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HomeMy WebLinkAbout2003 07-10 FCM• Financial Commission Meeting Minutes July 10, 2003 1. Call to Order The meeting was called to order by Chair Escher at 6:30 PM 2. Roll Call Members Present: Chair Escher, Commissioners Elftman, Nemec, Peterson, Wilkinson and Hruska. Commissioner Blamey arrived at 7:30 PM City Council Liaison: Council Member Bob Peppe Others Present: City Manager Michael McCauley, Fiscal and Support Services Director Douglas Sell and Assistant City Manager Curt Boganey 3. Meetins Minutes Motion by Commissioner Wilkinson, Second by Commissioner Hruska to approve the meeting minutes of June 16, 2003. Motion carried. 4. Annrove Agenda Motion by Commissioner Hruska, Second by Commissioner Wilkinson to approve the • agenda as presented. Motion carried. 5. Budget Discussion Chair Escher summarized the discussion to date and reviewed the budget materials submitted by the City Manager in preparation for this meeting. City Manager McCauley discussed several issues related to the 2004 Budget, potential property taxes, franchise fees and budget reductions. He identified the potential impact of a $560,000 property tax increase on an average home in the City to be $32-$60. He stated that these are subject to the tax capacity rates and final tax capacity values to be determined later this year. He indicated that an increase in property taxes to homeowners would likely be more significant as the tax capacity value increases and the limited market value cap is diminished. City Manager McCauley indicated that the $560,000 tax levy increase is a fraction of the amount the legislature permitted in the tax bill. The tax bill permits the City to increase the property tax levy to 60% of the lost LGA in 2004. The total amount the City could levy is in excess of $1.0 million. City Manager McCauley reviewed the impact of a potential franchise fee on the community. Such a fee would generate approximately $600,000 of additional income. The suggestion is that should such a franchise fee be recommended, the proceeds would be dedicated to the street reconstruction program. This fee would probably apply to all property types including those that are currently exempt from property taxes. • Commissioner Peterson asked about the impact of the budget reductions on current or pending labor contracts. City Manager McCauley indicated that the city is currently paying maintenance personnel at a level that is in the bottom quartile. Police contracts currently pay in the mid-range of comparable communities. City Manager McCauley indicated that the increased property taxes are an item eligible for deduction on individual income taxes as an itemized deduction. The franchise fee does not receive the same treatment. Chair Escher asked if the street reconstruction projects would be accomplished every- other-year rather than every year. Council Member Peppe stated that street reconstruction is a high priority for the Council and this is why the Council has maintained this activity at its current level. City Manager McCauley indicated that every- other-year does present the possibility of some savings over two small projects each year. However, he indicated there is the problem of staffing up/down every-other-year to accommodate this approach. In the end, he believes it maybe more costly to move to an every-other-year program. Commissioner Elftman asked about the "Delinquent Taxes" line and the impact. Mr. McCauley explained that the City dos not collect 100% of the taxes levied in any given year. This allowance permit a realistic explanation of actual collections for cash flow purposes. i City Manager McCauley reviewed the areas of the budget he and staff have identified for potential reductions in 2004; the basic budget assumptions for the 2004 Budget; the ongoing efforts to identify additional resources or areas for cost reduction; and, issues concerning wages and benefits. He explained that there is concern that the November state forecast of state revenues may find the state further behind. In turn, this may lead the Governor to further un-allot amounts already committed in 2003 should the state's revenues fall short. This may reduce the City's share of LGA and/or MVHC for 2003 in 2003. Motion by Commissioner Peterson, Second by Commissioner Wilkinson that the Financial Commission is opposed to using City reserves to fund operations and, that the Financial Commission favors the continuation of the street improvement program at its current levels. Motion carried. Chair Escher asked that this recommendation be carried forward to the City Council. Chair Escher indicated that there was consensus among the Commissioners that the direction currently be pursued was acceptable. He suggested that formulation of the 2004 Budget continue in the direction identified by the City Manager. 6. Next Meetine The next Financial Commission meting is scheduled for Monday, August 4, 2003 beginning at 7:00 PM in the Council/Commission Conference Room at City Hall. 0 • 7. Adjournment Motion by Commissioner Blarney, Second by Commissioner Hruska to adjourn the meeting. Meeting adjourned at 8:10 PM. • 0