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HomeMy WebLinkAboutItem 06.b-2In attendance: Staff: M i nutes Lakeville City Council Work Session August 23, 2010 Mayor Holly Dahl Council Member Mark Bellows Council Member Laurie Rieb Council Member Kerrin Swecker Council Member Kevin Miller Steve Mielke, City Administrator Dennis Feller, Finance Director Hawkins, Deputy City Clerk The meeting was called to order by Mayor Dahl at 6:00 pm. ITEM #1 — 2011 -12 Preliminary Budget and Tax Levy Finance Director Dennis Feller presented the first draft of the preliminary budget and tax levy for Council's review. He stated that with the economy's decline, the work that was done by the City Council in 2009 is being used asa platform for operations and finances. This platform is continuing to be built for the future and is based on four main elements: 1. Achieving Service Expectations. This statistical foundation is the reality of what residents want and expect for services, and what they are willing to pay for those services, as compiled through the community survey and other sources. The internal service prioritization was also used as a measuring tool. 2. Efficient and Effective Services: Items that indicate service efficiency are low per capita spending, low taxes, and lowest fees for services in the county. These are the result of technology, cooperative ventures, i.e., DCC, LOGIS, and Fire Services, use of contractual services, personnel management in all departments, energy efficiency, and conscientious leadership and management. 3. Long Term Financial Planning: The five -year Capital Improvement Plan for 2011 -15 invests in the infrastructure in order to get the best and longest use from the City's assets. Good roadway and trail infrastructures add to the quality of life but they are aging and in need of repair and reconstruction. The two -year budget and tax levy does not add any new programs not supported by user fees. No new personnel are scheduled to be added in 2011. Various methods of financing the CIP were discussed including the use of non -tax dollars, debt management, and fund balance. Council Member SNecker asked if the budget amounts for the Police Officer and Police Records Technician positions proposed for 2012 include benefits and possible overtime. Council members also asked about increased Met Council charges in the future. City Council Work Session Minutes August 23, 2010 Page -2- 4. Proposed 2011 -12 Budget and Tax Levy: There is no increase proposed in the 2011 tax levy; the preliminary 2012 tax levy in this document is for planning purposes only and anticipates a 2.7% increase. The MVHC loss of State Aid will result in an additional adjustment of $157,466. Liquor funds will continue to pay approximately $1.1 million for various items, including new civil defense sirens, a fire truck, debt retirement, and general fund items. Residential property taxes contribute the greatest share of the tax levy. For the third consecutive year, because of declining property values, there will be a decrease in the tax impact on residential properties. Due to commercial /industrial property values remaining more stable they will see a small increase in the tax levy. An increase of approximately $160 to $200 is anticipated for a business valued at $1 million. The major components of the 2012 tax levy increase are: a. Street reconstruction; with the City funding 60% and the balance funded by the benefitted property owners; b. Kenrick Avenue project: $191,000 per year; c. Operations and equipment acquisitions: $173,000 Council Member Miller asked what the possible consequences would be of drawing down the fund balance to the bottom of the range of policy guidelines. Mr. Feller stated that as proposed there is not significant danger of higher interest rates, but that would be the ultimate risk. Depending on what the cause would be for the drawdown, it may cause concern to the rating agencies. Mayor Dahl asked if staff had concerns about the State taking control of the fund balances, such as what has taken place in some of the affluent school districts. Mr. Mielke stated that there is a concern and as such most cities try to keep about a 40 -50% reserve. Mr. Feller described various special revenue funds and significant capitol projects for the coming years. There are no recommended increases in base water and sewer charges, however increases are being recommended in the three tiered water rates. The increase in rates might also have a positive effect on water conservation. As an update to the gun range discussion held at the last work session, MAC now indicates that there might be the ability to have a gun range on a different MAC property for the short term while a long -term solution continues to be explored. Council Member Bellows requested a clarification on the Certificates of Indebtedness. Mr. Feller referred to the complete list on pages 117 -123. Council Member Bellows asked if it was the norm to issue certificates for items with a short life span. Mr. Feller stated that it is preferable to fund as much as possible with a "pay as you go" policy, but historically the City issues certificates for equipment purchases rather than using the fund balance. City Council Work Session Minutes August 23, 2010 Page -3- Mr. Mielke stated that in order to avoid using Certificates of Indebtedness, the levy would need to be increased by the amount that is being spent. Bellows asked why it was being pushed to 2012 instead of 2011. Feller stated that residents do not wish to see a tax increase and this plan takes a long -range approach. Bellows asked if this is not "posturing" because the purchases are being made in 2011. Bellows indicated that it may be more appropriate to see a small tax levy in 2011 or a reduction in spending rather than pushing all equipment payments to the future. Feller stated that adding the equipment purchases back into the 2011 tax levy would result in approximately a 2.5% increase. This would have the greatest implication for commercial /industrial properties. Mr. Mielke stated that the budget proposal tries to avoid using the fund balance for ongoing operations. Staff will analyze various options for Council's review. Council Member Bellow asked what impact staff believes the Costco store will have on Lakeville's liquor revenues. Feller stated that the Kenrick store will most likely be modestly impacted by Costco, but other stores not as much. The new Apple Valley liquor store could have an effect on Lakeville's Galaxy store in the future. Bellows asked if there had been funds set aside for eradication of the Emerald Ash Borer. The City of Lakeville has not earmarked funds for that, but has begun an inventory of ash trees. The City will also discontinue funding for Oak Wilt eradication and for private property counseling; State grant funds are no longer available. Mr. Mielke requested that if there are some specific issues Council wants addressed at the September 7 meeting, to please provide those questions in advance so responses can be prepared. Staff will summarize the options that were discussed at this meeting and their implications to the proposed tax levy. Council has the ability to adopt afinal tax levy in December that is equal to or less than the preliminary tax levy approved in September. It may not, however, adopt afinal tax levy that is greater than the preliminary tax levy. Council members discussed options for scheduling the Truth in Taxation public hearing and adoption of the budget. Todd Bornhauser, Chamber of Commerce Executive Director, asked if holding the Truth in Taxation hearing at the same meeting as the adoption of the budget would provide adequate time for questions to be answered. Mr. Feller stated that the budget adoption can be put off until a later date if necessary. After some discussion Council decided to hold the Truth in Taxation Hearing on December 6, 2010 and schedule the adoption of the budget and tax levy for December 20, 2010. Mr. Mielke complimented the department directors for recognizing the economic environment and preparing their budget requests accordingly. City Council Work Session Minutes August 23, 2010 Page -4- ITEM #2 — High Performance Partnership Update In 2003 and 2004 the High Performance Partnership (HiPP) solicited input from the public to identify programs and services in an attempt to find ways to consolidate and create efficiencies between communities. Approximately 20 programs were analyzed for initiatives, the largest being the Dakota Communications Center. The group has recently been reactivated by the Steering Committee to identify new programs and opportunities. ICMA is preparing a proposal to assist with reorganizing and restarting the process. Scott County hasa similar partnership (SCALE) with their cities, school districts and non - profit groups. The HiPP and SCALE groups will be getting together to share ideas and Council will be invited to attend. ITEM #3 — Other a. Strategic Plan Update Council received an update on the 2008 Strategic Plan. b. LCA Housing Goals Lakeville isa member of the Met Council Livable Communities Act initiative which requires cities to adopt housing goals for workforce (affordable) and Iifecycle (available options) housing, both usually higher - density housing. The benefit to the City is access to funds for cleanup of neglected sites, which has been done through the Dakota County CDA. Council's legislative policy is to support LCA as long as it does not become mandated or require support from property taxes. This will be on a Council agenda in September. c. Inter - agency Committee /Board Reports • ALF The transfer from ALF to AlIina has gone very smoothly and improved the quality of service. • DCC The Executive Director search is temporarily suspended. • Lakevi l l e Arenas The budget was recently adopted by the Lakeville Arenas Board. No property tax subsidy is needed for the operation of the arenas. • 1 -35 Solutions Alliance A new .bint Powers Agreement is being prepared and will be presented to Council for consideration. Elko New Market has decided to join the alliance. • M LC Cities in this group have similar characteristics and legislative needs. Savage has chosen to join; Shakopee and Roseville are considering joining. City Council Work Session Minutes August 23, 2010 Page -5- ITEM #4 — Adjourn The meeting adjourned at 7:57 pm. Respectfully submitted, Judi Hawkins Deputy Clerk Holly Dahl Mayor • Cedar Corridor Improvement Group This project is moving into the construction phase. • CVB The CVB is currently working on their budget. • DLBA The board is discussing changes to the 2011 Farmers' Market. Downtown businesses were informed that they are not allowed to serve alcohol on Ladies Nights. This also pertains to Chamber "Business After Hours' events. Alcohol can only be served by a caterer who holds a liquor license. • HiPP Discussion was held earlier.