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HomeMy WebLinkAboutItem 06.dCITY OF LAKEVILLE CITY COUNCIL WORK SESSION MINUTES August 28, 2013 Mayor Little called the meeting to order at 6:30 p.m. in the Marion Conference Room at City Hall. Members Present: Council Members Swecker, LaBeau, Anderson, and Davis, and Mayor Little Staff Present: Steve Mielke, City Administrator; Dennis Feller, Finance Director; Julie Werner, Accountant; Judi Hawkins, Deputy City Clerk 2. Citizen Comments There were no citizen comments. 3. Proposed Preliminary Budget Steve Mielke stated that at the July 24th work session, following review of the proposed maximum levy, Council requested staff prioritize additions to the 2014 -15 budget and tax levy, for discussion purposes. Staff has addressed the budget in this way and in addition has provided information on tax impacts with the objective to receive direction from Council on a maximum tax levy and a proposed 2014 budget. Dennis Feller reviewed previous discussions by Council and staff and requested direction and guidance from the Council in setting a framework for adopting a preliminary budget and tax levy on September 16. Feller stated that several assumptions need to be made: • Resumption of growth • Emerging trends • Aging infrastructure • inflationary pressures • Legislative mandates Swecker asked what is the status of the visioning process and if results of that will be available to assist with budget decisions by being aware of the community's priorities. Mielke stated that Envision Lakeville results will be provided to Council at a work session on September 3. 4. Budget Discussion Topics Feller stated that the proposed budget assumes a steady upward trend of growth, which will impact the two -year budget as well as planning for future capital improvements such as the County Road 50 corridor. Staff is recommending lowering the fund balance to 40% and appropriating those unencumbered fund balances to the equipment fund ($1.8M); the 6d. City Council Work Session Minutes August 28, 2013 Page -2- building fund to finance major maintenance projects in all facilities for the next five years ($590,000); and for Emerald Ash Borer control ($45,000). Of the 5.5% proposed increase in property taxes, 2.2% would be carried by growth in the tax base due to new construction, leaving a 3.3% net increase in taxes to be spread over existing residents. Taking into account that 1.2% of that increase is for the street reconstruction improvements, the net increase for services is 2.1 %. Swecker asked if conservative figures are being used for the growth. Feller stated that the 2.2% is based on the actual increase as of December 31, 2012. Future growth is projected to be 340 dwelling units in 2014, 370 in 2015. Staff believes these projections are achievable based on economic conditions and trends. Additional growth means added needs and costs to maintain service levels and infrastructure, a high priority to Lakeville residents. - To assist with considering the 2014 tax levy, staff formulated five scenarios of tax impact on a median value home ($225,000) ranging from maintaining the same tax levy as 2013 with no increase, to an increase of 5.5 %. Feller stated that with the divergence in property values, there would be various impacts on actual dollars of increases or decreases. Anderson asked how the connections can be made between the various funds available and how choices are made as to how to distribute those funds. Little stated that it is important to look at the details before seeing the big picture. Mielke added that the budget is premised on a certain use of funds and where tax dollars are allocated; the decision is the bottom line. In the past fund balances have been used for operating costs; this budget proposes that fund balances are not used for operations. If the Legislature re- imposes levy limits the levy will be set at a lower amount and where dollars are spent may impact next year's budget. The City can issue bonds for equipment purchases, but not for operating dollars. Feller discussed major cost drivers which have resulted in increases over the 2013 adopted budget and proposed prioritization of budget additions which would be supported by property taxes include legislative mandates, debt management, infrastructure improvements, and other budget line items. Staff continued to discuss the budget in detail by line items and provided additional; information as requested. Mielke reiterated that the objective is to get to a 2014 preliminary levy and budget. Council has expressed that maintaining existing infrastructure is a high priority. Priorities need to be discussed to determine if the Council is willing to decrease other categories at the expense of infrastructure. City Council Work Session Minutes August 28, 2013 Page -3- Swecker asked for information on the school district levies and how they might affect taxpayers. Swecker would like residents to know that the City is working with the school districts. LaBeau believes that a large number of people choose whether to move to a community based on the school district. Little stated that decisions on the City's budget should be based on what's best for the City and not what other agencies are doing, including the state and the county. LaBeau believes taxpayers basically look at and care about the bottom line on their tax statements. Davis stated it is important to know what the school districts are doing in order to run the city most efficiently. Staff will provide more school district levy information to Council at the September 9 work session. The cumulative total of the proposed tax levy is $24,264,040, which is a 5.1% increase. After adjusting for growth, the impact is 2.3 %. Feller stated that the Legislature could impose levy limits again, as they have done in the past. Mielke explained that the Legislature imposed levy limits for what was supposed to be one year, but at the same time they were adding LGA to the state -wide payment system. If LGA is not effective in encouraging cities to lower their taxes, there is a strong possibility that levy limits could be put on again. In 2013 the Legislature allowed a 3% levy over 2012, regardless of whether it was a growing community. Staff recommends strategically appropriating funds in an effort to protect the City's ability to respond to future levy limits. 5. Responses to July 24 Work Session The biannual community survey is scheduled to be conducted in 2014. Swecker asked if the results of the visioning process could replace a community survey. Mielke stated that although the visioning process was statistically valid, the information gathered is not typical of a community survey. Council members suggested the next survey wait until 2015. Proposed personnel changes which would be paid with taxes were discussed, including part time code enforcement and engineering tech. Contingency fund includes health care increases. Positions paid for with fees, or revenues, include utilities and inspections. Little stated tli,t any new personnel needs to be justified, i.e., forester, and options explored. Mielke stated that several department directors will be at the September 9th budget meeting to discuss justifications for staff increases. Mielke stated that with the new growth some personnel will be needed and ongoing services shouldn't be sacrificed. Little added that options can be explored for personnel. LaBeau asked for clarification on the cost of trail maintenance and replacement and believes it is important for people to understand the total costs. Feller added that a trail management fund was established two years ago for those expenditures and is funded from liquor revenues. Little stated that Council has expressed a desire to support road and trail maintenance. City Council Work Session Minutes August 28, 2013 Page -4- Mielke encouraged Council members to look at the whole picture and remember that the City is currently experiencing growth and is also experiencing aging infrastructure. Council has expressed that maintaining infrastructure is a priority since it is good for neighborhoods and saves on pavement management costs. Council needs to look at service levels and decide if maintaining infrastructure needs to be at the expense of services, if it's not possible to do it all. LaBeau believes the visioning process will provide indications of the residents' priorities. Feller provided clarification on the budget and the process of distributing costs over several years. He explained policies of city budgeting: 1) revenues equal expenditures, 2) there are no new services financed by taxes, 3) balancing short term and long term and general fund transfers to avoid peaks and valleys. Mielke stated that by spending fund balances to lower the levy, the potential exists to be capped at that amount by the Legislature. The city can be somewhat protected by positioning funds to cap - eligible funds. Due to the variance in property values, some residents will see an increase and some will see a decrease in their taxes. Little added that Lakeville's tax goals needs to be compared to cities within the region and not those in the northern suburbs. Swecker believes Lakeville should stay in the bottom one -third of Dakota County cities. Davis stated that maintaining the current efficiencies are important. Little suggested that some principles be defined to guide staff in arriving at a proposed budget. These principles might include being most efficient and looking for areas to cut costs. Mielke stated that Council look at how to use the fund balance and how other funds are being used; staff has gone line by line to make sure the budget is as lean as possible. Davis said he would prefer not to' go.line by line, but look at the overall picture. Council members generally agreed that 5.1% is higher than they would like to approve. Mielke stated that it has been beneficial for Council to express their priorities and provide guidelines on the budget. Little believes that the need for additional personnel is difficult to perceive as it does not seem to be an obvious expenditure. Mielke stated that department directors will' be invited to the September 9th work session to discuss justifications for the staff increase requests. Employee benefits and increases were discussed and Council members were supportive of increases, but thought there might be some options for a smaller than proposed health insurance increase of 12 %. 6. Future Work Session Agendas Future work sessions will be held on September 9, September 23, and October 28. City Council Work Session Minutes August 28, 2013 Page -5- Anderson brought up the recent gravel mining issue and asked if the item could be continued to a future meeting, since there are several citizen concerns which need to be heard. Staff will contact the applicant and ask to bring the item forward at the September 16t meeting. 7. Adjourn Mayor Little adjourned the meeting at 9:15 p.m. Respectfully submitted, Judi Hawkins, Deputy Clerk Matt Little, Mayor