HomeMy WebLinkAbout2.B, 2011 Preliminary Budget Discussion H EN ILLS
MEMORANDUM
DATE: June 21, 2010 Item 2.B
TO: Honorable Mayor and City Council
FROM: Sue Iverson, Finance Director/Treasurer
SUBJECT: 2011 Preliminary Budget Discussion
BACKGROUND:
The City staff is in the process of developing a Preliminary 2011 Budget. As we progress
forward and take the necessary steps, staff needs general direction and guidance from the
Council with regards to changes for the coming year.
As of this time, we are under levy limits for 2011. The Implicit price deflator (IPD) cannot be
below zero. Current estimates are at 1.68%. The Minnesota Department of Revenue sets this in
early July, so we do not have the actual number yet. We did not levy to our full maximum last
year when we take into account special levies, I will have an estimate of what amount we could
be looking at for the worksession on Monday evening.
DISCUSSION:
Preliminarily, staff has identified a number of factors that will influence the 2011 Budget. Some
are identified as follows:
• Tax Levy—what is the Council's comfort level? Last year was a 2.3% increase. A 1%
levy increase translates to approximately$25,000.
• Another area where staff sees a need is in park funding. Park dedication fees are
generally limited to capital improvements not general repair and maintenance items and
they are not a steady stream of income. In looking at the financial plan, staff sees a need
to set up a reserve for park improvements. This fund would then be a funding source for
items which are included in the CIP.
• Personnel—Council and staff have been discussing these issues over past few months and
we are in the process of hiring a public works maintenance worker and a public work
director. We have contracted for more engineering hours with Roseville and anticipate
that we will reevaluate this once the Public Works department is fully staffed.
• Overall budget increases—preferences/limits?
Memo
2009 Budget Memo
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• Salaries and Benefits. The Council did a market study and updated our pay scales in
December of 2007. We did not have a COLA increase in 2010 for non-union employees.
The union contract expires on December 31, 2010. The union employees did have a
COLA increase of 3% for 2010. Would the Council like staff to run various alternatives
during the budget process this year? What research would Council like staff to re are?
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• Increase in employee benefits costs (health and dental). We do not yet have preliminary
numbers for these costs yet,but will be getting these in the next few months. Our
insurance pool went out for bids and rates last year and we received only a 1% in crease
overall. We did go out for various bids with other firms last year and we did not
experience favorable rates. Staff recommends staying with the current insurance provider
at this time. Until we get the actual numbers, a 15% increase will be used. The current
City contribution towards health and dental is $680.21 per month. Over the past few
years, the Council had approved budgeting for 50% of the increase in premium. In other
words, the City equally shared the rate increase with the employees. In 2008, the Council
approved budgeting for 50% of the increase,but also added an additional plan with a
deductible at a lower cost (HSA). This plan was available to employees with the same
City contribution as the co-pay plan, as they were taking on more of the risk,but
participation in the plan would reduce city overall costs. Additionally, only those who
took the new HSA plan are receiving the full City contribution if there is any remaining
after health insurance premiums, this provided an incentive to employees to convert to
the new plan. Would this be an appropriate formula to continue to use for budget
purposes?
• Update the five year CIP. The Council reviewed this in January and we will be
discussing this at the worksession on Monday evening.
• As a step in creating a quality budget document, performance measures/service indicators
need to be established for each department. Some of these may come about as a result of
the community survey(if one is done) as areas that the Council would like to improve.
Goals and objectives also need to be established for each department. These would need
to be established in 2011, then in subsequent years actual performance can be tracked to
show progress against these goals. This would provide Council and the public another
tool to evaluate city services. Staff would appreciate input from the Council on this
matter.
RECOMMENDED ACTION:
Staff is seeking direction from the Council as it continues with the 2010 n Bud eti process.
Budgeting