City Council Minutes 07-22-2013 SpecialMINUTES
SPECIAL WORKSHOP MEETING — MONTICELLO CITY COUNCIL
Monday, July 22, 2013 — 5:30 p.m.
Mississippi Room, Monticello Community Center
Present: Clint Herbst, Lloyd Hilgart, Tom Perrault, Glen Posusta, Brian Stumpf
Absent: None
Others: Wayne Oberg, Jeff O'Neill, City Department heads
1. Call to Order
Mayor Herbst called the special meeting to order at 5:30 p.m.
2. Purpose of Workshop: Review of proposed 2014 Budget
Wayne Oberg started off the 2014 budget with a presentation that included: important
dates, what's new, levy information, and initial budget comments. Important dates
include the preliminary levy deadline to the certification of a final tax levy. There are
several new items that came out of the state legislative session. There is a levy limit of
3% of the general levy for 2014, excluding any special levies such as debt. A general
sales tax exemption for municipalities goes into effect on January 1, 2014, which covers
most items related to costs of doing business unless it is a competitive service with
private business.
Wayne Oberg provided summaries and comparisons of the city and other taxing district
levies, tax capacity values and rates, property tax breakdown, and tax levy by purpose.
Wayne noted that Monticello had the lowest tax rate of Wright County cities for 2013.
Wayne Oberg talked about the budgeting process and noted that there are three basic
rules: spend most restrictive money first, recurring expenditures should be offset by
recurring revenues, and use conservative estimates for revenues and liberal estimates for
expenditures. He pointed out that one of the major stressors for the city is an 82%
dependence on property taxes, with the other portion spread among five revenue sources.
Glen Posusta asked for an example of some that cities don't depend on property taxes.
Wayne Oberg gave the example of cities that received quite a bit of local government aid
(LGA), such as East Grand Forks, which depended on about one -third of its funding from
LGA.
Wayne Oberg noted that Personnel Services are 41 % of the city budget. Any increases in
that area require a larger chunk of the levy. Other Services & Charges equal 47% which
includes large contracts such as law enforcement. Impact fees, such as from
development, are low right now so they are not providing funds for debt service related to
utility expansion. Sanitary Sewer Access fund is projected to have a balance of $772,000
at end of 2013, which is not enough to cover the debt service for 2014 so transfers will
need to be made. Lloyd Hilgart asked where the transfer would come from, and Wayne
Oberg explained that would be from the water and sewer fund reserves. Clint Herbst
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mentioned that some of the funds such as sewer and water create their own revenues to
support the operating expenses. Those funds do not depend on the property tax levy.
Brian Stumpf asked about the transfer from the Water Tower fund and what that money
was used for. Jeff O'Neill explained that was used for the Krutzig property buy back so
that fund will have to be replenished at some time.
Wayne Oberg talked about assessments of approximately $1.7 million from the 2005A
and 2011A bond funds and noted that a large amount is not being paid. The annual
amount due would be $240,722 and the delinquency now totals $870,766. Clint Herbst
commented that the city should keep an eye on any of those situations.
Wayne Oberg discussed capital needs and distributed copies of the proposed CIP for
2014 to 2018 showing assets to be included in the budget. Wayne Oberg talked about
incorporating these purchases into the debt service schedule.
Wayne Oberg provided a chart showing some proposed figures for tax levy changes by
fund with the 2005A and 2011 A bond needing a 71.4% increase to make up the debt
service payment. The net levy increase would be 4.2% under this proposal. One of the
challenges that Wayne Oberg talked about briefly was the need to increase the levy to
cover the debt service.
Some of the tax base changes that Wayne Oberg pointed out are:
o Nuclear plant value is $33 million lower due to retiring equipment (amounting to
about $100,000 in decreased taxes to Xcel).
o Building permits issued totaled $12 million increase in value.
o TIF 1 -6 was decertified at an amount of $3.5 million in value, which goes back on
the general property tax roll.
Glen Posusta asked if there are any requirements for Xcel Energy to pull permits with the
city that would generate some revenues. Jeff O'Neill stated that in most cases, Xcel was
supposedly exempt from building permits.
Wayne Oberg talked about the handout he provided with some preliminary budget details
for the various city funds. He pointed out that he is still working on coming up with
balancing the revenues to offset the expenses. Clint Herbst asked about the fees for water
usage and suggested looking at that to see if the charges are generating the appropriate
revenue to cover expenses. He commented on how low the rates are in Monticello
compared to surrounding communities.
Wayne Oberg commented that he worked over the weekend to put the budget numbers
together and still has to finish working through the details. He suggested to Council that
they allow some leeway when setting the preliminary levy in September so that there is
an opportunity to make tweaks. Clint Herbst stated that the Council usually sets the
amount in September that they are planning for a final number so that the public has a
good idea of what to expect. Glen Posusta asked if there were any concerns about the
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effect of ObamaCare on health care plans. Wayne Oberg said that he is planning for
those changes in the proposed budget figures.
Jeff O'Neill mentioned that the next workshop is planned for August 26t" and would like
to allow time for department heads to meet with Council individually. Clint Herbst felt
that would be acceptable and asked to limit meeting with those departments that really
have something to present to Council. Brian Stumpf asked to include a discussion on
water and sewer rates and make sure costs are being covered. Brian Stumpf would also
like to see a list of city -owned properties which are available for sale.
Jeff O'Neill talked about some of the large capital projects that are on the list of things to
accomplish but there is no strategy in place at this time to invest in those projects. Some
examples are public works facility, new fire hall, Bertram Park, Fallon Avenue overpass,
and street reconstruction. Bob Paschke noted that city staff is still working with Cargill
to determine sewer rates for TSS and BOD.
Lloyd Hilgart asked if Wayne Oberg had figured in operations costs for FiberNet.
Wayne Oberg stated that he has not, but he also has not included any uses for liquor or
DMV reserves. He indicated that FiberNet operations might be getting close to breaking
even. Lloyd Hilgart asked if any liquor funds were going toward MCC operations.
Wayne Oberg stated that no liquor funds are planned to go toward MCC operations. The
increase in MCC debt service is planned to be covered by the tax levy. Lloyd Hilgart
also preferred to have the department head presentations included in the next workshop.
3. Adiournment
BRIAN STUMPF MOVED TO ADJOURN THE SPECIAL MEETING AT 6:32 P.M.
TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED 5 -0.
Recorder: Catherine M. Shuman ft..)
Approved: August 12, 2013
Attest:
C' inistrator
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