CC Minutes 2000 12 18CHANHASSEN CITY COUNCIL
SPECIAL MEETING
DECEMBER 18, 2000
Mayor Mancino called the meeting to order at 4:45 p.m. The meeting was opened with the Pledge to
the Flag.
COUNCIL MEMBERS PRESENT: Mayor Mancino, Councilman Labatt, Councilman Peterson,
Councilwoman Jansen, and Councilman Labatt
STAFF PRESENT: Scott Botcher, Bruce DeJong, Todd Hoffman, and Todd Gerhardt
Mayor Mancino: Thank you and thank you all for coming. Following tonight's session, budget discussion,
we will have a closed meeting on the City Manager's performance review and if no one mind's, I think
we'll move that up to the courtyard room instead of here in the council chambers since it is closed. If
anyone should have a concern about that. Is that okay with other council members? Just making it a little
more comfortable to sit around a table together. Anyone have any concerns? Seeing one, we'll go ahead to
the budget.
RESOLUTION ADOPTING THE BUDGET FOR 2001 AND CERTIFYING FINAL TAX
LEVIES FOR 2000, COLLECTIBLE IN 2001.
Mayor Mancino: Tonight, we got a little further in the budget discussion last week and have to really kind
of finish it up tonight. We did approve CIP. Just a couple of factual questions Bruce. What happens, just
so everyone knows, that we all know. We do want to get somewhere tonight. If we were not to approve a
budget and a levy, what would happen? We couldn't get a majority to approve a new budget and a new
levy tonight.
Bruce DeJong: Tonight?
Mayor Mancino: Yes.
Bruce DeJong: You can reschedule meetings up through December 27th I believe my sheet said and you
have to have that certified if you're going to increase the levy, it has to be certified to Carver County by
December 27th. So you could still have meetings the rest of this week, up through next week.
Mayor Mancino: Thank you.
Bruce DeJong: If we don't adopt it, I can dig up the information while you're discussing something else
but I believe that if we do not adopt a new levy by December 27th and certify that to Carver County, that
we are restricted to what we levied last year.
Mayor Mancino: Okay. So it would fall back to the 2000 levy amount?
Bruce DeJong: Correct.
Mayor Mancino: And the budget amount also?
City Council Meeting - December 18, 2000
Bruce DeJong: I don't know what the effect is legally of not adopting a budget. Quite honestly you could
continue to function without a budget. You know unless there's some restrictions that Roger could tell you
that I'm not aware of but I know you're supposed to adopt a budget but if you don't, my assumption is you
could continue to operate.
Councilwoman Jansen: Well if I could piggy back on that question. The budget can be adopted then after
the beginning of the year. It's not as if you go without an adopted budget per se. We just, if we don't
approve it tonight, because we can always amend anyway in January, correct? But the levy.
Bruce DeJong: Certainly. The budget can be amended any time.
Mayor Mancino: Throughout the year.
Bruce DeJong: Throughout the year and even after the year's done. I've seen that done in the minutes a
couple of times where we get out to March or April and they're amending the previous year's budget so.
Mayor Mancino: Sure.
Councilwoman Jansen: But once the levy's set or not, after the 27th, that's the last that it can be adjusted?
Bruce DeJong: Correct.
Mayor Mancino: And I think we did do that, or attempted to do that one year with the budget because we
saw that revenues were not coming in as projected so we went back and looked at the budget and I think
made a couple cuts or at least contemplated it. I don't know who would like to start. One of the things that
just philosophically that I've been thinking about for the past few days, and obviously before we talked
about the budget last Monday was my concern about a double digit, almost a 20% increase in one year.
Especially when the last couple years we've increased the levy by 3 and 3 ½%. At the same time we
increased our cash balances, our overall city cash balances have gone from 15.6 million to right around 28
million in cash balances. We've also over that time period been able to increase our general fund balance
by over 100% with a surplus of 1.6 million, over and above our stated financial policy. And I think our
financial policy, we really did renew and update that in March of 2000. So I do have a concern, a real
problem with thinking about an 18.4% increase all in one year with those kind of cash balances and with
what we've been able to do in the general fund. So I'd like to back offofa double digit increase. One of
the things I'd like to do is go back and to look at the budget and to say instead of an 8.8% increase is to do,
is to look at that and suggest instead of that big of an increase in the budget for this year, go back to a 5-5
½% increase. I'd like to hear some thoughts on that.
Councilman Peterson: I missed the last thing, I'm sorry.
Mayor Mancino: I said in the budget to go from, kind of stepping back on the, my concern with the huge
levy increase and looking at our budget and taking that from an 8, almost 9% increase to more like a 5-5
½% increase.
Councilman Peterson: A couple questions before I'll respond to that. Bruce, in the information you sent
today there's some items in there that are circled. Is there a significance to those items that are circled or
not?
City Council Meeting - December 18, 2000
Bruce DeJong: Yes. The items that I made notations by are really items that we know there are remaining
amounts to come in. Or that will not be used in the same sense. If you want to turn to that, page 1 of that
revenue report.
Mayor Mancino: Is this what we're looking at Bruce?
Bruce DeJong: Yes. The information that I handed out. I did e-mail that this afternoon but I realized that
not everyone may have had a chance to get that. So I did place one in front of each of the council members.
But if you look at what's happening at our current property tax, the vast majority of the property tax has
come in already and there still remains a delinquent, final settlement for delinquents to be collected
approximately February 1st. It looks to me that based off of past history, we're probably not going to have
any delinquents which that allowance for delinquents, the minus 60 that shows up on top of there, is really
designed as an offset. That's in essence allowance for bad debts off of the total dollar amount that you
levy. So what you're really levying is a net tax, you know from the 4 million 036 minus the $60,000
dollars for the delinquents. Now if we collect all of the property tax, that means that we really didn't have
any delinquents under that addition. Plus we've been collecting the delinquent property tax at a fairly rapid
pace. So what it really means when you're looking at it is that there's $60,000 that we anticipated not
getting of property taxes that we are getting. Then the next line down, the homestead and agricultural
credits.
Mayor Mancino: So there's some good news.
Bruce DeJong: Is that our property tax collections remain high, yeah.
Mayor Mancino: What, 99%?
Bruce DeJong: They have been over 99% for the last several years and once again will be. Now the next
thing to take a look at is the homestead and agricultural credit. We note that that will be coming in. That
does not get paid out until December. December 26th I believe is when the Department of Revenue issues
that. So we know that is yet to come in. We know that we haven't received the traffic violations from
Carver County for December yet. That's been, looks like about $3,500 based on the last several months
activity. We know that there's some aid from the State for basically they increased the rate that the city
has to pay for PERA pensions on our employees. But then they offset it with some aid and we know that
the second half of that aid payment is yet to come in. That's the $9,733. And the investment management
fee has not been recorded because our past practices has been to split investment income and to pay the fee
at year end. So we have that $65,000 coming in and we have then roughly $147,000 worth of interest that
has not been recorded yet. For the general fund. Splitting out of our investment fund. So when you add all
of that up, if you take a look at the sheet that I've prepared which is the 2001, or the 2000 estimate on the
budget. Right here. When you add those in and then put the actual dollar figures for the other amounts,
and I've... detail on that revenue report. It looks like in total we're going to have general fund revenues of
approximately $7,139,000. When you lay that against our expenditures, as estimated in the documents that
were sent out I believe on Friday with the agenda for tonight, if you put the estimated expenditures there
you can see that there's a net gain in fund balance or surplus of excessive revenues over expenditures of
about $180,000 for this year.
Mayor Mancino: Of revenues over expenditures.
City Council Meeting - December 18, 2000
Bruce DeJong: Correct. I have done this because I was requested to by Councilmember Jansen to explain
where I came up with the $300,000, 2000 general fund surplus on the information that I had sent out on
Friday. So I've taken that figure off the top of my head rather than going back and analyzing it, so this is
the supporting analysis. That figure really should be $120,000 less based on this analysis that you have in
front of you tonight.
Councilwoman Jansen: Thank you for correcting the numbers for us. I appreciate it.
Bruce DeJong: You're welcome.
Mayor Mancino: Okay, going back to I think Craig you were.
Councilman Peterson: Yeah. I'm probably in the same area that I was last week. That I'm not
comfortable with the 18. I'm comfortable with something less than that and I think that why I'm not
comfortable really goes back to the crux of we really don't know with a clear, succinct vision of whether
these numbers and the balances are positive or negative. You know it was, to use a cliche, they're a little
bit squishy and they can go either way. And what that is driving me to do is to say, let's give ourselves
time before we raise taxes on the citizens. Let's be sure that we don't have excess. We don't have a need
for additional and I don't sense we've got that 100% yet. I also don't sense that we need to have funds in
2001 to require any of these payments. We've got more than enough cash to pay any obligations that will
happen in 2001. And by the end of 2001, I certainly hope that Bruce, you have a much better, you can sit
where you're sitting and say with 100% accuracy, these are what the numbers are. This is really what the
outlook looks like with a much greater degree of confidence than you can now. I mean I don't blame you
for not being able to do that now by any means. So I think before we raise the levy, inherently raise the
taxes on everybody, let's find out whether we really have to or not. That's really what's driving me
tonight. And that really is the crux of where I'm coming from and I would recommend that we also not
lower the, not increase it 18.4 but I'm thinking, I'm in that 5 ½-6% range and also to ask staff to go back
and look at, I think Nancy you said look at the budget for reductions in that area. I'm in that 2 to 250,000
dollar range to say, what can we do to present to council to lower the budget by $250,000. To present
thoughts to us and ideas. So that's probably where I'm at.
Councilwoman Jansen: Just a couple comments to follow up on your comments Craig. Actually starting
from the very beginning when we were first presented the budget back in August. My position had been to
challenge staff to hold the expenses flat to 2000. So that would have completely eliminated the 8%
increase in expenses and it would have kept the levy flat to last year. In looking at that, and I don't know if
you realize this. There is such a big increase in the debt service levy that even before we raise the general
fund levy amount, we're already at an 8% increase in that levy because it was a 42% increase just on the
debt service alone.
Councilman Peterson: It went up $700,000, right at that. Yep.
Councilwoman Jansen: So a big chunk of this is that debt service number. And what staff had shared with
us back in August, as I was challenging that 8% increase, are the same numbers that Bruce has reviewed
with us a couple times but there's two funds, or two amounts. The $200,000 in salaries and there's also
$85,000 in the fire relief contribution that have been brought over into general fund so we're already
starting with $285,000 in expenses above what our base was from last year. So if you pull that number
out, what staff has proposed to last year is a 4.2% increase. So I started out philosophically in the same
position that everyone else is currently. So challenging it back in the beginning would have been the period
City Council Meeting - December 18, 2000
of time in which we probably could have done more of the in depth analysis but I have to share with you
that I really think that Bruce and staff and Scott went through those numbers and as Bruce keeps sharing
with us, there's no increase in services. You know they haven't added above and beyond and they've been
very cautious in what they have proposed. So as you know I was hearing you say last Monday, you know
200, 250. I asked Bruce today is there a cushion? You know did I miss something back when we were
talking in August? You know could I have whacked that 200-250 out of there and basically his response
is, whatever we tell them to do, they'll do but it will be a cut in the service levels. Because whatever they
cut now will take out of the cost of living and it will take us then down below the base that we're starting
from and coming pretty much in line with this year in 2000. So it's not an easy cut. We're going to feel
something if and as we do that. My hesitation then is as we continue to try to challenge staff on their
position that they don't want us using the cash balance. We're dealing with two people from last year who
adamantly supported using fund balance for the year 2000. So now they've had enough experience over
the last year with what's been happening with our numbers and trying to look into the financial security of
Chanhassen and they're saying don't touch the cash balances. Having seen them make that philosophical
change themselves, I have to give that a great deal of weight in consideration of not using the cash
balances. If in fact it was still something that they thought was prudent, I believe they would have brought
forward numbers to use cash balance but there's all sorts of what if's in the numbers that we've even been
presented in the budget. One that struck me today as Bruce and I were walking through these revenue
numbers. This surprised me, and Bruce correct me if I repeat this wrong. Of our revenues, of our permit
revenues of the million one, 600,000 of that came from one project.
Bruce DeJong: That's right.
Councilwoman Jansen: One project. If one project hadn't come in, our revenues would be decreased,
would have been decreased by 54%. One project. And I think of sitting up here on this council and having
a project in front of us and I would hate to feel the pressure of passing something because we need it in
order to make our revenue numbers because now what we've done is we've taken out that guess work.
We're being planned comparable to the 2000 revenues when in fact we're reflecting in permit revenue a
decrease. ~99 over ~98 was a 6% decrease. 2000 compared to 1999 will be 19% decrease. So the permit
revenues are on their way down. We're planning them now flat and of that one project could tip it 54%.
So even though they're not recommending that we use cash balance, I'm seeing that as our security for
these sorts of projections because conceivably we could end up having to go in there for 600,000 if we
don't make that number since we don't control it. We sit here and it's so different from private industry
because private industry, if you're not making your revenues, you pound on your company and you get out
there and you hit the street and you start trying to increase your revenues. Here we sit and we wait for the
projects to come to us and that generates the permit revenue. So unfortunately if we're not making these
numbers, there isn't something that we can do to go out there to generate it. It has to happen. So we're in
a, we're not in control I guess is part of it and to not be in control and start gambling with the cash
balances when staff has reflected all sorts of what if scenarios, and they haven't even been able to project
for the further rate compression, which now I did share with you the discussion that I had last week that
Ron Abrahms will probably be coming out to discuss what rate compression is going to do to Chanhassen.
So it went in my mind from a possibility to a likelihood that we're going to have this rate compression
happen and of course it's all based upon what happens in the legislature. But it's not idle speculation. You
know it's hanging out there. It will affect our ability to generate revenue and the levy limits, everyone is
speaking to the fact that levy limits will undoubtedly go back into place just because that is what happens
when they start doing tax reform. So I have a great deal of difficulty challenging staff and over riding what
they're recommending that we do for the future health of Chanhassen. They're asking for one year to be
able to get through these numbers and though it sounds like a great deal of increase when you look at 18%,
City Council Meeting - December 18, 2000
you've got to back down out of that and realize how much of it is that debt service. It's not as if it's
expenses that are generating that 18%. We've been hit with a higher debt service which I guess again I see
the irony of touting all this cash that we're sitting on, when at the same time we're getting hit with the
burden of now having to pay for deferred payments on debt. You know maybe it should have been used
back then. We weren't fully levying to cover the debt service payments so I guess I'm not looking at it as a
windfall, and those numbers that the Mayor shared, include the dedicated funds. Not all of that is
available. It sounds significant, but we can't go into these numbers in order to cover a general fund
expenditure or to apply to our TIF situation. So though they sound good, we're not dealing with that
amount of cash. It's the cash number that you requested in the last meeting that now maybe is 6 million
with 7.6 million that might be attributable to needing that cash, and though we wouldn't spend it in the year
2001, my understanding from Bruce is that they're looking to have as many options available so that they
can deal with these and if we take that option away in 2001, it might have been one of the more financially
prudent decisions that we end up ruling out if we do it just to have a little bit smaller tax increase to the
residents. I don't like hearing 18%. But because we're sitting up here and because we're well informed by
staff, we know that 8% of that is attributable to new growth and fortunately it's taking some of that burden
off of our existing taxpayers. And the 10% isn't reflected to most of the residents as 10%. I'm hearing 5%
is more the average as far as what people's increases are. So we're not placing this 18% heavy burden on
our existing taxpayers. We're showing them that we're doing the most prudent step that we can and I
would, I shared my philosophy, 2001 the council very early needs to reflect to staff where we stand on
expenses and they have already agreed to put into place an employee incentive program and I very much
want the employees to really have a stake in cutting these expenses. And if we force back a quarter million
dollar budget cut, staff isn't going to be on board with us as we do that. That's political. If we were going
to do the cutting and we thought that was prudent, you know I would have liked to have seen it done back
in August so that staff could then sit down with their budgets and try to figure out where to get it. Whereas
now I think if we come on board as early as possible in the year and start with the philosophy that we want
to see the budgets get lean and prepare for 2002...this is such a lean budget as it's been presented. I don't
see the fluff. Bruce has spoken to the fact that services would have to be diminished and then I have to
weigh the burden that's going to be felt by the taxpayers if we then decide to cut, if we decide to bring it
down and it has to go below this year's expenses, our taxpayers are going to feel the brunt of it in their
services. And though they don't like the high taxes, one of the survey results that had come through was
they also don't see that they're getting the quality of service that they expect for the tax level that we're at.
So we need to also evaluate the service level that's there and how do we improve that versus diminish it by
stepping back. So I am in full agreement with the philosophy that's being kicked around here. I don't want
to increase the taxes, and I said that back in August and I tried to go after it back in August. But to be
sitting here now and suggesting that we just cut these things out and ignore Bruce and Scott when they're
saying leave us with the cash, we need the options, I can't question their credibility that way. I've seen the
time that they've spent with seeing them sit with the financial advisors and go through these numbers and
unfortunately we're second guessing them if we start questioning the options that they're looking for.
Scott Botcher: I guess the question, and we are all paid to be second guessed and that's okay. I guess the
question that I have is, and you guys have talked about expenses and you're a finance guy Craig. Expenses
is, an expense is simply a singular measurement of financial activity. And you can do all sorts of fun
things with a statement of cash flows or with a balance sheet to make an organization look anyway you
want it to. You know I've had this talk. I mean we can make these numbers do whatever you want to
make them do. Just like we can make the numbers for Rosemount do whatever we want them to do. If we
got their balance sheet. But I guess maybe from my own edification, now what I'm hearing is all of a
sudden expenses are an issue whereas last week the levy was the issue and they're not necessarily directly
or causally related. So I need some direction. Or maybe clarification. Expenses are not the levy. And we
City Council Meeting - December 18, 2000
can do whatever we want to with the expenses and the levy can go up and down opposite of what you
would think it would happen. I know Nancy talked about expenses. Well again, same thing. I mean
expenses are a singular measurement of financial activity within the organization, but it is not necessarily
impactful on what it is you want to levy. I'm trying to frame a discussion here because we're going off the
road saying cut $250,000 out of the budget as an example.
Councilman Peterson: Let me clarify that.
Scott Botcher: So I see two somewhat related, not distinct but they are somewhat distinct issues.
Councilman Peterson: The levy certainly helps pay for the expenses that are incurred within the budget so
I don't think you can argue that. And really what, the impetus of my comment or my question to the group
was, and I didn't sense throughout this process that we as a council really challenged staff. The way I
normally approach a budget is, you know I don't like to take a red pen and whack. I like to hear what the
opportunity costs if something is reduced and that's really what I'm asking to do in my quasi proposal
tonight. That I'm a proponent of show me some alternatives and show me the impacts if we cut $250,000.
Will services be cut? Is it a prognostication with merit to it and facts or is it just a guess right now, or can
we cut $250,000 from your team getting together and saying how can we help maintain taxes as low as we
can? Meaning lowering expenses.
Scott Botcher: Right but again though, we could touch the expense level and not touch the levy.
Councilman Peterson: Agreed.
Scott Botcher: So I'm just trying to understand maybe the point. Because if we have a $7 million budget,
and you want me to find $250,000 in there, I could find an infinite amount of ways to make $250,000 come
out of there and you would have an infinite number of choices as to whether or not you thought that was
good public policy or in the best interest of the organization. So that's not the challenge. I mean frankly
that's, Bruce and I could go back and do it in about 10 minutes. If you just want to find $250,000. I think
the issue is far more complex than that and again, I'm not sure that that necessarily directly relates to your
issuing a levy. If we're talking about the levy on the revenue generation side, you know I think that's really
where this discussion has been. It's been a revenue allocation, revenue generation issue. Now all of a
sudden we're jumping over and say well, we're going to tie expenses to this and certainly, we could go back
and Ms Jansen is correct in terms of the allocation of the salaries. We could go back and start playing shell
games again. That's sort of what got this city in trouble in the first place is that they made the statement,
we're going to keep taxes flat come hell or high water. I've asked Todd and Don at length about this as to
the budget philosophy that were in place in the early to mid 90's. And that in a nutshell, and I wasn't here
and it's hearsay, but that's what I've been told. And so partially in response to that, I think, we started
setting up these funds. All over the place and we did things like put salaries in TIF funds and charge
salaries against capital funds, and the reason we did that is that we can go back to the council and say hey,
our expenses are the same as last year. General fund and you guys all picked this up, well not you guys
because none of you were here but you picked this up and you say oh, isn't this great. Expenses are the
same. Let's pass the budget when in fact they weren't. And what we've tried to do is just lay this down
and say folks, we're all big boys and girls here. Here's what the numbers are. Here's what we think you
ought to do. This is a responsible thing to do. If you want to have a lengthy expenditure discussion, I
would agree and we have no problem, department heads have no problem engaging into a lengthy
expenditure defense discussion. So long as the council's willing to engage into a lengthy service delivery
discussion with it's constituents because I think that necessarily follows. But here we are December 18th
City Council Meeting - December 18, 2000
and all of a sudden we're going to go back and say Scott, find $250,000. We can do that. I question
whether or not that's the way to make financial policy in a city. I guess that's my response. Bruce. I'll be
bad cop.
Councilman Peterson: And I fully respect that. I mean it's a position that I would expect you to take. I
would take it if I were sitting in the same chair. I think that responding Linda I think to more of your
comments. I think first and foremost, I certainly am not questioning the credibility of either Scott or Bruce.
What I'm doing is raising a different perspective. I think the perspective really correlates back to three
driving forces of what particularly Bruce has shared about his position as it relates to the need for
additional surplus cash per se is, it goes back to how strong do you believe in a levy freeze and levy limits
will be there, number one. Rate compression, number two. And the tax reform plan, the "Jesse Plan". I
think that, I think the crux of this is you see those as a high probability of happening and how do you
assess the impact of those things happening? Are they multi million dollar impacts to the city over the next
2 to 3 years or are they a few hundred thousand and what's the probability again that they will happen next
year? I don't assess the probability as being that high. Okay, right or wrong, I don't assess it being that
high and that's why there's so many things that are going to happen in the next 12 months that I just want a
longer window. That's really what's driving me in my perspective today is, I can't see that this city will be
harmed at all by waiting another year to assess where we're at, both from a financial perspective and from
a political perspective, so.
Scott Botcher: And that phrase, because I was listening outside believe it or not, you can do that and that's
not necessarily an expense issue. I mean you know that.
Councilman Peterson: Agreed. They're two different things. We're talking about the budget and we're
talking about the levy. I didn't, we happen to join both things at the hip which.
Scott Botcher: No I just, but both you and Nancy started down the expense road and that's a fair issue in
terms ofa...budget. I'm not saying it's not.
Councilman Peterson: My opinion is just to challenge, which I don't think we've done, and if anybody
agrees with me, fine. If they don't, you know.
Councilwoman Jansen: Well I guess the challenging occurred from August until this date because we were
given all of the detail on the budget back in August and we've gone through with each of the department
heads so I guess that's where I keep coming back to the fact that the increase in the expenses largely has to
do with the funds coming back into the general fund that should have been but weren't. And a cost of
living increase. So yes, they've been challenged and they've held the line and they haven't increased the
services. But then that other part about assessing the probability of these things happening. I guess I
would suggest that we all fall back and listen to the experts instead of making our own judgments as to
what the probability is. These gentlemen have been doing this much longer than we have and they're trying
to account for the fact that they have assessed that the probability is higher than you seem to think that it is.
And I would suggest that their experience is worth listening to.
Councilman Peterson: You're evaluating political.
Mayor Mancino: Well they're doing worst case and that's what they are supposed to bring to us. What
they feel would be.
City Council Meeting - December 18, 2000
Councilwoman Jansen: But they didn't factor in, I mean the numbers don't include what would happen
with rate compression or what would happen with levy limits. Those are not in their figures.
Mayor Mancino: But also on the other side there isn't growth that's in here. There also isn't the 2.7
financial stated policy that we have also, the available cash or the environmental protection fund as
available cash so there are a few things also missing in the cash here. And I know again that Bruce has
been very, very conservative because he said that and that's what he is supposed to bring forward to us and
then have us look at it in that perspective.
Scott Botcher: The biggest issue that's potentially out there is the big plan. I mean that beats rate
compression. I e-mailed to every one of you the article came out the day after our last budget hearing.
You know I just know in the State of Wisconsin went through the same thing where Tommy decided that he
was going to take over. It wasn't 100%. I want to say it was like 75 or 80% of the school financing at the
State level. There was a significant drop in taxes and there were tax increment districts in Wisconsin which
is far more conservative in utilization of tax increment, but they still have them. That were detrimentally
impacted. Significantly impacted. And I'm not going to make any guarantees as to what the Governor's
going to do. The Governor can't even make any guarantees what the Governor's going to do, but if we are
to adequately represent, you know we're paid with the tax dollars of the citizens and the taxpayers and you
know I'd much rather be sitting here a year from now and saying you know, things didn't turn out so bad
and we're able to do something things because we took the conservative approach as opposed to having to
say, guess what? We cut your taxes, you didn't have to pay that 5% last year but by the way it's going to
be 20 this year because you know, so there's no right or wrong choice on that. I mean none of us have a
crystal ball. We don't and I don't want to represent that we do. It's just a choice and if I'm serving I guess
as a caretaker in part, and I realize I'm not elected. We are caretakers of what we do for the citizens. I
want to do my best to make sure that I eliminate surprises. Negative surprises. I'd much rather deliver
positive surprises just like you do in private business. You want to deliver positive surprises to your
customers. And we think it's prudent but you know again if the discussion's going to be utilization of
revenue and how we're going to generate it, then we need to have the discussion. On the environmental
thing, I mean I guess the question that, or the position that Bruce and I took is that, we've been levying
those dollars for the environmental funds. Now all of a sudden we're saying oh well, they weren't really
for environmental funds. They were general fund. We'll use them for whatever we feel like. I don't think
that's being straight with the taxpayers that pay these taxes. I think if you say I'm levying for this, and
you've passed budgets for I don't know how many years saying, environmental fund will be levied for 80
grand, 40 grand, whatever the number is, every year then those funds at least maybe ethically, you told the
citizens that's what you're levying for. Now the fund balances are in there say well, we kind of need them.
We're going to take them. I realize you have the legal right to do it. We took again the more conservative
position saying you know, this is what, the pretense under which these taxes were levied and we stuck with
that and that's why it's not included in the list.
Mayor Mancino: No because the environmental fund can always be used in the general fund for
environmental purposes. I mean I'm not saying don't do that. I'm just saying that it is cash available if
and when we need that in the general fund. Whether it's in park or rec or whether it's in community
development. Right now we're using those funds to pay salaries. Three salaries of those in community
development so.
Scott Botcher: Yeah, you're correct. We would be hard.
Mayor Mancino: We are using that.
City Council Meeting - December 18, 2000
Scott Botcher: We would be hard pressed though to define an expansion of utilization of those fund
balances for environmental purposes under the general fund. It would take some creativity on our part in
terms of defining.
Mayor Mancino: ...lift station or the tree planting that the park and rec is doing, etc. I mean there's a lot
that you can co-mingle there that.
Scott Botcher: It would be a definitional argument.
Mayor Mancino: It's under the category of environment is all I'm saying. That you could use those for.
Bruce DeJong: I guess the position that we took is that, absent of direction from the City Council to
eliminate that, that over the course of the next several years we are intending to use those funds for the
stated purposes. And we need to find an alternative revenue source in order to fund that program four
years hence if we don't, you know start levying for it.
Mayor Mancino: And again if you don't start levying for it because in four years hence the general fund
has grown because a lot of the TIF districts come off line and into the general fund and you may not have
to levy for it.
Scott Botcher: But you don't know that your fund balance.
Bruce DeJong: ... start mingling the expenditures with levy again and that's not necessarily...
Scott Botcher: And you don't know if your fund balances are actually going to grow in that interim.
Mayor Mancino: I'm just saying you may not need to levy.
Scott Botcher: You will need to, you will probably need to levy for those functions at the end of four years
unless you direct other revenue sources to those projects. You absolutely will have to levy for those. And
it may show up in the general fund levy. It could, again, we could put the revenue, just like an expenditure,
we could make it show up anywhere. Just about.
Councilwoman Jansen: Bruce, the other question that had come up that you and I reviewed on the phone
today, 2002. I guess you were asked to do some speculating as to what would happen with the levy amount
and it's my understanding that what you were sharing was based upon the general fund levy and the
possibility that that could conceivably remain flat. That would not include the increases that would have to
occur and are planned for the debt service levy. Possibly library coming on line as far as repaying those
bonds because that would be a levy. And the park and trail also being a levy. So as to what happens with
the 2002 general fund amount, that will be more dependent upon budget, correct?
Bruce DeJong: Yes, it will be dependent upon the budget but there's an upward bias built into our levy
through the adoption of the CIP because we've got several things that will necessarily have to come on line
as additional debt payments based on the adoption of that program last Monday. We know that we will
have to levy additional monies for the Lake Ann Park building, which was passed by the City Council a
couple weeks ago. We know that next year's debt will be going up as scheduled by Mr. Ruff. And we
know that, or excuse me, the debt levy will be going up based on the schedule for debt by Mr. Ruff. And
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City Council Meeting - December 18, 2000
we know that next year's CIP is not fully funded. The capital replacement portion of that is going to be
several hundred thousand dollars above and beyond the available amounts in those two funds that the
council suggested last year that we combine. Which is the Fund 400 and Fund 950. So what that means is
that we can issue equipment certificates but we have to pay those back over the course of 5 years so it's a
built in upward bias of a couple hundred thousand dollars automatically just for debt service, not counting
how much we're going to have to pay back for the library referendum. And quite honestly I do believe the
taxes should go up for that. The levy should go up because the voters you know asked for additional
services to be provided. But there's a built in bias to increasing that and I don't know that there's a built in
inflationary bias in a lot of our general fund revenue numbers outside of perhaps the building permits.
Mayor Mancino: So you're saying 2002, I'm sorry. Go ahead Scott.
Scott Botcher: No, I was just going to say that, and the other thing with the capital plan, much like we did
this year, is that it is a plan and we will get to things in there. The rate study comes to mind. We will
simply get to and not do. I mean we'll make a decision internally not to do something that was scheduled.
So what I think you adopted in your CIP is, you know outside of a place like Plymouth that has $50 million
of pre-paid assessments and everything else, is not that uncommon. You want to, you know you're in a
situation where you want to maximize the utility of your assets, of your cash and sometimes utilization of
debt is a good way to do that. In theory could we have written a check for the Lake Ann Park building?
Sure. When you can sell debt for 30 basis points above AAA insured debt invested in arbitrage, do you do
it? In a second. Absolutely in a second. And it's a management issue. It's a financial management issue
and so in terms of the CIP and the upper bias, there is some there. I mean the upper bias in the CIP to me
is the big stuff. The water treatment plant is a huge thing out there. Recognizing that the utility bills and
utility funds generally cover those, the bias is probably you know covered somewhat by an alternative
revenue source. Not a levy. But there are things in there that we do need to keep doing. We have a
growing community. And expenses are increasing, just like it costs more to buy a new car every year. It
costs more to pay for your natural gas. It costs more to buy snowplows every year.
Councilwoman Jansen: Well just the park and trail levy alone Bruce, wasn't that $500,000 that we talked
about was going to be added back in again to the levy amounts next year?
Bruce DeJong: Yeah. I think that was $489,000. Yeah, but the...
Mayor Mancino: But the big hit's this year.
Bruce DeJong: ...but I mean the total is increasing about $68,000. Of course that's a rough schedule.
Mayor Mancino: But the debt service hit is this year of an additional 700 plus and next year it's 100 and
something plus. 2002, so.
Scott Botcher: Yeah, are these the '98 Al's Bruce? GO 90-8A. Of the park bonds?
Bruce DeJong: Yes.
Scott Botcher: So then you work your way out and I guess maybe this is one of the issues that you take a
longer term approach. I mean 2002-3 it jumps up another $50,000. Then 2003-4 it goes up almost
$300,000 and this, as I said before and you've heard me say this, this park and trail levy is really back
loaded. And I think it was in a library discussion when we gave you the straight line on the library. So
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City Council Meeting - December 18, 2000
again longer term, if you want to try to avoid some of these spikes in the levies or work your way out,
setting aside some cash for some of these purposes also might be in your interest and that's just an example
of a single bond issue that has that kind of impact.
Mayor Mancino: There is some cash set aside. Also, wasn't it timed out again, Todd's not here. I thought
some of that was timed out to look at when the TIF districts come back on line for the general fund. So
that was looking out into the future.
Scott Botcher: Some, but they're not going to general, they're not generating that much cash. I mean
we've got them, we keep counting for them.
Mayor Mancino: A million dollars.
Scott Botcher: Yeah, that's before fiscal disparities. I mean we keep counting this money for a couple
different places. We've got to be really careful about doing that. It's going to help. I'm not saying that
it's not. But you know between 2003 and 2007/8, the debt service just on that one bond issue is not quite
going to double. I mean it's going from 540 to 1.027 million dollars.
Mayor Mancino: How many years is that debt? 107
Scott Botcher: Retired in 9. 10 years.
Mayor Mancino: Is it a 10 year debt?
Scott Botcher: Retired in 2008 and 9 so that would be 10 years. That's just, obviously you're going to set
that up. I'm just reading the CAFR.
Mayor Mancino: Okay. I just thought we had set it up for a longer debt payment.
Scott Botcher: No. But there's some big balloons in the back. Not balloons but they really take off.
Mayor Mancino: In the brochure. Any other discussion?
Councilman Labatt: Yeah. So Bruce. So ifI give just in your numbers right here from your sheet in the
packet. So we're actually at.
Bruce DeJong: Which page?
Councilman Labatt: Cash becomes 6.133.
Councilman Peterson: Today's packet?
Bruce DeJong: It's in the agenda packet.
Councilman Labatt: The agenda. By adjusting that 300,000 from the 2000 general fund surplus, correct?
Bruce DeJong: Correct.
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City Council Meeting - December 18, 2000
Councilman Labatt: Okay. And then our potential commitments, as you listed here, are 7.626 million so
that gives us a net deficit of 1.493 million dollars. If I punched the calculator right.
Bruce DeJong: Yes.
Councilman Labatt: Okay. So as I look at this, the five us up here are the crew of a cruise ship. Okay?
And we're going to take the city on a cruise. We're now deciding what sort of safety equipment we're
going to take with us. And we're arguing over here as far as how many life jackets we're going to put on
this boat with us. Life jackets are these fund balances we have. And some of us up here are taking a very
safe, cautious approach through all these unknowns. Other ones that are frankly, have less regard for these
safety measures we want to take. We don't know what potential impacts we have coming down. We don't
know what our surprises are. Our experts have told us this. We've hired out consultants. Our two
professional employees here have said folks, this is a problem. Or a potential problem. We don't know
whether it's surprises but let's take a safe approach for 2001. Yeah, they've given us the worst case
scenario here and you know, we're elected by the people of this city to be responsible with their money.
Now okay, so ifa 5% budget gets passed for 2001. What impact is that going to have for 2002? Are we
going to be going back to folks and saying well geez you know, we really screwed up. And now we're
going to be faced with a 25.7% increase for 2002. You know, I don't know. I don't have the magic ball
here but I don't, I mean you take it over politics or being responsible. What tips the scale? Okay. You
know frankly I don't care about politics. It's just, we've got to be responsible. You know we don't know
the impacts of the rate compression. Okay. Craig you said you feel it's a low probability. I don't know.
You know Jesse's big plan. Frankly that scares the h-e-double hockey sticks out of me. You know there's
too many unknowns out there. Let's take, as I said before, I'm going to take the safe approach. In looking
back at what Bruce and Scott have done here, they've removed the shells from the shell game that's been
played the last 10 years. Last 8 years with all these funds and money here and there. They did the job that
we hired Scott to do two years ago. To get our finances in order. He hired Bruce. Brought Bruce on.
Bruce has done a fantastic job of reconciling things and saying okay folks, by god we did the shell game.
We pulled the shells off. Here are the problems of what's gone on for the last 8-9 years, 10 years. Your
past practices of not levying to cover your debt service has put you in this spot so. I'll leave it at that.
Bruce, thank you for your hard work. Thank you. It's hard to speak the truth sometimes when you can
look at 1.493 million dollar deficit.
Councilman Peterson: Well I think just as an aside, you have to add in the 2.7 that's already in there for
the policy reserves.
Councilman Labatt: Well I'm not even, that's a policy. That's there. But this is the cold, hard truth.
Councilman Peterson: Well the 2.7 is for you know if you want to call it...to be used for so.
Scott Botcher: Except that I don't think debt service is an extraordinary expense.
Councilman Peterson: Pardon me?
Scott Botcher: I would never argue that debt service, the 95 B and C is an extraordinary expense.
Councilman Peterson: Yeah, you're right.
Scott Botcher: That we just screwed up.
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City Council Meeting - December 18, 2000
Councilman Peterson: We've got other funds to pay for that so.
Scott Botcher: Sort of.
Councilman Peterson: This comes down to philosophically, you know I haven't got a problem, you know
god willing I'll be sitting here in a year. I haven't got a problem by saying minimize it unless you're
absolutely sure, which I'm not absolutely sure and I'll go higher next year. I haven't got a problem with
that. That's philosophically probably where the biggest difference is. And it's right or wrong, that's how I
feel.
Scott Botcher: And if you all, I mean if you, the five of you are going to figure out what it is you want to
do but I think my recommendation would be that in order to facilitate the discussion, and maybe I'm just
missing the boat. I think what Craig said, cruise ship yeah. I think what you said is true. I mean you need
to figure out what you want to levy and then assuming that it's less than what's recommended, I then draw
the assumption that you think that there's fund balances there that you wanted to apply the revenue sources
alternatively to a levy, you just need to tell us what that amount is. Sort of like I said last week. And if
you don't, then say zero. We say, Bruce and I have been firm, we think you ought to not use them, but
obviously we don't vote.
Councilwoman Jansen: Well and to that point, that's where I'm going in and looking at expense cutting in
the budget as directly impacting the levy amount because we don't want to be using the cash balances. I'm
looking at any cut that we take in the levy as being a direct cut in the budget. And whether, and we don't
need to do that tonight. I do get the sense that the majority of the 2001 council is not going to be in favor
of using cash balances so the budget will be affected by whatever cuts we do tonight. Which could be
significant but.
Mayor Mancino: Councilman Senn.
Councilman Senn: I don't think I have anything more to add at this time.
Mayor Mancino: Okay, thank you. Any other discussion? Just so everyone knows, I was just checking to
see if Mr. Benson was up there and kind of timing wise so we're fine.
Scott Botcher: Elvis is in the building.
Mayor Mancino: Elvis is in the building. A motion from any of the discussion that we've had.
Councilwoman Jansen: I'll move approval of the staff recommendation.
Councilman Labatt: Second. Let's get it over with. I mean we're arguing over nutshells here folks. Let's
go. We know how it's going to come down. I seconded it.
Mayor Mancino: I'm sorry, what was your motion?
Councilwoman Jansen: That we approve the staff recommendation on both the tax levy amount and the
2001 budget.
14
City Council Meeting - December 18, 2000
Mayor Mancino: Alright. Steve's already seconded it.
Councilwoman Jansen moved, Councilman Labatt seconded to adopt the budget for 2001 and
certifying final tax levies for 2000, collectible in 2001 as presented by staff. Councilwoman Jansen
and Councilman Labatt voted in favor. Mayor Mancino, Councilman Senn, and Councilman
Peterson voted in opposition. The motion failed with a vote of 2 to 3.
Mayor Mancino: Let's have another motion.
Councilman Peterson: I make a motion that we reduce the levy by $500,000 and request staff return to us
with $250,000 in budget cuts and the ramifications of each of those presented.
Scott Botcher: And the balance?
Mayor Mancino: And the balance?
Councilman Peterson: To be taken out of surplus.
Mayor Mancino: And applied to?
Scott Botcher: It'd just be an alternative revenue source.
Mayor Mancino: For debt? For debt payment?
Scott Botcher: Well it'd be applied to the levy. For purposes of cleanliness as we go into the future I guess
I'd recommend we apply it to the general fund levy leaving the debt services understandable as possible so
we don't start thinking it's less than it is. If that's okay Bruce.
Mayor Mancino: Is there a second?
Councilman Senn: I've got a question. Where does that leave us then as far as levy?
Scott Botcher: Percent? Don't know. Craig do you know? Did you run it?
Mayor Mancino: Bruce, do you know?
Councilman Peterson: 5.9% increase at $500,000.
Mayor Mancino: Bruce, could you check on that? Do you mind taking a minute?
Councilman Senn: And while he's figuring that, secondly is your 250 that you're suggesting in budget cuts
then also a reduction in levy?
Councilman Peterson: This goes back to the discussion earlier with Scott. It would be my desire that they
would present to us a plan that would reduce expenses so inherently we would not need to raise the levy by
that equivalent amount.
Mayor Mancino: So it would affect levy?
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City Council Meeting - December 18, 2000
Councilman Peterson: Yes.
Councilman Senn: It would be levy reduction?
Councilman Peterson: Yes.
Councilman Senn: So what your motion entails is basically $750,000 in levy reduction of which $250,000
would be expenditure cuts.
Councilman Peterson: Correct.
Mayor Mancino: Wait, wait, wait. Wait, wait, wait, wait, wait, hold on.
Councilwoman Jansen: He said $500,000.
Mayor Mancino: Excuse me. No, wait, wait, wait. Let's just ask Craig to say it because Craig what we
heard was $500,000. We heard 250 in budget cuts which would have, from what Mark just asked you, a
direct relationship to the levy. And another 250 from surplus or alternative budget sources so that's a total
of 500 total.
Councilman Peterson: It would be 5.9% increase in levy is what gets me to the 500 so I misspoke.
Bruce DeJong: Reducing the levy by $500,000 leaves approximately 580 some thousand dollars and it's
still the 9.9% increase in the levy year over year.
Councilman Peterson: So you've got a million 83 from the year to year.
Bruce DeJong: So the 583, there's 9.9% increase in the tax levy over last year's $5,874,000 tax levy.
Scott Botcher: And I don't know how you calculate, if you are. You don't have to because.
Councilman Peterson: Well I did it in my head but.., inaccurately, $500,000.
Scott Botcher: But if you do the growth factors an issue, you know the 8%.
Councilman Senn: Growth factor? You don't have a growth factor in here.
Scott Botcher: In that 8%. Correct?
this hard. Oh no, you're right Craig.
thinking of something else.
Or am I just on too much caffeine? Say that again? It shouldn't be
I'm sorry. You're right Mark. Move to strike. You're right. I was
Mayor Mancino: So again, that would be a 9.9% decrease in the current levy. Instead of, I'm sorry.
Bruce DeJong: Instead of an 18.4% increase...
Mayor Mancino: It's a 9.9% increase, yeah. Which is almost 18. Okay, is there?
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City Council Meeting - December 18, 2000
Councilman Labatt: Almost 18 or almost 5.47
Councilman Senn: Okay so again, I just want to clarify. Okay, what you were suggesting then is that
you're talking about a $500,000 reduction in levy of which $250,000 would be in expenses and $250,000
would be used from surplus?
Councilman Peterson: No.
Scott Botcher: That's how I understood it.
Councilman Senn: I'm not tracking.
Councilman Peterson: That's not how I meant it. So it really is a total of $750,000 is what I'm
recommending in my motion.
Scott Botcher: Okay. Just so we know.
Bruce DeJong: Just so we're clear what you're asking for is, are you decreasing the debt levy arbitrarily?
Councilman Peterson: I'm not decreasing the debt levy per se. Again, you can take the funds from
wherever. In my motion my intent is that we will need to raise the debt levy, general operating levy less
$250,000 because the budget is now $250,000 less. Again whether we need to.
Bruce DeJong: And you're using $500,000 of fund balance towards that? Is that, I heard $750,000 and
it's not very clear.
Councilman Peterson: It goes back, you've got two things are going on here. We've got the budget that we
need to fund with the general levy, right?
Mayor Mancino: You're right.
Councilman Peterson: We need to, I'm saying is consider lowering that levy by $250,000 and a
corresponding drop in expenses by $250,000.
Bruce DeJong: Alright.
Councilman Peterson: So that aside, now I'm saying to decrease the levy, general or otherwise, by an
additional $500,000.
Scott Botcher: Utilizing.
Mayor Mancino: Fund balances for the debt.
Scott Botcher: Now I understand what your motion is.
Councilman Senn: Okay. Then I do too. But now could you tell us what the percentages are based on
that?
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City Council Meeting - December 18, 2000
Scott Botcher: So it would be $750,000 reduction in the levy. It should be right around 5%. 6%.
Councilman Peterson: That's 5.9. That's my original number so.
Bruce DeJong: Yeah. That's, I didn't run out all the dollars but just using round thousands, it looks like
an increase of approximately 5.6% increase in the levy.
Councilwoman Jansen: How does that work without affecting the debt levy?
Bruce DeJong: Where the difficulty comes in, well then you just decrease the general fund levy. I think
what happens then is that next year, if you don't have the surplus cash available and please try and
understand that because of the vagaries of fund accounting, we have deficits in some funds. We have
surpluses in others, but cash on cash, the cash has already been spent. We're balancing it with balance
sheet entries that there's a due to one fund from the fund that's in deficit and there's a due from, the fund
that has the cash surplus, it's due from somewhere else.
Mayor Mancino: So we're transferring it from the general fund surplus into the debt service fund to pay
for that debt.
Bruce DeJong: In essence it's already been transferred. We just haven't recognized it on our balance
sheet and done the accounting entries for it. But what happens next year then is, if you do not have
$500,000 of fund balance to use, you start using, you have to start that as your base. Whatever your
expenditure base is, you have to levy $500,000 more than you did this year just to stay at zero, plus
whatever programmatic increases are above and beyond that. And we've already discussed that the levy
for debt purposes is going up a couple hundred thousand dollars so that implies that the increase next year
will be larger than the increase that you're proposing this year.
Councilman Peterson: Assuming that you don't have cash balances. That's the key question.
Bruce DeJong: That's correct.
Councilman Labatt: Assuming that we continue deficit budgeting too.
Bruce DeJong: The problem is that this is different than commercial accounting in that using other
people's money doesn't make you more money for a city. You know, leveraging yourself very highly does
not mean that your returns are higher. You're just mortgaging the future taxpayers rather than the current
taxpayers.
Scott Botcher: The only place we've ever done that is TIF grants. That I've ever seen where we've
leveraged money that we didn't have to get grants and then turn around a second year and leverage the
State's money to get more of the State's money. That's the only place I've ever seen that.
Bruce DeJong: Correct.
Scott Botcher: And that's why we've been so anal about it.
Councilwoman Jansen: Well and just so I understand, if we take $750,000 out of the general fund levy, the
general fund portion of our levy becomes $3,880,000, which is less than 1999, let alone 2000.
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City Council Meeting - December 18, 2000
Mayor Mancino: So you're only taking 250 out of that part of the levy.
Councilwoman Jansen: No.
Bruce DeJong: Well if you leave the debt service levy alone, and nobody's talked about Southwest Metro
Transit. If you leave those two things alone, the only place left is the general fund.
Mayor Mancino: Is the general fund. I'm understanding that but that is not what I understood that you
wanted to do.
Councilman Peterson: I don't care where it comes from. I mean again I'll let.
Scott Botcher: The internal accounting we can do some different things with. I will tell you that neither
one of us, Bruce or I will touch the debt service levy and so whatever else we may go to net out the bottom
line is going to be a council decision. One of the things that Linda said is possible. It's possible to do that.
Councilwoman Jansen: Well I'm just wanting to reflect the significance of what this does. I mean it sets
us back before what was even done in 1999, and I'm trying to figure out why we would do this to ourselves
realizing that we're going to be sitting on this council in a year. I would think at minimum keep it flat to
what 2000 was. I mean we're trying to cushion, what I'm hearing you trying to do is cushion the current
taxpayer. Well that's the same taxpayer we're going to whack a year from now.
Councilman Peterson: Potentially.
Bruce DeJong: And quite honestly it's the same taxpayer that hasn't been paying the full boat for the past
several years.
Councilman Peterson: I want to have the option not to whack them either time. There's a possibility we
don't have to do it either time.
Councilman Labatt: How?
Councilwoman Jansen: I just can't even imagine banking on how slim that possibility is because you've
got all of, you sat through that TIF meeting. I mean you've got that debt looming out there.
Councilman Peterson: We allocated it. We've allocated it in the surplus funds already.
Councilwoman Jansen: From this. So now you've, we are so depleting our options by doing this. Right
now what is recommended in our levy is a million dollars less than we legally, if there were levy limits,
we're a million below what we could levy this year. So in looking at the responsibility factor on this, it's a
responsible levy. You're reacting to that 18% and that 18% isn't being seen by anyone, not in their tax
bills. There isn't a single person.
Councilman Peterson: I'm not reacting to it. Don't assume I'm reacting to 18%. I'm reacting to increase
in taxes. I'm not reacting to the 18%. It's inclusive of that. Plus we don't know what the levy limits will
be if they will be there, because there will be a growth factor in there and we don't know what they're going
to do.
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City Council Meeting - December 18, 2000
Councilwoman Jansen: But you're hearing that whatever we now step down from, we ultimately are going
to end up having to levy it next year.
Councilman Peterson: No. I'm saying we may or may not depending upon what the fund balances do next
year. We have surplus that we, you know I'm recommending that we use part of those surpluses this year
and we may not do that next year. We may do it again.
Councilwoman Jansen: And we conceivably could fall a half a million short in this revenue forecast that
could then.
Councilman Peterson: But we could be a half a million dollars high. It goes back to is your glass half
empty or is your glass half full? Mine happens to be full.
Councilwoman Jansen: But, yeah well, if you look at the trend though. Look at the trend. I mean where
we're sitting up here without numbers to get our arms around, these gentlemen came up with this proposal
working these numbers. They're not just pulling them out of thin air. I'm you know, forgive me but I feel
like this is getting pulled out thin air and we're going to have to live with this and it's going to get worse.
Councilman Peterson: See I won't agree with you that it's going to get worse. You haven't presented a
plausible argument that it's going to get worse.
Councilwoman Jansen: Staff has presented the most detailed information to support their recommendation.
They've gone beyond what I think is appropriate for a City Council to be putting them through as far as an
exercise because they are the ones that are working these numbers. We're now interjecting personal
opinions instead of relying on professional advice. If we all come to these finances and interject our
personal opinions, we don't want to raise taxes. In fact we'd probably sit here and well, we'd do what
you're doing. We'd back down below '99 and just keep backing off. Well it is our taxpayer that's
ultimately going to get hit with it, whether it's in services that we end up cutting or this. You know the
potential of defaulting. You're hearing staff wanting to take the cash and improve our credit rating.
You're getting cash back then for our taxpayers by improving our credit situation. This is probably the
worst outcome that I can even have tried to imagine as you were sitting down with staff and trying to get
your arms around these financial numbers because you haven't lived it. And to interject a personal
opinion.
Mayor Mancino: Let's not get personal.
Councilwoman Jansen: Above and beyond staff's recommendations is stretching.
Councilman Peterson: So then you're inferring that every single thing that the staff would recommend in
the last 2 years that you've been involved in council, and the ensuing two years as mayor, that you're going
to listen to every single perspective and agree with the staff's perspective on everything then?
Councilwoman Jansen: I'm saying on these financial recommendations.
Councilman Peterson: So you're portioning out that you're going to listen to them on finances and not
listen to them on other things. That's what I'm hearing you say. And I would think that our personal
opinions should be heard and listened to. That's what we all make our business judgments on or judgments
20
City Council Meeting - December 18, 2000
as you make decisions, you have to use your personal experiences and personal opinions. I mean I can't
fathom that you wouldn't do that.
Councilwoman Jansen: The financial health of the community is a whole lot different than factoring in
what personal latitude you have on some of these variances and development proposals so to compare the
two is difficult at best. But when you're looking at these financial numbers and trying to figure out the bias
in them, and whether or not they've overly gone conservative, you're not basing it upon trends. There's no
trend here to suggest that they're wrong. The trend, and historical track that we're on is that they're
accurate. You heard Bruce say last week, every surprise has been a six digit negative surprise. They're
basing it on factual, historical trend. Same thing as I'm pointing out within our permit revenues. It's a
trend. It's not just speculation. They're looking at what's occurring. Yeah, I tried to challenge it back in
August and that's why I've thrown out for you the defense that they raised when I went after the expenses
in August. They're legitimate. And we went through the budget discussions department by department.
And looked at the numbers. And they're not projecting any new programs. No new services.
Mayor Mancino: Well, let's go forward. See if, call for a vote. I don't even know if it's been, yeah just a
minute. I don't know if it's been seconded or not but I think we do want to kind of bring this to closure in
the next couple minutes. Is there a second for Craig's motion? Any other motion?
Councilwoman Jansen: How about if we try a motion that maintains Councilman Peterson's challenge that
staff go back into the budgets. Try to find the $250,000 in cuts. Prior to taking those cuts though they
come back to council.
Mayor Mancino: And you're saying reduce the levy by $250,000?
Councilwoman Jansen: Reducing the levy by the 250.
Mayor Mancino: Okay, is there a second? Are you done?
Councilwoman Jansen: Nope, just a sec. I just want to calculate what that actually does then compared to
the general fund levy from last year.
Mayor Mancino: Could you give us Bruce what that would do to the levy?
Bruce DeJong: Scott just took my sheets so I'm not sure.
Councilwoman Jansen: It's like an 8.5%.
Mayor Mancino: What does that actually do to the levy.
Bruce DeJong: I'm not even sure what the question is.
Mayor Mancino: Okay Linda, would you please ask it to Bruce so he can kind of double check your
numbers.
Councilwoman Jansen: I was taking the $250,000 in budget cuts out of the general fund levy amount,
which the recommended is the $4,630,000. And then what that increase is then over the 2000 levy in just
the general fund. I come up with 8.5.
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City Council Meeting - December 18, 2000
Councilman Peterson: Overall it's 14.1 for the total levy.
Councilwoman Jansen: And that's that difficult nut to crack because you've got that leap, it's a 42%
increase in the debt service.
Mayor Mancino: If you could, I'm sorry, I don't mean to rush you.
Councilwoman Jansen: So then if you factor out the 8% growth that went to new tax base, it's a 6%.
Mayor Mancino: 14.17
Bruce DeJong: 14.2.
Mayor Mancino: Okay, 14.2. So is there a second to Linda's motion?
Scott Botcher: So what we're doing is whacking 250 out of it?
Mayor Mancino: Yes. 250 from the.
Bruce DeJong: Reducing the levy and the budget by $250,000.
Mayor Mancino: $250,000. So it would be an overall levy increase of 14.1 which would cover the general
fund levy and the debt service levy. So an overall levy increase of 14.1. Is there a second to the motion?
Councilman Labatt: I'll second.
Mayor Mancino: Okay, there's a second to the motion.
Councilwoman Jansen moved, Councilman Labatt seconded to adopt an amended budget for 2001
and certifying the final tax levies for 2000, collectible in 2001 by reducing the amount recommended
by staff by $250,000, which results in an increase of 14.2% in the tax levy. Councilwoman Jansen
and Councilman Labatt voted in favor. Mayor Mancino, Councilman Senn, and Councilman
Peterson voted in opposition. The motion failed with a vote of 2 to 3.
Mayor Mancino: So is there another motion?
Councilman Labatt: So let's see, we started out at 18.4. Then Craig's was 5.9. Then Linda tried 14.2.
Let's get a middle ground so all of us can get back to our families. Okay, enough of this you know. I
mean we're splitting hairs here trying to come up with some sort of solution. You don't want double digit
figure. Do a 9.9 then and let's get out of here. Let's just tell Bruce okay, 9.9 is what we'll give you. You
figure it out.
Mayor Mancino: Okay, do you want to make that motion?
Councilman Labatt: I did.
Mayor Mancino: Is there a second to the 9.9? There's no second.
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City Council Meeting - December 18, 2000
Councilwoman Jansen: Well let me ask this. The 9.9, that's taking, I think that's taking $500,000 out?
Councilman Labatt: I don't know. I just threw it out frustration.
Councilwoman Jansen: It goes back to the $500,000.
Councilman Peterson: Yeah.
Councilman Labatt: We're not doing any good.., future of the city by sitting here arguing about this.
Councilwoman Jansen: So it's a $500,000 decrease in the levy amount and next year's council then would
have to decide if it comes out of the budget? Instead of cash balance.
Scott Botcher: Well yeah.
Councilwoman Jansen: Second.
Mayor Mancino: I'm sorry. Are you talking about Steve's motion?
Councilwoman Jansen: Yep.
Mayor Mancino: The 9.9. Okay, all those in favor. I think we've done this, the 9.9.
Councilman Labatt moved, Councilwoman Jansen seconded to adopt an amended budget for 2001
and certifying the final tax levies for 2000, collectible in 2001 by reducing the amount recommended
by staff by approximately $500,000, which results in an increase of 9.9% in the tax levy.
Councilwoman Jansen and Councilman Labatt voted in favor. Mayor Mancino, Councilman Senn,
and Councilman Peterson voted in opposition. The motion failed with a vote of 2 to 3.
Mayor Mancino: Craig, your's was a 750 with a 250 for budget cuts and the other 500. Bruce, where
would a 700 get us? Going a little bit higher than Craig's. As far as increase if we took 700 out of the
levy. $700,000.
Councilman Peterson: You're saying that versus the 750?
Mayor Mancino: Yes.
Councilman Labatt: Probably about 6.6.
Bruce DeJong: 6.5%.
Mayor Mancino: Excuse me, pardon Bruce?
Bruce DeJong: 6 ½%.
Mayor Mancino: 6 ½%. A motion for $700,000 or a 6 ½% levy increase. Is there a second?
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City Council Meeting - December 18, 2000
Councilman Peterson: You made the motion?
Mayor Mancino: Yes.
Councilman Peterson: Can you do that?
Mayor Mancino: Yes.
Councilman Peterson: I'll second it.
Scott Botcher: For clarification purposes, this is all reducing the levy and applying fund balance?
Councilman Peterson: And budget.
Scott Botcher: Well you need to define what you want. Or the motion maker and seconder need to define
what they want.
Mayor Mancino: Motion maker will say 200 budget, 500.
Scott Botcher: 500 levy, okay.
Mayor Mancino: Fund balances.
Scott Botcher: Okay.
Mayor Mancino: And do you feel comfortable with that, making a second?
Councilman Peterson: Affirmative.
Mayor Mancino moved, Councilman Peterson seconded to adopt an amended budget for 2001 and
certifying the final tax levies for 2000, collectible in 2001 by reducing the amount recommended by
staff by $700,000, ($200,000 from budget and $500,000 from the levy), which results in an increase of
6.5% in the tax levy. Mayor Mancino and Councilman Peterson voted in favor. Councilman Senn,
Councilman Labatt and Councilwoman Jansen voted in opposition. The motion failed with a vote of
2to3.
Scott Botcher: You wanted to know why I wanted to fill that fifth seat.
Councilman Peterson: You now know why I didn't really have a strong desire to do this.
Scott Botcher: But you get paid for it though Craig.
Councilman Peterson: That's what I'm doing.
Scott Botcher: At least until we cut council pay.
Mayor Mancino: We'll go to 6:30.
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City Council Meeting - December 18, 2000
Councilman Peterson: Do you have any brilliant ideas Mr. Senn?
Councilman Senn: No... so it doesn't make any difference.
Councilman Peterson:
Scott Botcher: 6 ½.
Councilman Peterson:
Scott Botcher: 735.
What was the last percentage?
Got your calculator? What does 7 do? What does 7% do?
Bruce DeJong: That would be $411,000 increase in the levy over last year. That would be $672,000 cut
in the levy.
Mayor Mancino: I'll offer the 6.5% or the $700,000 again. I'll go back to one of the other motions and
that is a $200,000 decrease in the budget levy and a $500,000 in using fund balances. For again a levy
increase this year of 6 ½%. Which is twice last year's. Is there a second?
Councilman Peterson: I'll second it.
Mayor Mancino moved, Councilman Peterson seconded to adopt an amended budget for 2001 and
certifying tax levies for 2000, collectible in 2001 with a $200,000 decrease in the budget levy and a
$500,000 in using fund balances for a levy increase of 6 ½%. Mayor Mancino and Councilman
Peterson voted in favor. Councilman Senn, Councilman Labatt and Councilwoman Jansen voted in
opposition. The motion failed with a vote of 2 to 3.
Mayor Mancino: Okay. Any other motion?
Councilman Peterson: I'd make a motion that we do, instead of the 500 and 2, we do 450 decrease and 2.
Mayor Mancino: Pardon?
Councilman Peterson: We would decrease it not by 500,000 but by 450,000, so it's going to be in that 7%
range.
Mayor Mancino: So how much is out of the general fund levy? What's the decrease in the general fund?
Councilman Peterson: The decrease in the general fund would be 450 and 200 in the.
Mayor Mancino: In the debt?
Councilman Peterson: Yeah. No, in the budget.
Mayor Mancino: Budget. So a total of 6507
Councilman Peterson: Yeah.
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City Council Meeting - December 18, 2000
Mayor Mancino: And Bruce, what is our percentage increase at 650? Total levy please. 7.2?
Councilman Labatt: Out of my back pocket on that one too.
Bruce DeJong: 7.4.
Mayor Mancino: Okay. Is there a second for that motion? And if we don't pass a levy it goes to the 2000
levy which would be 5.8.
Bruce DeJong: Correct. I've looked at the information and I did give you a wrong date. It's a day later
this year. It's on or before five business days after December 20th, which would be December 28th. YOU
have to certify your levy to the County according to information received from Minnesota Department of
Revenue. If a county, school district, city of any size, town or special taxing district has not certified it's
final property tax by this time, it's property tax shall be the amount levied by them in the preceding year.
Mayor Mancino: Okay. Well I'm going to give us another minute or two. Otherwise we go back to the
levy unless everyone would like to meet again.
Councilwoman Jansen: I guess what I'm having difficulty accepting is that the numbers that are fixed, if
you would, and Southwest Metro is of the understanding that you know we are levying the same amount
that the other two communities. It is a joint powers agreement. We've had the discussions with them. I
would hate to pull a last minute surprise on the other parties that are involved in that, so I am looking at
these three as set. That by itself is an 8% increase in the levy. So to hold the general fund at, the general
fund levy at the, well even less than, it's less than a cost of living increase. Because I am looking at
whatever comes out of this general fund is it's a direct correlation to what we've got in our budget.
Mayor Mancino: Linda, I do believe there was a 7.5% increase on the table. That was your last one.
Councilman Peterson: Whatever the 650 total is.
Mayor Mancino: Yes.
Councilwoman Jansen: Excuse me, I thought you moved the meeting on because there wasn't a second.
Mayor Mancino: I did. There wasn't but your concern was that we be at 8%just with leaving those so I
thought you were going, why couldn't we get there is where I thought you were going with it. Why
couldn't we get agreement on the 8%.
Councilwoman Jansen: Because we're not factoring anything in at all for the budget. If you're at 650,000,
correct? That you would be taking out.
Councilman Peterson: Yes.
Councilwoman Jansen: So now you've got.
Councilman Peterson: 450 would come from fund balances and 2 would come from the budget.
Councilman Labatt: And that's a 7.4, right?
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City Council Meeting - December 18, 2000
Councilman Peterson: Is that the number it was?
Mayor Mancino: Yes.
Councilwoman Jansen: So all we're doing is covering what we weren't responsible for receiving as a
problem. I mean this is all those deferred debt payments and we're not then putting any latitude in here at
all for any increase in the general fund expenditures, which this is where we're funding them from. So I'm
looking for the incremental, if you would. You're saying 7.4%. That's just barely shy of covering the debt
service and our joint powers agreement.
Councilman Peterson: It goes back to using the fund balances again. I'm tired of going, restructuring that
conversation again. Let's, you're using fund balances to cover it.
Councilwoman Jansen: I certainly understand that. Philosophically we're not generating annual revenue to
cover annual expenses and that's a minimum that we should be doing for the community. Is making sure
that our annual revenues are covering those expenses and if then, and this is what I would like to see
happen is that we work with staff to identify any one time expenditures and if council then in the future
wants to say that those could be allocated to be used for cash balance, it's a one time. Otherwise we're not
generating revenue to sustain the expenses that we're incurring. And that right now is by fault of expenses
being out in other funds that weren't being accounted for. I mean all of this has come to bear this year and
I guess I'm looking at the new growth having picked up 8% of that 18% increase. I mean we were really
lucky. Now we're down to this 10% and expenses didn't go up by that amount. The revenues being
brought up into line with covering them, and I guess that's where I go back to your challenge is where I
was back in August, and that's why I can support, although I don't like pulling it on staff at the last hour,
doing the $250,000 cut from the budget, cut from the levy. When we start going after the cash balances,
again to your point and this is where we're on opposite sides of these cash balances. You're hearing that
staff isn't sure one way or the other whether we're going to need them. They want another year. I tend to
favor giving them that other year with what they have so that they can work through that situation versus
our taking away any options that they might be able to exercise. I can't come up with what foul is being
committed if we go with their recommendation to not use the cash balances realizing we're going to use
them once we know their surplus. Right now we don't know that they're truly a surplus. And right now
they are helping our credit rating get improvement so it's not as if we aren't getting a benefit from them.
It's not as if they're sitting there and we're losing out on not shifting them. Because there will be an
increase in 2002 just from all the debt and the library and trails and those things. So there's already that
increase that's going to be out there for 2002. We could be shifting this further out into and impacting that
and making that worse.
Councilman Peterson: Could be. Maybe not. I guess that's a deep philosophical difference that we're at
so. I'm not the only vote here so.
Councilwoman Jansen: Well it's just that you are the vote that will have to live with this. And I.
Councilman Peterson: And I'm very comfortable doing this. I said that before and I won't say it again.
I'm very resolved and comfortable in the perspective that I presented tonight.
Mayor Mancino: Craig, do you want to do one last motion and we'll just, meeting will be closed.
27
City Council Meeting - December 18, 2000
Councilman Labatt: Bruce, what is the impact if we can't come up with a decision here and we go back to
528? 2000. What obviously negative impact is that going to have on the city financially because this
group can't make a decision here for the future of the city?
Bruce DeJong: Well I think it's a very large negative impact. Because as I stated strongly before, you
need to start levying for that debt service and what we've got is a work out plan. We're still under levied
from those scheduled levies that are in your bond indebtures. Now I believe the City of Chanhassen to be
in technical default on it's bonds. If somebody comes in here and says you know, what are you doing and
you say, you know gee. We didn't levy for it. You know because we didn't want to or because we
couldn't make a decision. That's going to be a problem. So if you go back to last year's levy, you have to
take an additional $500,000 worth of fund balance just to get to the work out position that's in that debt
study information that...
Mayor Mancino: Needed to take from your excess reserves.
Bruce DeJong: And then you eliminate almost any flexibility because where, the majority of your
expenses are fairly fixed expenses in the general fund without cutting programs so you can cut park and
recreation programs. They have four full time staff. You know program less of that. You know the
council made a decision a little while back that you actually want more law enforcement. That you want to
increase the amount of services you're getting from Carver County. So that's not really available for cuts
and that's a fairly large chunk of the budget.
Scott Botcher: It certainly is available for cuts.
Bruce DeJong: What?
Scott Botcher: It certainly is available for cuts. Everything in that budget's available for cuts under that
scenario. I mean it comes down to whatever services are provided through that fund are eligible and I don't
know what those could be. They could be whatever the council ultimately decides would be. But again,
with your human service cost and...
Bruce DeJong: ...programs cuts.
Scott Botcher: Oh yeah. I mean and that doesn't make it good or bad. It's a philosophical question. I
mean you can take the libertarian approach. You could take the opposite approach. I'm just suggesting to
you that what we hear from constituents, and what you hear from them in terms of adding services, and you
have added services as the community has grown. It would be a step away from that. And that's a choice
you can make certainly, but it would have serious ramifications in terms of service delivery.
Bruce DeJong: And I guess my judgment is that there's probably a 50/50 chance that levy limits will be
re-imposed and if you.
Scott Botcher: I'll take that bet.
Bruce DeJong: Well that's my guess. That's my judgment and certainly that's open but even if it's a
10"% probability, and those levy limits do get imposed, if you have this low a levy, you are really
handicapping yourself for the next you know, for a long time.
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City Council Meeting - December 18, 2000
Scott Botcher: Until caps are removed again. You never make that up.
Mayor Mancino: But again the levy limits don't apply to the debt part of the levy.
Scott Botcher: No.
Mayor Mancino: Only to the general tax levy.
Scott Botcher: That's correct.
Mayor Mancino: For the last 20 years that's how they've done it.
Bruce DeJong: But I think you know, I'll make my viewpoint known. I think it's irresponsible of the
council to significantly cut the levy without identifying some areas, some programmatic areas that you want
to cut. You know if you go cut 5% or 10% out of your operating expenditures, we can do that. But if you
want to cut significantly out of the general fund yearly expenditures, you need to identify some
programmatic areas and say we want less of service X. Whether that's park and recreation. Whether
that's you know street maintenance and snowplowing. Whether that's accounting. Whether that's
planning. You name it but I think it requires some type of philosophical equivalent saying that if we want
to cut the levy, we need to cut expenditures and here are the areas that I favor cutting.
Councilman Peterson: So philosophically though, when you say that, where is, then the question I asked a
week ago. When is enough of a surplus enough? If you had 20 million of unallocated cash, that
philosophy wouldn't...
Bruce DeJong: Every single program other than the general fund, then I think you need to have the $2.7
million that we've got put aside there because you have no money at the beginning of the year. You get
your settlement for taxes in June so you have to have at least $2.7 million there. You look at those debt
service funds, whatever is in there is in there for a reason and that's because you have you know, we're
structured around that payment timeframe where you get your tax settlements in June and in December and
then you mm around and you pay your bonds off August and February. So any surpluses that are there are
there to make those payments coming due on February 1st. So those are out of the mix. You can't, you've
got legal obligations on a bunch of those funds which is why we left them out of the mix. And certainly if
you're going to run a utility system, I don't know. Maybe the city can make some money trying to sell it.
Maybe that's what we ought to do. Sell the utility system and get out of that business and not cash flow it,
but you have to cash flow that business too. And right now we're not even putting enough money aside in
there for replacements and we'd probably have a hard time going out and making a specific special
assessment case against individual property. Once you've got water and sewer, if the city's not having
rates high enough to fund replacement of that system, you can't go out and special assess it because there's
no increase in property value due simply to the replacement of water and sewer lines.
(There was a tape change at this point in the discussion. The recording from this point on was very poor
quality.)
Councilwoman Jansen: Let me give this a try. You know I ultimately want to be at zero as far as what we
give up here. 250 I'm more comfortable with. You're at 750. Can we come to the middle on this because
what I heard you say early on is that you would like for an increase to be less than double digits. Your
$500,000 number thrown out in the initial conversation that was quoted with a 9.9%, and I realize that's
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City Council Meeting - December 18, 2000
barely under. But that at least eliminates a smaller amount of cash balance and puts a little less of a
burden back onto cutting so much out of the budget to try to hit that And we talked very early in the year
and we can get this employee incentive program going on cutting expenses, then maybe we can achieve
both goals. If we can start to affect the expense line more from a department.., and having them come up
with some of those savings, we work our way towards getting this out of the budget. And we're in a better
situation as we go into the 2002 budget because we've been bringing down the expense line. So I would
make a motion, unless you wanted to talk about it.
Councilman Peterson: Just to give you a background. I came on with... 2 ½-3 ½% is where I was coming
from so I'm not starting from 5 to 750. Just to give you some background...
Councilwoman Jansen: Was that before you knew that our debt levy increase was already putting us at
8%?
Councilman Peterson: No, I knew that the debt levy was going up... 42%, whatever that is. I knew that.
Councilwoman Jansen: Even though that was at 8, you were.
Councilman Peterson: Again it gets back to the fundamental question and point is, I'm not at all concerned
about using fund balances to get us through another 12 months to ascertain really where we stand. I'm not
concerned about taking $450,000 out of fund balances for 12 months and, I don't see it as being a big
factor. We used 300 and some thousand last year.
Councilwoman Jansen: Actually not because the revenue was forecast so conservatively, it was picked up
in the permit revenue and that's one of the differences in how the accounting and the budgeting is being
done for next year. We don't have that cushion in there anymore.
Councilman Peterson: You lost me. Didn't you when you approved the budget approve a 300 and some
thousand dollar application of funds for.
Mayor Mancino: Every year in the past the pattern has been that our revenues have been over projected
anywhere from 3 to 500,000 since 1996 and our expenses have come in under by 100 to 200,000. So there
has been this kind of 3 to 5 to $700,000 surplus in the general fund over the years. That has been the
pattern and we have always, always come in over projected revenues because they have been so
conservatively and some would say prudently projected that we have always go, if you look at the pattern.
I don't think there's been in a year in the last 5 or 6 years where revenues haven't come over at least by
250 to 300,000.
Councilwoman Jansen: So what I'm saying is that Bruce projected to us and mentioned in his last memo is
he's taken that cushion out of there because he's upped the projection to a million one. So instead of being
at that $800,000 number like we were this year and we came in at a million one, we're starting at a million
one so and we're losing some of that possibility as far as our having additional revenues. In fact what I
was hearing was that in the year 2000 our permit revenues are going to come in down 19% from last year
and 99 to 98 they were down 6. So we've gone down 6 and then 19 and now we're projecting flat for
2001. If we continue in this historical pattern, coming in flat would be a good thing with it showing could
potentially come in below that and then again we're dipping into fund balance to cover whatever we're off
there...
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City Council Meeting - December 18, 2000
Councilman Peterson: Well... I mean. I hear you. You know unfortunately a couple of months ago quite
a few thousand people.., both a private and a public commitment not to raise taxes and here I am being
forced to consider doing that you know a few weeks after that election... I think I've gone, from my
perspective and again I'm one of five votes here. I think that my proposal of 450 and 2 is a good proposal.
Not where I wanted to be and not where anybody else wants to be, because I haven't gotten a second on the
motion.
Councilwoman Jansen: I guess as far as asking if we could come to a compromise that neither one of us
likes and I don't think even Councilman Labatt, I don't mean to exclude him, would particularly care for
but maybe we move a little closer to center. We manage to not have the double digit increase and in fact at
9.9% with 8% new growth, you're then just projecting a 1.9%. So I mean that new growth number does
take away some of the pain of whatever we're setting the levy at. It's not a direct impact onto each
taxpayer.
Councilman Peterson: I'm comfortable with my 450 and 2. Now if others here are going to a different
one, you know...
Councilman Labatt and Councilman Peterson had a discussion back and forth about the use of fund
balances.
Mayor Mancino: You've already got a deficit budget in the budget right now... In this budget it is a deficit
budget... It's using the environmental protection fund... I mean if that's the term and that's what
everybody is going to hang their hat on and .... that it is a deficit budget. You use those fund balances.
That's why they're there. And when you have a surplus, when you've had revenues.., revenues come in
higher than projected, everybody should be excited that we have that extra surplus, that extra money and
that you can use it for next year or the next year for either.., give it back to the taxpayers by reducing the
levy.., and we've done a lot to keep them there by trying to reduce expenses. And we've kept those
surpluses there in place. We haven't used them. We've been very judicious the last couple years about
using them. But it does mean when you do the fund balances, it does mean that you will have.., a deficit
budget...
Councilwoman Jansen: But the point here tonight is that you can't call the cash balances a surplus until
you can show that they're not needed. And right now we're being told that what we have on hand is
needed. In fact we're being shown it may not be enough in worst case scenario. And that's not
extrapolating on to that what could conceivably even.., even more. And when we're saying it's a deficit
budget, we're saying the operating revenues are not, the annual operating revenues will not cover the
annual operating expenses and that means we're not covering the cost...
Scott Botcher: The term deficit budget.., given the situation the city has been in and.., different
methodology of cash management. That's what it is. But again, I think that given where we are and given
the situations that are in front of us...
Mayor Mancino: ... would like to come back and discuss this.., go forward onto the performance review if
we want to... but I will be closing the meeting.
Councilwoman Jansen: Councilman Peterson would you consider, instead of your 650, 600 which would
then leave the general fund levy at least flat to last year?
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City Council Meeting - December 18, 2000
There was discussion between Councilwoman Jansen, Councilman Peterson and Councilman Labatt about
trying to reach a compromise position on a number that would work for a majority of the council. Mayor
Mancino stated the council was meeting on December 27, 2000 and could finish the discussion on that day.
Staff stated their concern about the time needed to complete the paperwork and get the levy information
submitted by the deadline. After further discussion Councilman Peterson made a motion to increase the
levy by 7.4% with $450,000 being funded out of fund balances and $200,000 taken out of the budget.
Councilwoman Jansen: Okay, I'm going to second this so we can discuss it.
Mayor Mancino: Okay. It's been seconded. Any discussion?
Councilwoman Jansen: Councilman Labatt. We're kind of between a rock and a hard place. Since we're
not getting any cooperation as far as... I'm going to suggest that we may have to go with this in spite of the
fact that we don't think it's in the best interest of the community because I quite frankly, am not
comfortable.., coming back on the 27th or the 28th and I'm not seeing any wiggle. I'm not seeing any move
here.., not even $50,000 as a token.., up to 7.4% increase that doesn't even, doesn't even meet our growth
number.., but to come back and put staff through this again...
Councilman Labatt made a comment at this point expressing his disappointment in his fellow council
members.
Mayor Mancino: And Steve I'm really disappointed in you for being quite so rude about it... People can
have philosophical differences and always will have on a council and it's... I certainly hope that...that the
discussion will be respectful.., because they were elected too... We have a motion and we have a second.
Councilman Peterson moved, Councilwoman Jansen seconded to adopt the budget for 2001 and
certify final tax levies for 2000, collectible in 2001 amended to reduce the budget by $200,000 and
reducing the levy by $450,000 out of fund balances for a total increase in the levy of 7.4%.
Councilman Peterson, Councilwoman Jansen, and Councilman Labatt voted in favor. Mayor
Mancino and Councilman Senn voted in opposition. The motion carried with a vote of 3 to 2.
Mayor Mancino adjourned the special meeting of the City Council at 7:10 p.m.
Submitted by Scott Botcher
City Manager
Prepared by Nann Opheim
32