HomeMy WebLinkAbout2006-06-20 Council Work Session MINUTES
OF THE SPECIAL MEETING OF THE
EDINA CITY COUNCIL HELD AT CITY HALL
JUNE 20, 2006
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 2007 Operating Budget.
Manager Hughes explained the 2006 legislature did not enact any significant changes to
property tax laws. Therefore, the City's 2007 budget planning would not be affected by
levy limits, property tax freezes, or any other provisions that would further restrict the
Council's budget considerations. He added this also meant no corrections had been
made to the law concerning Market Value Homestead Credit (MVHC) so the City must
continue to include in its tax levy amounts necessary to offset this lost aid. Mr. Hughes
also noted 2005 legislation increased the PERA employer contribution which has been
estimated at approximately $90,000 for 2007.
Mr. Hughes reviewed forecasts used in developing the 2007 scenarios, which included:
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 2007
• Insurance Increases-Employee health insurance has an expected increase of
sixteen percent for 2007. The forecast includes a $60 per month per employee
increase toward employee insurance coverage
• Contractual Services, Commodities - A three percent across the board increase in
contractual services and commodities and a three percent increase in central
service expenses were projected for 2007
• Budget Adjustments-Department Heads' proposed new programs/expenditures
for 2007
Revenues:
• Non-Tax Revenue - In past years, the City has followed a conservative approach
in forecasting revenue from "non-tax" sources. Based upon past experience the
City was projecting additional revenues from building permits, ambulance fees
and investment earnings due to higher short term interest rates. The added
revenue would reduce dependence upon property tax revenues to support the
2007 budget
• Budget Reserves - Previously the Council discussed the possibility of applying
some of the 2005 surplus to the 2007 budget. The bulk of the 2005 surplus was
Minutes/Edina City Council/Special Meeting June 20, 2006
retained in the General Fund as a result of the Council's discussion pending final
decisions on the 2007 Budget. Caution must be exercised in using surplus funds
for ongoing costs which while reducing the 2007 levy could increase the 2008
levy disproportionately. Agencies that assign bond ratings question the use of
servers for that purpose. The suggestion was to apply General Fund surplus to
areas of the 2007 Budget that would be non reoccurring such as the
comprehensive plan update.
Mr. Hughes reviewed the following calendar for the 2007 Budget development:
• July 28, 2006 - Budget submitted to Council
• August 1, 2006 - Budget hearing
• September 5, 2006 - Council Resolution setting maximum tax levy adopted
• December 2006 - Truth in Taxation hearings and final budget adoption
Mr. Hughes reviewed possible budget scenarios. The first one included all the
requested 2007 new programs/expenditures and would result in an approximate 8.29
percent increase in expenditures and corresponding 7.84 percent increase in taxes. The
third scenario included Mr. Hughes recommendations for new programs/expenditures
would result in a 6.54 percent increase in expenditures and a corresponding 4.68
percent increase in taxes.
The Council briefly discussed proposed 2007 Budget scenarios, gave direction about the
percentage increases they would feel reasonable for 2007; and reviewed the proposed
schedule for 2007 Budget preparation and adoption.
Mayor Hovland declared the meeting adjourned at 6:55 p.m.
Respectfully submitted,
n
ebra Niangen, City Clerk