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HomeMy WebLinkAbout12-15-93 CITY OF LAI~EVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 The meeting was called to order at 7:00 p.m. by Mayor Zaun. Roll call was taken. Present: Councilmembers Ruhmann, Sindt, Mulvihill, Harvey and Mayor Zaun. Also present: B. Erickson, City Administrator; D. Feller, Finance Director; C. Friedges, City Clerk. Mayor Zaun opened the Truth in Taxation public hearing, which provides the City's property taxpayers an opportunity to ask questions or make comments regarding the proposed City of Lakeville budget. He explained that the County Auditor has prepared and delivered parcel specific notices which inform the taxpayers of the public hearing and discloses the impact they can expect the preliminary tax levy. to have on their specific parcels. A notice of the meeting was also published in the "Messages" section of the Lakeville Life and Times. A summary of the .budget document is available to the public. Mayor Zaun explained that Truth in Taxation laws require disclosure of the following information at the public hearing: (a) percent of total proposed budget representing total compensation costs for employees (wages, salaries, . benefits, etc.); (b) numbers of employees by general classification, and whether they are full-time or part-time; (c) budgeted expenditures for and numbers of consultants and other independent contractors; and (d) the effect of budget increases or decreases on the proposed property tax levy. Dennis Feller, Finance Director, then gave the following presentation: PROPOSED CHANGES TO THE PRELIMINARY 1994 BUDGET The following is a summary of proposed adjustments to the Preliminary 1994 General Fund .Budget which have occurred as a result of the Council budget -work sessions on November 16 and 29. 1. DAP Grant The City is anticipating a Dakota Alliance for Prevention Grant CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 • PAGE 2 (DAP Grant) of $2,000. .The expenditures are already included in the General Fund Budget for 1994. 2. Court Fines Revenues are up significantly as a result of .additional officers. Additional anticipated revenue is approximately $19,300 per year. 3. Computer/Word Processing The City word processing equipment has long outlived its useful life. Replacement of the software, training, installation and computer replacement will cost approximately $40,630. 4. Workers Comp Premium Reduction As a result of an adjustment in the experience modification to .63, the General Fund will recognize a $71,736 reduction in workers comp premiums for 1994. 5. Special Census e A special census is proposed for 1994 in order that the City might receive a significant increase in its state aid street funds. The proposed adjustment to the City Administrator program for the special census in the amount of $99,152 is recommended. 6. Code Book Updates The City Clerk budget appropriations need to be adjusted by approximately $1,000 in order to purchase additional code books. 7. Inspection Department -Building Inspector The 1994 budget provides funding for a temporary inspector in the amount of $21,423. It is recommended the City Council authorize this position as permanent thereby requiring an increase in the appropriations of approximately $14,025. 8. Finance As a result of bidding audit services for 1994, the Finance Department Budget can be reduced by $600. Accordingly, these funds should be .allocated to travel expense to allow staff the • CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 3 opportunity to apply for an improved credit rating from Moody's Investor Services in New York. 9. Mobile Data Terminals (MDT) The Police department is proposing a five year lease of mobile data terminals to be installed in new squad cars. Installation and leasing of five MDT's in 1994 will cost $16,765. The 1995 .costs will be $43,589. 10. Drafting Technician The 1994. preliminary budget included a new position for a drafting technician commencing March 1, 1994. The Council has determined that this position is premature. 11. Privatized Landscape The City staff is recommending contractual mowing and landscape maintenance of six City parks. The cost of such services is estimated to be $3,300. 12. North Park Pay. Telephone The Park Department is requesting City Council consideration of a pay telephone at North Park. Currently, this high intense use park has no telephone available to-the public. Cost of such a telephone is .approximately $500. 13. Recreation The City of Lakeville sold its share of the portable stage in 1993; however, the acquisition of the stage is included in the 1994 budget. PROPOSED AD.TUSTMENTS TO THE PRELIMINARY 1994 BUDGET GENERAL FUND 1994 REVENUES 1. DAP Grant 2,000 2. .Court fines 19,300 Net Revenue Adjustments 21,300 CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 4 EXPENDITURES 3. Computer/word processing software 40,630 4. Workers Comp. premium reduction (71,736) 5. City Administrator - special census 99,152 6. City Clerk - code book updates 1,000 7. Inspections Temporary inspector (21,423) Permanent inspector (2/1/94) 35,448 8. Finance Audit (600) Travel (Moody's credit rating) 600 9. Police - Mobile Data Terminals (MDT) 16,765 10. Engineering - drafting technician (30,008) 11. Parks - privatized landscaping 3,300 12. Parks - pay telephone at North Park 500 13. Recreation - stage 3,038 Net Expenditure Adjustments 76.666 ADJUSTMENTS TO FUND BALANCE Proposed (as of Sept. 14,1993) Beginning Fund Balance 3,428,456 Estimated Fund Balance-January 1 3,.556,880 128,424 Net Adjustments to Fund Balance 73,058 BUDGET OVERVIEW General Fund Revenues for the 1994 General Fund are proposed to be approximately $7,402,401. This represents roughly a $13,.000 decrease when .compared to the 1993 revenues. The primary reason for the decrease in revenues is a result of projected decrease in single family building permits. The City was anticipating approximately 670 single family permits in 1993. The 1994 estimate is based on 560 .single family permits. Primary sources of revenue.-for the General Fund are property taxes and state aids for property tax relief. General Fund expenditures are proposed to be $7,986.,836. This is an increase of approximately $1,060,000. The increase is CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 5 primarily due to the purchase of a fire truck (net $200,000)., the addition of three new police officers, the addition of one full-time building inspector, two additional community safety officers, one full-time secretary/receptionist for the Police Department, one full-time street maintenance person and one full-time park maintenance person. .Lakeville has one of the .lowest per capita General Fund -expenditures in the State of Minnesota. The major departmental expenditures are: Public Safety ($112/per capita/year), General Government ($67 per capita/year), Public Works ($53 per capita/year) and Parks & Recreation ($30 per capita/year). The function of government is the delivery of services to the public. The primary method or focus on service delivery is provided with City Staff and volunteers. Personnel costs for 1994 comprise 67.5 of the budget, which is consistent with. spending levels of 1992 and 1993. Other major spending categories include Commodities (6.7~), Charges .for Services (21.7°x) and Capital Outlay (4.1°s) . Budgets for other city funds are as follows: CABLE TV This fund is used to account for franchise fees from Cable TV operations. Expenditures are used to finance the Cable TV budget and long-term replacement of equipment. The Assistant Producer position will change from part-time to full-time effective January 1, 1994. ENVIRONMENTAL/RECYCLING FUND This fund is used to account for all grants and tax revenues which are related to the implementation of recycling activities. .The 1994 budget provides adequate funding. for the spring community cleanup (drop-off) day. A special assistance grant is also included for 1994. DRUG ENFORCEMENT FUND The Drug Enforcement Fund is used to account for all revenues derived from the sale of assets which are confiscated as a result of drug arrests. The fund also receives approximately $14,000 per year from a state grant. One full-time investigator is assigned to the South Metro Drug .Task Force; salaries for this individual are included within the .fund. CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 6 EMPLOYEE BENEFIT FUND This fund is used to account for accrued liability of employee benefits which are attributable to severance pay. There is the possibility of one retirement in 1994. GIS FUND The primary revenue source of the GIS Fund is a $25 per parcel fee charged developers for the creation of new parcels. Expenditures are for the acquisition of hardware and software related to the development and maintenance of a GIS system. The intern position included in the preliminary budget has been deleted from the final budget; work projects originally intended to be completed by the intern will be performed by consulting engineers. MOTOR VEHICLE FUND This fund has been created to account for Deputy Registrar fees collected from sales of motor vehicle licenses and registrations. Expenditures are budgeted to finance operation of the Motor Vehicle office. The fee structure is set forth in Minnesota Statutes; the City of Lakeville has no authority to increase or decrease the rate structure. Revenues reflect a significant improvement commencing July 1, 1993 as a result of recent legislation to increase deputy fees for driver's license renewals. INSURANCE FUND The Insurance Fund is a self-insurance fund for the excess liability coverage. Revenues (transfers from other funds) are equivalent to premiums charged by insurance carriers for $1,000,000 of liability coverage in excess of the statutory $600,000 maximum. STORM WATER UTILITY FUND The Storm Water Utility Fund will be created for fiscal year 1994. The City Council will need to consider approving a storm water utility fee consistent with the Comprehensive Storm Water Study prepared by Barr Engineering. Fees would be included with the utility bills. commencing in 1994. Expenditures for the Storm Water Utility Fund are intended to finance the cost of the Environmental Specialist position, Water Management Organizations, contractual street sweeping and water quality programs. CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 7 BUILDING FUND This fund is used to account for the acquisition and disbursement of funds for the construction and improvement of public buildings. The primary source of revenue has historically come from liquor fund sources. The Liquor Fund will transfer $150,000 to the ,Building Fund in 1994 and 1.995. Proposed-1994 expenditures include the acquisition of workstations and a vertical file for the Inspection Department and the exterior painting of the public works building. The unallocated fund balance is intended to be used for future equipment acquisitions and city building improvements. EQUIPMENT FUND This fund is used to account for- the purchase of police, fire, street and park maintenance equipment financed by Certificates of Indebtedness. Certificates of Indebtedness are short-term debt which mature in five years or less. Principal and interest obligations are repaid with annual tax levies. LIQUOR FUND The proposed Liquor Fund budget is based on approximately $4,072,000 of sales which is the fifth largest in the State. As such, net income before transfers is projected to be $289,382. The Liquor Fund .will continue to .contribute 100 of its net operating income to the school districts for chemical dependency programs. The Fund will transfer $150,000 per year to the Building Fund to be used for equipment and future City building improvements. The annual budget also includes appropriations for the Pan-O-Prog fireworks display. SANITARY SEWER UTILITY FUND The Metropolitan Waste Control Commission jMWCC) billed the City $1,017,768-in 1992 based on 880 million gallons of sewage. Actual cost of treatment was $1,139,074 for 1,038 million gallons of sewage. The increase in sewer flows was a direct result of above average precipitation and ground water levels. The $138,524 difference in treatment .costs will be repaid to MWCC in 1994. To offset the adjusted 1992 sewer treatment costs, City Staff made a recommendation, as part of the preliminary budget, that a one time charge of $15.90 per sewer connection would be implemented. Implementation of the onetime fee would, therefore, eliminate the need to increase sewer rates. CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 8 The sewer f lows for 1993 are also exceeding budget levels.; however, most of the increase will be offset by the FEMA disaster assistance award. WATER UTILITY FUND The 1992 Legislature :enacted a law :which required municipalities to =remit, to: the Minnesota Department of Health, $5.21 per connection -to thee. municipal--water supply system. The City passed the fee directly back to the utility customers as an itemized $1..30 charge per quarter. The $38,491 payment to the Minnesota Department of .Health will not increase due to new water customers. The City will, therefore, be collecting $8,387 more in connection fees than it will be remitting to the State of Minnesota. The recommendation is for utility customers to receive a rebate for the utility water connection collections which exceed the payments to the State of Minnesota for the two year period from July 1993 through June 1995. The rebate would be in the form of a $1.92 credit on the first quarter 1994 utility bill. There are no other proposed adjustments to the water rate structure. Employee Compensation Truth in Taxation laws require disclosure. of the number of full-time and part-time employees. The 1994 budget includes 10 new full-time and part-time employees. The total number of full-time and part-time positions are as follows: 1992 1993 1994 Full Part Full Part Full Part Fund Time Time Time Time Time Time General 85 6 88 8 96 10 Cable TV 0 2 0 2 1 1 Drug Enforcement 1 0 1 0 1 0 Motor Vehicle. 1 4 1 4 1 4 Liquor 7 21 7 28 7 28 Utility 9 2 9 2 10 1 Total 103 35 106 44 116 44 CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 9 "independent Contractors" Minnesota Truth in Taxation laws require cities to disclose the budgeted expenditures for and numbers of consultants and other independent contractors.. The Minnesota Department of Revenue defines independent contractors as "those individuals, firms, or businesses .which provide a service needed on a recurring basis which could reasonably be provided by one or ..more .employees, an the primary purpose for the contract is to augment or .replace employees." City Staff has separated independent contractors into the categories of: (a) consultants services; and (b) maintenance- related services. Consultants include but are not necessarily limited to planners, attorneys, personnel advisors and engineers. Maintenance-related services includes but is not limited to contractual landscaping, contractual janitorial services, street striping, sealcoating, contractual cracksealing, equipment maintenance, contractual computer services, ambulance service, and towing services. • The costs for "independent contractors" are as follows: 1992 .1993 1994 Consultants 406,450 443,134 318,645 Maintenance Services 256,412 359,634 515,223 Total 662,862 802,768 833,868 PROPOSED TAX LEVY Truth in Taxation laws require the disclosure of the effect budget increases or decreases have on the proposed property tax levy. .Parcel .specific .Truth in Taxation notices which were mailed to Lakeville .taxpayers were based on an 8/10 of 1% incr8ase in the ..tax capacity ..rate .for tfie City of Lakeville. That tax capacity -rate was based on a preliminary tax levy approved by the City Council September 14, 1993 of $3,892,646. On November 15, 1993, the City Council awarded favorable bids for Certificates of Indebtedness which will result in a reduction in the tax levy of $4,334. The proposed tax levy can, therefore, be lowered by $4,334 to a revised levy of $3,888,312. CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 . PAGE 10 The proposed tax levy is appropriated to finance current operations, repayment of debt approved by voter referendum and repayment of debt to finance public improvements. The following summary illustrates the percentage of the tax dollar going for each of the major categories. 1994 Preliminary Final Category. Levy Adiust Levv Operations $2,657,753 2,657,753 Debt Service Certif. of Indebt. 466,630 (4,334) 462,296 Voter approved 374,436 374,436 Public Improvements 393,827 393,827 Total $3,892.,646 (4,334) 3,888,312 .The tax .levy for operations includes the General Fund, Recycling Fund, Drug Enforcement Fund and Equipment Fund. Voter approved debt includes the 1993 police station bonds, the 1986 park bonds and 1986 fire station (#3) bonds. Public improvement debt is that portion .not specially assessed or financed from the Trunk Funds. • The State of Minnesota provides for property tax relief in the form of state aids. State aids are deducted from the overall tax levy to arrive at a net tax levy which is certified to the Dakota County Auditor. The state aids property tax relief come in the form of LGA and HACA. The 1993 legislature changed the funding for property tax relief by rolling the Equalization Aid into the Local Government Aid (LGA). The funding for LGA was also changed such that appropriations will be based on the City's housing age, population, and other overburden factors. In addition, the 1994 LGA was reduced by $13,291 because of a recent state statute which requires any losses in school state aids due to newly created TIF districts to be reimbursed from the City's state aid. The total LGA increased by only $1,015 from $454,218 in 1993 to $455,233 in 1994. The legislature also amended the HACA distribution. formula by only allowing slight. increases to partially offset shifts as a result of property class reductions for commercial/industrial, non-residential homestead and agricultural property. There .will be no increase. in HACA due to growth. .HACA increased. by only $33,899 from the 1993 amount of $1,698,586 to $1,732.,485 in 1994. • CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 11 1993 1994 Actual Proposed Increase Revenues $5,739,432 $6,076,030 336,598 State Aids for tax relief 2,152,804 2,187,718 34,914 Net Taxes $3,586,628 $3,888,312 $301,684 POPULATION 27,982 30,109 1993 1994 Actual Proposed Increase Per Capita Taxes 205.11 201.95 (3.17). Per Capita State Aids 76.94 72.66 (4.28) Per Capita Net Taxes 128.18 129.29 1.11 Modest increases in state aids for property tax relief translates into property tax increases for growing communities such as Lakeville. The per capita tax related revenues have. been dropping on a consistent basis from $232 in 1990 to $202 in 1994. However, because of the state policy on distribution of state aids for property tax relief, there is an overriding concern that there is a potential for a tax increase to Lakeville property owners. A recent publication by the Citizens League and the Minnesota .Tax Payers Association shows that Lakeville ranks 71st out of 91 communities in level of taxation on residential property. In other words, it ranks amongst the .lowest tax levies in the metropolitan area. CONCLUSION Lakeville has the lowest per capita debt and tax capacity rates of any Dakota County cities with a population greater than 5,000. Lakeville also maintains a per capita expenditure which is below the state .norm of $322. Preliminary 1993 Tax Per Capacity Per Capita Capita Rate Debt. Expenditures Lakeville 0.20074 850 225 Burnsville. 0.20386 1,713 280 Eagan 0.22202 1,332 204 Apple Valley 0.24539 1,178 330 • Hastings 0.32570 1,249 286 Rosemount 0.32182 1,405 349 Farmington 0.34340 1,148 355 CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 15,1993 PAGE 12 Moody's Investor Service provided an excellent summation of Lakeville's fiscal policies in its July 14, 1993 credit report by stating "[Lakeville'sJ Conservative budgeting practices have contributed to a long trend of favorable operating results..." The proposed 1994-1995 budget continues such fiscal policies and practices. Mayor Zaun opened the public hearing to questions and comments from the audience. Mr. John Boland, 10241-205th Street West, asked how the City was involved in the School District's donation of land for the construction of an ice arena. Mr. Erickson explained that the property was purchased by the School District and recently deeded to the .Lakeville H.R.A. for the ice arena site. Mr. Boland also asked why City elections are held on the odd .years, rather than on the even years along with State and National elections. Mayor Zaun responded by explaining that the. Council has felt over the years that the citizens can focus on, • and get a better understanding of, local issues when they are not being addressed with the more complex state and national issues. Motion was made by Harvey, seconded by Ruhmann to close the public hearing. Roll call was taken on the motion. Ayes, Ruhmann, Zaun, Sindt, Mulvihill, Harvey. There being no further business, Mayor Zaun adjourned the meeting at 7:45 p.m. Respectfully submitted, Charlene Friedge , City Clerk Duane Zaun, or •