CC 2010 12 06
CHANHASSEN CITY COUNCIL
SPECIAL MEETING
DECEMBER 6, 2010
Mayor Furlong called the meeting to order at 7:00 p.m. The meeting was opened with the
Pledge to the Flag.
COUNCIL MEMBERS PRESENT:
Mayor Furlong, Councilman Litsey, Councilwoman
Ernst, Councilwoman Tjornhom, and Councilman McDonald
STAFF PRESENT:
Todd Gerhardt, Laurie Hokkanen, and Greg Sticha
PUBLIC PRESENT:
Al Reckner 6595 Foxtail Court
Tom Devine 7640 South Shore Drive
Greg Fletcher 7616 South Shore Drive
Rita Jurgens 731 Sierra Trail
Gerald Dresow 7601 Nicholas Way
Gloria and John Cox 6990 Shawnee Lane
Rick Dorsey 1551 Lyman Boulevard
Jeff Fox 5370 Howards Point
Mike Leonard 8129 Stone Creek Drive
Mike Corbin 8750 Sunset Trail
Paul, Terri and Stephanie Bloomquist 960 Lake Susan Drive
Frank Ernst 840 Cree Drive
Jan and Jerry Paulsen 7305 Laredo Drive
Dick Pearson 1321 Lake Drive
Bob Ayotte 6213 Cascade Pass
Bill Munig 6850 Stratford Boulevard
Karen Kaiser 7601 Nicholas Way
PUBLIC MEETING ON THE PROPOSED 2011 BUDGET.
Mayor Furlong: Thank you, good evening and welcome to those who have joined us here in the
council chambers as well as those watching at home. We’re glad that you joined us this evening
for our annual Truth in Taxation hearing. We will be having a public meeting tonight on budget
and tax issues that the council will be deciding on. We won’t be making any decisions this
evening. Our decision with regard to the final budget and levy and other matters will be made at
our regular council meeting next Monday. But let’s start with a staff report please and then we
will open it up for public comments and questions and try to get your questions answered here
this evening if we can. So Mr. Sticha, good evening.
Greg Sticha: Good evening Mayor and council members. I’m going to jump right into my power
point presentation. If you guys have any questions along the way, don’t hesitate to stop and ask.
Before I get started I just want to point out that all of the slides in tonight’s presentation are
City Council Truth in Taxation - December 6, 2010
based on the preliminary levy which was set in September and so all the numbers will be based
on that preliminary levy. Kind of give a brief overview of how the budget process works. In
July the department heads met with their staff to formulate their budgets for 2011, in early July.
Those were sent to myself and the city manager for review in late July. Then in August of this
year we had our detailed budget meeting. In previous years we had had that in October. Staff
gave detailed power point presentations on each of the department’s budgets. In September, on
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September 13 we set the preliminary budget for Truth in Taxation statement purposes, which
residents should have received within the last week and a half or two weeks. This evening we’re
holding our public budget meeting and then next week we’ll be adopting the final tax levy and
budget for 2011.
Todd Gerhardt: Greg, excuse me. If anybody would like a copy of the power point or detailed
budget, they’re sitting on the table right there so.
Mayor Furlong: Excuse me as well. If anybody else has any trouble hearing, we’ve got
microphones and sometimes it’s hard to find the right balance. There are some hearing assistant
devices over there at the counter as well. Thank you. Please continue.
Greg Sticha: First let’s take a look at the expenditures and the changes from 2010 til 2011.
They’re broken out by general area within the general fund. General government, law
enforcement and fire, public works, community development, park and recreation and then the
transfer. As you can tell from the slide, no particular general area had a very significant increase.
There was a small increase in the law enforcement fire area based on the preliminary levy which
was due to an increase in, small increase in the police contract and an increase for the
contribution for fire relief. A small increase. And then any other increases were either due to
health care costs or wage increases based on the prelim levy. On the revenue side, a couple
items of note. In particular permit revenue line item was adjusted for 2011 to reflect what we’re
actually receiving in 2010. That line item was increased by just over $80,000 which makes up
most of the 11.7% increase for 2011. On the charges for services line item, that decrease was
entirely due to the admin charge for utility projects for 2011. We are planning on participating in
as many large utility projects for 2011. Therefore the admin charge for engineering services for
those projects are down significantly from the previous year. And other revenue is down 8.3%
and that’s mostly or solely due to interest earning income being budgeted lower than the
previous year. So taking a look at our general fund expenditure history since 2003, it shows each
of the years general fund expenditure budget since then and the percent increases that we
experienced in each of those years.
Mayor Furlong: Excuse me. That slide there. Are those budgeted or actual expenditures?
Greg Sticha: Those are budgeted expenditures.
Mayor Furlong: Okay and the.
Greg Sticha: And the next slide I’m going to go into budgeted and actual.
Mayor Furlong: Alright, thank you.
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City Council Truth in Taxation - December 6, 2010
Greg Sticha: So how did we compare budget versus actual in each of those years? I put together
this slide to represent that. As you can see in 2009 the budget was $9,859,000 for expenditures.
We actually spent $9,238,000. A note should be made on the 2009 expenditure budget. There
were significant amount of cost reductions we partook in that year to offset the amount of permit
revenue that we knew we were going to be under budget on so thus resulting in $620,000 dollar
positive variance on the expenditures, or the largest impacted factor on the expenditure budget.
And then each of the years previous to that is listed with either the over/under variance with
budget. With under being the items in parenthesis. What factors changed the budget for 2011?
Most expenditure line items remain flat for 2011. General fund expenditures increased less than
1%. .8% or $80,000. Of that increase public safety accounts for almost $60,000 of that, and I
discussed that a little bit briefly earlier. There are wage increases included in the preliminary
budget of 2% and as I discussed earlier we did budget for an increase in permit revenue of
$81,000 to reflect actual collections that we’re seeing in 2010. And as a side note, it appears that
permit revenue for 2010 will most likely exceed budget by about $200,000, which is even a little
higher than I had previously projected so that’s a bit of good news. Tax capacity levy changes.
Each of, I’m going to go through each of the levies that the City has for 2011 as they compare to
2010. The general fund levy experienced a 1.5% increase based on the expenditures that were,
and revenues that were listed in the previous slides. And the preliminary levy we planned for a
flat capital replacement equipment levy, a flat sealcoating levy, and then the remaining four
levies are for required debt obligations. There isn’t a whole lot of room there to make
adjustments to those. Those are required by statute and the obligations we have to pay back the
bonds in each of those areas so not a large amount of possibly for adjusting any of those
particular levies. And then we do have one market value levy for the library which we’ve
refinanced earlier this year and those bonds are on the books til 2022. What’s the net result of all
that information? It results in the general fund levy increase of 1.5% that I mentioned earlier.
Total tax levy increase of all of those levies that I just discussed is 1.06% which is the exact
amount of new growth the City experienced in, for taxes payable in 2011. We do have one slide
on health care costs comparison and Laurie was going to help me with that slide and she stepped
out on me so I’ll attempt to go through these here real quickly. We experienced a 16.8%
decrease in our health care costs for 2008 and then 9% and 11% increases in 2009 and 10. From
what I understand that’s pretty typical of amounts of increases. We had known about the
decrease in 2008 by making some adjustments to our plan at that point in time and we knew that
at some point in time there was going to be a catch up for that and that is in 2011 where
budgeting for 25% increase. In total we’ve seen a 23%-24% increase in health care costs since
2005 resulting in an average increase per year of about 4% in health care costs. Taking a look at
how we compare to our key financial strategy cities, on our contribution for single and family
coverage for our employees, based on 2010 data, the City spends about $488 per month for
employees of single coverage compared to the other cities in our key financial strategy cities of a
$503 and a median of that is $485. And for family coverage the City spends $812 per month
compared to our other comparable cities who spend about $830 and the median is the $812. We
were the median of all the cities for family and for single coverage. Wanted to give just a little
more information about compensated absences and what that number comprises. It’s required by
the Government Accounting Standards Board made a requirement in 1992. It is a designated
liability for accruals of sick and vacation balances. It is not a reserve of actual cash. The
liability is reported on the balance sheet only and is offset by other assets. Not having that
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City Council Truth in Taxation - December 6, 2010
liability on our books would be a failure to comply with the standard and would result in a
qualified opinion from our audit firm. A violation of generally accepted accounting principles,
which would also be a violation of state law and a loss of our financial reporting excellence
award and would also most like impact our bond rating. So how does this impact the
homeowners which are here this evening and based on the preliminary levy what the truth in
taxation statements they received were based on. I took 6 parcels within the city. These are
actual truth in taxation statements that were sent out in November by the County. I tried to find
some homes that decreased in value very close to zero or had increases. Was not able to find
many or any that did. I found a couple that decrease in value minimally. Parcel 2, Parcel 4 and
Parcel 5 experienced right around a 1% or less decrease in value and as you can see the thus
resulting increase in the city portion of their property tax. Parcel 3 and Parcel 6 saw an increase
in their property value, more than the average of the 5.2 to 5.3 percent which is the taxable
market value average decrease for homes in Chanhassen for 2011 and Parcel 3 and Parcel 6 saw
a slightly above that average thus resulting in a decrease, slight decrease in their city portion of
their property taxes. So I took one of the actual statements on the previous page and broke it out
by what that parcel is paying for with that property tax bill. Just under 31% of their property tax
bill is going to the County. Just over 44% is going to the school district. Just under 21% is for
the City levies and then 5.6 for other levies which would include Met Council and the
Metropolitan Mosquito Control District and a couple other small levies. Some discussion points
that will impact our final levy adoption and that we’ve already discussed with the City Council
and will be discussing in our remaining meetings before we set the final levy. A couple of
budget adjustments will probably need to be made to interest earnings and for the volunteer fire
fighter pension contribution. Interest earnings as we talked about previously are not rebounding
and the budget we set for that at the preliminary levy I think is a little high and an adjustment
will need to be made as well as we now know what the volunteer fire fighter pension
contribution is going to be required for 2010 and we have some estimates as to what we think it
could be for 2011, which is probably going to be pretty similar to what we experienced for 2010.
Some other areas that council still wanted to look in before setting the final levy were the capital
equipment replacement levy. Whether to continue the transfer for roads. Whether to continue
animal licensing and what to set the wage adjustment for employees at. Staff will be meeting
with the City Council later this evening to discuss these points and other points in regards to the
budget and the levy and then we’ll be meeting next Monday evening to set the final budget and
levy for 2011. And that’s the end of my presentation so be happy to take any questions from the
council.
Mayor Furlong: Any questions for Mr. Sticha at this point? No? Okay. Let’s go ahead then
and open the public hearing. I would invite anyone who would like to address the council on
matters of the budget, or the taxation, to come forward. When you do come forward please state
your name and address for the record so that our minutes can be recorded accurately. Also if you
have a question about your particular property we would certainly welcome those but we may
need to have staff investigate it and get back to you after this evening if it’s a specific question
for your property, but I don’t want to exclude somebody if they have a question from not asking
it this evening. As a council we’re here to listen tonight so we’re not making any decisions, as I
said earlier and would like to hear what your thoughts are as we get started. Mr. Sticha, did you
have a?
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City Council Truth in Taxation - December 6, 2010
Greg Sticha: Yep. Mayor, if they do have a question about their particular property tax
statement, if they could find a way to get me a copy of their statement so I can take a look at
their statement in particular and research each of the areas that might help them with an answer
to their question, that would be helpful.
Mayor Furlong: Or a property address might help you...
Greg Sticha: Yeah. Or property address or PID. Then I can get the information…but if they
have it with them that’d be great.
Mayor Furlong: …start making a list we can take care of that.
Greg Sticha: Absolutely.
Mayor Furlong: Okay, that’s fine. And then we may or may not have those questions but I just
want to make sure they’re welcome. At this point then I would open the public hearing and
invite people to come forward and address the council.
Bob Ayotte: Good evening Council. My name’s Bob Ayotte. I live at 6213 Cascade Pass in
Chanhassen obviously. I’m not here to raise an issue about my property taxes but I would ask
the council to visit, as they take a look at the budget I notice that some numbers, for example in
the area of public works and another area, parks and rec, in my view were diametrically opposed
when we’re facing a water treatment issue. Possibly water supply issue and I would just ask that
you would consider reviewing that particular area and possibly coming back to the public and
seeing what things can be done so my only concern with respect to the budget process and what I
saw in the numbers was public works. Where it sat versus some other areas that went up and
when we’re coming to a possibly a water issue, maybe we’ve got to look at that. Thank you.
Mayor Furlong: Alright. And I guess for clarification if I could Mr. Ayotte, were you looking at
the general fund expenditures? What was presented here tonight, was there a particular slide that
you saw or was it more detailed information?
Bob Ayotte: More detailed information. I don’t, I just want to make it a matter of public record
of my concern and I’ll probably give one or two of you a call to discuss it specifically another
time. Thank you.
Mayor Furlong: Okay. Thank you. Others that would like to address the council this evening.
Good evening ma’am. Please come forward.
Rita Jurgens: I’m Rita Jurgens, 731 Sierra Trail. Our taxes went up 10.4% for $399. That’s
kind of hard on retirement income but my question is on the voter approved levies, that was our
biggest jump and I’m wondering what those levies were. According to the figures up there it
didn’t look like they added up that much.
Mayor Furlong: Do you have a copy of your statement here? Could you point it out to Mr.
Sticha.
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City Council Truth in Taxation - December 6, 2010
Greg Sticha: I believe the voter approved levies that are broken out on the Truth in Taxation
statement are actually from the school district. Are you talking about these right down here?
Rita Jurgens: Yes.
Greg Sticha: Those are the school district levies, both of them so you, they had their meeting,
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actually your’s has your meeting next, the 9. This Thursday.
Mayor Furlong: That’s correct.
Greg Sticha: So to address each of those concerns you would have to attend Eastern Carver
County School District meeting.
Mayor Furlong: Is that District 112 then?
Greg Sticha: That is yep, 112.
Mayor Furlong: Okay. So District 112 is holding their public hearing on Thursday.
Greg Sticha: On Thursday.
Mayor Furlong: Okay. And I think that speaks a little bit to that one pie chart. Could you pull
that back up?
Greg Sticha: Yep.
Mayor Furlong: That shows the total property taxes at the bottom of the statement is really the
collection or the addition of all the different taxing districts. Others that would like to speak this
evening. Good evening sir.
Bill Munig: Bill Munig, 6850 Stratford Boulevard. Just like to look at the general idea of
keeping spending under control a little bit better. I see a continual growth in the spending on
your charts. I’m making what I was making in ’98 myself and a lot of people that are on fixed
income aren’t getting pay raises and President Obama asked the federal employees to take a pay
freeze so I don’t want you to be more liberal than Obama so when you take a look at pay raises,
you might want to take a look at that. Capital expenditures, everybody’s driving their vehicles
an extra year or two. You might take a look at that and just kind of get a grasp on spending.
There’s a general moving around to keep government under control a little bit and things are
getting out of control at the county level. Buying dance halls and different types of pet projects
that they have at the county level and I hope that disease doesn’t make it’s way down here to the
city level so just asking you to take another look at keeping spending under control. See if we
can’t cut some stuff out of the budget. Thank you.
Mayor Furlong: Thank you.
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City Council Truth in Taxation - December 6, 2010
Tom Devine: Tom Devine, 7640 South Shore Drive. First of all I’d like to thank all of you for
all the work that you do and I certainly appreciate all the work that the City does and the
wonderful community that we live in and the fact that we are listed in various surveys being one
of the best places to live. I certainly appreciate all that and I’m more than happy to pay taxes
you know in order to enjoy those wonderful benefits that we all have. I come here tonight really
to bring a certain awareness of what my own particular situation is really in terms of what my
taxes are right now. I spoke last week at the Carver County Truth in Taxation hearing. There
was a pretty good turnout of people there. Much greater than what normally is there and of
course the people there came with much of the same stories about what the impact is relative to
the County portion of the taxes. What I’m going to do tonight is just talk about the City portion
of those taxes in terms of how it affects me. If we, over each of the last 5 years my taxes have
gone up. They haven’t gone up significantly in some years but certainly some of that’s been
related to the assessed values. How the assessed values have climbed and then now have
dropped back. Right now the assessed value on my house is actually below where it was 5 years
ago and what I did is I pulled out my property tax statements tonight in order to pull out and
really kind of compare, not just this year to last year but to really look at the window over 5
years to see what the real picture really looks like and the story tonight that I share with you, just
to bring awareness because most people don’t go back 5 years but what my property tax
statement shows is that my property taxes are up 22.8% over that 5 years. Even though my
assessed value has gone back down below what it was 5 years ago and so when we look at this
and try to understand where we’re at, I think that part of what we’ve got to do is look at the
overall spending that we’re looking at and I noticed that the slides addressed a lot of the issues
that have come out. The issues that were in the Chanhassen Villager here, there was the article
that was in the paper and what not this last Thursday but certainly I think what we have to do is
there isn’t a lot of spending as I see and as I flip through the handout tonight, the areas that have
gone down and I guess that’s really what my concern is, is in terms of what’s going to happen
you know going forward. I bring this because this is the onset of what we’re going to be dealing
with in January. All of you have seen that the State is going to be 6.2 billion dollars behind here
in the upcoming several years here, the state legislature and that effect is going to be a ripple
effect somehow backwards. I can’t, I don’t know enough about all of the impacts of how all
these things affect each one of us in each budget within the city. I know we’re by and large not
dependent on state revenues and whatever but somehow it has an affect in the overall economy
here in the State of Minnesota what this is and clearly one of the issues that’s going to be front
and center is the impact on school districts, and I’m not here to talk about the school district
taxes but it’s all part of what makes up the whole picture of what we end up paying obviously in
the property taxes. And so what I come to share tonight is I think that we’ve got to really look at
are we mirroring in terms of our spending here in the city what’s really going on around us and
all the other aspects of the government right now, and certainly we’re looking at the federal
government. We’re looking at the state. We’re going to see a significant financial changes up
the road. What they are. How it’s going to play out I guess we don’t really know at this point
but I think that we really need to look at this and understand what our expenditures are, what our
salaries are, all of the things that have been brought up. I don’t know all it. I haven’t dwelled
into it but I just know in a general sense, when I look at the budget numbers and see that the
same or just slight, slight increases, I know that’s not necessarily reflective of income that a lot
of people here in the community have. Last week at the Truth in Taxation hearing in Carver
County there was story after story of commercial property owners here in Chanhassen, what the
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City Council Truth in Taxation - December 6, 2010
detrimental effect is going to be in terms of empty properties and that sort of thing that they are
not going to be able to continue to pay the property taxes on, and they’re worried about that.
They’re worried about having empty buildings. How do they pay the taxes and so I say to you
tonight, I hope that you carefully analyze what you’re doing here for this next week and really
give serious, serious consideration that the budget match the reality of what’s going on all the
way around us here right now. In the federal spending, state spending, and the county and here
in the City of Chanhassen. Thank you very much.
Mayor Furlong: Thank you.
Al Reckner: I’m Al Reckner, 6595 Foxtail Court. A lot of us are on fixed income and any kind
of a tax increase is really intolerable. I have not had a pay increase in a while. My health care is
going up and my share of the health care is going up and my benefits have decreased meaning
more of that’s coming out of my pocket and somehow I have to make due through all of this and
I do appreciate your hard work in trying to go through the budget and struggle to keep it flat and
do a good job of trying to manage it. I really would ask that you take a real hard look at pay,
pensions and the shared health care because that’s the kind of thing that seems to be moving
ahead even though everything else is stable. Thank you.
Rolly Neve: My name is Rolly Neve. I live at 7635 Nicholas Way and I share with most of my
friends and associates have that in a down economy we’re suffering and we look at government
and the increase and it’s a very, very difficult thing to come to grips with. If we are suffering we
expect that the, our elected representatives should maybe feel a little pain also but I understand
and appreciate all the work that you do and that everything that comes before is beyond what
most of us have an idea of what is involved in all of these government services that come. But
the message is cut spending. You have to cut spending. I see a wage increase for public
employees. None of us are getting wage increases. If you have a statutory problem there, I think
that things should be looked at for renegotiation. If you’re locked into a certain wage increase
situation, then you’re not very responsive to the economic conditions as they vary over time and
a renegotiation would be in order. Renegotiating contracts of course is not a new concept. I
didn’t see anything in here about unfunded liabilities but I think there’s a lot of unfunded
liabilities in the budget and I think an unfunded liability is intolerable. If you can’t fund all of
your services in a given year and try to kick some forward to finance it with future taxes, I can’t,
I can’t go along with that. I think it’s, like I say, it’s intolerable and should not be allowed and
that you should focus and concentrate on how you can illuminate unfunded liabilities. I think
there’s areas where you can save money in contracting out certain services. You can contract
services in the public sector on a competitive bid basis and you would probably be able to get
some significant savings there. There’s other issues of course and one of them that I think is a
craw in my neck is federal mandates. If you were mandated by the federal government to do
things, the question comes in my mind is, is that Constitutionally authorized and I don’t believe
that the federal government has the authority to mandate to you funding the…they send to you,
in other words if they’re coming down with a mandate they should come down with the funding
also and not ask the local community to provide that money, and there have been cases were that
has been sustained that the government is not you know legally liable so. I mean legal, has the
legal power to do that, and I would encourage you to investigate that where you can minimize or
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City Council Truth in Taxation - December 6, 2010
eliminate these mandates on a lawful basis. So I guess the basic message is cut some spending
and there’s a lot of people around that express the same.
Mayor Furlong: Others.
Michael Leonard: Good evening. I’m Michael Leonard. I live at 8129 Stone Creek Drive in
Chanhassen and I would like to reinforce the idea of cutting spending. I know I’m a
businessman also in town and I know that my staff hasn’t had a, hasn’t had a raise in over 2
years and it’s not because I’m not a hard task master. I consider my employees to be very well
compensated but when times get tough, we have to examine things. We have to pull together
and we have to make tough decisions. I don’t think a tough decision is an increase. That’s an
easy decision. Everybody would like to have a raise. That brings me to another thing I would
like some clarification on. It’s a very simple thing. This history of compensated absences. Is
that basically sick time and vacation?
Greg Sticha: Yep. Accrual of sick and vacation balances.
Michael Leonard: So you accrual vacation? Okay. I just, now when that gets paid out, when is
that paid out and at what rate is that paid out? Is that paid out at the rate? Say someone makes
$10 an hour in 1995 and now they’re making $20 an hour, at what rate when they take that, when
they take that vacation time, at what rate is that paid?
Greg Sticha: That’s paid out at the current rate at the time they take the vacation or sick time.
Michael Leonard: So in other words money that I earned in 1995 has almost been put in a
retirement account for me so it effectively doubles rather than being compensated for what their
equitable worth was at the time. Is that not correct?
Todd Gerhardt: We have them capped. Sick and vacation is capped 5 times your earning rate so
if you’re earning 2 weeks, you can have 10 weeks on the books. We also have sick time capped
up to 600 hours and over the 600 you’re bought out at the end of the year at the current rate of
pay.
Michael Leonard: So there’s some type of.
Todd Gerhardt: Oh yeah.
Michael Leonard: Of governor on it in some case. I would have a hard time justifying that. I, at
the end of the year any sick time or health isn’t paid, I write the check out and they do, they can
do with the money as they wish and I don’t have an uncompensated balance. I don’t have
something I haven’t funded.
Todd Gerhardt: The 600, excuse me Mike but the 600 hours of sick time, the City doesn’t have
short term disability so that 600 hours covers the short term disability up until the long term
kicks in so we ask them to be good managers of their sick time to cover their gap there.
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City Council Truth in Taxation - December 6, 2010
Michael Leonard: Okay. So that, I just needed some clarification on that. But like I said, I find
you know, and other times when I’ve been hit either by, and mine went up by the way 4.2% even
though I consider myself right to be, just right at the, right in that range where everybody else’s
went down so but once again it’s only 20 bucks. It’s only the cost of what I think the school
board said one time is the cost of a pizza. The problem is someone else is eating my pizza, okay.
You know you can have a philosophical concern with that but someone else is eating my pizza
and I think that, I think like I said, in times, in the last 2 years in my own office, my own
business, we’ve been forced to make hard decisions about how we cut things. What do we cut?
What we, how do we reinvent the wheel? How do we do things better with less money? You
know how do we negotiate with people that we’ve never thought about negotiating with before.
Vendors and that type of things for a better price and a better deal. Sometimes all you have to do
is ask and I’m sure you guys have, you know have probably gone down that road on many
occasions and my, I guess my admonition to you is try harder because I know we’re all out there
pulling together for everybody and it’s a wonderful town to live in and I wouldn’t live anywhere
else and I would just consider you to you know take a good hard look at trying to keep you know
spending as close to flat or find out ways to get creative as you possibly can. Thank you.
Mayor Furlong: Others that would like to speak this evening. Anyone else? Good.
John Cox: Yeah I’m, my name is John Cox. I live at 6990 Shawnee Lane in Greenwood Shores
and again I would just like to have a possible to have them take a re-look at my taxes. That’s my
main concern. Everything else, I appreciate all the people that made the other comments about
how well things are going here and like I say it is a nice place to live so I want to stay here as
well. However I haven’t had a raise in two years and I’m, my taxes basically have been pretty
much the same for oh I’d say 7 or 8 years now. I remember paying roughly $1,800 twice a year
which is roughly $3,600 a year for my property taxes. This year all of a sudden it jumps $447
for some reason and I just wish somebody could take another look and try to figure out why for
the many, many years I haven’t had any increases, even though things fluctuate up and down and
now my value is lower than it’s ever been and it’s jumped $447. If they could just take a look at
that particular one.
Greg Sticha: Certainly give me a copy and I can take a look at it for you.
John Cox: You already get one?
Greg Sticha: Oh, actually I have your address. 6990 Shawnee.
John Cox: Right.
Greg Sticha: Yep.
Todd Gerhardt: If you give your daytime phone number we can give you a call.
Greg Sticha: Yeah, if you could leave me your phone number I can give you a call.
John Cox: Okay my phone number would be.
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City Council Truth in Taxation - December 6, 2010
Mayor Furlong: Sir, why don’t you write it down so it’s broadcast over cable. You don’t need
too many calls.
John Cox: Thank you.
Mayor Furlong: Thank you.
Frank Ernst: My name is Frank Ernst, 840 Cree Drive here in Chan. I’ve heard a number of
other people try to do this tonight. Send a real simple message. Reduce spending. I’m retired.
I’ve been retired for about a year and a half. Part of my retirement came because my employer
offered me an opportunity to retire early to reduce salaries because a private business. They
were looking to reduce costs. My last 3 or 4 years of working I watched co-workers get laid off.
I watched people not get raises. I watched people paying increasing health costs out of their
pocket because the employer could no longer tolerate doing it. They were reducing costs. What
we’re trying to ask of you tonight is that you reduce spending. I keep hearing talking, keep
hearing talk about the average homeowner and how they’re affected by taxes and stuff. I’m a
below average homeowner. My home is valued at about 74% of what is considered average in
Chanhassen. My taxes continue to go up. The only way it can stop is if you get the message.
We need to stop some of the spending. There’s a lot of people here tonight supporting that
opinion and we really ask that you take it seriously. It’s time to reduce spending.
Mayor Furlong: Others that would like to speak this evening? Anyone else? Last chance. I
want to make sure. Okay, well if nobody else wants to speak this evening. You did or didn’t?
No? Okay.
Karen Kaiser: I just agree.
Mayor Furlong: That’s fine. I appreciate the comments. Well thank you everybody. Let’s, if
there’s nobody else that wants to speak tonight then without objection we’ll close the public
hearing and again we’re not making any decisions tonight but with the comments made I’d
certainly feel comfortable if members of the council want to make any comments or reaction
from the, let me explain a little bit about the budget process. It starts, it seems like it goes on
throughout the whole year but it’s only about half the year, which might still be too long for
some but it’s a long process. We’re nearing the end. The council and staff have been working in
multiple meetings since the summer months, July-August timeframe. I think we started meeting
early August or late July and have had a number of meetings and we have been looking at a
number of different alternatives and that’s why you see some of the slides come up that seem to
focus on a particular area or the topics that were listed there or some other things that the
council’s asked for further information on and it’s an ongoing process but again thoughts or
comments from other members of the council, if any?
Councilwoman Ernst: I do have comments.
Mayor Furlong: Sure, Councilwoman Ernst.
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City Council Truth in Taxation - December 6, 2010
Councilwoman Ernst: I’d just like to say that you know in my years here at, as a City Council
member, really only one term, I’ve not seen a room full of people like this coming to talk about
the concerns with the budget and so I want to thank each and every one of you for coming here
and really pouring out your hearts to us and letting us know what your concerns are and taking
the time out of your evening to come here and tell us that so thank you again. I really appreciate
you coming here tonight.
Mayor Furlong: Any other thoughts?
Councilman Litsey: No, it’s nice to receive the feedback. Just so you know we’ve been working
really hard at this. We’ve been continually challenging staff to come up with looking at things
differently. Being creative. I think rest assured we have an excellent staff that really tries hard
to think outside of the box and to really bring us different approaches and different ways of
doing things and we’ve been doing that for months so, just so you know that, and you can see
that in the work sessions that we’ve had and if you care to go back and look at those, how much
time and effort this whole council and staff has put in, because we understand these are
challenging times and we’re trying to do the right thing so.
Karen Kaiser: Well I think that’s really what makes the difference. I know I’m speaking out of
turn but.
Mayor Furlong: And ma’am if you could, I know you don’t want to speak in the microphone but
if you could state your name and address for the record. This way people at home can hear you
speak too.
Karen Kaiser: Karen Kaiser and I live at 7601 Nicholas Way. Townhouse. You know we hear
a lot of lip service. We’ve had to cut our budgets to live and so when we see what looks like a
really extensive budget we would like to see it cut too because we have to do without in order to
make our ends meet and we don’t want to see this go on and so that’s why you see a room full of
people. It’s hitting us in our daily lives and so we want to see a budget reflect that. We don’t
like to see what’s going on with our country. We are paying for a medical program we don’t
want so we don’t want to see that happen in our local government, and that’s why we’re all here
is because we’re having to do without so that means we want the budget cut. We don’t want to
pay more taxes. We don’t want to assess and have more paid of what we’re going to be meeting
again on Wednesday for an assessment that’s going to come for a road we don’t need repairs on.
It’s like when does it stop so I know we’re all here and we’re all speaking from our hearts but it
won’t mean a hill of beans if this doesn’t change and change now with you all because you’re
here for us and I think the politicians in our nation have forgotten that and they just go on
spending and we can’t do it anymore and that’s why we’re all here. Thank you.
Mayor Furlong: Thank you. Other comments from the council. Councilwoman Tjornhom.
Councilwoman Tjornhom: Yeah I actually wish more people were here tonight and I wish you
all would come every other Monday night to be here and guide us in what we’re doing with our
city because we are representing you and I am one of you. It’s awkward for me to sit here
sometimes because I got my property statement in the mail also and I’m writing the same check
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City Council Truth in Taxation - December 6, 2010
you are and I’m just as frustrated as you are with what’s happening in our State. Mr. Devine said
that there’s going to be a ripple effect coming our way and unfortunately it will come our way.
You know they’ll ask us for more money to pay for their irresponsible spending and I take that
seriously and I think that responsible spending is the key and I think that from my perspective at
least, the priority for me is not growing government. To making sure we’re not adding new
programs. That we’re not spending irresponsibly on things we don’t need in this town. As a
council we take that very seriously. Whether it’s a park and rec program or whether it is a piece
of equipment we need to purchase, we discuss it and we analyze it and figure out if it’s a prudent
thing to do. And I feel good about that. I once heard someone make a comment that when you
run for office in a debate or whenever is one of the main questions they’ll ask you is well why
are you running for office. And a typical, 90% of the time people are going to say we just want
to give back to the community and serve and that is I guess an easy answer but now that I’ve
been here as long as I’ve been here I think my answer now would be that I want to preserve what
we have, if not decrease it because that really is the answer is to make sure that we hold our
quality of life to what it is without having to pay more for it so the next time someone runs for
office I’d like to hear them say, you elect me I’m going to do absolutely nothing. You know.
I’m going to make sure that I’m not creating new jobs by making you pay for me. Build roads.
I’m on the TAB board and I’ve seen that happen. RO’s come through and this is a program
that’s supposed to stimulate jobs and all it’s done is made us further in debt and so I don’t think
we’re doing that in this town, as far as I know mayor. We’re not subsidizing new jobs with
money we don’t have and I think we all believe in that philosophy so I just want you to know
that I am going to take this budget seriously because I’m writing a check for it too and everyone
else on this council is so thank you and I’m always available for emails or phone calls or even
getting together and talking about your comments and concerns.
Mayor Furlong: Thank you. Councilman McDonald.
Councilman McDonald: Well I guess I’ll say a few words in closing too. I do want to thank
everybody for coming out today. It’s always beneficial to hear what everybody you know is
feeling. Pretty much already knew this beforehand because I do talk to a lot of you and a lot of
individuals. All I can do is, as Councilwoman Tjornhom said, we’re doing everything we can to
cut spending. You talk about trucks. Yeah, all the trucks are on a schedule. Just about all of
them are over the schedule because we do keep them longer just because we’re able to maintain
them. We spend a little bit of money there and where the payoff is, we don’t have to buy new
vehicles. Fire station. We’ve looked at doing that. We put that off because the growth isn’t
there so we’re not making moves on those kind of structures. The hardest thing about this job,
and I’ve talked to a lot of people about this, and I was yet to get a real good answer but just
cutting spending truthfully is not the answer. If I cut spending I’m going to cut your services.
What services do you want to live without? We do not provide that many services compared to
the State government, compared to the Federal government. A lot of what we provide to
residents are considered essential services and people don’t want to go without them. Water,
fire, police. The parks and rec we can discuss but a lot of people with children want to have
those ballfields. That is the hardest part about this job. I got the message loud and clear that we
do need to reduce spending but where do I reduce it? You know who’s area do I cut into? It’s
going to affect you and that’s the real balance in doing this job. We’re trying everything we can
to cut spending. You talk about roads. The problem there is if we don’t repair the road today,
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City Council Truth in Taxation - December 6, 2010
we’re going to have to build a brand new road which is going to cost 4 times that much or even 5
times that much maybe 5 years in the future just because of wear and tear so sometimes it’s
better to spend a little bit of money to again get the life of something so that we can reduce
spending. That’s one of the, well that’s one of the balances that we look at and we have actually
discussed on a few of these roads, can we go a little bit longer? Is there something else that we
can do to extend the lives? So we do get the message. I mean we’re trying to cut spending for
the 3 years I’ve been here, I’ve been looking for places to cut. Truthfully I just don’t know
where it’s all at. There isn’t that much fat in the city budget to cut. If you look at the total pie,
the City takes very little of the property tax dollar compared to the county, the state and the
school district. We will do our best to continue to hold spending down and to make sure that any
spending we do do is reasonable and it goes to maintain what everyone tells us they want for a
quality of life within the city. I rely heavily upon the survey that we put out every 2 to 3 years.
That’s one of the places where citizens can give feedback and basically tell us how we’re doing.
What do you think about the city? Are there certain amenities or certain services you want to
see? I rely heavily upon that because I do feel that that’s the voice of the people coming back so
I am available by email. I’ve taken a lot of emails. Anyone that sends me one, it will be
answered. I’ll make sure that you get an answer to your question but yes this is, you’re right.
There are some hard choices that do need to be made if we’re going to cut spending and that’s
one of the things that we are looking at so we do understand the message. We’re also out there
telling government to cut spending.
Mayor Furlong: Thank you. I think we live in unusual times. I’m not sure if that was a blessing
or a curse but certainly we’re all living through it now and I think it’s pretty clear that the times
are changing. I think in my time on the council this is the most people that have come to a Truth
in Taxation period. Or meeting and I appreciate it. Too often, and I think a comment was made
about having other people come to council meetings. It may sound silly but it is kind of nice to
sit in a full room once in a while and to hear what people are thinking because that gives us the
ability to represent the interest of our residents and businesses and that’s our goal. The message
for spending and the affects on spending and reducing spending I think was very clear this
evening for me. I think some of the things that we do throughout the year that, and over the
years as well, have put us in the position that we are in. We’re in a, relative to other cities we’re
in a, we’re doing just fine thank you very much but I think that doesn’t mean that we can’t do
more and what I’m hearing tonight from people is to look for ways to do more. You know some
of the things that we’ve done over the last few years to try to control spending, to reduce
spending and ultimately that means to reduce the cost of government, to reduce taxes going
forward. 2009 was a very difficult year for a lot of people as you recall and the City we saw a
significant reduction in permit revenue. When development stopped, our building permits went
down significantly and I’m going to say some numbers here and I’m not a politician. I just play
one on cable TV every other Monday night but the senators always say I reserve the right to
revise and extend my remarks. I might get some numbers wrong but the general flavor is
correct. We were down about $400,000 or so in permit revenue in 2009 from where we had
planned to be and credit to Mr. Gerhardt and his staff, some of whom are here tonight, but all of
city staff, that $400,000 reduction, which is about 4% of our total general budget, was covered
with offset reductions in spending and that was last year. That was 2009. Going into this year’s
budget, the goal was to maintain control of spending as well. Some of the factors that we did as
a council last year was no increase to staff salaries. There was zero change in staff salaries from
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City Council Truth in Taxation - December 6, 2010
2009 to this year, 2010. Anticipating growth a few years ago we had planned to add some staff
in some areas and we had planned to make some investments in public facilities, we did not do
those. We deferred those and we will continue to defer those until the demand is there. At least
that would be my opinion and I believe I speak for the council on that. And we actually did
something that I don’t think the City has done in the past and that was, we had to unfortunately
lay somebody off in our inspections department again because demand was down for those
services. We reduced the services that we offered. That was a trying time for people. We’ve all
been through, I’ve been through in my professional life and I know many people have situations
where there are layoff’s and that’s, that tugs at the heart strings of any organization and the same
is true here at city hall. Some of the investments we’ve made and where we’ve ended up, we
will see some reductions in spending and taxation. In other words our cost will be less going
forward long term than they would be otherwise was our new public works facility. Now some
may say how can you make that type of investment and call it a reduction in spending. Our old
public works facility was about one-half the size that we need for our current city size. It was
inefficient. It was wasting money. Operating money and specifically, for example when the
trucks needed to go out and plow snow we had to get, there were too many vehicles inside. They
had to move all the vehicles out of the way so they could get the trucks out and then once they
got the routes done and come back in, they had to get all the vehicles back in and talking to one
of the plow drivers he said he thinks that it saves him about a half hour to 45 minutes on each
side. Now that may not sound like much but remember these guys are doing it in the dead of
night and they’re on overtime when they’re doing it generally, and so at time and a half to have
12 or 14-15 people being able to be more efficient. One, it saves them time but it saves us
money. That’s just one of the operational efficiencies. There will be others too, but the way we
built that building as well is going to save all of us money in the future. We did things
differently. That’s what I heard tonight too. Look for different ways to do things. We used a
construction manager for the first time as a part of that construction process and that was a
recommendation to staff as something to look at. Estimates are we probably saved about 5% of
the overall cost rather than going through a general contractor, which for an 8 million dollar
building is roughly around $400,000. That’s $400,000 that we didn’t have to spend, tax or
borrow. You know in terms of the design, we also looked to build a building that was
affordable. We ended up building that building for roughly I think it was just under or right
around $100 a square foot. There have been other public works buildings in and around the
Twin Cities that have been much more than that. $125-$130 a square foot in construction.
That’s 25 to 30 percent more. The other advantage we had with that project, and that was just
completed earlier this year, is we were able to take advantage of a very competitive bidding
environment. Overall the project came in about $500,000 below the budget. That’s $500,000
we don’t have to spend. Take out of cash, borrow and that’s going to save on interest costs
going forward. So all in all the other thing that impressed me again about staff is that sometimes
when projects are coming in under budget you start getting those, well we really need to add this
or we really wanted to get this in but we weren’t sure where the budget was. We didn’t see a lot
of that and I don’t know if we saw any of that. Just because it was below budget didn’t give staff
the opportunity to say let’s add some more in and so, so I think when we look at that project and
it coming in under budget, on time and at lower overall cost by doing things differently, I think
that’s what I’m hearing. Those are some of the things that we’re doing. We’ll continue to do it.
We heard about street projects tonight. Audubon Road is probably a good example there of a
project that needed to be done for a long time and in working with and listening to residents in
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City Council Truth in Taxation - December 6, 2010
the area our engineering staff, internally rather than going to outside consultants, because in this
case we could, we had the capacity, the time and the talent and the ability to do it in-house, we
did that and the result was a change in the road design and that reduced the overall cost of the
project significantly and yet better met the needs of the residents. That project, instead of we
initially estimated it to be at about 3 million dollars, came in closer to 2 million. That’s a million
dollars that we didn’t have to spend or borrow and in fact by looking at the size of that project
we were able to change the way we plan to fund it. We had planned to borrow for it and then
pay that back over time with taxes and instead we were able to internally finance that. We’re
going to save taxpayers roughly about $300,000 over what would have been the life of those
bonds had we financed it. That’s money that we don’t have to tax and it’s changed in spending.
Whether we’re spending it on people, whether we’re spending it on interest, whether we’re
spending it on goods and services it’s still spending and so any chance we can do that we’ve
done that. Over the years, as many of you know, we’ve been able to increase our bond rating
and that has saved all of us money in terms of the cost of financing. We’re still growing and
financing major investments is a good way to do that. We refinanced it was mentioned earlier
the library bonds earlier this year. I think we’ve done, and I was trying to think of the number of
refinances we’ve done but probably 2 or 3.
Todd Gerhardt: At least 3.
Mayor Furlong: I’m sorry?
Todd Gerhardt: At least 3.
Mayor Furlong: At least 3 and they’re all significant savings each and every time and so doing
the same things that homeowners are doing, whether they’re refinancing their mortgage or
combining mortgages into, that’s what we’re doing the same thing in trying to find ways to do
that. Health insurance. That’s always a challenge but when I saw the slide tonight that says
we’ve kept health insurance increases to under 4% since 2005, I wish my company’s health
insurance had stayed there and I know Mr. Leonard and others, you know that’s an issue. So I
think we’ve been, we’ve had some successes there. I’m giving these examples because a lot of
times they’re not in the budget diagrams. You know when you save money on a big project, you
don’t have to budget for it and so there’s work to do. I’ve heard the comments made tonight. I
know that my fellow members of the council have heard it too and we’re going to keep working
and well we’re going to make a decision on this budget next week for 2011. That doesn’t mean
we’re going to stop working on this, just as we haven’t stopped working on all these examples
that are used so to close, thank you for coming. I appreciate your comments. I appreciate your
interest and care for the city. It’s why I’m here. It’s why all of us are here is to serve you and to
make Chanhassen an even better place for all of us to live and work and raise our families so
again thank you for coming this evening. I do appreciate it and folks, we’ve got some more
work to do so let’s get going. Anything else to come before this Truth in Taxation meeting? If
not, would there be a motion to adjourn.
Councilwoman Ernst moved, Councilman Litsey seconded to adjourn the meeting. All
voted in favor and the motion carried unanimously with a vote of 5 to 0. The Truth in
Taxation meeting was adjourned at 8:00 p.m.
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City Council Truth in Taxation - December 6, 2010
Submitted by Todd Gerhardt
City Manager
Prepared by Nann Opheim
17