while the$83,500 for the Community Center includes entrance doors,rink improvements, a phone-in registration system and golf facilities to set up a permanent net system and chipping and putting courses. Clark said the Public Safety request is for a civil defense siren, fire equipment,radar replacement and additional cars. CITY COUNCIL/STAFF WORKSHOP MM=S August 18, 1998 Page 3 Tyra-Lukens asked if we have defibrillators for all first response people,per the goal of Hennepin County Community Health. Clark said we switch them from car to car now,because they need to be kept warm. He said any uniformed patrol officer would have one. Dietz said the Public Works request includes$125,000 for trail replacement and expansion and emergency pre-emption equipment for six signals. It also includes an elevator at the maintenance facility. Butcher-Younghans asked if there are any funds available from the Federal government to cover the ADA requirements. Uram was not aware of any. Swaggert said there was some relief given in terms of relaxed standards after ADA was implemented. B. Discussion of Budget Scenarios Enger reviewed the Budget Options. Thorfinnson said the first point under Option 1 is a surplus,not a savings, and would mean putting$491,000 into a capital savings account. He asked if there are any minimum amounts that could not be transferred to a CIP. Enger said there is $1.5 million in capital requests in the 1999 budget, $844,500 of which is above the normal expenditure. Harris thought such things as adding police cars are a cost of doing business and some items may have a higher priority than others. Uram said the$844,500 are those type of capital expenditures that would fit into a CIP. Enger said he was hearing some discussion about not transferring items that are part of doing business. He said they can go back through the list to determine critical operation items, and also put a filter against the requested positions. He said the budget will balance if we remove$353,000 out of it. Dietz said he understood that we would fund capital improvements to the$491,000 level next year,the exact nature of which would not be determined until the CIP is completed. Thorfinnson thought it makes sense to remove$844,500 to give an incentive to complete the CIP,with the final decisions to be left to the service areas. He thought there may be other sources of revenue that would come along,but he liked the idea of putting$491,000 into a capital savings account because it gets us one step closer to creating a fund. We can start to put money away for capital expenditures and we will have the CIP to work from. We can look at on-going capital expenditures and determine how this year fits in that plan. Harris said she also likes Option No. 1 because it starts the process in terms of future budgeting. CITY COUNCIL/STAFF WORKSHOP MINUTES August 18, 1998 Page 4 Enger reviewed the Assumptions for the Budget Model Projections,noting we will be short about 1200 housing units from the projections in southwest Eden Prairie,which creates a disparity in the budget model. We are also not planning on the levy limits continuing. Uram then reviewed the Budget Model Projections which show a 5%increase in taxes for the year 2000 on a median single family house. Enger thought we may want to make some multi-year decisions to even out increases in taxes. Thorfinnson thought realistically we can't always not have a surplus or a deficit. We need to set up reserves so we don't have to put the burden on the taxpayer. Dietz said there will need to be a 5%per 1000 gallon increase in the water rate in order to maintain the Utility Fund balance of$1 million. Enger then reviewed the Utility Operations Proposed Budget. Uram said we can do a Financial Ratio Analysis on the Liquor Fund because we have some sales and can establish benchmarks. They are proposing a transfer of $420,000 from Liquor Operations to the General Fund. C. Final Direction for Preparing 1999 Budget In review,Harris said the Council gave direction regarding Option 1 and reviewing items in the capital budget for appropriateness. Enger said he understood that the Staff positions should be evaluated against the proposed critical questions. There would be$353,000 transferred out so that the budget balances. Thorfinnson thought we have made tremendous strides in the budget process in the last three or so years . The Council has been elevated to a long-term planning position and away from squabbling about nickels. Enger said Staff agrees with that assessment, and he believes the most recent change engaging five service area directors as a Management Team will move us to a more team oriented approach and will cause us to look at the whole process together. III. OTHER BUSINESS IV. ADJOURNMENT Mayor Harris adjourned the meeting at 6:30 PM.