Budget Update: Option 7

Today Council met for another Budget Wo_20170511_192749rkshop Meeting.  Based on previous feedback from Council, staff put together and presented a compromise that we are commonly referring to as “Option 7.”

Some key points:

  1. Option 7 does not include a millage rate increase.  This was important to me because I cannot justify increasing taxes until we have a long-term plan in place, and we don’t.  As I have said a number of times before, we need to establish a strategic plan. We need to prioritize what’s most important, determine the funding needed to make those things happen, and create a plan for generating the revenue to apply to those goals. If those goals require a tax increase to move the city forward, we can talk about that. But not until we have a plan. Notably, this option does include a $10 Public Works fee increase.  I wanted no increase, but this extra $10/year is what made the brush collection possible (see below).
  2. Option 7 provides funds for 2 new personnel and 2 new trucks for brush collection. This will eliminate the need for bundling brush, which has been a problem for residents since we decided to privatize sanitation services.
  3. Option 7 allows for the hiring of a new Assistant Fire Chief. This is really important because Chief Williams will be retiring in the near future, and we need to begin thinking about the future of the Fire Department when that happens.  Hiring an Assistant Fire Chief will allow us to prepare a successor.  The Assistant Fire Chief position has remained unfilled for years.
  4. Option 7 allows us to hire a Planner I.  This position is critical to the future of the city.  It is the only personnel position we looked at that has a significant ROI.  This year, over 50% of our city revenue will come from activities directly tied to economic development. We project that number could increase to 65% next year.  In order to protect and grow that revenue, we need a Planner. Without protecting and growing revenue, we will never be in a place to budget for all of the other priorities that got cut this year. It was really important to me, as I expressed earlier, that we get this position. (This position is also one that has been left unfilled.  Mr. Knudsen previously held this position and was promoted into Mr. Dyrhaug’s position when Mr. Dyrhaug was promoted to City Administrator by the previous Council.)
  5. Option 7 allows us to purchase limited capital via a Master Lease and a G.O. Bond.  Staff cut the capital expenditures to the very most important ones to create this limited list and decrease our financial obligation, which gave us a little more wiggle room in the budget.
  6. Option 7 offers several previously overlooked opportunities for revenue/cost savings: a) we have reviewed and plan to revise our permitting and other fees (this has not been reexamined for some time).  This will give us an estimated $25,000 extra but allow us to remain competitive with our neighbors.   b) we have reviewed and plan to increase the Public Works fee by $10.  This will net us an additional $76,000. This isn’t ideal in my opinion, but given the alternatives, this fee increase is a compromise I can live with. c) Stop providing door-to-door trash service to mobile home parks.  This will save us $30,000. At first, this may not make sense and may seem like we’re just arbitrarily removing services from a specific  group of residents. But here’s the thing with mobile home parks: they’re businesses–they’re in the business of renting.  And they pay a business license fee as such.  However, the public works fee is assigned based on tax map ID number.  So basically, a mobile home park with 170 homes gets service to all 170 residences despite only paying the fee for one.  Thus, mobile homes should be treated the same way other multi-family dwellings, like apartment complexes, are treated.  And that means they provide their own trash service. d) Eliminate trash service to businesses in the city.  This will net $75,000.  This one gave me a little trouble personally because I want to make sure we’re still business-friendly.  But the logic is sound: we do not provide roll-out cart services to ALL businesses in the city.  Commercial properties are expected to provide their own service. If we even the playing field and treat all businesses the same, it provides consistency as well as a cost savings to the city.  These changes will allow us to afford to purchase the equipment and hire the employees to do brush collection.
  7. Unfortunately, Police Recruitment and Retention didn’t make it into Option 7.  And I really wanted it in there.  I think, as I have said before, it is incredibly important to the future of the city.  If we don’t get it this year, I want it as part of a long-term plan–a plan we need to start working on once we’ve passed this year’s budget.  Because like I’ve said before, this time next year, we need to be better prepared to meet the city’s most critical needs (like police recruitment and retention) in a fiscally responsible and sustainable way.
  8. Like all the options, Option 7 includes a 3% salary increase; 8% health insurance increase; 2% retirement increase; moving $200,000 for infrastructure to be paid from the Sewer Bond; moving $200,000 for Fire Station #5 to be paid from General Fund Balance.

As I said in the meeting, I don’t love Option 7, but I think it represents a compromise–one I can live with, and one the other council members present can too.  We’ll have a public hearing and a first reading at the beginning of June. And then–we need to get to work on a long-term plan. I know other council members, our Administrator, and our Finance Director all agree on that.