HomeMy WebLinkAbout2005-07-19 Council Special Meeting MINUTES
OF THE SPECIAL MEETING OF THE
EDINA CITY COUNCIL HELD AT CITY HALL
July 19,2005
5:30 P.M.
ROLLCALL Answering rollcall were Members Housh, Hulbert, Masica, Swenson and
Mayor Hovland.
Mayor Hovland said the purpose of the special work session was to review issues that
will affect the preparation of the City's 2006 Operating Budget.
Manager Hughes suggested the Council keep in mind while reviewing the budget
scenarios that it will consider the issuance of bonds for the purpose of constructing
gymnasiums on the Community Center campus. The first year's debt service for the
bonds will be levied in 2006. Therefore, the effect of the bonds on the taxes should be
considered when evaluating the 2006 general fund budget.
Mr. Hughes stated the State of Minnesota Legislators adjourned their Special Session
after passage of a number of bills affecting Minnesota cities. He noted potential effects
included:
• No levy limits for 2006. As with 2005, the City's 2006 property tax levy will not
be restricted by the State.
• No "Turbo Charged Truth In Taxation'. The Governor had proposed new
process whereby the annual Truth in Taxation notice would include a "tear off"
for the purpose of allowing taxpayers to initiate a referendum allowing voters to
override a Council-approved levy increase that was not enacted by the
Legislature.
• No property Tax Freeze. Earlier in 2005 the Senate had passed legislation calling
for a property tax freeze, however, this legislation was not included in the bills
adopted during the special session.
• Market Value Homestead Credit (MVHC) not funded. In 2005, the Council
correctly predicted this would not be funded and it was not included in the
State's Budget legislation, so the recommendation was to assume it would be lost
aid in 2006 also.
• Increase in Pension Contributions. Significant increases were approved in the
legislation for both employer and employees contributions to PERA. The
employer contribution for police and fire employees will increase by almost 13%
and the employer for other public employee funds will increase by 8.5%.
Additional increases were planned for the next several years. The 2006 increase
will require a budget increase of$110,000.
Mr. g
Hughes reviewed forecasts used in develo in "the 2006 scenarios, which included:
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Minutes/Edina City Council/Special Meeting July 19,2005
Expenditures:
• Wage and Employee Benefits - a three percent wage increase for our employees
is included plus an additional lh% to account for employees who will go through
salary steps in 2006
• Insurance Increases-Employee health insurance has an expected increase of
twelve percent for 2006
• Contractual Services, Commodities - A two percent across the board increase in
contractual services and commodities and a three percent increase in central
service expenses were projected for 2006
• Budget Adjustments-Department Heads' proposed new programs/expenditures
for 2006
Revenues:
• Non-Tax Revenue - Based upon the last three years, a higher revenue projected
has been forecast, principally from building permit and ambulance fees, plus
higher revenues from investment earnings were projected due to higher short
term interest rates. This would reduce dependance on property tax revenues to
support the 2006 budget.
Mr. Hughes reviewed the following calendar for the 2006 Budget development:
• July 19, 2005 - Budget Assumption Work Session
• August 12, 2005 - Budget submitted to Council
• August 16, 2005 - Budget hearing
• September 6, 2005 - Council Resolution setting maximum tax levy adopted
• December 2005 -Truth in Taxation hearings and final budget adoption
Mr. Hughes reviewed possible budget scenarios. The first one included all the
requested 2006 new programs/expenditures and would result in an approximate 8.76
percent increase in expenditures and corresponding 9.03 percent increase in taxes. The
third scenario included Mr. Hughes recommendations for new programs/expenditures
would result in a 5.48 percent increase in expenditures and a corresponding 4.60
percent increase in taxes.
The Council briefly discussed the pros and cons of increasing the Council and Mayor
salaries; gave direction about the percentage increases they would feel reasonable for
2006; and reviewed the proposed schedule for 2006 Budget preparation and adoption.
A hearing was scheduled for 5:00 p.m. on August 16, 2005, before the regular Council
meeting.
There being no further business, Mayor Hovland decla d t e meeting adjourned at
6:55 p.m.
Debra Ma4en, City Clerk