1. Call to Order. The budget workshop session of the Council of the City of Rogers was called to order by Acting Mayor Bell on Tuesday, November 22, 2011 at 5:30 p.m. at Rogers Community Center, 21201 Memorial Drive, Rogers, MN, 55374.
Council present: Rob Bell, Jay Bunting, Rick Ihli, and Maureen Stanley.
Mayor Grimm arrived at 6:25 p.m.
Staff present: Gary Buysse, Liquor Operations Manager; Stacy Doboszenski, Assistant City Administrator; John Seifert, Public Works Supt.; Robert Shellum, Police Chief; Steve Stahmer, City Administrator; and Lisa Wieland, Finance Director.
2. Memo by Administrator Stahmer Outlining Budget Modifications
Administrator Stahmer opened the meeting and reviewed the following memo with Council:
Major Budget/Operational Modifications Final 2011 to Preliminary 2012
• No intentional use of fund balance (apart from carryovers)
• Increase of $247,000 to begin levying for PW building debt
• Increase of $8,000 for City Code recodification related to annexation
• Increase of $2,500 for improved/expanded City newsletter
• Increase of $8,000 due to 2012 election
• Increase of $5,000 to Planning services related to annexation
• Increase of $3,000 for audit services related to annexation
• Increase of $10,000 for legal due to historical trending
• Increase of $155,000 estimated for Cabela's abatement
• Reduction of $500,000 in revenue from excess rate TIF
• Increase of $93,000 to debt service due to equipment certificate
• Reduction of $75,000 for old Word of Peace debt levy (debt retired in 2012)
• Reduction of $25,000 in engineering for intern/projects
• Reduction of $43,674 in Fire contract revenues due to market value reductions
• Reduction of $7,717 in Fire Relief Association pension contribution (reduction to mandatory contribution)
• Increase of $20,000 for brush/yard waste drop off site
• Increase of $20,000 to Senior Programming
• Increase of $50,000 for transfer to IT/equipment sinking fund
• Increase of $119,000 to begin repayment to RSAC for Public Works interfund loan (discussed at the previous work session as a discretionary cushion, between the preliminary and final levies) that could be partially or completely postponed until 2013)
• Across the board increase to fuel and utilities
• Increase of $12,750 for PD building items (carpet, garage door)
• Staffing/operational changes to include:
o First cost of living (COLA) adjustment to salaries since 2009.
- Budgeted 2011 personnel changes/addition delayed beyond 2012
- (Additional PD Officer included in "Hassan" budget/reserves, not in Rogers levy/line item budget)
- Revised salary allocations to General Fund and Utility Funds
- Salary grade change to one position, from PW Maintenance 1 to PW Maintenance 2 to properly reflect current job duties and responsibilities
- Increase to part time Parks hours
Supt. Seifert described the proposed salary grade change and job description for one public works employee. Seifert stated there is additional part-time labor hours budgeted for parks with the additional park responsibilities.
- Deputy Clerk split 50% to Planning, increase from 0.8FTE to 1 FTE
- Community Room Coordinator decreased from 1 FTE to 0.8FTE
Stahmer asked for questions regarding the changes from the 2011 budget to the 2012 preliminary budget. There were no questions.
Stahmer then addressed the following changes between the 2012 preliminary budget and present:
Major Budget/Operational Changes between Preliminary 2012 and Current Proposed 2012
• Increase of $6,500 to Mayor Council Travel/Conferences (in addition to the $1,000 increase in the preliminary budget) to reflect funding of transportation funding efforts to be paid via General Fund as opposed to TIF
• Increase of $5,200 in liquor license revenue due to one additional liquor license
• Increase of in Police State Aid
• Increase of $56,000 to RAC recommissioning expense with multi-year payback through efficiencies
o Reduction of $15,000 in RAC expenses, increase of $7,000 in revenue due to rebate
• Reduction of $47,500 in expenditures due to debt refunding
• Increase of $25,000 to Police records management (LOGIS contract, replaces future CIP item for City-owned records management system)
• Reduced budgeted transfer IT sinking fund by $25,000 (offsets PD records system above)
• Increase of $11,052 for tax abatement (actual compared to estimate)
• Increase of $7,000 for PD building items
• Staffing/operational changes to include:
- Assumed increase to Chief salary scale will not impact 2012 budget due to hiring timeline, but will carry forward to 2013.
- Increase of $4,000 to Fire call pay to reflect actual 2011 call volume/costs
- Increase of $3,565 in revenue due to Fire training grant
• Revised Fiscal Disparities distribution numbers received from Hennepin County reduces revenues by $66,265 due to zero levy by Hassan
• Reduction of $119,000 through postponing repayment of PW interfund loan to RSAC
• Increase to citywide salary per negotiated PD contract and Council closed session to follow regular meeting
Supt. Seifert spoke on the RAC recommissioning project; the re-evaluation of how the RAC uses its energy and ways in how to do it more efficiently. Seifert stated it is a $56,000 total project cost; an outlay of $49,000 after $7,000 in rebates. Also, we will be realizing $15,000 a year in energy savings. A $400,000 cost savings over 20 years.
Chief Shellum addressed the Council regarding a records management system for Police; $25,000 proposed for a program with LOGIS. Shellum stated the current records management system is archaic. Shellum discussed the benefits of transitioning to LOGIS. LOGIS charges on the number of officers; $25,000 if we do it alone. This number could be reduced depending on the number of departments that will be participating.
Wieland explained the difference in the fiscal disparities. Staff then proceeded with the budget memo:
Overview of Budget, Levy, Tax Rate
• General Fund/RAC Expenditures
Assuming implementation of all items noted above, the current proposed 2012 General Fund plus RAC budgeted operating expenditures amount to $6,044,335 or a 2.2% increase over 2011. The increase to the General Fund expenditures only (removing the RAC increase due to the recommissioning project) equates to only 1.58%.
• General Fund/RAC Levy
The current proposed General Fund/RAC operating levy amounts to $3,739,533, or a 26.38% increase over 2011. The required Debt Service portion of the levy for 2012 is $934,388, for a total 2012 property tax levy proposed at $4,673,921.
• Total Net Levy and Tax Rate
The current proposed final levy reflects a $96,317 reduction over the $4,770,238 preliminary proposed levy and amounts to $4,673,921. Based upon currently-available information, the City tax rate would equal 41.463% given this levy scenario. This is a reduction from the preliminary proposed tax rate which was estimated at 41.756% in September, and from the 42.402% rate distributed by the County in Truth in Taxation Statements sent to taxpayers.
Please note that the large increase in the levy is attributable primarily to significant losses in revenues (such as $500,000 in excess rate TIF that the City will no longer receive due to the expiration of TIF 1 and the $66,265 Fiscal Disparities reduction per the County), increased expenses ($167,000 for Cabela's abatement) and a debt service increase of $335,000. Slight increases in operating expenses and offsetting increases in additional tax capacity coming from TIF and the Phase 2 Annexation help to maintain a largely flat tax rate with the majority of residential property taxpayers likely to see an overall reduction in their City tax bills.
• Hassan Annexation/Zero Levy
The above budget and levy assumptions take into account the zero levy set by Hassan Township for newly annexed properties. As such, expenditures related to the "Hassan budget" will be paid via remaining fund balance for 2012, with likely amendments to be made after the 2011 audit is completed, providing additional financial information.
• Impact of 2012 Budget and Levy on Financial Management Plan
Based on the proposed budget and levy scenario, future years of the City's Financial Management Plan (FMP) show a solid financial position with improvements to tax rates even when an additional $1,000,000 of tax levy is budgeted to backfill fund balance used in lieu of property taxes from Phase 3 Hassan parcels in 2012. The FMP also shows fund balance percentages remaining within the City reserve policy of 45-50%.
Bell questioned the amount of additional tax capacity from TIF 1. Wieland stated it was approximately $4 million in tax capacity.
3. Review of Property Tax Levy Worksheet
Finance Director Wieland reviewed the property tax levy worksheet.
No questions from Council.
4. Review of Financial Management Plan (FMP) as per Staff Recommendations for 2012 levy/budget
Wieland and Stahmer reviewed the updated FMP line by line.
Wieland briefly reviewed the capital, staffing plan, and growth projection portions of the Financial Management Plan.
5. Other handouts for City Council Informational Purposes
A. Line Item Enterprise Fund Budgets
B. Summary Budget Worksheets
C. Line Item General Fund and RAC Special Revenue Fund Budget
Wieland highlighted the enterprise fund budgets, summary line item budget worksheets and summary budget worksheet. Staff stated these documents will be recommended for approval at the December 13th meeting.
6. Additional Discussion
A. Need for additional budget workshop prior to December 13th meeting
B. Direction to staff to finalize budget document upon recommendations and pending closed session discussion of Police Contract.
Administrator Stahmer stated staff is looking to Council for direction on the budget as presented tonight and will be incorporating the information the budget documents to be presented on December 13th.
Pat Johnson questioned the $20,000 line item for Seniors. Johnson stated they have a request for a place-holder for part-time director for $30,000.
Stahmer clarified the placeholder would be an inclusion in the 2013 financial management plan.
Bell stated one thing that jumps out to him in the list of bullet points is the yard waste expense. Bell stated he would be all for leaving it out – not bringing it back in 2012. A service that the City does not need to provide for residents; not a core service.
Bunting stated he disagrees and would like to see this come back. He stated he has received more phone calls on this issue than any other issue and likes the idea of establishing a fee.
Ihli stated he agrees with Bunting.
Grimm stated he is in favor of keeping it in the budget. Staff will take that as direction to keep it in the budget.
Wieland stated the fee for yard waste will be coming before the Council on December 13th along with the full fee schedule.
Pat Johnson stated she would like to thank the Council, Lisa, John, and Mike for working with the seniors and allowing the funds which will hopefully get some congregate dining.
Bunting stated he does want to go through the line item budgets that were handed out and if he sees anything alarming, he will come to staff before the next meeting.
Council consensus was no need to schedule an additional budget workshop unless staff has a number of questions that come forward from Council between now and the next meeting, we then can have the Mayor call a special budget workshop meeting.
Bunting moved, Stanley seconded a motion to adjourn at 6:40 p.m.
Assistant City Administrator/Clerk