BUDGET WORKSHOP MEETING TAPE 1 OF 1
November 14, 2007 Side A
0004 Mayor Barbara Larsen called the workshop meeting to order at 7:02 p.m. The
following were present: Councilmembers Bean, Yund, Marcil and Smith. Staff
included Public Works Director David Vorse, Chief Bob Heuer, Sergeant Scott
Neves, Officer Branden McNew and Clerk-Treasurer Ryana Covington.
Members of the public included: Mike Mask and Mr. and Mrs. Jack Riley
0046 Covington distributed a summary of requested increases affecting General Fund
expenditures, which totaled $170,481.00 and a summary of the total expense
impacts, which included mandatory wage and benefit costs.
The estimated revenues for 2008 equal $1,303.780, with projected expenses being
$1,532,693; a deficit of $228,913. This deficit includes budgeting for an ending
fund balance of $135,000 as directed by council at an earlier meeting.
Covington stated she has been monitoring revenues and feels it would be
appropriate to increase the projected beginning fund balance an additional
$80,000, which would still leave a deficit of $148,913. She cautioned that
evaluation of beginning fund balance estimates is contingent on expense
projections and emergency expenditures could adversely impact projections.
0507 Councilmembers reviewed proposed projects as outlined by staff. Covington
stated she did not include training travel expenses on this list. Councilmembers
concurred they considered travel expenses to be an operating expense (to allow
for ongoing certifications, etc) and not subject for this review.
Covington also stated AWC RMSA has advised that there will not be an increase
in the city’s liability insurance cost; and the budget has been adjusted to reflect
0938 Yund noted that the city will only be getting an additional $2698 for property
taxes because of the State’s 1% tax limitation initiative. Bean added this levy cap
does not even keep up with cost of living increases for employees, not to mention
operating increases for fuel, utilities and inflation. Yund said that the taxpayers
voted in the initiative to keep taxes from increasing, however reassessments of
property values still increase taxpayer costs, even though the city does not benefit.
If this continues, there will come a time when services will need to be reevaluat-
1256 Covington stated that repairs to the RV disposal will be completed this year, to
avoid a health hazard situation.
1320 In answer to Smith’s question, Vorse stated the real estate excise tax currently is
slated for a street project, however this revenue source can be included in other
funds. Marcil stated he did not want to eliminate the crack seal project on
Huntington Avenue South because lack of maintenance will create a larger
problem, requiring greater funding to repair.
Marcil suggested eliminating the following projects from the 2008 budget
proposal: $25,000 for data processing software to update the budgetary processes
to Windows based (from DOS), $8,000 to chip seal the gravel streets, $42,000
Phase II downtown parking improvements; $10,000 Phase III entry feature
Chief Heuer suggested to not fund the vehicle replacement, in the amount of
Vorse stated the public works department is not able to crack seal the concrete
portion of Huntington Avenue South because they do not have adequate
equipment. However his department could crack seal the asphalt portion of the
roadway, which would provide a cost savings of $3,000 for that project. If a
contractor did the work, it would cost $4895 for the asphalt section, not including
tax and approximately $7100 to do the concrete section. In answer to Mask’s
question, Vorse explained the process to crack seal the concrete sections.
In answer to Councilmember Smith’s question, Covington stated that the city
attorney did not request an increase in his contract, however there has not been an
increase over the past few years. Councilmembers agreed to leave the increase, as
Councilmembers discussed the proposed upgrade to the phone system. By
consensus, it was agreed that recent this equipment failure warrants this purchase.
In answer to Yund’s question, Vorse stated he has not researched the ‘Crime
Stoppers’ program, available through the county. The $1500 proposed for the
Park Department is intended for signage and a reward system for reporting
In answer to Mask’s question, Vorse stated he has not contacted the city’s
insurance carrier regarding the vandalized street lights along the Riverfront Trail.
Yund felt it would be better to use an existing process, such as Crime Stoppers
rather than developing our own system. Neves explained the elements of the
county Crime Stopper program.
In answer to Marcil’s question, Covington stated if the council provided for the
development of an archive storage area in the south end of the concrete building
currently housing the police evidence room, she would need shelving and some
type of heat source to protect records. Shelving would need to be of industrial
strength to support heavy boxes. Yund stated the room could accommodate three
shelving sections of 12’ to 15’ long. Vorse explained the electrical capabilities in
that building and Yund stated that an industrial heater would need to be installed
to eliminate dampness in the building.
Councilmembers summarized eliminating the following items from the 2008
- $15,000 for the police vehicle lease
- $25,000 for the budgetary data processing software
- $8,000 for chip seal of gravel streets
- $42,000 Phase II roadside development – downtown parking
- $10,000 Phase III roadside development – entry feature
Vorse stated elimination of the reward program would save an additional $1500.
In answer to Marcil’s question, Bean stated that Public Works employees will be
getting a 2.43% increase in accordance with their collective bargaining
agreement (CBA). Per CBA, Clerical employees will receive a 4.43% increase,
which includes a market adjustment and police employees will receive a 4%
In answer to Smith’s question, Vorse stated the building maintenance budgetary
request of $10,000 does not have a specific project identified. However,
recommended projects include reroofing the main City Hall structure and exterior
painting at City Hall.
Councilmembers discussed reducing the Huntington Avenue South crack seal
project by $3,000. This would require public works personnel to do the asphalt
Smith recommended reducing the building maintenance to $5,000. He noted
this would provide enough funding to complete the exterior paint project.
3904 Councilmembers discussed the proposed supervisory COLA increase of 4%.
Yund and Smith recommended that this amount not be reduced. They noted there
was a very small amount of savings between the 2.43% and the 4% COLA and
they felt staff salaries need to keep up with other classification increases.
4128 Yund suggested the beginning fund balance be increased an additional $32,000 to
allow for a street project to be completed, if revenues are received. If revenues
are not realized, the street project would not proceed.
4348 In answer to Yund’s question, Covington stated the city would know the actual
beginning fund balance by mid-January. Yund suggested the police vehicle lease
be retained in the General Fund and the beginning fund balance be increased an
additional $15,000 – to a total of $515,000. If funds are not realized, the project
would be eliminated.
In answer to Marcil’s question, Heuer stated he does not have adequate funding in
the Local Criminal Justice Fund to include lease expenses for a new vehicle.
By consensus, Councilmembers made the following amendments to the General
Fund 2008 proposed budget:
* Increase the General Fund beginning fund revenue projections to $515,000
* Reduce building maintenance allocations to $5,000 (General Fund)
* Eliminate $1500 for the reward program (Park Fund)
* Eliminate $25,000 for the computer software upgrade (General Fund)
* Eliminate $8,000 to chip seal gravel streets
* Eliminate $42,000 for Phase II downtown parking improvements
* Eliminate $10,000 for Phase III entry feature project
* Reduce $3,000 from the Huntington Avenue South crack seal project. City
personnel will be used to complete the asphalt section of this project.
* Retain the proposed street project and the police vehicle lease in the 2008
budget and if the projected beginning fund balance is not realized, these projects
will be eliminated.
Side - B
4947 Stormwater Fund – Covington stated annual revenues are approximately $40,000.
Proposed expenses for 2008 total $86,975.
Covington distributed a summary showing current stormwater rates and impacts
to those rates for increases of 25%, 50% and 75%. Vorse noted that stormwater
rates will need to be increased to fund project requirements to retain the city’s
flood protection level.
5254 Vorse stated projects include tree removal along the levee ($10,000), levee
certification ($20,000) and Lions Pride Park erosion mitigation ($25,000). He
stated that the North Street Stormwater Phase IV project has already been
eliminated from the proposed projects for 2008 fiscal year.
Vorse stated councilmembers had denoted the levee certification and tree removal
as the highest priorities. If the Lion’s Pride Park mitigation project were also
removed from the 2008 budget, the deficit would be reduced further.
Vorse suggested appropriating funding to complete the levee certification and
remove a portion of the trees along the levee. If the projects could be reduced by
$10,000, an increase of 25% would be appropriate.
In answer to Mask’s question, Vorse stated he intended to use county jail crews to
remove the trees. This is the least expensive labor force. Mask suggested the use
of volunteer forces, if the city’s liability insurance carrier will allow. Vorse stated
the county jail crew is fully insured and have the equipment to do the work.
Mask spoke in favor of increasing the stormwater fee to meet the demands of
these projects. Bean spoke in favor of increasing the fee by 50% to allow for
adequate funding to meet emergency situations.
Councilmembers agreed to trim expenses to meet the lesser percentage, however
to increase the fee 50% of the current rate. This will eventually create reserve
funds for emergency repairs. Mask stated the city could always consider a
decrease in future years.
In answer to Mask’s question, Vorse explained that stormwater fees are based on
the amount of impervious surfaces. Mask asked if businesses could be exempt
from the increase. Yund stated that eliminating the cost share would place an
unfair burden on residents.
Councilmembers discussed the impact on commercial customers if the fee were
increased by 50%.
By consensus, councilmembers directed the clerk to amend the rates by increasing
the current rate an additional 50%. This would bring the residential rate from
$2.50/month to $3.75/month.
6359 Vorse summarized as follows:
- Fund the certification of the levee, using the Army Corps of Engineer
- Removal of only those trees required by the regulatory agencies. The
remaining tree removal project will be phased in subsequent years.
- Delete funding for mitigation of Lion’s Pride Park damage
6410 If council is concerned with mitigation of Lion’s Pride Park storm damage, Vorse
suggested the city could fund the engineering at a cost of $5,000. This would
allow the engineer to complete the shorelines environmental permitting process.
Bean voiced concern that if the city expends funds to fill the hole and does not
have adequate funds to allow proper repair of the damage (as recommended by
the city engineer), then it would be wasted efforts. She noted that the underlying
problem would still exist and subsequent high water would wash out any efforts
the city had attempted.
By consensus, councilmembers agreed to include $5,000 in the budget for
engineering costs at Lion’s Pride Park, however the project would be ‘on hold’
until adequate funds are available.
6730 Mask suggested the fee be increased to 55% to allow completion of the project.
Vorse stated the 50% increase would provide the needed revenue, however the
city would need to wait until the accumulation is reached. Mask stated if the
Corps of Engineer require total removal of the trees, it would be prudent to
increase 55% to allow for the additional revenue. In answer to Mask, Covington
stated that an increase of 55% would be $3.88/month for residential customers.
Smith stated the Corps of Engineer will allow the city time to remove the trees
and Vorse noted that the levee certification is a cost that the city will need to plan
for every ten years. In answer to Marcil’s question, Vorse stated that the Corps
of Engineer conducts an annual inspection, at not charge to the city.
7130 Councilmembers reviewed the Water – Sewer Fund. Covington stated she has
amended sewer serve charge revenues an additional $30,000. In addition, the
beginning fund balance has been amended to reflect current financial information.
The water service projected revenues still includes a 7% increase in rates,
however Covington continues to work on an amended rate structure, as requested
by the council at an earlier workshop meeting.
Covington stated the budget presented includes revenue projections of $1,373,200
and expenditure requests of $1,399,459; a deficit of $26,259. This would leave
an ending fund balance of only $20,000 in the Water Fund and $20,000 in the
Sewer Fund. Covington stated these projected ending fund balances will be
inadequate to fund any emergency expenses or repairs.
Covington outlined projected revenues based on a percentage increase of water
and sewer rates as follows:
10% = $29,600 (additional 3% water and 10% sewer)
13% = $59,570 (additional 6% water and 13% sewer).
For clarification, water increases would be in addition to the 7% already included
in estimated 2008 revenue projections, for a total of 10%, or 13% as recommend-
ed by councilmembers.
7802 In answer to Marcil’s question, Covington stated she is still attempting to
schedule a meeting with the Regional Utility Board to review those budgets prior
to council’s first reading of the budget.
7850 Yund advised that he would not be opposed to the higher percentage rate, to allow
for a more adequate reserve. He still favors a sliding scale type of rate structure,
based on usage. Covington distributed a summary showing the average number
of customers for each 100 cubic feet of usage. The majority use less than 1000
cubic feet of services each month.
8231 Covington explained the rate structure currently being developed. In the proposed
rate structure, the ‘base fee’ will generate enough revenues to fund basic O&M
costs. The cubic feet charge will generate revenues to fund the cost of services
paid to the regional utility funds. By developing such a rate structure, the city can
more effectively explain to customers the reason for any rate increases. As an
example, if O&M costs increase, the ‘base fee’ will need to be increased to meet
those demands. In addition, the rate structure would represent costs for each
utility service. In the past, sewer charges have not been adequate enough to fund
sewer O&M needs and water revenues have supplanted those deficits. Covington
provided a detailed explanation of the proposed rate structure. Vorse stated the
proposed structure would create a higher cost for large utility consumers and
some customers may even see increases exceeding 30%. Yund stated his goal is
to lessen the impacts for consumers using the least amount of services.
Vorse stated the proposed new rate structure does not include a sliding
scale, based on usage, as Yund had recommended. Yund’s request included
separate scales for higher use customers. The proposed rate structure charges
each customer the same amount per 100 cubic feet of usage. In addition, the rate
structure for sewer services would still be based on water use consumption.
8517 Vorse noted that in coming years, the State may require cities to impose rate
structures that would encourage conservation of water. State mandates from the
Water Efficiency Rule, will be requiring cities to obtain a 10% water loss by year
8805 Yund stated he feels the proposed rate structure is moving in the right direction,
but in the future, he still supports a sliding scale type structure. By consensus,
councilmembers also stated they would like to promote water conservation and
for this reason, the new rate structure would not include any separate summer
sprinkling rate allowance.
8917 In answer to Mask’s question, Vorse stated a 13% increase in water and sewer
rates would equate to a $10/month increase, not including tax and stormwater
9134 In answer to Marcil’s question, Covington stated that no rate increases are
proposed from the Regional Utility Board. In addition, the board will be
reviewing the possibility of paying off some of the loan debt.
9354 In answer to Mask’s question, Covington stated even with the 13% rate increase,
the city would still be using a portion of the beginning fund balance toward 2008
expenses. The city also used a portion of the fund balance in this current fiscal
Vorse suggested that if the $10,000 is spent on the billing system in 2008, then
the same amount can be allocated in 2009 for meter upgrades.
9831 Mask stated he would support a 13% increase in utility rates to cover the budget
deficit. Bean reminded him that if the city adopts a new rate structure, some
customers may have much higher increases in their rates.
Covington asked if council wants to impose a blanket percentage increase, using
the current rate structure or do they want to modify the rate structure as described
By consensus, councilmembers favored the amended rate structure.
Mayor Larsen adjourned the meeting at 8:30 p.m.
Mayor Barbara Larsen