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HomeMy WebLinkAbout2004-08-17 Council Work Session MINUTES OF THE SPECIAL MEETING OF THE EDINA CITY COUNCIL HELD AT CITY HALL AUGUST 17,2004 5:00 P.M. ROLLCALL Answering rollcall were Members Housh, Hovland, Masica and Mayor Maetzold. Mayor Maetzold stated the purpose of the Special Meeting was to begin the public hearing process on the preliminary 2005 budget. He reviewed the preliminary schedule for budget adoption noting the City Council would establish a maximum levy for the 2004 budget at their September 7, 2004, Council meeting. He added that in early December 2004 the Council would conduct a Truth in Taxation hearing before final budget adoption later in December. Mayor Maetzold stated this meeting would focus first on advisory boards and commissions' testimony before reviewing the budget in detail. Manager Hughes explained that nearly all Minnesota cities have been affected by the State Aid Reductions enacted during the past legislative sessions. He said that state aids for cities were comprised of Local Government Aid (LGA) and Market Value Homestead Credit (MVHC). Mr. Hughes pointed out that Edina had not been a recipient of LGA for many years, but had been receiving MVHC. Mr. Hughes stated that pursuant to legislation Edina lost its entire 2003 and 2004 MVHC allocations. Mr. Hughes said he was pessimistic that the 2005 MVHC would be funded because of the ongoing fiscal problem with the State. Mr. Hughes explained the City had been subject to state imposed levy limits for several years. In previous years the levy limit was a function of the prior year's levy adjusted by household growth, Commercial/Industrial (C/1) growth and an inflationary adjustment. For the 2004 budget, the levy limit was even more restrictive than the prior years. The City could not increase its levy due to inflation or household and C/I growth - it could only increase the levy to recover 60% of the MVHC that had been cut for 2004. Mr. Hughes explained that for that reason, the 2004 budget required a number of significant expenditures and non-tax revenue adjustments in order to comply with the State-imposed levy limit and loss of MVHC Mr. Hughes noted the levy limits had been eliminated by the State for 2005. He added this meant the Council could establish a property tax levy without restrictions from the State. Mr. Hughes continued that this would give the City an opportunity to consider two significant changes to the General Fund Budget. The first would be to base the 2005 Budget on the assumption that the MVHC program will not be funded in 2005 so the City levy should be adjusted accordingly. Mr. Hughes added that this approach would safeguard the City from future dependency upon State aids. Secondly, the City could Minutes/Edina City Council/Special Meeting August 17,2004 eliminate the issuance of equipment certificates (a form of borrowing) in 2005 and instead include the full cost of the equipment replacement program within the General Fund. He added this would save interest expense that not need be incurred. Mr. Hughes noted the City had issued two-year equipment certificates in 2003 as a way to manage the budget within restrictive levy limit constraints. Mr. Hughes stated the 2005 General Fund Expenditures would be $24,038,621, which represented a 6.32 percent increase from 2004. However, he explained it was important to understand it was staff recommendation not to issue equipment certificates in 2005 which had the effect of increasing expenditures in the General Fund. If equipment certificates were to be issued, the General Fund increase would be 3.67%, but the debt service funds would also increase a corresponding amount. Mr. Hughes reminded the Council that a number of accounting changes were implemented in 2004 as required by GASB (Government Accounting Standards Board) that need to be kept in mind when doing budget comparisons from year to year. Mr. Hughes said a total property tax increase for 2005 of 4.96% was proposed which included the General Fund levy and the debt service levies. He stated the General Fund tax levy would increase 7.95% (exclusive of the debt service levies). Mr. Hughes again pointed out these calculations were based upon not issuing equipment certificates. He explained if the Council decided to issue such certificates the 2005 General Fund levy would be 4.31% with a corresponding increase in the debt service levy. In addition Mr. Hughes noted the proposed levy assumed no 2005 MVHC and included this amount in the budget to arrive at the 4.96% increase. If the Council were to assume it would receive its 2005 MVHC allocation the increase in the levy would be at 4.74%. The Council discussed the various options for the 2005 Budget. Discussion included whether to leave equipment replacement in the General Fund or issue equipment certificates in 2005, the possibility of rebating the MVHC if it were to be received in some form in 2005; whether or not a financial workshop for the Council was needed; areas that could be looked at for potential savings in 2005; and when to review the City's enterprises. Human Relations Commission Presentation Wayne Prozniak, Chair, Edina Human Relations Commission, reviewed the process the Human Relations Commission used in arriving at their recommendations for Human Services Funding as follows: Senior Community Services $26,250 Cornerstone 15,100 VEAP 16,000 Women In Transition 5,200 Minneapolis Mediation Program 5,000 Ministry for Healing&Wholeness 5,180 Minutes/Edina City Council/Special Meeting August 17,2004 The Bridge 4,000 Ready For Success 2,850 Store to Door 2,660 $82,240.00 Mr. Prozniak noted this proposed budget represented a 4.9% increase over the 2004 recommendation with one new program. He outlined the requests for the RPC and Edina Resource Center: RPC 22,736 Edina Resource Center 33,372 Sharon Ming, Human Relations Commission member gave a brief update on the status of the RPC ad hoc committee and the work that has been done during the past year. Linda Kieffer, Edina Public Art Committee Chair explained the Committee's request for funding. Ms. Kieffer stated their hope to install a permanent pedestal in front of each department with appropriate sculptures, and the desire to commission a large stained glass panel to hang in the entrance lobby. The Council briefly discussed the Committee's request with the suggestion that a matching fund be sought. Mayor Maetzold reminded the Council there would be a Truth In Taxation Hearing in December 2004, and the Council would adopt the 2005 Budget at its regular meeting later in December 2004. Motion made by Member Housh and seconded by Member Hovland to close the Year 2005 Budget Hearing. Ayes: Housh, Hovland, Masica, Maetzold Motion carried. There being no further business on the Council Agenda, Mayor Maetzold declared the meeting adjourned at 6:50 P.M. ity Clerk 3 i -THIS PAGE LEFT BLANK INTENTIONALLY-