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HomeMy WebLinkAboutCity Council Minutes 03-11-1998 SpecialADOPTED MINUTES SPECIAL COUNCIL MEETING MARCH 11, 1998 A special meeting of the Plymouth City Council was called to order by Mayor Tierney at 7:10 p.m. in the City Center, 3400 Plymouth Blvd., on March 11, 1998. COUNCIL PRESENT: Mayor Tierney; Councilmembers Bildsoe, Wold, Johnson, Preus, and Spigner. COUNCIL ABSENT: Councilmember Black. CHARTER COMMISSION PRESENT: Chairperson Robert Sipkins, Ty Bujold, Terry Donovan, Kapila Bobra, Timothy Peterson, David Pauba, Mary McKee, and Lori Schwartz. STAFF PRESENT: City Manager Johnson, Assistant Manager Lueckert, Public Works Director Moore, City Attorney Knutson, and City Clerk Ahrens Supermajority Vote Issue Assistant Manager Lueckert stated that the following question will appear on the November 1998 ballot: "Shall the Plymouth City Charter be amended to provide that a two-thirds majority of all members of the Council is required to adopt a tax levy resolution that increases the City's tax rate over the prior year. Tax rate means the quotient derived by dividing the City's tax levy by the City net tax capacity?" She stated that the tax rate equates to the taxes to be raised divided by the tax capacity. The City establishes the dollars to be raised by the levy, and the tax rate is only estimated. The tax rate is actually established by the county after property base adjustments. The City can control the amount of tax dollars to be raised, but has less control on factors such as tax capacity, fiscal disparities, economic conditions, etc. If a new levy and budget are not established by the end of December, the current year's levy and tax rate remain in effect. Assistant Lueckert said that staff has reviewed all documents and discussions on the supermajority issue by the City Council and the Charter Commission. She shared the following arguments for and against the supermajority issue, summarized in four major issue areas: Should there be a higher standard for raising taxes? Pro: It should be difficult to raise taxes. Pro: Elected officials are biased in favor of tax increases without a higher vote requirement. Pro: The power to tax is the power to spend. Pro: A supermajority requirement sends a strong message to voters; may help restore public trust in government. Pro: Increasing taxes is as important as rezonings. Adopted City Council Minutes March 11, 1998 Page 2 Con: Taxation decisions are not as permanent as decisions on land. Con: A supermajority requirement may mean creating other revenue sources, such as user fees, which have the same effect as raising taxes. Con: Supermajority requirement was considered when the charter was drafted, but rejected. Protecting Future Taxpayers Pro: Pressures at all government levels to increase taxes, supermajority is counterbalance. Pro: Devolution --shifting of services downward; supermajority makes certain decisions are carefully considered. Pro: Plymouth has good record on taxes, but must make it hard to raise taxes in the future. Pro: Supermajority will force tough decisions on spending. Con: Supermajority requirements make it difficult to balance revenue sources. Con: Plymouth does not control destiny, must maintain flexibility to meet changes. Con: An economic downturn and a supermajority requirement could have disastrous impact on city services. Con: Important not to get caught "with our levies down." Con: Supermajority may have negative impact on AAA bond rating. Con: Devolution may mean some citizens do not receive needed services, may impact local services, such as public safety. Majority Rule Pro: Tax increases should require more than a simple majority. Pro: Constitution requires a supermajority for some issues. Pro: Robert's Rules protect the rights of the minority. Pro: An extra vote for a tax increase will require serious thinking and a broad consensus. Pro: Expenditures from CIF require a supermajority. Con: Effectiveness of supermajority often depends on political affiliation, philosophy. Con: Building consensus may lead to dealmaking and vote trading. Con: Minority should not determine community resource allocation. Con: Minority should not determine overall economic policy. Con: Plymouth's budget historically adopted by more than a majority. Con: Some votes are more important than other votes with supermajority. Con: A minority on council could gridlock the budget and levy approval process. Con: Council vacancies and absences could have impact with supermajority. Con: Majority rule should apply to taxation. Adopted City Council Minutes March 11, 1998 Page 3 Constitutional or Legislative? Pro: Constitutional supermajority is largely immune from legislative circumvention. Pro: Constitutional requirement more effective at controlling spending, taxes. Pro: Legislative requirements provide no permanent protection for taxpayers. Pro: Supermajority in charter is clear, simple, permanent. Pro: Charter amendment lets voters decide on standard for tax increases. Pro: Voters are smart enough to decide issue themselves. Pro: Plymouth can set an example for other local governments in making a strong statement about tax rate increases, and provide leadership for entire state. Con: Constitutional changes are permanent, but circumstances change. Con: Constitutional supermajority requirements limit the flexibility of governing body to deal with change. Con: Legislative requirements, properly designed, can provide protection against tax increases. Con: Charter amendment is too restrictive, amending the charter, the city's constitution, is a serious matter. Con: An ordinance can achieve goal of making tax increases difficult, but provide needed flexibility for council. Con: No other Minnesota city has such a requirement. Assistant Manager Lueckert summarized the possible options for City Council and/or Charter Commission action relating to the supermajority vote issue: Take no further action. Supermajority amendment will appear on the November 1998 ballot. Charter Commission could draft and propose its own amendment. If council prefers this, can adopt by ordinance and repeal previous action. The Council could repeal the ordinance which places issue on ballot. City Council could amend previously adopted ordinance. Any revisions must go to Charter Commission for review. Councilmember Wold asked if any of the presented arguments are new since the City Council voted to place the question on the ballot. Assistant Manager Lueckert responded no. Councilmember Bildsoe asked the City Attorney to summarize a March 6 memo relating to setting the tax rate. Attorney Knutson responded that the City Council does not set the tax rate; it is set by the county. There are two components of the tax rate that are not controlled by the City: the Adopted City Council Minutes March 11, 1998 Page 4 tax classification rates which are established by the legislature and the taxable market values of property which fluctuate on a day-to-day basis. Councilmember Bildsoe asked if this means that at the time of budget adoption, the City Council is unsure of the exact impact on the tax rate. Attorney Knutson responded that the City would not know the precise impact on the tax rate, but could have a good estimate based on information gathered from the county. He said that a major valuation decision, for example, would have some impact on the tax rate. Councilmember Bildsoe said that the proposed supermajority requirement for the tax rate would, in essence, mean that a supermajority vote is needed to adopt the City tax levy. Attorney Knutson explained that there could be a situation where the tax levy decreases, but the tax rate increases. The Council would use the best information available at the time the tax levy is adopted to determine, by estimate, the impact on the tax rate. Commissioner Sipkins asked that staff further explain the con argument under Protecting Future Taxpayers that an economic downturn and a supermajority requirement could have a disastrous impact on city services. Assistant Manager Lueckert described a situation that occurred in the early 1990's in Prince William County, Virginia. Due to an economic downturn, decisions had to be made on which services would be decreased or discontinued. Commissioner Sipkins asked what type of municipal services could be affected. Assistant Lueckert responded that the level of snowplowing, police services, park maintenance, and similar services would need to be evaluated. Some services that residents take for granted may have to be cut back or eliminated. She said that a supermajority requirement adds another dynamic to making tough decisions. Ty Bujold asked how the City Council will accurately determine whether their vote on the tax levy will effectively increase the tax rate, when the tax rate is not established by the City. The tax levy is set by the City, but the tax capacity may not be capable of precise identification. It could cause fodder for litigation. He said this concern was not previously considered by the Charter Commission. Attorney Knutson said that the Council would have to calculate the tax capacity based on the best available information at the time. The information cannot be exact, and the Council would need to leave a margin for error. Adopted City Council Minutes March 11, 1998 Page 5 Councilmember Wold said that it has not been difficult to determine whether the tax rate would be effectively raised by the Council the past three years during the budget adoption process. City Manager Johnson explained that the City Council does not set the tax rate, but uses estimates from the County to determine the approximate tax rate. The County changes taxable market values, and there is some change in value from the State on certain types of property. He said that the County does not know until year-end the exact impact of homestead filings. He added that, in reality, the tax rate has remained unchanged from the estimate determined early in the budget process during the past few years. Mayor Tierney asked what the Council adopts in September. City Manager Johnson responded that the Council adopts the amount of the tax levy, which the Council can later reduce but not increase. Councilmember Wold said that he is disturbed that there was no indication from staff until this memo that setting the tax rate is not clear. Mayor Tierney stated that the supermajority vote issue was approved by the previous Council for placement on the ballot, and the Charter Commission had unanimously voted against it. She would like the Council and Charter Commission to compromise and reach an understanding. Councilmember Preus said that the purpose of this City Council study session is to gather information, not to reach a decision. Assistant Manager Lueckert said that the study session was noticed as "discussion" of the issue. However, staff could be directed to prepare something to place on the next regular Council agenda. Mayor Tierney said that she shares the view of Charter Commissioner Scott Martin who believes that the majority should be in control of City issues. Other supermajority requirements relating to land use are set by state law. Commissioner Sipkins said that another argument mentioned was that the supermajority vote requirement may have a negative impact on Plymouth's Aaa bond rating. He asked how long the City has maintained this rating and the cost impact of a potentially lesser bond rating. Councilmember Bildsoe said that a reduction in the bond rating from Aaa to Aa would be more symbolic than would equate to money to the City. While it is true that rating agencies don't like restrictions on revenue, it is only one issue considered in issuing the rating. Adopted City Council Minutes March 11, 1998 Page 6 City Manager Johnson added that it would be a minor negative factor. Many other factors would overshadow this restraint on revenue. Commissioner Peterson asked the Council to comment on whether they may be inclined to not vote for a lower levy in a year when the levy could be reduced because of the following year impact, possibly requiring an increase. Mayor Tierney stated that some states believe supermajority requirements are necessary, while others believe it is useful. She does not believe the Council's reasoning on the issue has been clear. Councilmember Preus responded to Commissioner Peterson's question that the supermajority vote requirement would have no impact on his decision on setting the tax levy. If the tax rate should be lowered, then he would favor lowering it. If it should be raised, he will vote to raise it. The future year implications of the supermajority requirement could influence some individuals, but he believes that is irresponsible. The right decision should be made each year. Councilmember Wold agreed that it would not be an issue for him in establishing the tax levy. Commissioner Bobra asked how many Minnesota cities have the supermajority vote requirement and how it affects the tax levy/tax rate. Assistant Manager Lueckert responded that no Minnesota city has this identical provision. Fridley and a number of other cities require a supermajority vote to adopt a budget, but not for a tax rate increase. Councilmember Bildsoe stated that this City Council spends a significant amount of time discussing philosophy, priorities, and dollars related to the budget. By the time of the budget adoption, the Council has largely reached agreement on budget priorities. He believes it would be difficult not to have a supermajority vote on the budget adoption. He favors having the supermajority vote question on the November ballot because a previous Council voted to do so, and he believes it would be difficult not to reach a unanimous vote on the budget. Mayor Tierney said that most individuals believe that the supermajority vote requirement would send a message to the voters that the Council is attempting to be fiscally responsible. However, the Charter Commission believes there could be undesired consequences. She asked if any Councilmember sees dangers of a supermajority vote requirement, particularly the ability of the minority to control the budget adoption. Adopted City Council Minutes March 11, 1998 Page 7 Councilmember Spigner said that the Council is not partisan. Voting is done by conscience and commitment to the City, not by party. Councilmembers come to the table without minority issues, and she doesn't recall any faction on the Council pushing a minority issue. Since she has been on the Council, all votes on the budget have been by a supermajority. She believes that the charter provision may restore public trust. Councilmember Johnson stated that there have been close votes on various issues, and the same thing could occur on a budget vote. It is fine to send a philosophical message to the voters that the Council is fiscally conservative, but she questioned why the Council was trying to fix a process that is working well. She noted that there could be future Councilmembers who may not be reasonable and problems could result. If this is only a philosophical issue, she believes that the ballot language can be improved because of the issues that the City does not control. She would support consideration of alternative language. Councilmember Spigner responded that none of the Council's close votes have related to the budget, but rather to land use issues. She believes that citizens also have the right to sign -off on their desire for a supermajority vote requirement for a tax rate increase. Mayor Tierney said that no other Minnesota city charter has a similar provision. Plymouth is not trying to address the past because there has not been a problem. She asked why Plymouth would want to set a precedent for other cities. Councilmember Preus explained that the budget process is a long, detailed study process. At the end of months of study, the Council makes a decision. He said that over the past few years, several zoning issues have come before the Council two or three times because a supermajority vote was needed for approval. The first efforts could not receive a supermajority vote, and the developer did further work on the proposal. In his view, the final result was the best that could have been done. In the future Plymouth may come to this same situation when setting the tax levy. He believes that the taxpayers' money is their money, and this warrants extra work on the part of the Council to make the process the best it can be. Councilmember Johnson said that the timing is different on the two examples. The Council is not typically running against a deadline when considering land use issues. Councilmember Preus responded that by the end of the budget process, all issues have been discussed and compromises have been reached to get the votes needed to adopt a tax levy. He anticipates having sufficient votes to adopt a levy at the end of the budget process. Councilmember Johnson asked why the supermajority vote requirement is needed if that scenario is so unlikely. She said that it gives one more vote to the minority to defeat the budget. Adopted City Council Minutes March 11, 1998 Page 8 Councilmember Preus said that he considers it one more vote to protect the citizen's money. Commissioner Donovan said that one of the pro arguments for the provision is voter dissatisfaction or taxpayer revolt. He noted that zoning codes throughout the nation are falling behind the changing nature of the world and asked how many variance requests the City is receiving. He said that sometimes the 2/3 vote requirement is needed because the codes are not current. Commissioner Donovan asked if Councilmember Bildsoe would ever consider reversing a previous Council decision, and why not this one? Councilmember Bildsoe said that he enjoys the budget debate. He believes that it is more an issue of priorities to the City than of money. He said there could be an instance where the supermajority requirement causes a problem, but he does not consider it likely. It is somewhat redundant to address the issue because the previous Council went through much debate with public input on the issue. He would like to see the debate continue and would like to see the question on the ballot. However, he doubts that he will vote in favor of the ballot question at the polls. He said that this was a priority issue for the previous Council, and he doesn't want to change that. City Attorney Knutson responded to Mr. Donovan that the City just adopted a complete new zoning ordinance. Commissioner Donovan asked if the zoning ordinance keeps up with the world. City Manager Johnson responded that an effort was made to update the zoning ordinance for current market conditions. The Council's split votes are not with variances, but rather with difficult land use and zoning decisions because those are major policy decisions for the City. Commissioner Donovan asked why the City Council felt it necessary to update the zoning ordinance and whether it was outdated. Councilmember Wold questioned whether this was germane to the discussion. Mayor Tierney stated it is germane only in terms of who sets the authority. Commissioner Donovan said that the economy will not always remain the same as today. If the zoning ordinance is not keeping up, the budget also may not keep up. He said that Plymouth will age and will face significant issues in the next 15 years. Councilmember Wold stated that the cost in staff time and dollars is the primary reason the zoning ordinance is not updated more frequently. He does not believe it is relevant to the supermajority vote discussion. Adopted City Council Minutes March 11, 1998 Page 9 Councilmember Bildsoe said that he would favor a supermajority vote requirement on discretionary spending. Councilmember Johnson said that discretionary spending occurs outside of the budget process, and she would also consider it. She stated that four members of this Council have indicated that they will individually vote against the supermajority ballot question at the polls, and she believes that better language could be proposed. She said that a future event or crisis could result in difficulties, and some exemptions could be considered to the proposed language. She believes the proposed language is too restrictive. Commissioner Sipkins said that while as a body the Charter Commission has expressed itself as opposed to the supermajority requirement, that does not mean the Commission favors tax increases. He said that everyone is looking for a sensible approach. It is encouraging to hear Councilmembers describe the compromises that go into the budget process, and he hopes that continues with future Councils. However, he said that previous Councils have been extremely acrimonious, and the charter amendment would be permanent in nature. Commissioner Sipkins explained that this amendment had its genesis from what may befall the City in the future when the economy is not as good and the Council has to make tough choices. He believes that a future worst-case scenario should be envisioned with an economic downturn and acrimonious Council. There are Charter Commission members who believe that more flexibility rather than less flexibility; with respect to taxes, would be needed in that situation. Commissioner Bobra said that she has concerns about how to educate the public about all of the issues related to the proposal. She said that she is a fiscal conservative and likes the concept of the supermajority requirement but believes it will be difficult to explain to the voters. Councilmember Bildsoe agreed that public education on the issue is important. He believes that a citizen will have a better understanding of the issue from simply reading the ballot language than on a candidate's name appearing on the ballot. Councilmember Wold said the budget study and implementation process is profound, and this should alleviate the concern about long-term effects of the supermajority vote requirement. He believes that the probability of a negative impact is about the same probability as a positive impact. He believes that the Council and staff will work harder on the budget, knowing that a certain number of votes are needed for adoption. He firmly believes that the proposed requirement will have a positive impact on how a Councilmember does their job and on how the Council works together to adopt the budget. It would also send a positive message to the taxpayers. Commissioner Pauba said he understands that the Council has faith in the electorate because the Councilmembers were elected. However, he is concerned that the electorate Adopted City Council Minutes March 11, 1998 Page 10 cannot make an educated decision on this complex issue. He said that it may also encourage the thought that taxes are bad. He said that taxes are not always bad, and if used appropriately, make a city a nice place to live. Councilmember Preus agreed with Commissioner Sipkins that the future should be considered. He said that everyone has to admit that there is a possible negative impact of this change. There could be a situation where three Councilmembers are irresponsible, the City is in a crisis, the Council refuses to raise taxes, and it causes long-term damage to the City. However, he believes that scenario is extremely remote. He believes that most of the con arguments are based on an absolute worst-case scenario and can be considered from the other side. For example, the exact same problem could occur in the future without a supermajority vote requirement. He believes that it is far more likely that the requirement will have a positive rather than a negative impact due to the nature of the budget process. Councilmember Johnson said the proposed language is very complex and voters will not have the benefit of all of the research done on the issue. She philosophically agrees with sending a message to the voters, as she wants to be accountable in all facets of her service as a Councilmember. She wants to instill confidence in elected officials. She suggested that the language be amended to provide for a revocation process with a public process in the future without a charter amendment. Councilmember Johnson said that she does not want to adopt something that will create a problem for a future Council due to state law changes or bad economic times. She said that the Council could consider the original Option 3 charter language: "The Council may by ordinance require a two-thirds majority of all members of the Council to adopt a tax levy resolution that increases the City's tax rate over the prior year. Tax rate means the quotient derived by dividing the City's tax levy by the City's net tax capacity. The ordinance, if adopted, may not be repealed or amended without a public hearing following two (2) publications in the official newspaper stating the time, place, and purpose of the hearing. The two (2) publications shall be a week apart and the hearing shall be at least three (3) days after the last publication." City Manager Johnson suggested one additional option. He explained that the premise behind it is that if you are a proponent of the requirement, the power is not in the details, but in the message of concern that can be sent to the public and they can mirror that concern back at the polls. If you are an opponent of the requirement, the greatest fear is that provisions rarely get repealed from charters so consideration needs to be given to 20 or 50 years in the future. The City and State could be very different by that time. He said there may be a way to highlight the positive part and minimize the long-range concerns. It may be possible to adopt, along with the supermajority vote requirement, a provision that the ordinance could not be repealed for a certain period of time; e.g. one year, until after the next election, etc. Adopted City Council Minutes March 11, 1998 Page 11 Councilmember Johnson encouraged this Council to work to find the best solution to address everyone's concerns on the issue. She said there are valid pro and con concerns. She believes that a message of fiscal responsibility can be sent to the taxpayers, while addressing the long-range concerns. She would like the Council to unanimously support the ballot language submitted to the voters. She believes that improvements can be made to the existing language. Mayor Tierney said that she believes that would mean changing the provision from constitutional to legislative. Commissioner Bujold described the deliberative process that led the Charter Commission to reach its conclusions. He said the Charter Commission is composed of citizens who are concerned about good government. They are not elected, but rather appointed by the Chief Judge of Hennepin County. He said that these individuals really wanted to be on the Commission and demonstrated that they have a profound interest in good government, just as the Council does. He explained that members of the Council were invited to meet with the Charter Commission to discuss the proposed issue, and he thanked Councilmember Preus for sharing his thoughts on the validity of the supermajority vote requirement at a Charter Commission meeting. The Commission also heard testimony from experts -- representative of the Minnesota Taxpayers Association, representative of the League of Minnesota Cities, and former City Manager Jim Willis. He said there was not strong interest in the supermajority concept. He had expected that the Minnesota Taxpayer Association representative would be a proponent of the concept, but he was not. Commissioner Bujold said the issue had vigorous debate that resulted in the Charter Commission not endorsing the idea of a supermajority requirement. The view of the Commission was that a supermajority requirement did not represent good government for a number of reasons. He said it is easy to say that we don't want increased taxes, but the future is unknown. He said that this City Council has demonstrated the integrity to keep taxes down and the requirement should not be imposed on this Council. He recognized the instant appeal of the supermajority concept, as well as the good intentions of Council and Charter Commission members in considering the issue. He said that as strongly as he opposes the supermajority requirement, there is some appeal of amending the Charter to allow the Council to adopt a supermajority ordinance with the provision that the Council can undo it after a number of years. He would be willing to consider that option. He said that the Charter Commission does not want to be viewed as opposed to anything that the City Council is doing, but Commissioners have strong feelings about a Charter that they have spent seven years working on. He said their protection of the Charter is expressed in the best interest of good faith and good government. Councilmember Wold said that there is great value in the process for electing officials. His job is to represent citizens. He said that when he was running for office, citizens favored the supermajority requirement. He believes that listening to experts overlooks the 60,000 citizen experts in the community. He believes in a participatory democracy, where everyone is part of the government. He said it is unacceptable to say that voters Adopted City Council Minutes March 11, 1998 Page 12 cannot make an informed decision because he believes citizens are intelligent. He believes that the voters can handle this question and encouraged Charter Commissioners to run for elected office. Councilmember Johnson said she also believes that residents can make an intelligent decision, but questioned whether they will know the nuances related to this issue. She believes the voters can be given better language. During her campaign process, she said that residents were unaware of the proposed supermajority vote requirement. She agreed that it sounds good, but believes the language can be improved so there is an accountable way for future Councils and future taxpayers to handle difficult situations. She expressed concern about the permanency of a charter amendment. Mayor Tierney shared that during her campaign, many voters were unaware of the supermajority vote issue. Commissioner Schwartz stated that no one on the Charter Commission or City Council questions the integrity of the voting population or of the Council. She believes the intentions of all Councilmembers are good, but is concerned about the unintended consequences of the supermajority vote item. Such a provision is not common practice, and she believes that careful consideration should be given to the possible unintended consequences as well as the desired results. Mayor Tierney asked if the Council is interested in considering alternative language as proposed by Councilmember Johnson. Mayor Tierney said that it is likely that the supermajority vote requirement will be adopted by voters because it sounds good but concerns will remain unaddressed. She believes that a compromise could be made because all Council members want to be fiscally responsible to the voters. Councilmember Preus said that the first question of the meeting was, "Is there anything new?" and the answer was "no." In his opinion, the Council has thoroughly considered all options, and the pros and cons have been exhausted. He is willing to do other things to protect taxpayers' money, such as a supermajority vote requirement on discretionary spending, but does not wish to rehash an issue that has been discussed for nearly two years. He said that adopting the supermajority requirement by ordinance was one of the previous options that was rejected by the Council. If there is a new proposal, he will consider it. Mayor Tierney said that either the Charter Commission or the City Council could consider an alternative proposal. Her biggest concern is that two conflicting questions could be placed on the ballot. Councilmember Bildsoe thanked the Charter Commission members for attending this meeting. He will consider the comments made by Commissioners and supports continued debate. Adopted City Council Minutes March 11, 1998 Page 13 Councilmember Spigner said she is impressed with the caliber of the Charter Commission members. She has a strong opinion with regard to the supermajority vote requirement, but will be happy to consider any language proposed by the Charter Commission. On behalf of the Charter Commission, Chairman Sipkins thanked the Council for the invitation to discuss the issue. He believes that if this type of meeting had been held earlier, it could have diffused the situation. It has not been an easy issue for the Council or the Charter Commission. Motion was made by Councilmember Bildsoe, seconded by Councilmember Spigner, to adjourn the meeting at 9:20 p.m. Motion carried, six ayes. A L A City Clerk