HomeMy WebLinkAbout12-18-09 WSIn attendance:
Minutes
Lakeville City Council Work Session
December 18, 2009
3:00 p.m.
Mayor Holly Dahl
Council Member Mark Bellows
Council Member Laurie Rieb
Council Member Kerrin Swecker
Council Member Kevin Miller
Staff: Steve Mielke, City Administrator
Dave Olson, Community and Economic Development Director
Judi Hawkins, Deputy City Clerk
The meeting was called to order at 3:00 pm in the Marion Conference Room.
ITEM #1 Discussion regarding the 2010 Budget and Tax Levy
City Administrator Mielke opened the special meeting, the purpose of which is to review
comments and concerns that were discussed at the Truth in Taxation meeting and to provide
additional information, if necessary, to assist the Council in their decision making process. No
action will be taken by the Council at this meeting.
Mr. Mielke provided a historical perspective and the factors which are affecting the budget:
Economy: Lower interest rates affecting the city's investment earnings; a higher number of
tax delinquencies; more foreclosed and abandoned homes; reduced residential market
values; and declining development. In contrast the City also benefited from the current
economy with the recent purchase of bonds at a favorable rate.
State of Minnesota: A State property tax credit of up to $304 is given to homeowners for
the purpose of providing property tax relief for lower valued homes. The Market Value
Homestead Credit (MVHC) is to be reimbursed to cities, however, in the past several years
the funds have been unallotted by the state, and the City of Lakeville has not received
anticipated funds. In 2008 and 2009 the State unallotted nearly $1 million to Lakeville.
The State of Minnesota also gives cities the ability to only collect half of the growth for levy
limits.
Lakeville has joined the Transit Taxing District at a cost of $743,000 peryear, which is paid
out of the general fund through budget adjustments. Taxing authority has been given up in
order to accomplish this service.
Loss of revenues in 2009 were offset with several factors: employee furloughs, fees for
financial management services for Lakeville Arenas and DCC; cuts in the Community and
Economic Development marketing; reduced number of ice rink sites; contract mowing;
City Council Work Session Minutes
December 18, 2009 Page -2-
elimination of major trail maintenance projects; reduced snow plowing of trails and
sidewalks, and a reallocation of the employee accrual fund to the general fund. In addition,
the staff is down approximately 18.5 full time employees.
A decrease in the fund balance of $372,000 which will be allocated to various other funds
will leave a 45.6% fund balance at the end of 2010.
Council has chosen not to enact a utility franchise fee however there will be an addedyouth
sports surcharge from $2.50 per person to $5.00.
Cities have also lost Local Government Aid (LGA) which cannot be levied back.
Staff felt that several themes had emerged from the Truth in Taxation public hearing:
Ice rinks Closing half of the City's rinks resulted in a savings of approximately $35- 40,000.
People asked to be allowed to maintain their neighborhood rinks with private funding. Council
feels a policy discussion should be held on this topic. Staff suggested revisiting this item before
fall since it is too late this season to begin building ice for the rink and to determine at that time
if reopening some sites is feasible. Miller felt it would be important to monitor how much usage
the remaining rinks receive thisyear. Bellows suggested using funds from the liquor stores for
the rinks instead of for the drug- awareness program at the high schools.
Business Climate The City has reacted to the economy with cuts in staffing, but services such
as police, streets, and utilities need to remain constant. Inspectors have additional
responsibilities due to home foreclosures; however, this produces no revenue. Staff also
continues to spend time in administrative support for development projects that may or may not
produce revenue. Other factors affecting the business climate are an unfavorable tax system and
the shift in market values.
Liquor Funds Although it would be feasible to use the profits to offset the tax levy, profits
have traditionally been earmarked for capital items, after actual Liquor Store expenses have been
reimbursed to the City. Staff does not recommend adding Liquor profits to the General Fund.
Fees and Charges City fees incurred by developers are in alignment with other cities and
should not preclude home or business owners from locating in Lakeville.
Storm Water Runoff and Surface Water Management Lakeville's long -time policy has been
that development costs are borne by the developers while ongoing maintenance is the City's
responsibility.
Per Capita Spending Lakeville operates very efficiently and in spite of a growing population
overall spending has decreased. Swecker asked to see per capita spending trends over theyears.
MVHC Staff suggested that Council members appeal to their representatives to introduce
legislation which would eliminate the Market Value Homestead Credit program. Swecker pointed
out that several cities are still receiving both MVHC and LGA. Mielke will forward a recent LMC
report.
Core Services vs. Amenities: Some of the recent discussions regarding core services include
dialogue with the schools on snow removal functions, filling of fire fighter vacancies, etc.
Assessed Valuations: As for setting property valuations, the City of Lakeville has no authority.
Mielke feels that many people don't fully examine their tax statements and suggested that an
City Council Work Session Minutes
December 18, 2009 Page -3-
educational campaign be conducted in March when the new valuations are received by residents.
Bellows feels the Chamber and City could partner on re- evaluations of properties. In response to
uncomplimentary reports from taxpayers regarding their treatment by County staff, City staff will
discuss customer service concerns with the County.
Tax Levy The 2.4% levy will produce revenue of $554,000 which will largely compensate for
the $630,000 loss of MVHC. Alternatives to the levy are budget cuts in that amount, or finding
an optional revenue source.
Council Member Swecker apologized for her absence at the public hearing and thanked fellow
council members and members of the community for their comments. Since then she has polled
several people regarding the budget. The response was largely in favor of finding the means to
maintain Lakeville's current amenities. Swecker feels this council needs to be able to make
difficult decisions and not push the burden onto future leadership. Previous councils have
maintained a fiscally responsible community and she feels it is important to continue that effort.
Council Member Miller stated that he moved here for the quality of life and he feels that is
important to the community. Even though people are suffering in this economy 35,000 people
visited the Arts Center thisyear and 27,000youth are involved in Parks and Rec activities. He
believes people are staying closer to home and taking advantage of these opportunities more than
ever. Amenities such as these and the Senior Center meet the needs of the population and
require continued City support.
Council Member Bellows believes that the large turnout at Monday's meeting reflects people's
desperation with the economy. He is concerned about creating a "poisonous environment"
between the City and the business community. He would like to distinguish core services to
identify possible areas for cuts and discontinue educational programs currently provided by the
City e.g. fire, drugs, etc.
Mielke stated that the budget presentations were very open and honest but realizes that taxpayers
continue to be frustrated. Bellows said he didn't think Council had adequately listened to the
business community, and cautioned not to underestimate their anger.
Council Member Rieb stated that she wants to do what's best for the community as a whole
residents and businesses because they rely on each other. She also feels it would not be
fiscally responsible to push issues off to a future Council.
Dahl felt that the Council and staff have been very attentive to the community's comments, and
have responded to all questions and concerns. Many projects have been deferred to assist with
the current budget issues, but at some point they will need to be done.
Mielke outlined several possible scenarios which would reduce the budget:
City Council Work Session Minutes
December 18, 2009 Page -4-
No tax levy would mean cuts of approximately $554,000. This is not enough to offset the
loss of MVHC ($630,000). Mielke provided a list of potential cuts to programs and
services.
Pursue the legislative elimination of MVHC across the board.
Subsidize the budget with additional fund balance dollars down to 45.6 Council
members felt this is too great a risk for the City's credit rating and is a non sustainable
option.
Use Liquor Funds to support the general fund. Liquor Funds have historically funded
capital projects, equipment, major maintenance and technology. It would be feasible to
appropriate some of the annual proceeds to offset the tax levy through a debt reduction,
such as park bonds. Council members do not wish to become dependent on Liquor funds;
they could be unavailable in the future.
Additional staff reductions.
Miller feels it is important to continue to fund the alcohol awareness educational program at the
high schools. If the program is not as effective as it could be it should be reviewed and
improved, not eliminated.
Council members stated that the CR 70 bridge improvement was a very good project and
positively impacts businesses, especially the Airlake businesses, but the cost needs to be repaid.
Council members will consider these options and be prepared to make a decision on Monday
night.
ITEM #2 Adjourn
The meeting adjourned at 4:50 p.m.
Respectfully submitted,
Hawkins
D puty Clerk
Ma or
kva