- DRAFT –
SUNFISH LAKE SPECIAL COUNCIL BUDGET STUDY MEETING –
AUGUST 5, 2014
6:00 P.M. - ST. ANNE’S EPISCOPAL CHURCH
Mayor: Molly Park
Councilmembers: Cathy DeCourcy, JoAnne Wahlstrom, and Mike Hovey.
City Treasurer: Ann Lanoue
Engineer: Tim Hanson
City Clerk: Cathy Iago
Councilmember Steven Bulach arrived at 6:50 p.m.
1. CALL TO ORDER: Mayor Park opened the meeting at 6:00 p.m. for the purpose of discussing the proposed
Sunfish Lake 2015 Budget.
2. DISCUSS CITY OF SUNFISH LAKE PROPOSED 2015 BUDGET: Mayor Park asked Treasurer Lanoue to provide an overview of the proposed 2015 budget and Tax Levy.
Treasurer Lanoue referred to the Budget Analysis document which showed the 2013 and 2014 budget and the proposed 2015 budget including staff requests for the upcoming year. She explained that expenditures in 2015 are slightly lower than 2014, in part due to the fact that there would be no election held next year. She also noted that Capital Improvements were reduced $22,700. She explained that Revenues are slightly higher this year than projected, due in part to the increase in building permits and the amount of tax levy was reduced.
The Treasurer stated that there is no change in the City Attorney fees for 2015 and that she included a 3 percent increase for the City Clerk/Administrator and Treasurer positions. She further noted that the Police Department service costs include a 2 percent increase. She explained that she estimated the Fire Department service costs to be the same as 2014 and that she should have a definite amount before the September Council meeting.
Councilmember Wahlstrom asked if the fee was based on the number of calls received. Treasurer Lanoue responded yes and explained that there is a formula used by the Fire Department to calculate the amount.
Councilmember Hovey asked if she anticipated an additional $1,000 to be sufficient and the Treasurer responded that she included an additional $2,000 in the amount.
The Treasurer explained that the Engineering Budget was submitted with a large reduction in the Capital Improvement amount.
Tim Hanson of WSB Engineering explained that the 2015-2020 Capital Improvement Plan for 2015 does not list any major improvements and that the two engineering items scheduled in 2015 would be paid for from the City’s general road maintenance fund. He explained that the two projects scheduled are an Infrastructure Management Update and a Benchmark Update and he briefly described what the projects entailed.
Treasurer Lanoue stated that the snowplowing budget and the Forester’s budget remained the same as 2014.
Councilmember DeCourcy questioned the costs to Inver Grove Heights for snowplowing and the Treasurer stated that she had not received a billing statement for their services.
Engineer Hansen explained that the Water Quality Plan was reduced because the Citizen Assisted Lake Monitoring Program (CAMP) costs were reduced by $200.00.
Treasurer Lanoue advised that the rent for St. Anne’s Church would increase this year and that she had not included that cost; she explained it was a three year contract this being the last year, and the cost increase would be minimal. She noted that staff would have to renegotiate the contract with the Church for 2016.
The Treasurer explained that Memberships remained the same and noted that she pays her own membership dues.
Clerk Iago advised that she would be requesting payment from the City for renewal of her Notary costs.
Councilmember DeCourcy stated she wished to have the City assist with the Treasurer’s membership dues and Council concurred that they also would authorize assisting with those costs. Council suggested that the Treasurer include those costs in the revised budget for review at the September meeting.
Treasurer Lanoue explained that the miscellaneous item was for the EAID Grant from the State of Minnesota and that would only be included for this year’s budget.
Mayor Park asked when the new homes recently approved for construction would be placed on the tax rolls.
The Treasurer explained that she receives a Tax Levy Report from Dakota County and that the County calculates the taxes for new home construction she noted that taxes for new homes are not received until one year after they are completed. She referred to page five of her handouts and explained that the new construction was listed at $1,818,200 which calculates a tax capacity of $21,477. She explained the formula used to calculate the additional tax capacity and that the home valuations are done in January, therefore the City would not receive the tax until the following year.
Treasurer Lanoue advised that she included copies of staff budgets requests and bond payment information with the handouts she distributed. She reviewed the property tax levy history between 2008 and 2014. She explained that she prepared a comparison of average home values and the impact of various tax rates. She commented that she included three (3) different scenarios using median values, as calculated by the County Assessor, for Council review:
1) Tax Rate Unchanged – Tax rate would remain the same and property taxes would increase by remain the same 14 percent.
2) Balanced Budget – Tax rate would decrease by 21 percent and property taxes would decrease 11 percent.
3) Tax Dollars Unchanged.
The Treasurer explained that the tax levy adopted in September by Council and sent to Dakota County should be the maximum amount Council wishes to approve for 2015 since Council may choose to decrease the amount at the public hearing in December after receiving public comments. She explained that the amount adopted in September cannot be increased in December before final adoption.
Councilmember Hovey commented that the City may lose interest on bonds because in the past residents have paid off assessments early or in full prior to the term of the bond.
Engineer Hanson pointed out that the Capital Improvement Plan shows an amount of $32,750 for 2016, which would be a $22,000 increase over the 2015 proposed budget amount. He indicated that would be a substantial increase in the tax levy for 2016.
Councilmember Hovey stated he would prefer to have a steady rate for taxes versus having the amounts vary up and down; he stated he would prefer not to reduced taxes in 2015 only to have to increase them substantially the following year.
Councilmembers concurred that a large fluctuation in the rates would not be preferable.
Councilmember DeCourcy noted the expensive for the Website Management was only $60 and asked if the website manager receives a salary.
Councilmember Hovey stated the $60 pays for hosting the website and that he volunteers his time to do the website management.
Mayor Park asked if all the money donated for that purpose from the Driscoll’s is being used and Councilmember Hovey responded yes.
There was discussion relating to compensation for the website manager and Council concurred that the position should receive some compensation. They asked the City Attorney if it was appropriate to pay a Councilmember to manage the website.
Attorney Kuntz explained that Councilmember Hovey could be compensated and that the position does not have to be sent out for bids if Council verifies that the amount paid to Councilmember Hovey is the lowest price for this type of service. He offered to prepare a certificate for Council action to verify the amount is the lowest cost for comparable services, but stated he was unsure what the cost would be for managing the website.
Clerk Iago offered to contact some of the smaller, comparable cities to determine the average cost for website management.
Attorney Kuntz commented that in his opinion Council should determine an amount of money to keep in the reserve fund in order to pay the City operating costs for 2015; he explained that normally cities retain 5 percent of their operating budget for the year for this purpose. He asked the Treasurer for an estimated amount that would cover the City’s operating costs for a six month period and explained that the tax collars owed the City are collected by Dakota County and not paid to the City until June of 2015.
The Attorney reviewed the three scenarios proposed by the Treasurer and pointed out that the $383,328 amount shown for a balanced budget would be the lowest adopted in the last five years. The Treasurer explained that if that amount were adopted it would not include any of the staff requests discussed this evening.
Attorney Kuntz advised that the $414,900 amount would be the same as the levy adopted in 2014 and there would be an additional $31,572 increase which could be held in reserve to cover operating costs if necessary.
There was discussion relating to an appropriate amount to maintain the reserve fund and the Attorney and Treasurer agreed that it would be wise to levy so that the additional $31,000 may be held in reserve. Treasurer Lanoue again pointed out that Council may not increase the number in December, but have the option to decrease the number if deemed appropriate.
The City Attorney and Treasurer agreed that the amount to be levied should be at least the same as last year or $414,000.
Mayor Park asked if it was possible to increase the number. Attorney Kuntz responded yes and reiterated that Council should discuss an appropriate amount, usually half of the operating budget, to be held in reserve for the City’s operating budget since property taxes are not received until June of the year. He explained that approximately $200,000 in reserve would be 50 percent of the City’s operating budget.
Councilmember Hovey commented that the City cannot depend on everyone paying their property taxes and he would prefer to have at least 50 percent in reserve.
Treasurer Lanoue indicated that Sunfish Lake has a fairly good collection rate for taxes, however she agreed that most cities retain at least 50 percent of their operating budget in reserve.
Mayor Park stated she would prefer to keep the taxes more level and not to have ups and downs in the property tax amounts.
Attorney Kuntz suggested that Council agree on an amount to be placed in the budget for adoption at the September meeting and indicated that staff would prefer to have the amount be at least the same as last year.
Councilmember Hovey suggested setting the amount at $485,000 and asked if that would keep the tax rate the same as last year.
Treasurer Lanoue responded yes.
Councilmember Bulach arrived at 6:50 p.m.
Council concurred to have the Treasurer set the proposed 2015 Tax Levy amount at $485,051.
Attorney Kuntz noted that property taxes may increase.
Treasurer Lanoue commented that property valuations may also increase.
Mayor Park asked if the Treasurer would make the adjustments as discussed this evening and bring the final version of the proposed 2015 Budget for Council adoption at the September meeting.
Treasurer Lanoue agreed to do so and reiterated that once the preliminary budget is adopted in September, the Council may not increase the amount, but may decrease it in December at the public hearing.
Mayor Park asked if there was any further business for discussion and hearing no response, called for adjournment.
3. ADJOURN: Councilmember DeCourcy moved, to adjourn the Study Meeting at 6:55 p.m., seconded by Councilmember Hovey and carried. (5-0)
Molly Park., Mayor Catherine Iago, City Clerk