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HomeMy WebLinkAboutCover Memo & supporting documents MEMORANDUM TO: Honorable Mayor and City Councilmembers FROM: Dave Osberg, City Administrator DATE: August 6, 2010 SUBJECT: Special City Council Meeting Monday City Councilmembers are reminded of the special meeting scheduled for August 9, 2010 at 6:00 PM in the Volunteer Room to discuss the 2011 Budget. Several documents are attached, which will be used as a basis for discussion during the meeting, as Staff will present in more detail the following: a.)ATTACHMENT A-This provides the City Council with information on preliminary operating budget figures, along with an illustration of the potential tax levy options to consider. In particular, Staff will focus on the figures outlined on the bottom of this document, as there are various scenarios regarding the tax rate for the City. The Finance Committee is very clear that a tax rate including all current budget requests will not be approved, and further work and deliberation will be needed by the full City Council, not only leading up to September 7, 2010 when the preliminary levy will be set, but more importantly before final adoption of the budget in December. b.)ATTACHMENT B-Included in this document are the various capital requests provided by the Departments. This is a complete listing of those items that were included. This is not a listing of items recommended by either the members of the Finance Committee, nor of Staff. All items are included, irrespective of their priority or final recommendation from the Staff. Further review, discussion and ultimate elimination will be forthcoming as the budget process continues through December; before the final budget is adopted. c.)ATTACHMENT C-Early in this budget process, both the Finance Committee and Staff realized the magnitude of the problem facing us, and began a discussion that broke it down into four different categories. Using $1.7 million as a starting point for the magnitude of the problem, we attempted to find approximately $425,000 in each category. Thus, Attachment C will be used by Staff to illustrate savings/revenues sources that might be achieved to account for over $1.7 million in budget savings. Again, not all of these are recommended by the Finance Committee or Staff at this time, but all warrant some discussion and consideration. d.)ATTACHMENT D-As you will note upon review of the above attachment C, there are a variety of concepts under consideration that are related labor and personnel costs. This attachment includes a description of certain options available relating to early retirement, voluntary separation and voluntary reduction in hours. Staff has provided its recommendations for the Council to consider. In addition to the above attachments, Staff would draw your attention to the following topics and reminders relating to the 2011 Budget. 1.)The current schedule calls for adoption of the preliminary levy at the September 7, 2010 with final adoption on December 20, 2010. The levy amount adopted on December 20, 2010 cannot be greater than the preliminary amount set on September 7, 2010. 2.)An update on the meetings with four Unions and the expectations for 2011 will be provided by Staff. 3.)Employee meetings are scheduled for mid-August to provide further background on the current Budget situation and provide the opportunity to address any questions that may be forthcoming from the employees. Staff would seek direction from the City Council (not necessarily final policy approval) on the various programs outlined in Attachment D, regarding early retirement, voluntary separation and voluntary reduction in hours. In addition, the possibility of layoffs must be recognized and discussed by the City Council. 4.)As previously directed by the City Council, last year at this time, there is no funding allocated to continue with the Youth First Coordinator Position. 5.)Currently, there are no additional meetings of the Finance Committee scheduled prior to the meeting of the full City Council on September 7, 2010 when the preliminary levy is scheduled to be adopted. It would be the recommendation of the City Staff that action be taken at the meeting on Monday August 9, 2010 to include a motion to the effect of: Moved by ___________________, Seconded by _________________to direct Staff to prepare a Resolution for the City Council to approve at its meeting on September 7, 2010 that would set the preliminary levy at $11,264,000 recognizing that it is the desire of the full City Council to adopt a final levy that is lower. Again, recall the meeting starts at 6:00 PM on Monday August 9, 2010 in the Volunteer Room at the City Hall. While Staff will attempt to be efficient with the time needed to present the material, there is a great deal of ground to cover during the course of the meeting and direction to receive from the City Council, thus the likelihood of a two hour discussion may not be out of the question. David M. Osberg City Administrator Preliminary 2011 PRELIMINARY OPERATING BUDGET Current Numbers Salaries and Benefits This includes longevity and lane changes, PERA increase & Health inc. 10,934,749 Supplies 918,630 Other Charges for Services This includes increases for fixed costs such as utilities, insurance, street improvements, professional services, consultants, audit & bank fees, legal fees, IT maintenance agreements, police & fire DCC costs. 5,297,589 Miscellaneous 674,562 Other Transfer Out (Transfers between funds) 679,000 Admin Charge (Transfers to the general fund for admin costs.) 188,861 Capital Outlay 20,000 Stormwater allocation Debt-levy supported 4,953,109 Debt-Enterprise funds 376,475 Total Expenditures24,042,975 Total Other Revenues11,588,912 PRELIMINARY LEVY REQUIREMENT12,454,063 Results in a tax rate of (2011) (Reduced Tax Capacity)62.793 Department Capital Requests800,975 Possible reduction for equipment certificates-330,050 Possible reduction for use of ERF funds-173,000 Possible reduction for use of park dedication funds-138,000 Possible reduction for use of arena funds-66,100 Department ERF Allocations (Levy supported only)117,200 Net Changes per Department Requests-42,017 Total changes to preliminary budget169,071 Same Tax LevyBreak even Tax Levy @ same as 2010LevyTax Rate as 2010 DEPARTMENT REQUESTED LEVY REQUIREMENT12,623,13411,581,00011,264,00011,000,00010,839,000 Results in a tax rate of (2011) (Reduced Tax Capacity)63.512%57.230%55.320%53.730%52.760% Taxes on a $176,720 home in 2010 ($931.00 Tax rate of 52.76)1,122.001,011.00978.00950.00932.00 Taxes based on a home value of $167,884 (5% reduction in pay 2011)1,066.00961.00929.00902.00884.00 AMOUNT TO DECREASE TO GET TO DESIRED LEVY LEVEL (after changes)$1,042,134$1,359,134$1,623,134$1,784,134 CITY OF HASTINGS CAPITAL OUTLAY REQUESTS 2011 BUDGET Proposed DepartmentRankingCapital ItemPurposeBenefitFund SourceAmountTotal City Clerk Cable Access IT PC ReplacementAnnual ReplacementLevy 12,540 Office Pro 2003Levy 3,000 PD-APS ClientsLevy 800 PD-APS Squad MiscLevy 300 PC Replacement High EndLevy 865 Video Camera UpgradeLevy 1,200 Finance Payroll Timekeeping$3,000 EFF, $5,000 Levy 8,000 Disaster recovery SAN-PW 2nd Site2nd stage of virtualizationEquip Certificates 20,000 Disaster recovery Server-VM 2nd Site2nd stage of virtualizationEquip Certificates 7,000 5 laptopsReplacementLevy 21,000 No longer supported SwitchReplacementLevy 8,170 Video System UpgradeLevy 1,500 PD ServerLevy 4,300 5 new monitors for laptops-PoliceSecondary monitorsLevy 750 89,425 Maint.-City Hall 300 Kilowatt generatorEmergency back upFac Mgmt ERF/EC 200,000 200,000 125,000/75,000 Maint.-Fire Maint-PoliceReduce safety hazard Replace stair coveringsFac Mgmt ERF 20,000 20,000 Planning Building Inspections Police 2 Squad CarsReplacement ScheduleEquip Certificates 56,050 TasersReplacement PartsLevy 3,200 59,250 More efficient use less staff to Streetsoperate Spray PatcherEquip Certificates 65,000 65,000 Total General Fund 433,675 Cable - CITY OF HASTINGS CAPITAL OUTLAY REQUESTS 2011 BUDGET Proposed DepartmentRankingCapital ItemPurposeBenefitFund SourceAmountTotal Fire 3/4 Ton Pick up TruckReplacementEquip Certificates 35,000 Fire hose/fittingsAnnual ReplacementLevy 3,000 Technical rescue equipmentAnnual ReplacementLevy 7,500 Water rescue equipmentAnnual ReplacementLevy 3,750 Backboards/Pagers/SplintsAnnual ReplacementLevy 4,700 53,950 Heritage Preservation ArtifactsLevy 250 250 Parks Operations Anticipate $15K trade in 580 MowerReplacementEquip Certificates 72,000 Total Parks 72,000 Arena Desicant Replace/RepairDehumidification 20,000 Floor ScrubberReplacement 6,500 Rental Skate Replacement 6,600 Outside Entrance Upgrade 33,000 Total Arena 66,100 Fund balance in arena Pool New Deck ChairsLevy 5,000 Lily Pads/Cargo Net Water FeatureLevy 15,000 Total Pool 20,000 Parks Capital Cari Park Playground EquipmentReplacementPark Dedication 60,000 Safety concern Crestview Park Backstop/FencingReplacementPark Dedication 18,000 Control lights remotely Satellite Controlled Lighting-Vet's ParkLevy 17,000 Westwood Park Playground EquipmentReplacementPark Dedication 60,000 Total Parks Capital Fund 155,000 Economic Dev Leduc Mansion Water CITY OF HASTINGS CAPITAL OUTLAY REQUESTS 2011 BUDGET Proposed DepartmentRankingCapital ItemPurposeBenefitFund SourceAmountTotal Drill a test site each year for future well locations. In the pasts have had difficulty in locating a good uncontaminated groundwater well site, the plan is to test one a year and keep a log of the results of the test for future growth needs. Test WellRevenues 40,000 Total Water Fund 40,000 Wastewater Stormwater Malcolm Avenue drainage problemRevenues 50,000 Street SweeperReplacement Equip Certificates 205,000 Total Wastewater 255,000 Hydro Pumps for dewateringPurchase vs. rentingRevenues 50,000 50,000 Total Capital Outlay Requests 1,145,975 HRA Total HRA - TOTAL ALL CITY 1,145,975 Proposed Funding Sources: Equipment Certificates-general levy supported330,050 Equipment Certificates-stormwater supported205,000 ERF Transfer148,000 Cash on Hand-Arena66,100 Water revenues40,000 Stormwater revenues50,000 Hydro revenues50,000 Park Dedication138,000 Levy Requirement118,825 Total Funding Sources1,145,975 RevenueExpense/Program TaxesIncreasesRevenuesLaborSavingsReductionsSavings Tax IncreaseAfton Alps Retainer Reduce city-wide newsletter 425,000 5,000Voluntary reductions: 4,000 This will increase tax rate to 55.321Advertising at PoolTargeted voluntary furloughsNo Police annual report 5,000 80,000 2,900 Use Cable Fund for Shannon's salaryEarly retirement plan (2 staff)Lifeworks - 1/2 time reduction 15,000 120,000 3,500 Negotiate a fee with the Detox CenterEliminate Spring clean up day 5,000Non-voluntary reductions: 6,000 One Council meeting per month (includes One FTE lay off-averageestimated staff costs and energy savings) Overall fee review: 57,000 500 9 month positions w/Health or w/o Health all year (this is net of unemployment costs.) 27,500-Close City Buildings on Fridays during - Alarm permit fee(Average of 1 FTE)20,000 summer/energy savings (CH, Parks, PW) 8,750 1,800 Close City Buildings between Xmas and New - Vacant property registration feeEliminate LEO position Years-energy savings (4 days) 11,400 18,000 600 - Excess consumption of police servicesReduced Schedule 2,500 32 hours/per week vs. 40 full year - Rental license fee increase(Average) 7,000 14,000 32 hours/per week vs. 40 six months of a year 7,000 - Aquatic Center fee increasesEliminate all seasonal staff 11,900 - Parks participant fee Public Works 7,500 13,200 Increase Engineering service charge on projects to 20%-this will increase debt and amount assessed to citizens Parks (not arena or pool) 125,000 24,720 *Change special assessment hearing to current year, thus in 2011 we would have two years of engineering revenue in the general fund. One time fix.Warming House staff (1/2) 425,000 7,500 Increase Municipal State Aid-Maintenance to 35% of apportionment. This will decrease future funds available for construction projects. This could increase debt. 45,000 Other: *Open position in Police stays open (Admin *Sale of stored firearmsposition) 30,000 60,000 *TRAC Projected 2010 Fund BalanceReduction in police reserves 150,000 8,000 Options: Allow 50/100% to 2011 budget or help Allocation of additional staff to Enterprise General Fund balancefunds-may aid in fee increases to citizens 60,400 Total 425,000 854,050 469,820 19,300 Total Options 1,795,370 497,020 Total Options 1,788,170 489,820 * one time revenue/expense City of Hastings SAMPLE POLICIES Voluntary Early Retirement Voluntary Separation Incentive Reduction in Hours Programs The City of Hastings continues to experience a loss in revenue as a result of declining market values. These factors impact the financial health of the City, and a number of approaches are being implemented: increasing revenues, cutting programs/expenses, labor reductions, and tax increases. Currently, there exists a significant gap between projected revenues and projected expenses for the 2011 budget. One approach being implemented by the City is to offer a number of voluntary programs to eligible employees for a limited time only. This includes options for voluntary Early Retirement, voluntary Early Separation (non-retirement eligible) and voluntary Reduction in Hours Incentives. Eligible employees seriously interested in participating in any of these programs must submit an application by October 15, 2010. Application paperwork is enclosed in this packet. I.Voluntary Early Retirement a.Eligibility Retirements  X A full-time employee with (10, 15, 20) years of service with the City of Hastings;  The employee must be eligible for a reduced or full pension through PERA immediately upon retirement.  WHO The program application must be completed and submitted to by WHEN . The application must be approved by the City Administrator. Z The last working day must be no later than (December 31, 2010) b. Early Retirement Incentives options note: the items below are staff explored; X number of weeks b. 1. additional severance pay at your current hourly rate, to be deposited in a Post-Retirement Heath Care Savings Account, which will be opened for employees Illustration  Thirteen weeks (520 hours) additional severance pay at your current hourly rate, to be deposited in a Post-Retirement Heath Care Savings Account, which will be opened for employees (cost estimate for eligible employees: $10-27k)  Six weeks (240 hours) additional severance pay at your current hourly rate, to be deposited in a Post-Retirement Heath Care Savings Account, which will be opened for employees (cost estimate for eligible employees: $4,800- $12,500) X$5,000-15,000) One time contribution of $ ( into the employee’s b. 2. retirement health savings account to assist with future health insurance premiums. X Incentive equivalent to hours of gross salary at the employee’s current b. 3. rate of pay. This X hour payment will be taxable and paid directly to the employee. (illustration: 120 hours would range from $2,400-6,300 for eligible employees) of X ($5,000-$10,000) A one-time payment . This payment will be taxable b. 4. and be paid directly to the employee. c. Other Considerations Participation in the program is strictly voluntary. c. 1. To accept this offer, you must sign the release agreement, which waives c. 2. your right to pursue any legal claim against the City of Hastings and its employees. The City reserves the right to decline any employee’s request for the early c. 3. retirement incentive program based on the number of requests received, an employee’s critical skills, or business need. Employees that terminate employment with the City during the early c. 4. retirement incentive program may not be rehired as a benefit-earning employee. All payments made are subject to customary payroll deductions. c. 5. Once submitted and approved, participation is non-revocable. c. 6. STAFF RECOMMENDATION: VOLUNTARY EARLY RETIREMENT PROGRAM 5 years of service, eligible for full/reduced pension through PERA, application paperwork submitted by October 15, 2010. One time payment of $10,000. Last working day will be no later than December 31, 2010. II.Voluntary Separation a.Eligibility Requirements X (5, 10 A regular status, full or part-time employee with ) years of service a. 1. with the City of Hastings. WHO The program application must be completed and submitted to by a. 2. WHEN . The application must be approved by the City Administrator. Z The last working day must be no later than (December 31, 2010) b. Voluntary Separation Incentives One time lump sum payment to an eligible employee who voluntarily b. 1. $X elects to take advantage of the voluntary separation program of EARLY FALL, 2010 ($5,000-$10,000) by . A one time lump sum payment to an eligible employee who voluntarily b. 2. $X-? elects to take advantage of the voluntary separation program of (some amount less than the option above offered for those who commit LATE FALL, 2010 earlier rather than later) by . The City will provide the separating employee with a one time b. 3. $X contribution of to be deposited in a Post-Retirement Heath Care Savings Account, which will be opened for employees ($6,000 would be the equivalent of $500 for 12 months) c. Other Considerations Participation in the program is strictly voluntary. c. 1. To accept this offer, you must sign the release agreement, which waives c. 2. your right to pursue any legal claim against the City of Hastings and its employees. The City reserves the right to decline any employee’s request for the c. 3. voluntary separation incentive program based on the number of requests received, an employee’s critical skills, or business need. Employees that terminate employment with the City during the voluntary c. 4. separation incentive program may not be rehired as a benefit-earning employee. All payments made are subject to customary payroll deductions. c. 5. Once submitted and approved, participation is non-revocable. c. 6. STAFF RECOMMENDATION: VOLUNTARY SEPARATION PROGRAM Eligibility: 5 years of service, application paperwork submitted by October 15, 2010. One time payment of $10,000. Last working day will be no later than December 31, 2010. III.Voluntary Reduction in Hours a.Eligibility Requirements A regular status, full or part-time employee with the City of a. 1. Hastings. The program application must be completed and submitted to a. 2. WHO WHEN by . The application must be approved by the City Administrator. The implementation date of the reduced work the beginning of the next payroll schedule will be effective period following approval. b. Voluntary Reduction in Hours Incentives (if any) The employee’s health insurance at time of application will remain b. 1. in effect, with the City’s contribution to the premium unchanged, XX for a period of (ex. six) months. Following that month period, the employee may elect insurance continuation under Minnesota and Federal continuation regulations. If the employee does not desire continued health insurance upon b. 2. approval of a reduced work schedule, the City will provide a lump $X sum payment of (ex. $1,500) to the employee. c. Other Considerations Participation in the program is strictly voluntary. c. 1. To accept this offer, you must sign the release agreement, which c. 2. waives your right to pursue any legal claim against the City of Hastings and its employees. The City reserves the right to decline any employee’s request for c. 3. the voluntary reduction in hours program based on the number of requests received, an employee’s critical skills, or business need. All payments made are subject to customary payroll deductions. c. 4. STAFF RECOMMENDATION: VOLUNTARY REDUCTION IN HOURS PROGRAM Eligibility: full-time employees; reduction from 40 hours/week to 32 hours/week; application paperwork submitted by October 15, 2010. One time payment of $2,000. Effective date the beginning of the next payroll period following approval.