09-12-2016 Council Minutes - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, September 12, 2016 7:00 o'clock p.m. 22. 2017 BUDGET AND PRELIMLTTARY LEVY (continued) Non-union step increases equal $18,000. Olson noted non-union wages has a two percent COLA increase which adds $32,000 to the budget, and union step/longevity increases amount to $45,000. Olson noted the City had more senior police officers that have retired and that they were replaced with younger officers, which has resulted in the increased step increases. In addition, workers comp for the police department adds $36,000. Olson noted the City's rating went from a .75 to a 1 and that the City did have a couple of very expensive workers comp claims, which resulted in an increase if the workers comp premium. Other increases in the General Fund include software licensing at $8,000, cloud backup at $6,000, LOGIS application at 58,000, Comprehensive Plan update at $18,700, professional services for the Navarre Plan at $30,000, for a total amount of $60,700. Olson stated also included in the tax levy is the debt service levy, which is staying the same in 2017. The pavement management levy is being increased to $401,506. The total of all proposed levies is $5,353,730. Olson noted there has been some discussion about whether to bond or not bond and that the Council will need to make those decisions in the next couple of weeks. Olson stated since 2011, Orono has been well below the average state-wide for property tax increases. On average other cities have increased their taxes by 9.44 percent more than the City of Orono. That number amounts to $475,000. Olson noted since 2010, Orono's levy has increased 6.18 percent, which is lower than a number of other local cities. Olson noted the City of Medina increased their taxes by 36 percent since 2010. Olson stated overall Orono has done a very good job at controlling the tax rate but that the City Council will need to decide how to fund some necessary road improvements. Olson stated if there is no change in property values, the tax levy increase would be 8.06 percent, which increases the pavement management levy to $401,000. On a $250,000 home, that would result in a savings of $10.82. On a $500,000 home, that would result in a savings of $23.00, on a million dollar home the property owner would save $51.75, and on a $2 million home the property owner would save $109.00. If a 5 percent increase is assumed on property valuations, taxes on a $250,000 home would increase by $12.00 per year and on a $2 million property the taxes would go up by $101.50. Olson stated his understanding after the last work session is the Council needs to decide whether to bond and how much the pavement management levy should increase. Edwards reviewed the City's options for bonding. Edwards stated if the City chooses to bond, starting in 2018 a source of funding will need to be identified. Olson stated if the City chooses to bond, the City would need to pass a revised pavement management plan, which was originally done back in 2008. Olson stated the pavement management plan does not have to be unanimous but the decision to go out to bond has to be unanimous by all attending Council members. Short of having a 4-0 vote or a 5-0 vote, the City would be required to have a hearing. Page 32 of 34