SUNFISH LAKE SPECIAL COUNCIL BUDGET STUDY MEETING
AUGUST 4, 2020
5:30 P.M. – ONLINE MEETING
Mayor: Dan O’Leary
Councilmembers: Mike Hovey, JoAnne Wahlstrom and Shari Hansen.
City Treasurer: Ann Lanoue
Attorney: Tim Kuntz
Engineer: Jeff Sandberg
Planner Ryan Krzos
Police Chief Brian Sturgeon
City Clerk: Cathy Iago
Councilmember Steven Bulach was absent
1. CALL TO ORDER: Mayor O’Leary opened the meeting at 5:30 p.m. for the purpose of discussing the proposed 2021
City of Sunfish Lake Budget and Tax Levy.
2. DISCUSS CITY OF SUNFISH LAKE PROPOSED 2020 BUDGET: Mayor O’Leary asked Treasurer Lanoue to provide an overview of the proposed 2021 Budget and Tax Levy.
Treasurer Lanoue referred Council to the proposed 2021 Budget Analysis document which shows the 2019 Actual Budget, the 2020 Budget to date, and the proposed 2021 budget. She also referred to the Taxable Market Value and Tax Capacity Value Comparison for 2020-2021. She stated that the preliminary Taxable Market Value and Tax Capacity Valuation actually slightly decreased for residential property and that the Debt Service Tax Levy would be lower than last year. She noted that under the Revenues section of the proposed budget, the Special Assessment installments would increase in 2021 due to payments from the Charlton Road project. She stated that she would review the proposed 2021 budget requests from staff and then request direction from Council to prepare the preliminary 2021 Tax Levy and Budget for adoption by Council at their September meeting.
The Treasurer reviewed the following requests form staff:
City Clerk - Requested $500 be placed in the budget to purchase shelving to place at Lilydale City Hall and that the shelving would accommodate moving the files that were sent to WSB from the former planning consultant.
City Attorney – Requested an increase of $500 from $36,000 to $36, 500
City Planner – Requested an increase of $6,000 from $30,000 to $36,000
Police Department – Requested a 1% increase
Fire Department – Preliminary figures show a decrease of 20% from $69,000 to $57,000. Treasurer Lanoue explained that the Fire Department budget had not yet been approved by the Mendota Heights City Council and that she should have an exact figure prior to the September meeting.
City Engineer – Request does not show a substantial increase – request does not include projects from the Capital Improvement Plan (CIP), however, the City has the option to sell bonds for upcoming projects.
Councilmember Hovey asked why the Fire Department budget was reduced.
Treasurer Lanoue explained that she was unsure of the reason, however, the costs are based on a formula that divides the budget between the four (4) contract cities; she indicated that one factor of the formula relates to the number of calls the Fire department responds to in each city.
The Treasurer explained that all Revenues are approximately the same with the exception of the Tax Levy. She advised that a 3% salary increase was included for the City Clerk, City Administrator, City Treasurer and City Forester. She also explained that the election budget would decrease substantially since there is no election in 2021 and the costs only relate to machine maintenance.
Treasurer Lanoue explained that the largest increase would be the Planner’s budget and that relates to the change in consultants and the level of expertise.
The Treasurer explained that the City had an agreement for sharing the cost of snowplowing on the border street between Sunfish Lake and Inver Grove Heights, however, the City of Inver Grove Heights has never sent a bill for plowing; she left the funds in the budget in the event a bill is received in the future.
Treasurer Lanoue explained that if Council prefers to leave the Tax Levy as proposed for 2021, the Tax Rate would be 0.28441 or Council may choose to reduce the budget, which would slightly lower taxes.
Mayor O’Leary questioned if property taxes would increase if the Tax Levy remains as proposed.
The Treasurer responded no and commented that property taxes should remain the same.
Mayor O’Leary pointed out that the City does not receive any funding from the State and only receives a minimal amount for recycling from Dakota County and that most large cities budgets have been impacted due to the COVID virus costs. He noted that Sunfish Lake has not been negatively impacted thus far by the virus, although there may be a few residents who may have difficulty paying property taxes due to the pandemic.
Treasurer Lanoue explained that the City received one-half of the tax payments from Dakota County and that the County had revised their payment schedule due to the fact that residents were granted additional time to pay property taxes. She noted that the County implemented four (4) distribution payments of taxes to cities; one large payment and three smaller installments.
Attorney Kuntz asked if the $112,523 would be to levy for Bond payments and the remainder of the $670,000 proposed would be to cover City costs.
Treasurer Lanoue responded yes and advised that Council would have the option to reduce the amount or they could add the money to the City’s cash reserves.
There was discussion regarding whether or not to reduce the tax rate or to maintain the proposed tax rate and place the additional $62,000 in the City’s reserve funds to use for road improvements and to reduce any future bond sales for improvements.
Engineer Sandberg explained that he placed a larger sum, $46,000, in the Engineer’s 2021 budget for road maintenance, he asked if those funds would be taken from the General Fund.
Treasurer Lanoue explained that the $46,000 was already included in the 2021 proposed budget amount.
Councilmember Hansen asked if the money could be used for other street patching projects if Council keeps the additional funds in the General Fund and the Treasurer responded yes.
Mayor O’Leary stated he would prefer that the budget amounts not go up and down each and he would support the proposed $670,000 budget as requested, with the additional funds being placed in reserve.
There was discussion regarding the current bond issues and upcoming payments. The Treasurer explained that currently the City has $1,619,000 in outstanding bonds; she noted that the 2009 Bond Issue was paid in full in February this year. She explained that there are three outstanding bond issues: 2014 at $210,00, 2017 at $375,00 and 2019 at $995,000. She advised that the City does not have to pay the principal on the 2019 bond issue until 2021 and can only pay interest on it this year.
Councilmember Hansen questioned why the City could only pay interest on the bond issue this year.
Attorney Kuntz explained that was how the bond issue was structed by Ehlers and the rationale was that the City would pay off one of the bond issues and have some leeway prior to payment on the next bond issue.
Mayor O’Leary explained that the City Engineer had related an issue with the Charlton Road improvement project that may require the City to pay some additional monies to correct the problem; he asked if those funds were included in the $46,000 budget request.
Engineer Sandberg responded no.
Treasurer Lanoue pointed out that the if Council adopts the budget as presented, the reserve funds could be used to correct problems related to the Charlton Road improvement.
Mayor O’Leary asked if there were any further comments or questions or if Council concurred with maintain the same tax Levy as last year.
Councilmembers Hansen and Wahlstrom agreed that it would be more appropriate to maintain the budget as is rather than go up and down with the tax levy.
Councilmember Hovey agreed, but explained that it was his opinion the Fire Department request appears to be low and he would prefer to place more money in the Fire Department budget that could be moved to reserves if it is not needed.
Treasurer Lanoue explained that she would have the correct amount from Mendota Heights prior to the September Council meeting and that she would contact Council if there is a dramatic change in the proposed amount.
Councilmember Hansen explained that she was contacted by neighbors who noted cracks in the roadway on Windy Hill Road and Windy Hill Court. She asked if the reserve funds could be used to do crack-filling in this area so that there is not further damage to the road.
Mayor O’Leary pointed out that the City has the 5-year CIP plan so that all the streets can be evaluated and rate in order to make plans for upcoming improvement projects where they are needed within the City.
Engineer Sandberg explained that the Engineering staff conducts a road inventory every three (3) years to prepare a listing of roads that need maintenance. He noted that this inventory is scheduled for the spring of 2021 and that the $46,000 budgeted amount would cover the cost of completing the inventory. He stated that if Windy Hill Road and Windy Hill Court are found to be high priority streets in need of maintenance, they would be included in the improvements done in 2021.
Councilmember Hansen asked if it would be cost effective to do the inventory every three years, or if it would be more beneficial to do it more often. She asked if three years was typical for conducting the inventory.
Mayor O’Leary suggested that the City needs to place the money where it is most needed for repairs and to stay ahead of road maintenance to delay reconstruction projects. He stated he was unsure if roads would deteriorate more if the inventory is done more often than every three years.
Engineer Sandberg explained that most cities conduct the road inventory every three years and if the City stay ahead on maintenance projects, most roads should last at least 20-25 years.
Councilmember Hansen stated she would explain this to the neighbors and thanked staff for the information.
The Mayor asked if there were any further questions or comments and there was no response.
Council concurred to direct the Treasurer prepare documentation for the 2021 Preliminary Budget as presented in the amount of $670,158 for their review and adoption at the September meeting.
Council thanked the Treasurer for a wonderful job presenting the proposed budget and an excellent job handling the City finances.
Mayor O’Leary asked if there was any further discussion and, hearing no response, adjourned the meeting at 6:10 p.m.
Catherine Iago, City Clerk Dan O’Leary, Mayor