Council Worksession on Budget: 12/6/18

The Council and City Administration spends the better part of each year gathering information, looking at trends,  and trying to predict the future by setting priorities for the upcoming years. This includes a number of public worksessions throughout the course of the year.

The City Council had the final of those worksessions today (Thursday) in preparation for the December 12th Truth in Taxation Hearing at 6:30pm, just prior to the regular City Council meeting.

At this session Councilors looked at the (more or less) final numbers for the past year so the Council could choose a revised number to bring forward at the Truth in Taxation meeting this coming Wednesday.

A few things to know about the process:

1. The City has a "Long Term Priority" list. This includes projects that we do not have on any calendar, but that we know will have to be done at some point. An example for this list would be street reconstruction based on a roughly 30-40 year rotation.

2. The City has a "Five Year Project" list that includes all of the major projects that the City has put on the schedule and calculated into its future debt load. These projects are, in no particular order:
-1st St. Reconstruction from Library to the west side of town. This project will include needed utility work under the street as well as resurfacing/subsurface work.
-5th Ave. W Reconstruction, which is a county road, but it has City infrastructure under it, so we need to budget for replacing that infrastructure when the road is redone by the county.
-Hwy 61 Reconstruction. The vast majority of the project cost will be footed by MN DOT and through grant funds that the City has been able to secure, but the City PUC will be putting in significant resources to replace all of the aging infrastructure under the highway and the City will be putting in funds to make sure that the street lighting and general function of the roadway is what we want it to be.
-MN DNR Boat Launch Project. This project has been approved and funded by the MN DNR and the City is a partner with it. It will effectively move the MN DNR lake access from Artist's Point (Coast Guard Point) to the west end of the Harbor by the existing rubble wall. The City will likely participate in certain amenities that will benefit the Rec. Park and the overall usability of the space, but this is a DNR project and is funded through their budget.
-City Hall/Liquor Store. This item made its way onto the list last year and has picked up steam with conversation in the City starting about where a new City Hall/Liquor Store should be, should they be in the same place, how much office space is necessary, etc. No decisions nor formal conversations have been had about this topic, only the assessment of the current facility's value is roughly equivalent to the cost of getting it to meet our needs. That tied to the feedback from the Liquor Store Manager that the current facility does not meet their needs makes a case.
-Digger derrick truck for City PUC. This is a piece of equipment used in setting poles, digging holes, bucket lifting, and much more. This item has been on the plan for quite a while and has been budgeted for by the PUC.

3. The City has a rolling "Three Year Analysis" of the City budget. This includes two years behind present and two years ahead of present. This year the City looked at the budget (revenue, debt, levy, etc) for 2017 and 2018 to inform our budget for 2019, but also to look ahead to what we expect to need to operate for 2020 and 2021. This is a very helpful tool and the City has been able to follow this analysis pretty closely during my time as mayor, which leads me to believe that it is pretty true to reality.

Ok, so that's the information the Council is armed with going into these conversations. Another few pieces of information so that we are all on the same page:

*In September the Council set the Preliminary Levy at a 5.99% increase over last year's. That means that the City cannot increase it any more than that. 5.99% more than 2018 would be the absolute maximum the City can collect. This is a conservative number that assumes most, if not all of the worst things we can expect would happen.

*There are moving pieces in this year's budget: Revenues for 2018 were set at a high level for the 2018 budget and did not quite make that number, so that is brings revenues down and is reflected in the 2019 budget. This is largely due to the campground operating at near capacity during its operating season and without any way to increase beyond that season, the numbers are starting to flatten out. It is important to note that this is not a problem at all. The campground is still providing a great deal of property tax relief and will continue to do so.

*Another moving part has been employee health benefits, which the City successfully renegotiated this year to provide similar if not the same amount of coverage for employees for significantly less cost. This also will be saving the City money and thus lowering the cost of the City's share of employee benefits.

Due to these changes, which have been formalized since the September meeting, the Council was able to reduce the levy increase to 4.32% before the worksession. Through the scrutiny of the worksession, the Council was able to remove another $15,000 from the budget to get the levy increase down to roughly 2.76%, which is what will be presented at the Truth in Taxation meeting, barring new information that would cause a change.

It is the job of the City Council to be responsible with public money and the current members of the Council take that job very seriously. This post is meant as a snapshot and basic information. More information will be available at the Truth in Taxation Hearing this coming Wednesday. Please feel free to come and listen/give your two cents.

As always, if you would like to ask any questions, just let me know. I am around until the 22nd, when I head out for family Christmases.