The URL can be used to link to this page

Home My WebLink About09-15-98 CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 15, 1998 The meeting was called to order at 8:00 p.m. by Mayor Zaun. Roll. call was taken.. Present: Councilmembers Ryan, Sindt, Mulvihill, Holberg and Mayor Zaun. Also present: B. Erickson, City Administrator; D. Feller, Finance Director; D. Quintus, Recording Secretary. City Administrator Bob Erickson presented the City of Lakeville proposed 1999-2000 Budget Message. (See attached memo dated September 11, 1998) Mr. Erickson explained the City of Lakeville continues to strive: to meet the expectations of residents for a level of services that supports the .excellent quality of life the community enjoys, despite the restraints imposed by state levy limits and the challenge of meeting unfunded mandates by state and federal governments. We are pleased to report that we are recommending a budget that will enable Lakeville-for the seventh straight year- to have the lowest tax capacity rate of any City in Dakota County.. We will be able to maintain our ratio of 3.4 employees per thousand residents, thus ranking among the lowest employee/resident ratios in the state. The predictability of Lakeville's tax levy is due primari-Iy to taking amulti-year perspective in planning and budgeting resources and in allocating resources based on a vision and goals. In 1999, the City will enter its second year of State Legislature-imposed levy limits. It's been almost a decade since the Lakeville City Council advocated a level playing field for the redistribution of monies to communities across the state, yet significant inequities continue to exist. Basically, older cities and those with declining populations receive more Local Government Aid than growth cities. Lakeville has been one of the fastest growing cities in the state for the past 10 years, but this growth is not adequately accounted for in the LGA distribution formula. For example, next year the City of Lakeville will see more than a $24,000 decrease in Local Government Aids, from $478,083 in 1998 to $453,650 in 1999. This decrease is in sharp contrast to the increased funding that will be received by the cities such as Minneapolis and Rochester. For example, the City of Minneapolis, which received nearly $70.6 million in 1998, will gain an additional $2.2 million in LGA for a total of more than $72.8 million in 1999. This funding will enable that city to maintain its-ratio of 25 employees per thousand residents, and the City of Rochester, which received $6.2 million in 1998, will receive $6.6 million in 1999, a gain of more than $375,000 in LGA funding. Rochester has 6.9 employees per thousand residents, CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 15, 1998 PAGE 2 Unfunded mandates have plagued us for a number of years, and 1999 will be no exception. to September 1999, the City must begin complying with the latest unfunded federal mandate, the Safe Water Act. Enacted by Congress and administered by the Environmental Protection Agency, the Act requires water suppliers to provide customers with detailed information about their drinking water. Anticipated costs for printing alone are budgeted at $5,000. The City is already required by the state to perform extensive tests on its drinking water and then pay the state to review the results of those tests. The annual cost to the City for state-mandated "water testing" is $57,000, with each local utility customer paying $5.31 annually. The new federal notification requirements represent the third layer of expense involving the testing of our drinking water supply. Another commitment is providing funding for Lakeville's 45 percent share of all major county highway construction projects. Dakota County is the only county in the state to impose .this requirement. Despite this obligation, Lakeville's Capital Improvement Plan for 1998-2002 identifies a consistent debt levy of $11.50/capita for each year of this five-year period. Major projects include: • Reconstructing. Cedar Avenue from Dodd Boulevard to the south boundary • Reconstructing County Road. S from County Road 46 to 170th Street • Reconstructing Pilot Knob Road from County Road 46 to 170th Street • Reconstructing County Road 50 from Dodd Boulevard to Holyoke Avenue • Reconstructing County Road 64 from Holyoke Avenue to Cedar Avenue • Extending Ipava Avenue from 185th Street to Lakevi le Senior High School On the other hand, Dakota County also deserves credit for the .low property taxes that Lakeville residents enjoy. With a population nearly equal to that of the City of Minneapolis, Dakota County has a ratio of 4.6 employees per thousand residents, the lowest ratio among all seven counties in the metropolitan area Now for the good news. The City had a $422,386 unanticipated ash carryover from 1997. These excess funds are proposed to be applied to'Iimit the 1999 tax levy. Thus the 1999 tax levy is proposed to increase by only 1.8 percent or the equivalent of implicit price indicators-the inflation index for .government. The carryover was applied to the following: • $209,268 for the 3.6 percent increase in household population CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 15, 1998 PAGE 3 • • $56,660 for additional police officer costs not funded by the federal COPS grant • $149,943 to compensate for state aid formula shortfalls for property tax relief Despite storm cleanup costs estimated at nearly a quarter of a million dollars, budgeted expenditures for 1998 will be less than original budget estimates. In addition, non-tax revenues are expected to exceed budget estimates by a million dollars. The fact that revenues will exceed budget estimates is due in large part to two important factors-close monitoring of expenses by individual departments and a strong economy. We are recommending that this unanticipated revenue be utilized to fund two needed public safety projects:. • $854,000 for expanding the communications center at the Lakeville Police • Department, including the installation of a new radio console to upgrade the 14-year-old console, and upgrading the 911 system with a Year- 2000 compliant system and replacing the records management system • $225,000 to purchase a new fire pumper to replace the 1972 engine These one-time capital expenditures, which will have a useful life of more than • 10 years, can be accomplished without imposing additional debt on residents or businesses. Eventhough the new Water Treatment facility has just opened, we do not see a need to increase the water rates at present. The City's rates for treated water continue to be the lowest in Dakota County. The stability in water rates is made possible in part by the anticipated installation of a standby generator at the Water Treatment Facility and the resulting lower (off-peak} electrical rates.. Although we had alerted sanitary sewer customers that a rate increase seemed inevitable, the Metropolitan Council Environmental Services has made significant reductions in its work force. These reductions and other changes at MCES are expected to lower costs and ensure rate stability for the next three years.. As identified in last year's budget message, however, a street light rate increase of .between 60 and 75 cents per quarter is being. proposed for implementation in January 1999. This is the first street. light rate increase in seven years. Through prudent financial planning, the City is committed to a balanced budget . that will maintain and even improve the quality of life that our residents depend on and expect. To that end, the 1999-2000 budget anticipates: CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 15, 1998 PAGE 4 • • Opening. the Dakota County Library-Heritage next year • Completing the Comprehensive Plan Update • Making available a second sheet of ice at Lakeville Ames Arena • Continuing to implement the initiatives of the Economic Development Strategic Plan • Enhancing technology • Implementing the recommendations of the reconvened Strategic Growth • .Management Task Force • Preserving, protecting and enhancing environmental resources In closing, Dennis Feller, Finance Director,. and I want to thank Brian Kempa, Senior Accountant, and David Lang, Accountant I, for :their in-depth analysis of each departmental budget in this document. We're providing you with a copy of the questions, answers and adjustments made during the budget review process. Also included are 52 attachments that lend support to many of the complex issues that surfaced during this extensive critique. The 1999-2000 budget is dedicated to the members of'our Street, Park and Utility Departments for their tireless efforts in responding to the storm damage experienced this past May and June. The entire community appreciates their dedication and commitment to completing the cleanup in record time. Finance Director Dennis Feller provided an overview of the major General Fund sources of revenues as follows: • Taxes $ 4,687,113 (44.1 °lo) • State Aid 2,264,518 (21.3%) • Licenses and Permits 1,267,465 (11.9%) • Charges for Services _ 1,169,942 (11.0%) • Other 692, 926 (6.5°~} • Intergovernmental 547.365 (5.2%) ToTA~. $ 10,629,329 (100.0%) The major General Fund expenditures by function are as follows: • Public Safety 4,657,333 (41.4%) • General Government Service.... 2,882,527 (25.7%) • Public Works 1,989,340 (17.7°~) • Parks and Recreation 1,385,854 (12.3°~) • Other 326.358 .9%) Tort. $ 11,241,412 (100.0°~) The proposed 1999 fund balance is $3,773,442 or 33.6% of the General Fund expenditures. The designated fund balance represents the amount of funds CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 15, 1998 PAGE 5 required to operate during the first six months of the year. The City's most significant revenue sources taxes and intergovernmental revenue do not provide appreciable revenues until the second half of the year. The proposed fund balance is adequate and sufficient, .but not excessive. Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. Establishment of such funds also enables the City to more effectively manage its resources and minimize tax levies. Enterprise Funds account for liquor, water and sanitary sewer operations for the City; they .are self-supporting from retail sales .and user charges. Operations are managed in much the same. way as private enterprises. The City of Lakeville operates the fourth largest liquor operation in the State of Minnesota. Sales are .projected to increase from $6.9 million in 1998 to $7.2 million in 1999. As a result, net income before transfers is estimated to attain $326,944 in 1999. The Water Operating Fund budget had an estimated $1,267,.342 of water sales in 1999. There. are no proposed rate increases for the coming year. Lakeville has the lowest water. rates of any City with treated water in Dakota County. The proposed 1999 Sanitary Sewer Operating Fund budget has an estimated $2,575,021 of sewer use fees. There are no proposed rate increases for 1999. The Metropolitan Council Environmental Services (MCES~ which is responsible for sewage treatment and disposal, represents 83% of the proposed 1999 sanitary sewer operating budget. The proposed 1999 tax levies for General Special Revenues and Debt Service Funds are as shown below: • General Fund, $ 4,632,731 • Drug Enforcement 60,000 • GIS Fund 64,592 • Certificates of Indebtedness 220,327 • Voter approved debt 467,092 • Police station remodeling 216,488 • Public improvements 259.126 TOTAL ~ 5.920.056 The legislature's change in property classification rates and the increase in the fiscal disparities will result in an estimated 1°~ increase in the tax capacity rate. Mr. Feller stated that homestead residential .properties valued at less than $150,000 will experience an increase in City taxes and homestead residential CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 15, 1998 PAGE 6 properties with values greater than $150,000 will experience a decrease in taxes as a result of the legislature`s change in the property classification rates. Mr. Feller stated that, according to the Minnesota Taxpayers Association, Lakeville's taxes are among the lowest in the metropolitan area. Qespite the Legislature's re-imposition of levy limits, inequitable state aids for property tax relief and shifts in .property classification rates, the City of Lakeville anticipates it will continue to have one of the lowest tax rates in the metro area Mayor Zaun expressed concern regarding the continued decrease in Local Government Aid to the City of Lakeville. Only two other cities in the metro area received a greater decrease in aid than Lakeville. This is in spite of the fact #hat the City of Lakeville has been one of the fastest growing cities. in the State for the past ten years.. In addition, Mayor Zaun indicated that the Legislative change in tax classification rates has resulted in a compression of taxes payable between the various property classes. to 1989, residential homes paid 29% of the property tax burden (on a state-wide basis); however, currently, residential properties are paying 40°!° of the total property taxes. Councilmember Sindt asked if anyone has ever questioned Dakota County regarding -their policy which requires cities to~provide 45%° of the cost for constructing County roads...CityAdministrator Erickson indicated that this issue has been discussed on numerous occasions with Dakota County. One of the .results of those conversations is Dakota County's acceptance of additional maintenance of the county roads. Cities wilt continue their efforts to obtain a greater financial contribution on the part of the County. Councilmember Holberg stated that she is concerned about the amount of aid (LGA) other cities receive even though they have a disproportionately larger number of employees per capita. Councilmember Ryan stated that Lakeville is a growth City. Lakeville should, therefore, pursue legislative funds for transportation now to avoid traffic congestion problems and higher construction costs. City Administrator Erickson further indicated that the City will continue to pursue a level playing field in regard to the distribution of Local Government Aid. However, until the allocation formula for Local Government Aid is modified to create a more equitable distribution of State funds, the City could request its local legislators to pursue state funding. to finance major transportation projects such as the I-35/County Road 70 bridge, 1-35/185th • Street interchange, and the 1-35/County Road 50 interchange upgrades. CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 15, 1998 PAGE 7 • 98.207 Motion was made by Mulvihill, seconded by Holberg to approve the following preliminary budget resolutions: • Resolution No. 98-178 adopting the preliminary 1998 Generaf Fund • Resolution No. 98-179 adopting the preliminary 1998 Cable TV Fund • Resolution No. 98-180 adopting the preliminary 1998 Environmental Recycling Fund • Resolution No. 98-181 adopting the preliminary 1998 Drug Enforcement Fund • Resolution No. 98-182 adopting the preliminary 1998 Employee Benefit Fund • Resolution No. 98-183 adopting the preliminary 1998-GIS Fund • Resolution No. 98-184 adopting the preliminary 1998 Surface Water Management Utility Fund • Resolution No. 98-1.85 adopting the preliminary 1998 Oak Wilt Suppression Grant Fund • Resolution No. 98-186 adopting the preliminary 1998 E-91.1 Fund • Resolution No. 98-187 adopting the preliminary 1998 Economic Development Revolving Loan Fund • Resolution No. 98-188 adopting the preliminary 1998 Municipal Reserves Fund. • Resolution. No, 98-189. adopting the preliminary 1998 Equipment Fund • Resolution No. 98-190 adopting the preliminary 1998 Building Fund • Resolution No. 98-191 adopting the preliminary 1998 Police Station Expansion Fund • Resolution No. 98-192 adopting the preliminary 1998 Park and Trail Improvement Fund • Resolution No. 98-193 adopting the preliminary 1998 Liquor Fund • Resolution No. 98-194 adopting the preliminary 1998 Water Operating Fund • Resolution No. 98-195 adopting the preliminary 1998 Sanitary Sewer Operating Fund, Roll call was taken on the motion. Ayes, Ryan, Zaun, Sindt, .Mulvihill, Holberg. 98.208 Motion was made by Sindt, seconded by Holberg to approve .Resolution No. 98-196 approving the preliminary 1999.payable tax levy. Roll call was taken on the motion. Ayes, Zaun, Sindt, Mulvihill, Holberg, Ryan. • 98.209. Motion was made by Sindt, seconded by Mulvihill to approve Resolution No. 98-197 setting budget (Truth in Taxation) public hearing dates. CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 15, 1998 PAGE 8 • Roll call was taken. on the motion. Ayes, Sindt, Mulvihill, Holberg, Ryan, Zaun. City Administrator Erickson distributed a proposed agenda of items for Council discussion and consideration and requested Council to set a Council Work Session to address. those items. .98.210 Motion was made by Holberg, seconded by Sindt to set a Council Work Session for Monday, September 28, 1998 at 4:30 p.m. Councilmembers decided to set the budget work session dates at their next regular City Council meeting on September 21, 1998. Mayor Zaun adjourned the meeting at 9:00 p.m. Respe fully submit _ ; on uintus, Re rding Secretary Duane un, Mayor •