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Home My WebLink About15.F.3. 2003 Budget Reduction Plan / s: r. :3 .. CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Budget Reduction Plan DATE: February 27,2003 INTRODUCTION: The Council is asked to consider a plan to deal with the proposed reduction in State aid and market value credit from the State of Minnesota, for FY 03. BACKGROUND: On February 12th, the Governor Tim Pawlenty unveiled his plan for dealing with the $4.2 billion deficit that is projected for the two-year biennium that begins July 1, 2003. Since that time, the projected deficit has increased slightly to $4.23 billion, Governor Pawlenty has previously indicated that he will not consider raising taxes, and therefore has proposed a series of expenditure and service cuts to deal with the projected shortfall. In that plan, Shakopee loses 100% of its Local Government Aid (LGA), and Market Value Credit aid (MVC). The amount of the reduction to the City is $652,471 for both 2003, and 2004. In January, the Council met in a workshop to consider a tentative budget reduction proposal. Coincidentally, the amount ofthe reduction estimated at that time was nearly exactly what the Governor has proposed. Note that while this amount will not be finaled until the legislature acts on the changes and the bill is signed into law, indications are that the legislature is likely to pass something very similar, at least in terms of its cuts to Shakopee. DISCUSSION: After the announcement was made by the Governor, I held four meetings with City employees to review the impact of the Governor's proposal, and to seek ideas that they might have that would help the City address the shortfall. They were asked to think in terms of what tasks are done by the City which are mandated by the State, but may not be critical (which then assumes the legislature will be willing to eliminate obsolete requirements); what tasks can be performed more efficiently; and finally, what revenue options should be considered to more accurately reflect the cost of providing those services. Note that any fee increases that are suggested will need to be considered by the City Council in terms of desirability, and the recipients' ability (and willingness) to pay. For example, the operation of the outdoor aquatic center is subsidized; however, that is a service that is expected to be provided by City residents. . Approximately 35 employees attended the four sessions. A summary oftheir suggestions is attached. BUDGET IMP ACT: Now that the figure is clearer, the Council may wish to consider enacting cuts, On February 25th, City department heads met to review the proposed changes, and recommends changes as shown on the attached pages. The highlights are as follows: Expenditure Reductions $498,320 Revenue Increases $128,500 Delete LGA $165,000 Total $791,820 Staff does recommend to "add back-in" $185,715 in items which were previously suggested for cutting at the January workshop. The Council may choose to delete those as well, but staff does not feel that that is necessary at this time. The reductions this year, totaling about one half million dollars, are comprised primarily of "one-time" cuts. In other words, assuming that the Governor's proposal (or something very similar) becomes law, the $650,000 in cuts next year will be more difficult. However, the City will have more time to work into that. It is likely, however, that those reductions will need to be more personnel-cost related - the elimination of employee positions are the most long-lasting cost reduction majors, but also result in the reduction of service levels. At a future Council meeting, the discretionary revenue increases resulting from potential reinspection fees and plan review fees in the Building Department will be presented for consideration. Note that the School Resource Officer grant is an item which was omitted from the revenue side of the FY 03 budget when it was originally adopted; sales tax have been charged on Community Center sales since January 1 st. The Council is free to add or delete to any of these items. RECOMMENDATION: I recommend that the Council adopt the proposed expenditure reductions as presented from the department heads. ACTION REQUIRED: If the Council concurs, it should, by motion, adopt the 2003 budget reduction options as outlined on the attached sheets, or as otherwise modified. ..vwt.~ Mark McNeill City Administrator MM:th FY 2003 Budget Reduction Options Target--$652,471 Net Chng Mayor and Council Combine Hometown Messenger with P & R Catalog 4,400 Derby Days contribution 2,000 6400 Administration City Admin salary step 1810 Website Material 400 Furniture 3,500 National Conference 1,500 Chamber Dues 80 7290 Legal SJPA Savings 11,000 Specialized Legal Fees 10,000 21000 Government Buildings Library Start Up Costs 3,000 3000 Natural Resources Consulting fees 3,050 Lake monitoring program 1 ,400 Printing 1,000 National Conference 1,500 Travel 500 Dues 200 7650 Finance Prof, Fees--Audit 3,000 Telephone 1,000 Expense Charge Back 8,000 PIT Wages Benefits 16,980 28980 Police Drug Task Force 8,400 Delete 1 CD Siren 19,500 Provide New Officers Starting 4/1; 5/1; 7/1 111500 Travel 1,500 140900 Fire Misc Equipment 15,000 Hurst Tool Equipment 15,300 30300 Public Works--Engineering PT Wages 5,900 Supplies 5,000 Prof Services 8,000 Telephone 1,000 Rentals 2,000 21900 Public Works--Street PT Wages 5,000 Prof Services 37,000 Pavement Preservation 30,000 72000 Public Works--Parks PT Wages 5,000 Supplies 2,500 Pavement Preservation 10,000 Prof Services 7,000 Capital Expenditures (Tahpah Well) 15,000 39500 Public Works--Shop Third Mechanic (Assumes seasonal all year) 25,000 25000 Comm Development--Plng and MIS Supplies 8,000 Prof Services 10,000 Printing 2,000 Training 1,500 Dues 2,200 23700 Comm Development--Inspections PT Wages 5,000 Supplies 13,000 Prof Services 8,000 Travel 2,000 28000 Parks and Recreation--Rec Fund Utilities 15,000 CC Carpet/Lobby Furniture 9,500 Ice Arena Compressor and Boards 11 ,300 Travel 1,900 Education 3,000 Motor Fuels 1,000 Rec Supplies 1,000 42700 Total 498,320 Revenue Increases Reinspection Fees* 7500 Plan Review Fees Not currently Charged* 30000 School Resource Officer Grant 88000 Charge Sales Tax on Comm Center/Parks Sales 3000 *assumes 4/1 implementation date 128,500 Delete LGA 165000 165,000 Grand Total 791,820 Items Considered for Cutting at January Workshop, but Recommended to "Add Back": Recognition Picnic/Employee Appre Lunch (Council) 1200 Dues--Coalition Utility Cities (Council) 3000 Staff Training (Administration) 5000 Electronic Imaging (City Clerk) 17000 Finance PT Wages 16980 Additional CD Siren (Police) 19500 Drug Task Force--from forfeitures (Police) 8400 Police Officer Hiring Delays 47930 Misc. Fire Equipment 15200 Haz-Mat Equipment 15000 Prof Services (Engineering) 8000 PT Wages (Parks) 5000 Prof Services (CD--Planning) 5000 Prof Services (CD--Inspections) 8255 Restore Aquatic Park Hours (Parks) 8120 Fitness Equipment (Parks) 2130 Total 185,715 Ideas for budget cuts from employee meetings: 1, Need to look further ahead - can the City do multiple year budgeting? 2, Should look at building rental charges, to make certain that they accurately reflect depreciation. 3, One inspector noted that there are several other permits that could be issued, for which the City could charge (however, there would also be a need for follow up to insure compliance). 4, Check heat in the southwest corner stairwell of City Hall building. 5, Concern about high-density town homes, and future costs, 6. Need to enforce homeowners or contractors dumping building or landscaping materials on streets - that causes the streets to get torn up. Also, there are problems with roll off dumpsters, and bobcats tearing up new streets. Can enforcement be done by non-police employees? 7, Need to do rental housing code enforcement. 8, Is it possible to require permits of landscapers and snow removal companies throughout the City - this would give the City a better opportunity to follow up on violators. Can landscaping and snow removal issues be handled through the right-of-way permit? 9, Is the City fully utilizing enterprise funds; Le, if we hires employees to do nothing but sanitary sewer maintenance, 100% of those salaries would come from sanitary sewer maintenance, Currently, sanitary sewer maintenance is done on an "as available" basis - charging 100% of their time to that would assure maintenance is done on a more regular basis, 10, Grease traps for restaurants - can those be required and enforced? 11, Contractor licensing - could that also include sewer cleaning? 12. Is the Community Center making a profit - is it paying for itself? 13. Will the City be providing early retirement incentives for employees? 14. The City could eliminate the recording of minor subdivisions. Perhaps charge for stamping those deeds, 15. Charge a small fee for signing and notarizing motor vehicle dealer license forms. 16, For building permits that require more than one review, require an additional review charge, consistent with the permit review charges that the City currently has in its fee schedule, 17. Require applicants to pay $0,50 for each notice that the City sends out (in addition to the charge the abstractor makes), 18, Require additional review fees for development projects that are large and/or complex- currently there is a single charge, regardless of the amount of staff time spent.