12-06-2010 Council Minutes Truth in Taxation

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IV MINUTES OF THE TRUTH- IN- TAXATION MEETING Monday, December 6, 2010 7:00 o'clock p.m. • Olson stated the state auditor recommends that cities have between 35 to 50 percent of the annual budget. At the last council meting a fund balance policy was adopted, and any fund balance over 50 percent of the budget will be transferred to a construction fund, which will be used to help finance projects. Esau stated the City could send out a message that reducing the cash balance and keeping the budget flat would be a good message to send to the citizens in these tough economic times. Olson stated there are a couple of risks with reducing the cash balance. A higher fund balance is good to have in the event of an unexpected cost. Olson stated there was a city in Minnesota that used their fund balance to decrease property taxes and then the State of Minnesota placed a levy limit on everyone. That city was not able to increase their taxes back to the pervious year's level, which caused them some difficulty. Olson stated levy limits are a good possibility this year given the poor economy. If the fund balance is used for ongoing expenses, the City may find itself in a position where taxes need to be increased by 3 to 5 percent but they are unable to raise them that amount due to the levy limit. Ed Callahan, Orono, commented each year the City is at risk that the state will decrease their state aid. White stated the amount of industrial /commercial tax has decreased, which has increased the tax on residential homes. Orono has a small industrial/commercial tax base. White stated the City has cut costs but they have also experienced increases in expenditures due to rising costs on energy and other items. Orono does not have a public works engineer and those services are contracted out. Orono also does not have a big planning department and has no park and recreation department. Ted Capra indicated his taxes went up 20 percent because the City moved commercial properties into a • lower tax bracket and residential into a higher tax bracket. White noted the state legislature did that and not the City. Murphy noted Wayzata has a large commercial tax base and they experienced some difficulty with their budget given that state legislature mandate. White stated that change occurred over a 10 -year period of time. Franchot asked how much Mr. Capra's city's tax amount went up. Capra indicated his residential property did not increase that much. Beth Bailey, Community Mediation Services, indicated their organization provides mediation services to the Orono community. Community Mediation Services helps people who are stuck in conflict move through that conflict. That process is expensive, and if the conflict is not resolved, it likely will end up with a police officer being called or end up in the court system. A number of people volunteer their services and they currently have over 100 volunteer mediators available. Bailey stated they would propose that the City of Orono's 2011 budget include mediation services at the level of 2005, which would reflects a 10 percent cut. They believe it is a resource that the City will want to have available to the residents. Community Mediation Services would recommend that as part of that $2000, someone from the City, perhaps someone from the police department or the city administrator, • attend a 30 -hour training session. That training would provide the individual with the skills necessary to handle conflicts and would provide them with some insight into the types of conflicts that they deal with. PAGE 4 of 6