1. Call to Order. The budget workshop session of the Council of the City of Rogers was called to order by Mayor Grimm on Tuesday, August 11, 2009 at 5:35 p.m. at the Rogers Community Room, 21201 Memorial Drive, Rogers, MN, 55374.
Council present: Jason Grimm, Jay Bunting, Rob Bell, and Steve Rauenhorst.Council excused: Jamie Davis.
Staff present: Gary Buysse, Liquor Manager; Stacy Doboszenski, Assistant City Administrator/Clerk; Brad Feist, Fire Chief; Jeff Luther, Police Chief; John Seifert, Public Works Supt.; Steve Stahmer, City Administrator; and Lisa Wieland, Finance Director.
2. Presentation of Budget Reduction OptionsAdministrator Stahmer began the discussion with a recap of the last budget workshop; the discussion on the levy and the options presented to council which showed varying tax rates resulting from those options. Stahmer stated, to keep the levy flat, higher tax capacity is needed to have a lower tax rates. With lower tax capacity, it will result in a higher tax rate. Stahmer stated staff has with our financial advisors and with Hennepin County and we have pretty fair working numbers for tax capacity.The Council received property tax levy information worksheets illustrating two scenarios based on new tax capacity information received. The worksheets were prepared using option 1 and option 4 from the previous meeting.Finance Director Wieland provided an excel spreadsheet on the overhead screen. Wieland stated the worksheets were identical worksheets with exception of the levy amounts.Wieland indicated the loss in total taxable market value – lost $72M in market value between 2009 and 2010.Wieland provided an explanation on tax capacity and fiscal disparities. Wieland stated the general fund levy is decreasing and the special levy is increasing. Wieland stated not all properties decreased in value at the same percentage. Some decreased only 2% while others decreased 20%. Wieland provided the following examples for residential properties: in 2010, homes valued at 199,000 or less will receive a 0% increase to their city property taxes, $262,000 median value sees 3.1% increase in city tax. Discussed was the same for commercial/industrial properties.Wieland then provided information on sample parcels and a spreadsheet indicating estimated change in city taxes. Out of the sample parcels, the biggest drop was $57 and the biggest increase was $180. Wieland also provided comparative data for commercial/industrial properties.Wieland informed the Council of the $2000 quote from Ehlers to take county information and put all parcels into the spreadsheet. Stahmer stated the point he is trying to make is the tax rate itself is not what the city council and the city needs to set. The only thing we set for the purpose of certification is the total levy. The tax rate comes after setting the levy. Cities that focus on rate, are cities with fast growing market values; keeping taxes low because of increase in market values works well in rapid growth areas. With market values decreasing the interplay of the market values and taxable tax capacity has nothing to do with the cost of providing government services. Stahmer stated it is not a good practice to continually look at the rate. Reducing market values does not mean you can reduce the cost of government service. Lower market values do not result in a lower tax collection; you can only achieve that by setting a lower levy.Council was then given taxable tax capacity of comparative cities.Stahmer provided an explanation of fiscal disparities – a percentage of our tax capacity goes into a pool and by formula is distributed back to cities. Share the wealth principle.Stahmer stated Rogers’ tax rate falls in the middle of comparative cities. If the fiscal disparities portion were removed, the tax rate based on net levy would be 29.27% putting Rogers toward the bottom. Bell questioned if there is an appeal process regarding the fiscal disparities.Stahmer stated it is done through lobbyists. Bloomington is currently lobbying for this.Wieland explained the cities of Minneapolis and St. Paul are gainers in fiscal disparities because their growth has stopped. The bulk of Rogers’s growth falls into fiscal disparities.Grimm questioned why Albertville doesn’t pay into fiscal disparities. Stahmer stated because they are in Wright County.Bell asked what the Hennepin County tax levy is for 2009 and what it may be for 2010.Wieland stated she doesn’t have that information at this point. In 2009 it was about a third.Bell stated he is curious if the county is also going through this.Stahmer stated a point he wanted to make is in looking at what the rate might be for next year, he assumes there are not any cities staying at same tax rates they were in 2009, unless their taxable market values stayed strong. Stahmer stated even with a 44% rate, it assumes heavy cuts of 2.5 FTE, assumes excess TIF, and not much use of fund balance.Stahmer then addressed the comparison of staffing levels department by department, as requested by Council two work sessions ago. Stahmer stated this was staff’s best attempt to collect data from their peers at other cities.Stahmer corrected a typo reported under police (Corcoran), 6 pt should be 3 FTE changes Corcoran to 11 total FTE; changes average down to 18.63.Stahmer stated in reviewing the information provided, there were no grand conclusions. Rogers is hovering around the average in most departments, some a little bit lower. Of the 8 cities surveyed, only four had police departments.Bell stated it was really good information and thanked everyone who put it together and thanks to the cities for giving the information.Stahmer stated will be sharing the information with those cities.Wieland added that only two other communities have liquor operations; two other had ice areas which were joint facilities; so they don’t carry the full burden of ice arenas on those communities either. Grimm questioned the Elk River arena.Seifert stated Elk River is city owned and operated stating they sell ice time to the school district same way Rogers does.Stahmer stated only a few have liquor, half have police departments, and only a few with ice arenas. Several don’t have sewer or water. Others contract out those operations with wastewater treatment facilities part of Met Council’s facilities. Several operate with County Sheriff Departments for police service. Grimm questioned why Elk River doesn’t have utility billing clerk asking if it was blended into finance.Seifert stated Elk River combines their water with electric and has a separate public utilities operation; not done through the city.Grimm asked council if there were any other questions.Bell commented that he did not see anything that jumped out as a red flag or major discrepancy stating this is good confirmation that we are not standing out.Stahmer stated the goal is to still get a preliminary levy set by September 15 with another work session scheduled for Aug 25th. Wieland stated all individual departments have provided line item worksheets and will have them provided for the next work session.Staff discussed not setting the preliminary levy too low; it can always be reduced before the final levy is set.Grimm stated today he received some other information regarding staff, salaries by individuals and asked Council if there are questions or comments regarding that information.Bunting stated he knows we have various scenarios that staff has recommended, talking about option 1 and option 4. Bunting stated he didn’t want to make a rash assumption, but asked Council if we are talking positions tonight? Bunting stated he has said from the get go the Council should also review positions starting at the top and looking to the bottom. Bunting then stated every city needs a city administrator, a necessary position. Is Council fine if we go about it that way, start at top and go down?No other comments from Bell or Rauenhorst.Bell stated we need to continue to move along as soon as possible to get resolution to the reorganization and position eliminations – move along and do what we have to do.Council referred to a list of city employees. Bunting stated the first positions listed are mayor and council – assume we can’t eliminate those positions.Grimm asked if we can agree on the need for the city administrator. Grimm stated as we look at these and eliminations of any positions, look at eliminating the position for 5 to 7 years, unless something dramatic happens, these are positions that we would never bring back into the fold. Instead, we would outsource or figure out other ways to do it. Grimm stated he would hate to eliminate a position knowing we are going to bring it back.Bell stated he is not sure that the format of going down the list and talking about them is extremely effective. Bell stated it will take analysis, obviously the department heads have done that. He stated he is not sure doing it this way, how educated we would be in going down the list.Wieland stated as an internal control person, there are government mandates regarding separation of duties, something for the Council to keep in mind as you discuss positions.Bunting commented on spurring thought in bringing up positions; might spur conversation on combining positions.Bell stated he was not sure and questioned if this discussion is something we can have without having specific union representation.Attorney Carson stated a general discussion on operations and numbers and types of numbers are fine. If it affects union contracts, then you have to deal with the unions.Grimm stated, having said that he thinks it’s open game discussing the reorganization, stating it has some dollar savings. Grimm referenced a letter received from union states we can’t do what we want to do. Grimm received this letter a few days ago. Bell stated he received one in the mail a couple days ago. Staff stated they were unfamiliar with the letter sent.Stahmer stated he assumes it’s a recap of what was said earlier. That point was already addressed in previous letter. Staff stated Article 24 dictates management rights. Our labor attorney is very confident that we have that ability to make those types of decisions. Salaries would need to be negotiated.Bunting suggested starting with the police department stating he doesn’t want to touch that and asked Council to talk about that and knock it out of contention. Bell and Grimm stated they were okay with that.Stahmer asked if he was referring to the department as a whole, or just officers. Bunting stated the department as a whole.Grimm brought up the position of Clerk/Assistant City Administrator.Bunting stated this is tough to talk about a few of these positions as we go down – everyone is replaceable, this is a tough one, this is one we may have to speak about. Bunting stated he looked at bang for the buck, and when talking about cutting big dollars his eyes immediately went to those. Bunting stated the position is extremely important, but not essential to the operations of the city, important but not essential.Rauenhorst stated he disagrees with him. Rauenhorst looks at the Clerk/Assistant City Administrator/HR and, doesn’t see that as something we should be looking at getting rid of at this time, stating there is value built into the job, knowledge base of what is going on, and he can’t support even entertaining the idea at this point stating there is too much rolled into that position.Attorney Carson stated the position of clerk is a statutory required position, and can’t be eliminated.Bell stated we definitely have to talk about the role. Maybe this is a situation where splitting it out into multiple positions or separating things out into individual roles may be beneficial. HR may be its own realm.Bunting stated he tried to go off of the information received from other cities. Administrators, Administrative Assistants, and unique positions; it behooves us to speak about those. May be one of those things to go back and revisit and how comfortable we are with that and that dollar amount.Stahmer stated he will go on record for that position, the number and type of duties done by that position, HR, special assessments, direct management; that position and institutional memory he does not feel that it would be good for the city in any way to alter that position.Grimm asked does the special assessment piece fall under the Assistant Administrator. Stahmer stated yes.Stahmer stated the position of clerk would do the 429 process but this is a management of entire special assessment process, payoffs, daily/weekly calls on assessments, and huge HR duties on top of that.Grimm stated it’s a unique position. Stahmer stated in other cities there are some unique breakouts. Some Assistant Administrators are combined with planning. Stahmer stated it is common for the duties of Assistant Administrator to be done with HR.Grimm stated the next position is Deputy Clerk asking if this is a position that we have to have.Attorney Carson stated not by statute, but you need a back-up. This led to a discussion on the Deputy Clerk backing up the City Clerk with items such as document signing.Stahmer added that the Deputy Clerk is an assistant to him.Bunting stated it is a given fact that we need clerk and deputy clerk.Grimm asked the hours of the Deputy Clerk, clarifying that it is part-time; 4 days per week. Staff stated yes.Grimm then addressed the Administrative Assistant position. Stahmer stated it is front desk reception at City Hall.Grimm questioned the administrative assistant in public works. Stahmer explained the position in public works is supporting John as a continuous backfill after losing Brant Lander.Bell questioned the split of Administrative Assistant/Community Room Coordinator. Staff stated it is the position just approved at the last meeting to go full-time. Grimm moved to the position of Web IT/Communications Specialist, stating we need an IT person. Bell stated especially just to keep day-to-day operations functional.Bunting stated this was a contract position before Jason. Rauenhorst stated several contracts by different people.Grimm moved to the position of Finance Director. Staff stated the statutory part of the position is Treasurer. No further discussion.Grimm moved to the position of accountant.Bunting asked if it would be easier to talk about the department as a whole and reorganization of duties. Bunting suggested administration and finance to be the same department stating there are synergies and asked Council to look at combining them.Bell stated it would probably be a more effective way to discuss it.Stahmer stated there is a significant amount in the finance department. Beyond the reduction of the AP/Payroll Clerk, there is quite a bit of work there. Stahmer stated the separation of duties is a large part of the reason for keeping position separate. Stahmer stated we are fairly complex in terms of finance compared to other cities our size given the amount of TIF and development projects outstanding.Grimm asked if every TIF district is complex and questioned if we lose complexity with TIF #1 coming off.Wieland provided examples of the amount of debt issuances the City has, the number of internal transfers from TIF funds to other funds stating the City has 63 funds to handle. Bunting asked who is all involved.Wieland explained the separation of duties with cash receipts, utility billing, and accounts payable and stated the reason for adding the AP/Payroll Clerk and commented that development accounting is getting put on back burner. Wieland stated there are a number of different things her department is striving to improve on.Grimm questioned the unfilled administrative position. Wieland stated it is the Brant Lander shared position. Bunting questioned, in regard to the position of the AP/Payroll clerk, if there is the ability to outsource those duties.Wieland stated we do outsource to ADP for the processing of payroll and doesn’t know of a way of eliminating it all together since someone will still need to handle the inputting of the information. Bunting commented on eliminating the use of ADP and bringing payroll all in-house. Wieland stated it would take moving the position from a clerical level to a payroll accountant level. Bunting stated he wouldn’t mind taking a closer look at that.Wieland asked the Council to keep in mind the software for bringing payroll in-house and commented on the future use of the current accounting software.Bunting commented that it is something to be looked at down the road.Bell stated that anything that comes out of this (workshop) doesn’t have to be an instant thing.There was discussion on needing to do RFP’s for both credit card processing and future accounting software purchase. Bunting asked if the City has ever used interns for processing RFP’s.Grimm asked how many RFP’s we have done and commented that if we are eliminating staff, then he better see a bunch of RFP’s coming in front of Council. Wieland commented on her staff being busy; barely keeping their heads above water. She stated staff did recommend a full-time going to half time, which is still up for discussion, but not without pain to the department.Grimm continued with staff list with Planner being the next position and stated he already knows Stahmer’s thoughts about planning. Stahmer stated an RFP will be will be coming forward for Council consideration. There was discussion on outsourcing planner duties and who is currently handing planning issues; Administrator and Deputy Clerk.Grimm got to the Public Works portion of the list and stated a plan has been put before Council for reorganization and a position that has been brought before Council for elimination.Bunting asked Council what they would like to tackle first; the position or reorganization.Bell suggested waiting until the main meeting to discuss that.Grimm stated he would like to get the feeling from the Council before adjourning the workshop. Grimm stated he knows Council wants to make decisions as soon as possible for the benefit of the people involved. Grimm stated if we come to a point where we have to make a levy limit decision, he wants a feeling from the Council where they are. Grimm stated his ultimate goal is to be at the same level as last year.Bunting stated the rate means much less to him than actual tax dollars that resident is paying. Bunting stated if we are levying the same amount as last year it equates to the same amount of taxes.Bell stated he is still thinking option 3 or 4 on the list of potential scenarios are the best.Grimm wants to know if Council is ok levying that amount or are we ok levying $150k more on the basis that it would be used only if something drastic happened; not bind the Council to a low amount when setting the preliminary levy.Rauenhorst said he has stated before he is an option 1 guy and doesn’t like the idea of raising the levy; there are other ways of taking care of the issue we are in.Grimm stated he doesn’t want to put himself in the position that we can’t levy to increase the amount of revenue. Grimm doesn’t want to take away Council’s options if something comes up that gives us the opportunity to act on.Rauenhorst stated we asked staff to come forward with cuts, and they worked hard on it and came forward with their recommendations.Stahmer commented on levying higher provides the Council with more options. If something happens between September and December, then keep the options open and can always set the final levy lower; explain to the public that we expect to come in lower and will work toward coming in lower.Bell stated he is fine with putting the initial levy estimate higher to have cushion to work with.Rauenhorst asked when has government ever come in under budget than what they levied (preliminary).There was discussion among the Council and with staff regarding levy history and the ability to build reserves by coming under budget.Grimm stated one last comment he is going to make, if elimination of positions do happen, he wants to propose a severance plan. Grimm stated he would like to propose that any eliminated positions be given 60 days notice in which they work those 60 days, be given 3 weeks per year to be grandfathered to the next higher year based on where they fall within the year, and be given up to $3000 for reimbursable expenses for education based on receipts they turn in. Grimm stated these are tough times with tough decisions. This will be a burden on some people and wants to treat people with respect.Attorney Carson stated in this workshop, it can be discussed, but not decided on.Bunting stated he agrees with Grimm and commented there may be issues because of the union. Bunting stated he has said from the start to go above the minimum is what he wants to do.Stahmer pointed out the issue of the union contract and this may be a negotiable item in the contract. The City’s labor attorney was concerned that it becomes a negotiable item.
Council discussed continuing the workshop session. Discussed was when to continue the meeting. Rauenhorst stated he will continue the workshop only if we are actually going to do something.Staff stated Council can continue the workshop during the agenda item on the regular meeting.
3. Adjourn. There being no further discussion, motion by Bell, seconded by Bunting to adjourn. Motion carried 4-0. The meeting was adjourned at 7:05 p.m.
Respectfully submitted,Stacy DoboszenskiAssistant City Administrator/Clerk