Minutes - Council Work Session - 07/08/2014

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Finance Director Lund reviewed the staff report, starting with the budget notes. Based on the very preliminary (working document) 2015 budget, the levy would be $8,648,123 for the General Fund and EDA Fund, an increase of $1,324,610. The total levy would be $10,147,264 (including debt service) for an increase of $1,582,923. The total levy including $1 7 million in debt service for road funding with a 20% assessment would be $10,301,571, or an increase of $1,737,230. Finance Director Lund presented the levy breakdown and explained the majority of this increase results from dissolving the HRA of $207,802; decrease in building permit revenue of $208,293; engineering revenue decrease of $195,000; equipment certificates or capital items of $228,478; no longer having TIF 4 of $275,000; personnel increases of $234,301; and COLA, PERA and health adjustments of $152,485. She pointed out that of the $1,582,923 increase, these one -time expenditures and decreases total $1,501,359. With the proposed budget, the estimated tax capacity rate would be 46% and last year's tax capacity rate was 44.235 %. Finance Director Lund reviewed these percentages compared to like cities, noting the average is 45 %. She stated Coon Rapids has a $2.5 million franchise fee that goes into their General Fund and Champlin has a franchise fee of $655,000 that goes into their General Fund. Finance Director Lund presented a breakdown of the levy and bonded debt. Mayor Pro Tem Backous asked why engineering revenue is being decreased. Finance Director Lund explained it was decreased because a lot of engineering work has now been outsourced. Mayor Pro Tem Backous suggested using last year's figure because road projects will be done this year. Councilmember LeTourneau asked about the decrease in building permit revenue. Community Development Director Gladhill stated this is a more conservative estimate because of unknowns relating to where projects will be in the queue next year. He noted that some commercial projects were anticipated in 2014 but did not move forward, such as McDonalds. Because of that, staff is planning conservatively and can `ramp up' if more building is experienced. Community Development Director Gladhill stated he thinks a more conservative approach is the best to take at this point. He noted that in addition to reducing this level of revenue, community development expenses have also been reduced. Councilmember Riley stated he supports taking a conservative approach as long as it includes the best estimate of where it may end up. Community Development Director Gladhill stated the revenue forecast can be raised, but that would also increase expenses. City Administrator Ulrich stated staff will refine the budget to find a realistic number that remains conservative. Mayor Pro Tem Backous stated the City is to just cover costs so it may be revenue neutral. City Council Work Session / July 8, 2014 Page 2 of 10