1. Call to Order. The workshop session of the Council of the City of Rogers was called to order by Mayor Grimm on Tuesday, November 9, 2010 at 5:30 p.m. at the Rogers Community Room, 21201 Memorial Drive, Rogers, MN, 55374. Council present: Rob Bell, Jay Bunting, Jamie Davis, Jason Grimm, and Steve Rauenhorst.
Staff present: Gary Buysse, Liquor Operations Manager; Stacy Doboszenski, Assistant City Administrator/Clerk; Brad Feist, Fire Chief; Jeff Luther, Police Chief; John Seifert, Public Works Supt., Steve Stahmer, City Administrator; Lisa Wieland, Finance Director; and Bret Weiss, City Engineer.
1. Budget Update A. Preliminary levy review, TNT notices, preliminary tax rate B. Explanation of assumptions changed since preliminary levy was setFinance Director Wieland provided an update on the preliminary levy, the upcoming notices being sent to the taxpayers showing a 45% tax rate, and provided an explanation on the miscalculation of the taxable tax capacity; the addition of TIF 10 and TIF 11 taxable tax capacity twice.
2. 2011 Excess Rate TIF revenue from $375,000 to $500,000 based upon updated calculations from Ehlers & Associates/Hennepin County with allowances for final School District & Hennepin County tax rate changes and unpaid taxesWieland provided a brief explanation on how excess rate TIF was calculated and provided an update on the amount of excess rate TIF being used in the preliminary levy and the amount the City can expect to receive in 2011. Wieland stated using a $500,000 excess rate TIF line item is reasonable in estimating the amount received for 2011 after discussing the issue with the County and Ehlers; $375,000 was included in the preliminary budget. The adjustments made to certain revenue line items such as building permits, brings the revenue up an additional $28,000.
Routine changes occurring since preliminary budget presented – building permit revenues, Police State Aid revenues, Recycling Grant revenue - Total General Fund Budget 6.3% increase over 2010Administrator Stahmer addressed the Council on two broad options he is asking for the Council to come to a consensus on.Additional use of fund balance from 2010 Excess Rate TIF Stahmer discussed having a reduced levy with a flat tax rate based on the 1st version proposed: using an additional $125,000 in Fund Balance showing overall levy decreasing $35,142 from 2010, leaving tax rate flat estimated at 40.8% ($125,000 in Fund Balance added to preliminary budget of $75,000 plus $67,000 in carryovers for MSAS street work = $267,000 in total use of estimated 2010 year end Fund Balance) – General Fund Levy decrease of $84,517 from 2010.Stahmer stated this option would keep the rate flat with the addition of $125,000 in fund balance. This option reduces the levy; it would put it at the 2007 level of a tax rate of 40.8%.
Stahmer stated the 2nd version uses less in fund balance but keeps the levy flat with a slight rate increase: using an additional $89,858 in Fund Balance showing overall levy flat, increasing tax rate estimated at 41.6%, which is an increase of 6/10ths of 1% over 2010 ($89,858 in Fund Balance added to preliminary budget of $75,000 plus $67,000 in carryovers for MSAS street work = $231,858 in total use of estimated 2010 year end Fund Balance) – General Fund Levy $49,375 decrease from 2010.
Wieland stated in both versions, the general fund levy is reduced from 2010; the special levies are increased due to the 2010 equipment certificate.
Grimm questioned the Administrator’s concern with option one. Stahmer stated it decreases the levy while costs are continuing to increase. Stahmer stated it comes down to the Council’s comfort level in the amount of reserves being used.
Grimm asked about the additional $100,000 added in the preliminary. Staff stated that is not included; already taken out for tonight’s discussion.
Wieland discussed the tax notices being mailed to residents and the preliminary figures will be changed because of the school’s referendum passing and the city’s rate being at 45%.
Grimm’s concern is the tax rate in 2013 as shown on the Financial Management Plan. His concern is the use of fund balance.
Davis questioned the percent of fund balance shown on the FMP. Wieland reviewed the fund balance percentages with Council. There was brief discussion on the FMP.
Wieland stated because items are built into the budget, it does not constitute an automatic approval; items still need to come back before the Council for final approval. Wieland stated if the Council chose not to make the expenditures that are included in the line item budgets, then the use of fund balance would not be as great.
Stahmer and Wieland discussed the fund balance and the recommended percentage the City should stay at.
Davis asked how reserve balance affects the City’s bond rating. Wieland stated that fund balance is only one of the major items looked at. Wieland stated that if we were on the low end of the state’s policy, then she would be concerned.
Wieland discussed the annexation of Hassan and the town board setting their rate/levy for the 2012 budget and the amount anticipated to be in Hassan’s reserves.
Stahmer discussed the MOU Hassan is committing to and the risk surrounding Hassan not setting a full levy for 2012.
Grimm stated he is leaning toward version two proposed by staff stating his reasoning is not about today, but about the future.
Staff discussed with keeping the levy flat for 2011, it remains flat from 2009 to 2011.
Wieland discussed some of the increases such as PERA, however the levy is not reflecting an increase in version two.
There was a moment of silence while Council considered the options.
Scott Adams asked to address the Council. Adams asked if the police budget includes the investigator position. Wieland provided an explanation of what items are included in the police items; investigator, ½ time clerical, ¾ time increase in patrol.
Staff discussed some of the internal consolidations within the entire public safety budgets.
Stahmer stated the Council needs to hold the required public hearing on December 14th regardless of when the Council adopts the final levy. It’s staff’s intention to hold the public meeting on the budget and adopt the final levy at that meeting.
Paul Przybilla addressed the Council and asked why the change. He is asking about the change in the picture; what changed to cause the rate to increase.
Wieland provided an explanation on the emails received from Hennepin County and the interpretation of the emails received. $750,000 being inadvertently added in twice because of expiring TIF tax capacity.
Grimm stated the additional $100,000 is being used, the savings from 2010, and the excess rate TIF are being used to get us back to where we were when we set the preliminary budget. Grimm stated we are using $170,000 that we were hoping not to use.
Wieland discussed the conservative estimation on the amount of excess rate TIF.
Grimm asked for Council’s thoughts on the versions proposed.
Bunting stated he is thinking of going with version two to stay on the conservative side. Not increasing the levy amount.
Davis stated he has not decided.
Bell stated he is unsure; he is leaning toward version one, but not totally convinced about version two.
Rauenhorst stated he does not know and asked if these are all the options or are there other options out there. He stated he doesn’t like the idea of raising the rate; has a problem with that.
Grimm stated the options of not raising the rates are taking stuff out of the budgets or increasing reserve.
Davis stated he would rather see items removed from the budget before using reserves.
Davis asked staff to contact Moody’s to see if the change in reserve balance affects the City’s bond rating.
Davis asked if we would be going out for bonds in the near future. Wieland reviewed some capital items included in the financial management plan and the upcoming agenda for the next budget workshop to include the CIP and enterprise fund budgets.
Stahmer stated to the question of use of fund balance; it’s one factor among many. Davis asked staff to use the assumption that all other items remain the staff, but the reserves go down.
Davis and Wieland discussed unforeseen expenditures that the fund balance is intended to protect the city.
Wieland stated her comfort level with the reserve balance if 40 to 50%. Grimm stated his comfort level is 45%.
Wieland continued to discuss the FMP and the assumptions that can be changed.
Bell asked Wieland to discuss the expenses included in the 2011 budget for public works and public safety.
Bell and Wieland discussed the police budget for 2011.
Scott Adams commented on reserve balance, for 2007 budget we projected a reserve balance of 45% dipping into it because of the ice arena. Adams stated he doesn’t think what is being projected is unusual given what we have done in the past.
Continued discussion on the assumptions built into the financial management plan.
Stahmer stated staff is looking for a consensus on what to include in the draft levy/budget for staff to bring back into the next budget work session.
Stahmer stated the next item for Council’s consideration is the CSO program.
Council discussed whether or not to proceed with discussing the CSO program.
3. CSO/CEO Programs Council asked Chief Luther how long the first two phases of training takes for a candidate to become an officer. Luther stated one week of orientation, 1 to 1 ½ months of field training, and the rest of the time is as an officer in phase three where they need to demonstrate they have the decision making ability to function as an officer. Phase four is the evaluation stage based on their final ability to perform the functions of the job. Typically within the first six months we have most of the phases completed.
Stahmer stated this would not be a cadet program. It’s a matter of identifying candidates for hire.
Chief Luther and Rauenhorst stated it would be used as an examination period to see if they would fit into the community.
Davis, asked if part of the discussion taking some of the duties away from our current code enforcement officer and the dollars for a CSO position versus a CEO position.
Luther talked about cost savings.
Davis said we could look at how the current position is structured.
Rauenhorst stated according to the worksheet, there is only ½ time in for the CEO position.
Stahmer reviewed his worksheet with council with the assumptions of two 20 hour per week CSO positions and the cost of ½ time CEO position.
If all the City is looking at is two CSO’s and ½ time CEO, we would still see an increase in $7,000 to $8,000 annually.
Davis asked if you need two CSO’s starting out; if the current work level is 20 hours why would you bring two people in right away.
Przybilla asked for explanation on what is being discussed. Stahmer clarified.
Przybilla stated the CEO has to have value. Przybilla also discussed the value in having the CSO program. Przybilla asked if the CEO has value to the City. If you can’t state it is, then it has no value. He concurs with the CSO value and program, he has seen it work.
Luther stated as we approach the Hassan annexation and hire officers, the need to hire a position to backfill the investigator position if the Council deems it appropriate. The last officers we hired were recruited and it has been beneficial to us; however we may be running out of recruitment options.
Rauenhorst is in favor of the CSO program and believes we should pursue it.
Stahmer stated to look at the two items separate. Stahmer spoke to the annexation of properties from Hassan and the code enforcement issues associated with those. Stahmer stated he has spent too much of his time working on code enforcement issues; same to be said for planning. There is likely to be more code enforcement moving forward with the annexation.
Adams added another thought; if code enforcement is something Stahmer feels is necessary then taking it out of the police department and putting it in administration or public works and running the function out of another department instead of the police department.
There was discussion on putting the position under public works and having it be doing other work such as lawn mowing.
Stahmer stated in a larger community, the CEO function would not be in a police department.
Rauenhorst stated it could maintain a full-time position in the public works department and eliminate the need to hire the additional part-time in public works. Davis stated he is in favor of the budget savings.
In regard to the two versions proposed for the 2011 budget, Stahmer stated he thought he heard consensus in favor of version two; Davis said no, two people are undecided and one person stating one.
Bell stated he would rather keep the rate flat as in version number one. Rauenhorst and Davis stated they would lean toward version one as well.
Grimm and Bunting stated the are leaning toward version two.
Council directed staff to bring the CSO program discussion back to the next meeting as a general business item.
4. Adjourn. Mayor Grimm adjourned the budget meeting at 7:00 p.m.
Respectfully submitted,Stacy DoboszenskiAssistant City Administrator/Clerk