07-17-2019 Budget Work SessionJuly 17, 2019
The City Council conducted a Budget Work Session on the above date beginning at 4:37 p.m.
The following were present: Council members Chris Ness, Jerry Cusick, Steve Kronmiller, Patti
Ray, and Mayor Christine Maefsky.
Staff members: Public Works Director Adam Hawkinson, Fire Chief Mike Hinz, Treasurer
Colleen Firkus, and former City Administrator Neil Soltis
APPROVAL OF THE AGENDA
Motion by Ness, seconded by Ray, to approve the agenda as amended to talk about hiring a new
city administrator. Vote 5-0. Motion carried.
DISCUSSION OF THE 2020 OPERATING AND CAPITAL BUDGETS
Soltis presented a draft 2020 Budget starting with the wage detail/allocations and assumption
that the Personnel wages were based on the Council adopting the new wage step scale prior to
January 1, 2020. Benefits included family coverage health insurance in Administrator position.
Next Soltis covered the impact on property taxes based on a proposed levy increase $218,174, or
nearly 10%. In the General Fund (Operating Expenses) the increase is $133,000 (10%). But last
year the levy was reduced to stay level, which was achieved by cutting $68,000 from the General
Fund. Another part of the increase is a recommendation from the Capital Improvement
Committee of $30,000 for the Park Capital Improvement Fund and $55,000 for the Local Road
Improvement Fund.
Taxable Market Value projects a 12% increase. So even levying $218,174 more, actually per
thousand dollars of taxable market valuation is going down by $.07.
Focusing on the target fund balance for 2020, year-end fund balance is projected to be
$1,126,701. Goal is to keep 65%, or $1,152,710, so a little under target but still a good cushion.
However, no extra fund balance to transfer to capital funds is projected.
GENERAL FUND
Total increase in General Fund is about $73,800, of which $43,200 is in Wages and $32,950 in
Contractual Services.
ADMIN & FINANCE
2020 Budget is close to the 2019 Projected Budget (less transfer), but an increase of $27,200
from 2019, much of it in Personnel costs. In the past, to keep levy constant any increase was
taken out of Admin & Finance. No transfer is projected for 2020. Treasurer Firkus spoke to the
need for managed computer services.
PLANNING
The 2020 Budget assumes a lower permit revenue than in 2017 and 2018 which were unusually
large due to storm damage, solar gardens, and school building project, but kept the same as 2019.
Planning Fees were increased $10,000 to rewrite development code once the Comprehensive
Plan is adopted.
FIRE DEPT
Chief Hinz talked about increasing expenditures for computer support due to increasing
complicated systems. Training higher as three new people going through EMT training. Other
training expected to be covered by grants. Almost $11,000 in grants were received in 2019.
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Scandia City Council Work Session
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Some line items were increased due to changing where things were allocated. County CAD
system requires three iPad for trucks and three new air cards.
PUBLIC WORKS
Public Works Director Hawkinson gave an overview of his process of evaluating six-month
figures and adjusting next year’s figures accordingly. There were some big equipment repairs
were done in 2019, so increased that budget slightly. Councilmember asked why such an
increase in salt costs from 2018 to 2019 and if more were being used. The cost of salt increased
by $10 per ton since 2018, and there were bigger snow events in early 2019. Staff will send
information on tons used to Council.
CABLE TV FUND
This year a big expenditure for the audio system in board room. End of 2020 expected balance of
$15,000, of which only about $4,000 is restricted. Expenditures expected are $6,7600, the rest
can be used at the Council’s discretion.
EDA FUND
Kept a levy of $5,000. End of 2019 expect a fund balance of $25,000, of which $20,000 is held
in reserve for a revolving fund. So, end of 2020 about $10,000 is available.
DEBT SERVICE FUNDS
Big jump is starting to pay for 2018 road improvement project. No other changes.
CAPITAL IMPROVEMENT FUND
The fund balance is a result of the transfers of the past two years. The 2020 projects are the
$100,000 for Community building, $60,000 for emergency generator at Fire Hall, $25,000
HVAC at Fire Hall, $75,000 for parking lot at Fire Hall/Public Works, leaving about $850,000
balance.
EQUIPMENT REPLACEMENT FUND
Three purchases scheduled for 2020 includes $30,000 for a defibrillator, $98,000 to replace a
tractor/mower, and $95,000 to add a loader. That fund is projected to run out of money in 2021
and the Capital Improvement Committee will be recommending a $100,000 transfer into this
fund from the Capital Improvement Fund.
PARK CAPITAL IMPROVEMENT FUND
Capital Improvement Committee will be recommending a dedicated revenue source for project
by levying $30,000 beginning 2020. The big drop in Revenue between 2019 and 2020 reflects
the land sale of $140,000 in 2019. Biggest purchase in 2020 is the Zamboni. The grant for
Lilleskogen reflected split over four years. The money was budgeted in 2019, but will be spent
over four years.
LOCAL ROAD IMPROVEMENT FUND
The Capital Committee recommended a $55,000 increase in funding to fund annual projects as
recommended on a schedule from the city engineer approved by the Committee.
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Scandia City Council Work Session
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201 SEWER
To replace the panels, the budget numbers are too low this year at $37,500 each as they will cost
$55,000 each. So that will overspend the 2019 budget. Currently the fund cash flows, but in the
long term it is not accumulating very fast. The Wastewater Committee is expected to recommend
an increase in revenue in user fees. There is the 5-year plan to be submitted to the PCA in
September, which needs a number to support that plan. Rate structures can flow out of that plan.
UPTOWN SEWER
No big changes, other than a 5% increase. Soltis suggested the increased use of the warming
house may provide that extra 5% revenue depending on how much the volume increases, but
should be discussed by the Wastewater Committee. Mayor Maefsky asked if the Uptown will be
in the same position of the 201 System where a large amount is needed to replace the system.
Soltis all the equipment is on a replacement schedule, but not a major upgrade. The Uptown
doesn’t have the same issue as the nitrate problem requiring a remedy, and it doesn’t have an
inflow & infiltration problem, like the 201 System. Uptown also has a lot of capacity.
Councilmember Kronmiller indicated that every system has a lifespan and the city needs to plan
for replacement.
Further information that the Council will need are the final recommendations, including
broadband figure, from the Capital Improvement Committee which is meeting August 8, and
from the Wastewater Committee which is meeting July 24. Soltis expressed concern about the
cash balance in the Capital Improvement Fund over 5 years, especially with no additional inflow.
Mayor Maefsky reported on the possibility of funds for the Capital building from a State bonding
bill.
Next budget workshop on Wednesday, August 21, at 4:30 p.m.
ADJOURNMENT
Motion by Ness, seconded by Cusick to adjourn the meeting. Vote 5-0. Motion carried.
The meeting adjourned at 5:45 p.m.
Respectfully submitted,
Colleen Firkus
Treasurer