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HomeMy WebLinkAbout2.c. 2003 Budget IssuesCITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION COMMITTEE OF THE WHOLE MEETING DATE: March 13,2003 AGENDA ITEM: 2003 Budget Issues AGENDA SECTION: PREPARED BY: Jeff May, Finance Director && 2,.- C A GENDA ff ATTACHMENTS: General Fund Balances Memo, Budget APPROVED BY: Update Memo, Staffing Memo from Paula Graff, 1/15/03 Committee of the Whole Budget Update For your discussion this evening is the City's 2003 budget status in relation to the`'State's deficit situation. Attached for your consideration and discussion is a memo outlining some of the issues and how the City might be able to address them. This is an item that you will be updated on a monthly basis as the State addresses their deficit situation and how that will impact the City. Also this evening we will be discussing the City's General Fund balance and the use of some of those funds in relation to the proposed Chippendale Avenue project. RECOMMENDED ACTION: Discussion only. COUNCIL ACTION: MEMORANDUM DATE: February 11, 2003 TO: Mayor Droste Council Members DeBettignies, Riley, Shoe - Corrigan, Strayton Gary Kalstabakken, Interim City Administrator FROM: Jeff May, Finance Director SUBJECT: General Fund Balances Staff would like an opportunity to discuss fund balances with the Council at the March 13 Committee of the Whole work session. This discussion will actually precede the discussion on budgets and will be tied into that discussion. Earlier this year the State Auditor released a report on city fund balances. In this report the Auditor used figures that showed many cities to have excessively high fund balances, the City of Rosemount included. The numbers that were used and how they were used do not completely agree with how we have typically calculated the percentage of fund balance that we have available. Her numbers show that we have an 82 % unreserved fund balance as a "Percent of Total Current Expenditures ". This number includes not only the General Fund but all Special Revenue funds as well. This is somewhat high because if you take our General Fund fund balance and compare it to our "next year's" budget, which is a fairly accepted way of looking at fund balances and how they relate to managing cash flow, the percentage is closer to 69 %. We understand that this number is still high in accordance with the State Auditor's guidelines but not nearly as high as the 82% number. To give the Council a bit of history, 7 to 10 years ago our fund balance was in the 20% to 25% range and was a cause of concern to the City and to its financial advisors. Through prudent budgeting practices and steady growth we have been able to build that fund balance number to its current level. We have always said that the optimum range is from 45% to 60 % for a number to strive for. We have exceeded that number mostly because of some of the largest growth the City has ever encountered the last 3 to 5 years. General Fund Balances — Page 2 The State does look at this number closely and has talked about penalizing cities for excessive fund balances for the last 15 to 20 years. That has never happened and I would hope never would but I believe that we need to be proactive in dealing with the situation. This year we have an opportunity to take advantage of a situation with our Chippendale Avenue project and do a 2 -year project in one year and minimize the time people are inconvenienced with the construction on this street. Doing this will also allow us to "wisely" utilize some of these reserves and bring our fund balance down to a more acceptable level without adversely impacting any budget or any other projects. As a matter of fact, doing this project this year and utilizing reserves may also help deal with our State Aid losses into next year as well. In 2004's Street CIP budget there is $565,000 allocated for the Chippendale Avenue project. If we do this project this year and utilize _reserves we will free up the $565,000 in next year's levy to address the shortfalls we may be experiencing. I am not saying that we want to do that - we would much rather look at another street project that is on our list to do — but if levy limits are put into place that would not allow to make up for our losses we would have a way of addressing $565,000 of the approximate $800,000 we would be looking at next year. Based on these thoughts I would like to recommend taking a total of $1,000,000 from the General Fund reserves and moving it to the Street CIP fund with $750,000 to be used for the Chippendale Avenue project and the remaining $250,000 to be saved for future street projects. By lowering the General Fund reserves we will decrease that percentage from 69 % to 56% of our 2003 General Fund budget and put us more in line with an acceptable figure in relation to the State's guidelines. Andy will be present to discuss the details of the Chippendale Avenue projects with you on Thursday evening and I will be available to answer any other questions that you may have regarding the fund balance issues. Please feel free to call and discuss these issues with me ahead of time as well. MEMORANDUM DATE: March 7, 2003 TO: Mayor Droste Council Members DeBettignies, Riley, Shoe - Corrigan, Strayton Gary Kalstabakken, Interim City Administrator FROM: Jeff May, Finance Director SUBJECT: 2003 Budget Update For your review is a revised update of the City's 2003 budget and how we may deal with the loss of the State's Local Government Aid (LGA) & Market Value Credit (MVC). At this point in time, under the Governor's proposal, we are scheduled to lose all $402,142 of our LGA and $375,408 of our total $422,457 in MVC for a total loss of $777,550. I have attached a copy of the memorandum that had items discussed at the January 15"' Committee of the Whole meeting. These items totaled $341,747 and addressed much of the dollar amount that we believed we would be losing at that time (the $402,142 in LGA). Staff has identified other areas in the General Fund and the CIP Funds that can be looked towards for savings. At this point in time we are using the terms "delaying" or "postponing" versus cutting. Once the State's legislative session is over and everything is finalized we will bring forward a list of "budget amendments" that the Council will formally adopt that will adjust the budgets to reflect our State Aid losses. The first seven items listed are a repeat of the earlier discussion and the items following will reflect the new items for discussion: 1) $143,142 from the Street CIP — These funds are listed under "CIP Reserves — Future Street Projects" and are not identified for any specific purpose at this time. 2) $114,105 of Additional General Fund Revenues — We have "project" funds that owe the General Fund and the Utility Funds 5% administrative fees. In the 2003 budget the General Fund is scheduled to receive $100,000 of these fees. The fees that we have to pay the General Fund exceeds the $100,000 by $114,105 which we would recommend to use as an offset to part of the LGA losses. 3) $12,000 from the Council Budget for a "Planning Consultant" This was a carryover from previous budgets and has not been identified for a specific purpose in 2003. 4) $ 5,000 from the General Government Budget for "Broadcast of Port Authority Meetings — Because of the uncertainty of the number of meetings the Port Authority will require staff feels that this is not necessary at this time. 5) $30,000 from the General Government Budget for "Cable Television Programming — Staff feels that it would be unwise to add a service that nobody currently has when we could be looking at cutting services in the future. 6) $17,500 from the Community Development Budget for a "Planning Intern" — With the addition of an Assistant Planner the need for a Planning Intern is eliminated for the short term. 7) $20,000 from the Equipment CIP for a "Motor Pool Vehicle" — Staff feels that we can get by keeping one of the old squad cars that are normally sold at auction instead of purchasing a new additional vehicle. 8) $18,000 by delaying the hiring of the new Assistant Planner from 1/1/03 to 4/1/03. 9) $20,000 by delaying the hiring of the new P.W. Maintenance worker from 1/1/03 to 5/1/03. 10)$ 3,000 by delaying the promotion of the Sergeant from 1/1/03 to 5/6/03. 2003 Budget Update — Page 2 11)$ 6,000 by delaying the hiring of a new Patrol Officer from 7/1/03 to 8/1/03. 12)$28,200 savings from renegotiated contract with WSB for engineering services. 13)$19,700 savings for General Fund share of Civil Engineer covered under WSB contract. _ 14)$30,000 by delaying /reconfiguring duties of new Parks person scheduled for 1/1/03. 15)$20,000 savings from hiring of new City Administrator 3/14/03 versus 1/1/03. 16)$ 900 from Administration budget for "Other Equipment" purchased in 2002. 17)$10,000 from the Elections budget for future equipment purchases. 18)$ 1,500 from the Finance budget by canceling national conference attendance. 19)$ 1,000 from C/D budget by reducing planning consultant fees (added Asst. Planner). 20)$ 3,000 from C/D budget for PC Maintenance based on history for that number. 21)$ 5,000 from Police budget for overtime costs to reflect policy changes and adding officer. 22)$ 500 from Police budget to cut back in clothing for reserves, chaplains & CSO's. 23)$ 2,500 from Police budget by canceling career fairs. 24)$ 1,500 from Police budget by canceling IACP national conference attendance. 25)$ 1,000 from Police budget by reducing (not eliminating) training opportunities. 26)$ 500 from Police budget by cutting a contingency in equipment rental not typically used. 27)$ 500 from Police budget for savings on the deer inventory that will cost less than thought. 28)$ 1,000 from Fleet Maintenance budget for conferences & travel not scheduled this year. 29)$ 1,000 from Street Maintenance budget for conferences & travel not scheduled this year. 30)$ 3,000 from Street Maintenance budget for reduction of street sweeping (do more in- house). 31)$ 3,000 from Street Maintenance budget for part-time salaries for summer help. 32)$ 4,000 from Parks Maintenance budget for part-time salaries for summer help. 33)$ 2,000 from P & R budget part-time salaries to closer reflect actual. 34)$ 4,000 from P & R budget to delay purchase of new chairs and tables. 35)$ 1,000 from P & R budget to cut back the Adopt -A -Park program. 36)$ 3,000 from P & R budget to cut back on brochures and special marketing. 37)$ 2,500 from P & R budget to cut back on conferences and seminars. 38)$10,000 from Equipment CIP - PC Printers cut in half — replace only if needed. The grand total of all of these items is $549,047. This leaves a balance of $228,503 to be addressed if we lose the total $777,550. At this point in time staff would recommend using fund balance reserves to make up this difference. We will be changing many of our fees based on discussion earlier this evening as a result of our fee study. I believe that this will increase revenues to the General Fund that will help offset a large portion of the remaining dollars that need to be addressed. All departments are aware of the situation and have been cautious in their spending and will continue to do so. Staff feels that all of the remaining positions need to be carefully addressed and, if at all possible, filled. The attached memo from Paula shows that we do have a lean staff and as we continue to grow that we are being stretched to the limits. The Assistant Planner interviews are going on right now. The Public Works maintenance worker will actually be filling a void that will be created as one of the current workers will be out for an extended period of time this year and possibly into next year as well. The Police Sergeant and Patrol Officer positions bring our staff there to a level that will allow us to better serve the citizens and cut down on some of the overtime currently being experienced. The two Park & Rec positions have still not been finalized as Dan is working on the organizational structure of his department. Those positions will be discussed with you at a later date. Overall, we should be able to maintain an acceptable level of service that our citizens have come to expectwithout adversely affecting any of our operations — for this year. If the governor's proposal goes forward as presented, 2004 and 2005 could be more difficult to deal with if levy limits are very restrictive and the reverse referendum portion of his proposal is enacted into law. In the coming months we will be discussing budgets extensively. MEMORANDUM DATE: March 6, 2003 TO: Mayor, City Council Members, and Finance Director May FROM: Paula Graff, HR Coordinator RE: Staffing of Other Stanton 6 Communities In preparing budget recommendations, it may be helpful to understand what other communities of comparable size have for employee populations. While communities provide a different level of services and therefore the comparison is somewhat contrived, it does demonstrate the leanness of Rosemount's operations in comparison to other Stanton 6 cities. On average, the number of employees per capita for this group of cities is about 1 staff person for every 219 residents. City Population " 2002) # ofFull -time emplo "yes # EE, .per ca ita ' RAMSEY 18,510 54 342.7778 FOREST LAKE 15,000 45 333.3333 CHANHASSEN 22,000 68 323.5294 CHAMPLIN 22,193 76 292.0132 NEW BRIGHTON 22,328 85 262.6824 PRIOR LAKE 16,500 64 257.8125 MENDOTA HEIGHTS 11,434 45 254.0889 WHITE BEAR LAKE 24,325 96 253.3854 CRYSTAL 22,698 90 252.2 LINO LAKES 15,375 63 244.0476 ROSEMOUNT 15,500 64 242.1875 NEW HOPE 20,873 89 234.5281 SHAKOPEE 20,568 93 221.1613 SOUTH ST. PAUL 20,167 93 216.8495 FARMINGTON 13,000 63 206.3492 WEST ST. PAUL 19,405 101 192.1287 NORTH ST. PAUL 11,900 62 191.9355 ROBBINSDALE 14,123 75 188.3067 HASTINGS 18,201 97 187.6392 SAVAGE 21,115 117 180.4701 STILLWATER 15,143 85 178.1529 CHASKA 17,449 100 174.49 GOLDEN VALLEY 20,281 122 166.2377 COLUMBIA HEIGHTS 18,520 116 159.6552 HOPKINS 17,560 111 E8. 1982 CITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION COMMITTEE OF THE WHOLE MEETING DATE: January 15, 2003 AGENDA ITEM: 2003 Budget Update AGENDA SECTION: PREPARED BY: Jeff May, Finance Director AGEN .- "M r4 ATTACHMENTS: Budget Update Memo APPROVED BY: For your discussion this evening is the City's 2003 budget situation in_ relation to the State's deficit situation. Attached for your consideration and discussion is a memo outlining some of the issues and how the City might be able to address them. This is an item that you will be updated on a monthly basis as the State addresses their deficit situation and how that wilh impact the City. RECOMMENDED ACTION: Discussion only. COUNCIL ACTION: MEMORANDUM DATE: January 9, 2003 TO: Gary Kalstabakken, Interim City Administrator FROM: Jeff May, Finance Director SUBJECT: 2003 Budget Update For your review is an update of the City's 2003 budget and how we may deal with the loss of the State's Local Government Aid (LGA). At this point in time, we are scheduled to receive $402,142 in LGA. We do not know how much of this aid we will lose, although it appears likely we could lose all of it. Prior to approving the 2003 budget, staff had identified approximately $500,000 worth of items in the General Fund and CIP Funds budgets that we would could recommend for possible cuts /postponements if necessary. At this point in time we are looking at the following items to address most of the $400,000 in LGA losses: 1) $143,142 from the Street CIP — These funds are listed under "CIP Reserves — Future Street Projects" and are not identified for any specific purpose at this time. 2) $114,105 of Additional General Fund Revenues — We have "project" funds that owe the General Fund and the Utility Funds 5% administrative fees. In the 2003 budget the General Fund is scheduled to receive $100,000 of these fees. The fees that we have to pay the General Fund exceeds the $100,000 by $114,105 which we would recommend to use as an offset to part of the LGA losses. 3) $12,000 from the Council Budget for a "Planning Consultant" — This was a carryover from previous budgets and has not been identified for a specific purpose in 2003. 4) $5,000 from the General Government Budget for "Broadcast of Port Authority Meetings — Because of the uncertainty of the number of meetings the Port Authority will require staff feels that this is not necessary at this time. 5) $30,000 from the General Government Budget for "Cable Television Programming - Staff feels that it would be unwise to add a service that nobody currently has when we could be looking at cutting services in the future. 6) $17,500 from the Community Development Budget for a "Planning Intern With the addition of an Assistant Planner the need for a Planning Intern is eliminated for the short term. 7) $20,000 from the Equipment CIP for a "Motor Pool Vehicle" — Staff feels that we can get by keeping one of the old squad cars that are normally sold at auction instead of purchasing a new additional vehicle. These items total $341,247 of the $402,142 in possible LGA losses. We feel that the additional dollars will be recovered through excess Administrative Fees and /or Building Permit Revenues. 2003 Budget Update — Page 2 One other issue that may need to be addressed in the future is the City's Market Value Credit. These are dollars that we actually levy to the County and the State reimburses us directly thereby reducing tax bills. In 2002, we received approximately $460,000 for these credits. At this point, we are not sure how the State would handle the cut of these credits. If they were to take away the credits the County could recalculate our levy the way it was originally certified or we could possibly just lose these funds as well as the LGA. At this point in time the discussion on this item as been very limited so staff feels that if this were to become an issue later in the year we would look at the current revenue /expenditure situation for possible resolutions or look to using our fund balance to address this issue. We would have sufficient funds to address the market value credit cuts without putting us in a dangerous financial position. We would have to look at budgets in future years if the State did not allow us to recoup the LGA or market value losses in our levies.