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HomeMy WebLinkAboutCity Council Packet 12-06-2004 SpecialAgenda City of Plymouth Special City Council Meeting Monday, December 6, 2004 7:00 PM Council Chambers 1. Call to Order 2. Truth in Taxation Hearing 3. Adj ourn Agenda Number: TO: Laurie Ahr s, City Manager FROM: Dale Hahninance Director SUBJECT: 2005 Truth in Taxation Public Hearing DATE: December 2, 2004 for City Council Meeting December 6, 2004 1. ACTION REQUESTED: Hold the 2005 Truth in Taxation Public Hearing and determine if a continuation hearing is needed. if no continuation hearing is needed, announce that the date for the adoption of the 2005 budgets and tax levies will be December 141n 2. BACKGROUND: Attached is an updated budget memo for 2005 which reflects direction given by City Council in the three budget study sessions held on August 23, August 31, and September 7, 2004. It also reflects all utility and fee rate changes approved since the proposed budgets and tax levies were adopted on September 131H 3. DISCUSSION: In early November, taxpayers were mailed notices of their proposed 2005 taxes, including information about where and when the Truth in Taxation Public Hearing would be held. In addition, a notice was published in the Star Tribune announcing the date and time of the hearing. Prior to the public hearing, staff will provide additional information on the proposed 2005 budgets and tax levies, after which time the public hearing will be opened, and comments received. 4. RECOMMENDATION: At the conclusion of the Truth in Taxation hearing, the City Council should determine if a continuation hearing is necessary. If a continuation hearing is not needed, it should be announced that the proposed adoption of the 2005 budgets and tax levies will be on December 14`" ri CITY OF PLYMOUTH 2005 Proposed Budget December 2004 Attached is the proposed 2005 budget for the City of Plymouth. The proposed budget is designed to maintain service levels throughout the City. It places particular emphasis on the council's annual goals and core services most heavily impacted by the City's continued growth, such as public safety, street maintenance and reconstruction, drainage, and the City's water system. The City's overall tax rate is proposed to be 24.65, which is a decrease from the 2004 tax rate of 24.87. The total rate is comprised of a tax capacity rate of 23.80, plus 0.31 for the Open Space Bond issue and 0.54 for the Activity Center/Field House debt service. Because the tax rate will be reduced in 2005, a supermajority vote of the Council will not be required to adopt the tax levy. The projected numbers and percentages are based on our best-known sources at this time and will have some minor adjustments when the final numbers are obtained. Background We historically begin the annual budget process with a look at population growth and inflation, as both of these factors significantly impact our ability to maintain service levels. Levy limits did not allow the City to levy for growth or inflation last year. Therefore, we are showing this information for the past two years. The numbers are a conservative estimate since population estimates from more than a year ago are used. Total 2001 2002 2003 Increase Population (April annual) 66,675 67,824 703238 Population % Increase 1.723% 3.559% 5.282% Inflation CPI -U (dune annual) 179.9 183.7 189.7 Inflation % Increase 2.112% 3.266% 5.378% Two Year Total 10.66% This data indicates that population has increased by 5.282% in the past two years, while inflation has been 5.378% over the past two years. If we started the 2005 budget process by using a typical "growth plus inflation" formulae, as we have done for many years, this would indicate that our levy would need to increase by 10.66% simply to maintain services at current levels. One observation is that we are doing a good job of maintaining service levels considering this 10 percent decline in buying power. Our employees are trying hard to keep up and are identifying more efficient ways of providing services. However, it is also honest to acknowledge that: some of our service levels have slipped over the past few years. The impacts of many years of levy limits, most recently with no allowance for inflation or growth, along with significant cuts in state aid, have put us in an increasingly difficult position to maintain service levels as one of the fastest growing cities in the state. As a few examples, less reforestation and tree trimming is done each year, no trail trimming will be done in 2004, and additional ice rinks will be recommended for closure this winter. With the exception of police squads, our vehicles and equipment are being carried over for longer use. Some services like drainage maintenance and median maintenance have become increasingly visible concerns. The number of police officers has not kept up with the population growth, and we are getting further behind each year in maintenance and reconstruction of the street system. In general, all services are stretched further. City Councils of the past five years have adopted tax increases needed to maintain and enhance core services. The following charts indicate how the priority of expenditures has changed in the General Fund from 2001 to 2005 (proposed budget): 2001 General Fund Budget & Debt Service Allocation 2005 General Fund Budget & Debt Service Allocation Street Community Support Street Community Support Maintenance Service Services Maintenance Service Services 14.8% 2.0% 11.5% 14.8% 2.0% 11.5% Fire Fire 7.7% 7.7% y Inspections & a ; Inspections &.., F.. Planning Police Planning 8.0% 36.3% 8.0% Parks, Trails & Parks, Trails & Recreation Recreation 19.7% 19.7% Budget Process The budget process began with employee information meetings in early June where employees learned about operating and capital budgets, sound financial and budget practices, council goals, historic information on Plymouth budgets and taxes, and the budget outlook for 2005. Employees were informed that the; focus for development of the 2005 budget would be to maintain service levels to the extent possible, to fund new known costs (such as operating costs for the new facilities under construction), to address core services where we are falling significantly behind (such as street maintenance and reconstruction), as well as to focus on issues of overtime, contractual/professional services, revenues, and innovative service changes to make our tax dollars go further. 2•- Police 36.3% Employees who attended the information meetings were eligible for selection to serve on the budget team, and Senior Planner Marie Darling was subsequently selected to serve. Other members of the budget team were Finance Director Dale Hahn, Financial Analyst Mike Kohn, Public Services Manager Pat Qvale, Finance Supervisor Bobbi Leitner, Human Resource Manager Jeanette Sobania, and City Manager Laurie Ahrens. In addition to the employee meetings, feedback was sought from all employees through a new budget survey, and managers considered those comments while formulating their budget proposals. Department budgets were developed and justifications were provided for changes to line items. Department directors prioritized all requests for increased services and held meetings with the budget team to fully discuss budget proposals. The budget continues the program budget format that allocates personnel, material, and other costs to programs. While this budget document is the "City Manager's ]Budget" as required by the City Charter, it is more accurately the culmination of many ideas and much work by the budget team, department directors and supervisors, and all employees. The City Council held three budget study sessions to consider the proposed 2005 budget, and adopted the preliminary tax levies and budgets on September 13th. The Truth in Taxation hearing will be held on December 6, and the City Council is scheduled to adopt the final budget and tax levies on December 14. We also prepared the 2005-2009 Capital Improvement Program coincident with the operating budget, and it was adopted on November 9th. This will help us more accurately identify and budget the operating cost impacts related to capital projects. Proposed 2005 Budget General Fund spending is proposed to increase in 2005 by 4.83% over the budgeted amount for 2004. This is considerably below the City's growth rate plus inflation, and well below past annual General Fund increases averaging almost 6%. Due to the City's growth, no tax increase would be needed to fund the proposed continued service levels in the General Fund. The increase is due to other factors described below. The overall City property tax levy is proposed to increase by 10.13%. We believe this is needed to maintain service levels to the extent possible. The Legislature did not place levy limit restrictions on the 2005 levies. The projected increase for an average home valued at $323,900 is 9.54%, or an increase of 69.57. There are a number of factors that contribute to this increase: Public Safety Bonds debt service and additional operating costs associated with building and parking garage 4.1% Additional Street Reconstruction levy 2.9% Phase-out of Limited Market Value 1.5% Valuation change differential between C/I & residential 1.0% 3- The projected decrease for a business property valued at $1,000,000 is -2.88%, or - $82.63. The disparity between residential and business property is not due to any action of the City in the budget process. It will primarily occur because residential property appreciated at a rate of 9%, while commercial/industrial property experienced a 2% decrease in value for the year. Levy Limits There are no levy limits for the 2005 budget. This is certainly an improvement over last year when the levy limits did not allow adjustments for inflation and growth, and allowed the City to recover only up to 60 cents for each dollar of lost state aid. Limited Market Value In 2005, taxes on many Plymouth homes will be impacted by the phase-out of limited market value. The 2001 tax bill included a six-year phase-out of limited market value that began in 2003. This phase-out did not impact most Plymouth homes in 2003 because the average 11 % appreciation in value was greater than the 10% increase in the phase-out amount. In 2004, approximately 14,500 parcels experienced some degree of phase out because the phase out percentage was 12% whereas the average home value appreciated by only 8%. In 2005, some homes will continue to be impacted to some degree by the phase-out. Currently, about 7,250 of the 24,354 parcels in the City qualify for limited market value. Although residential properties increased in value by 9%, the phasing out of limited market value provides that taxes may be levied on taxable valuations that are increasing by up to 15%. Nearly all of the impact resulting from the limited market value phase-out will occur in 2004 and 2005, rather than phasing over the next few years until the program sunsets in 2008. The weighted average of Plymouth homes will see a 10.5% increase in their taxable value for 2005. Most Plymouth properties will be taxed at their full value by 2006. State Aid The City lost all Local Government Aid ($74,579) and all Market Value Credit Aid 688,700) in 2004. Plymouth is scheduled to get back the Market Value Credit in 2005, but based on past experience and the projected State deficit, we are not entirely confident that this will occur. The budget proposes using the Market Value Credit Aid dollars for street reconstruction, which could be paid for with bonding if it is once again cut to cover the State's deficit. Interest Earnings The historically low interest rates continue to negatively affect all City funds. The impact on the General Fund is moderate, but the impact is significant on the capital projects funds, enterprise funds, HRA funds, and internal service funds. This will turn around if interest rates rise in the future. Salary Vacancy Factor The 2005 budget includes a budget correction factor of $127,000 to acknowledge an ongoing statistical job vacancy rate. Approximately 15 employees leave City employment each year. The salary vacancy factor recognizes the savings that occurs when there is a lapse in time from the former to new employee, as well as the fact that a new employee typically begins employment at a lower rate of pay. 4- Earlier Spending Decisions New operating costs will affect the 2005 budget: for several capital projects where construction is underway. The operating costs for the public safety building expansion are estimated to increase by $150,000, and are included in the General Fund budget. Also, the third sheet of ice will result in additional operating costs of $318,500 which will be fully covered by increased user fees. A second example of earlier spending decisions is the "tails" that result when positions are added mid -year and the full budget impact does not occur until the following year. For example, due to several mid -year positions hired in 2004, we began the 2005 budget with a new" cost of $71,000. This occurred because we did not budget for the full position in the year hired. We are suggesting that full -year salaries be budgeted for all new positions in the General Fund. While using mid -year dates can allow us to hire a position at less budget impact in the current year, it always creates an additional burden in the subsequent year due to "salary tails." Working Capital/Contingency Fund Some General Fund surplus is beneficial and expected, since the City budgets contingency funds that are normally not needed. Moderate surpluses help the City maintain its policy of having the equivalent of 40% of our General Fund levy in cash reserves. This is necessary to provide "working capital" for the City since the City does not receive any property tax revenue until July each year. The 2005 budget proposes a contingency amount of $200,000. Revenues All fee levels have been evaluated as part of the budget process. The budget includes the rate increase in building permit and fire inspection fees that was adopted on November 23` d. The State law requires that all fees be justified through actual expenditure reporting. Tax Capacity/Fiscal Disparities The following chart illustrates the changes in total tax capacity and fiscal disparity contributions. The City's net contribution to the fiscal disparities pool will be $6,438,000. This equals 7.7% of our total tax capacity value. Total Tax Capacity for ]Payable 2004 and 2005 5- 2004 2005 Actual Actual Real Property: Tax Capacity 86,601,518 94,654,558 Personal Property: Tax Capacity 845,341 893.652 Total Tax Capacity 87,446,859 95,548,210 Fiscal Disparity Contribution 11,682,453) 11,363,043) Tax Increment 537,046) 599,691) 75.227.360 83.585.476 5- The table shows that Plymouth has had a healthy growth in the tax base during the last year. Our growth in tax base has been uneven in the last year, with residential property increasing rapidly while business properties have decreased in value. The differences in valuation and tax capacity growth have an impact on the actual taxes paid by Plymouth homes and businesses. The following table illustrates the changes in tax capacity and taxes paid by this average value home ($323,900). An increase of 9% is due to the real increase in property value, with an additional 1.5% applied to property value that was previously not taxed under limited market value. Estimated Tax Burden. on Average Home 2004 versus 2005 2004 2005 Average home value — $293,100 Homestead: 293,100 @1% = 2,931 Total Tax Capacity City Tax Rate Subtotal Mkt. Value Levy 293,100 @.00346% (Open Space Bonds) 293,100 @ .00604% (Activity Center Bonds) Total City Tax 728.94 Total City Tax The average $1,000,000 business decreased in value by 2% during 2004. The following table shows the change in 2005 taxes payable: Estimated Tax Burden on $1,000,000 Business 2004 versus 2005 2004 Business value — $1,000,000 150,000 @ 1.50%= Average home value — $323,900 850,000 @ 2.00%= 17,000 Homestead: 19,250 Less Fiscal Disp. 323,900 @ 1%= 3,239 Net Tax Capacity Value 2,931 Total Tax Capacity 3,239 23.92% City Tax Rate 23.80% 701.10 Subtotal 770.88 Total City Tax Nlkt. Value Levy: 980,000@.00311% (Open Space Bonds) 30.48 323,900 @ .00311% (Open Space 53.12 10.14 Bonds) 10.07 323,900 @.00542% (Activity Center 17.70 Bonds) 17.56 728.94 Total City Tax The average $1,000,000 business decreased in value by 2% during 2004. The following table shows the change in 2005 taxes payable: Estimated Tax Burden on $1,000,000 Business 2004 versus 2005 2004 Business value — $1,000,000 150,000 @ 1.50%= 2,250 850,000 @ 2.00%= 17,000 Gross Tax Capacity Value 19,250 Less Fiscal Disp. 7,660 Net Tax Capacity Value 11,590 City Tax Rate 23.92% Subtotal 2,772.21 Mkt. Value Levy: 23.80% 1,000,000 @.00346% (Open Space Bonds) 34.60 1,000,000 @.00604% (Act Center Bonds) 60.40 Total City Tax 21 2005 Business Value — $980,000 150,000 @ 1.5%= 2,250 830,000 @ 2.0%= 16,600 Gross Tax Capacity Value 18,850 Less Fiscal Disp. 7,501 Net Tax Capacity Value 11,349 City Tax Rate 23.80% Subtotal 2,700.98 Mkt. Value Levy: 980,000@.00311% (Open Space Bonds) 30.48 980,000 @.00542% (Act Center Bonds) 53.12 Total City Tax 6- 2005 Budget Overview Estimating the Tax Levy Rate City revenues from all sources in the General Fund will be $22,493,654, a 4.83% increase from 2004. Of this amount, $17,035,807 (75.70/'0) comes from property taxes. We propose a 2005 tax rate estimated at 23.80, plus a market value rate of .00311 for the Open Space Bonds and .00542 for the Activity Center/Field House bonds, for a total estimated rate equal to 24.65, compared to 24.87 for 2004. Plymouth's overall tax levy will increase by 10.13% in 2005. The City's overall tax rate will decrease by -.22 to an estimated 24.65. The following table compares the tax levy by fund for 2004 and 2005: Tax Capacity Value Referendum Market Value 75.227.360 S7,138,190,300- 83.585.476 7,928,351,7007.928.351.700 I)Equals Market value Rate of .00346% (2)Equals Market value Rate of.00604% (3)Equals Market Value Rate of .00311 %-Est. (4) Equals Market value Rate of .00542% -Est. 7 2005 2004 2004 2005 Proposed Proposed Tax Levy Tax Rate Tax Levy Tax Rate GENERAL PURPOSE LEVIES General Fund 16,189,626 21.52 17,035,807 20.38 Mkt. Value Cr Aid -State Aid Cut 737,392 0.98 0 0.00 Mkt. Value Cr Aid -Street Rec. 0 0.00 688,700 0.82 Street Reconstruction 0 0.00 600,000 0.72 Mill & Overlay 47,000 0.06 47,000 0.06 Recreation Fund 623,569 0.83 623,569 0.75 Capital Improvement Levy 309,000 0.41 318,270 0.38 Total General Purpose 17,906,887 23.80 19,313,346 23.11 SPECIAL LEVIES 1995 Open Space Bonds 247,071 1) 0.35 0 0.00 Act. Center/Field House Bonds 430,435 2) 0.60 429,962 3) 0.54 2003 Open Space Refunding 0 0.00 246,060 0.31 2003 Street Recon. Bonds 184,222 0.24 181,388 0.22 2004 Street Recon. Bonds 415,000 0.55 418,222 0.50 2004 Public Safety Bonds 0 0.00 619,942 0.74 PERA Increases 35,630 0.05 0 0.00 HRA 593,395 0.79 607,556 0.73 Total Special Levies 1,905,753 2.58 2,503,130 3.04 TOTAL ALL LEVIES 19,812,640 26.38 21,816,476 26.15 LESS: Fiscal Disparity -City 1,106,269) 1.46 1,215,708) 1.45 Fiscal Disparity -HRA 35,044) 0.05 38,969) 0.05 18.671327 24_87 20.561.799 24_65 Tax Capacity Value Referendum Market Value 75.227.360 S7,138,190,300- 83.585.476 7,928,351,7007.928.351.700 I)Equals Market value Rate of .00346% (2)Equals Market value Rate of.00604% (3)Equals Market Value Rate of .00311 %-Est. (4) Equals Market value Rate of .00542% -Est. 7 Expenditures The 2005 budget includes total General Fund expenditures of $22,493,654. This represents an increase of 4.83% over the 2004 adopted budget. The following chart lists expenditures in all major operating funds: Expenditures 2004 2005 General Fund 21,458,236 22,493,654 Recreation Fund 1,423,881 1,481,622 Transit Fund 4,345,337 4,518,060 HRA Funds 4,290,581 4,661,527 Water Fund 3,802,200 4,019,700 Sewer Fund 6,524,407 5,733,392 Solid Waste Fund 958,421 1,041,494 Ice Center Fund 919,277 1,292,674 Water Resources Fund 3,706,040 3,068,232 Field House Fund 285,200 290,000 Central Equipment Fund 2,185,883 2,154,955 Risk Management Fund 651,370 684,752 Design Engineering 369,237 378,982 Employee Benefit Fund 2,512,400 2,652,900 Information Technology Services Fund 1,660,591 1,837,647 Facilities Management Fund 856,739 1,082,602 Areas of Emphasis Police The City Council has adopted public safety initiatives as a top goal. In 2004, we concentrated on staffing and added four new police officers in order to reduce committed time. Committed time has actually increased significantly since last year because the calculation includes all self -initiated contact by officers (i.e. traffic stops), as well as resident calls for service. Our theory last year was to free up committed time to allow for more proactive enforcement, and that is occurring. As proactive enforcement increases, our committed time will increase. Committed time is certainly one measure of adequate staffing, but we will also continue to consider a balance of issues such as types of calls, number of officers per capita, and the outcomes we are trying to achieve. Due to the training timeline, we have not yet realized the full impact of the four new officers added in 2004. One new police sergeant and one new police officer are proposed in the 2005 budget. The most significant single impact on the 2005 budget is the new costs related to operations and debt service for the public safety building expansion and garage project. Nearly one-half of the proposed 2005 tax increase is due to this project. Hennepin County has advised that the MDCs for the squad cars will be available in 2006 at an estimated cost of $120,000. The 2005 budget contains $60,000 to cover half of the cost to prepare for the transition in 2006. Streets The proposed budget emphasizes street reconstruction and maintenance in several ways. First, the budget proposes returning the City's normal street reconstruction amount back within the normal levy. The budget proposes $600,000, and an additional $688,700 of Market Value Credit Aid that the City is scheduled to receive in 2005, for street reconstruction. Should the State eliminate the Market Value Credit Aid, a portion of the street reconstruction could be bonded. Due to the state aid cuts and strict levy limits of the past several years, the City bonded street reconstruction in 2003 and 2004. We do not recommend continuing this as a long- term strategy for the annual reconstruction costs due to the increased interest costs. In addition, this is one factor that could negatively affect our Aaa bond rating. Our last two conferences with Moody's have included a discussion about getting the annual street reconstruction amount back within our normal levy, and this is a high priority for this budget. We are also working on options for a future street reconstruction bond issue in order to catch up with reconstruction of local streets in serious need of repair. A number of financing options will be reviewed during the budget process. A reconstruction bond sale in 2005 would result in manageable, new debt service beginning in 2006. We also need to consider incrementally increasing the amount of our annual levy for street reconstruction. The budget also enhances street maintenance in several ways. The purchase of a conveyor for loading the spray patcher is proposed in the amount of $31,000. The City currently pays $26,000 annually for rental of this piece of equipment. By the second year, funds will be freed up to apply toward additional street maintenance. The purchase of a second spray patcher was considered. Rather than purchasing a second patcher, we are going to try running two shifts using the existing spray patcher in 2005. The City should be able to add at least four hours of machine operation per day using existing employees, as well as eliminate a current contractual cost of $1,500 per day for rental. A portion of this savings ($10,000) has been applied to increase the asphalt line item. The budget also moves the street repair work: that is required after water main break repairs from the General Fund to the Water Fund. This will free up 540 hours of labor and 13,665 in materials in the General Fund to be applied toward normal street repair. Finally, the budget proposes changing the Street Leadperson position to a Street and Drainage Maintenance Supervisor. There is a cost savings in the proposed change, it will 9 bring greater emphasis to street and drainage maintenance, and accountability will be gained in these divisions. Cell Phones The majority of the City's workforce is mobile., and we gain efficiency through enhanced communication in the field. A new feature in this year's budget is an allocation for cell phone service. The budget previously charged each program for the purchase and service of their phones, and there was no provision for replacement. During 2004, the Information Technology Division negotiated new service plans, which resulted in a significant overall savings to the City. The centralized administration of cell phones will result in our ability to more frequently negotiate service plans, as well as provide for replacement of phones and batteries. Recommended Staffing Changes The City's full-time work force of 257 would increase by one full-time equivalent. The following describes the proposed staffing changes, most of which result in service enhancements and budget savings. Police Sergeant; 01/01/05 A new police sergeant is proposed ($83,442) in order to ensure that there is supervisory coverage during all patrol shifts. This would result in a $25,000 savings in overtime. Police Officer; 01/01/05 A new police officer is proposed ($57,000) to assist with reducing the officers' committed time to conduct proactive patrol activities and traffic enforcement. Transit Coordinator, 03/01/05 A Transit Coordinator would replace the services currently done by a contract provider. These tasks include handling route issues and requests, financial and other required reporting to the Met Council, customer service, and support to the Advisory Committee on Transit. The Public Services Manager would continue to oversee the overall transit program. Changing this position from contract: to an in-house position results in a cost savings to the Transit Fund of $19,700. Reclassify Street Lead Position to Drainage Maintenance Supervisor, 01/01/05 Last year, the City Council approved adding a second leadperson to the Street Division. It was hoped that this would help provide additional work direction; however, it did not solve the fundamental problem of span -of -control where one supervisor is responsible for as many as 20-25 employees, nor increase availability to customers. The 2005 budget proposes a restructuring of the Street Division into a Street Maintenance Division and a Drainage Maintenance Division. Each division would have a supervisor and this would help enhance accountability in each of these areas. This model was approved in the Park Maintenance Division several years ago and is working well. Because the new leadperson position was never filled in 2004 and we would not be replacing that unfilled position, the reclassification request will result in a savings of $56,991. 10 Ice Center Part-time Clerical Position — Expand Hours The budget proposes adding seven hours per week to the Ice Center part-time clerical position ($7,542). This request relates to the increased clerical support needed for the third sheet of ice. Volunteer Coordinator Part-time Position — Expand Hours Increasing the Volunteer Coordinator position from 32 to 40 hours is viewed as an investment to get many more hours of labor. The City's volunteer program is very successful and is a best practices model used across the nation by other cities. The program is currently at capacity due to the part-time nature of the coordinator position. In 2003, we had 1,042 volunteers contribute 13,741 hours of work to the City. This translates into $227,276 of value added in service to the City of Plymouth. With the expansion of the Volunteer Coordinator to a full-time position, we could easily meet or exceed our investment of $14,366 through volunteer labor value in the first year. Continue use of Tree Trust We have a very positive relationship with The Tree Trust, a nonprofit organization dedicated to improving communities through investment in people. Projects recently done by The Tree Trust include construction of 1,100' of boardwalk at Lake Camelot Park at a savings to the City of $70,000, construction of a stairway near Lions Park at a savings to the City of $7,000, and construction of a 35'x 3' block wall, landscaping, and riprap for 50 yards of shoreline at Parkers Lake. The increased cost for the Tree Trust in 2005 is 2,500. Expand I.C.W.C. from 2 to 3 days per week We currently receive the services of an 8 -person labor crew through the I.C.W.C. program two days per week. The budget proposes expanding this to three days per week. The I.C.W.C. crew recently completed construction of the dog park including 300' of boardwalk, installation of signs, trail layout, mowing, tree removal, and wood chipping. They have also assisted with tree and buckthorn removal throughout the park system, heavy cleaning at the ice center, removal of tennis courts and hockey rinks, and reconstruction of hockey rinks. The cost of an 8 -person labor crew one day per week for the year is $16,000, and the cost would be shared between the General Fund and the Ice Center. Public Works Clerical A new part-time clerical position was requested for the public works facility. This is particularly needed during peak periods of snow removal, heavy rains, and other events when resident calls are very heavy. No new position is proposed for 2005. Instead, we are going to try interdepartmental sharing from other buildings on a scheduled and as - needed basis to address this need. ii Reduction in Overtime While overtime is a necessary part of doing business for some divisions, we need to make every effort to limit it. It costs the City 1'/2 times for a task that is done on overtime. If overtime is limited, more dollars will be available to hire additional staff or apply to program needs. The 2005 budget reduces overtime in the General Fund by $46,516. Other Funds While the General Fund is by far the City's largest operating fund, the City has a number of other important operating funds. These include: Recreation Fund. General tax support of the Recreation Fund will not increase for 2005. Scholarships for recreation programs have been increased, as well as the amount paid to Senior Community Services. These costs will be covered by increased registration revenue. The Plymouth Fine Arts Council will make decisions on expenditures for arts groups. Transit Fund. This budget assumes Motor Vehicle Excess Tax (MVET) funding based on the estimate from the Met Council. This budget includes the hiring of a Transit Coordinator who will replace existing services by contract. This will result in a cost savings to the Transit Fund. No reduction or increase in transit service is proposed in this budget. Operating costs for'/4 year for a possible transit facility are included in this budget. Facilities Management Fund. This fund is an internal financing fund, similar to the Central Equipment Fund. Major expenditures planned for the Facilities Management Fund include maintenance items at the fire stations ($46,000), replacement of carpeting and tables ($28,000) and replacement of the cement near the gas pumps at public works 9,000), wiring of a generator to serve City Hall from public safety ($33,800), replacement of an alarm panel at City Hall ($12,000), purchase of updated software for building maintenance ($3,000), and purchase of a sweeper for the new public safety garage ($35,000). Housing and Redevelopment Fund. The HRA levy is proposed to increase from 593,395 to $607,556. Last year's budget included the housing staff taking over the Section 8 housing inspections, in order to allow more of the Housing Inspector's time to be spent toward rental housing inspections and property maintenance complaints. The 2005 budget includes a vehicle for the housing staff to conduct those inspections. Water Fund. This budget proposes an additional $30,000 to cover the repair of streets that is required after watermain break repairs. This allocation to the Water Fund is appropriate and will free up General Fund dollars needed for standard street maintenance. Funds are included for leak detection as an initial step toward water conservation. The Water Fund budget reflects the rates adopted at the November 9th council meeting to cover the costs of the water treatment plant expansions and renovations. 12 Sewer Fund. This budget reflects the sewer rate increase adopted at the November 9t' Council meeting to provide funding for the 7.7% increase estimated by the Met Council for treatment costs and long-range system improvements. Manhole sealing is proposed in the amount of $20,000 to reduce inflow and infiltration problems. This is needed to avoid future Met Council penalties. A mainline reel, cable, and larger wheels are proposed relating to the sewer camera, and our program for lift station upgrades and replacement will be continued. Solid Waste Fund. The budget includes the $38,000 grant recently awarded by Hennepin County relating to analysis of the recycling program, and $8,000 for expansion of the recycling drop-off site. This site expansion is needed due to the construction of the new water treatment plant site, as well as to safely accommodate the large amount of traffic that uses this site. Each year, the drop-off site takes in about 500 tons of material, which is about the same amount picked up in one month of curbside collection. Risk Management Fund. The budget would increase charge backs to other funds by 71,015 over the 2004 budget. Even with the increased allocation, the fund is anticipated to have a $250,000 loss in 2005. The increased charge -backs are one-step toward stabilizing the fund long-term. The consistently low interest rates have had a significant impact on this fund, which previously maintained an adequate fund balance solely through interest earnings. Growth of the City and increase of City facilities has also increased exposure and premiums. Central Equipment Fund. Expenditures of $1,155,700 are recommended for replacing 24 pieces of equipment according to the master schedule for equipment replacement. We have been fortunate to get more useful life out of most of our equipment. Of the 24 replacement pieces, 16 are being replaced beyond their projected replacement year, 1 is right on schedule, and 7 pieces have been advanced in the schedule. The equipment replacement schedule is a guide, and we carefully evaluate each piece of equipment before making the replacement. The budget includes $20,000 for a new swap loader for single axle truck, as well as $5,600 for an on -the -vehicle brake lathe. Design Engineering. This Fund manages the annual street reconstruction program in- house, and transfers annual surpluses to the Street Reconstruction Fund for future projects. Iee Center Fund. This fund is again projected to be self-supporting with fees and rental charges, and will provide its share of the outdoor maintenance costs. An amount for retained earnings is also allocated, which will be reserved for future building repairs and equipment replacement. The budget includes funds to cover the costs associated with the new third sheet of ice in the amount of $318,500. 13 Information Technolozies Fund. This budget maintains the current level of services, which includes modest advances in e -government, such as the ability to take credit card payments and access accounts via the internet. Field House Fund. The operating costs of the field house are anticipated to be fully covered by rental revenue. An amount for retained earnings, which will be reserved for future replacement, is also projected. The budget includes purchase of a larger replacement Cushman to maintain the field ($3,000). Water Resources. The City Council received. the report from the Surface Water Task Force at the Special Council meeting on August 9h. The report included recommendations for water quality activities and funding sources. Based upon these recommendations, staff provided recommendations for utility fees at the first budget study meeting on August 23`d. The utility fee has not been increased since its adoption in 2001. On September 28th, the City Council approved a rate increase consistent with the Task Force recommendations, and the 2005 revenue projections reflect the revised rate. The 2005 budget includes increased services of $16,000 for lumber, drainage materials and additional goose removal. Also recommended is machinery and equipment of 41,000, which includes $31,000 for a trench compactor, $6,000 to purchase a sewer pipe camera which is shared with sewer, and $4,000 for an automatic water sampler. Conclusion The City remains in excellent financial shape. Plymouth is among an elite group of cities with a Aaa bond rating — the highest rating possible. This rating has saved the City thousands of dollars in bond interest costs. The City has a diverse tax base and a low debt per capita. Plymouth recently received an exemplary audit report, and the Financial Trends are positive. The 2005 budget attempts to strengthen core services, while maintain a balance of services that Plymouth residents expect and enjoy. 14