City Council Minutes 08-27-2012 Special (Budget)MINUTES
SPECIAL WORKSHOP — MONTICELLO CITY COUNCIL
Monday, August 27, 2012 —5:30 p.m.
Mississippi Room, Monticello Community Center
Present: Clint Herbst, Lloyd Hilgart, Tom Perrault, Glen Posusta, Brian Stumpf
Absent: None
Others: Jeff O'Neill, Wayne Oberg, Department Heads
1. Call to Order
Mayor Herbst called the Special Meeting to order at 5:34 p.m.
2. Purpose of Workshop: Review of proposed 2013 Budget
Jeff O'Neill explained that the purpose of the meeting is to review the overall budget
proposed for 2013, look at items that staff has taken out of the proposed budget, and
discuss financial implications that may affect the levy in upcoming years.
3. Workshop — Consideration of 2013 budget and preliminary tax levy
Jeff O'Neill led off the workshop by thanking Finance Director Wayne Oberg for getting
the budget organized in a short period of time for today's workshop. Council had
directed staff to shoot for a target levy of $7.9 million which is a different approach than
has been used in the past. The purpose of this meeting is to provide Council with a
general picture of what is included in the 2013 budget proposal. Jeff O'Neill asked
Council to consider whether they want to meet with department heads to discuss their
concerns and considerations about the budget. Clint Herbst said he felt that this is an
important process and would like to see it continue so that each department can be heard.
This could be done either before or after the preliminary levy is set.
Jeff O'Neill noted that the City has kept the levy fairly flat for the past 8 -9 years in spite
of a lot of growth and extension of infrastructure. Under Council direction, city staff has
concentrated on reaching a budget proposal that met their request for a maximum levy of
$7.9 million. Jeff O'Neill reviewed various budget areas that were adjusted in order to
meet the $7.9 million levy target.
• Seal Coating - $80,000
• Future equipment purchases - $200,000 (in exchange for borrowing for future
equipment purchases)
• Data Processing - $25,000 (duplicated expense)
• Street Department, mise equipment and supplies - $6,500
• Engineering, consultant expense - $10,000
• Planning, consultant expense - $5,000
• Lighting supplies - $10,000 (to be funded by franchise fees)
• Lighting maintenance agreements - $16,000 (to be funded by franchise fees)
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• Chipper replacement - $29,000 (CIP)
• Small tractor - $75,000 (CIP)
• Tree replacement funds - $5,000
• MCC, City Council /Wedding dais and pool heater —reduce to $10,000
Jeff O'Neill also noted several items that were left in the budget at this time:
• Step increases - $33,000 (General Fund); $57,000 (overall)
• Health insurance increase - $50,000 (General Fund); $115,000 (overall)
• Garbage collection services remain funded via levy
Jeff O'Neill noted that there are some impacts to Debt Service coming down the road and
turned the discussion over to Wayne Oberg. Wayne Oberg provided some handouts to
Council. Wayne Oberg first talked about the MCC bond which does not expire until
2015. In 2014 the City will reach a point where some additional funds will need to be
found to cover this debt for 2 more years. After 2016, the debt service amounts will drop
and again in 2019. However, prior to that, the City may have to increase the levy to
cover debt payments. Brian Stumpf asked if the money could be taken from a reserve
fund and then paid back. Wayne Oberg pointed out that there are restrictions on
borrowing for debt funds. However, he stated there are other options that could be used,
such as special revenue or enterprise funds. Jeff O'Neill commented that it will be good
to see the debt fall off eventually, but there may be other debt that has to be added such as
for the Fallon Avenue Overpass, Waste Water Treatment Facility improvements, and
some other large future projects.
Clint Herbst asked about the ice arena payments and whether the City would need to
purchase some ice time when they are no longer making those payments. Glen Posusta
noted that the agreement for ice time was set up for 20 years so we should be okay.
Clint Herbst asked if there were any bonds that could be refinanced to save some money.
Wayne Oberg reviewed the outstanding bonds and commented that the bond consultants
would probably have contacted the City if those bonds would have been eligible for
refinancing and savings would have been sufficient enough. Wayne Oberg stated that he
would look into that further. Brian Stumpf asked if the interest rate for borrowing would
be affected due to FiberNet. Wayne Oberg explained that the projected interest rates take
that into consideration. In today's market of low interest rates, there is little impact.
Jeff O'Neill also talked about the status of the Access funds. Sanitary Sewer Access fund
will not support any debt service after 2014. The Water Access fund has no reserves
remaining. However, the Storm Water Access has sufficient reserves for the foreseeable
future. It is suggested that Council consider increasing water and sewer fees to help
support debt service needs. The other option is to levy for the debt service and utilize the
tax base supported by Xcel to help spread out the cost to the taxpayers.
Jeff O'Neill talked briefly about delays on street and pathway maintenance. Many miles
of streets and trails were added during the growth years. However the seal coating and
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crack- sealing of streets and pathways has not kept pace and we are getting behind. The
cost to catch up is estimated at close to $400,000.
Jeff O'Neill noted that stormwater utilities have not kept up with needed maintenance.
For 2012, the city used some of the stormwater access funds to fund some urgent
maintenance. However, this money was intended for development of infrastructure (one
time costs) and not maintenance (ongoing costs).
Jeff O'Neill commented that there is no money in the budget again for a frisbee golf
course at Water Tower Park. One of the community service organizations was willing to
donate $5000 which would cover close to 50% of the cost. Since the City could not come
up with the balance needed, it has been removed from the budget for several years now.
Clint Herbst feels that it would be worthwhile to pursue this project; perhaps look into
some other donations to cover the cost. Tom Pawelk said there is a minimal budget for
maintenance for several pathway segments. Clint Herbst asked if there was any merit in
the City purchasing some equipment so that they can do their own sealcoating. He
suggested that this be discussed with Streets and Parks departments during the upcoming
budget discussions.
Jeff O'Neill went on to talk about the improvements that will be needed for the WWTF
and for a storage building replacement. It is estimated to cost approximately at $1.8
million. Wayne Oberg recommends that the bond sale for the improvements include the
storage building. It is anticipated that the first bond payment would be made in 2014 and
would be paid from the sanitary sewer Rind. Wayne Oberg noted there is a significant
balance in the sanitary sewer fund; however it might be advantageous to preserve those
funds to offset the lack of reserves in the sanitary sewer access fund to pay for future
infrastructure needs.
Jeff O'Neill noted that there is some funding budgeting in the FDA fund which is held
for replacement of an Economic Development Director next year and /or other needs such
as consultant assistance to fill in without an Economic Development Director in place.
Jeff O'Neill discussed a situation existing in the Fire Relief Association where the
investment funds are not performing as they did in years with higher interest rates. There
are implications if the City does not maintain their current pension finding levels, such as
losing a large number of firefighters to retirement if the pension levels drop too much.
Fire Chief Steve Joerg would like to keep the retirements at one a year to preserve their
experience levels.
Jeff O'Neill highlighted the situation occurring with FiberNet's deficit, which appears to
continue requiring a transfer from the Liquor Fund to maintain operations. This does not
include any funding toward debt service. It is hoped that some of the changes underway
will lead to higher revenues. No portion of the 2013 levy is earmarked to fund FiberNet
expenses. Jeff O'Neill noted that Mark Pultusker is focusing on some major fixes which
should help the system to operate more efficiently and, hopefully, generate some new
revenue sources.
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Jeff O'Neill summarized that Council should provide direction for staff on the next steps
for the budget process. Clint Herbst said he would like a chance to talk with various
departments before making a final recommendation on the levy. Jeff O'Neill will look at
the calendar to see what dates are available before September 10th to meet from about 6
to 8 P.M.
Tom Perrault asked whether the County had provided any figures on the tax base yet.
Wayne Oberg has contacted the County but they do not have figures available at this
time.
4. Adjournment
BRIAN STUMPF MOVED TO ADJOURN THE SPECIAL MEETING AT 6:30 P.M.
TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED 5 -0.
Recorder: Catherine M. Shuman
Approved: September 10, 2012
Attest:
City Ad*f ator
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