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HomeMy WebLinkAbout12-04-1991 Budget Hearing MinutesMINUTES OF THE ORONO 1992-BUDGET HEARING — DECEMBER 4, 1991 ROLL The Council met on the above date with the following members present: Mayor Barbara Peterson, Councilmembers Gabriel Jabbour, Edward Callahan and J. Diann Goetten. Mary Butler was absent. ,The fallowing represented the City staff: City Administrator Ron Moorse, Public Works Director John Gerhardson, Finance Director Tom Kuehn, City Clerk Dorothy Hallin, Building & Zoning Administrator Jeanne Mabusth, and City Recorder Teri Naab. Mayor Peterson called the meeting to order at 7:00 P.M. OPEN OF PUBLIC HEARING The Affidavit of Publication was duly noted and Mayor Peterson opened the Public Hearing at 7:00 p.m. INTRODUCTORY INFORMATION Moorse explained that when the process was started last spring, they knew revenue sources would be very tight, and direction was given to Department Heads to stay within the budget. Those requests were reviewed by both the Finance Director and City Administrator who further cut the proposed expenditures. The proposed budget was then reviewed by the Council at a work session, which lead to further refinements, which lead to the current proposed budget. He noted the levy reflected in the budget is the same as that reflected in the Truth in Taxation Statement sent to all residents. Moorse went on to explain the general fund, general government activities, such administration, elections, zoning, and reviewed the revenues, and reflected how a been reduced significantly, although the pro stayed basically the same as a year ago. which includes all as police, fire, public works. He number of them have perty tax portion has Newell Weed asked what "transfers in" encompasses. Moorse explained that is interest earnings from the building fund. He noted that has been a revenue source for the general fund for a number of years, which has helped to keep the tax levy down. Moorse reviewed the expenditures handout. He pointed out expenditures have actually been reduced for 1992. He indicated the increase in taxes comes from either increases in expenditures of the general fund or greater debt service..- He stated the main reason for a -tax increase this •year is- because of the debt service for the new facility. _. Weed asked what the expenditure for fire entails. Moorse explained that the City contracts with four different fire departments for service. 1 N MINUTES OF THE.ORONO 199$ BUDGET HEARING — DECEMBER 49 1991 Bruce Fike asked what are the interest payments on the bond issue which were proposed to be accelerated last year. He asked what were the normal interest payments last year. Kuehn noted that they are in the water and sewer operating funds, and have not been accelerated this year. Callahan noted that $103,000 of the money allocated for fire protection goes to the Long Lake fire department. Weed asked if the Long Lake fire budget is solely funded by contracts. Moorse stated the Long Lake Fire Department is supported by contract cities plus tax levies. . Jabbour pointed out the City does have a mutual aid agreement with the fire departments. Moorse explained that in regards to the tax levy, the general fund has increased only .4 %, which is basically frozen. Sewer and water bonds has increased to retire the Crystal Bay sewer bond. The new item is the bonds for the new City facility. The total increase in tax levy for 1992 is 14.46 %. Weed reiterated that amount is the payment on the building bonds. He asked how much the City bonded for, and how much was in the building fund. Callahan noted the budget for the building is $4,050,000 on the assumption that the decommissioned sewer plant property would be sold for an additional $150,000. He stated the City paid $300,000 for the land. They borrowed $4,000,000 and are putting $400,000 into an escrow account against the bonds. He noted the building fund balance is about $2,000,565. Goetten noted they are using the interest to buy down the bonds. Jabbour stated they essentially were able to borrow money at a lower rate than the City could get on its investments because of the City's excellent credit rating. He noted if the building fund were used, the rating could change for additional bond sales. He noted that only 10% of the bond amount can be put aside to service the bonds. Goetten stated that they were concerned about the future of Minnesota Legislation and they wanted to be well prepared if the State were to further reduce revenues available to cities. Fike asked if these numbers are contingent upon both the sale of the sewer plant site and the Crystal Bay site this year. Callahan noted that if the properties were retained for park land, money would be used from the building fund to offset the difference. 2 MINUTES OF THE ORONO 199t_ BUDGET HEARING — DECEMBER 4, 1991 Weed reiterated that the annual service on the bonds is $232,000. Moorse explained that is the amount that the Council has indicated that will be levied on an annual basis, which is a 1.75 levy for the debt service. . Callahan noted the interest rate on the bonds was 6.175% average. Moorse explained that the total gross tax levy is increasing 14.5 %. He noted with the aids they will receive, the net tax levy increase will be 10.3 %. Weed asked what HACA stands for. Moorse stated it reflects homestead and agricultural credits from the State. Moorse stated they are receiving less in fiscal disparity than before. He reviewed the handout reflecting the effect of the tax levy on homes. He explained that the estimated market value is the value the assessor assigns, the tax capacity is the taxable value on that property, and the tax capacity rate is the percentage that is applied to the taxable value to determine the actual tax for a parcel. He stated the tax law changed in 1991, reducing the taxable value of higher valued homes and shifting a portion of the property tax burden to lower valued homes. Fike asked what governmental body determined the tax capacity for 1992. Moorse stated that State law determines that amount. Weed noted this is only Orono's portion of the tax capacity rate. Moorse compared Orono with other metropolitan cities with over 2,000 in population. He noted there are 95 cities in this catagory and Orono ranks fifth in lowest tax capacity rate at 11.865 %. The average rate is 21.248 %. PUBLIC COMMENTS Mayor Peterson asked if there were any other questions from the public. Vicki McKinney, 3399 Crystal Bay Road, asked what the procedure is if they do not agree with their assessed value. Callahan stated that each spring the Board of Review is held to review complaints or comments by residents on their assessed _ value. He noted Council is limited by law as to what they can change. Jabbour noted it would be best to contact the assessor now and do homework on neighboring property values. 3 r ' ,. MINUTES OF THE ORONO 1992,BUDGET HEARING - DECEMBER 4 ,1991 Fike noted that once the review process has been opened, the assessor may determine if the value is too high or too low. Callahan noted there is an item in the budget which reflects a reduction in revenue referring to the levy for lost tax receipts due to abatements. He suggested that.if. the homeowner did not ,wish to appear before the Board, she write a letter stating her objection and move onto the County level of appeal. Goetten noted that it would be best to contact Rolf. Erickson, City Assessor, to answer any questions she may' have 'on the procedure or dates of appeal. Weed felt the budget was good and was glad to see the Council hold the cost down. Fike asked when and how the City would divest in the Crystal Bay facilities site. Jabbour noted the unofficial feeling of the Council was.that it ,should not be sold. Dr. Vongries, Park Commission Member, stated that the Park Commission is planning to hold a public meeting to discuss the fate of the property. 1992 BUDGET It was moved by Jabbour, seconded by Goetten, to adopt the 1992 budget as presented, conditioned upon.review of Public. Works expenditures. Moorse pointed out the Council needs to adopt two resolutions, one to certify the levy and one to adopt the budget in detail. Jabbour withdrew his motion. Kuehn noted that the budget can be amended throughout the year if needed. He noted that capital items for Public Works would need further Council approval as they come up throughout the year. FINAL 1991 TAX LEVY — RESOLUTION #3050 It was moved by Callahan, seconded by Jabbour, to adopt Resolution #3050, approving the final 1991 tax levy collectible in 1992 as follows: -, M MINUTES OF THE ORONO 19n BUDGET HEARINQ - DEQEMUR 4, 1991 General fund $1,644,831 Special assessments 5,630 Lost tax receipts due to abatements 1990 6,220 G.O. sewer improvement bond 1985 50,000 G.O. sewer improvement bonds 1980 16,800 G.O. sewer, water, street improvement -- . bond 1982 5,500 Bonds of other goverment units H.R.A. building bond 232,400 $1,961,381 and hereby directs the City Clerk to transmit a certi.fJ ed copy of the resolution to the County Auditor of Hennepin County, Minnesota. Ayes 4, nays 0. 1992 BUDGET — RESOLUTION ##3049 It was moved by Callahan, seconded by Goetten, to adopt Resolution ##3049, adopting the 1992 budget in the following amounts: ESTIMATED REVENUES Taxes — General $1,644,831 — Special levy City assessments 5,630 — Tax abatements 6,220 — Penalties and interest 91999 Licenses and permits 115,000 Intergovernmental 185,600 Charge for services 791,960 Fines and forfeits 76,000 Interest income 46,500 Other 19,700 Transfers from other funds 123,450 APPROPRIATED EXPENDITURES General government Public safety Street maintenance Parks and recreation Recycling program Engineering — unallocated Reimbursable expenditures ..,Special projects — contingency Transfers to other funds Ayes 4, nays 0. 5 $3,024,890 MINUTES OF THE ORONO 1991-BUDGET HEARING — DECEMBER 49.-1991 ADJOURNMENT It was moved by Jabbour, seconded by Mayor Peterson, to adjourn the 1992 Budget Public Hearing Meeting at 7:50 p.m,. Ayes 4, nays 0. Barbara A. Peterson, Mayor A EST: Z4 Ootlothy allin, City Clerk ` 6