City Council Workshop

Blaine City Hall City of Blaine 10801 Town Square Dr Blaine, MN 55449 Anoka County, Minnesota Minutes - Final City Council Workshop *While this is a public meeting where interested persons are welcome to attend, it is a work session for Council and staff to discuss issues before them. It is not for the purpose of receiving public input. Thursday, December 3, 2015 7:00 PM Cloverleaf Farm Room A NOTICE OF WORKSHOP MEETING 1 Call to Order The meeting was called to order by Mayor Ryan at 7:00 p.m. 2 Roll Call Quorum Present. ALSO PRESENT: City Manager Clark Arneson; City Attorney Patrick Sweeney; Planning and Community Development Director Bryan Schafer; Public Services Manager Bob Therres; Finance Director Joe Huss; Financial Analyst Ward Brown; Police Chief/Safety Services Manager Chris Olson; Communications Technician Roark Haver; Senior Engineering Technician Al Thorp; City Clerk Catherine Sorensen; and Recording Secretary Linda Dahlquist. Present: 6 - Mayor Ryan, Councilmember Swanson, Councilmember Clark, Councilmember Bourke, Councilmember Herbst, and Councilmember King Absent: 1 - Councilmember Hovland 3 New Business 3-1 WS 15-61 2016 GENERAL FUND BUDGET UPDATE Finance Director Huss stated direction from the Council was to reduce the tax levy to equal the tax rate of 2015 which would cut revenue by $300,000 and would require a reserve draw for the 2016 general fund budget resulting in an unbalanced budget. He noted that long term a structurally imbalanced budget is problematic for future years. He gave an overview of the general fund five-year projection which included assumptions of 3.5% and 5% annual growth rates. He stated concerns with a structurally imbalanced budget include the EDA operations not being fully supported; the PMP relies on unrestricted reserves; market value corrections; legislative acts; and fiscal disparities assumptions. He commented the 3.5% model shows a deficit and City of Blaine Page 1 City Council Workshop Minutes - Final December 3, 2015 the 5% model would bring the budget into balance. Councilmember Clark asked where the reserve draw funds come from. Finance Director Huss replied the general fund has a reserve for cash flow and contingency. Councilmember Swanson clarified the model shows there will be no additions to the unrestricted reserve. Councilmember Bourke stated the funds that are there today will be there tomorrow. Finance Director Huss replied the model assumes there are no increases in staff or in the level of service. Councilmember King asked about market value correction concerns. Finance Director Huss replied yes he does not know where they will end up. He stated the City is in a good position with development coming onto the tax rolls in 2016-2018. Councilmember King asked if a structurally imbalance budget will affect the City’s bond rating. Finance Director Huss replied cash reserves are a gold standard with bond companies. He stated bond companies rate the City on its ability to repay its debt. He noted the past three years had budgeted reserve draws that were not used. Councilmember Bourke stated the $300,000 is available in unrestricted reserves. Finance Director Huss replied it is not a recommended practice to adopt an imbalanced budget. Councilmember Bourke stated the City would be fine for 2016. Finance Director Huss replied the City would be $300,000 behind going into 2017. Councilmember Bourke commented the $300,000 is over the operating necessities. He noted that 2016 budget is not a concern, but the 2017 budget is a concern. Councilmember Herbst commented in the past the City had a large carry over from previous years. He noted the projected carry over for 2015 will bring down the deficit. Finance Director Huss replied the 2015 unrestricted funds are projected to be $1.1 million and would be used to cover the $300,000 deficit, the Pavement Management Program and Capital Equipment purchases. Councilmember Clark commented that the carry over funds are from budgeted items that were not spent. Councilmember Swanson clarified the budget the Council is to adopt for 2016 may create problems for future years. City of Blaine Page 2 City Council Workshop Minutes - Final December 3, 2015 Mayor Ryan commented he is concerned that market values will continue to drop. Councilmember Clark commented the City underspent $1.1 million which the City collected in taxes. Councilmember Bourke commented there are a lot of assumptions and staff can balance the budget within $1.1 million. He asked about the dollar amounts in the money manager funds. Finance Director Huss replied between $65,000,000 and $70,000,000. Discussed Other Business None. ADJOURN The Workshop adjourned at 7:30 p.m. Adjourned City of Blaine Page 3