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09-08-1993 CC MIN e e e MEETING OF THE ELK RIVER CITY COUNCIL HELD AT THE ELK RIVER CITY HALL WEDNESDAY, SEPTEMBER 8, 1993 Members Present: Mayor Duitsman, Councilmembers Dietz, Farber, and Holmgren. Members Absent: Councilmember Scheel Staff Present: Pat Klaers, City Administrator; Lori Johnson, Finance Director; Tom Zerwas, Police Chief 1. Call Meeting To Order Pursuant to due call and notice thereof, the meeting of the Elk River City Council was called to order at 6 p.m. by Mayor Duitsman. Prior to beginning the budget work session, Mayor Duitsman updated the City Council on the Fire Relief Association meeting that he attended when retirement plan changes were reviewed. Mayor Duitsman indicated that a task force is being formed to review the retirement compensation plan and he asked that he and Finance Director, Lori Johnson, be appointed to this task force. COUNCILMEMBER HOLMGREN MOVED JOHNSON, FINANCE DIRECTOR, FORCE. COUNCILMEMBER FARBER 4-0. TO APPOINT MAYOR HANK DUITSMAN AND LORI TO THE FIRE RELIEF COMPENSATION PLAN TASK SECONDED THE MOTION. THE MOTION CARRIED 2. Budget Work Session The City Administrator noted that this was a continuation of the first budget work session held August 30, 1993. This 8/30 budget work session concluded with a brief discussion on the proposed General Fund Revenues. 1994 Revenues The City planned proposed Administrator stated that the projected 1994 revenues to increase $365,900, or 12.17%, to a total of $3,372,300. revenues are $145,800 short of the requested expenditures. are The This $145,800 budget gap exists even with the General Fund Tax Revenues increasing $216,750, or 16.38%. This increase is based on a gross tax increase of $185,000 plus additional shifting of funds from the tax levy and a change in how the State distributes the equalization aid and homestead and agricultural credit aid (HACA). Taxes represent about 45% of the total General Fund revenues. The City Administrator indicated that (LGA), and HACA represent approximately local the government aid total proposed taxes, 68.5% of e e e Elk River city Council Meeting september 8, 1993 Page 2 revenues. This compares to 68.3% in 1993. When levy limits were in place in previous years, these three revenue catagories were controlled by the state. This left only 32% of the City's General Fund monies under City Council control. With levy limits being removed, the situation has changed slightly but not dramatically as the City Council must still keep any tax increase at a reasonable level. The City Council noted that it is impossible to determine what affect the increase in tax revenue will have on the local tax rates as the City does not have the final figures on the growth in the City's net tax capacity. The City Administrator highlighted some of the other major changes in the general fund revenues. These highlights include the following: An increase in LGA due to the shifting of equalization aid from HACA. A decrease in the HACA revenues due to the shifting of the equalization aid from HACA to LGA. An increase in the police relief and gravel tax revenues. A decrease in the landfill surcharge revenues. An increase in the administrative project fees due to more construction projects. An increase in plan check fees due to more building activity. An increase in the D.A.R.E. contribution due to the new program. A decrease in the NSP and landfill contribution. An increase in the recreation fees, which is off-set by an expenditure in the recreation area. An increase in the building permit fees and in the plumbing and heating permit fees. A new fee for apartment licenses. A decrease in the interest revenue. A reserve transfer for elections. An increase in the street reserve transfer for the overlay program. A decrease in the equipment reserve transfers, garbage transfers due to the utilities taking over this program, and the EDA transfer. Elk River city Council Meeting September 8, 1993 Page 3 e Overall, the revenues are projected to change by catagories in the following amounts: General property taxes: up $216,750 (16%) Governmental revenues: up $51,200 (5.8%) Charges for services: up $100,900 (35.9%) Fines and forfeits: down $5,000 (-5%) Licenses and permits: up $27,550 (20%) other revenues: down 10,000 (-9%) Transfers: down $15,500 (-8%) Budget Issues e This City Council and staff reviewed some of the budget issues associated with the proposed 1994 budget. These issues include an increase in taxes, wages for employees, personnel additions, capital outlay expenditures, the equipment certificate policy, a storm sewer city-wide fee, assessments for seal coating, and changes in the assessment manual for street projects. It was noted that a 3% across the board increase in wages is included in the budget, however, this money can be distributed in any manner deemed appropriate by the City Council. It is stated that the City is currently in compliance with the State Comparable Worth law. The Council decided to deal with the wage plan at a later date. Discussion took place regarding the tax revenues in the projected budget and its affect on the local tax rate. Concern was expressed regarding the growth in the City tax base, and how this growth is off-set by a decrease in the taxes generated by the power plants. It was noted that in 1993, the City's net tax capacity decreased and it is uncertain as to whether or not any growth will be realized in 1994. If there is no change in the net tax capacity in the City, then the budget includes tax revenues that will result in an almost 11% increase in the urban tax rate. On the other hand, if the City net tax capacity increases by 5%, the budget projection shows tax revenues resulting in a 5.6% increase in the urban tax rate. e Extensive discussion took place regarding the increase in the rural tax rate as the City has made an adjustment in the urban and rural taxing ratio. This adjustment was required due to a major decrease in the 1993 rural tax rate from 17% to 13%. With no change in the amount of taxes generated, this adjustment made by the City Council will result in a tax rate change in the rural district from 13 up to 18. With the increased taxes projected in the draft budget, this would place the 1994 rural rate in the 19.6 to 20.6 range. The Council discussed . e e Elk River City Council Meeting september 8, 1993 Page 4 strategies in presenting this information to the public prior to the Truth in Taxation Public Hearings. The Council discussed the proposed personnel additions and which positions were most necessary in 1994. Additionally, the Council also discussed its strong desire to move away from a dependance on equipment certificates for the purchase of new equipment. The Budget Gap In review of the budget gap, the City Council examined various options including: Delaying some expenditures until 1995. Financing expenditures now. Using more City reserves. Raising taxes more than projected. Obtaining an increase in other contributions. Limiting wage increases. Reducing equipment certificate purchases. Raising revenues Cutting expenditures. In closing the $145,800 budget gap, the City Council made the following decisions: Cut $30,000 from the Fire Department reserve allocation. Cut $18,500 from the Fire Department expenditure for the 1981 equipment van. capital outlay Cut $4,800 from the Planning and the Building and Zoning Departments for the aerial photos. Adding $21,100 help finance program. from the NSP and landfill revenue sources to police activity related to a truck inspection and Zoning program, but this program Cutting $30,000 in expenses in the Building Department related to the housing inspection also cutting 6,000 in revenue associated with (apartment licenses). Police capital outlay category by and authorizing $8,100 worth of cutting $13,100 from the not purchasing the VCR camera expenditures at this time. Elk River City Council Meeting September 8, 1993 Page 5 e cutting $11,250 from the Planning Department for the intern. The Council noted that this item may be financed from the Council contingency fund, if necessary, in 1994. cutting $2,500 from the Senior Citizen capital outlay budget for the computer. This item will be financed now with a contribution from the Senior Citizen organization. Cutting $10,000 in personnel costs for Steve Rohlf and Gary Schmitz for their work associated with environmental problems. These expenses will be transferred to the landfill special revenue budget. Reducing recreation expenses by $3,100. Directing staff to raise revenues by $7,350. The above adjustments produce a balanced budget in the amount of $3,394,750. This is 12.9% increase over the adopted 1993 budget. It was noted that not all of the budget increases are related to new expenditures and some of the increases are simply a more accurate reflection of activities that are taking place and a more accurate documentation of revenues and expenditures. e COUNCI LMEMBER AERIAL PHOTOS THIS TIME, COUNCILMEMBER FARBER MOVED TO HAVE THE CITY PURSUE THE PURCHASE OF THE FOR THE PLANNING AND BUILDING AND ZONING DEPARTMENTS AT USING EQUIPMENT RESERVES TO FINANCE THIS PURCHASE. DIETZ SECONDED THE MOTION. THE MOTION CARRIED 4-0. COUNCILMEMBER DIETZ MOVED TO AUTHORIZE THE POLICE DEPARTMENT TO PURCHASE $8,100 WORTH OF CAPITAL OUTLAY ITEMS AS LISTED IN THE PROPOSED BUDGET AT THIS TIME, USING REVENUES GENERATED BY THE SELLING OF POLICE VEHICLES IN 1993. COUNCILMEMBER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 4-0. City Council Action Items Various dates for the Truth in Taxation public hearings in December were reviewed with the City Council. COUNCILMEMBER FARBER MOVED TO CALL A TRUTH IN TAXATION PUBLIC HEARING FOR THE 1994 PROPOSED TAX LEVY AND BUDGET FOR WEDNESDAY, DECEMBER 8, 1993, AT 7:00 P.M. AT THE ELK RIVER CITY HALL, AND FOR THE SECOND TRUTH IN TAXATION PUBLIC HEARING ON THE PROPOSED 1994 TAX LEVY AND BUDGET FOR MONDAY, DECEMBER 13, 1993, IMMEDIATELY FOLLOWING THE ECONOMIC DEVELOPMENT AUTHORITY MEETING IN THE ELK RIVER CITY HALL. COUNCILMEMBER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 4-0. The Finance Director reviewed the proposed debt levy changes for 1994 with the City Council. . COUNCILMEMBER HOLMGREN MOVED TO REDUCE THE 1990 EQUIPMENT CERTIFICATE DEBT LEVY BY $5,050. COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 4-0. . . . Elk River city Council Meeting September 8, 1993 Page 6 COUNCILMEMBER FARBER MOVED TO REDUCE THE 1993 EQUIPMENT CERTIFICATE DEBT LEVY BY $8,384. COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 4-0. COUNCILMEMBER FARBER MOVED TO REDUCE THE 1986 IMPROVEMENT BOND BY THE AMOUNT OF $16,159. COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 4-0. The Finance Director reviewed the three tax levy resolutions that need to be approved by the City Council. COUNCILMEMBER HOLMGREN MOVED TO ADOPT RESOLUTION 93-45, A RESOLUTION FOR THE CITY OF ELK RIVER APPROVING THE HOUSING AND REDEVELOPMENT AUTHORITY 1994 TAX LEVY. COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 4-0. COUNCILMEMBER DIETZ MOVED TO ADOPT RESOLUTION 93-46, A RESOLUTION FOR THE CITY OF ELK RIVER APPROVING THE 1994 TAX LEVY FOR ECONOMIC DEVELOPMENT PURPOSES FOR THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY. COUNCILMEMBER FARBER SECONDED THE MOTION. THE MOTION CARRIED 4-0. COUNCILMEMBER FARBER MOVED TO ADOPT AUTHORIZING THE PROPOSED TAX LEVY COUNCILMEMBER DIETZ SECONDED THE MOTION. RESOLUTION 93-47, A RESOLUTION FOR CALENDAR YEAR 1994. THE MOTION CARRIED 4-0. 3. Adjournment There being no further business, COUNCILMEMBER HOLMGREN MOVED TO ADJOURN THE 9/8/93 CITY COUNCIL BUDGET WORK SESSION MEETING. COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 4-0. The meeting of the Elk River City Council adjourned at 9:00 p.m. Respectfully submitted, (~~ a4~ Patrick Klaers City Administrator PK:cms