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HomeMy WebLinkAboutCity Council Minutes 09-09-1993 SpecialMINUTES STUDY SESSION SEPTEMBER 9, 1993 A special meeting budget study session of the Plymouth City Council was called to order by Mayor Bergman at 12:00 noon in the Council Conference Room of the City Center, 3400 Plymouth Blvd., on September 9, 1993. PRESENT: Mayor Bergman, Councilmembers Edson, Helliwell, Tierney. Councilmember Vasiliou left the meeting at 1:05 p.m. ABSENT: None ALSO PRESENT: Jenny Martin, Financial Advisory Committee STAFF PRESENT: City Manager Johnson, Assistant City Manager Lueckert, Finance Director Hahn, Finance Office Supv. Leitner, Personnel Coordinator Sobania, and City Clerk Rauenhorst 1994 PROPOSED BUDGET City Manager Johnson provided written reports on questions raised at the previous budget study session pertaining to conflict of interest in retaining a contractual commercial appraiser, Plymouth's fire insurance rating, staffing problems at fire stations, status of the clerical position proposed for the fire department in 1993, K-9 units used by other cities, Home Free shelter funding and services, employees per capita compared with eight comparable cities, and the Teens Alone program. He stated that staff will work further on alternatives for the city attorney budget, and additional information will be provided on services that are shared with other communities. Manager Johnson presented options to further reduce the proposed tax levy, as requested by the City Council at the previous budget study session. He presented a list of items in priority order for reducing the tax levy by $200,000. He stated the first alternative would be to implement a storm water utility fee for 1994 which would provide for capital and operating costs to improve water quality throughout the city. The fee could replace about 200,000 of existing tax effort for drainage maintenance and street sweeping. It would also begin providing about $200,000 per year for capital projects in the future and pay for the city's water management organizations. Manager Johnson recommended that this alternative should be implemented either in 1994 or 1995; the question is the timing. He stated the City needs a stable revenue source to improve our water quality programs and to fund future projects. However, this alternative would increase fees by about $12 per homeowner, while the originally proposed budget would result in only a $5 - $6 increase in City taxes for the average homeowner. Budget Study Session September 9, 1993 Page 2 Manager Johnson stated a second alternative would be to reduce administrative and personnel costs in non -frontline positions in the General Fund. He suggested these be considered in the following order: 1) Begin paying the liability insurance for city equipment from the risk management fund interest proceeds, 2) Net saving from eliminating the salary reserve of $50,000 but adding to general contingency to make it equal $125,000, 3) Reduce legal budget, 4) Pay for classification study from comp worth reserve fund, 5) Eliminate two interns, 6) Eliminate the half-time clerk typist in fire, 7) Eliminate two of six proposed firefighters. Manager Johnson stated a third alternative would be to liquidate two seldom used reserve funds (intern reserve fund and comparable worth reserve fund), in addition to paying the liability insurance on equipment from the risk management fund as in alternative 2. The City Council discussed paying the liability insurance for city equipment from the risk management fund interest proceeds. Manager Johnson stated that the City's fund balance is currently about $5.6 million, and this amount is higher than other cities maintain for risk management purposes, and higher than many cities insure for. Councilmember Helliwell asked if this would be only for one year or would be an ongoing recommendation. Manager Johnson stated that this could be ongoing because the insurance would be paid from interest proceeds while maintaining the fund balance. Finance Director Hahn stated that he believes $5 million is an adequate balance for the risk management fund. The Council discussed the amount of the contingency budget. Finance Director Hahn stated the city has always had an amount of at least $50,000. Manager Johnson stated it is good to have adequate contingency funds particularly in the event of mid -year reductions in state aid. Councilmember Helliwell expressed concerns about the amount of the legal budget. She asked if the retainer system that was implemented several months ago includes everything with the exception of prosecution. Finance Director Hahn stated the retainer excludes litigation, HRA, construction projects, tax increment financing, and other special projects. Councilmember Helliwell requested that the Council continue to receive copies of the monthly summary attorney billings in the weekly information memo. Budget Study Session September 9, 1993 Page 3 Councilmember Helliwell stated that she believes the city should bring its legal budget down to about $300,000. She stated that she is concerned that staff is reconunending only a $8,000 reduction in legal fees from the original proposed budget. Councilmember Vasiliou stated that the attorney had recommended a number of months ago that certain costs be billed back to developers. She asked why this has not been implemented. Councilmember Vasiliou stated that the City spent about $289,000 in legal fees when the population was much smaller. She is unsure whether $300,000 is sufficient given the growth of the community. She noted that legal fees were increased during the transition between Holmes and Graven law firm and the Best and Flanagan law firm because the former city manager did not have a transition plan in place. She noted that the City also had $50,000 in legal fees on the community center issue alone. Councilmember Vasiliou stated that just because an amount is budgeted for legal fees does not mean that amount will be spent. Councilmember Edson stated he feels the retainer system is appropriate, and requested that the Council receive a breakdown of estimated legal costs for 1993 by prosecution, projects, general, etc. Councilmember Helliwell suggested that Best & Flanagan be invited to attend a council study session to justify the legal charges. The Council concurred that this would be beneficial. Manager Johnson stated that the staff may propose consideration of a combination in- house and contracted legal service at some time in the future. Staff has not been able to confirm that that system would save money, but it is being considered. Councilmember Tierney stated that the legal fees have increased 32.8 percent between 1991 and 1994. During the same time, fines and forfeitures have increased only 12 percent. She feels that this expenditure increase is excessive. Councilmember Tierney stated that she believes legal fees in the area of $330,000 - 340,000 would be reasonable. Manager Johnson stated that the figures contained in this preliminary budget are the staffs best estimate of the maximum reasonable amount that could be spent in 1994. Staff will do further review with Best & Flanagan on these figures. Mayor Bergman suggested that staff obtain actual estimated expenditures from Best & Flanagan. Budget Study Session September 9, 1993 Page 4 The Council reviewed the alternatives to further reduce the proposed tax levy. Manager Johnson stated the Council would have to reduce $127,000 from the preliminary budget if the goal is to hold the City tax stable on an average homeowner. Councilmember Helliwell asked why there was a difference in the levy rate from 1993 to 1994. Finance Director Hahn stated changes have been made in calculating the formulas, and further information will be provided. He stated that the net levy would be identical from 1993 to 1994. Councilmember Edson stated that he has concerns with the salary contingency fund as it relates to the negotiating position of the city. The Council discussed ways of eliminating a salary reserve but adding to the general contingency. Manager Johnson stated he believes the city should ideally have about $150,000 in contingency based on the amount of the general fund budget. Councilmember Helliwell stated she would like to reduce the levy to its 1992 rate. She noted that the levy rate was increased from 1992 to 1993. Finance Director Hahn stated that the large increase in the levy rate last year was due to the loss of commercial/industrial value. Councilmember Helliwell addressed the recommended new positions for 1994. She stated that she is not in favor of the financial analyst position; however, she had talked to Public Safety Director Gerdes about the proposed K-9 program and she may consider support of that program. She supports the request for six additional firefighters to increase daytime response, but does not support the new engineering positions unless further information is provided that justifies the service. Mayor Bergman stated that the Financial Advisory Committee discussed the proposed financial analyst position. He suggested that the Financial Advisory Committee could also consider the proposed engineering positions for an opinion. Financial Advisory Connuittee member Martin stated that the committee supports the position of financial analyst. Councilmember Helliwell stated she would like to add new employees at a slower rate. She suggested using a consultant for financial analyst services if staff feels this is needed for 1994. Budget Study Session September 9, 1993 Page 5 Finance Director Hahn stated that the type of services the City needs would only be cost effective if conducted in-house. He stated that the new employee would not be shopping for better interest rates, but would rather be analyzing cash flows so that maximum amounts can be invested. Councilmember Helliwell requested copies of the minutes and recommendation from the Financial Advisory Committee on the financial analyst position. She stated that if the Financial Advisory Committee supports that position, as well as the three engineering positions, she will consider the request. Councilmember Vasiliou stated she agrees with eliminating $127,000 in the preliminary budget in order that City taxes would not increase. She noted that the Council will be requested to approve a preliminary budget amount on September 13. This will establish the maximum levy, but amounts within the budget can still be adjusted. She stated that the private street issue will be a big consideration in 1994. Councilmember Vasiliou left the meeting at 1:05 p.m. Councilmember Edson stated that he supports maintaining the 1993 levy rate so that the average homeowner with an average increase in value will have no City tax increase. Councilmember Tierney concurred with retaining the 1993 rate. She stated that last year the City had about $.5 million surplus in its general fund budget, and it should be no problem to retain the previous year's rate. Councilmember Edson stated that a substantial portion of this surplus was the result of development and high building permit revenues. He stated that the Council cannot rely on permit revenues continuing at a high rate in order to maintain current services. He noted that if the MUSA line is not extended, the City could experience a large reduction in permit revenues. Mayor Bergman stated he believes the City should begin consideration of submitting an application for extension of the MUSA line to the Metropolitan Council. Councilmember Helliwell stated she is not in favor of implementing a storm water utility fee for 1994. Councilmembers concurred that the fee should not be considered for implementation until at least 1995. The Water Quality Committee needs to consider this issue and promote it for consideration for 1995. Councilmember Edson stated that he would support paying the liability insurance for the City from the risk management fund interest proceeds eliminating $105,000, retaining the salary reserve but eliminating the line item in the budget, eliminating the intern reserve Budget Study Session September 9, 1993 Page 6 fund, and further considering reductions in the legal budget. He is still concerned about the fire response times, particularly from Station 2. He requested that the Public Safety Director provide the Council with a report on whether replacing a couple of on-call firefighters with a few full time positions would be a viable alternative to improving response. He requested that the Public Safety Director provide information on response times and how it can be reduced. Councilmember Helliwell requested that the response times be compared with other communities. She also asked for further information on the response to a Brooklyn Park fire that occurred on September 8 where significant damage occurred. Councilmember Edson suggested that the staff prepare resolutions for establishing the preliminary levy on September 13 by reducing $127,000 from the budget. He stated that the Council can then continue to work on refining the budget to meet or possibly reduce that amount further. Personnel Coordinator Sobania presented information on the State of Minnesota's 1994 - 1995 settlement with AFSCME. She stated that the State's claim that there was a 0% increase in salaries for 1994 is somewhat misleading, because increases were received in benefits and step increases. Manager Johnson stated that the City would have no problem staying within the guidelines used by the State for its. 1994 bargaining unit negotiations, with the exception of additional step increases, particularly relating to the new clerical/technical/professional union. Manager Johnson stated that staff will seek an opinion from the Financial Advisory Committee on the proposed new engineering positions. If this is going to be implemented for 1994, the Council will need to provide that direction within the next month or so, in order that recruitment can be done and equipment can be ordered. Councilmember Edson stated that the public's perception that too many employees are being added is important for the Council to consider, but the Council cannot lose sight of the money that will be saved for all tax payers by implementing the in-house engineering option. The meeting was adjourned at 1:50 p.m. O Caf berk