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HomeMy WebLinkAbout06-28-2021 Council Work Session PacketCouncil Work Session Monday, June 28, 2021 5:00 P.M. Orono Council Chambers, 2780 Kelley Parkway, Orono, MN 55356 WORK SESSION AGENDA The Orono Council Work Session is open to the public 1. Budget Discussion Council Work Session Monday, June 28, 2021 5:00 P.M. Orono Council Chambers, 2780 Kelley Parkway, Orono, MN 55356 Past Meeting Agendas June 14, 2021  Fire Department Equipment Overview May 10, 2021  Potential Land Use Classification April 26, 2021  2022 Street Maintenance Project  Council Delegation of Administrative Responsibility Changes Annual Discussions Timeframe:  Budget: Part of June, All of July, August and October.  City Administrator & Police Chief Update (3 times per year for 15 minutes) 2020 Budget – Page 1 MEMORANDUM To: Mayor Walsh and Orono City Council From: Ron Olson, Finance Director Subject: 2022 Budget Date: June 28, 2021 Attachments: 2022 Budget Work on the 2022 budget has begun. Staff is looking for guidance from the Council on the funding priorities for the budget and the level of the property tax levy. In order to assist the council, the departments have identified items that may be increasing that are outside of our control, program and/or staffing change requests that may impact the budget, previously planned tax levy increases (parks and road). Guidance form tonight’s meeting will be used to prepare a draft General Fund budget that will be presented at the July 26th work session. Issues for discussion: 1. Wage and benefit (FICA, PERA, Health, Work Comp) increases. The City’s four union contracts are in force through 12/31/22. The contracts call for a Cola increase of 2% increase on January 1st, and an additional 1% on July first. The non-union employees have been calculated at 3% on January 1st. In addition to the Cola increase, some employees will be eligible for step and longevity increases. Wages for current employees, including Cola, Step, Longevity, FICA, and PERA will increase $115,000. Workers’ Comp premiums are calculated based on wages and an underlying rate based on job classification. The underlying rates are currently estimated to be increasing by 20%; this is driven in large part to the increase of PTSD claims. This will result in an estimated 30% ($40,000) increase in premiums. For health insurance, union contracts call for a 50% match of the family health insurance premium increase. A 10% premium increase would result in an additional city contribution of $75 per month which is approximately $30,000. We will not know the actual insurance premium increases until later this year. The total General Fund increase in wages and benefits is expected to increase by $185,000. 2. Inflation looks to be a factor in 2022. The current Minneapolis/St Paul CPI-U is at 4.6% over the last 12 months. Some of this increase is the result of a rebound of prices after pandemic related dip last spring. Some of the increases are due to ongoing supply chain issues, and some are related to ongoing labor shortfalls. The biggest impact of the CPI for expenditures will most likely occur in the 2023 budget as the labor unions will ask for higher Colas. 2020 Budget – Page 2 Staff has identified the following significant increases that are expected for key supplies and services for the City. 3. There are some significant revenue increases that will offset some of the increased expenditures. The agreement with Spring Park to provide public works service will bring in $191,000 of new revenue. Increases to the Police Service contracts will total $103,000. Spring Park and Minnetonka Beaches increases are based on the labor contracts 2022 COLA, Mound’s increase is calculated on the Mpls/St. Paul CPI-U from May 2020 to May 2021. 4. What level of increase in the tax increase is the Council comfortable with? The 2021 property tax levy totaled $6,610,620. 2022 is the final year for the 2016 Debt Service levy. 2021 2022 (E) General Fund $4,921,140 $5,142,940 Building Fund 310,000 390,000 Pavement Management 750,000 900,000 Parks 50,000 100,000 2014 Debt Service 166,700 161,000 2016 Debt Service 412,780 416,680 Total: $6,610,620 $7,110,620 Current estimates have the City’s taxable market value increasing by approximately 8%. This increase would allow an increase in the levy of $500,000 without increasing the tax rate. The City’s current tax rate is 16.78% and is the 4th lowest in Hennepin County. Each increase of .1 in the tax rate is equal to approximately $39,000. 5. There are several organizational / position changes staff would like to explore during the 2022 Budget process. The majority of the changes should be budget neutral. The plan will be to review these position changes with the Organization Committee this summer and fall concurrent with the 2022 budget process so that any changes can be incorporated. Department Description Cost Police Body Cam Storage 10,270 Central Services Recodification – 18 years since last done 25,400 Elections 2020 is an election year (includes staffing for early voting 42,070 Building & Zoning Inspection Services – Net increase with MnSpect 215,000 Parks Building and Grounds Maint – Organic & Norlings 10,000 Spring Park – PW Additional PW Costs 173,000 All Departments Comprehensive Property and Casualty Ins 20,000 All Departments Wage and Benefits (As highlighted above) 185,000 $507,740 2020 Budget – Page 3 As part of the process staff will provide more detailed budget impact statements for each. Below is a summary for the proposed organizational changes to be explored. A. Mechanic Position. Reinstate the full time mechanic position. i. Justification. Currently the city spends a lot of money on contracted maintenance for both vehicles and generators. In addition the public works department is routinely required to divert utility and streets maintenance workers to perform routine vehicular maintenance. Providing the capability in house will increase responsiveness, provide flexibility and release maintenance works to focus on the cities utilities and infrastructure. ii. Resource. Realign current budget resources from contracted vehicle maintenance and generator maintenance to wages and benefits for a full time mechanic. B. Finance Assistant - Change of Utility Billing/ Public Works Admin position to a Finance Assistant position. i. Justification. Utility Billing and Payroll are both finance related activities and should be combined and placed under the direction of the Finance Director to improve efficiency and accountability. This position will also serve as the back up to accounts payable and allows for internal controls in line with financial accountability best practices. ii. Resource. This change will be overall budget neutral involving the reallocation of duties and retitling of position. C. Parks Maintenance Worker. Convert / combine the current seasonal parks maintenance workers into a fulltime parks maintenance worker. i. Justification. The City’s parks have received increased investment and there is an ever increasing expectation of level of service. ii. Resource. Reallocate seasonal budget and use part of the parks operating budget increases. Part of the revenues from the Spring Park Contact will fund this position. D. Parks and Public Works Administrative Assistant. i. Justification. The Public Works and parks departments need dedicated administrative support to efficiently operate. In addition the acceptance the Spring Park contract has increased the administrative burden on the department. ii. Resource. This position will be funded through General Fund (streets, parks, golf course), Utility Funds (Water, Sewer and Storm) and a portion of the Spring Park contract. 6. Are there initiatives that the Council would like to see funded that are not currently included in the budget? Task Who June 6/2 – 6/10 Finance updates budget documents Finance 6/7 Finance meets with City Administrator Finance 6/8 Finance updates Departments on upcoming budget Finance 6/14 Budget worksheets available to Departments Finance send to Department Heads 6/14 – 6/23 Department identify 2022 budget needs (aka Department highlights)Department Heads 6/23 Department highlights due to Finance for 6/28 WS Department Heads 6/28 Council Work Session (wages and levy budget and Department highlights)Finance 6/29 Finance updates Departments on Council guidance Finance July 6/29 – 7/8 Departments work detail budgets as needed Department Heads 7/8 Budget worksheets due (General Fund)Department Heads 7/13 – 7/16 Department budget meetings with Administrator (Finance first)Department Heads 7/16 Deadline for Information included in 7/23/ Council Work Session Department Heads 7/19– 7/22 Prepare Draft Budget for Council WS – Packet to Council by 7/22 Finance 7/26 Council Work Session (General Fund)Finance 7/27 – 7/30 Update budget to reflect Council Input Department Heads 7/30 Enterprise Fund deadline (Utilities) & Internal Service Fund deadline Finance & PW Superintendent August 8/2 – 8/13 Update budget to reflect input Finance 8/16 – 8/19 Updated General Fund and Enterprise Budgets to Council for 8/23 WS Finance 8/23 Council Work Session (Enterprise Fund and Updated General Fund)Finance 8/24 – 9/23 Refine budget Information – Packet to Council by 9/23 Finance September 9/1 CIP forms distributed Finance send to Department Heads 9/1 – 10/8 Utility rate study starts Finance  9/27 Council Work Session (Updated Enterprise Fund, if needed)Finance 9/27 Adopt preliminary tax levy and GF budget at council meeting Finance 9/30 Preliminary budget/TNT date on website Finance October  10/1 CIP updates due Department Heads 10/4 Fee Schedule Updates Start Finance send to Department Heads 10/1 – 10/18 Refine budget as estimated numbers become firm Department Heads 10/11 – 10/15 Finance meets with PW to discuss utility rate study Finance, City Engineer, & PW Sup 10/11 Council Work Session (CIP)Department Heads 10/25 Council Work Session (any updated budget numbers and CIP)Department Heads 10/29 Fee Schedule updates due Department Heads November 11/1 – 11/30 Final Budget preparation Finance 11/22 Fee Schedule Discussed at Work Session Finance December 12/6 TNT Hearing, Adopt final levy, budgets, fee schedule and CIP Finance 12/8 Final Budget information on website Finance 12/17 Certify Levy to Hennepin County Finance 12/31 Budget submitted to the state and distributes budget books to Council Finance City of Orono 2022 Budget Timeline Dates