06/17/1991 - City Council SpecialIiiiiiirr ,., i4
MEMO TO: HONORABLE MAYOR AND CITY COUNCILMEMBERS
FROM: CITY ADMINISTRATOR HEXES
DATE: JUNE 17, 1991
SUBJECT: SPECIAL CITY COUNCIL MEETING/JUNE 18, 1991
A special City Council meeting is scheduled for 5:00 p.m. on
Tuesday, June 18, 1991, for the purpose of reviewing
recommendations for a second adjustment to the 1991 General Fund
Budget and revised numbers for the 1992 through 1996 capital
improvements program.
A meal will be provided from Apples Restaurant (menu attached) ;
please contact Karen by noon on Tuesday to order the sandwich of
your choice.
All Department Heads will be present and an hour and 15 minutes,
starting at 5: 00 p.m. , should allow enough time to discuss each of
the two agenda items that are outlined in further detail in the
attached memos.
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MEMO TO: HONORABLE MAYOR & CITY COUNCILMEMBERS
FROM: CITY ADMINISTRATOR HEDGES
DATE: JUNE 10, 1991
SUBJECT: BUDGET REDUCTIONS/JUNE 1991
The Legislature has adopted, as a part of the Omnibus Tax Bill
package, yet another HACA reduction in 1991 to be taken from the
December payment. The Director of Finance has verified the
reduction with the Department of Revenue to be $162,575, subject to
a small adjustment. Like the July payment reduction, the general
fund adjustment is 79.9% of that total, while the debt service
levy, major street fund levy and equipment revolving fund levy
combined are 20. 1%. The general fund dollar amount of the
reduction is therefore $129,897 and the other funds total a
reduction of $32,678.
At the March 5, 1991 City Council meeting, the general fund budget
was adjusted by $171,160 of which $154,660 were reductions and
$16, 500 were an increase in park revenues. This budget adjustment
offset legislative action that reduced the July payment of HACA by
$167, 820. There were five (5) positions eliminated as a result of
that budget reduction.
The City Administrator issued a memo to all departments in early
February suggesting that a part of each departmental operating
budget be frozen, including capital equipment, until the
Legislature adjourned and cities knew the implications of the 1991
budget reductions and also budgetary expectations for 1992.
Across all City departments, the services currently being offered
by the City of Eagan are basic. Most all of the services are
considered essential as public safety, both police and fire, or are
expected by the public, such as street and park maintenance,
recreational programs, planning and zoning and inspections.
Support functions, such as administration and finance, provide only
basic support to these operating functions as well. Numerous
cities provide services, such as tree trimming, leaf pick-up from
curbsides and other similar programs, which are clearly less
essential in nature.
Three (3) options are being presented for the City Council to
consider in adjusting the 1991 general fund budget. The first
consideration is a proportionate reduction of the $129,897 across
all general fund departmental budgets. The result of this decision
might be cuts and reductions of certain line items the City will
find very difficult to control, such as supplies, fuel, maintenance
and other related costs. Also, the impact, without reducing a
0.
specific service delivery, is a lowering in the quality of all City
services. Each time the general fund operating budget is reduced
without eliminating or reducing the quantity of service, the
quality of all services is reduced. Department Heads have
considered a variety of reductions that vary from transferring
certain fees to public enterprise, such as, intersection street
lighting energy costs, a reduction of line item expenses in the
Fire Department, a reduction of capital totalling $19,000 in
Community Development, across the board reductions on line item
expenses for Police, reduction of sealcoating in Parks and
Recreation for trail improvements, and other capital outlay
equipment as listed in the General Fund to be financed by the
Equipment Revolving Fund or General Fund.
The second consideration is to reduce one or two departments by the
$129,897 which specifically eliminates a service to the public.
The department heads did not address this option as a part of the
1991 budget amendment, using the argument that services that are
being provided in the City of Eagan are basic and the impact would
be felt and considered unacceptable by the residents/users. As an
example, boulevard mowing could be eliminated. However,
developers, neighborhoods and the image of the community would be
impacted by this type of decision. Reducing recreational programs
when the users are increasing at a rate of 20% per year is another
difficult decision. The City Council has already reduced certain
services, such as responding to car lock-outs which will now be
served by the private sector.
The third consideration is to create new revenue sources. One
example which many cities are utilizing is to charge a management
investment fee for all investments that are coordinated by the
Director of Finance or City Treasurer. A 2% management investment
fee charged against all interest earnings generated by the City
would generate approximately $100,000 of revenue for the general
fund. There are public entities that hire management investment
firms to handle all investments on behalf of the municipality.
Since the City of Eagan uses the talent of the Director of Finance
for coordinating all City investments, it would be appropriate for
the general fund to receive, as a revenue source, a management
investment fee for that service. The 1991 budget could be amended
to include this revenue source in addition to some other budgetary
reductions totaling $129,897. The second amendment to the 1991
general fund operating budget could then be approved without any
further impact on general fund operations.
The 1989 actual general fund expenditures eliminating non-recurring
charges and transfers were $10,628,111. The 1990 budget was
$10,767, 130. Assuming a budget adjustment totaling approximately
$300,000 to the 1991 budget of $11,109,160, the 1991 budget as
amended will be $10,809,160. Unfortunately, the level of spending
has been nearly constant for three (3) years while inflation has
increased at a rate of approximately 4% and the growth of the
community has increased at a rate of 4%-5% per year. During these
three (3) years, there have been very few reductions in the
quantity of services provided by local government. However, the
quality of those services has been impacted due to a constant
budget with a corresponding increase in police calls, recreation
program sign-ups, miles of streets to maintain by serving
approximately 7,000-8, 000 more constituents over the past three (3)
years.
Because the City of Eagan is a rapid growth community, struggling
due to levy limits, low per capita aids and the pressures of a
growing constituency, it is recommended that the third option be
given strong consideration in evaluating the second budget
amendment for 1991.
Tc3cLCity Admini rator T41-
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MEMO TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: CITY ADMINISTRATOR HEDGES
DATE: JUNE 17, 1991
SUBJECT: C.I.P. (1992 - 1996)
The draft Capital Improvements Program budget has been changed from
1991 - 1995 to 1992 - 1996. Both replacement and new equipment for
1991 has been authorized for acquisition. More than likely capital
building programs will not require funding during 1991. This
change will be consistent with plans for the 1992 general fund
budget.
Certain C.I.P. expenditures are financed with public enterprise
user or connection fees and other projects receive financing from
dedicated funds, such as special assessments. This memo addresses
projects that require funding from the sale of General Obligation
Bonds (G.O. ) , Community Investment and Equipment Certificates.
Instead of considering $16,018,500 of capital expenditures that
would require $7,858,500 to be financed by a bond referendum or
referendums and the remaining amount financed with interest from
the Community Investment Fund, the five year C.I.P. has been
reduced.
For comparative purposes these numbers are included in this memo.
At the most recent meeting, during which the C.I.P. was discussed,
the following summary was presented:
COMMUNITY G.O.
INVESTMENT BOND
PROJECT FUND JEFERENDUM
1991
Law Enforcement Arch $ 30,000
Ice/Pool 2,750,000 $2,750,000
Park Improvements* 486,500
1992
Law Enforcement 2,500,000
Fire Station 6, Station 2
and Equipment 2,865,000
Park Improvements* 1,484,000
1993
Fire Administration Remodel 425,000
Fire Opticom Signalization 343,000
Park Improvements* 442,500
1994
Fire Station 3 Expansion 185,000
Park Improvements* 569,500
CAPITAL IMPROVEMENTS PROGRAM
JUNE 17, 1991
PAGE TWO
COMMUNITY G.O.
INVESTMENT BOND
PROJECT FUND REFERENDUM
1995
Fire Station 1 Remodel $ 125,000
Park Improvements* 1,063,000
$8,433,000 $7,585, 500
Summary
Law Enforcement $2,530,000 - $2,530,000
Ice/Pool 2,750,000 $2,750,000 5, 500,000
Fire 1,078,000 2,865,000 3,943,000
Park Improvements* 2.075. 000 1,970.500 4. 045.500,
$8,433, 000 $7,585,500 $16,018,500
* All park improvement expenditures listed are over and above
amounts available from the Park Site Fund.
The revised C.I.P. is non-specific by project, for example, amounts
have been proposed for Parks and Fire without an actual designation
of use. Direction by the City Council as to a level of capital
spending and years to propose financing certain projects is
necessary. Staff will readjust the priorities and recommend
projects that meet the revenue levels set by the City Council. The
following is one consideration/example of a five year C.I.P. that
reduces reliance on referendums and allows for the use of interest
only of the Community Investment Fund. Any expenditure proposed to
be financed by a referendum can certainly be changed if financing
is available from another funding source such as a private
contribution or special City funding.
REVISED C.I.P.
COMMUNITY 0.0.
INVESTMENT BOND
PROJECT FUND REFERENDUM
1992
Land Acquisition/Fire
Station #6 $100,000
Ice Arena Facility $2,500,000
1993
Law Enforcement/
Municipal Center 2,500,000
Fire Station #6
and Equipment 1,200,000
CAPITAL IMPROVEMENTS PROGRAM
JUNE 17, 1991
PAGE THREE
COMMUNITY G.O.
INVESTMENT BOND
PROJECT FUND REFERENDUM
1994
Park Land Improvements
(Non-park site) $1,000,000
1995
None
1996
None
$4,800,000 $2,500,000
Summary
Law Enforcement $2,500, 000 $2,500,000
Ice Arena $2, 500,000 2,500,000
Fire 1,300,000 1,300, 000
Park Improvements 1.000.000 1.000, 000
$4,800,000 $2,500,000 $7,300,000
The reduction in reliance on G.O. Bonds from $7,585,500 to
$2,500,000 is favorable in terms of the City's ability to pass the
necessary referendums as well as with the impact on the bond
rating. The recently passed omnibus tax bill which requires
referendum levies to be spread against market value and not tax
capacity will probably make it more difficult to pass any type of
referendum.
The revised amount from the Community Investment Fund also brings
that funding source into line with a principal amount that can be
supported from interest earnings. All available revenue currently
projected from that source would be tied up for the 20 year period.
You will note that this consideration/example illustrates
significant reductions and eliminates or postpones $8,718,500 of
expenditures which had originally been included in the proposed
five-year C.I.P.
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City Administrato i
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