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HomeMy WebLinkAbout09-14-15 WSCITY OF LAKEVILLE CITY COUNCIL WORK SESSION MINUTES September 14, 2015 Mayor Little called the meeting to order at 6 p.m. in the Marion Conference Room at City Hall. Members Present: Mayor Little, Council Members Anderson and Davis; Council Member LaBeau arrived at 6:20 p.m. Absent: Council Member Swecker Staff present: Justin Miller, City Administrator; Allyn Kuennen, Assistant City Administrator; Jerilyn Erickson, Finance Director; Chris Petree, Public Works Director; Mike Meyer, Fire Chief, Judi Hawkins, Deputy City Clerk 2. Citizen Comments: None 3. Discussion Items: a. 2016 Budget At their August 24, 2015 work session Council asked staff to provide additional information in several areas of the proposed 2016 preliminary budget and property tax levy. Staff prepared the following responses. 1. Comparisons of Tax Impact: Staff provided comparisons of a 5.5% City tax levy increase on different valued homes in $10,000 increments. Comparisons were provided assuming no increase in market value and assuming a 2.41% increase in market value. A $200,000 home with no market value change factored in would see an increase of $5 in city taxes; a $500,000 home would see an increase of $14. The 2.41% market value increase is based on an average valued home; however, actual adjusted values will fluctuate. Council asked if they could obtain figures similar to what they received last year which tracked housing stock and provided an overall view of property value adjustments. 2. Clarification of City Hall Improvements: The 2016-2020 Facility Plan portion of the proposed budget included rearrangement of some offices and conference rooms on the west end of City Hall. Only repairs to the sinking floor and associated costs are included in the 2016 budget. 3. Possible Property Tax Levy Reductions: Staff identified possible adjustments that would result in a lower City property tax levy for 2016. Options were listed by dollar amount and City Council Work Session September 14, 2015 Page -2 - not in priority order, taking the levy from 5.5% to approximately 3%. To reduce the budget by 1% a total of $248,000 in increased revenues or reduced expenditures is needed. 4. Allowed use for the Southfork TIF reimbursement: There are three categories where the HRA can use the $2.3M in funds: housing, to remove blight, or for traffic hazards. 5. In response to a question regarding job creation in Lakeville, Mr. Miller stated that according to the MN Dept. of Economic Development since 2013 there have been 1,400 jobs created in Lakeville. Mayor Little had also asked staff to provide the number of jobs created as a result of recent projects with which the City has assisted. 6. Staff distributed data from the League of Minnesota Cities of per capita tax burden throughout the metro area. Lakeville had the lowest 2015 per capita tax levy in Dakota County among cities with over 30,000 population. Many cities listed in the report are recipients of Local Government Aid but Lakeville is not. The Council agenda for September 21, 2015 will include adoption of the 2016 budget and preliminary levy and setting the public hearing for December 7, 2015. Council Member Anderson stated that from some residents' perspective the City should set the levy based on growth (2.2%), plus accelerated road improvements (.64%), plus inflation (1%) and live within that increase of 3.84%. He would like to review staff s suggestions for possible reductions and discuss going a little lower than 5.5%. Council Member Davis suggested approving a preliminary tax levy of 5.5%, providing staff more time to look for efficiencies and opportunities to discover areas for reductions; the adopted preliminary tax levy can be reduced but cannot increase. Mayor Little stated that the City is not like a typical consumer when it comes to inflation and deals with different economy issues for goods and services, such as road project costs. Actual inflation for the City is probably higher. Anderson used fuel costs as an example of a budget component that is probably overestimated and will be an opportunity to reduce expenditures. Council Member LaBeau asked about the City's fuel contract. Petree stated that quantities for 2016 have been provided to the supplier and new contract pricing begins in February. Jerilyn Erickson stated that even though prices are favorable for the general public at this time, a higher price could be locked in. Anderson pointed out that the contract price is wholesale and based on a national market. Petree added that the price for 60-70% of the City's fuel consumption is locked in; the rest is spot pricing. When there is excess fuel in the consortium's fuel bank the City Council Work Session September 14, 2015 Page -3 - City can purchase based on spot or unit pricing, whichever is lower, thereby realizing a savings. Miller stated that approximately 405,000 gallons of motor fuel is included in the budget for Streets, Parks and Police. A $.30 per gallon price difference equates to a savings of $63,000. Anderson stated that motor fuel savings could possibly reduce the levy to 4.9%. Little believes the budget reflects essential expenditures and supports a 5.5% tax levy. LaBeau supports starting at 5% and attempting to reduce starting there. She believes residents are still concerned about the added cost of the roundabout and their perceptions become reality. Anderson asked about starting the street maintenance position in August or September. Petree stated that the employee is being hired to use the new velocity patcher beginning April 1st, a service which is currently contracted. Velocity patching is in addition to current methods of patching and an additional employee is needed to operate that equipment. If the equipment is not available until later, hiring of the employee could be delayed also. Anderson suggests achieving a lower levy with motor fuel savings plus delaying the street maintenance position start. He supports the additional police IT position but has not committed to the forester position. Miller stated that the forester would be outside of the general fund and will be discussed at a future work session. Anderson stated he would prefer a tax levy of 4.9%. Mayor Little agrees that there are some potential areas that could bring the levy down, but they are not certainties and he doesn't wish to put the Council in a position of not being able to accomplish other items where commitments have been made. He believes staff has worked hard to present this reasonable bare -bones budget and that cuts were made before the document reached Council. If the fuel costs go down or the street maintenance position could be delayed he would prefer to remove the funds from the levy rather than redirecting them elsewhere. Anderson agrees that staff has done a good job of prioritizing and putting the budget together. Council needs to consider how the residents will respond to the levy increase and believes they would be more agreeable to a 4.9% increase. Mayor Little believes a levy that low creates the risk of not having necessary funds. LaBeau stated that the 2014 actual revenues and expenditures resulted in extra funds and there are several unknowns in both revenues and expenses, such as the RFP for land. She believes there are additional budget items that could be discussed with staff. Little believes residents realize that they need to pay for important, quality services. Unless council has a specific item to eliminate, there is a risk in lowering the levy. Anderson stated that City Council Work Session September 14, 2015 Page -4 - assumptions can be perceived as either risk or opportunity. Little does not wish to speculate but would like to wait to lower the tax levy as unknowns become clear. Davis stated that cost of debt and inflation will both increase. He agrees that any potential cuts should be explored before budget adoption but there are other discussions that should be held. He supports a preliminary tax levy of 5.5% but is willing to look at opportunities to lower it later. Council will consider approval of a resolution adopting the 2016 Preliminary Budget and Tax Levy at the September 21 meeting; staff will prepare appropriate resolutions to reflect Council's potential decision. Anderson stated that he will continue to look for ways to lower the tax levy and become more effective. LaBeau stated that Council's goal is to work most efficiently with the tax dollars and make the best decisions possible. Little reiterated the need to begin funding long-term capital debt, the building fund and the trail fund. Anderson asked staff to provide a memorandum regarding risks and opportunities and a possible range of impacts. City Administrator Miller reminded Council of the work session at 5:30 p.m. prior to the regular meeting on September 21. 4. Adjourn The meeting adjourned at 7:00 p.m. Respectfully submitted, L Ju ipawkins, Deputy City Clerk v Matt Littl ayor