Minutes - Council Work Session - 08/27/2024

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Councilmember Musgrove noted that what is happening in the market in regard to wages is beyond their control and the market rate adjustment is an issue that is impacting a lot of cities. She said the market rate increase more than doubled over last year's increase. Councilmember Woestehoff asked if they are under-budgeting for debt services. Finance Director Lund said yes and explained that Anoka County has paid $300,000 on debt and they have refinanced this debt, but the payment is staying the same. Councilmember Specht noted that the 47% increase in tax capacity is hard for him to stomach. City Administrator Hagen shared that businesses had a 46% increase for what was paid in 2024 and they are looking at a 20% decrease in what will be paid in 2025. He said the residential is reading flat as of now. Councilmember Riley stated his original thought was that they needed to revisit all of the positions and equipment items that they had discussed before they knew what the budget would look like; however,many of these positions and equipment items have already been moved out from previous years so revisiting this would not save them very much. He said the firetruck is such a large item for them to fund out of their current budget. He asked if this would make sense to bond or use debt to fund the firetruck. He said he does not want to create a cycle of debt, but he would like to look into this. Finance Director Lund explained that the 2025 road debt will come off for 2026 payable which will be approximately $110,000 that will come back. She said next year may be a better time to bond than this year as they anticipate interest rates coming down. Councilmember Riley noted that this firetruck will be a huge, 25-year asset and he does not know why they would need to fund it out of their current budget. Finance Director Lund stated they could take the first installment for the firetruck out of the budget, and they could look at doing an internal loan to fund it until they are able to issue the debt to pay it back. Mayor Kuzma asked if they will be bonding for capital equipment next year. Finance Director Lund said they are working through the CIP right now which will help them get a better idea of what they are looking at for the next three years of equipment. She noted they may want to look at ten year certificates that will fund three years of capital. Councilmember Musgrove asked if they would be using the internal loan for this year and bond for it in future years or use the internal loan and pay this off through the levy instead of bonding. Finance Director Lund said they could look into both scenarios. She explained that they can look into what amount they need to issue debt for the equipment. She noted that this would be hard for her to answer until they start looking into the 2026 budget. City Council Work Session/August 27, 2024 Page 2 of 12