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1991-09-10 Special City Council Minutes MINUTES OF A SPECIAL MEETING OF THE EAGAN CITY COUNCIL Eagan, Minnesota September 10, 1991 A special meeting of the Eagan City Council was held in Conference Rooms A and B of the Eagan Municipal Center building on Tuesday, September 10, 1991 beginning at 5:00 p.m. Present were Mayor Egan, Councilmembers Gustafson, McCrea, Pawlenty and Wachter. Also present were Chief of Police Geagan, Fire Chief Southorn, Director of Parks and Recreation Vraa, Director of Community Development Runkle, Director of Public Works Colbert, Director of Finance VanOverbeke and City Administrator Hedges. The purpose of the meeting was to further consider the draft 1992 general fund budget. 1992 GENERAL FUND BUDGET City Administrator Hedges presented the draft 1992 general fund operating budget estimated at $11,664,640. The City Administrator summarized the budget document by reviewing several policy issues that relate directly to present and future service delivery. He stated that policy considerations are as follows: 1) consider a transfer in the allocation of property tax for the major street fund and equipment revolving fund to the general fund, 2) consider a reduction In service delivery, 3) transfer all intersection and signal light costs to the public enterprise fund, 4) delay additional police personnel until adjournment of the State Legislature to assure funding alternatives for the new positions and 5) consider a reduction in the percentage increase for certain employee groups as proposed for 1992. City Administrator Hedges further stated with the uncertainty of the Minnesota State Legislature to continue suppressing the ability of local units of government to raise revenue through increased property tax collection, he presented a three (3) year general fund budget projection allowing the City Council to evaluate the impact on local government services beyond 1992. The City Administrator presented a three (3) year budget projection extending through calendar 1995 based on certain assumptions that no new personnel would be hired between 1993 and 1995, personal services and health Insurance are increased at a rate of approximately 4% and all other parts, supplies, services and other charges and capital outlay are projected at a rate of 3% for inflation and 2% for system growth, the general fund budget will increase at a rate of approximately $500,000 each year. City Councilmembers expressed concern that the projection is conservative and realistic, however, without any non-property tax revenues, the City would experience a property tax increase in order to maintain a constant level of service for an expanded community. Director of Finance VanOverbeke reviewed the revenue projections stating that a trend continues to be an increased reliance in property taxes for general fund operations. He stated that with development activities decreasing, there will be little increase, and a very real potential for decrease, In the traditional general fund non-tax revenues. Director of Finance VanOverbeke reviewed a number of revenue estimates for calendar year 1992 presenting the tax related revenue, license revenue, a decrease in permit revenue due to a slow-down In building activity, and other revenue adjustments due primarily to a loss in development escrow, reimbursement and related fees. The Director of Finance did indicate that the new investment management fee will provide approximately $100,000 of new revenue, recreation charges are increasing and most other revenues are relatively constant with the exception of higher interest earnings due to a higher general fund balance. City Administrator Hedges reviewed a departmental budget analysis that illustrates an increase or decrease for departmental activities. He summarized the departmental review by stating that the overall increase is $574,035, an increase of 5.2%, which is caused mainly by increasing personal service and Page 2/EAGAN SPECIAL CITY COUNCIL MINUTES September 10, 1991 adding four (4) new positions to the Police Department. The remaining increases to the 1992 general fund budget are small and represent less than I% of the increase. Following a detailed analysis of the proposed 1992 general fund budget by the City Administrator and Director of Finance, Mayor Egan asked whether new industry is helping or hindering the ability for the City of Eagan to maintain its general fund budget, and further if the City should look at cost for service more carefully. Director of Finance VanOverbeke provided a cost benefit analysis. City Counci member Pawlenty stated that the City is facing a serious dilemma In that property taxes will more than likely increase as a result of several legislative changes in property tax reclassifications, fiscal disparities and other legislative changes, while the City of Eagan will receive no new revenue for Its general fund operations from property tax collection. He stated that any property tax Increase will be of concern and that the City should consider all alternatives before the general fund budget is presented to the community in December. City Councilmember McCrea asked for a comparison of contractual services versus full-time, a study that would be helpful in evaluating cost efficiencies while providing general government services. City Councilmember Gustafson stated that contracting for services or privatization could reduce liability in workers compensation, which are increasing costs to the City. City Councilmember McCrea questioned whether greater efficiencies could be maintained by the City if one law firm were used for all services, and further if greater efficiencies could be considered with neighboring cities regarding scheduling of court time for prosecution. Chief of Police Geagan stated that the use of two (2) law firms has not presented any problems to the Police Department, and further that court time schedules are often consolidated by the prosecuting attorney with the various cities served as a cost savings. City Councilmember Gustafson expressed his frustration in the lack of court fines that are assessed in Dakota County in comparison with other counties who charge higher fines for serious driving infractions and other types of local prosecution. He stated that a surcharge for tax on alcohol and cigarettes should be lobbied through the AMM and LMC and collected directly by cities to offset the increase in police services. Mayor Egan asked that specific direction be given to the City Administrator regarding modification to the draft 1992 general fund budget. He stated that it would be difficult to cut services by $500,000- $600,000 which is necessary if the City is to consider a reduction In the property tax increase that has been imposed by the State Legislature due to a change in the property tax classification rates for higher valued homes and the overall impact caused by the fiscal disparities distribution formula City Councilmember McCrea expressed her concern that the City not lose any ground in the Police Department and would support reductions in other departments in order to increase police personnel in 1992. There was agreement when Councilmember McCrea suggested that a hiring freeze be placed on all other departments, the City reconsider the filing of positions through natural attrition, consider a reduction in wages and accelerate contractual if a savings in service deliver is beneficial to the City. City Councilmember Gustafson asked that the City continue its investigation of other revenue sources, thanking staff for the work and creativity to date. City Councilmember Pawlenty expressed his concern about future years, commenting on the short-term solution that the 1992 general fund budget provides for the transfer and reallocation of property taxes in the major street fund and equipment revolving fund to the general fund budget, and further that this opportunity will not exist In 1993 and even with the removal of levy limit caps, there could be some serious reductions necessary for future budgets as the three (3) year projections presented by the City Administrator illustrates. City Coun cilmember Gustafson, further stated that there is continued need to communicate and consider consolidation with surrounding communities and present the dilemma to the community. City Councilmember Wachter asked that the public enterprise fund be reviewed at the next budget work session and asked if staff could survey utility rates for other communities to determine how competitive the City of Eagan is in comparison. Mayor Egan thanked the City Administrator and Director of Finance for an excellent budget narrative and support documentation and expressed the frustration a growth community is experiencing Page 31EAGAN SPECIAL CITY COUNCIL MINUTES September 10, 1991 with levy caps, shrinking local government aid and a need to expand its service delivery to meet a new constituency. City Counciknember Pawlenty also expressed his appreciation for the work and commented that the quality of the existing service delivery will begin to diminish if departments are not properly funded to offset growth in the City. He further commented that it may be necessary to reduce the quantity of services in the near future to assure quality for those services provided to the community. Mayor Egan stated that the 1992 general fund budget will be further reviewed at the October workshop and eventually presented for the community to consider at the truth-in-taxation hearings scheduled for December. OTHER BUSINESS City Administrator Hedges reminded the City Council of the Employee Recognition Luncheons scheduled for September 13 and provided a brief update on the status of the Northwest Airlines/Unisys TIF Project. ADJOURNMENT The meeting was adjourned at approximately 8:40 p.m. TLH September 10 1991 Date City Clerk