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CC 2003 12 1 Truth in TaxCHANHASSEN CITY COUNCIL TRUTH IN TAXATION HEARING DECEMBER 1, 2003 Mayor Furlong called the meeting to order at 7:00 p.m. The meeting was opened with the Pledge to the Flag. COUNCIL MEMBERS PRESENT: Mayor Furlong, Councilman Ayotte, Councilman Labatt, Councilman Lundquist and Councilman Peterson STAFF PRESENT: Todd Gerhardt, Justin Miller and Bruce DeJong PUBLIC PRESENT: Dick Hanson Melissa Gilman Jerry & Janet Paulsen Jeff Seiler Debbie Lloyd Ann & Kenneth Block 7750 Crimson Bay Road Chanhassen Villager 7305 Laredo Drive 6511 Gray Fox Curve 7302 Laredo Drive 7015 Dakota Avenue Mayor Furlong: Good evening and welcome to everybody here this evening and those watching at home for the 2003 Truth in Taxation hearing for the City Council. As we get started here tonight, it will be an opportunity for residents to hear about the City's proposed 2004 budget and tax levy, both of which are the result of multiple meetings between the City Council and staff over the last several months, up to and including last week. As we begin tonight ! want to start by first commending Mr. Gerhardt and Mr. DeJong and the other members of the staff for working so well with the council on this matter over that period of time and for incorporating our comments and suggestions into the presentation you'll see tonight. So after the presentation by Mr. DeJong, we'll open up the public hearing for citizens comments and if there's no objection I'd like to amend the agenda this evening to allow for council discussion and comments after the public hearing is closed. So if there's no objection to that we'll make that amendment to provide that opportunity as well. So with that, Mr. DeJong. Bruce DeJong: Good evening Mayor Furlong and City Council members. Make sure I've got my microphone close enough so that the vast listening audience can hear me. We're here tonight to talk about our 2004 Truth in Taxation hearing. The reason that we're holding this is to allow for citizen input onto our budget and tax levy for the following year. They've received truth in taxation property tax notice that will show them the potential increase that could be placed on their property if all the tax levies for the city, county, school district and other special taxing jurisdictions are put into place as they were presented back in September. I'll just run through a slide show here that ! have that will kind of lay out how we've gotten to this point and what our budget and tax levy look like for 2004. And after I'm done with this I'd ask you to open up a public Truth in Taxation Hearing - December 1, 2003 hearing for the citizens to provide input and after that we can bring it back for council discussion and any other questions that you may have of me. Mayor Furlong: Thank you. Bruce DeJong: What we have to do for Truth in Taxation purposes is actually hold this meeting. We have to present a presentation on our proposed 2004 budget. Present information on our proposed 2004 tax levy. Discuss the major changes to the budget. Hold the public hearing and then we can adopt the tax levy. We can't do it tonight. It has to be at least one day after this hearing, but generally you hold this open for a continuation hearing so we hold that open for one week and have our budget adoption and tax levy adoption at our regularly scheduled meeting the second Monday in December. We started this process way back in July when the department heads presented preliminary budget estimates to the city manager. We've gone through and reviewed those and examined them in August and presented them to you at work session and brought them back in September for adoption. On September 15th you adopted a maximum Truth in Taxation tax levy and that is an amount that we cannot exceed but that we can go below. We have the ability to reduce our tax levy below that amount, which we are actually proposing to do. Then what happened is we had detailed budget meetings with you and department directors and actually all the significant, the foreman and other management personnel who are involved in tracking and maintaining their own budgets. During those we've discussed items that we could possibly cut. Items that we could postpone, and generally how we could be more efficient in the management of our resources and still maintain the performance goals that the City Council wants us to see. Now we're having the Truth in Taxation meeting and we'll adopt the budget next Monday on December 8th. The 2004 budget has changed slightly from the 2003. As you can see I've included two columns on the percentage change side, and that's because when we started out in 2003 we adopted a budget that was significantly different. When the state legislature met starting in January, running all the way through the end of their special session in June, they had a 4 lA billion dollar budget deficit that they had to deal with. Part of the solution was to reduce state aids to cities and counties and so because of that process, the city of Chanhassen adopted a budget, just a month ago, that is significantly lower than it was before. We dropped about $225,000 worth of expenditures and we raised about $75,000 worth of fees in order to balance the roughly $300,000 that was lost in state aid. Now that was lost mid-year so we adopted that for the 2003 budget. The 2004 budget reflects the lost of that aid still, and what we've done here and what we're proposing for your adoption next Monday is a budget that keeps operating expenditures exactly the same as the modified 2003 budget, which is significantly lower than where we started even back in 2002. The revenue side of the budget has changed fairly dramatically. What's happened is we have a very unique situation with the property tax. Because of the formula that the state legislature used for reducing the aids to cities, we find ourselves in a situation where our property tax levy is actually higher than what we will net by about $191,000. We're losing that much in state aid that we cannot recoup. We have roughly $300,000 and of that we can recover 60 percent, 40 percent of that aid is lost, but the other part we can recover through the property tax levies so our property tax levy is higher even though it produces less than we 2 Truth in Taxation Hearing - December 1, 2003 anticipated in 2003. The other significant item is that our other revenue is down quite a bit. That's about $40,000 simply because the revenues that you receive for interest earnings on our fund balance are down and predicted to stay down. There did not seem to be a significant upward pressure on interest rates so the rates that I'm able to invest excess funds with is very low and so that return is expected to stay low for 2004. Just a little graphic here to show you what's happened with our operating expenses. Our operating expenses for 2003 and 2004 are actually below 2002 levels. The reason that we're able to do that is because we've cut significantly during both the 2003 in order to meet that state aid change, and we've kept that at the same amount for 2004. We do have significant transfers to debt service included in our general fund so that total expenditures are above the 2002 level, but those are going to mitigate our debt service requirements for 2004. And we anticipate being able to use that money out of our tax levy in 2005 to fund our capital equipment needs that we won't have to bond for that anymore. So just a recap of what changed in the 2004 budget. Our personnel costs have gone up slightly. Our materials and supplies have decreased a fair amount. And our contractual services have decreased. So total net net brings our expenditures to a zero increase. We'll have the same operating expenditures in 2004 as we had in 2003. Quick review of our general fund balance. General fund balance has gone up fairly dramatically in the late 90's and has kind of moderated since then but that was generally due to building permits coming in ahead of our projections. We've had more building permits come in then we've had budget. At this point we're seeing a slow down in our building activity in town due to two things. One, general economic conditions and two, kind of the glut in available commercial properties that's existing in the marketplace. There's about a 20 percent vacancy rate in commercial property in the metropolitan area and until some of that starts to be absorbed, there's going to be very little commercial building activity that goes on. The second column that you see down low is the amount that we have of fund balance that's in excess of our policy. We have a policy that says we'll keep cash flow reserve of approximately 50 percent of the coming year's tax levy and state aids. Now as we relied more heavily on the property tax levy to fund the functions of our city, that means that we have a higher policy amount that we have to keep in reserve. That's why this lower one has decreased in the last couple of years. So while it's gone down, we still have roughly $1,750,000 of general fund balance that is in excess of your policy, but we will be transferring some of that money out. We've talked about the $850,000 at the last council meeting that will be transferred in order to pay off some debt early to call some bonds and then there will be a transfer of an additional $85,470 that we will accomplish this year. Next year we'll have $821,000 budgeted for transfer to the debt service. Why do we need the fund balance? We need approximately 50 percent of our taxes for cash flow. What happens is that's the majority revenue source for the general fund. It's over 6 million dollars and we don't get that until June and November. It just actually on the day before Thanksgiving received our second half settlement from Carver County of approximately 6.7 million dollars so what that means is we have to have money available to fund our operations up until those taxes come in. That leaves us with a large fund balance right at the end of December and then you turn around and spend it down during the course of the year until that first settlement comes in in June. We also need a contingency fund in case of emergencies. Things that come up, ! know a few years ago there was a large wind storm that came through and we had to spend a lot of extra money Truth in Taxation Hearing - December 1, 2003 cleaning up downed trees around town and getting that taken care of. And we also need to have a contingency fund in case we do not meet our budget, either because of higher expenses for emergencies or because we don't hit our revenue amounts based on activities of building permits. And thirdly, bond rating agencies like to see a fund balance of somewhere around 50 percent of your operating expenditures for the year. In our case that's about 7.8 million dollars so half of that would be about 3.9 million dollars as a fund balance that a bond rating agency such as Standard and Poor's who rates us would like to see. What does this do to our debt service? Well we're really buying down for one year our debt levies through transferring the $900,470 which is made up of the two amounts that we talked about. One, the $815,000 and the other is the $85,470 which will bring our tax levy back down to the zero dollar increase. And we're going to use those transfers, that and the $821,000 transfer in 2004 to cancel debt levies for 2004. It drops our scheduled debt levies down from $3,703,000 down to $1,982,000. What that really does is it closes out some funds that some bond levies that were off schedule that we had not levied all of the taxes that we needed to for that. We'll get them closed out ahead of schedule and reduce the tax levy in future years. The 2005 debt levy where we'll be back on schedule and all of our remaining debt service funds is scheduled to be at $2,191,549. That increase will be mitigated by the downtown TIF district value coming back on line and the effect of that will be something like a million dollars of new taxable value coming on. So even through we'll have an increase in our tax levy in 2005 for the debt service portion, it will feel like a decrease to almost all of the property owners in town because we'll be spreading it over a much larger taxable base. Just showing you graphically what happens with our debt service levies. You can see the 2004 is below the 2003 amount. In 2005 it will jump back up by that approximately $200,000 and then gradually increases but those were scheduled increases at the time that the debt service levies were adopted. The net tax levy effects are the general fund levy is up $191,525, which equals the 60 percent of state aid lost in 2003. Our operating expenditures are flat with a zero dollar increase and zero percent increase. And to offset that increase to the general fund levy we've lowered the debt service levies by $191,525, or approximately 8.8 percent. The total tax increase is zero dollars for 2004. Zero percent increase. What does that do for an average homeowner? I've gone through and made a revised estimate. ! think my earlier estimates were off slightly because of the market value homes type credit calculation that's included in on a percentage basis from Carver County. Even though we don't receive any of that credit, the homeowner still sees the reduction on their property tax bill. But with a zero tax levy increase and an increase in taxable value in the city of approximately 2.7 percent, the average homeowner should see a slight decrease someplace around the 2 percent range for 2004 after we're finished with this. Now those tax levies that show up on the Truth in Taxation statements are higher than this because we have cut $233,500 out of the tax levy since you initially adopted that. So the staff recommendation is to adopt the tax levy and budget as shown next Monday and then in 2005 we'll start the process over. Mayor Furlong: We're already talking about starting over. Thank you. At this time if there's no questions for staff I'd like to open up the public hearing for citizen comment. We'd invite anybody to come forward and raise issues or ask questions that you may have regarding the budget, the levy, or the capital improvement plan. We didn't talk 4 Truth in Taxation Hearing - December 1, 2003 about that tonight but some of that information's been out there too. I would ask that you state your name and address and invite anybody to come forward at this time. Jerry Paulsen: Jerry Paulsen, 7305 Laredo Drive. Thank you to the council and the staff for the time they put in on this planning. I know it takes up a lot of your time. One item I'd like maybe to get a little explanation on, there's a legislative line item in the budget of a hundred and some thousand dollars and I wondered how is that spent other than being a member of the League of Minnesota Cities? Mayor Furlong: Mr. DeJong. Jerry Paulsen: I'm not sure what the figure is. It's 100 and, almost 200. Bruce DeJong: The figure is $139,200 for the 2004 budget. That includes City Council salaries for the 5 council members, along with the workers compensation coverage and the FICA coverage that we're required to have. That's about $34,000. Then there are some small supplies for $200 and then we have about $105,000 worth of contractual services. Some of those are consulting services. Some of that is publishing the newsletter, the Chanhassen Connection. And approximately $26,000 is for memberships in groups like the League of Minnesota Cities and the National League of Cities. Jerry Paulsen: A portion of that is used for lobbying, is that true? The League of Minnesota lobbyist. Bruce DeJong: Yes. The League of Minnesota does lobby at the legislature. They have some legislative liaison people that try to provide information to the legislature. Jerry Paulsen: Is it not a significant figure? We're talking about 5,000 or 10,000 maybe. Todd Gerhardt: Our memberships for the League of Minnesota Cities is around $8,000. Jerry Paulsen: It's hard to say what percent of that is spent for lobbying per se I guess. Todd Gerhardt: Yeah it's, you know I'm sure they have a budget. I know they have 2 or 3 staff individuals over there but they represent out state cities and metropolitan cities so, and both groups have different needs as a part of their efforts over there. So it's, there are lobbying dollars per se in that membership fee that pays for those staff members. Jerry Paulsen: Okay. I just have some reservations about public entities lobbying for money from other public entities I guess. Whether it's school district or city or county. Realizing that you have to get some money in and you can influence the legislature. Thank you. Mayor Furlong: Thank you. Truth in Taxation Hearing - December 1, 2003 Debbie Lloyd: Good evening. ! observed in work session, I'm sorry, Debbie Lloyd, 7302 Laredo Drive. In work session last Monday ! observed some very difficult questions that you all asked of staff and under expenditures, cuts to be determined. Just for a matter of public record ! think it would be good for you to possibly present the type of items that you brought forward. The tough questions you asked as a matter of public record so people know what you really are looking at. ! know the question of salary and benefits, it's really a tough one and ! think as a member of the public that's always a question ! have because ! know how hard the company ! work for has been on us in the past couple of years. Thank you. Mayor Furlong: Thank you. Bruce DeJong: While that $148,000 of cuts was not specifically identified in the materials that were given to you, we met as department head staff last week Tuesday after our discussion at the work session and came up with some cuts that we would recommend. Those cuts would be the management fee, basically that portion of Mr. Gerhardt's salary that was brought back in. Moving that back to the other revenue producing funds and we also cut the survey from the legislative costs. We had the goose removal program for approximately $4,500. Cutting the recreation center staffing level by $8,000. We would cut about $7,000 through redeploying some personnel, because of some staff resignations. Cut about $13,000 of consulting fees out of the engineering department. Cut $8,000 worth of consulting fees out of the finance department. $5,000 worth of park seasonal labor. $5,000 worth of portable toilets in the parks. Saved roughly $30,000 by replacing a full time staff member in the inspections department with a part time member at the front desk, and would be cutting park overtime by $4,000 and street maintenance materials by about $3,300. So that's the $148,000 cuts that staff would propose. Mayor Furlong: Okay, thank you. Jeff Seiler: For the record my name is Jeff Seiler. My address is 6511 Gray Fox Curve. First of all thanks for this opportunity to speak. I'd like to say thank you to the mayor and City Council for all the hard work you put on. That you've done on setting the direction of the budget this year. It appears that you've worked really hard on getting the message across that you want to hold the line on taxes. ! know the city staff works the numbers and makes all the recommendations and they put in a lot of hard work too from looking at the presentation today, but you play the leadership role in setting the direction. As you know property tax took a big jump in 2003. ! attended last year's Truth in Taxation meeting and ! came away with the impression that the 2004 city taxes would go way up because of the TIF district situation and the debt of the city. ! was afraid ! was really going to be in for sticker shock when ! opened up by proposed property taxes this past week. ! never thought I'd be saying this but ! was relieved that my property tax was only going to be $3,100 this year, or next year. However my overall property taxes are still up $900 in 2 years and that's a 40 percent increase. But this year's property tax seems to be a lot more manageable. ! voted for some of you because you campaigned on the theme that Chanhassen taxes are too high. You seem to understand that people Truth in Taxation Hearing - December 1, 2003 cannot afford big jump in property taxes. You seem to understand the city of Chanhassen needs to be a more affordable place to live. You seem to understand that being the town with the highest property taxes is not a good thing. Having said all that, I'd like to comment that ! think the property tax in Chanhassen are still too high. It looks to me that our county, city and school districts spend more than any of our neighbors. It's so bad that I've actually had people sarcastically comment to me boy, you guys pay enough taxes there in Chanhassen. Apparently they have looked at buying homes in Chanhassen. When ! talked to these people who are interested in moving to Chanhassen I've told them you know make sure you look at the property taxes because they are higher than anywhere else, or they seem to be high. You know just make sure you take a close look at that. I've actually considered moving if my property tax keep going up. My only hope is that as the city and county grows there will be some economies of scale. Is it appropriate for me to ask questions at this time? Mayor Furlong: Certainly. Jeff Seiler: Okay. ! know that the Mayor and City Council are only directly responsible for the city portion of the taxes. However, since some of you campaigned on the theme the City of Chanhassen's overall property tax burden is too high, do you have any plans for working with the county or school districts on reducing taxes? Mayor Furlong: ! guess I'd like to bring back those. If you want to pose the questions then we'll see, you know in terms of commenting on them afterwards. Jeff Seiler: Okay. Now for an unpopular question. Mayor Furlong: Okay. Jeff Seiler: If that one wasn't enough. Councilman Ayotte: That first question wasn't so popular. What are you going to say for a second one? Go ahead. Mayor Furlong: You're more than welcome to ask staff questions so. No, I'm sorry. Go ahead. Please, continue. Jeff Seiler: ! don't remember you Mr. Ayotte campaigning on the theme of lower taxes so that wasn't necessarily directed right at you. ! remember talking to you after the last year's meeting so. At least year's Truth in Taxation meeting it was stated that personnel was the single biggest cost to the city. Yet when the council started talking about budget cuts, it seemed like they talked about nickel and dime things such as reducing the city newsletter from 4 to 3 times a year, or postponing the city survey. There's no talk of reducing personnel costs, even through attrition, out sourcing, or other means. There's no talk of sharing more of the health care costs with workers as you know have stayed at health care costs are really up. I'm going to guess that personnel costs are still the biggest cost to the city. My question is have you looked at any cost reductions for the Truth in Taxation Hearing - December 1, 2003 2004 budget. The reason ! ask this is because my company has shifted a lot more the health care costs to the workers and ! don't even want to think about the number of people that have been laid off in the last year. So that's my questions. Thanks for the opportunity to speak. Mayor Furlong: Thank you. We'll continue with the public hearing at this point. Mr. DeJong, is there something you wanted to respond to? Bruce DeJong: Do you want me to respond to that at this point? At least... Mayor Furlong: Sure. If there's some direct response, absolutely. Bruce DeJong: Yes there is. Of the general fund budget, of the operating expenditures of approximately $7.8 million, roughly 70 percent of those costs are directly personnel salary and benefit related. And we have reduced costs in this budget. We are replacing, you know one full time person with a part time staff member, and we are redeploying some staff people to take advantage of an opportunity created through a resignation to save some money, so we're down roughly 2 percent in actual staff levels from this point back in 2002. So yes we have reduced that and we do share the increase in insurance costs with those employees who are getting family insurance. That we have a long standing policy that we split those cost increases with family coverage 50/50. Todd Gerhardt: Mayor if ! may comment on the working with the school district and the county. The Mayor and ! attend monthly meetings. They're called the Easterly Carver County Leadership Group and that group constantly looks at ways of trying to create joint ventures between the county, cities and school districts in trying to save money. Probably one of the biggest things that we do right now with the school district is we have a joint relationship with them in mowing and plowing the parking lots at Bluff Creek Elementary and then they maintain the inside of the building for us so it's a sharing of expenses. They do what they're good at and we do what we're good at is mowing grass and they maintain the inside with their janitorial service. We constantly bring up issues every month when we meet and brainstorm from roads to swimming pools to recreational opportunities so. Jeff Seiler: My question, ! live in School District 276 so...talking about, does that apply to both districts? Todd Gerhardt: Both. Jeff Seiler: Is there a 276, schools within the school district 276 within the city? Mayor Furlong: Yes, Minnetonka Middle School West is in the city of Chanhassen. Todd Gerhardt: But our associations also played a role in the new dome that they're building where a lot of Chanhassen residents contribute to like the South Tonka Baseball Truth in Taxation Hearing - December 1, 2003 Association, the Youth Football Program, so that was a joint effort between the school district and our associations that are located here in Chanhassen. Jeff Seiler: That sounds like a joint effort in spending more money, not saving money. Todd Gerhardt: They expanded their services but it also made their operation a little more efficient in how they maintain their current infrastructure. There's costs associated with the current football field that they have to mow, fertilize and by replacing that, those are some of the elements that they will not have to do. Jeff Seiler: They won't have to do it but how much more is it going to cost? Perhaps I shouldn't be asking that question. Todd Gerhardt: That's one of the things they brought up as a cost savings measure. Mayor Furlong: I think to go along with the city manager's comments in terms of working with, he mentioned the one specifically within the school district which includes other neighboring cities as well as county representatives. This council, members of this council also participate in the Carver County elected leadership seminars that take place throughout the year. Most recently there was a seminar held to talk about strategic direction. Issues that are going to be facing, not only Chanhassen but the rest of Carver County going forward as growth occurs. Clearly one of the issues that came up within that meeting was affordability and continuing to look at what it costs to live in the county. Transportation, development, are also key issues. Schools. Quality schools. Those are important things but clearly affordability was one of the issues that came up as well. And I think whether there are formal meetings such as this one or our regular council meetings, there also is a lot of interaction on a regular basis between individuals sitting here and individuals, county commissioners and members of the school boards as well. I think this council tries to maintain and develop good relationships with members of the other elected officials. Elected bodies as well. Jeff Seiler: Sounds like you're aware of the issue. Mayor Furlong: Okay, thank you. Some of the other issues we might bring up in comments. Is there anybody else who would like to speak this evening? Sir. Richard Hanson: My name is Richard Hanson. Again thank you for allowing me to speak and I live at 7750 Crimson Bay Road and I really have to commend everybody on taking this hard stand. I know it's a tough world out there and in the consulting that I do for smaller companies, the biggest problem of course is the health issues. I'm sure we're continually addressing that. And more and more people are being asked by their employers to absorb more of their health increase costs which is always tough on a family. It's a matter of tax increases. Just as a side line, I live on a small road. It's only got 5 homes and I noticed during our first snowfall this year, the snowplow didn't come through until after the snow ceased. Now normally last year and the year before, the snowplow came through at least 10 times during a snowstorm. So I'm glad to see that Truth in Taxation Hearing - December 1, 2003 we're cutting our costs somewhere. But my only concern, and I'm very happy that my taxes are down and that we really are looking at controlling our spending, but the fact that still my valuation went up 7 percent on my home this year. ! know that's across the board kind of thing but Carver County and everybody else says that's normal. To me that's got to stop somewhere because it just keeps adding to our tax burdens here. But I'd like to commend you again for looking at everything in a hard light and ! know it's a tough world out there for all of you and again all ! can do is ask you to please control the spending because that's what it's all about. Thank you. Mayor Furlong: Thank you. Mr. DeJong, you want to comment on any of those items? The property value increases and ! guess the other ones ! heard were health care costs and snow plowing policy, or Mr. Gerhardt. Todd Gerhardt: Well on the snow plowing, we haven't changed our practice in that so the last snowfall that we had, ! know ! did my driveway 3 times because ! thought it was going to stop so, ! think the guys out there knew more than what ! knew. So if they got out there, they kind of waited until the last minute. They come in and do the major roads so people can get about but towards the later part of the evening they should have had all the roads open and especially in the morning commute time. As to the health care costs. Richard Hanson: ! wasn't really complaining about that. I'm glad to see them wait until they didn't have to come through 3 or 4, 5 times unnecessarily. Todd Gerhardt: Sure. And my point was, we didn't touch that portion of the budget so the guys are still out there performing the same service they have in the past, but they are doing it more efficiently and ! think that's your point and I'm glad to hear that. As to the health care cost. In the past, oh approximately 2 years ago we did change some of our practices in our copays and did make some adjustments to that that we haven't experienced in the past. However our experience shows that we had a higher rates the previous 2 years in the range of about 15 percent. ! think the norm was around 15 to 20 percent increase in health care costs. This year our experience showed a dramatic decrease so our overall health insurance costs was 7.1 percent and we did not feel that this was the time this year to make any adjustments to our current health care coverage based on that low experience. However we did have several meetings with employees to look at options that would, might peak some of their interest and looking into the future of other plans that might work for us. Bruce DeJong: The only thing that I'd like to respond to is the comment about valuation increases. ! know the council's heard this several times that if you have for simplicity sake, 10 houses valued at $100,000 and that's the entire amount of property in your city, and you have $10,000 worth of city property taxes that are levied, you know it's clear to see that there's $1,000 per house of property tax that has to be levied. If the value of all those properties doubles, you still have the same houses. If your tax levy stays the same, the only thing that changes is the rate. Rather than being a 10 percent rate, you drop down to a 5 percent rate on the $200,000 houses. So for the most part property taxes are not driven by valuation increases. Property taxes are driven by tax levy increases and 10 Truth in Taxation Hearing - December 1, 2003 that's what this council has really focused on is keeping the tax levy down to the same amount as last year. Todd Gerhardt: Mayor, if ! could just expand on your market value is also we contract with the County for that service. We think that's a very efficient method for us and most cost efficient. There's a Board of Review that is performed each year where you can come in and contest your market value. That typically occurs in the March-April timeframe and if you feel that your market value's too high, that's the time to come in and appeal that value. The County is mandated, the State audits their evaluations of each property so they have to have a review of that home approximately every 4 years and so, the key thing is to keep an eye on market value or valuation form, Board of Review that comes up in the March-April timeframe. Mayor Furlong: ! guess one more thing just to add to that to continue upon your example Mr. DeJong. If there's the next year if there's an additional house built, or if there is real growth and the levy stays the same, which is what we're seeing here tonight, that there's actually a reduction then on the previous taxpayers if every home is increased by the same average or the assessed value in that example. Bruce DeJong: That's correct Mayor Furlong. Mayor Furlong: So the assessed value going up absent any remodeling or expansion to the property is really an inflationary increase and what was our average across the city for 2004? Bruce DeJong: The average increase in residential property values was about 10 percent according to the information that ! received from the Carver County Assessor. Mayor Furlong: Okay. And our real growth ifI recall was about 2.7 percent. Bruce DeJong: That's correct. Mayor Furlong: Was the best estimate for that. So it's a real growth with the flat levy that's contributing then to the reduction in the average property taxes. Based on your calculations here. Okay. Thank you. Anybody else that would like to address the council this evening? You're certainly welcome to come forward. If not, did ! understand you correctly Mr. DeJong, it's appropriate at this point to continue this Truth in Taxation hearing until our meeting next week versus officially closing the comments? Bruce DeJong: No. Since there is no one else that wishes to speak I'd ask you to close the Truth in Taxation hearing and then next week we will not have a hearing but we will have council discussion about this item. Mayor Furlong: Okay. At this point then ! would make a final request for anybody that would like to come forward before we close the public hearing. Seeing none we'll go ahead and close the public hearing. As always people are free to contact the City Council 11 Truth in Taxation Hearing - December 1, 2003 by e-mail or the city manager if they wish to address comments or to provide some comments to the council. With that I'll bring it back to the council and open it up for discussion, comments, other questions the members might have. Councilman Peterson: Based upon Bruce's comments, maybe it's more appropriate that we comment next week. Mayor Furlong: Okay. Councilman Ayotte: I'm going to make a couple comments if! may. Mayor Furlong: Certainly. Councilman Ayotte: First of all, this individual councilman has done what he said he was going to do with the exception of public safety. ! think this council collectively has said what it's going to do and the folks that did speak tonight were correct. Taxes are still too high and I'd like to tell the people here and the people who are watching at home that ! really want them to talk to their other government entities at other echelons and do that part. It's not just so as council. And that's how things change. When people take an interest and address those interests with all government entities. ! think you have to pay attention to those points. With regard to District 276, it's lower than 112. So ! think we should pay attention to that. With regard to what Commissioner Gerhardt was saying, and I'm surprised he didn't make the additional comment with regard to insurance, and what we're paying was 7.1 percent pop. Other communities go as high as 20 percent recently so Gerhardt's done a pretty good job in that fashion. With regard to big hitters, personnel is a big hit but when you take a look at services, ! go back to public safety. That's a large amount of what we pay out and ! personally as a councilman have wanted to make it a point of taking a more scrutinizing look at public safety and see how we match service to need. And this council collectively is working towards that but ! do think it's an area we have to accelerate and address a little bit more diligently but ! think it is going in the right direction. So I'd like to add to your point, although personnel is an issue, we do need to look at services. And there are certain things that suggest by budget aren't going to happen, that's not necessarily true. Life cycle management of roads is still alive and well. And we've pushed out some of the activity from 2003 to 2004 without having adverse affect to the city, which ! think is hats off to staff and some of the select council. But ! just wanted to make those specific points and have folks realize that this council is working for you, but you have to address your concerns to some other government entities. ! hope folks at home heard that. Thank you. Mayor Furlong: Thank you. Any other comments? Councilman Lundquist: Mr. Mayor, I'd just like to second your positive comments for Mr. Gerhardt and Mr. DeJong and staff. ! think as we started this process back in August-September timeframe, that we had set a, tried to send a message that we were looking for a flat or close to flat in expenditures this year over last year. ! think Todd and Bruce and staff did a fine job on putting that together. It could have been a lot more 12 Truth in Taxation Hearing - December 1, 2003 painful of a process to go through all those things and through many long hours of their time I'm sure spent, made it ! don't, we had a long evening last week going through some of the cuts and talking about some of those suggestions. However, ! didn't think it was all of that much effort compared to I'm sure the amount of time that the staff put in so hats off to them for that. And just another comment on the county and school district. ! think another thing that this council and staff has done to work with the county and school district this year with the proposed budget that we have in front of us now is to set an example for the county and school district that these things can be done and there are ways to offset personnel increases and health care increases and things because as we let Todd and Bruce, gave them some leeway on that to determine where they thought they needed to increase spending, just that you offset it in other ways so again ! think that's positive for the staff that they were able to not take it out so hard on all the employees but yet still keep the, and actually reduce the taxpayers burden so that's an example that has been set that it can be done so. Mayor Furlong: Thank you. Councilman Labatt. Councilman Labatt: Just quick comments. I'm proud of what staff has done here in taking the future here, next year we're going to be looking at a lot of these same questions and a lot of our cuts here, a lot of them are one time cuts that are going to be hard to repeat for next year. Some are going to be faced, we're going to be faced with a citizens survey. Do we cut it again next year? So the challenge is still ahead of us to maintain this and the challenge is on the staff too to look big picture on this and how we're going to keep this same line next year. That's it. Mayor Furlong: Thank you. Anything that you'd like not to delay until next week Councilman Peterson? Councilman Peterson: You know ! think that, me being the stoic Norwegian, ! sometimes have to preface myself saying that this is my excited voice, and it truly is. ! think that I've been hanging around the city for close to 10 years and have been working hard at trying to have numbers like this and I'm proud of what everybody has done that has participated in this. We've done the right thing. We're doing more with less and that's what my mantra has been over the years, and I'm just proud of that. As some of my fellow council people have shared tonight, maybe not as abruptly as ! will but I'll state it differently that ! think we should put the stake in the ground that other leaders in the county, I'll challenge them to do what we have done tonight, or what we will do next week more importantly by voting for a zero-zero. Again doing more with less, and ! challenge them to match what we do or better us, and I'll applaud them. Thank you. Mayor Furlong: Thank you. ! think comments well said. This is a, ! think this is good proposal here from a budget and a levy standpoint for the city. ! think it's one that as Councilman Lundquist mentioned, it was one that the council originally set some targets and what appeared to be some aggressive targets perhaps to some, but they were achievable and the staff did a very good job of working together with the council. We did have a couple late night meetings, but that's okay. That's part of the job. ! think 13 Truth in Taxation Hearing - December 1, 2003 overall there are, it's hard sometimes to see within the numbers what's not there and ! get back to the personnel questions that's been raised a couple times. What's not there is some addition to staff that was desired. Additional staff positions that were requested and...! think Mr. Gerhardt exemplified the ability to take advantage of attrition to reorganize the staff from a service level to reduce cost. To reduce overall cost for getting the same work done at less cost. Be more efficient in how we do it. If there's one thing I've seen from the staff, they look for opportunities to be more efficient and that is what we need and we ask of them and ! think they respond very well to that. Overall a zero percent levy increase and zero percent increase on expenses ! think is a wonderful goal considering where we started, and especially in light of the significant increase in the debt that was coming due in 2004. Again it's what we don't see. That we had a $1.5 million dollar increase in debt in 2004 that we're finding a way to work through so in addition to not increasing our spending, we're able to keep taxes flat because we've been able to work through the debt side of the equation as well. And so ! think again in large part to opportunities that have been identified by the staff, we have the ability to sit here tonight. It's always been said that the city is not all of the property taxes, and that's true. People do look at their total property taxes they pay and whether that goes up or down. ! believe we can either be part of the problem or part of the solution to the property taxes that are paid by our residents in Chanhassen. ! think tonight we're taking the step to be part of the solution. So I'll look forward to see more detail in our council packets next week and if there are more questions that need to be asked, we'll address them at that time. And again ! would encourage anyone else who would like to provide some comment to the council, to utilize e-mail either to the city manager or myself or just to the council on the whole. Or by telephone, thank you. Get your comments to us so that we can do what you want us to do. Are there any other comments or questions this evening? If not, then ! will ask for a motion to adjourn. Councilman Lundquist moved, Councilman Labatt seconded to adjourn the meeting. All voted in favor and the motion carried. The Truth in Taxation meeting was adjourned at 8:00 p.m. Submitted by Todd Gerhardt City Manager Prepared by Nann Opheim 14