City Council Minutes 09-12-2011 SpecialMINUTES
SPECIAL MEETING /WORKSHOP — MONTICELLO CITY COUNCIL
Monday, September 12, 2011— 5:30 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 Special Meeting to order at 5:30 p.m.
2. Purpose of Workshop: Discussion of 2012 BudEet and Preliminary Lew
Jeff O'Neill reviewed the main goals of the meeting, which are to review the proposed
budget and decide on a preliminary levy figure. He gave an update on the status of
FiberNet to make the Council aware of future considerations for cash flow balances. He
also talked about some challenges and opportunities that FiberNet is facing and working
on. Eventually the City may need to loan some funds to FiberNet to meet cash flow
needs. Jeff O'Neill also pointed out a deficiency that is building for the loan payments
for the Waste Water Treatment Facility. Previously those payments have been made
from access fee fund balances which are becoming depleted.
Lloyd Hilgart asked about the FiberNet business plan and the basis for projections. Brian
Stumpf asked about the plans to extend services beyond the city limits and what would be
entailed in that process. Ben Ranft explained some of the things he has changed to help
reduce or delay expenses. Tom Kelly talked about the debt repayment for the FiberNet
bonds in the upcoming years.
3. 2012 BudEet & Preliminary Lew
Tom Kelly summarized that the total levy with the current proposed budget would be
$8,856,070 which includes the operations budgets for General and Special funds along
with some capital expenditures. Tax capacity is estimated at $15.308 million by Wright
County Assessor. Tom Kelly pointed out that the tax impact on various home values
would vary from a decrease to a slight increase, and non - homestead and commercial
values would see an increase.
Using his tax calculator worksheet, Tom Kelly displayed some of the larger expenditures
being proposed. Council discussed the $100,000 proposed for pathway construction,
which is for maintaining existing trails in accordance with the pathway maintenance plan.
Tom Pawelk explained there are some options such as overlay or adding a thin rubber
coating over some of the pathways to extend their life. Bob Paschke explained that they
should also fogseal every so many years to help maintain their surface. Glen Posusta
asked about possibly doing some cracksealing maintenance on the paths. Bob Paschke
said they started some of that last year but they have not had the staff to do much of the
work. The streets take precedence over paths when they do crackfilling. Clint Herbst
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asked if there were any street reconstruction projects planned for 2012. Tom Moores
explained that they are proposing to do overlays on about 4 miles of rural streets that the
City has taken over with annexed property. Clint Herbst said he would like the City to
take a look at the possibility of assessing township properties that would benefit from
street work. Tom Moores has done some research on the state statutes related to
assessing properties such as these and there does not appear to be much flexibility to do
that. Tom Moores also pointed out that he would like to keep his budget for sealcoating
as there are so many streets that need work and he doesn't want to get further behind.
Tom Kelly entered Clint Herbst's request into the tax levy worksheet so that staff could
look his proposal. With this proposal, the levy would be almost. $8.1 million and would
result in a tax impact that would show a decrease or slight increase. Glen Posusta pointed
out that it would be helpful to show the impact on businesses, which often carry the brunt
of the tax impacts. Tom Kelly explained that the main reason for the tax increases to
businesses is due to the homestead credit tax calculation changes, which moves the
impact from residential to commercial properties. The impact appears that it could
increase commercial taxes by tip to 28 %. Glen Posusta said he feels the City has to
address this like a business would: if you can't increase the revenue, then you have to cut
your expenditures. He would like to see the least possible increase for commercial taxes
and feels that the City has to be willing to keep taxes as low as possible.
Tom Kelly entered Glen Posusta's request into the tax levy worksheet to show what he is
proposing. Tom Kelly explained the change that the legislature made with the intent of
reducing the aid that the State would reimburse to local governments. The effect of Glen
Posusta's request would be just under $7.8 million for the proposed levy. Clint Herbst
talked about the need for Council to work with these numbers to come up with a
proposal. Tom Perrault said he would not be willing to go to $8 million for a levy figure.
Jeff O'Neill talked about the impact on services provided by the City due to commercial
growth in the City. The large businesses that have chosen to build here did so because of
what the City could offer and they now expect the services to be delivered. If Council
wishes to keep the levy low, they may have to make choices that will decrease services
that the City can offer.
Lloyd Hilgart talked about some of the things that might be cut out of Public Works
budget, the drawdown of Liquor Store reserves, the future need to pay the Waste Water
Treatment Facility loan, and for future Bertram land purchases. If the levy is kept low,
he expressed concern over how the City will afford all of these future debts. Lloyd
Hilgart does feel it is probably justified to include a small increase for employees as it has
been several years since any increases were given, although this might be an area to
consider no increases. Glen Posusta feels that wages do not necessarily have to be
increased in this economic environment.
Brian Sturnpf explained that he did not make it into city hall to provide input into the
worksheet. He pointed out a couple of items in the Parks budget that really should not be
cut as they are state mandated projects that need to be done. He would like to see the
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levy set around $8 million to help fund some of the things that the City should be
working on.
Brian Stumpf feels strongly that the City should not be using their reserves to balance the
budget. Tom Kelly pointed out that the only reserves proposed in this budget are to
borrow some funds from the Liquor Store reserves for the MCC Natatorium
improvements. Tom Kelly pointed out that using reserves to balance the budget for
operating expenditures would have a negative impact according to the bond rating
experts. Using reserves for a one -time expenditure would not necessarily have a negative
impact as long as they would not create a long term effect on drawing down reserves.
Brian Stumpf mentioned that the City should not fund too much out of reserves; for
example, rather than take street reconstruction out of reserves and instead consider
increasing the assessment ratio. Jeff O'Neill pointed out that paying debt out of reserves
is not a good idea when there might be other one -time expenditures. He noted, by adding
the equipment rental charge into the budget, the City could create funds for equipment
replacement in the future.
Torn Kelly mentioned that they could shift the Waste Water Treatment Facility debt
payments to the sewer fund by increasing sewer rates; he is in the process of running
some calculations. Glen Posusta pointed out that increasing the rates for utilities is
probably better than increasing taxes because it puts the burden on those that actually use
the services. Clint Herbst suggested that the City might need to look at some other fees
that are being charged to help offset expenditures, such as park rentals or ball team fees.
Glen Posusta stressed that his concern is mostly with the costs that businesses have to
pay. Clint Herbst talked about some of the savings that residents will realize on their
taxes due to the legislative change on homestead credit. He also pointed out that
residents have been saving money in other ways such as through their telecommunication
bills since FiberNet has started operating.
Clint Herbst pointed out that setting the levy at $8 million would be an increase of
approximately $300,000. Tom Perrault said he was thinking he would suggest about
$7.95 million. Lloyd Hilgart asked about the tax impact if the levy were left exactly the
same as 2011. Tom Kelly showed that would still increase commercial taxes by about
10 %.
4. Adiournment
TOM PERRAULT MOVED TO ADJOURN THE WORKSHOP AT 6:56 P.M. BRIAN
STUMPF SECONDED THE MOTION. MOTION CARRIED 5 -0.
Recorder: Catherine M. Shuman
Approved: September 26, 2011
Attest:
C inistrator
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