City Council - 09/06/2011 - Workshop APPROVED MINUTES
CITY COUNCIL WORKSHOP & OPEN PODIUM
TUESDAY, SEPTEMBER 6, 2011 CITY CENTER
5:00—6:25 PM, HERITAGE ROOM II
6:30—7:00 PM, COUNCIL CHAMBER
CITY COUNCIL: Mayor Nancy Tyra-Lukens, Council Members Brad Aho, Sherry Butcher
Wickstrom, Kathy Nelson, and Ron Case
CITY STAFF: City Manager Rick Getschow, Police Chief Rob Reynolds, Fire Chief George
Esbensen, Public Works Director Robert Ellis, Community Development Director Janet Jeremiah,
Parks and Recreation Director Jay Lotthammer, City Attorney Ric Rosow, and Recorder Lorene
McWaters
Workshop - Heritage Room H
I. 2012/2013 BUDGET
City Manager Rick Getschow made a presentation on the proposed 2012 and 2013
budgets. Getschow reviewed goals for the two-year budget cycle, which include:
• Enhancing service levels in public safety and maintenance of infrastructure
• Preserving other city service levels using the same resources
• Sustaining employee morale and engagement
• Implementing service efficiencies and innovations
The proposed 2012 budget includes a two percent base wage increase and step increases,
funding for one new police officer, and funding for the Fire Duty Crew initiative. This
budget represents a proposed 3.9 percent increase in expenditures, which translates into a
0.9 percent increase in the levy with a 0.5 percent tax impact($6) on the median single-
family home. Getschow also reviewed the anticipated changes to commercial and
apartment properties.
City Assessor Steve Sinell said the state legislature has changed the market value
homestead credit program to an exclusion program. The City has been levying $490,000
for the homestead value credit program in anticipation that the state would not
necessarily pay the City the amount owed. Staff is recommending that this $490,000 be
applied to reduction of the deficit.
Getschow said the City Council will set a preliminary levy at their meeting tonight. This
figure represents the highest levy the Council can set when it approves the final budget in
December.
Mayor Tyra-Lukens said she is pleased with how staff has worked to keep tax increases
low while maintaining service levels. She also likes the idea of using the $490,000 from
market value credit to reduce the deficit. She said the public will likely still have
questions about how the levy works and why the property tax increase to the median
value home in 2011 (with a zero levy increase) was $19 as opposed to a proposed 0.9
percent levy increase in 2012, which would result in a$6 increase.
City Council Workshop Minutes
August 16, 2011
Page 2
Council Member Nelson said she recalls funds were taken out of the road repair fund last
year as a one-time reduction. She asked how much that was and whether or not that
amount has been added back into the budget this year.
Council Member Aho said he would like to dig into the details of the budget more, and he
asked when the Council would have the opportunity to do that. Getschow said there
would be time to discuss the budget in more detail in October or November. Aho said he
would prefer see those discussions take place in October.
II. BUDGET ADVISORY COMMISSION FINAL REPORT ON CAPITAL
IMPROVEMENT FUNDING STRATEGIES
Finance Manager Sue Kotchevar presented the Budget Advisory Commission's (BAC)
report on alternative revenue sources for the Capital Improvement Program. The BAC
reviewed the advantages and disadvantages of the following funding sources:
• Franchise Fees
• Street Lighting Utility
• User Fees
• Naming Rights
• Tax-exempt Property Fees
• Right-of-way Fees Charged to Internal Utility Funds
• Accumulation of Fees Charged to All Users for Facility Replacement
The BAC determined that franchise fees and street lighting utility merited further
consideration. The BAC found that the street light utility would require a great deal of
research and design to implement, cable franchise fees are capped by law, and a garbage
hauling franchise fee would not provide sufficient funds because there are so many
different haulers.
The BAC found that electric and gas utilities are very experienced with implementation
of franchise fees, and they would provide a stable source of funds since they are
exclusive providers. The BAC concluded that a franchise fee for these two utilities is the
preferable option. They also determined that a flat fee for both electric and gas is
preferable, since it is simpler to implement and the rate of income would be stable.
Nelson said she likes the idea of a flat franchise fee similar to the one used by
Minnetonka. That way everyone has a stake in it. Case asked if a tiered fee might not be
fairer to owners of smaller units. Kotchevar pointed out that a tiered fee would introduce
more volatility to the income stream. The BAC also felt a tier structure might not be as
fair as it initially appears since a large, new home with state-of-the art energy efficiency
features might end being charged less than a smaller, poorly insulated older property.
Butcher said she believes the proposed franchise fee is a prudent way to plan for the
future. Aho said he understands the need for funds,but he feels the public will view a
franchise fee as another tax.
City Council Workshop Minutes
August 16, 2011
Page 3
Mayor Tyra-Lukens said she liked the process used for this study and feels that the BAC
did an exemplary job with the task the Council set for them. She asked about next steps.
Kotchevar said the City will have to negotiate the fees with the utility companies. The
City would also have to pass an ordinance, and the County would need 90 days to
implement the program. She also said the City will need some time to communicate the
changes to residents.
Open Podium - Council Chamber
III. ADJOURNMENT