City Council Minutes 07-11-2011 WorkshopMINUTES
SPECIAL WORKSHOP /MEETING — MONTICELLO CITY COUNCIL
Monday, July 11, 2011— 6:00 p.m.
Mississippi Room, Monticello Community Center
Present: Clint Herbst, Lloyd Hilgart, Tom Perrault, Glen Posusta, Brian Stumpf
Absent: None
1. Call to Order
Mayor Herbst called the Budget Workshop to order at 6 p.m.
2. Purpose of Workshop: Discussion of 2012 Budget Process; 2012 wages & benefits;
GASB 54 funds; fund balance and reserves
3. 2012 Budget Schedule
Tom Kelly reviewed the budget schedule that he is proposing in order to set the
preliminary levy by the first meeting in September. The next meeting will most likely
include a workshop on the 5 year Capital Improvement Plan.
Jeff O'Neill brought up the plans to discuss goals and preliminary budgets with each
department head. Tom Kelly said that should take place in late July or early August in
order to meet the other deadlines. Brian Stumpf would like to see it done on the same
night as a Council meeting and the other council members agreed. Tom Kelly suggested
holding the workshop prior to the first meeting in August.
4. Discuss 2012 wage and benefit adjustment
Tom Kelly noted that he would like some feedback from Council on wages and salaries
as this makes up a large portion of the annual budget. This would give him an idea on
numbers to put into the first budget draft; this would give a starting point to work from.
This will be discussed further by the Personnel Committee.
5. Discuss GASB 54 fund adjustments
Tom Kelly explained that this is a new statement that the City has to implement for the
2011 audit year. GASB 54 establishes new reporting standards for fund balances and
reserves. Tom Kelly is particularly concerned about the reporting of special revenue
funds since there are new requirements to have restricted or committed revenues. Tom
Kelly has made some recommendations on which funds could remain classified as special
revenue funds (EDA, Park Dedication, NSP Fund, MN Investment) and which ones
should be moved into another fund (Street Reconstruction, Street Light Improvement,
Capital Outlay Revolving, Sanitary Sewer Access, Stormwater Access, Water Access to
Capital Projects; Library, Shade Tree, Orderly Annexation Area to General Fund). Clint
Herbst asked if it would be simplest to move funds into the most lenient rather than
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having to identify so many restrictions (i.e. nonspendable, restricted, committed,
assigned). There are 3 that Tom Kelly was looking for some input: DMV, Community
Center, and Bertram Chain of Lakes funds. Resolutions will be required for approval to
continue as a special revenue fund. Tom Kelly noted that Rind balances may need to be
adjusted to accommodate assets for future replacement.
Brian Stumpf asked for an explanation of how the Capital Improvements funds would
work. Tom Kelly explained that within the Capital Improvement fund type, each capital
project would be a standalone fund. They would need to fall within this classification, be
reported in this group, and abide by the new GASB 54 guidelines.
Clint Herbst asked why these guidelines are being implemented. Tom Kelly explained
that this is probably due to the rating agencies asking GASB to consider simplifying the
classification process and to rectify some possible misclassification of special revenue
fiords. Tom Kelly pointed out that some of the classifications are very similar such as
"committed" which requires formal action by Council for allocation of funds and
"assigned" which allows staff to specify allocation of fund balances for specific purposes.
Tom Kelly will prepare adjusting entries and bring them to Council for approval
6. Discuss City fund balances /reserves
Tom Kelly noted that he pulled together information on city fund balances and reserves
based on a request from Council. Council was provided with spreadsheets showing
current fund balances for existing funds along with designated and/or restricted amounts.
He also provided a spreadsheet showing projected fund balances and deficits.
Tom Kelly pointed out that he has incorporated anticipated expenses and revenues in
calculating the projected balances. He would recommend that Council not use reserves to
balance the budget. It would be better to allocate the reserves for future capital needs.
Glen Posusta commented that he does not think that the City should count on growth
from development.
Jeff O'Neill noted that Council has been astute in keeping the levy flat and not increasing
budgets during the last 5 years. He asked Council to keep that in mind as there is not a
much room to make a lot of adjustments.
Lloyd Hilgart asked which funds are the ones to keep an eye on. Tom Kelly noted that
FiberNet is probably the one to watch as it is so new that there has not been enough time
to build up revenues to support it. Although it has been keeping up with the business
plan, it is about a year behind due to the legal constraints. Tom Kelly pointed out that the
City pools all of its fiord balances in looking at cash balances and noted there are funds
that have healthy fund balances.
Jeff O'Neill suggested that Council keep in mind that they have held the budget down for
the last 5 years or so and they may have to look at some new revenue sources or a slight
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increase in the levy to help offset some expenditures and to keep fiom using reserves.
Jeff O'Neill also noted that there is an advantage in a tax levy increase as Xcel Energy
provides a larger portion of the tax collections. Clint Herbst asked the Council if any of
them thinks the goal should be to maintain a zero levy increase. Tom Perrault and Glen
Posusta think that should be a consideration and do not necessarily want to increase the
levy. Clint Herbst feels it is important that Council weigh the amount of additional
revenue that might be needed to balance the budget and consider the impact to residential
and commercial taxes.
7. Adjournment
Clint Herbst summarized by asking staff to schedule departmental meetings to review
their proposed budgets. He would also like staff to have a budget number to present to
Council so they have some idea of the totals under consideration for the tax levy.
TOM PERRAULT MOVED TO ADJOURN THE WORKSHOP AT 6:48 P.M. LLOYD
HILGART SECONDED THE MOTION. MOTION CARRIED 5 -0.
Recorder: Catherine M. Shuman
Approved: July 25, 2011
Attest:
Cf(y AWinistrator
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